SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13E-3/A
Rule 13e-3 Transaction Statement
Under Section 13(e) of the Securities Exchange Act of 1934
(Amendment No. 1)
Johnson Outdoors Inc.
(Name of Issuer)
Johnson Outdoors Inc.
Helen P. Johnson-Leipold
Imogene P. Johnson
Dr. H. Fisk Johnson
S. Curtis Johnson
Winifred J. Marquart
JWA Consolidated, Inc.
Johnson Bank
Samuel C. Johnson 1988 Trust Number One u/a September 14, 1988
JO Acquisition Corp.
Class A common stock, par value $0.05 per share
Class B common stock, par value $0.05 per share
479167 10 8
(CUSIP Number of Class of Securities)
| Johnson Outdoors Inc. 555 Main Street Racine, WI 53403 Attn: Alisa Swire Tel. No.: (262) 631-6600 |
J Venture Management, Inc. 555 Main Street Racine, WI 53403 Attn: Linda L. Mallon Tel. No.: (262) 260-4041 |
Johnson Bank 555 Main Street Racine, WI 53403 Attn: Brian Lucareli Tel. No.: (262) 619-2912 |
(Name, Address, and Telephone Numbers of Person Authorized to Receive Notices and Communications on Behalf of Persons Filing Statement)
copies to:
| Foley & Lardner LLP 777 East Wisconsin Ave. Milwaukee, WI 53202 Attn: Jay O. Rothman Tel. No.: (414) 271-2400 |
McDermott Will & Emery LLP 28 State Street Boston, MA 02109 Attn: John B. Steele Patricia A. Johansen Tel. No.: (617) 535-4000 |
Skadden, Arps, Slate, Meagher & Flom LLP 333 West Wacker Drive Chicago, IL 60606 Attn: Charles W. Mulaney, Jr. Susan S. Hassan Tel. No.: (312) 407-0700 |
This statement is filed in connection with (check the appropriate box):
| a. x | The filing of solicitation materials or an information statement subject to Regulation 14A, Regulation 14C or Rule 13e-3(c) under the Securities Exchange Act of 1934. |
| b. ¨ | The filing of a registration statement under the Securities Act of 1933. |
| c. ¨ | A tender offer. |
| d. ¨ | None of the above. |
Check the following box if the soliciting materials or information statement referred to in checking box (a) are preliminary copies: x
Check the following box if the filing is a final amendment reporting the results of the transaction: ¨
Calculation of Filing Fee
| Transaction Valuation(1) | Amount of Filing Fee(2) | |
| $87,730,866 |
$11,116 | |
| (1) | For purposes of calculating the filing fee only, the proposed maximum aggregate transaction valuation is $87,730,866, which is the sum of (a) the product of (i) the 4,210,134 shares of Common Stock that are proposed to be converted into the right to receive the merger consideration, multiplied by (ii) the merger consideration of $20.10 per share of common stock, plus (b) the product of (i) 274,971, the number of shares of common stock underlying options to purchase such shares at a per-share exercise price of less than $20.10, multiplied by (ii) the amount by which the per-share merger consideration of $20.10 exceeds the $8.80 per share weighted average exercise price of such options. |
| (2) | The filing fee, calculated in accordance with Regulation 0-11 under the Securities Exchange Act of 1934, as amended, equals 0.00012670 multiplied by the total Transaction Valuation. |
| x | Check the box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing with which the offsetting fee was previously paid. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. |
| Amount Previously Paid: $11,116 | Filing Party: Johnson Outdoors Inc. | |
| Form or Registration No.: Schedule 14A – Preliminary Proxy Statement |
Date Filed: November 24, 2004 | |
INTRODUCTION
This Amendment No. 1 to Rule 13e-3 transaction statement on Schedule 13E-3 is being filed with the Securities and Exchange Commission (the “Commission”) jointly by the following persons (collectively, the “filing persons”): Johnson Outdoors Inc. (“Johnson Outdoors”), Helen P. Johnson-Leipold, Imogene P. Johnson, Dr. H. Fisk Johnson, S. Curtis Johnson, Winifred J. Marquart, JWA Consolidated, Inc., Samuel C. Johnson 1988 Trust Number One u/a September 14, 1988, Johnson Bank and JO Acquisition Corp.
On October 28, 2004, Johnson Outdoors and JO Acquisition Corp. entered into an Agreement and Plan of Merger (the “Merger Agreement”), pursuant to which JO Acquisition Corp., an entity organized by Ms. Johnson-Leipold solely for the purpose of acquiring all of the outstanding shares of Johnson Outdoors’ common stock not already owned or controlled by members of the family of the late Samuel C. Johnson, will be merged with Johnson Outdoors and Johnson Outdoors will be the surviving corporation (the “Merger”). As a result of the Merger, Johnson Outdoors will be wholly owned by members of the Johnson family and entities controlled by them. Under the terms of the Merger Agreement, each existing share of Johnson Outdoors Class A common stock, par value $0.05 per share, and Class B common stock, par value $0.05 per share, other than shares held by the filing persons and treasury shares and dissenting shares, will be converted into the right to receive $20.10 in cash, without interest (the “merger consideration”). The Merger is subject to the satisfaction or waiver of the conditions set forth in the Merger Agreement, including approval of the Merger Agreement by shareholders of Johnson Outdoors.
Concurrently with the filing of this Schedule 13E-3, Johnson Outdoors is filing with the Commission Amendment No. 1 to the preliminary proxy statement on Schedule 14A filed with the Commission on November 24, 2004 pursuant to Section 14(a) of the Exchange Act of 1934 (the “Proxy Statement”) relating to a special meeting of shareholders of Johnson Outdoors. At the meeting, shareholders of Johnson Outdoors will consider and vote upon, among other things, a proposal to approve the Merger Agreement. A copy of the Proxy Statement is attached hereto as Exhibit (a)(1). A copy of the Merger Agreement is attached as Annex A to the Proxy Statement.
Pursuant to General Instruction G of Schedule 13E-3, this Schedule 13E-3 incorporates by reference the information contained in the Proxy Statement in answer to the items of Schedule 13E-3. The information set forth in the Proxy Statement, including all annexes thereto, is hereby expressly incorporated herein by reference, and the responses to each item in this Schedule 13E-3 are qualified in their entirety by the information contained in the Proxy Statement, including all annexes thereto.
The information contained in this Schedule 13E-3 and the Proxy Statement concerning Johnson Outdoors was supplied by Johnson Outdoors. Similarly, the information contained in this Schedule 13E-3 and the Proxy Statement concerning each filing person other than Johnson Outdoors was supplied by each such filing person.
| Item 1. | Summary Term Sheet. |
Item 1001 of Regulation M-A:
The information set forth in the Proxy Statement under the following captions is incorporated herein by reference: “SUMMARY TERM SHEET” and “QUESTIONS AND ANSWERS ABOUT THE MERGER.”
| Item 2. | Subject Company Information. |
Item 1002 of Regulation M-A:
| (a) | Name and Address. The information set forth in the Proxy Statement under the caption “PARTIES INVOLVED IN THE PROPOSED TRANSACTION” is incorporated herein by reference. |
| (b) | Securities. The information set forth in the Proxy Statement under the caption “THE SPECIAL MEETING – Record Date; Voting Rights” is incorporated herein by reference. The exact title of each class of the subject equity securities is “Class A common stock, par value $0.05 per share” (“Class A common stock”) and “Class B common stock, par value $0.05 per share” (“Class B common stock” and together with the Class A common stock, “common stock”). |
| (c) | Trading Market and Price. The information set forth in the Proxy Statement under the caption “MARKET PRICE AND DIVIDEND INFORMATION” is incorporated herein by reference. |
| (d) | Dividends. The information set forth in the Proxy Statement under the caption “MARKET PRICE AND DIVIDEND INFORMATION” is incorporated herein by reference. |
| (e) | Prior Public Offerings. None. |
| (f) | Prior Stock Purchases. The information set forth in the Proxy Statement under the caption “RECENT TRANSACTIONS AND PRIOR STOCK PURCHASES” is incorporated herein by reference. |
| Item 3. | Identity and Background of Filing Persons. |
Item 1003 of Regulation M-A:
| (a)-(c) | Name and address; Business Background of Filing Persons: The information set forth in the Proxy Statement under the captions “PARTIES INVOLVED IN THE PROPOSED TRANSACTION” and “Annex F – Directors and Executive Officers of Johnson Bank” is incorporated herein by reference. Johnson Outdoors is the subject company. |
| Item 4. | Terms of the Transaction. |
Item 1004 of Regulation M-A:
| (a) | (1) Material Terms. Tender Offers. Not Applicable. |
(2) Material Terms. Mergers or Similar Transactions. The information set forth in the Proxy Statement under the following captions is incorporated herein by reference: “SUMMARY TERM SHEET,” “QUESTIONS AND ANSWERS ABOUT THE MERGER”, “THE SPECIAL MEETING,” “SPECIAL FACTORS,” “THE MERGER AGREEMENT,” “CONTRIBUTION AND VOTING AGREEMENTS,” “Annex A – Agreement and Plan of Merger”, “Annex B – Contribution Agreement”, and “Annex C –Voting Agreement.”
| (c) | Different Terms. The information set forth in the Proxy Statement under the following captions is incorporated herein by reference: “SUMMARY TERM SHEET,” “QUESTIONS AND ANSWERS ABOUT THE MERGER,” “SPECIAL FACTORS – Purpose and Reasons for the Merger”, “SPECIAL FACTORS – Certain Effects of the Merger”, “SPECIAL FACTORS – Interests of Certain Persons in the Merger”, “THE MERGER AGREEMENT – Treatment of Stock Options,” “THE MERGER AGREEMENT – Treatment of Other Equity Based Compensation Arrangements,” and “CONTRIBUTION AND VOTING AGREEMENTS.” |
| (d) | Appraisal Rights. The information set forth in the Proxy Statement under the following captions is incorporated herein by reference: “SUMMARY TERM SHEET,” “QUESTIONS AND ANSWERS ABOUT THE MERGER” and “SPECIAL FACTORS – Dissenters’ Rights.” |
| (e) | Provisions For Unaffiliated Security Holders. There have been no provisions in connection with this transaction to grant unaffiliated security holders access to the corporate files of any of the filing persons or to obtain counsel or appraisal services at the expense of the filing persons. |
| (f) | Eligibility for Listing or Trading. Not applicable. |
| Item 5. | Past Contacts, Transactions, Negotiations and Agreements. |
Item 1005 of Regulation M-A:
| (a) | Transactions. Except as set forth in the information in the Proxy Statement under the following captions, which are incorporated herein by reference, none of the filing persons, nor any executive officers or directors of a filing person who is a corporation was party to a transaction identified by Item 1005(a): “SPECIAL FACTORS – Interests of Certain Persons in the Merger,” and “CONTRIBUTION AND VOTING AGREEMENTS.” Johnson Outdoors purchases certain services primarily from S.C. Johnson & Son, Inc. (“S.C. Johnson”) and, to a lesser extent, from other organizations controlled by the Johnson family (including Ms. Johnson-Leipold). For example, Johnson Outdoors leases its Headquarters facility from S.C. Johnson and S.C. Johnson provides Johnson Outdoors with (1) administrative services pertaining to things like automobile leasing, office equipment leasing and travel services; (2) information processing and telecommunication services; (3) use of S.C. Johnson’s aircraft and crews, pursuant to a time sharing agreement; and (4) from time to time, certain loaned employees. Johnson Outdoors believes that the amounts paid to these organizations are no greater than the fair market value of the services. The total amount incurred by the Company for the foregoing services during the fiscal year ended October 1, 2004 was approximately $1,571,088. |
| (b) | Significant Corporate Events. Except as set forth in the information in the Proxy Statement under the following captions, which are incorporated herein by reference, none of the filing persons, nor any executive officers or directors of a filing person who is a corporation was party to an event identified in Item 1005(b): “SPECIAL FACTORS – Background of the Merger”, “SPECIAL FACTORS – Interests of Certain Persons in the Merger” and “THE MERGER AGREEMENT.” |
| (c) | Negotiations or Contacts. Except as set forth in the information in the Proxy Statement under the caption “SPECIAL FACTORS – Background of the Merger,” which is incorporated herein by reference, none of the filing persons, nor any executive officers or directors of a filing person who is a corporation was party to negotiations or contracts identified in Item 1005(c). |
| (e) | Agreements Involving the Subject Company’s Securities. Except as set forth in the information in the Proxy Statement under the following captions, which are incorporated herein by reference, none of the filing persons, nor any executive officers or directors of a filing person who is a corporation is a party to agreements identified in Item 1005(e): “SUMMARY TERM SHEET,” “QUESTIONS AND ANSWERS ABOUT THE MERGER,” “THE SPECIAL MEETING – Record Date; Voting Rights,” “SPECIAL FACTORS –Recommendations of the Special Committee and Board of Directors; Reasons for Recommending Approval of the Merger,” “SPECIAL FACTORS – Purpose and Reasons for the Merger,” “SPECIAL FACTORS – Certain Effects of the Merger,” “SPECIAL FACTORS – Merger Financing,” “THE MERGER AGREEMENT,” “CONTRIBUTION AND VOTING AGREEMENTS,” and “SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS.” The information set forth above in Item 2(f) of this Schedule 13E-3 is incorporated herein by reference. |
| Item 6. | Purposes of the Transaction and Plans or Proposals |
Item 1006 of Regulation M-A:
| (b) | Use of Securities Acquired. The information set forth in the Proxy Statement under the following captions is incorporated herein by reference: “SUMMARY TERM SHEET,” “QUESTIONS AND ANSWERS ABOUT THE MERGER,” “THE SPECIAL MEETING,” “SPECIAL FACTORS – Purpose and Reasons for the Merger,” “SPECIAL FACTORS – Certain Effects of the Merger” and “THE MERGER AGREEMENT.” |
| (c)(1)-(8) | Plans. The information set forth in the Proxy Statement under the following captions is incorporated herein by reference: “SUMMARY TERM SHEET,” “QUESTIONS AND ANSWERS ABOUT THE MERGER,” “SPECIAL FACTORS – Background of the Merger,” “SPECIAL FACTORS – Interests of Certain Persons in the Merger,” “SPECIAL FACTORS – Certain Effects of the Merger” and “THE MERGER AGREEMENT.” |
| Item 7. | Purposes, Alternatives, Reasons and Effects. |
Item 1013 of Regulation M-A:
| (a) | Purposes. The information set forth in the Proxy Statement under the following captions is incorporated herein by reference: “SUMMARY TERM SHEET,” “QUESTIONS AND ANSWERS ABOUT THE MERGER,” “SPECIAL FACTORS – Background of the Merger” and “SPECIAL FACTORS – Purpose and Reasons for the Merger.” |
| (b) | Alternatives. The information set forth in the Proxy Statement under the following captions is incorporated herein by reference: “SPECIAL FACTORS – Background of the Merger,” and “SPECIAL FACTORS –Alternatives to the Merger.” |
| (c) | Reasons. The information set forth in the Proxy Statement under the following captions is incorporated herein by reference: “SUMMARY TERM SHEET,” “QUESTIONS AND ANSWERS ABOUT THE MERGER,” “SPECIAL FACTORS – Background of the Merger,” “SPECIAL FACTORS –Purpose and Reasons for the Merger,” “SPECIAL FACTORS – Recommendations of the Special Committee and Board of Directors; Reasons for Recommending Approval of the Merger,” “SPECIAL FACTORS – Opinion of the Financial Advisor to the Special Committee,” and “Annex D – Opinion of William Blair & Company, L.L.C.” |
| (d) | Effects. The information set forth in the Proxy Statement under the following captions is incorporated herein by reference: “SUMMARY TERM SHEET,” “QUESTIONS AND ANSWERS ABOUT THE MERGER,” “SPECIAL FACTORS – Recommendations of the Special Committee and Board of Directors; Reasons for Recommending Approval of the Merger Agreement,” “SPECIAL FACTORS – Opinion of the Financial Advisor to the Special Committee,” “SPECIAL FACTORS –Certain Effects of the Merger,” “SPECIAL FACTORS – Interests of Certain Persons in the Merger,” “SPECIAL FACTORS – Federal Income Tax Consequences” and “THE MERGER AGREEMENT.” |
| Item 8. | Fairness of the Transaction. |
Item 1014 of Regulation M-A:
| (a) | Fairness. The information set forth in the Proxy Statement under the following captions is incorporated herein by reference: “SUMMARY TERM SHEET,” “QUESTIONS AND ANSWERS ABOUT THE MERGER,” “SPECIAL FACTORS – Purposes and Reasons for the |
| Merger,” “SPECIAL FACTORS – Background of the Merger,” “SPECIAL FACTORS – Recommendations of the Special Committee and Board of Directors; Reasons for Recommending Approval of the Merger Agreement,” “SPECIAL FACTORS – Position of the Participating Shareholders and JO Acquisition Corp. as to the Fairness of the Merger to Johnson Outdoors’ Unaffiliated Shareholders,” “SPECIAL FACTORS- Johnson Outdoors’ Position as to the Fairness of the Merger to Johnson Outdoors’ Unaffiliated Shareholders,” “SPECIAL FACTORS – Opinion of the Financial Advisor to the Special Committee” and “Annex D – Opinion of William Blair & Company, L.L.C.” |
| (b) | Factors Considered in Determining Fairness. The information set forth in the Proxy Statement under the following captions is incorporated herein by reference: “SPECIAL FACTORS – Purposes and Reasons for the Merger,” “SPECIAL FACTORS – Background of the Merger,” “SPECIAL FACTORS – Recommendations of the Special Committee and Board of Directors; Reasons for Recommending Approval of the Merger Agreement,” “SPECIAL FACTORS – Position of the Participating Shareholders and JO Acquisition Corp. as to the Fairness of the Merger to Johnson Outdoors’ Unaffiliated Shareholders,” SPECIAL FACTORS- Johnson Outdoors’ Position as to the Fairness of the Merger to Johnson Outdoors’ Unaffiliated Shareholders,” “SPECIAL FACTORS – Opinion of the Financial Advisor to the Special Committee”, “Annex D – Opinion of William Blair & Company, L.L.C.” and “SPECIAL FACTORS – Certain Effects of the Merger.” |
| (c) | Approval of Security Holders. The information set forth in the Proxy Statement under the following captions is incorporated herein by reference: “SUMMARY TERM SHEET,” “QUESTIONS AND ANSWERS ABOUT THE MERGER,” “THE SPECIAL MEETING – Record Date; Voting Rights,” “THE SPECIAL MEETING – Quorum,” “THE SPECIAL MEETING – Required Vote,” “SPECIAL FACTORS – Recommendations of the Special Committee and Board of Directors; Reasons for Recommending Approval of the Merger Agreement,” “SPECIAL FACTORS – Position of the Participating Shareholders and JO Acquisition Corp. as to the Fairness of the Merger to Johnson Outdoors’ Unaffiliated Shareholders,” and “THE MERGER AGREEMENT – Conditions to Completion of the Merger.” |
| (d) | Unaffiliated Representative. The information set forth in the Proxy Statement under the following captions is incorporated herein by reference: “SUMMARY TERM SHEET,” “SPECIAL FACTORS – Background of the Merger,” “SPECIAL FACTORS – Recommendations of the Special Committee and Board of Directors; Reasons for Recommending Approval of the Merger Agreement,” “SPECIAL FACTORS – Position of the Participating Shareholders and JO Acquisition Corp. as to the Fairness of the Merger to Johnson Outdoors’ Unaffiliated Shareholders,” “SPECIAL FACTORS- Johnson Outdoors’ Position as to the Fairness of the Merger to Johnson Outdoors’ Unaffiliated Shareholders,” “SPECIAL FACTORS – Opinion of the Financial Advisor to the Special Committee” and “Annex D – Opinion of William Blair & Company, L.L.C.” |
| (e) | Approval of Directors. The information set forth in the Proxy Statement under the following captions is incorporated herein by reference: “SUMMARY TERM SHEET,” “SPECIAL FACTORS – Background of the Merger” “SPECIAL FACTORS – Recommendations of the Special Committee and Board of Directors; Reasons for Recommending Approval of the Merger Agreement,” “SPECIAL FACTORS – Position of the Participating Shareholders and JO Acquisition Corp. as to the Fairness of the Merger to Johnson Outdoors’ Unaffiliated Shareholders” and “SPECIAL FACTORS- Johnson Outdoors’ Position as to the Fairness of the Merger to Johnson Outdoors’ Unaffiliated Shareholders.” |
| (f) | Other Offers. The information set forth in the Proxy Statement under the following captions is incorporated herein by reference: “SUMMARY TERM SHEET,” “SPECIAL FACTORS – Background of the Merger,” “SPECIAL FACTORS – Recommendations of the Special Committee and Board of Directors; Reasons for Recommending Approval of the Merger |
| Agreement,” and “SPECIAL FACTORS- Johnson Outdoors’ Position as to the Fairness of the Merger to Johnson Outdoors’ Unaffiliated Shareholders.” |
| Item 9. | Reports, Opinions, Appraisals and Negotiations. |
Item 1015 of Regulation M-A:
| (a) | Report, Opinion or Appraisal. The information set forth in the Proxy Statement under the following captions is incorporated herein by reference: “SUMMARY TERM SHEET,” “SPECIAL FACTORS – Background of the Merger,” “SPECIAL FACTORS – Recommendations of the Special Committee and Board of Directors; Reasons for Recommending Approval of the Merger Agreement,” “SPECIAL FACTORS – Position of the Participating Shareholders and JO Acquisition Corp. as to the Fairness of the Merger to Johnson Outdoors’ Unaffiliated Shareholders,” “SPECIAL FACTORS- Johnson Outdoors’ Position as to the Fairness of the Merger to Johnson Outdoors’ Unaffiliated Shareholders,” “SPECIAL FACTORS – Opinion of the Financial Advisor to the Special Committee”, “Annex D – Opinion of William Blair & Company, L.L.C.” and “SPECIAL FACTORS- VALUE Incorporated Memorandum.” |
| (b) | Preparer and Summary of the Report, Opinion or Appraisal. The information set forth in the Proxy Statement under the following captions is incorporated herein by reference: “SUMMARY TERM SHEET,” “SPECIAL FACTORS – Background of the Merger,” “SPECIAL FACTORS – Recommendations of the Special Committee and Board of Directors; Reasons for Recommending Approval of the Merger Agreement,” “SPECIAL FACTORS- Johnson Outdoors’ Position as to the Fairness of the Merger to Johnson Outdoors’ Unaffiliated Shareholders,” “SPECIAL FACTORS – Opinion of the Financial Advisor to the Special Committee”, “Annex D – Opinion of William Blair & Company, L.L.C.” and “SPECIAL FACTORS-VALUE Incorporated Memorandum” |
| (c) | Availability of Documents. The reports, opinions or appraisal referenced in this Item 9 will be made available for inspection and copying at the principal executive officers of Johnson Outdoors’ during its regular business hours by any interested holder of Common Stock or any representative who has been designated in writing. |
| Item 10. | Source and Amounts of Funds or Other Consideration. |
Item 1007 of Regulation M-A:
| (a)-(d) | Source and Amounts of Funds or other Consideration; Conditions; Expenses; Borrowed Funds. The information set forth in the Proxy Statement under the following captions is incorporated herein by reference: “SUMMARY TERM SHEET,” “QUESTIONS AND ANSWERS ABOUT THE MERGER,” “THE SPECIAL MEETING – Required Vote,” “SPECIAL FACTORS – Purpose and Reasons for the Merger,” “SPECIAL FACTORS – Background of the Merger,” “SPECIAL FACTORS – Certain Risks in the Event of Bankruptcy,” “SPECIAL FACTORS – Merger Financing,” “SPECIAL FACTORS – Estimated Fees and Expenses of the Merger” and “THE MERGER AGREEMENT – Expenses.” |
| Item 11. | Interest in Securities of the Subject Company. |
Item 1008 of Regulation M-A:
| (a) | Securities Ownership. The information set forth in the Proxy Statement under the following captions is incorporated herein by reference: “SPECIAL FACTORS – Interests of Certain Persons |
| in the Merger,” “CONTRIBUTION AND VOTING AGREEMENTS” and “SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS.” |
| (b) | Securities Transactions. The information set forth in the Proxy Statement under the following captions is incorporated herein by reference: “CONTRIBUTION AND VOTING AGREEMENTS” and “RECENT TRANSACTIONS AND PRIOR STOCK PURCHASES” |
| Item 12. | Solicitation or Recommendation. |
Item 1012(d) and (e) of Regulation M-A:
| (d) | Intent to Tender or Vote in a Going-Private Transaction. The information set forth in the Proxy Statement under the following captions is incorporated herein by reference: “QUESTIONS AND ANSWERS ABOUT THE MERGER,” “THE SPECIAL MEETING – Record Date; Voting Rights,” “THE SPECIAL MEETING – Required Vote,” SPECIAL FACTORS – Johnson Outdoors Position as to the Fairness of the Merger to Johnson Outdoors’ Unaffiliated Shareholders; Recommendation by the Johnson Outdoors’ Special Committee and Board of Directors,” “SPECIAL FACTORS – Position of the Participating Shareholders and JO Acquisition Corp as to the Fairness of the Merger to Johnson Outdoors’ Unaffiliated Shareholders,” “SPECIAL FACTORS – Interests of Certain Persons in the Merger” and “CONTRIBUTION AND VOTING AGREEMENTS.” |
| (e) | Recommendation of Others. The information set forth in the Proxy Statement under the following captions is incorporated herein by reference: “QUESTIONS AND ANSWERS ABOUT THE MERGER,” “SPECIAL FACTORS – Recommendations of the Special Committee and Board of Directors; Reasons for Recommending Approval of the Merger Agreement,” “SPECIAL FACTORS – Position of the Participating Shareholders and JO Acquisition Corp. as to the Fairness of the Merger to Johnson Outdoors’ Unaffiliated Shareholders” and “SPECIAL FACTORS- Johnson Outdoors’ Position as to the Fairness of the Merger to Johnson Outdoors’ Unaffiliated Shareholders.” |
| Item 13. | Financial Statements. |
Item 1010(a) and (b) of Regulation M-A:
| (a) | Financial Information. The information set forth in the Proxy Statement under the following captions is incorporated herein by reference: “SELECTED HISTORICAL FINANCIAL INFORMATION” and “WHERE YOU CAN FIND MORE INFORMATION.” The information contained in the Consolidated Financial Statements included in Johnson Outdoors’ annual report on Form 10-K for the fiscal year ended October 3, 2003 and in its quarterly report on Form 10-Q for its quarter ended July 2, 2004 is incorporated herein by reference. |
| (b) | Pro Forma Information. Not applicable. |
| Item 14. | Persons/Assets, Retained, Employed, Compensated or Used. |
Item 1009 of Regulation M-A:
| (a)-(b) | Solicitations or Recommendations; Employees and Corporate Assets. The information set forth in the Proxy Statement under the following captions is incorporated herein by reference: “THE SPECIAL MEETING – Solicitation of Proxies,” “SPECIAL FACTORS – Background of the Merger,” “SPECIAL FACTORS –– Johnson Outdoors Position as to the Fairness of the Merger to Johnson Outdoors’ Unaffiliated Shareholders; Recommendation by the Johnson Outdoors’ Special Committee and Board of Directors,” “SPECIAL FACTORS – Opinion of the Financial |
| Advisor to the Special Committee,” “SPECIAL FACTORS – Interests of Certain Persons in the Merger,” “SPECIAL FACTORS – Estimated Fees and Expenses of the Merger,” and “Annex D –Opinion of William Blair & Company, L.L.C.” |
| Item 15. | Additional Information. |
Item 1011(b) of Regulation M-A:
| (b) | Other Material Information. The entirety of the Proxy Statement, including all Annexes thereto, is incorporated herein by reference. |
| Item 16. | Exhibits. |
Item 1016(a) through (d), (f) and (g) of Regulation M-A:
| (a)(1) | Amendment No. 1 to preliminary proxy statement for the special meeting of the shareholders of Johnson Outdoors Inc., incorporated by reference to the Schedule 14A filed with the Commission on January , 2005 (the “Proxy Statement”). |
| (a)(2) | Form of Proxy Card filed with the Commission together with the Proxy Statement. |
| (a)(3) | Letter to Shareholders filed with the Commission together with the Proxy Statement |
| (a)(4) | Press Release dated October 29, 2004 (filed as Exhibit 99.1 to Johnson Outdoors’ Current Report on Form 8-K dated October 28, 2004 and incorporated herein by reference). |
| (a)(5) | Voting Agreement dated as of October 28, 2004 entered into by JO Acquisition Corp., Helen P. Johnson-Leipold, Imogene P. Johnson, H. Fisk Johnson, S. Curtis Johnson, Winifred J. Marquart, JWA Consolidated, Inc., Samuel C. Johnson 1988 Trust Number One u/a September 14, 1988 and Johnson Bank (attached as Annex C to the Proxy Statement and incorporated herein by reference). |
| (b)(1) | Commitment Letter from GE Capital Corporation, dated October 28, 2004 (incorporated herein by reference to Exhibit 99.8 to Amendment No. 5 to Schedule 13D filed by Helen P. Johnson-Leipold, Imogene P. Johnson, H. Fisk Johnson, S. Curtis Johnson, Winifred J. Marquart, JWA Consolidated, Inc., Samuel C. Johnson 1988 Trust Number One u/a September 14, 1988 and Johnson Bank on November 2, 2004). |
| (c)(1) | Opinion of William Blair & Company, L.L.C. (attached as Annex D to the Proxy Statement and incorporated herein by reference). |
| (c)(2) | Presentation materials, dated as of October 28, 2004, prepared by William Blair & Company, L.L.C. (filed as Exhibit (c)(2) to the Schedule 13E-3 filed by the filing persons on November 24, 2004 and incorporated herein by reference). |
| (c)(3) | Draft discussion materials, dated as of March 24, 2004, prepared by William Blair & Company, L.L.C. |
| (c)(4) | Draft discussion materials, dated as of March 29, 2004, prepared by William Blair & Company, L.L.C. |
| (c)(5) | Draft discussion materials, dated as of May 14, 2004, prepared by William Blair & Company, L.L.C. |
| (c)(6) | Draft discussion materials, dated as of September 30, 2004, prepared by William Blair & Company, L.L.C. |
| (c)(7) | Memorandum, dated as of March 19, 2004, prepared by VALUE Incorporated. |
| (c)(8) | Draft discussion materials, dated as of December 18, 2003, prepared by Valuemetrics Capital, L.L.C. |
| (d)(1) | Agreement and Plan of Merger dated as October 28, 2004, by and between JO Acquisition Corp. and Johnson Outdoors Inc. (incorporated herein by reference to Annex A to the Proxy Statement). |
| (d)(2) | Contribution Agreement dated as of October 28, 2004 entered into by JO Acquisition Corp., Helen P. Johnson-Leipold, Imogene P. Johnson, H. Fisk Johnson, S. Curtis Johnson, Winifred J. Marquart, JWA Consolidated, Inc., Samuel C. Johnson 1988 Trust Number One u/a September 14, 1988 and Johnson Bank (attached as Annex B to the Proxy Statement and incorporated herein by reference). |
| (d)(3) | Amendment to Johnson Outdoors Inc. Class B Common Stock Voting Trust Agreement, incorporated herein by reference to Item 7 of Amendment No. 4 to Schedule 13D filed with the Commission jointly by Ms. Johnson-Leipold, Mrs. Johnson and the Samuel C. Johnson 1988 Trust Number One u/a September 14, 1988, and Johnson Outdoors Inc. Class B Common Stock Voting Trust Agreement incorporated herein by reference to Item 6 of Ms. Johnson-Leipold’s Schedule 13D filed with the Commission on January 10, 1994 and Item 6 of Amendment No. 1 to Mrs. Johnson’s Schedule 13D filed with the Commission on January 14, 1994 (filed as Exhibit (d)(3) to the Schedule 13E-3 filed by the filing persons on November 24, 2004 and incorporated herein by reference). |
| (d)(4) | Option Agreement dated June 27, 2003 by and among Samuel C. Johnson, S. Curtis Johnson, Helen P. Johnson-Leipold, H. Fisk Johnson, and Winifred J. Marquart incorporated herein by reference to Item 6 of Amendment No. 2 to Ms. Johnson-Leipold’s Schedule 13D filed with the Commission on July 10, 2003 and Item 6 of Mr. Fisk Johnson’s Schedule 13D filed with the Commission on March 23, 2004 (filed as Exhibit (d)(4) to the Schedule 13E-3 filed by the filing persons on November 24, 2004 and incorporated herein by reference). |
| (d)(5) | Agreement dated July 8, 2003 by and among Samuel C. Johnson, S. Curtis Johnson, Helen P. Johnson-Leipold, H. Fisk Johnson, and Winifred J. Marquart incorporated herein by reference to Item 6 of Amendment No. 6 to Ms. Johnson-Leipold’s, Mr. Curtis Johnson’s, Mr. Fisk Johnson’s, and Ms. Marquart’s Schedule 13D filed with the Commission on November 24, 2004 (filed as Exhibit (d)(5) to the Schedule 13E-3 filed by the filing persons on November 24, 2004 and incorporated herein by reference). |
| (f)(1) | Dissenters’ rights of appraisal are described under the caption “SPECIAL FACTORS – Dissenters’ Rights” set forth in the Proxy Statement and in Annex E to the Proxy Statement entitled “Subchapter XIII of the Wisconsin Business Corporation Law” and are incorporated herein by reference. |
SIGNATURES
After due inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct.
