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 December 27, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 0-16255
JOHNSON WORLDWIDE ASSOCIATES, INC.
(Exact name of Registrant as specified in its charter)
Wisconsin 39-1536083
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1326 Willow Road, Sturtevant, Wisconsin 53177
(Address of principal executive offices)
(414) 884-1500
(Registrant's telephone number, including area code)
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, 1997, 6,901,785 shares of Class A and 1,228,053 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 December 27, 1996
and December 29, 1995 3
Consolidated Balance Sheets -
December 27, 1996, September 27, 1996
and December 29, 1995 4
Consolidated Statements of Cash Flows -
Three Months Ended December 27, 1996
and December 29, 1995 6
Notes to Consolidated Financial
Statements 7
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of
Operations 9
PART II OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 12
JOHNSON WORLDWIDE ASSOCIATES, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
Three Months Ended
(thousands, except per share data) December 27 December 29
1996 1995
Net sales $51,817 $56,405
Cost of sales 33,688 35,084
------- -------
Gross profit 18,129 21,321
------- -------
Operating expenses:
Marketing and selling 14,280 15,545
Financial and administrative 5,653 6,057
management
Research and development 1,277 1,713
Profit sharing 103 43
Amortization of acquisition costs 603 681
------- -------
Total operating expenses 21,916 24,039
------- -------
Operating loss (3,787) (2,718)
Interest income (121) (167)
Interest expense 2,083 2,130
Other (income) expenses, net 65 (50)
------- -------
Loss before income taxes (5,814) (4,631)
Income tax benefit (1,948) (1,838)
------- -------
Net loss $(3,866) $(2,793)
======= =======
Loss per common share $( .48) $( .34)
======= =======
The accompanying notes are an integral part of the consolidated financial
statements.
JOHNSON WORLDWIDE ASSOCIATES, INC.
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(unaudited)
(thousands, except share data) December 27 September 27 December 29
1996 1996 1995
ASSETS
Current assets:
Cash and temporary
cash investments $9,278 $12,697 $6,578
Accounts receivable, less
allowance for doubtful
accounts of $2,284, $2,235,
and $2,707, respectively 58,057 55,847 63,632
Inventories 110,350 101,903 123,507
Deferred income taxes 14,428 13,561 7,458
Other current assets 8,119 10,336 11,443
------- ------- -------
Total current assets 200,232 194,344 212,618
Property, plant and equipment 30,356 30,154 34,039
Intangible assets 53,436 54,422 58,309
Other assets 1,630 1,848 935
------- ------- -------
Total assets $285,654 $280,768 $305,901
======= ======= =======
LIABILITIES AND
SHAREHOLDERS' EQUITY
Current liabilities:
Short-term debt and current
maturities of long-term debt $63,323 $43,118 $55,399
Accounts payable 10,945 11,086 19,353
Accrued liabilities:
Salaries and wages 4,942 6,260 5,195
Income taxes 352 4,283 (476)
Other 19,508 23,659 14,283
------- ------- -------
Total current liabilities 99,070 88,406 93,754
Long-term debt, less current
maturities 61,472 61,501 68,994
Other liabilities 4,414 4,437 4,324
------- ------- -------
Total liabilities 164,956 154,344 167,072
------- ------- -------
Shareholders' equity:
Preferred stock: none issued - - -
Common stock:
Class A shares issued:
December 27, 1996, 6,901,885;
September 27, 1996, 6,901,801;
December 29, 1995, 6,896,959 345 345 345
Class B shares issued
(convertible into Class A):
December 27, 1996, 1,228,053;
September 27, 1996, 1,228,137;
December 29, 1995, 1,228,537 61 61 61
Capital in excess of par value 44,087 44,084 43,968
Retained earnings 74,065 77,940 86,387
Contingent compensation (94) (121) (224)
Cumulative translation
adjustment 2,500 4,115 8,294
Treasury stock:
December 27, 1996, 23,400 Class
A shares;
December 29, 1995, 100 Class A
shares (266) - (2)
------- ------- -------
Total shareholders' equity 120,698 126,424 138,829
------- ------- -------
Total liabilities and
shareholders' equity $285,654 $280,768 $305,901
======= ======= =======
The accompanying notes are an integral part of the consolidated financial
statements.
