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FORM 10-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from _________ to __________
Commission file number 1-5325
HUFFY CORPORATION
(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
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (937) 866-6251
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which registered
------------------- -----------------------------------------
Common Stock, $1.00 Par Value New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
--- ---
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of the registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [X]
The aggregate market value of the Common Stock held by non-affiliates of the
registrant, as of February 27, 1998, was $183,821,293.
The number of shares outstanding of each of the registrant's classes of Common
Stock, as of February 27, 1998, was 12,474,310.
"Index of Exhibits" at page 16 of this Report
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DOCUMENTS INCORPORATED BY REFERENCE
-----------------------------------
1. The Huffy Corporation Annual Report to Shareholders for the year ended
December 31, 1997. Only such portions of the Annual Report as are
specifically incorporated by reference under Parts I, II and IV of this
Report shall be deemed filed as part of this Report.
2. The Huffy Corporation Proxy Statement for its Annual Meeting of
Shareholders on April 17, 1998. Only such portions of the Proxy
Statement as are specifically incorporated by reference under Part III
of this Report shall be deemed filed as part of this Report.
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PART I
ITEM 1. BUSINESS
Huffy Corporation, an Ohio corporation, and its subsidiaries (collectively
called "Huffy" or the "Company") are engaged in the design, manufacture and sale
of Consumer Products and the furnishing of Services for Retail. The Company's
executive offices are located in Miamisburg, Ohio and its principal business
offices and/or manufacturing facilities are located in San Diego, California,
Farmington, Missouri, Miamisburg and Celina, Ohio, Camp Hill and Harrisburg,
Pennsylvania, Sussex, Wisconsin, and Whites Cross, Cork, Ireland.
The general development of business within each business segment (Consumer
Products and Services for Retail) is discussed in more detail below. See also
Part IV herein for financial information relating to each such business segment.
CONSUMER PRODUCTS
Huffy Bicycle Company, Huffy Sports Company, Royce Union Bicycle
Company, and True Temper Hardware Company comprise the Consumer
Products segment of the Company. Principal products within this
business segment include bicycles, basketball backboards and related
products, and lawn and garden tools. Sales of bicycles represented 44.4
percent, 43.2 percent, and 45.0 percent of consolidated revenues of the
Company for the years ended December 31, 1997, 1996 and 1995. Sales of
basketball backboards, poles, goals and related products represented
13.2 percent, 12.7 percent, and 15.2 percent of consolidated revenues
of the Company for the years ended December 31, 1997, 1996, and 1995.
Sales of lawn and garden tools represented 16.4 percent, 17.6 percent,
and 14.8 percent of consolidated revenues of the Company for the years
ended December 31, 1997, 1996, and 1995. Although to date the export
business is not significant, the companies in the Consumer Products
segment participate in various foreign markets and are actively
involved in expanding export volume. On April 21, 1997, Huffy sold the
assets of Gerry Baby Products Company and Gerry Wood Products Company
to Evenflo Company, Inc.
a. Products, Marketing and Distribution
------------------------------------
Huffy Bicycle Company: The Huffy(R) bicycle brand is the largest
selling brand of bicycles sold in the United States. The full
line of Huffy(R) bicycles is produced by Huffy Bicycle Company,
a division of the Company, whose manufacturing facilities are
located in Celina, Ohio, and Farmington, Missouri. In 1994,
Huffy Bicycle Company opened the bicycle manufacturing facility
in Farmington, Missouri to increase manufacturing flexibility
and to reduce costs. Included in the Huffy(R) bicycle line are
adult all purpose bicycles; adult all terrain bicycles; a series
of innovative boys' and girls' 20" bicycles; a series of popular
children's 12" and 16" sidewalk bicycles; and tricycles. In
addition, in 1996, the Company purchased the Rebike business
which produces a line of recumbent style bicycles and in
December, 1997, the Company acquired the assets of Royce Union
Bicycle Company, Inc. which holds a leading market position in
the growing sporting goods distribution channel. Huffy(R)
bicycles are extensively advertised and are sold predominantly
through national and regional high volume retailers, a
distribution network accounting for approximately 75 percent of
all bicycles sold in the United States. Approximately 90 percent
of Huffy Bicycle Company's bicycles are sold under the Huffy(R)
brand name with the balance being sold under private label
brands.
Huffy Sports Company: Huffy Sports Company, a division of the
Company located in Sussex, Wisconsin, is the leading supplier of
basketball backboards, poles, goals, and related products and
juvenile indoor portable basketball units for use at home. In
1997, the Company purchased the business and assets of Sure
Shot(TM)/Hydra-Rib(TM) which
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produces basketball units for institutional and in-arena use.
Huffy Sports Company products, many of which bear the logo of
the National Basketball Association ("NBA") as well as the Huffy
Sports(R) trademark, are sold predominately through national and
regional high volume retailers in the United States.
