Johnson Outdoors Inc. Annual Report 1999

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FY1999 Annual Report · Johnson Outdoors Inc.

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J o h n s o n Wo r l d w i d e As s o c i a t e s, I n c.

1 9 9 9 A n n u a l R e p o r t

C O R P O R A T E P R O F I L E

JWA’s aggressive new management

team is working to capture more of

the $30 billion market for recreation

products, building on strong brands,

market share leadership and extensive

distribution networks. Our long-term

growth strategy flows from the strengths

highlighted throughout this report —

our path to an exciting new day.

JWA Vision

Globally we will be the best at providing

high quality, innovative, branded

outdoor recreation products that will

increase participation and enjoyment

of active families and enthusiasts.

Summary Financial Information

Johnson Worldwide Associates, Inc.

(thousands, except per share data)

19981997

1998

1999

Operating Results

Net sales

Gross profit

Operating profit

Net income

Diluted earnings
per common share

Diluted average common
shares outstanding

Capitalization

Total debt

Shareholders’ equity

$303,121

111,332

12,011

2,056

$0.25

8,115

$328,525

125,964

18,723

5,212

$0.64

8,114

$364,277

142,079

21,623

7,022

$0.87

8,108

$114,835

117,731

$124,680

124,386

$122,586

127,178

Total debt to total capital

49%

50%

49%

$400

350

300

250

200

150

100

s
n
o
i
l
l
i

$160

140

120

100

s
n
o
i
l
l
i

$24

s
n
o
i
l
l
i

1997 1998 1999

N e t S a l e s

G ro s s P rof i t

O p e ra t i n g P rof i t

Table of Contents

1 Summary Financial Information

2 Letter to Fellow Shareholders

6 Watercraft

8 Motors

10 Diving

12 Outdoor Equipment

14 Fishing

• Form 10-K

Inside Back Cover

Directors and Executive Officers

Shareholders’ Information

one

Dear Fellow Shareholders:

Helen P. Johnson-Leipold
Chairman and Chief Executive Officer

Samuel C. Johnson
Chairman of the Executive Committee

“Our management team is

Since March 1999, when the Board of

Our management team is serious about

serious about executing this

strategy. This means making

the tough calls…We will

manage our portfolio according

to strict criteria. When a

business falls short, we’ll act

immediately to bring it back

Directors asked me to take on the role

executing this strategy, about making

of JWA Chairman and Chief Executive

the tough calls — including selling

Officer, I have focused on accelerat-

the Fishing business in January 2000,

ing the Company’s momentum. Our

which will result in a loss of $24 million

team is growing sales, managing

in the first quarter of our 2000 fiscal

costs, enhancing quality, encouraging

year. In building on the hard work of

innovation, making acquisitions —

those who came before us, we looked

and improving profitability.

at how each business fits JWA’s goals.

Above all, we are positioning Johnson

did not meet our success criteria, out-

Worldwide for sustainable growth

lined below. The sale of this business

that outpaces the industry. Many of

will significantly strengthen JWA’s

This objective analysis showed Fishing

in line…Our goal is to achieve

our shareholders, myself included,

portfolio and our prospects for long-

double-digit operating profit

margin and increased share-

holder value in the future.“

have stood by this company through

term growth as we redeploy assets.

good times and bad. We have invested

faith as well as dollars and cents.

We also decided to refocus the North

To keep JWA moving toward the per-
formance you deserve and demand, we

American Outdoor Equipment business
on tents, traditionally our strength. We

are requiring each of our businesses

returned the marketing function to our

to meet strict criteria we consider

Eureka! tent operations in Binghamton,

essential for success.

New York, causing some nonrecurring

two

strategic charges for 1999. This business

To make the best use of our resources,

acquisitions are an important element

should return to profitability in 2000.

we classified our businesses into

of our strategy, we installed a fully

three groups: key drive, profitable

dedicated resource to pursue external

Finally, we are intent on better com-

growth, and restructure/divest.

growth opportunities.

municating just what this company is

Watercraft, Diving and Motors are the

about. At the Shareholders’ meeting

businesses we intend to drive, the

we will vote on the change of our

areas where we will focus expansion

name to Johnson Outdoors. We believe

and acquisition efforts. These busi-

the new name captures the spirit

nesses have potential for strong

behind our vision and mission.

growth in sales and profits, with an

S T R A T E G I E S F O R S U C C E S S

extensive new product stream.

We will concentrate on continued

One of my first actions as CEO was to

profitable growth for Jack Wolfskin,

conduct a strategic review of all our

in the markets where we can make the

businesses. We thoroughly analyzed

most of its competitive advantages.

our industry and JWA’s strengths to

define our success criteria, looking

Finally, we classified both our North

specifically for ways to identify long-

American Outdoor Equipment and our

term growth opportunities in our

Fishing businesses as “restructure/

businesses and through acquisitions.

divest.” Competition has escalated in

The success model we developed has

few barriers to entry. By returning to

outdoor equipment, where there are

Network Model
Instead of operating as a centralized

or decentralized business, JWA is

building a hybrid: a network of spe-

cialized companies encouraged and

strengthened by headquarters.

We want to preserve the creativity,

independent spirit and sense of owner-

ship behind each company’s success.

At the same time, we are looking for

efficiencies and sharing best practices

and expertise. Headquarters serves as

an accelerator, a source of shared

strategies and resources for innova-

tion and growth. Our goal is not to

smother our businesses but to nurture

them, cultivating expertise and talent

three drivers: disciplined portfolio

our traditional strength, tent design

as we grow strong brands.

management; a network organiza-

and manufacturing, we expect to bring

tional model; and market expansion.

performance up to our standards.

Innovation is key to all three.

Portfolio Management
Portfolio management is at the

It is a challenging model, requiring

us to balance the value of gaining

When we looked at Fishing’s potential

synergies with the importance of

for creating shareholder value, we found

preserving entrepreneurship. But we

inadequate share in most markets;

believe it will give us a competitive

foundation of our plan for sustainable,

minimal growth in premium segments;

advantage in today’s recreation

profitable growth. JWA will play only
where we can win — in businesses

• where we can be #1 or #2 in

market share

• where we can achieve desirable,

defensible margins

little reward for innovation; and lack

industry. We have more focus and

of control over manufacturing.

flexibility than the large conglomer-

ates, yet greater resources and a

Even so, the decision to sell was

broader strategic perspective than

difficult. We have a long history in the

niche players.

business, and profitability had recently

improved. We are convinced, however,

that this sale will make JWA more

Expanding Markets
Our goals go beyond being the market

• where we can create demand

profitable, less leveraged, and more

leader in our categories. We want to

through innovation

focused as we channel proceeds from

create a higher level of consumer

Each of our businesses is expected to

the sale into more productive areas.

demand, to expand the total market
for the products we sell. Our research

meet these criteria. When a business

Strict portfolio management applies

on the recreational marketplace as

falls short, we will act immediately to

not only to our current businesses but

well as consumer trends uncovered

bring it back in line.

to potential acquisitions. Because

key opportunities in this area.

three

The New JWA Success Model

Disciplined Portfolio
Management

• Play only where we can win

• Evaluate existing and
new businesses against
JWA success criteria:
– growth/demand
– margins/defensibility
– size/significance

• Optimize capital deployment

Network
Organizational Model

• Support and leverage
entrepreneurial leaders

• Accelerate with vision,
strategic direction and
global resources

• Share expertise, capture
cross-business opportunities

• Realize efficiencies

Expanding

Expanding Markets

• Grow entire categories
through focused innovation

• Leverage brand equities

• Increase product trial and
recreational participation

• Create new segments

• Forge strategic alliances

• Win at e-commerce

Profitable Growth

• Achieve double-digit
operating profit margin

• Increase shareholder value

Helping People “Get Out There!”

that makes it easier for retailers and

edge as long as the underlying

We see terrific potential in being

distributors to work with us, and a

product is the best it can be. We are

the company that helps more people

business-to-consumer model that makes

devoted to maintaining our premium

enjoy more activities in the great out-

economic sense and that keeps cus-

brand image.

doors. JWA is making recreation more

tomers coming back while preserving

accessible, offering boats that are

trade relationships. We think it is pos-

easier to use and transport…motors

sible to have it all, and the coming

1 9 9 9 R E S U L T S

that don’t require an engineering

year should bear out our expectations.

Our fiscal 1999 results capture JWA’s

degree to operate...diving equipment

strengths as well as our challenges.

that can be tried without breaking the

Leading with Innovation

1999 results do not reflect the benefit

bank. We also see value in products

To JWA, “new” means “new to the

of reduced interest expense from the

the whole family can use to foster a
spirit of adventure and togetherness.

world.” While line extensions play an
important role, new products are our

lifeblood. Thus we have increased

sale of Fishing, as the transaction had
not yet closed at fiscal year-end.

Increasing access also means getting

R&D dollars across our businesses.

Watercraft, Motors and Outdoor

products to new markets — new

And our headquarters offers resources

Equipment all contributed strong

geographic areas, new distribution

to encourage innovation: consumer

sales and earnings growth. As a

channels, new consumers. Each of our

and product research, connections to

result, 1999 saw sales increase $35.8

businesses is exploring these oppor-

technology partners, shared ideas and

million, to $364 million — 11% over

tunities, intensifying marketing and

expertise — everything to make it easy

1998. Operating profit, exclusive of

forming strategic alliances.

to move from concept to prototype

strategic charges, increased for the

Reaching Out Online

We are attacking e-commerce on all

Leveraging Brand Equity

to successful product.

third consecutive year, reaching
$23.9 million — 19% over 1998.

Net earnings rose from $0.75 to

fronts, and we expect to win. That

JWA is a company of strong brands —

$1.04 per share, excluding strategic

means a business-to-business system

brands that give us a significant

charges. This is progress to be sure,

four

but we are looking for more satisfac-

Diving experienced a relatively weak

delivered positive results in 1999. Our

tory results long-term.

year, though it remains one of our more

business is growing; our profitability

profitable businesses. The integration

will grow faster. Our reputation for

In Watercraft, successful acquisitions,

of 1997 and 1998 acquisitions is now

innovation in each of our product

a hot kayak market and the strength

largely complete, and we have added

lines continues to be confirmed by

of our brands led to record sales and

key managers in North America and

retailers and consumers.

profits. The acquisition of three new

Europe. With a renewed customer focus

companies added scale and exciting

and accelerated product development,

But Wall Street has been indifferent

products: Necky’s sea touring and

Diving should return to more historical

to our stock, based on our track

whitewater kayaks, Escape’s user-

profitability levels in the next year.

record in the first part of the 1990s

friendly sailboats and Extrasport’s

personal flotation devices. These

additions won’t be fully reflected in

P E O P L E

plus a difficult market for recreation

stocks and smaller capitalization

stocks in general. We seek a healthy

our results until 2000. Our challenge

In April 1999, we were able to recruit

stock currency not only to create

is to continue this group’s strong

Patrick O’Brien from S.C. Johnson &

value for you, our shareholders, but

growth and high returns while retaining

Son, Inc. to join us as President and

to use in effecting acquisitions and

each business’s entrepreneurial spirit.

Chief Operating Officer. Patrick brings

reducing our cost of capital.

valuable experience in sales and general

The rejuvenated product line of our

management, with skills that comple-

Our strategy should help us achieve

Motors group generated 20% sales

ment my marketing and advertising

strong, stable growth not just in

growth and helped us better penetrate

background. His ideas and decisive

the next four quarters, but well into

the critical southern U.S. market. We

management style have been instru-

the future. Our goal is to achieve

made inroads with original equipment

mental in moving JWA toward our goals.

sustainable, double-digit operating

boat manufacturers, traditionally our

profit margin and increased share-

competitors’ strength. As a result,

Terry London, President and Chief

holder value.

we strengthened our leading market

Executive Officer of the Gaylord

share. Factory efficiency improve-

Entertainment Company, recently

We thank our employees, partners,

ments further increased profitability.

joined our Board of Directors. Terry

customers and shareholders for your

New products like the award-winning

brings keen insights on retailing and

support. I invite each of you to share

Genesis bow mount motor and win-win

recreation to our Board.

in our vision as we begin a new day.

partnerships throughout the supply

chain should make Motors’ future
even brighter.

While my father, Sam Johnson,
relinquished his role as Chairman, he

actively participates in the business

Jack Wolfskin continues to build its

as Chairman of the Executive

reputation in Europe for high quality

Committee of the Board of Directors.

clothing and outdoor products and is

Under his stewardship, S.C. Johnson

expanding steadily and profitably.

has grown into a leading global con-

North American Outdoor Equipment

sumer products company — a goal to

sales benefited from 1998 contracts

which JWA aspires. His ongoing

with the U.S. military, but inefficient

counsel is a great asset.

manufacturing kept us from reducing
operating losses as much as expected.

The refocusing of this business

O U T L O O K

should lead to improvements in the

The strength of our brands and the

year ahead.

talents and efforts of our people

Helen P. Johnson-Leipold
Chairman and Chief Executive Officer

five

B r a n d s
B r a n d s

Old Town
Canoes and kayaks

Necky
Kayaks

Leisure Life
Canoes, pedal boats, kayaks,
deck boats and tenders

Ocean Kayak
Sit-on-top kayaks

Escape
Sailboats

Carlisle
Paddles and oars

Extrasport and Swiftwater
Personal floatation devices

Dimension
Kayaks

t Sale

N e

22%

six

Saturday morning at last! Throw the kayak on top

of the car and go. JWA is on top of small watercraft

innovation, nurturing a network of maverick

companies. Building market share across the continent.

And leaving competitors behind with barely a ripple.

User-friendly Escape
sailboats — IMTEC
Boat of the Year —
include a color-matching
system to make sailing
intuitive, self-taught
and fun.

Watercraft is more than a key

spirit. As a result, we’re #1 in

growth engine for JWA; it’s the

kayaks, canoes, pedal boats and

model for the success we seek

small sailboats. And we’re out to

businesswide. We’re coordinating

lead the recreational and family

the innovative companies we’ve

segments, with products that

acquired, sharing strengths and

make it easy for people to enjoy

maximizing efficiencies while

the great outdoors.

encouraging entrepreneurial

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Carlisle RS Xtreme

The Carlisle RS Xtreme
kayak paddle delivers
maximum power in a fresh
design. Its asymmetric
blades move smoothly in and
out of the water; a slightly
textured, spoon-shaped
blade face reduces drag,
increasing stroke efficiency.
The blades snap-lock
quickly into a lightweight
aluminum shaft — just
what kayakers demand for
this fast-growing sport.

seven

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Minn Kota
Genesis foot control

It’s a first for trolling motors:
power steering at your feet.
Genesis foot pedal controls
combine the responsiveness of
traditional cable-steer systems
with the ease of electric steer.
Heel/toe push-button action
makes it easy to lower the
motor into the water, change
its depth and return it to
stow position — keeping
hands free for fishing.