Dated: January 10, 2005
| JOHNSON OUTDOORS INC. | ||
| By: |
/s/ Paul A. Lehmann | |
| Paul A. Lehmann | ||
| Vice Pres. & Chief Financial Officer | ||
After due inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct.
Dated: January 10, 2005
| /s/ Helen P. Johnson-Leipold | ||
| Helen P. Johnson-Leipold | ||
After due inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct.
Dated: January 10, 2005
| /s/ Imogene P. Johnson | ||
| Imogene P. Johnson | ||
After due inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct.
Dated: January 10, 2005
| /s/ H. Fisk. Johnson | ||
| H. Fisk Johnson | ||
After due inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct.
Dated: January 10, 2005
| /s/ S. Curtis Johnson | ||
| S. Curtis Johnson | ||
After due inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct.
Dated: January 10, 2005
| /s/ Winifred J. Marquart | ||
| Winifred J. Marquart | ||
After due inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct.
Dated: January 10, 2005
| JWA CONSOLIDATED, INC. | ||
| By: |
/s/ Imogene P. Johnson | |
| Imogene P. Johnson | ||
| President | ||
After due inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct.
Dated: January 10, 2005
| SAMUEL C. JOHNSON 1988 TRUST NUMBER ONE U/A SEPTEMBER 14, 1988 | ||
| By: |
/s/ Imogene P. Johnson | |
| Imogene P. Johnson | ||
| Co-Trustee | ||
After due inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct.
Dated: January 10, 2005
| JOHNSON BANK | ||
| By: |
/s/ Brian Lucareli | |
| Senior Vice President | ||
After due inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct.
Dated: January 10, 2005
| JO ACQUISITION CORP. | ||
| By: |
/s/ Helen P. Johnson-Leipold | |
| Helen P. Johnson-Leipold | ||
| President & Chief Executive Officer | ||
Exhibit Index
| Exhibit No. |
Description | |
| (a)(1) | Amendment No. 1 to preliminary proxy statement for the special meeting of the shareholders of Johnson Outdoors Inc., incorporated by reference to the Schedule 14A filed with the Commission on January , 2005 (the “Proxy Statement”). | |
| (a)(2) | Form of Proxy Card filed with the Commission together with the Proxy Statement. | |
| (a)(3) | Letter to Shareholders filed with the Commission together with the Proxy Statement. | |
| (a)(4) | Press Release dated October 29, 2004 (filed as Exhibit 99.1 to Johnson Outdoors’ Current Report on Form 8-K dated October 28, 2004 and incorporated herein by reference). | |
| (a)(5) | Voting Agreement dated as of October 28, 2004 entered into by JO Acquisition Corp., Helen P. Johnson-Leipold, Imogene P. Johnson, H. Fisk Johnson, S. Curtis Johnson, Winifred J. Marquart, JWA Consolidated, Inc., Samuel C. Johnson 1988 Trust Number One u/a September 14, 1988 and Johnson Bank (attached as Annex C to the Proxy Statement and incorporated herein by reference). | |
| (b)(1) | Commitment Letter from GE Capital Corporation, dated October 28, 2004 (incorporated herein by reference to Exhibit 99.8 to Amendment No. 5 to Schedule 13D filed by Helen P. Johnson-Leipold, Imogene P. Johnson, H. Fisk Johnson, S. Curtis Johnson, Winifred J. Marquart, JWA Consolidated, Inc., Samuel C. Johnson 1988 Trust Number One u/a September 14, 1988 and Johnson Bank on November 2, 2004). | |
| (c)(1) | Opinion of William Blair & Company, L.L.C. (attached as Annex D to the Proxy Statement and incorporated herein by reference). | |
| (c)(2) | Presentation materials, dated as of October 28, 2004, prepared by William Blair & Company, L.L.C. (filed as Exhibit (c)(2) to the Schedule 13E-3 filed by the filing persons on November 24, 2004 and incorporated herein by reference). | |
| (c)(3) | Draft discussion materials, dated as of March 24, 2004, prepared by William Blair & Company, L.L.C. | |
| (c)(4) | Draft discussion materials, dated as of March 29, 2004, prepared by William Blair & Company, L.L.C. | |
| (c)(5) | Draft discussion materials, dated as of May 14, 2004, prepared by William Blair & Company, L.L.C. | |
| (c)(6) | Draft discussion materials, dated as of September 30, 2004, prepared by William Blair & Company, L.L.C. | |
| (c)(7) | Memorandum, dated as of March 19, 2004, prepared by VALUE Incorporated. | |
| (c)(8) | Draft discussion materials, dated as of December 18, 2003, prepared by Valuemetrics Capital, L.L.C. | |
| (d)(1) | Agreement and Plan of Merger dated as October 28, 2004, by and between JO Acquisition Corp. and Johnson Outdoors Inc. (incorporated herein by reference to Annex A to the Proxy Statement). | |
| (d)(2) | Contribution Agreement dated as of October 28, 2004 entered into by JO Acquisition Corp., Helen P. Johnson-Leipold, Imogene P. Johnson, H. Fisk Johnson, S. Curtis Johnson, Winifred J. Marquart, JWA Consolidated, Inc., Samuel C. Johnson 1988 Trust Number One u/a September 14, 1988 and Johnson Bank (attached as Annex B to the Proxy Statement and incorporated herein by reference). | |
| (d)(3) | Amendment to Johnson Outdoors Inc. Class B Common Stock Voting Trust Agreement, incorporated herein by reference to Item 7 of Amendment No. 4 to Schedule 13D filed with the Commission jointly by Ms. Johnson-Leipold, Mrs. Johnson and the Samuel C. Johnson 1988 Trust Number One u/a September 14, 1988, and Johnson Outdoors Inc. Class B Common Stock Voting Trust Agreement incorporated herein by reference to Item 6 of Ms. Johnson-Leipold’s Schedule 13D filed with the Commission on January 10, 1994 and Item 6 of Amendment No. 1 to Mrs. Johnson’s Schedule 13D filed with the Commission on January 14, 1994 (filed as Exhibit (d)(3) to the Schedule 13E-3 filed by the filing persons on November 24, 2004 and incorporated herein by reference). | |
| Exhibit No. |
Description | |
| (d)(4) | Option Agreement dated June 27, 2003 by and among Samuel C. Johnson, S. Curtis Johnson, Helen P. Johnson-Leipold, H. Fisk Johnson, and Winifred J. Marquart incorporated herein by reference to Item 6 of Amendment No. 2 to Ms. Johnson-Leipold’s Schedule 13D filed with the Commission on July 10, 2003 and Item 6 of Mr. Fisk Johnson’s Schedule 13D filed with the Commission on March 23, 2004 (filed as Exhibit (d)(4) to the Schedule 13E-3 filed by the filing persons on November 24, 2004 and incorporated herein by reference). | |
| (d)(5) | Agreement dated July 8, 2003 by and among Samuel C. Johnson, S. Curtis Johnson, Helen P. Johnson-Leipold, H. Fisk Johnson, and Winifred J. Marquart incorporated herein by reference to Item 6 of Amendment No. 6 to Ms. Johnson-Leipold’s, Mr. Curtis Johnson’s, Mr. Fisk Johnson’s, and Ms. Marquart’s Schedule 13D filed with the Commission on November 24, 2004 (filed as Exhibit (d)(5) to the Schedule 13E-3 filed by the filing persons on November 24, 2004 and incorporated herein by reference). | |
| (f)(1) | Dissenters’ rights of appraisal are described under the caption “SPECIAL FACTORS – Dissenters’ Rights” set forth in the Proxy Statement and in Annex E to the Proxy Statement entitled “Subchapter XIII of the Wisconsin Business Corporation Law” and are incorporated herein by reference. | |
CONFIDENTIAL DRAFT
Special Committee Discussion Materials
March 24, 2004
William Blair & Company
Important Information DRAFT
Confidential Material Presented to the Special Committee of the Board of Directors of Johnson Outdoors, Inc.
The following pages contain material that was provided to the Special Committee of the Board of Directors (the “Special Committee”) of Johnson Outdoors Inc. (the “Company”) and is for discussion purposes only. The accompanying material was compiled or prepared on a confidential basis for use by the Special Committee and not with a view toward public disclosure. This material is preliminary in nature and contains assumptions and methodologies which may be subject to change.
Table of Contents DRAFT
I. Executive Summary
II. Situation Overview
III. Valuation Methodologies
A. Comparable Public Companies Analysis
B. Comparable M&A Transactions Analysis
C. M&A Premiums Paid Analysis
D. Discounted Cash Flow Analysis
E. Leveraged Buyout Analysis
Appendix
A. Valuation Matrix
B. Comparable Public Companies Model
DRAFT
Executive Summary
Executive Summary
Implied Transaction Multiples DRAFT
(in millions, except for per share amounts)
Proposed Transaction
Purchase Price Per Share $18.00
Basic Shares Outstanding (1) 8.7
CSEs (2) 0.3
Fully Diluted Shares Outstanding 9.0
Equity Value $161.1
Plus: Debt (3) 67.1
Less: Cash (3) 38.4
Enterprise Value $189.8
JOUT Statistic (4) Enterprise Value Multiples
EBITDA
LTM (2/29/04) $29.5 6.4x
FY 2004E 25.6 7.4
EBIT
LTM (2/29/04) $21.6 8.8x
FY 2004E 18.0 10.5
Equity Value Multiples
Net Income
LTM (2/29/04) $9.8 16.4x
FY 2004E 7.9 20.3
(1) Based on 7.446 million shares of Class A and 1.222 million shares of Class B common stock (per 1/2/04 10-Q)
(2) Based on 0.515 million in the money options outstanding with a weighted average exercise price of $8.17 per share (per management); calculation uses the treasury stock method.
(3) As of 2/29/04, provided by the Company.
(4) LTM ended 2/29/04. Fiscal year ending September 31, 2004. YTD financials provided by the Company and adjusted for non-recurring expenses. Tax effected at 40%.
1
DRAFT
Situation Overview
Situation Overview
Johnson Outdoors Stock Price Performance DRAFT
Daily Closing Price and Volume – Last Three Years
Stock Price $22.00 $20.00 $18.00 $16.00 $14.00 $12.00 $10.00 $8.00 $6.00 $4.00
Mar-01 Ma y-01 Aug-01 Oct-01 Jan-02 Mar-02 Jun-02 Aug-02 Oct-02 Jan-03 Ma r-03 Ma y-03 Aug-03 Oct-03 Jan-04 Mar-04
400,000
350,000
300,000
250,000
200,000
150,000
100,000
50,0000
Volume
Feb. 20, 2004: JOUT receives $18.00 per share bid from Johnson Group
Note: As of March 19, 2004.
2
Situation Overview
Distribution of Historical Trading DRAFT
Average Daily Trading Volume – Three Year Period Ended February 19, 2004
% of Trading Volume
20% 18% 16% 14% 12% 10% 8% 6% 4% 2% 0%
11.7% 11.4% 11.0% 10.3% 9.0% 8.6%
7.6% 6.7% 5.2% 5.5% 4.9%
3.1% 2.4% 2.5%
$6.00—$7.00
$7.00—$8.00
$8.00—$9.00
$9.00—$10.00
$10.00—$11.00
$11.00—$12.00
$12.00—$13.00
$13.00—$14.00
$14.00—$15.00
$15.00—$16.00
$16.00—$17.00
$17.00—$18.00
$18.00—$19.00
$19.00—$20.00
Source: FactSet Research Systems.
3
Situation Overview
Distribution of Historical Trading DRAFT
Average Daily Trading Volume – One Year Period Ended February 19, 2004
% of Trading Volume
30% 25% 20% 15% 10% 5% 0%
25.2%
24.4%
17.8%
10.1%
9.0%
7.4%
3.7% 1.1% 1.4%
$8.00—$9.00
$9.00—$10.00
$10.00—$11.00
$11.00—$12.00
$12.00—$13.00
$13.00—$14.00
$14.00—$15.00
$15.00—$16.00
$16.00—$17.00
Source: FactSet Research System.
4
Situation Overview
Distribution of Historical Trading DRAFT
Average Daily Trading Volume – Six Month Period Ended February 19, 2004
% of Trading Volume
30% 25% 20% 15% 10% 5% 0%
$12.50—$13.00
$13.00—$13.50
$13.50- $14.00
$14.00- $14.50
$14.50- $15.00
$15.00- $15.50
$15.50- $16.00
$16.00- $16.50
$16.50—$17.00
24.8%
20.3%
18.3%
15.5%
8.6%
7.9%
2.2%
1.1% 1.2%
Source: FactSet Research Systems.
5
Situation Overview
Stock Ownership Analysis DRAFT
Total Common Shares
The Johnson Group (1)
Johnson Samuel C 2,575,323 29.7%
Johnson Imogene 32,543 0.4%
Johnson H Fisk 304,257 3.5%
Johnson Leipold Helen P 38,691 0.4%
Shares Jointly Owned or owned by Affiliated
Entities 1,811,777 20.9%
Total Johnson Group 4,762,591 54.9%
Institutional Investors(2)
Dimensional Fund Advisors, Inc. 420,400 4.8%
Fidelity Management & Research Co. 238,288 2.7%
Royce & Associates LLC 195,300 2.3%
Advisory Research, Inc. 182,600 2.1%
Bridgeway Capital Management, Inc. 119,350 1.4%
Fleet National Bank 106,521 1.2%
Columbia Management Advisors, Inc. 100,421 1.2%
Kennedy Capital Management, Inc. 99,879 1.2%
Other Institutional Investors 421,578 4.9%
Total Institutional Investors 1,884,337 21.7%
Retail Investors(3) 2,021,897 23.3%
Total Shares Outstanding (4) 8,668,825 100.0%
Public Float 23.3%
Institutional 21.7%
Insiders 54.9%
The Johnson Group controls:
55% of the economic interest
80% of the voting interest
(1) Proxy dated February 25, 2004.
(2) From FactSet Lionshares as of March 20, 2004.
(3) Retail investors defined as total shares outstanding minus insiders and institutional investors. (4) Total shares outstanding taken from 10-Q dated January 2, 2004.
6
Valuation Methodologies
DRAFT
Valuation Methodologies
Valuation Methodologies DRAFT
William Blair performed several analyses each of which is preliminary in nature and contains assumptions and methodologies which may be subject to change
Comparable Public Companies Analysis
Trading multiple analysis based on companies that William Blair considered similar to the Company based on the selected companies’ operations
M&A Transactions Analysis
Transaction multiple analysis based on transactions that William Blair considered similar to the proposed acquisition based on the target operations
Discounted Cash Flow Analysis
Utilized the Company’s fiscal 2004 – 2008 projections to derive free cash flows for the Company and discounted those cash flows, along with a terminal value based on a multiple of 6.0x – 9.0x EBITDA, back to March 31, 2004
Leveraged Buyout Analysis
Utilized the Company’s 2004 – 2008 forecasts to analyze the values that a typical LBO could be completed under established return parameters using five year exit multiples of 6.0x – 9.0x EBITDA
7
Valuation Methodologies
Historical and Projected Financial Information DRAFT
(in millions, except for per share amounts)
Historical Fiscal Years Ended September 30, (1) LTM (2) Projected Fiscal Years Ended September 30, (3)
1999 2000 2001 2002 2003 02/04 2004 2005 2006 2007 2008
Net Sales $310.2 $354.9 $345.6 $342.5 $315.9 $331.9 $341.6 $327.3 $337.3 $349.1 $361.3
Cost of Goods Sold 184.4 212.1 206.9 201.5 183.6 192.4 201.5 187.1 191.1 196.5 202.0
Gross Profit 125.8 142.8 138.8 141.1 132.3 139.5 140.1 140.2 146.2 152.7 159.4
Total Operating Expenses 103.5 115.7 121.6 119.6 113.8 118.0 122.1 121.8 123.5 127.8 132.3
EBIT 22.3 27.1 17.2 21.5 18.5 21.6 18.0 18.4 22.7 24.8 27.1
Interest Income (0.8) (0.5) - - -
Interest Expense 5.2 5.0 5.0 4.1 3.6
Other (Income) Expense, net (2.5) 0.0 - - -
EBT 16.6 17.1 13.0 14.3 19.1
Income Tax Expense 7.0 7.3 5.1 5.0 6.7
Net Income 9.6 9.8 7.9 9.4 12.4
EBIT 22.3 27.1 17.2 21.5 18.5 21.6 18.0 18.4 22.7 24.8 27.1
Depreciation and Amortization 12.6 12.5 13.5 9.1 8.2 8.0 7.6 7.6 7.6 7.6 7.6
EBITDA 34.9 39.6 30.7 30.6 26.7 29.5 25.6 26.0 30.3 32.4 34.7
Operating Statistics
Net Sales Growth 14.4% (2.6%) (0.9%) (7.8%) 8.1% (4.2%) 3.1% 3.5% 3.5%
Gross Margin 40.5% 40.2% 40.2% 41.2% 41.9% 42.0% 41.0% 42.8% 43.3% 43.7% 44.1%
Operating Expenses as% of Net Sales 33.4% 32.6% 35.2% 34.9% 36.0% 35.5% 35.7% 37.2% 36.6% 36.6% 36.6%
EBITDA Margin 11.2% 11.2% 8.9% 8.9% 8.5% 8.9% 7.5% 7.9% 9.0% 9.3% 9.6%
EBIT Margin 7.2% 7.6% 5.0% 6.3% 5.9% 6.5% 5.3% 5.6% 6.7% 7.1% 7.5%
EBT Margin 5.3% 5.2% 3.8% 4.4% 5.7%
Net Income Margin 3.0% 3.0% 2.3% 2.9% 3.7%
(1) Historical fiscal years per JOUT 10-Ks dated 10/3/03 and 9/28/01. Fiscal 1999 – 2002 exclude expenses itemized as ‘strategic charges’ in JOUT 10-Ks. Cost of goods sold and total operating expenses for fiscal 2003 exclude non-recurring expenses as highlighted in JOUT 10-K dated 10/3/03. All adjustments tax effected at 40%.
(2) 2003 and 2004 five months YTD financials provided by Company and adjusted for non-recurring expenses. Tax effected at 40%.
(3) 2004-2006 estimates per Company management. 2004 adjusted for non-recurring items and tax effected at 40%. 2007 & 2008 estimates per Company guidance.
8
Valuation Methodologies
Projected Financial Information DRAFT
(in millions, except for per share amounts)
Based on the forecasts obtained from the Company (“Management Case”) and the Company’s actual historical financial performance compared to budgeted financial performance, the EBIT in the 2006 – 2008 period has been discounted by a factor of 15% reflecting an alternative scenario (“Alternative Case”)
A comparison of the Management Case and Alternative Case forecasts follows:
Projected Fiscal Years Ended September 30,
2004 2005 2006 2007 2008
Net Sales $341.6 $327.3 $337.3 $349.1 $361.3
EBITDA
Management Case $25.6 $26.0 $30.3 $32.4 $34.7
Alternative Case 25.6 26.0 26.9 28.7 30.6
EBIT
Management Case $18.0 $18.4 $22.7 $24.8 $27.1
Alternative Case 18.0 18.4 19.3 21.1 23.0
EBITDA Margin
Management Case 7.5% 7.9% 9.0% 9.3% 9.6%
Alternative Case 7.5% 7.9% 8.0% 8.2% 8.5%
EBIT Margin
Management Case 5.3% 5.6% 6.7% 7.1% 7.5%
Alternative Case 5.3% 5.6% 5.7% 6.0% 6.4%
9
Comparable Public Companies Analysis
DRAFT
Comparable Public Companies Analysis
Comparable Companies Analysis DRAFT
William Blair reviewed the following publicly traded manufacturers of sports and recreational products deemed to be similar to the Company [list to be completed]
The comparable companies analysis is preliminary in nature and contains assumptions and methodologies which may be subject to change
($in millions) Stock Price Market Enterprise
03/22/04 Value Value
Amer Group $48.34 $1,186.6 $1,366.9
Brunswick Corp 38.73 3,544.6 3,806.3
Callaway Golf Co 17.60 1,329.8 1,282.5
Columbia Sportswear 50.52 2,036.8 1,793.1
Head N V 3.19 120.2 257.5
Huffy Corp 3.87 58.3 144.4
K2 Inc 15.27 532.5 727.4
Johnson Outdoors Inc 19.60 169.9 198.6
Note: Market Value and Enterprise Value based off of basic shares outstanding.