True Temper Hardware Company: True Temper Hardware Company, a
wholly-owned subsidiary of the Company, is headquartered in Camp
Hill, Pennsylvania. True Temper Hardware Company is one of three
leading suppliers of non-powered lawn and garden tools and snow
tools; products include long-handled shovels, hoes, forks,
wheelbarrows, snow shovels, and rakes for use in the home and in
agricultural, industrial and commercial businesses. In 1994,
True Temper Hardware Company discontinued manufacturing
spreaders and pruning tools and sold the assets used to produce
such products, including its Anderson, South Carolina
manufacturing facility. Manufacturing facilities are located in
Camp Hill and Harrisburg, Pennsylvania. True Temper Hardware
Company also owns four sawmill facilities located in Indiana,
New York, Pennsylvania, and Vermont. In addition, True Temper
Limited, an Irish Corporation and a wholly-owned subsidiary of
the Company, has offices and a manufacturing facility in Whites
Cross, Cork, Ireland. True Temper Hardware products are sold
both directly, and through wholesale distributors, to national
and regional high volume retailers and hardware stores. Over 88
percent of True Temper Hardware's products are sold under the
True Temper(R) and Jackson(R) names; the remainder are sold
under other names or under private labels. In 1996, True Temper
acquired the Meaford wheelbarrow product line, solidifying True
Temper Hardware Company's position as the manufacturer of the
largest selling brand of wheelbarrows in North America. During
1994 and 1995, the Company substantially completed a plan to
restructure the True Temper lawn and garden tool business to
address inefficiencies in the manufacturing process and to
improve future profitability of True Temper Hardware Company.
b. Suppliers
---------
Basic materials such as raw steel, steel and aluminum tubing,
plastic, wood, fabric, resins, ash timber, and welding materials
used in the manufacturing operations are purchased primarily
from domestic sources. Alternate sources are available for all
critical products and components, but the sudden loss of any
major supplier could, on a temporary basis, cause a negative
effect on the segment's operations.
c. Patents, Trademarks and Licenses
--------------------------------
The patents, trademarks (including the registered trademarks
"Huffy", "Huffy Sports", "Royce Union", "True Temper" and
"Jackson"), licenses (including the license to use the NBA logo)
and other proprietary rights of the companies in this segment
are deemed important to the Company. The loss by the Company of
its rights under any individual patent, trademark (other than
"Huffy" or "True Temper"), license or other proprietary right
used by this segment would not have a material adverse effect on
the Company or the segment. The loss of the registered trademark
"Huffy" or "True Temper" could have a material adverse effect on
the Company and this segment. The Company has no reason to
believe that anyone has rights to either the "Huffy" or "True
Temper" trademarks for the products for which the Company uses
such trademarks.
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d. Seasonality and Inventory
-------------------------
Due to the relatively short lapse of time between placement of
orders for products and shipments, the Company normally does not
consider its backlog of orders as significant to this business
segment. Because of rapid delivery requirements of their
customers, the companies in this segment maintain significant
quantities of inventories of finished goods to meet their
customers' requirements. Sales of bicycles are seasonal in that
sales tend to be higher in the Spring and Fall of each year.
Basketball products tend to have varying degrees of seasonality,
none of which are significant to the operations of the Company.
Sales of lawn and garden products and snow tools tend to be
higher in the Spring and Winter of each year, respectively.
e. Competition and Customers
-------------------------
In the high volume retailer bicycle business, Huffy Bicycle
Company has numerous competitors in the United States market,
only two of which are deemed significant. Although importers in
the aggregate provide significant competition, only one
individual importer is deemed a significant competitor. Even
though competition among domestic manufacturers and importers of
bicycles is intense, Huffy Bicycle Company believes it is cost
competitive in the high volume retailer bicycle market and
maintains its position through continued efforts to improve
manufacturing efficiency and product value. Huffy Bicycle
Company's ability to provide its customers with low cost,
innovative new products has enabled it to maintain its market
position despite the marketing efforts of domestic competitors
and competitors from Taiwan, China, and other nations. Huffy
Sports Company has several competitors, but only one is deemed
significant. Huffy Sports Company maintains its competitive
position by offering its customers high quality, innovative
products at competitive prices and by supporting its products
with outstanding customer service. True Temper Hardware Company
has numerous competitors in the United States and Canada, but
considers only two competitors significant. True Temper Hardware
Company believes it remains competitive by offering its
customers in the residential, agricultural, industrial, and
commercial markets competitively priced, high quality,
innovative products. The loss by the Consumer Products segment
of either of its two largest customers could result in a
material adverse effect on the segment.
SERVICES FOR RETAIL
Huffy Service First, Inc. ("HSF") and Washington Inventory Service
("WIS") each provide certain services to retailers. Inventory,
assembly, repair and merchandising services provided by WIS and HSF to
their customers represented 26.0 percent, 26.5 percent, and 25.0
percent, of consolidated revenues of the Company for the years ended
December 31, 1997, 1996, and 1995.
a. Products, Marketing and Distribution
------------------------------------
Huffy Service First: HSF, a wholly-owned subsidiary of the
Company, headquartered in Miamisburg, Ohio, serves the needs of
major retailers in 50 states, Puerto Rico and the Virgin Islands
by providing in-store and in-home assembly and repair, and
in-store display services for a variety of products, including,
among other things, bicycles, barbeque grills, physical fitness
equipment, lawnmowers, and furniture. HSF is the only assembly
service business of this kind available to high volume retailers
on a nationwide basis. HSF also offers merchandising services
(product resets and periodic maintenance of displays) to
manufacturers who supply high volume retailers.
