1
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For Quarter Ended SEPTEMBER 30, 2000
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OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from TO
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Commission file number 1-5325
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Huffy Corporation
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(Exact name of registrant as specified in its charter)
Ohio 31-0326270
- -------------------------------- ---------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
225 Byers Road, Miamisburg, Ohio 45342
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(Address of principal executive offices) (Zip Code)
(937) 866-6251
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(Registrant's telephone number, including area code)
No Change
---------
(Former name, former address and former fiscal year, if changed since
last report)
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
--- ---
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all documents
and reports required to be filed by Sections 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court.
Yes No
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APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
Outstanding Shares: 10,208,655 as of November 10, 2000
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PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS COMPANY FOR WHICH REPORT IS FILED:
--------------------
HUFFY CORPORATION
CONSOLIDATED STATEMENTS OF EARNINGS
(Dollar Amounts in Thousands, Except Per Share Data)
(unaudited)
Three Months Nine Months Ended
--------------------------------- -----------------------------------
September October 2, September 30, October 2,
30, 2000 1999 2000 1999
-------------- -------------- --------------- ----------------
Net sales $ 123,875 $ 76,350 $ 345,972 $ 315,528
Cost of sales 102,034 77,868 292,305 281,275
------------ ------------ ------------ ------------
Gross profit (loss) 21,841 (1,518) 53,667 34,253
Selling, general and administrative expenses 12,536 14,122 37,032 42,251
Plant closure and manufacturing
reconfiguration (1,817) 30,739 1,511 33,447
------------ ------------ ------------ ------------
Operating income (loss) 11,122 (46,379) 15,124 (41,445)
Other expense (income)
Interest expense 2,885 348 7,440 1,712
Interest income (171) (219) (219) (337)
Other 1,364 (111) 1,228 135
------------ ------------ ------------ ------------
Earnings (loss) before income taxes 7,044 (46,397) 6,675 (42,955)
Income tax expense (benefit) 2,175 (16,491) 2,291 (15,004)
------------ ------------ ------------ ------------
Earnings (loss) from continuing operations 4,869 (29,906) 4,384 (27,951)
------------ ------------ ------------ ------------
Discontinued operations:
Earnings from discontinued operations, net of
income tax expense of $71, $588, $2,541, and
$1,598 160 1,059 4,864 3,518
Gain on disposal of discontinued
operations, net of income tax
expense of $1,740 and $4,078 -- 3,232 -- 6,260
Extraordinary gain (loss) from early
extinguishment of debt, net of income
tax expense (benefit) of $130 and (389) 213 -- (635)
------------ ------------ ------------ ------------
Net earnings (loss) $ 5,242 $ (25,615) $ 8,613 $ (18,173)
============ ============ ============ ============
Earnings per common share:
Basic:
Weighted average number of
common shares 10,199,664 10,157,036 10,178,679 10,803,081
============ ============ ============ ============
Earnings (loss) from
continuing operations $ 0.48 $ (2.94) $ 0.43 $ (2.59)
Earnings from discontinued operations 0.02 0.42 0.48 0.91
Extraordinary gain (loss) from early
extinguishment of debt 0.02 -- (0.06) --
------------ ------------ ------------ ------------
Net earnings (loss) per common share $ 0.52 $ (2.52) $ 0.85 $ (1.68)
============ ============ ============ ============
Diluted:
Weighted average number of
common shares 10,385,678 10,157,036 10,303,365 10,803,081
============ ============ ============ ============
Earnings (loss) from continuing operations $ 0.47 $ (2.94) $ 0.43 $ (2.59)
Earnings from discontinued operations 0.01 0.42 0.47 0.91
Extraordinary gain from early
extinguishment of debt 0.02 -- (0.06) --
------------ ------------ ------------ ------------
Net earnings (loss) per common share $ 0.50 $ (2.52) $ 0.84 $ (1.68)
============ ============ ============ ============
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HUFFY CORPORATION
CONSOLIDATED BALANCE SHEETS
(Dollar Amounts In Thousands)
September 30,
2000 December 31,
(Unaudited) 1999
------------- ------------
ASSETS
Current assets:
Cash and cash equivalents $ 4,322 $ 20,190
Accounts and notes receivable, net 73,582 56,797
Inventories 37,909 23,354
Prepaid expenses and federal income taxes 35,381 32,262
Net assets of discontinued operations 43,182 35,584
--------- ---------
Total current assets 194,376 168,187
--------- ---------
Property, plant and equipment, at cost 42,662 65,822
Less: Accumulated depreciation and amortization 28,082 46,794
--------- ---------
Net property, plant and equipment 14,580 19,028
Excess of cost over net assets acquired, net 8,945 9,490