10
Comparable Public Companies Analysis
Indexed Stock Price Performance DRAFT
Last Twelve Months
240 220 200 180 160 140 120 100 80
Feb. 19, 2004: +86.3%
115.9%
59% 54.9
38.9%
Mar-03
Apr-03
May-03
Jun–03
Jul-03
Aug-03
Sep-03
Oct–03
Nov-03
Dec-03
Jan-04
Feb-04
Mar-04
Peer Group (+59.0%)
Russell 2000 (54.9%)
NASDAQ (+38.9%)
JOUT (+115.9%)
Note: As of March 19, 2004.
Peer Group: Amer Group, Brunswick Corp., Callaway Golf, Columbia Sportswear, Head, Huffy Corp., and K2.
11
Comparable Public Companies Analysis
Margin and Growth Analysis DRAFT
LTM EBITDA Margin
25.0% 20.0% 15.0% 10.0% 5.0% 0.0%
22.4% 12.8% 12.7%
9.6%
8.9%
6.8% 6.7% Median 9.6%
0.5%
COLM ELY AMEAS BC JOUT KTO HED HUF
LTM EBIT Margin
25.0% 20.0% 15.0% 10.0% 5.0% 0.0% -5.0%
20.0% 9.2% 8.1% 6.5% 6.0% 4.5% 2.0% Median 6.0%
-0.4%
COLM AMEAS ELY JOUT BC KTO HED HUF
3 Year Revenue CAGR 20.0% 15.0% 10.0% 5.0% 0.0% -5.0% 15.7% 7.5% 2.7% 2.7% 2.6% Median 2.7% - -0.9% -3.6% -3.8% COLM AMEAS BC HED KTO ELY HUF JOUT
3 Year EBITDA CAGR
30.0%
20.0%
10.0%
0.0%
-10.0%
-20.0%
-30.0%
-40.0%
-50.0%
-60.0%
-70.0%
24.4% 8.6% -2.7% -10.5% -12.9% Median -12.9% -13.8% -19.0% -59.5%
COLM AMEAS KTO JOUT BC ELY HED HUF
Note: Medians exclude JOUT.
12
Comparable Public Companies Analysis
Preliminary Multiples Analysis DRAFT
Enterprise Value/LTM EBITDA
16.0x
14.0x
12.0x
10.0x
8.0x
6.0x
4.0x
2.0x
0.0x
14.9x
12.3x
9.6x
8.9x 8.6x Median 8.4x
9.2x
6.7x
NMF
KTO ELY BC HED AMEAS COLM JOUT HUF
Enterprise Value/CY 2004E EBITDA
16.0x
14.0x
12.0x
10.0x
8.0x
6.0x
4.0x
2.0x
0.0x
9.8x
7.8x 7.7x 7.7x 7.6x
7.4x
Median 7.7x
NA NA
KTO JOUT AMEAS BC COLM ELY HED HUF
Enterprise Value/LTM EBIT
35.0x 30.0x 25.0x 20.0x 15.0x 10.0x 5.0x 0.0x
29.9x
22.7x
19.5x
15.4x
Median 17.5x
11.9x
9.4x 9.2x
NM
HED KTO ELY BC AMEAS COLM JOUT HUF
Enterprise Value/CY 2004E EBIT
35.0x 30.0x 25.0x 20.0x 15.0x 10.0x 5.0x 0.0x
12.7x
11.1x 11.0x 10.4x
10.2x
8.3x
Median 10.4x
NA NA
KTO JOUT BC ELY AMEAS COLM HED HUF
Note: Medians exclude JOUT.
13
Comparable Public Companies Analysis
Preliminary Multiples Analysis DRAFT
Equity Value /LTM Net Income
60.0x 50.0x 40.0x 30.0x 20.0x 10.0x 0.0x
52.8x
29.2x
23.6x
17.3x 17.0x 16.2x Median 23.6x
NM NM
KTO ELY BC JOUT COLM AMEAS HUF HED
Equity Value /CY 2004E Net Income
60.0x 50.0x 40.0x 30.0x 20.0x 10.0x 0.0x
21.5x
18.0x 16.8x 16.8x
15.3x 15.3x 14.7x Median 16.1x
NA
JOUT KTO BC HUF COLM AMEAS ELY HED
Note: Medians exclude JOUT.
14
Comparable Public Companies Analysis
Preliminary Valuation Multiples DRAFT
(in millions, except for per share amounts)
JOUT JOUT Relevant Public Company Multiples
Metric (1) Results Multiple Min Mean Median Max
CY 2003 EBITDA $27.8 6.8x 8.4x 10.4x 9.2x 14.9x
LTM EBITDA 29.5 6.4x
CY 2004E EBITDA 25.5 7.4x 7.4x 8.0x 7.7x 9.8x
CY 2003 EBIT $19.7 9.6x 9.4x 18.1x 17.5x 29.9x
LTM EBIT 21.6 8.8x
CY 2004E EBIT 17.9 10.6x 8.3x 10.5x 10.4x 12.7x
CY 2003 Net Income $10.0 16.1x 16.2x 28.2x 24.0x 54.1x
LTM Net Income 9.8 16.4x
CY 2004E Net Income 7.9 20.4x 14.7x 16.1x 16.1x 18.0x
(1) LTM ended 2/29/04. Financials adjusted for non-recurring expenses. Tax effected at 40%.
15
DRAFT
Comparable M&A Transactions Analysis
\
Comparable M&A Transactions Analysis
Preliminary List of Selected Transactions DRAFT
William Blair reviewed publicly available transactions for the past three years to identify those transactions that involved the acquisition of companies similar to the Company [list to be completed]
The comparable M&A transactions analysis is preliminary in nature and contains assumptions and methodologies which may be subject to change
Total
Enterprise Equity Transaction Value to
Date Date Value Value LTM Form of
Announced Effective Target Acquiror ($MM) ($MM) Sales EBITDA EBIT Consideration
08/27/03 12/18/03 Bombardier Recreational Products Bain Capital $844.9 NA 0.50x 7.9x 12.5x Cash
11/06/03 12/02/03 CamelBak Products Bear Stearns Merchant Banking $210.0 NA NA 7.0x NA Cash
12/16/02 03/26/03 Rawlings Sporting Goods K2 Inc. $112.5 $73.1 0.66x 11.8x 14.6x Stock
02/12/03 02/12/03 Remington Arms Bruckmann, Rosser, Sherrill $314.1 NA 0.85x 5.1x NA Cash
06/17/02 09/19/02 Gen-X Sports Huffy Corporation $104.9 $54.4 0.77x 12.7x 15.6x Cash and Stock
08/28/02 09/09/02 Jack Wolfskin Bain Capital $62.9 NA 1.25x NA 9.0x Cash
06/18/01 07/27/01 Koninklijke Gazelle Gazelle Holding $122.0 $112.0 0.95x NA 6.7x Cash
04/30/01 06/25/01 Riddell Sports Lincolnshire Management $67.3 NA 0.75x NA 9.7x Cash
Mean 0.82x 8.9x 11.4x
Median 0.77x 7.9x 11.1x
Maximum 1.25x 12.7x 15.6x
Minimum 0.50x 5.1x 6.7x
16
Comparable M&A Transactions Analysis
Preliminary Valuation Multiples DRAFT
(in millions, except for per share amounts)
JOUT JOUT Relevant Mergers & Acquisition Multiples Metric (1) Results Multiple Min Mean Median Max
LTM EBITDA $29.5 6.4x 5.1x 8.9x 7.9x 12.7x FY 2004E EBITDA 25.6 7.4x
LTM EBIT $21.6 8.8x 6.7x 11.4x 11.1x 15.6x FY 2004E EBIT 18.0 10.5x
(1) LTM ended 2/29/04. YTD financials provided by the Company and adjusted for non-recurring expenses. Tax effected at 40%.
17
DRAFT
M&A Premiums Paid Analysis
M&a Premiums Paid Analysis
Methodology and Assumptions DRAFT
William Blair analyzed 1,461 domestic public transactions that were announced since January 1, 2001 (through March 17, 2004):
All completed transactions (1,461 transactions)
All completed transactions between between $100 million and $500 million in equity value (328 transactions) All completed transactions between $100 and $500 million in equity value in which less than 50% of the target was acquired (483 transactions) All completed transactions which were “going private” transactions (101 transactions)
William Blair compared the price of each transaction to the closing price of the target stock one day, one week and one month prior to the announcement of the transaction
The M&A premiums analysis is preliminary in nature and contains assumptions and methodologies which may be subject to change
18
M&a Premiums Paid Analysis
Premiums Paid Summary DRAFT
All completed transactions since January 1, 2001
ALL TRANSACTIONS COMPLETED SINCE JANUARY 1, 2001
Premiums Paid Data Percentile
25th 50th 75th
All Completed Transactions (Total 1461)
One Day Before Announcement 18.3% 35.9% 66.2%
One Week Before Announcement 21.0% 40.0% 73.3%
One Month Before Announcement 23.4% 45.0% 82.2%
Source: Commscan M&A Desk as of March 17, 2004.
Note: Premiums analysis includes all completed or M&A activity (but excludes transactions including Closed-End Funds, REITs and ADRs).
19
M&a Premiums Paid Analysis
Premiums Paid Summary DRAFT
All completed transactions since January 1, 2001 between between $100 million and $500 million in equity value
SUBSET: TRANSACTION VALUE BETWEEN $100 and $500 MILLION
Premiums Paid Data Percentile
25th 50th 75th
All Completed Transactions (Total 328)
One Day Before Announcement 21.6% 38.8% 63.0%
One Week Before Announcement 25.1% 41.6% 67.6%
One Month Before Announcement 24.4% 44.6% 82.2%
Source: Commscan M&A Desk as of March 17, 2004.
Note: Premiums analysis includes all completed or M&A activity (but excludes transactions including Closed-End Funds, REITs and ADRs).
20
M&a Premiums Paid Analysis
Premiums Paid Summary DRAFT
All completed transactions since January 1, 2001 between $100 and $500 million in equity value in which less than 50% of the target was acquired
SUBSET: LESS THAN 50% of EQUITY ACQUIRED
Premiums Paid Data Percentile
25th 50th 75th
All Completed Transactions (Total 483)
One Day Before Announcement 12.5% 33.3% 64.8%
One Week Before Announcement 12.8% 33.6% 65.3%
One Month Before Announcement 18.6% 38.2% 77.9%
Source: Commscan M&A Desk as of March 17, 2004.
Note: Premiums analysis includes all completed or M&A activity (but excludes transactions including Closed-End Funds, REITs and ADRs).
21
M&a Premiums Paid Analysis
Premiums Paid Summary DRAFT
All completed transactions since January 1, 2001 which were “going private” transactions
ALL GOING PRIVATE TRANS. COMPLETED SINCE JANUARY 1, 2001
Premiums Paid Data Percentile
25th 50th 75th
All Completed Transactions - Initial Premium to Announcement (Total 101)
One Day Before Announcement 12.9% 32.3% 67.6%
One Week Before Announcement 14.9% 36.9% 62.9%
One Month Before Announcement 19.9% 38.0% 63.0%
All Completed Transactions - Final Premium to Announcement (Total 101)
One Day Before Announcement 20.1% 34.0% 78.6%
One Week Before Announcement 19.7% 42.9% 81.8%
One Month Before Announcement 31.1% 47.2% 69.4%
Source: Commscan M&A Desk as of March 17, 2004.
Note: Premiums analysis includes all completed or M&A activity (but excludes transactions including Closed-End Funds, REITs and ADRs).
22
DRAFT
Discounted Cash Flow Analysis
Discounted Cash Flow Analysis
Methodology and Assumptions DRAFT
A discounted cash flow analysis calculates the present value of the Company based upon its future earnings stream and corresponding cash flows
The discounted cash flow analysis is preliminary in nature and contains assumptions and methodologies which may be subject to change
William Blair examined the future earnings and “free cash flows” of the Company through fiscal 2008 based on:
Management Case forecast Alternative Case forecast
William Blair estimated the value of the Company at the end of fiscal year 2008 (“terminal value”) by assuming Company would be purchased by an independent party based upon a multiple of the projected trailing EBITDA
The sum of the above two components is the preliminary estimate of the Company’s total present value
William Blair assumed the following preliminary valuation parameters:
Terminal EBITDA multiples ranging from 6.0x to 9.0x Discount rates ranging from 11.0% to 13.0% Discounted to March 31, 2004
23
Discounted Cash Flow Analysis
Discounted Cash Flow Analysis – Management Case DRAFT
(in millions, except for per share amounts)
Present Value of Enterprise Value
Discount Rate Terminal EBITDA Multiple
6.0x 7.5x 9.0x
11.0% $168.8 $201.3 $233.8
11.5% 165.8 197.6 229.5
12.0% 162.7 194.0 225.2
12.5% 159.8 190.4 221.0
13.0% 156.9 186.9 216.9
Present Value of Per Share Equity Value
Discount Rate Terminal EBITDA Multiple
6.0x 7.5x 9.0x
11.0% $15.66 $19.29 $22.92
11.5% 15.31 18.87 22.43
12.0% 14.98 18.47 21.95
12.5% 14.65 18.07 21.49
13.0% 14.33 17.68 21.03
24
Discounted Cash Flow Analysis
Discounted Cash Flow Analysis – Alternative Case DRAFT
(in millions, except for per share amounts)
Present Value of Enterprise Value
Discount Rate Terminal EBITDA Multiple
6.0x 7.5x 9.0x
11.0% $149.6 $178.3 $207.0
11.5% 146.9 175.0 203.1
12.0% 144.2 171.8 199.3
12.5% 141.6 168.6 195.7
13.0% 139.1 165.6 192.1
Present Value of Per Share Equity Value
Discount Rate Terminal EBITDA Multiple
6.0x 7.5x 9.0x
11.0% $13.51 $16.71 $19.92
11.5% 13.21 16.35 19.49
12.0% 12.91 15.99 19.07
12.5% 12.62 15.64 18.65
13.0% 12.34 15.29 18.25
25
DRAFT
Leveraged Buyout Analysis
Leveraged Buyout Analysis
Methodology and Assumptions DRAFT
William Blair performed a leveraged buyout analysis of the Company based on:
Management Case forecast
Alternative Case forecast
The leveraged buyout analysis is preliminary in nature and contains assumptions and methodologies which may be subject to change
William Blair assumed the following preliminary valuation/capitalization parameters:
Bank debt maximum of 3.0x 2004E EBITDA; subordinated debt maximum of 1.0x 2004E EBITDA
Bank debt interest rate of 5.0%; coupon on subordinated debt of 12.0%
Exit multiples ranging from 6.0x to 9.0x EBITDA
18% targeted returns for subordinated debt investors (including warrants)
22.5%—27.5% targeted returns for equity investors
26
Leveraged Buyout Analysis
Leveraged Buyout Analysis – Management Case DRAFT
(in millions, except for per share amounts)
Enterprise Value
Equity IRR Terminal EBITDA Multiple
6.0x 7.5x 9.0x
22.5% $145.9 $164.6 $183.1
25.0% 140.6 158.3 175.3
27.5% 137.4 152.8 168.1
Equity Value Per Share
Equity IRR Terminal EBITDA Multiple
6.0x 7.5x 9.0x
22.5% $13.10 $15.19 $17.25
25.0% 12.50 14.48 16.38
27.5% 12.15 13.87 15.58
27
Leveraged Buyout Analysis
Leveraged Buyout Analysis – Alternative Case DRAFT
(in millions, except for per share amounts)
[Alternative Case Forthcoming]
28
DRAFT
Valuation Matrix
Valuation Matrix
Valuation Matrix DRAFT
(in millions, except for per share amounts)
Johnson Outdoors Stock Price
1 Day Prior $16.95
1 Week Prior 16.85
1 Month Prior 15.97
Equity Purchase Price
Price per share $15.00 $16.00 $17.00 $18.00 $19.00 $20.00 $21.00 $22.00 $23.00 $24.00 $25.00
Premium to 1 Day Prior -11.5% -5.6% 0.3% 6.2% 12.1% 18.0% 23.9% 29.8% 35.7% 41.6% 47.5%
Premium to 1 Week Prior -11.0% -5.0% 0.9% 6.8% 12.8% 18.7% 24.6% 30.6% 36.5% 42.4% 48.4%
Premium to 1 Month Prior -6.1% 0.2% 6.4% 12.7% 19.0% 25.2% 31.5% 37.8% 44.0% 50.3% 56.5%
Common Shares Outstanding (1) 8.7 8.7 8.7 8.7 8.7 8.7 8.7 8.7 8.7 8.7 8.7
CSEs (2) 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.4 0.4
Fully Diluted Share Outstanding 8.9 8.9 9.0 9.0 9.0 9.0 9.0 9.0 9.0 9.0 9.0
Equity Value $133.9 $143.0 $152.2 $161.4 $170.5 $179.7 $188.9 $198.1 $207.3 $216.5 $225.7
Net Debt (3) 28.7 28.7 28.7 28.7 28.7 28.7 28.7 28.7 28.7 28.7 28.7
Total Value $162.5 $171.7 $180.8 $190.0 $199.2 $208.4 $217.6 $226.8 $235.9 $245.1 $254.3
Johnson Outdoors Financials (4)
Total Value / EBITDA
EBITDA
CY 2003 $27.8 5.8x 6.2x 6.5x 6.8x 7.2x 7.5x 7.8x 8.2x 8.5x 8.8x 9.1x
LTM 29.5 5.5x 5.8x 6.1x 6.4x 6.7x 7.1x 7.4x 7.7x 8.0x 8.3x 8.6x
CY 2004E 25.5 6.4x 6.7x 7.1x 7.5x 7.8x 8.2x 8.5x 8.9x 9.3x 9.6x 10.0x
Total Value / EBIT
EBIT
CY 2003 $19.7 8.3x 8.7x 9.2x 9.6x 10.1x 10.6x 11.0x 11.5x 12.0x 12.4x 12.9x
LTM 21.6 7.5x 8.0x 8.4x 8.8x 9.2x 9.7x 10.1x 10.5x 10.9x 11.4x 11.8x
CY 2004E 17.9 9.1x 9.6x 10.1x 10.6x 11.1x 11.6x 12.1x 12.6x 13.2x 13.7x 14.2x
Equity Value / Net Income
Net Income
CY 2003 $10.0 13.4x 14.3x 15.2x 16.1x 17.1x 18.0x 18.9x 19.8x 20.7x 21.6x 22.6x
LTM 9.8 13.6x 14.6x 15.5x 16.4x 17.4x 18.3x 19.2x 20.2x 21.1x 22.0x 23.0x
CY 2004E 7.9 16.9x 18.1x 19.2x 20.4x 21.6x 22.7x 23.9x 25.0x 26.2x 27.4x 28.5x
(1) Based on 7.446 million shares of Class A and 1.222 million shares of Class B common stock (per 1/2/04 10-Q)
(2) Based on 0.515 million in the money options outstanding with a weighted average exercise price of $8.17 per share (per management); calculation uses the treasury stock method. (3) As of 2/29/04, provided by the Company.
(4) LTM ended 2/29/04. YTD financials provided by the Company and adjusted for non-recurring expenses. Tax effected at 40%.
29
DRAFT
Comparable Public Companies Model
Comparable Public Companies Model
Comparable Public Companies Detail DRAFT
Stock Price LTM Total Value (1) / 2004 E Total Value
Closing Price 52 Week Change Since Market Net Debt Total Revenue EBITDA LTM LTM LTM EBITDA EBIT 2004E 2004E Price / Earnings Ratio
03/22/04 Low High 52 Wk High 1/1/03 Value (MM) (Cash) (MM) Value (MM)(1) (MM) (MM) Revenue EBITDA EBIT (MM) (MM) EBITDA EBIT LTM Cal. 04E Cal. 05E
AMER GROUP $48.34 $31.82 $49.97 -3.3% 13.0% $1,186.6 $176.6 $1,366.9 $1,250.3 $158.5 1.09 x 8.6 x 11.9 x $177.3 $134.4 7.7 x 10.2 x 16.2 x 15.3 x 13.7 x
BRUNSWICK CORP 38.73 18.51 41.85 -7.5% 21.7% 3,544.6 261.7 3,806.3 4,128.7 397.8 0.92 9.6 15.4 495.9 345.0 7.7 x 11.0 x 23.6 16.8 13.8
CALLAWAY GOLF CO 17.60 11.36 19.25 -8.6% 4.5% 1,329.8 (47.3) 1,282.5 814.0 103.9 1.58 12.3 19.5 173.7 123.7 7.4 x 10.4 x 29.2 14.7 12.5
COLUMBIA SPORTSWEAR 50.52 35.56 59.39 -14.9% -7.3% 2,036.8 (243.7) 1,793.1 951.8 213.3 1.88 8.4 9.4 234.8 215.4 7.6 x 8.3 x 17.0 15.3 13.7
HEAD N V 3.19 1.51 3.54 -9.9% 27.6% 120.2 137.3 257.5 431.2 29.1 0.60 8.9 29.9 NA NA NA NA NMF NA NA
HUFFY CORP 3.87 3.80 8.00 -51.6% -26.3% 58.3 86.2 144.4 437.7 2.2 0.33 NMF NMF NA NA NA NA NMF 16.8 12.9
K2 INC 15.27 7.20 19.00 -19.6% 0.4% 532.5 194.9 727.4 718.5 49.0 1.01 14.9 22.7 74.3 57.1 9.8 x 12.7 x 52.8 18.0 14.5
Minimum $3.19 $1.51 $3.54 -51.6% -26.3% $58.3 ($243.7) $144.4 $431.2 $2.2 0.33 x 8.4 x 9.4 x $74.3 $57.1 7.4 x 8.3 x 16.2 x 14.7 x 12.5 x
Mean 25.36 15.68 28.71 -16.5% 4.8% 1,258.4 80.8 1,339.7 1,247.5 136.2 1.06 10.4 18.1 231.2 175.1 8.0 10.5 27.7 16.1 13.5
Median 17.60 11.36 19.25 -9.9% 4.5% 1,186.6 137.3 1,282.5 814.0 103.9 1.01 9.2 17.5 177.3 134.4 7.7 10.4 23.6 16.1 13.7
Maximum 50.52 35.56 59.39 -3.3% 27.6% 3,544.6 261.7 3,806.3 4,128.7 397.8 1.88 14.9 29.9 495.9 345.0 9.8 12.7 52.8 18.0 14.5
JOHNSON OUTDOORS INC $19.60 $8.57 $20.21 -3.0% 31.0% $169.9 $28.7 $198.6 $331.9 $29.5 0.60 x 6.7 x 9.2 x $25.5 $17.9 7.8 x 11.1 x 17.3 x 21.5 x 20.5 x
Source: Historical data per company filings. Projections represent mean analyst estimates, per Bloomberg.
(1) Total Value = Market Capitalization + Preferred Equity + Total Debt + Minority Interest—Cash and Equivalents. Assumes Cash and Equivalents for these companies represent excess cash. LTM = Latest Twelve Months, CAGR = Compound Annual Growth Rate, NA = Not Available, NMF = Not Meaningful
30
Comparable Public Companies Model
Comparable Public Companies Detail DRAFT
Gross Profit as a EBITDA as a EBIT as a
% of Revenue % of Revenue % of Revenue 3 YR CAGR
LTM 4 YR Avg LTM 4 YR Avg LTM 4 YR Avg Revenue EBITDA EBIT EPS
AMER GROUP NMF NA 12.7% 12.4% 9.2% 9.1% 7.5% 8.6% 9.3% 7.7%
BRUNSWICK CORP 24.2% 24.4% 9.6% 11.3% 6.0% 7.2% 2.7% -12.9% -18.3% -15.2%
CALLAWAY GOLF CO 45.3% 48.2% 12.8% 17.3% 8.1% 12.6% -0.9% -13.8% -18.6% -15.8%
COLUMBIA SPORTSWEAR 46.3% 46.0% 22.4% 21.0% 20.0% 18.7% 15.7% 24.4% 25.4% 26.0%
HEAD N V 38.3% 40.3% 6.7% 9.7% 2.0% 5.3% 2.7% -19.0% -39.3% NMF
HUFFY CORP 17.9% 16.1% 0.5% 2.4% -0.4% 1.3% -3.6% -59.5% NMF NMF
K2 INC 30.6% 29.4% 6.8% 7.0% 4.5% 4.6% 2.6% -2.7% -6.2% -22.0%
Minimum 17.9% 16.1% 0.5% 2.4% -0.4% 1.3% -3.6% -59.5% -39.3% -22.0%
Mean 33.8% 34.1% 10.2% 11.6% 7.0% 8.4% 3.8% -10.7% -8.0% -3.8%
Median 34.5% 34.9% 9.6% 11.3% 6.0% 7.2% 2.7% -12.9% -12.3% -15.2%
Maximum 46.3% 48.2% 22.4% 21.0% 20.0% 18.7% 15.7% 24.4% 25.4% 26.0%
JOHNSON OUTDOORS INC 42.0% 40.7% 8.9% 9.2% 6.5% 6.0% -3.8% -10.5% -9.2% 2.6%
Source: Historical data per company filings.
(1) Total Value = Market Capitalization + Preferred Equity + Total Debt + Minority Interest—Cash and Equivalents. Assumes Cash and Equivalents for these companies represent excess cash. LTM = Latest Twelve Months, CAGR = Compound Annual Growth Rate, NA = Not Available, NMF = Not Meaningful
31
CONFIDENTIAL DRAFT
Special Committee Discussion Materials
March 29, 2004
Important Information DRAFT
Confidential Material Presented to the Special Committee of the Board of Directors of Johnson Outdoors, Inc.
The following pages contain material that was provided to the Special Committee of the Board of Directors (the “Special Committee”) of Johnson Outdoors Inc. (the “Company”) and is for discussion purposes only. The accompanying material was compiled or prepared on a confidential basis for use by the Special Committee and not with a view toward public disclosure. This material is preliminary in nature and contains assumptions and methodologies which may be subject to change.
Table of Contents DRAFT
I. Executive Summary
II. Situation Overview
III. Valuation Methodologies
A. Comparable Public Companies Analysis
B. Comparable M&A Transactions Analysis
C. M&A Premiums Paid Analysis
D. Discounted Cash Flow Analysis
E. Leveraged Buyout Analysis
Appendix
A. Valuation Matrix
B. Comparable Public Companies Model
DRAFT
Executive Summary
Executive Summary
Implied Transaction Multiples DRAFT
(in millions, except for per share amounts)
Proposed Transaction
Purchase Price Per Share $18.00
Basic Shares Outstanding (1) 8.7
CSEs (2) 0.3
Fully Diluted Shares Outstanding 9.0
Equity Value $161.1
Plus: Debt (3) 67.1
Less: Cash (3) 38.4
Enterprise Value $189.8
JOUT Financial Info. (4) JOUT Financial Info.