JOHNSON WORLDWIDE ASSOCIATES, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
Three Months Ended
December 27 December 29
(thousands) 1996 1995
CASH USED FOR OPERATIONS
Net loss $(3,866) $(2,793)
Noncash items:
Depreciation and amortization 2,810 2,723
Deferred income taxes (642) 191
Change in:
Accounts receivable, net (2,770) (2,352)
Inventories (9,256) (25,335)
Accounts payable and accrued liabilities (8,987) (6,638)
Other, net 1,876 (2,103)
------- -------
(20,835) (36,307)
------- -------
CASH USED FOR INVESTING ACTIVITIES
Net additions to property, plant and (2,521) (2,937)
equipment
CASH PROVIDED BY FINANCING ACTIVITIES
Issuance of senior notes - 45,000
Repayment of revolving credit facilities - (13,412)
Net change in short-term debt 20,337 5,299
Common stock transactions (272) (2)
------- -------
20,065 36,885
Effect of foreign currency fluctuations on
cash (128) (7)
------- -------
Decrease in cash and temporary cash
investments (3,419) (2,366)
CASH AND TEMPORARY CASH INVESTMENTS
Beginning of period 12,697 8,944
------- -------
End of period $9,278 $6,578
======= =======
The accompanying notes are an integral part of the consolidated financial
statements.
JOHNSON WORLDWIDE ASSOCIATES, INC.
AND SUBSIDIARIES
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. (the
Company) as of December 27, 1996 and the results of operations and cash
flows for the three months ended December 27, 1996. These consolidated
financial statements should be read in conjunction with the
consolidated financial statements and notes thereto included in the
Company's 1996 Annual Report.
Because of seasonal and other factors, the results of operations for
the three months ended December 27, 1996 are not necessarily indicative
of the results to be expected for the full year.
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:
December 27 September 27 December 29
(thousands) 1996 1996 1995
Raw materials $41,120 $30,102 $36,282
Work in process 6,217 6,167 6,896
Finished goods 76,936 79,299 85,651
------- ------- -------
124,273 115,568 128,829
Less: reserves 13,923 13,665 5,322
------- ------- -------
$110,350 $101,903 $123,507
======= ======= =======
4 Shareholders' Equity
In October 1996, the Company granted options to purchase 75,000 shares
of Class A common stock at $13.125 per share. In December 1996, the
Company granted options to purchase 156,000 shares of Class A common
stock at $11.50 per share and 10,000 shares of Class A common stock at
$13.125 per share. In January 1997, the Company granted 5,500 shares
of restricted Class A common stock.
5 Earnings Per Share
Earnings per share of common stock are computed on the basis of a
weighted average number of common shares outstanding. Common stock
equivalents are not significant in any period presented.
(thousands) Three Months Ended
December 27 December 29
1996 1995
Weighted average common shares 8,120 8,116
======= =======
6 Sale of Plastimo Business
In 1996, the Board of Directors approved a plan to divest the Company's
Plastimo business, which manufactured navigation and safety equipment
and distributed these products and other products to the marine
industry, primarily in Europe. The Company estimated that the sale of
this business would result in a loss of approximately $2,000,000.
Accordingly, this loss was recognized in 1996 operating results. The
Company completed the divestiture in January 1997. Net sales and
operating losses of the Plastimo business for the three months ended
December 27, 1996 were $4.7 million and $1.1 million, respectively.
Net assets of this business totaled $15.5 million at December 27, 1996.
7 Acquisition of Uwatec AG
In January 1997, the Company announced it has entered into an
arrangement to acquire the common stock of Uwatec AG, a privately held
manufacturer and marketer of diving electronic instruments sold under
the Aladin and Uwatec trademarks. The acquisition is subject to
finalization of a definitive agreement and satisfaction of certain
preclosing conditions.
8 Reclassification
Certain amounts as previously reported have been reclassified to
conform with the current period presentation.
JOHNSON WORLDWIDE ASSOCIATES, INC.
AND SUBSIDIARIES
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 December 27, 1996 and December 29, 1995. 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 1996 Annual Report.
Foreign Operations
The Company has significant foreign operations, for which the functional
currencies are denominated primarily in French francs, German marks,
Italian lire, Japanese yen and Canadian dollars. As the values of the
currencies of the foreign countries in which the Company has operations
increase or decrease relative to the U.S. dollar, the sales, expenses,
profits, assets and liabilities of the Company's foreign operations, as
reported in the Company's consolidated financial statements, increase or
decrease, accordingly. The Company mitigates a portion of the
fluctuations in certain foreign currencies through the purchase of forward
contracts and options to hedge known commitments, primarily for purchases
of inventory and loans denominated in foreign currencies.
Results of Operations
Net sales for the three months ended December 27, 1996 totaled $51.8
million, a decrease of approximately 8% from net sales of $56.4 million
for the three months ended December 29, 1995. Net sales of the Company's
North American units for the three months ended December 27, 1996
decreased $3.1 million, or 11%, over the corresponding period in the prior
year. Higher inventory levels at retail, along with continued softness in
the outdoor products business, contributed to the decline. Net sales of
the Company's European units decreased $1.4 million, or 6%, compared to
the corresponding period of the preceding year. Increases in sales in the
European outdoor products and marine businesses were more than offset by
sales declines in the diving and fishing businesses.
Relative to the U.S. dollar, the average values of most currencies of the
European countries in which the Company has operations were lower for the
three months ended December 27, 1996 as compared to the preceding year.
Excluding the impact of foreign currencies, net sales decreased 6% for the
three months ended December 27, 1996.
