<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, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from______to________
Commission file number 1-5325
HUFFY CORPORATION
(Exact name of registrant as specified in its charter)
OHIO 31-0326270
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
225 Byers Road, Miamisburg, Ohio 45342
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (513) 866-6251
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which registered
------------------- -----------------------------------------
Common Stock, $1.00 Par Value New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
---- -----
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of the registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [X]
The aggregate market value of the Common Stock held by non-affiliates of the
registrant, as of February 29, 1996, was $142,671,617.
The number of shares outstanding of each of the registrant's classes of Common
Stock, as of February 29, 1996, was 13,481,066.
"Index of Exhibits" at page 16 of this Report
-1-
<PAGE> 2
DOCUMENTS INCORPORATED BY REFERENCE
-----------------------------------
1. The Huffy Corporation Annual Report to Shareholders for the year ended
December 31, 1995. 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 26, 1996, 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.
-----------------
-2-
<PAGE> 3
PART I
ITEM 1. BUSINESS
Huffy Corporation, an Ohio corporation, and its subsidiaries (collectively
called "Huffy" or the "Company") are engaged in the design, manufacture and
sale of Consumer Products and the furnishing of Services for Retail. The
Company's executive offices are located in Miamisburg, Ohio and its principal
business offices and/or manufacturing facilities are located in San Diego,
California; 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 (Consumer
Products and Services for Retail) is discussed in more detail below. See also
Part IV herein for financial information relating to each such business
segment.
CONSUMER PRODUCTS
Gerry Baby Products Company, Gerry Wood Products Company
(collectively, the "Gerry Companies"), Huffy Bicycle Company, Huffy
Sports Company, and True Temper Hardware Company comprise the Consumer
Products segment of the Company. Principal products within this
business segment include juvenile products, bicycles, basketball
backboards and related products, and lawn and garden tools. Sales of
juvenile products, which also include 12" and 16" bicycles and
juvenile indoor basketball units, represented 20.7 percent, 21.0
percent, and 19.8 percent of consolidated revenues of the Company for
the years ended December 31, 1995, 1994, and 1993. Sales of adult
bicycles represented 33.8 percent, 36.9 percent, and 41.3 percent of
consolidated revenues of the Company for the years ended December 31,
1995, 1994, and 1993. Sales of adult basketball backboards, poles,
goals and related products represented 12.2 percent and 10.8 percent
of consolidated revenues of the Company for the years ended December
31, 1995 and 1994. Sales of lawn and garden tools represented 12.4
percent, 12.1 percent, and 13.6 percent of consolidated revenues of
the Company for the years ended December 31, 1995, 1994, and 1993.
Although to date the export business is not significant, the companies
in the Consumer Products segment participate in various foreign
markets and are actively involved in expanding export volume.
a. Products, Marketing and Distribution
------------------------------------
The Gerry Companies: Gerry Baby Products Company ("GBPC") and
Gerry Wood Products Company ("GWPC") which manufacture juvenile
products are both direct subsidiaries of the Company. The Gerry
Companies' headquarters and GBPC's principal manufacturing
facilities are located in Thornton, Colorado. GWPC is a
manufacturer of juvenile wooden products and is located in
Suring, Wisconsin. The "Gerry" and "Snugli" names are two
prominent brand names in the industry. Gerry(R) baby products
include a wide range of market entries, including car seats,
infant carriers, frame carriers, security gates, toilet
trainers, electronic baby monitors, and a broad line of various
wood juvenile products including high chairs, 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 these
juvenile products have wide distribution; the products are
marketed through all of the retail channels that sell juvenile
products: toy chains, warehouse clubs, catalog showrooms,
national and regional high volume retailers, and specialty
shops. In 1994, the Company discontinued
-3-
<PAGE> 4
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.
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 12" and 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. Approximately 90 percent of Huffy Bicycle Company's bicycles
are sold under the Huffy(R) brand name with the balance being sold
under private label brands.
Huffy Sports Company: Huffy Sports Company, a division of the
Company located in Waukesha, Wisconsin, is the leading supplier of
basketball backboards, poles, goals, and related products and juvenile
indoor portable basketball units 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. True Temper Hardware Company is one of three leading
suppliers of non-powered lawn and garden tools and snow tools;
products include long-handled shovels, hoes, forks, wheelbarrows, snow
shovels, and rakes for use in the home and in agricultural, industrial
and commercial businesses. In 1994, True Temper Hardware Company
discontinued manufacturing spreaders and pruning tools and sold the
assets used to produce such products, including its Anderson, South
Carolina manufacturing facility. Manufacturing facilities are located
in Camp Hill and Harrisburg, Pennsylvania. True Temper Hardware
Company also owns four sawmill facilities located in Indiana, New
York, Pennsylvania, and Vermont. In addition, True Temper Limited,
an Irish Corporation and a wholly-owned subsidiary of the Company, has
offices and a manufacturing facility in Whites Cross, Cork, Ireland.
True Temper Hardware products are sold both directly, and through
wholesale distributors, to national and regional high volume retailers
and hardware stores. Over 81 percent of True Temper Hardware's
products are sold under the True Temper(R) and Jackson(R) names; the
remainder are sold under other names or under private labels. During
1994 and 1995, the Company substantially completed a plan to
restructure the True Temper lawn and garden tool business to address
inefficiencies in the manufacturing process and to improve future
profitability of True Temper Hardware Company.
-4-
<PAGE> 5
b. Suppliers
---------
Basic materials such as raw steel, steel and aluminum tubing,
plastic, wood, fabric, resins, ash timber, and welding materials
used in the manufacturing operations are purchased primarily
from domestic sources. Alternate sources are available for all
critical products and components, but the sudden loss of any
major supplier could, on a temporary basis, cause a negative
effect on the segment's operations.
c. Patents, Trademarks and Licenses
--------------------------------
The patents, trademarks (including the registered trademarks
"Gerry", "Snugli", "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
"Gerry", "Snugli", "Huffy" or "True Temper"), license or other
proprietary right used by this segment would not have a material
adverse effect on the Company or the segment. The loss of the
registered trademark "Gerry", "Snugli", "Huffy" or "True Temper"
could have a material adverse effect on the Company and this
segment. The Company has no reason to believe that anyone has
rights to either the "Gerry", "Snugli", "Huffy" or "True Temper"
trademark 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. Juvenile products' sales, excluding
sales of juvenile bicycles, are not seasonal. Sales of juvenile
and adult 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
-------------------------
There are numerous juvenile products competitors in the U.S.
market, six 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. In the high volume retailer bicycle business,
Huffy Bicycle Company has numerous competitors in the United
States market, only two of which are deemed significant.
Although importers in the aggregate provide significant
competition, only one individual importer is deemed a significant
competitor. Even though competition among domestic manufacturers
and importers of bicycles is intense, Huffy Bicycle Company
believes it is cost competitive in the high volume retailer
bicycle market and maintains its position through continued
efforts to improve manufacturing efficiency and product value.
Huffy Bicycle Company's ability to provide its customers with low
cost, innovative new products has enabled it to maintain its
market position despite the marketing efforts of domestic
competitors and
-5-
<PAGE> 6
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 Consumer Products segment
of either of its two largest customers could result in a
material adverse effect on the segment.
SERVICES FOR RETAIL
Huffy Service First, Inc. ("HSF") and Washington Inventory Service
("WIS") each provide certain services to retailers. Inventory,
assembly, repair and merchandise services provided by WIS and HSF to
their customers represented 20.9 percent, 19.2 percent, and 15.8
percent of consolidated revenues of the Company for the years ended
December 31, 1995, 1994, and 1993, 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, Canada 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 high
volume retailers, drug stores, home centers, sporting goods
stores, specialty stores and grocery stores.
b. Seasonality
-----------
The demand for services provided by this business segment is
seasonal in that assembly service demand is generally strongest
in Spring and at the Winter holiday season, and inventory
service demand is generally strongest in the first and third
calendar quarters of the year.
c. Competition and Customers
-------------------------
Although WIS has numerous competitors in the United States
market, only one is significant. HSF has numerous competitors
in the United States market, none of which
-6-
<PAGE> 7
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 the Services
for Retail Segment of either of its two largest customers could
result in a material adverse effect on the segment.
Sales to Wal-Mart Stores, Inc. and Kmart Corporation aggregated over ten
percent or more of the Company's consolidated revenues from each such customer
for the year ended December 31, 1995, and the loss of either one of these
customers could have a material adverse effect on the Company and its
subsidiaries as a whole.
The number of persons employed full-time by the Company (excluding seasonal
employees in the Services for Retail Segment) as of December 31, 1995, was
8,144 (3,388 employed by the Consumer Products Segment and 4,756 employed by
the Services for Retail Segment).
ITEM 2. PROPERTIES: Location and general character of the principal plants
and other materially important physical properties of the Company as
of January 1, 1996.
<TABLE>
<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
(Consumer Products)
Farmington, Missouri Offices, manufacturing and 412,052 2014(3)
warehouse facility
(Consumer Products)
Celina, Ohio Offices, manufacturing and 822,000 Owned
warehouse facility
(Consumer Products)
Miamisburg, Ohio Offices and display 47,000 2003(4)
facilities (Corporate and
Consumer Products)
Miamisburg, Ohio Offices and warehouse 42,682 2001(5)
facility (Services for
Retail)
Camp Hill, Pennsylvania Offices, manufacturing and 391,690 2012(6)
distribution facility
(Consumer Products)
Harrisburg, Pennsylvania Offices and manufacturing 254,329 Owned
facility (Consumer Products)
</TABLE>
-7-
<PAGE> 8
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------------
Owned or
Expiration
Building Area Date
Location Description (Sq. Ft.) of Lease
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Suring, Wisconsin Offices and manufacturing 140,000 Owned
facility (Consumer Products)
Waukesha, Wisconsin Offices and manufacturing 123,500 2001(5)
facility (Consumer Products)
Whites Cross, Cork, Offices and manufacturing 70,000 Owned
Ireland facility (Consumer Products)
- -----------------
<FN>
(1) Subject to two consecutive options to renew for additional terms of
five years each.
(2) 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.
(6) 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 Farmington,
Missouri; Harrisburg, Pennsylvania; and Waukesha, Wisconsin manufacturing
facilities normally operate on a two full shift basis. The Thornton, Colorado;
and Whites Cross, Cork, Ireland, manufacturing facilities normally operate 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.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable.
-8-
<PAGE> 9
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
27 and 29 and notes 5 and 6 to the consolidated financial statements on pages
21 and 22 of the Company's Annual Report to Shareholders for the year ended
December 31, 1995.
ITEM 6. SELECTED FINANCIAL DATA
Selected unaudited financial data for each of the last 10 calendar years are
incorporated herein by reference to pages 8 and 9 of the Company's Annual
Report to Shareholders for the year ended December 31, 1995.
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 11 through 13, and note 4 to the
consolidated financial statements on pages 20 and 21 of the Company's Annual
Report to Shareholders for the year ended December 31, 1995.
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, 1995, is set forth on pages 10 and
14 through 27 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 1996
Annual Meeting of Shareholders.
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 1, 1996, were as follows:
-9-
<PAGE> 10
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------
Name Age Position Officer Since
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Thomas A. Frederick 41 Vice President - Finance and December, 1994
Chief Financial Officer
Timothy G. Howard 49 Vice President - Controller September, 1978
Nancy A. Michaud 49 Vice President - General February, 1993
Counsel and Secretary
Richard L. Molen 55 Chairman of the Board, January, 1979
President and Chief Executive
Officer
Pamela J. Whipps 42 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 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.
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 11 through 14 in the Company's Proxy Statement for its 1996 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 which begins on page 8 and ends on page 10 and the graph
which is set forth on page 14 in the Company's Proxy Statement for its 1996
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 1, 1996,
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 1996 Annual
Meeting of Shareholders.
-10-
<PAGE> 11
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 11 in the Company's Proxy Statement for its 1996
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, 1995, and
1994.
Consolidated Statements of Operations for the years ended
December 31, 1995, 1994, and 1993.
Consolidated Statements of Cash Flows for the years ended
December 31, 1995, 1994, and 1993.
Consolidated Statements of Shareholders' Equity for the
years ended December 31, 1995, 1994, and 1993.
Notes to Consolidated Financial Statements.
The Annual Report to Shareholders for the year ended December 31,
1995, 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, 1995, 1994, and 1993.
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, 1995, the Company filed no
report on Form 8-K.
-11-
<PAGE> 12
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.
<TABLE>
<CAPTION>
HUFFY CORPORATION
<S> <C>
By /s/ Richard L. Molen Date: March 19, 1996
--------------------------
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 19, 1996
- ----------------------------
Richard L. Molen
Chairman of the Board, President and
Chief Executive Officer and Director
(Principal Executive Officer)
/s/ Thomas A. Frederick Date: March 19, 1996
- ----------------------------
Thomas A. Frederick
Vice President - Finance and Chief
Financial Officer (Principal
Financial Officer)
/s/ Timothy G. Howard Date: March 19, 1996
- ----------------------------
Timothy G. Howard
Vice President - Controller
(Principal Accounting Officer)
/s/ Thomas D. Gleason Date: February 14, 1996
- ----------------------------
Thomas D. Gleason, Director
/s/ William K. Hall Date: February 14, 1996
- ---------------------------
William K. Hall, Director
/s/ Stephen P. Huffman Date: February 14, 1996
- ---------------------------
Stephen P. Huffman, Director
/s/ Linda B. Keene Date: February 14, 1996
- ---------------------------
Linda B. Keene, Director
</TABLE>
-12-
<PAGE> 13
<TABLE>
<S> <C>
/s/ Jack D. Michaels Date: February 14, 1996
- ----------------------------
Jack D. Michaels, Director
/s/ Donald K. Miller Date: February 14, 1996
- ----------------------------
Donald K. Miller, Director
/s/ James F. Robeson Date: February 14, 1996
- ----------------------------
James F. Robeson, Director
/s/ Patrick W. Rooney Date: February 14, 1996
- ----------------------------
Patrick W. Rooney, Director
/s/ Geoffrey W. Smith Date: February 14, 1996
- ----------------------------
Geoffrey W. Smith, Director
/s/ Thomas C. Sullivan Date: February 14, 1996
- ---------------------------
Thomas C. Sullivan, Director
/s/ Fred G. Wall Date: February 14, 1996
- ----------------------------
Fred G. Wall, Director
</TABLE>
-13-
<PAGE> 14
INDEPENDENT AUDITORS' REPORT
----------------------------
ON FINANCIAL STATEMENT SCHEDULE
-------------------------------
The Board of Directors,
Huffy Corporation:
Under date of February 15, 1996, we reported on the consolidated balance sheets
of Huffy Corporation and subsidiaries as of December 31, 1995, and 1994, 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,
1995, as contained in the 1995 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 1995. In connection
with our audits of the aforementioned consolidated financial statements, we
also have audited the related consolidated financial statement schedule as
listed in Part IV, Item 14(a)(2) of Form 10-K. The financial statement
schedule is the responsibility of the Company's management. Our responsibility
is to express an opinion on the financial statement schedule based on our
audits.
In our opinion, such financial statement schedule, when considered in relation
to the basic consolidated financial statements taken as a whole, presents
fairly, in all material respects, the information set forth therein.