GAAP Adjusted GAAP Adjusted
Enterprise Value Multiples
EBITDA
LTM (2/29/04) $22.8 $29.7 8.3x 6.4x
FY 2004E 25.6 25.6 7.4x 7.4x
EBIT
LTM (2/29/04) $14.7 $21.6 13.0x 8.8x
FY 2004E 18.0 18.0 10.5x 10.5x
Equity Value Multiples
Net Income
LTM (2/29/04) $5.7 $9.8 28.3x 16.4x
FY 2004E 7.9 7.9 20.3x 20.3x
(1) Based on 7.446 million shares of Class A and 1.222 million shares of Class B common stock (per 1/2/04 10-Q)
(2) Based on 0.515 million in the money options outstanding with a weighted average exercise price of $8.17 per share per management; calculation uses the treasury stock method. (3) As of 2/29/04, provided by the Company.
(4) LTM ended 2/29/04. Fiscal year ending September 31, 2004. Financials adjusted for strategic charges and certain charges highlighted in JOUT 10-Ks. Tax effected at 40%.
1
DRAFT
Situation Overview
Situation Overview
Johnson Outdoors Stock Price Performance DRAFT
Daily Closing Price and Volume – Last Three Years
Stock Price
$22.00 $20.00 $18.00 $16.00 $14.00 $12.00 $10.00 $8.00 $6.00 $4.00
Apr. 20, 2002: JOUT reports strong 2Q02 EPS, increasing 70.4%(1) year-over-year; share price increases $5.70 over seven days
July 23, 2002: JOUT reports 4.6% year-over-year EPS growth; share price declines $5.40 over five days
Feb. 20, 2004: JOUT receives $18.00 per share bid from Johnson Group
400,000 350,000 300,000 250,000 200,000 150,000 100,000 50,000 0
Volume
Mar- 01
May – 01
Aug- 01
Oct – 01
Jan- 02
Mar- 02
Jun- 02
Aug – 02
Oct- 02
Jan- 03
Mar- 03
May- 03
Aug- 03
Oct- 03
Jan- 04
Mar- 04
Note: As of March 19, 2004.
(1) Adjusted for income of $0.06 per share related to discontinued fishing operations.
2
Situation Overview
Distribution of Historical Trading DRAFT
Average Daily Trading Volume – Three Year Period Ended February 19, 2004
% of Trading Volume
20% 18% 16% 14% 12% 10% 8% 6% 4% 2% 0%
11.7% 11.4%
11.0% 10.3%
9.0% 8.6%
7.6%
6.7%
5.2% 5.5%
4.9%
3.1%
2.4% 2.5%
$6.00-$7.00
$7.00- $8.00
$8.00-$9.00
$9.00-$10.00
$10.00-$11.00
$11.00-$12.00
$12.00-$13.00
$13.00- $14.00
$14.00- $15.00
$15.00-$16.00
$16.00-$17.00
$17.00-$18.00
$18.00- $19.00
$19.00-$20.00
Source: FactSet Research Systems.
3
Situation Overview
Distribution of Historical Trading DRAFT
Average Daily Trading Volume – One Year Period Ended February 19, 2004
% of Trading Volume
30% 25% 20% 15% 10% 5% 0%
25.2%
24.4%
17.8%
10.1%
9.0%
7.4%
3.7%
1.1%
1.4%
$8.00-$9.00
$9.00-$10.00
$10.00-$11.00
$11.00-$12.00
$12.00-$13.00
$13.00-$14.00
$14.00-$15.00
$15.00-$16.00
$16.00-$17.00
Source: FactSet Research System.
4
Situation Overview
Distribution of Historical Trading DRAFT
Average Daily Trading Volume – Six Month Period Ended February 19, 2004
% of Trading Volume
30% 25% 20% 15% 10% 5% 0%
24.8%
20.3%
18.3%
15.5%
8.6%
7.9%
2.2%
1.1%
1.2%
$12.50-$13.00
$13.00-$13.50
$13.50-$14.00
$14.00-$14.50
$14.50-$15.00
$15.00-$15.50
$15.50-$16.00
$16.00-$16.50
$16.50-$17.00
Source: FactSet Research Systems.
5
Situation Overview
Stock Ownership Analysis DRAFT
Total Common Shares
The Johnson Group (1)
Johnson Samuel C 2,575,323 29.7%
Johnson Imogene 32,543 0.4%
Johnson H Fisk 304,257 3.5%
Johnson Leipold Helen P 38,691 0.4%
Shares Jointly Owned or owned by Affiliated Entities 1,811,777 20.9%
Total Johnson Group 4,762,591 54.9%
Institutional Investors (2)
Dimensional Fund Advisors, Inc. 420,400 4.8%
Fidelity Management & Research Co. 238,288 2.7%
Royce & Associates LLC 195,300 2.3%
Advisory Research, Inc. 182,600 2.1%
Bridgeway Capital Management, Inc. 119,350 1.4%
Fleet National Bank 106,521 1.2%
Columbia Management Advisors, Inc. 100,421 1.2%
Kennedy Capital Management, Inc. 99,879 1.2%
Other Institutional Investors 421,578 4.9%
Total Institutional Investors 1,884,337 21.7%
Retail Investors (3) 2,021,897 23.3%
Total Shares Outstanding (4) 8,668,825 100.0%
Public Float 23.3%
Institutional 21.7%
Insiders 54.9%
The Johnson Group controls:
55% of the economic interest
80% of the voting interest
(1) Proxy dated February 25, 2004.
(2) From FactSet Lionshares as of March 20, 2004.
(3) Retail investors defined as total shares outstanding minus insiders and institutional investors.
(4) Total shares outstanding taken from 10-Q dated January 2, 2004.
6
DRAFT
Valuation Methodologies
Valuation Methodologies
Valuation Methodologies DRAFT
William Blair performed several analyses each of which is preliminary in nature and contains assumptions and methodologies which may be subject to change
Comparable Public Companies Analysis
Trading multiple analysis based on companies that William Blair considered similar to the Company based on the selected companies’ operations
M&A Transactions Analysis
Transaction multiple analysis based on transactions that William Blair considered similar to the proposed acquisition based on the target operations
Discounted Cash Flow Analysis
Utilized the Company’s fiscal 2004 – 2008 projections to derive free cash flows for the Company and discounted those cash flows, along with a terminal value based on a multiple of 6.0x – 9.0x EBITDA, back to March 31, 2004
Leveraged Buyout Analysis
Utilized the Company’s 2004 – 2008 forecasts to analyze the values that a typical LBO could be completed under established return parameters using five year exit multiples of 6.0x – 9.0x EBITDA
7
Valuation Methodologies
Financial Information Used in Preliminary Valuation DRAFT
The preliminary valuation is based on the following historical financial information:
EBIT and EBITDA as reported in the Company’s public filings (“GAAP Historical Financial Information”)
EBIT and EBITDA as reported in the Company’s 10-Ks adjusted for (i) charges classified as ‘strategic charges’ in fiscal 1999 – 2002 and (ii) charges highlighted by the Company in the fiscal 2003 10-K (in aggregate totaling $6.9 million) related to a product recall, a discontinued acquisition, reorganization of the Watercraft and Outdoor Equipment businesses, closing of a facility and write-downs for certain inventory, tooling and equipment (“Adjusted Historical Financial Information”)
Based on the forecasts obtained from the Company (“Management Forecast”) and the fact that the Company’s historical GAAP EBIT has trailed budgeted EBIT by an average of 29% for the last three fiscal years, the EBIT in the 2006 – 2008 period has been discounted by a factor of 15% reflecting an alternative scenario (“Alternative Forecast”)
The Management Forecast reflects a favorable adjustment to EBIT and EBITDA of $500,000 in fiscal 2004 related to adjustments for certain budgeted items identified by the Company related to (i) costs to respond to the bid by the Johnson Group and (ii) a one-time gain related to a legal settlement
8
Valuation Methodologies
Historical and Projected Financial Information DRAFT
GAAP Historical Financial Information and Management Forecast
(in millions, except for per share amounts)
Historical Fiscal Years Ended September 30, (1) LTM (2) Projected Fiscal Years Ended September 30, (3)
1999 2000 2001 2002 2003 02/04 2004 2005 2006 2007 2008
Net Sales $310.2 $354.9 $345.6 $342.5 $315.9 $331.9 $341.6 $327.3 $337.3 $349.1 $361.3
Cost of Goods Sold 184.4 212.1 206.9 201.5 187.9 196.7 201.5 187.1 191.1 196.5 202.0
Gross Profit 125.8 142.8 138.8 141.1 128.0 135.2 140.1 140.2 146.2 152.7 159.4
Total Operating Expenses 106.3 118.1 123.1 121.3 116.4 120.6 122.1 121.8 123.5 127.8 132.3
EBIT 19.5 24.7 15.7 19.8 11.6 14.7 18.0 18.4 22.7 24.8 27.1
Interest Income (0.8) (0.5) - - -
Interest Expense 5.2 5.0 5.0 4.1 3.6
Other (Income) Expense, net (2.5) 0.0 - - -
EBT 9.7 10.2 13.0 14.3 19.1
Income Tax Expense 4.3 4.5 5.1 5.0 6.7
Net Income 5.4 5.7 7.9 9.4 12.4
EBIT 19.5 24.7 15.7 19.8 11.6 14.7 18.0 18.4 22.7 24.8 27.1
Depreciation and Amortization 12.6 12.5 13.5 9.1 8.2 8.2 7.6 7.6 7.6 7.6 7.6
EBITDA 32.1 37.2 29.2 28.8 19.8 22.8 25.6 26.0 30.3 32.4 34.7
Operating Statistics
Net Sales Growth 14.4% (2.6%) (0.9%) (7.8%) 8.1% (4.2%) 3.1% 3.5% 3.5%
Gross Margin 40.5% 40.2% 40.2% 41.2% 40.5% 40.7% 41.0% 42.8% 43.3% 43.7% 44.1%
Operating Expenses as% of Net Sales 34.3% 33.3% 35.6% 35.4% 36.8% 36.3% 35.7% 37.2% 36.6% 36.6% 36.6%
EBITDA Margin 10.4% 10.5% 8.5% 8.4% 6.3% 6.9% 7.5% 7.9% 9.0% 9.3% 9.6%
EBIT Margin 6.3% 7.0% 4.5% 5.8% 3.7% 4.4% 5.3% 5.6% 6.7% 7.1% 7.5%
EBT Margin 3.1% 3.1% 3.8% 4.4% 5.7%
Net Income Margin 1.7% 1.7% 2.3% 2.9% 3.7%
(1) Historical fiscal years per JOUT 10-Ks dated 10/3/03 and 9/28/01. (2) 2003 and 2004 five months YTD financials provided by Company.
(3) 2004-2006 forecasts per Company management. 2007 and 2008 forecasts per Company management guidance.
9
Valuation Methodologies
Historical and Projected Financial Information DRAFT
Adjusted Historical Financial Information and Management Forecast
(in millions, except for per share amounts)
Historical Fiscal Years Ended September 30, (1) LTM (2) Projected Fiscal Years Ended September 30, (3)
1999 2000 2001 2002 2003 02/04 2004 2005 2006 2007 2008
Net Sales $310.2 $354.9 $345.6 $342.5 $315.9 $331.9 $341.6 $327.3 $337.3 $349.1 $361.3
Cost of Goods Sold 184.4 212.1 206.9 201.5 183.6 192.4 201.5 187.1 191.1 196.5 202.0
Gross Profit 125.8 142.8 138.8 141.1 132.3 139.5 140.1 140.2 146.2 152.7 159.4
Total Operating Expenses 103.5 115.7 121.6 119.6 113.8 118.0 122.1 121.8 123.5 127.8 132.3
EBIT 22.3 27.1 17.2 21.5 18.5 21.6 18.0 18.4 22.7 24.8 27.1
Interest Income (0.8) (0.5) - - -
Interest Expense 5.2 5.0 5.0 4.1 3.6
Other (Income) Expense, net (2.5) 0.0 - - -
EBT 16.6 17.1 13.0 14.3 19.1
Income Tax Expense 7.0 7.3 5.1 5.0 6.7
Net Income 9.6 9.8 7.9 9.4 12.4
EBIT 22.3 27.1 17.2 21.5 18.5 21.6 18.0 18.4 22.7 24.8 27.1
Depreciation and Amortization 12.6 12.5 13.5 9.1 8.2 8.2 7.6 7.6 7.6 7.6 7.6
EBITDA 34.9 39.6 30.7 30.6 26.7 29.7 25.6 26.0 30.3 32.4 34.7
Operating Statistics
Net Sales Growth 14.4% (2.6%) (0.9%) (7.8%) 8.1% (4.2%) 3.1% 3.5% 3.5%
Gross Margin 40.5% 40.2% 40.2% 41.2% 41.9% 42.0% 41.0% 42.8% 43.3% 43.7% 44.1%
Operating Expenses as% of Net Sales 33.4% 32.6% 35.2% 34.9% 36.0% 35.5% 35.7% 37.2% 36.6% 36.6% 36.6%
EBITDA Margin 11.2% 11.2% 8.9% 8.9% 8.5% 9.0% 7.5% 7.9% 9.0% 9.3% 9.6%
EBIT Margin 7.2% 7.6% 5.0% 6.3% 5.9% 6.5% 5.3% 5.6% 6.7% 7.1% 7.5%
EBT Margin 5.3% 5.2% 3.8% 4.4% 5.7%
Net Income Margin 3.0% 3.0% 2.3% 2.9% 3.7%
(1) Historical fiscal years per JOUT 10-Ks dated 10/3/03 and 9/28/01. Fiscal 1999 – 2002 exclude expenses itemized as ‘strategic charges’ in JOUT 10-Ks. Cost of goods sold and total operating expenses for fiscal 2003 exclude certain charges highlighted in JOUT 10-K dated 10/3/03. All adjustments tax effected at 40%.
(2) 2003 and 2004 five months YTD financials provided by Company and adjusted for strategic charges and certain charges highlighted in JOUT 10-Ks. Tax effected at 40%. (3) 2004-2006 forecasts per Company management. 2007 and 2008 forecasts per Company management guidance.
10
Valuation Methodologies
Projected Financial Information DRAFT
(in millions, except for per share amounts)
A comparison of the Management Forecast and Alternative Forecast follows:
Projected Fiscal Years Ended September 30,
2004 2005 2006 2007 2008
Net Sales $341.6 $327.3 $337.3 $349.1 $361.3
EBITDA
Management Forecast $25.6 $26.0 $30.3 $32.4 $34.7
Alternative Forecast 25.6 26.0 26.9 28.7 30.6
EBIT
Management Forecast $18.0 $18.4 $22.7 $24.8 $27.1
Alternative Forecast 18.0 18.4 19.3 21.1 23.0
EBITDA Margin
Management Forecast 7.5% 7.9% 9.0% 9.3% 9.6%
Alternative Forecast 7.5% 7.9% 8.0% 8.2% 8.5%
EBIT Margin
Management Forecast 5.3% 5.6% 6.7% 7.1% 7.5%
Alternative Forecast 5.3% 5.6% 5.7% 6.0% 6.4%
11
DRAFT
Comparable Public Companies Analysis
Comparable Public Companies Analysis
Comparable Companies Analysis DRAFT
William Blair reviewed the following publicly traded manufacturers of sports and recreational products deemed to be similar to the Company
The comparable companies analysis is preliminary in nature and contains assumptions and methodologies which may be subject to change
($in millions)
Stock Price Market Enterprise
03/25/04 Value Value
Amer Group $46.94 $1,152.1 $1,332.4
Brunswick Corp 39.08 3,576.7 3,838.4
Callaway Golf Co 18.22 1,376.7 1,329.3
Columbia Sportswear 53.75 2,167.0 1,923.3
Head N V 3.02 113.8 251.1
Huffy Corp 3.91 58.9 145.0
K2 Inc 15.78 550.3 745.2
Johnson Outdoors Inc 19.56 169.6 198.3
Note: Market Value and Enterprise Value based off of basic shares outstanding.
12
Comparable Public Companies Analysis
Indexed Stock Price Performance DRAFT
Last Twelve Months
240 220 200 180 160 140 120 100 80
Feb. 19, 2004: +86.3%
115.9%
59.0% 54.9%
38.9%
Mar-03
Apr-03
May-03
Jun-03
Jul-03
Aug-03
Sep-03
Oct–03
Nov-03
Dec–03
Jan-04
Feb–04
Mar-04
Peer Group (+59.0%)
Russell 2000 (54.9%) NASDAQ (+38.9%) JOUT (+115.9%)
Note: As of March 19, 2004.
Peer Group: Amer Group, Brunswick Corp., Callaway Golf, Columbia Sportswear, Head, Huffy Corp., and K2.
13
Comparable Public Companies Analysis
Margin and Growth Analysis DRAFT
LTM EBITDA Margin
25.0%20.0%15.0%10.0%5.0%0.0%
22.4%
13.6%
12.7%
9.6%
6.9% 6.8% 6.7% Median 9.6%
0.5%
COLM ELY AMEAS BC JOUT KTO HED HUF
LTM EBIT Margin
25.0%20.0%15.0%10.0%5.0%0.0%-5.0%
20.0%
9.2%
8.1%
6.0%
4.5% 4.4%
2.0% Median 6.0%
-0.4%
COLM AMEAS ELY BC KTO JOUT HED HUF
3 Year Revenue CAGR
20.0%15.0%10.0%5.0%0.0%-5.0%
15.7%
7.5%
2.7% 2.7% 2.6%
Median 2.7%
-0.9%
-3.6% -3.8%
COLM AMEAS BC HED KTO ELY HUF JOUT
3 Year EBITDA CAGR
30.0%
20.0%
10.0%
0.0%
-10.0%
-20.0%
-30.0%
-40.0%
-50.0%
-60.0%
-70.0%
24.4%
8.6%
-2.7% Median
-12.1% -12.9% -12.1%
-19.0% -19.0%
-59.5%
COLM AMEAS KTO ELY BC JOUT HED HUF
Note: Medians exclude JOUT. JOUT data based on GAAP Historical Financial Information. Multiples based on stock prices as of March 25, 2004.
14
Comparable Public Companies Analysis
Preliminary Multiples Analysis DRAFT
Enterprise Value/LTM EBITDA
16.0x
14.0x
12.0x
10.0x
8.0x
6.0x
4.0x
2.0x
0.0x
15.2x
12.0x
9.6x
9.0x 8.7x 8.6x Median
8.4x
9.3x
NMF
KTO ELY BC COLM JOUT HED AMEAS HUF
Enterprise Value/CY 2004E EBITDA
16.0x
14.0x
12.0x
10.0x
8.0x
6.0x
4.0x
2.0x
0.0x
10.0x
8.2x 7.8x
7.7x 7.7x 7.5x Median
7.7x
NA NA
KTO COLM JOUT BC ELY AMEAS HED HUF
Enterprise Value/LTM EBIT
35.0x30.0x25.0x20.0x15.0x10.0x5.0x0.0x
29.2x
23.2x
20.2x
15.6x Median
13.5x 17.9x 11.6x 10.1x
NM
HED KTO ELY BC JOUT AMEAS COLM HUF
Enterprise Value/CY 2004E EBIT
35.0x30.0x25.0x20.0x15.0x10.0x5.0x0.0x
13.0x
11.1x 11.0x 10.8x
9.9x Median
8.9x
10.8x
NA NA
KTO BC JOUT ELY AMEAS COLM HED HUF
Note: Medians exclude JOUT. JOUT data based on GAAP Historical Financial Information. Multiples based on stock prices as of March 25, 2004.
15
Comparable Public Companies Analysis
Preliminary Multiples Analysis DRAFT
Equity Value /LTM Net Income
60.0x50.0x40.0x30.0x20.0x10.0x0.0x
54.5x
30.2x 29.8x
23.8x
18.0x Median 23.8x
15.7x
NM NM
KTO ELY JOUT BC COLM AMEAS HUF HED
Equity Value /CY 2004E Net Income
60.0 x50.0x 40.0x 30.0x 20.0x 10.0x 0.0x
21.4x
18.6x 17.0x 17.0x
16.3x 15.2x 14.8x
Median 16.6x
NA
JOUT KTO BC HUF COLM ELY AMEAS HED
Note: Medians exclude JOUT. JOUT data based on GAAP Historical Financial Information. Multiples based on stock prices as of March 25, 2004.
16
Comparable Public Companies Analysis
Preliminary Valuation Multiples DRAFT
GAAP Historical Financial Information and Management Forecast
(in millions, except for per share amounts)
Implied JOUT Multiples at
JOUT the Following Per Share Price Relevant Public Company Multiples
Metric (1) Results $16.00 $17.00 $18.00 $19.00 $20.00 $21.00 Min Mean Median Max
CY 2003 EBITDA $20.9 8.2x 8.6x 9.1x 9.5x 10.0x 10.4x 8.4x 10.6x 9.3x 15.2x
LTM EBITDA 22.8 7.5x 7.9x 8.3x 8.7x 9.1x 9.5x
CY 2004E EBITDA 25.5 6.7x 7.1x 7.4x 7.8x 8.2x 8.5x 7.5x 8.2x 7.7x 10.0x
CY 2003 EBIT $12.8 13.4x 14.1x 14.8x 15.6x 16.3x 17.0x 10.1x 18.3x 17.9x 29.2x
LTM EBIT 14.7 11.7x 12.3x 13.0x 13.6x 14.2x 14.8x
CY 2004E EBIT 17.9 9.6x 10.1x 10.6x 11.1x 11.6x 12.1x 8.9x 10.8x 10.8x 13.0x
CY 2003 Net Income $5.9 24.4x 25.9x 27.5x 29.1x 30.6x 32.2x 15.7x 28.5x 23.8x 54.5x
LTM Net Income 5.7 25.1x 26.7x 28.3x 30.0x 31.6x 33.2x
CY 2004E Net Income 7.9 18.1x 19.2x 20.4x 21.5x 22.7x 23.9x 14.8x 16.5x 16.6x 18.6x
(1) LTM ended 2/29/04. Financials adjusted for strategic charges and certain charges highlighted in JOUT 10-Ks. Tax effected at 40%.
17
Comparable Public Companies Analysis
Preliminary Valuation Multiples DRAFT
Adjusted Historical Financial Information and Management Forecast
(in millions, except for per share amounts)
Implied JOUT Multiples at
JOUT the Following Per Share Price Relevant Public Company Multiples
Metric (1) Results $16.00 $17.00 $18.00 $19.00 $20.00 $21.00 Min Mean Median Max
CY 2003 EBITDA $27.8 6.2x 6.5x 6.8x 7.2x 7.5x 7.8x 8.4x 10.6x 9.3x 15.2x
LTM EBITDA 29.7 5.8x 6.1x 6.4x 6.7x 7.0x 7.3x
CY 2004E EBITDA 25.5 6.7x 7.1x 7.4x 7.8x 8.2x 8.5x 7.5x 8.2x 7.7x 10.0x
CY 2003 EBIT $19.7 8.7x 9.2x 9.6x 10.1x 10.6x 11.0x 10.1x 18.3x 17.9x 29.2x
LTM EBIT 21.6 8.0x 8.4x 8.8x 9.2x 9.7x 10.1x
CY 2004E EBIT 17.9 9.6x 10.1x 10.6x 11.1x 11.6x 12.1x 8.9x 10.8x 10.8x 13.0x
CY 2003 Net Income $10.0 14.3x 15.2x 16.1x 17.0x 17.9x 18.9x 15.7x 28.5x 23.8x 54.5x
LTM Net Income 9.8 14.5x 15.5x 16.4x 17.3x 18.3x 19.2x
CY 2004E Net Income 7.9 18.1x 19.2x 20.4x 21.5x 22.7x 23.9x 14.8x 16.5x 16.6x 18.6x
(1) LTM ended 2/29/04. Financials adjusted for strategic charges and certain charges highlighted in JOUT 10-Ks. Tax effected at 40%.
18
DRAFT
Comparable M&A Transactions Analysis
Comparable M&A Transactions Analysis
Preliminary List of Selected Transactions DRAFT
William Blair reviewed publicly available transactions for the past three years to identify those transactions that involved the acquisition of companies similar to the Company
The comparable M&A transactions analysis is preliminary in nature and contains assumptions and methodologies which may be subject to change
Total
Enterprise Equity Transaction Value to
Date Value Value LTM Form of
Effective Target Acquiror ($MM) ($MM) Sales EBITDA EBIT Consideration
12/18/03 Bombardier Recreational Products Bain Capital $844.9 NA 0.50x 7.9x 12.5x Cash
12/02/03 CamelBak Products Bear Stearns Merchant Banking $210.0 NA NA 7.0x NA Cash
03/26/03 Rawlings Sporting Goods K2 Inc. $112.5 $73.1 0.66x 11.8x 14.6x Stock
02/12/03 Remington Arms Bruckmann, Rosser, Sherrill $314.1 NA 0.85x 5.1x NA Cash
09/19/02 Gen-X Sports Huffy Corporation $104.9 $54.4 0.77x 12.7x 15.6x Cash and Stock
09/09/02 Jack Wolfskin Bain Capital $59.3 NA 1.06x 8.5x 9.0x Cash
07/27/01 Koninklijke Gazelle Gazelle Holding $122.0 $112.0 0.95x NA 6.7x Cash
06/25/01 Riddell Sports Lincolnshire Management $67.3 NA 0.75x NA 9.7x Cash
Mean 0.79x 8.8x 11.4x
Median 0.77x 8.2x 11.1x
Maximum 1.06x 12.7x 15.6x
Minimum 0.50x 5.1x 6.7x
19
Comparable M&A Transactions Analysis
Preliminary Valuation Multiples DRAFT
GAAP Historical Financial Information and Management Forecast
(in millions, except for per share amounts)
Implied JOUT Multiples at Relevant Merger & Acquisition
JOUT the Following Per Share Price Multiples
Metric (1) Results $16.00 $17.00 $18.00 $19.00 $20.00 $21.00 Min Mean Median Max
LTM EBITDA $22.8 7.5x 7.9x 8.3x 8.7x 9.1x 9.5x 5.1x 8.8x 8.2x 12.7x
FY 2004E EBITDA 25.6 6.7x 7.1x 7.4x 7.8x 8.1x 8.5x
LTM EBIT $14.7 11.7x 12.3x 13.0x 13.6x 14.2x 14.8x 6.7x 11.4x 11.1x 15.6x
FY 2004E EBIT 18.0 9.5x 10.0x 10.5x 11.1x 11.6x 12.1x
(1) LTM ended 2/29/04. Financials adjusted for strategic charges and certain charges highlighted in JOUT 10-Ks. Tax effected at 40%.