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Washington Inventory Service: WIS, a wholly-owned subsidiary of
the Company, headquartered in San Diego, California, provides
physical inventory services on a nationwide basis to meet the
financial reporting and inventory control requirements of high
volume retailers, drug stores, home centers, sporting goods
stores, specialty stores and grocery stores.
b. Seasonality
-----------
The demand for services provided by this business segment is
seasonal in that assembly service demand is generally strongest
in Spring and at the Winter holiday season, and inventory
service demand is generally strongest in the first and third
calendar quarters of the year.
c. Competition and Customers
-------------------------
Although WIS has numerous competitors in the United States
market, only one is significant. HSF has numerous competitors in
the United States market, none of which is deemed significant in
the in-store and in-home assembly service business; six are
deemed significant in the merchandising services. WIS and HSF
believe they remain competitive due to their nationwide network
of operations, competitive pricing and full service. The loss by
the Services for Retail Segment of either of its two largest
customers could result in a material adverse effect on the
segment.
Sales to two customers aggregated over ten percent or more of the Company's
consolidated revenues from each such customer for the year ended December 31,
1997, and the loss of either one of these customers could have a material
adverse effect on the Company and its subsidiaries as a whole.
The number of persons employed full-time by the Company (excluding seasonal
employees in the Services for Retail Segment) as of December 31, 1997, was 6,770
(2,673 employed by the Consumer Products Segment and 4,097 employed by the
Services for Retail Segment).
ITEM 2. PROPERTIES: Location and general character of the
principal plants and other materially important physical
properties of the Company as of January 1, 1998.
- --------------------------------------------------------------------------------
Owned or
Expiration
Building Area Date
Location Description (Sq. Ft.) of Lease
- --------------------------------------------------------------------------------
San Diego, California Offices (Services for Retail) 30,000 2004(1)
Farmington, Missouri Offices, manufacturing and
warehouse facility
(Consumer Products) 412,052 2014(2)
Celina, Ohio Offices, manufacturing and
warehouse facility
(Consumer Products) 822,000 Owned
Miamisburg, Ohio Offices and display facilities
(Corporate and Consumer
Products) 47,000 2003(3)
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- --------------------------------------------------------------------------------
Owned or
Expiration
Building Area Date
Location Description (Sq. Ft.) of Lease
- --------------------------------------------------------------------------------
Miamisburg, Ohio Offices and warehouse 42,682 2001(4)
facility (Services for Retail)
Camp Hill, Offices, manufacturing and 391,690 2012(5)
Pennsylvania distribution facility
(Consumer Products)
Harrisburg, Offices and manufacturing 254,329 Owned
Pennsylvania facility (Consumer Products)
Sussex, Wisconsin Offices and manufacturing 192,000 2004(6)
facility (Consumer Products)
Whites Cross, Cork, Offices and manufacturing 70,000 Owned
Ireland facility (Consumer Products)
<FN>
(1) Subject to two consecutive options to renew for additional terms of five
years each.
(2) The City of Farmington, Missouri financed the acquisition of the premises
through the issuance of Industrial Development Revenue Bonds (Huffy
Corporation Project) Series 1994 in the aggregate principal amount of
$20,000,000 and leased the premises to the Company. The Company has an
option to purchase during the term or at expiration of the lease.
(3) Subject to an option to purchase during the term of or at the expiration of
the lease, and if the option is not exercised at the expiration of the
lease, the Company automatically receives an extension of the term for up
to 12 months or until the property is sold, whichever time period is
shorter.
(4) Subject to one option to renew for an additional term of five years.
(5) Subject to one option to renew for an additional term of five years and an
option to purchase.
(6) Subject to an option to purchase during the term of or at the expiration of
the lease.
There are no encumbrances on the Celina, Ohio, Harrisburg, Pennsylvania, and
Whites Cross, Cork, Ireland properties which are owned. All of the Company's
facilities are in good condition and are considered suitable for the purposes
for which they are used. The Camp Hill, Pennsylvania, and Celina, Ohio
manufacturing facilities normally operate on a two full shift basis, with third
shift operations scheduled as needed to meet seasonal production requirements.
The Farmington, Missouri, and Harrisburg, Pennsylvania manufacturing facilities
normally operate on a two full shift basis. The Whites Cross, Cork, Ireland and
Sussex, Wisconsin manufacturing facilities normally operate on a one full shift
basis, with second shift operations scheduled as needed at the Sussex, Wisconsin
facility.
ITEM 3. LEGAL PROCEEDINGS
The Company is not a party, nor is its property subject, to any material pending
legal proceedings.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS
The market information and other related security holder matters pertaining to
the Common Stock of the Company set forth in Exhibit 13 under (i) the captions
entitled Common Stock and Shareholder Information, and (ii) notes 7 and 8
(Preferred Stock, and Common Stock and Common Stock Plans) to
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the consolidated financial statements, are contained in the Company's Annual
Report to Shareholders for the year ended December 31, 1997, and are hereby
incorporated herein by reference.