Deferred federal income taxes 9,398 13,443
Other assets 5,292 4,135
--------- ---------
$ 232,591 $ 214,283
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Notes payable $ 39,461 $ 21,902
Current installments of long-term obligations 43,205 9,119
Accounts payable 43,875 30,229
Accrued expenses and other current liabilities 40,497 41,634
--------- ---------
Total current liabilities 167,038 102,884
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Long-term obligations, less current installments -- 51,348
Other long-term liabilities 18,449 22,569
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Total liabilities 185,487 176,801
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Shareholders' equity:
Common stock 16,684 16,667
Additional paid-in capital 66,593 66,242
Retained earnings 51,630 42,863
Accumulative comprehensive income (2,854) (2,854)
Less: cost of treasury shares 90,657 91,144
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Total shareholders' equity 47,104 37,482
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$ 232,591 $ 214,283
========= =========
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HUFFY CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollar Amounts in Thousands)
(Unaudited)
Nine Months Ended
----------------------------------------
September 30, 2000 October 2, 1999
------------------- ------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings (loss) from continuing operations $ 4,384 $(27,951)
Adjustments to reconcile net earnings (loss) to net cash used in operating
activities:
Depreciation and amortization 4,178 7,399
(Gain) Loss on sale of property, plant and equipment (3,050) 1,208
Write down of certain property, plant and equipment -- 23,675
Extraordinary charge for early extinguishment of debt (635) --
Deferred federal income tax expense (benefit) 4,045 (2,500)
Changes in assets and liabilities:
Accounts and notes receivable, net (16,785) 7,004
Inventories (14,555) (9,658)
Prepaid expenses and federal income taxes (3,119) (5,244)
Other assets (1,157) 56
Accounts payable 13,646 6,249
Accrued expenses and other current liabilities (281) 1,206
Other long-term liabilities (4,120) (1,993)
Other 154 --
-------- --------
Net cash used in continuing operating activities (17,295) (549)
Discontinued operations:
Gain on disposal of discontinued operations -- 6,260
Earnings from discontinued operations 4,864 3,518
Items not affecting cash, net 3,266 3,092
Cash provided by (used in) discontinued operations (10,864) 64,324
-------- --------
Net cash provided by (used in) discontinued operating activities (2,734) 77,194
Net cash provided by (used in) operating activities (20,029) 76,645
==============================================================================================================
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (1,889) (6,276)
Acquisition of businesses -- (1,248)
Proceeds from sale of property, plant and equipment 5,754 6,258
-------- --------
Net cash provided by (used in) investing activities 3,865 (1,266)
==============================================================================================================
CASH FLOWS FROM FINANCING ACTIVITIES:
Net increase (decrease) in short-term borrowings 17,559 (37,240)
Reduction of long-term debt (17,262) (12,102)
Issuance of common shares 368 543
Issuance (purchase) of treasury shares 487 (23,078)
Dividends paid (856) (2,993)
-------- --------
Net cash provided by (used in) financing activities 296 (74,870)
==============================================================================================================
Net change in cash and cash equivalents (15,868) 509
Cash and cash equivalents:
Beginning of the year 20,190 17,834
-------- --------
End of the nine month period $ 4,322 $ 18,343
==============================================================================================================
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NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
(Dollar Amounts in Thousands)
Note 1: Footnote disclosure, which would substantially duplicate the disclosure
contained in the Annual Report to Shareholders for the year ended
December 31, 1999, has not been included. The unaudited interim
consolidated financial statements reflect all adjustments which, in the
opinion of management, are necessary to a fair statement of the results
for the periods presented and to present fairly the consolidated
financial position of Huffy Corporation as of September 30, 2000. All
such adjustments are of a normal recurring nature.
Note 2: On November 3, 2000, the Company disposed of its Washington Inventory
Service subsidiary with WIS Acquisition Corp., a subsidiary of WIS
Holdings Corp., pursuant to a previously announced Agreement and Plan
of Reorganization dated September 20, 2000, for $84,750 cash and is
subject to certain post-closing adjustments. The results for Washington
Inventory Service have been classified as discontinued operations in
the Consolidated Statement of Earnings. The assets and liabilities of
discontinued operations have been classified in the Consolidated
Balance Sheet as "Net assets of discontinued operations."