B r a n d s
B r a n d s

Minn Kota
Electric boat motors, power
equipment and accessories

Airguide
Speedometers, marine and automotive
compasses and weather instruments

t Sale

N e

eight

21%

The new Minn Kota Genesis
eliminates lifting and tugging
with power stow and deploy.

Motors fits JWA‘s success criteria

makes every day on the water

at nearly every turn. We have

easier than ever. And with a

the size: Minn Kota electric

renewed commitment to techno-

trolling motors are #1 and

logical expertise, we expect our

growing. Our products drive

motor business to power JWA

demand, with innovation that

well into 2000 and beyond.

Tangled weeds. Timber-infested

waters. But the redfish are waiting,

and you’re going after them.

JWA works the tough waters —

penetrating the southern U.S. with

our bow mounts. Strengthening

original equipment and marine

channel sales. Enhancing electronics

expertise. Making us a powerful

player — in any waters.

nine

B r a n d s
B r a n d s

Scubapro
Regulators, buoyancy compensators,
masks, fins, wet and dry suits, gloves,
dive lights and other accessories

Aladin
Premium dive computers

Uwatec
Dive computers and other
electronic instruments

Soniform
Buoyancy compensators

SnorkelPro
Masks, fins and snorkels

t Sale

N e

26%

ten

Forty feet. Fifty-five. Sixty. You descend into a world

of shifting light and color — a world attracting

beginners as well as enthusiasts. JWA makes diving

accessible with innovative products. From state

of the art dive computers to superior regulators

and buoyancy compensators, JWA is plunging

into new opportunities for growth worldwide.

Our Classic NT Buoyancy
Compensator incorporates
the latest materials and
weight integration features
for top performance.

Diving continues as one of

regulators and dive computers

our drive businesses, despite

are top choices in Europe and

1999’s difficulties integrating

the U.S. With organizational

earlier acquisitions. Our high-

capacity strengthened, we can

performance brands improve

focus our efforts on growing

the experience of beginners

market share — for solid

and pros alike. We hold a strong

performance in the years ahead.

share of the global market; our

n
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Uwatec Neverlost

The new Neverlost Locator
makes it simple for divers
to return to the point of
entry at the end of a dive.
The NeverLost provides
direction and distance infor-
mation using two units: a
stationary transponder that
hangs off the boat, and a
receiving instrument carried
by the diver. It adds up to
confidence that creates a
better diving experience,
in and out of the water.

eleven

n
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Silva Ranger Ultra
530 compass

Silva compasses are
known for precision, and
the Ranger Ultra 530 is no
exception. Designed for
surveyors, foresters and
other professionals, this
sighting compass has a
unique mirror slit for
simultaneous viewing of
landmark and compass
face. Geared declination
lets the user correct for
the difference between
geographic and magnetic
North. With lifetime
dependability guaranteed,
the Ranger lives up to the
promise of the Silva name.

E Q U I

P M E N T

B r a n d s

Eureka!
Camping tents, backpacks,
accessories and commercial tents

Camp Trails
Camping tents, backpacks
and accessories

Silva
Field compasses

t Sale

N e

Will your tent hold thermal

sleeping bags and climbing gear,

or buffet tables and a string quartet?

JWA covers you either way as

we focus on our strength —

“outdoor shelters,” from easy-up

camping gear to commercial

tents for elegant parties.

The Eureka! Aurora tent
meets campers‘ demands
with extra waterproofing
and a patented high/low
venting system.

To attain the business perform-

major start-up costs. To build

ance and competitive edge vital

our consumer tent business,

for success, JWA‘s Outdoor

we’ve returned marketing

Equipment business will return

headquarters to Binghamton,

to its strength: tents. We‘re also

New York. And we‘re improving

a leader in commercial tents,

manufacturing operations,

where we control manufacturing,

which should also make tent

and would-be competitors face

production more profitable.

twelve

16%

thir teen

J A C K

B r a n d
B r a n d

Jack Wolfskin
Outdoor clothing, travel gear,
footwear, accessories, camping
tents, backpacks and sleeping bags

t Sale

N e

14%

four teen

You stand higher than an eagle’s aerie. No civilization

in sight. A world of experience behind you, and

ahead. Jack Wolfskin connects with consumers

ready to climb a mountain or bike across town.

of the European market.

New-to-the-world fabric,
developed with Gore-Tex®,
makes our Protanium jacket
perfect for mountaineering
or skiing.

Jack Wolfskin combines scientific

Wolfskin the #1 brand in

knowledge with the experiences

Germany, Europe's largest market.

of real people in extreme condi-

To continue our profitable rollout,

tions to create unique outdoor

we‘re increasing our physical

gear. The use of cutting-edge

and virtual presence — opening

materials and superior work-

an Internet store as well as

manship set our clothing, tents

franchised Wolfskin stores in

and backpacks apart, making

key European cities.

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Jack Wolfskin
Packmonster II

PACKMONSTER II. The name
says it all: a rucksack that‘s
tough where it needs to be
and light where it can be.
Our revolutionary system
puts heavy gear close in
to the back and lighter
equipment on the outside
for safe, comfortable weight
distribution. Generous
compartments organize
clothing, provisions, stove,
sleeping bag and more —
making hard trekking easier,
the Jack Wolfskin way.

fifteen

B R A N D

watercraft

diving

SONIFORM

motors

outdoor equipment

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549

FORM 10-K

[ X ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended October 1, 1999

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

For the transition period from ______ to ______

Commission file number 0-16255

JOHNSON WORLDWIDE ASSOCIATES, INC.
(Exact name of Registrant as specified in its charter)

Wisconsin
(State or other jurisdiction of
incorporation or organization)

39-1536083
(I.R.S. Employer Identification No.)

1326 Willow Road, Sturtevant, Wisconsin 53177
(Address of principal executive offices)

(262) 884-1500
(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act: None

Securities registered pursuant to section 12(g) of the Act:

Class A common stock, $.05 par value

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of
the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant
was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes. [ X ] No. [ ]

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein,
and will not be contained, to the best of Registrant’s knowledge, in definitive proxy or information statements incor-
porated by reference in Part III of this Form 10-K, or any amendment to this Form 10-K. [ X ]

As of November 2, 1999, 6,905,403 shares of Class A and 1,222,755 shares of Class B common stock of the Registrant
were outstanding. The aggregate market value of voting stock of the Registrant held by nonaffiliates of the Registrant
was approximately $30,829,000 on November 2, 1999.

D O C U M E N T S I N C O R P O R AT E D B Y R E F E R E N C E

D o c u m e n t

Johnson Worldwide Associates, Inc. Notice of Annual
Meeting of Shareholders and Proxy Statement for the
Annual Meeting of Shareholders to be held February 17, 2000

P a r t a n d I t e m N u m b e r o f F o r m 1 0 - K
i n t o w h i c h I n c o r p o r a t e d

Part III, Items 10, 11, 12 and 13

TA B L E O F C O N T E N T S

Page

Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1

Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5

Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5

Submission of Matters to a Vote of Security Holders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5

Market for Registrant’s Common Equity and Related Stockholder Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6

Selected Financial Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6

Management’s Discussion and Analysis of Financial Condition and Results of Operations . . . . . . . . . . . . . . . . . . . .7

Quantitative and Qualitative Disclosures about Market Risk . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11

Financial Statements and Supplementary Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure . . . . . . . . . . . . . . . . . .11

Directors and Executive Officers of the Registrant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .12

Executive Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .12

Security Ownership of Certain Beneficial Owners and Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .12

Certain Relationships and Related Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .12

Exhibits, Financial Statement Schedules and Reports on Form 8-K . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .12

Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .13

Exhibit Index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .14

Consolidated Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .F-1

PA R T I

I T E M 1 . B U S I N E S S

Johnson Worldwide Associates, Inc. and its subsidiaries (hereinafter the Company) are engaged in the design, manufacture
and marketing of outdoor recreation products. The Company’s primary focus is product design, product innovation and
marketing to maintain its strong brand names and consumer recognition. Research and development activities for each
of the Company’s five principal businesses emphasize new products and innovation to differentiate the Company’s products
from those of its competitors. The Company is controlled by Samuel C. Johnson, members of his family and related entities.

The Company was a leading supplier in Europe of marine products and accessories, which the Company sold under the
Plastimo name. The Plastimo business was sold in January 1997.

D i v i n g

The Company is one of the world’s largest manufacturers and distributors of technical underwater diving products which
it sells under the Scubapro and SnorkelPro names. The Company markets a full line of underwater diving and snorkeling
equipment, including regulators, stabilizing jackets, tanks, depth gauges, masks, fins, snorkels, diving electronics and
other accessories. In 1997, the Company acquired the stock of Uwatec AG, a leading manufacturer of dive computers and
other electronics, which are sold under the Aladin and Uwatec brands. Scubapro, Aladin and Uwatec products are
marketed globally to the high quality, premium priced segment of the market. The Company maintains a marketing
strategy of limited distribution, selling primarily through independent specialty diving shops worldwide. These diving shops
generally provide a wide range of services to divers, including instruction and repair service.

The Company focuses on maintaining Scubapro, Aladin and Uwatec as the market leaders in innovation and new
products. The Company maintains research and development functions both in the United States and Europe and holds
several patents on products and features. Consumer advertising focuses on building the brand names and position as the
high quality and innovative leader in the industry. The Company advertises its equipment in diving magazines and
through in-store displays.

In 1998, the Company acquired Soniform, Inc., a manufacturer of diving buoyancy compensators primarily for the original
equipment market, which expanded the Company’s manufacturing capability for these products.

The Company maintains manufacturing and assembly facilities in Switzerland, Mexico, Italy and Indonesia. The Company
procures a majority of its rubber and plastic products and components from third-party manufacturers.

Wa t e r c r a f t

The North American market for kayaks is exhibiting strong growth, while the canoe market is growing modestly. The
Company believes, based on industry and other data, that it is the leading manufacturer of canoes and kayaks in the
United States in both unit and dollar sales.

The Company’s original watercraft company is Old Town Canoe. High quality canoes and kayaks for family recreation,
touring and tripping are produced under the Old Town brand. The Company uses a patented rotational-molding process
for manufacturing polyethylene kayaks and canoes to compete in the high volume, low and mid-priced range of the mar-
ket. These kayaks and canoes feature stiffer and more durable hulls than higher priced boats. The Company also manu-
factures canoes from fiberglass, Royalex (ABS) and wood. Carlisle Paddles, a manufacturer of canoe and kayak paddles
and rafting oars, manufactures products that are sold by the Company’s other watercraft businesses as well as products
distributed directly through the same channels as the Company’s watercraft.

The Company completed three acquisitions in 1999. In December 1998, the Company completed the acquisition of True
North Paddle & Necky Kayaks Ltd., a privately held manufacturer and marketer of high quality Necky sea touring and
whitewater kayaks. In April 1999, the Company completed the acquisition of Escape Sailboat Company LLC, a privately
held manufacturer and marketer of Escape recreational sailboats. In July 1999, the Company acquired Extrasport, Inc.,
a privately held manufacturer and marketer of high quality Extrasport and Swiftwater personal flotation devices.

In 1998, the Company completed the acquisition of Leisure Life Limited, a privately held manufacturer and marketer of
small thermoformed recreational boats, including canoes, pedal boats, deck boats and tenders. In 1998, the Company
also acquired Plastiques L.P.A. Limitée, a Canadian manufacturer of the Dimension brand of kayaks. In 1997, the
Company acquired Ocean Kayak, a leading manufacturer of sit-on-top kayaks.

The Company’s kayaks, canoes and accessories are sold primarily to specialty stores and marine dealers, sporting goods
stores and catalog and mail order houses such as L. L. Bean®, in the United States and Europe. Leisure Life products
are sold through marine dealers and large retail chains under several brand identities.

The Company manufactures its watercraft products in six locations in the United States and two locations in Canada.
Ocean Kayak products are also manufactured and sold under license in Europe and New Zealand.

O u t d o o r E q u i p m e n t

The Company’s outdoor equipment products include Jack Wolfskin high quality outdoor clothing, innovative footwear,
camping tents, backpacks and a line of travel gear and accessories; Eureka! and Camp Trails camping tents and back-
packs; and Silva field compasses.

Jack Wolfskin, based in Germany, distributes its products primarily through specialized outdoor stores, selected sporting
goods dealers and a number of franchised Jack Wolfskin stores. Jack Wolfskin has a strong position in Germany with
additional distribution in the key European markets of Great Britain, Benelux, Switzerland and Austria. The product is
also sold in Canada and the United States and, under license, in Japan.

Eureka! and Camp Trails camping tents and backpacks compete primarily in the mid- to high-price range within their
respective markets and are sold in the United States and Canada through independent sales representatives primarily to
sporting goods stores, catalog and mail order houses and camping and backpacking specialty stores. Marketing of the
Company’s tents and backpacks is focused on building the Eureka! and Camp Trails brand names and establishing the
Company as a leader in product design and innovation. The Company’s camping tents and backpacks are produced primarily
by third-party manufacturing sources.

The Company’s Eureka! camping tents have outside self-supporting aluminum frames, allowing quicker and easier set-up,
a design approach first introduced by the Company. Most Eureka! tents are made from breathable nylon. Eureka! camping
products are sold under license in Japan and Korea.

Camp Trails backpacks consist primarily of internal and external frame backpacks for hiking and mountaineering, but
also include soft back bags, day packs and travel packs.

Silva field compasses, which are manufactured by third parties, are marketed exclusively in North America, the area for
which trademark rights for the Silva brand are owned.

The Company’s Eureka! commercial tents include party tents, sold primarily to general rental stores, and other commercial
tents sold directly to tent erectors. Commercial tents are manufactured by the Company in the United States. The
Company also serves as the exclusive distributor of Losberger commercial framing structures in the United States. The
Company was awarded several multi-year contracts for production of both camping and commercial tents by the U.S.
Armed Forces in 1997.

M o t o r s a n d F i s h i n g

The overall motors and fishing markets in which the Company competes have been stagnant in recent years. The
Company believes it has been able to increase or maintain its share of most markets primarily as a result of emphasis
on marketing and product innovation.