/s/ KPMG Peat Marwick LLP
-------------------------
KPMG PEAT MARWICK LLP
Cincinnati, Ohio
February 15, 1996 ____________________________
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 15, 1996, relating to the consolidated
balance sheets of Huffy Corporation and subsidiaries as of December 31, 1995
and 1994 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, 1995, which report appears in the 1995 Annual Report to
Shareholders, which is incorporated by reference in the Company's 1995 Annual
Report on Form 10-K and our report dated February 15, 1996, relating to the
financial statement schedule for each of the years in the three-year period
ended December 31, 1995, which report appears in the Company's 1995 Annual
Report on Form 10-K. Our report refers to a change in the method of accounting
for postemployment benefits in 1993.
/s/ KPMG Peat Marwick LLP
------------------------
KPMG PEAT MARWICK LLP
Cincinnati, Ohio
March 18, 1996
-14-
<PAGE> 15
HUFFY CORPORATION
CONSOLIDATED FINANCIAL STATEMENT SCHEDULE II
VALUATION AND QUALIFYING ACCOUNTS
(DOLLAR AMOUNTS IN THOUSANDS)
<TABLE>
<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, 1995 $1,783 726 (720) 1,789
Year ended December 31, 1994 $2,382 - (599) 1,783
Year ended December 31, 1993 $2,208 1,921 (1,747) 2,382
Inventory obsolescence:
Year ended December 31, 1995 $2,843 2,902 (3,427) 2,318
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]
Reserves which support the balance sheet
caption, Reserves
Restructuring Reserve:
Year ended December 31, 1995 $2,033 2,152[2] (2,355) 1,830
Year ended December 31, 1994 $9,296 - (7,263) 2,033
Year ended December 31, 1993 -0- 9,296[3] - 9,296
Note: Represents accounts written off, less recoveries for allowance for doubtful accounts.
Represents inventory written off, less scrap value for inventory obsolescence.
- ------------
<FN>
[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 net restructure charge for personnel reductions and the negotiation of a concessionary labor contract.
[3]Represents estimated charges relating to the restructuring of the Company's lawn and garden tools business.
</TABLE>
-15-
<PAGE> 16
INDEX TO EXHIBITS
-----------------
<TABLE>
<CAPTION>
Exhibit Form 10-K
No. Exhibits
- ------- ------------------------------------------------------------------ ---------
<S> <C> <C>
3.a Amended Articles of Incorporation, dated June 16, 1995, *
incorporated by reference to Exhibit (3)(i) to Form 10-Q for the
quarter ended June 30, 1995
3.b Code of Regulations, as amended, dated April 28, 1995, incorporated *
by reference to Exhibit (3)(ii) to Form 10-Q for the quarter ended
June 30, 1995
4.a Specimen Common Stock Certificate of Huffy Corporation ***
4.b Note Purchase Agreement, dated June 24, 1988, among Huffy *
Corporation, The Prudential Insurance Company of America and Pruco
Life Insurance Company, incorporated by reference to Exhibit (4) to
Form 10-Q for the fiscal quarter ended June 30, 1988
4.c Amendment, dated as of December 20, 1993, to Note Purchase *
Agreement, dated June 24, 1988, among Huffy Corporation, The
Prudential Insurance Company of America and Pruco Life Insurance
Company, incorporated by reference to Exhibit (4)(c) to Form 10-K
for the fiscal year ended December 31, 1993
4.d 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
- ------------
<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, 1995.
</TABLE>
-16-
<PAGE> 17
<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
- ------------
<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, 1995.
</TABLE>
-17-
<PAGE> 18
<TABLE>
<S> <C> <C>
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
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
- -------------
<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, 1995.
</TABLE>
-18-
<PAGE> 19
<TABLE>
<S> <C> <C>
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 1995 ***
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, incorporated by reference to
Exhibit (10)(y) to Form 10-K for the fiscal year ended December 31,
1994
10.z Third Amendment to Huffy Corporation Supplemental/Excess Benefit *
Plan, dated as of June 27, 1994, incorporated by reference to
Exhibit (10)(2) to Form 10-K for the fiscal year ended December 31,
1994
10.aa Huffy Corporation Master Benefit Trust Agreement as Restated, dated ***
June 9, 1995
- ------------
<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, 1995.
</TABLE>
-19-
<PAGE> 20
<TABLE>
<S> <C> <C>
10.bb Huffy Corporation 1987 Director Stock Option Plan, incorporated by *
reference to Exhibit 19(a) to Form 10-Q for the fiscal quarter
ended June 30, 1988
10.cc 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.dd 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.ee 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.ff Huffy Corporation 1990 Directors' Retirement Plan incorporated by *
reference to Exhibit (10)(qq) to Form 10-K for the fiscal year
ended December 31, 1991
10.gg Description of Huffy Corporation Executive Automobile Policy *
incorporated by reference to Exhibit (10)(ii) to Form 10-K for the
fiscal year ended December 31, 1994
OTHER FILINGS
- -------------
13 Certain sections of the Annual Report to Shareholders for fiscal ***
year ended December 31, 1995
19 Schedule of certain documents substantially identical to filed ***
documents with parties thereto and other material differing details
- ------------
<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, 1995.
</TABLE>
-20-
<PAGE> 21
<TABLE>
<CAPTION>
<S> <C> <C> <C>
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
True Temper Limited Whites Cross, Cork, Ireland
Washington Inventory Service California
27 Financial Data Schedules ***
- ------------
<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, 1995.
</TABLE>
-21-
<PAGE> 1
EXHIBIT 4.a
DESCRIPTION OF STOCK CERTIFICATE OF HUFFY CORPORATION
The graphics on the stock certificate are as follows: The face of the stock
certificate has a border design with a woman at the top center in a circle of
approximately one inch in diameter. The seal of Huffy Corporation is located in
the lower left corner.
The text on the face of the stock certificate reads as follows:
NUMBER SHARES
COMMON COMMON
INCORPORATED UNDER THE LAWS OF THE STATE OF OHIO
HUFFY CORPORATION CUSIP 444356 10 9
THIS CERTIFICATE IS TRANSFERABLE IN CLEVELAND, OHIO OR IN NEW YORK, NEW YORK
This certifies that
is the owner of
FULLY PAID AND NON ASSESSABLE COMMON SHARES, PAR VALUE $1 PER SHARE, OF
Huffy Corporation, transferable on the books of the Company by the holder hereof
in person or by duly authorized attorney upon surrender of this certificate
properly endorsed. This certificate and the shares represented hereby are issued
and shall be held subject to all the provisions of the Amended Articles of
Incorporation of the Company and all amendments thereto, copies of which are on
file with the Transfer Agents, to all of which the holder, by acceptance hereof
assents. This certificate is not valid unless countersigned and registered by
the Transfer Agent and Registrar. Witness the facsimile seal of the Company and
the facsimile signatures of its duly authorized officers.
/s/ NANCY A. MICHAUD /s/ RICHARD L. MOLEN
Secretary President
The lower right corner contains the following language: Countersigned and
Registered: KEY CORP SHAREHOLDER SERVICES, INC. (Cleveland, Ohio) Transfer
Agent and Registrar
<PAGE> 2
The reverse side of the stock certificate reads as follows:
This certificate also evidences and entitles the holder hereof to certain rights
as set forth in an Amended and Restated Rights Agreement, dated as of December
16, 1988, as amended as of August 23, 1991, and as amended and restated as of
December 9, 1994, between Huffy Corporation and Society National Bank, the
successor rights agent (the "Rights Agreement"). The Rights Agreements terms are
hereby incorporated herein by reference and a copy is on file at the principal
executive offices of Huffy Corporation. Under certain circumstances, as set
forth in the Rights Agreement, such Rights will be evidenced by separate
certificates and will no longer be evidenced by this certificate. Huffy
Corporation will mail to the holder of this certificate a copy of the Rights
Agreement without charge after receipt of a written request therefor. As
described in the Rights Agreement, Rights issued to any Person who becomes an
Acquiring Person (as defined in the Rights Agreement) shall become null and
void.
The following abbreviations, when used in the inscription on the face on
this certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:
<TABLE>
<S> <C> <C> <C>
TEN COM -as tenants in common UNIF GIFT MIN ACT - ___ Custodian ___
TEN ENT -as tenants by the entireties (Cust) (Minor)
JT TEN -as joint tenants with right of
survivorship and not as tenants
in common under Uniform Gifts to Minors
Act _______
(State)
</TABLE>
Additional abbreviations may also be used though not in the above list.
THE COMPANY WILL MAIL TO THE HOLDER HEREOF (WITHOUT CHARGE WITHIN FIVE DAYS
AFTER RECEIPT OF WRITTEN REQUEST THEREFOR) A COPY OF THE EXPRESS TERMS OF THE
SHARES REPRESENTED BY THIS CERTIFICATE, AND OF THE OTHER CLASS OR CLASSES AND
SERIES OF SHARES, IF ANY, WHICH THE COMPANY IS AUTHORIZED TO ISSUE.
For Value Received, __________________ hereby sell, assign and transfer unto
Please insert social security or other
identifying number of assignee
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Shares represented by the within Certificate, and do hereby irrevocably
constitute and appoint _______________ Attorney to transfer the said shares on
the books of the within named Company with full power of substitution in the
premises.
<PAGE> 3
Dated
------------------------
NOTICE: The signature to this assignment must correspond with
the name as written upon the face of the Certificate, in every
particular, without alteration or enlargement, or any change
whatever.
<PAGE> 1
EXHIBIT 10.k
LONG TERM INCENTIVE PLAN
POLICY
- ------
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 AND BE
COMPETITIVE WITH THE MARKETPLACE.
<TABLE>
<CAPTION>
Award as a % of
Base Salary on each January 1
-----------------------------
I. Participants Target Maximum
------------ ------ -------
<S> <C> <C> <C>
A. Chairman and Chief Executive Officer 50% 100%
President and Chief Operating Officer
B. Vice President-General Counsel & 17.5% 35%
Secretary
Vice President-Finance and
Chief Financial Officer
Vice President and Controller
Vice President and Treasurer
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 annual performance as measured by Huffy Company EVA in the case of
Huffy Company participants and Corporate EVA in the case of Corporate
participants.
A. Award Cycle
-----------
The award cycle shall be based on the results at the end of each
calendar year.
B. Definitions
-----------
CORPORATE EVA: Tax-affected earnings before interest and taxes
minus an asset usage charge.
HUFFY COMPANY EVA: Earnings before interest and taxes, tax affected
at the current profit plan tax rate minus an asset usage charge.
Page 1 of 3
<PAGE> 2
AUC: Asset utilization charge computed using the Corporation's weighted
average cost of capital.
C. Award Scales(1)
---------------
<TABLE>
<CAPTION>
Actual Huffy Company/Corporate % of Award
EVA versus Goal Earned
- ------------------------------ ------------
<S> <C> <C>
Less than 90% 0%
90% Threshold 50%
95% 75%
100% Target(2) 100%
105% 133 1/3%
110% 166 2/3%
115% Maximum 200%
</TABLE>
(1) Scale is linear between points and shall be interpolated to the nearest
1/10th of 1% to determine award level.
(2) No Huffy Company or Corporate participant shall be eligible to receive an
award above Target until Corporate EVA results exceeds the weighted cost of
capital.
III. Payment
-------
A. On or about March 1 following the completion of each calendar year.
B. Form and Manner
---------------
Payment shall be 100% cash payable in equal amounts over three
years. Payments in years two and three for any given calendar year
may be reduced in part or in the whole dependent on performance in
subsequent years. For example, a payment scheduled to be made in
1998 for an award earned for calendar year 1996 will be contingent
on calendar year 1997 performance. The percent of reduction is
based on the schedule below.
<TABLE>
<CAPTION>
% of Goal* % Reduction in*
Achieved Subsequent Year Payments
-------------- ------------------------
<S> <C>
90% or more 0%
80% 25%
70% 50%
60% 75%
50% 100%
</TABLE>
* The scale between points is linear and shall be interpolated to the
nearest 1/10th of 1%.
Page 2 of 3
<PAGE> 3
IV. Implementation
--------------
Eligibility, transfers, promotions, demotion
terminations and death or retirement shall be governed
by the provisions of Policy 128 - Profit Sharing Bonus
Plan.
V. Distribution
------------
Distribution shall be limited to Corporate Officers,
Huffy Company President and the Director of Corporate
Human Resources.
/s/ Donald R. Scheick /s/ Richard L. Molen
- ----------------------------------- --------------------------------------
Director, Corporate Human Resources Chairman, President and
Chief Executive Officer
Page 3 of 3
<PAGE> 1
PROFIT-SHARING BONUS PLAN -- C96 EXHIBIT 10.r
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>
FINANCIAL BONUS
- ---------------
Bonus opportunity as a % of
I. Basis and Level of Awards Actual Base Salary
------------------------- -----------------------------
Min. Target Max.
--- ------ ---
<S> <C> <C> <C>
A. Chairman and President
----------------------
Corporate E.P.S. vs. PP 0 20.0% 40.0%
Corporate RONA vs. PP 0 20.0% 40.0%
----- ----- -----
0% 40.0% 80.0%
B. Other Corporate Officers
------------------------
Corporate E.P.S. vs. PP 0 12.00% 24.0% (REV.)
Corporate RONA vs. PP 0 12.00% 24.0% (REV.)
----- ----- -----
0% 24.00% 48.0%
C. Huffy Company Heads
-------------------
1. HBC, HSC, HSF, TTH and WIS
Huffy Company RONA vs. PP 0 12.0% 24.0%
Huffy Company EBIT vs. PP 0 12.0% 24.0%
----- ----- -----
0% 24.0% 48.0%
</TABLE>
Page 1 of 15
<PAGE> 2
<TABLE>
C. Huffy Company Heads (Cont'd) Min. Target Max.
------------------- --- ------ ---
<S> <C> <C> <C>
2. GBPC
Huffy Company (without GWPC)
RONA vs. PP 0 9.6% 19.2%
GWPC RONA vs. PP 0 2.4% 4.8%
Huffy Company (without GWPC) EBIT vs. PP 0 9.6% 19.2%
GWPC EBIT vs. PP 0 2.4% 4.8%
--- ------ -----
0% 24.0% 48.0%
D. Huffy Company Staffs
--------------------
1. HBC, HSC, WIS, TTH and HSF
Huffy Company RONA vs. PP 0 6.0% 12.0%
Huffy Company EBIT vs. PP 0 6.0% 12.0%
--- ------ -----
0% 12.0% 24.0%
2. GWPC Vice President & General Manager
GWPC EBIT vs. PP 0 6.0% 12.0%
GWPC RONA vs. PP 0 6.0% 12.0%
--- ------ -----
0% 12.0% 24.0%
3. GBPC Staff (excluding GWPC V.P./General Manager)
Huffy Company (without GWPC) EBIT vs. PP 0 4.8% 9.6%
Huffy Company (without GWPC) RONA vs. PP 0 4.8% 9.6%
GWPC RONA vs. PP 0 1.2% 2.4%
GWPC EBIT vs. PP 0 1.2% 2.4%
--- ------ -----
0% 12.0% 24.0%
E. Corporate Exempt
----------------
1. Positions with 700 or more Hay points
Corporate E.P.S. vs. PP 0 6.0% 12.0%
Corporate RONA vs. PP 0 6.0% 12.0%
--- ------ -----
0% 12.0% 24.0%
</TABLE>
Page 2 of 15
<PAGE> 3
<TABLE>
E. Corporate Exempt (Cont'd) Min. Target Max.
---------------- --- ------ ---
<S> <C> <C> <C> <C>
2. Positions with less than 700 Hay points
Corporate E.P.S. vs. PP 0% 4.0% 8.0%
Corporate RONA vs. PP 0% 4.0% 8.0%
---- ------ ------
0% 8.0% 16.0%
F. Other Exempt
------------
1. Huffy Company Exempt (except HSF Exempt;
GBPC Exempt; GWPC Exempt; WIS Field
Management (see Policy 701-B for WIS Field
Management personnel) and Exempt; TTH
Canadian District Sales Manager and TTH
Wood Mills Exempt Employees)
(REV.)
