1
Ex. 13
Huffy Corporation
FIVE-YEAR FINANCIAL AND OPERATING REVIEW (UNAUDITED)
(Dollar amounts in thousands, except per share data)
1999 1998
SUMMARY OF OPERATIONS
Net sales $ 561,039 $ 584,201
Gross profit 58,514 97,514
Selling, general, and administrative expenses 73,876 76,884
Operating income (loss) (53,921) (690)
Other (income) expense, net (693) (390)
Interest expense, net 6,733 6,524
Earnings (loss) before income taxes (59,961) (6,824)
Income tax expense (benefit) (20,725) (2,677)
Earnings (loss) from continuing operations (39,236) (4,147)
Discontinued operations 5,948 1,982
Net earnings (loss) (33,288) (2,165)
- ----------------------------------------------------------------------------------------------
Earnings (loss) per common share:
Basic (3.13) (.18)
Diluted (3.13) (.18)
- ----------------------------------------------------------------------------------------------
Common dividends declared 2,869 4,092
Common dividends per share .26 .34
Capital expenditures for plant and equipment 11,039 19,535
Weighted average common shares outstanding:
Basic 10,642 12,122
Diluted 10,642 12,280
- ----------------------------------------------------------------------------------------------
FINANCIAL POSITION AT YEAR END
Total assets 223,781 332,470
Working capital 32,132 52,532
Net investment in plant and equipment 30,395 63,732
Notes payable 21,902 99,240
Long-term obligations 52,028 29,784
Shareholders' equity 37,482 95,390
Equity per share 3.68 7.91
- ----------------------------------------------------------------------------------------------
CASH FLOWS
Net cash provided by continuing operating activities 15,950 24,489
Net cash provided by (used in) discontinued operations 76,286 (4,272)
Net cash provided by (used in)operating activities 92,236 20,217
Net cash used in investing activities (12,239) (32,447)
Net cash provided by (used in) financing activities (77,641) 27,954
Net change in cash and cash equivalents 2,356 15,724
- ----------------------------------------------------------------------------------------------
RATIOS AND MISCELLANEOUS
Net profit margin on earnings from continuing operations N/A N/A
Average working capital turnover 21.8 14.8
Return on net assets N/A N/A
Return on beginning shareholders' equity N/A N/A
Current ratio 1.29 1.3
Debt/total capital 62.0% 28.0%
- ----------------------------------------------------------------------------------------------
Number of common shareholders 3,250 3,454
N/A - Not Applicable.
1
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1997 1996 1995
SUMMARY OF OPERATIONS
Net sales $ 580,686 $ 477,741 $ 487,753
Gross profit 92,059 73,760 60,308
Selling, general, and administrative expenses 75,661 63,925 62,348
Operating income (loss) 16,398 9,835 (7,418)
Other (income) expense, net 998 (37) 1,550
Interest expense, net 3,918 4,139 4,729
Earnings (loss) before income taxes 11,482 5,733 (13,697)
Income tax expense (benefit) 3,025 1,563 (4,415)
Earnings (loss) from continuing operations 8,457 4,170 (9,282)
Discontinued operations 500 2,287 (1,175)
Net earnings (loss) 8,957 6,457 (10,457)
- -----------------------------------------------------------------------------------------------------------
Earnings (loss) per common share:
Basic .70 .48 (.78)
Diluted .69 .48 (.78)
- -----------------------------------------------------------------------------------------------------------
Common dividends declared 4,365 4,582 4,577
Common dividends per share .34 .34 .34
Capital expenditures for plant and equipment 12,390 14,684 21,232
Weighted average common shares outstanding:
Basic 12,895 13,449 13,422
Diluted 13,062 13,578 13,533
- -----------------------------------------------------------------------------------------------------------
FINANCIAL POSITION AT YEAR END
Total assets 314,871 302,753 278,528
Working capital 96,143 111,890 103,651
Net investment in plant and equipment 60,101 61,269 65,326
Notes payable 43,000 38,910 5,750
Long-term obligations 36,184 43,897 51,236
Shareholders' equity 116,578 115,972 116,104
Equity per share 8.87 8.67 8.64
- -----------------------------------------------------------------------------------------------------------
CASH FLOWS
Net cash provided by continuing operating activities 1,498 2,784 27,576
Net cash provided by (used in) discontinued operations 45,165 (8,440) 322
Net cash provided by (used in)operating activities 46,663 (5,656) 27,898
Net cash used in investing activities (30,086) (14,665) (21,201)
Net cash provided by (used in) financing activities (16,456) 19,872 (5,724)
Net change in cash and cash equivalents 121 (449) 973
- -----------------------------------------------------------------------------------------------------------
RATIOS AND MISCELLANEOUS
Net profit margin on earnings from continuing operations 1.5% 1.2% N/A
Average working capital turnover 8.1 10.1 8.3
Return on net assets 6.8% 5.1% N/A
Return on beginning shareholders' equity 8.8% 5.6% N/A
Current ratio 1.8 2.1 2.3
Debt/total capital 28.07% 30.7% 33.7%
- -----------------------------------------------------------------------------------------------------------
Number of common shareholders 3,127 3,570 3,688
N/A - Not Applicable.
2
3
INDEPENDENT AUDITORS' REPORT
THE BOARD OF DIRECTORS AND SHAREHOLDERS,
HUFFY CORPORATION:
We have audited the accompanying consolidated balance sheets of Huffy
Corporation and subsidiaries as of December 31, 1999 and 1998, and the related
consolidated statements of operations, shareholders' equity and cash flows for
each of the years in the three-year period ended December 31, 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
misstatement. 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 Huffy
Corporation and subsidiaries at December 31, 1999 and 1998, and the results of
their operations and their cash flows for each of the years in the three-year
period ended December 31, 1999 in conformity with generally accepted accounting
principles.
KPMG LLP
February 3, 2000
Cincinnati, Ohio
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Huffy Corporation
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS OF
OPERATIONS
(Dollar amounts in thousands, except per share data)
COMPARISON OF THE YEAR ENDED DECEMBER 31, 1999
TO THE YEAR ENDED DECEMBER 31, 1998
The Company recorded a net loss from continuing operations of $(39,236) or
$(3.69) per common share in 1999 compared to a net loss of $(4,147) or $(0.34)
per common share for 1998. Earnings for 1999 included a pretax charge of $38,559
($25,218 after tax), or $2.37 per common share, for plant closure and
manufacturing reconfiguration at the Huffy Bicycle Company. Earnings for 1998
included a pretax charge of $21,320 ($13,112 after tax), or $1.07 per common
share, for plant closure and manufacturing reconfiguration at the Huffy Bicycle
Company. Net loss from continuing operations, excluding the Huffy Bicycle
Company plant closure and reconfiguration charges, was $(14,018) or $(1.32) per
common share for 1999. Net earnings from continuing operations, excluding the
Huffy Bicycle Company plant closure and reconfiguration charges, was $8,965 or
$0.73 per common share for 1998. Decreased net earnings are the result of import
pricing pressures, lower margin product mix and inventory writedowns, primarily
due to exiting U.S. manufacturing, all at Huffy Bicycle Company.
Net Sales
Net sales in 1999 were $561,039, a 4.0% decrease compared to net sales of
$584,201 in 1998. Net sales in the Consumer Products segment decreased 12.1%
versus 1998. Net sales in this segment declined due to cautious retail orders,
import pricing pressures, and store level inventory reductions. In the Services
for Retail segment, net sales increased by 11.9% compared to 1998, primarily due
to strong demand for inventory services and the full year impact of the
Inventory Auditors acquisition completed in mid-1998.
Gross Profit
Consolidated gross profit for 1999 was $58,514, or 10.4% of net sales,
compared to $97,514, or 16.7% of net sales for 1998. The decrease in gross
profit dollars and percentage was primarily driven by the Consumer Products
segment, resulting from import pricing pressures, lower margin product mix, and
inventory writedowns of $6,300 at Huffy Bicycle Company.
Consolidated gross profit in total and as a percentage of sales varies by
quarter due to normal seasonal fluctuations in both segments. Lower gross profit
percentages in the fourth quarter are typically caused by seasonal fluctuations
at Huffy Bicycle Company and Washington Inventory Service. Washington Inventory
Service experiences a significant unfavorable seasonal impact during the
fourth quarter as retailers typically do not conduct inventories during the
Christmas season, causing low fourth quarter sales volume and reduced gross
profit.
Selling, General, and Administrative Expenses
Selling, general, and administrative expenses in 1999 were $73,876, a 3.9%
decrease versus 1998. The decrease in selling, general, and administrative
expenses is primarily due to volume related commissions, customer service costs,
and distribution costs.
Net Interest Expense
Net interest expense was $6,733, a $209 increase over net interest expense
for 1998. The increase in interest expense is due primarily to higher interest
rates during 1999, offset by lower working capital requirements.
COMPARISON OF THE YEAR ENDED DECEMBER 31, 1998 TO THE YEAR ENDED
DECEMBER 31, 1997
The Company recorded a net loss from continuing operations of $(4,147) or
$(0.34) per common share in 1998 compared to net earnings of $8,457 or $0.65 per
common share for 1997. Earnings for 1998 included a pretax charge of $21,320
($13,112 after tax), or $1.07 per common share, for plant closure and
manufacturing reconfiguration at the Huffy Bicycle Company. Net earnings from
continuing operations, excluding the Huffy Bicycle Company plant closure and
reconfiguration charges was $8,965, or $0.73 per common share for 1998.
Increased net earnings are the result of innovative new products and services,
brand development and channel expansion.
