<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 March 31, 1995
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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
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(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)
(513) 866-6251
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(Registrant's telephone number, including area code)
No Change
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(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: 13,414,931 as of May 5, 1995.
"Index of Exhibits" is page 10 herein. Page 1 of 10
<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
March 31,
--------------------------------
1995 1994
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<S> <C> <C>
Net sales $200,653 $189,220
Cost of sales 164,227 153,234
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Gross profit 36,426 35,986
Selling, general and
administrative expenses 27,006 26,381
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Operating profit 9,420 9,605
Other expense
Interest expense 2,309 1,696
Interest income (43) (27)
Other (53) (225)
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Earnings before income taxes 7,207 8,161
Income taxes 2,792 3,316
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Net earnings 4,415 4,845
============== ==============
Earnings per common share:
Weighted average
number of common
shares 134,093,386 14,899,397
============== ==============
Net earnings per
common share $0.33 $0.33
============== ==============
</TABLE>
See accompanying notes to interim consolidated financial statements.
Page 2 of 10
<PAGE> 3
<TABLE>
HUFFY CORPORATION
CONSOLIDATED BALANCE SHEETS
(Dollar Amounts In Thousands)
<CAPTION>
March 31, December 31,
1995 1994
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ASSETS
------
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 5,074 $ 1,604
Accounts and notes receivable, net 149,037 105,802
Inventories 85,801 67,954
Prepaid expenses and federal income taxes 12,849 13,938
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Total current assets 252,761 189,298
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Property, plant and equipment, at cost 201,404 192,856
Less accumulated depreciation and amortization (108,201) (103,256)
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Net property, plant and equipment 93,203 89,600
Excess of cost over net assets acquired, net 25,555 25,755
Deferred federal income taxes 8,719 8,719
Other assets 8,646 8,596
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$388,884 $321,968
========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------
Current liabilities:
Notes payable 43,020 --
Current installments of long-term obligations 5,361 5,300
Accounts payable 71,321 43,853
Accrued expenses 39,002 44,604
Other current liabilities 5,459 5,216
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Total current liabilities 164,163 98,973
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Long-term obligations, less current installments 58,561 58,611
Other long-term liabilities 31,405 30,981
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Total liabilities 254,129 188,565
Shareholders' equity:
Preferred stock -- --
Common stock 16,189 16,166
Additional paid-in capital 60,619 60,155
Retained earnings 94,401 91,089
Less: cost of treasury shares (36,454) (34,007)
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Total shareholders' equity 134,755 133,403
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$388,884 $321,968
========== ==========
</TABLE>
See accompanying notes to interim consolidated financial statements.
Page 3 of 10
<PAGE> 4
<TABLE>
HUFFY CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollar Amounts in Thousands)
<CAPTION>
Three Months Ended
March 31,
------------------------------------
1995 1994
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<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings $ 4,415 $ 4,845
Adjustments to reconcile net earnings to net cash
used in operating activities:
Depreciation and amortization 5,795 5,302
Gain on sale of property, plant and equipment -- (18)
Changes in assets and liabilities:
Accounts and notes receivable, net (43,235) (54,301)
Inventories (17,847) 16,578
Prepaid expenses and Federal income taxes 1,089 1,670
Other assets (355) (371)
Accounts payable 27,468 5,916
Accrued expenses (5,602) (2,181)
Other current liabilities 347 865
Other long-term liabilities 424 (896)
Other (69) (156)
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Net cash used in operating activities (27,570) (22,747)
=====================================================================================================================
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (8,901) (4,350)
Proceeds from sale of property, plant and equipment 8 1,540
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Net cash used in investing activities (8,893) (2,810)
=====================================================================================================================
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from short-term borrowings 43,020 23,750
Issuance of long-term obligations 30 3
Reduction of long-term debt (19) (662)
Issuance of common shares 487 124
Purchase of treasury shares (2,447) (65)
Dividends paid (1,138) (1,247)
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Net cash provided by financing activities 39,933 21,903
=====================================================================================================================
Net change in cash and cash equivalents 3,470 (3,654)
Cash and cash equivalents:
Beginning of the year 1,604 4,140
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End of the three month period $ 5,074 $ 486
=====================================================================================================================
</TABLE>
See accompanying notes to interim consolidated financial statements.