Gross profit as a percentage of sales decreased to 35.0% for the three
months ended December 27, 1996 compared to 37.8% over the corresponding
period in the prior year. Most business units and all geographical areas
experienced a decline. Underabsorption of overhead expenses due to lower
sales volume and sales of excess inventory at lower than normal margins
contributed to the decline.
The Company incurred an operating loss of $3.8 million for the three
months ended December 27, 1996, compared to an operating loss of $2.7
million for the corresponding period of the prior year. The decreases in
sales and gross profit were partially offset by a $2.1 million decrease in
operating expenses. The decrease in operating expenses is attributable to
the decline in sales and also to management's efforts to control such
expenses.
Interest expense of $2.1 million for the three months ended December 27,
1996 remained level with the prior year.
The Company incurred a net loss of $3.9 million in the three months ended
December 27, 1996 compared to a loss of $2.8 million in the corresponding
period of the preceding year. On a per share basis, the loss amounts to
$0.48 compared to $0.34 in the preceding year.
Financial Condition
The following discusses changes in the Company's liquidity and capital
resources.
Operations
Cash flows used for operations totaled $20.8 million for the three months
ended December 27, 1996 and $36.3 million for the corresponding period of
the prior year. Growth in inventories of $9.3 million for the three
months ended December 27, 1996 and $25.3 million for the corresponding
period of the prior year account for a significant amount of the net usage
of funds. Accelerated delivery schedules for certain new products,
inventories of acquired product lines, and level loading of production at
certain of the Company's manufacturing operations contributed to the
increase in 1995. Inventory turns decreased for the three months ended
December 27, 1996 compared to the corresponding period of the prior year.
Accounts receivable increased $2.8 million for the three months ended
December 27, 1996 and $2.4 million for the corresponding period of the
prior year. Early season buying programs account for the increase in
accounts receivable in 1996 and 1995.
Accounts payable and accrued liabilities decreased $9.0 million for the
three months ended December 27, 1996 and $6.6 million for the
corresponding period of the prior year, increasing the net outflow of cash
from operations. Reduced inventory procurement accounts for a significant
amount of the change between years.
Depreciation and amortization charges were $2.8 million for the three
months ended December 27, 1996 and $2.7 million for the corresponding
period of the prior year, mitigating the net outflow of operating funds.
Investing Activities
Expenditures for property, plant and equipment were $2.5 million for the
three months ended December 27, 1996 and $2.9 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 1997, capitalized expenditures are anticipated to total
approximately $10.0 million. These expenditures are expected to be funded
by working capital or existing bank lines of credit.
Financing Activities
Cash flows from financing activities totaled $20.1 million for the three
months ended December 27, 1996 and $36.9 million for the corresponding
period of the prior year. In October 1995, the Company consummated
private placements of long-term debt totaling $45 million. Payments on
long-term debt required to be made in 1997 total $7.5 million. Net
proceeds totaling approximately $16 million from the sale of the Company's
Plastimo business are expected to be used to reduce indebtedness in 1997.
Other Factors
The Company has not been significantly impacted by inflationary pressures
over the last several years. However, from time to time the Company faces
changes in the prices of commodities. Price increases and, in certain
situations, price decreases are implemented for individual products, when
appropriate. The Company anticipates that rising costs of basic raw
materials may impact 1997 operating costs and, accordingly, the prices of
its products. The Company is involved in continuing programs to mitigate
the impact of cost increases through changes in product design and
identification of sourcing and manufacturing efficiencies.
JOHNSON WORLDWIDE ASSOCIATES, INC.
AND SUBSIDIARIES
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 4.1 Second Amendment dated October 31, 1996 to
Note Agreements dated May 1, 1991
Exhibit 4.2 Second Amendment dated October 31, 1996 to
Note Agreements dated May 1, 1993
Exhibit 4.3 First Amendment dated October 31, 1996 to
Note Agreement dated October 1, 1995
Exhibit 27: Financial Data Schedule
(b) There were no reports on Form 8-K filed for the three
months ended December 27, 1996.
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 10, 1997
/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.
AND SUBSIDIARIES
EXHIBIT INDEX
Page
Exhibit Description Number
4.1 Second Amendment dated October 31, 1996
to Note Agreements dated May 1, 1991
4.2 Second Amendment dated October 31, 1996
to Note Agreements dated May 1, 1993
4.3 First Amendment dated October 31, 1996
to Note Agreements dated October 1,
1995
27. Financial Data Schedule
Exhibit 4.1
Johnson Worldwide Associates, Inc.