Net Sales
Net sales in 1998 were $584,201, a 0.6% increase over net sales of $580,686
in 1997. Net sales in the Consumer Products segment decreased 3.3% over 1997,
primarily due to cautious retail orders and store level inventory reductions. In
the Services for Retail segment, net sales increased by 9.0% over 1997,
primarily due to strong demand for inventory services.
Gross Profit
Consolidated gross profit for 1998 was $97,514, or 16.7% of net sales,
compared to $92,059, or 15.9% of net sales for 1997. Both the Consumer Products
and Services for Retail segments contributed to the increase in gross profit for
1998. This increase in gross profit dollars was primarily volume driven in the
Services for Retail segment, while improved margin was the major factor in the
Consumer Products segment. Gross profit expressed as a percent of net sales
increased primarily due to improvements achieved through cost reduction ("CRI")
initiatives.
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5
Consolidated gross profit in total and as a percentage of sales varies by
quarter due to normal seasonal fluctuations in both segments. Lower gross profit
percentages in the fourth quarter are typically caused by seasonal fluctuations
at Huffy Bicycle Company and Washington Inventory Service. Prior to closing its
U.S. manufacturing facilities, Huffy Bicycle Company typically stopped
production for a period during December to prevent inventory build-up. The fixed
costs associated with this shutdown reduced fourth quarter profitability.
Washington Inventory Service also experienced a significant unfavorable seasonal
impact during the fourth quarter as retailers typically do not conduct
inventories during the Christmas season, causing low fourth quarter sales
volume and reduced gross profit.
Selling, General, and Administrative Expenses
Selling, general, and administrative expenses in 1998 were $76,884, a 1.6%
increase over 1997. In both segments, the increase in selling, general, and
administrative expenses was primarily due to volume related commissions,
customer service costs, and distribution costs which was partially offset by
reductions in employee benefit costs. Selling, general, and administrative
expenses for 1997 were favorably impacted by an insurance recovery.
Net Interest Expense
Net interest expense was $6,524, a $2,606 increase over net interest expense
for 1997. The increase in interest expense was due primarily to high levels of
short-term borrowings which was partially offset by principal reductions in
long-term debt.
LIQUIDITY AND CAPITAL RESOURCES
The financial condition of the Company changed during the third quarter of
1999. The Company was in default of a $4 million dollar principal payment due
October 22, 1999, under an unsecured loan agreement. A formal notice of
acceleration was received for this loan. The Corporation also had violated
several financial covenants (current ratio, consolidated adjusted net worth,
consolidated debt to total capital, EBITDA to interest coverage) under the
existing credit arrangement with certain of its unsecured lending banks and
under a guarantee of certain other indebtedness.
As a result of the above, the Company's committed and uncommitted lines of
credit were capped at existing borrowing levels. On November 1, 1999, the
Corporation delayed payment of a dividend payable to its shares of Common Stock
in the aggregate amount of $855,779.
Throughout the remainder of the fourth quarter, the Company maintained a
positive cash position while negotiating with potential lenders on a new
long-term financing package.
On January 26, 2000, the Company signed a new $170 million, 18 month, secured
lending facility. Management believes that the new facility provides adequate
liquidity to fund the Company's operations throughout the term of the agreement.
As of January 26, 2000, the Company has $40 million of senior term debt and
$27 million of subordinated debt outstanding. In addition, the Company has a
$100 million secured credit facility with availability of $52.5 million of which
$27.7 million was outstanding as of February 3, 2000.
Funds expended for capital additions and improvements totaled $11,039 in 1999
compared to $19,535 in 1998 and $12,390 in 1997. In 2000, capital expenditures
are expected to be approximately $7,500, reflecting continuing investment in new
products and technology.
PLANT CLOSURE AND MANUFACTURING RECONFIGURATION
During the third quarter of 1999, the Company implemented the final
transformation of its bicycle operations, including a plan to cease U.S. bicycle
manufacturing. Huffy Bicycle Company closed its U.S. production facilities in
Farmington, Missouri and Southaven, Mississippi and intends to increase imports
from a global network of sourcing partners. Closing the plants eliminated the
costs required to operate the facilities and completed Huffy Bicycle Company's
transformation from a single brand manufacturer to a multi-brand design,
marketing and distribution company. The plan included the termination of 742
hourly and salary employees. In 1999, the Company incurred plant closure and
manufacturing reconfiguration charges of $38,559 ($25,218 after tax), or $2.37
per common share. The Company incurred $34,744 related to the 1999
reconfiguration and $3,815 related to the 1998 reconfiguration. The 1999 charges
included severance and related benefits ($4,165) and facility shutdown and asset
write-downs ($30,579). The remaining plant closure and manufacturing
reconfiguration reserve which is included in other accrued expenses at December
31, 1999 includes $3,117 of unpaid severance and $1,683 of facility shutdown.
The Company anticipates the remaining balance to be expended in 2000.
During 1998, the Company implemented a plan to maximize operational
efficiency by eliminating excess production capacity and reducing annual
operating expenses at the Huffy Bicycle Company. The plan included the closure
of the Celina, Ohio manufacturing facility to reduce capacity; the leasing of a
parts
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6
fabrication facility to support other plants; and the continuation of its import
program for opening price point bikes. The plan included the termination of 935
hourly and salaried employees. In 1998, the Company incurred plant closure and
manufacturing reconfiguration charges of $21,320 ($13,112 after tax or $1.07 per
share). In 1998, these charges included severance and related benefits ($6,548);
facility shutdown and asset writedowns ($8,218); and new facility startup and
equipment, personnel and inventory relocation ($6,554). In 1999 these charges
included severance and related benefits ($2,248) and new facility startup and
equipment, personnel and inventory relocation ($1,567).
YEAR 2000 COMPLIANCE
Huffy Corporation relies on computer-based technology and uses a variety of
third-party hardware and proprietary and third-party software. In addition to
the information technology ("IT") systems, the Company's operations rely on
various non-IT equipment and systems that contain embedded computer technology.
During 1996, the Company began evaluating and assessing all its internal
date-sensitive systems and equipment for Year 2000 compliance. The assessment
phase of the Year 2000 project included both information technology equipment
and non-information technology equipment. Based on such assessment, the Company
determined that it was necessary to modify or replace a portion of its
information systems. For its major IT systems, as of December 31, 1999, the
Company has completed the modification or replacement of its critical software
and hardware, and has completed testing of its remediated systems.
The Company has also communicated with significant suppliers and customers
to determine their Year 2000 compliance and the extent to which the Company is
vulnerable to any third party Year 2000 issues. Essentially all significant
suppliers and customers replied to our inquiries in writing indicating that they
expected to be Year 2000 compliant on a timely basis.
The Company developed contingency plans for mission critical systems,
however, the Company has not encountered any significant Year 2000 related
failures.
Because the Company began this process in a timely fashion, and because it
regularly evaluates and upgrades its IT capabilities, the total estimated cost
of the Year 2000 project alone is not material and has been funded by operating
cash flows.
Although the Company believes that its Year 2000 compliance program
appropriately identified and addressed those Year 2000 issues that are subject
to the Company's reasonable control, there can be no assurance that the
Company's efforts in this regard will be fully effective.
OTHER MATTERS
The Company, along with others, has been designated as a potentially
responsible party (PRP) by the U.S. Environmental Protection Agency (the "EPA")
with respect to claims involving the discharge of hazardous substances into the
environment in the Baldwin Park operable unit of the San Gabriel Valley
Superfund site. Currently, the Company, along with other PRPs, the San Gabriel
Basin Water Quality Authority and numerous local water districts are working
with the EPA on a mutually satisfactory remedial plan.
The total accrual for estimated environmental remediation costs related to
the Superfund site and other potential environmental liabilities is
approximately $7,250 at December 31, 1999. Management expects that the majority
of expenditures relating to costs currently accrued will be made over the next
year.
As a result of factors such as the continuing evolution of environmental laws
and regulatory requirements, the availability and application of technology, the
identification of presently unknown remediation sites and the allocation of
costs among PRPs, estimated costs for future environmental compliance and
remediation are necessarily imprecise and it is not possible to fully predict
the amount or timing of future costs of environmental remediation requirements
which may subsequently be determined.
Based upon information presently available, such future costs are not
expected to have a material adverse effect on the Company's financial condition,
liquidity, or its ongoing results of operations. However, such costs could be
material to results of operations in a future period.
INFLATION
Inflation rates in the United States have not had a significant impact on the
Company's operating results for the three years ended December 31, 1999. The
impact on the Company is minimized as a result of rapid turnover of inventories
and partially offset by cost reduction programs and increased operating
efficiency.
