<PAGE> 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 June 30, 1994
----------------------------------------------
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ______________ to __________________________
Commission file number 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)
(513) 866-6251
----------------------------------------------------
(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 _____
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: 14,735,330 as of August 5, 1994
------------------- ----------------------
"Index of Exhibits" is page 12 herein
<PAGE> 2
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS (UNAUDITED). COMPANY FOR WHICH REPORT IS FILED:
<TABLE>
HUFFY CORPORATION
CONSOLIDATED STATEMENTS OF EARNINGS
(Dollar Amounts in Thousands, Except Per Share Data)
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
------------------------------ -----------------------------
1994 1993 1994 1993
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net sales $ 214,898 $ 220,095 $ 404,118 $ 435,094
Cost of sales 173,835 178,062 327,069 353,489
--------- --------- --------- ---------
Gross profit 41,063 42,033 77,049 81,605
Selling, general and administrative
expenses 26,587 28,145 52,968 57,346
--------- --------- --------- ---------
Operating profit 14,476 13,888 24,081 24,259
Other (income) expense
Interest expense, net 1,309 2,330 2,978 4,627
Other (21) 113 (246) 131
--------- --------- --------- ---------
Earnings before income taxes
and cumulative effect of
accounting change 13,188 11,445 21,349 19,501
Income taxes 5,227 4,576 8,543 7,723
--------- --------- --------- ---------
Earnings before cumulative
effect of accounting change 7,961 6,869 12,806 11,778
Cumulative effect of accounting
change, net of income taxes -- -- -- (1,084)
--------- --------- --------- ---------
Net earnings $ 7,961 $ 6,869 $ 12,806 $ 10,694
========= ========= ========= =========
</TABLE>
(Continued.....)
Page 2 of 12
<PAGE> 3
<TABLE>
HUFFY CORPORATION
CONSOLIDATED STATEMENTS OF EARNINGS
(Dollar Amounts in Thousands, Except Per Share Data)
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
------------------------------ ------------------------------
1994 1993 1994 1993
---- ---- ---- ----
<S> <C> <C> <C> <C>
Earnings per common share:
PRIMARY
Weighted average number of
common shares 14,949,562 12,806,287 14,924,480 12,794,266
========== ========== ========== ==========
Earnings per common share before
cumulative effect of
accounting change $ .53 $ .54 $ .86 $ .92
Cumulative effect of accounting
change, net of income taxes -- -- -- ( .08)
------- ------- ------- ------
Net earnings per
common share $ .53 $ .54 $ .86 $ .84
====== ====== ====== ======
FULLY DILUTED
Weighted average number of
common shares 14,949,562 14,786,944 14,924,480 14,771,262
========== ========== ========== ==========
Earnings per common share
before cumulative effect of
accounting change $ .53 $ .48 $ .86 $ .84
Cumulative effect of accounting
change, net of income taxes -- -- -- ( .07)
------- ------- ------- ------
Net earnings per
common share $ .53 $ .48 $ .86 $ .77
====== ====== ====== ======
<FN>
See accompanying notes to interim consolidated financial statements.
</TABLE>
Page 3 of 12
<PAGE> 4
<TABLE>
HUFFY CORPORATION
CONSOLIDATED BALANCE SHEETS
(Dollar Amounts In Thousands)
<CAPTION>
June 30, December 31,
1994 1993
----------- ------------
<S> <C> <C>
ASSETS
- - ------
Current assets:
Cash and cash equivalents $ 12,275 $ 4,140
Accounts and notes receivable, net 134,039 93,268
Inventories 61,671 82,144
Prepaid expenses and federal income taxes 16,281 17,813
---------- ---------
Total current assets 224,266 197,365
--------- ---------
Property, plant and equipment, at cost 180,356 170,719
Less accumulated depreciation and amortization (105,996) (97,072)
---------- ---------
Net property, plant and equipment 74,360 73,647
Excess of cost over net assets acquired, net 26,154 26,555
Other assets 21,677 21,770
---------- ---------
$ 346,457 $ 319,337
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
- - ------------------------------------
Current liabilities:
Notes payable $ -- $ 3,500
Current installments of long-term obligations 5,329 5,968
Accounts payable 61,860 43,713
Accrued expenses 43,849 37,466
Restructuring reserve 6,099 9,296
Other current liabilities 4,757 3,827
---------- ---------
Total current liabilities 121,894 103,770
---------- ---------
Long-term obligations, less current installments 41,375 43,211
Other long-term liabilities 35,546 36,327
Shareholders' equity:
Preferred stock -- --
Common stock 16,084 15,963
Additional paid-in capital 59,494 58,059
Retained earnings 86,217 75,920
---------- ---------
161,795 149,942
Less: cost of treasury shares (14,153) (18,913)
---------- ---------
Total shareholders' equity 147,642 136,029
--------- ---------
$ 346,457 $ 319,337
========= =========
<FN>
See accompanying notes to interim consolidated financial statements.