Huffy Company EBIT vs. PP 0% 5.0% 10.0%
Huffy Company RONA vs. PP 0% 5.0% 10.0%
---- ------ -----
0% 10.0% 20.0%
2. HSF District Managers
District Gross Field Profit % vs. PP 0 2.5% 5.0% (REV.)
District Gross Field Profit $ vs. PP 0 2.5% 5.0% (REV.)
Huffy Company EBIT vs. PP 0 2.5% 5.0%
Huffy Company RONA vs. PP 0 2.5% 5.0%
---- ------ -----
0% 10.0% 20.0%
3. HSF Area Managers
Area Gross Field Margin % vs. PP 0 2.5% 5.0% (REV.)
Area Gross Field Margin $ vs. PP 0 5.0% 5.0% (REV.)
Huffy Company EBIT vs. PP 0 2.5% 5.0%
Huffy Company RONA vs. PP 0 2.5% 5.0%
---- ------ -----
0% 10.0% 20.0%
4. HSF Other Exempt
Huffy Company EBIT vs. PP 0 5.0% 10.0%
Huffy Company RONA vs. PP 0 5.0% 10.0%
---- ------ -----
0% 10.0% 20.0%
</TABLE>
Page 3 of 15
<PAGE> 4
<TABLE>
<CAPTION>
Min. Target Max.
---- ------ ----
<S> <C> <C> <C>
5. GBPC Financial Staff (including
all Denver-based MIS, Credit and
Accounting employees except for MIS
LAN Administrator and Cost Accountant)
Huffy Company (without GWPC) EBIT vs. PP 0 4.0% 8.0%
Huffy Company (without GWPC) RONA vs. PP 0 4.0% 8.0%
GWPC RONA vs. PP 0 1.0% 2.0%
GWPC EBIT vs. PP 0 1.0% 2.0%
---- ------ ------
0% 10.0% 20.0%
6. 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) EBIT vs. PP 0 4.0% 8.0%
Huffy Company (without GWPC) RONA vs. PP 0 4.0% 8.0%
GWPC RONA vs. PP 0 1.0% 2.0%
GWPC EBIT vs. PP 0 1.0% 2.0%
---- ------ ------
0% 10.0% 20.0%
7. Other GBPC Exempt
Huffy Company (without GWPC) EBIT vs. PP 0 5.0% 10.0%
Huffy Company (without GWPC) RONA vs. PP 0 5.0% 10.0%
---- ------ ------
0% 10.0% 20.0%
8. GWPC Exempt
GWPC EBIT vs. PP 0 5.0% 10.0%
GWPC RONA vs. PP 0 5.0% 10.0%
---- ------ ------
0% 10.0% 20.0%
</TABLE>
Page 4 of 15
<PAGE> 5
<TABLE>
Min. Target Max.
--- ------ ---
<S> <C> <C> <C>
9. TTH Canadian District Sales Manager
Net Sales $ vs. Sales Objective $* 0% 10.0% 20.0%
--- ------ -----
0% 10.0% 20.0%
</TABLE>
* 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>
<CAPTION>
<S> <C> <C> <C> <C>
10. TTH Wood Mills Exempt (REV.)
Huffy Company EBIT vs. PP 0 5.0% 10.0%* (REV.)
Huffy Company RONA vs. PP 0 5.0% 10.0%* (REV.)
Huffy Company Gainsharing Plan 0 -- 12.0%* (REV.)
--- ------ -----
0% 10.0% 20.0%* (REV.)
* Either category of bonus payment may pay up to the maximum award shown, but (REV.)
the maximum total bonus payable shall not exceed 20.0%. (REV.)
</TABLE>
<TABLE>
11. All WIS exempt positions with Manager or
Director titles (excluding WIS National Account
Manager; WIS National Sales Manager; and
WIS Field Management Personnel)
<S> <C> <C> <C> <C>
Huffy Company EBIT vs. PP 0 5.0% 10.0%
Huffy Company RONA vs. PP 0 5.0% 10.0%
--- ------ -----
0 10.0% 20.0%
12. WIS National Account Manager
Huffy Company EBIT vs. PP 0 5.0% 10.0% (REV.)
Huffy Company RONA vs. PP 0 5.0% 10.0% (REV.)
--- ------ -----
0% 10.0% 20.0%
13. Other WIS Exempt and WIS Service
Managers, and WIS Managers in
Training (excluding WIS Field
Management; WIS National Account (REV.)
Manager and WIS National Sales (REV.)
Manager (REV.)
</TABLE>
Page 5 of 15
<PAGE> 6
<TABLE>
<CAPTION>
Min. Target Max.
--- ------ ---
<S> <C> <C> <C>
Huffy Company EBIT vs. PP 0 2.5% 5.0%
Huffy Company RONA vs. PP 0 2.5% 5.0%
--- ------ -----
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 recom-mendations will be subject to approval by the Audit
Committee of the Board of Directors.
III. Award Scales(1)
---------------
<TABLE>
<CAPTION>
Huffy Company RONA vs. Plan (REV.)
Huffy Company EBIT vs. Plan % of Targeted
Corporate RONA vs. Plan Award Earned(2)
---------------------------------------------------- ---------------
<S> <C> <C>
A separate letter will be sent to each Huffy (REV.)
Company with their applicable award scale. (REV.)
</TABLE>
<TABLE>
<CAPTION>
% of Targeted
Corporate EPS vs. Plan Award Earned(2)
------------------------------------------------------ ---------------
<S> <C> <C>
The 1996 award scale is maintained by the (REV.)
Vice President and Controller. (REV.)
</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>
Page 6 of 15
<PAGE> 7
<TABLE>
<CAPTION>
% of Targeted
Award Earned
------------
HSF District Gross Field Profit % vs. PP (REV.)
HSF Area Gross Field Margin % vs. PP (REV.)
- ------------------------------------
<S> <C> <C>
Greater than -1.00% below -0- (REV.)
-1.00 Threshold 25 (REV.)
-0.67 50 (REV.)
-0.33 75 (REV.)
PP% Target 100 (REV.)
+0.5 133 (REV.)
+1.0 167 (REV.)
+1.5 Maximum 200 (REV.)
</TABLE>
1. The scales are sliding. When actual performance 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. Percent of targeted award earned is used as a multiple of bonus
target which varies by level of employee. Refer to Section I.
IV. Positions Covered
A. Corporate Officers and Huffy Company Presidents
Corporate Officers
------------------
Chairman of the Board, President & CEO
Vice President - Finance and CFO
Vice President - Controller
Vice President - General Counsel and Secretary
Vice President - 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
Page 7 of 15
<PAGE> 8
B. Huffy Company Staff
<TABLE>
<S> <C>
- HBC
---
V.P./G.M. - Celina
V.P./G.M. - Farmington
V.P. Marketing
V.P. Controller
V.P. Plant Operations and Logistics
V.P. Human Resources
V.P. Sales (REV.)
- HSC
---
V.P. Sales and Marketing (REV.)
V.P. Controller
V.P. Product Engineering/Quality Assurance
V.P. Manufacturing
V.P. Materials Management
- GBPC
----
V.P. Sales/Marketing/Design
V.P. Controller
V.P. Operations and Engineering
V.P. Human Resources
V.P. General Manager - GWPC
V.P. and Corporate Counsel (REV.)
- 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. Sales and Account Management
</TABLE>
Page 8 of 15
<PAGE> 9
- TTH
---
V.P. Sales and Marketing
V.P. Operations
V.P. Controller
V.P. Human Resources
Managing Director, TT Ireland
V. Individual Personal Objectives
------------------------------
<TABLE>
<CAPTION>
Bonus Opportunity as a % of
Actual Base Salary
---------------------------------------
Below
Position Threshold Threshold Maximum
-------- --------- --------- -------
<S> <C> <C> <C> <C>
A. Chairman, President & CEO 0% 10.0% 20.0%
-------------------------
B. Executive Vice President & COO 0% 8.0% 16.0%
------------------------------
C. Corporate Officers and
----------------------
Huffy Company Heads 0% 6.0% 12.0%
-------------------
D. Huffy Company Staff 0% 3.0% 6.0%
-------------------
E. Corporate Exempt
----------------
1. Positions with 700 or
more Hay Points 0% 3.0% 6.0%
2. Positions with less than
700 Hay Points 0% 2.0% 4.0%
</TABLE>
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 EBIT or RONA goals in the Profit Plan.
(Financial goals for such things as cost reduction or similar
projects are appropriate goals.)
Page 9 of 15
<PAGE> 10
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 Executive Vice 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 and Other Corporate
Exempt shall each develop no more than 3 objectives.
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>
<CAPTION>
4. Personal Objectives Schedule
----------------------------
<S> <C> <C>
Upon Approval by The CEO's and COO's objectives shall be communicated to
Compensation the Corporate Officers and Huffy Company Presidents
Committee 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 submit them to their
respective supervisor. (REV.)
</TABLE>
Page 10 of 15
<PAGE> 11
<TABLE>
<S> <C> <C>
Corporate Officers' and Huffy Company Presidents'
10 days later objectives shall be approved by their respective (REV.)
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 Other Corporate Exempt and Huffy
Company Staffs ("Huffy Staff").
30 days later Huffy Staff personnel shall have submitted and received (REV.)
approval of their objectives from their respective Huffy (REV.)
Company President. Corporate Staff shall have submitted (REV.)
and received approval of their objectives from their (REV.)
respective Corporate Officer. Other Corporate Exempt (REV.)
shall have submitted and received approval of their (REV.)
objectives from their respective Corporate Staff (REV.)
supervisor or, if applicable, supervising Corporate (REV.)
Officer. (REV.)
(REV.)
</TABLE>
5. Personal Objectives Results Schedule
------------------------------------
<TABLE>
<S> <C> <C>
First Friday in Corporate Staff and Other Corporate Exempt shall submit
December their results for the year ending for evaluation to the
appropriate Corporate Officer and immediate supervisor,
respectively, and, with respect to Huffy Staff, to their
Huffy Company President.
10 days later Personal objective results for Corporate Staff, Other
Corporate Exempt and Huffy Company Staff shall have been
reviewed and have received comments as follows:
- Corporate Officers shall comment to their Corporate
Staff and Other Corporate Exempt, if immediately
supervised. (REV.)
- Supervisors of Other Corporate Exempt. (REV.)
- Huffy Company Presidents to Huffy Staff. (REV.)
10 days later CEO and COO provide Compensation Committee of Board of (REV.)
Directors with their results for evaluation and approval. (REV.)
</TABLE>
Page 11 of 15
<PAGE> 12
<TABLE>
<S> <C> <C>
Corporate Staff and Other Corporate Exempt and personnel
5 days later results shall be approved by their immediate supervisors. (REV.)
Huffy Staff personnel results shall be approved by Huffy (REV.)
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.
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:
(A) ALL CORPORATE OFFICERS, HUFFY COMPANY PRESIDENTS, HUFFY STAFF, (REV.)
CORPORATE STAFF AND OTHER CORPORATE EXEMPT. (REV.)
A separate letter outlining the parameters of Personal (REV.)
Objectives eligibility shall be forwarded to each Huffy (REV.)
Company President and Corporate Officer. (REV.)
</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.
Page 12 of 15
<PAGE> 13
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> <C> <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%
</TABLE>
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.
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
Page 13 of 15
<PAGE> 14
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:
BONUS AS PERCENT PAYMENT
TERMINATION DATE OF FULL BONUS OPPORTUNITY
JULY 1 - SEPTEMBER 30 50%
OCTOBER I - DECEMBER 31 75%
JANUARY 1 - DATE OF PAYMENT 100%
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.
Page 14 of 15
<PAGE> 15
Definitions
-----------
Consolidated RONA Profit after tax after cost of plan plus
----------------- tax affected interest expense divided by
the twelve (12) month rolling average of
total assets less current liabilities
excluding all interest bearing debt.
E.P.S. Earnings per common share.
------
Huffy Company RONA Earnings before interest and taxes, tax
------------------ affected at the current profit plan tax
rate, divided by the twelve (12) month
rolling average of total assets other
than goodwill less current liabilities
excluding all interest bearing debt.
EBIT Earnings before interest and taxes.
----
Actual Base Salary Employee's actual base salary as of the
------------------ January 1 of 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 with substantially
-------- different duties and responsibilities
which does not constitute a promotion or
demotion.
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 and 701-C which is restricted to
Corporate Officers and President and General Manager of WIS. (REV.)