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Huffy Corporation
CONSOLIDATED BALANCE SHEETS
(Dollar amounts in thousands, except per share data)
December 31, 1999 1998
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 20,190 $ 17,834
Receivables:
Trade 66,691 70,716
Taxes and other 1,093 1,528
-------- --------
67,784 72,244
Less allowance for doubtful accounts 1,922 2,095
-------- --------
Net receivables 65,862 70,149
Inventories 23,354 50,054
Deferred federal income taxes 22,435 15,045
Prepaid expenses 11,991 5,380
Net assets of discontinued operations -- 70,338
-------- --------
Total current assets 143,832 228,800
-------- --------
PROPERTY, PLANT, AND EQUIPMENT, AT COST:
Land and land improvements 1,287 1,395
Buildings and improvements 10,312 11,822
Machinery and equipment 60,442 109,754
Office furniture, fixtures, and equipment 18,659 26,569
Leasehold improvements 1,477 25,170
Construction in progress 5,678 3,282
-------- --------
97,855 177,992
Less accumulated depreciation and amortization 67,460 114,260
-------- --------
Net property, plant, and equipment 30,395 63,732
OTHER ASSETS:
Excess of cost over net assets acquired, net of
accumulated amortization of $7,154 in 1999
and $5,318 in 1998 31,347 31,985
Deferred federal income taxes 13,443 3,565
Other 4,764 4,388
-------- --------
$223,781 $332,470
======== ========
See accompanying notes to consolidated financial statements
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(Dollar amounts in thousands, except per share data)
December 31, 1999 1998
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Notes Payable $ 21,902 $ 99,240
Current installments of long-term obligations 9,141 6,411
Accounts payable 34,397 32,603
Accrued expenses:
Salaries, wages, and other compensation 5,664 8,076
Insurance 9,428 10,198
Environmental 7,250 2,994
Other 15,721 6,895
--------- ---------
Total accrued expenses 38,063 28,163
Other current liabilities 8,197 9,851
--------- ---------
Total current liabilities 111,700 176,268
--------- ---------
Long-term obligations, less current installments 52,028 29,784
Pension liability 3,198 4,598
Postretirement benefits other than pensions 13,903 15,403
Other liabilities 5,470 11,027
--------- ---------
Total liabilities 186,299 237,080
--------- ---------
SHAREHOLDERS' EQUITY:
Preferred stock, par value $1 per share
Authorized 1,000,000 shares -- --
Common stock, par value $1 per share
Authorized 60,000,000 shares; issued 16,667,669
shares in 1999 and 16,632,676 shares in 1998 16,667 16,633
Additional paid-in capital 66,242 65,892
Retained earnings 48,571 84,728
Accumulated other comprehensive income (2,854) (3,522)
--------- ---------
128,626 163,731
--------- ---------
Less cost of 6,659,687 treasury shares in 1999
and 4,907,987 in 1998 91,144 68,341
--------- ---------
Total shareholders' equity 37,482 95,390
--------- ---------
$ 223,781 $ 332,470
========= =========
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Huffy Corporation
CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollar amounts in thousands, except per share data)
Years Ended December 31, 1999 1998 1997
Net sales $ 561,039 $ 584,201 $ 580,686
Cost of sales 502,525 486,687 488,627
------------ ------------ ------------
Gross profit 58,514 97,514 92,059
Selling, general, and administrative expenses 73,876 76,884 75,661
Plant closure and manufacturing reconfiguration 38,559 21,320 --
------------ ------------ ------------
Operating income (loss) (53,921) (690) 16,398
Other expense (income)
Interest expense 7,158 6,647 4,098
Interest income (425) (123) (180)
Other (693) (390) 998
------------ ------------ ------------
6,040 6,134 4,916
------------ ------------ ------------
Earnings (loss) before income taxes (59,961) (6,824) 11,482
Income tax expense (benefit) (20,725) (2,677) 3,025
------------ ------------ ------------
Earnings (loss) from continuing operations (39,236) (4,147) 8,457
------------ ------------ ------------
Discontinued operations:
Earnings (loss) from discontinued operations,
net of income tax expense (benefit) of $(208),
$1,317 and $(164) in 1999, 1998 and 1997 (312) 1,982 (59)
Gain on disposal of discontinued operations,
net of income tax of $4,078 in 1999 and
$4,490 in 1997 6,260 -- 559
Net earnings (loss) ------------ ------------ ------------
$ (33,288) $ (2,165) $ 8,957
------------ ------------ ------------
EARNINGS (LOSS) PER COMMON SHARE:
Basic
Weighted average number of common shares 10,642,257 12,122,278 12,894,600
Earnings (loss) from continuing operations $ (3.69) $ (.34) $ .66
Earnings from discontinued operations .56 .16 .04
------------ ------------ ------------
Net earnings (loss) per common share $ (3.13) $ (.18) $ .70
------------ ------------ ------------
Diluted
Weighted average number of common shares
and common stock equivalents 10,642,257 12,279,833 13,062,174
Earnings (loss) from continuing operations $ (3.69) $ (.34) $ .65
Earnings from discontinued operations .56 .16 .04
------------ ------------ ------------
Net earnings (loss) per common share $ (3.13) $ (.18) $ .69
------------ ------------ ------------
See accompanying notes to consolidated financial statements
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Huffy Corporation
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollar amounts in thousands)
Years Ended December 31, 1999 1998 1997
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings (loss) from continuing operations $(39,236) $ (4,147) $ 8,457
Adjustments to reconcile net earnings (loss) to
net cash provided by operating activities:
Depreciation and amortization 12,484 14,615 14,295
Loss on sale of property, plant, and equipment 11,069 3,666 222
Write-down of certain property, plant and equipment 23,278 -- --
Deferred federal income tax benefit (17,269) (954) (1,671)
Increase (decrease) in cash resulting from changes in:
Receivables, net 4,287 18,228 (17,850)
Inventories 26,946 3,589 (21,974)
Prepaid expenses (6,611) (265) 293
Other assets (1,165) (732) (1,602)
Accounts payable 1,554 (1,282) 14,383
Accrued expenses 9,900 (7,207) 1,598
Other current liabilities (1,639) (399) 4,666
Postretirement benefits other than pensions (1,500) (1,897) 474
Other long-term liabilities (6,148) 1,138 694
Other -- 136 (487)
-------- -------- --------
Net cash provided by continuing operating activities 15,950 24,489 1,498
-------- -------- --------
Discontinued operations:
Gain on disposal of discontinued operations 6,260 -- --
Gain (loss) from discontinued operations (312) 1,982 500
Items from discontinued operations -- 3,474 4,887
Cash provided by (used in) discontinued operations 70,338 (9,728) 39,778
-------- -------- --------
Net cash provided by (used in) discontinued
operating activities 76,286 (4,272) 45,165
-------- -------- --------
Net cash provided by operating activities 92,236 20,217 46,663
-------- -------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (11,039) (19,535) (12,390)
Proceeds from sale of property, plant, and equipment 48 46 293
Acquisitions of businesses (1,248) (12,958) (17,989)
-------- -------- --------
Net cash used in investing activities (12,239) (32,447) (30,086)
-------- -------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Decrease in notes payable (77,338) 56,240 4,090
Issuance of long-term obligations 37,098 -- 96
Reduction of long-term obligations (12,124) (7,775) (7,616)
Issuance of common shares 384 2,165 1,461
Purchase of treasury shares (22,803) (18,518) (10,051)
Dividends paid (2,858) (4,158) (4,436)
-------- -------- --------
Net cash provided by (used in) financing activities (77,641) 27,954 (16,456)
-------- -------- --------
Net change in cash and cash equivalents 2,356 15,724 121
Cash and cash equivalents:
Beginning of year 17,834 2,110 1,989
-------- -------- --------
End of year $ 20,190 $ 17,834 $ 2,110
-------- -------- --------
Cash paid (refunded) during the year for:
Interest $ 7,201 $ 9,218 $ 6,744
Income taxes (420) (3,191) 6,042
See accompanying notes to consolidated financial statements.
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Huffy Corporation
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(Dollar amounts in thousands, except per share data)
Accumulated
Additional Other
Common Paid-In Retained Comprehensive Treasury
Total Stock Capital Earnings Income Stock
BALANCE AT DECEMBER 31, 1996
AS PREVIOUSLY REPORTED $115,972 $16,411 $62,488 $81,436 $(4,591) $(39,772)
Adjustments for the cumulative
effect on prior years of applying
retroactively the new method of
valuing inventory 4,957 4,957
-------- ------- ------- ------- ------- --------
BALANCE AT DECEMBER 31, 1996
AS ADJUSTED $120,929 $16,411 $62,488 $86,393 $(4,591) $(39,772)
Net earnings 8,957 8,957
Comprehensive income
Minimum pension liability
adjustment, net of income tax
expense of $73 134 134
Foreign currency
translation adjustment (487) (487)
--------
Total comprehensive income 8,604
Issuance of 63,771 shares in
connection with common
stock plans 1,461 64 1,397
Common dividends $.34
per share (4,365) (4,365)
Purchase of 783,500
treasury shares (10,051) (10,051)
-------- ------- ------- ------- ------- --------
BALANCE AT DECEMBER 31, 1997 $116,578 $16,475 $63,885 $90,985 $(4,944) $(49,823)
Net loss (2,165) (2,165)
Comprehensive income
Minimum pension liability
adjustment, net of income tax
expense of $693 1,286 1,286
Foreign currency
translation adjustment 136 136
--------
Total comprehensive income (743)
Issuance of 157,325 shares in
connection with common
stock plans 2,165 158 2,007
Common dividends $.34
per share (4,092) (4,092)
Purchase of 1,211,800
treasury shares (18,518) (18,518)
-------- ------- ------- ------- ------- --------
BALANCE AT DECEMBER 31, 1998 $ 95,390 $16,633 $65,892 $84,728 $(3,522) $(68,341)
Net loss (33,288) (33,288)
Comprehensive income, net of tax
Minimum pension liability
adjustment, net of income tax
expense of $360 668 668
--------
Total comprehensive income (32,620)
Issuance of 34,993 shares in
connection with common
stock plans 384 34 350
Common dividends $.26
per share (2,869) (2,869)
Purchase of 1,751,700
treasury shares (22,803) (22,803)
-------- ------- ------- ------- ------- --------
BALANCE AT DECEMBER 31, 1999 $ 37,482 $16,667 $66,242 $48,571 $(2,854) $(91,144)
-------- ------- ------- ------- ------- --------
See accompanying notes to consolidated financial statements.