</TABLE>
Page 4 of 12
<PAGE> 5
<TABLE>
HUFFY CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollar Amounts in Thousands)
<CAPTION>
SIX MONTHS ENDED
JUNE 30,
-----------------------
1994 1993
---- ----
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings $ 12,806 $ 10,694
Adjustments to reconcile net earnings to net cash
provided by operating activities:
Depreciation and amortization 10,835 10,406
(Gain) loss on sale of property, plant & equipment (20) 285
Changes in assets and liabilities:
Accounts and notes receivable, net (40,771) (16,251)
Inventories 20,473 (7,664)
Prepaid expenses and federal income taxes 1,532 1,541
Other assets (644) (1,066)
Accounts payable 18,147 8,146
Accrued expenses 6,383 7,073
Restructuring reserve (3,197) --
Other current liabilities 921 2,567
Other long-term liabilities (1,495) (895)
Other 4 (398)
----------- ----------
Net cash provided by operating activities 25,688 16,224
===================================================================================================================
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (12,015) (8,687)
Proceeds from sale of property, plant & equipment 1,625 110
---------- ----------
Net cash used in investing activities (10,390) (8,577)
===================================================================================================================
CASH FLOWS FROM FINANCING ACTIVITIES:
Net (decrease) increase in short-term borrowings (3,500) 1,705
Issuance of long-term obligations 39 35
Reduction of long-term obligations (2,514) (2,124)
Issuance of common shares 1,556 122
Purchase of treasury shares (240) --
Dividends paid (2,504) (1,889)
----------- ---------
Net cash used in financing activities (7,163) (2,151)
===================================================================================================================
Net change in cash and cash equivalents 8,135 5,496
Cash and cash equivalents:
Beginning of period 4,140 3,489
----------- ----------
End of period 12,275 $ 8,985
===================================================================================================================
<FN>
See accompanying notes to interim consolidated financial statements.
</TABLE>
Page 5 of 12
<PAGE> 6
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
Note 1: Footnote disclosure which would substantially duplicate the
disclosure contained in the Annual Report to Shareholders for the
year ended December 31, 1993 has not been included. The unaudited
interim consolidated financial statements reflect all adjustments
which are, in the opinion of management, 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
June 30, 1994. All such adjustments are of a normal recurring
nature.
Note 2: The Consolidated Statement of Earnings for the six months ended June
30, 1993 and the Consolidated Statement of Cash Flows for the six
months ended June 30, 1993 have been restated to reflect the adoption
of Statement of Financial Accounting Standards No. 112 "Employers
Accounting for Postemployment Benefits" in the fourth quarter of
1993, effective January 1, 1993.
Note 3: Inventories of Huffy Bicycle Company and Huffy Sports Company are
valued using the dollar value LIFO method and, as a result, it is
impractical to separate inventory values between raw materials,
work-in-process and finished products on an interim basis.
Note 4: The Company acquired a facility and began modifications necessary for
bicycle production in the third quarter of 1994. The new facility
will require a capital investment of approximately $23,000. On
August 1, 1994, the City of Farmington, Missouri issued and sold
Industrial Development Revenue Bonds (Huffy Corporation Project),
Series 1994 in the aggregate principal amount of $20,000 (the
"Bonds") to provide financing for the acquisition, construction and
installation of equipment and certain industrial facilities in
Farmington, Missouri (the "Site"). The Bonds bear interest at the
rate of 8.23% per annum payable in quarterly installments. The Bonds
mature in equal semi-annual installments over a fourteen year period
beginning in 2000. The Company has entered into a Lease Agreement
with the City of Farmington for the Site and a Guarantee Agreement
for the benefit of the holders of the Bonds, both effective as of
August 1, 1994.