Summarized balance sheet data for the discontinued operations is as
follows:
September 30, 2000 December 31, 1999
------------------- -----------------
Current Assets $19,477 $11,229
Property, plant and equipment, net 10,255 11,367
Other assets 21,517 22,486
------- -------
Total Assets 51,249 45,082
Current Liabilities 7,401 8,816
Long Term Liabilities 666 682
------- -------
Net Assets $43,182 $35,584
======= =======
Proceeds from the sale, net of expenses, were used to repay $81,600
of senior notes, senior subordinated notes and revolving credit
facility on November 3, 2000.
Note 3: Inventories of Huffy Bicycle Company and Huffy Sports Company are at
cost (not in excess of market) determined by the FIFO method. The
components of inventories are as follows:
September 30, December 31,
2000 1999
--------------- ---------------
Finished Goods $33,182 $17,345
Work-in-Progress 106 106
Raw Materials & Supplies 4,621 5,903
--------------- ---------------
$37,909 $23,354
=============== ===============
Note 4: During the fourth quarter of 1999, the Company closed its remaining
domestic bicycle manufacturing facilities in Farmington, Missouri and
Southaven, Mississippi and reorganized its bicycle operations. During
the first quarter of 2000, the Company increased imports from a global
network of sourcing partners to offset this loss of production
capacity. Closing the plants eliminated the costs required to operate
the facilities and completed Huffy Bicycle Company's transformation
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from a single brand manufacturer and marketer of bicycles, to a
multi-brand design, marketing and distribution company. During the
third quarter of 2000, reorganization charges included severance and
related benefits ($195); and facility shutdown costs and related gains
$2,012. During the first nine months of 2000, reorganization charges
included severance and related benefits ($1,067); and facility shutdown
and related costs ($444). Facility shutdown costs in the third quarter
include a gain on the sale of the Farmington, Missouri plant of $3,050.
For the first nine months of 1999, these charges included severance and
related benefits ($3,362); and facility shutdown and asset write-downs
($26,584). It is anticipated that the Company will continue to incur
costs associated with this transformation through 2000.
During the second quarter of 1998, the Company took action to maximize
operational efficiency by eliminating excess production capacity and
annual operating costs by closing its manufacturing facility in Celina,
Ohio. Throughout 1999, the Company incurred charges in support of this
action. During the first nine months of 1999 the Company incurred the
following costs: facility shutdowns and asset write-downs ($221); new
facility startup and equipment, personnel, and inventory relocation
($1,357); and severance and related benefits ($1,923).
Note 5. The Company classifies its operations into a single integrated business
segment.
Note 6: Statement of Financial Accounting Standards (SFAS) No. 133, "Accounting
for Derivative Instruments and Hedging Activities," is required to be
implemented in the first quarter of the Company's fiscal year 2001. The
Company does not expect the implementation of this pronouncement to
have a material effect on its consolidated financial condition or
results of operations.
Note 7: The components of comprehensive income are immaterial and are therefore
not disclosed.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2000
COMPARED TO THE
THREE AND NINE MONTHS ENDED OCTOBER 2, 1999
(Dollar Amounts in Thousands, Except Per Share Data)
NET EARNINGS
For the third quarter of 2000, Huffy Corporation ("Huffy" or "Company") had net
earnings from continuing operations of $4,869, or $.47 per common share versus a
loss of $29,906 or $2.94 for the same period last year. Earnings for the third
quarter of 2000 include pretax income of $1,817, or approximately $0.11 per
common share for the reconfiguration of the bicycle business, while the same
period in 1999 includes a reconfiguration charge of $30,739, or $1.95 per common
share. The net earnings from discontinued operations for the Company's inventory
counting business, Washington Inventory Service, were $160 of $0.01 per common
share while the extraordinary gain on early termination of debt added $213 or
$0.02 per common share.