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Huffy Corporation
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollar amounts in thousands, except per share data)
[1] SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
[a] Consolidation -- The consolidated financial statements include the
accounts of Huffy Corporation and its subsidiaries. All intercompany
transactions and balances have been eliminated.
[b] Reclassification -- Certain 1998 and 1997 balances have been reclassified
to conform with the 1999 presentation.
[c] Cash and Cash Equivalents -- Cash equivalents consist principally of
short-term money market instruments with original maturities of three months or
less.
[d] Concentrations of Credit Risk -- Financial instruments which potentially
expose the Company to concentrations of credit risk, as defined by Statement of
Financial Accounting Standards (SFAS) No. 105, consist primarily of trade
accounts receivable. In the normal course of business, Huffy extends credit to
various companies in the retail industry where certain concentrations of credit
risk exist. These concentrations of credit risk may be similarly affected by
changes in economic or other conditions and may, accordingly, impact Huffy's
overall credit risk. However, management believes that consolidated accounts
receivable are well diversified, thereby reducing potential material credit
risk, and that the allowance for doubtful accounts is adequate to absorb
estimated losses as of December 31, 1999.
[e] Inventories -- Inventories are valued at cost (not in excess of market)
determined by the first-in, first-out (FIFO) method. Effective the fourth
quarter of 1999 the Company changed from the LIFO method to the FIFO method.
Note (5).
[f] Property, Plant, and Equipment -- Depreciation and amortization of plant
and equipment is provided on the straight-line method.
Annual depreciation and amortization rates are as follows:
Land improvements 5-- 10%
Buildings and improvements 2-1/2-- 10%
Machinery and equipment 5-- 33-1/3%
Office furniture, fixtures, equipment
and computer software 10-- 33-1/3%
Leasehold improvements 4-1/2-- 33-1/3%
[g] Amortization of Intangibles -- The excess of cost over net assets
acquired is amortized on a straight-line basis over fifteen to forty years. The
carrying value of goodwill is reviewed at each balance sheet date to determine
whether goodwill has been impaired. If this review indicates that goodwill will
not be recoverable, as determined based on projected undiscounted future cash
flows of the entity acquired, the Company's carrying value of goodwill would be
reduced by the estimated impairment.
[h] Disclosures About the Fair Value of Financial Instruments -- The carrying
amount of cash and cash equivalents, trade receivables, trade accounts
payable, notes payable, and accrued expenses approximates fair value due to the
short maturity of these instruments. The fair value of the Company's long-term
debt obligations is disclosed in Note (6).
[i] Earnings (Loss) Per Common Share -- Earnings (loss) per share of common
stock is based upon the weighted average number of shares of common stock
outstanding during the year. Diluted earnings (loss) per share is computed based
on the weighted average number of shares of common stock and common stock
equivalents outstanding.
[j] Foreign Currency Translation -- The functional currency of the Company's
non-U.S. subsidiaries is the local currency. Adjustments resulting from the
translation of financial statements are reflected as a component of
comprehensive income.
[k] Use of Estimates -- Management of the Company has made a number of
estimates and assumptions relating to the reporting of assets and liabilities
and the disclosure of contingent assets and liabilities to prepare these
financial statements in conformity with generally accepted accounting
principles. Actual results could differ from those estimates.
[l] Stock Option Plans -- Prior to January 1, 1996, the Company accounted for
its stock option plans in accordance with the provisions of Accounting
Principles Board ("APB") Opinion No. 25, "Accounting for Stock Issued to
Employees," and related interpretations. As such, compensation expense would be
recorded on the date of grant only if the current market price of the
underlying stock exceeded the exercise price. On January 1, 1996, the Company
adopted SFAS No. 123, "Accounting for Stock-Based Compensation," which permits
entities to recognize as expense over the vesting period the fair value of all
stock-based awards on the date of grant. Alternatively, SFAS No. 123 also allows
entities to continue to apply the provisions of APB Opinion No. 25 and provide
pro forma net income and pro forma earnings per share disclosures for employee
stock option grants made in 1995 and future years as if the fair-value-based
method defined in SFAS No. 123 had been applied. The Company has elected to
continue to apply the provisions of APB Opinion No. 25 and provide the pro forma
disclosure provisions of SFAS No. 123.
[2] ACQUISITIONS
In June, 1998, the Company acquired the assets of Inventory Auditors, Inc.
This acquisition combines the second and third largest businesses in the
inventory taking services industry in the U.S., and allows expanded service
coverage to the nation's retailers.
[3] DISCONTINUED OPERATIONS
On March 16, 1999, the Company sold the assets of the Harrisburg,
Pennsylvania based lawn and garden tools and wheelbarrows business, True Temper
Hardware Company, for $100 million to U.S. Industries, Inc. The results for True
Temper Hardware Company have been classified as discontinued operations in the
Consolidated Statements of Operations and Consolidated Statements of Cash Flows.
The assets and liabilities of discontinued operations have been classified in
the December 31, 1998 Consolidated Balance Sheet as net assets of discontinued
operations.
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13
On April 21, 1997, the Company sold the assets of its Denver-based juvenile
products business, Gerry Baby Products Company, for $73 million to Evenflo
Company, Inc. The results of Gerry Baby Products Company have been classified as
discontinued operations for all periods presented in the Consolidated
Statements of Operations and Consolidated Statements of Cash Flows.
[4] PLANT CLOSURE AND MANUFACTURING RECONFIGURATION
During the third quarter of 1999, the Company implemented the final
transformation of its bicycle operations, including a plan to cease U.S. bicycle
manufacturing. Huffy Bicycle Company closed its U.S. production facilities in
Farmington, Missouri and Southaven, Mississippi and to increase imports from a
global network of sourcing partners. Closing the plants eliminates the costs
required to operate the facilities and completes Huffy Bicycle Company's
transformation from a single brand manufacturer to a multi-brand design,
marketing and distribution company. The plan included the termination of 742
hourly and salaried employees. In 1999, the Company incurred plant closure and
manufacturing reconfiguration charges of $38,559 ($25,218 after tax), or $2.37
per common share. The Company incurred $34,744 related to the 1999
reconfiguration and $3,815 related to the 1998 reconfiguration. The 1999 charges
included severance and related benefits ($4,165) and facility shutdown and asset
write-downs ($30,579). Included in adjusted gross profit was $6,300 in inventory
write-downs. The remaining plant closure and manufacturing reconfiguration
reserve which is included in other accrued expenses at December 31, 1999
includes $3,117 of unpaid severance and $1,483 of facility shutdown. The
Company anticipates the remaining balance to be expended in 2000.
During 1998, the Company implemented a plan to maximize operational
efficiency by eliminating excess production capacity and reducing annual
operating expenses at the Huffy Bicycle Company. The plan included the closure
of the Celina, Ohio manufacturing facility to reduce capacity; the leasing of a
parts fabrication facility to support other plants; and the continuation of its
import program for opening price point bikes. The plan included the termination
of 935 hourly and salaried employees. In 1998, the Company incurred plant
closure and manufacturing reconfiguration charges of $21,320 ($13,112 after tax
or $1.07 per share). In 1998, these charges included severance and related
benefits ($6,548); facility shutdown and asset writedowns ($8,218); and new
facility startup and equipment, personnel and inventory relocation ($6,554). In
1999 these charges included severance and related benefits ($2,248) and new
facility startup and equipment, personnel and inventory relocation ($1,567).
[5] INVENTORIES
The components of inventories are as follows:
1999 1998
Finished goods $17,345 $29,212
Work-in-process 106 4,424
Raw materials and supplies 5,903 16,418
------- -------
$23,354 $50,054
------- -------
During the fourth quarter of 1999, the Company changed its method of
determining the cost of inventories from the LIFO method to the FIFO method.
Under the current economic environment of deflation, the Company believes that
the FIFO method will result in a better measurement of operating results. The
change has been applied retroactively by restating the financial statements for
prior years. This change decreased net earnings by $1,500 in 1998 and $1,218 in
1997. If the Company remained on the LIFO method in 1999, net earnings would be
lowered by $1,083.
[6] LINES OF CREDIT AND LONG-TERM OBLIGATIONS
The financial condition of the Company changed during the fourth quarter of
1999. The Company was in default of a $4 million dollar principal payment due
October 22, 1999, under an unsecured loan agreement. A formal notice of
acceleration was received for this loan. The Corporation also had violated
several financial covenants (current ratio, consolidated adjusted net worth,
consolidated debt to total capital, EBITDA to interest coverage) under the
existing credit arrangement with certain of its unsecured lending banks and
under a guarantee of certain other indebtedness. As a result of the above, the
Company's committed and uncommitted lines of credit were capped at existing
borrowing levels.
Throughout the remainder of the fourth quarter, the Company maintained a
positive cash position while negotiating with potential lenders on a new
long-term financing package.
On January 26, 2000, the Company signed a new $170 million, 18 month, secured
lending facility. The lending facility is secured by all assets of the Company.
Management believes that the new facility provides adequate liquidity to fund
the Company's operations throughout the term of the agreement.
As of January 26, 2000, the Company has $40 million of senior term debt and
$27 million of subordinated debt outstanding. In addition, the Company has a
$100 million secured credit facility with availability of $52.5 million of which
$27.7 million was outstanding as of February 3, 2000.