Second Amendment to Note Agreements
Dated as of October 31, 1996
Re:
Note Agreements Dated as of May 1, 1991
and
$25,000,000 9.16% Senior Notes
Due September 25, 1997
Johnson Worldwide Associates, Inc. Second Amendment to Note Agreements
Johnson Worldwide Associates
1326 Willow Road
Sturtevant, Wisconsin 53177
Second Amendment to Note Agreements
Dated as of October 31, 1996
Re: Note Agreements Dated as of May 1, 1991
and
$25,000,000 9.16% Senior Notes
Due September 25, 1997
To the Noteholders named in
Schedule I hereto which are also
signatories to this Second Amendment
to Note Agreement.
Ladies and Gentlemen:
Reference is made to the separate Note Agreements each dated as of
May 1, 1991, as amended by Amendment No. 1 dated as of September 30, 1993
(the "Note Agreements"), between Johnson Worldwide Associates, Inc., a
Wisconsin corporation (the "Company"), and the Purchasers named therein,
under and pursuant to which $25,000,000 aggregate principal amount of
9.16% Senior Notes due September 25, 1997 (the "Notes") of the Company
were originally issued. Terms used but not otherwise defined herein shall
have the meanings set forth in the Note Agreements.
The Company hereby requests that you accept each of the amendments
set forth below in the manner herein provided:
ARTICLE 1. WAIVER
Section 1.1. Waiver of Cross Defaults under Section 6.1(e). Upon the
proper waiver of any default which shall have occurred under any
indenture, agreement or other instrument pursuant to which any
Indebtedness for borrowed money of the Company or any Restricted
Subsidiary in excess of $3,000,000 was issued, the Noteholders hereby
waive the Events of Default which shall have occurred under Section 6.1(e)
of the Note Agreements.
Section 1.2. Waiver of Compliance with Section 5.11 The Noteholders
hereby waive compliance by the Company with Section 5.11 of the Note
Agreements for the period of four consecutive fiscal quarters ended on
September 27, 1996; provided that the ratio of Net Income Available for
Fixed Charges to Fixed Charges for each period was not less than 0.20 to
1.00.
ARTICLE 2. AMENDMENTS OF NOTE AGREEMENTS
Section 2.1. Amendment of Section 5.8. Section 5.8 of the Note
Agreements shall be amended by the addition thereto of a new subparagraph
(e) which shall read as follows:
(e) Notwithstanding any other provision of this Section 5.8, the
Company may sell stock or assets of Airguide Instrument Co. and all
of the Plastimo businesses. Sales of stock or assets permitted by
this Section 5.8(e) shall not be taken into account for purposes of
calculating the limitations on permitted sales of assets and stock
set forth in Section 5.8(b)(1) and the proviso at the end of Section
5.8(c).
Section 2.2. Amendment of Section 5.10. Section 5.10 of the Note
Agreements shall be amended in its entirety so that the same shall read as
follows:
Section 5.10. Consolidated Tangible Net Worth. The Company will at
all times keep and maintain Consolidated Tangible Net Worth at an
amount not less than $25,000,000; provided, however, that if the
Company incurs any special charges as a result of the closing of
certain distribution centers or the closing of certain plants if
Uwatec A.G. is acquired, such special charges in an aggregate amount
not to exceed $5,000,000 shall not be taken into account for purposes
of determining the amount of Consolidated Tangible Net Worth required
to be maintained pursuant to this Section 5.10.
Section 2.3. Amendment of Section 5.11. Section 5.11 of the Note
Agreements shall be amended in its entirety so that the same shall read as
follows:
Section 5.11. Fixed Charge Coverage Ratio. (a) On December 27,
1996, the Company will have kept and maintained the ratio of Net
Income Available for Fixed Charges to Fixed Charges for the fiscal
quarter ending on such date at not less than (1.25) to 1.00.
(b) On March 28, 1997, the Company will have kept and maintained the
ratio of Net Income Available for Fixed Charges to Fixed Charges for
the period of two consecutive fiscal quarters ending on such date at
not less than 1.00 to 1.00.
(c) On June 27, 1997, the Company will have kept and maintained the
ratio of Net Income Available for Fixed Charges to Fixed Charges for
the period of three consecutive fiscal quarters ending on such date
at not less than 1.20 to 1.00.
Section 2.4. Amendment of Section 8.1. Section 8.1 of the Note
Agreements shall be amended by amending the definition of "Net Income
Available for Fixed Charges" in its entirety so that the same shall read
as follows:
"Net Income Available for Fixed Charges" for any period shall mean
the sum of (a) Consolidated Net Income during such period plus (to
the extent deducted in determining Consolidated Net Income), (b) all
provisions for any Federal, state or other income taxes made by the
Company and its Restricted Subsidiaries during such period, plus (c)
Fixed Charges during such period, plus (d) special charges not to
exceed $5,000,000 taken in respect of the closing of certain
distribution centers, and, if Uwatec A.G. is acquired, the closing of
certain plants, during such period.
ARTICLE 3. MISCELLANEOUS
Section 3.1. Fee. In consideration of the execution and delivery of
this Amendment, the Company agrees to pay to each holder of a Note, within
ten (10) days of the date hereof, its ratable portion of a fee in the
aggregate amount of $7,000.