Page 4 bof 10
<PAGE> 5
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, 1994 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
March 31, 1995. All such adjustments are of a normal recurring
nature.
Note 2: 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.
Page 5 of 10
<PAGE> 6
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
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AND RESULTS OF OPERATIONS
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THREE MONTHS ENDED MARCH 31, 1995
COMPARED TO THE
THREE MONTHS ENDED MARCH 31, 1994
(Dollar Amounts in Thousands, Except Per Share Data)
NET EARNINGS
- ------------
Net earnings for Huffy Corporation ("Huffy" or "Company") for the quarter ended
March 31, 1995 were $4,415, compared to $4,845 for the same period last year.
Net earnings per share for the first quarter of 1995 and 1994 were $.33 per
common share. Operating profits in the Recreation and Leisure Time Products
segment were slightly above those reported for the first quarter of 1994.
Operating profits in the Services for Retail and Juvenile Products segments
were slightly below net earnings reported for the first quarter of 1994.
NET SALES
- ---------
Net sales for the quarter ended March 31, 1995 were $200,653, up 6.0% from the
net sales level of $189,220 for the same quarter in 1994. Net sales increased
for all reportable segments with the greatest increase in the Recreation and
Leisure Time Products segment. Huffy Bicycle Company had record unit shipments
in February and March while True Temper Hardware Company had increased sales in
long-handled lawn and garden tools. In the Services for Retail segment, Huffy
Service First had record sales due primarily to increased market share in the
non-bike product assembly market segment.
GROSS PROFIT
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Gross profit for the quarter ended March 31, 1995 was $36,426, up 1.2% from the
$35,986 achieved in the first quarter of 1994. Expressed as a percentage of
net sales, gross profit for the first quarter of 1995 was 18.2% compared to
19.0% for the first quarter of 1994. Gross profit as a percentage of net sales
was flat for the Recreation and Leisure Time Products segment. Within this
segment, Huffy Bicycle Company continued to experience declining profit margins
due primarily to a highly competitive retail environment and increased
competition from China. Gross margins declined slightly at Huffy Sports
Company as a result of a shift in mix to lower margin product.
Page 6 of 10
<PAGE> 7
Declining gross margin percentages at Huffy Bicycle Company and Huffy Sports
Company were offset by continued improvement at True Temper Hardware Company.
True Temper Hardware Company benefited from additional improvements in
operating efficiency and market share gains in the long-handled garden tools
segment, as well as a $1,587 reduction in environmental reserves resulting from
the favorable resolution of certain contractual issues related to the Company's
purchase of True Temper Hardware Company in 1990.
Soft retail sales and a strong commitment to maintain market share caused the
gross profit margin percentage to decline in the Juvenile Products segment.
Gross profit margin percentages decreased slightly in the Services for Retail
segment due to lower sales volume and increased labor costs at Washington
Inventory Service. Huffy Service First had an increase in gross margin
percentage, primarily due to volume-related efficiencies and growth in the
non-bike product assembly and merchandising markets.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
- --------------------------------------------
Selling, general and administrative expenses were $27,006 for the first quarter
of 1995, compared to $26,381 for the same period of 1994. Expressed as a
percentage of net sales, selling, general and administrative expenses were
13.5% for the first quarter of 1995 versus 13.9% for the same period in 1995.
The decrease in expense as a percentage of net sales is primarily due to
reduced levels of promotional accruals at Huffy Bicycle Company.