20
Comparable M&A Transactions Analysis
Preliminary Valuation Multiples DRAFT
Adjusted Historical Financial Information and Management Forecast
(in millions, except for per share amounts)
Implied JOUT Multiples at Relevant Merger & Acquisition
JOUT the Following Per Share Price Multiples
Metric (1) Results $16.00 $17.00 $18.00 $19.00 $20.00 $21.00 Min Mean Median Max
LTM EBITDA $29.7 5.8x 6.1x 6.4x 6.7x 7.0x 7.3x 5.1x 8.8x 8.2x 12.7x
FY 2004E EBITDA 25.6 6.7x 7.1x 7.4x 7.8x 8.1x 8.5x
LTM EBIT $21.6 8.0x 8.4x 8.8x 9.2x 9.7x 10.1x 6.7x 11.4x 11.1x 15.6x
FY 2004E EBIT 18.0 9.5x 10.0x 10.5x 11.1x 11.6x 12.1x
(1) LTM ended 2/29/04. Financials adjusted for strategic charges and certain charges highlighted in JOUT 10-Ks. Tax effected at 40%.
21
DRAFT
M&A Premiums Paid Analysis
M&a Premiums Paid Analysis
Methodology and Assumptions DRAFT
William Blair analyzed 1,461 domestic public transactions that were announced since January 1, 2001 (through March 17, 2004):
All completed transactions (1,461 transactions)
All completed transactions between between $100 million and $500 million in equity value (328 transactions) All completed transactions in which less than 50% of the target was acquired (485 transactions) All completed transactions which were “going private” transactions (101 transactions)
William Blair compared the price of each transaction to the closing price of the target stock one day, one week and one month prior to the announcement of the transaction
The M&A premiums analysis is preliminary in nature and contains assumptions and methodologies which may be subject to change
22
M&a Premiums Paid Analysis
Premiums Paid Summary DRAFT
All completed transactions since January 1, 2001
ALL TRANSACTIONS COMPLETED SINCE JANUARY 1, 2001
JOUT Premium at Premiums Paid Data Percentile
Price $16.00 $17.00 $18.00 $19.00 $20.00 $21.00 25th 50th 75th
All Completed Transactions (Total 1461)
One Day Before Announcement $16.95 -5.6% 0.3% 6.2% 12.1% 18.0% 23.9% 4.7% 27.8% 55.4%
One Week Before Announcement 16.85 -5.0% 0.9% 6.8% 12.8% 18.7% 24.6% 8.0% 31.8% 62.7%
One Month Before Announcement 15.97 0.2% 6.4% 12.7% 19.0% 25.2% 31.5% 8.2% 33.6% 71.3%
Source: Commscan M&A Desk as of March 17, 2004.
Note: Premiums analysis includes all completed or M&A activity (but excludes transactions including Closed-End Funds, REITs and ADRs) for which premiums are reported.
23
M&a Premiums Paid Analysis
Premiums Paid Summary DRAFT
All completed transactions since January 1, 2001 between between $100 million and $500 million in equity value
SUBSET: TRANSACTION VALUE BETWEEN $100 and $500 MILLION
JOUT Premium at Premiums Paid Data Percentile
Price $16.00 $17.00 $18.00 $19.00 $20.00 $21.00 25th 50th 75th
All Completed Transactions (Total 328)
One Day Before Announcement $16.95 -5.6% 0.3% 6.2% 12.1% 18.0% 23.9% 8.6% 33.3% 58.9%
One Week Before Announcement 16.85 -5.0% 0.9% 6.8% 12.8% 18.7% 24.6% 16.0% 35.0% 62.7%
One Month Before Announcement 15.97 0.2% 6.4% 12.7% 19.0% 25.2% 31.5% 14.0% 38.7% 73.7%
Source: Commscan M&A Desk as of March 17, 2004.
Note: Premiums analysis includes all completed or M&A activity (but excludes transactions including Closed-End Funds, REITs and ADRs) for which premiums are reported.
24
M&a Premiums Paid Analysis
Premiums Paid Summary DRAFT
All completed transactions since January 1, 2001 in which less than 50% of the target was acquired
SUBSET: LESS THAN 50% of EQUITY ACQUIRED
JOUT Premium at Premiums Paid Data Percentile
Price $16.00 $17.00 $18.00 $19.00 $20.00 $21.00 25th 50th 75th
All Completed Transactions (Total 485)
One Day Before Announcement $16.95 -5.6% 0.3% 6.2% 12.1% 18.0% 23.9% -1.4% 13.0% 50.0%
One Week Before Announcement 16.85 -5.0% 0.9% 6.8% 12.8% 18.7% 24.6% 0.0% 17.6% 54.7%
One Month Before Announcement 15.97 0.2% 6.4% 12.7% 19.0% 25.2% 31.5% -1.9% 19.4% 50.0%
Source: Commscan M&A Desk as of March 17, 2004.
Note: Premiums analysis includes all completed or M&A activity (but excludes transactions including Closed-End Funds, REITs and ADRs) for which premiums are reported.
25
M&a Premiums Paid Analysis
Premiums Paid Summary DRAFT
All completed transactions since January 1, 2001 which were “going private” transactions
ALL GOING PRIVATE TRANSACTIONS COMPLETED SINCE JANUARY 1, 2001
JOUT Premium at Premiums Paid Data Percentile
Price $16.00 $17.00 $18.00 $19.00 $20.00 $21.00 25th 50th 75th
All Completed Transactions - Initial Premium to Announcement (Total 101)
One Day Before Announcement $16.95 -5.6% 0.3% 6.2% 12.1% 18.0% 23.9% 4.3% 26.0% 60.0%
One Week Before Announcement 16.85 -5.0% 0.9% 6.8% 12.8% 18.7% 24.6% 8.2% 31.5% 57.0%
One Month Before Announcement 15.97 0.2% 6.4% 12.7% 19.0% 25.2% 31.5% 12.0% 32.3% 58.8%
All Completed Transactions - Final Premium to Announcement (Total 101)
One Day Before Announcement $16.95 -5.6% 0.3% 6.2% 12.1% 18.0% 23.9% 9.0% 32.9% 75.3%
One Week Before Announcement 16.85 -5.0% 0.9% 6.8% 12.8% 18.7% 24.6% 11.2% 36.9% 80.6%
One Month Before Announcement 15.97 0.2% 6.4% 12.7% 19.0% 25.2% 31.5% 19.4% 42.6% 66.7%
Source: Commscan M&A Desk as of March 17, 2004.
Note: Premiums analysis includes all completed or M&A activity (but excludes transactions including Closed-End Funds, REITs and ADRs) for which premiums are reported.
26
DRAFT
Discounted Cash Flow Analysis
Discounted Cash Flow Analysis
Methodology and Assumptions DRAFT
A discounted cash flow analysis calculates the present value of the Company based upon its future earnings stream and corresponding cash flows
The discounted cash flow analysis is preliminary in nature and contains assumptions and methodologies which may be subject to change
William Blair examined the future earnings and “free cash flows” of the Company through fiscal 2008 based on:
Management Forecast Alternative Forecast
William Blair estimated the value of the Company at the end of fiscal year 2008 (“terminal value”) by assuming the Company would be purchased by an independent party based upon a multiple of the projected trailing EBITDA
The sum of the above two components is the preliminary estimate of the Company’s total present value
William Blair assumed the following preliminary valuation parameters:
Terminal EBITDA multiples ranging from 6.0x to 9.0x Discount rates ranging from 11.0% to 13.0% Discounted to March 31, 2004
27
Discounted Cash Flow Analysis
Discounted Cash Flow Analysis DRAFT
Management Forecast
(in millions, except for per share amounts)
Present Value of Enterprise Value
Discount Terminal EBITDA Multiple
Rate 6.0x 6.5x 7.0x 7.5x 8.0x 8.5x 9.0x
11.0% $168.8 $179.7 $190.5 $201.3 $212.2 $223.0 $233.8
11.5% 165.8 176.4 187.0 197.6 208.2 218.8 229.5
12.0% 162.7 173.2 183.6 194.0 204.4 214.8 225.2
12.5% 159.8 170.0 180.2 190.4 200.6 210.8 221.0
13.0% 156.9 166.9 176.9 186.9 196.9 206.9 216.9
Present Value of Per Share Equity Value
Discount Terminal EBITDA Multiple
Rate 6.0x 6.5x 7.0x 7.5x 8.0x 8.5x 9.0x
11.0% $15.66 $16.87 $18.08 $19.29 $20.50 $21.71 $22.92
11.5% 15.31 16.50 17.69 18.87 20.06 21.24 22.43
12.0% 14.98 16.14 17.30 18.47 19.63 20.79 21.95
12.5% 14.65 15.79 16.93 18.07 19.21 20.35 21.49
13.0% 14.33 15.45 16.56 17.68 18.80 19.91 21.03
28
Discounted Cash Flow Analysis
Discounted Cash Flow Analysis DRAFT
Alternative Forecast
(in millions, except for per share amounts)
Present Value of Enterprise Value
Discount Terminal EBITDA Multiple
Rate 6.0x 6.5x 7.0x 7.5x 8.0x 8.5x 9.0x
11.0% $149.0 $158.5 $168.1 $177.6 $187.2 $196.8 $206.3
11.5% 146.3 155.6 165.0 174.4 183.7 193.1 202.5
12.0% 143.6 152.8 162.0 171.2 180.3 189.5 198.7
12.5% 141.0 150.0 159.0 168.0 177.0 186.0 195.0
13.0% 138.5 147.3 156.2 165.0 173.8 182.6 191.5
Present Value of Per Share Equity Value
Discount Terminal EBITDA Multiple
Rate 6.0x 6.5x 7.0x 7.5x 8.0x 8.5x 9.0x
11.0% $13.44 $14.51 $15.57 $16.64 $17.71 $18.78 $19.85
11.5% 13.14 14.18 15.23 16.28 17.32 18.37 19.42
12.0% 12.84 13.87 14.89 15.92 16.94 17.97 19.00
12.5% 12.55 13.56 14.56 15.57 16.57 17.58 18.59
13.0% 12.27 13.26 14.24 15.23 16.21 17.20 18.19
29
DRAFT
Leveraged Buyout Analysis
Leveraged Buyout Analysis
Methodology and Assumptions DRAFT
William Blair performed a leveraged buyout analysis of the Company based on:
Management Forecast Alternative Forecast
The leveraged buyout analysis is preliminary in nature and contains assumptions and methodologies which may be subject to change
William Blair assumed the following preliminary valuation/capitalization parameters:
Bank debt maximum of 3.0x 2004E EBITDA; subordinated debt maximum of 1.0x 2004E EBITDA
Bank debt interest rate of 5.0%; coupon on subordinated debt of 12.0% Exit multiples ranging from 6.0x to 9.0x EBITDA
18% targeted returns for subordinated debt investors (including warrants) 22.5%—27.5% targeted returns for equity investors
30
Leveraged Buyout Analysis
Leveraged Buyout Analysis DRAFT
Management Forecast Forecast
(in millions, except for per share amounts)
Enterprise Value
Equity Terminal EBITDA Multiple
IRR 6.0x 6.5x 7.0x 7.5x 8.0x 8.5x 9.0x
22.5% $145.9 $152.1 $158.3 $164.6 $170.6 $176.8 $183.1
25.0% 141.5 147.1 152.6 158.3 163.8 169.6 175.3
27.5% 137.4 142.5 147.7 152.8 157.7 162.9 168.1
Equity Value Per Share
Equity Terminal EBITDA Multiple
IRR 6.0x 6.5x 7.0x 7.5x 8.0x 8.5x 9.0x
22.5% $13.10 $13.79 $14.48 $15.19 $15.86 $16.55 $17.25
25.0% 12.60 13.23 13.84 14.48 15.10 15.74 16.38
27.5% 12.15 12.72 13.30 13.87 14.41 15.00 15.58
31
Leveraged Buyout Analysis
Leveraged Buyout Analysis DRAFT
Alternative Forecast
(in millions, except for per share amounts)
Enterprise Value
Equity Terminal EBITDA Multiple
IRR 6.0x 6.5x 7.0x 7.5x 8.0x 8.5x 9.0x
22.5% $134.6 $140.1 $145.5 $151.8 $156.5 $162.0 $167.4
25.0% 131.2 136.1 141.1 146.1 150.9 156.0 161.0
27.5% 128.2 132.8 137.3 141.7 146.3 150.7 155.2
Equity Value Per Share
Equity Terminal EBITDA Multiple
IRR 6.0x 6.5x 7.0x 7.5x 8.0x 8.5x 9.0x
22.5% $11.83 $12.45 $13.05 $13.76 $14.28 $14.89 $15.50
25.0% 11.45 12.00 12.56 13.12 13.65 14.22 14.78
27.5% 11.12 11.63 12.14 12.63 13.14 13.63 14.14
32
DRAFT
Valuation Matrix
Valuation Matrix
Valuation Matrix DRAFT
GAAP Historical Financial Information and Management Forecast
(in millions, except for per share amounts)
JOUT Stock Price Prior to
2/20/04 Announcement
1 Day Prior $16.95
1 Week Prior 16.85
1 Month Prior 15.97
Equity Purchase Price
Price per share $15.00 $16.00 $17.00 $18.00 $19.00 $20.00 $21.00 $22.00 $23.00 $24.00 $25.00
Premium to 1 Day Prior -11.5% -5.6% 0.3% 6.2% 12.1% 18.0% 23.9% 29.8% 35.7% 41.6% 47.5%
Premium to 1 Week Prior -11.0% -5.0% 0.9% 6.8% 12.8% 18.7% 24.6% 30.6% 36.5% 42.4% 48.4%
Premium to 1 Month Prior -6.1% 0.2% 6.4% 12.7% 19.0% 25.2% 31.5% 37.8% 44.0% 50.3% 56.5%
Common Shares Outstanding (1) 8.7 8.7 8.7 8.7 8.7 8.7 8.7 8.7 8.7 8.7 8.7
CSEs (2) 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.4 0.4
Fully Diluted Share Outstanding 8.9 8.9 9.0 9.0 9.0 9.0 9.0 9.0 9.0 9.0 9.0
Equity Value $133.9 $143.0 $152.2 $161.4 $170.5 $179.7 $188.9 $198.1 $207.3 $216.5 $225.7
Net Debt (3) 28.7 28.7 28.7 28.7 28.7 28.7 28.7 28.7 28.7 28.7 28.7
Total Value $162.5 $171.7 $180.8 $190.0 $199.2 $208.4 $217.6 $226.8 $235.9 $245.1 $254.3
Johnson Outdoors Financials (4)
Total Value / EBITDA
EBITDA
CY 2003 $20.9 7.8x 8.2x 8.6x 9.1x 9.5x 10.0x 10.4x 10.8x 11.3x 11.7x 12.2x
LTM 22.8 7.1x 7.5x 7.9x 8.3x 8.7x 9.1x 9.5x 9.9x 10.3x 10.7x 11.1x
CY 2004E 25.5 6.4x 6.7x 7.1x 7.5x 7.8x 8.2x 8.5x 8.9x 9.3x 9.6x 10.0x
Total Value / EBIT
EBIT
CY 2003 $12.8 12.7x 13.4x 14.1x 14.9x 15.6x 16.3x 17.0x 17.7x 18.4x 19.2x 19.9x
LTM 14.7 11.1x 11.7x 12.3x 13.0x 13.6x 14.2x 14.8x 15.5x 16.1x 16.7x 17.4x
CY 2004E 17.9 9.1x 9.6x 10.1x 10.6x 11.1x 11.6x 12.1x 12.6x 13.2x 13.7x 14.2x
Equity Value / Net Income
Net Income
CY 2003 $5.9 22.8x 24.4x 26.0x 27.5x 29.1x 30.7x 32.2x 33.8x 35.4x 36.9x 38.5x
LTM 5.7 23.5x 25.2x 26.8x 28.4x 30.0x 31.6x 33.2x 34.8x 36.5x 38.1x 39.7x
CY 2004E 7.9 16.9x 18.1x 19.2x 20.4x 21.6x 22.7x 23.9x 25.0x 26.2x 27.4x 28.5x
(1) Based on 7.446 million shares of Class A and 1.222 million shares of Class B common stock (per 1/2/04 10-Q)
(2) Based on 0.515 million in the money options outstanding with a weighted average exercise price of $8.17 per share per management; calculation uses the treasury stock method. (3) As of 2/29/04, provided by the Company.
(4) LTM ended 2/29/04.
33
Valuation Matrix
Valuation Matrix DRAFT
Adjusted Historical Financial Information and Management Forecast
(in millions, except for per share amounts)
JOUT Stock Price Prior to
2/20/04 Announcement
1 Day Prior $16.95
1 Week Prior 16.85
1 Month Prior 15.97
Equity Purchase Price
Price per share $15.00 $16.00 $17.00 $18.00 $19.00 $20.00 $21.00 $22.00 $23.00 $24.00 $25.00
Premium to 1 Day Prior -11.5% -5.6% 0.3% 6.2% 12.1% 18.0% 23.9% 29.8% 35.7% 41.6% 47.5%
Premium to 1 Week Prior -11.0% -5.0% 0.9% 6.8% 12.8% 18.7% 24.6% 30.6% 36.5% 42.4% 48.4%
Premium to 1 Month Prior -6.1% 0.2% 6.4% 12.7% 19.0% 25.2% 31.5% 37.8% 44.0% 50.3% 56.5%
Common Shares Outstanding (1) 8.7 8.7 8.7 8.7 8.7 8.7 8.7 8.7 8.7 8.7 8.7
CSEs (2) 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.4 0.4
Fully Diluted Share Outstanding 8.9 8.9 9.0 9.0 9.0 9.0 9.0 9.0 9.0 9.0 9.0
Equity Value $133.9 $143.0 $152.2 $161.4 $170.5 $179.7 $188.9 $198.1 $207.3 $216.5 $225.7
Net Debt (3) 28.7 28.7 28.7 28.7 28.7 28.7 28.7 28.7 28.7 28.7 28.7
Total Value $162.5 $171.7 $180.8 $190.0 $199.2 $208.4 $217.6 $226.8 $235.9 $245.1 $254.3
Johnson Outdoors Financials (4)
Total Value / EBITDA
EBITDA
CY 2003 $27.8 5.8x 6.2x 6.5x 6.8x 7.2x 7.5x 7.8x 8.2x 8.5x 8.8x 9.1x
LTM 29.7 5.5x 5.8x 6.1x 6.4x 6.7x 7.0x 7.3x 7.6x 7.9x 8.2x 8.5x
CY 2004E 25.5 6.4x 6.7x 7.1x 7.5x 7.8x 8.2x 8.5x 8.9x 9.3x 9.6x 10.0x
Total Value / EBIT
EBIT
CY 2003 $19.7 8.3x 8.7x 9.2x 9.6x 10.1x 10.6x 11.0x 11.5x 12.0x 12.4x 12.9x
LTM 21.6 7.5x 8.0x 8.4x 8.8x 9.2x 9.7x 10.1x 10.5x 10.9x 11.4x 11.8x
CY 2004E 17.9 9.1x 9.6x 10.1x 10.6x 11.1x 11.6x 12.1x 12.6x 13.2x 13.7x 14.2x
Equity Value / Net Income
Net Income
CY 2003 $10.0 13.4x 14.3x 15.2x 16.1x 17.1x 18.0x 18.9x 19.8x 20.7x 21.6x 22.6x
LTM 9.8 13.6x 14.6x 15.5x 16.4x 17.4x 18.3x 19.2x 20.2x 21.1x 22.0x 23.0x
CY 2004E 7.9 16.9x 18.1x 19.2x 20.4x 21.6x 22.7x 23.9x 25.0x 26.2x 27.4x 28.5x
(1) Based on 7.446 million shares of Class A and 1.222 million shares of Class B common stock (per 1/2/04 10-Q)
(2) Based on 0.515 million in the money options outstanding with a weighted average exercise price of $8.17 per share per management; calculation uses the treasury stock method. (3) As of 2/29/04, provided by the Company.
(4) LTM ended 2/29/04. Financials adjusted for strategic charges and certain charges highlighted in JOUT 10-Ks. Tax effected at 40%.
34
DRAFT
Comparable Public Companies Model
Comparable Public Companies Model
Comparable Public Companies Detail DRAFT
Stock Price LTM Total Value (1) / 2004 E Total Value
Closing Price 52 Week Change Since Market Net Debt Total Revenue EBITDA LTM LTM LTM EBITDA EBIT 2004E 2004E Price / Earnings Ratio
03/25/04 Low High 52 Wk High 1/1/03 Value (MM) (Cash) (MM) Value (MM)(1) (MM) (MM) Revenue EBITDA EBIT (MM) (MM) EBITDA EBIT LTM Cal. 04E Cal. 05E
AMER GROUP $46.94 $31.82 $49.97 -6.1% 9.7% $1,152.1 $176.6 $1,332.4 $1,250.3 $158.5 1.07 x 8.4 x 11.6 x $177.3 $ 134.4 7.5 x 9.9 x 15.7 x 14.8 x 13.3 x
BRUNSWICK CORP 39.08 18.51 41.85 -6.6% 22.8% 3,576.7 261.7 3,838.4 4,128.7 397.8 0.93 9.6 15.6 495.9 345.0 7.7 x 11.1 x 23.8 17.0 13.9
CALLAWAY GOLF CO 18.22 11.36 19.25 -5.4% 8.1% 1,376.7 (47.3) 1,329.3 814.0 110.4 1.63 12.0 20.2 173.7 123.7 7.7 x 10.8 x 30.2 15.2 12.9
COLUMBIA SPORTSWEAR 53.75 35.56 59.39 -9.5% -1.4% 2,167.0 (243.7) 1,923.3 951.8 213.3 2.02 9.0 10.1 234.8 215.4 8.2 x 8.9 x 18.0 16.3 14.5
HEAD N V 3.02 1.51 3.54 -14.7% 20.8% 113.8 137.3 251.1 431.2 29.1 0.58 8.6 29.2 NA NA NA NA NMF NA NA
HUFFY CORP 3.91 3.80 8.00 -51.1% -25.5% 58.9 86.2 145.0 437.7 2.2 0.33 NMF NMF NA NA NA NA NMF 17.0 13.0
K2 INC 15.78 7.20 19.00 -16.9% 3.7% 550.3 194.9 745.2 718.5 49.0 1.04 15.2 23.2 74.3 57.1 10.0 x 13.0 x 54.5 18.6 15.0
Minimum $3.02 $1.51 $3.54 -51.1% -25.5% $58.9 ($243.7) $145.0 $431.2 $2.2 0.33 x 8.4 x 10.1 x $74.3 $57.1 7.5 x 8.9 x 15.7 x 14.8 x 12.9 x
Mean 25.81 15.68 28.71 -15.8% 5.5% 1,285.1 80.8 1,366.4 1,247.5 137.2 1.09 10.5 18.3 231.2 175.1 8.2 10.8 28.5 16.5 13.8
Median 18.22 11.36 19.25 -9.5% 8.1% 1,152.1 137.3 1,329.3 814.0 110.4 1.04 9.3 17.9 177.3 134.4 7.7 10.8 23.8 16.6 13.6
Maximum 53.75 35.56 59.39 -5.4% 22.8% 3,576.7 261.7 3,838.4 4,128.7 397.8 2.02 15.2 29.2 495.9 345.0 10.0 13.0 54.5 18.6 15.0
JOHNSON OUTDOORS INC $19.51 $8.57 $20.21 -3.5% 30.4% $169.1 $28.7 $197.9 $331.9 $22.8 0.60 x 8.7 x 13.5 x $25.5 $ 17.9 7.8 x 11.0 x 29.8 x 21.4 x 20.4 x
Source: Historical data per company filings. Projections represent mean analyst estimates, per Bloomberg.
(1) Total Value = Market Capitalization + Preferred Equity + Total Debt + Minority Interest—Cash and Equivalents. Assumes Cash and Equivalents for these companies represent excess cash. LTM = Latest Twelve Months, CAGR = Compound Annual Growth Rate, NA = Not Available, NMF = Not Meaningful
35
Comparable Public Companies Model
Comparable Public Companies Detail DRAFT
Gross Profit as a EBITDA as a EBIT as a
% of Revenue % of Revenue % of Revenue 3 YR CAGR
LTM 4 YR Avg LTM 4 YR Avg LTM 4 YR Avg Revenue EBITDA EBIT EPS
AMER GROUP 48.4% 49.1% 12.7% 12.4% 9.2% 9.1% 7.5% 8.6% 9.3% 7.7%
BRUNSWICK CORP 24.2% 24.4% 9.6% 11.3% 6.0% 7.2% 2.7% -12.9% -18.3% -15.2%
CALLAWAY GOLF CO 45.3% 48.2% 13.6% 17.5% 8.1% 12.6% -0.9% -12.1% -18.6% -15.8%
COLUMBIA SPORTSWEAR 46.3% 46.0% 22.4% 21.0% 20.0% 18.7% 15.7% 24.4% 25.4% 26.0%
HEAD N V 38.3% 40.3% 6.7% 9.7% 2.0% 5.3% 2.7% -19.0% -39.3% NMF
HUFFY CORP 17.9% 16.1% 0.5% 2.4% -0.4% 1.3% -3.6% -59.5% NMF NMF
K2 INC 30.6% 29.4% 6.8% 7.0% 4.5% 4.6% 2.6% -2.7% -6.2% -22.0%
Minimum 17.9% 16.1% 0.5% 2.4% -0.4% 1.3% -3.6% -59.5% -39.3% -22.0%
Mean 35.9% 36.2% 10.3% 11.6% 7.0% 8.4% 3.8% -10.4% -8.0% -3.8%
Median 38.3% 40.3% 9.6% 11.3% 6.0% 7.2% 2.7% -12.1% -12.3% -15.2%
Maximum 48.4% 49.1% 22.4% 21.0% 20.0% 18.7% 15.7% 24.4% 25.4% 26.0%
JOHNSON OUTDOORS INC 40.7% 40.4% 6.9% 8.4% 4.4% 5.2% -3.8% -19.0% -22.3% -15.1%
Source: Historical data per company filings.
(1) Total Value = Market Capitalization + Preferred Equity + Total Debt + Minority Interest—Cash and Equivalents. Assumes Cash and Equivalents for these companies represent excess cash. LTM = Latest Twelve Months, CAGR = Compound Annual Growth Rate, NA = Not Available, NMF = Not Meaningful
36
CONFIDENTIAL DRAFT
Special Committee Discussion Materials
May 14, 2004
Important Information
DRAFT
Confidential Material Presented to the Special Committee of the Board of Directors of Johnson Outdoors, Inc.
The following pages contain material that was provided to the Special Committee of the Board of Directors (the “Special Committee”) of Johnson Outdoors Inc. (the “Company”) and is for discussion purposes only. The accompanying material was compiled or prepared on a confidential basis for use by the Special Committee and not with a view toward public disclosure. This material is preliminary in nature and contains assumptions and methodologies which may be subject to change.