ITEM 6. SELECTED FINANCIAL DATA
Selected unaudited financial data for each of the last 10 calendar years set
forth in Exhibit 13 under the caption entitled Ten-Year Financial and Operating
Review (Unaudited) is contained in the Company's Annual Report to Shareholders
for the fiscal year ended December 31, 1997, and is hereby incorporated herein
by reference.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Discussion and analysis of financial condition and results of operations set
forth in Exhibit 13 under the caption entitled Management's Discussion and
Analysis of Financial Conditions and Results of Operations and note 6 (Lines of
Credit and Long-Term Obligations) to the consolidated financial statements, are
contained in the Company's Annual Report to Shareholders for the year ended
December 31, 1997, and are hereby incorporated herein by reference.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The financial information set forth in Exhibit 13 under the captions entitled
Independent Auditor's Report and Consolidated Balance Sheets, Consolidated
Statements of Operation, Consolidated Statements of Cash Flows, Consolidated
Statements of Shareholders' Equity, and Notes to Consolidated Financial
Statements, is contained in the Company's Annual Report to Shareholders for the
year ended December 31, 1997, and is hereby incorporated herein by reference.
See also the information contained in Item 14 of Part IV of this Report.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
Not applicable.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Directors of the Company
- ------------------------
The name, age and background information for each of the Company's Directors is
set forth in the section entitled ELECTION OF DIRECTORS and the table therein
contained in the Company's Proxy Statement for its 1998 Annual Meeting of
Shareholders, and is hereby incorporated herein by reference.
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Executive Officers of the Company
- ---------------------------------
The Executive Officers are elected annually to their respective positions,
effective at the April meeting of the Board of Directors. The Executive Officers
of the Company at March 9, 1998, were as follows:
- --------------------------------------------------------------------------------
Name Age Position Officer Since
- --------------------------------------------------------------------------------
Stanley H. Davis 53 Vice President - Human July, 1997
Resources and Organization
Development
Thomas A. Frederick 43 Vice President - Finance and December, 1994
Chief Financial Officer
Don R. Graber 54 Chairman of the Board, July, 1996
President and Chief
Executive Officer
Timothy G. Howard 51 Vice President - Controller September, 1978
Nancy A. Michaud 51 Vice President - General February, 1993
Counsel and Secretary
Prior to being elected Vice President-Human Resources and Organization
Development, Mr. Davis was Vice President-Human Resources and Organization
Development of Triangle Wire and Cable, Inc. and Vice President Administration
of Ocean View Capital, Inc. Prior to being elected an Executive Officer in 1994,
Mr. Frederick was President and General Manager of Huffy Service First, Inc.
Prior to being elected Chairman, President and Chief Executive Officer in 1997,
Mr. Graber was President and Chief Operating Officer since 1996; prior thereto,
Mr. Graber was President of Worldwide Household Products Group and Group Vice
President of The Black and Decker Corporation from 1994; prior thereto, Mr.
Graber was President of the International Group of The Black and Decker
Corporation from 1991 to 1994. Prior to being elected Vice President - General
Counsel and Secretary in 1994, Ms. Michaud was Vice President - General Counsel
and Assistant Secretary of the Company; prior thereto, Ms. Michaud was General
Counsel and Assistant Secretary of the Company in 1993.
ITEM 11. EXECUTIVE COMPENSATION
Information on executive compensation set forth in the section entitled
EXECUTIVE COMPENSATION and the tables therein, is contained in the Company's
Proxy Statement for its 1998 Annual Meeting of Shareholders, and is hereby
incorporated herein by reference. Notwithstanding anything to the contrary set
forth herein or in any of the Company's previous filings under the Securities
Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended,
that might incorporate future filings, including this Form 10-K, the section
entitled REPORT OF COMPENSATION COMMITTEE and the Performance Graph which is set
forth in the Company's Proxy Statement for its 1998 Annual Meeting of
Shareholders are not deemed to be incorporated by reference in this Form 10-K.
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ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The number of shares of Common Stock of the Company beneficially owned by each
Director and by all Directors and Officers as a group as of January 2, 1998, set
forth in the section entitled SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT, and the table therein, is contained in the Company's Proxy
Statement for its 1998 Annual Meeting of Shareholders, and is hereby
incorporated herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Information on certain transactions with management set forth in the section
entitled CERTAIN RELATIONSHIPS AND OTHER RELATED TRANSACTIONS is contained in
the Company's Proxy Statement for its 1998 Annual Meeting of Shareholders, and
is hereby incorporated herein by reference.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) Documents
(1) The following Consolidated Financial Statements of the Company
included in the Company's Annual Report to Shareholders are
incorporated by reference as part of this Report at Item 8 hereof:
Consolidated Balance Sheets as of December 31, 1997, and
1996.
Consolidated Statements of Operations for the years ended
December 31, 1997, 1996, and 1995.
