<PAGE> 1
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 [FEE REQUIRED]
For the fiscal year ended December 31, 1994
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
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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: (513) 866-6251
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which registered
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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 28, 1995, was $196,798,047.
The number of shares outstanding of each of the registrant's classes of Common
Stock, as of February 28, 1995, was 13,392,963.
"Index of Exhibits" at page 18 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, 1994. 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 28, 1995, definitive copies of which have been
filed with the Commission. 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 Recreation and Leisure Time Products, Juvenile 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; Thornton, Colorado;
Farmington, Missouri; Miamisburg and Celina, Ohio; Camp Hill and Harrisburg,
Pennsylvania; Waukesha and Suring, Wisconsin; and Whites Cross, Cork, Ireland.
The general development of business within each business segment (Recreation
and Leisure Time Products, Juvenile 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.
RECREATION AND LEISURE TIME PRODUCTS
Huffy Bicycle Company, Huffy Sports Company, and True Temper Hardware
Company comprise the Recreation and Leisure Time Products segment of
the Company. Bicycles are one of the principal products produced
within the business segment. Bicycles sold to high volume retailers
represented 40.6 percent, 44.2 percent, and 44.6 percent of
consolidated revenues of the Company for the years ended December 31,
1994, 1993, and 1992, respectively. Sales to high volume retailers of
basketball backboards, poles, goals and related products represented
11.2 percent of consolidated revenues of the Company for the year
ended December 31, 1994. Sales to high volume retailers of lawn and
garden tools, which are also principal products within the business
segment, represented 12.1 percent, 13.6 percent, and 15.6 percent of
consolidated revenues of the Company for the years ended December 31,
1994, 1993, and 1992, respectively. Although to date the export
business is not significant, the companies in the Recreation and
Leisure Time Products segment participate in various foreign markets
and are actively involved in expanding export volume.
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, capacity and market share, 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; and a series of
popular children's 16" sidewalk bicycles. Huffy(R) bicycles are
extensively advertised and are sold predominantly through
national and regional high volume retailers, a distribution
network accounting for approximately 75 to 80 percent of all
bicycles sold in the United States. Over 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 Waukesha, Wisconsin, is the leading supplier
of basketball backboards, poles, goals, and
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related products for use at home. 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. The Company acquired the True Temper
Hardware business from certain affiliates of Black & Decker,
Inc. in 1990. 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
extensively advertised and are sold both directly, and through
wholesale distributors, to national and regional high volume
retailers and hardware stores. Over 82 percent of True Temper
Hardware's products are sold under the True Temper(R) name; the
remainder are sold under the Jackson(R) name, or other names, or
under private labels. During 1994, the Company substantially
completed a restructuring 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. The Company recorded a credit to
the restructure provision of $934,000. Information regarding
the Company's restructure of True Temper Hardware Company is
incorporated herein by reference to page 24 and note 2 to the
consolidated financial statements on page 32 of the Company's
Annual Report to Shareholders for the year ended December 31,
1994.
b. Suppliers
---------
Basic materials such as raw steel, steel tubing, plastic, 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", "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 either 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
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believe that anyone has rights to either the trademark "Huffy"
or the trademark "True Temper" for the products in connection
with which such trademarks are used.
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 targeted marketing efforts of 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 home
use, agricultural, industrial, and commercial markets
competitively priced, high quality, innovative products. The
loss by the Recreation and Leisure Time Products segment of
either of its two largest customers could result in a
short-term, material adverse effect on the segment.
JUVENILE PRODUCTS
The Juvenile Products segment is comprised of Gerry Baby Products
Company and Gerry Wood Products Company (collectively, the "Gerry
Companies"). Although to date the export business is not significant,
the Gerry Companies participate in various foreign markets and are
actively involved in expanding export volume.
a. Products, Marketing and Distribution
------------------------------------
Juvenile Products include products sold under two prominent
brand names: "Gerry" and "Snugli". Gerry(R) baby products
include a wide range of market entries, including car seats,
infant carriers, frame carriers, security gates, toilet
trainers, electronic baby
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monitors, and a broad line of various wood juvenile products
including portable cribs, changing tables and security gates
sold under the "Nu-Line" brand name prior to 1992 and under the
Gerry(R) brand name since 1992. Snugli(R) baby products include
infant carriers.
All of the juvenile products have wide distribution; the
products are marketed through all of the retail channels that
sell juvenile products: mass merchants, toy chains, warehouse
clubs, catalog showrooms, national and regional retailers, and
specialty shops. Juvenile Products represented 16.9 percent,
16.4 percent, and 16.4 percent of consolidated revenues of the
Company for the years ended December 31, 1994, 1993, and 1992,
respectively.
The Juvenile Products segment has been developed through
selective acquisitions and internal growth and expansion. It is
comprised of two direct subsidiaries of the Company: Gerry Baby
Products Company ("GBPC") and Gerry Wood Products Company.
GBPC's headquarters and principal manufacturing facilities are
located in Thornton, Colorado. Gerry Wood Products Company is a
manufacturer of juvenile wooden products and is located in
Suring, Wisconsin. In 1994, the Company discontinued its
assembly operations at its facilities located in Vancouver,
British Columbia which prior thereto had been operated through
an indirect subsidiary of the Company, Snugli-Canada, Ltd. In
1987, GBPC entered into a joint venture known as Takata-Gerico
Corporation ("TGC"), with Takata Corporation of Japan, to
manufacture children's car seats in the United States for
distribution by GBPC. The joint venture was subsequently
terminated by the parties' mutual agreement in 1992, and in
connection with such termination GBPC purchased certain assets
of TGC.
b. Suppliers
---------
Basic materials such as steel and aluminum tubing, plastic,
wood, fabric, and resins used in domestic manufacturing
operations are purchased primarily from domestic sources. All
electronic products and some sewn products are imported.
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
"Gerry" and "Snugli") and other proprietary rights of the Gerry
Companies in this segment are deemed important to the Company.
However, the loss of any rights under any individual patent,
trademark (other than "Gerry" or "Snugli"), or other proprietary
right used by this segment would not have a material adverse
effect on the Company or this segment. The loss of the
registered trademark "Gerry" or "Snugli" could have a material
adverse effect on the Company and this segment, but the Company
has no reason to believe anyone has rights to either the "Gerry"
or "Snugli" trademark for the products in connection with which
either is used.
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d. Seasonality and Inventory
-------------------------
The Gerry Companies do not consider their backlog of orders
significant to this business segment, due to the relatively
short lapse of time between placement of orders for products and
shipments. Because of the rapid delivery requirements of their
customers, the Gerry Companies maintain sufficient quantities of
inventories of finished goods to meet their customers'
requirements. Most products within this business segment are
not seasonal.
e. Competition and Customers
-------------------------
There are numerous juvenile products competitors in the U.S.
market, four of which are deemed significant. The Gerry
Companies believe they are competitive because of their
continued efforts to provide innovative new products of high
quality at competitive costs and to support their products with
outstanding customer service. The loss by the Gerry Companies
of their largest customer could have a short-term, 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 merchandise services provided by WIS and HSF to
their customers represented 19.2 percent, 15.8 percent, and 15.6
percent of consolidated revenues of the Company for the years ended
December 31, 1994, 1993, and 1992, respectively.
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 assembly, repair, and 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.
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 mass
retailers, drug stores, home centers, sporting goods stores,
specialty stores and grocery stores. WIS operates from 115
offices nationwide.
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.
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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. WIS and HSF believe they remain competitive due to
their nationwide network of operations, competitive pricing and
full service. The loss by either WIS or HSF of its largest
customer could result in a short-term, material adverse effect
on the segment.
Sales to Wal-Mart Corporation, Kmart Corporation and Toys "R" Us aggregated
over ten percent or more of the Company's consolidated revenues from each such
customer for the year ended December 31, 1994, and the loss of any one of these
customers could have a short-term, 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, 1994, was
6,955.
<TABLE>
ITEM 2. PROPERTIES: Location and general character of the principal plants
and other materially important physical properties of the Company as
of January 1, 1995.
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
Owned or
Expiration
Building Area Date
Location Description (Sq. Ft.) of Lease
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
San Diego, California Offices (Services for Retail) 30,000 2004(1)
Thornton, Colorado Offices, manufacturing and 386,000 2001(2)
warehouse facility
(Juvenile Products)
Farmington, Missouri Offices, manufacturing and 412,052 2014(3)
warehouse facility
(Recreation and Leisure
Time Products)
Celina, Ohio Offices, manufacturing and 822,000 Owned
warehouse facility
(Recreation and
Leisure Time Products)
Miamisburg, Ohio Offices and display 47,000 2003(4)
facilities (Corporate,
Recreation and Leisure
Time Products)
Miamisburg, Ohio Offices and warehouse 34,500 1996(1)
facility (Services for
Retail)
</TABLE>
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<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
Owned or
Expiration
Building Area Date
Location Description (Sq. Ft.) of Lease
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Camp Hill, Offices, manufacturing and 391,690 2012(5)
Pennsylvania distribution facility
(Recreation and Leisure
Time Products)
Harrisburg, Offices and manufacturing 254,329 Owned
Pennsylvania facility (Recreation and
Leisure Time Products)
Suring, Wisconsin Offices and manufacturing 140,000 Owned
facility (Juvenile Products)
Waukesha, Wisconsin Offices and manufacturing 123,500 1996(1)
facility (Recreation and
Leisure Time Products)
Whites Cross, Cork, Offices and manufacturing 70,000 Owned
Ireland facility (Recreation and
Leisure Time Products)
<FN>
(1) Subject to two consecutive options to renew for additional terms of five
years each.
(2) Subject to an option to purchase at the expiration of the lease.
(3) 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.
(4) 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 on the term for up to
12 months or until the property is sold, whichever time period is shorter.
(5) Subject to one option to renew for an additional term of five years and an
option to purchase.
</TABLE>
There are no encumbrances on the Celina, Ohio; Harrisburg, Pennsylvania;
Suring, Wisconsin; 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; Celina, Ohio; and Suring, Wisconsin, manufacturing facilities
normally operate on a two full shift basis, with third shift operations
scheduled as needed to meet seasonal production requirements. The Thornton,
Colorado; Harrisburg, Pennsylvania; and Waukesha, Wisconsin manufacturing
facilities normally operate on a two full shift basis. The Whites Cross, Cork,
Ireland, manufacturing facility normally operates on a one full shift basis.
ITEM 3. LEGAL PROCEEDINGS
The Company is not a party, nor is its property subject, to any material
pending legal proceedings.
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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 are incorporated herein by reference to pages
44 and 45 and notes 5 and 6 to the consolidated financial statements on pages
33 through 35 of the Company's Annual Report to Shareholders for the year ended
December 31, 1994.
ITEM 6. SELECTED FINANCIAL DATA
Selected unaudited financial data for each of the last 10 calendar years are
incorporated herein by reference to pages 20 and 21 of the Company's Annual
Report to Shareholders for the year ended December 31, 1994.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Discussion and analysis of financial condition and results of operations are
incorporated herein by reference to pages 22 through 25, and note 4 to the
consolidated financial statements on page 33 of the Company's Annual Report to
Shareholders for the year ended December 31, 1994.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The financial information included in the Company's Annual Report to
Shareholders for the year ended December 31, 1994, is set forth on pages 19 and
36 through 43 thereof and is 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
incorporated herein by reference to the section entitled ELECTION OF DIRECTORS
and the table therein contained in the Company's Proxy Statement for its 1995
Annual Meeting of Shareholders.
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<TABLE>
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 February 20, 1995, were as follows:
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
Name Age Position Officer Since
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Thomas A. Frederick 40 Vice President - Finance, December, 1994
Chief Financial Officer
Timothy G. Howard 48 Vice President - Controller September, 1978
W. Anthony Huffman 52 Vice President - Corporate March, 1982
Affairs
Nancy A. Michaud 48 Vice President - General February, 1993
Counsel and Secretary
Richard L. Molen 54 Chairman of the Board, January, 1979
President and Chief
Executive Officer
Gary E. Morin 45 Executive Vice President and February, 1993
Chief Operating Officer
George A. Plotner 43 Vice President - Human Resources March, 1992
Pamela J. Whipps 41 Vice President - Treasurer February, 1994
</TABLE>
Prior to being elected an Executive Officer in December, 1994, Mr. Frederick
was President and General Manager of Huffy Service First, Inc. from 1992; prior
thereto, he served as Vice President - Controller of Huffy Service First, Inc.
from 1990 to 1992. Prior to being elected Vice President - General Counsel and
Secretary, Ms. Michaud was Vice President - General Counsel and Assistant
Secretary of the Company from February, 1994 to July, 1994; prior thereto, Ms.
Michaud was General Counsel and Assistant Secretary of the Company from
February, 1993 to February, 1994; prior thereto, Ms. Michaud served as Senior
Counsel of the Company. Prior to being elected Chairman of the Board,
President and Chief Executive Officer of the Company in 1994, Mr. Molen was
President and Chief Executive Officer of the Company from 1993 to 1994; prior
thereto, Mr. Molen served as President and Chief Operating Officer of the
Company. Prior to being elected Executive Vice President and Chief Operating
Officer in February, 1995, Mr. Morin was Executive Vice President of the
Company from February, 1993 to February, 1995; prior thereto, he served as
President and General Manager of Huffy Bicycle Company from 1992 to 1993; prior
thereto, he served as President and General Manager of Washington Inventory
Service from 1991 to 1992; prior thereto, he served as Vice President -
Finance, Chief Financial Officer and Treasurer of the Company. Prior to being
elected an Executive Officer in 1992, Mr. Plotner was Vice President - Quality
and Human Resources of Huffy Bicycle Company from 1989 to 1992, and prior
thereto, Vice President - Human Resources of such company. Prior to being
elected Vice President - Treasurer, Ms. Whipps was Treasurer and Director of
Investor Relations from February, 1994 to November, 1994; prior thereto, Ms.
Whipps served as Assistant Treasurer and Manager Investor Relations of the
Company from 1990 to February, 1994.
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ITEM 11. EXECUTIVE COMPENSATION
Information on executive compensation is incorporated by reference to the
sections entitled EXECUTIVE COMPENSATION and the tables therein, contained on
pages 12 through 15 in the Company's Proxy Statement for its 1995 Annual
Meeting of Shareholders. 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 REPORT OF
COMPENSATION COMMITTEE OF BOARD OF DIRECTORS ON EXECUTIVE COMPENSATION which
begins on page 8 and ends on page 12 and the graph which is set forth on page
16 in the Company's Proxy Statement for its 1995 Annual Meeting of Shareholders
are not deemed to be incorporated by reference in this Form 10-K.
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 February 8, 1995,
is incorporated herein by reference to the section entitled SECURITY OWNERSHIP
OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT, and the table therein, contained
on pages 6 through 8 in the Company's Proxy Statement for its 1995 Annual
Meeting of Shareholders.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Information on certain transactions with management is incorporated herein by
reference to the section entitled CERTAIN RELATIONSHIPS AND OTHER RELATED
TRANSACTIONS contained on page 12 in the Company's Proxy Statement for its 1995
Annual Meeting of Shareholders.
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, 1994, and
1993.
Consolidated Statements of Operations for the years ended
December 31, 1994, 1993, and 1992.
Consolidated Statements of Cash Flows for the years ended
December 31, 1994, 1993, and 1992.
Consolidated Statements of Shareholders' Equity for the
years ended December 31, 1994, 1993, and 1992.
Notes to Consolidated Financial Statements.
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The Annual Report to Shareholders for the year ended December 31,
1994, 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, 1994, 1993, and 1992.
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, 1994, the Company filed one
report on Form 8-K, dated December 22, 1994, reporting an Amendment,
dated as of December 9, 1994, to its Rights Agreement, dated as of
December 16, 1988, as amended August 23, 1991, between the Company and
Bank One, Indianapolis, National Association.
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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/ Richard L. Molen Date: March 16, 1995
--------------------------------
Richard L. Molen
Chairman of the Board, President
and Chief Executive Officer
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/ Richard L. Molen Date: March 16, 1995
- ------------------------------------
Richard L. Molen
Chairman of the Board, President and
Chief Executive Officer and Director
(Principal Executive Officer)
/s/ Thomas A. Frederick Date: March 16, 1995
- ------------------------------------
Thomas A. Frederick
Vice President - Finance and Chief
Financial Officer (Principal
Financial Officer)
/s/ Timothy G. Howard Date: March 16, 1995
- ------------------------------------
Timothy G. Howard
Vice President - Controller
(Principal Accounting Officer)
/s/ Thomas D. Gleason Date: February 17, 1995
- ------------------------------------
Thomas D. Gleason, Director
/s/ William K. Hall Date: February 17, 1995
- ------------------------------------
William K. Hall, Director
/s/ Stephen P. Huffman Date: February 17, 1995
- ------------------------------------
Stephen P. Huffman, Director
/s/ Linda B. Keene Date: February 17, 1995
- ------------------------------------
Linda B. Keene, Director
-14-
<PAGE> 15
/s/ Jack D. Michaels Date: February 17, 1995
- -----------------------------------
Jack D. Michaels, Director
/s/ Donald K. Miller Date: February 17, 1995
- -----------------------------------
Donald K. Miller, Director
/s/ James F. Robeson Date: February 17, 1995
- -----------------------------------
James F. Robeson, Director
/s/ Boake A. Sells Date: February 17, 1995
- -----------------------------------
Boake A. Sells, Director
/s/ Geoffrey W. Smith Date: February 17, 1995
- -----------------------------------
Geoffrey W. Smith, Director
/s/ Robin B. Smith Date: February 17, 1995
- -----------------------------------
Robin B. Smith, Director
/s/ Fred G. Wall Date: February 17, 1995
- -----------------------------------
Fred G. Wall, Director
-15-
<PAGE> 16
INDEPENDENT AUDITORS' REPORT
----------------------------
ON FINANCIAL STATEMENT SCHEDULE
-------------------------------
The Board of Directors,
Huffy Corporation:
Under date of February 17, 1995, we reported on the consolidated balance sheets
of Huffy Corporation and subsidiaries as of December 31, 1994, and 1993, 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,
1994, as contained in the 1994 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 1994. In connection
with our audits of the aforementioned consolidated financial statements, we
also have audited the related 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
Cincinnati, Ohio
February 17, 1995
-------------
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. 2-95128) pertaining to the 1984 Stock Option Plan;
(ii) the Form S-8 Registration Statement (No. 33-25487) pertaining to the 1988
Stock Option Plan and Restricted Share Plan; (iii) the Form S-8 Registration
Statement (No. 33-25143) pertaining to the 1987 Director Stock Option Plan;
(iv) the Form S-8 Registration Statement (Nos. 33-28811, 33-42724) pertaining to
the 1989 Employee Stock Purchase Plan; (v) the Form S-8 Registration Statement
(No. 33-44571) pertaining to five company savings plans and (vi) the Form S-8
Registration Statement (No. 33-60900) pertaining to the W.I.S. Savings Plan of
our report dated February 17, 1995, relating to the consolidated balance sheets
of Huffy Corporation and subsidiaries as of December 31, 1994 and 1993 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, 1994,
which report appears in the 1994 Annual Report to Shareholders, which is
incorporated by reference in the Company's 1994 Annual Report on Form 10-K and
our report dated February 17, 1995 relating to the financial statement schedule
for each of the years in the three-year period ended December 31, 1994, which
report appears in the Company's 1994 Annual Report on Form 10-K.