LIQUIDITY AND CAPITAL RESOURCES
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There have been no other significant changes in the Company's liquidity and
capital resources as of March 31, 1995 from those discussed in the Company's
Annual Report on Form 10-K for the year ended December 31, 1994. The Company's
balance sheet reflects fluctuations in both current assets and current
liabilities attributable to seasonal changes in the operations of its
businesses.
INTEREST EXPENSE
- ----------------
Interest expense for the first quarter of 1995 was $2,309, which is $613 or
36.1% higher than the first quarter of 1994. This increase is due primarily to
the issuance of Industrial Development Revenue Bonds used to finance the
acquisition of the Company's Farmington, Missouri bicycle facility in the third
quarter of 1994.
Page 7 of 10
<PAGE> 8
PART II -- OTHER INFORMATION
ITEM 4: SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
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The Annual Meeting of Shareholders of the Company was held on April
28, 1995. At such meeting the Shareholders of the Company elected as
Directors Linda B. Keene, Geoffrey W. Smith, and Thomas C. Sullivan,
each for a three year term expiring in 1998, and Patrick W. Rooney
for a one year term expiring in 1996. Shares were voted as follows:
FOR: Linda B. Keene (12,037,344), Patrick W. Rooney (12,040,468),
Geoffrey W. Smith (12,055,843), and Thomas C. Sullivan (12,061,167);
WITHHELD (INCLUDING BROKER NON-VOTES): Linda B. Keene (297,967),
Patrick W. Rooney (294,843), Geoffrey W. Smith (279,468), and Thomas
C. Sullivan (274,144).
In addition, the Shareholders approved a proposal to adopt Amended
Articles of Incorporation of the Company in a vote in which
11,866,311 shares were voted for adoption, 379,626 cast against, and
89,374 cast to abstain (including broker non-votes).
The Shareholders also approved a proposal to adopt an amended Code of
Regulations of the Company in a vote in which 11,848,196 shares were
voted for adoption, 386,033 cast against, and 101,082 cast to abstain
(including broker non-votes).
Further, the Shareholders also ratified the appointment of KPMG Peat
Marwick as the Company's independent public accountants for calendar
year 1995. In connection with such ratification, there were
12,257,631 shares voted for ratification, 46,390 cast against, and
31,290 cast to abstain (including broker non-votes).
ITEM 6: EXHIBITS AND REPORTS ON FORM 8-K
--------------------------------
a. Exhibits - The Exhibits, as shown in the "Index of Exhibits",
attached hereto as page 10, 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 8 of 10
<PAGE> 9
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
May 8, 1995 /s/ Timothy G. Howard
- ----------- --------------------------
Date Timothy G. Howard
Vice President - Corporate Controller
(Principal Accounting Officer)
Page 9 of 10
<PAGE> 10
INDEX OF EXHIBITS
Exhibit
No. Item
- ------- --------------------------------------------
(2) 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) Not applicable
Page 10 of 10
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
COMPANY'S CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE MONTHS ENDED MARCH 31,
1995 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> MAR-31-1995
<CASH> 5,074
<SECURITIES> 0
<RECEIVABLES> 150,753
<ALLOWANCES> (1,716)
<INVENTORY> 85,801
<CURRENT-ASSETS> 252,761
<PP&E> 201,404
<DEPRECIATION> (108,201)
<TOTAL-ASSETS> 388,884
<CURRENT-LIABILITIES> 164,163
<BONDS> 58,561
<COMMON> 16,189
0
0
<OTHER-SE> 118,566
<TOTAL-LIABILITY-AND-EQUITY> 388,884
<SALES> 200,653
<TOTAL-REVENUES> 200,653
<CGS> 164,227
<TOTAL-COSTS> 164,227
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 323
<INTEREST-EXPENSE> 2,309
<INCOME-PRETAX> 7,207
<INCOME-TAX> 2,792
<INCOME-CONTINUING> 4,415
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4,415
<EPS-PRIMARY> $.33
<EPS-DILUTED> 0
</TABLE>