M o t o r s

The Company manufactures, under its Minn Kota name, battery powered motors used on fishing boats and other boats
for quiet trolling power or primary propulsion. The Company’s Minn Kota motors and related accessories are sold in the
United States, Canada, Europe and the Pacific Basin through large retail store chains such as Wal Mart and K-Mart, catalogs,
such as Bass Pro Shops and Cabelas, sporting goods specialty stores, marine dealers, and original equipment boat man-
ufacturers. Consumer advertising and promotion include advertising on regional television and in outdoor, general interest
and sports magazines. Packaging and point-of-purchase materials are used to increase consumer appeal and sales.

In 1998, the Company entered into an arrangement with Ranger® Boats, a premier manufacturer, to supply Minn Kota
motors on original equipment boats. In 1998, the Company also entered into an arrangement with Outboard Marine
Corporation to manufacture all Evinrude® branded electric trolling motors for use on original equipment and to service
the aftermarket through their dealer base. In 1999, the Company expanded its base of original equipment partners to
include several other manufacturers. The Company’s Lake Electric Motors division manufactures components for Minn Kota
and electric motors for original equipment manufacturers.

The Company has the leading market share of the electric fishing motor market in the United States.

The Company’s line of Airguide marine, weather and automotive instruments is distributed primarily in the United States
through large retail store chains and original equipment manufacturers. Airguide products are manufactured by the
Company or sourced from third-party manufacturers.

F i s h i n g

The Company’s fishing products include Mitchell and Spidercast reels and rods, Johnson reels, Beetle Spin soft body
lures, Johnson’s Silver Minnow spoons and Spiderline, a leading brand in the “superline” and monofilament segments
of the fishing line market.

The Company markets Mitchell and Spidercast reels, primarily open-faced spinning and bait casting reels, as well as
Johnson fishing reels, which are primarily closed-face spincast reels. Reels are sold individually and in rod and reel com-
binations, primarily through large retail store chains, catalogs and specialty fishing shops in the United States, Canada,
Europe and the Pacific Basin. The Company’s reels compete in a segment of the U.S. and European fishing reel markets
which is dominated by larger manufacturers. Marketing support for the Company’s reels and fishing line is focused on
building brand names and emphasizing product features and innovation through advertising on television, in national
outdoor magazines and through trade and consumer support at retail. The Company’s reels and rods are produced by
third-party manufacturing sources.

The Company purchases, from third-party manufacturers, its Spiderline premium braided line and Spiderline Fusion
products, which have performance characteristics superior to those of monofilament fishing line. Spiderline premium
braided line competes in the “superline” segment of the fishing line category, while Spiderline Fusion is positioned just
above the high end of the monofilament market. In 1997, the Company introduced a monofilament product to expand
the breadth of its line offerings. These products are sold through large retail store chains, catalogs and specialty stores.

The Company’s artificial lure products are manufactured by third parties. These products are sold primarily through large
retail store chains.

S a l e s b y P r i n c i p a l B u s i n e s s

See Note 12 to the Consolidated Financial Statements for financial information comparing sales by major product category.

I n t e r n a t i o n a l O p e r a t i o n s

See Note 12 to the Consolidated Financial Statements for financial information comparing the Company’s domestic and
international operations.

R e s e a r c h a n d D e v e l o p m e n t

The Company commits significant resources to research and new product development. The Company expenses research
and development costs as incurred. The amounts expended by the Company in connection with research and develop-
ment activities for each of the last three fiscal years are set forth in the Consolidated Statements of Operations.

C o m p e t i t i o n

The markets for the Company’s products are very competitive. The Company believes its products compete favorably on
the basis of product innovation, product performance and marketing support and, to a lesser extent, price.

E m p l o y e e s

At October 1, 1999, the Company had approximately 1,500 employees working in its businesses. The Company
considers its employee relations to be excellent. Temporary employees are utilized to manage peaks in the seasonal
manufacturing of products.

B a c k l o g

Unfilled orders for future delivery of products totaled approximately $66.6 million at October 1, 1999 and $42.3 million
at October 2, 1998.

Pa t e n t s, Tra d e m a r ks a n d P ro p r i e t a r y R i g h t s

The Company owns no single patent which is material to its business as a whole. However, the Company holds numer-
ous patents, principally for diving products, rotational-molded canoes and electric motors and regularly files applica-
tions for patents. The Company has numerous trademarks and trade names which it considers important to its business,
many of which are discussed on the preceding pages. The Company vigorously defends its intellectual property rights.

S o u r c e s a n d A v a i l a b i l i t y o f M a t e r i a l s

The Company’s products use materials that are generally in adequate supply.

S e a s o n a l i t y

The Company’s business is seasonal. The following table shows total net sales and operating profit or loss of the Company
for each quarter, as a percentage of the total year. Inventory writedowns of $10.3 million in 1996 are included as com-
ponents of the fourth quarter operating loss. Strategic charges totaling $2.2 million, $1.4 million, $0.3 million and $6.8
million impacted operating results in 1999, 1998, 1997 and 1996, respectively.

October 1, 1999

October 2, 1998

October 3, 1997

September 27, 1996

September 29, 1995

Quarter Ended

Operating
Profit
(Loss)

Net
Sales

Operating
Profit
(Loss)

Net
Sales

Operating
Profit
(Loss)

Operating
Profit
(Loss)(1)

Net
Sales

December

16%

(14)%

16%

(14)%

17%

(32)%

17%

March

June

September

(3)

100%

(15)

100%

Operating
Profit)
(Loss)

(8)%

50)%

66)%

(8)%

Net
Sales

15%

100% 100%

Year Ended

(1) Results not meaningful due to full year operating loss.

E x e c u t i v e O f f i c e r s
The following list sets forth certain information, as of December 1, 1999, regarding the executive officers of the Company.

Helen P. Johnson-Leipold, age 42, became Chairman and Chief Executive Officer of the Company in March 1999. From
September 1998 until March 1999, Ms. Johnson-Leipold was Vice President, Worldwide Consumer Products-Marketing of
S. C. Johnson & Son, Inc. (SCJ). From October 1997 to September 1998, she was Vice President, Personal and Home Care
Products of SCJ. From October 1995 until July 1997, Ms. Johnson-Leipold was Executive Vice President - North American
Businesses of the Company. From 1992 to September 1995, she was Vice President - Consumer Marketing Services
Worldwide of SCJ.

Patrick J. O’Brien, age 41, became President and Chief Operating Officer of the Company in April 1999. From October
1997 until March 1999, Mr. O’Brien was Vice President and General Manager, Home Storage of SCJ. From July 1997 until
October 1997, Mr. O’Brien was Vice President - Strategic Business of SCJ; from April 1996 until June 1997, he was Vice
President - North American Sales of SCJ; from June 1995 until March 1996, he was Director - North American Sales of
SCJ and from January 1993 until May 1995, he was National Sales Manager of SCJ.

Carl G. Schmidt, age 43, has been Senior Vice President and Chief Financial Officer, Secretary and Treasurer since May
1995. From July 1994 to May 1995 he served as Vice President, Chief Financial Officer, Secretary and Treasurer. From
1988 to July 1994, he was a partner in the firm of KPMG LLP.

Mamdouh Ashour, age 61, has been a Group Vice President of the Company since October 1997 and President - Worldwide
Diving since August 1996. From 1994 to August 1996, he served as President of Scubapro Europe.

There are no family relationships between the above executive officers.

I T E M 2 . P R O P E R T I E S

The Company maintains both leased and owned manufacturing, warehousing, distribution and office facilities throughout
the world. The Company believes that its facilities are well maintained and have capacity adequate to meet its current needs.

See Note 5 to the Consolidated Financial Statements for a discussion of lease obligations.

The Company’s principal manufacturing (identified with an asterisk) and other locations are:

Antibes, France (Diving)
Bad Säkingen, Germany (Diving)
Batam, Indonesia* (Diving)
Barcelona, Spain (Diving)
Basingstoke, Hampshire, England (Diving)
Binghamton, New York* (Outdoor Equipment)
Burlington, Ontario, Canada

(Fishing, Motors, Outdoor Equipment)

Chi Wan, Hong Kong (Diving)
Ferndale, Washington* (Watercraft)
Gelnhausen, Germany (Fishing)
Genoa, Italy* (Diving)
Grand Rapids, Michigan* (Watercraft)
Grayling, Michigan* (Watercraft)
Hallwil, Switzerland* (Diving)
Hamburg, Germany (Diving)

Henggart, Switzerland (Diving)
Honolulu, Hawaii (Diving)
Idstein, Germany (Outdoor Equipment)
Mankato, Minnesota* (Fishing, Motors)
Mansonville, Quebec, Canada* (Watercraft)
Miami, Florida* (Watercraft)
Marignier, France (Fishing)
Nyköping, Sweden (Diving)
Old Town, Maine* (Watercraft)
Portsmouth, Rhode Island* (Watercraft)
Racine, Wisconsin* (Motors)
El Cajon, California (Diving)
Silverwater, Australia

(Fishing, Motors, Outdoor Equipment)

Tijuana, Mexico* (Motors, Diving)
Tokyo (Kawasaki), Japan (Diving)

The Company’s corporate headquarters is located in Mount Pleasant, Wisconsin. The Company’s mailing address is
Sturtevant, Wisconsin.

I T E M 3 . L E G A L P R O C E E D I N G S

See Note 15 to the Consolidated Financial Statements for a discussion of legal proceedings.

I T E M 4 . S U B M I S S I O N O F M AT T E R S T O A V O T E O F S E C U R I T Y H O L D E R S

There were no matters submitted to a vote of security holders during the last quarter of the year ended October 1, 1999.

PA R T II

ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

Certain information with respect to this item is included in Notes 4, 8, 9 and 10 to the Consolidated Financial
Statements. The Company’s Class A common stock is traded on The Nasdaq Stock Market® under the symbol: JWAIA. There
is no public market for the Company’s Class B common stock. However, the Class B common stock is convertible at all
times at the option of the holder into shares of Class A common stock on a share for share basis. As of November 2,
1999, the Company had 714 holders of record of its Class A common stock and 59 holders of record of its Class B common
stock. The Company has never paid a dividend on its common stock.

A summary of the high and low prices for the Company’s Class A common stock during each quarter of the years ended
October 1, 1999 and October 2, 1998 is as follows:

First Quarter

Second Quarter

Third Quarter

Fourth Quarter

1999

1998

1999

1998

1999

1998

1999

1998

Stock prices:

High

Low

Last

$10.25

$17.75

$9.75

$17.28

$9.50

$16.38

$9.75

$14.00

6.25

9.25

14.50

17.63

6.06

7.38

15.50

16.25

7.13

8.88

12.25

12.75

8.38

8.94

8.00

8.50

I T E M 6 .

S E L E C T E D F I N A N C I A L D ATA

A summary of the Company’s operating results and key balance sheet data for each of the years in the five-year period
ended October 1, 1999 is as follows:

October 1,
1999

October 2,
1998

October 3,
1997

September 27,
1996

September 29,
1995

Year Ended

(thousands, except per share data)

O P E R AT I N G R E S U LT S (1)
Net sales

Gross profit

Operating expenses(2)

Operating profit (loss)

Interest expense

Other income, net

Income (loss) before income taxes

Income tax expense

Net income (loss)

Basic earnings (loss) per common share

Diluted earnings (loss) per common share $

$364,277

$ 328,525

142,079

120,456

21,623

9,719

(47)

11,951

4,929

7,022

0.87

125,964

107,241

18,723

9,829

(255)

9,149

3,937

5,212

0.64

8,114

Diluted average common shares outstanding

8,108

B A L A N C E S H E E T D ATA (1)

Current assets

Total assets

Current liabilities(3)

Long-term debt, less current maturities

Total debt

Shareholders’ equity

$152,862

$ 154,189

302,562

48,094

73,141

122,586

127,178

296,017

42,405

82,066

124,680

124,386

$303,121

111,332

99,321

12,011

8,780

(728)

3,959

1,903

2,056

0.25

8,115

$152,749

277,019

40,027

88,753

114,835

117,731

$344,373

$347,190

119,724

121,200

(1,476)

10,181

(496)

(11,161)

194

138,155

114,411

23,744

7,613

(861)

16,992

6,903

$(11,355)

$ 10,089

(1.40)

8,130

1.25

1.24

8,117

$194,344

$185,380

280,768

45,288

61,501

104,619

278,353

45,292

68,948

87,511

126,424

141,262

(1) The year ended October 3, 1997 includes 53 weeks. All other years include 52 weeks.
(2) Includes strategic charges of $2,247, $1,424, $335 and $6,768 in 1999, 1998, 1997 and 1996, respectively.
(3) Excludes short-term debt and current maturities of long-term debt.

I T E M 7 . M A N A G E M E N T ’ S D I S C U S S I O N A N D A N A LY S I S O F F I N A N C I A L C O N D I T I O N A N D

R E S U LT S O F O P E R AT I O N S

The following discussion includes comments and analysis relating to the Company’s results of operations and financial
condition for the three years ended October 1, 1999. This discussion should be read in conjunction with the Consolidated
Financial Statements and related notes thereto.

F o r w a r d L o o k i n g S t a t e m e n t s

Certain matters discussed in this 1999 Form 10-K are “forward-looking statements,” intended to qualify for the safe harbors
from liability established by the Private Securities Litigation Reform Act of 1995. These forward-looking statements can
generally be identified as such because the context of the statement includes phrases such as the Company “expects,”
“believes” or other words of similar meaning. Similarly, statements that describe the Company’s future plans, objectives
or goals are also forward-looking statements. Such forward-looking statements are subject to certain risks and uncer-
tainties which could cause actual results or outcomes to differ materially from those currently anticipated. Factors that
could affect actual results or outcomes include changes in consumer spending patterns, the success of the Company’s
EVA® program, actions of companies that compete with the Company, the Company’s success in managing inventory,
movements in foreign currencies or interest rates, the success of the Company, suppliers, customers and others regarding
compliance with year 2000 issues, and adverse weather conditions. Shareholders, potential investors and other readers
are urged to consider these factors in evaluating the forward-looking statements and are cautioned not to place undue
reliance on such forward-looking statements. The forward-looking statements included herein are only made as of the
date of this 1999 Form 10-K and the Company undertakes no obligation to publicly update such forward-looking statements
to reflect subsequent events or circumstances.