/s/ KPMG PEAT MARWICK LLP
Cincinnati, Ohio
March 15, 1995
-16-
<PAGE> 17
<TABLE>
HUFFY CORPORATION
CONSOLIDATED FINANCIAL STATEMENT SCHEDULE II
VALUATION AND QUALIFYING ACCOUNTS
(DOLLAR AMOUNTS IN THOUSANDS)
<CAPTION>
BALANCE AT ADDITIONS CHARGED BALANCE
BEGINNING TO COSTS AND DEDUCTIONS AT END
OF PERIOD EXPENSES (NOTE) OF PERIOD
--------- ----------------- ---------- ---------
<S> <C> <C> <C> <C>
Reserves deducted from assets to which they apply:
Allowance for doubtful accounts:
Year ended December 31, 1994 $2,382 - (599) 1,783
Year ended December 31, 1993 $2,208 1,921 (1,747) 2,382
Year ended December 31, 1992 $4,941 1,034 (3,767) 2,208
Inventory obsolescence:
Year ended December 31, 1994 $6,171 2,083 (5,411) 2,843
Year ended December 31, 1993 $1,108 7,430[1] (2,367) 6,171[1]
Year ended December 31, 1992 $1,227 999 (1,118) 1,108
Reserves which support the balance sheet
caption, Reserves
Restructuring Reserve:
Year ended December 31, 1994 $9,296 - (7,263) 2,033
Year ended December 31, 1993 -0- 9,296[2] - 9,296
<FN>
Note: Represents accounts written off, less recoveries.
(1) Includes $4,080 of charges for estimated obsolete inventory as a result of
the decision to restructure the Company's lawn and garden tools business.
(2) Represents estimated charges relating to the restructuring of the Company's
lawn and garden tools business.
</TABLE>
-17-
<PAGE> 18
<TABLE>
INDEX TO EXHIBITS
-----------------
<CAPTION>
Exhibit Form 10-K
No. Exhibit
- -------- ------------------------------------------------------------------------------------ ---------
<S> <C> <C>
3.a Amended Articles of Incorporation, dated January 31, 1994 ***
3.b Code of Regulations, as amended, dated April 24, 1987, incorporated by reference to *
Exhibit (3)(b) to Form 10-K for the fiscal year ended December 31, 1987
4.a Specimen Common Stock Certificate of Huffy Corporation, incorporated by reference to *
Exhibit (4)(a) to Form 10-K for the fiscal year ended December 31, 1991
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 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.e 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.f 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.g 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, 1994.
</TABLE>
-18-
<PAGE> 19
<TABLE>
<S> <C> <C>
4.h 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 Deferred Compensation Agreement For Director, as amended, between Huffy Corporation and *
certain of its directors, in substantially the forms incorporated by reference to
Exhibit (x) to Form 10-K for the fiscal year ended June 27, 1980, as amended, and to
Exhibit (1) to Form 10-Q for the fiscal quarter ended September 23, 1983
10.f Form of Amendment to Deferred Compensation Agreement For Director, as amended, dated as *
of April 30, 1991, between Huffy Corporation and a director, incorporated by reference
to Exhibit (10)(o) to Form 10-K for the fiscal year ended December 31, 1991
10.g Form of Deferred Compensation Agreement for Director, incorporated by reference to *
Exhibit (10)(p) to Form 10-K for the fiscal year ended December 31, 1991
10.h Severance Pay Agreements, between Huffy Corporation and certain of its officers, *
as amended, in substantially the forms incorporated by reference to Exhibit (xi) to
Form 10-K for the fiscal year ended June 27, 1980, and to Exhibit 10(n) to Form 10-K
for the fiscal year ended June 26, 1981
* 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, 1994.
</TABLE>
-19-
<PAGE> 20
<TABLE>
<S> <C> <C>
10.i Severance Pay Agreements, dated June 30, 1986, between Huffy Corporation and certain *
of its officers, in substantially the form incorporated by reference to Exhibit (19)(a)
to Form 10-Q for the fiscal quarter ended June 30, 1986
10.j 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.k Long Term Incentive Compensation Program ***
10.l Huffy Corporation 1984 Stock Option Plan, as amended, incorporated by reference *
to Exhibit A to the Company's Proxy Statement, dated September 13, 1984, for the
Annual Meeting of Shareholders held October 19, 1984, and to Exhibit B to the
Company's Proxy Statement, dated March 13, 1992, for the Annual Meeting of
Shareholders held April 24, 1992
10.m 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
10.n 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.o Huffy Corporation 1993 CEO Long-Term Performance Plan, effective as of January 1, *
1993, between Huffy Corporation and Richard L. Molen, incorporated by reference to
Exhibit (10) to Form 10-Q for the fiscal quarter ended June 30, 1993
10.p 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.q 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.r Profit Sharing Bonus Plan of Huffy Corporation for 1994 ***
* 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, 1994.
</TABLE>
-20-
<PAGE> 21
<TABLE>
<S> <C> <C>
10.s 1987 Restricted Stock Unit Agreement, dated as of January 1, 1987, between Huffy *
Corporation and Richard L. Molen, incorporated by reference to Exhibit (10)(dd)
to Form 10-K for the fiscal year ended December 31, 1991
10.t Amendment No. 1 to 1987 Restricted Stock Unit Agreement dated July 12, 1988, *
between Huffy Corporation and Richard L. Molen, incorporated by reference to
Exhibit (10)(cc) to Form 10-K for the fiscal year ended December 31, 1988
10.u Amendment No. 2 to 1987 Restricted Stock Unit Agreement, dated as of April 30, 1991, *
between Huffy Corporation and Richard L. Molen, incorporated by reference to Exhibit
(10)(ff) to Form 10-K for the fiscal year ended December 31, 1991
10.v Amendment No. 3 to 1987 Restricted Stock Unit Agreement dated as of July 12, 1991, *
between Huffy Corporation and Richard L. Molen, incorporated by reference to Exhibit
(10)(gg) to Form 10-K for the fiscal year ended December 31, 1991
10.w 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.x 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.y Second Amendment to Huffy Corporation Supplemental/Excess Benefit Plan, dated as of ***
June 30, 1991
10.z Third Amendment to Huffy Corporation Supplemental/Excess Benefit Plan, dated as of ***
June 27, 1994
10.aa Huffy Corporation Master Benefit Trust Agreement, dated October 1, 1987, between *
Huffy Corporation and Bank One, Dayton, National Association, incorporated by reference
to Exhibit (10)(bb) to Form 10-K for the fiscal year ended December 31, 1987
10.bb Huffy Corporation Second Master Benefit Trust Agreement, dated as of January 1, 1988, *
between Huffy Corporation and Bank One, Dayton, National Association, incorporated by
reference to Exhibit (10)(cc) to Form 10-K for the fiscal year ended December 31, 1987
10.cc Form of First Amendment to Huffy Corporation Second Master Benefit Trust Agreement, *
effective as of January 1, 1988, incorporated by reference to Exhibit (10)(hh) to
Form 10-K for the fiscal year ended December 31, 1990
10.dd 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
* 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, 1994.
</TABLE>
-21-
<PAGE> 22
<TABLE>
<S> <C> <C>
10.ee 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.ff 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.gg 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, and to Exhibit A to the Company's Proxy Statement dated March 13,
1992 for the Annual Meeting of Shareholders held April 24, 1992
10.hh 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.ii Description of Huffy Corporation Executive Automobile Policy ***
OTHER FILINGS
- -------------
13 Certain sections of the Annual Report to Shareholders for fiscal year ended ***
December 31, 1994
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
------------------ ------------------
Gerry Baby Products Company Delaware
Huffy FSC, Inc. Virgin Islands
Huffy International Finance, N.V. Netherland Antilles
Huffy Service First, Inc. Ohio
Gerry Wood Products Company Wisconsin
Snugli-Canada, Ltd. British Columbia, Canada
The Huffman Manufacturing Company Ohio
True Temper Hardware Company Ohio
Washington Inventory Service California
27 Financial Data Schedule ***
<FN>
* 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, 1994.
</TABLE>
-22-
<PAGE> 1
Exhibit (3)(a)
CERTIFICATE OF AMENDMENT
TO
AMENDED ARTICLES OF INCORPORATION
OF
HUFFY CORPORATION
RICHARD L. MOLEN, President and Chief Executive Officer, and
NANCY A. MICHAUD, Secretary, of HUFFY CORPORATION, an Ohio corporation for
profit, do hereby certify that at a meeting of the Board of Directors of said
Corporation, duly called and held on the 9th day of December, 1994, at which
all of the Directors were present, the following resolution amending the
Amended Articles of Incorporation was adopted by the affirmative vote of eleven
of the twelve Directors of the Corporation, pursuant to the authority granted
to the Board of Directors by the Corporation's Amended Articles of
Incorporation, Article Fourth, Section 2, under and pursuant to Section
1701.70(B)(1) of the Ohio Revised Code:
RESOLVED, that Article Fourth, Section 4 is hereby amended in
its entirety by substituting the following terms and
provisions of Series C Preferred Stock in place of the prior
terms and provisions thereof.
Section 4. ADDITIONAL TERMS AND PROVISIONS OF
SERIES C PREFERRED STOCK.
In addition to the express terms set forth in Section 2 of this
Article Fourth which are applicable to all series of Preferred Stock,
additional express terms of the Series C Preferred Stock are as
follows:
(a) The designation of such series shall be Series C
Cumulative Preferred Stock ("Series C Preferred Stock") and such
series shall consist of 200,000 shares. Such number of shares may be
increased or decreased by resolution of the Board of Directors;
provided, that no decrease shall reduce the number of shares of Series
C Preferred Stock to a number less than the number of shares then
outstanding plus the number of shares reserved for issuance upon the
exercise of outstanding options, rights or warrants or upon the
conversion of any outstanding securities issued by the corporation
convertible into Series C Preferred Stock.
(b) The holders of shares of Series C Preferred Stock
shall be entitled to receive, as and when declared by the Board of
Directors, out of funds legally available for the payment thereof,
quarterly dividends payable in cash on the 1st day of February, May,
August and November in each year (each such date being referred to
herein as a "Quarterly Dividend Payment Date"), commencing on the first
Quarterly Dividend Payment Date after the first issuance of a share or
fraction of a share of Series C Preferred Stock, in an amount per
share (rounded to the nearest cent) equal to the greater of (a) Ten
Dollars ($10.00) or (b) subject to the provision for adjustment
hereinafter set forth, 100
<PAGE> 2
times the aggregate per share amount of all cash dividends, and 100
times the aggregate per share amount (payable in kind) of all non-cash
dividends or other distributions, other than a dividend payable in
shares of Common Stock or a subdivision of the outstanding shares of
Common Stock (by reclassification or otherwise), declared on the
Common Stock since the immediately preceding Quarterly Dividend
Payment Date or, with respect to the first Quarterly Dividend
Payment Date, since the first issuance of any share or fraction of a
share of Series C Preferred Stock. In the event the corporation shall
at any time declare or pay any dividend on the Common Stock payable in
shares of Common Stock, or effect a subdivision or combination or
consolidation of the outstanding shares of Common Stock (by
reclassification or otherwise than by payment of a dividend in shares
of Common Stock) into a greater or lesser number of shares of Common
Stock, then in each such case the amount to which holders of shares of
Series C Preferred Stock were entitled immediately prior to such event
under clause (b) of the preceding sentence shall be adjusted by
multiplying such amount by a fraction, the numerator of which is the
number of shares of Common Stock outstanding immediately after such
event and the denominator of which is the number of shares of Common
Stock that were outstanding immediately prior to such event.
(c) The corporation shall declare a dividend or
distribution on the Series C Preferred Stock as provided in paragraph
(b) of this Section immediately after it declares a dividend or
distribution on the Common Stock (other than a dividend payable in
shares of Common Stock) ; provided that, in the event no dividend or
distribution shall have been declared on the Common Stock during the
period between any Quarterly Dividend Payment Date and the next
subsequent Quarterly Dividend Payment Date, a dividend of Ten Dollars
($10.00) per share on the Series C Preferred Stock shall nevertheless
be accrued and payable on such subsequent Quarterly Dividend Payment
Date.
(d) Dividends shall begin to accrue and be cumulative on
outstanding shares of Series C Preferred Stock from the Quarterly
Dividend Payment Date next preceding the date of issue of such shares,
unless the date of issue of such shares is prior to the record date
for the first Quarterly Dividend Payment Date, in which case dividends
on such shares shall begin to accrue from the date of issue of such
shares, or unless the date of issue is a Quarterly Dividend Payment
Date or is a date after the record date for the determination of
holders of shares of Series C Preferred Stock entitled to receive a
quarterly dividend and before such Quarterly Dividend Payment Date, in
either of which events such dividends shall begin to accrue and be
cumulative from such Quarterly Dividend Payment Date. Accrued but
unpaid dividends shall not bear interest. Dividends paid on the
shares of Series C Preferred Stock in an amount less than the total
amount of such dividends at the time accrued and payable on such
shares shall be allocated pro rata on a share-by-share basis among all
such shares at the time outstanding. The Board of Directors may fix a
record date for the determination of holders of shares of Series C
Preferred Stock entitled to receive payment of a dividend or
distribution declared thereon, which record date shall be not more
than 60 days prior to the date fixed for the payment thereof.
<PAGE> 3
(e) Whenever quarterly dividends or other dividends or
distributions payable on the Series C Preferred Stock as provided in
Section 4(b) of this Article Fourth are in arrears, thereafter and
until all accrued and unpaid dividends and distributions, whether or
not declared, on shares of Series C Preferred Stock outstanding shall
have been paid in full, the corporation shall not:
(i) declare or pay dividends, or make any other
distributions, on any shares of stock ranking
junior (either as to dividends or upon
liquidation, dissolution or winding up) to
the Series C Preferred Stock;
(ii) declare or pay dividends, or make any other
distributions, on any shares of stock ranking
on a parity (either as to dividends or upon
liquidation, dissolution or winding up) with
the Series C Preferred Stock, except
dividends paid ratably on the Series C
Preferred Stock and all such parity stock on
which dividends are payable or in arrears in
proportion to the total amounts to which the
holders of all such shares are then entitled;
(iii) redeem or purchase or otherwise acquire for
consideration shares of any stock ranking
junior (either as to dividends or upon
liquidation, dissolution or winding up) to
the Series C Preferred Stock, provided that
the Corporation may at any time redeem,
purchase or otherwise acquire shares of any
such junior stock in exchange for shares of
any stock of the Corporation ranking junior
(either as to dividends or upon dissolution,
liquidation or winding up) to the Series C
Preferred Stock; or
(iv) redeem or purchase or otherwise acquire for
consideration any shares of Series C
Preferred Stock, or any shares of stock
ranking on a parity with the Series C
Preferred Stock, except in accordance with a
purchase offer made in writing or by
publication (as determined by the Board of
Directors) to all holders of such shares upon
such terms as the Board of Directors, after
consideration of the respective annual
dividend rates and other relative rights and
preferences of the respective series and
classes, shall determine in good faith will
result in fair and equitable treatment among
the respective series or classes.
(f) The corporation shall not permit any subsidiary of
the corporation to purchase or otherwise acquire for consideration any
shares of Series C Preferred Stock, or any shares of stock ranking on
a parity with the Series C Preferred Stock, unless the corporation
could, under Section 3(e) of this Article Fourth purchase or
otherwise acquire such shares at such time and in such manner.
<PAGE> 4
(g) Any shares of Series C Preferred Stock purchased or
otherwise acquired by the corporation in any manner whatsoever shall
be retired and cancelled promptly after the acquisition thereof.
Except as contemplated herein in this Article Fourth, all such shares
shall upon their cancellation become authorized but unissued shares of
Preferred Stock and may be reissued as part of a new series of
Preferred Stock subject to the conditions and restrictions on issuance
set forth herein or as otherwise required by law.
(h) Upon any liquidation, dissolution or winding up of
the corporation, no distribution shall be made (1) to the holders of
shares of stock ranking junior (either as to dividends or upon
liquidation, dissolution or winding up) to the Series C Preferred
Stock unless, prior thereto, the holders of shares of Series C
Preferred Stock shall have received One Hundred Dollars ($100.00) per
share, plus an amount equal to accrued and unpaid dividends and
distributions thereon, whether or not declared, to the date of such
payment, provided that the holders of shares of Series C Preferred
Stock shall be entitled to receive an aggregate amount per share,
subject to the provision for adjustment hereinafter set forth, equal
to 100 times the aggregate amount to be distributed per share to
holders of shares of Common stock or (2) to the holders of shares of
stock ranking on a parity (either as to dividends or upon liquidation,
dissolution or winding up) with the Series C Preferred Stock, except
distributions made ratably on the Series C Preferred Stock and all
such parity stock in proportion to the total amounts to which the
holders of all such shares are entitled upon such liquidation,
dissolution or winding up. In the event the corporation shall at any
time declare or pay any dividend on the Common Stock payable in shares
of Common Stock, or effect a subdivision or combination or
consolidation of the outstanding shares of Common Stock (by
reclassification or otherwise than by payment of a dividend in shares
of Common Stock) into a greater or lesser number of shares of Common
Stock, then in each such case the aggregate amount to which holders of
shares of Series C Preferred Stock were entitled immediately prior to
such event under the proviso in clause (1) of the preceding sentence
shall be adjusted by multiplying such amount by a fraction the
numerator of which is the number of shares of Common Stock outstanding
immediately after such event and the denominator of which is the
number of shares of Common Stock that were outstanding immediately
prior to such event.