/s/ DONALD R. SCHEICK /s/ RICHARD L. MOLEN
____________________________________ ___________________________________
Director, Corporate Human Resources Chairman, President and
Chief Executive Officer
Page 15 of 15
<PAGE> 1
EXHIBIT 10.aa
HUFFY CORPORATION
MASTER BENEFIT TRUST AGREEMENT AS RESTATED
June 9, 1995
<PAGE> 2
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
ARTICLE I Name of Trust................................... 2
1.1 Name.................................. 2
1.2 Purpose............................... 2
ARTICLE II Definitions..................................... 2
ARTICLE III Payments to Executives Pursuant to
the Plans....................................... 4
ARTICLE IV Payment Schedules under Plans................... 5
4.1 Payment Schedules..................... 5
4.2 Modified Payment Schedules............ 5
4.3 Withholdings.......................... 5
4.4 Further Assurances.................... 5
4.5 Distributions in the Event
of Taxability......................... 6
ARTICLE V The Trust Fund and Funding...................... 6
5.1 Receipt and Holding of
the Trust Fund........................ 6
5.2 Initial Funding of Trust.............. 6
5.3 Additional Funding; Excess Assets..... 7
5.4 Release of Trust Funds Unless
a Change of Control Occurs............ 7
5.5 Transfer to Another Trustee........... 8
ARTICLE VI Status of Trust and Trustee Responsibility
When the Company is Insolvent................... 8
6.1 Grantor Trust......................... 8
6.2 Cessation of Payments and Insolvency.. 8
6.3 Subject to Claims of Creditors of
a Participating Employer.............. 9
ARTICLE VII The Trustee's Accounting........................ 10
7.1 Books and Records..................... 10
7.2 Trustee's Report...................... 10
7.3 Additional Reports.................... 11
ARTICLE VIII Administration of the Trust Fund................ 11
8.1 Ownership and Investment
of the Trust Fund..................... 11
8.2 Powers of the Trustee................. 11
8.3 Situs of Assets....................... 12
</TABLE>
-i-
<PAGE> 3
<TABLE>
<S> <C> <C>
8.4 Entire Agreement...................... 12
ARTICLE IX Relating to the Trustee......................... 13
9.1 Liability of the Trustee.............. 13
9.2 Obligations under Law................. 13
9.3 Bond.................................. 13
9.4 Compensation.......................... 13
9.5 Indemnification....................... 13
ARTICLE X Missing Persons, Incapacitated Executives,
Directions, and Notices......................... 14
10.1 Missing Persons....................... 14
10.2 Incapacitated Executives.............. 14
10.3 Form.................................. 14
10.4 Proof of any Matter................... 14
10.5 Absence of Directions................. 14
ARTICLE XI Resignation or Removal of Trustee............... 14
11.1 Successor Trustee..................... 14
11.2 Final Account......................... 15
11.3 Transfer and Discharge................ 15
11.4 Effective Date of Appointment
of Successor Trustee.................. 15
11.5 Merger or Consolidation............... 15
ARTICLE XII Protection for Third Persons.................... 15
12.1 Protection for Third Persons.......... 15
ARTICLE XIII Termination; Amendment; and Waiver.............. 16
13.1 Termination........................... 16
13.2 Amendment and Waiver.................. 16
13.3 Schedule B to the Trust............... 16
ARTICLE XIV General Provisions.............................. 17
14.1 Ohio Trust............................ 17
14.2 Nonalienation of Benefits............. 17
14.3 Severability.......................... 17
14.4 Arbitration........................... 17
14.5 Notices............................... 17
14.6 Trust Beneficiaries................... 18
14.7 Headings.............................. 18
14.8 Counterparts.......................... 18
14.9 Company as Agent...................... 18
</TABLE>
SCHEDULE A - Form of Adoption Agreement
SCHEDULE B - Plans as to which the Trustee has been Designated to make Payments
on behalf of the Company
-ii-
<PAGE> 4
HUFFY CORPORATION
-----------------
MASTER BENEFIT TRUST AGREEMENT AS RESTATED
------------------------------------------
THIS MASTER BENEFIT TRUST AGREEMENT AS RESTATED (the
"Agreement") is entered into as of the 9th day of June, 1995 by HUFFY
CORPORATION, an Ohio corporation, as grantor (the "Company"), and BANK ONE
TRUST COMPANY, N.A., as trustee (the "Trustee"), and is, in accordance with the
resolution of the Compensation Committee of the Board adopted on October 21,
1993, a consolidation and restatement in this Agreement of the Master Benefit
Trust Agreement and the Second Master Trust Agreement entered into by the
Company as of October 1, 1987 and January 1, 1988, respectively; this Agreement
supersedes and replaces both such master trust agreements and the trusts
established under each of them are consolidated and combined in the trust of
the Company established hereunder; and this Agreement is entered into, and the
trusts created pursuant hereto are established, for the following purposes:
(A) The Company desires to establish this Trust as a master
trust arrangement under which a separate and independent Sub-trust
shall be created and maintained for the funds contributed to the Trustee
by the Company and a separate and independent Sub-trust shall be created
and maintained for each Subsidiary which has executed, with the consent
of the Company, an Adoption Agreement, in the form attached hereto as
SCHEDULE A ("Participating Employer" as used hereinafter means,
individually, the Company and any Subsidiary which has established a
Sub-trust hereunder and, collectively, all of the foregoing; and
"Sub-trust" means, individually, a sub-trust established hereunder by a
Participating Employer and, collectively, all Sub-trusts);
(B) Each Participating Employer from time to time
establishes incentive and other compensation plans under which it
becomes obligated to make payments to present and former directors and
executives of the Participating Employer;
(C) Those compensation arrangements are not funded or
otherwise secured, and each Participating Employer by this Agreement
desires to provide further assurance to such persons that in the event
of a Change of Control of the Company (as defined at Article II) such
payments will be timely made by depositing with the Trustee upon the
occurrence of a Potential Change of Control of the Company, subject only
to the claims of the Participating Employer's existing or future
creditors in the event the Participating Employer becomes Insolvent (as
defined at Section 6.2), assets for use in making such payments;
(D) Each Participating Employer desires to be able from
time to time (i) to designate on SCHEDULE B to this Agreement
<PAGE> 5
the plans giving rise to deferred payment obligations of the
Participating Employer that the Trustee is authorized to pay on behalf
of the Participating Employer from the Sub-trust assets of such
Participating Employer in the event of a Change of Control and (ii) to
set forth on SCHEDULE B to this Agreement (upon or before the occurrence
of a Potential Change of Control) the persons for whose benefit the
Sub-trust is established, the amounts contributed to the Sub-trust on
behalf of each such person and the Participating Employer's payment
obligations to each such person;
(E) The Trustee shall maintain a separate account for each
Sub-trust, except that for investment purposes, the Trustee shall
commingle the assets of the Sub-trusts; and
(F) It is the intention of the Company and each
Participating Employer that each Sub-trust shall constitute an unfunded
arrangement and shall not affect the status of the compensation
arrangements as unfunded plans maintained for the purpose of providing
future compensation for present and former directors and executives of
each Participating Employer for purposes of Title I of the Employee
Retirement Income Security Act of 1974;
NOW, THEREFORE, in consideration of the mutual agreements
contained herein and for other good and valuable consideration, the parties
hereto agree as follows:
ARTICLE I
---------
NAME OF TRUST
-------------
1.1 NAME. This Trust may be referred to as the "Huffy
Corporation Master Benefit Trust Agreement As Restated."
1.2 PURPOSE. This Trust and the Sub-trusts are established for
the purposes set forth in Preambles A through F to this Agreement.
ARTICLE II
----------
DEFINITIONS
-----------
The following terms used in this Agreement shall have the
following meanings:
A. "Board" means the Board of Directors of the Company.
B. "Change of Control" shall mean and shall be deemed to have
occurred upon the occurrence of any of the following events: (i) any person
shall acquire other than directly from the Company in exchange for cash or
property in excess of thirty percent (30%) of the Company's outstanding shares
of Common
-2-
<PAGE> 6
Stock; or (ii) there shall be a merger, consolidation or other combination of
the Company with one or more other corporations as a result of which more than
forty-nine percent (49%) of the voting stock of the merged, consolidated or
combined corporation is held by former shareholders of the corporations (other
than the Company) which are parties to, or are shareholders of corporations
(other than the Company) in control of parties to, such merger, consolidation or
other combination; or (iii) two or more persons, who were not nominated as
candidates for the Board of Directors of the Company in proxy statements
forwarded to shareholders during any period of twenty-four (24) consecutive
months on behalf of the Board of Directors of the Company, are elected to the
Board of Directors of the Company by the shareholders of the Company voting in
person or by proxy, and such persons so elected are nominated as candidates for
the Board of Directors in proxy statements forwarded, or caused to be forwarded,
to the shareholders of the Company during such period by any person other than
the Board of Directors of the Company.
C. "Company" means Huffy Corporation, an Ohio corporation,
and any successor to such entity.
D. "Executive" means (i) a person who in accordance with the
terms of a Plan is or was a participant in a Plan and who is a person to whom
the Trustee by the terms of this Agreement is directed to make payments on
behalf of a Participating Employer or (ii) a beneficiary who has succeeded to
the interest of any such person.
E. "Fiscal Year" means the fiscal year of the Company.
F. "Insolvent" shall have the meaning ascribed to it at
Section 6.2.
G. "Payment Schedule" shall have the meaning ascribed to it
at Section 4.1.
H. "Participating Employer" shall have the meaning
ascribed to it at Preamble A to this Agreement; any action which it is
necessary or desirable for a Participating Employer to take under this
Agreement may be taken by the Company if an Adoption Agreement executed by the
Participating Employer authorizing the Company to so act on behalf of the
Participating Employer is in effect at the time any such action is to be taken.
I. "Plans" means those compensation arrangements, plans or
agreements listed on Schedule B to this Agreement under which a Participating
Employer is obligated to make payments to individual Executives and the Trustee
under this Agreement is directed to make such payments on behalf of a
Participating Employer.
J. "Potential Change of Control" means and shall be deemed to
have occurred if (i) Common Stock of the Company has been acquired other than
directly from the Company in exchange
-3-
<PAGE> 7
for cash or property by any person who thereby becomes the owner of more than
20% of the Company's outstanding shares of Common Stock; or (ii) any person
(other than the Company) has made a tender offer for, or a request for
invitations for tenders of, shares of Common Stock of the Company; or (iii) any
person forwards or causes to be forwarded to shareholders of the Company proxy
statement(s) in any period of twenty-four (24) consecutive months, soliciting
proxies to elect to the Board of Directors of the Company two or more
candidates who were not nominated as candidates in proxy statements forwarded
to shareholders during such period by the Board of Directors of the Company; or
(iv) the Board adopts a resolution to the effect that, for purposes of this
Agreement, a Potential Change of Control of the Company has occurred.
K. "Sub-trust" shall have the meaning ascribed to it at
Preamble B to this Agreement. For identification purposes, each Sub-trust
established hereunder shall bear the name of the Participating Employer
establishing the same, for example, "Huffy Corporation Sub-trust," "Huffy
Bicycle Company Sub-trust," and similar for other Participating Employers.
L. "Subsidiary" means any corporation or other entity of
which 50% or more of the total voting power is owned, directly or indirectly,
by the Company.
M. "Trust" means the trust created by this agreement.
N. "Trust Fund" shall have the meaning ascribed to it at
Section 5.1.
O. "Trustee" means any trustee from time to time serving as
the trustee of the Trust.
ARTICLE III
-----------
PAYMENTS TO EXECUTIVES PURSUANT TO THE PLANS
--------------------------------------------
After a Change of Control, the Trustee shall, except as
otherwise provided at Section 6.2, use the funds in the Sub-trust of a
Participating Employer to make the payments required to be made to Executives
of such Participating Employer pursuant to the Plans in accordance with the
Payment Schedules delivered to the Trustee by such Participating Employer
pursuant to Sections 4.1 and 4.2. Each Participating Employer shall continue
to be liable to make such payments to Executives to the extent such payments
have not been made out of the Sub-trust of such Participating Employer. Any
payment made from a Sub-trust to an Executive shall, to the extent of such
payment, be applied to reduce the Participating Employer's obligation to the
Executive under the Plan in respect of which the payment was made. In no event
shall the funds held in the Sub-trust of one Participating Employer be used to
pay the obligations of another Participating Employer.
-4-
<PAGE> 8
ARTICLE IV
----------
PAYMENT SCHEDULES UNDER PLANS
-----------------------------
4.1 PAYMENT SCHEDULES. Upon or before the occurrence of a
Potential Change of Control, each Participating Employer shall provide the
Trustee with a schedule of the individual Executives who are participants in
the Plans listed on SCHEDULE B and to whom payments are to be made from the
Trust on behalf of the Participating Employer. Upon the occurrence of a
Potential Change of Control, each Participating Employer shall also deliver to
the Trustee payment schedules, included as PART II TO SCHEDULE B, showing as to
each Executive the dates payments are to be made to each individual Executive
and the amount of each such payment or setting forth a formula or instructions
acceptable to the Trustee for determining the amounts so payable and the
payment dates ("Payment Schedules"). The Payment Schedules, as they pertain to
each Executive, shall also be delivered by the Participating Employer to such
Executive.
4.2 MODIFIED PAYMENT SCHEDULES. After the occurrence of a
Potential Change of Control, modified Payment Schedules shall be delivered by a
Participating Employer to the Trustee and to each Executive (as it pertains to
such Executive) each time that additional amounts are required to be paid by a
Participating Employer to the Trustee under Section 5.3 and upon the occurrence
of any event, such as early retirement of an Executive, requiring a
modification of the Payment Schedule. The Trustee shall make payments from the
Sub-trust assets to an Executive in accordance with the provisions of the
Payment Schedule applicable to such Executive. In the event that an Executive
reasonably believes that the Payment Schedule, as modified, does not properly
reflect the amount payable to such Executive or the time or form of payment
from the Sub-trust assets in respect of any Plan, such Executive shall be
entitled to deliver to the Trustee written notice (the "Executive's Notice")
setting forth payment instructions for the amount the Executive believes is
payable under the relevant terms of such Plan. The Executive shall also
deliver a copy of the Executive's Notice to the Participating Employer within
three (3) business days of the delivery to the Trustee. Unless the Trustee
receives written objection from the Participating Employer within thirty (30)
business days after receipt by the Participating Employer of such notice, the
Trustee shall make the payment in accordance with the payment instructions set
forth in the Executive's Notice. In the event the Participating Employer
delivers to the Trustee a written objection in accordance with the preceding
sentence, then, if the Participating Employer and the Executive are unable to
resolve their differences within the 45-day period following the Participating
Employer's delivery of objections to the Trustee, the parties shall submit the
matter to arbitration in accordance with Section 14.4.
4.3 WITHHOLDINGS. The Trustee shall make provision for the
reporting and withholding of any federal, state or local
-5-
<PAGE> 9
taxes that may be required to be withheld with respect to the payment of
benefits pursuant to the terms of the Plans and shall pay amounts withheld to
the appropriate taxing authorities or determine that such amounts have been
reported, withheld and paid by the Participating Employer. The Trustee may
rely on instructions from the Participating Employer as to any required
withholding and shall be fully protected under Section 9.5 in relying on such
instructions.
4.4 FURTHER ASSURANCES. The Trustee shall, at any time and
from time to time, administer this Trust as may be necessary or proper to
effectuate the purposes of this Trust. If the Trustee receives an unqualified
opinion of tax counsel selected by the Trustee, which opinion states that the
Executives are subject to Federal income tax on amounts held in Trust prior to
the distribution to the Executives of such amounts, the Trustee shall, to the
extent practicable, take such action and administer the Trust Fund in such a
manner so as to prevent the Trust Fund from being immediately taxable income to
the Executives before making any distributions pursuant to Section 4.5,
provided that the Trustee shall not return any portion of the Trust Fund to a
Participating Employer.
4.5 DISTRIBUTIONS IN THE EVENT OF TAXABILITY. In the event
of any final determination by the Internal Revenue Service or a court of
competent jurisdiction, which determination is not appealable or the time for
appeal or protest of which has expired, or the receipt by the Trustee of a
substantially unqualified opinion of tax counsel selected by the Trustee, which
determination determines, or which opinion opines, that the Executives or any
particular Executive, is subject to Federal income taxation on amounts held in
the Trust prior to the distribution to Executives or Executive of such amounts
and no curative action is available under Section 4.4, the Trustee shall, on
receipt by the Trustee of such opinion or notice of such determination, pay to
each Executive the portion of the Trust assets includible in such Executive's
Federal gross income, provided as a condition of receiving such payment, the
Executive delivers to the Trustee a written agreement stating that the payment
being made is in satisfaction of the obligations of the Participating Employer
due to him in respect of which the payment is made, after taking into
consideration that such payment is being made prior to the required
distribution date, and the Participating Employer concurs in such agreement
which concurrence shall not be unreasonably withheld.
ARTICLE V
---------
THE TRUST FUND AND FUNDING
--------------------------
5.1 RECEIPT AND HOLDING OF THE TRUST FUND. The Trustee will
accept and hold all contributions and all insurance contracts, insurance
policies and other property transferred and delivered to the Trustee by a
Participating Employer or at a
-6-
<PAGE> 10
Participating Employer's direction; and the Trustee shall maintain a separate
record of account showing the interest in Trust assets of each Sub-trust
established by a Participating Employer. All contributions and property
received by the Trustee, plus income and appreciation, constitute the trust
fund (the "Trust Fund").
5.2 INITIAL FUNDING OF TRUST. Concurrently with the
execution of this Trust, the Company is delivering to the Trustee the sum of
Ten Dollars to be held in the Sub-trust established hereunder by the Company
and known as the "Huffy Corporation Sub-trust." The Sub-Trust of a Subsidiary
shall be initially established hereunder at the time the Subsidiary delivers an
executed copy of its Adoption Agreement to the Trustee indicating that such
Subsidiary has become a Participating Employer hereunder. Upon the occurrence
of a Potential Change of Control, each Participating Employer shall promptly
contribute to the Trust, in cash or other property, the amount determined under
accepted actuarial principles to be necessary to fund the amounts payable to
the Executives of the Participating Employer under the Plans in accordance with
the Payment Schedules for the Executives delivered to the Trustee pursuant to
Section 4.1 and 4.2.