R e s u l t s o f O p e r a t i o n s

Summary consolidated financial results are as follows:

(millions, except per share data)

Net sales

Gross profit

Operating expenses(1)

Operating profit

Interest expense

Net income

Diluted earnings per common share

1999

$364.3

142.1

120.5

21.6

9.7

7.0

0.87

1998

$328.5

126.0

107.2

18.7

9.8

5.2

0.64

1997

$303.1

111.3

99.3

12.0

8.8

2.1

0.25

(1)Includes strategic charges of $2.2 million, $1.4 million and $0.3 million in 1999, 1998 and 1997, respectively.

1 9 9 9 v s 1 9 9 8

N e t S a l e s

Net sales totaled $364.3 million in 1999 compared to $328.5 million in 1998, an increase of 10.9%. Sales as measured
in U.S. dollars were modestly impacted by the effect of foreign currencies relative to the U.S. dollar in comparison to
1998. Excluding the effects of foreign currency movements, sales increased 10.5% from 1998. The increase was due to
strong growth in sales of watercraft, including sales of products of businesses the Company acquired in 1999 and 1998,
and growth in sales of motors and outdoor equipment products, which more than offset weaker diving equipment sales.

O p e r a t i n g R e s u l t s

The Company recognized an operating profit of $21.6 million in 1999 compared to an operating profit of $18.7 million
in 1998. Gross profit margins increased from 38.3% in 1998 to 39.0% in 1999, as a result of an improved mix of prod-
ucts sold, increases in volume and the effect of businesses acquired in 1999. In spite of the overall increase in gross
profit margin in 1999, the Company continues to experience margin pressure in all of its businesses due to competition.

Operating expenses, excluding strategic charges, totaled $118.2 million, or 32.5% of sales, in 1999 compared to $105.8
million, or 32.2% of sales, in 1998. The increase in the operating expense ratio was attributable to increased emphasis
on advertising and promotional expenses and research and development expenses in support of the Company’s various
brands. The allowance for doubtful accounts receivable was also increased due to higher levels of sales and receivables.
These factors were partially offset by a decline from the prior year in unusual legal expenses incurred to successfully
defend certain of the Company’s key outdoor equipment, diving and motors patents and trademarks.

The Company recognized strategic charges totaling $2.2 million in 1999 and $1.4 million in 1998. These charges resulted
from severance and other costs related to the integration of acquired businesses, primarily in the diving business, and
for severance, relocation and recruitment costs in the North American outdoor equipment business. The Company antic-
ipates no significant additional strategic charges will be incurred in 2000 to further integrate recent acquisitions into
its business or to complete other announced actions.

Interest expense decreased $0.1 million in 1999, reflecting higher debt levels resulting from the acquisition of three
businesses, which was more than offset by lower levels of debt from reduction of working capital, primarily inventory,
and improved profitability.

O t h e r I n c o m e a n d E x p e n s e s

O v e r a l l R e s u l t s

The Company recognized net income of $7.0 million in 1999, or $0.87 per diluted share, compared to net income of $5.2
million, or $0.64 per diluted share, in 1998. The Company recorded income tax expense of $4.9 million in 1999, an effec-
tive rate of 41%, due to earnings in foreign jurisdictions that are taxed at higher rates than in the United States. The
Company’s effective tax rate improved from 43% in the prior year to 41% in 1999 due to an improved mix of domestic
versus foreign income.

1 9 9 8 v s 1 9 9 7

N e t S a l e s

Net sales totaled $328.5 million in 1998 compared to $303.1 million in 1997, an increase of 8%. Sales as measured in
U.S. dollars were negatively impacted by the effect of weaker foreign currencies relative to the U.S. dollar in comparison
to 1997. Excluding the effects of foreign currency movements and the sale of the Plastimo business in January 1997,
sales increased $40.6 million, or 13%, from 1997. The increase was due primarily to sales of products of businesses the
Company acquired in 1998 and 1997 and strong growth in sales of watercraft, which more than offset a decline in fishing
sales and weaker diving equipment sales in Asia.

O p e r a t i n g R e s u l t s

The Company recognized an operating profit of $18.7 million in 1998 compared to an operating profit of $12 million in
1997. Gross profit margins increased from 36.7% in 1997 to 38.3% in 1998, primarily as a result of sales of products of
businesses acquired by the Company in 1998 and 1997.

Operating expenses, excluding strategic charges, totaled $105.8 million, or 32.2% of sales, in 1998 compared to $99
million, or 32.7% of sales, in 1997. The improvement in the operating expense ratio was attributable to management’s
efforts to control such expenses and the impact of weaker foreign currencies for much of the year. These factors were
partially offset by operating expenses of businesses acquired in 1998 and 1997 and unusual legal expenses incurred to
successfully defend certain of the Company’s key outdoor equipment, diving and motors patents and trademarks.

The Company recognized strategic charges totaling $1.4 million in 1998 and $0.3 million in 1997. These charges resulted
primarily from severance and other costs related to the integration of acquired businesses, primarily in the diving business.

Interest expense increased $1 million in 1998, reflecting higher debt levels resulting from the acquisition of five businesses
since July 1997, which was partially offset by lower levels of working capital, primarily inventory, and a favorable interest
rate environment.

O t h e r I n c o m e a n d E x p e n s e s

O v e r a l l R e s u l t s

The Company recognized net income of $5.2 million in 1998, or $0.64 per diluted share, compared to net income of $2.1
million, or $0.25 per diluted share, in 1997. The Company recorded income tax expense of $3.9 million in 1998, an
effective rate of 43%, due to earnings in foreign jurisdictions that are taxed at higher rates than in the United States.
The tax benefit of operating losses generated in the United States did not fully offset the taxes in these foreign juris-
dictions. The Company’s effective tax rate improved from 48.1% in 1997 due to a rate reduction in Italy and an increase
in profits in Switzerland, which has lower overall tax rates.

F i n a n c i a l C o n d i t i o n

The following discusses changes in the Company’s liquidity and capital resources.

The Company is focused on reduction of its working capital ratio and has shown improvement over the last several years.
The following table sets forth the Company’s working capital position at the end of each of the past three years:

O p e r a t i o n s

(millions)

Current assets
Current liabilities(1)

Working capital

Current ratio

1999

$152.9
48.1

$104.8

3.2 to 1

1998

$154.2
42.4

$111.8

3.6 to 1

1997

$152.7
40.0

$112.7

3.8 to 1

(1)Excludes short-term debt and current maturities of long-term debt.

Cash flows provided by operations totaled $27.8 million in 1999 and $20.5 million in 1998. Proactive management
efforts, which led to reduction of inventories of $4.1 million in 1999 and $6.6 million in 1998, accounted for part of
the positive cash flows. The Company’s profitability in 1999 and 1998 also contributed to the positive cash flows. Growth
in accounts receivable of $6.5 million and $1.7 million in 1999 and 1998, respectively, offsets the positive cash flows.

Depreciation and amortization charges were $15.1 million in 1999, $14.0 million in 1998 and $11.9 million in 1997.
Amortization of intangible assets arising from the Company’s acquisitions and increased depreciation from capital spend-
ing in all years accounted for the increases in these charges.

I n v e s t i n g A c t i v i t i e s

Expenditures for property, plant and equipment were $14.3 million in 1999, $13.1 million in 1998, and $8.9 million in
1997. The Company’s recurring investments are primarily related to tooling for new products, manufacturing facilities and
information systems improvements. In 2000, capital expenditures are anticipated to total approximately $14 million. These
expenditures are expected to be funded by cash generated from reduction of working capital or existing credit facilities.

The Company completed the acquisitions of three businesses in 1999, three businesses in 1998 and two businesses in
1997, which increased tangible and intangible assets and debt by $13.6 million, $12.8 million and $37.2 million, respec-
tively. The sale of the Company’s Plastimo business in January 1997 provided $13.9 million of cash, which was used to
reduce short-term debt.

The following table sets forth the Company’s debt and capital structure at the end of the past three years:

F i n a n c i n g A c t i v i t i e s

(millions)

Current debt

Long-term debt

Total debt

Shareholders’ equity

Total capitalization

Total debt to total capital

1999

$ 49.5

73.1

122.6

127.2

$249.8

49.1%

1998

$ 42.6

82.1

124.7

124.4

$249.1

50.1%

1997

$ 26.1

88.7

114.8

117.7

$ 232.5

49.4%

Cash flows from financing activities totaled $7.8 million in 1998 and $6.9 million in 1997. In 1998, the Company
consummated a private placement of long-term debt totaling $25 million. Payments on long-term debt required to be
made in 2000 total $6.1 million. At October 1, 1999, the Company had available unused credit facilities in excess of
$67.2 million, which is believed to be adequate for its needs.

M a r k e t R i s k M a n a g e m e n t

The Company is exposed to market risk stemming from changes in foreign exchange rates, interest rates and, to a lesser
extent, commodity prices. Changes in these factors could cause fluctuations in earnings and cash flows. In the normal course
of business, exposure to certain of these market risks is managed by entering into hedging transactions authorized under
Company policies that place controls on these activities. Hedging transactions involve the use of a variety of derivative finan-
cial instruments. Derivatives are used only where there is an underlying exposure: not for trading or speculative purposes.

F o r e i g n O p e r a t i o n s

The Company has significant foreign operations, for which the functional currencies are denominated primarily in Swiss
and French francs, German marks, Italian lire, Japanese yen and Canadian dollars. As the values of the currencies of the
foreign countries in which the Company has operations increase or decrease relative to the U.S. dollar, the sales,
expenses, profits, assets and liabilities of the Company’s foreign operations, as reported in the Company’s Consolidated
Financial Statements, increase or decrease, accordingly. The Company mitigates a portion of the fluctuations in certain
foreign currencies through the purchase of foreign currency swaps, forward contracts and options to hedge known com-
mitments, primarily for purchases of inventory and other assets denominated in foreign currencies.

The Company’s debt structure and interest rate risk are managed through the use of fixed and floating rate debt. The
Company’s primary exposure is to United States interest rates. The Company also periodically enters into interest rate
swaps, caps or collars to hedge its exposure and lower financing costs.

I n t e r e s t R a t e s

Certain components used in the Company’s products are exposed to commodity price changes. The Company manages
this risk through instruments such as purchase orders and non-cancelable supply contracts. Primary commodity price
exposures are metals and packaging materials.

C o m m o d i t i e s

S e n s i t i v i t y t o C h a n g e s i n Va l u e

The estimates that follow are intended to measure the maximum potential fair value or earnings the Company could lose
in one year from adverse changes in foreign exchange rates or market interest rates under normal market conditions. The
calculations are not intended to represent actual losses in fair value or earnings that the Company expects to incur. The
estimates do not consider favorable changes in market rates. Further, since the hedging instrument (the derivative)
inversely correlates with the underlying exposure, any loss or gain in the fair value of derivatives would generally be
offset by an increase or decrease in the fair value of the underlying exposures. The positions included in the calculations
are foreign exchange forwards, currency swaps and fixed rate debt. Certain instruments are included in both categories
of risk exposure calculated below. The calculations do not include the underlying foreign exchange positions that are
hedged by these market risk sensitive instruments. The table below presents the estimated maximum potential one year
loss in fair value and earnings before income taxes from a 10% movement in foreign currencies and a 100 basis point
movement in interest rate market risk sensitive instruments outstanding at October 1, 1999:

(millions)

Foreign exchange rate instruments

Interest rate instruments

1 0

Fair Value

$3.2

3.0

Estimated Impact on

Earnings Before
Income Taxes

$0.7

0.7

O t h e r F a c t o r s

The Company has not been significantly impacted by inflationary pressures over the last several years. The Company
anticipates that changing costs of basic raw materials may impact future operating costs and, accordingly, the prices of
its products. The Company is involved in continuing programs to mitigate the impact of cost increases through changes
in product design and identification of sourcing and manufacturing efficiencies. Price increases and, in certain situa-
tions, price decreases are implemented for individual products, when appropriate.

Ye a r 2 0 0 0

The year 2000 issue is the result of computer programs using two digits (rather than four) to define years. Computers
or other equipment with date sensitive software may recognize “00” as the year 1900 rather than 2000. This could result
in system failures or miscalculations. If the Company or its significant customers or suppliers fail to correct year 2000
issues, the Company’s ability to operate could be materially affected.

The Company has assessed the impact of year 2000 issues on the processing of date-related information for all of its
information systems infrastructure and non-technical assets, such as production equipment. All systems and non-tech-
nical assets have been inventoried and classified as to their compliance with year 2000 data processing. Any systems
found year 2000 deficient are being modified, upgraded or replaced. Project plans anticipate all existing, critical infor-
mation systems infrastructure and non-technical assets to be year 2000 compliant before failure to comply would sig-
nificantly disrupt the Company’s operations. Contingency plans have been developed to address any failures resulting
from relationships with customers, suppliers or other third parties. The Company has made inquiries of its suppliers, cus-
tomers and other organizations which impact the Company’s business, but cannot guarantee that circumstances beyond
its control will not have an adverse impact on its operations.

Since 1993, the Company has invested more than $11 million in information systems improvements and has been migrat-
ing its businesses to systems that are year 2000 compliant. Based on assessments and testing to date, the financial
impact of addressing any potential remaining internal system issues should not be material to the Company’s financial
position, results of operations or cash flows.

A c c o u n t i n g C h a n g e s

In June 1998, the FASB issued Statement 133, Accounting for Derivative Instruments and Hedging Activities. This
Statement requires companies to record derivatives on the balance sheet as assets and liabilities, measured at fair value.
Gains or losses resulting from changes in the values of those derivatives will be accounted for depending on the use of the
derivative and whether it qualifies for hedge accounting. Statement 133, as amended by Statement 137, is effective for
fiscal years beginning after June 15, 2000. The Company will adopt this accounting standard for the year beginning
October 2000. The Company has not yet determined the impact of Statement 133 on the Consolidated Financial Statements.

I T E M 7 A . Q U A N T I TAT I V E A N D Q U A L I TAT I V E D I S C L O S U R E S A B O U T M A R K E T R I S K

Information with respect to this item is included in Management’s Discussion and Analysis of Financial Condition and
Results of Operations under the heading “Market Risk Management.”

I T E M 8 . F I N A N C I A L S TAT E M E N T S A N D S U P P L E M E N TA R Y D ATA

Information with respect to this item is included on pages F-1 to F-20.

I T E M 9 .

C H A N G E S I N A N D D I S A G R E E M E N T S W I T H A C C O U N TA N T S O N A C C O U N T I N G A N D
F I N A N C I A L D I S C L O S U R E

None.