Table of Contents
DRAFT
I. Executive Summary
II. Valuation Discussion Materials
A. Comparable Public Companies Analysis
B. Comparable M&A Transactions Analysis
C. M&A Premiums Paid Analysis
D. Discounted Cash Flow Analysis
E. Leveraged Buyout Analysis
DRAFT
Executive Summary
Executive Summary
Overview
DRAFT
Subsequent to the preparation of the Special Committee Discussion Materials, dated March 29, 2004, and the Special Committee meeting of same date, Johnson Outdoors acquired Techsonic Industries, Inc. (“Techsonic”) on May 6, 2004
The preliminary valuation analysis contained in the Special Committee Discussion Materials, dated March 29, has been revised to reflect the acquisition of Techsonic and is presented in summary form on the following pages
1
Executive Summary
Implied Transaction Multiples
DRAFT
(in millions, except for per share amounts)
Transaction Value
Proposed Purchase Price Per Share $20.10
Basic Shares Outstanding (1) 8.669
CSEs (2) 0.307
Fully Diluted Shares Outstanding 8.975
Equity Value $180.4
Plus: Debt (3) 67.1
Less: Cash (3) 36.2
Enterprise Value $211.3
Transaction Value—Pro Forma for Techsonic Acq.
Proposed Purchase Price Per Share $20.10
Basic Shares Outstanding (1) 8.669
CSEs (2) 0.307
Fully Diluted Shares Outstanding 8.975
Equity Value $180.4
Plus: Debt (3) 67.1
Less: Cash (3) 7.4
Enterprise Value $240.2
JOUT Financial Info. (4) JOUT Financial Info.
GAAP Adjusted GAAP Adjusted
Enterprise Value Multiples
EBITDA
JOUT Only:
LTM (4/2/04) $23.4 $30.2 9.0x 7.0x
FY 2004E 25.6 25.6 8.3x 8.3x
Pro Forma for Techsonic Acq.:
LTM (4/2/04) $28.6 $35.4 8.4x 6.8x
FY 2004E 30.1 30.1 8.0x 8.0x
EBIT
JOUT Only:
LTM (4/2/04) $15.3 $22.1 13.8x 9.6x
FY 2004E 18.0 18.0 11.7x 11.7x
Pro Forma for Techsonic Acq.:
LTM (4/2/04) $18.5 $25.3 13.0x 9.5x
FY 2004E 20.3 20.3 11.8x 11.8x
Equity Value Multiples
Net Income
JOUT Only:
LTM (4/2/04) $6.4 $10.4 28.1x 17.3x
FY 2004E 8.1 8.1 22.3x 22.3x
Pro Forma for Techsonic Acq.:
LTM (4/2/04) [Pending Due Diligence]
FY 2004E [Pending Due Diligence]
(1) Based on 7.446 million shares of Class A and 1.222 million shares of Class B common stock (per 1/2/04 10-Q) (2) Based on 0.515 million in the money options outstanding with a weighted average exercise price of $8.17 per share per management; calculation uses the treasury stock method.
(3) As of 4/2/04, provided by the Company. Where indicated, pro forma for Techsonic acquisition.
(4) LTM ended 4/2/04. Fiscal year ending September 31, 2004. Financials adjusted for strategic charges and certain charges highlighted in JOUT 10-Ks. Tax effected at 40%. Where indicated, pro forma for Techsonic acquisition.
2
DRAFT
Summary Valuation Materials
Valuation Methodologies
Financial Information Used in Preliminary Valuation
DRAFT
The preliminary valuation is based on the following historical financial information:
EBIT and EBITDA as reported in the Company’s public filings (“GAAP Historical Financial Information”)
EBIT and EBITDA as reported in the Company’s 10-Ks adjusted for (i) charges classified as ‘strategic charges’ in fiscal 1999 – 2002 and (ii) charges highlighted by the Company in the fiscal 2003 10-K (in aggregate totaling $6.9 million) related to a product recall, a discontinued acquisition, reorganization of the Watercraft and Outdoor Equipment businesses, closing of a facility and write-downs for certain inventory, tooling and equipment (“Adjusted Historical Financial Information”)
Historical financial information for Techsonic Industries provided by the Company
Based on the forecasts obtained from the Company (the “Management Forecast”) and the fact that the Company’s historical GAAP EBIT has trailed budgeted EBIT by an average of 29% for the last three fiscal years, we have created an alternative scenario wherein the EBIT in the 2006 – 2008 period has been discounted by a factor of 15% (the “Alternative Forecast”)
The Management Forecast reflects a favorable adjustment to EBIT and EBITDA of $500,000 in fiscal 2004 related to adjustments for certain budgeted items identified by the Company related to (i) costs to respond to the bid by the Johnson Group and (ii) a one-time gain related to a legal settlement
The Management Forecast and Alternative Forecast reflect the acquisition of Techsonic Industries on a pro forma basis
3
Valuation Methodologies
Historical and Projected Financial Information DRAFT
GAAP Historical Financial Information and Management Forecast –JOUT Only
(in millions, except for per share amounts)
LTM(2) Projected Fiscal Years Ending September 30,
JOUT Only 4/2/04 2004 2005 2006 2007 2008
Net Sales $336.2 $341.6 $327.3 $337.3 $349.1 $361.3
Cost of Goods Sold 198.9 201.5 187.1 191.1 196.5 202.0
Gross Profit 137.3 140.1 140.2 146.2 152.7 159.4
Total Operating Expenses 122.0 122.1 121.8 123.5 127.8 132.3
EBIT 15.3 18.0 18.4 22.7 24.8 27.1
Interest Income (0.4)—-—
Interest Expense 4.9 5.0 4.1 3.6
Other (Income) Expense, net (0.2) (0.2)—-
EBT 11.0 13.2 14.3 19.1
Income Tax Expense 4.6 5.1 5.0 6.7
Net Income 6.4 8.1 9.4 12.4
EBIT 15.3 18.0 18.4 22.7 24.8 27.1
Depreciation and Amortization 8.1 7.6 7.6 7.6 7.6 7.6
EBITDA 23.4 25.6 26.0 30.3 32.4 34.7
Operating Statistics
Net Sales Growth 8.1% (4.2%) 3.1% 3.5% 3.5%
Gross Margin 40.8% 41.0% 42.8% 43.3% 43.7% 44.1%
Operating Expenses as % of Net Sales 36.3% 35.7% 37.2% 36.6% 36.6% 36.6%
EBITDA Margin 7.0% 7.5% 7.9% 9.0% 9.3% 9.6%
EBIT Margin 4.6% 5.3% 5.6% 6.7% 7.1% 7.5%
EBT Margin 3.3% 3.9% 4.4% 5.7%
Net Income Margin 1.9% 2.4% 2.9% 3.7%
(1) Historical fiscal years per JOUT public filings, pro forma for Techsonic acquisition.
(2) 2004-2006 forecasts per Company management. 2007 and 2008 forecasts per Company management guidance.
4
Valuation Methodologies
Historical and Projected Financial Information
DRAFT
GAAP Historical Financial Information and Management Forecast – Pro Forma For Techsonic Acquisition
(in millions, except for per share amounts)
LTM (1) Projected Fiscal Years Ending September 30, (2)
Pro Forma for Techsonic Acq. 3/31/04 2004 2005 2006 2007 2008
Net Sales $377.5 $383.6 $368.7 $382.6 $396.0 $409.9
Cost of Goods Sold 226.6 230.7 216.0 222.3 228.7 235.4
Gross Profit 150.9 153.0 152.7 160.3 167.2 174.5
Total Operating Expenses 132.4 132.6 131.4 133.9 138.6 143.4
EBIT 18.5 20.3 21.3 26.4 28.7 31.0
EBIT 18.5 20.3 21.3 26.4 28.7 31.0
Depreciation and Amortization 10.1 9.8 9.8 9.9 9.9 9.9
EBITDA 28.6 30.1 31.1 36.3 38.5 40.9
Operating Statistics
Net Sales Growth (3.9%) 3.8% 3.5% 3.5%
Gross Margin 40.0% 39.9% 41.4% 41.9% 42.2% 42.6%
Operating Expenses as % of Net Sales 35.1% 34.6% 35.6% 35.0% 35.0% 35.0%
EBITDA Margin 7.6% 7.9% 8.4% 9.5% 9.7% 10.0%
EBIT Margin 4.9% 5.3% 5.8% 6.9% 7.2% 7.6%
EBT Margin [Pending Additional Due Diligence]
Net Income Margin [Pending Additional Due Diligence]
(1) Historical fiscal years per JOUT public filings, pro forma for Techsonic acquisition.
(2) 2004-2006 forecasts per Company management. 2007 and 2008 forecasts per Company management guidance.
5
Valuation Methodologies
Historical and Projected Financial Information
DRAFT
Adjusted Historical Financial Information and Management Forecast –JOUT Only
(in millions, except for per share amounts)
LTM (2) Projected Fiscal Years Ending September 30, (3)
JOUT Only 4/2/04 2004 2005 2006 2007 2008
Net Sales $336.2 $341.6 $327.3 $337.3 $349.1 $361.3
Cost of Goods Sold 194.6 201.5 187.1 191.1 196.5 202.0
Gross Profit 141.6 140.1 140.2 146.2 152.7 159.4
Total Operating Expenses 119.5 122.1 121.8 123.5 127.8 132.3
EBIT 22.1 18.0 18.4 22.7 24.8 27.1
Interest Income (0.4)—-—
Interest Expense 4.9 5.0 4.1 3.6
Other (Income) Expense, net (0.2) (0.2)—-
EBT 17.8 13.2 14.3 19.1
Income Tax Expense 7.3 5.1 5.0 6.7
Net Income 10.4 8.1 9.4 12.4
EBIT 22.1 18.0 18.4 22.7 24.8 27.1
Depreciation and Amortization 8.1 7.6 7.6 7.6 7.6 7.6
EBITDA 30.2 25.6 26.0 30.3 32.4 34.7
Operating Statistics
Net Sales Growth 8.1% (4.2%) 3.1% 3.5% 3.5%
Gross Margin 42.1% 41.0% 42.8% 43.3% 43.7% 44.1%
Operating Expenses as % of Net Sales 35.5% 35.7% 37.2% 36.6% 36.6% 36.6%
EBITDA Margin 9.0% 7.5% 7.9% 9.0% 9.3% 9.6%
EBIT Margin 6.6% 5.3% 5.6% 6.7% 7.1% 7.5%
EBT Margin 5.3% 3.9% 4.4% 5.7%
Net Income Margin 3.1% 2.4% 2.9% 3.7%
(1) Historical information per JOUT public filings, pro forma for Techsonic acquisition. Cost of goods sold and total operating expenses for LTM period exclude certain charges highlighted in JOUT 10-K dated 10/3/03. All adjustments tax effected at 40%.
(2) 2004-2006 forecasts per Company management. 2007 and 2008 forecasts per Company management guidance.
6
Valuation Methodologies
Historical and Projected Financial Information
DRAFT
Adjusted Historical Financial Information and Management Forecast –Pro Forma for Techsonic Acquisition
(in millions, except for per share amounts)
LTM (1) Projected Fiscal Years Ending September 30, (2)
Pro Forma for Techsonic Acq. 3/31/04 2004 2005 2006 2007 2008
Net Sales $377.5 $383.6 $368.7 $382.6 $396.0 $409.9
Cost of Goods Sold 222.3 230.7 216.0 222.3 228.7 235.4
Gross Profit 155.2 153.0 152.7 160.3 167.2 174.5
Total Operating Expenses 129.9 132.6 131.4 133.9 138.6 143.4
EBIT 25.3 20.3 21.3 26.4 28.7 31.0
EBIT 25.3 20.3 21.3 26.4 28.7 31.0
Depreciation and Amortization 10.1 9.8 9.8 9.9 9.9 9.9
EBITDA 35.4 30.1 31.1 36.3 38.5 40.9
Operating Statistics
Net Sales Growth (3.9%) 3.8% 3.5% 3.5%
Gross Margin 41.1% 39.9% 41.4% 41.9% 42.2% 42.6%
Operating Expenses as % of Net Sales 34.4% 34.6% 35.6% 35.0% 35.0% 35.0%
EBITDA Margin 9.4% 7.9% 8.4% 9.5% 9.7% 10.0%
EBIT Margin 6.7% 5.3% 5.8% 6.9% 7.2% 7.6%
EBT Margin [Pending Additional Due Diligence]
Net Income Margin [Pending Additional Due Diligence]
(1) Historical information per JOUT public filings, pro forma for Techsonic acquisition. Cost of goods sold and total operating expenses for LTM period exclude certain charges highlighted in JOUT 10-K dated 10/3/03. All adjustments tax effected at 40%.
(2) 2004-2006 forecasts per Company management. 2007 and 2008 forecasts per Company management guidance.
7
Valuation Methodologies
Projected Financial Information
DRAFT
(in millions, except for per share amounts)
A comparison of the Management Forecast and Alternative Forecast follows – JOUT only:
Projected Fiscal Years Ended September 30,
2004 2005 2006 2007 2008
Net Sales $341.6 $327.3 $337.3 $349.1 $361.3
EBITDA
Management Forecast $25.6 $26.0 $30.3 $32.4 $34.7
Alternative Forecast 25.6 26.0 26.9 28.7 30.6
EBIT
Management Forecast $18.0 $18.4 $22.7 $24.8 $27.1
Alternative Forecast 18.0 18.4 19.3 21.1 23.0
EBITDA Margin
Management Forecast 7.5% 7.9% 9.0% 9.3% 9.6%
Alternative Forecast 7.5% 7.9% 8.0% 8.2% 8.5%
EBIT Margin
Management Forecast 5.3% 5.6% 6.7% 7.1% 7.5%
Alternative Forecast 5.3% 5.6% 5.7% 6.0% 6.4%
8
Valuation Methodologies
Projected Financial Information
DRAFT
(in millions, except for per share amounts)
A comparison of the Management Forecast and Alternative Forecast follows – pro forma for Techsonic acquisition:
Projected Fiscal Years Ended September 30,
2004 2005 2006 2007 2008
Net Sales $383.6 $368.7 $382.6 $396.0 $409.9
EBITDA
Management Forecast $30.1 $31.1 $36.3 $38.5 $40.9
Alternative Forecast 30.1 31.1 32.3 34.2 36.3
EBIT
Management Forecast $20.3 $21.3 $26.4 $28.7 $31.0
Alternative Forecast 20.3 21.3 22.4 24.4 26.4
EBITDA Margin
Management Forecast 7.9% 8.4% 9.5% 9.7% 10.0%
Alternative Forecast 7.9% 8.4% 8.4% 8.6% 8.8%
EBIT Margin
Management Forecast 5.3% 5.8% 6.9% 7.2% 7.6%
Alternative Forecast 5.3% 5.8% 5.9% 6.2% 6.4%
9
DRAFT
Comparable Public Companies Analysis
Comparable Public Companies Analysis
Preliminary Valuation Multiples
DRAFT
GAAP Historical Financial Information and Management Forecast
(in millions, except for per share amounts)
Implied JOUT Multiples at the Following Per Share Price
Relevant Public Company Multiples
Metric (1) JOUT Results $16.00 $17.00 $18.00 $19.00 $20.00 $21.00 Min Mean Median Max
JOUT Only:
LTM EBITDA $23.4 7.4x 7.8x 8.2x 8.6x 9.0x 9.4x 7.3x 9.3x 8.7x 11.8x
CY 2004E EBITDA 25.6 6.8x 7.1x 7.5x 7.9x 8.2x 8.6x 7.0x 7.8x 8.1x 9.0x
LTM EBIT 15.3 11.3x 11.9x 12.5x 13.1x 13.7x 14.3x 9.4x 15.8x 14.6x 29.5x
CY 2004E EBIT 18.1 9.6x 10.1x 10.6x 11.1x 11.6x 12.2x 8.1x 10.1x 9.5x 12.1x
LTM Net Income [ ] #### #### #### #### #### #### 14.8x 19.7x 18.9x 27.1x
CY 2004E Net Income [ ] #### #### #### #### #### #### 11.5x 14.6x 15.0x 17.6x
Pro Forma for Techsonic Acq.:
LTM EBITDA $28.6 7.1x 7.4x 7.7x 8.0x 8.4x 8.7x 7.3x 9.3x 8.7x 11.8x
CY 2004E EBITDA 30.8 6.6x 6.9x 7.2x 7.5x 7.8x 8.1x 7.0x 7.8x 8.1x 9.0x
LTM EBIT 18.5 10.9x 11.4x 11.9x 12.4x 12.9x 13.4x 9.4x 15.8x 14.6x 29.5x
CY 2004E EBIT 20.8 9.8x 10.2x 10.6x 11.1x 11.5x 12.0x 8.1x 10.1x 9.5x 12.1x
LTM Net Income [ ] #### #### #### #### #### #### 14.8x 19.7x 18.9x 27.1x
CY 2004E Net Income [ ] #### #### #### #### #### #### 11.5x 14.6x 15.0x 17.6x
(1) LTM ended 4/2/04.
10
Comparable Public Companies Analysis
Preliminary Valuation Multiples
DRAFT
Adjusted Historical Financial Information and Management Forecast
(in millions, except for per share amounts)
Implied JOUT Multiples at the Following Per Share Price
Relevant Public Company Multiples
Metric (1) JOUT Results $16.00 $17.00 $18.00 $19.00 $20.00 $21.00 Min Mean Median Max
JOUT Only:
LTM EBITDA $30.2 5.8x 6.1x 6.4x 6.7x 7.0x 7.3x 7.3x 9.3x 8.7x 11.8x
CY 2004E EBITDA 25.6 6.8x 7.1x 7.5x 7.9x 8.2x 8.6x 7.0x 7.8x 8.1x 9.0x
LTM EBIT 22.1 7.9x 8.3x 8.7x 9.1x 9.5x 9.9x 9.4x 15.8x 14.6x 29.5x
CY 2004E EBIT 18.1 9.6x 10.1x 10.6x 11.1x 11.6x 12.2x 8.1x 10.1x 9.5x 12.1x
LTM Net Income [ ] #### #### #### #### #### #### 14.8x 19.7x 18.9x 27.1x
CY 2004E Net Income [ ] #### #### #### #### #### #### 11.5x 14.6x 15.0x 17.6x
Pro Forma for Techsonic Acq.:
LTM EBITDA $35.4 5.7x 6.0x 6.2x 6.5x 6.8x 7.0x 7.3x 9.3x 8.7x 11.8x
CY 2004E EBITDA 30.8 6.6x 6.9x 7.2x 7.5x 7.8x 8.1x 7.0x 7.8x 8.1x 9.0x
LTM EBIT 25.3 8.0x 8.4x 8.7x 9.1x 9.5x 9.8x 9.4x 15.8x 14.6x 29.5x
CY 2004E EBIT 20.8 9.8x 10.2x 10.6x 11.1x 11.5x 12.0x 8.1x 10.1x 9.5x 12.1x
LTM Net Income [ ] #### #### #### #### #### #### 14.8x 19.7x 18.9x 27.1x
CY 2004E Net Income [ ] #### #### #### #### #### #### 11.5x 14.6x 15.0x 17.6x
(1) LTM ended 4/2/04. Financials adjusted for strategic charges and certain charges highlighted in JOUT public filings. Tax effected at 40%.
11
DRAFT
Comparable M&A Transactions Analysis
Comparable M&A Transactions Analysis
Preliminary Valuation Multiples
DRAFT
GAAP Historical Financial Information and Management Forecast
(in millions, except for per share amounts)
Implied JOUT Multiples at the Following Per Share Price Relevant Merger & Acquisition Multiples JOUT Results Metric (1) $16.00 $17.00 $18.00 $19.00 $20.00 $21.00 Min Mean Median Max
JOUT Only:
LTM EBITDA $23.4 7.4x 7.8x 8.2x 8.6x 9.0x 9.4x 5.3x 8.9x 8.3x 12.7x
LTM EBIT 15.3 11.3x 11.9x 12.5x 13.1x 13.7x 14.3x 6.6x 10.7x 9.7x 15.6x
Pro Forma for Techsonic Acq.:
LTM EBITDA $28.6 7.1x 7.4x 7.7x 8.0x 8.4x 8.7x 5.3x 8.9x 8.3x 12.7x
LTM EBIT 18.5 10.9x 11.4x 11.9x 12.4x 12.9x 13.4x 6.6x 10.7x 9.7x 15.6x
(1) LTM ended 4/2/04.
12
Comparable M&A Transactions Analysis
Preliminary Valuation Multiples
DRAFT
Adjusted Historical Financial Information and Management Forecast
(in millions, except for per share amounts)
Implied JOUT Multiples at the Following Per Share Price Relevant Merger & Acquisition Multiples JOUT Results Metric (1) $16.00 $17.00 $18.00 $19.00 $20.00 $21.00 Min Mean Median Max
JOUT Only:
LTM EBITDA $30.2 5.8x 6.1x 6.4x 6.7x 7.0x 7.3x 5.3x 8.9x 8.3x 12.7x
LTM EBIT 22.1 7.9x 8.3x 8.7x 9.1x 9.5x 9.9x 6.6x 10.7x 9.7x 15.6x
Pro Forma for Techsonic Acq.:
LTM EBITDA $35.4 5.7x 6.0x 6.2x 6.5x 6.8x 7.0x 5.3x 8.9x 8.3x 12.7x
LTM EBIT 25.3 8.0x 8.4x 8.7x 9.1x 9.5x 9.8x 6.6x 10.7x 9.7x 15.6x
(1) LTM ended 4/2/04. Financials adjusted for strategic charges and certain charges highlighted in JOUT public filings. Tax effected at 40%.
13
DRAFT
M&A Premiums Paid Analysis
M&A Premiums Paid Analysis
Premiums Paid Summary
DRAFT
All completed transactions since January 1, 2001
ALL TRANSACTIONS COMPLETED SINCE JANUARY 1, 2001
JOUT Price Premium at Premiums Paid Data Percentile
$16.00 $17.00 $18.00 $19.00 $20.00 $21.00 25th 50th 75th
All Completed Transactions (Total 590)
One Day Before Announcement $16.95 -5.6% 0.3% 6.2% 12.1% 18.0% 23.9% 7.1% 26.3% 50.0%
One Week Before Announcement 16.85 -5.0% 0.9% 6.8% 12.8% 18.7% 24.6% 10.5% 30.8% 56.3%
One Month Before Announcement 15.97 0.2% 6.4% 12.7% 19.0% 25.2% 31.5% 12.5% 34.8% 67.8%
Source: Commscan M&A Desk as of March 17, 2004.
Note: Premiums analysis includes all completed or M&A activity (but excludes transactions including Closed-End Funds, REITs and ADRs) for which premiums are reported.
14
M&A Premiums Paid Analysis
Premiums Paid Summary
DRAFT
All completed transactions since January 1, 2001 between between $100 million and $500 million in equity value
SUBSET: TRANSACTION VALUE BETWEEN $100 and $500 MILLION
JOUT Price Premium at Premiums Paid Data Percentile
$16.00 $17.00 $18.00 $19.00 $20.00 $21.00 25th 50th 75th
All Completed Transactions (Total 213)
One Day Before Announcement $16.95 -5.6% 0.3% 6.2% 12.1% 18.0% 23.9% 6.2% 26.8% 50.9%
One Week Before Announcement 16.85 -5.0% 0.9% 6.8% 12.8% 18.7% 24.6% 12.3% 31.7% 56.0%
One Month Before Announcement 15.97 0.2% 6.4% 12.7% 19.0% 25.2% 31.5% 10.9% 35.7% 66.7%
Source: Commscan M&A Desk as of March 17, 2004.
Note: Premiums analysis includes all completed or M&A activity (but excludes transactions including Closed-End Funds, REITs and ADRs) for which premiums are reported.
15
M&A Premiums Paid Analysis
Premiums Paid Summary
DRAFT
All completed transactions since January 1, 2001 in which a control shareholder acquired the remaining interest in a target
SUBSET: REMAINING INTEREST ACQUIRED by a CONTROL SHAREHOLDER
JOUT Price Premium at Premiums Paid Data Percentile
$16.00 $17.00 $18.00 $19.00 $20.00 $21.00 25th 50th 75th
All Completed Transactions (Total 31)
One Day Before Announcement $16.95 - -5.6% 0.3% 6.2% 12.1% 18.0% 23.9% 10.2% 21.8% 38.7%
One Week Before Announcement 16.85 -5.0% 0.9% 6.8% 12.8% 18.7% 24.6% 11.0% 24.0% 38.7%
One Month Before Announcement 15.97 0.2% 6.4% 12.7% 19.0% 25.2% 31.5% 7.0% 19.5% 47.3%
Source: Commscan M&A Desk as of March 17, 2004.
Note: Premiums analysis includes all completed or M&A activity (but excludes transactions including Closed-End Funds, REITs and ADRs) for which premiums are reported.
16
M&A Premiums Paid Analysis
Premiums Paid Summary DRAFT
All completed transactions since January 1, 2001 which were “going private” transactions
ALL GOING PRIVATE TRANSACTIONS COMPLETED SINCE JANUARY 1, 2001
JOUT Price Premium at Premiums Paid Data Percentile
$16.00 $17.00 $18.00 $19.00 $20.00 $21.00 25th 50th 75th
All Completed Transactions—Initial Premium to Announcement (Total 43)
One Day Before Announcement $16.95 -5.6% 0.3% 6.2% 12.1% 18.0% 23.9% 14.5% 32.3% 45.9%
One Week Before Announcement 16.85 -5.0% 0.9% 6.8% 12.8% 18.7% 24.6% 16.4% 34.6% 51.2%
One Month Before Announcement 15.97 0.2% 6.4% 12.7% 19.0% 25.2% 31.5% 19.6% 40.0% 61.7%
All Completed Transactions—Final Premium to Announcement (Total 43)
One Day Before Announcement $16.95 -5.6% 0.3% 6.2% 12.1% 18.0% 23.9% 22.9% 33.9% 55.9%
One Week Before Announcement 16.85 -5.0% 0.9% 6.8% 12.8% 18.7% 24.6% 19.4% 36.9% 64.6%
One Month Before Announcement 15.97 0.2% 6.4% 12.7% 19.0% 25.2% 31.5% 28.0% 43.6% 65.3%
Source: Commscan M&A Desk as of March 17, 2004.
Note: Premiums analysis includes all completed or M&A activity (but excludes transactions including Closed-End Funds, REITs and ADRs) for which premiums are reported.