(i) In case the corporation shall enter into any
consolidation, merger, combination or other transaction in which the
shares of Common Stock are exchanged for or changed into other stock
or securities, cash and/or any other property, then in any such case
each share of Series C Preferred Stock shall at the same time be
similarly exchanged or changed into an amount per share, subject to
the provision for adjustment hereinafter set forth, equal to 100 times
the aggregate amount of stock, securities, cash and/or any other
property (payable in kind), as the case may be, into which or for
which each share of Common Stock is changed or exchanged. In the
event the corporation shall at any time declare or pay any dividend on
the Common Stock payable in shares of Common Stock, or effect a
subdivision or combination or consolidation of the outstanding shares
of Common Stock (by reclassification or otherwise than by payment of a
dividend in shares of Common Stock) into a greater or lesser number of
shares of Common Stock, then in each such case the amount set forth in
the preceding sentence with respect to the exchange
<PAGE> 5
or change of shares of Series C Preferred Stock shall be adjusted by
multiplying such amount by a fraction, the numerator of which is the
number of shares of Common Stock outstanding immediately after such
event and the denominator of which is the number of shares of Common
Stock that were outstanding immediately prior to such event.
(j) The shares of Series C Preferred Stock shall not be
redeemable.
(k) The Series C Preferred Stock shall rank, with respect
to the payment of dividends and the distribution of assets, pari passu
to all series of any other class of the corporation's Preferred Stock.
IN WITNESS WHEREOF,RICHARD L. MOLEN, President and Chief Executive
Officer, and NANCY A. MICHAUD, Secretary, of HUFFY CORPORATION, acting for and
on behalf of the Corporation, have hereunto subscribed their names this
30th day of January, 1995.
/s/ Richard L. Molen
-------------------------------------
Richard L. Molen
President and Chief Executive Officer
/s/ Nancy A. Michaud
-------------------------------------
Nancy A. Michaud
Secretary
<PAGE> 1
Exhibit (10)(k)
LONG TERM INCENTIVE PLAN
------------------------
POLICY
- ------
<TABLE>
CERTAIN OFFICERS AND HUFFY COMPANY PRESIDENTS SHALL PARTICIPATE IN A LONG TERM
INCENTIVE PLAN OF COMPENSATION. THE PURPOSE OF THE LONG TERM INCENTIVE PLAN
SHALL BE TO PROVIDE AN INCENTIVE FOR LONG TERM PERFORMANCE, BE COMPETITIVE WITH
THE MARKETPLACE, AND PROMOTE STOCK OWNERSHIP.
<CAPTION>
Award as a % of
Average 3 Year Salary Midpoint
------------------------------
Target Maximum
I. PARTICIPANTS ------ -------
------------
<S> <C> <C> <C>
A. Chairman and President 50% 100%
Executive Vice President 34% 68%
B. Vice President-General Counsel & 17.5% 35%
Secretary
Vice President-Human Resources
Vice President-Corporate Affairs
Vice President-Finance and CFO
Vice President-Controller
Treasurer and Director, Investor
Relations
President & General Manager - HBC
President & General Manager - HSC
President & General Manager - GBPC
President & General Manager - HSF
President & General Manager - WIS
President & General Manager - TTH
</TABLE>
II. MEASUREMENT:
-----------
Based on long term performance as measured 50% on average Company
performance during a three year cycle against average internal ROE
goal, and 50% on average Company performance as measured against
average Standard and Poor 400 Industrial ROE Average for the three
year period.
<TABLE>
A. Award Cycle
-----------
The award cycle shall be based on the average of the results
at the end of each of the three calendar years in the cycle.
Examples of award cycles under this plan are as follows:
<S> <C>
1991 - 1993
1992 - 1994
1993 - 1995
1994 - 1996
</TABLE>
<PAGE> 2
B. Definitions
-----------
HUFFY AVERAGE ROE1: Average of actual ROE for each of the
three years in the cycle. Formula for ROE is:
PROFIT AFTER TAX, AFTER COST OF PLAN*
------------------------------------
AVERAGE OF BEGINNING AND ENDING
COMMON SHAREHOLDERS'S EQUITY OF EACH YEAR
*the Board of Directors may at its discretion make an
adjustment for extraordinary items of such magnitude that
not to adjust would distort the purpose of the plan.
INTERNAL ROE GOAL: The ROE goal set by the Board of Directors
for the three year cycle.
S & P ROE GOAL: Average of the mean ROE for the companies in
the S & P 400 Industrials as reported for each of the three
years in the award cycle.
C. Award Scales*
------------
<TABLE>
<CAPTION>
50% of Award 50% of Award
-------------------------------------------------------------------------------------------------------
3 year average ROE vs. ROE goal set for each 3 year average ROE vs. 3 year average S & P 400
cycle** Industrials for each cycle**
Actual ROE Actual ROE
versus % Award versus % Award
Goal Earned S & P Average Earned
------------------------ --------- ------------- ---------
<S> <C> <C> <C>
Greater than 2 Points Greater than 2 Points
Below 0% Below 0%
-2 50% -2 50%
-1 75% -1 75%
TARGET EQUAL TO 100% TARGET EQUAL TO 100%
+1 120% +1 120%
+2 140% +2 140%
+3 160% +3 160%
+4 180% +4 180%
+5 200% +5 200%
<FN>
* Scale between points is linear
**Calendar 1990-1992, 1991-1992, 1992-1993, 1992-1994, etc.
(1) Note: Huffy Average ROE shown above is for award cycles beginning in
1990 and after. For annual cycles beginning prior to 1990, Huffy Average ROE
utilized is:
PROFIT AFTER TAX, AFTER COST OF PLAN
------------------------------------
COMMON SHAREHOLDER EQUITY AT THE BEGINNING OF EACH YEAR
</TABLE>
<PAGE> 3
III. PAYMENT
A. Timing
------
On September 1 following the completion of each award cycle or
as soon thereafter as practicable.
B. Form
----
Payment shall be 100% cash.
C. Eligibility for Payment
-----------------------
To be eligible to participate, the employee must have been on
the Company payroll and in an eligible position as of the
first day of the first calendar year of the cycle.
To be eligible to receive payment, participant must be on
Company payroll or in one of the following categories at the
time payment is made (and in addition may not have been
employed by a competitor since termination of employment with
the Company):
- On Company disability plan
- On Normal Retirement under the Company's Retirement Plan
- On Early Retirement under the Company's Retirement Plan
with the Company's written consent
- Have died after end of award cycle but before payment is
made
Participants who terminate employment due to any of these
causes shall be eligible for fractional awards for the next
two Award Cycles as follows:
A. Employed first two calendar years of Award Cycle -
66-2/3%
B. Employed first calendar year of Award Cycle - 33-1/3%
IV. CALCULATIONS
Awards under this Plan are to be based upon participant's Average
Actual Base Salary, calculated as the average of his/her actual
salary on the following dates:
1. First day of first calendar year in three-year award cycle
2. First day of second calendar year in three-year award cycle
3. First day of third calendar year in three-year award cycle
Participants who move between impact levels during a 3 year Award
Cycle will obtain a weighted average award based on their period of
service during such Award Cycle (expressed in quarters of a year) in
each impact Level.
<PAGE> 4
V. ADMINISTRATION -- Administrator of the plan shall be the
Compensation Committee of the Board of Directors who can at any
time, with a majority vote, terminate, amend or make exceptions to
this policy.
VI. DISTRIBUTION -- Restricted to Corporate Officers and Huffy Company
Presidents.
/s/ George A. Plotner /s/ Gary E. Morin
- -------------------------------- -------------------------------------
Vice President - Human Resources Executive Vice President
/s/ Richard L. Molen
-------------------------------------
President and Chief Executive Officer
<PAGE> 1
Exhibit (10)(r)
PROFIT SHARING BONUS PLAN
-------------------------
POLICY
- ------
CERTAIN EXEMPT EMPLOYEES OF THE CORPORATION AND ITS SUBSIDIARIES SHALL BE GIVEN
CONSIDERATION FOR PAYMENT UNDER THE CORPORATION'S PROFIT SHARING BONUS PLAN
PROVIDED THEY HAVE COMPLETED SIX (6) MONTHS OF SERVICE BY CALENDAR YEAR END.
PAYMENTS WILL BE CONSIDERED ON THE BASIS OF CORPORATE AND HUFFY COMPANY
FINANCIAL RESULTS AND, FOR SOME POSITIONS, INDIVIDUAL PERFORMANCE AGAINST
OBJECTIVES.
THE SCHEDULES SET FORTH BELOW ARE GUIDELINES ONLY AND PAYMENTS MAY BE MODIFIED
OR OMITTED BY MANAGEMENT, OR BY THE COMPENSATION COMMITTEE OF THE BOARD OF
DIRECTORS, IN THEIR SOLE DISCRETION.
PAYMENTS SHALL BE MADE ONLY TO EMPLOYEES WITH AT LEAST "MEETS SOME BUT NOT ALL
PERFORMANCE REQUIREMENTS" JOB EVALUATION.
<TABLE>
<CAPTION>
Bonus opportunity as a % of
I. Basis and Level of Awards Actual Base Salary
------------------------- -------------------------------
Min. Target Max.
--- ------ ---
<S> <C> <C> <C> <C>
A. Chairman and President
----------------------
Corporate RONA 0 40.0% 80%
Personal Objectives 0 10.0% 20%
--- ----- ----
0% 50.0% 100%
B. Executive Vice President
------------------------
Corporate RONA 0 32.0% 64.0%
Personal Objectives 0 8.0% 16.0%
--- ----- ------
0% 40.0% 80.0%
C. Other Corporate Officers
------------------------
Corporate RONA 0 22.5% 45.0%
Huffy Company Performance* vs. PP 0 1.5% 3.0%
Personal Objectives 0 6.0% 12.0%
--- ----- -----
0% 30.0% 60.0%
<FN>
*Huffy Company Performance as used herein means the principal criteria (Huffy
Company RONA, Huffy Company EBIT-AUC or Huffy Company EBIT) utilized for the
assigned Huffy Company.
</TABLE>
<TABLE>
<CAPTION>
D. Huffy Company Heads
-------------------
<S> <C> <C> <C> <C>
1. HBC*, HSC, and WIS
Corporate RONA 0 6.0% 12.0%
Huffy Company RONA vs. PP 0 18.0% 36.0%
Personal Objectives 0 6.0% 12.0%
----- ----- -----
0% 30.0% 60.0%
<FN>
*HBC President/General Manager also participates in the HBC Gainsharing
Program. Any monies earned under this PSBP will be reduced by an amount equal
to the amount earned under the HBC Gainsharing Program.
</TABLE>
<PAGE> 2
<TABLE>
<S> <C> <C> <C> <C>
2. HSF
Corporate RONA 0 6.0% 12.0%
Huffy Company EBIT-AUC vs. PP 0 18.0% 36.0%
Personal Objectives 0 6.0% 12.0%
----- ----- -----
0% 30.0% 60.0%
3. TTH
Corporate RONA 0 6.0% 12.0%
Huffy Company EBIT vs. PP 0 18.0% 36.0%
Personal Objectives 0 6.0% 12.0%
----- ----- -----
0% 30.0% 60.0%
4. GBPC
Corporate RONA 0 6.0% 12.0%
Huffy Company (without GWPC)
RONA vs. PP 0 14.4% 28.8%
GWPC RONA vs. PP 0 3.6% 7.2%
Personal Objectives 0 6.0% 12.0%
----- ----- -----
0% 30.0% 60.0%
E. Huffy Company Staffs
--------------------
1. HBC**, HSC, WIS
Huffy Company RONA vs. PP 0 12.0% 24.0%
Personal Objectives 0 3.0% 6.0%
----- ----- -----
0% 15.0% 30.0%
<FN>
**HBC Staff also participate in the HBC Gainsharing Program. Any
monies earned under this PSBP will be reduced by an amount equal to
the amount earned under the HBC Gainsharing Program.
</TABLE>
<TABLE>
<S> <C> <C> <C> <C>
2. GWPC Vice President & General Manager
GWPC RONA vs. PP 0 12.0% 24.0%
Personal Objectives 0 3.0% 6.0%
----- ----- -----
0% 15.0% 30.0%
3. TTH Staff and Manager, Cost and
Control
Huffy Company EBIT vs. PP 0 12.0% 24.0%
Personal Objectives 0 3.0% 6.0%
----- ------ -----
0% 15.0% 30.0%
4. HSF Staff
Huffy Company EBIT-AUC vs. PP 0 12.0% 24.0%
Personal Objectives 0 3.0% 6.0%
----- ----- -----
0% 15.0% 30.0%
5. GBPC Staff (excluding GWPC V.P./General Manager)
Huffy Company (without GWPC)
RONA vs. PP 0 9.6% 19.2%
GWPC RONA vs. PP 0 2.4% 4.8%
Personal Objectives 0 3.0% 6.0%
----- ----- -----
0% 15.0% 30.0%
</TABLE>
<PAGE> 3
<TABLE>
<S> <C> <C> <C> <C>
F. Corporate Exempt
----------------
1. Positions with 700 or more Hay points
Corporate RONA 0 12.0% 24.0%
Personal Objectives 0 3.0% 6.0%
----- ----- -----
0% 15.0% 30.0%
2. Positions with less than 700 Hay points
Corporate RONA 0% 10.0% 20.0%
G. Other Exempt
------------
1. Huffy Company Exempt* (except HSF Exempt;
HBC First Line Production and Maintenance
Supervisors; GBPC Exempt; GWPC Exempt;
WIS Field Management (see Policy 701-B
for WIS Field Management personnel) and
Exempt; and TTH Exempt)
Huffy Company RONA vs. PP 0% 10.0% 20.0%
<FN>
*HBC Exempt also participate in the HBC Gainsharing Program. Any
monies earned by HBC Exempt under this PSBP will be reduced by an
amount equal to the amount earned under the HBC Gainsharing Program.
</TABLE>
<TABLE>
<S> <C> <C> <C> <C>
2. HBC First Line Production and Maintenance
Supervisors
Huffy Company RONA vs. PP 0 10.0% 12.0%*
Huffy Company Gainsharing Plan 0 - 12.0%*
----- ----- ------
0% - 20.0%
<FN>
*Either category of bonus payment (Huffy Company RONA vs. PP or
Gainsharing performance) may pay up to a maximum of 12% for the fiscal
year but the maximum total bonus for both categories may not exceed 20%.
</TABLE>
<TABLE>
<S> <C> <C> <C> <C>
3. HSF District Managers
District Gross Field Profit $ vs. PP 0 5.0% 10.0%
Huffy Company EBIT-AUC vs. PP 0 5.0% 10.0%
----- ----- -----
0% 10.0% 20.0%
4. HSF Area Managers
Area Gross Field Margin $ vs. PP 0 5.0% 10.0%
Huffy Company EBIT-AUC vs. PP 0 5.0% 10.0%
----- ----- -----
0% 10.0% 20.0%
5. HSF Other Exempt
Huffy Company EBIT-AUC vs. PP 0% 10.0% 20.0%
</TABLE>
<PAGE> 4
<TABLE>
<S> <C> <C> <C> <C>
6. GBPC Financial Staff (including
all Denver-based MIS, Credit and
Accounting employees except for MIS
LAN Administrator and Cost Accountant)
Huffy Company (without GWPC)
RONA vs. PP 0 8.0% 16.0%
GWPC RONA vs. PP 0 2.0% 4.0%
----- ----- -----
0% 10.0% 20.0%
7. GBPC Director - Sales, GBPC Director -
Marketing, GBPC Director - International
Sales and Marketing, GBPC Sales
Administrator, GBPC Consumer Relations
Supervisor, GBPC Sales Managers, GBPC
Customer Service Manager, GBPC Business
Line Manager for GWPC, GBPC Manager of
Design
Huffy Company (without GWPC)
RONA vs. PP 0 8.0% 16.0%
GWPC RONA vs. PP 0 2.0% 4.0%
----- ----- -----
0% 10.0% 20.0%
8. Other GBPC Exempt
Huffy Company (without GWPC)
RONA vs. PP 0% 10.0% 20.0%
9. GWPC Exempt
GWPC RONA vs. PP 0% 10.0% 20.0%
10. TTH Exempt
TTH EBIT vs. PP 0% 10.0% 20.0%
11. TTH Canadian District Sales Managers
Net Sales $ vs. Sales Objective $* 0% 10.0% 20.0%
-- ----- -----
0% 10.0% 20.0%
<FN>
*Threshold payment of 2% applies when 90% of pre-established Sales Objective $
are attained, 10% when 100% of Sales Objective $ are attained, and 20% when
110% of Sales Objective $ are obtained.
</TABLE>
12. WIS Director - Accounting; WIS Director -
Management Information Systems; WIS Manager -
Payroll; WIS Manager - Accounts Receivable;
WIS Manager - Tax & Financial Analysis;
WIS Manager, Business Systems Development;
WIS Manager - Compensation & Benefits;
WIS Manager - Systems Development;
WIS Manager - Requirements & Testing;
WIS Manager - General Accounting;
WIS Manager - Computer Operations;
WIS National Processing Manager;
WIS Manager - Credit and Collections;
<PAGE> 5
WIS Manager - Employee Relations;
WIS Manager - Operations Support and Services;
WIS Management Information Systems Manager
<TABLE>
<S> <C> <C> <C>
Huffy Company RONA vs. PP 0 10.0% 20.0%
</TABLE>
<TABLE>
<S> <C> <C> <C> <C>
13. WIS Director - Account Management
& Customer Service; WIS National
Account Manager; WIS National Sales
Manager
Huffy Company RONA vs. PP 0 5.0% 10.0%
Sales Volume $ vs. PP 0 5.0% 10.0%
----- ----- -----
0% 10.0% 20.0%
14. Other WIS Exempt (excluding WIS
Field Management)
Huffy Company RONA vs. PP 0 5.0% 10.0%
</TABLE>
II. Corporate Internal Audit Staff
------------------------------
Corporate Internal Audit staff are members of the Corporate Exempt category
and bonus recommendations will generally be made on that basis. Such bonus
recommendations will be subject to approval by the Audit Committee of the
Board of Directors.