Short-term borrowings are summarized as follows:
1999 1998
Unsecured notes payable:
Average borrowings $ 64,831 $ 82,498
Maximum at any month end 118,220 102,500
Weighted average rate 6.16% 5.87%
Long-term obligations are summarized as follows:
1999 1998
Secured notes payable:
9.62% due serially through 2000 $ -- $ 12,000
Prime plus 3-6% term loan due 2001 57,098 --
8.23% Industrial Development Bonds
due serially from 2000 through 2014 -- 20,000
Other 4,071 4,195
-------- --------
61,169 36,195
Less current installments 9,141 6,411
-------- --------
$ 52,028 $ 29,784
-------- --------
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14
Principal payments required on long-term obligations during each of the years
2001 through 2004 are approximately $38,769, $1,691, $1,712, and $2,539,
respectively.
The estimated fair value of the Company's long-term obligations at December
31, 1999 and 1998 was approximately $63,688 and $38,745, respectively. Fair
value estimates are made at a specific point in time, based on relevant market
information and information about the financial instrument. Fair value
estimates were based on the amount of future cash flows discounted using the
Company's current borrowing rate for loans of comparable maturity. These
estimates are subjective in nature and involve uncertainties and matters of
significant judgment and, therefore, cannot be determined with precision.
Changes in assumptions could significantly affect the estimates.
[7] PREFERRED STOCK
Under the Company's Amended Articles of Incorporation, there are 1,000,000
authorized, unissued shares of Cumulative Preferred Stock, $1.00 par value.
Subject to certain limitations, the Articles provide that the Board of Directors
may fix the conditions of each series of Preferred Stock.
The Company entered into a Rights Agreement with its transfer agent in 1988,
as amended in 1991 and 1994, and the Board of Directors declared a dividend of
one Preferred Share Purchase Right for each outstanding share of the Company's
Common Stock. Upon the occurrence of certain events, Preferred Share Purchase
Rights entitle the holder to purchase, at a price of $60.00, one one-hundredth
of a share of Series C Cumulative Preferred Stock, subject to adjustment. The
Rights become exercisable only if a person or group acquires 15% or more of the
Company's Common Stock or announces a tender offer for 15% or more of the Common
Stock. Under certain circumstances, all Rights holders, except the person or
group holding 15% or more of the Company's Common Stock, will be entitled to
purchase a number of shares of the Company's Common Stock having a market value
of twice the Right's current exercise price. Alternately, if the Company is
acquired in a merger or other business combination, after the Rights become
exercisable the Rights will entitle the holder to buy a number of the acquiring
company's common shares having a market value at that time of twice each Right's
current exercise price.
Further, after a person or group acquires 15% or more (but less than 50%) of
the Company's outstanding Common Stock, the Company's Board of Directors may
exchange part or all of the Rights (other than the Rights held by the acquiring
person or group) for shares of Common Stock. The Rights expire December 9, 2004
and may be redeemed by the Company for $.01 per Right at any time prior to the
acquisition by a person or group of 15% or more of the Company's Common Stock.
[8] COMMON STOCK AND COMMON STOCK PLANS
At December 31, 1999, the Company has stock-based compensation plans which
are described below. The Company applies APB Opinion No. 25 and related
Interpretations in Accounting for its plans. Accordingly, no compensation cost
has been recognized for its fixed stock option plans and its stock purchase plan
except for options issued below fair market value. The compensation cost that
has been charged against income for options issued below fair market value was
$81, $202, and $432 for 1999, 1998, and 1997, respectively. Had compensation
cost for the Company's stock-based compensation plans been determined consistent
with FASB Statement No. 123, the Company's net income and earnings per share
would have been reduced to the pro forma amounts indicated below:
1999 1998 1997
Net earnings (loss)
As Reported $ (33,288) $ (2,165) $ 8,957
Pro Forma (34,053) (2,799) 8,523
Diluted net earnings (loss)
per common share
As Reported $ (3.13) $ (0.18) $ 0.69
Pro Forma (3.20) (0.23) 0.66
1999 1999 1998 1998 1997 1997
NUMBER WEIGHTED-AVERAGE Number Weighted-Average Number Weighted-Average
OF SHARES EXERCISE PRICE of Shares Exercise Price of Shares Exercise Price
1998 NON-QUALIFIED PLAN
Outstanding at January 1 244,950 $ 15.73 -- -- (PLAN NOT IN EFFECT)
Granted at fair value 138,000 7.31 245,700 $ 15.73
Granted below fair value -- -- -- --
Forfeited (32,000) 16.67 (750) 15.94
Exercised -- -- -- --
------- --------- ------- ---------
Outstanding at December 31 350,950 $ 12.33 244,950 $ 15.73
------- --------- ------- ---------
Exercisable at December 31 58,858 $ 15.75 -- --
------- --------- ------- ---------
Weighted-average fair value of
options granted during the year;
Issued at fair value on grant date $ 3.42 $ 4.58
Issued below fair value on grant date -- --
(PLAN NOT IN EFFECT)
1998 Qualified Plans
Outstanding at January 1 231,958 $ 16.57 -- --
Granted at fair value 63,976 10.10 231,958 $ 16.57
Granted below fair value -- -- -- --
Forfeited -- -- -- --
Exercised (1,059) 1.00 --
------- --------- ------- ---------
Outstanding at December 31 294,875 $ 15.22 231,958 $ 16.57
------- --------- ------- ---------
Exercisable at December 31 111,500 $ 12.49 16,000 $ 16.25
------- --------- ------- ---------
Weighted-average fair value of
options granted during the year;
Issued at fair value on grant date $ 6.40 $ 5.08
Issued below fair value on grant date -- --
14
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1999 1999 1998 1998 1997 1997
NUMBER WEIGHTED-AVERAGE Number Weighted-Average Number Weighted-Average
OF SHARES EXERCISE PRICE of Shares Exercise Price of Shares Exercise Price
1988 PLAN
Outstanding at January 1 1,131,763 $ 12.73 1,327,315 $ 12.75 1,278,647 $ 12.42
Granted at fair value -- -- 15,000 14.75 272,399 14.34
Granted below fair value -- -- -- -- -- --
Forfeited (63,412) 13.28 (136,834) 13.94 (168,510) 13.66
Exercised (12,463) 11.22 (73,718) 12.05 (55,221) 9.76
--------- --------- --------- --------- --------- ---------
Outstanding at December 31 1,055,888 $ 12.67 1,131,763 $ 12.73 1,327,315 $ 12.75
--------- --------- --------- --------- --------- ---------
Exercisable at December 31 851,457 $ 12.45 632,399 -- 422,962 $ 13.51
--------- --------- --------- --------- --------- ---------
Weighted-average fair value of
options granted during the year:
Issued at fair value on grant date $ -- $ 4.29 $ 4.42
Issued below fair value on grant date -- -- --
1987 DIRECTOR STOCK OPTION PLAN
Outstanding at January 1 196,078 $ 12.98 243,818 $ 12.35 188,882 $ 12.44
Granted at fair value -- -- -- -- 50,625 13.00
Granted below fair value -- -- -- -- 4,728 1.00
Forfeited -- -- (5,625) 11.66 -- --
Exercised (6,466) 1.00 (42,115) 9.55 (417) 1.00
--------- --------- --------- --------- --------- ---------
Outstanding at December 31 189,612 $ 13.38 196,078 $ 12.98 243,818 $ 12.35
--------- --------- --------- --------- --------- ---------
Exercisable at December 31 189,612 $ 13.38 140,725 -- 181,224 $ 12.92
--------- --------- --------- --------- --------- ---------
Weighted-average fair value of
options granted during the year -- -- --
Options Outstanding Options Exercisable
----------------------------------------------------------- -----------------------------
Average Weighted Weighted
Range of NUMBER Remaining Average NUMBER Average
Exercise OUTSTANDING Contractual Exercise EXERCISABLE Exercise
Price AT 12/31/99 Life Price AT 12/31/99 Price
1998 NON-QUALIFIED PLAN
$ 5 to 13 123,000 9.9 Years $ 6.44 -- $ --
13 to 17 180,700 9.0 Years 15.01 41,421 15.06
17 to 20 47,250 8.6 Years 17.44 17,437 17.38
1998 QUALIFIED PLAN
$ 0 to 1 28,375 9.0 Years $ 1.00 28,375 $ 1.00
13 to 18 111,500 9.0 Years 14.63 44,375 14.82
18 to 20 155,000 8.5 Years 18.25 38,750 18.25
1988 PLAN
$ 0 to 1 90,000 6.6 Years $ 1.00 90,000 $ 1.00
10 to 12 276,797 5.9 Years 11.05 244,417 11.04
12 to 17 597,080 6.6 Years 14.16 425,029 14.19
17 to 20 92,011 3.2 Years 19.35 92,011 19.35
1987 DIRECTOR STOCK OPTION PLAN
$ 0 to 5 20,862 4.8 Years $ 0.98 20,862 $ 0.98
11 to 18 168,750 4.2 Years 14.92 168,750 14.92
Due to the phase-in period for applying the disclosure requirements of SFAS
No. 123, the pro forma information provided above is not likely to be
representative of the effects on reported net earnings for future years.
The Company has fixed option plans, which include the 1998 Qualified Plans,
the 1998 Non-Qualified Plan, the 1988 Stock Option Plan and Restricted Share
Plan and the 1987 Director Stock Option Plan. The 1998 Qualified Plans consist
of the 1998 Director Stock Option Plan, the 1998 Key Employee Stock Plan, and
the 1998 Restricted Share Plan.
The 1998 Non-Qualified Plan, the 1998 Key Employee Stock Plan, and the 1988
Stock Option Plan and Restricted Share Plan authorize the issuance of
non-qualified stock options, restricted shares, incentive stock options, and
stock appreciation rights, although no incentive stock options or stock
appreciation rights have been issued. Under the plan, the exercise price of each
non-qualified stock option equals the market price of the Company's stock on the
date of the grant, and such option's maximum term is ten years. Options vest at
the end of the first through fifth years.