Section 3.2. No Legend Required. References in the Note Agreements or
in any Note, certificate, instrument or other document to the Note
Agreements shall be deemed to be references to the Note Agreements as
amended hereby and as further amended from time to time.
Section 3.3. Effect of Amendment. Except as expressly amended hereby,
the Company agrees that the Note Agreements, the Notes and all other
documents and agreements executed by the Company in connection with the
Note Agreements in favor of the Noteholders are ratified and confirmed and
shall remain in full force and effect and that it has no set-off,
counterclaim or defense with respect to any of the foregoing.
Section 3.4.Successors and Assigns. This Second Amendment to Note
Agreements shall be binding upon the Company and its successors and
assigns and shall inure to the benefit of the Noteholders and to the
benefit of the Noteholders' successors and assigns, including each
successive holder or holders of any Notes.
Section 3.5. Requisite Approval; Expenses. This Second Amendment to
Note Agreements shall not be effective until (a) the Company and the
holders of 66-2/3% in aggregate principal amount of all Notes outstanding
on the date hereof shall have executed this Second Amendment to Note
Agreements, and (b) the Company shall have paid all out-of-pocket expenses
incurred by the Noteholders in connection with the consummation of the
transactions contemplated by this Second Amendment to Note Agreements,
including, without limitation, the fees, expenses and disbursements of
Chapman and Cutler which are reflected in statements of such counsel
rendered on or prior to the effective date of this Second Amendment to
Note Agreements.
Section 3.6. Counterparts. This Second Amendment to Note Agreements may
be executed in any number of counterparts, each executed counterpart
constituting an original but all together only one agreement.
In Witness Whereof, the Company has executed this Second Amendment to
Note Agreements as of the day and year first above written.
Johnson Worldwide Associates, Inc.
By /s/
Its
This Second Amendment to Note Agreements is accepted and agreed to as
of the day and year first above written.
Allstate Life Insurance Company
By /s/
Its Authorized Signatory
By /s/
Its Authorized Signatory
This Second Amendment to Note Agreements is accepted and agreed to as
of the day and year first above written.
ReliaStar Bankers Security Life
Insurance Company (as successor by
merger to The North Atlantic Life
Insurance Company)
By /s/
Its
By /s/
Its
This Second Amendment to Note Agreements is accepted and agreed to as
of the day and year first above written.
ReliaStar Life Insurance Company
(as successor by merger to
Northwestern National Life
Insurance Company)
By /s/
Its
This Second Amendment to Note Agreements is accepted and agreed to as
of the day and year first above written.
Northern Life Insurance Company
By /s/
Its
Schedule I
Outstanding
Noteholder
Principal Amount
of Notes
Allstate Life Insurance Company $3,920,000
ReliaStar Bankers Security Life Insurance Company $560,000
ReliaStar Life Insurance Company $1,260,000
Northern Life Insurance Company $1,260,000
----------
Total $7,000,000
==========
Exhibit 4.2
Johnson Worldwide Associates, Inc.
Second Amendment to Note Agreements
Dated as of October 31, 1996
Re:
Note Agreements Dated as of May 1, 1993
and
$15,000,000 6.58% Senior Notes
Due September 25, 1999
Johnson Worldwide Associates, Inc. Second Amendment to Note Agreements
Johnson Worldwide Associates
1326 Willow Road
Sturtevant, Wisconsin 53177
Second Amendment to Note Agreements
Dated as of October 31, 1996
Re: Note Agreements Dated as of May 1, 1993
and
$15,000,000 6.58% Senior Notes
Due September 25, 1999
To the Noteholders named in
Schedule I hereto which are also
signatories to this Second Amendment
to Note Agreement.
Ladies and Gentlemen:
Reference is made to the separate Note Agreements each dated as of
May 1, 1993, as amended by the Amendment Agreement dated as of September
30, 1993 (the "Note Agreements"), between Johnson Worldwide Associates,
Inc., a Wisconsin corporation (the "Company"), and the Purchasers named
therein, under and pursuant to which $15,000,000 aggregate principal amount
of 6.58% Senior Notes due September 25, 1999 (the "Notes") of the Company
were originally issued. Terms used but not otherwise defined herein shall
have the meanings set forth in the Note Agreements.
The Company hereby requests that you accept each of the amendments set
forth below in the manner herein provided:
ARTICLE 1. WAIVER
Section 1.1. Waiver of Cross Defaults under Section 6.1(e). Upon the
proper waiver of any default which shall have occurred under any
indenture, agreement or other instrument pursuant to which any
Indebtedness for borrowed money of the Company or any Restricted
Subsidiary in excess of $3,000,000 was issued, the Noteholders hereby
waive the Events of Default which shall have occurred under Section 6.1(e)
of the Note Agreements.