Consolidated Statements of Cash Flows for the years ended
December 31, 1997, 1996, and 1995.
Consolidated Statements of Shareholders' Equity for the
years ended December 31, 1997, 1996, and 1995.
Notes to Consolidated Financial Statements.
The Annual Report to Shareholders for the year ended December 31,
1997, is not deemed to be filed as part of this Report, with the
exception of the items incorporated by reference in Items 1, 5, 6,
7 and 8 of this Report and those financial statements and notes
thereto listed above.
(2) The Accountants' Report on Consolidated Financial Statements and
the following Financial Statement Schedule of the Company is
included as part of this Report at Item 8 hereof:
Schedule II. Valuation and Qualifying Accounts - years ended
December 31, 1997, 1996, and 1995.
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All other schedules for which provision is made in the applicable
accounting regulations of the Securities and Exchange Commission
are not required under the related instructions or are
inapplicable and, therefore, have been omitted.
(3) The exhibits shown in "Index to Exhibits" are filed as a part of this
Report.
(b) Reports on Form 8-K
-------------------
During the fiscal quarter ended December 31, 1997, the Company filed no report
on Form 8-K.
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
HUFFY CORPORATION
By /s/ Don R. Graber Date: March 6, 1998
----------------------------
Don R. Graber
Chairman of the Board, President
and Chief Executive Officer
(Principal Executive Officer)
and Director
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the registrant and
in the capacities and on the dates indicated.
/s/ Thomas A. Frederick Date: March 6, 1998
- ----------------------------------------
Thomas A. Frederick
Vice President - Finance and Chief
Financial Officer (Principal
Financial Officer)
/s/ Timothy G. Howard Date: March 6, 1998
- ----------------------------------------
Timothy G. Howard
Vice President - Controller
(Principal Accounting Officer)
/s/ William A. Huffman Date: February 12, 1998
- ----------------------------------------
William A. Huffman, Director
/s/ Linda B. Keene Date: February 12, 1998
- ----------------------------------------
Linda B. Keene, Director
/s/ Jack D. Michaels Date: February 12, 1998
- ----------------------------------------
Jack D. Michaels, Director
/s/ Donald K. Miller Date: February 12, 1998
- ----------------------------------------
Donald K. Miller, Director
/s/ James F. Robeson Date: February 12, 1998
- ----------------------------------------
James F. Robeson, Director
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/s/ Patrick W. Rooney Date: February 12, 1998
- ----------------------------------------
Patrick W. Rooney, Director
/s/ Geoffrey W. Smith Date: February 12, 1998
- ----------------------------------------
Geoffrey W. Smith, Director
/s/ Thomas C. Sullivan Date: February 12, 1998
- ----------------------------------------
Thomas C. Sullivan, Director
/s/ Joseph P. Viviano Date: February 12, 1998
- ----------------------------------------
Joseph P. Viviano, Director
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INDEPENDENT AUDITORS' REPORT
----------------------------
ON FINANCIAL STATEMENT SCHEDULE
-------------------------------
The Board of Directors,
Huffy Corporation:
Under date of February 6, 1998, we reported on the consolidated balance sheets
of Huffy Corporation and subsidiaries as of December 31, 1997, and 1996, 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, 1997, as
contained in the 1997 Annual Report to Shareholders. These consolidated
financial statements and our report thereon are incorporated by reference in the
Annual Report on Form 10-K for the year 1997. In connection with our audits of
the aforementioned consolidated financial statements, we also have audited the
related consolidated financial statement schedule as listed in Part IV, Item
14(a)(2) of Form 10-K. The financial statement schedule is the responsibility of
the Company's management. Our responsibility is to express an opinion on the
financial statement schedule based on our audits.
In our opinion, such financial statement schedule, when considered in relation
to the basic consolidated financial statements taken as a whole, presents
fairly, in all material respects, the information set forth therein.
/S/ KPMG PEAT MARWICK LLP
---------------------------------
KPMG PEAT MARWICK LLP
Cincinnati, Ohio
March 18, 1998
INDEPENDENT AUDITORS' CONSENT
-----------------------------
The Board of Directors,
Huffy Corporation:
We consent to the incorporation by reference in the Registration Statements, and
the Prospectuses constituting part thereof, of (i) the Form S-8 Registration
Statement (No. 33-25487) pertaining to the 1988 Stock Option Plan and Restricted
Share Plan; (ii) the Form S-8 Registration Statement (No. 33-25143) pertaining
to the 1987 Director Stock Option Plan; (iii) the Form S-8 Registration
Statement (Nos. 33-28811 and 33-42724) pertaining to the 1989 Employee Stock
Purchase Plan; (iv) the Form S-8 Registration Statement (No. 33-44571)
pertaining to five company savings plans and (v) the Form S-8 Registration
Statement (No. 33-60900) pertaining to the W.I.S. Savings Plan of our report
dated February 6, 1998, relating to the consolidated balance sheets of Huffy
Corporation and subsidiaries as of December 31, 1997 and 1996 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, 1997, which report
appears in the 1997 Annual Report to Shareholders, which is incorporated by
reference in the Company's 1997 Annual Report on Form 10-K and our report dated
February 6, 1998, relating to the financial statement schedule for each of the
years in the three-year period ended December 31, 1997, which report appears in
the Company's 1997 Annual Report on Form 10-K.