The 1998 Director Stock Option Plan and 1987 Director Stock Option Plan
authorize the automatic issuance of nonqualified stock options to members of the
Board of Directors who are not employees of the Company. Directors can elect to
receive discounted stock options in lieu of all or part of the annual retainer
fee. Such shares cannot include stock appreciation rights. Under the 1998
Director Stock Option Plan, options vest at the end of six months and at the end
of two years. Under the 1987 Director Stock Option Plan, options vest at the end
of the third, fourth, and fifth years.
The fair value of each option grant is estimated on the date of grant using
the Black-Scholes option-pricing model with the following weighted-average
assumptions used for grants in 1999, 1998 and 1997, respectively: dividend yield
of 2.4% for
15
16
1998 and 1997; expected volatility of 36.0% in 1999 and 30% in 1998 and 1997;
risk-free interest rates from 4.9% to 6.8% for all plans and years; and expected
lives of 5.8 years for all plans.
The 1989 Employee Stock Purchase Plan, as amended, authorizes the offering
and sale to employees of up to 975,000 shares of the Company's common stock at a
price approximately 90% of the closing price of the common stock on the offering
date. Under the plan, the Company sold 14,895 shares, 40,729 shares, and 8,133
shares to employees in 1999, 1998, and 1997, respectively. At December 31, 1999,
rights to purchase approximately 15,000 shares were outstanding under this
plan at an exercise price of $9.00 per share and 516,236 additional shares were
available for issuance.
Under FASB Statement No. 123, compensation cost is recognized for the fair
value of the employee's purchase rights, which was estimated using the
Black-Scholes model with the following assumptions for 1999, 1998, and 1997,
respectively: dividend yield of 2.4% for 1998 and 1997; an expected life of one
year for all years; a risk-free interest rate of 6.7% for 1999 grants, 4.8% for
1998 grants and 5.7% for 1997 grants, and expected volatility of 36.0% in 1999
and 30.0% in 1998 and 1997. The weighted-average fair value of those purchase
rights granted in 1999, 1998, and 1997 were $1.56, $1.47, and $1.85,
respectively.
[9] EARNINGS PER SHARE
INCOME SHARES PER SHARE
(NUMERATOR) (DENOMINATOR) AMOUNT
1999
BASIC EPS
Net earnings available to
common shareholders $(33,288) 10,642,257 $(3.13)
------
EFFECT OF DILUTIVE SECURITIES
Stock options -- --
-------- ----------
DILUTED EPS
Earnings available to common
shareholders and assumed
conversions $(33,288) 10,642,257 $(3.13)
-------- ---------- ------
INCOME SHARES PER SHARE
(NUMERATOR) (DENOMINATOR) AMOUNT
1998
BASIC EPS
Net earnings available to
common shareholders $ (2,165) 12,122,278 $ (.18)
------
EFFECT OF DILUTIVE SECURITIES
Stock options -- 157,555
-------- ----------
DILUTED EPS
Earnings available to common
shareholders and assumed
conversions $ (2,165) 12,279,833 $ (.18)
-------- ---------- ------
INCOME SHARES PER SHARE
(NUMERATOR) (DENOMINATOR) AMOUNT
1997
BASIC EPS
Net loss available to
common shareholders $ 8,957 12,894,600 $ .70
------
EFFECT OF DILUTIVE SECURITIES
Stock options -- 167,574
-------- ----------
DILUTED EPS
Earnings available to common
shareholders and assumed
conversions $ 8,957 13,062,174 $ .69
-------- ---------- ------
Options to purchase 1,752,088, 385,340, and 224,785 shares of common stock
were outstanding in 1999, 1998, and 1997, respectively, but were not included in
the computation of diluted EPS because the options' exercise price was greater
than the average market price of the common shares.
[10] COMMITMENTS AND CONTINGENCIES
The Company leases certain manufacturing and warehouse facilities, office
space, machinery, and vehicles under cancellable and non-cancellable operating
leases, most of which expire within ten years and may be renewed by the Company.
Rent expense under such arrangements totaled approximately $8,339, $6,848, and
$5,382 in 1999, 1998, and 1997, respectively.
Future minimum rental commitments under non-cancellable operating leases at
December 31, 1999 are as follows:
AMOUNT
2000 $ 7,786
2001 6,357
2002 4,909
2003 3,929
2004 2,230
Thereafter 1,819
-------
Total minimum payments $27,030
-------
The Company is subject to a number of lawsuits, investigations, and claims
arising out of the conduct of its business primarily related to commercial
transactions and product liability. While it is not feasible to predict the
outcome of all pending suits and claims, management is of the opinion that their
ultimate disposition will not have a material adverse effect upon the
consolidated financial position, liquidity, or ongoing results of operations of
the Company.
[11] ENVIRONMENTAL EXPENDITURES
Environmental expenditures that relate to current operations are expensed or
capitalized as appropriate. Remediation costs that relate to an existing
condition caused by past operations are accrued when it is probable that these
costs will be incurred and can be reasonably estimated.
The Company, along with others, has been designated as a potentially
responsible party (PRP) by the U.S. Environmental Protection Agency (the "EPA")
with respect to claims involving the discharge of hazardous substances into the
environment in the Baldwin Park operable unit of the San Gabriel Valley
Superfund site ("Superfund"). Currently, the Company, along with other PRPs, the
San Gabriel Basin Water Quality Authority and numerous local water districts are
working with the EPA on a mutually satisfactory remedial plan. In developing its
estimate of environmental remediation costs, the Company considers, among other
things, currently available technological solutions, alternative cleanup methods
and risk-based assessments of the contamination and, as applicable, an
estimation of its proportionate share of remediation costs. The Company may also
make use of external consultants, and consider, when available, estimates by
other PRPs and governmental agencies and information regarding the financial
viability of other PRPs. Based upon information currently available, the Company
believes it is unlikely that it will incur substantial previously unanticipated
costs as a result of failure by other PRPs to satisfy their responsibilities for
remediation costs.
16
17
The Company has recorded environmental accruals, based upon the information
available, that are adequate to satisfy known remediation requirements. The
total accrual for estimated environmental remediation costs related to the
Superfund site and other potential environmental liabilities is approximately
$7,250 and $6,100 for 1999 and 1998, respectively. This accrual has not been
discounted, and management expects that the majority of expenditures relating to
costs currently accrued will be made over the next year. As a result of factors
such as the continuing evolution of environmental laws and regulatory
requirements, the availability and application of technology, the identification
of presently unknown remediation sites, and the allocation of costs among
potentially responsible parties, estimated costs for future environmental
compliance and remediation are necessarily imprecise and it is not possible to
fully predict the amount or timing of future costs of environmental remediation
requirements which may subsequently be determined.
Based upon information presently available, such future costs are not
expected to have a material adverse effect on the Company's financial condition,
liquidity, or its ongoing results of operations. However, such costs could be
material to results of operations in a future period.
[12] BENEFIT PLANS
The Company sponsors defined benefit pension plans covering certain
salaried and hourly employees. Benefits to salaried employees are based upon the
highest three consecutive years of earnings out of their last ten years of
service; benefits to hourly workers are based upon their years of credited
service. Contributions to the plans reflect benefits attributed to employees'
service to date and also to services expected to be provided in the future. Plan
assets consist primarily of common and preferred stocks, common stock index
funds, investment grade corporate bonds, and U.S. government obligations.
In 1999 the Company changed the benefit formulas for Huffy Service First and
Washington Inventory Service hourly employees resulting in a curtailment gain of
$1,612. In addition, the sale of the True Temper Hardware Company generated a
curtailment gain of $1,138 included in gain on disposal of discontinued
operations.