Page 6 of 12
<PAGE> 7
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
-----------------------------------------------------------
AND RESULTS OF OPERATIONS
-------------------------
Three Months and Six Months Ended June 30, 1994
-----------------------------------------------
Compared to the Three Months and Six Months Ended June 30, 1993
---------------------------------------------------------------
(Dollar Amounts in Thousands, Except Per Share Data)
Net Earnings
- - ------------
Net earnings for Huffy Corporation ("Huffy" or "Company") for the quarter ended
June 30, 1994 were $7,961, compared to $6,869 for the same period last year.
Fully diluted earnings per share for the second quarter of 1994 were $.53 per
common share, compared to $.48 per common share for the second quarter of 1993.
The majority of the increases in net earnings occurred in the Services for
Retail segment, where sales volumes were significantly above last year's
levels. Net earnings in the Juvenile Products and the Recreation and Leisure
Time Products segments were comparable to net earnings reported for the second
quarter of 1993.
Net earnings for the six months ended June 30, 1994 were $12,806, compared to
$10,694 for the same period last year. Fully diluted earnings per share for
the six months ended June 30, 1994 were $.86 per common share, compared to $.77
per common share for the same period last year. 1993 net earnings and net
earnings per common share include a one-time cumulative charge of $1,084, or
$.07 per common share, as a result of the adoption of Statement of Financial
Accounting Standards (SFAS) No. 112, "Employers' Accounting for Postemployment
Benefits."
The most significant factor contributing to the increase in earnings before the
cumulative effect of accounting change for the six months ended June 30, 1994,
occurred at Washington Inventory Service and Huffy Service First in the
Services for Retail segment. Increased earnings at Washington Inventory
Service were a result of volume increases caused by the continuing market shift
to SKU (stock keeping units) and cycle inventory counts, as well as a market
shift from in-house inventory crews to outside service crews. Huffy Service
First experienced a significant earnings increase caused by increased market
penetration in both the consumer product assembly and in the supplier services
business. These increases in the Services for Retail segment were partially
offset by decreases in the Recreation and Leisure Time Products segment, and in
the Juvenile Products segment. In the Recreation and Leisure Time Products
segment, Huffy Bicycle Company experienced soft retail sales reflecting market
conditions and retailers' increased emphasis on inventory management. In
addition, competitive pricing pressure both at the retail and manufacturing
level, and a shift in product mix to lower priced juvenile bikes, negatively
impacted operating profits. This loss in earnings at Huffy Bicycle Company was
partially offset by increased earnings at True Temper Hardware Company through
improved operating margins and increased manufacturing efficiency. In the
Juvenile Products segment, the decrease in earnings was primarily due to
increased administrative and warranty expense.
Page 7 of 12
<PAGE> 8
Net Sales
- - ---------
Net sales for the quarter ended June 30, 1994 were $214,898, down 2.4% from the
net sales level of $220,095 for the same quarter in 1993. The decrease
occurred primarily in the Recreation and Leisure Time Products segment due to
the discontinuance of certain product lines at True Temper Hardware Company and
an intense competitive retail environment in the bicycle market. The sales
decreases at True Temper Hardware Company and Huffy Bicycle Company were
partially offset by a sales increase at Huffy Sports Company due to new product
introductions, particularly portable products. The sales decrease in the
Recreation and Leisure Time Products segment was partially offset by higher
sales volume in the Services for Retail segment.
Net sales for the six months ended June 30, 1994 were $404,118, a 7.1% decrease
from net sales of $435,094 for the same period last year. The decrease in net
sales occurred predominately in the Recreation and Leisure Time Products
segment. Huffy Bicycle Company net sales were lower than last year due to a
soft retail sales environment resulting from 1993 retail year end inventory
carryover with some customers and a shift in product mix to lower priced
juvenile bicycles. In addition, the discontinuance of certain product lines at
True Temper Hardware Company in 1994 also influenced year to year comparisons.