5.3 ADDITIONAL FUNDING; EXCESS ASSETS. Unless the Trust
Funds contributed to the Trustee pursuant to the last sentence of Section 5.2
have been released to the Participating Employers pursuant to Section 5.4, the
Company shall, as soon as practicable after the end of each Fiscal Year,
recalculate the amount determined under accepted actuarial principles to be
necessary to fund the amounts payable to Executives under all Plans and in
accordance with the Payment Schedules for Executives delivered to the Trustee
pursuant to Sections 4.1 and 4.2 through the end of the most recently completed
Fiscal Year (herein referred to as the "Aggregate Payment Obligation"). The
calculation shall be made by the Company for each Sub-trust on a separate and
independent basis; it being understood that for the purposes of funding,
contributions, and distributions by, or for the benefit of, a Participating
Employer the assets of the Sub-trusts are separate and distinct and no
Participating Employer has any interest, right, or claim to any assets held in
the Sub-trust of another Participating Employer. If the Aggregate Payment
Obligation of a Participating Employer exceeds the fair market value of the
assets in the Sub-trust of such Participating Employer at the end of the most
recently completed Fiscal Year, then there exists a funding deficiency to the
extent of such excess; and such Participating Employer shall by no later than
90 days after the end of such Fiscal Year contribute to the Trustee additional
cash or property having a fair market value equal to the amount of the funding
deficiency in the particular Sub-trust. If the fair market value of assets in
a Sub-trust at the end of the most recently completed Fiscal Year is more than
125% of the Aggregate Payment Obligation of the Participating Employer, then
there is an overfunding in such Sub-trust to the extent of such excess; and the
Trustee shall as soon as practicable after the determination that an
overfunding exists distribute cash or other
-7-
<PAGE> 11
property to such Participating Employer having a fair market value equal to the
amount by which the fair market value of Sub-trust assets exceeds 125% of the
Aggregate Payment Obligation of such Participating Employer.
5.4 RELEASE OF TRUST FUNDS UNLESS CHANGE OF CONTROL OCCURS.
Any funds delivered to the Trustee pursuant to Section 5.2 because of the
occurrence of a Potential Change of Control, together with any assets in the
individual Sub-trusts in excess of the initial contributions of Participating
Employers, shall be returned to the Participating Employers two years after the
date of delivery to the Trustee pursuant to Section 5.2, unless a Change of
Control shall have occurred. If any subsequent Potential Change of Control
occurs during such initial two-year period, such initial two-year period shall
be extended to a date two years after the occurrence of the subsequent
Potential Change of Control. The Company shall notify the Trustee of the
occurrence of a Change of Control or Potential Change of Control, and
Executives holding 25% or more beneficial interest in Trust Funds may notify
the Trustee that a Change of Control or Potential Change of Control has
occurred (provided in the case of any such notice from Executives, it is
accompanied by an opinion of qualified counsel acceptable to the Company
stating that in the opinion of such counsel a Change of Control or Potential
Change of Control has occurred). The Trustee may rely on any such notice or on
any other actual notice satisfactory to the Trustee of such a change or
potential change which the Trustee may receive. Notwithstanding the foregoing,
the Trustee shall have no duty or obligation to make any independent
determination that such a change or potential change has occurred. In the
event Trust Funds are released to Participating Employers pursuant to this
Section 5.4, all payment schedules delivered to the Trustee pursuant to Section
4.1 and 4.2 shall be returned to the Participating Employers and be of no
further force and effect.
5.5 TRANSFER TO ANOTHER TRUSTEE. The Company may direct the
Trustee to transfer the Trust Fund to a successor trustee as set forth in
Section 11.1. The Trustee immediately will comply with that direction. When
that transfer is completed, the Trustee will be relieved from all further
obligations in connection with the Trust Fund.
ARTICLE VI
----------
STATUS OF TRUST AND TRUSTEE RESPONSIBILITY
------------------------------------------
WHEN COMPANY IS INSOLVENT
-------------------------
6.1 GRANTOR TRUST. The Trust is part of each Participating
Employer's program established for the purpose of providing deferred
compensation to its present and former directors and key employees and is
intended to be exempt from the participation, vesting, funding and fiduciary
requirements of the
-8-
<PAGE> 12
Employee Retirement Income Security Act of 1974, as amended. Each
Participating Employer intends its Sub-trust to be treated as a grantor trust
within the meaning of Section 671 of the Internal Revenue Code and all income
attributable to a Sub-trust shall be reported by the Participating Employer
which established the Sub-trust. The Sub-trust of each Participating Employer
shall at all times be subject to the claims of the creditors of such
Participating Employer as set forth in Section 6.3.
6.2 CESSATION OF PAYMENTS AND INSOLVENCY. The Trustee shall
cease payment of benefits to Executives of a particular Participating Employer
if such Participating Employer is Insolvent. A Participating Employer shall be
considered "Insolvent" for purposes of this Agreement if (i) the Participating
Employer is unable to pay its debts as they become due, or (ii) the
Participating Employer is subject to a pending proceeding as a debtor under the
United States Bankruptcy Code.
6.3 SUBJECT TO CLAIMS OF CREDITORS OF A PARTICIPATING
EMPLOYER. At all times during the continuance of this Trust, the principal and
income of a Sub-trust of a Participating Employer shall be subject to claims of
general creditors of such Participating Employer under federal and state law as
set forth below.
(a) The Board of Directors and the Chief Executive Officer of a
Participating Employer shall have the duty to inform the Trustee in
writing if the Participating Employer becomes Insolvent. If a person
claiming to be a creditor of a Participating Employer alleges in writing
to the Trustee that the Participating Employer has become Insolvent, the
Trustee shall determine whether the Participating Employer is Insolvent
and, pending such determination, the Trustee shall discontinue payment
of benefits to Executives of such Participating Employer.
(b) Unless the Trustee has actual knowledge that the
Participating Employer is Insolvent, or has received notice from the
Participating Employer or a person claiming to be a creditor alleging
that the Participating Employer is Insolvent, the Trustee shall have no
duty to inquire whether the Participating Employer is Insolvent. The
Trustee may in all events rely on such evidence concerning the
Participating Employer's solvency as may be furnished to the Trustee and
that provides the Trustee with a reasonable basis for making a
determination concerning the Participating Employer's solvency.
(c) If at any time the Trustee has determined that a
Participating Employer is Insolvent, the Trustee shall discontinue
payments to Executives of such Participating Employer and shall hold the
assets of the particular Sub-trust for the benefit of such Participating
Employer's general creditors. Nothing in this Agreement shall in any
way diminish any rights of Executives to pursue their rights
-9-
<PAGE> 13
as general creditors of such Participating Employer with respect to
benefits due under the Plans or otherwise.
(d) The Trustee shall resume the payment of benefits to
Executives of such Participating Employer in accordance with this Trust
only after the Trustee has determined that such Participating Employer
is not Insolvent (or is no longer Insolvent).
(e) Provided that there are sufficient assets, if the Trustee
discontinues the payment of benefits from a Sub-trust pursuant to
Section 6.3 and subsequently resumes such payments, the first payments
following such discontinuance shall include the aggregate amount of all
payments due to Executives of such Participating Employer under the
terms of the Plans for the period of such discontinuance, less the
aggregate amount of any payments made to Executives by the Participating
Employer in lieu of the payments provided for hereunder during any such
period of discontinuance.
ARTICLE VII
-----------
THE TRUSTEE'S ACCOUNTING
------------------------
7.1 BOOKS AND RECORDS. The Trustee will keep accurate and
detailed accounts of all investments, receipts, disbursements and other
transactions in respect of the Trust Fund and each Sub-trust. Those accounts
and related records may be inspected by any person designated by a
Participating Employer. The Trustee will retain those records and supporting
data for the period required by law. All assets of the Sub-trusts may be
commingled for purposes of investment. For recordkeeping purposes only, a
deferred payment account shall be maintained for each Executive of a
Participating Employer. Each deferred payment account will be credited with
all contributions relating to the Executive for whom it was established and
will be debited with all payments to such Executive.
7.2 TRUSTEE'S REPORT. Within 60 days after the end of each
Fiscal Year, the Trustee shall file a written report with each Participating
Employer containing:
(a) A description of investments, receipts, disbursements
and other transactions effected by the Trustee during the most recently
completed Fiscal Year;
(b) An exact description of any asset transferred to the
Trustee or transferred by the Trustee to any other person during such
Fiscal Year;
(c) An exact description of assets sold or purchased by the
Trustee during such Fiscal Year, the cost of each item purchased and the
net proceeds of each item sold;
-10-
<PAGE> 14
(d) An exact description of all assets held by the Trustee
as of the close of business on the last day of such Fiscal Year, and the
cost and fair market value of each item (other than insurance contracts)
determined as of the same date; and
(e) Any other information required by law to be filed on
behalf of the Trust.
The information described in subsections (a), (b) and (c),
above, may be given in the form of monthly or quarterly reports, if those
reports, taken together, contain the required information.
7.3 ADDITIONAL REPORTS. In addition to the report required
under Section 7.2 above, the Trustee shall make any interim reports reasonably
requested by a Participating Employer.
ARTICLE VIII
------------
ADMINISTRATION OF THE TRUST FUND
--------------------------------
8.1 OWNERSHIP AND INVESTMENT OF THE TRUST FUND. The Trustee is
the legal owner of all Trust Fund assets and, subject to this Article, shall
invest and reinvest the Trust Fund. Any amounts reasonably necessary to meet
contemplated payments or to be transferred from the Trust Fund may be deposited
temporarily in the commercial department of any bank or trust company,
including that of the Trustee or any affiliate or subsidiary of it or its
parent. The Trustee will not be liable for any interest on those deposits
except for interest actually paid by the bank or trust company or, if the
deposit is with the Trustee's own commercial department, interest at the rate
in effect from time to time for such deposits. Alternatively, the Trustee may
make temporary deposits in governmental obligations, certificates of deposit,
commercial paper, commercial paper master notes or a common trust fund
maintained by the Trustee for temporary cash investments.
8.2 POWERS OF THE TRUSTEE. Subject to this Article, Article 5
and Sections 9.1 and 9.2 and in addition to the powers generally given to
trustees by law, the Trustee may:
(a) Invest and reinvest the Trust Fund in (i) obligations
issued or guaranteed by the United States or by any person controlled or
supervised by and acting as an instrumentality of the United States
pursuant to authority granted by Congress, (ii) obligations issued or
guaranteed by any state or political subdivision thereof having a rating
equal to or higher than the current A rating classification of Moody's
Investors Service, Inc. or the current A rating classification of
-11-
<PAGE> 15
Standard & Poor's Corporation, both of New York, New York, or their
successors; (iii) commercial or finance paper of any corporation having
a net worth of $10,000,000 and having a rating classification equal to
or higher than the current P-1 rating classification of Moody's
Investors Service, Inc. or the current A-1 rating classification of
Standard & Poor's Corporation, both of New York, New York, or their
successors; (iv) bankers' acceptances drawn on and accepted by banks or
trust companies organized under the laws of the United States of America
or any state thereof, having a reported capital and surplus of at least
$10,000,000 in dollars of the United States of America or bankers'
acceptances drawn on and accepted by the Trustee; (v) certificates of
deposit maturing within twelve months of the Trustee or any affiliate or
subsidiary of it or its parent or of banks or trust companies, organized
under the laws of the United States of America or any state thereof,
having a reported capital and surplus of at least $10,000,000 in dollars
of the United States of America and which has a rating at least equal to
the rating required in (iii) above; and (vi) repurchase agreements
collateralized with obligations described in (i) above; and (vii) money
market funds the assets of which are of the types specified above;
provided that any such investment or deposit is not prohibited by law.
(b) Abandon, adjust, arbitrate, compromise, or otherwise
settle any obligation or liability due to or from it as Trustee,
including any tax claim, and/or enforce or contest any claim in legal or
administrative proceedings. The Trustee will not be required to contest
any claim unless it has been indemnified against the costs and expenses
of that action or unless available Trust Fund assets are sufficient to
pay those expenses.
(c) Compensate from the Trust Fund, agents, accountants,
brokers and counsel (who may be counsel for any of the Participating
Employers) and other assistants and advisors which it believes are
necessary or desirable for the proper administration of the Trust Fund.
(d) Temporarily deposit uninvested funds in a commingled
temporary deposit medium maintained by the Trustee or any affiliate or
subsidiary of it or its parent, which is composed of certificates of
deposit or other obligations issued by the Trustee or any affiliate or
subsidiary of it or its parent.
(e) Do all other acts not specifically mentioned above
which are necessary to administer the Trust Fund and to carry out the
purposes of the Trust.
-12-
<PAGE> 16
8.3 SITUS OF ASSETS. Except as permitted by law, the Trustee
may not maintain in the Trust Fund any assets located outside the
jurisdiction of the district courts of the United States.
8.4 ENTIRE AGREEMENT. The Trustee will have only those powers,
duties, or responsibilities set forth in this Agreement.
ARTICLE IX
----------
RELATING TO THE TRUSTEE
-----------------------
9.1 LIABILITY OF THE TRUSTEE. The Trustee will exercise its
powers and perform its duties with the care, skill, prudence, and diligence
under the circumstances then prevailing that a prudent man acting in a like
capacity and familiar with those matters would use in the conduct of an
enterprise of a like character and with like aim. The Trustee also will
diversify Trust Fund investments to minimize the risk of large loss unless
under the circumstances the Trustee believes it clearly would be prudent not to
diversify. Wherever this Agreement provides that the Trustee must follow
directions of the Company or a Participating Employer or that the Trustee has
no duty or power concerning a matter, the Trustee will not be liable for any
harm caused by a direction or lack of a direction or by any exercise or
non-exercise of power by another unless:
(a) the Trustee knowingly participates in, or knowingly
undertakes to conceal an act or omission of another fiduciary with
respect to a Plan or the Trust; or
(b) by the Trustee's failure to act in accordance with this
Section, the Trustee has enabled another fiduciary to breach a fiduciary
duty; or
(c) the Trustee has knowledge of a breach of fiduciary duty
which resulted in harm or injury and does not make reasonable efforts
under the circumstances to remedy the breach.
9.2 OBLIGATIONS UNDER LAW. Regardless of any general or
specific power or authority granted to it, the Trustee may not engage in any
transaction, exercise any power or perform any duty under this Trust in
violation of the Internal Revenue Code, Employee Retirement Income Security
Act, as amended, or any regulations or rulings issued under those laws.
9.3 BOND. Unless required by law, the Trustee is not required
to furnish bond for the faithful performance of its duties.
9.4 COMPENSATION. The Trustee will be compensated reasonably
as agreed to by the Company and the Trustee. That
-13-
<PAGE> 17
compensation and all reasonable expenses of administration will be paid by the
Company directly and not out of Trust Funds.
9.5 INDEMNIFICATION. The Company and each Participating
Employer agree, jointly and severally, to indemnify and hold harmless the
Trustee from and against any and all damages, losses, claims or expenses as
incurred, including expenses of investigation of claims and fees and
disbursements of counsel to the Trustee and any taxes imposed on the Trust Fund
or income of the Trust (the "Indemnified Amounts"), arising out of or in
connection with the performance by the Trustee of its duties hereunder provided
the Indemnified Amounts do not arise out of, or in connection with, a harm as
to which the Trustee may be liable under Section 9.1. Any amount payable to
the Trustee under this Section 9.5 and not previously paid shall be paid by the
Participating Employers promptly upon demand therefor by the Trustee.