<TABLE>
III. Award Scales(1)
------------
<CAPTION>
Corporate RONA % of Targeted
Level Award Earned(2)
------------------------- ---------------
<S> <C> <C>
Under 7.7% -0-
7.7% Threshold 25%
8.4 50
9.0 75
9.7 Target 100
10.4 125
11.2 150
11.9 175
12.7 Maximum 200
</TABLE>
<TABLE>
<CAPTION>
Percent of Targeted Award Earned
--------------------------------
Profit Plan Profit Plan
Huffy Company RONA 5% RONA less
RONA vs. Plan(3) or Greater(2) than 5%(2)
- ------------- ------------- -----------
<S> <C> <C> <C>
Under 90% -0- -0-
90 Threshold 25% 25%
92 40 40
94 55 55
96 70 70
98 85 85
100 Target 100 100
101.5 110 105
103.0 120 110
104.5 130 115
106.0 140 120
107.5 150 125
109.0 160 130
110.5 170 135
112.0 180 140
113.5 190 145
<PAGE> 6
115.0 200 150
116.5 200 155
118.0 200 160
119.5 200 165
121.0 200 170
122.5 200 175
124.0 200 180
125.5 200 185
127.0 200 190
128.5 200 195
130.0+ Maximum 200 200
</TABLE>
<TABLE>
<CAPTION>
HSF % of Targeted
EBIT-AUC vs. Plan Award Earned
----------------- -------------
<S> <C>
Under 90% -0-
90 Threshold 25%
92 40
94 55
96 70
98 85
100 Target 100
101 110
102 120
103 130
104 140
105 150
106 160
107 170
108 180
109 190
110+ Maximum 200
</TABLE>
<TABLE>
<CAPTION>
HSF District Gross % of Targeted
Field Profit $ vs. PP Award Earned(2)
--------------------- ---------------
<S> <C>
Under 90% -0-
90 25%
100 100
110+ 200
</TABLE>
<TABLE>
<CAPTION>
HSF Area Gross Field % of Targeted
Margin $ vs. PP Award Earned
-------------------- ---------------
<S> <C>
Under 90% -0-
90 25%
100 100
110+ 200
</TABLE>
<TABLE>
<CAPTION>
% of Targeted
TTH EBIT vs. Profit Plan Award Earned(2)
------------------------ ---------------
<S> <C>
Less than $ 0 -0-
0 Threshold 25%
$1,300,000 Target 100
$3,000,000+ Maximum 200
</TABLE>
<PAGE> 7
1. The scales are sliding. When actual Corporate RONA is above 8.5% and
falls between the points on the scale, it will be adjusted to the
nearest 1/10th of 1% and interpolated to determine the award level.
When Huffy Company RONA or TTH EBIT or HSF EBIT-AUC falls between the
points on the scale, it will be adjusted to the nearest 1/10th of 1%
and interpolated to determine the award level.
2. % of targeted award earned is used as a multiple of bonus target
which varies by level of employee. Refer to Section I.
3. This scale is applicable to Huffy Company RONA, HSF EBIT-AUC, and
similar Huffy Company performance measures.
IV. Positions Covered
A. Corporate Officers and Huffy Company Presidents
Corporate Officers
------------------
Chairman of the Board
President
Executive Vice President
Vice President - Chief Administrative Officer and Secretary
Vice President - Finance and CFO
Vice President - Corporate Affairs
Vice President - Controller
Vice President - Human Resources
Vice President - General Counsel and Assistant Secretary
Treasurer and Director, Investor Relations
Huffy Company Presidents
------------------------
President and General Manager - Huffy Bicycle Company
President and General Manager - Huffy Sports Company
President and General Manager - Gerry Baby Products Company
President and General Manager - Washington Inventory Service
President and General Manager - Huffy Service First, Inc.
President and General Manager - True Temper Hardware Company
B. Huffy Company Staff
HBC
---
V.P. Operations
V.P. Marketing/Sales and Design
V.P. Controller
V.P. Global Sourcing and Logistics
V.P. Product Engineering
V.P. Human Resources
V.P. International
HSC
---
V.P. Sales
V.P. Controller
V.P. Product Engineering/Quality Assurance
V.P. Manufacturing
V.P. Materials Management
<PAGE> 8
GBPC
----
V.P. Sales/Marketing
V.P. Controller
Sr. V.P. Operations
V.P. Human Resources
V.P. General Manager - GWPC
V.P. Product Design and Engineering
HSF
---
V.P. Operations
V.P. Controller
V.P. Sales/Marketing
V.P. Human Resources
WIS
---
V.P. Operations
V.P. Finance and Controller
V.P. Technology & Information Systems
V.P. Human Resources
V.P. Marketing and Account Management
V.P. Sales
TTH
---
V.P. Sales and Marketing
V.P. Operations
Controller
V.P. Human Resources
Managing Director, TT Ireland
Acting Director, TT Canada
V.P. Materials
V. Individual Personal Objectives
------------------------------
For those individuals who have a portion of their bonus measured on this basis,
the following implementation procedure will be used:
1. Each individual will draw up objectives covering the calendar year
based on supporting the supervisor's objectives and his own.
2. These objectives should have the following characteristics:
a) Not be associated with financial goals in the Profit Plan.
(Financial goals for such things as cost reduction or similar
projects are appropriate goals.)
b) Be as specific and as measurable as to successful attainment
as possible. (A project need not be completed in the calendar
year. The objective can be to obtain a specific status in the
project by calendar year end.)
c) 1) Chairman and President shall each develop no more than
7 to 8 objectives.
2) Other Corporate Officers and Huffy Company Presidents
shall each develop no more than 6 objectives.
3) Huffy Company Staff and Corporate Officer Direct Reports
in positions with 700 or more Hay points shall each
develop no more than 3 objectives.
<PAGE> 9
d) A "degree of difficulty" should be assigned to each objective
on the basis of 1 to 10.
3. The objectives and degrees of difficulty shall be reviewed between
the individual and his supervisor and agreement reached on:
a) Completeness of list
b) State of objectives
c) Degree of difficulty
It is the supervisor's responsibility to ensure that there is some
consistency in the measurement of "degree of difficulty" among all
his subordinates, and the Corporate Officer's responsibility to
review for consistency in measurement of "degree of difficulty"
among Huffy Company Staff personnel within his function.
<TABLE>
4. Personal Objectives Schedule
----------------------------
<S> <C>
Upon Approval by The President's and Executive Vice President's objectives
Compensation shall be communicated to the Corporate Officers and Huffy
Committee Company Presidents promptly following approval by
Compensation Committee of the Board of Directors.
15 days later Corporate Officers and Huffy Company Presidents shall
develop their objectives and circulate them to other
Corporate Officers and Huffy Company Presidents by this
date.
10 days later Corporate Officers' and Huffy Company Presidents'
objectives shall be reviewed with Corporate Officers and
approved by their respective immediate supervisors.
Corporate Officers and Huffy Company Presidents shall
communicate their approved objectives to their respective
Corporate Officer Direct Reports in positions with 700 or
more Hay points ("Corporate Staff") and Huffy Company
Staffs ("Huffy Staff").
30 days later Corporate Staff and Huffy Staff personnel shall have
completed their respective objectives, reviewed them with
the appropriate Corporate Officer (who shall furnish his
comments to such Corporate Staff or Huffy Staff member,
the Huffy Company President and the President) and have them
approved by the Corporate Officer and President with
respect to Corporate Staff and by the Huffy Company
President and the President with respect to Huffy Staff
members.
</TABLE>
<TABLE>
5. Personal Objectives Results Schedule
------------------------------------
<S> <C>
First Friday in Corporate Staff and Huffy Staff personnel shall submit
December their results for the year ending for evaluation to the
appropriate Corporate Officer and, with respect to Huffy
Staff, to the Huffy Company President.
</TABLE>
<PAGE> 10
<TABLE>
<S> <C>
10 days later Corporate Officers shall have reviewed results submitted
to them by such Corporate Staff and Huffy Staff members
and submitted their comments to the Corporate Staff or
Huffy Staff member, the Huffy Company President and the
President with respect to Huffy Staff, and the President
with respect to Corporate Staff.
10 days later CEO provides Compensation Committee of Board of Directors
with his results for evaluation and approval.
5 days later Corporate Staff results shall be approved by Corporate
Officers. Huffy Staff personnel results shall be approved
by Corporate Officers and Huffy Company Presidents.
Corporate Officers and Huffy Company Presidents shall
submit their results for the year ending to their
immediate supervisor for evaluation and approval.
Feb. 1 The evaluation and approval of personal objectives results
are to be completed.
</TABLE>
6. The participant shall evaluate his own performance and then submit
the evaluation to his supervisor who shall review and approve the
evaluation. This score is not binding. The supervisor shall use
his judgment to arrive at a final rating. However, ONLY
performance on the written objectives shall be evaluated, not
performance on any other matters.
7. Each individual shall be informed by his supervisor of his
performance rating but only AFTER all approvals have been secured.
8. Notwithstanding the foregoing, payments for personal
objectives performance are expressly conditioned upon and made
subject to the following base financial criteria:
<TABLE>
<CAPTION>
(A) CORPORATE OFFICERS AND ELIGIBLE CORPORATE OFFICER DIRECT REPORTS
----------------------------------------------------------------
<S> <C>
Corporate RONA less than 50% of Target RONA for - No bonus shall be paid for
Corporate bonus purposes performance of personal
objectives
Corporate RONA at least 50%, but less than 75%, - 50% of calculated bonus for
of Target RONA for Corporate bonus purposes performance of personal
objectives shall be paid
Corporate RONA 75% or greater of Target RONA for - 100% of calculated bonus
Corporate bonus purposes for performance of
personal objectives
</TABLE>
<TABLE>
<CAPTION>
(B) HUFFY COMPANY PRESIDENT AND STAFF
---------------------------------
<S> <C>
Huffy Company RONA, EBIT or EBIT-AUC less than 50% - No bonus shall be paid for
of approved Huffy Company Profit Plan performance of personal
objectives
<PAGE> 11
Huffy Company RONA, EBIT or EBIT-AUC at least 50%, - 50% of calculated bonus for
but less than 75%, of approved Huffy Company Profit performance of personal
Plan objectives shall be paid
Huffy Company RONA, EBIT or EBIT-AUC 75% or greater - 100% of calculated bonus
of approved Huffy Company Profit Plan for performance of personal
objectives shall be paid
</TABLE>
VI. Implementation
--------------
1. Eligibility
-----------
All exempt employees on the payroll on or before the first business day
of the calendar year shall be eligible for consideration for a full
bonus opportunity.
Hires: Employee coming on the payroll after the first business day of
the calendar year but on or before the first business day of
July will be eligible for consideration for one-half the
annual bonus opportunity.
Exception: HSF Regional Operations, District and Area
Managers, and eligible WIS personnel hired
after January 1 of the calendar year shall
be eligible for consideration for the
percentage of annual bonus opportunity shown
below:
<TABLE>
<CAPTION>
Percentage of Annual
Hire Date Bonus Opportunity
--------- --------------------
<S> <C>
During 1st quarter 75%
During 2nd quarter 50%
During 3rd quarter 25%
During 4th quarter 0%
</TABLE>
Transfers, Promotions or Demotions: Individuals transferred,
promoted or demoted during the calendar year shall have bonus
opportunity as follows:
<TABLE>
<CAPTION>
Calculation Based on
--------------------
Old Oppor. New Oppor.
--------- ----------
Old Actual New Actual
----------- ----------
Base Salary Base Salary
----------- -----------
Old. Opp. Level New Opp. Level
--------------- -------------
<S> <C> <C>
Transferred, Promoted or Demoted
During 1st Quarter 25% 75%
During 2nd Quarter 50% 50%
During 3rd Quarter 75% 25%
During 4th Quarter 100% 0%
<FN>
Note: Non-exempt and/or hourly employees promoted to exempt
positions are eligible for bonus consideration as above
but only for those quarters in which they held exempt
positions. Also, status changes (including transfers,
promotions and demotions, but excluding new hires) for
bonus eligible employees at WIS which are effective for
the first pay period beginning on or after the first day
of the quarter shall be treated for bonus purposes as if
they were effective the first day of the quarter.
</TABLE>
<PAGE> 12
Terminations: To be eligible to receive the Profit Sharing
payment for a calendar year, an employee must be
on the active payroll at the time payment for
that calendar year is made OR HAVE BEEN
TERMINATED DUE TO A CURTAILMENT OF PRODUCTION
BETWEEN JULY 1 OF THAT CALENDAR YEAR AND THE DATE
OF BONUS PAYMENT, HAVING MET ALL ELIGIBILITY
REQUIREMENTS OF THE PLAN AND HAVING PERFORMED ALL
DUTIES AND RESPONSIBILITIES IN AT LEAST AN
AVERAGE MANNER. UNDER THESE CIRCUMSTANCES, SUCH
EMPLOYEES MUST HAVE BEEN ON THE PAYROLL AT THE
BEGINNING OF THE CALENDAR YEAR IN ORDER TO
QUALIFY FOR BONUS FOR THAT CALENDAR YEAR.
APPROVAL OF THE CEO IS REQUIRED IN ALL SUCH
CASES. EXEMPT EMPLOYEES TERMINATED DUE TO A
CURTAILMENT OF PRODUCTION SHALL BE ELIGIBLE FOR
BONUS OPPORTUNITY AS FOLLOWS:
<TABLE>
<CAPTION>
Bonus as percent payment
------------------------
Termination Date of full bonus opportunity
---------------- -------------------------
<S> <C>
July 1 - September 30 50%
---------------------
October 1 - December 31 75%
-----------------------
January 1 - date of payment 100%
---------------------------
</TABLE>
Death or Retirement: Employees who retired or died during
or after the calendar year for which
bonus is being calculated and who
met the requirement of being on the
active payroll during the year will
be given consideration for a bonus
payment on basis of the following
percentage of full bonus
opportunity: retired or died in 1st
Qtr - 25%; 2nd Qtr 50%; 3rd Qtr -
75%; 4th Qtr - 100%. Payment for
deceased employees shall be made to
the beneficiary designated under the
Salaried Employees Group Term Life
Insurance Plan.
Active payroll is defined as
receiving wages (recorded on the
Federal W-2 form) from the
Corporation or one of the Huffy
Companies. Except for those
terminated or retiring or deceased
employees described above, employees
absent for any reason and not
receiving wages (as defined above)
are not considered on the active
payroll.
Exception to the eligibility requirements must be approved by the
CEO at the time approval is obtained for transfer or hire.
2. Payment
-------
Except as noted below, payment for Profit Sharing shall be annual
and shall occur in March of each year for the prior calendar year's
results.
3. Calculations
------------
All bonus calculations will be rounded up to the nearest $25.00
increment and the minimum bonus payment to be paid will be $125.00
per employee, provided employee is eligible for bonus and such
bonus is approved.
<TABLE>
<CAPTION>
Definitions
-----------
<S> <C>
Corporate RONA Profit after tax after cost of plan plus tax
-------------- affected interest divided by the twelve (12)
month rolling average of total assets less
current liabilities excluding all interest
bearing debt.
Huffy Company Tax affected earnings before interest and
------------- taxes excluding interest income divided by the
RONA twelve (12) month rolling average of total
---- assets other than cash less current
liabilities excluding all interest bearing
debt.
</TABLE>
<PAGE> 13
<TABLE>
<S> <C>
Asset Usage Charge to Huffy Company at a 15% pretax rate
Charge multiplied by the change between Huffy Company
------ actual Average Net Assets and Huffy Company
planned Average Net Assets. Huffy Company
Average Net Assets equal average total assets
minus average current liabilities (excluding
all interest bearing liabilities and
intercompany accounts).
TTH EBIT Earnings before interest and taxes.
--------
HSF EBIT-AUC
TTH EBIT-AUC Earnings before interest and taxes minus an
------------ Asset Usage Charge.
Actual Base Employee's actual base salary as of January 1
Salary of the calendar year for which bonus is
----- calculated.
Midpoint of Midpoint of Salary Range as of January 1 of
Salary Range the calendar year for which bonus is
------------ calculated.
Promotion 15% upward difference in Hay points (see
--------- Corporate Policy 113).
Demotion 15% downward difference in Hay points (see
-------- Corporate Policy 113).
Transfer A change in position which does not constitute
-------- a promotion or demotion.
Average Usage If Huffy Company actual Average Net Assets
Charge Rules exceed the profit plan for 1994, the excess
(Applicable to over the target will be extended times Huffy
HSF & TTH) Corporation's average cost of capital (15%).
---------- The resulting cost for excess asset usage will
be deducted from the EBIT earned by the Huffy
Company during 1994.
If Huffy Company actual Average Net Assets
are lower than the profit plan for 1994, the
savings will be extended times Huffy
Corporation's average cost of capital, and the
resulting savings from asset efficiency will
be added to the EBIT earned by the Huffy
Company during 1994.
</TABLE>
Distribution of This Policy
- ---------------------------
Restricted to Corporate Officers, Huffy Company Presidents, Huffy Company
Staff, and Corporate Officers Direct Reports in positions with 700 or
more Hay points, except for Policy 701-B which is restricted to Corporate
Officers and President and General Manager of WIS.
/s/ George A. Plotner /s/ Gary E. Morin
- ---------------------------------- --------------------------------------
Vice President - Human Resources Executive Vice President
/s/ Richard L. Molen
--------------------------------------
President and Chief Executive Officer
<PAGE> 14
PROFIT SHARING BONUS PLAN ADDENDUM
----------------------------------
1. HBC
A. For purposes of 1994 bonus calculation, Huffy Company RONA vs.
PP for HBC shall exclude all costs associated with the start-
up of the new production facility in Farmington, Missouri.
B. For purposes of 1994 bonus calculation, the payment of
Personal Objectives (POs) for the HBC President and General
Manager, and HBC Huffy Company staff, to the extent they
pertain to the Farmington, Missouri facility, will not be
subject to the minimum attained Huffy Company RONA requirement
in order to be eligible for payment of Personal Objectives.
For example, an individual whose Personal Objectives are
dedicated 100% to the Farmington facility will be eligible for
a maximum award for his/her Personal Objectives. Conversely,
to the extent that any individual is assigned POs that do not
pertain to Farmington, those POs unrelated to Farmington will
be subject to the normal Huffy Company RONA attainment
requirements as per policy in order to be eligible for
payment. In such instances, actual bonus paid for POs will be
calculated on a pro-rata basis. For example, assume a Huffy
Company Staff Member has POs worth a total of 40 points and
that 20 points are related to Farmington and 20 points are
non-Farmington related. Then three percentage points would be
payable related to Farmington and three percentage points
would be payable related to the non-Farmington goals. Assume
that a perfect score of 20 is achieved on the Farmington goals
and 18 of 20 points is achieved on the non-Farmington goals
and that HBC has attained at least 75% of its approved profit
plan RONA. In this case, the Huffy Company Staff Member would
be eligible to be paid 100% of his Farmington goals or 3% and
90% of his/her non-Farmington goals or 2.7% for a combined
total of 5.7% versus a maximum opportunity of 6.0%.