For the nine months ended September 30, 2000 net earnings from continuing
operations were $4,384 or $.43 per common share compared to a loss of $27,951 or
$2.59 per common share for the same period in 1999. The current year to date net
earnings from continuing operations include a pretax charge of $1,511 ($992
after tax), or $0.10 per common share, for charges related to the bicycle
reorganization, and a pretax charge of $688 ($452 after tax), or $0.04 per
common share for charges related to the Company's refinancing. Net earnings from
discontinued operations for the Company's inventory counting business were
$4,864, or $0.47 per common share for the first nine months of 2000. Net
earnings for the first nine months of 2000 were also negatively impacted by
$5,846 ($3,841 after tax), or $.37 per common share, due to higher net interest
expense associated with new financing put in place in January 2000, and
additional extraordinary charges associated with the early extinguishment of
debt equaling $0.06 per common share. In 1999, earnings for the nine months
ended October 2 included $0.55 of earnings per share from discontinued
operations, reflecting the sale of the True Temper hardware business and $0.36
of earnings per share from the discontinued operations of Washington Inventory
Service.
NET SALES
Consolidated net sales for the quarter ended September 30, 2000 were $123,875,
an increase of 62.2% over sales of $76,350 for the same quarter in 1999. Sales
growth was driven primarily by strong demand for the Company's X-Games(R)
bicycles and Huffy Micro(R) scooters. In addition, Huffy Sports sales were
significantly better than last year.
Consolidated net sales for the nine months ended September 30, 2000 were
$345,972, an increase of 9.6% from sales of $315,528 for the same period in
1999. On a year to date basis, strong demand for X-Games(R) bicycles, Huffy
Micro(R) scooters and merchandising services were offset by an overall softness
in the sporting goods industry that negatively impacted Huffy Sports Company's
basketball backboard business.
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GROSS PROFIT
Gross profit for the quarter ended September 30, 2000 was $21,841, compared to a
loss of $1,518 in the third quarter of 1999. As a percent of net sales, gross
profit for the third quarter of 2000 was 17.6%, an increase of 19.6 percentage
points over the third quarter of 1999. Cost containment throughout all Huffy
companies and improved product mix at Huffy Bicycle Company, coupled with the
favorable impact of the bicycle business reorganization, were sufficient to
offset volume driven margin declines at Huffy Sports Company and increased costs
and field inefficiency in the assembly services business.
Gross profit for the nine months ended September 30, 2000 was $53,667, up 56.7%
from $34,253 for the same period in 1999. As a percent of net sales, 2000 year
to date gross profit was 15.5% compared to 10.9% for the same period last year.
The gross profit improvement is directly related to the favorable impact of the
bicycle business reorganization and the elimination of domestic manufacturing as
well as new products such as the Huffy Micro(R) scooter and X-Games(R) bicycles.
This favorable impact was partially offset by volume driven margin declines at
Huffy Sports and higher costs of travel and training at Huffy Service First.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
Selling, general and administrative expenses were $12,536 for the third quarter
of 2000, compared to $14,122 for the same period in 1999. As a percent of net
sales, selling, general and administrative expenses (SG&A) for the quarter ended
September 30, 2000 were 8.4 percentage points lower than the same period in the
prior year, 10.1% versus 18.5%, respectively. This improvement is the result of
the Huffy Bicycle Company reorganization, as well as strong cost containment at
all Huffy Companies.
Year to date selling, general and administrative expenses were down from $42,251
in 1999 to $37,032 in 2000. As a percent of net sales, selling, general and
administrative expenses for the nine months ended September 30, 2000 were 10.7%
versus 13.4% for the same period in 1999. The reasons for this improvement are
essentially the same as those described for the third quarter.
PLANT CLOSURE AND MANUFACTURING RECONFIGURATION
During the third quarter of 2000, reorganization charges included severance and
related benefits costs of ($195); and facility shutdown and related income of
$2,012. During the first nine months of 2000, reorganization charges included
severance and related benefits costs of ($1,067); and facility shutdown and
related costs of ($444). Facility shutdown costs in the third quarter include a
gain on the sale of the Farmington, Missouri plant of $3,050. In 1999, these
charges included severance and related benefits costs of ($3,362); and facility
shutdown and asset write-downs of ($26,584). It is anticipated that the Company
will continue to incur costs associated with this transformation through 2000.
During the second quarter of 1998, the Company took action to maximize
operational efficiency by eliminating excess production capacity and annual
operating costs by closing its manufacturing facility in Celina, Ohio.
