Filed by Huffy Corporation
Pursuant to Rule 425 under the Securities Act of 1933
and deemed filed pursuant to Rule 14a-12
under the Securities Exchange Act of 1934
Subject Company: Huffy Corporation
Commission File No. 333-92030
Contact:
Robert W. Lafferty
V.P. – Finance, CFO and Treasurer
(937) 865-5407
HUFFY CORPORATION ANNOUNCES SECOND QUARTER EARNINGS
SECOND QUARTER HIGHLIGHTS
•
SECOND QUARTER EARNINGS AT HIGH END OF FORECAST RANGE
•
BALANCE SHEET REMAINS DEBT FREE CASH AND INVESTMENTS AT $36.3 MILLION
•
S-4 REGISTRATION STATEMENT FOR GEN-X ACQUSITION FILED WITH SEC
DAYTON, OHIO, JULY 16, 2002 – HUFFY CORPORATION (NYSE-HUF)announced today that net earnings for the second quarter of 2002 were $1.3 million or $0.12 per common share versus net earnings of $0.8 million or $0.07 per common share for the second quarter of 2001. For the six-month period ended June 30, 2002, net earnings were $1.9 million or $0.18 per common share versus earnings of $1.8 million or $0.17 per common share for the same period in 2001.
Net sales for the second quarter of 2002 were $93.4 million compared to sales of $86.9 million for the second quarter of 2001, an increase of 7.5%. For the first six months of 2002, sales were $163.8 million compared to sales of $168.1 million for the same period of 2001, a decrease of 2.6%. Gross margins for the second quarter were 18.2%, approximately a 31.0% improvement over the gross margin of 13.9% reported for the second quarter of 2001. On a year to date basis, corporate-wide gross margins were 17.7 %, an improvement of approximately 26.0% when compared to gross margins of 14.1% for the first six months of 2001.
In commenting on the second quarter, Don Graber, President and CEO said, ”The second quarter has been an exciting quarter for Huffy. In addition to completing the McCalla service acquisition announced earlier this year, we announced the acquisition of Gen-X Sports in June. The acquisition remains on schedule to close in the fourth quarter and in early July, Huffy filed an S-4 registration statement with the SEC to register the additional common shares required for the acquisition. Gen-X Sports is currently tracking to its forecast of generating sales in excess of $150.0 million for this year and has the potential to add significantly to our sales and earnings in 2003.”
“Second quarter sales and earnings have been excellent in the product areas. Wheeled products and basketball backboard sales and earnings are well above last year’s levels and the recently announced line of inflatable sport balls has been well received by our customers. Additionally McCalla, our recently acquired service subsidiary, is tracking to forecast. However, the reorganization of one of our largest customers has had a significant impact on the balance of our assembly and merchandising business with sales and earnings for both the quarter and first half of the year significantly below last year’s level.”
“Overall, in spite of the softness in the retail services area, our gross margins continue to improve and we continue to focus on basics – new product development, customer relations, cost reductions and cash generation. Our balance sheet remains debt-free and we ended the second quarter with cash and short-term investments of $36.3 million. Unfortunately, administrative costs have been higher this year than anticipated driven by increases in post employment benefits costs and steep increases in insurance premiums. We do not see these costs decreasing in the second half of this year. As a consequence of these increasing costs and the softness in assembly and merchandising services mentioned earlier, although we remain confident that earnings for the year will be within the previously announced range of $0.40 to $0.60 per common share, it is possible that earni ngs could be in the middle of that range as opposed to the higher end.”
Graber concluded by saying, “The third quarter will be both challenging and exciting. We recently announced an advertising campaign to support the Huffy® bicycle brand and will be introducing a number of new innovative products, but we are aware that the competitive landscape may change as new brands enter the mass market for the first time. We will continue to work with our external advisors to explore alternatives to enhance profitable growth and maximize value for our shareholders.”
Huffy Corporation (NYSE-HUF) is a leading provider of consumer and retail services and the leading supplier of bicycles and home basketball equipment.