/s/ George A. Plotner /s/ Gary E. Morin
- ---------------------------------- --------------------------------------
Vice President - Human Resources Executive Vice President
/s/ Richard L. Molen
--------------------------------------
President and Chief Executive Officer
<PAGE> 1
Exhibit (10)(y)
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 401(k) or Section 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 R. Wieland
Vice President - General Counsel
and Secretary
<PAGE> 1
Exhibit (10)(z)
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 text:
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
ARTICLE III
-----------
AMOUNT OF SUPPLEMENTAL/EXCESS BENEFIT
-------------------------------------
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:
<PAGE> 3
Exhibit A
---------
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
<PAGE> 1
Exhibit (10)(ii)
EXECUTIVE AUTOMOBILE POLICY
---------------------------
POLICY
- ------
IT IS THE POLICY OF HUFFY CORPORATION AND ITS SUBSIDIARY
CORPORATIONS (THE "CORPORATION") TO PROVIDE A MONTHLY
AUTOMOBILE ALLOWANCE TO ITS OFFICERS AND HUFFY COMPANY
PRESIDENTS TO:
1. RECOGNIZE THEIR SENIOR EXECUTIVE STATUS WITHIN THE
CORPORATION;
2. ASSIST THEM FINANCIALLY WITH THE PURCHASE OR LEASE OF
AN AUTOMOBILE SUITED TO THE EXECUTIVE'S INDIVIDUAL
TASTES; AND
3. ENABLE THE EXECUTIVE TO REGULARLY REPLACE THEIR
CURRENT AUTOMOBILE WITH A NEW VEHICLE.
Implementation
- --------------
1. AUTOMOBILE SELECTION GUIDELINES
-- Any American or foreign made automobile.
-- However, the factory suggested retail price
("sticker price") for the automobile selected must
not be less than the sticker price of the following
automobile of the same model year.
-- Chairman and President: Buick Park Avenue
4 door sedan.
-- Other Corporate Officers and Huffy Company
Presidents: Buick Century Limited 4 door sedan.
2. ADMINISTRATION
-- The individual Corporate Officer or Huffy Company
President shall be responsible for purchasing or
leasing the automobile, for which he will receive a
monthly allowance in an amount to be determined
from time to time by the Company.
-- Service and maintenance, insurance, and oil and gas
shall be paid for by the individual Corporate
Officer or Huffy Company President, but he shall be
reimbursed at a rate per mile to be determined from
time to time by the Company for mileage related to
Company business or participation in civic and
cultural affairs in the community.
-- Automobiles must be replaced as frequently as the
executive chooses but in no event not less frequently
than 60 months.
<PAGE> 2
3. USAGE
-- The Company shall have no responsibility for any
executive's obligations or liabilities with respect
to any automobile except for the allowances and
mileage reimbursement specifically described
herein.
-- The interior and exterior of the car shall be kept
in a clean, presentable condition at all times.
Distribution of this Policy
- ---------------------------
Restricted to Corporate Officers and Huffy Company Presidents.
/s/ George A. Plotner /s/ Gary E. Morin
- ------------------------------- ----------------------------------------
Vice President - Human Executive Vice President
Resources
/s/ Richard L. Molen
----------------------------------------
President and Chief Executive Officer
<PAGE> 1
EXHIBIT 13
INDEPENDENT AUDITORS' REPORT
The Board of Directors and
Shareholders, Huffy Corporation:
We have audited the accompanying consolidated balance sheets of Huffy
Corporation and subsidiaries as of December 31, 1994 and 1993, 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, 1994. These
consolidated financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these consolidated
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Huffy Corporation
and subsidiaries at December 31, 1994 and 1993, and the results of their
operations and their cash flows for each of the years in the three-year period
ended December 31, 1994 in conformity with generally accepted accounting
principles.
As discussed in Note 1 to the consolidated financial statements, the Company
adopted the provisions of the Financial Accounting Standards Boards Statement
of Financial Accounting Standards No. 112, effective January 1, 1993 and
Statement Nos. 106 and 109, effective January 1, 1992.
/s/ KPMG Peat Marwick LLP
KPMG Peat Marwick LLP
February 17, 1995
Cincinnati, Ohio
<PAGE> 2
<TABLE>
TEN-YEAR FINANCIAL AND OPERATING REVIEW (UNAUDITED)
(Dollar amounts in thousands, except per share data)
<CAPTION>
1994 1993 1992
<S> <C> <C> <C>
SUMMARY OF OPERATIONS
Net sales $719,485 $757,863 $703,345
Gross profit 128,607 138,288 122,608
Selling, general, and administrative expenses 96,696 102,493 95,163
Operating income [1] 32,845 7,040 27,445
Other (income) expense, net [2] (688) 1,379 (497)
Earnings before interest, taxes and
cumulative effect of accounting changes 33,533 5,661 27,942
Interest expense, net 5,897 8,739 9,321
Earnings (loss) before income taxes and
cumulative effect of accounting changes 27,636 (3,078) 18,621
Income taxes (benefit) 10,209 755 6,778
Earnings (loss) before cumulative effect of accounting changes 17,427 (3,833) 11,843
Cumulative effect of accounting changes, net of income taxes -- (1,084) (7,628)
Net earnings(loss) 17,427 (4,917) 4,215
- ---------------------------------------------------------------------------------------------------------
Earnings (loss) per common share:[3]
Primary 1.20 (.38) .33
Fully diluted [4] 1.20 (.38) .33
- ---------------------------------------------------------------------------------------------------------
Common dividends declared 4,861 4,175 3,809
Common dividends per share .34 .31 .30
Capital expenditures for plant and equipment 35,737 21,322 23,914
Average common and common equivalent shares outstanding:
Primary 14,519 13,240 12,903
Fully diluted 14,519 13,240 12,903
- ---------------------------------------------------------------------------------------------------------
FINANCIAL POSITION AT YEAR END
Total assets 321,968 319,337 335,328
Working capital 90,325 93,595 91,308
Net investment in plant and equipment 89,600 73,647 80,020
Notes payable -- 3,500 18,975
Long-term obligations 58,611 43,211 74,918
Redeemable preferred stock -- -- --
Shareholders' equity 133,403 136,029 117,687
Equity per share 9.85 9.27 9.35
- ---------------------------------------------------------------------------------------------------------
CASH FLOWS
Net cash provided by operating activities 43,009 41,422 11,417
Net cash used in investing activities (34,012) (21,182) (22,374)
Net cash provided by (used in) financing activities (11,533) (19,589) 5,984
Net change in cash and cash equivalents (2,536) 651 (4,973)
- ---------------------------------------------------------------------------------------------------------
RATIOS AND MISCELLANEOUS
Net profit margin (before cumulative effect of accounting changes) 2.4% N/A 1.7%
Average working capital turnover 7.8 8.2 7.4
Return on net assets 8.9% N/A 4.1%
Return on beginning shareholders' equity 12.8% N/A 3.4%
Current ratio 1.9 1.9 1.8
Debt/total capital 32.4% 26.6% 40.5%
- ---------------------------------------------------------------------------------------------------------
Number of common shareholders 4,196 3,760 3,883
Number of employees [5] 7,912 8,100 6,339
20
<PAGE> 3
<CAPTION>
1991 1990 1989 1988 1987 1986 1985
<S> <C> <C> <C> <C> <C> <C> <C>
SUMMARY OF OPERATIONS
Net sales $678,936 $516,744 $449,389 $335,713 $340,551 $294,698 $263,935
Gross profit 132,485 102,545 84,638 62,847 67,328 54,145 45,393
Selling, general, and administrative expenses 92,499 69,957 57,972 45,511 46,726 40,280 38,671
Operating income [1] 39,986 32,588 26,666 17,336 20,602 13,865 6,722
Other (income) expense, net [2] 482 (370) (605) 5,704 352 82 4,830
Earnings before interest, taxes and
cumulative effect of accounting changes 39,504 32,958 27,271 11,632 20,250 13,783 1,892
Interest expense, net 8,047 4,390 3,467 3,856 3,048 2,873 2,293
Earnings (loss) before income taxes and
cumulative effect of accounting changes 31,457 28,568 23,804 7,776 17,202 10,910 (401)
Income taxes (benefit) 11,630 10,561 8,811 3,240 7,111 5,003 (646)
Earnings (loss) before cumulative effect of accounting changes 19,827 18,007 14,993 4,536 10,091 5,907 245
Cumulative effect of accounting changes, net of income taxes -- -- -- -- -- -- --
Net earnings(loss) 19,827 18,007 14,993 4,536 10,091 5,907 245
- -----------------------------------------------------------------------------------------------------------------------------------
Earnings (loss) per common share:[3]
Primary 1.52 1.37 1.17 .36 .81 .49 .02
Fully diluted [4] 1.41 1.28 1.11 .36 .78 .48 .02
- -----------------------------------------------------------------------------------------------------------------------------------
Common dividends declared 3,740 3,461 3,071 2,613 2,333 2,148 2,137
Common dividends per share .29 .27 .24 .20 .19 .18 .18
Capital expenditures for plant and equipment 24,509 9,832 14,143 14,786 6,806 7,638 5,356
Average common and common equivalent shares outstanding:
Primary 13,056 13,157 12,882 12,641 12,441 12,074 12,095
Fully diluted 15,114 15,179 14,271 13,376 13,415 13,112 12,095
- -----------------------------------------------------------------------------------------------------------------------------------
FINANCIAL POSITION AT YEAR END
Total assets 316,577 297,310 234,532 183,255 149,259 141,267 129,264
Working capital 99,110 87,558 80,189 45,884 61,649 54,161 50,034
Net investment in plant and equipment 72,226 65,423 45,659 41,360 27,895 27,495 26,679
Notes payable -- -- -- -- -- -- --
Long-term obligations 80,208 84,348 57,525 37,196 15,181 18,427 19,529
Redeemable preferred stock -- -- -- -- -- -- --
Shareholders' equity 124,997 106,747 95,645 80,776 78,914 68,848 64,678
Equity per share 9.68 8.39 7.43 6.50 6.35 5.68 5.38
- -----------------------------------------------------------------------------------------------------------------------------------
CASH FLOWS
Net cash provided by operating activities 15,169 16,356 24,344 23,862 10,697 7,433 8,476
Net cash used in investing activities (21,784) (61,974) (12,642) (38,215) (6,428) (5,710) (965)
Net cash provided by (used in) financing activities (6,774) 15,596 24,819 16,869 (3,159) (2,861) (10,838)
Net change in cash and cash equivalents (13,389) (30,022) 36,521 2,516 1,110 (1,138) (3,327)
- -----------------------------------------------------------------------------------------------------------------------------------
RATIOS AND MISCELLANEOUS
Net profit margin (before cumulative effect of accounting changes) 2.9% 3.5% 3.3% 1.4% 3.0% 2.0% 0.1%
Average working capital turnover 7.3 6.2 6.9 6.2 5.9 5.7 4.9
Return on net assets 11.5% 13.8% 13.7% 6.7% 12.5% 8.8% 1.8%
Return on beginning shareholders' equity 18.6% 18.8% 18.6% 5.7% 14.7% 9.1% 0.4%
Current ratio 2.0 2.0 2.1 1.8 2.2 2.1 2.2
Debt/total capital 40.3% 45.7% 40.5% 33.3% 17.3% 22.2% 24.3%
- ------------------------------------------------------------------------------------------------------------------------------------
Number of common shareholders 3,016 2,410 2,473 2,180 2,173 2,615 3,019
Number of employees [5] 6,330 5,736 4,650 3,571 3,330 2,943 3,073
<FN>
[1] Operating income in 1993 includes a provision of $28,755 for restructuring the Company's lawn and garden tools business.
[2] Other (income) expense, net includes the following: August 1985 - $4,288 cost for discontinuance of product line; October
1988 - $5,584 loss on sale of capital stock of Raleigh Cycle Company of America.
[3] The 1993 net loss per share is computed using actual average outstanding shares. In 1992 the assumed conversion of the 7.25%
Convertible Subordinated Debentures was antidilutive, and therefore, the per share amounts reported for primary and fully
diluted are the same.
[4] The 1993 loss per share before cumulative effect of accounting changes is ($.30). The 1992 fully diluted earnings per share
before the cumulative effect of accounting changes is $.89.
[5] 1994 and 1993 numbers represent average annual full-time equivalent employees, while 1992 and prior employment numbers
represent year end employment levels.
N/A = Not Applicable.
</TABLE>
21
<PAGE> 4
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Dollar amounts in thousands, except per share data)
COMPARISON OF THE YEAR ENDED DECEMBER 31, 1994 TO THE YEAR ENDED DECEMBER 31,
1993
The Company recorded net earnings of $17,427 in 1994, compared to a net
loss of $4,917 in 1993. The 1993 net loss included an after-tax charge of
$20,329 to reflect the restructure of the Company's lawn and garden tools
business, and an after-tax charge of $1,084 to reflect the cumulative effect of
a change in accounting for postemployment benefits upon adoption of Statement
of Financial Accounting Standards (SFAS) No. 112.
Net earnings per share of common stock were $1.20 in 1994 compared to a
net loss per common share of $.38 in 1993. If net earnings (loss) were
adjusted to exclude the impact of the restructuring charge in 1993 and the
cumulative effect of a change in accounting resulting from the adoption of SFAS
No. 112, net earnings per common share on a fully diluted basis would have been
$1.20 in 1993.
NET SALES
Net sales in 1994 were $719,485, a 5.1% decrease from net sales of
$757,863 in 1993. 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, a shift in
product mix to lower priced juvenile bicycles, and intense price competition.
The discontinuance of certain product lines at True Temper Hardware Company in
connection with the restructuring of the Company's lawn and garden tools
business also influenced year to year comparisons. Net sales for the Juvenile
Products segment decreased 2.4% due to a sluggish retail market. In the
Services for Retail segment, net sales were a record $139,637, up 15.1% over
1993. Washington Inventory Service continued to benefit from a market shift to
SKU (Stock Keeping Unit) inventories and cycle inventory counts, and a shift
from in-house inventory crews to outside service crews. Huffy Service First
sales increased due to market penetration in both the consumer product assembly
and in the supplier services businesses.
GROSS PROFIT
Consolidated gross profit for 1994 was $128,607, or 17.9% of net sales,
compared to $138,288, or 18.2% reported for 1993. The decrease in gross profit
occurred primarily in the Recreation and Leisure Time Products segment. Lower
unit volume sales and a shift in sales mix to lower margin juvenile bicycles,
coupled with strong competitive pricing pressure caused gross profit dollars
and percentages to decline at Huffy Bicycle Company. This decline was
partially offset by an increase in gross profit margin at True Temper Hardware
Company. Reductions in fixed manufacturing expenses and improvements in
manufacturing efficiency as a result of restructuring the lawn and garden tools
business were responsible for the improved gross profit margin at True Temper
Hardware Company. Gross profit in the Juvenile Products segment decreased
slightly due to increased expenses associated primarily with rework to improve
new product performance. Gross profit increases in the Services for Retail
segment were primarily a result of increased sales volume.
Consolidated gross profit in total and as a percentage of sales varies
by quarter due to normal seasonal fluctuations at several Huffy companies.
True Temper Hardware Company typically experiences lower sales in the third
quarter due to the seasonal nature of its products. Lower gross profit
percentages in the fourth quarter are typically caused by seasonal fluctuations
at Huffy Bicycle Company and Washington Inventory Service. Huffy Bicycle
Company typically stops production for a period during December to prevent
inventory build-up. The fixed costs associated with this shutdown reduce
fourth quarter profitability. Washington Inventory Service also experiences a
significant unfavorable seasonal impact
22
<PAGE> 5
during the fourth quarter as retailers typically do not conduct inventories
during the Christmas season, causing low fourth quarter sales volume and
reduced gross profit.
SELLING, GENERAL AND
ADMINISTRATIVE EXPENSES
Selling, general, and administrative expenses in 1994 were $96,696, a
decrease of $5,797 or 5.7% from 1993. Reduced selling, general, and
administrative expenses in 1994 are primarily a result of successful cost
reduction efforts and volume related reductions in selling expenses at Huffy
Bicycle Company, coupled with fixed expense reductions made in connection with
the decision to restructure the business and exit certain unprofitable product
lines at True Temper Hardware Company.
NET INTEREST EXPENSE
Net interest expense decreased by 32.5% in 1994 due to the call for
redemption and subsequent conversion of the Company's 7.25% Convertible
Subordinated Debentures in October, 1993, and lower average short-term
borrowings in 1994.
COMPARISON OF THE YEAR ENDED DECEMBER 31, 1993 TO THE YEAR ENDED DECEMBER 31,
1992
The Company recorded a net loss of $4,917 in 1993, compared to net
earnings of $4,215 reported in 1992. The 1993 net loss included an after- tax
charge of $20,329 to reflect the restructure of the Company's lawn and garden
tools business, and an after-tax charge of $1,084 to reflect the cumulative
effect of a change in accounting for postemployment benefits upon adoption of
Statement of Financial Accounting Standards (SFAS) No. 112. The 1992 net
earnings included an after-tax charge of $7,628 to reflect the cumulative
effects of changes in accounting for postretirement benefits and income taxes
upon adoption of SFAS No. 106 and SFAS No. 109.
Net loss per share of common stock was $.38 in 1993 compared to net
earnings per common share of $.33 in 1992. If net earnings (loss) were
adjusted to exclude the impact of the restructuring charge in 1993 and the
cumulative effects of changes in accounting resulting from the adoption of SFAS
No. 112 in 1993, and SFAS No. 106 and SFAS No. 109 in 1992, net earnings per
common share on a fully diluted basis would have been $1.20 in 1993 compared to
$.89 in 1992.
NET SALES
Net sales in 1993 were $757,863, a 7.8% increase over net sales of
$703,345 in 1992. The net sales increase was spread across all business
segments as follows: Recreation and Leisure Time Products, 7.3%; Juvenile
Products, 7.6%; and Services for Retail, 10.7%.
The net sales increase in the Recreation and Leisure Time Products
segment was due primarily to significant sales increases at Huffy Bicycle
Company and Huffy Sports Company. Net sales increased at Huffy Bicycle Company
due to increased demand in the mountain bike category and strong sales of new
bicycle introductions in the youth bike category. Huffy Sports Company
experienced significant sales increases attributable primarily to new product
introductions, particularly portable basketball systems. Net sales decreased
slightly at True Temper Hardware Company primarily due to soft demand for lawn
and garden tool products in the fourth quarter as a result of eliminating
year-end rebates, and reductions of inventory by some of the Company's
important customers.
The Juvenile Products segment had record sales in 1993 due primarily to
new product introductions and increased distribution of existing products.
The net sales increase in the Services for Retail segment occurred
primarily at Huffy Service First with sales volume increases attributable to
increased bicycle assemblies caused by an overall improvement in the bicycle
market and further penetration into additional product category assemblies and
display programs. The net sales increase at Washington Inventory Service was
due to a broadening of the customer base and increased sales to existing
customers.
GROSS PROFIT
Consolidated gross profit for 1993 was $138,288, or 18.2% of net sales,
compared to $122,608, or 17.4% of net sales reported for 1992.