/S/ KPMG PEAT MARWICK LLP
---------------------------------
KPMG PEAT MARWICK LLP
Cincinnati, Ohio
March 18, 1998
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HUFFY CORPORATION
CONSOLIDATED FINANCIAL STATEMENT SCHEDULE II
VALUATION AND QUALIFYING ACCOUNTS
(DOLLAR AMOUNTS IN THOUSANDS)
BALANCE AT ADDITIONS CHARGED BALANCE
BEGINNING TO COSTS AND DEDUCTIONS AT END
OF PERIOD EXPENSES (NOTE) OF PERIOD
--------- ---------------- --------- ----------
Reserves deducted from assets to which they apply:
Allowance for doubtful accounts:
Year ended December 31, 1997 $1,437 2,085 (1,060) 2,462
Year ended December 31, 1996 $1,449 1,197 (1,209) 1,437
Year ended December 31, 1995 $1,493 943 (987) 1,449
Inventory obsolescence:
Year ended December 31, 1997 $2,181 2,541 (1,947) 2,775
Year ended December 31, 1996 $1,891 3,059 (2,769) 2,181
Year ended December 31, 1995 $2,160 1,191 (1,460) 1,891
Reserves which support the balance sheet
caption, Reserves
Restructuring Reserve:
Year ended December 31, 1997 - - - -
Year ended December 31, 1996 $1,830 - (1,830) -
Year ended December 31, 1995 $2,033 2,152[1] (2,355) 1,830
Note: Represents accounts written off, less recoveries for allowance for
doubtful accounts. Represents inventory written off, less scrap value
for inventory obsolescence.
[1] Represents net restructure charge for personnel reductions and the
negotiation of a concessionary labor contract.
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INDEX TO EXHIBITS
-----------------
Exhibit Form 10-K
No. Exhibits
- ------- ------------------------------------------------- ----------
3.a Amended Articles of Incorporation, dated June 16, *
1995, incorporated by reference to Exhibit (3)(i)
to Form 10-Q for the quarter ended June 30, 1995
3.b Code of Regulations, as amended, dated April 28, *
1995, incorporated by reference to Exhibit (3)(ii)
to Form 10-Q for the quarter ended June 30, 1995
4.a Specimen Common Stock Certificate of Huffy ***
Corporation
4.b Note Purchase Agreement, dated June 24, 1988, *
among Huffy Corporation, The Prudential Insurance
Company of America and Pruco Life Insurance
Company, incorporated by reference to Exhibit (4)
to Form 10-Q for the fiscal quarter ended June 30,
1988
4.c Amendment, dated as of December 20, 1993, to Note *
Purchase Agreement, dated June 24, 1988, among
Huffy Corporation, The Prudential Insurance
Company of America and Pruco Life Insurance
Company, incorporated by reference to Exhibit
(4)(c) to Form 10-K for the fiscal year ended
December 31, 1993
4.d Second Amendment, dated as of December 30, 1997, ***
to Note Purchase Agreement, dated June 24, 1988,
among Huffy Corporation, The Prudential Insurance
Company of America and Pruco Life Insurance
Company
4.e Rights Agreement, dated as of December 16, 1988, *
between Huffy Corporation and Bank One,
Indianapolis, National Association, incorporated
by reference to Exhibit (4)(n) to Form 10-K for
the fiscal year ended December 31, 1988
4.f Amendment, dated as of August 23, 1991, to Rights *
Agreement, dated as of December 16, 1988, between
Huffy Corporation and Bank One, Indianapolis,
National Association, incorporated by reference to
Form 8-K, dated August 23, 1991
4.g Amendment, dated as of December 9, 1994, to Rights *
Agreement, dated as of December 16, 1988, as
amended August 23, 1991, between Huffy Corporation
and Bank One, Indianapolis, National Association,
incorporated by reference to Form 8-K, dated
December 22, 1994
4.h Note Agreement, dated as of December 1, 1990, *
among Huffy Corporation and Nationwide Life
Insurance Company, Employees Life Insurance
Company of Wausaw and Financial Horizons Life
Insurance Company in connection with the issuance
and sale of $30,000,000 Huffy Corporation 9.62%
Senior Notes, Series A, due December 1, 2000,
incorporated by reference to Exhibit (4)(j) to
Form 10-K for the fiscal year ended December 31,
1990
* Indicates that the exhibit is incorporated by reference into this Annual
Report on Form 10-K from a previous filing with the Commission.
*** Indicates that the exhibit is included as part of this Annual Report on
Form 10-K for the year ended December 31, 1997.