Section 1.2. Waiver of Compliance with Section 5.11 The Noteholders
hereby waive compliance by the Company with Section 5.11 of the Note
Agreements for the period of four consecutive fiscal quarters ended on
September 27, 1996; provided that the ratio of Net Income Available for
Fixed Charges to Fixed Charges for each period was not less than 0.20 to
1.00.
ARTICLE 2. AMENDMENTS OF NOTE AGREEMENTS
Section 2.1. Amendment of Section 5.8. Section 5.8 of the Note
Agreements shall be amended by the addition thereto of a new subparagraph
(e) which shall read as follows:
(e) Notwithstanding any other provision of this Section 5.8, the
Company may sell stock or assets of Airguide Instrument Co. and all
of the Plastimo businesses. Sales of stock or assets permitted by
this Section 5.8(e) shall not be taken into account for purposes of
calculating the limitations on permitted sales of assets and stock
set forth in Section 5.8(b)(1) and the proviso at the end of Section
5.8(c).
Section 2.2. Amendment of Section 5.10. Section 5.10 of the Note
Agreements shall be amended in its entirety so that the same shall read as
follows:
Section 5.10. Consolidated Tangible Net Worth. The Company will at
all times keep and maintain Consolidated Tangible Net Worth at an
amount not less than $25,000,000; provided, however, that if the
Company incurs any special charges on or before October 2, 1998 as a
result of the closing of certain distribution centers or the closing
of certain plants if Uwatec A.G. is acquired, such special charges in
an aggregate amount not to exceed $5,000,000 shall not be taken into
account for purposes of determining the amount of Consolidated
Tangible Net Worth required to be maintained pursuant to this Section
5.10.
Section 2.3. Amendment of Section 5.11. Section 5.11 of the Note
Agreements shall be amended in its entirety so that the same shall read as
follows:
Section 5.11.Fixed Charge Coverage Ratio. (a) On December 27, 1996,
the Company will have kept and maintained the ratio of Net Income
Available for Fixed Charges to Fixed Charges for the fiscal quarter
ending on such date at not less than (1.25) to 1.00.
(b) On March 28, 1997, the Company will have kept and maintained the
ratio of Net Income Available for Fixed Charges to Fixed Charges for
the period of two consecutive fiscal quarters ending on such date at
not less than 1.00 to 1.00.
(c) On June 27, 1997, the Company will have kept and maintained the
ratio of Net Income Available for Fixed Charges to Fixed Charges for
the period of three consecutive fiscal quarters ending on such date
at not less than 1.20 to 1.00.
(d) On October 3, 1997 and on the last day of each fiscal quarter
thereafter, the Company will have kept and maintained the ratio of
Net Income Available for Fixed Charges to Fixed Charges for the
period of four consecutive fiscal quarters ending on each of such
dates at not less than 1.50 to 1.00.
Section 2.4. Amendment of Section 8.1. Section 8.1 of the Note
Agreements shall be amended by amending the definition of "Net Income
Available for Fixed Charges" in its entirety so that the same shall read
as follows:
"Net Income Available for Fixed Charges" for any period shall mean
the sum of (a) Consolidated Net Income during such period plus (to
the extent deducted in determining Consolidated Net Income), (b) all
provisions for any Federal, state or other income taxes made by the
Company and its Restricted Subsidiaries during such period, plus (c)
Fixed Charges during such period, plus (d) in the case of any fiscal
quarter ending on or before October 2, 1998, special charges not to
exceed $5,000,000 taken in respect of the closing of certain
distribution centers, and, if Uwatec A.G. is acquired, the closing of
certain plants, during such period.
ARTICLE 3. MISCELLANEOUS
Section 3.1. Fee. In consideration of the execution and delivery of
this Amendment, the Company agrees to pay to each holder of a Note, within
ten (10) days of the date hereof, its ratable portion of a fee in the
aggregate amount of $15,000.
Section 3.2. No Legend Required. References in the Note Agreements or
in any Note, certificate, instrument or other document to the Note
Agreements shall be deemed to be references to the Note Agreements as
amended hereby and as further amended from time to time.
Section 3.3. Effect of Amendment. Except as expressly amended hereby,
the Company agrees that the Note Agreements, the Notes and all other
documents and agreements executed by the Company in connection with the
Note Agreements in favor of the Noteholders are ratified and confirmed and
shall remain in full force and effect and that it has no set-off,
counterclaim or defense with respect to any of the foregoing.
Section 3.4. Successors and Assigns. This Second Amendment to Note
Agreements shall be binding upon the Company and its successors and
assigns and shall inure to the benefit of the Noteholders and to the
benefit of the Noteholders' successors and assigns, including each
successive holder or holders of any Notes.