The Juvenile Products segment also had slightly lower sales due to a sluggish
retail market. Net sales decreases in the Recreation and Leisure Time Products
and Juvenile Products segments were partially offset by increased sales in the
Services for Retail segment.
Gross Profit
- - ------------
Gross profit for the quarter ended June 30, 1994 was $41,063, down 2.3% from
the $42,033 achieved in the second quarter of 1993. Expressed as a percentage
of net sales, gross profit for the second quarter of 1994 and 1993 was 19.1%.
The dollar decrease in gross profit was due primarily to decreased volume in
the Recreation and Leisure Time Products segment. Volume related decreases in
gross profit at Huffy Bicycle Company were partially offset by volume related
increases in gross profit at Huffy Sports Company.
Gross profit for the six months ended June 30, 1994 was $77,049, or 19.1% of
net sales, versus $81,605, or 18.8% of net sales, for the same period in 1993.
The dollar decrease in gross profit was due primarily to decreased volume in
the Recreation and Leisure Time Products segment, offset by improved profit
margins in the Juvenile Products and Services for Retail segments. Within the
Recreation and Leisure Time Products segment, dollar decreases in gross profit
at Huffy Bicycle Company were partially offset by a dollar increase in gross
profit at Huffy Sports Company and True Temper Hardware Company. The increase
at True Temper Hardware Company was due primarily to reductions in fixed
manufacturing expenses and improvements in manufacturing efficiency as a result
of restructuring the lawn and garden tools business.
Page 8 of 12
<PAGE> 9
The increase in gross margins as a percent of net sales for the six months
ended June 30, 1994 vs. the same period in 1993 was caused primarily by a shift
in the mix of consolidated net sales from the Recreation and Leisure Time
Products segment to the Juvenile Products and Services for Retail segments.
Selling, General and Administrative Expenses
- - --------------------------------------------
Selling, general and administrative expenses were $26,587 for the second
quarter of 1994, compared to $28,145 for the same period of 1993. Expressed as
a percentage of net sales, selling, general and administrative expenses were
12.4% for the second quarter of 1994, as compared to 12.8% for the same period
in the previous year.
Selling, general and administrative expenses for the six months ended June 30,
1994 were $52,968, or 13.1% of net sales, versus $57,346, or 13.2% of net sales
for the same period in 1993.
The dollar decrease in selling, general and administrative expenses for both
the second quarter and the six months ended June 30, 1994, occurred primarily
in the Recreation and Leisure Time Products segment at Huffy Bicycle Company
and True Temper Hardware Company. The decrease at Huffy Bicycle Company was
due to a reduction in bad debt expense and other successful cost reduction
efforts. At True Temper Hardware Company, the decrease was primarily the
result of the restructuring of the lawn and garden tools business, but was also
impacted by a reduction in bad debt expense and liability claims.
Restructuring Reserve
- - ---------------------
The estimate recorded in the Company's 1993 Annual Report for restructuring the
Company's lawn and garden tools business remains substantially unchanged.
During the first six months of 1994, the Company charged $3,197 against the
restructuring reserve. The charges related primarily to current year operating
losses of product lines which have been discontinued as a part of the
restructuring plan, and other administrative costs associated with
restructuring the business.
Liquidity and Capital Resources
- - -------------------------------
The Company acquired a facility and began modifications necessary for bicycle
production in the third quarter of 1994. The new facility will require a
capital investment of approximately $23,000. On August 1, 1994, the City of
Farmington, Missouri issued and sold Industrial Development Revenue Bonds
(Huffy Corporation Project), Series 1994 in the aggregate principal amount of
$20,000 (the "Bonds") to provide financing for the acquisition, construction
and installation of equipment and certain industrial facilities in Farmington,
Missouri (the "Site"). The Bonds bear interest at the rate of 8.23% per annum
payable in quarterly installments. The Bonds mature in equal semi-annual
installments over a fourteen year period beginning in 2000. The Company has
entered into a Lease
Page 9 of 12
<PAGE> 10
Agreement with the City of Farmington for the Site and a Guarantee Agreement
for the benefit of the holders of the Bonds, both effective as of August 1,
1994.