23
<PAGE> 6
Gross profit as a percentage of net sales increased in the Recreation
and Leisure Time Products segment. This increase was caused primarily by the
sale of a more profitable product mix and volume related efficiencies at Huffy
Bicycle Company. This increase was partially offset by a reduction in gross
profit as a percentage of net sales at True Temper Hardware Company due to
competitive pricing pressures, costly customer promotional programs, and
manufacturing inefficiencies. The Services for Retail segment showed an
improved gross profit percentage, primarily as a result of increased volume and
operating efficiencies. Gross profit as a percentage of sales remained at 1992
levels in the Juvenile Products segment.
SELLING, GENERAL, AND
ADMINISTRATIVE EXPENSES
Selling, general, and administrative expenses in 1993 were $102,493, or
13.5% of net sales, compared to $95,163, or 13.5% of net sales in 1992. The
overall dollar increase in selling, general and administrative expenses was
caused primarily by volume related increases in selling expenses, increases in
incentive pay, increases in product engineering costs, and overall inflation.
NET INTEREST EXPENSE
Net interest expense decreased by 6.2% in 1993 due to the call for
redemption and subsequent conversion of the Company's 7.25% Convertible
Subordinated Debentures in October, 1993, lower interest rates for short-term
borrowings in 1993 compared to 1992, and lower average short-term borrowings.
LIQUIDITY AND CAPITAL RESOURCES
The financial condition of the Company remained strong during 1994.
Company operations have historically provided a strong, positive cash flow
which, along with the credit facilities maintained, provides adequate liquidity
to meet the Company's operational needs. Cash provided by operations amounted
to $43,009 in 1994, compared to $41,422 in 1993 and $11,417 in 1992. Operating
cash flows in 1992 were adversely impacted by a significant inventory build-up
near the end of the year. The Company's current ratio (current assets over
current liabilities) was 1.9 at December 31, 1994 and 1993. Committed and
uncommitted short-term lines of credit total $130,000 of which there was no
outstanding balance at December 31, 1994. The Company believes that its
capital structure provides the financial flexibility to obtain additional
financing that may be necessary to fund future growth.
Funds expended for capital additions and improvements totaled $35,737
in 1994 compared to $21,322 in 1993 and $23,914 in 1992. The significant
increase in capital expenditures in 1994 is related to the acquisition and
construction of a new bicycle production facility in Farmington, Missouri. In
1995, capital expenditures are expected to be approximately $27,000 as the
Company completes its new bicycle production facility and continues to invest
in new product and technology.
The Company's debt to total capital ratio increased to 32% at December
31, 1994 compared to 27% at December 31, 1993. This increase was due
primarily to Huffy Bicycle Company's facility expansion which was financed with
$20,000 of Industrial Development Revenue Bonds coupled with a $20,000 stock
repurchase program.
OTHER MATTERS
In the fourth quarter of 1993, the Company recorded a $28,755 ($20,329
after-tax) charge to restructure its lawn and garden tools business. During
1992 and 1993, True Temper Hardware Company experienced operating losses due to
several unprofitable product lines, and inefficiencies in the manufacturing
process. In order to position this business for future profitability,
Management determined it necessary to restructure operations by discontinuing
certain unprofitable products, relocating production to improve manufacturing
efficiency, and writing off impaired assets.
The restructuring plan entailed the shut-down of facilities in
Anderson, South Carolina and certain other locations; discontinuation of
certain unprofitable product lines; and other facilities consolidation. During
1994, the Company substantially completed its restructuring plan and recorded a
credit to the restructure provision of $934.
24
<PAGE> 7
The Company, along with others, has been designated as a potentially
responsible party (PRP) by the U.S. Environmental Protection Agency (the "EPA")
with respect to claims involving the discharge of hazardous substances into the
environment in the Baldwin Park operable unit of the San Gabriel Valley Super
Fund site. Currently, the Company, along with other PRP's, the San Gabriel
Basin Water Quality Authority and numerous local water districts are working
with the EPA on a mutually satisfactory remedial plan.
During 1994, the Company accrued an additional $1,750 for potential
environmental expenditures. The total accrual for estimated environmental
remediation costs related to the Super Fund site and other potential
environmental liabilities is approximately $3,600 at December 31, 1994.
Management expects that the majority of expenditures relating to costs
currently accrued will be made over the next two to ten years. As a result of
factors such as the continuing evolution of environmental laws and regulatory
requirements, the availability and application of technology, the
identification of presently unknown remediation sites and the allocation of
costs among potentially responsible parties, estimated costs for future
environmental compliance and remediation are necessarily imprecise and it is
not possible to predict the amount or timing of future costs of environmental
remediation requirements which may subsequently be determined.
Based upon information presently available, such future costs are not
expected to have a material adverse effect on the Company's financial
condition, liquidity, or its ongoing results of operations. However, such
costs could be material to results of operations in a future period.
Dividends per share of common stock rose 10% in 1994, marking the 9th
consecutive year of increase.
During 1994, the Company purchased 1,326,346 shares of its common stock
at an average cost of approximately $15 per share, bringing the total common
shares outstanding to 13,550,033 at December 31, 1994. As of February 17,
1995, an additional 158,712 shares had been purchased at an average cost of
approximately $15 per share. In 1993, a total of 11,781 shares were purchased
at an average cost of approximately $17 per share. Treasury stock purchases
were made under plans authorized by the Company's Board of Directors.
INFLATION
Inflation has had a minimal effect on the Company during the three
years ended December 31, 1994. Although there was limited inflation in labor,
material, overhead, and administrative costs, it was essentially offset by
sales price increases, cost reduction programs, and increased operating
efficiency.
25
<PAGE> 8
<TABLE>
CONSOLIDATED BALANCE SHEETS
(Dollar amounts in thousands, except per share data)
<CAPTION>
December 31, 1994 1993
-------- --------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 1,604 $ 4,140
Receivables:
Trade 98,340 93,233
Taxes and other 9,245 2,417
-------- --------
107,585 95,650
Less allowance for doubtful accounts 1,783 2,382
-------- --------
Net receivables 105,802 93,268
Inventories 67,954 82,144
Deferred federal income taxes 8,450 12,444
Prepaid expenses 5,488 5,369
-------- --------
Total current assets 189,298 197,365
-------- --------
PROPERTY, PLANT, AND EQUIPMENT, AT COST:
Land and land improvements 1,610 1,657
Buildings and improvements 33,943 25,811
Machinery and equipment 121,445 109,581
Office furniture, fixtures, and equipment 26,156 23,456
Leasehold improvements 3,585 2,208
Construction in progress 6,117 8,006
-------- --------
192,856 170,719
Less accumulated depreciation and amortization 103,256 97,072
-------- --------
Net property, plant, and equipment 89,600 73,647
OTHER ASSETS:
Excess of cost over net assets acquired, net of
accumulated amortization of $5,563 in 1994
and $4,763 in 1993 25,755 26,555
Deferred federal income taxes 8,719 11,853
Other 8,596 9,917
-------- --------
$321,968 $319,337
======== ========
<FN>
See accompanying notes to consolidated financial statements.
</TABLE>
26
<PAGE> 9
<TABLE>
<CAPTION>
December 31, 1994 1993
-------- ---------
<S> <C> <C>
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Notes payable to bank $ -- $ 3,500
Current installments of long-term obligations 5,300 5,968
Accounts payable 43,853 43,713
Accrued expenses:
Salaries, wages, and other compensation 15,486 14,910
Insurance 11,379 10,581
Other 17,739 11,975
-------- ---------
Total accrued expenses 44,604 37,466
Restructuring reserve 2,033 9,296
Other current liabilities 3,183 3,827
-------- ---------
Total current liabilities 98,973 103,770
Long-term obligations, less current installments 58,611 43,211
Pension liability 8,780 12,688
Postretirement benefits other than pensions 15,482 15,010
Other liabilities 6,719 8,629
-------- ---------
Total liabilities 188,565 183,308
-------- ---------
SHAREHOLDERS' EQUITY:
Preferred stock, par value $1 per share
Authorized 1,000,000 shares -- --
Common stock, par value $1 per share
Authorized 60,000,000 shares; issued 16,166,026
shares in 1994 and 15,963,246 shares in 1993 16,166 15,963
Additional paid-in capital 60,155 58,059
Retained earnings 94,595 82,029
Minimum pension liability adjustment (2,859) (4,839)
Cumulative translation adjustment (647) (1,270)
--------- ---------
167,410 149,942
Less cost of 2,615,993 treasury shares
in 1994 and 1,289,647 in 1993 34,007 13,913
--------- ---------
133,403 136,029
--------- ---------
Total shareholders' equity $ 321,968 $ 319,337
========= =========
27
</TABLE>
<PAGE> 10
<TABLE>
CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollar amounts in thousands, except per share data)
<CAPTION>
Years Ended December 31, 1994 1993 1992
----------- ----------- -----------
<S> <C> <C> <C>
Net sales $ 719,485 $ 757,863 $ 703,345
Cost of Sales 590,878 619,575 580,737
----------- ----------- -----------
Gross profit 128,607 138,288 122,608
Selling, general, and administrative expenses 96,696 102,493 95,163
Restructuring costs (credits) (934) 28,755 --
----------- ----------- ----------
Operating income 32,845 7,040 27,445
Other expense (income)
Interest expense 6,425 8,830 9,590
Interest income (528) (91) (269)
Other (688) 1,379 (497)
----------- ----------- ----------
5,209 10,118 8,824
----------- ----------- ----------
Earnings (loss) before income taxes and cumulative
effect of accounting changes 27,636 (3,078) 18,621
Income taxes 10,209 755 6,778
----------- ---------- ----------
Earnings (loss) before cumulative effect
of accounting changes 17,427 (3,833) 11,843
Cumulative effect of accounting
changes, net of income taxes -- (1,084) (7,628)
----------- ---------- ---------
Net earnings (loss) $ 17,427 $ (4,917) $ 4,215
----------- ---------- ---------
EARNINGS (LOSS) PER COMMON SHARE:
Weighted average number of common shares 14,518,671 13,023,211 12,903,209
Earnings (loss) per common share before
cumulative effect of accounting changes $ 1.20 $ (.30) $ .92
Cumulative effect of accounting changes,
net of income taxes -- (.08) (.59)
----------- ---------- ---------
Net earnings (loss) per common share $ 1.20 $ (.38) $ .33
=========== ========== =========
<FN>
See accompanying notes to consolidated financial statements.
</TABLE>
28
<PAGE> 11
<TABLE>
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollar amounts in thousands)
<CAPTION>
YEARS ENDED DECEMBER 31, 1994 1993 1992
-------- -------- --------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings (loss) $ 17,427 $ (4,917) $ 4,215
Adjustments to reconcile net earnings (loss) to net cash
provided by operating activities:
Restructuring costs (credits), net of payments (7,263) 28,755 --
Depreciation and amortization 20,222 20,260 17,965
Loss on sale of property, plant, and equipment 135 744 56
Deferred federal income tax expense (benefit) 6,062 (10,989) (387)
Increase (decrease) in cash resulting from changes in:
Receivables, net (12,534) 26,928 (24,040)
Inventories 14,190 (14,926) 6,110
Prepaid expenses (119) 170 (190)
Other assets (1,040) (401) (1,165)
Accounts payable 140 (11,650) 4,697
Accrued expenses 7,138 6,729 (1,982)
Other current liabilities (535) (938) (5,200)
Postretirement benefits other than pensions 472 820 14,190
Other long-term liabilities (1,910) 1,384 (2,202)
Other 624 (547) (650)
-------- -------- --------
Net cash provided by operating activities 43,009 41,422 11,417
-------- -------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (35,737) (21,322) (23,914)
Proceeds from sale of property, plant and equipment 1,725 140 335
Reduction of notes receivable -- -- 1,205
-------- -------- --------
Net cash used in investing activities (34,012) (21,182) (22,374)
-------- -------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Increase (decrease) in notes payable to bank (3,500) (15,475) 18,975
Issuance of long-term obligations 20,666 3,967 76
Reduction of long-term obligations (5,934) (4,957) (4,356)
Issuance of common shares 2,299 952 568
Purchase of treasury shares (20,094) (204) (5,445)
Dividends paid (4,970) (3,872) (3,834)
-------- -------- --------
Net cash provided by (used in) financing activities (11,533) (19,589) 5,984
-------- -------- --------
Net change in cash and cash equivalents (2,536) 651 (4,973)
Cash and cash equivalents:
Beginning of year 4,140 3,489 8,462
-------- -------- --------
End of year $ 1,604 $ 4,140 $ 3,489
======== ======== ========
Cash paid during the year for:
Interest $ 6,368 $ 9,188 $ 8,734
Income taxes 11,050 5,612 8,003
<FN>
Supplemental disclosure of non-cash financing activities:
During 1993, the Company issued 1,973,305 shares of common stock upon the conversion of $29,995
principal amount of subordinated debentures.
See accompanying notes to consolidated financial statements.
</TABLE>
29
<PAGE> 12
<TABLE>
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(Dollar amounts in thousands, except per share data)
<CAPTION>
Minimum
Additional Pension Cumulative
Common Paid-In Retained Liability Translation Treasury
Stock Capital Earnings Adjustment Adjustment Stock
<S> <C> <C> <C> <C> <C> <C>
BALANCE AT DECEMBER 31, 1991 $ 13,804 $ 29,041 $ 90,715 $ (226) $ (73) $ (8,264)
Net earnings 4,215
Issuance of 56,521 shares in
connection with common stock
plans and convertible debentures 56 512
Common dividends $.30 per share (3,809)
Purchase of 392,439 treasury shares (5,445)
Minimum pension liability
adjustment (2,189)
Foreign currency
translation adjustment (650)
-------- -------- -------- --------- --------- ------------
BALANCE AT DECEMBER 31, 1992 13,860 29,553 91,121 (2,415) (723) (13,709)
Net (loss) (4,917)
Issuance of 2,102,956 shares in
connection with common stock
plans and convertible debentures 2,103 28,506
Common dividends $.31 per share (4,175)
Purchase of 11,781 treasury shares (204)
Minimum pension liability
adjustment (2,424)
Foreign currency
translation adjustment (547)
-------- -------- -------- --------- --------- ------------
BALANCE AT DECEMBER 31, 1993 15,963 58,059 82,029 (4,839) (1,270) (13,913)
Net earnings 17,427
Issuance of 202,717 shares in
connection with common stock
plans 203 2,096
Common dividends $.34 per share (4,861)
Purchase of 1,326,346 treasury shares (20,094)
Minimum pension liability
adjustment 1,980
Foreign currency
translation adjustment 623
-------- -------- -------- --------- --------- ------------
BALANCE AT DECEMBER 31, 1994 $ 16,166 $ 60,155 $ 94,595 $ (2,859) $ (647) $ (34,007)
======== ======== ======== ========= ======== ==========
</TABLE>
30
<PAGE> 13
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollar amounts in thousands, except per share data)
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) Consolidation -- The consolidated financial statements include the
accounts of Huffy Corporation and its subsidiaries. All intercompany
transactions and balances have been eliminated.
(b) Cash and Cash Equivalents -- Cash equivalents consist principally
of short-term money market instruments, with original maturities of three
months or less.
(c) Concentrations of Credit Risk -- Financial instruments which
potentially expose the Company to concentrations of credit risk, as defined by
Statement of Financial Accounting Standards (SFAS) No. 105, consist primarily
of trade accounts receivable. In the normal course of business, Huffy extends
credit to various companies in the retail industry where certain
concentrations of credit risk exist. These concentrations of credit risk may
be similarly affected by changes in economic or other conditions and may,
accordingly, impact Huffy's overall credit risk. However, management
believes that consolidated accounts receivable are well diversified, thereby
reducing potential material credit risk, and that the allowance for
doubtful accounts is adequate to absorb estimated losses as of December 31,
1994.
(d) Inventories -- Inventories are valued at cost (not in excess of
market) determined by the last-in, first-out (LIFO) method for all bicycle and
basketball inventories. Baby products and lawn and garden tools inventories are
valued on the first-in, first-out (FIFO) method. At December 31, 1994 and 1993,
48% and 53%, respectively, of the Company's inventories were valued using
the LIFO method.
(e) Property, Plant, and Equipment -- Depreciation and amortization
of plant and equipment is provided generally on the straight-line method,
except for minor land improvements and certain buildings for which the
sum-of-the-years-digits method is used. Annual depreciation and amortization
rates are as follows:
<TABLE>
<S> <C>
Land improvements 5 -- 10%
Buildings and
improvements 2-1/2 -- 10%
Machinery and
equipment 5 -- 33-1/3%
Office furniture, fixtures,
and equipment 10 -- 33-1/3%
Leasehold
improvements 4-1/2 -- 33-1/3%
</TABLE>
(f) Amortization of Intangibles -- The excess of cost over net assets
acquired is amortized on a straight-line basis over forty years. The
carrying value of goodwill is reviewed at each balance sheet date to
determine whether goodwill has been impaired. If this review indicates that
goodwill will not be recoverable, as determined based on projected
undiscounted future cash flows of the entity acquired, the Company's carrying
value of goodwill would be reduced by the estimated impairment.
(g) Income Taxes -- Effective January 1, 1992, the Company adopted SFAS
No. 109, "Accounting for Income Taxes," which requires recognition of
deferred tax liabilities and assets for the expected future tax consequences of
events that have been included in the financial statements or tax returns.
Under this method, deferred tax liabilities and assets are determined based
on the difference between the financial statement and tax bases of assets and
liabilities using enacted tax rates in effect for the year in which the
differences are expected to reverse.
(h) Postretirement Benefits Other Than Pensions -- Effective January
1, 1992, the Company adopted SFAS No. 106, "Employers' Accounting for
Postretirement Benefits Other Than Pensions," which requires employers to
accrue the cost of such retirement benefits during the employees' service with
the company.
31
<PAGE> 14
(i) Postemployment Benefits -- Effective January 1, 1993, the Company
adopted SFAS No. 112, "Employers' Accounting for Postemployment Benefits,"
which requires companies to recognize the obligation to provide postemployment
benefits in accordance with SFAS No. 43, "Accounting for Compensated
Absences," or SFAS No. 5, "Accounting for Contingencies." Prior to 1993, the
cost of providing these benefits was charged against income as incurred.
(j) Disclosures About the Fair Value of Financial Instruments -- The
carrying amount of cash and cash equivalents, trade receivables, trade accounts
payable, notes payable to bank, and accrued expenses approximates fair value
due to the short maturity of these instruments. The fair value of each of the
Company's long-term debt instruments is disclosed in Note (4).
(k) Earnings (Loss) Per Common Share -- Net earnings (loss) per share
of common stock is based upon the weighted average number of shares of common
stock outstanding during the year. No effect has been given to options
outstanding under the Company's Stock Option Plans as no material dilutive
effect would result from the issuance of these shares.