Section 3.5. Requisite Approval; Expenses. This Second Amendment to
Note Agreements shall not be effective until (a) the Company and the
holders of 66-2/3% in aggregate principal amount of all Notes outstanding
on the date hereof shall have executed this Second Amendment to Note
Agreements, and (b) the Company shall have paid all out-of-pocket expenses
incurred by the Noteholders in connection with the consummation of the
transactions contemplated by this Second Amendment to Note Agreements,
including, without limitation, the fees, expenses and disbursements of
Chapman and Cutler which are reflected in statements of such counsel
rendered on or prior to the effective date of this Second Amendment to
Note Agreements.
Section 3.6. Counterparts. This Second Amendment to Note Agreements may
be executed in any number of counterparts, each executed counterpart
constituting an original but all together only one agreement.
In Witness Whereof, the Company has executed this Second Amendment to
Note Agreements as of the day and year first above written.
Johnson Worldwide Associates, Inc.
By /s/
Its
This Second Amendment to Note Agreements is accepted and agreed to as
of the day and year first above written.
Connecticut General Life
Insurance Company
By: CIGNA Investments, Inc.
By /s/
Its
This Second Amendment to Note Agreements is accepted and agreed to as
of the day and year first above written.
Life Insurance Company of
North America
By: CIGNA Investments, Inc.
By /s/
Its
Schedule I
Outstanding
Principal Amount
of Notes
Connecticut General Life Insurance Company $12,000,000
Life Insurance Company of North America $3,000,000
----------
Total $15,000,000
==========
Exhibit 4.3
Johnson Worldwide Associates, Inc.
First Amendment to Note Agreements
Dated as of October 31, 1996
Re:
Note Agreements Dated as of October 1, 1995
and
$30,000,000 7.77% Senior Notes, Series A
Due October 15, 2005
and
$15,000,000 6.98% Senior Notes, Series B
Due October 15, 2005
Johnson Worldwide Associates, Inc. First Amendment to Note Agreements
Johnson Worldwide Associates
1326 Willow Road
Sturtevant, Wisconsin 53177
First Amendment to Note Agreements
Dated as of October 31, 1996
Re: Note Agreements Dated as of October 1, 1995
and
$30,000,000 7.77% Senior Notes, Series A
Due October 15, 2005
and
$15,000,000 6.98% Senior Notes, Series B
Due October 15, 2005
To the Noteholders named in
Schedule I hereto which are also
signatories to this First Amendment
to Note Agreement.
Ladies and Gentlemen:
Reference is made to the separate Note Agreements each dated as of
October 1, 1995 (the "Note Agreements"), between Johnson Worldwide
Associates, Inc., a Wisconsin corporation (the "Company"), and the
Purchasers named therein, under and pursuant to which $30,000,000
aggregate principal amount of 7.77% Senior Notes, Series A, due October
15, 2005 and $15,000,000 6.98% Senior Notes, Series B, due October 15,
2005 (collectively, the "Notes") of the Company were originally issued.
Terms used but not otherwise defined herein shall have the meanings set
forth in the Note Agreements.
The Company hereby requests that you accept each of the amendments
set forth below in the manner herein provided:
ARTICLE 1. WAIVER
Section 1.1. Waiver of Cross Defaults under Section 6.1(e). Upon
the proper waiver of any default which shall have occurred under any
indenture, agreement or other instrument pursuant to which any
Indebtedness for borrowed money of the Company or any Restricted
Subsidiary in excess of $3,000,000 was issued, the Noteholders hereby
waive the Events of Default which shall have occurred under Section 6.1(e)
of the Note Agreements.
ARTICLE 2. AMENDMENTS OF NOTE AGREEMENTS
Section 2.1. Amendment of Section 5.9. Section 5.9 of the Note
Agreements shall be amended in its entirety so that the same shall read as
follows:
Section 5.9. Consolidated Tangible Net Worth. The Company will at
all times keep and maintain Consolidated Tangible Net Worth at an
amount not less than $25,000,000; provided, however, that if the
Company incurs any special charges on or before October 2, 1998 as a
result of the closing of certain distribution centers or the closing
of certain plants if Uwatec A.G. is acquired, such special charges in
an aggregate amount not to exceed $5,000,000 shall not be taken into
account for purposes of determining the amount of Consolidated
Tangible Net Worth required to be maintained pursuant to this Section
5.9.
Section 2.2. Amendment of Section 5.15. Subparagraphs (e) and (f)
of Section 5.15 of the Note Agreements shall be amended by changing the
references to "Section Section 5.6 through 5.11" set forth therein to
"Section Section 5.6 through 5.11 and Section 5.16".
Section 2.3. Amendment of Section 5. Section 5 of the Note Agreements
shall be amended by the addition thereto of a new Section 5.16 which
shall read as follows:
Section 5.16. Fixed Charge Coverage Ratio. On October 3, 1997 and
on the last day of each fiscal quarter thereafter, the Company will
have kept and maintained the ratio of Net Income Available for Fixed
Charges to Fixed Charges for the period of four consecutive fiscal
quarters ending on each of such dates at not less than 1.50 to 1.00.