ARTICLE X
---------
MISSING PERSONS, INCAPACITATED EXECUTIVES,
------------------------------------------
DIRECTIONS, AND NOTICES
-----------------------
10.1 MISSING PERSONS. If any payment to be made by the Trustee
to an Executive is not claimed or accepted by the Executive, the Trustee shall
notify the Participating Employer of the Executive. The Trustee shall not have
any obligation to search for or ascertain the whereabouts of any Executive.
10.2 INCAPACITATED EXECUTIVES. While an Executive who is
entitled to a payment or distribution hereunder is under a legal disability or,
in the Trustee's opinion, in any way is incapacitated so as to be unable to
manage his financial affairs, the Trustee may make any required distribution to
an Executive by making it (i) directly to the Executive, (ii) to a legal
guardian of the Executive, or (iii) in such other manner as the Trustee deems
in the best interest of the Executive.
10.3 FORM. All directions, notices, certifications and
amendments to the Trust to be given by the Company or a Participating Employer
will be in writing and will be signed on behalf of the Company or the
Participating Employer, as the case may be.
10.4 PROOF OF ANY MATTER. If required by the Trustee, any
matter may be proved conclusively by certification by the Company. The Trustee
also may accept or require any other or further evidence it believes to be
sufficient or necessary.
10.5 ABSENCE OF DIRECTIONS. If the Trustee believes that it
must take action under this Trust, it may act in its sole discretion unless
direction is provided under this Trust.
-14-
<PAGE> 18
ARTICLE XI
----------
RESIGNATION OR REMOVAL OF TRUSTEE
---------------------------------
11.1 SUCCESSOR TRUSTEE. The Trustee may resign and be
discharged from its duties hereunder at any time by giving notice in writing of
such resignation to each Participating Employer and to each Executive, who has
received a payment from Trust Assets within the 12-month period preceding the
date such notice is to be given by the Trustee, specifying a date (not less
than thirty (30) days after the giving of such notice) when such resignation
shall take effect. Promptly after such notice, the Company, for itself and as
authorized agent of each Participating Employer, shall appoint a successor
trustee, such trustee to become Trustee hereunder upon the resignation date
specified in such notice. The Trustee shall continue to serve until its
successor accepts the trust and receives delivery of the Trust Fund. The
Company may at any time substitute a new trustee by giving thirty (30) days
notice thereof to the Trustee then acting. The Trustee and any successor
thereto appointed hereunder shall be a commercial bank or trust company which
is not an affiliate of a Participating Employer, and which has equity in excess
of $10,000,000.
11.2 FINAL ACCOUNT. If the Trustee dissolves, resigns or is
removed, and unless each Participating Employer accepts without exception the
Trustee's final account, the Trustee (or its representative) may settle its
account either (a) by beginning an action to procure a judicial settlement or
(b) by agreeing on a settlement with the Participating Employers.
11.3 TRANSFER AND DISCHARGE. If a successor trustee is
appointed, the Trustee will transfer the Trust Fund to the successor along with
true copies of all relevant records reasonably requested by the successor. The
Trustee also will execute all documents necessary to the transfer of the Trust
Fund. When it has completed those actions, the Trustee will not be further
accountable for any matters covered in its accounting.
11.4 EFFECTIVE DATE OF APPOINTMENT OF SUCCESSOR TRUSTEE.
Appointment of a successor trustee will be effective when it delivers to the
Company and to the former trustee written acceptance of the appointment. When
delivered, this Trust will be interpreted as if the successor trustee had been
originally named Trustee. However, the successor trustee will not be liable or
responsible for anything done or omitted in the administration of the Trust
before the effective date of its appointment.
11.5 MERGER OR CONSOLIDATION. If the Trustee engages in a
corporate reorganization, the resulting corporation automatically will be the
Trustee's successor.
-15-
<PAGE> 19
ARTICLE XII
-----------
PROTECTION FOR THIRD PERSONS
----------------------------
12.1 PROTECTION FOR THIRD PERSONS. In dealing with the
Trustee, no one other than a Participating Employer is required to inquire into
the Trustee's authority to take any action authorized by this Trust. Those
persons may assume that the Trustee is authorized to take any action which it
undertakes and will not be liable for any act done under written direction of
the Trustee. Also, those persons may assume that the Trustee is authorized to
receive any money or property paid to the Trustee, or paid under the Trustee's
written direction. Written certification by the Company of the Trustee's name
will be conclusive evidence that the Trustee is qualified to act as Trustee at
the date of that certification.
ARTICLE XIII
------------
TERMINATION; AMENDMENT; AND WAIVER
----------------------------------
13.1 TERMINATION. This Trust shall be terminated upon the
final payment of all amounts payable to all of the Executives pursuant to all
the Plans. A Sub-trust shall be terminated upon the final payment of all
amounts payable out of the Sub-trust to all of the Executives of the
Participating Employer which established the Sub-trust. Promptly upon
termination of a Sub-trust, any remaining portion of the assets of the
Sub-trust shall be paid to the Participating Employer which established the
Sub-trust.
13.2 AMENDMENT AND WAIVER. This Trust is irrevocable and may
not be amended except by an instrument in writing signed on behalf of the
parties hereto together with the written consent of Executives having at least
a sixty-five percent (65%) interest in all amounts then held in each Sub-trust
(with such calculation of interest being made on separate basis for each
Sub-trust) credited to their accounts, except that in the event a proposed
amendment relates only to Executives participating in one Plan or Sub-trust,
then the written consent of Executives required to adopt such an amendment
shall be determined on the basis of the assets held in the Trust in respect of
that Plan or Sub-trust, as the case may be, and the interest of such
Executives in such assets. Notwithstanding the foregoing, any such amendment
may be made by written agreement of the parties hereto without obtaining the
consent of the Executives if such amendment does not, in the opinion of counsel
acceptable to the Trustee, adversely affect the rights of the Executives
hereunder. No amendment relating to this Trust or any Sub- trust may be made
which only affects a particular Executive unless such Executive has agreed in
writing to such amendment.
13.3 SCHEDULE B TO THE TRUST. SCHEDULE B lists those Plans
which a Participating Employer, pursuant to Section 4.1,
-16-
<PAGE> 20
has designated as a Plan with respect to which the Trustee is authorized to
make payments to Executives of such Participating Employer from the Sub-trust
of such Participating Employer as set forth in this Trust. A Participating
Employer may from time to time, as set forth in Section 4.1, amend SCHEDULE B
insofar as it relates to the Participating Employer to include an additional
Plan or Plans or to list Executives or additional Executives. A Participating
Employer shall not, however, amend Schedule B to delete a Plan or Plans from
Schedule B unless any such deletion has been approved in the same manner and by
the same consent of Executives as an amendment is required to be approved under
Section 13.2.
ARTICLE XIV
-----------
GENERAL PROVISIONS
------------------
14.1 OHIO TRUST. The Trust and each Sub-trust will be
construed and enforced according to the laws of the State of Ohio and the
United States.
14.2 NONALIENATION OF BENEFITS. Benefits payable to Executives
and their beneficiaries under this Trust may not be anticipated, assigned
(either at law or in equity), alienated, pledged, encumbered or subjected to
attachment, garnishment, levy, execution or other legal or equitable process.
14.3 SEVERABILITY. In the event that any provision of this
Trust or the application thereof to any person or circumstances shall be
determined by a court of proper jurisdiction to be invalid or unenforceable to
any extent, the remainder of this Trust, or the application of such provision
to persons or circumstances other than those as to which it is held invalid or
unenforceable, shall not be affected thereby, and each provision of this Trust
shall be valid and enforced to the fullest extent permitted by law.
14.4 ARBITRATION. Any dispute between or among the Executives,
a Participating Employer, and the Trustee as to the interpretation or
application of the provisions of this Trust and amounts payable hereunder shall
be determined exclusively by binding arbitration in Dayton, Ohio, in accordance
with the rules of the American Arbitration Association then in effect.
Judgment may be entered on the arbitrator's award in any court of competent
jurisdiction.
14.5 NOTICES. Any notice, report, demand or waiver required or
permitted hereunder shall be in writing and shall be given personally or by
prepaid registered or certified mail, return receipt requested, addressed as
follows:
-17-
<PAGE> 21
If to the Company: Huffy Corporation
P.O. Box 1204
Dayton, Ohio 45401
Attn: Corporate Secretary
If to a Participating
Employer (other than
the Company): To the Address Listed in its
Adoption Agreement
If to the Trustee: Bank One Trust Company, N.A.
P.O. Box 1103
Dayton, Ohio 45401
Attn: Trust Department
If to an Executive, to the address of such Executive as listed next to his name
on Schedule B hereto.
A notice shall be deemed received upon the date of delivery if
given personally or, if given by mail, upon the receipt thereof.
14.6 TRUST BENEFICIARIES. Each Executive is an intended
beneficiary under the Sub-trust of his Participating Employer, and shall be
entitled to enforce all applicable terms and provisions hereof with the same
force and effect as if such person had been a party hereto.
14.7 HEADINGS. The headings and subheadings in this Agreement
are inserted for convenience of reference only and are not to be considered in
the construction of its provisions.
14.8 COUNTERPARTS. This Agreement may be executed in any
number of counterparts, each of which is an original; all counterparts
constitute the same instrument, sufficiently evidenced by any one counterpart.
14.9 COMPANY AS AGENT. By executing an Adoption Agreement, a
Participating Employer appoints the Company as its agent for the purpose of
exercising certain powers specifically conferred on the Company in this
Agreement with respect to the Sub-trust of the Participating Employer.
-18-
<PAGE> 22
IN WITNESS WHEREOF, the Company and the Trustee have caused this
instrument to be executed this 9th day of June, 1995.
HUFFY CORPORATION
By: /s/ Nancy A. Michaud
----------------------------
Title: Vice President and
General Counsel
-------------------------
"Company"
BANK ONE TRUST COMPANY, N.A.
By: /s/ Louis W. Feldmann III
----------------------------
Title: Vice President
-------------------------
"Trustee"
-19-
<PAGE> 23
SCHEDULE A
----------
ADOPTION AGREEMENT
FOR
HUFFY CORPORATION
MASTER BENEFIT TRUST AGREEMENT AS RESTATED
------------------------------------------
This ADOPTION AGREEMENT is entered into as of the ___day of
___________1995 by __________________________, an _____corporation, as grantor
of a Sub-trust under the Huffy Corporation Master Benefit Trust Agreement As
Restated (the "Employer"), and Bank One Trust Company, N.A., as trustee (the
"Trustee"), under the following circumstances:
A. On June 9, 1995, Huffy Corporation, an Ohio corporation
(the "Company") and the Trustee entered into the Huffy Corporation
Master Benefit Trust Agreement As Restated (the "Master Trust") for
the purpose of providing an arrangement under which the Company and
subsidiaries of the Company could establish separate and distinct
Sub-trusts for the purpose of providing additional assurance to
Employer's executives that deferred payments under specified employee
plans would be paid even after a change of control of the Company; and
B. Employer desires hereby to adopt the Master Trust and
establish a Sub-trust under the Master Trust;
NOW, THEREFORE, EMPLOYER HEREBY AGREES, COVENANTS, AND UNDERTAKES AS FOLLOWS:
1. Employer hereby adopts the Master Trust, hereby as grantor
establishes a Sub-trust under the Master Trust, and herewith delivers to the
Trustee a copy of Employer's Adoption Agreement.
2. Employer hereby designates the name of its Sub-trust as
"__________________________Sub-trust."
3. All notices required or permitted to be given to Employer
under Section 14.5 of the Master Trust shall be addressed as follows:
____________________________, Employer
c/o Huffy Corporation
P.O. Box 1204
Dayton, Ohio 45401
Attention: Corporate Secretary
4. Employer certifies that its Board of Directors has adopted
the following preambles and resolutions:
<PAGE> 24
WHEREAS, the Company desires to provide further assurance to
its employees who are or may become entitled to deferred payments
under compensation plans that such payments will be made even after a
change of control of Huffy Corporation;
NOW, THEREFORE, IT IS RESOLVED, that the Company be, and it is
hereby, authorized and directed to enter into an Adoption Agreement
relating to the Huffy Corporation Master Benefit Trust Agreement As
Restated, dated June 9, 1995 (the "Master Trust") and to establish a
Sub-trust thereunder and to make contributions to such Sub-trust as
more fully provided in the Master Trust;
FURTHER RESOLVED, that any officer of the Company be, and he
or she is hereby, authorized to enter into such an Adoption Agreement
and to take such further action as any such officer may deem necessary
or appropriate to carry out the intent of the immediately preceding
resolution; and
FURTHER RESOLVED, Huffy Corporation be, and it is hereby,
authorized to take on behalf of the Company any action which is
necessary or desirable to be taken by the Company as a Participating
Employer in connection with the Master Trust provided at the time that
such action is to be taken, Huffy Corporation owns, directly or
indirectly, 80% or more of the outstanding capital shares of the
Company.
5. All capitalized terms used herein and not defined herein
shall have the meaning ascribed to them in the Master Trust unless the context
herein requires otherwise.
IN WITNESS WHEREOF, the undersigned has executed this Adoption
Agreement as of the date and year first written above.
"EMPLOYER"
__________________________________
By________________________________
Title_____________________________
"TRUSTEE"
BANK ONE TRUST COMPANY, N. A.
By________________________________
Title_____________________________
A-2
<PAGE> 25
CONSENT OF HUFFY CORPORATION
The undersigned Huffy Corporation hereby consents to execution
and delivery of the foregoing Adoption Agreement by the Employer named therein.
HUFFY CORPORATION
By________________________________
Title_____________________________
Date______________________________
A-3
<PAGE> 26
SCHEDULE B
HUFFY CORPORATION
MASTER BENEFIT TRUST AGREEMENT AS RESTATED
JUNE 9, 1995
PLANS AS TO WHICH THE TRUSTEE HAS BEEN DESIGNATED
TO MAKE PAYMENTS ON BEHALF OF A PARTICIPATING EMPLOYER
PART I -- PLANS
1. 1987 Restricted Stock Unit Agreement, dated as of January 1,
1987, as amended from time to time, between Huffy Corporation
and Richard L. Molen.
2. Special Deferred Compensation Agreements, as amended from time
to time, between Huffy Corporation and certain of its Officers
and key employees.
3. Deferred Compensation Agreements, as amended from time to
time, between Huffy Corporation and certain of its Officers
and employees.
4. Deferred Compensation Agreements for Director, as amended from
time to time, between Huffy Corporation and certain of its
Directors.
5. Huffy Corporation Capital Accumulation Plan Participation
Agreements between Huffy Corporation and certain of its
Officers, Directors, and key employees.
6. Supplemental Excess Benefit Plan, dated as of January 1, 1988,
as amended from time to time.
7. Huffy Corporation 1990 Directors' Retirement Plan, as amended
from time to time.