Throughout 1999, the Company incurred charges in support of this action. During
the first nine months of 1999 the Company incurred the following costs: facility
shutdowns and asset write-downs of ($221); new facility startup and equipment,
personnel, and inventory relocation cost of ($1,357); and severance and related
benefits of ($1,923).
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SALE OF TRUE TEMPER HARDWARE
In March 1999, the Company sold the assets of its lawn and garden tool and
wheelbarrow business, True Temper Hardware Company, to U.S. Industries, Inc. The
purchase price was $100 million cash and was subject to certain post-closing
adjustments based on closing date financial statements.
The net earnings from continuing operations exclude True Temper hardware
operating results and the gain on the sale of the Company's lawn and garden tool
and wheelbarrow business. The 1999 gain on the sale of the lawn and garden tool
and wheelbarrow business was $6,260, offset by a loss from discontinued
operations of $312, for a net of $0.55 per common share.
SALE OF WASHINGTON INVENTORY SERVICE
On November 3, 2000, the Company disposed of its Washington Inventory Service
subsidiary with WIS Acquisition Corp., a subsidiary of WIS Holdings Corp.,
pursuant to a previously announced Agreement and Plan of Reorganization dated
September 20, 2000, for $84,750 cash and is subject to certain post-closing
adjustments. The results for Washington Inventory Service have been classified
as discontinued operations in the Consolidated Statement of Earnings. The assets
and liabilities of discontinued operations have been classified in the
Consolidated Balance Sheet as "Net assets of discontinued operations." The
Company is applying the $81,600 in proceeds from the sale, net of expenses, to
repayment of all of its senior notes and senior subordinated notes and a portion
of its revolving credit facility.
The net earnings from continuing operations exclude Washington Inventory
Service's operating results. Net earnings from discontinued operations for the
quarter were $160, or $0.01 per common share down from $1,059, or $0.42 per
common share in the third quarter of last year. Worker's compensation charges
coupled with higher interest costs were the cause of the decline. Year to date
net earnings from discontinued operations were $4,864, or $0.47 per common share
up from $3,830, or $.32 per common share in the first nine months of 1999.
Improved sales volume and field productivity were offset by higher interest
costs.
LIQUIDITY AND CAPITAL RESOURCES
On January 26, 2000, the Company signed a $170 million, 18 month, secured
lending facility. This facility provides adequate liquidity to fund the
Company's operations throughout the term of the agreement.
As of September 30, 2000, the Company had $ 32,306 of senior term debt and
$8,704 of subordinated debt outstanding. In addition, the Company had a $100,000
secured credit facility with availability of $78,810 of which $33,622 was
outstanding as of September 30, 2000. Other obligations at September 30, 2000
totaled $8,034.
On November 3, 2000, the Company repaid $81,600 of debt from the net proceeds
from the sale of Washington Inventory Service retiring all of its outstanding
senior term debt, subordinated debt, capital lease and a portion of the
revolving credit facility.
The Company expects existing cash, cash flow from operations and its revolving
credit facility will be sufficient to finance seasonal working capital needs and
capital expenditures in the coming year.
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ENVIRONMENTAL
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"). On May 15, 1997, the Company, along with other
PRPs, received special notice letters from the EPA requesting a good faith offer
of remediation for the Superfund. A group of PRPs, including the Company, filed
a good faith offer on September 9, 1999 for remediation of the Baldwin Park
Operable Unit, and the offer was accepted. This acceptance committed the PRPs
and the EPA to negotiate a final consent decree. On June 30, 2000, the EPA
issued a Unilateral Administrative Order ("Order") pursuant to Section 106 of
the Comprehensive Environmental Response, Compensation and Liability Act of
1980, as amended, and Section 1003 of the Solid Waste Disposal Act, as amended,
to all PRPs for the Superfund directing such PRPs, jointly and severally, to
complete the remedial design and make arrangements for the construction and
operation of the Superfund remediation systems and facilities. The Company has
responded to the EPA that it will comply with the lawful provisions of the
Order, while denying liability and reserving all rights and defenses related to
the Superfund, and is cooperating with other PRPs in responding to the Order's
requirements. At this time, the relative liabilities of the parties are
uncertain as to the allocation of remediation costs for the Superfund site and
other potential environmental liabilities related thereto. The Company estimates
its environmental remediation costs at approximately $8,000 at September 30,
2000. 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. 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. Based upon information currently available, such future costs
are not expected to have a material adverse effect on the results of operations
in future periods.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
-----------------
The Company along with numerous California water companies and numerous other
defendants have been served in 10 civil lawsuits which allege claims related to
the contaminated groundwater in the Azusa, California area. On March 12, 1998,
the Public Utilities Commission ("PUC") issued an Order Instituting
Investigation ("OII"), stating that because the toxic tort lawsuits relate to
water quality, public health and safety, and the operations and practices of the
public utilities subject to the PUC's jurisdiction, the PUC intends to pursue
its jurisdiction by investigating the operations and practices of the named
defendant public utilities, their compliance with the PUC standards and policies
regarding water quality, and whether those standards and policies regarding
water quality continue to be adequate to protect the public health and safety.