# # #
Huffy Corporation (“Huffy”) has filed a registration statement on Form S-4 (File Number 333-92030) in connection with the transaction, and Huffy and Gen-X Sports Inc. intend to mail a joint proxy statement/prospectus to their stockholders in connection with the transaction. INVESTORS AND SECURITY HOLDERS ARE URGED TO READ THE JOINT PROXY STATEMENT/PROSPECTUS AND ANY OTHER RELEVANT DOCUMENTS FILED WITH THE SEC WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION. Investors and security holders may obtain a free copy of the joint proxy statement/prospectus (when it becomes available) and other documents filed by Huffy with the SEC at the SEC’s web site at www.sec.gov. A free copy of the joint proxy statement/prospectus and these other documents may also be obtained free of charge from Huffy by directing a request to 225 Byers Roa d, Miamisburg, Ohio 45342, Attention: Investor Relations.
Huffy and its officers and directors may be deemed to be participants in the solicitation of proxies from Huffy’s shareholders with respect to these transactions. Information regarding such officers and directors is included in Huffy’s proxy statement for its 2002 annual meeting of shareholders filed with the SEC on March 6, 2002. This document is available free of charge at the SEC’s web site at www.sec.gov or from Huffy as described above.
# # #
The discussion in this press release contains forward-looking statements and is qualified by the cautionary statements contained in the Company’s report on Form 10K, dated February 21, 2002.
-table to follow-
HUFFY CORPORATION | ||||
CONSOLIDATED STATEMENTS OF EARNINGS | ||||
(Dollars in thousands, except per share data) | ||||
Quarter Ended | Six Months Ended | |||
June 30, | June 30, | |||
2002 | 2001 | 2002 | 2001 | |
Net sales | $93,413 | $86,864 | $163,798 | $168,107 |
Gross profit | 17,031 | 12,077 | 29,032 | 23,712 |
% to net sales | 18.2% | 13.9% | 17.7% | 14.1% |
Selling, general and administrative expenses | 13,847 | 11,089 | 24,375 | 21,132 |
Operating income | 3,184 | 988 | 4,657 | 2,580 |
Other expense | ||||
Interest expense, net | 319 | 86 | 621 | 492 |
Other | 762 | (337) | 966 | (754) |
1,081 | (251) | 1,587 | (262) | |
Earnings (loss) before income taxes | 2,103 | 1,239 | 3,070 | 2,842 |
Income tax expense (benefit) | 828 | 471 | 1,171 | 1,080 |
Net earnings (loss) | $1,275 ===== | $768 ===== | $1,899 ===== | $1,762 ===== |
Earnings per common share: | ||||
Weighted average number of | ||||
common shares | 10,736,459 ======== | 10,502,865 ========= | 10,715,752 ======== | 10,491,116 ======== |
DILUTED: |
|
|
|
|
Net earnings (loss) per common share | $0.12 | $0.07 | $0.18 | $0.17 |
BALANCE SHEET HIGHTLIGHTS (Dollars in thousands, except per share data) | ||||
June 30, | December 31, | June 30, | ||
2002 | 2001 | 2001 | ||
Cash and cash equivalents | $36,255 | $26,541 | $16,948 | |
Receivables, net | 45,795 | 48,934 | 47,273 | |
Inventories | 26,211 | 12,483 | 35,654 | |
Prepaid expenses and other expenses | 18,181 | 17,803 | 27,607 | |
Total current assets | 126,442 | 105,761 | 127,482 | |
Property, plant and equipment, net | 8,956 | 9,267 | 11,846 | |
Intangibles and others | 36,175 | 30,457 | 13,199 | |
Total assets | $171,573 ======= | $145,485 ======= | $152,527 ======= | |
Notes payable and current portion | ||||
of long-term debt | $0 | $0 | $0 | |
Accounts payable and accruals | 78,788 | 54,289 | 54,125 | |
Income taxes and other | 5,246 | 7,096 | 6,410 | |
Total current liabilities | 84,034 | 61,385 | 60,535 | |
Long-term debt | 0 | 0 | 0 | |
Other liabilities | 19,398 | 18,498 | 17,142 | |
Shareholders’ equity | 68,141 | 65,602 | 74,850 | |
Total liabilities and shareholders’ equity | $171,573 ======= | $145,485 ======= | $152,527 ======= | |
Equity per common share outstanding | $6.51 | $6.32 | $7.28 | |
Working capital ratio | 1.5 | 1.7 | 2.1 | |