17
DRAFT
Discounted Cash Flow Analysis
Discounted Cash Flow Analysis
Discounted Cash Flow Analysis
DRAFT
Management Forecast
(in millions, except for per share amounts)
Present Value of Per Share Equity Value
Discount Rate Terminal EBITDA Multiple
6.0x 6.5x 7.0x 7.5x 8.0x 8.5x 9.0x
JOUT Only:
11.0% $15.37 $16.57 $17.78 $18.99 $20.19 $21.40 $22.61
11.5% 15.02 16.20 17.39 18.57 19.75 20.94 22.12
12.0% 14.69 15.85 17.00 18.16 19.32 20.48 21.64
12.5% 14.36 15.49 16.63 17.77 18.90 20.04 21.18
13.0% 14.04 15.15 16.27 17.38 18.49 19.61 20.72
Present Value of Per Share Equity Value
Discount Rate Terminal EBITDA Multiple
6.0x 6.5x 7.0x 7.5x 8.0x 8.5x 9.0x
Pro Forma For Techsonic:
11.0% $15.72 $17.14 $18.57 $19.99 $21.42 $22.84 $24.27
11.5% 15.31 16.71 18.10 19.50 20.90 22.29 23.69
12.0% 14.91 16.28 17.65 19.02 20.39 21.76 23.13
12.5% 14.53 15.87 17.21 18.55 19.89 21.23 22.58
13.0% 14.15 15.46 16.78 18.09 19.41 20.72 22.04
18
Discounted Cash Flow Analysis
Discounted Cash Flow Analysis
DRAFT
Alternative Forecast
(in millions, except for per share amounts)
Present Value of Per Share Equity Value
Discount Rate Terminal EBITDA Multiple
6.0x 6.5x 7.0x 7.5x 8.0x 8.5x 9.0x
JOUT Only:
11.0% $13.15 $14.22 $15.28 $16.35 $17.41 $18.48 $19.54
11.5% 12.85 13.89 14.94 15.98 17.02 18.07 19.11
12.0% 12.55 13.58 14.60 15.62 16.65 17.67 18.69
12.5% 12.27 13.27 14.27 15.28 16.28 17.28 18.28
13.0% 11.99 12.97 13.95 14.93 15.92 16.90 17.88
Present Value of Per Share Equity Value
Discount Rate Terminal EBITDA Multiple
6.0x 6.5x 7.0x 7.5x 8.0x 8.5x 9.0x
Pro Forma For Techsonic:
11.0% $13.17 $14.44 $15.70 $16.96 $18.22 $19.49 $20.75
11.5% 12.81 14.05 15.29 16.53 17.77 19.00 20.24
12.0% 12.47 13.68 14.89 16.10 17.32 18.53 19.74
12.5% 12.12 13.31 14.50 15.69 16.88 18.07 19.26
13.0% 11.79 12.96 14.12 15.29 16.45 17.62 18.78
19
DRAFT
Leveraged Buyout Analysis
Leveraged Buyout Analysis
Leveraged Buyout Analysis – Forthcoming
DRAFT
Management Forecast
(in millions, except for per share amounts)
JOUT Only:
Pro Forma For Techsonic:
20
Leveraged Buyout Analysis
Leveraged Buyout Analysis—Forthcoming
DRAFT
Alternative Forecast
(in millions, except for per share amounts)
JOUT Only:
Pro Forma For Techsonic:
21
CONFIDENTIAL DRAFT
Special Committee Discussion Materials
September 30, 2004
Important Information DRAFT
Confidential Material Presented to the Special Committee of the Board of Directors of Johnson Outdoors, Inc.
The following pages contain material that was provided to the Special Committee of the Board of Directors (the “Special Committee”) of Johnson Outdoors Inc. (the “Company”) and is for discussion purposes only. The accompanying material was compiled or prepared on a confidential basis for use by the Special Committee and not with a view toward public disclosure. This material is preliminary in nature and contains assumptions and methodologies which may be subject to change.
Table of Contents DRAFT
I. Executive Summary
II. Valuation Discussion Materials
A. Comparable Public Companies Analysis
B. Comparable M&A Transactions Analysis
C. M&A Premiums Paid Analysis
D. Discounted Cash Flow Analysis
E. Leveraged Buyout Analysis
Appendix
A. Valuation Matrix
B. Comparable Public Companies Model
DRAFT
Executive Summary
Executive Summary
Implied Transaction Multiples DRAFT
(in millions, except for per share amounts)
Transaction Value
Proposed Purchase Price Per Share $20.10
Basic Shares Outstanding (1) 8.804
CSEs (2) 0.276
Fully Diluted Shares Outstanding 9.080
Equity Value $182.5
Plus: Debt (3) 67.0
Less: Cash (Reflects Adjustment for Working Capital) (3) 51.0
Enterprise Value $198.5
JOUT Financial Information (4), (5) Enterprise Value Multiples
EBITDA
LTM (8/31/04) $26.4 7.5x
FY 2004E 27.5 7.2x
CY 2004E 28.1 7.1x
Pro Forma LTM (8/31/04) 28.6 6.9x
Pro Forma FY 2004E 30.1 6.6x
Pro Forma CY 2004E 30.8 6.5x
EBIT
LTM (8/31/04) 17.7 11.2x
FY 2004E 18.9 10.5x
CY 2004E 19.0 10.4x
Pro Forma LTM (8/31/04) 18.7 10.6x
Pro Forma FY 2004E 20.6 9.6x
Pro Forma CY 2004E 21.0 9.5x
Net Income Equity Value Multiples
LTM (8/31/04) $7.4 24.6x
FY 2004E 8.6 21.2x
CY 2004E 9.0 20.2x
Pro Forma LTM (8/31/04) 7.9 23.1x
Pro Forma FY 2004E 9.5 19.1x
Pro Forma CY 2004E 10.2 17.8x
(1) Based on 7.582 million shares of Class A and 1.222 million shares of Class B common stock (per 7/2/04 10-Q).
(2) Option information provided by Company and as of 9/15/04; calculation uses the treasury stock method.
(3) As of 8/31/04, provided by the Company. Reflects $16.2 million working capital adjustment.
(4) LTM ended 8/31/04. Fiscal year ending September 30, 2004. YTD financials provided by the Company.
(5) FY 2004E excludes one-time legal settlement recovery ($2.0 million) and estimated expenses related to the current proposed buyout situation ($2.5 million). Pro forma FY 2004E assumes full year impact of Techsonic Industries acquisition.
1
Executive Summary
Working Capital Adjustment DRAFT
(in millions, except for per share amounts)
Reviewed quarterly working capital requirements for JOUT and for the comparable public companies for the three years ended December 31, 2003 For purposes of this analysis, working capital is defined as accounts receivable plus inventory less accounts payable Adjusted JOUT 2003 working capital to account for the acquisition of Techsonic Industries, Inc. and related working capital requirements Compared to the comparable public companies as a whole, JOUT exhibits higher peak-to-trough working capital requirements Downward adjustment to cash on hand at August 31, 2004 to reflect the amount by which JOUT’s peak-to-trough working capital requirements exceed that of the comparable public company group Adjustment based on the product of (i) JOUT median (45.8%) less median of comparable public company group (31.4%) equals 14.4% and (ii) average JOUT calendar 2003 working capital of $112.5 million.
Adjustment totals $16.2 million.
Calendar Year Three-Year Average
2001 2002 2003
Comp. Public Co. Group
High 71.4% 68.7% 77.1% 72.4%
Mean 30.0% 41.6% 39.4% 37.0%
Median 19.1% 45.7% 33.0% 31.4%
Low 8.0% 13.9% 20.6% 18.3%
JOUT 42.4% 58.2% 36.9% 45.8%
JOUT Less Median 23.3% 12.5% 3.9% 14.4%
2
DRAFT
Valuation Discussion Materials
Valuation Discussion Materials
Valuation Methodologies DRAFT
William Blair performed several analyses each of which is preliminary in nature and contains assumptions and methodologies which may be subject to change
Comparable Public Companies Analysis
Trading multiple analysis based on companies that William Blair considered similar to the Company based on the selected companies’ operations
M&A Transactions Analysis
Transaction multiple analysis based on transactions that William Blair considered similar to the proposed acquisition based on the target operations
Merger Premiums Analysis
Analyzed the merger premiums of domestic public transactions announced since January 1, 2001
Discounted Cash Flow Analysis
Utilized the Company’s fiscal 2005 – 2009 projections to derive free cash flows for the Company and discounted those cash flows, along with a terminal value based on a multiple of 6.0x – 9.0x EBITDA, back to September 30, 2004
Leveraged Buyout Analysis
Utilized the Company’s 2005 – 2009 forecasts to analyze the values that a typical LBO could be completed under established return parameters using five year exit multiples of 6.0x – 9.0x EBITDA
3
Valuation Discussion Materials
Financial Information Used in Preliminary Valuation DRAFT
The preliminary valuation is based on the following historical financial information:
EBIT and EBITDA as reported in the Company’s public filings (“Reported”)
EBIT and EBITDA as reported in the Company’s public filings adjusted for the acquisition of Techsonic Industries, Inc. (which closed May 5, 2004) assuming such acquisition had closed on October 1, 2003 (“Pro Forma”)
Based on the forecasts obtained from the Company (“Management Forecast”) and the fact that the Company’s historical GAAP EBIT has trailed budgeted EBIT by an average of 20% for the last four fiscal years (i.e, 2001 – 2004), the EBIT in the 2006 – 2009 period has been discounted by a factor of 15% reflecting an alternative scenario (“Alternative Forecast”)
The Management Forecast reflects an favorable adjustment to EBIT and EBITDA of $500,000 in fiscal 2004 related to adjustments for certain budgeted items identified by the Company related to (i) budgeted costs to respond to the bid by the Johnson Group ($2.5 million) offset by (ii) a onetime gain related to a legal settlement ($2.0 million)
4
Valuation Discussion Materials
Historical and Projected Financial Information DRAFT
Reported Historical Financial Information and Management Forecast
(in millions, except for per share amounts)
Historical Fiscal Years Ended September 30, (1) LTM (2) Projected Fiscal Years Ending September 30, (3)
1999 2000 2001 2002 2003 8/31/04 2004 2005 2006 2007 2008 2009
Net Sales $310.2 $354.9 $345.6 $342.5 $315.9 $352.0 $352.6 $365.2 $391.5 $405.6 $420.2 $435.3
Cost of Goods Sold 184.4 212.1 206.9 201.5 187.9 208.7 206.6 207.3 224.1 230.6 237.2 244.0
Gross Profit 125.8 142.8 138.8 141.1 128.0 143.3 146.0 157.9 167.4 175.0 183.0 191.3
Total Operating Expenses 106.3 118.1 123.1 121.3 116.4 125.6 127.1 138.8 140.9 146.0 151.2 156.7
EBIT 19.5 24.7 15.7 19.8 11.6 17.7 18.9 19.1 26.5 29.1 31.8 34.6
Interest Income (0.8) (0.5) (0.4)
Interest Expense 5.2 5.0 5.0
Other (Income) Expense, net (2.5) 0.6 0.1
EBT 9.7 12.6 14.2
Income Tax Expense 4.3 5.2 5.6
Net Income 5.4 7.4 8.6
EBIT 19.5 24.7 15.7 19.8 11.6 17.7 18.9 19.1 26.5 29.1 31.8 34.6
Depreciation and Amortization 12.6 12.5 13.5 9.1 8.2 8.7 8.6 9.9 9.9 9.9 9.9 9.9
EBITDA 32.1 37.2 29.2 28.8 19.8 26.4 27.5 29.0 36.4 39.0 41.7 44.5
Operating Statistics
Net Sales Growth 14.4% (2.6%) (0.9%) (7.8%) 11.6% 3.6% 7.2% 3.6% 3.6% 3.6%
Gross Margin 40.5% 40.2% 40.2% 41.2% 40.5% 40.7% 41.4% 43.2% 42.8% 43.2% 43.6% 43.9%
Operating Expenses as % of Net Sales 34.3% 33.3% 35.6% 35.4% 36.8% 35.7% 36.0% 38.0% 36.0% 36.0% 36.0% 36.0%
EBITDA Margin 10.4% 10.5% 8.5% 8.4% 6.3% 7.5% 7.8% 7.9% 9.3% 9.6% 9.9% 10.2%
EBIT Margin 6.3% 7.0% 4.5% 5.8% 3.7% 5.0% 5.4% 5.2% 6.8% 7.2% 7.6% 8.0%
EBT Margin 3.1% 3.6% 4.0%
Net Income Margin 1.7% 2.1% 2.4%
(1) Historical fiscal years per JOUT 10-Ks dated 10/3/03 and 9/28/01. (2) LTM financials provided by Company.
(3) 2004-2006 forecasts per Company management. 2007 through 2009 forecasts per Company management guidance.
5
Valuation Discussion Materials
Projected Financial Information DRAFT
(in millions, except for per share amounts)
A comparison of the Management Forecast and Alternative Forecast follows:
Projected Fiscal Years Ended September 30, 2005 2006 2007 2008 2009
Net Sales $ 365.2 $ 391.5 $ 405.6 $ 420.2 $ 435.3
EBITDA
Management Forecast $ 29.0 $ 36.4 $ 39.0 $ 41.7 $ 44.5 Alternative Forecast 29.0 32.4 34.6 36.9 39.3
EBIT
Management Forecast $ 19.1 $ 26.5 $ 29.1 $ 31.8 $ 34.6 Alternative Forecast 19.1 22.5 24.7 27.0 29.4
EBITDA Margin
Management Forecast 7.9% 9.3% 9.6% 9.9% 10.2% Alternative Forecast 7.9% 8.3% 8.5% 8.8% 9.0%
EBIT Margin
Management Forecast 5.2% 6.8% 7.2% 7.6% 8.0% Alternative Forecast 5.2% 5.8% 6.1% 6.4% 6.8%
6
DRAFT
Comparable Public Companies Analysis
Comparable Public Companies Analysis
Comparable Companies Analysis DRAFT
William Blair reviewed the following publicly traded manufacturers of sports and recreational products deemed to be similar to the Company
The comparable companies analysis is preliminary in nature and contains assumptions and methodologies which may be subject to change
($in millions)
Stock Price 9/29/2004 Market Value Enterprise Value
Amer Group $47.16 $1,122.64 $1,274.75
Brunswick Corp 45.19 4,319.21 4,620.91
Callaway Golf Co. 10.61 798.07 782.42
Columbia Sportswear Co. 54.61 2,214.29 1,950.02
Head N V 2.80 104.72 252.09
K2 Inc. 14.15 660.12 842.72
Lowrance Electronics Inc. 24.56 120.61 127.12
Johnson Outdoors 19.28 169.75 196.56
Note: Market Value and Enterprise Value based off of basic shares outstanding.
7
Comparable Public Companies Analysis
Indexed Stock Price Performance DRAFT
Last Twelve Months
160 150 140 130 120 110 100 90 80
Sep-03
Oct-03
Nov-03
Dec-03
Jan-04
Feb-04
Mar-04
Apr-04
May-04
Jun-04
Jul-04
Aug-04
Sep-04
Feb. 19, 2004: +30.6%
48.5% 29.7% 15.9% 3.8%
Peer Group (+29.7%) Russell 2000 (15.9%) NASDAQ (+3.8%) JOUT (+48.5%)
Note: As of September 29, 2004.
Peer Group: Amer Group, Brunswick Corp., Callaway Golf, Columbia Sportswear, Head N V, K2 Inc., and Lowrance Electronics Inc
8
Comparable Public Companies Analysis
Preliminary Valuation Multiples DRAFT
(in millions, except for per share amounts)
Implied JOUT Multiples at the Following Per Share Price Relevant Public Company Multiples
Metric (1) JOUT Results $16.00 $17.00 $18.00 $19.00 $20.00 $21.00 Min Mean Median Max
As Reported
LTM EBITDA $26.4 6.1x 6.4x 6.8x 7.1x 7.5x 7.8x 7.2x 9.0x 8.9x 13.0x
CY 2004E EBITDA 28.1 5.7x 6.0x 6.4x 6.7x 7.0x 7.4x 7.2x 8.2x 8.4x 9.0x
LTM EBIT 17.7 9.1x 9.6x 10.1x 10.6x 11.2x 11.7x 9.5x 14.4x 13.0x 23.8x
CY 2004E EBIT 19.0 8.5x 8.9x 9.4x 9.9x 10.4x 10.9x 8.5x 11.9x 10.6x 19.8x
LTM Net Income 7.4 19.5x 20.7x 22.0x 23.2x 24.5x 25.7x 13.7x 21.8x 18.8x 34.5x
CY 2004E Net Income 9.0 16.0x 17.0x 18.1x 19.1x 20.1x 21.2x 11.8x 20.4x 16.6x 40.9x
Pro Forma for Techsonic Acq.:
LTM EBITDA $28.6 5.6x 5.9x 6.3x 6.6x 6.9x 7.2x 7.2x 9.0x 8.9x 13.0x
CY 2004E EBITDA 30.8 5.2x 5.5x 5.8x 6.1x 6.4x 6.7x 7.2x 8.2x 8.4x 9.0x
LTM EBIT 18.7 8.6x 9.1x 9.6x 10.1x 10.6x 11.1x 9.5x 14.4x 13.0x 23.8x
CY 2004E EBIT 21.0 7.6x 8.1x 8.5x 9.0x 9.4x 9.9x 8.5x 11.9x 10.6x 19.8x
LTM Net Income 7.9 18.3x 19.5x 20.7x 21.8x 23.0x 24.2x 13.7x 21.8x 18.8x 34.5x
CY 2004E Net Income 10.2 14.1x 15.0x 15.9x 16.9x 17.8x 18.7x 11.8x 20.4x 16.6x 40.9x
(1) LTM ended 8/31/04.
9
DRAFT
Comparable M&A Transactions Analysis
Preliminary List of Selected Transactions DRAFT
William Blair reviewed publicly available transactions for the past three years to identify those transactions that involved the acquisition of companies similar to the Company
The comparable M&A transactions analysis is preliminary in nature and contains assumptions and methodologies which may be subject to change
($in millions)
Transaction Value to
LTM
Date Announced Date Effective Target Acquiror Total Enterprise Value ($MM) Equity Value ($MM) Sales EBITDA EBIT Form of Consideration
08/27/03 12/18/03 Bombardier Recreational Products Bain Capital $853.3 $874.3 0.51x 8.0x 12.6x Cash
11/06/03 12/02/03 CamelBak Products Bear Stearns Merchant Banking $210.0 NA NA 7.0x NA Cash
12/16/02 03/26/03 Rawlings Sporting Goods K2 Inc. $112.5 $73.1 0.66x 11.8x 14.6x Stock
02/12/03 02/12/03 Remington Arms Bruckmann, Rosser, Sherrill $314.1 NA 0.78x 5.3x 6.6x Cash
06/17/02 09/19/02 Gen-X Sports Huffy Corporation $104.9 $54.4 0.77x 12.7x 15.6x Cash and Stock
08/28/02 09/09/02 Jack Wolfskin Bain Capital $59.3 NA 1.06x 8.5x 9.0x Cash
06/18/01 07/27/01 Koninklijke Gazelle Gazelle Holding $122.0 $112.0 0.95x NA 6.7x Cash
04/30/01 06/25/01 Riddell Sports Lincolnshire Management $67.3 NA 0.75x NA 9.7x Cash
Mean 0.78x 8.9x 10.7x
Median 0.77x 8.3x 9.7x
Maximum 1.06x 12.7x 15.6x
Minimum 0.51x 5.3x 6.6x
10
Comparable M&A Transactions Analysis
Preliminary Valuation Multiples DRAFT
(in millions, except for per share amounts)
Implied JOUT Multiples at the Following Per Share Price Relevant Merger & Acquisition Multiples
Metric (1) JOUT Results $16.00 $17.00 $18.00 $19.00 $20.00 $21.00
Min Mean Median Max
As Reported
LTM EBITDA $26.4 6.1x 6.4x 6.8x 7.1x 7.5x 7.8x 5.3x 8.9x 8.3x 12.7x
LTM EBIT 17.7 9.1x 9.6x 10.1x 10.6x 11.2x 11.7x 6.6x 10.7x 9.7x 15.6x
Pro Forma for Techsonic Acq.:
LTM EBITDA $28.6 5.6x 5.9x 6.3x 6.6x 6.9x 7.2x 5.3x 8.9x 8.3x 12.7x
LTM EBIT 18.7 8.6x 9.1x 9.6x 10.1x 10.6x 11.1x 6.6x 10.7x 9.7x 15.6x
(1) LTM ended 2/29/04. Financials adjusted for strategic charges and certain charges highlighted in JOUT 10-Ks. Tax effected at 40%.
11
DRAFT
M&A Premiums Paid Analysis
M&a Premiums Paid Analysis
Methodology and Assumptions DRAFT
William Blair analyzed 1,200 domestic public transactions that were announced since January 1, 2001 (through September 26, 2004): All completed transactions (1,200 transactions) All completed transactions between between $100 million and $500 million in transaction value (321 transactions) All completed transactions in which the remaining interest was acquired by a control shareholder (179 transactions) All completed transactions which were “going private” transactions (323 transactions)
William Blair compared the price of each transaction to the closing price of the target stock (i) one day, one week, one month, two months and three months prior to the announcement of the transaction and (ii) to the 52-week average, 52-week high and 52-week low of the target stock prior to the announcement of the transaction
The M&A premiums analysis is preliminary in nature and contains assumptions and methodologies which may be subject to change
12
M&a Premiums Paid Analysis
Premiums Paid Summary DRAFT
All completed transactions since January 1, 2001
ALL TRANSACTIONS COMPLETED SINCE JANUARY 1, 2001
Premium at Premiums Paid Data Percentile
JOUT Price $16.00 $17.00 $18.00 $19.00 $20.00 $21.00 25th 50th 75th
All Completed Transactions (Total 1200)
One Day Before Announcement $16.95 -5.6% 0.3% 6.2% 12.1% 18.0% 23.9% 7.2% 27.3% 54.0%
One Week Before Announcement 16.85 -5.0% 0.9% 6.8% 12.8% 18.7% 24.6% 9.9% 31.7% 60.5%
One Month Before Announcement 15.97 0.2% 6.4% 12.7% 19.0% 25.2% 31.5% 11.2% 34.7% 68.4%
Two Months Before Announcement 13.84 15.6% 22.8% 30.1% 37.3% 44.5% 51.7% 9.8% 38.3% 81.2%
Three Months Before Announcement 14.41 11.0% 18.0% 24.9% 31.9% 38.8% 45.7% 8.2% 39.7% 81.4%
52 Week Avg. Before Announcement 13.84 15.6% 22.8% 30.1% 37.3% 44.5% 51.7% -3.3% 34.1% 68.9%
52 Week High Before Announcement 17.10 -6.4% -0.6% 5.3% 11.1% 17.0% 22.8% -47.5% -7.6% 4.9%
52 Week Low Before Announcement 8.40 90.5% 102.4% 114.3% 126.2% 138.1% 150.0% 66.7% 120.0% 217.3%
Source: Commscan M&A Desk as of September 26, 2004.
Note: Premiums analysis includes all completed or M&A activity (but excludes transactions including Closed-End Funds, REITs and ADRs) for which premiums are reported.
13
M&a Premiums Paid Analysis
Premiums Paid Summary DRAFT
All completed transactions since January 1, 2001 between between $100 million and $500 million in equity value
SUBSET: TRANSACTION VALUE BETWEEN $100 and $500 MILLION
Premium at Premiums Paid Data Percentile
JOUT Price $16.00 $17.00 $18.00 $19.00 $20.00 $21.00 25th 50th 75th
All Completed Transactions (Total 321)
One Day Before Announcement $16.95 -5.6% 0.3% 6.2% 12.1% 18.0% 23.9% 9.1% 28.9% 51.1%
One Week Before Announcement 16.85 -5.0% 0.9% 6.8% 12.8% 18.7% 24.6% 14.9% 31.9% 58.5%
One Month Before Announcement 15.97 0.2% 6.4% 12.7% 19.0% 25.2% 31.5% 16.0% 37.8% 68.2%
Two Months Before Announcement 13.84 15.6% 22.8% 30.1% 37.3% 44.5% 51.7% 15.8% 40.2% 83.3%
Three Months Before Announcement 14.41 11.0% 18.0% 24.9% 31.9% 38.8% 45.7% 15.4% 42.4% 83.0%
52 Week Avg. Before Announcement 13.84 15.6% 22.8% 30.1% 37.3% 44.5% 51.7% 9.3% 37.9% 79.4%
52 Week High Before Announcement 17.10 -6.4% -0.6% 5.3% 11.1% 17.0% 22.8% -32.1% -1.1% 8.0%
52 Week Low Before Announcement 8.40 90.5% 102.4% 114.3% 126.2% 138.1% 150.0% 67.1% 121.5% 222.3%
Source: Commscan M&A Desk as of September 26, 2004.
Note: Premiums analysis includes all completed or M&A activity (but excludes transactions including Closed-End Funds, REITs and ADRs) for which premiums are reported.
14
M&a Premiums Paid Analysis
Premiums Paid Summary DRAFT
All completed transactions since January 1, 2001 in which the remaining interest was acquired by a control shareholder
SUBSET: REMAINING INTEREST ACQUIRED by a CONTROL SHAREHOLDER
Premium at Premiums Paid Data Percentile
JOUT Price $16.00 $17.00 $18.00 $19.00 $20.00 $21.00 25th 50th 75th
All Completed Transactions (Total 179)
One Day Before Announcement $16.95 -5.6% 0.3% 6.2% 12.1% 18.0% 23.9% -1.5% 13.0% 44.7%
One Week Before Announcement 16.85 -5.0% 0.9% 6.8% 12.8% 18.7% 24.6% -0.6% 17.3% 45.2%
One Month Before Announcement 15.97 0.2% 6.4% 12.7% 19.0% 25.2% 31.5% -2.1% 18.9% 49.8%
Two Months Before Announcement 13.84 15.6% 22.8% 30.1% 37.3% 44.5% 51.7% -10.3% 19.4% 53.4%
Three Months Before Announcement 14.41 11.0% 18.0% 24.9% 31.9% 38.8% 45.7% -18.7% 12.3% 56.8%
52 Week Avg. Before Announcement 13.84 15.6% 22.8% 30.1% 37.3% 44.5% 51.7% -23.7% 8.8% 28.6%
52 Week High Before Announcement 17.10 -6.4% -0.6% 5.3% 11.1% 17.0% 22.8% -66.2% -30.0% -6.6%
52 Week Low Before Announcement 8.40 90.5% 102.4% 114.3% 126.2% 138.1% 150.0% 42.7% 80.2% 176.0%
Source: Commscan M&A Desk as of September 26, 2004.
Note: Premiums analysis includes all completed or M&A activity (but excludes transactions including Closed-End Funds, REITs and ADRs) for which premiums are reported.