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4.i Amendment, dated as of December 30, 1997, to Note ***
Agreement, dated as of December 1, 1990, among
Huffy Corporation and Nationwide Life Insurance
Company, Employees Life Insurance Company of
Wausaw and Financial Horizons Life Insurance
Company in connection with the issuance and sale
of $30,000,000 Huffy Corporation 9.62% Senior
Notes, Series A, due December 1, 2000
4.j Credit Agreement, dated as of April 21, 1992, *
among Huffy Corporation, Bank One, Dayton, N.A.,
NBD Bank, N.A., Security Pacific National Bank,
and Society National Bank, individually and as
agent, in connection with revolving loans up to an
aggregate amount of $50,000,000 to Huffy
Corporation, incorporated by reference to Exhibit
(4)(g) to Form 10-K for the fiscal year ended
December 31, 1992
10.a Lease, effective as of October 29, 1992, between *
SELCO Service Corporation and Gerry Baby Products
Company, incorporated by reference to Exhibit
(10)(b) to Form 10-K for the fiscal year ended
December 31, 1992
10.b Lease, effective as of December 29, 1993, between *
SELCO Service Corporation and Huffy Corporation,
incorporated by reference to Exhibit (10)(c) to
Form 10-K for the fiscal year ended December 31,
1993
10.c Special Deferred Compensation Agreements, as *
amended, between Huffy Corporation and certain of
its officers and key employees, in substantially
the forms incorporated by reference to Exhibit
(ix) to Form 10-K for the fiscal year ended June
24, 1977, to Exhibit (2) to Form 10-Q for the
fiscal quarter ended September 23, 1983, and to
Exhibit (19)(c) to Form 10-Q for the fiscal
quarter ended September 30, 1986
10.d Deferred Compensation Agreements, as amended, *
between Huffy Corporation and certain of its
officers and key employees, in substantially the
forms incorporated by reference to Exhibit (vi) to
Form 10-K for the fiscal year ended June 29, 1979,
and to Exhibit (3) to Form 10-Q for the fiscal
quarter ended September 23, 1983
10.e Form of Severance Pay Agreements, as revised and ***
restated, between Huffy Corporation and its
Officers
10.f Description of Executive Medical Reimbursement *
Plan between Huffy Corporation and certain
executive officers and key employees, incorporated
by reference to Exhibit (10)(n) to Form 10- K for
the fiscal year ended December 31, 1989
10.g Long Term Incentive Compensation Program ***
10.h Huffy Corporation Capital Accumulation Plan *
Participation Agreement, between Huffy Corporation
and certain of its officers, in substantially the
forms incorporated by reference to Exhibit (19)(a)
to Form 10-Q for the fiscal quarter ended
September 30, 1985, and to Exhibit 19(b) to Form
10-Q for the fiscal quarter ended September 30,
1986
* Indicates that the exhibit is incorporated by reference into this Annual
Report on Form 10-K from a previous filing with the Commission.
*** Indicates that the exhibit is included as part of this Annual Report on
Form 10-K for the year ended December 31, 1997.
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18
10.i Huffy Corporation Capital Accumulation Program *
Participation Agreement, between Huffy Corporation
and certain of its directors, in substantially the
forms incorporated by reference to Exhibit (19)(b)
to Form 10-Q for the fiscal quarter ended
September 30, 1985, and to Exhibit 19(b) to Form
10-Q for the fiscal quarter ended June 30, 1986
10.j Description of supplemental group life insurance *
arrangement between Huffy Corporation and certain
officers and key employees, incorporated by
reference to Exhibit (10)(aa) to Form 10-K for the
fiscal year ended December 31, 1991
10.k Description of financial planning and tax *
preparation services between Huffy Corporation and
certain officers and key employees, incorporated
by reference to Exhibit (10)(dd) to Form 10-K for
the fiscal year ended December 31, 1993
10.l Performance Incentive Plan of Huffy Corporation ***
for 1998
10.m Retirement Agreement, dated as of December 22, ***
1997, between Huffy Corporation and Richard L.
Molen
10.n Supplemental Benefit Agreement, dated as of June *
21, 1996, between Huffy Corporation and Don R.
Graber, incorporated by reference to Exhibit 10.u
to Form 10-K for the fiscal year ended December
31, 1996
10.o Supplemental/Excess Benefit Plan, dated as of *
January 1, 1988, incorporated by reference to
Exhibit (10)(aa) to Form 10-K for the fiscal year
ended December 31, 1987
10.p First Amendment to Huffy Corporation *
Supplemental/Excess Benefit Plan, effective as of
January 1, 1988, incorporated by reference to
Exhibit (10)(ee) to Form 10-K for the fiscal year
ended December 31, 1990
10.q Second Amendment to Huffy Corporation *
Supplemental/Excess Benefit Plan, dated as of June
30, 1991, incorporated by reference to Exhibit
(10)(y) to Form 10-K for the fiscal year ended
December 31, 1994
10.r Third Amendment to Huffy Corporation *
Supplemental/Excess Benefit Plan, dated as of June
27, 1994, incorporated by reference to Exhibit
(10)(2) to Form 10-K for the fiscal year ended
December 31, 1994
10.s Fourth Amendment to Huffy Corporation ***
Supplemental/Excess Benefit Plan dated as of May
26, 1995
10.t Fifth Amendment to Huffy Corporation *
Supplemental/Excess Benefit Plan, effective as of
July 15, 1996, incorporated by reference to
Exhibit 10.z to Form 10-K for the fiscal year
ended December 31, 1996
* Indicates that the exhibit is incorporated by reference into this Annual
Report on Form 10-K from a previous filing with the Commission.