1 1

PA R T I I I

I T E M 1 0 . D I R E C T O R S A N D E X E C U T I V E O F F I C E R S O F T H E R E G I S T R A N T

Information with respect to this item, except for certain information on executive officers (which appears at the end of
Part I of this report) is included in the Company’s February 17, 2000 Proxy Statement, which is incorporated herein by
reference, under the headings “Election of Directors” and “Section 16(a) Beneficial Ownership Reporting Compliance.”

I T E M 1 1 . E X E C U T I V E C O M P E N S AT I O N

Information with respect to this item is included in the Company’s February 17, 2000 Proxy Statement, which is incor-
porated herein by reference, under the headings “Election of Directors - Compensation of Directors” and “Executive
Compensation;” provided, however, that the subsection entitled “Executive Compensation - Compensation Committee
Report on Executive Compensation” shall not be deemed to be incorporated herein by reference.

I T E M 1 2 . S E C U R I T Y O W N E R S H I P O F C E R TA I N B E N E F I C I A L O W N E R S A N D M A N A G E M E N T

Information with respect to this item is included in the Company’s February 17, 2000 Proxy Statement, which is incor-
porated herein by reference, under the heading “Stock Ownership of Management and Others.”

I T E M 1 3 . C E R TA I N R E L AT I O N S H I P S A N D R E L AT E D T R A N S A C T I O N S

Information with respect to this item is included in the Company’s February 17, 2000 Proxy Statement, which is incor-
porated herein by reference, under the heading “Certain Transactions.”

I T E M 1 4 . E X H I B I T S , F I N A N C I A L S TAT E M E N T S C H E D U L E S A N D R E P O R T S O N F O R M 8 - K

PA R T I V

The following documents are filed as a part of this Form 10-K:

F i n a n c i a l S t a t e m e n t s

Included in Item 8 of Part II of this Form 10-K are the following:

Independent Auditors’ Report

Consolidated Balance Sheets - October 1, 1999 and October 2, 1998

Consolidated Statements of Operations - Years ended October 1, 1999, October 2, 1998 and October 3, 1997

Consolidated Statements of Shareholders’ Equity - Years ended October 1, 1999, October 2, 1998 and October 3, 1997

Consolidated Statements of Cash Flows - Years ended October 1, 1999, October 2, 1998 and October 3, 1997

Notes to Consolidated Financial Statements

F i n a n c i a l S t a t e m e n t S c h e d u l e s

All schedules are omitted because they are not applicable, are not required or equivalent information has been
included in the Consolidated Financial Statements or notes thereto.

E x h i b i t s

See Exhibit Index.

R e p o r t s o n F o r m 8 - K

No reports on Form 8-K were filed during the three months ended October 1, 1999.

1 2

S I G N AT U R E S

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly
caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, in the Town of Mount
Pleasant and State of Wisconsin, on the 30th day of December 1999.

JOHNSON WORLDWIDE ASSOCIATES, INC.

(Registrant)

/s/ Helen P. Johnson-Leipold

Helen P. Johnson-Leipold
Chairman and Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed by the following persons
in the capacities indicated on the 30th day of December 1999.

/s/ Helen P. Johnson-Leipold

(Helen P. Johnson-Leipold)

Chairman and Chief Executive Officer and Director
(Principal Executive Officer)

/s/ Thomas F. Pyle, Jr.

(Thomas F. Pyle, Jr.)

/s/ Samuel C. Johnson

(Samuel C. Johnson)

/s/ Gregory E. Lawton

(Gregory E. Lawton)

/s/ Glenn N. Rupp

(Glenn N. Rupp)

(Terry E. London)

/s/ Carl G. Schmidt

(Carl G. Schmidt)

Vice Chairman of the Board and Director

Director

Senior Vice President and Chief Financial
Officer, Secretary and Treasurer
(Principal Financial and Accounting Officer)

1 3

E X H I B I T I N D E X

Exhibit

Title

Page

Articles of Incorporation of the Company. (Filed as Exhibit 3.1 to the Company’s
Form S-1 Registration Statement No. 33-16998 and incorporated herein by reference.)

Amendments to Bylaws of the Company dated as of March 9, 1999 (Filed as Exhibit 3.1 to the
Company’s Form 10-Q for the quarter ended April 2, 1999 and incorporated herein by reference.)

Bylaws of the Company as amended through March 9, 1999 (Filed as Exhibit 3.2 to the
Company’s Form 10-Q for the quarter ended April 2, 1999 and incorporated herein by reference.)

Note Agreement dated October 1, 1995. (Filed as Exhibit 4.1 to the Company’s Form 10-Q for
the quarter ended December 29, 1995 and incorporated herein by reference.)

First Amendment dated October 31, 1996 to Note Agreement dated October 1, 1995.
(Filed as Exhibit 4.3 to the Company’s Form 10-Q for the quarter ended December 27, 1996
and incorporated herein by reference.)

Second Amendment dated September 30, 1997 to Note Agreement dated October 1, 1995.
(Filed as Exhibit 4.8 to the Company’s Form 10-K for the year ended October 3, 1997
and incorporated herein by reference.)

Third Amendment dated October 3, 1997 to Note Agreement dated October 1, 1995.
(Filed as Exhibit 4.9 to the Company’s Form 10-K for the year ended October 3, 1997 and
incorporated herein by reference.)

Note Agreement dated as of September 15, 1997. (Filed as Exhibit 4.15 to the Company’s
Form 10-K for the year ended October 3, 1997 and incorporated herein by reference.)

Amended and Restated Credit Agreement dated as of April 3, 1998. (Filed as Exhibit 4.16
to the Company’s Form 10-Q for the quarter ended April 3, 1998 and incorporated herein
by reference.)

Amendment No. 1 dated September 11, 1998 to the Amended and Restated Credit Agreement
dated as of April 3, 1998. (Filed as Exhibit 4.17 to the Company’s Form 10-Q for the quarter
ended January 1, 1999 and incorporated herein by reference.)

Johnson Worldwide Associates, Inc. Class B common stock Voting Trust Agreement, dated
December 30, 1993 (Filed as Exhibit 9 to the Company’s Form 10-Q for the quarter ended
December 31, 1993 and incorporated herein by reference.)

Asset Purchase Agreement between Johnson Worldwide Associates, Inc. and Safari Land Ltd.,
Inc. dated as of March 31, 1995 (Filed as Exhibit 2 to the Company’s Form 10-Q for the quarter
ended March 31, 1995 and incorporated herein by reference.)

Share Purchase Agreement by and between Johnson Worldwide Associates, Inc., Société
Figeacoise de Participations and Plastimo, S.A., dated as of January 30, 1997. (Filed as Exhibit 2
to the Company’s Form 8-K dated January 30, 1997 and incorporated herein by reference.)

Share Purchase Agreement by and between Johnson Beteiligungsgesellschaft mbH, Johnson
Worldwide Associates, Inc. and Heinz Ruchti and Karl Leeman (the selling shareholders of
Uwatec AG), dated July 11, 1997. (Filed as Exhibit 2 to the Company’s Form 8-K dated July 11,
1997 and incorporated herein by reference.)

Johnson Worldwide Associates, Inc. Amended and Restated 1986 Stock Option Plan.
(Filed as Exhibit 10 to the Company’s Form 10-Q for the quarter ended July 2, 1993 and
incorporated herein by reference.)

3.1

3.2

3.3

4.1

4.2

4.3

4.4

4.5

4.6

4.7

10.1

10.2

10.3

10.4+

1 4

Exhibit

10.5

10.6

10.7+

10.8+

10.9+

10.10+

10.11

10.12+

10.13+

10.14+

10.15+

Title

Registration Rights Agreement regarding Johnson Worldwide Associates, Inc. common stock
issued to the Johnson family prior to the acquisition of Johnson Diversified, Inc. (Filed as
Exhibit 10.6 to the Company’s Form S-1 Registration Statement No. 33-16998 and incorporated
herein by reference.)

Registration Rights Agreement regarding Johnson Worldwide Associate, Inc. Class A common
stock held by Mr. Samuel C. Johnson. (Filed as Exhibit 28 to the Company’s Form 10-Q for the
quarter ended March 29, 1991 and incorporated herein by reference.)

Form of Restricted Stock Agreement. (Filed as Exhibit 10.8 to the Company’s Form S-1
Registration Statement No. 33-23299 and incorporated herein by reference.)

Page

Form of Supplemental Retirement Agreement of Johnson Diversified, Inc. (Filed as Exhibit 10.9 to *
the Company’s Form S-1 Registration Statement No. 33-16998 and incorporated herein by reference.)

Johnson Worldwide Associates Retirement and Savings Plan. (Filed as Exhibit 10.9 to the
Company’s Form 10-K for the year ended September 29, 1989 and incorporated herein by reference.)

Form of Agreement of Indemnity and Exoneration with Directors and Officers. (Filed as
Exhibit 10.11 to the Company’s Form S-1 Registration Statement No. 33-16998 and
incorporated herein by reference.)

Consulting and administrative agreements with S. C. Johnson & Son, Inc. (Filed as
Exhibit 10.12 to the Company’s Form S-1 Registration Statement No. 33-16998 and
incorporated herein by reference.)

Johnson Worldwide Associates, Inc. 1994 Long-Term Stock Incentive Plan. (Filed as Exhibit 4
to the Company’s S-8 Registration Statement No. 333-88091 and incorporated herein by reference.)

Johnson Worldwide Associates, Inc. 1994 Non-Employee Director Stock Ownership Plan.
(Filed as Exhibit 4 to the Company’s Form S-8 Registration Statement No. 333-88089 and
incorporated herein by reference.)

Johnson Worldwide Associates Economic Value Added Bonus Plan (Filed as Exhibit 10.15 to the
Company’s Form 10-K for the year ended October 3, 1997 and incorporated herein by reference.)

Separation agreement, dated March 9, 1999, between the Company and R. C. Whitaker.
(Filed as Exhibit 10.1 to the Company’s Form 10-Q for the quarter ended April 2, 1999 and
incorporated herein by reference.)

Statement regarding computation of per share earnings. (Incorporated by reference to Note 14
to the Consolidated Financial Statements on page F-19 of the Company’s 1999 Form 10-K.)

Subsidiaries of the Company as of October 1, 1999.

Consent of KPMG LLP.

Financial Data Schedule (EDGAR version only)

Definitive Proxy Statement for the 2000 Annual Meeting of Shareholders. Except to the extent
specifically incorporated herein by reference, the Proxy Statement for the 2000 Annual Meeting
of Shareholders shall not be deemed to be filed with the Securities and Exchange Commission as
part of this Form 10-K. The Proxy Statement for the 2000 Annual Meeting of Shareholders will be
filed with the Securities and Exchange Commission under Registration 14A within 120 days after
the end of the Company’s fiscal year.

* Incorporated herein by reference.
+ A management contract or compensatory plan or arrangement.

1 5

C O N S O L I D AT E D F I N A N C I A L S TAT E M E N T S

Table of Contents

Page

Report of Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .F-1

Independent Auditors’ Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .F-1

Consolidated Balance Sheets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .F-2

Consolidated Statements of Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .F-3

Consolidated Statements of Shareholders’ Equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .F-4

Consolidated Statements of Cash Flows . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .F-5

Notes to Consolidated Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .F-6

REPORT OF MANAGEMENT

The management of Johnson Worldwide Associates, Inc. is responsible for the preparation and integrity of all financial
statements and other information contained in this Form 10-K. We rely on a system of internal financial controls to meet
the responsibility of providing accurate financial statements. The system provides reasonable assurances that assets
are safeguarded, that transactions are executed in accordance with management’s authorization and that the financial
statements are prepared on a worldwide basis in accordance with generally accepted accounting principles.

The financial statements for each of the years covered in this Form 10-K have been audited by independent auditors,
who have provided an independent assessment as to the fairness of the financial statements, after obtaining an under-
standing of the Company’s systems and procedures and performing such other tests as deemed necessary.

The Audit Committee of the Board of Directors, which is composed solely of directors who are not officers of the
Company, meets with management and the independent auditors to review the results of their work and to satisfy itself
that their respective responsibilities are being properly discharged. The independent auditors have full and free access
to the Audit Committee and have regular discussions with the Committee regarding appropriate auditing and financial
reporting matters.

Helen P. Johnson-Leipold
Chairman and Chief Executive Officer

Carl G. Schmidt
Senior Vice President and Chief Financial Officer

INDEPENDENT AUDITORS’ REPORT

Shareholders and Board of Directors
Johnson Worldwide Associates, Inc.:

We have audited the consolidated balance sheets of Johnson Worldwide Associates, Inc. and subsidiaries as of October
1, 1999 and October 2, 1998, and the related consolidated statements of operations, shareholders’ equity, and cash flows
for each of the years in the three-year period ended October 1, 1999. These Consolidated Financial Statements are the
responsibility of the Company’s management. Our responsibility is to express an opinion on these Consolidated Financial
Statements based on our audits.

We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial statements are free of material mis-
statement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, the Consolidated Financial Statements referred to above present fairly, in all material respects, the financial
position of Johnson Worldwide Associates, Inc. and subsidiaries as of October 1, 1999 and October 2, 1998, and the
results of their operations and their cash flows for each of the years in the three-year period ended October 1, 1999, in
conformity with generally accepted accounting principles.

KPMG LLP
Milwaukee, Wisconsin
November 9, 1999

F - 1

C O N S O L I D AT E D B A L A N C E S H E E T S

(thousands, except share data)

A S S E T S
Current assets:

Cash and temporary cash investments
Accounts receivable, less allowance for doubtful
accounts of $3,663 and $2,570, respectively

Inventories
Deferred income taxes
Other current assets

Total current assets
Property, plant and equipment
Deferred income taxes
Intangible assets
Other assets
Total assets

L I A B I L I T I E S A N D S H A R E H O L D E R S’ E Q U I T Y
Current liabilities:

Short-term debt and current maturities of long-term debt
Accounts payable

Accrued liabilities:

Salaries and wages
Income taxes
Other
Total current liabilities
Long-term debt, less current maturities
Other liabilities
Total liabilities

Shareholders’ equity:

Preferred stock: none issued

Common stock:

Class A shares issued:

October 1, 1999, 6,910,577;
October 2, 1998, 6,909,577

Class B shares issued (convertible into Class A shares):

October 1, 1999, 1,222,861;
October 2, 1998, 1,223,861

Capital in excess of par value
Retained earnings
Contingent compensation
Other comprehensive income -

cumulative foreign currency translation adjustment

Treasury stock, Class A shares, at cost:

October 1, 1999, 5,280;
October 2, 1998, 39,532

Total shareholders’ equity

Total liabilities and shareholders’ equity

The accompanying notes are an integral part of the Consolidated Financial Statements.