15
M&a Premiums Paid Analysis
Premiums Paid Summary DRAFT
All completed transactions since January 1, 2001 which were “going private” transactions
ALL GOING PRIVATE TRANSACTIONS COMPLETED SINCE JANUARY 1, 2001
Premium at Premiums Paid Data Percentile
JOUT Price $16.00 $17.00 $18.00 $19.00 $20.00 $21.00 25th 50th 75th
All Completed Transactions—Initial Premium to Announcement (Total 323)
One Day Before Announcement $16.95 -5.6% 0.3% 6.2% 12.1% 18.0% 23.9% 2.9% 25.0% 54.7%
One Week Before Announcement 16.85 -5.0% 0.9% 6.8% 12.8% 18.7% 24.6% 6.7% 29.5% 61.3%
One Month Before Announcement 15.97 0.2% 6.4% 12.7% 19.0% 25.2% 31.5% 9.2% 32.2% 64.2%
Two Months Before Announcement 13.84 15.6% 22.8% 30.1% 37.3% 44.5% 51.7% 6.6% 31.7% 62.3%
Three Months Before Announcement 14.41 11.0% 18.0% 24.9% 31.9% 38.8% 45.7% 0.4% 28.7% 62.0%
52 Week Avg. Before Announcement 13.84 15.6% 22.8% 30.1% 37.3% 44.5% 51.7% -10.3% 27.8% 56.3%
52 Week High Before Announcement 17.10 -6.4% -0.6% 5.3% 11.1% 17.0% 22.8% -49.7% -15.4% 0.8%
52 Week Low Before Announcement 8.40 90.5% 102.4% 114.3% 126.2% 138.1% 150.0% 60.5% 105.6% 200.0%
All Completed Transactions—Final Premium to Announcement (Total 323)
One Day Before Announcement $16.95 -5.6% 0.3% 6.2% 12.1% 18.0% 23.9% 4.7% 29.7% 60.7%
One Week Before Announcement 16.85 -5.0% 0.9% 6.8% 12.8% 18.7% 24.6% 8.2% 32.5% 64.9%
One Month Before Announcement 15.97 0.2% 6.4% 12.7% 19.0% 25.2% 31.5% 11.1% 37.6% 70.7%
Two Months Before Announcement 13.84 15.6% 22.8% 30.1% 37.3% 44.5% 51.7% 10.6% 35.4% 69.0%
Three Months Before Announcement 14.41 11.0% 18.0% 24.9% 31.9% 38.8% 45.7% 0.8% 33.8% 66.7%
52 Week Avg. Before Announcement 13.84 15.6% 22.8% 30.1% 37.3% 44.5% 51.7% -8.2% 30.3% 62.9%
52 Week High Before Announcement 17.10 -6.4% -0.6% 5.3% 11.1% 17.0% 22.8% -48.4% -14.4% 1.8%
52 Week Low Before Announcement 8.40 90.5% 102.4% 114.3% 126.2% 138.1% 150.0% 64.4% 116.2% 207.7%
Source: Commscan M&A Desk as of September 26, 2004.
Note: Premiums analysis includes all completed or M&A activity (but excludes transactions including Closed-End Funds, REITs and ADRs) for which premiums are reported.
16
DRAFT
Discounted Cash Flow Analysis
Discounted Cash Flow Analysis
Methodology and Assumptions DRAFT
A discounted cash flow analysis calculates the present value of the Company based upon its future earnings stream and corresponding cash flows
The discounted cash flow analysis is preliminary in nature and contains assumptions and methodologies which may be subject to change
William Blair examined the future earnings and “free cash flows” of the Company through fiscal 2009 based on: Management Forecast Alternative Forecast
William Blair estimated the value of the Company at the end of fiscal year 2009 (“terminal value”) by assuming the Company would be purchased by an independent party based upon a multiple of the projected trailing EBITDA
The sum of the above two components is the preliminary estimate of the Company’s total present value
William Blair assumed the following preliminary valuation parameters: Terminal EBITDA multiples ranging from 6.0x to 9.0x Discount rates ranging from 13.0% to 15.0% Discounted to September 30, 2004
17
Discounted Cash Flow Analysis
Discounted Cash Flow Analysis DRAFT
Management Forecast
(in millions, except for per share amounts)
Present Value of Enterprise Value
Terminal EBITDA Multiple
Discount Rate 6.0x 6.5x 7.0x 7.5x 8.0x 8.5x 9.0x
13.0% $180.3 $192.4 $204.5 $216.6 $228.6 $240.7 $252.8
13.5% 176.6 188.4 200.2 212.0 223.9 235.7 247.5
14.0% 173.0 184.5 196.1 207.6 219.2 230.8 242.3
14.5% 169.4 180.7 192.0 203.4 214.7 226.0 237.3
15.0% 166.0 177.0 188.1 199.2 210.2 221.3 232.4
Present Value of Per Share Equity Value
Terminal EBITDA Multiple
Discount Rate 6.0x 6.5x 7.0x 7.5x 8.0x 8.5x 9.0x
13.0% $18.09 $19.43 $20.76 $22.09 $23.42 $24.75 $26.08
13.5% 17.68 18.99 20.29 21.59 22.89 24.19 25.49
14.0% 17.28 18.56 19.83 21.10 22.38 23.65 24.92
14.5% 16.89 18.14 19.39 20.63 21.88 23.12 24.37
15.0% 16.51 17.73 18.95 20.17 21.39 22.61 23.83
18
Discounted Cash Flow Analysis
Discounted Cash Flow Analysis DRAFT
Alternative Forecast
(in millions, except for per share amounts)
Present Value of Enterprise Value
Terminal EBITDA Multiple
Discount Rate 6.0x 6.5x 7.0x 7.5x 8.0x 8.5x 9.0x
13.0% $161.1 $171.8 $182.5 $193.1 $203.8 $214.5 $225.2
13.5% 157.8 168.3 178.7 189.1 199.6 210.0 220.5
14.0% 154.6 164.8 175.0 185.2 195.5 205.7 215.9
14.5% 151.5 161.5 171.4 181.4 191.4 201.4 211.4
15.0% 148.4 158.2 168.0 177.7 187.5 197.3 207.1
Present Value of Per Share Equity Value
Terminal EBITDA Multiple
Discount Rate 6.0x 6.5x 7.0x 7.5x 8.0x 8.5x 9.0x
13.0% $15.98 $17.16 $18.33 $19.51 $20.68 $21.86 $23.03
13.5% 15.62 16.77 17.92 19.07 20.22 21.37 22.52
14.0% 15.26 16.39 17.51 18.64 19.76 20.89 22.01
14.5% 14.92 16.02 17.12 18.22 19.32 20.42 21.52
15.0% 14.58 15.66 16.74 17.81 18.89 19.97 21.04
19
DRAFT
Leveraged Buyout Analysis
Leveraged Buyout Analysis
Methodology and Assumptions DRAFT
William Blair performed a leveraged buyout analysis of the Company based on: Management Forecast Alternative Forecast
The leveraged buyout analysis is preliminary in nature and contains assumptions and methodologies which may be subject to change
William Blair assumed the following preliminary valuation/capitalization parameters:
Bank debt maximum of 3.5x 2004E EBITDA; subordinated debt maximum of 1.0x 2004E EBITDA
Bank debt interest rate of 6.0%; coupon on subordinated debt of 12.0% Exit multiples ranging from 6.0x to 9.0x EBITDA
18% targeted returns for subordinated debt investors (including warrants) 22.5%—27.5% targeted returns for equity investors
20
Leveraged Buyout Analysis
Leveraged Buyout Analysis DRAFT
Management Forecast Forecast
(in millions, except for per share amounts)
Enterprise Value
Terminal EBITDA Multiple
Equity IRR 6.0x 6.5x 7.0x 7.5x 8.0x 8.5x 9.0x
22.5% $178.5 $186.5 $194.7 $202.6 $210.7 $218.4 $226.7
25.0% 173.1 180.4 187.4 194.6 201.8 209.0 216.2
27.5% 168.1 174.7 181.3 187.6 194.3 200.8 207.4
Equity Value Per Share
Terminal EBITDA Multiple
Equity IRR 6.0x 6.5x 7.0x 7.5x 8.0x 8.5x 9.0x
22.5% $17.90 $18.78 $19.68 $20.55 $21.44 $22.29 $23.20
25.0% 17.30 18.10 18.88 19.67 20.46 21.25 22.05
27.5% 16.75 17.48 18.20 18.90 19.64 20.35 21.08
21
Leveraged Buyout Analysis
Leveraged Buyout Analysis DRAFT
Alternative Forecast
(in millions, except for per share amounts)
Enterprise Value
Terminal EBITDA Multiple
Equity IRR 6.0x 6.5x 7.0x 7.5x 8.0x 8.5x 9.0x
22.5% $164.0 $171.1 $178.1 $184.8 $191.3 $198.0 $206.2
25.0% 159.8 166.2 172.6 178.5 184.6 190.3 198.0
27.5% 156.1 161.9 167.6 173.1 178.5 184.0 190.8
Equity Value Per Share
Terminal EBITDA Multiple
Equity IRR 6.0x 6.5x 7.0x 7.5x 8.0x 8.5x 9.0x
22.5% $16.30 $17.08 $17.85 $18.59 $19.31 $20.04 $20.95
25.0% 15.84 16.54 17.25 17.90 18.57 19.20 20.04
27.5% 15.43 16.07 16.70 17.30 17.90 18.50 19.25
22
DRAFT
Valuation Matrix
Valuation Matrix
Valuation Matrix DRAFT
Reported Historical Financial Information and Management Forecast
(in millions, except for per share amounts)
Equity Purchase Price
Price per share $16.00 $17.00 $18.00 $19.00 $20.00 $21.00
Premium to 1 Day Prior -5.6% 0.3% 6.2% 12.1% 18.0% 23.9%
Premium to 1 Week Prior -5.0% 0.9% 6.8% 12.8% 18.7% 24.6%
Premium to 1 Month Prior 0.2% 6.4% 12.7% 19.0% 25.2% 31.5%
Common Shares Outstanding (1) 8.804 8.804 8.804 8.804 8.804 8.804
CSEs (2) 0.231 0.243 0.255 0.266 0.276 0.286
Fully Diluted Share Outstanding 9.035 9.047 9.059 9.070 9.080 9.090
Equity Value $144.6 $153.8 $163.1 $172.3 $181.6 $190.9
Net Debt (3) 16.0 16.0 16.0 16.0 16.0 16.0
Total Value $160.6 $169.8 $179.1 $188.3 $197.6 $206.9
Johnson Outdoors Financials (4)
Total Value / EBITDA
EBITDA
LTM (8/31/04) $26.4 6.1x 6.4x 6.8x 7.1x 7.5x 7.8x
FY 2004E 27.5 5.8x 6.2x 6.5x 6.8x 7.2x 7.5x
CY 2004E 28.1 5.7x 6.0x 6.4x 6.7x 7.0x 7.4x
Pro Forma LTM (8/31/04) 28.6 5.6x 5.9x 6.3x 6.6x 6.9x 7.2x
Pro Forma FY 2004E 30.1 5.3x 5.6x 5.9x 6.2x 6.6x 6.9x
Pro Forma CY 2004E 30.8 5.2x 5.5x 5.8x 6.1x 6.4x 6.7x
Total Value / EBIT
EBIT
LTM (8/31/04) $17.7 9.1x 9.6x 10.1x 10.6x 11.2x 11.7x
FY 2004E 18.9 8.5x 9.0x 9.5x 10.0x 10.5x 10.9x
CY 2004E 19.0 8.5x 8.9x 9.4x 9.9x 10.4x 10.9x
Pro Forma LTM (8/31/04) 18.7 8.6x 9.1x 9.6x 10.1x 10.6x 11.1x
Pro Forma FY 2004E 20.6 7.8x 8.3x 8.7x 9.2x 9.6x 10.1x
Pro Forma CY 2004E 21.0 7.6x 8.1x 8.5x 9.0x 9.4x 9.9x
Equity Value / Net Income
Net Income
LTM (8/31/04) $7.4 19.5x 20.7x 22.0x 23.2x 24.5x 25.7x
FY 2004E 8.6 16.8x 17.9x 18.9x 20.0x 21.1x 22.2x
CY 2004E 9.0 16.0x 17.0x 18.1x 19.1x 20.1x 21.2x
Pro Forma LTM (8/31/04) 7.9 18.3x 19.5x 20.7x 21.8x 23.0x 24.2x
Pro Forma FY 2004E 9.5 15.2x 16.1x 17.1x 18.1x 19.0x 20.0x
Pro Forma CY 2004E 10.2 14.1x 15.0x 15.9x 16.9x 17.8x 18.7x
JOUT Stock Price Prior to 2/20/04 Announcement
1 Day Prior $16.95
1 Week Prior 16.85
1 Month Prior 15.97
(1) Based on 7.582 million shares of Class A and 1.222 million shares of Class B common stock (per 7/2/04 10-Q) (2) Options information provided by Company and as of 9/15/04; calculation uses the treasury stock method.
(3) As of 8/31/04, provided by the Company. Reflects working capital adjustment.
(4) LTM ended 8/31/04.
23
DRAFT
Comparable Public Companies Model
Comparable Public Companies Model
Comparable Public Companies Detail DRAFT
Stock Price LTM Total Value (1) / 2004 E Total Value
52 Week Change Since Revenue EBITDA EBIT LTM LTM LTM EBITDA EBIT 2004E 2004E Price / Earnings Ratio
Closing Price 09/29/04 Low High 52 Wk High 1/1/04 Market Value (MM) Net Debt (Cash) (MM) Total Value (MM)(1) (MM) (MM) (MM) Revenue EBITDA EBIT (MM) (MM) EBITDA EBIT LTM Cal. 04E Cal. 05E
AMER GROUP $47.16 $33.27 $50.91 -7.4% -12.8% $1,122.6 $152.1 $1,274.8 $1,301.5 $167.3 $121.0 0.98 x 7.6 x 10.5 x $174.0 $146.7 7.3 x 8.7 x 14.2 x 12.0 x 12.0 x
BRUNSWICK CORP 45.19 25.19 45.30 -0.2% 42.0% 4,319.2 301.7 4,620.9 4,745.5 493.8 339.2 0.97 9.4 13.6 582.6 417.6 7.9 11.1 21.0 16.9 13.6
CALLAWAY GOLF CO 10.61 9.85 20.00 -47.0% -37.0% 798.1 (15.7) 782.4 961.9 83.4 32.9 0.81 9.4 23.7 87.2 39.7 9.0 19.7 34.5 40.8 17.4
COLUMBIA SPORTSWEAR CO 54.61 49.22 59.39 -8.0% 0.2% 2,214.3 (264.3) 1,950.0 968.6 218.6 197.3 2.01 8.9 9.9 231.7 206.7 8.4 9.4 17.5 16.5 14.8
HEAD N V 2.80 2.11 3.54 -20.9% 12.0% 104.7 147.4 252.1 456.0 35.1 15.9 0.55 7.2 15.8 NA NA NA NA NMF NMF NMF
K2 INC 14.15 12.60 19.00 -25.5% -7.0% 660.1 182.6 842.7 890.1 65.9 46.4 0.95 12.8 18.2 97.5 77.5 8.6 10.9 30.3 16.3 13.5
LOWRANCE ELECTRONICS IN 24.56 10.79 37.19 -34.0% 20.0% 120.6 6.5 127.1 111.9 15.9 13.3 1.14 8.0 9.6 NA NA NA NA 13.8 NA NA
Minimum -47.0% -37.0% 0.55 x 7.2 x 9.6 x 7.3 x 8.7 x 13.8 x 12.0 x 12.0 x
Mean -20.4% 2.5% 1.06 9.0 14.5 8.3 12.0 21.9 20.5 14.3
Median -20.9% 0.2% 0.97 8.9 13.6 8.4 10.9 19.2 16.5 13.6
Maximum -0.2% 42.0% 2.01 12.8 23.7 9.0 19.7 34.5 40.8 17.4
JOHNSON OUTDOORS INC $19.28 $12.30 $20.21 -4.6% 28.9% $169.7 $26.8 $196.6 $348.9 $30.4 $21.8 0.56 x 6.5 x 9.0 x NA $24.4 NA 8.1 x 17.2 x 13.4 x 12.6 x
Source: Historical data per company filings. Projections represent mean analyst estimates, per Bloomberg.
(1) Total Value = Market Capitalization + Preferred Equity + Total Debt + Minority Interest—Cash and Equivalents. Assumes Cash and Equivalents for these companies represent excess cash. LTM = Latest Twelve Months, CAGR = Compound Annual Growth Rate, NA = Not Available, NMF = Not Meaningful
24
Comparable Public Companies Model
Comparable Public Companies Detail DRAFT
Gross Profit as a EBITDA as a EBIT as a
% of Revenue % of Revenue % of Revenue 3 YR CAGR
LTM 4 YR Avg LTM 4 YR Avg LTM 4 YR Avg Revenue EBITDA EBIT EPS
AMER GROUP 48.4% 49.1% 12.9% 12.4% 9.3% 9.1% 7.5% 8.6% 9.3% 7.7%
BRUNSWICK CORP 25.1% 21.9% 10.4% 11.3% 7.1% 7.2% 2.7% -12.9% -18.3% -14.9%
CALLAWAY GOLF CO 41.4% 48.2% 8.7% 17.6% 3.4% 12.7% -0.9% -12.1% -18.6% -15.8%
COLUMBIA SPORTSWEAR CO 48.1% 46.0% 22.6% 21.0% 20.4% 18.7% 15.7% 24.4% 25.4% 26.0%
HEAD N V 39.3% 40.3% 7.7% 9.5% 3.5% 5.3% 2.7% -20.1% -39.3% NMF
K2 INC 31.1% 29.4% 7.4% 7.0% 5.2% 4.6% 2.6% -1.9% -5.0% -17.7%
LOWRANCE ELECTRONICS INC 42.3% 39.5% 14.2% 10.3% 11.9% 7.7% 15.1% 54.4% 75.2% 49.7%
Minimum 25.1% 21.9% 7.4% 7.0% 3.4% 4.6% -0.9% -20.1% -39.3% -17.7%
Mean 39.4% 39.2% 12.0% 12.7% 8.7% 9.3% 6.5% 5.8% 4.1% 5.8%
Median 41.4% 40.3% 10.4% 11.3% 7.1% 7.7% 2.7% -1.9% -5.0% -3.6%
Maximum 48.4% 49.1% 22.6% 21.0% 20.4% 18.7% 15.7% 54.4% 75.2% 49.7%
JOHNSON OUTDOORS INC 41.3% 40.4% 8.7% 8.8% 6.3% 5.6% -3.8% - -16.7% -18.6% -10.1%
Source: Historical data per company filings.
(1) Total Value = Market Capitalization + Preferred Equity + Total Debt + Minority Interest—Cash and Equivalents. Assumes Cash and Equivalents for these companies represent excess cash. LTM = Latest Twelve Months, CAGR = Compound Annual Growth Rate, NA = Not Available, NMF = Not Meaningful
25
MEMORANDUM:
JOHNSON OUTDOORS INC.
PRELIMINARY OBSERVATIONS
REGARDING INTRINSIC VALUE
| MEMORANDUM DATE: | MARCH 19, 2004 |
VALUE Incorporated
5221 N. O’Connor Blvd Suite 830
Irving, Texas 75039
Telephone: 972.831.7900 Facsimile 972.831.7901
www.valueinc.com
Introduction
At the request of Plaintiffs’ counsel, VALUE Incorporated has prepared a preliminary valuation analysis of a buyout offer (the “Offer”) for Johnson Outdoors Inc. (Nasdaq: JOUT) made by Samuel Johnson (JOUT’s controlling shareholder and a director of the company) and members of the Johnson family. We have prepared this memorandum to summarize our preliminary findings and observations. This memorandum is not intended to be a fairness opinion or a formal valuation report in accordance with generally accepted appraisal standards and should not be so construed.
Company Description
JOUT 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. It manufactures and distributes technical underwater diving products, dive computers and other electronics and diving buoyancy compensators as well as canoes, kayaks, paddles, oars, recreational sailboats, personal flotation devices and small thermoformed recreational boats. The company’s outdoor equipment product line includes Eureka! military, commercial and consumer tents and backpacks and Silva field compasses. In addition, JOUT manufactures battery-powered motors used on fishing boats and other boats for quiet trolling power or primary propulsion. The company was incorporated in Wisconsin 1987.
Offer Background
On February 20, 2004, JOUT announced that it had received a buyout proposal from Samuel Johnson and Helen Johnson-Leipold (JOUT’s chairman and chief executive officer). The two seek to acquire the outstanding Class A common shares not already owned by the Johnson family for cash consideration of $18.00 per share. Mr. Johnson and Ms. Johnson- Leipold have explicitly stated that they will not entertain alternative offers to purchase the company. The board of directors has appointed a special committee of directors to evaluate the proposal.
Scope of Analysis
As requested, we have prepared a preliminary valuation analysis of JOUT. Information that we considered in the course of our analysis included:
| 1. | Press releases and published accounts pertaining to the Offer, |
| 2. | JOUT’s filings with the SEC, including Forms 10-K, 10-Q and 8-K, as well as Schedules 13D and 14A, |
| 3. | Pricing data taken from public markets for JOUT shares, |
| 4. | Financial and market pricing data pertaining to companies with operations comparable to JOUT, and |
| 5. | Other publicly available information we deemed pertinent to our analysis. |
2
It should be noted that our analysis is based exclusively on publicly available data concerning JOUT. We have not been given the opportunity to interview company management or any of the parties involved in negotiations between the offering parties and the special committee. Furthermore, JOUT’s SEC filings to date have contained no fairness opinions or other substantive discussion pertaining to the rationale for the current bid of $18.00.
Fair Value of JOUT
Based on our preliminary analysis, the fair value of the JOUT Class A common shares subject to the Offer appears to be considerably higher than the current Offer price and could be as high as $24.00 per share.
Among other things, we considered:
| • | JOUT’s trading price before and after the Offer was announced; |
| • | Recent financial performance and pricing multiples of K2 Inc., Huffy Corporation and Variflex Inc., three public companies we believe sufficiently comparable to JOUT to offer meaningful evidence of value; |
| • | Pricing multiples paid in acquisitions of companies with similar operations since the beginning of 1999; and |
| • | Acquisition premiums paid for manufacturers generally, and producers of sporting and athletic goods specifically, for the five years preceding the Offer. |
Each of these is discussed in turn below.
JOUT Trading Price
JOUT shares have traded above the Offer price since the Offer was announced, trading as high as $20.21 on March 8, 2004. The closing price as of March 18, 2004 was $19.54.
3
This trading pattern clearly illustrates the broad investor perception that the current Offer price reflects an inadequate valuation of JOUT’s shares.
Capital Market Analysis
We examined the recent financial performance and equity pricing multiples of:
| • | K2 Inc. (NYSE: KTO) |
| • | Huffy Corporation (NYSE: HUF) |
| • | Variflex Inc. (Nasdaq: VFLX) |
to derive meaningful evidence of the value of JOUT’s common equity. A summary of our findings is shown in the following table.
4
| JOUT | ||||||||||||||
| KTO |
HUF |
VFLX |
Selected Pricing Multiple |
Financial Figures |
Indicated Share Value | |||||||||
| Ratio of 3/18/04 close price to: |
||||||||||||||
| LTM earnings per share * |
42.6 | N/A | 151.1 | 25.0 | $ | 0.92 | $ | 23.00 | ||||||
| FY 2004 earnings per share (proj.) |
19.7 | 16.3 | N/A | 18.0 | $ | 1.42 | $ | 25.56 | ||||||
| FY 2005 earnings per share (proj.) |
15.4 | 13.1 | N/A | 14.5 | $ | 1.49 | $ | 21.61 | ||||||
| LTM sales per share |
0.74 | 0.14 | 0.59 | 0.65 | $ | 37.75 | $ | 24.54 | ||||||
| Book value per share |
1.3 | 0.7 | 1.1 | 1.2 | $ | 17.42 | $ | 20.90 | ||||||
| * | JOUT LTM earnings per share adjusted for charge taken in the fourth quarter of fiscal 2003 |
Sources: Reuters, Nelson Earnings Estimates, SEC filings, press releases
Precedent Transactions
In addition, we observed prices and pricing multiples paid in acquisitions of companies operating in SIC code 3949 (sporting & athletic goods, not elsewhere classified) for the five years preceding the Offer. During that time, we observed three acquisitions for which transaction data was available. The ratios of enterprise value to EBITDA for the three companies ranged from approximately 10.6x to 12.6x. Applying these multiples to JOUT’s EBITDA (adjusted for a $4 million restructuring charge taken in the 4th quarter of fiscal 2003) results in a range of enterprise values from approximately $174 million to 208 million. The corresponding share values range from approximately $20.00 - $24.00.
Acquisition Premiums
We also examined premiums paid in acquisitions of companies operating in SIC codes 39 (miscellaneous manufacturing industries) and 3949 (sporting & athletic goods, not elsewhere classified) for the five years preceding the Offer. During that time, the observed premiums ranged from approximately 4% to more than 100%, with lower and upper quartiles of approximately 30% and 60%, respectively. Applying premiums ranging from 25% to 50% to JOUT’s $16.95 closing price the day before the Offer was announced results in share-price indications ranging from $21.19 to $25.43.
Additional Analysis
As noted, our analysis is preliminary and has been prepared without the benefit of access to management or information beyond that available to he public. We reserve the right to revise our opinions in light of any additional material information to which we may later be given access.
5
PROJECT ReLAP (CONFIDENTIAL)
Valuation Discussion
DRAFT – For Discussion Purposes Only
PROJECT ReLAP (CONFIDENTIAL)
Hypothetical Analysis that an Advisor might provide a SC
RANGE OF PER SHARE EQUITY VALUES
Comparable Companies
EV / Current EBITDA
EV / Projected EBITDA
Price / Current Earnings
Price / Projected Earnings
M&A Methods
EV / Current EBITDA
EV / Projected EBITDA
Price / Current Earnings
Price / Projected Earnings
Going Private Premiums Paid
2003 YTD—All Transactions
2002—All Transactions
2003 YTD—Control Buyers
2002—Control Buyers
DCF
LBO
Acquiror Pricing Model
100% Equity
50% / 50% Debt & Equity
100% Debt
$10.0 $12.0 $14.0 $16.0 $18.0 $20.0 $22.0 $24.0 $26.0
DRAFT – For Discussion Purposes Only
PROJECT ReLAP (CONFIDENTIAL)
VMC Rebuttal to SC Advisor’s Hypothetical Analysis
RANGE OF PER SHARE EQUITY VALUES
Comparable Companies
EV / Current EBITDA
EV / Projected EBITDA
Price / Current Earnings
Price / Projected Earnings
M&A Methods
EV / Current EBITDA
EV / Projected EBITDA
Price / Current Earnings
Price / Projected Earnings
Going Private Premiums Paid
2003 YTD—All Transactions
2002—All Transactions
2003 YTD—Control Buyers
2002—Control Buyers
DCF
LBO
Acquiror Pricing Model
100% Equity
50% / 50% Debt & Equity
100% Debt
$10.0 $12.0 $14.0 $16.0 $18.0 $20.0 $22.0
DRAFT – For Discussion Purposes Only
PROJECT ReLAP (CONFIDENTIAL)
What Overlap exists at Today’s Stock Price?
A Typical SC Viewpoint
Seller’s range may likely be based heavily on premium
Seller may want to apply premium to cash
Seller’s initial range for desired outcome based Advisor’s initial analysis
After negotiations, Seller’s range likely to be lower (given today’s price and agreement on no premium on cash)
Buyer’s Viewpoint
No premium on Cash
Lower growth – lower value
Smaller size – lower value
Continued problems at Watercraft
Some overlap may exist today
DRAFT – For Discussion Purposes Only