In addition to the Company's defined benefit pension plans, the Company
sponsors several defined benefit health care and
The following table sets forth the plans' funded status and amounts
recognized in the Company's Consolidated Balance Sheets at December 31, 1999 and
1998:
HEALTH CARE & HEALTH CARE & DEFERRED DEFERRED
PENSION PENSION LIFE INSURANCE LIFE INSURANCE COMPENSATION COMPENSATION
PLANS PLANS PLANS PLANS PLAN PLAN
1999 1998 1999 1998 1999 1998
Change in benefit obligations:
Benefit obligation at beginning
of year $ 102,402 $ 93,802 $ 9,720 $ 13,194 $ 6,797 $ 6,498
Service cost 2,168 2,787 261 402 -- --
Interest cost 6,283 6,654 459 727 478 458
Amendments -- 525 -- -- -- --
Actuarial (gain) loss (12,235) 5,955 (2,377) (2,439) -- --
Disbursements (5,316) (6,314) (862) (430) (236) (159)
Curtailments (3,273) (1,007) (1,088) (1,734) -- --
Settlements (13,900) -- -- -- -- --
--------- --------- --------- --------- --------- ---------
Benefit obligation at end of year 76,129 102,402 6,113 9,720 7,039 6,797
--------- --------- --------- --------- --------- ---------
Change in plan assets:
Fair value of plan assets at
beginning of year 98,038 85,456 -- -- -- --
Actual return on plan assets 12,145 14,271 -- -- -- --
Employer contribution 1,366 4,626 862 430 236 159
Disbursements (5,316) (6,315) (862) (430) (236) (159)
Settlements (15,046) -- -- -- -- --
--------- --------- --------- --------- --------- ---------
Fair value of plan assets at end of year 91,187 98,038 -- -- -- --
--------- --------- --------- --------- --------- ---------
Funded status 15,058 (4,364) (6,113) (9,720) (7,039) (6,797)
Unrecognized net actuarial (gain) loss (7,515) 8,318 (3,815) (1,961) 3,103 3,117
Unrecognized prior service cost 944 1,603 (39) (42) -- --
Unrecognized initial net (asset) obligation (989) (1,511) -- -- -- --
--------- --------- --------- --------- --------- ---------
Net amount recognized 7,498 4,046 (9,967) (11,723) (3,936) (3,680)
--------- --------- --------- --------- --------- ---------
Amounts recognized in the statement
of financial position consist of:
Prepaid benefit cost 9,375 4,815 -- -- -- --
Accrued benefit liability (5,075) (5,873) (9,967) (11,723) (3,936) (3,680)
Intangible asset 416 1,104 N/A N/A N/A N/A
Accumulated other comprehensive
income 2,782 4,000 N/A N/A N/A N/A
--------- --------- --------- --------- --------- ---------
Net amount recognized 7,498 4,046 (9,967) (11,723) (3,936) (3,680)
--------- --------- --------- --------- --------- ---------
Weighted-average assumptions as of
December 31:
Discount rate 8.00% 7.00% 8.00% 7.00% 7.25% 7.25%
Expected return on plan assets 9.50% 9.50% N/A N/A N/A N/A
Rate of compensation increase Age-graded Age-graded N/A N/A N/A N/A
17
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The following table sets forth the plans' funded status and amounts
recognized in the Company's Consolidated Balance Sheets at December 31, 1999 and
1998:
HEALTH CARE & HEALTH CARE & DEFERRED DEFERRED
PENSION PENSION LIFE INSURANCE LIFE INSURANCE COMPENSATION COMPENSATION
PLANS PLANS PLANS PLANS PLAN PLAN
1999 1998 1999 1998 1999 1998
Components of net periodic benefit cost:
Service cost $ 2,168 $ 2,787 $ 261 $ 402 $ -- $ --
Interest cost 6,283 6,654 459 727 478 458
Expected return on plan assets (8,282) (8,207) -- -- -- --
Amortization of prior service cost 170 163 (3) (3) -- --
Amortization of initial net asset (311) (336) -- -- -- --
Recognized net actuarial (gain) loss 305 100 (269) (150) -- --
Settlement loss 331 -- -- -- -- --
Curtailment (gain) loss (2,750) 44 (1,343) (2,725) -- --
------- ------- ------- ------- ----- -----
Net periodic benefit cost $(2,086) $ 1,205 $ (895) $(1,749) $ 478 $ 458
------- ------- ------- ------- ----- -----
life insurance plans that provide postretirement medical, dental, and life
insurance benefits to full-time employees who meet minimum age and service
requirements. The plans are contributory, with retiree contributions adjusted
annually, and contain other cost-sharing features such as deductibles and
coinsurance. The Company's policy is to fund the cost of medical benefits in
amounts determined at the discretion of management.
In connection with the sale of True Temper Hardware Company and the Celina
plant closure, future benefits were terminated for its employees under the
postretirement medical and dental plans and curtailment gains of $1,343 in 1999
and $2,725 in 1998 were included in the gain on disposal of discontinued
operations and plant closure and manufacturing reconfiguration, respectively.
The Company also sponsors a deferred compensation plan for the benefit of
highly compensated management employees. The eligible employees make
contributions to the plan and receive postretirement benefits based upon a
stated rate of return on those contributions. The Company's policy is to fund
the cost of the benefits in amounts determined at the discretion of management.
The projected benefit obligation, accumulated benefit obligation, and fair
value of plan assets for the pension plans with accumulated benefit obligations
in excess of plan assets were $6,284, $6,053, and $978, respectively, as of
December 31, 1999, and $10,892, $10,777, and $4,906, respectively, as of
December 31, 1998.
Assumed health care cost trend rates have a significant effect on the amounts
reported for the health care plans. A one-percentage-point change in assumed
health care cost trend rates would have the following effects:
1999 1998
ONE-PERCENTAGE-POINT INCREASE
Actuarial value of benefit obligations:
Vested benefit obligation $ 105 $ 168
Accumulated benefit obligation 671 1,287
ONE-PERCENTAGE-POINT DECREASE
Actuarial value of benefit obligations:
Vested benefit obligation $ (89) $ (145)
Accumulated benefit obligation (579) (1,136)
Prior to closure, the Celina, Ohio facility participated in a multiemployer
defined benefit plan. Contributions to the multiemployer plan totaled $489 in
1998.
The Company maintains defined contribution retirement plans covering its
eligible employees under Section 401(k) of the Internal Revenue Code. The
purpose of these defined contribution plans is generally to provide additional
financial security during retirement by providing employees with an incentive to
make regular savings. The Company's contributions to the plans are based on
employee contributions and were $1,171, $599, and $807 in 1999, 1998, and 1997,
respectively.
[13] INCOME TAXES
The provisions for federal and state income taxes attributable to income from
continuing operations consist of:
1999 1998 1997
Current tax expense (benefit):
Federal $ (3,141) $ (1,170) $ 4,803
State (72) (210) 102
Foreign 117 34 16
-------- -------- --------
(3,096) (1,346) 4,921
Deferred tax benefit (17,629) (1,331) (1,896)
-------- -------- --------
Total tax expense (benefit) $(20,725) $ (2,677) $ 3,025
-------- -------- --------
The Company and its domestic subsidiaries file a consolidated U.S. federal
income tax return. Such returns have been audited or settled through the year
1995.
Management expects that the Company's future level of taxable income will be
sufficient to fully utilize the net deferred tax asset. Therefore, a valuation
allowance has not been established.
The components of the net deferred tax asset as of December 31, 1999 and 1998
were as follows:
1999 1998
DEFERRED TAX ASSETS:
Allowance for doubtful accounts $ 673 $ 838
Inventory obsolescence reserve 567 994
Workers' compensation 2,652 1,954
Product liability 1,002 839
Deferred compensation 1,215 2,174
Accrued vacation 235 535
Pension liability 434 1,768
Postretirement benefits other than pensions 3,488 5,404
Environmental reserves 2,705 2,622
Severance reserves 8,784 1,855
Promotional allowances 936 1,435
Net operating loss carry forward and tax credits 15,670 --
Other liabilities and reserves 2,245 2,661
------- -------
Total deferred tax assets 40,606 23,079
------- -------
DEFERRED TAX LIABILITIES:
Property, plant, and equipment 3,822 3,529
Other assets 906 940
------- -------
Total deferred tax liabilities 4,728 4,469
------- -------
Net deferred tax asset $35,878 $18,610
------- -------
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Net operating losses of $4,885 and $38,788 expire in 2018 and 2019,
respectively. Net operating losses of $695 expire through varying dates between
2004 and 2019. Tax credits of $805 and $264 expire in 2018 and 2019,
respectively.
The following table accounts for the difference between the actual tax
provision and the amounts obtained by applying the statutory U.S. federal income
tax rate to the earnings (loss) before income taxes attributable to continuing
operations.
1999 1998 1997
Earnings (loss) before income
taxes from continuing
operations $(59,961) $ (6,824) $ 11,482
-------- -------- --------
Tax provision (benefit) computed
at statutory rate (20,387) (2,388) 3,904
Increase (reduction) in taxes
due to:
Impact of foreign losses for
which a current tax benefit
is not available (117) (35) --
State income taxes (net of
federal tax benefit) (507) (136) 67
Goodwill amortization 136 140 136
Foreign sales corporation (102) (91) (142)
Insurance proceeds (45) -- (320)
Non-deductible meals and
entertainment 518 467 361
Tax credits (205) (173) (66)
Refunds of prior year
income taxes -- (86) (531)
Miscellaneous (16) (375) (384)
-------- -------- --------
Actual tax provision (benefit) $(20,725) $ (2,677) $ 3,025
-------- -------- --------
[15] BUSINESS SEGMENTS
Huffy Corporation is a diversified manufacturer and supplier of bicycles,
basketball backboards, and inventory, assembly, and supplier services. Bicycles
and basketball backboards are sold predominantly through national and regional
high volume retailers in the United States. In-store and in-home assembly and
repair, and instore display services are provided to major retailers in fifty
states, Puerto Rico, and the Virgin Islands. Merchandising services (product
resets and periodic maintenance of displays) are marketed to manufacturers who
supply high volume retailers. Physical inventory services are marketed on a
nationwide basis to mass retailers, drug stores, home centers, sporting goods
stores, specialty stores, and grocery stores.
The Company has classified its operations into the following business
segments:
- - CONSUMER PRODUCTS -- bicycles, basketball backboards and related products.
- - SERVICES FOR RETAIL -- assembly, repair, and display services as well as
inventory counting services.
In 1999, two customers individually accounted for 26% and 18% of total
consolidated net sales. In 1998, two customers individually accounted for 28%
and 15% of total consolidated net sales. In 1997, two customers individually
accounted for 31% and 11% of total consolidated net sales.