PART II -- PAYMENT SCHEDULES
To Be Delivered As Required under the Master Benefit Trust Agreement
<PAGE> 1
EXHIBIT 13
TEN-YEAR FINANCIAL AND OPERATING REVIEW (UNAUDITED)
(Dollar amounts in thousands, except per share data)
<TABLE>
<CAPTION>
1995 1994 1993
<S> <C> <C> <C>
SUMMARY OF OPERATIONS
Net sales $ 684,752 $ 719,485 $ 757,863
Gross profit 96,049 128,607 138,288
Selling, general, and administrative expenses 97,769 96,696 102,493
Operating income (loss) [1] (7,098) 32,845 7,040
Other (income) expense, net [2] 35 (688) 1,379
Earnings (loss) before interest, taxes, and
cumulative effect of accounting changes (7,133) 33,533 5,661
Interest expense, net 7,906 5,897 8,739
Earnings (loss) before income taxes and
cumulative effect of accounting changes (15,039) 27,636 (3,078)
Income tax expense (benefit) (4,582) 10,209 755
Earnings (loss) before cumulative effect of accounting changes (10,457) 17,427 (3,833)
Cumulative effect of accounting changes, net of income taxes -- -- (1,084)
Net earnings (loss) (10,457) 17,427 (4,917)
- -------------------------------------------------------------------------------------------------------------------------------
Earnings (loss) per common share:[3]
Primary (.78) 1.20 (.38)
Fully diluted [4] (.78) 1.20 (.38)
- -------------------------------------------------------------------------------------------------------------------------------
Common dividends declared 4,577 4,461 4,175
Common dividends per share .34 .34 .31
Capital expenditures for plant and equipment 24,365 35,737 21,322
Weighted average common shares outstanding:
Primary 13,424 14,519 13,023
Fully diluted 13,424 14,519 13,023
- -------------------------------------------------------------------------------------------------------------------------------
FINANCIAL POSITION AT YEAR END
Total assets 298,546 321,968 319,337
Working capital 63,089 90,325 93,595
Net investment in plant and equipment 93,091 89,600 73,647
Notes payable 5,750 -- 3,500
Long-term obligations 51,236 58,611 43,211
Redeemable preferred stock -- -- --
Shareholders' equity 116,104 133,403 136,029
Equity per share 8.64 9.85 9.27
- --------------------------------------------------------------------------------------------------------------------------------
CASH FLOWS
Net cash provided by operating activities 31,008 43,009 41,422
Net cash used in investing activities (24,330) (34,012) (21,182)
Net cash provided by (used in) financing activities (5,724) (11,533) (19,589)
Net change in cash and cash equivalents 954 (2,536) 651
- --------------------------------------------------------------------------------------------------------------------------------
RATIOS AND MISCELLANEOUS
Net profit margin (before cumulative effect of accounting changes) N/A 2.4% N/A
Average working capital turnover 8.3 7.8 8.2
Return on net assets N/A 8.9% N/A
Return on beginning shareholders' equity N/A 12.8% N/A
Current ratio 1.6 1.9 1.9
Debt/total capital 33.7% 32.4% 26.6%
- --------------------------------------------------------------------------------------------------------------------------------
Number of common shareholders 3,688 4,196 3,760
</TABLE>
8
<PAGE> 2
<TABLE>
<CAPTION>
1992 1991 1990
<S> <C> <C> <C>
Summary of Operations
Net sales $703,345 $678,936 $516,744
Gross profit 122,608 132,485 102,545
Selling, general, and administrative expenses 95,163 92,499 69,957
Operating income (loss) [1] 27,445 39,986 32,588
Other (income) expense, net [2] (497) 482 (370)
Earnings (loss) before interest, taxes, and
cumulative effect of accounting changes 27,942 39,504 32,958
Interest expense, net 9,321 8,047 4,390
Earnings (loss) before income taxes and
cumulative effect of accounting changes 18,621 31,457 28,568
Income tax expense (benefit) 6,778 11,630 10,561
Earnings (loss) before cumulative effect of accounting changes 11,843 19,827 18,007
Cumulative effect of accounting changes, net of income taxes (7,628) -- --
Net earnings (loss) 4,215 19,827 18,007
- -----------------------------------------------------------------------------------------------------------------------------
Earnings (loss) per common share:[3]
Primary .33 1.52 1.37
Fully diluted [4] .33 1.41 1.28
- -----------------------------------------------------------------------------------------------------------------------------
Common dividends declared 3,809 3,740 3,461
Common dividends per share .30 .29 .27
Capital expenditures for plant and equipment 23,914 24,509 9,832
Weighted average common shares outstanding:
Primary 12,903 13,056 13,157
Fully diluted 12,903 15,114 15,179
- -----------------------------------------------------------------------------------------------------------------------------
Financial Position at Year End
Total assets 335,328 316,577 297,310
Working capital 91,308 99,110 87,558
Net investment in plant and equipment 80,020 72,226 65,423
Notes payable 18,975 -- --
Long-term obligations 74,918 80,208 84,348
Redeemable preferred stock -- -- --
Shareholders' equity 117,687 124,997 106,747
Equity per share 9.35 9.68 8.39
- -----------------------------------------------------------------------------------------------------------------------------
Cash Flows
Net cash provided by operating activities 11,417 15,169 16,356
Net cash used in investing activities (22,374) (21,784) (61,974)
Net cash provided by (used in) financing activities 5,984 (6,774) 15,596
Net change in cash and cash equivalents (4,973) (13,389) (30,022)
- -----------------------------------------------------------------------------------------------------------------------------
Ratios and Miscellaneous
Net profit margin (before cumulative effect of accounting changes) 1.7% 2.9% 3.5%
Average working capital turnover 7.4 7.3 6.2
Return on net assets 4.1% 11.5% 13.8%
Return on beginning shareholders' equity 3.4% 18.6% 18.8%
Current ratio 1.8 2.0 2.0
Debt/total capital 40.5% 40.3% 45.7%
- -----------------------------------------------------------------------------------------------------------------------------
Number of common shareholders 3,883 3,016 2,410
<CAPTION>
1989 1988 1987 1986
<S> <C> <C> <C> <C>
SUMMARY OF OPERATIONS
Net sales $449,389 $335,713 $340,551 $294,698
Gross profit 84,638 62,847 67,328 54,145
Selling, general, and administrative expenses 57,972 45,511 46,726 40,280
Operating income (loss) [1] 26,666 17,336 20,602 13,865
Other (income) expense, net [2] (605) 5,704 352 82
Earnings (loss) before interest, taxes, and
cumulative effect of accounting changes 27,271 11,632 20,250 13,783
Interest expense, net 3,467 3,856 3,048 2,873
Earnings (loss) before income taxes and
cumulative effect of accounting changes 23,804 7,776 17,202 10,910
Income tax expense (benefit) 8,811 3,240 7,111 5,003
Earnings (loss) before cumulative effect of accounting changes 14,993 4,536 10,091 5,907
Cumulative effect of accounting changes, net of income taxes -- -- -- --
Net earnings (loss) 14,993 4,536 10,091 5,907
- -----------------------------------------------------------------------------------------------------------------------------
Earnings (loss) per common share:[3]
Primary 1.17 .36 .81 .49
Fully diluted [4] 1.11 .36 .78 .48
Common dividends declared 3,071 2,613 2,333 2,148
Common dividends per share .24 .20 .19 .18
Capital expenditures for plant and equipment 14,143 14,786 6,806 7,638
Weighted average common shares outstanding:
Primary 12,882 12,641 12,441 12,074
Fully diluted 14,271 13,376 13,415 13,112
- -----------------------------------------------------------------------------------------------------------------------------
FINANCIAL POSITION AT YEAR END
Total assets 234,532 183,255 149,259 141,267
Working capital 80,189 45,884 61,649 54,161
Net investment in plant and equipment 45,659 41,360 27,895 27,495
Notes payable -- -- -- --
Long-term obligations 57,525 37,196 15,181 18,427
Redeemable preferred stock -- -- -- --
Shareholders' equity 95,645 80,776 78,914 68,848
Equity per share 7.43 6.50 6.35 5.68
- -----------------------------------------------------------------------------------------------------------------------------
CASH FLOWS
Net cash provided by operating activities 24,344 23,862 10,697 7,433
Net cash used in investing activities (12,642) (38,215) (6,428) (5,710)
Net cash provided by (used in) financing activities 24,819 16,869 (3,159) (2,861)
Net change in cash and cash equivalents 36,521 2,516 1,110 (1,138)
- -----------------------------------------------------------------------------------------------------------------------------
RATIOS AND MISCELLANEOUS
Net profit margin (before cumulative effect of accounting change 3.3% 1.4% 3.0% 2.0%
Average working capital turnover 6.9 6.2 5.9 5.7
Return on net assets 13.7% 6.7% 12.5% 8.8%
Return on beginning shareholders' equity 18.6% 5.7% 14.7% 9.1%
Current ratio 2.1 1.8 2.2 2.1
Debt/total capital 40.5% 33.3% 17.3% 22.2%
- -----------------------------------------------------------------------------------------------------------------------------
Number of common shareholders 2,473 2,180 2,173 2,615
</TABLE>
[1] Operating loss in 1995 includes a net restructure provision of $5,378
related to personnel reductions and the negotiation of a
concessionary labor contract. 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: 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.
N/A = Not Applicable.
9
<PAGE> 3
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, 1995 and 1994, 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, 1995. 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, 1995 and 1994, and the results of
their operations and their cash flows for each of the years in the three-year
period ended December 31, 1995 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 Board's Statement
of Financial Accounting Standards No. 112, effective January 1, 1993.
KPMG PEAT MARWICK LLP
February 15, 1996
Cincinnati, Ohio
10
<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, 1995 TO THE YEAR ENDED DECEMBER 31,
1994
The Company recorded a net loss of $10,457 in 1995, compared to net earnings
of $17,427 reported in 1994. The 1995 net loss included an after-tax
restructure charge of $3,496 to reflect severance and related costs associated
with a reduction of the Company's corporate and Huffy Bicycle Company workforce
and other costs associated with a new concessionary labor contract at the
Company's Celina, Ohio bicycle manufacturing facility.
Net loss per share of common stock was $.78 in 1995. If the net loss were
adjusted to exclude the impact of the restructuring charge in 1995, net loss
per common share would have been $.52 in 1995 compared to net earnings per
common share of $1.20 in 1994.
NET SALES
Net sales in 1995 were $684,752, a 4.8% decrease over net sales of $719,485
in 1994. Net sales decreased in the Consumer Products segment due primarily to
the softness at retail, a continued shift to lower specification and
promotionally priced products, and intensified price and product competition.
The decrease in net sales in the Consumer Products segment occurred
primarily at the Huffy Bicycle Company, where sales were lower than last year
due to a soft retail environment, significant pricing competition at the retail
level, and continued dumping of bicycles by the People's Republic of China.
True Temper Hardware Company's and Gerry Baby Products Company's sales were
below last year primarily as a result of soft retail and a very competitive
market environment.
In the Services for Retail segment, Huffy Service First had record sales due
primarily to growth in its Assembly Services market segment.
GROSS PROFIT
Consolidated gross profit for 1995 was $96,049, or 14.0% of net sales,
compared to $128,607, or 17.9% of net sales reported for 1994.
The decrease in gross profit as a percentage of net sales occurred primarily
in the Consumer Products segment. Huffy Bicycle Company continued to
experience declining profit margins as a result of lower unit volume sales, an
intensely competitive retail environment, continued shifting of consumer
preference to promotionally priced product, and pricing pressure caused by the
continued dumping of bicycles in the United States by the People's Republic of
China. Gross margin as a percentage of net sales declined at Huffy Sports
Company and True Temper Hardware Company as a result of a shift in mix to lower
margin product and increased material costs. Intense competition and a strong
commitment to maintain market share caused the gross profit margin to decline
at Gerry Baby Products Company. In the Services for Retail segment, gross
margin as a percentage of net sales declined slightly from 1994 levels due
primarily to increased labor and transportation costs at Washington Inventory
Service.
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 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 1995 were $97,769, a 1.1%
increase over 1994. Volume related reductions in selling, general, and
administrative expenses and lower incentive compensation in 1995 were offset by
increased advertising expenditures and increased expenses related to the
addition of the Company's Farmington, Missouri bicycle manufacturing facility.
NET INTEREST EXPENSE
Net interest expense was $7,906, a $2,009 increase over net interest expense
for 1994. The increase in net interest expense was primarily caused by the
issuance of industrial development bonds used to finance the acquisition of
the Company's Farmington, Missouri bicycle facility in the third quarter of
1994.
11
<PAGE> 5
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 in the Consumer Products segment.
Huffy Bicycle Company's 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 Gerry Baby Products Company were down slightly 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's sales increased due to
further market penetration in both the Assembly Services and 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 in the Consumer 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 at
Gerry Baby Products Company 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.
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 suc-
cessful 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.
LIQUIDITY AND CAPITAL RESOURCES
The financial condition of the Company remained strong during 1995. 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 $31,008
in 1995, compared to $43,009 in 1994 and $41,422 in 1993. The Company's
current ratio decreased from 1.9 at December 31, 1994 to 1.6 at December 31,
1995. The decrease was caused by a reduction in net accounts receivable which
occurred at December 31, 1995 as a result of reduced fourth quarter sales
volume at Huffy Bicycle Company and seasonal fluctuations of snow tool sales at
True Temper Hardware Company. Committed and uncommitted short-term lines of
credit total $135,000 of which $750 was outstanding at December 31, 1995. 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 $24,365 in
1995 compared to $35,737 in 1994 and $21,322 in 1993. 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 1996, capital
expenditures are expected to be approximately $21,000, reflecting continuing
investment in new products and technology.
The Company's debt to total capital ratio increased to 33.7% at December 31,
1995 compared to 32.4% at December 31, 1994 due to the impact of the current
year net loss as well as the repurchase of approximately 160,000 shares of the
Company's Common Stock.
12
<PAGE> 6
RESTRUCTURING ACTIVITY
During 1995, the Company recorded a restructure charge of $5,378 ($3,496
after-tax). The restructure plan includes a charge of $715 related to a 30%
reduction in the Company's Corporate Staff, $1,280 related to a reduction in
administrative and hourly employment at the Huffy Bicycle Company, and a charge
of $3,883, which includes a pension curtailment expense of $3,226, related to
the negotiation of a concessionary labor contract at the Company's Celina, Ohio
bicycle manufacturing facility. The restructure charge is offset by a $500
restructure credit recorded to reflect revised cost estimates for certain items
in the 1993 restructure charge.
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.
OTHER MATTERS
The Company, along with others, has been designated as a potentially
responsible party (PRP) by the U.S. Environmental Protection Agency (the "EPA")
with respect to claims involving the discharge of hazardous substances into the
environment in the Baldwin Park operable unit of the San Gabriel Valley
Superfund site. 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.
The total accrual for estimated environmental remediation costs related to
the Super Fund site and other potential environmental liabilities is
approximately $2,600 at December 31, 1995. 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 fully 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.
INFLATION
Inflation rates in the United States have not had a significant impact on
the Company's operating results for the three years ended December 31, 1995.
The impact on the Company is minimized as a result of rapid turnover of
inventories and partially offset by cost reduction programs and increased
operating efficiency.
13
<PAGE> 7
CONSOLIDATED BALANCE SHEETS
(Dollar amounts in thousands, except per share data)
<TABLE>
<CAPTION>
DECEMBER 31, 1995 1994
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 2,558 $ 1,604
Receivables:
Trade 75,523 98,340
Taxes and other 7,508 9,245
--------- ---------
83,031 107,585
Less allowance for doubtful accounts 1,789 1,783
--------- ---------
Net receivables 81,242 105,802
Inventories 65,175 67,954
Deferred federal income taxes 8,901 8,450
Prepaid expenses 5,562 5,488
--------- ---------
Total current assets 163,438 189,298
--------- ---------
PROPERTY, PLANT, AND EQUIPMENT, AT COST:
Land and land improvements 1,667 1,610
Buildings and improvements 38,049 33,943
Machinery and equipment 138,834 121,445
Office furniture, fixtures, and equipment 28,565 26,156
Leasehold improvements 4,179 3,585
Construction in progress 2,946 6,117
--------- ---------
214,240 192,856
Less accumulated depreciation and amortization 121,149 103,256
--------- ---------
Net property, plant, and equipment 93,091 89,600
OTHER ASSETS:
Excess of cost over net assets acquired, net of
accumulated amortization of $6,363 in 1995
and $5,563 in 1994 24,953 25,755
Deferred federal income taxes 9,166 8,719
Other 7,898 8,596
--------- ---------
$ 298,546 $ 321,968
========= =========
</TABLE>
See accompanying notes to consolidated finanicial statements.