*** Indicates that the exhibit is included as part of this Annual Report on
Form 10-K for the year ended December 31, 1997.
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19
10.u Sixth Amendment to Huffy Corporation ***
Supplemental/Excess Benefit Plan, effective as of
June 15, 1997
10.v Seventh Amendment to Huffy Corporation ***
Supplemental/Excess Benefit Plan, effective as of
December 22, 1997
10.w Form of Restricted Share Agreements between Huffy ***
Corporation and its Officers, subject to
shareholder approval of the Huffy Corporation 1998
Restricted Share Plan
10.x Huffy Corporation Master Benefit Trust Agreement *
as Restated, dated June 9, 1995, incorporated by
reference to Exhibit 10.aa for Form 10-K for the
fiscal year ended December 31, 1995
10.y First Amendment to Huffy Corporation Master *
Benefit Trust Agreement as Restated, effective as
of July 25, 1996, incorporated by reference to
Exhibit 10.bb to Form 10-K for the fiscal year
ended December 31, 1996
10.z Huffy Corporation 1987 Director Stock Option Plan, *
incorporated by reference to Exhibit 19(a) to Form
10-Q for the fiscal quarter ended June 30, 1988
10.aa First Amendment to Huffy Corporation 1987 Director *
Stock Option Plan, effective as of April 30, 1991,
incorporated by reference to Exhibit (10)(nn) to
Form 10-K for the fiscal year ended December 31,
1991
10.bb Second Amendment to Huffy Corporation 1987 *
Director Stock Option Plan, effective as of
December 15, 1991, incorporated by reference to
Exhibit (10)(oo) to Form 10-K for the fiscal year
ended December 31, 1991
10.cc Third Amendment to Huffy Corporation 1987 Director *
Stock Option Plan, effective as of February 15,
1996, incorporated by reference to Exhibit 10.ff
to Form 10-K for the fiscal year ended December
31, 1996
10.dd Huffy Corporation 1988 Stock Option Plan and *
Restricted Share Plan, as amended, incorporated by
reference to Exhibit 19(b) to Form 10-Q for the
fiscal quarter ended June 30, 1988; to Exhibit A
to the Company's Proxy Statement dated March 13,
1992 for the Annual Meeting of Shareholders held
April 24, 1992; and to Annex I to the Company's
Proxy Statement dated March 7, 1996 for the Annual
Meeting of Shareholders held April 26, 1996
10.ee Subscription Agreement between Huffy ***
Corporation and Don R. Graber
10.ff Huffy Corporation 1990 Directors' Retirement Plan *
incorporated by reference to Exhibit (10)(qq) to
Form 10-K for the fiscal year ended December 31,
1991
10.gg First Amendment to Huffy Corporation 1990 *
Directors' Retirement Plan, effective as of
February 15, 1996, incorporated by reference to
Exhibit 10.ii to Form 10-K for the fiscal year
ended December 31, 1996
* Indicates that the Exhibit is incorporated by reference into this Annual
Report on Form 10-K from a previous filing with the Commission.
*** Indicates that the Exhibit is included as part of this Annual Report on
Form 10-K for the year ended December 31, 1997.
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20
10.hh Second Amendment to Huffy Corporation 1990 *
Directors' Retirement Plan, effective as of
February 15, 1996, incorporated by reference to
Exhibit 10.jj to Form 10-K for the fiscal year
ended December 31, 1996
10.ii Description of Huffy Corporation Executive *
Automobile Policy incorporated by reference to
Exhibit 10(ii) to Form 10-K for the fiscal year
ended December 31, 1994
OTHER FILINGS
-------------
13. Certain sections of the Annual Report to ***
Shareholders for fiscal year ended December 31,
1997
19. Schedule of certain documents substantially ***
identical to filed documents with parties thereto
and other material differing details
22. List of all direct and indirect Subsidiaries of
the registrant:
Jurisdiction in
Name of Subsidiary which Incorporated
------------------- ------------------
Hufco Company Colorado
Hufco - Delaware Company Delaware
Huffy FSC, Inc. Virgin Islands
Huffy International Finance, N.V. Netherlands Antilles
Huffy Risk Management, Inc. Ohio
Huffy Service First, Inc. Ohio
Huffy Sports, Inc. Wisconsin
Royce Union Bicycle Company Ohio
Snugli-Canada, Ltd. British Columbia, Canada
True Temper Hardware Company Ohio
True Temper Limited Whites Cross, Cork, Ireland
Washington Inventory Service California
27. Financial Data Schedules ***
* Indicates that the exhibit is incorporated by reference into this Annual
Report on Form 10-K from a previous filing with the Commission.
*** Indicates that the exhibit is included as part of this Annual Report on
Form 10-K for the year ended December 31, 1997.
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