There have been no other significant changes in the Company's liquidity and
capital resources as of June 30, 1994 from those discussed in the Company's
Annual Report on Form 10-K for the year ended December 31, 1993. The Company's
balance sheet reflects increases in both current assets and current liabilities
attributable to seasonal changes in the operations of its businesses.
PART II -- OTHER INFORMATION
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. No reports on Form 8-K have been filed during the quarter for which
this report is filed.
Page 10 of 12
<PAGE> 11
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
August 5, 1994 /s/ Timothy G. Howard
- - ------------------------------ -------------------------------------
Date Timothy G. Howard
Vice President - Corporate Controller
(Principal Accounting Officer)
Page 11 of 12
<PAGE> 12
<TABLE>
INDEX OF EXHIBITS
<CAPTION>
Exhibit
No. Item
- - ------- --------------------------------------------------------------------------------
<S> <C>
(2) Not applicable
(4) Bond Purchase Agreement, dated as of August 1, 1994, among the
Company, the City of Farmington, Missouri ("City") and The Prudential
Insurance Company of America ("Prudential"); Lease Agreement, dated as
of August 1, 1994, between the Company and City; Guarantee Agreement,
dated as of August 1, 1994, executed by the Company; and Escrow
Agreement, dated as of August 1, 1994, among City, Company and escrow
agent. Pursuant to Instruction 4(iii)(A) of Item 601 under Regulation
S-K, the Company is not filing these documents as exhibits to this
Form 10-Q, but does agree to provide the Commission with a copy upon
the Commission's request.
(10)(a) Second Amendment to Huffy Corporation Supplemental/Excess Benefit
Plan, executed June 30, 1991.
(10)(b) Third Amendment to Huffy Corporation Supplemental/Excess Benefit Plan,
executed June 27, 1994.
(11) Not applicable
(15) Not applicable
(18) Not applicable
(19) Not applicable
(22) Not applicable
(23) Not applicable
(24) Not applicable
(27) Not applicable
(99) Not applicable
</TABLE>
Page 12 of 12
<PAGE> 1
EXHIBIT 10(a)
SECOND AMENDMENT
TO
HUFFY CORPORATION
SUPPLEMENTAL/EXCESS BENEFIT PLAN
WHEREAS, Huffy Corporation (the "Sponsor") maintains the Huffy Corporation
Supplemental/Excess Benefit Plan (the "Plan"), effective January 1, 1988; and
WHEREAS, the Sponsor wishes to amend the Plan;
NOW, THEREFORE, the Sponsor adopts the following amendment to the Plan
effective January 1, 1990:
The definition of "Compensation" contained in Exhibit B (as added by the
First Amendment to the Plan) is amended to read in its entirety as
follows:
"Compensation" means, subject to the Compensation Limitation, the salary,
incentive compensation, commissions and overtime pay paid to or accrued
by an Employee for services performed for the Employer during each Plan
year. It does not include deferred compensation (except for amounts by
which compensation was reduced by reason of a plan described in Code
Section Section 401(k) or 125 which amount will be included as
Compensation), Employer Contributions, forfeitures arising under the
Plan, any non-cash payments or incentive compensation arising from the
Special Phantom Stock Award Agreement, the 1986 CEO Performance Unit and
Performance Share Plan, the Restricted Stock Unit Program or any stock
option plan or employee stock purchase plan.
IN WITNESS WHEREOF, the Sponsor has caused this instrument to be executed as of
this 30th day of June, 1991.