During 1993 and 1992, if the 7.25% convertible subordinated debentures
had been converted, the inclusion of additional shares would have been
anti-dilutive.
(l) Foreign Currency Translation -- The functional currency of the
Company's non-U.S. subsidiaries is the local currency. Adjustments resulting
from the translation of financial statements are reflected as a separate
component of shareholders' equity.
(m) Reclassifications -- Certain reclassifications have been made to
prior year amounts to conform with the current year presentation.
(2) RESTRUCTURING PROVISION
In the fourth quarter of 1993, the Company recorded a $28,755
($20,329 after tax) charge to restructure operations of its lawn and garden
tools business. The restructuring plan included the write-down or write-off of
impaired fixed assets, inventory and goodwill, consolidation of certain man-
ufacturing facilities, the discontinuation of certain unprofitable product
lines, and the related reduction in production and administrative personnel.
During 1994, the Company substantially completed its restructuring
plan and, as a result, reduced operating expenses by $934 due to a change in
accounting estimate for restructuring charges. The restructuring accomplished
during the year included the relocation of manufacturing and distribution
facilities in Anderson, South Carolina and Ontario, Canada to Camp Hill,
Pennsylvania. In addition, the assets related to the discontinued pruning and
spreader product lines were sold for an unanticipated gain of approximately
$1,300, which was reflected as a credit to the restructuring reserve.
Remaining estimated expenditures related to the restructuring plan include:
continuation of severance and insurance payments for terminated employees,
remaining lease and holding costs related to the Canadian distribution
facility, costs related to the restructure of operations in Cork, Ireland, and
final equipment relocation costs at domestic facilities. It is anticipated
that all of the above, with the exception of the Canadian facility holding
costs, will be completed during 1995.
The following is a reconciliation of the changes in the restructuring
reserve balance during 1994:
<TABLE> SEVERANCE FACILITIES ESTIMATED
<CAPTION> AND RELATED CONSOLIDATION OPERATING
COSTS COSTS LOSSES TOTAL
<S> <C> <C> <C> <C>
Balance at December 31, 1993 $ 4,363 $ 2,792 $ 2,141 $ 9,296
Expenditures, net (2,510) (1,964) (1,855) (6,329)
Changes in estimates (1,243) 525 (216) (934)
-------- -------- -------- --------
Balance at December 31, 1994 $ 610 $ 1,353 $ 70 $ 2,033
======== ======= ======= =======
</TABLE>
32
<PAGE> 15
(3) INVENTORIES
The components of inventories are as follows:
<TABLE>
<CAPTION>
1 9 9 4 1 9 9 3
<S> <C> <C>
Finished goods $ 24,456 $ 45,219
Work-in-process 12,480 12,817
Raw materials
and supplies 39,875 32,904
-------- --------
76,811 90,940
Excess of FIFO
cost over LIFO
inventory value (8,857) (8,796)
-------- --------
$ 67,954 $ 82,144
======== ========
</TABLE>
(4) LINES OF CREDIT AND LONG-TERM OBLIGATIONS
During 1994, the Company had a short-term committed line of credit with
various banks in the form of a $50,000 revolving credit agreement, expiring
December 31, 1995. The Company also has $80,000 in uncommitted lines of
credit that exist on a no fee basis. There were no outstanding balances at
December 31, 1994 on either line of credit.
<TABLE>
<CAPTION>
Short-term borrowings are summarized as follows:
1 9 9 4 1 9 9 3
<S> <C> <C>
Average borrowings $ 4,166 $ 12,742
Maximum at any
month end 27,250 31,200
Weighted
average rate 3.61% 3.46%
</TABLE>
<TABLE>
<CAPTION>
Long-term obligations are summarized as follows:
1 9 9 4 1 9 9 3
<S> <C> <C>
Unsecured notes payable:
9.62% due serially
through 2000 $ 24,000 $ 27,000
9.81% due serially
through 1998 14,200 16,000
8.23% Industrial
Development
Revenue Bonds 20,000 --
Other 5,711 6,179
-------- --------
63,911 49,179
Less current
installments 5,300 5,968
-------- --------
$ 58,611 $ 43,211
======== ========
</TABLE>
Industrial Development Revenue Bonds were used to provide financing
for the acquisition, construction and installation of equipment and certain
industrial facilities in Farmington, Missouri. The bonds mature serially
from 2000 through 2014.
Certain of the loan agreements contain covenants which, among other
things, require the Company to maintain current assets equal to 150% of
current liabilities, limit the percentage of capitalization from funded
debt, and require that certain levels of net worth be maintained.
Principal payments required on long-term obligations during each of the
years 1996 through 1999 are approximately $7,500, $7,300, $7,700, and $6,300,
respectively.
The estimated fair value of the Company's long-term obligations at
December 31, 1994 was approximately $67,600. Fair value estimates are made at
a specific point in time, based on relevant market information and information
about the financial instrument. Fair value estimates were based on the amount
of future cash flows discounted using the Company's current borrowing rate for
loans of comparable maturity. These estimates are subjective in nature and
involve uncertainties and matters of significant judgment and, therefore,
cannot be determined with precision. Changes in assumptions could significantly
affect the estimates.
(5) PREFERRED STOCK
Under the Company's Amended Articles of Incorporation, there are
1,000,000 authorized shares of Cumulative Preferred Stock, $1.00 par value.
Subject to certain limitations, the Articles provide that the Board of
Directors may fix the conditions of each series of Preferred Stock.
The Company entered into a Right's Agreement with Bank One,
Indianapolis, N.A., in 1988, as amended in 1991 and 1994, and the Board of
Directors declared a dividend of one Preferred Share Purchase Right for each
outstanding share of the Company's Common Stock. Upon the occurrence of certain
events, Preferred
33
<PAGE> 16
Share Purchase Rights entitle the holder to purchase, at a price of $60.00, one
one-hundredth of a share of Series C Cumulative Preferred Stock , subject to
adjustment. The Rights become exercisable only if a person or group acquires
15% or more of the Company's Common Stock or announces a tender offer for 15%
or more of the Common Stock. Under certain circumstances, all Rights holders,
except the person or group holding 15% or more of the Company's Common Stock,
will be entitled to purchase a number of shares of the Company's Common Stock
having a market value of twice the Right's current exercise price. Alternately,
if the Company is acquired in a merger or other business combination, after the
Rights become exercisable the Rights will entitle the holder to buy a number of
the acquiring company's common shares having a market value at that time of
twice each Right's current exercise price.
Further, after a person or group acquires 15% or more (but less than
50%) of the Company's outstanding Common Stock, the Company's Board of
Directors may exchange part or all of the Rights (other than the Rights held by
the acquiring person or group) for shares of Common Stock. The Rights expire
December 9, 2004 and may be redeemed by the Company for $.01 per Right at any
time prior to the acquisition by a person or group of 15% or more of the
Company's Common Stock.
(6) COMMON STOCK AND COMMON STOCK PLANS
The 1988 Stock Option Plan and Restricted Share Plan authorizes the
issuance of both incentive stock options and nonqualified stock options, and
allows for the subscription of restricted shares of Common Stock. The total
number of shares which may be issued under this Plan shall not exceed 1,125,000
shares. These options may also include stock appreciation rights. Under the
1984 Stock Option Plan, both incentive stock options and non-qualified stock
options were granted. Under this Plan, no additional options can be
granted; however, options remain outstanding and exercisable.
The 1987 Director Stock Option Plan authorizes the automatic issuance
of non-qualified stock options to members of the Board of Directors who are
not employees of the Company. Directors can elect to receive discounted stock
options in lieu of all or part of the annual retainer fees. The total number
of shares issued under the Plan shall not exceed 337,500 shares, and such
shares cannot include stock appreciation rights.
Activity in 1994 and 1993 for the Common Stock Option Plans was as
follows:
<TABLE>
<CAPTION>
1 9 9 4 1 9 9 4 1 9 9 3 1 9 9 3
NUMBER OPTION PRICE NUMBER OPTION PRICE
OF SHARES PER SHARE OF SHARES PER SHARE
<S> <C> <C> <C> <C>
1988 AND 1984 PLANS
Outstanding at January 1 826,225 $ 4.83-20.00 829,088 $ 4.83-20.00
Granted 237,966 14.38-19.00 141,993 19.00
Cancelled (144,832) 5.44-20.00 (24,391) 4.83-20.00
Exercised (102,955) 4.83-11.33 (120,465) 4.83-11.33
------- ------------ ------- ------------
Outstanding at December 31 816,404 $ 4.83-20.00 826,225 $ 4.83-20.00
======= ============ ======= ============
Exercisable at December 31 334,590 $ 4.83-20.00 335,073 $ 4.83-15.50
======= ============ ======= ============
1987 DIRECTOR STOCK OPTION PLAN
Outstanding at January 1 113,142 $ .67-13.67 107,238 $ .67-13.67
Granted 66,585 1.00-17.63 5,904 1.00
Exercised --- --- ---
------- ------------ ------- ------------
Outstanding at December 31 179,727 $ .67-17.63 113,142 $ .67-13.67
======= ============ ======= ============
Exercisable at December 31 107,238 $ .67-13.67 98,856 $ .67-13.67
======= ============ ======= ============
</TABLE>
34
<PAGE> 17
The 1989 Employee Stock Purchase Plan, as amended, authorizes the
offering and sale of up to 975,000 shares of the Company's Common Stock at a
price approximating 90% of the closing price of the Common Stock on the
offering date.
During 1994 and 1993, 99,762 and 9,186 shares of Common Stock,
respectively, which had been granted under the 1989 Plan were issued at a
purchase or option price of $15.98 and $13.61 per share, respectively. At
December 31, 1994, rights to purchase 92,836 shares were outstanding under
this Plan at an exercise price of $15.98 per share and 553,987 additional
shares were available for issuance.
(7) COMMITMENTS AND CONTINGENCIES
The Company leases certain manufacturing and warehouse facilities,
office space, machinery, and vehicles under cancellable and non-cancellable
operating leases, most of which expire within ten years and may be renewed by
the Company. Rent expense under such arrangements totaled approximately
$6,950, $4,900, and $5,175 in 1994, 1993, and 1992, respectively.
Future minimum rental commitments under non-cancellable operating
leases at December 31, 1994 are as follows:
<TABLE>
<CAPTION>
Amount
<S> <C>
1995 $ 6,417
1996 5,089
1997 3,562
1998 2,943
1999 2,822
Thereafter 17,811
--------
Total minimum payments $ 38,644
========
</TABLE>
The Company is subject to a number of lawsuits, investigations and
claims arising out of the conduct of its business primarily related to
commerical transactions and product liability. While it is not feasible to
predict the outcome of all pending suits and claims, management is of the
opinion that their ultimate disposition will not have a material adverse
effect upon the consolidated financial position, liquidity or ongoing results
of operations of the Company.
(8) ENVIRONMENTAL EXPENDITURES
Environmental expenditures that relate to current operations are
expensed or capitalized as appropriate. Remediation costs that relate to an
existing condition caused by past operations are accrued when it is probable
that these costs will be incurred and can be reasonably estimated.
The Company, along with others, has been designated as a potentially
responsible party (PRP) by the U.S. Environmental Protection Agency (the
"EPA") with respect to claims involving the discharge of hazardous substances
into the environment in the Baldwin Park operable unit of the San Gabriel
Valley Super Fund site. Currently, the Company, along with other PRP's, the
San Gabriel Basin Water Quality Authority and numerous local water districts
are working with the EPA on a mutually satisfactory remedial plan. In
developing its estimate of environmental remediation costs, the Company
considers, among other things, currently available technological solutions,
alternative cleanup methods and risk-based assessments of the contamination
and, as applicable, an estimation of its proportionate share of remediation
costs. The Company may also make use of external consultants, and consider,
when available, estimates by other PRP's and governmental agencies and
information regarding the financial viability of other PRP's. Based upon
information currently available, the Company believes it is unlikely that it
will incur substantial additional costs as a result of failure by other PRP's
to satisfy their responsibilities for remediation costs.
The Company has recorded environmental accruals, based upon the
information available, that are adequate to satisfy known remediation
requirements. During 1994, the Company accrued $1,750 for potential
environmental expenditures. The total accrual for estimated environmental
remediation costs related to the Super Fund site and other potential
environmental liabilities is approximately $3,600 at December 31, 1994.
This accrual has not been discounted, and does not reflect any possible future
third party recoveries. Management expects that the majority of expenditures
relating to costs currently accrued will be made over the next two to ten
years.
35
<PAGE> 18
As a result of factors such as the continuing evolution of
environmental laws and regulatory requirements, the availability and
application of technology, the identification of presently unknown remediation
sites and the allocation of costs among potentially responsible parties,
estimated costs for future environmental compliance and remediation are
necessarily imprecise and it is not possible to predict the amount or timing of
future costs of environmental remediation requirements which may subsequently
be determined.
Based upon information presently available, such future costs are not
expected to have a material adverse effect on the Company's financial
condition, liquidity, or its ongoing results of operations. However, such
costs could be material to results of operations in a future period.
(9) BENEFIT PLANS
The Company sponsors defined benefit pension plans covering certain
salaried and hourly employees. Benefits to salaried employees are based upon
the highest three consecutive years of earnings out of their last ten years of
service; benefits to hourly workers are based upon their years of credited
service. Contributions to the plans reflect benefits attributed to employees'
service to date and also to services expected to be provided in the future.
Plan assets consist primarily of common and preferred stocks, common stock
index funds, and investment grade corporate bonds and U.S. government
obligations.
The following table sets forth the plans' funded status and amounts
recognized in the Company's Consolidated Balance Sheets at December 31, 1994
and 1993:
<TABLE>
<CAPTION>
1994 1994 1993 1993
ASSETS ACCUMULATED ASSETS ACCUMULATED
EXCEED BENEFITS EXCEED BENEFITS
ACCUMULATED EXCEED ACCULULATED EXCEED
BENEFITS ASSETS BENEFITS ASSETS
<S> <C> <C> <C> <C>
ACTUARIAL PRESENT VALUE
OF BENEFIT OBLIGATIONS:
Vested benefit obligation $ 19,846 $ 27,587 $ 20,928 $ 28,762
======== ======== ======== ========
Accumulated benefit obligation 21,302 32,612 22,542 34,096
======== ======== ======== ========
Projected benefit obligation for
service rendered to date 25,360 34,278 27,713 35,505
Plan assets at fair value 26,324 22,477 27,025 22,100
-------- -------- -------- --------
Plan assets in excess of (less than)
projected benefit obligation 964 (11,801) (688) (13,405)
Unamortized transition asset (2,300) (597) (2,516) (768)
Unrecognized prior service cost (763) 6,044 (533) 6,391
Unrecognized net loss 3,331 4,941 5,129 8,104
Adjustment required to recognize
minimum liability -- (8,780) -- (12,688)
-------- -------- -------- --------
Pension costs prepaid (accrued)
at year end $ 1,232 $(10,193) $ 1,392 $(12,366)
======== ======== ======== ========
</TABLE>
36
<PAGE> 19
<TABLE>
<CAPTION>
1994 1993 1992
<S> <C> <C> <C>
NET PENSION COST INCLUDED
THE FOLLOWING COMPONENTS:
Service cost benefits earned during the period $ 3,256 $ 1,994 $ 1,997
Interest cost on projected benefit obligation 4,882 4,215 4,007
Actual return on plan assets 629 (4,812) (1,802)
Net amortization and deferral (4,759) 592 (2,170)
------- ------- -------
Net periodic pension cost $ 4,008 $ 1,989 $2,032
======= ======= ======
ACTUARIAL ASSUMPTIONS:
Weighted average discount rate 8.5% 7.25% 8.5%
Rate of return on assets 9.5% 10.0% 10.0%
Rate of increase in compensation 5.0% 5.0% 6.0%
</TABLE>
In accordance with SFAS No. 87, the Company has recorded an additional
minimum pension liability of $8,780 at December 31, 1994 and $12,688 at
December 31, 1993, representing the excess of unfunded accumulated benefit
obligations over previously recorded pension cost liabilities. A
corresponding amount is recognized as an intangible asset except to the extent
that these additional liabilities exceed related unrecognized prior service
cost and net transition obligation, in which case the increase in liabilities
is charged directly to shareholders' equity. The change in the excess minimum
pension liability, net of income taxes, resulted in a credit to equity, of
$1,980 in 1994, and a charge to equity of $2,424 in 1993.
The Company maintains defined contribution retirement plans covering
its eligible employees under Section 401(k) of the Internal Revenue Code. The
purpose of these defined contribution plans is generally to provide additional
financial security during retirement by providing employees with an incentive to
make regular savings. The Company's contributions to the plans are based on
employee contributions and were $920, $834, and $607 in 1994, 1993, and 1992,
respectively.
(10) OTHER POSTRETIREMENT BENEFIT PLANS AND
POSTEMPLOYMENT BENEFITS
In addition to the Company's defined benefit pension plans, the Company
sponsors several defined benefit health care and life insurance plans that
provide postretirement medical, dental and life insurance benefits to full-time
employees who meet minimum age and service requirements. The plans are
contributory, with retiree contributions adjusted annually, and contain other
cost-sharing features such as deductibles and coinsurance. The Company's policy
is to fund the cost of medical benefits in amounts determined at the discretion
of management.
The Company also sponsors a deferred compensation plan for the benefit
of highly compensated management employees. The eligible employees make
contributions to the plan and receive postretirement benefits based upon a
stated rate of return on those contributions. The Company's policy is to fund
the cost of the benefits in amounts determined at the discretion of management.
The Company adopted SFAS No. 106, "Employers' Accounting for
Postretirement Benefits Other Than Pensions," effective January 1, 1992. The
cumulative effect of adopting SFAS No. 106 was to decrease net earnings by
$7,475. The effect of the change in accounting principle reduced 1992 operating
income by $453.