F - 2

October 1,
1999

October 2,
1998

$ 10,594

59,786
70,775
5,904
5,803
152,862
38,816
15,647
92,763
2,474
$302,562

$ 49,445
16,589

7,730
424
23,351
97,539
73,141
4,704
175,384

—

345

61
44,205
91,832
(134)

(9,049)

$ 11,496

53,421
76,603
6,067
6,602
154,189
35,469
15,435
90,101
823
$296,017

$ 42,614

11,681

6,213
3,019
21,492
85,019
82,066
4,546
171,631

—

345

61
44,205
85,068
(27)

(4,651)

(82)

127,178

$302,562

(615)

124,386

$296,017

C O N S O L I D AT E D S TAT E M E N T S O F O P E R AT I O N S

(thousands, except per share data)

Net sales

Cost of sales

Gross profit

Operating expenses:

Marketing and selling

Administrative management, finance

and information systems

Research and development

Amortization of acquisition costs

Profit sharing

Strategic charges

Total operating expenses

Operating profit

Interest income

Interest expense

Other (income) expense, net

Income before income taxes

Income tax expense

Net income
B A S I C E A R N I N G S P E R C O M M O N S H A R E
D I L U T E D E A R N I N G S P E R C O M M O N S H A R E

October 1,
1999

$364,277

222,198

142,079

73,732

29,294

8,329

4,147

2,707

2,247

120,456

21,623

(316)

9,719

269

11,951

4,929

$ 7,022

0.87

The accompanying notes are an integral part of the Consolidated Financial Statements.

October 2,
1998

$328,525

202,561

125,964

67,567

25,981

7,033

3,789

1,447

1,424

107,241

18,723

(363)

9,829

108

9,149

3,937

5,212

0.64

Year Ended

October 3,
1997

$303,121

191,789

111,332

66,259

23,031

5,453

2,631

1,612

335

99,321

12,011

(471)

8,780

(257)

3,959

1,903

2,056

0.25

F - 3

C O N S O L I D AT E D S TAT E M E N T S O F S H A R E H O L D E R S ’ E Q U I T Y

Common
Stock

Capital in
Excess of
Par Value

Retained
Earnings

Contingent
Compensation

Cumulative
Foreign
Currency
Translation
Adjustment

Treasury
Stock

Comprehensive
Income (Loss)

$406

$ 44,084

$ 77,940

$ (121)

$ 4,115

$ —

—

—
—

2,056

(114)

—

—
—

—

(67)

103

—
—

—

284

—

—
(10,471)

(609)
—

406

44,186

79,882

(85)

(6,356)

(302)

Other treasury stock transactions —
—
Translation adjustment

(thousands)

BALANCE AT SEPTEMBER 27, 1996
Net income

Exercise of stock options

Tax benefit of stock

options exercised

Issuance of restricted stock

Amortization of

contingent compensation

BALANCE AT OCTOBER 3, 1997
Net income

Exercise of stock options

Tax benefit of stock

options exercised

Issuance of restricted stock

Issuance of stock

under employees’
stock purchase plan

Amortization of

contingent compensation

—

—
—

5,212

(4)

—

(22)

—

—
—

—

(32)

—

—
—

(27)

—

(182)

—

—
1,705

—

146

—

177

—

(668)
—

(4,651)

(615)

—

(4,398)

—

319

214

—

Other treasury stock transactions —
—
Translation adjustment

BALANCE AT OCTOBER 2, 1998

406

44,205

85,068

Net income

Issuance of restricted stock

Issuance of stock

under employee
stock purchase plan

Amortization of

contingent compensation

Translation adjustment

—

7,022

(137)

(121)

—

$ 2,056

—

—
(10,471)

$ (8,415)

$ 5,212

—

—
1,705

$ 6,917

$ 7,022

—

(4,398)

BALANCE AT OCTOBER 1, 1999

$406

$44,205

$91,832

$(134)

$(9,049) $ (82)

$ 2,624

The accompanying notes are an integral part of the Consolidated Financial Statements.

F - 4

C O N S O L I D AT E D S TAT E M E N T S O F C A S H F L O W S

(thousands)

C A S H P R O V I D E D B Y O P E R AT I O N S

Net income

Noncash items:

Depreciation and amortization

Provision for doubtful accounts receivable

Provision for inventory reserves

Deferred income taxes

Change in assets and liabilities, net of effect of

businesses acquired or sold:

Accounts receivable

Inventories

Accounts payable and accrued liabilities

Other, net

C A S H U S E D F O R I N V E S T I N G A C T I V I T I E S
Net assets of businesses acquired, net of cash

Proceeds from sale of business, net of cash

Additions to property, plant and equipment

Sales of property, plant and equipment

CASH PROVIDED BY (USED FOR) FINANCING ACTIVITIES
Issuance of senior notes

Issuance of other long-term notes

Principal payments on senior notes and other

long-term notes

Net change in short-term debt

Common stock transactions

Effect of foreign currency fluctuations on cash

Increase (decrease) in cash and temporary

cash investments

C A S H A N D T E M P O R A R Y C A S H I N V E S T M E N T S

October 1,
1999

October 2,
1998

Year Ended

October 3,
1997

$ 7,022

$ 5,212

$ 2,056

15,127

2,322

828

211

(6,507)

4,104

5,772

(1,039)

27,840

(13,584)

—

(14,261)

691

(27,154)

—

(7,806)

6,764

(948)
(640)

(902)

14,038

918

343

(3,355)

(1,743)

6,583

(2,170)

685

20,511

(12,772)

—

(13,108)

1,592

(24,288)

25,000

—

(8,381)

(8,424)

(352)

7,843
300

4,366

11,949

1,604

445

(4,127)

(2,747)

13,071

(3,749)

1,489

19,991

(37,169)

13,937

(8,860)

640

(31,452)

—

10,543

(7,358)

4,085

(382)

6,888
(994)

(5,567)

Beginning of year

End of year

11,496

$ 10,594

7,130

$ 11,496

12,697

$ 7,130

The accompanying notes are an integral part of the Consolidated Financial Statements.

F - 5

N O T E S T O C O N S O L I D AT E D F I N A N C I A L S TAT E M E N T S

Johnson Worldwide Associates, Inc. is an integrated, global outdoor recreation products company engaged in the design,
manufacture and marketing of brand name outdoor equipment, diving, watercraft, motors and fishing products.

1 S U M M A R Y O F S I G N I F I C A N T A C C O U N T I N G P O L I C I E S
All monetary amounts, other than share and per share amounts, are stated in thousands.

P r i n c i p l e s o f C o n s o l i d a t i o n
The Consolidated Financial Statements include the accounts of Johnson Worldwide Associates, Inc. and all majority owned
subsidiaries (the Company). Significant intercompany accounts and transactions have been eliminated in consolidation.

The preparation of financial statements in conformity with generally accepted accounting principles requires management
to make estimates and assumptions that impact the reported amounts of assets, liabilities and operating results and the
disclosure of commitments and contingent liabilities. Actual results could differ significantly from those estimates. For
the Company, significant estimates include the allowance for doubtful accounts receivable, reserves for inventory valuation
and the valuation allowance for deferred tax assets.

The Company’s fiscal year ends on the Friday nearest September 30. The fiscal years ended October 1, 1999 (hereinafter
1999) and October 2, 1998 (hereinafter 1998) each comprise 52 weeks. The fiscal year ended October 3, 1997 (hereinafter
1997) comprises 53 weeks.

C a s h a n d Te m p o r a r y C a s h I n v e s t m e n t s
For purposes of the Consolidated Statements of Cash Flows, the Company considers all short-term investments in interest-
bearing bank accounts, securities and other instruments with an original maturity of three months or less, to be
equivalent to cash.

The Company maintains cash in bank accounts in excess of insured limits. The Company has not experienced any losses
as a result of this practice and does not believe that significant credit risk exists.

I n v e n t o r i e s
Inventories are stated at the lower of cost (determined using the first-in, first-out method) or market.

Inventories at the end of the respective years consist of the following:

Raw materials
Work in process
Finished goods

Less reserves

1999
$26,147
3,430
46,341
75,918
5,143
$70,775

1998
$27,834
4,753
49,875
82,462
5,859
$76,603

P r o p e r t y, P l a n t a n d E q u i p m e n t
Property, plant and equipment are stated at cost less accumulated depreciation. Depreciation of plant and equipment is
determined by straight-line and accelerated methods over estimated useful lives, which range from 3 to 30 years.

Upon retirement or disposition, cost and the related accumulated depreciation are removed from the accounts and any
resulting gain or loss is recognized in operating results.

The Company annually assesses the recoverability of long-lived tangible assets by comparing the carrying amount of an
asset to future net cash flows expected to be generated by that asset. If such assets are considered impaired, the impair-
ment to be recognized is measured by the amount by which the carrying value of the asset exceeds its fair market value.

F - 6

Property, plant and equipment at the end of the respective years consist of the following:

Property and improvements
Buildings and improvements
Furniture, fixtures and equipment

Less accumulated depreciation

1999
1,505
18,875
87,937
108,317
69,501
$ 38,816

1998
912
16,827
78,351
96,090
60,621
$35,469

I n t a n g i b l e A s s e t s
Intangible assets are stated at cost less accumulated amortization. Amortization is computed using the straight-line method
with periods ranging from 15 to 40 years for goodwill and 3 to 16 years for patents, trademarks and other intangible assets.

The Company annually assesses the recoverability of intangible assets, primarily by determining whether the amortization
of the balance over its remaining life can be recovered through projected undiscounted future operating cash flows of
the acquired business. The amount of impairment, if any, is measured primarily based on the deficiency of projected dis-
counted future operating cash flows relative to the carrying value of the asset, using a discount rate reflecting the
Company’s cost of capital, which is currently approximately 10%.

Intangible assets at the end of the respective years consist of the following:

Goodwill
Patents, trademarks and other

Less accumulated amortization

1999
$112,074
4,678
116,752
23,989
$ 92,763

1998
$105,829
4,683
110,512
20,411
$ 90,101

I n c o m e Ta x e s
The Company provides for income taxes currently payable, and deferred income taxes resulting from temporary differences
between financial statement and taxable income, using the asset and liability method.

In assessing the realizability of deferred tax assets, the Company considers whether it is more likely than not that some
portion, or all of the deferred tax assets, will not be realized. The ultimate realization of deferred tax assets is depen-
dent upon the generation of future taxable income during the years in which those temporary differences become
deductible. The Company considers the scheduled reversal of deferred tax liabilities, projected future taxable income and
tax planning strategies in making this assessment.

Federal and state income taxes are provided on foreign subsidiary income distributed to, or taxable in, the United States
during the year. At October 1, 1999, net undistributed earnings of foreign subsidiaries total approximately $57,100. A
substantial portion of these unremitted earnings have been permanently invested abroad and no provision for federal or
state taxes is made on these amounts. With respect to that portion of foreign earnings which may be returned to the
United States, provision is made for taxes if the amounts are significant.

The Company’s United States entities file a consolidated federal income tax return.

E m p l o y e e B e n e f i t s
The Company and certain of its subsidiaries have various retirement and profit sharing plans. United States pension
obligations, which are generally based on compensation and years of service, are funded by payments to pension fund
trustees. Foreign pension plans are funded as expenses are incurred. The Company’s policy is generally to fund the mini-
mum amount required under the Employee Retirement Income Security Act of 1974 for plans subject thereto. Profit sharing
and other retirement costs are funded at least annually.

F - 7

N O T E S T O C O N S O L I D AT E D F I N A N C I A L S TAT E M E N T S (continued)

F o r e i g n O p e r a t i o n s a n d D e r i v a t i v e F i n a n c i a l I n s t r u m e n t s
The Company operates internationally, which gives rise to exposure to market risk from movements in foreign exchange
rates. The Company uses foreign currency forward contracts and options in its selective hedging of foreign exchange
exposure. Gains and losses on contracts that qualify as hedges are recognized as an adjustment of the carrying amount
of the item hedged. The Company primarily hedges assets, inventory purchases and loans denominated in foreign cur-
rencies. The Company does not enter into foreign exchange contracts for trading purposes. Gains and losses on unhedged
exposures are recorded in operating results.

At October 1, 1999, foreign currency forward contracts and options with a notional value of approximately $9,800 are
in place, hedging existing and anticipated transactions. Substantially all of these contracts mature in 2000. Failure of
the counterparties to perform their obligations under these contracts would expose the Company to the risk of foreign
currency rate movements for those contracts. The Company does not believe the risk of counterparty failure is significant.
At October 1, 1999, the fair value of these instruments is not significant.

Foreign currency swaps effectively denominate, in foreign currencies, existing U.S. dollar denominated debt of the
Company. This foreign currency debt serves as a hedge of foreign assets. Accordingly, gains and losses on such swaps
are recorded in the cumulative foreign currency translation account.

Assets and liabilities of foreign operations are translated into U.S. dollars at the rate of exchange existing at the end of
the year. Results of operations are translated at monthly average exchange rates. Gains and losses resulting from the
translation of foreign currency financial statements are classified in the cumulative foreign currency translation account.

R e v e n u e R e c o g n i t i o n
Revenue from sales is recognized on the accrual basis, primarily upon the shipment of products, net of estimated costs
of returns and allowances.

A d v e r t i s i n g
The Company expenses substantially all costs related to production of advertising the first time the advertising takes
place. Cooperative promotional arrangements are accrued in relation to sales.

Advertising expense in 1999, 1998 and 1997 totals $21,906, $18,475 and $21,512, respectively. Capitalized costs at
October 1, 1999 and October 2, 1998 total $1,741 and $1,635, respectively, and primarily include catalogs and costs of
advertising which has not yet run for the first time.

R e s e a r c h a n d D e v e l o p m e n t
Research and development costs are expensed as incurred.

S t o c k - B a s e d C o m p e n s a t i o n
The Company accounts for stock options using the intrinsic value based method. Accordingly, compensation cost is
generally recognized only for stock options issued with an exercise price lower than the market price on the date of
grant. The fair value of restricted shares awarded in excess of the amount paid for such shares is recognized as contingent
compensation in the Consolidated Statements of Shareholders’ Equity and is amortized into operating results over 1 to
3 years from the date of award, the period after which all restrictions generally lapse.

A c c o u n t i n g C h a n g e s
The Company adopted Financial Accounting Standards Board (FASB) Statement 130, Reporting Comprehensive Income, in
1999. Comprehensive income includes net income and changes in shareholders’ equity from non-owner sources. For the
Company, the elements of comprehensive income excluded from net income are represented primarily by the cumulative
foreign currency translation adjustment.