A summary of the Company's 1999, 1998, and 1997 operations by business
segment is as follows:
EARNINGS (LOSS) DEPRECIATION
BEFORE INCOME IDENTIFIABLE AND CAPITAL
SALES TAXES ASSETS AMORTIZATION EXPENDITURES
1999
Consumer Products $ 340,429 $ (57,158) $ 101,899 $ 8,516 $ 6,023
Services for Retail 221,503 8,858 58,469 3,732 5,005
Eliminations (893) -- -- -- --
Interest expense -- (7,158) -- -- --
Interest income -- 425 -- -- --
General corporate -- (4,928) 63,413 236 11
--------- --------- --------- --------- ---------
$ 561,039 $ (59,961) $ 223,781 $ 12,484 $ 11,039
--------- --------- --------- --------- ---------
1998
Consumer Products $ 387,413 $ (4,884) $ 163,637 $ 9,012 $ 13,689
Services for Retail 197,901 9,051 55,442 5,280 5,575
Eliminations (1,113) -- -- -- --
Interest expense -- (6,647) -- -- --
Interest income -- 123 -- -- --
General corporate -- (4,467) 43,053 323 271
--------- --------- --------- --------- ---------
$ 584,201 $ (6,824) $ 262,132 $ 14,615 $ 19,535
--------- --------- --------- --------- ---------
1997
Consumer Products $ 400,482 $ 13,207 $ 174,991 $ 9,962 $ 8,046
Services for Retail 181,556 9,101 44,257 3,924 4,265
Eliminations (1,352) -- -- -- --
Interest expense -- (4,098) -- -- --
Interest income -- 180 -- -- --
General corporate -- (6,908) 25,509 409 79
--------- --------- --------- --------- ---------
$ 580,686 $ 11,482 $ 244,757 $ 14,295 $ 12,390
--------- --------- --------- --------- ---------
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[16] QUARTERLY FINANCIAL DATA (UNAUDITED)
Quarterly financial data for the years 1999 and 1998 are as follows:
1ST 2ND 3RD 4TH
QUARTER QUARTER QUARTER QUARTER TOTAL[1]
1999
Net sales $ 149,333 $ 172,131 $ 112,836 $ 126,739 $ 561,039
Gross profit 21,986 28,554 5,562 2,412 58,514
--------- --------- --------- --------- ---------
Earnings (loss) from continuing operations (565) 5,291 (28,847) (15,115) (39,236)
Discontinued operations 2,716 -- 3,232 -- 5,948
--------- --------- --------- --------- ---------
Net earnings(loss) 2,151 5,291 (25,615) (15,115) (33,288)
EARNINGS PER COMMON SHARE:
Basic
Earnings (loss) from continuing operations $ (.05) $ .50 $ (2.84) $ (1.49) $ (3.69)
Discontinued operations .23 -- .32 -- .56
--------- --------- --------- --------- ---------
Net earnings (loss) per common share $ .18 $ .50 $ (2.52) $ (1.49) $ (3.13)
Diluted
Earnings (loss) from continuing operations $ (.05) $ .50 $ (2.84) $ (1.49) $ (3.69)
Discontinued operations .23 -- .32 -- .56
--------- --------- --------- --------- ---------
Net earnings (loss) per common share $ .18 $ .50 $ (2.52) $ (1.49) $ (3.13)
1998
Net sales $ 143,923 $ 182,024 $ 120,097 $ 138,157 $ 584,201
Gross profit 24,960 37,755 20,115 14,684 97,514
--------- --------- --------- --------- ---------
Earnings (loss) from continuing operations 2,531 (772) 90 (5,996) (4,147)
Discontinued operations 1,255 746 (809) 790 1,982
--------- --------- --------- --------- ---------
Net earnings (loss) 3,786 (26) (719) (5,206) (2,165)
EARNINGS PER COMMON SHARE:
Basic
Earnings (loss) from continuing operations $ .20 $ (.06) $ .01 $ (.50) $ (.34)
Discontinued operations .10 .06 (.07) .07 .16
--------- --------- --------- --------- ---------
Net earnings (loss) per common share $ .30 $ .00 $ (.06) $ (.43) $ (.18)
Diluted
Earnings (loss) from continuing operations $ .20 $ (.06) $ .01 $ (.50) $ (.34)
Discontinued operations .10 .06 (.07) .07 .16
--------- --------- --------- --------- ---------
Net earnings (loss) per common share $ .30 $ .00 $ (.06) $ (.43) $ (.18)
[1]Quarterly per share amounts are computed independently for each quarter and
the full year based upon the respective weighted average number of common
shares outstanding and may not equal the total for the year.
COMMON STOCK
Huffy Corporation Common Stock is traded on the New York Stock Exchange. Cash
dividends declared and the quarterly high and low prices of Huffy Corporation
Common Stock during the years ended December 31, 1999 and 1998 were as follows:
Year ended December 31, 1999
COMMON STOCK DIVIDENDS
PRICE RANGE DECLARED
QUARTER HIGH LOW
FIRST $ 14-3/4 $ 12 $ .085
SECOND 14-1/2 13-3/16 .085
THIRD 14-11/16 9-7/8 .085
FOURTH 10-1/4 5-3/16 --
------
TOTAL $ .255
------
Year ended December 31, 1998
COMMON STOCK DIVIDENDS
PRICE RANGE DECLARED
Quarter HIGH LOW
First $16-1/2 $12-5/16 $ .085
Second 19-1/8 14-7/8 .085
Third 16-1/2 14-1/8 .085
Fourth 16-1/2 11-1/16 .085
------
Total $ .340
------
As of December 31, 1999 there were 10,159,026 shares of Huffy Corporation
Common Stock outstanding and there were 3,250 shareholders of record. Management
estimates an additional 4,000 shareholders hold their stock in nominee name.
Trading volume of the Company's Common Stock during the twelve months ended
December 31, 1999 totaled 9,777,100 shares. The average number of common shares
outstanding during this period was approximately 10,642,257 shares.
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DIRECTORS AND OFFICERS
BOARD OF DIRECTORS
Don R.Graber
Chairman of the Board, President and
Chief Executive Officer
W.Anthony Huffman
President of Huffman Travel Limited
Linda B.Keene
Vice President - Market Development of
American Express Financial Advisors
Jack D.Michaels
Chairman, President and Chief Executive
Officer of HON INDUSTRIES Inc.
Donald K.Miller
Chairman of the Board of Axiom International
Investors, LLC
James F.Robeson
Vice Chairman of Roberds, Inc. and
consultant to various distribution companies
Patrick W.Rooney
Chairman of the Board, President and
Chief Executive Officer of Cooper Tire &
Rubber Company
Thomas C.Sullivan
Chairman and Chief Executive Officer of
RPM, Inc.
Joseph P.Viviano
Vice Chairman of Hershey Foods Corporation
COMMITTEES OF THE BOARD OF DIRECTORS
Audit Committee:
James F.Robeson (Chairman), Linda B.Keene,
and Donald K.Miller
Compensation Committee:
Thomas C.Sullivan (Chairman), Patrick W.
Rooney, and Joseph P.Viviano
Nominating and Governance Committee:
Jack D.Michaels (Chairman), W.Anthony
Huffman, and Linda B.Keene
CORPORATE OFFICERS
Don R.Graber
Chairman of the Board, President and
Chief Executive Officer
Stanley H.Davis
Vice President - Human Resources and
Organization Development
Thomas A.Frederick
Vice President - Corporate Strategy
Timothy G.Howard
Vice President - Corporate Controller
Robert W.Lafferty
Vice President - Finance, Chief
Financial Officer and Treasurer
Nancy A.Michaud
Vice President - General Counsel and
Secretary
COMPANY PRESIDENTS
Paul R.D'Aloia
Huffy Service First, Inc.
Randy R.Schickert
Huffy Sports Company
Christopher W.Snyder
Huffy Bicycle Company
I.Edward Tonkon II
Washington Inventory Service
21
22
SHAREHOLDER INFORMATION
ANNUAL MEETING
The Annual Meeting of Shareholders will be held April 27, 2000 at 10:00 a.m.,
Eastern Daylight Time, in the Daytonian Ballroom of the DoubleTree Hotel, South
Ludlow Street, Dayton, Ohio. Shareholders are cordially invited to attend.
PRIMARY BUSINESS LOCATIONS
Huffy Corporation
225 Byers Road
Miamisburg, Ohio 45342
(937) 866-6251
Huffy Bicycle Company
225 Byers Road
Miamisburg, Ohio 45342
(937) 866-6251
Huffy Sports Company
N53 W24700 S. Corporate Circle
Sussex, Wisconsin 53089
(262) 820-3440
Washington Inventory Service
9265 Sky Park Court, Ste. 100
San Diego, California 92123
(858) 565-8111
Huffy Service First, Inc.
8521 Gander Creek Drive
Miamisburg, Ohio 45342
(937) 438-3664
Additional Operating Locations
- Hauppauge, New York
- Nuevo Laredo, Mexico
- Springboro, Ohio
STOCK EXCHANGE
New York Stock Exchange, Symbol HUF
TRANSFER AGENT AND REGISTRAR FOR COMMON STOCK
LaSalle Bank, N.A.
Corporate Trust
135 South LaSalle Street
Chicago, Illinois 60603
(800) 246-5761
AUDITORS
KPMG LLP
FORM 10-K
Shareholders interested in obtaining Huffy Corporation's Annual Report or
Form 10-K filed with the Securities and Exchange Commission may obtain a copy by
writing Huffy Corporation, 225 Byers Road, Miamisburg, Ohio 45342, Attention:
Assistant Treasurer.
SHAREHOLDER COMMUNICATIONS
Communications concerning lost certificates, transfer requirements, address
changes, and Common Stock dividend checks should be sent to LaSalle Bank, N.A.,
Corporate Trust, 135 South LaSalle Street, Chicago, Illinois 60603.
The Management of Huffy Corporation welcomes comments and suggestions from
shareholders and investors. Call Investor Relations, (937) 866-6251.
[ICON] This annual report has been produced on recycled paper.