On November 2, 2000, the Public Utilities Commission of the State of California
("PUC") issued a final order with respect to regulated water utility compliance
with existing law. The PUC agreed with Huffy and other parties and concluded
that, among other things, the water served by regulated water utilities was not
"harmful or dangerous to health" for the period of time where testing and
monitoring data were available. As a result of the PUC OII, a majority of the
lawsuits were stayed pending the PUC determination, and in one case the
regulated water companies were dismissed based upon the Court's finding that the
PUC had assumed jurisdiction. The decisions in these cases resulted in an appeal
and numerous writs being taken. In September 1999, the Court of Appeal found
that a lower court that had dismissed the regulated water companies from the
action and issued a stay had ruled correctly. The Court of Appeal issued
peremptory writs of mandate in other actions to
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reconsider the various motions, demurrers and stays in view of the Court of
Appeal findings. Petitions for review were filed before the California Supreme
Court and were granted on December 15, 1999. To date, the matters are in their
initial stage. It is impossible to currently predict the outcome of the
litigation.
ITEM 5: OTHER INFORMATION
On November 3, 2000, the Company closed the merger of its Washington Inventory
Service subsidiary with WIS Acquisition Corp., a subsidiary of WIS Holdings
Corp., pursuant to a previously announced Agreement and Plan of Reorganization
dated September 20, 2000. The purchase price was $84,750 cash and is subject to
certain post-closing adjustments based upon closing date financial statements to
be prepared by the parties. The purchase price was the result of arms' length
negotiations between the parties. Neither Huffy Corporation nor any of its
subsidiaries or affiliates has any material relationship or affiliation with WIS
Holding Corp., WIS Acquisition Corp., or any of their subsidiaries or
affiliates.
ITEM 6: EXHIBITS AND REPORTS ON FORM 8-K
a. Exhibits - The Exhibits, as shown in the "Index of Exhibits", attached
hereto as page 12, are filed as a part of this Report.
b. The Company filed a report on Form 8-K on November 2, 2000, which
reported the Corporation was not a defendant in certain litigation. The
report was dated November 2, 2000 and was filed with the Securities and
Exchange Commission on November 2, 2000.
Please see the Company's meaningful cautionary statements regarding forward
looking statements contained in the Company's report on Form 8-K filed with the
Securities and Exchange Commission on April 27, 2000 which is hereby
incorporated herein by reference.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
HUFFY CORPORATION, Registrant
November 14, 2000 /s/ Timothy G. Howard
- -------------------------------- -------------------------------
Date Timothy G. Howard
Vice President - Corporate Controller
(Principal Accounting Officer)
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INDEX OF EXHIBITS
Exhibit
NO. ITEM
- -------- ------------------------------------------------------------
(2) Agreement and Plan of Reorganization, dated September 20,
2000, by and among Huffy Corporation, Huffy Brands Company,
Washington Inventory Service, WIS Holdings Corp. and WIS
Acquisition Corp. (the "Agreement"). Pursuant to Section
229.601 (b)(2) of Regulation S-K of the Securities Act of
1933, the Registrant has omitted the exhibits and schedules to
the Agreement. A description of the exhibits and schedules is
included at the beginning of the Agreement. The Registrant
hereby agrees to furnish a supplementary copy of any omitted
exhibit or schedule to the Commission upon request.
(3) Not applicable
(4) Not applicable
(10) Not applicable
(11) Not applicable
(15) Not applicable
(18) Not applicable
(19) Not applicable
(22) Not applicable
(23) Not applicable
(24) Not applicable
(27) Financial Data Schedule
(99) Registrant's press release dated November 6, 2000 announcing
the closing of the sale of Washington Inventory Service
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