In June 1998, the FASB issued Statement 133, Accounting for Derivative Instruments and Hedging Activities. This
Statement requires companies to record derivatives on the balance sheet as assets and liabilities, measured at fair value.
Gains or losses resulting from changes in the values of those derivatives will be accounted for depending on the use of the
derivative and whether it qualifies for hedge accounting. Statement 133, as amended by Statement 137, is effective for fis-
cal years beginning after June 15, 2000. The Company will adopt this accounting standard for the year beginning October
2000. The Company has not yet determined the impact of Statement 133 on the Consolidated Financial Statements.

R e c l a s s i f i c a t i o n s
Certain reclassifications have been made to prior years’ amounts to conform with the current year presentation.

F - 8

2 S T R AT E G I C C H A R G E S
In 1999, 1998 and 1997, the Company recorded severance and other exit costs totaling $2,247, $1,424 and $335,
respectively, related primarily to the integration of acquired businesses, primarily in the diving business. In 1999,
strategic charges also include severance, moving and recruiting costs related to the relocation of certain sales and mar-
keting functions of the Company’s North American outdoor equipment business. 1999 severance costs included in strategic
charges totaled $1,101 and approximately 30 employees were impacted by these actions. 1998 severance costs totaled
$781 and approximately 80 employees were impacted by these actions. The Company anticipates no significant additional
strategic charges will be incurred in 2000 to further integrate recent acquisitions into its business or to complete other
announced actions. Unexpended funds related to these charges are not significant.

3 A C Q U I S I T I O N S
In July 1999, the Company completed the acquisition of the common stock of Extrasport, Inc., a privately held manufac-
turer and marketer of personal flotation devices. The initial purchase price, including direct expenses, for the acquisition
was approximately $3,300, of which approximately $2,500 was recorded as intangible assets and is being amortized over
25 years. Additional payments in 2000 through 2002 are dependent upon achievement of specified levels of sales of the
acquired business.

In March 1999, the Company completed the acquisition of substantially all of the assets and the assumption of certain
liabilities of Escape Sailboat Company LLC, a privately held manufacturer and marketer of recreational sailboats. The initial
purchase price, including direct expenses, for the acquisition was approximately $4,800, of which approximately $3,100
was recorded as intangible assets and is being amortized over 25 years. Additional payments in 2000 and 2001 are
dependent upon achievement of specified levels of sales of the acquired business.

In December 1998, the Company completed the acquisition of substantially all of the assets and the assumption of certain
liabilities of True North Paddle & Necky Kayaks Ltd., a privately held manufacturer and marketer of Necky kayaks, and an
affiliated entity. The initial purchase price, including direct expenses, for the acquisition was approximately $5,700, of
which approximately $3,200 was recorded as intangible assets and is being amortized over 25 years. An additional pay-
ment of $600 was accrued in 1999. Additional payments in the years 2000 through 2003 are dependent upon the
achievement of specified levels of sales and profitability of the acquired business.

The following pro forma operating results are unaudited and reflect purchase accounting adjustments assuming all 1999
acquisitions had been consummated at the beginning of each year presented:

Net sales
Net income
Diluted earnings per common share

1999
$370,921
7,028
0.87

1998
$342,069
4,866
0.60

In February 1998, the Company completed the acquisition of the common stock of Leisure Life Limited, a privately held
manufacturer and marketer of recreational watercraft. The purchase price, including direct expenses, for the acquisition
was approximately $10,300, of which approximately $7,300 was recorded as intangible assets and is being amortized
over 25 years.

In October 1997, subsequent to the end of the 1997 fiscal year, the Company completed the acquisitions of certain assets
of Soniform, Inc., a manufacturer of diving buoyancy compensators, and the common stock of Plastiques L.P.A. Limitée,
a privately held Canadian manufacturer of kayaks. The purchase prices for the acquisitions totaled approximately $3,400.

In July 1997, the Company completed the acquisition of the common stock of Uwatec AG (hereinafter Uwatec), a privately
held manufacturer and marketer of diving computers and other electronic instruments. The initial purchase price, including
direct expenses, for the acquisition was approximately $33,500, of which $32,800 was recorded as intangible assets and is
being amortized over 25 years. Additional payments of $529 and $432 were accrued in 1999 and 1998, respectively, based
upon utilization of certain acquired inventories. In connection with the acquisition, the Company entered into a long-term
product development and intellectual property agreement with an unaffiliated party with which Uwatec conducts business.

In July 1997, the Company completed the acquisition of substantially all of the assets of Ocean Kayak, Inc., a privately held
manufacturer and marketer of kayaks. The initial purchase price, including direct expenses, for the acquisition was approxi-
mately $5,000, of which $2,700 was recorded as intangible assets and is being amortized over 25 years. Additional payments
of $600 were accrued in both 1999 and 1998 due to achievement of specified levels of sales of the acquired business.

Additional payments in the years 2000 and 2001 related to acquisitions consummated in 1995 are dependent upon the
achievement of specified levels of sales and/or profitability of certain of the acquired products. No additional payments
were required in 1999, 1998 or 1997.

F - 9

N O T E S T O C O N S O L I D AT E D F I N A N C I A L S TAT E M E N T S (continued)

All acquisitions are accounted for using the purchase method and, accordingly, the Consolidated Financial Statements
include the results of operations since the respective dates of acquisition. Additional payments, if required, will increase
intangible assets.

4 I N D E B T E D N E S S
Short-term debt at the end of the respective years consists of the following:

Commercial paper and bank loans
Current maturities of long-term debt

1999
$43,380
6,065
$49,445

1998
$34,846
7,768
$42,614

Short-term credit facilities provide for borrowings with interest rates set periodically by reference to market rates.
Commercial paper rates are set by competitive bidding. The weighted average interest rate on short-term indebtedness
was 6.2% and 6.0% at October 1, 1999 and October 2, 1998, respectively. The Company’s primary facility is a $100,000
revolving credit agreement expiring in 2001, which includes a maximum amount of $80,000 in support of commercial
paper issuance. The Company has lines of credit, both foreign and domestic, totaling $125,000 of which $67,200 is
available at October 1, 1999. The Company also utilizes letters of credit for trade financing purposes.

Long-term debt at the end of the respective years consists of the following:

1998 senior notes
1996 senior notes
1993 senior notes
Other long-term notes, 1.8% to 10.9%, maturing through December 2005

Less current maturities

1999
$24,981
45,000
—
9,225
79,206
6,065
$73,141

1998
$27,369
45,000
7,500
9,965
89,834
7,768
$82,066

In 1998, the Company issued unsecured senior notes totaling $25,000 with an interest rate of 7.15%. Simultaneous with
the commitment of the 1998 senior notes, the Company executed a foreign currency swap, denominating in Swiss francs
all principal and interest payments required under the 1998 senior notes. The fixed, effective interest rate to be paid on
the 1998 senior notes as a result of the currency swap is 4.32%. The 1998 senior notes have annual principal payments
of $2,189 to $7,663 beginning October 2001 with a final payment due October 2007. Proceeds from issuance of the
1998 senior notes were used to reduce outstanding indebtedness under the Company’s primary revolving credit facility.

$8,093 of the initial purchase price of Uwatec is deferred with principal payments of $376 and $7,717 due in 2000 and
2002, respectively. Interest on the deferred amounts is payable annually at 6%. This obligation is denominated in Swiss
francs. A corresponding amount of the Company’s primary revolving credit facility is reserved in support of this obligation
through issuance of a letter of credit. The obligation was reduced by $1,482 in 1998 from liabilities to third parties paid
or accrued by the Company on behalf of the selling shareholders.

In 1996, the Company issued unsecured senior notes totaling $30,000 with an interest rate of 7.77% and $15,000 with
an interest rate of 6.98%. Total annual principal payments ranging from $5,500 to $7,500 are due beginning in October
2000 through 2006.

In 1993, the Company issued unsecured senior notes totaling $15,000 with an interest rate of 6.58%. The final principal
payment of $7,500 was made in 1999.

Aggregate scheduled maturities of long-term debt in each of the five years ending September 2004 are as follows:

Year
2000
2001
2002
2003
2004

F - 1 0

$ 6,100
6,600
15,900
8,200
9,500

Interest paid was $9,895, $9,119 and $9,046 for 1999, 1998 and 1997, respectively.

Based on the borrowing rates currently available to the Company for debt with similar terms and average maturities, the
fair value of the Company’s long-term debt as of October 1, 1999 and October 2, 1998 is approximately $80,300 and
$92,300, respectively. The carrying value of all other financial instruments approximates the fair value.

Certain of the Company’s loan agreements require that Samuel C. Johnson, members of his family and related entities
(hereinafter the Johnson Family) continue to own stock having votes sufficient to elect a 51% majority of the directors.
At October 1, 1999, the Johnson Family held approximately 3,280,000 shares or 48% of the Class A common stock,
approximately 1,168,000 shares or 95% of the Class B common stock and approximately 78% of the voting power of
both classes of common stock, taken as a whole. The agreements also contain restrictive covenants regarding the
Company’s net worth, indebtedness, fixed charge coverage and distribution of earnings. The Company is in compliance
with the restrictive covenants of such agreements, as amended from time to time.

5 L E A S E S A N D O T H E R C O M M I T M E N T S
The Company leases certain operating facilities and machinery and equipment under long-term, noncancelable operating
leases. Future minimum rental commitments under noncancelable operating leases having an initial term in excess of
one year at October 1, 1999 are as follows:

Year
2000
2001
2002
2003
2004
Thereafter

$5,900
5,200
4,600
2,600
1,500
4,600

Rental expense under all leases was approximately $6,743, $6,101 and $4,338 for 1999, 1998 and 1997, respectively.

In 1998, the Company executed a guarantee of $1,300 of debt of one of its suppliers. The guarantee is supported by a
priority lien on equipment owned by the supplier.

The Company makes commitments in a broad variety of areas, including capital expenditures, contracts for services,
sponsorship of broadcast media and supply of finished products and components, all of which are in the ordinary course
of business.

6 I N C O M E TA X E S
Income tax expense (benefit) for the respective years consists of the following:

Current:

Federal
State
Foreign

Deferred

1999

1998

1997

34
683
4,261
(49)
$ 4,929

56
514
6,672
(3,305)
$ 3,937

242
(11)
5,847
(4,175)
$ 1,903

The significant components of deferred tax expense (benefit) are as follows:

Deferred tax expense (benefit) (exclusive of effects

of other components listed below)
Decrease in beginning of the year balance

of the valuation allowance for deferred tax assets

1999

(137)
(49)

1998

1997

$(3,045)

(260)
$(3,305)

$(4,121)

(54)
$(4,175)

F - 1 1

N O T E S T O C O N S O L I D AT E D F I N A N C I A L S TAT E M E N T S (continued)

The tax effects of temporary differences that give rise to significant portions of deferred tax assets and deferred tax
liabilities at the end of the respective years are presented below:

1999

1998

Deferred tax assets:
Inventories
Compensation
Foreign income taxes
Foreign tax credit carryforwards
Net operating loss carryforwards
Other

Total gross deferred tax assets
Less valuation allowance

Deferred tax liabilities:

Foreign statutory reserves
Acquisition accounting
Total deferred tax liabilities
Net deferred tax asset

$ 2,674
3,044
1,816
4,051
15,883
3,360
30,828
5,751
25,077

1,973
1,553
3,526
$21,551

Following is the income (loss) before income taxes for domestic and foreign operations:

United States
Foreign

1999
$ (1,218)
13,169
$11,951

1998
$ (6,503)
15,652
$ 9,149

$ 3,299
2,205
1,212
4,211
15,986
4,152
31,065
5,911
25,154

2,334
1,318
3,652
$21,502

1997
$ (6,998)
10,957
$ 3,959

The significant differences between the statutory federal tax rate and the effective income tax rates are as follows:

Statutory U.S. federal income tax rate
State income taxes, net of federal income tax benefit
Foreign rate differential
Foreign operating losses (benefit)
Other

1999
34.0%
0.5
5.1
1.6
—
41.2%

1998
34.0%
(3.0)
12.7
(1.4)
0.7
43.0%

1997
34.0%
(6.2)
23.9
(2.0)
(1.6)
48.1%

At October 1, 1999, the Company has $4,051 of foreign tax credit carryforwards available to be offset against future
U.S. tax liability. The credits expire in 2000 through 2003 if not utilized.

During 1999, 1998 and 1997, foreign net operating loss carryforwards were utilized, resulting in a reduction in income
tax expense of $137, $260 and $54, respectively. At October 1, 1999, the Company has a U.S. federal operating loss carry-
forward of $29,062. In addition, certain of the Company’s foreign subsidiaries have net operating loss carryforwards
totaling $2,188. These amounts are available to offset future taxable income over the next 6 to 19 years and are antic-
ipated to be utilized during this period.

Taxes paid were $7,737, $6,299 and $8,328 for 1999, 1998 and 1997, respectively.

F - 1 2

7 E M P L O Y E E B E N E F I T S
The Company adopted FASB Statement 132, Employers’ Disclosure About Pension and Other Post Retirement Benefits, in
1999. Net periodic pension cost for noncontributory pension plans includes the following components:

Service cost
Interest on projected benefit obligation
Less expected return on plan assets
Amortization of unrecognized:

Net loss
Prior service cost
Transition asset
Net amount recognized

1999
$273
713
558

4
26
(81)
$377

1998
$301
697
520

15
26
(81)
$438

1997
292
638
1,075

602
26
(81)
402

The following provides a reconciliation of the changes in the plans’ benefit obligation and fair value of plan assets for
1999 and 1998 and a statement of the funded status at the end of each year:

1999

1998

Reconciliation of benefit obligation:

Benefit obligation at beginning of year
Service cost
Interest cost
Actuarial (gain) loss
Benefits paid

Benefit obligation at end of year
Reconciliation of fair value of plan assets:

Fair value of plan assets at beginning of year
Actual return on plan assets
Company contributions
Benefits paid

Fair value of plan assets at end of year
Funded status:

Funded status of the plan
Unrecognized net loss
Unrecognized prior service cost
Unrecognized transition asset

Net pension liability recognized in the Consolidated Balance Sheets

$ 9,456
273
713
(257)
(581)
$ 9,604

$ 7,515
860
276
(581)
$ 8,070

$(1,534)
4
174
(372)
$(1,728)

$ 8,934
301
697
34
(510)
$ 9,456

$ 7,003
515
507
(510)
$ 7,515

$(1,941)
581
200
(453)
$(1,613)

The following summarizes the components of the liability recognized in the Consolidated Balance Sheets at the end of
the respective years:

Prepaid benefit cost
Accrued benefit liability
Net pension liability recognized in the Consolidated Balance Sheets

1999
55
(1,783)
$(1,728)

1998
193
(1,806)
$(1,613)

Plan assets are invested primarily in stock and bond mutual funds and insurance contracts.