Section 2.4. Amendment of Section 6.1. Subparagraph (f) of Section
6.1 of the Note Agreements shall be amended in its entirety so that the
same shall read as follows:
(f) Default shall occur in the observance or performance of any
covenant or agreement contained in Section 5.6 through Section 5.11
or Section 5.16 hereof; or
Section 2.5. Amendment of Section 8.1. Section 8.1 of the Note
Agreements shall be amended by the addition thereto of three new
definitions which shall read as follows:
"Fixed Charges" for any period shall mean on a consolidated basis the
sum of (i) all Rentals (excluding all Capitalized Rentals) payable
during such period by the Company and its Restricted Subsidiaries,
and (b) all Interest Charges on all Indebtedness (including the
interest component of Capitalized Rentals) of the Company and its
Restricted Subsidiaries.
"Interest Charges" for any period shall mean on a consolidated basis
the sum of all interest and all amortization of debt discount and
expense on any particular Indebtedness for which such calculations
are being made, including the interest component of all Capitalized
Rentals of the Company and its Restricted Subsidiaries. For purposes
of this definition, computations of interest charges on a pro forma
basis for Indebtedness having a variable interest rate shall be
calculated at the rate in effect on the date of any determination.
"Net Income Available for Fixed Charges" for any period shall mean
the sum of (a) Consolidated Net Income during such period plus (to
the extent deducted in determining Consolidated Net Income), (b) all
provisions for any Federal, state or other income taxes made by the
Company and its Restricted Subsidiaries during such period, plus (c)
Fixed Charges during such period, plus (d) in the case of any fiscal
quarter ending on or before October 2, 1998, special charges not to
exceed $5,000,000 taken in respect of the closing of certain
distribution centers, and, if Uwatec A.G. is acquired, the closing of
certain plants, during such period.
ARTICLE 3. MISCELLANEOUS
Section 3.1. Fee. In consideration of the execution and delivery
of this Amendment, the Company agrees to pay to each holder of a Note,
within ten (10) days of the date hereof, its ratable portion of a fee in
the aggregate amount of $45,000.
Section 3.2. No Legend Required. References in the Note Agreements
or in any Note, certificate, instrument or other document to the Note
Agreements shall be deemed to be references to the Note Agreements as
amended hereby and as further amended from time to time.
Section 3.3. Effect of Amendment. Except as expressly amended
hereby, the Company agrees that the Note Agreements, the Notes and all
other documents and agreements executed by the Company in connection with
the Note Agreements in favor of the Noteholders are ratified and confirmed
and shall remain in full force and effect and that it has no set-off,
counterclaim or defense with respect to any of the foregoing.
Section 3.4.Successors and Assigns. This First Amendment to Note
Agreements shall be binding upon the Company and its successors and
assigns and shall inure to the benefit of the Noteholders and to the
benefit of the Noteholders' successors and assigns, including each
successive holder or holders of any Notes.
Section 3.5. Requisite Approval; Expenses. This First Amendment to
Note Agreements shall not be effective until (a) the Company and the
holders of 70% in aggregate principal amount of all Notes outstanding on
the date hereof shall have executed this First Amendment to Note
Agreements, and (b) the Company shall have paid all out-of-pocket expenses
incurred by the Noteholders in connection with the consummation of the
transactions contemplated by this First Amendment to Note Agreements,
including, without limitation, the fees, expenses and disbursements of
Chapman and Cutler which are reflected in statements of such counsel
rendered on or prior to the effective date of this First Amendment to Note
Agreements.
Section 3.6. Counterparts. This First Amendment to Note Agreements
may be executed in any number of counterparts, each executed counterpart
constituting an original but all together only one agreement.
In Witness Whereof, the Company has executed this First Amendment to
Note Agreements as of the day and year first above written.
Johnson Worldwide Associates, Inc.
By /s/
Its
This First Amendment to Note Agreements is accepted and agreed to as
of the day and year first above written.
Nationwide Life Insurance Company
By /s/
Its
This First Amendment to Note Agreements is accepted and agreed to as
of the day and year first above written.
Employers Life Insurance Company
of Wausau
By /s/
Its
This First Amendment to Note Agreements is accepted and agreed to as
of the day and year first above written.
Great-West Life & Annuity
Insurance Company
By /s/
Its
By /s/
Its
Schedule I
Outstanding
Principal Amount
of Notes
Nationwide Life Insurance Company $27,000,000
Employers Life Insurance Company of Wausau $3,000,000
Great-West Life & Annuity Insurance Company $15,000,000
----------
Total $45,000,000
==========
5
1,000
3-MOS
OCT-03-1997
SEP-28-1996
DEC-27-1996
9,278
0
60,341
(2,284)
110,350
200,232
79,546
(49,190)
285,654
99,070
61,472
0
0
406
120,292
285,654
51,817
51,817
33,688
33,688
20,937
203
2,803
(5,814)
(1,948)
(3,886)
0
0
0
(3,866)
(.48)
(.48)