HUFFY CORPORATION
BY /s/ Robert R. Wieland
----------------------------------------------
Robert W. Wieland
Vice President - General Counsel and Secretary
<PAGE> 1
EXHIBIT 10(b)
THIRD AMENDMENT
TO
HUFFY CORPORATION
SUPPLEMENTAL/EXCESS BENEFIT PLAN
WHEREAS, Huffy Corporation (the "Sponsor") maintains the Huffy Corporation
Supplemental/Excess Benefit Plan (the "Plan"), effective January 1, 1988, and
WHEREAS, the Sponsor desires to amend the Plan;
NOW, THEREFORE, the Sponsor adopts the following amendments to the Plan
effective March 1, 1990:
1. Section 1.3 is amended in its entirety to read as follows:
1.3 "Compensation Limitation" means the dollar limitation on
compensation (adjusted to reflect increases in the cost of living
announced by the Internal Revenue Service) imposed under Code
Section 401(a)(17).
2. Section 1.7 is amended in its entirety to read as follows:
1.7 "Participant" means (a) an employee of any of the entities
listed in Exhibit A to the Plan who, on or after March 1, 1990,
serves (or served) in one of the positions designated in Exhibit A
to the Plan, or (b) an individual otherwise designated on Exhibit A
to the Plan as such Exhibit was in effect on February 28, 1990.
3. Section 1.10 is amended in its entirety to read as follows:
1.10 "Retirement Plan" means the Huffy Salaried Employees'
Retirement Plan, the Huffy Service First, Inc. Retirement Plan, the
True Temper Hardware Company Salaried Employees' Retirement Plan,
and the W.I.S. Retirement Plan.
4. Article I is amended by adding the following sentence at the end of the
existing test:
Capitalized terms that are not otherwise defined in this
Article I or other provisions of this Plan but which are defined in
the Retirement Plan shall have the meanings ascribed to those terms
in the Retirement Plan.
5. Article III is amended in its entirety to read as follows:
<PAGE> 2
AMOUNT OF SUPPLEMENTAL/EXCESS BENEFIT
-------------------------------------
ARTICLE III
-----------
A Participant's Supplemental/Excess Benefit will equal (i) $2,500
per year, plus the Accrued Retirement Pension he would have earned under
the Retirement Plan but for the Amended Benefit Formula, Compensation
Limitation and ERISA Limitation; reduced (but not below 0) by (ii) the
Accrued Retirement Pension he has earned under the Retirement Plan. The
Accrued Retirement Pension attributable to any period of time during which
a Participant failed to accrue benefits under the Retirement Plan because
the Participant's employing unit did not sponsor or participate in the
Retirement Plan will be calculated in accordance with Exhibit B; the
reduction described in clause "(ii)" of the preceding sentence will apply
only to the extent a Participant has actually participated in the
Retirement Plan.
For purposes of determining benefits under this Article III, a
Participant's Accrued Retirement Pension and Supplemental/Excess Benefit
will be calculated as if they will be paid in the normal form of benefit
(as defined in the Retirement Plan). If a Participant's benefit under the
Retirement Plan is reduced to reflect distributions made before his Normal
Retirement Date or in a form other than the normal form of benefit, his
Supplemental/Excess Benefit also will be reduced in the same manner using
the same actuarial assumptions, tables and factors as those used in the
Retirement Plan. However, if a Participant Severs from Service within two
Years following a Change of Control and begins to receive his
Supplemental/Excess Benefit on or after attaining age 58, his
Supplemental/Excess Benefit will not be reduced to reflect distributions
made before his Normal Retirement Date but will be reduced to reflect
distributions in a form other than the normal form of benefit. Any
reductions in a Participant's actual Accrued Retirement Pension as a result
of a Qualified Domestic Relations Order will be disregarded when
calculating his Supplemental/Excess Benefit.
6. Exhibit B is amended by adding the following at the end of the
existing text:
If or to the extent any of the foregoing terms is also defined
in the Retirement Plan and the term, as defined in the Retirement
Plan, differs from the term as described above, then the definition
contained in the Retirement Plan shall be substituted for the
definition set forth above.
7. Exhibit A is amended in its entirety to read as follows:
Any individual who serves as (i) an Officer of Huffy
Corporation or (ii), a President and General Manager of a Huffy
Corporation operating division or subsidiary.
IN WITNESS WHEREOF, the Sponsor has caused this instrument to be executed this
27th day of June, 1994.
HUFFY CORPORATION
BY /s/ Nancy A. Michaud
---------------------------
Nancy A. Michaud Vice
President - General Counsel
and Secretary