Actuarial assumptions used to determine the projected benefit obligation and the net periodic pension cost are as follows:

Discount rate for obligations
Long-term rate of return on plan assets
Average salary increase rate

1999

8%
8
5

1998

8%
8
5

1997

8%
8
5

F - 1 3

N O T E S T O C O N S O L I D AT E D F I N A N C I A L S TAT E M E N T S (continued)

A majority of the Company’s full-time employees are covered by profit sharing or defined contribution programs.
Participating entities determine profit sharing distributions under various performance and service based formulas.

8 P R E F E R R E D S T O C K
The Company is authorized to issue 1,000,000 shares of preferred stock in various classes and series, of which there are
none currently issued or outstanding.

9 C O M M O N S T O C K
Common stock at the end of the respective years consists of the following:

Class A, $.05 par value:

Authorized
Outstanding

Class B, $.05 par value:

Authorized
Outstanding

1999

1998

20,000,000
6,905,297

3,000,000
1,222,861

20,000,000
6,870,045

3,000,000
1,223,861

Holders of Class A common stock are entitled to elect 25% of the members of the Board of Directors and holders of Class
B common stock are entitled to elect the remaining directors. With respect to matters other than the election of direc-
tors or any matters for which class voting is required by law, holders of Class A common stock are entitled to one vote
per share while holders of Class B common stock are entitled to ten votes per share. If any dividends (other than divi-
dends paid in shares of the Company) are paid by the Company on its common stock, a dividend would be paid on each
share of Class A common stock equal to 110% of the amount paid on each share of Class B common stock. Each share
of Class B common stock is convertible at any time into one share of Class A common stock. During 1999, 1998 and
1997, respectively, 1,000, 4,054 and 222 shares of Class B common stock were converted into Class A common stock.

1 0 S T O C K O W N E R S H I P P L A N S
The Company’s current stock ownership plans provide for issuance of options to acquire shares of Class A common stock
by key executives and non-employee directors. All stock options have been granted at a price not less than fair market
value at the date of grant and become exercisable over periods of one to four years from the date of grant. Stock options
generally have a term of 10 years. Current plans also allow for issuance of restricted stock or stock appreciation rights
in lieu of options. Grants of restricted shares are not significant in any year presented. No stock appreciation rights have
been granted.

A summary of stock option activity related to the Company’s plans is as follows:

Outstanding at September 27, 1996
Granted
Exercised
Cancelled
Outstanding at October 3, 1997
Granted
Exercised
Cancelled
Outstanding at October 2, 1998
Granted
Cancelled
Outstanding at October 1, 1999

F - 1 4

566,221
256,000
(24,400)
(111,300)
686,521
247,000
(10,243)
(321,217)
602,061
353,000
(176,224)
778,837

Weighted Average
Exercise Price

$20.37
12.09
6.93
16.95
18.32
17.01
13.96
19.11
17.43
8.53
14.67
$14.02

Other information regarding the Company’s stock option plans is as follows:

Options exercisable at end of year

Weighted average exercise price of exercisable options

1999

324,990

$18.63

Weighted average fair value of options granted during year

3.31

1998

257,055

$19.14

6.82

1997

388,264

$20.75

4.87

At October 1, 1999, the weighted average remaining contractual life of stock options outstanding is approximately 7.8
years. Exercise prices of outstanding stock options range from $6.81 to $25.31 at October 1, 1999.

Had compensation cost for the Company’s stock options been determined using the fair value method, the Company’s
pro forma operating results would have been as follows:

Net income

Diluted earnings per common share

1999

$6,504

0.80

1998

$4,542

0.56

1997

$1,659

0.20

For purposes of calculating pro forma operating results, the fair value of each option grant was estimated using the
Black-Scholes option pricing model with an expected volatility of 35%, a risk free interest rate equivalent to five year
U.S. Treasury securities and an expected life of five years. The pro forma operating results reflect only options granted
after 1995.

The Company’s employees’ stock purchase plan provides for the issuance of up to 150,000 shares of Class A common
stock at a purchase price of not less than 85% of the fair market value at the date of grant. During 1999 and 1998,
13,722 and 11,325 shares, respectively, were issued under this plan. No shares were issued under this plan in 1997.

11 R E L AT E D PA R T Y T R A N S A C T I O N S

Various transactions are conducted between the Company and organizations controlled by the Johnson Family. These
include consulting services, office rental, royalties and certain administrative activities. Total net costs of these trans-
actions are $415, $248 and $489 for 1999, 1998 and 1997, respectively.

12 S E G M E N T S O F B U S I N E S S

The Company conducts its worldwide recreation operations through separate global business units, each of which repre-
sent major product lines. Operations are conducted in the United States and various foreign countries, primarily in
Europe, Canada and the Pacific Basin.

Net sales and operating profit include both sales to customers, as reported in the Company’s consolidated statements of
operations, and interunit transfers, which are priced to recover cost plus an appropriate profit margin. Identifiable assets
represent assets that are used in the Company’s operations in each business unit at the end of the years presented.

F - 1 5

N O T E S T O C O N S O L I D AT E D F I N A N C I A L S TAT E M E N T S (continued)

A summary of the Company’s operations by business unit is presented below:

Net sales:

Outdoor equipment:

Unaffiliated customers
Interunit transfers

Diving:

Unaffiliated customers
Interunit transfers

Watercraft:

Unaffiliated customers
Interunit transfers

Motors:

Unaffiliated customers
Interunit transfers

Fishing:

Unaffiliated customers
Interunit transfers

Other

Eliminations

Operating profit (loss):

Outdoor equipment

Diving

Watercraft

Motors

Fishing

Other

Identifiable assets:

Outdoor equipment

Diving

Watercraft

Motors

Fishing
Other

1999

1998

1997

$ 92,367
14

$ 77,566
28

$ 74,162
12

77,393
421

22,885
364

53,700
1,412

63,799
1,021

11,182

(3,230)
$303,121

2,824

9,644

4,152

1,537

(1,870)

(4,276)

$ 12,011

80,200
9

66,461
260

64,260
1,783

59,184
451

1,805

(2,517)
$364,277

3,546

4,877

12,598

3,497

2,111

(5,006)

$ 21,623

$ 47,760

89,693

54,458

25,483

59,651
25,517

90,116
10

47,517
266

53,249
1,678

58,508
745

1,569

(2,727)
$328,525

1,987

10,193

8,658

1,156

367

(3,638)

$ 18,723

$ 49,090

104,344

29,340

22,905

62,099
28,239

Sales and operating profit of the Plastimo business, which was sold in January 1997, totaling $7,910 and $1,184,
respectively, and operating expenses of the Company’s corporate headquarters, are included above in the caption “Other.”

$302,562

$296,017

F - 1 6

A summary of the Company’s operations by geographic area is presented below:

1999

1998

1997

Net sales:

United States:

Unaffiliated customers
Interarea transfers

Europe:

Unaffiliated customers
Interarea transfers

Other:

Unaffiliated customers
Interarea transfers

Eliminations

Identifiable assets:

United States

Europe

Other

$175,675
9,345

101,751
3,922

25,695
6

(13,273)

$303,121

$229,301
6,772

109,866
6,628

25,110
5,491

(18,891)

$364,277

$171,022

109,478

22,062

$302,562

$194,296
9,175

110,863
6,830

23,366
1,738

(17,743)

$328,525

$151,864

128,711

15,442

$296,017

The Company’s fishing, motors and watercraft businesses recognized sales to Wal-Mart Stores, Inc. and its affiliated enti-
ties totaling $42,600, $37,200 and $33,800 in 1999, 1998 and 1997, respectively. Loss of this customer would have an
adverse impact on the operating results of the Company.

1 3 VA L U AT I O N A N D Q U A L I F Y I N G A C C O U N T S

The following summarizes changes to valuation and qualifying accounts:

Year ended October 1, 1999:

Allowance for doubtful accounts

Reserves for inventory valuation

Year ended October 2, 1998:

Allowance for doubtful accounts

Reserves for inventory valuation

Year ended October 3, 1997:

Allowance for doubtful accounts
Reserves for inventory valuation

Balance at
Beginning
of Year

Additions
Charged to
Costs and
Expenses

Reserves of
Businesses
Acquired
or Sold

Less
Deductions

Balance
at End
of Year

$ 2,570

$2,322

$ 14

$1,243

$ 3,663

5,859

828

—

1,544

5,143

2,693

10,220

2,235
13,665

918

343

1,604
445

120

1,076

4,824

2,570

5,859

217
1,100

1,363
4,990

2,693
10,220

Deductions include the impact of foreign currency fluctuations on the respective accounts.

F - 1 7

N O T E S T O C O N S O L I D AT E D F I N A N C I A L S TAT E M E N T S (continued)

1 4 E A R N I N G S P E R S H A R E

Basic earnings per share excludes any dilutive effects of instruments such as options, warrants and convertible securities.
Diluted earnings per share includes the impact of such instruments.

The following sets forth the computation of basic and diluted earnings per common share:

Net income for basic and diluted earnings per share

Weighted average shares outstanding

Less nonvested restricted stock

Basic average common shares

Dilutive stock options and restricted stock

Diluted average common shares

Basic earnings per common share

Diluted earnings per common share

1999

$7,022

8,108,781

12,206

8,096,575

11,653

8,108,228

$0.87

1998

$5,212

8,100,415

5,509

8,094,906

18,924

8,113,830

$0.64

1997

$2,056

8,111,322

9,222

8,102,100

13,218

8,115,318

$0.25

Substantially all of the Company’s outstanding stock options are excluded from the calculation of diluted earnings per
common share because the exercise prices of such options exceed the average market price of the Company’s common stock.

1 5 L I T I G AT I O N

The Company is subject to various legal actions and proceedings in the normal course of business, including those related
to environmental matters. The Company is insured against loss for certain of these matters. Although litigation is sub-
ject to many uncertainties and the ultimate exposure with respect to these matters cannot be ascertained, management
does not believe the final outcome will have a material adverse effect on the financial condition, results of operations,
liquidity or cash flows of the Company.

1 6 Q U A R T E R LY F I N A N C I A L S U M M A R Y ( U N A U D I T E D )

The following summarizes quarterly operating results:

First Quarter

Second Quarter

Third Quarter

Fourth Quarter

1999

1998

1999

1998

1999

1998

1999

1998

$60,000

$51,841

$104,210

$97,938

$119,841 $106,757

$80,226

$71,989

21,734

19,194

(3,043)
(3,019)

(2,672)
(2,784)

42,196

10,382
4,377

39,728

10,623
4,739

49,105

14,990
7,084

42,536

11,282
4,904

29,044

24,506

(706)
(1,420)

(510)
(1,647)

Net sales

Gross profit

Operating profit (loss)
Net income (loss)

Basic earnings (loss)

per common share $ (0.37) $ (0.34) $

0.54

$ 0.59

$ 0.88

$ 0.61

$ (0.18) $ (0.20)

Diluted earnings (loss)

per common share $ (0.37) $ (0.34) $

0.54

$ 0.58

$ 0.87

$ 0.61

$ (0.18) $ (0.20)

F - 1 8

B O A R D O F D I R E C T O R S

SAMUEL C. JOHNSON, 71

HELEN P. JOHNSON-LEIPOLD, 42

THOMAS F. PYLE, JR., 58

Director since 1970.

Chairman and

Chairman of S.C. Johnson & Son, Inc.

Chief Executive Officer.

Also Director of Mobil Corporation,

Director since 1994.

H. J. Heinz Company and

Deere & Company.

Vice Chairman of the Board.

Director since 1987.

Chairman, The Pyle Group.

Also Director of Kewaunee

Scientific Corporation and

Sub Zero Corporation.

GREGORY E. LAWTON, 48

Director since 1997.

President of Johnson Wax

GLENN N. RUPP, 55

Director since 1997.

Chairman and Chief Executive

Professional. Also Director of

Officer of Converse Inc.

BICCGeneral and Superior

Metal Products, Inc.

Also Director of

Consolidated Papers, Inc.

TERRY E. LONDON, 50

Director since 1999.

President and Chief Executive

Officer and a Director of

Gaylord Entertainment Company.

Shareholders’ Information

CORPORATE HEADQUARTERS
Johnson Worldwide Associates, Inc.
1326 Willow Road
Sturtevant, Wisconsin 53177 USA
(262) 884-1500

INTERNET ADDRESSES (www.)
jwa.com
dimension.ca (Dimension kayaks)
escapesail.com (Escape sailboats)
eurekatents.com (Eureka! commercial tents)
llboats.com (Leisure Life)
necky.com (Necky)
oceankayak.com (Ocean Kayak)
otccanoe.com (Old Town)
uwatec.com (Uwatec)
wolfskin.de (Jack Wolfskin)

COMMON STOCK
JWA Class A Common Stock is traded on The
Nasdaq Stock Market® under the symbol: JWAIA.

ANNUAL MEETING
The Annual Meeting of Shareholders will
convene at 10:00 a.m. (CST) on February 17, 2000,
at the Company’s Headquarters.

TRANSFER AGENT AND REGISTRAR
Firstar Bank Milwaukee, N.A.
Corporate Trust Department
P.O. Box 2077
Milwaukee, Wisconsin 53201
(414) 905-5000

SHAREHOLDER INQUIRIES
Communication concerning the transfer of
shares, lost certificates or changes of address
should be directed to the Transfer Agent.

Executive Officers

HELEN P. JOHNSON-LEIPOLD, 42

Chairman and Chief Executive Officer.

PATRICK J. O’BRIEN, 41

President and Chief Operating Officer.

CARL G. SCHMIDT, 43

Senior Vice President and

Chief Financial Officer,

Secretary and Treasurer.

MAMDOUH ASHOUR, 61

Group Vice President and

President – Worldwide Diving.

J o h n s o n W o r l d w i d e A s s o c i a t e s , I n c .

1 3 2 6 W i l l o w R o a d

S t u r t e v a n t , W i s c o n s i n

5 3 1 7 7 U S A

( 2 6 2 ) 8 8 4 - 1 5 0 0