37
<PAGE> 20
<TABLE>
The following table presents the plans' funded status reconciled with
amounts recognized in the Company's Consolidated Balance Sheet at December 31,
1994 and 1993 and the net periodic postretirement benefit cost recorded in the
Company's 1994 and 1993 Consolidated Statements of Operations:
<CAPTION>
HEALTH CARE AND DEFERRED
LIFE INSURANCE COMPENSATION
PLANS PLAN TOTAL
<S> <C> <C> <C>
1994
ACCUMULATED POSTRETIREMENT BENEFIT OBLIGATION:
Retirees $ 4,723 $ 1,912 $ 6,635
Fully eligible active plan participants 957 1,596 2,553
Other active plan participants 4,974 -- 4,974
--------- --------- ---------
10,654 3,508 14,162
UNRECOGNIZED NET GAIN 1,307 13 1,320
Postretirement benefits other than pensions --------- --------- ---------
accrued at year end $11,961 $ 3,521 $15,482
========= ========= =========
NET PERIODIC POSTRETIREMENT BENEFIT COST:
Service Cost $ 507 $ -- $ 507
Interest cost 830 275 1,105
Net amortization (3) -- (3)
--------- --------- ---------
Net periodic postretirement benefit cost $ 1,334 $ 275 $ 1,609
========= ========= =========
ACTUARIAL ASSUMPTIONS:
Weighted average discount rate 8.50% 8.50%
Health care cost trend rate for expenses of
participants over age 65 12.00%
Health care cost trend rate for expense of
participants over age 65 10.00%
</TABLE>
<TABLE>
<CAPTION>
HEALTH CARE AND DEFERRED
LIFE INSURANCE COMPENSATION
PLANS PLAN TOTAL
<S> <C> <C> <C>
1993
ACCUMULATED POSTRETIREMENT BENEFIT OBLIGATION:
Retirees $ 5,048 $ 1,625 $ 6,673
Fully eligible active plan participants 1,050 2,628 3,678
Other active plan participants 5,688 -- 5,688
--------- --------- ---------
11,786 4,253 16,039
UNRECOGNIZED NET LOSS (585) (427) (1,012)
--------- --------- ---------
Postretirement benefits other than pensions
accrued at year end $ 11,201 $ 3,826 $ 15,027
========= ========= =========
NET PERIODIC POSTRETIREMENT BENEFIT COST:
Service cost $ 488 $ -- $ 488
Interest cost 941 290 1,231
--------- --------- ---------
Net periodic postretirement benefit cost $ 1,429 $ 290 $ 1,719
========= ========= =========
ACTUARIAL ASSUMPTIONS:
Weighted average discount rate 7.25% 7.25%
Health care cost trend rate for expenses of
participants under age 65 14.25%
Health care cost trend rate for expenses of
participants over age 65 12.25%
</TABLE>
38
<PAGE> 21
For measurement purposes, in 1995, an 11.25% health care cost trend
rate was assumed for expenses of participants under age 65; this rate was
assumed to decrease gradually to 6.0% by the year 2002 and remain at that
level thereafter. In addition, for 1995, a 9.25% health care cost trend rate
was assumed for expenses of participants over age 65; this rate was assumed
to decrease gradually to 6.0% by the year 2000 and remain at that level
thereafter. The health care cost trend rate assumption has a significant
effect on the amounts reported. For example, increasing the assumed health
care cost trend rates by one percentage point in each year would increase the
accumulated postretirement benefit obligation as of December 31, 1994 by
$1,491 and the aggregate of the service and interest cost components of net
periodic postretirement benefit cost for the year ended December 31, 1994 by
$228.
The Company adopted SFAS No. 112, "Employers' Accounting for
Postemployment Benefits," effective January 1, 1993. The cumulative effect of
adopting SFAS No. 112 amounted to $1,084 after tax. Ongoing operating expenses
increased marginally as a result of adopting SFAS No. 112.
(11) INCOME TAXES
The provisions for federal and state income taxes attributable to
income from continuing operations consist of:
<TABLE>
<CAPTION>
1 9 9 4 1 9 9 3 1 9 9 2
<S> <C> <C> <C>
Current tax
expense:
Federal $ 2,971 $ 9,458 $ 2,876
State 1,150 1,598 727
Foreign 26 105 322
-------- --------- ---------
4,147 11,161 3,925
Deferred tax
expense
(benefit) 6,062 (10,406) 2,853
-------- --------- ---------
Total tax
expense $ 10,209 $ 755 $ 6,778
======== ========= =========
</TABLE>
39
<PAGE> 22
Effective January 1, 1992, the Company adopted the provisions of SFAS
No. 109, "Accounting for Income Taxes," which requires recognition of deferred
tax liabilities and assets for the expected future tax consequences of events
that have been included in the financial statements or tax returns. Under this
method, deferred tax liabilities and assets are determined based on the
difference between the financial statement and tax bases of assets and
liabilities using enacted tax rates in effect for the year in which the
differences are expected to reverse. Effective January 1, 1992, the Company
recorded a tax debit of approximately $153 or $0.01 per share, which amount
represents the net decrease to the deferred tax asset as of that date. Such
amount has been reflected in the Consolidated Statement of Operations as a
cumulative effect of an accounting change.
The Company and its domestic subsidiaries file a consolidated U.S.
federal income tax return. Such returns have been audited or settled through
the year 1990.
The components of the net deferred tax asset as of December 31, 1994
and 1993 were as follows:
<TABLE>
<CAPTION>
1 9 9 4 1 9 9 3
<S> <C> <C>
Deferred tax assets:
Allowance for
doubtful accounts $ 592 $ 984
Inventory
obsolescence reserve 911 2,160
Property, plant, and
equipment -- 243
Workers' compensation 1,567 1,728
Product liability 1,719 1,301
Deferred compensation 1,733 2,039
Accrued vacation 1,256 1,332
Restructuring reserves 791 3,254
Pension liability 1,724 2,317
Postretirement
benefits other
than pensions 5,413 5,254
Environmental reserves 1,268 652
Other liabilities
and reserves 3,768 4,505
------- -------
Total deferred
tax assets 20,742 25,769
------- -------
Deferred tax liabilities:
Property, plant, and
equipment 1,972 --
Other assets 1,601 1,472
------- -------
Total deferred
tax liabilities 3,573 1,472
------- -------
Net deferred
tax asset $17,169 $24,297
======= =======
</TABLE>
Management expects that the Company's future levels of taxable income
will be sufficient to fully utilize the net deferred tax asset. Therefore, a
valuation allowance has not been established.
40
<PAGE> 23
The following table accounts for the difference between the actual tax
provision and the amounts obtained by applying the statutory U.S. federal
income tax rate to the earnings (loss) before income taxes and cumulative
effect of accounting changes.
<TABLE>
<CAPTION>
Years Ended December 31, 1994 1993 1992
<S> <C> <C> <C>
Earnings (loss) before income taxes and
cumulative effect of accounting changes $ 27,636 $ (3,078) $18,621
======== ======== =======
Tax provision computed at statutory rate $ 9,673 $ (1,077) $ 6,331
Increase (reduction) in taxes due to:
Impact of foreign losses for which a current
tax benefit is not available 302 31 47
State income taxes (net of federal tax benefit) 748 1,039 480
Goodwill amortization 270 1,615 286
Foreign sales corporation (218) (67) --
Insurance proceeds (670) -- --
Meals and entertainment 274 107 99
Reduction in liability due to favorable
IRS settlement -- (900) --
Change in statutory tax rate -- (315) --
Intangible asset write-down -- 499 --
Miscellaneous (170) (177) (465)
-------- -------- -------
Actual tax provision $ 10,209 $ 755 $ 6,778
======== ======== =======
</TABLE>
(12) BUSINESS SEGMENTS
The Company's operations are transacted in the following business segments:
- - RECREATION AND LEISURE TIME PRODUCTS -- bicycles, basketball related
equipment, and lawn and garden tools.
- - JUVENILE PRODUCTS -- baby care and development products including car
seats, infant carriers, safety gates, cribs, and electronic safety products.
- - SERVICES FOR RETAIL -- in-store assembly, repair and display services as
well as inventory counting services.
41
<PAGE> 24
A summary of the Company's 1994, 1993, and 1992 operations by business
segment is as follows:
<TABLE>
<CAPTION>
Earnings (Loss)
Before Income
Taxes and
Cumulative Effect Depreciation
of Accounting Identifiable and Capital
1994 Sales Changes Assets Amortization Expenditures
<S> <C> <C> <C> <C> <C>
Recreation and Leisure
Time Products $459,951 $22,958 $208,747 $11,926 $28,772
Juvenile Products 121,300 6,356 53,410 3,904 3,161
Services for Retail 139,637 8,632 40,089 3,833 3,627
Eliminations (1,403)
Interest expense (6,425)
Interest income 528
General corporate (4,413) 19,722 559 177
-------- ------- -------- ------- -------
$719,485 $27,636 $321,968 $20,222 $35,737
======== ======= ======== ======= =======
1993
Recreation and Leisure
Time Products $513,639 $(4,765)(1) $196,585 $ 12,547 $13,881
Juvenile Products 124,274 8,081 (2) 60,007 3,604 3,873
Services for Retail 121,284 6,779 36,809 3,506 3,226
Eliminations (1,334)
Interest expense (8,830)
Interest income 91
General corporate (4,434) 23,331 603 342
-------- ------- -------- -------- -------
$757,863 $(3,078) $316,732 $ 20,260 $21,322
======== ======= ======== ======== =======
1992
Recreation and Leisure
Time Products $478,837 $17,911 $222,050 $ 10,850 $15,541
Juvenile Products 115,535 9,535 60,837 2,708 4,924
Services for Retail 109,573 4,013 35,934 3,799 3,138
Eliminations (600)
Interest expense (9,590)
Interest income 269
General corporate (3,517) 16,507 608 311
-------- ------- -------- ------- -------
$703,345 $18,621 $335,328 $17,965 $23,914
======== ======= ======== ======= =======
<FN>
(1) Includes a $28,755 provision to restructure the Company's lawn and garden
tools business.
(2) Includes a charge of $858 associated with the disposition of previous
manufacturing facility and move to a new facility, and a charge of $502 for
asset write-offs associated with discontinued product.
</TABLE>
The effect of adopting SFAS No. 112 on earnings (loss) before income
taxes and cumulative effect of accounting changes was immaterial in 1993.
The effect of adopting SFAS No. 106 on earnings before income taxes and
cumulative effect of accounting changes in 1992 was to reduce earnings of the
Recreation and Leisure Time Products, Juvenile Products, and Services for
Retail segments by $662, $36, and $157, respectively.
42
<PAGE> 25
In 1994, three customers individually accounted for 12%, 13% and 10% of
total consolidated net sales. In 1993 and 1992, two customers individually
accounted for 13% and 14%, and 13% and 12% of total consolidated net sales,
respectively.
<TABLE>
(13) QUARTERLY FINANCIAL DATA (UNAUDITED)
Quarterly financial data for the years 1994 and 1993 are as follows:
<CAPTION>
1st 2nd 3rd 4th
Quarter Quarter Quarter Quarter Total[3]
1994
<S> <C> <C> <C> <C> <C>
Net sales $ 189,220 $ 214,898 $ 153,332 $ 162,035 $ 719,485
Gross profit 35,986 41,063 26,795 24,763 128,607
Net earnings[1] 4,845 7,961 2,602 2,019 17,427
EARNINGS PER COMMON SHARE $ .33 $ .53 $ .18 $ .14 $ 1.20
----------- ----------- ----------- ------------ -----------
1993
Net sales $ 214,999 $ 220,095 $ 167,232 $ 155,537 $ 757,863
Gross profit 39,572 42,033 30,219 26,464 138,288
Earnings (loss) before cumulative
effect of accounting changes[2] $ 4,909 $ 6,869 $ 2,308 $ (17,919) $ (3,833)
Cumulative effect of accounting
changes, net of income taxes (1,084) (1,084)
----------- ----------- ----------- ------------ -----------
Net earnings (loss) $ 3,825 $ 6,869 $ 2,308 $ (17,919) $ (4,917)
----------- ----------- ----------- ------------ -----------
EARNINGS PER COMMON SHARE:
PRIMARY
Earnings (loss) before cumulative
effect of accounting changes $ .38 $ .54 $ .18 $ (1.26) $ (.30)
Cumulative effect of accounting
changes, net of income taxes (.08) (.08)
----------- ----------- ----------- ------------ -----------
Net earnings (loss) $ .30 $ .54 $ .18 $ (1.26) $ (.38)
----------- ----------- ----------- ------------ -----------
FULLY DILUTED
Earnings (loss) before cumulative
effect of accounting changes $ .35 $ .48 $ .18 $ (1.26) $ (.30)
Cumulative effect of accounting
changes, net of income taxes (.07) (.08)
----------- ----------- ----------- ------------ -----------
Net earnings (loss) $ .28 $ .48 $ .18 $ (1.26) $ (.38)
----------- ----------- ----------- ------------ -----------
<FN>
[1] The fourth quarter of 1994 includes a credit to the restructure provision of $934.
[2] The fourth quarter of 1993 includes a $28,755 ($20,329 after-tax) provision to restructure the Company's lawn and garden tools
business.
[3] Quarterly per share amounts are computed independently for each quarter and the full year based upon the respective weighted
average number of common shares outstanding and may not equal the total for the year.
</TABLE>
43
<PAGE> 26
COMMON STOCK
Huffy Corporation Common Stock is traded on the New York Stock
Exchange. Cash dividends declared and the quarterly high and low prices of
Huffy Common Stock during the years ended December 31, 1994 and 1993 were as
follows:
<TABLE>
YEAR ENDED DECEMBER 31, 1994
<CAPTION>
COMMON STOCK DIVIDENDS
PRICE RANGE DECLARED
QUARTER HIGH LOW
<S> <C> <C> <C>
First $ 19-1/2 $ 17-3/4 $ .085
Second 18-5/8 15-3/8 .085
Third 16-1/8 14 .085
Fourth 16 14 .085
---------
Total $ .340
=========
</TABLE>
<TABLE>
YEAR ENDED DECEMBER 31, 1993
<CAPTION>
COMMON STOCK DIVIDENDS
PRICE RANGE DECLARED
QUARTER HIGH LOW
<S> <C> <C> <C>
First $ 16-7/8 $ 14-5/8 $ .075
Second 16-3/8 14-3/4 .075
Third 20-3/8 16 .075
Fourth 19-7/8 16-3/4 .085
---------
Total $ .310
=========
</TABLE>
As of December 31, 1994 there were 13,550,033 shares of Huffy
Corporation Common Stock outstanding and there were 4,196 shareholders of
record. Management estimates an additional 8,500 shareholders hold their stock
in nominee name. As of February 17, 1995, the Company has repurchased an
additional 158,712 shares of Common Stock. Trading volume of the Company's
Common Stock during the twelve months ended December 31, 1994 totaled 7,706,100
shares. The average number of common shares outstanding during this period was
approximately 14,518,671 shares.
44
<PAGE> 27
SHAREHOLDER INFORMATION
ANNUAL MEETING
The Annual Meeting of Shareholders will be held April 28, 1995 at 10:00 a.m.,
Eastern Daylight Time, at the Dayton Marriott Hotel, 1414 South Patterson
Boulevard, Dayton, Ohio. Shareholders are cordially invited to attend.
STOCK EXCHANGE
New York Stock Exchange, Symbol HUF
DAYTON CENTER
225 Byers Road
Miamisburg, Ohio 45342
Telephone (513) 866-6251
PRIMARY BUSINESS LOCATIONS
- - Camp Hill, Pennsylvania
- - Celina, Ohio
- - Cork, Ireland
- - Farmington, Missouri
- - Harrisburg, Pennsylvania
- - Miamisburg, Ohio
- - San Diego, California
- - Suring, Wisconsin
- - Thornton, Colorado
- - Waukesha, Wisconsin
TRANSFER AGENT AND REGISTRAR FOR COMMON STOCK
Bank One, Indianapolis, NA
Bank One Center Tower
111 Monument Circle, Suite 1611
Indianapolis, IN 46277
Telephone (800) 753-7107
DIVIDENDS
Dividends are payable quarterly as declared by the Board of Directors. Huffy
has paid a dividend on its Common Stock each year since becoming publicly
traded on November 15, 1966.
DIVIDEND REINVESTMENT
A dividend reinvestment program is available to holders of Huffy Corporation
Common Stock through Bank One, Indianapolis, NA, Indianapolis, Indiana.
Shareholders interested in participating should write for further information
to: Huffy Corporation, P.O. Box 1204, Dayton, Ohio 45401, Attention: Vice
President - Finance, Chief Financial Officer.
AUDITORS
KPMG Peat Marwick LLP
FORM 10-K
Shareholders interested in obtaining Huffy Corporation's Annual Report on
Form 10-K filed with the Securities and Exchange Commission may obtain a copy
by writing Huffy Corporation, P.O. Box 1204, Dayton, Ohio 45401, Attention:
Vice President - Treasurer.
SHAREHOLDER COMMUNICATIONS
Communications concerning lost certificates, transfer requirements, address
changes, and Common Stock dividend checks should be sent to Bank One,
Indianapolis, NA, 111 Monument Circle, Suite 1611, Indianapolis, Indiana
46277. Telephone (800) 753-7107.
The Management of Huffy Corporation welcomes comments and suggestions from
shareholders and investors. Call the Vice President - Treasurer, telephone
(513) 866-6251.
45
<PAGE> 1
EXHIBIT 19
Schedule of certain documents
substantially identical to filed documents
with parties thereto and other material
differing details
----------------------------------------
(19)(a) Additional parties to Special Deferred Compensation Agreement, as
amended, 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:
Michael D. Bevis
Daryle A. Lovett
(19)(b) Additional parties to Severance Pay Agreement, as amended, in
substantially the form incorporated by reference to Exhibit (xi) to
Form 10-K for the fiscal year ended June 27, 1980, and to Exhibit
10(a) to Form 10-K for the fiscal year ended June 26, 1991:
Michael D. Bevis
Daryle A. Lovett
(19)(c) Additional party to Severance Pay Agreement, in substantially the
form incorporated by reference to Exhibit (19)(a) to Form 10-Q for
the fiscal quarter ended June 30, 1986:
Thomas A. Frederick
Nancy A. Michaud
(19)(d) Additional parties to Deferred Compensation Agreement, as amended
between Huffy Corporation and certain of its officers, 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:
Thomas A. Frederick
Daryle A. Lovett
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY INFORMATION EXTRACTED FROM THE COMPANY'S
CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 1994 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-START> JAN-01-1994
<PERIOD-END> DEC-31-1994
<CASH> 1,604
<SECURITIES> 0
<RECEIVABLES> 98,340
<ALLOWANCES> (1,783)
<INVENTORY> 67,954
<CURRENT-ASSETS> 189,298
<PP&E> 192,856
<DEPRECIATION> (103,256)
<TOTAL-ASSETS> 321,968
<CURRENT-LIABILITIES> 98,973
<BONDS> 58,611
<COMMON> 16,166
0
0
<OTHER-SE> 117,237
<TOTAL-LIABILITY-AND-EQUITY> 321,968
<SALES> 719,485
<TOTAL-REVENUES> 719,485
<CGS> 590,878
<TOTAL-COSTS> 590,878
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 6,425
<INCOME-PRETAX> 27,636
<INCOME-TAX> 10,209
<INCOME-CONTINUING> 17,427
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 17,427
<EPS-PRIMARY> 1.20
<EPS-DILUTED> 1.20
</TABLE>