14
<PAGE> 8
<TABLE>
<CAPTION>
DECEMBER 31, 1995 1994
<S> <C> <C>
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Notes payable $ 5,750 $ --
Current installments of long-term obligations 7,685 5,300
Accounts payable 39,856 43,853
Accrued expenses:
Salaries, wages, and other compensation 16,526 15,486
Insurance 12,457 11,379
Other 13,732 17,739
--------- ----------
Total accrued expenses 42,715 44,604
Other current liabilities 4,343 5,216
---------- ----------
Total current liabilities
100,349 98,973
---------- ----------
Long-term obligations, less current installments
Pension liability
Postretirement benefits other than pensions 51,236 58,611
Other liabilities 7,922 8,780
16,216 15,482
Total liabilities 6,719 6,719
---------- ----------
SHAREHOLDERS' EQUITY: 182,442 188,565
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 16,213,065
shares in 1995 and 16,166,026 shares in 1994 -- --
Additional paid-in capital 16,213 16,166
Retained earnings 60,644 60,155
Minimum pension liability adjustment 79,561 94,595
Cumulative translation adjustment (3,247) (2,859)
(613) (647)
---------- ---------
Less cost of 2,775,096 treasury shares
in 1995 and 2,615,993 in 1994 152,558 167,410
36,454 34,007
----------- ---------
Total shareholders' equity
116,104 133,403
----------- ---------
$ 298,546 $ 321,968
=========== =========
</TABLE>
15
<PAGE> 9
CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollar amounts in thousands, except per share data)
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31, 1995 1994 1993
<S> <C> <C> <C>
Net sales $ 684,752 $ 719,485 $ 757,863
Cost of sales 588,703 590,878 619,575
------------- ------------- -------------
Gross profit 96,049 128,607 138,288
Selling, general, and administrative expenses 97,769 96,696 102,493
Restructuring costs (credits) 5,378 (934) 28,755
------------- ------------- -------------
Operating income (loss) (7,098) 32,845 7,040
Other expense (income) 7,996 6,425 8,830
Interest expense (90) (528) (91)
Interest income 35 (688) 1,379
Other ------------- ------------- -------------
7,941 5,209 10,118
------------- ------------- -------------
Earnings (loss) before income taxes and cumulative
effect of accounting change (15,039) 27,636 (3,078)
Income tax expense (benefit) (4,582) 10,209 755
------------- ------------- -------------
Earnings (loss) before cumulative effect
of accounting change (10,457) $ 17,427 (3,833)
Cumulative effect of accounting
change, net of income taxes -- -- (1,084)
------------- ------------- -------------
Net earnings (loss) $ (10,457) $ 17,427 (4,917)
============= ============= =============
EARNINGS (LOSS) PER COMMON SHARE:
Weighted average number of common shares 13,423,784 14,518,671 $ 13,023,211
Earnings (loss) per common share before
cumulative effect of accounting change $ (.78) $ 1.20 $ (.30)
Cumulative effect of accounting change,
net of income taxes -- -- (.08)
------------- ------------- -------------
Net earnings (loss) per common share $ (.78) $ 1.20 $ (.38)
============= ============= =============
</TABLE>
See accompanying notes to consolidated financial statements.
16
<PAGE> 10
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollar amounts in thousands)
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31, 1995 1994 1993
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Earnings (loss) $(10,457) $ 17,427 $ (4,917)
Adjustments to reconcile net earnings (loss) to net cash
provided by operating activities:
Restructuring costs (credits), net of payments (203) (7,263) 28,755
Depreciation and amortization 22,419 20,222 20,260
Loss on sale of property, plant, and equipment 443 135 744
Deferred federal income tax expense (benefit) (689) 6,062 (10,989)
Increase (decrease) in cash resulting from changes in:
Receivables, net 24,560 (12,534) 26,928
Inventories 2,779 14,190 (14,926)
Prepaid expenses (74) (119) 170
Other assets (1,978) (1,040) (401)
Accounts payable (3,997) 140 (11,650)
Accrued expenses (1,889) 7,138 6,729
Other current liabilities (674) (535) (938)
Postretirement benefits other than pensions 734 472 820
Other long-term liabilities -- (1,910) 1,384
Other 34 624 (547)
-------- -------- -------
Net cash provided by operating activities 31,008 43,009 41,422
-------- -------- -------
(24,365) (35,737) (21,322)
CASH FLOWS FROM INVESTING ACTIVITIES: 35 1,725 140
-------- -------- -------
Capital expenditures
Proceeds from sale of property, plant, and equipment (24,330) (34,012) (21,182)
-------- -------- -------
Net cash used in investing activities
CASH FLOWS FROM FINANCING ACTIVITIES: 5,750 (3,500) (15,475)
Increase (decrease) in notes payable 150 20,666 3,967
Issuance of long-term obligations (5,140) (5,934) (4,957)
Reduction of long-term obligations 536 2,299 952
Issuance of common shares (2,447) (20,094) (204)
Purchase of treasury shares (4,573) (4,970) (3,872)
-------- -------- -------
Dividends paid (5,724) (11,533) (19,589)
-------- -------- -------
Net cash used in financing activities
954 (2,536) 651
Net change in cash and cash equivalents
Cash and cash equivalents: 1,604 4,140 3,489
-------- -------- -------
Beginning of year
$ 2,558 $ 1,604 $ 4,140
======== ======== =======
End of year
$ 8,655 $ 6,368 $ 9,188
Cash paid (refunded) during the year for: (2,415) 11,050 5,612
Interest
Income taxes
<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>
17
<PAGE> 11
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(Dollar amounts in thousands, except per share data)
<TABLE>
<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, 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)
Net (loss) (10,457)
Issuance of 47,039 shares in
connection with common stock
plans 47 489
Common dividends $.34 per share (4,577)
Purchase of 159,103 treasury shares (2,447)
Minimum pension liability
adjustment (388)
Foreign currency
translation adjustment 34
--------- -------- ------- -------- ------- ---------
BALANCE AT DECEMBER 31, 1995 $ 16,213 $60,644 $79,561 $ (3,247) $ (613) $ (36,454)
========= ======== ======= ======== ======= =========
</TABLE>
See accompanying notes to consolidated financial statements.
18
<PAGE> 12
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, 1995.
(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, 1995 and 1994,
51% and 48%, 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 on the straight-line method.
Annual depreciation and amortization rates are as follows:
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%
(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) 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.
(h) 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 the Company's
long-term debt obligations is disclosed in Note (4).
(i) 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.
If the 7.25% convertible subordinated debentures had been converted during
1993, the inclusion of additional shares would have been anti-dilutive.
(j) 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.
(k) Use of Estimates -- Management of the Company has made a number of
estimates and assumptions relating to the reporting of assets and liabilities
and the disclosure of contingent assets and liabilities to prepare these
financial statements in conformity with generally accepted accounting
principles. Actual results could differ from those estimates.
(l) Reclassifications -- Certain reclassifications have been made to prior
year amounts to conform with the current year presentation.
(m) Newly Issued Accounting Standards -- In October, 1995, SFAS No. 123,
"Accounting for Stock-Based Compensation" was issued. Companies will have the
option of recognizing compensation expense in the financial statements for
virtually all stock-based compensation arrangements based upon the fair value
of the option at the grant date, or alternatively, continuing to recognize
compensation expense based on the intrinsic value of the option on the
measurement date in accordance with Accounting Principles Board Opinion No. 25,
"Accounting for Stock Issued to Employees" (APB No. 25). This statement is
required to be adopted in 1996.
19
<PAGE> 13
While the Company intends to continue to recognize compensation expense
using the method prescribed by APB No. 25, the Company has not adopted SFAS No.
123 in 1995 and has not determined the impact it may have on the Company's
financial statement disclosures in future years.
(2) RESTRUCTURING PROVISION
During 1995, the Company recorded a restructure charge of $5,378 ($3,496
after-tax). The restructure plan includes a charge of $715 related to a 30%
reduction in the Company's Corporate Staff, $1,280 related to a reduction in
administrative and hourly employment at the Huffy Bicycle Company, and a charge
of $3,883, which includes a pension curtailment expense of $3,226, related to
the negotiation of a concessionary labor contract at the Company's Celina, Ohio
bicycle manufacturing facility. The restructure charge is offset by a $500
restructure credit recorded to reflect revised cost estimates for certain items
in the 1993 restructure charge. The remaining restructure reserve which is
included with other current liabilities at December 31, 1995 includes $657 of
contract settlement charges and $1,173 of unpaid severance and related
expenditures. The Company anticipates that the remaining balance in the
restructure reserve will be expended during 1996.
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
manufacturing facilities, the discontinuation of certain unprofitable product
lines, and the related reduction in production and administrative personnel.
The restructure charge was comprised of $19,459 of non cash asset write-offs, a
charge of $2,792 for facilities consolidation costs, a charge of $4,363 for
severance and related costs, and a charge of $2,141 for estimated operating
losses of discontinued product lines.
During 1994, the Company substantially completed the restructuring of its
lawn and garden tools business. 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 and the
sale of assets related to the discontinued pruning and spreader product lines.
Restructure credits of $500 in 1995 and $934 in 1994 were recorded to reflect
the revised cost estimates for certain items included in the 1993 charge.
(3) INVENTORIES
The components of inventories are as follows:
<TABLE>
<CAPTION>
1995 1994
<S> <C> <C>
Finished goods $ 31,715 $ 24,456
Work-in-process 10,587 12,480
Raw materials
and supplies 31,729 39,875
---------- ----------
74,031 76,811
Excess of FIFO
cost over LIFO
inventory value (8,856) (8,857)
---------- ----------
$ 65,175 $ 67,954
---------- ----------
</TABLE>
(4) LINES OF CREDIT AND
LONG-TERM OBLIGATIONS
During 1995, 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, 1997. The Company also had $85,000 in uncommitted lines of credit
on a no fee basis, of which $750 was outstanding at December 31, 1995, and a
$5,000 non-interest bearing loan from the Missouri Department of Economic
Development and the City of Farmington, Missouri due on September 1, 1996.
Short-term borrowings are summarized as follows:
<TABLE>
<CAPTION>
1995 1994
<S> <C> <C>
Unsecured notes payable:
Average borrowings $ 15,441 $ 4,166
Maximum at any
month end 45,580 27,250
Weighted
average rate 6.15% 3.61%
</TABLE>
Long-term obligations are summarized as follows:
<TABLE>
<CAPTION>
1995 1994
<S> <C> <C>
Unsecured notes payable:
9.62% due serially
through 2000 $ 21,000 $ 24,000
9.81% due serially
through 1998 12,400 14,200
8.23% Industrial
Development
Bonds 20,000 20,000
Other 5,521 5,711
-------- --------
58,921 63,911
Less current
installments 7,685 5,300
-------- --------
51,236 58,611
-------- --------
</TABLE>
Industrial Development 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 1997 through 2000 are approximately $7,400, $7,700, $6,300, and $7,700,
respectively.
20
<PAGE> 14
The estimated fair value of the Company's long-term obligations at December
31, 1995 and 1994 was approximately $64,500 and $67,600, respectively. 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, unissued 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 its transfer agent 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
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 non-qualified stock options, incentive stock options and stock appreciation
rights, although no incentive stock options or stock appreciation rights have
been issued, and allows for the subscription of restricted shares of Common
Stock, also none of which have been issued. The total number of shares which
may be issued under this Plan shall not exceed 1,125,000 shares. 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, non-qualified stock 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 fee. 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 1995 and 1994 for the Common Stock Option Plans was as follows:
<TABLE>
<CAPTION>
1995 1995 1994 1994
Number Option Price Number Option Price
1988 AND 1984 PLANS of Shares Per Share of Shares Per Share
<S> <C> <C> <C> <C>
Outstanding at January 1 816,404 $ 4.83-20.00 826,225 $ 4.83-20.00
Granted 336,080 10.38-11.13 237,966 14.38-19.00
Cancelled (156,719) 8.75-20.00 (144,832) 5.44-20.00
Exercised (38,609) 4.83-11.33 (102,955) 4.83-11.33
-------------- --------------- ------------ -------------
Outstanding at December 31 957,156 $ 5.44-20.00 816,404 $ 4.83-20.00
-------------- --------------- ------------ -------------
Exercisable at December 31 377,233 $ 5.44-20.00 334,590 $ 4.83-20.00
-------------- --------------- ------------ -------------
1987 DIRECTOR STOCK OPTION PLAN
Outstanding at January 1 179,727 $ .67-17.63 113,142 $ .67-13.67
Granted 6,293 1.00 66,585 1.00-17.63
Exercised (1,143) 1.00 -- --
-------------- --------------- ------------ -------------
Outstanding at December 31 184,877 $ .67-17.63 179,727 $ .67-17.63
-------------- --------------- ------------ -------------
Exercisable at December 31 111,999 $ .67-13.67 107,238 $ .67-13.67
-------------- --------------- ------------ -------------
</TABLE>
21
<PAGE> 15
The 1989 Employee Stock Purchase Plan, as amended, authorizes the offering
and sale to employees 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 1995 and 1994, 7,350 and 99,762 shares of Common Stock, respectively,
for which options had been granted, were issued at an average purchase or
option price of $15.45 and $13.77 per share, respectively. At December 31,
1995, rights to purchase 73,800 shares were outstanding under this Plan at an
exercise price of $11.36 per share and 565,673 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 $7,450,
$6,950, and $4,900 in 1995, 1994, and 1993, respectively.
Future minimum rental commitments under non-cancellable operating leases at
December 31, 1995 are as follows:
<TABLE>
<CAPTION>
Amount
<S> <C>
1996 $ 6,360
1997 4,747
1998 4,041
1999 3,799
2000 3,474
Thereafter 15,572
-------------
Total minimum payments $ 37,993
=============
</TABLE>
The Company is subject to a number of lawsuits, investigations, and claims
arising out of the conduct of its business primarily related to commercial
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
Superfund site ("Superfund"). 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 previously
unanticipated 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. The
total accrual for estimated environmental remediation costs related to the
Superfund site and other potential environmental liabilities is approximately
$2,600 at December 31, 1995. 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. 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 fully predict
the amount or timing of future costs of environmental remediation requirements
which may subsequently be determined.
22
<PAGE> 16
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,
investment grade corporate bonds, and U.S. government obligations.
In accordance with SFAS No. 87, the Company has recorded an additional
minimum pension liability of $7,922 at December 31, 1995 and $8,780 at December
31, 1994, 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 charge to equity of $388 in 1995 and a credit to
equity of $1,980 in 1994.
In connection with the negotiation of a concessionary labor contract at the
Company's Celina, Ohio bicycle manufacturing facility, future benefits were
suspended under one of the Company's defined benefit plans and a curtailment
charge of $3,226 was included in restructure costs. The suspended plan will be
replaced with participation in a multiemployer defined contribution plan.
The following table sets forth the plans' funded status and amounts
recognized in the Company's Consolidated Balance Sheets at December 31, 1995
and 1994:
<TABLE>
<CAPTION>
1995 1995 1994 1994
Assets Accumulated Assets Accumulated
Exceed Benefits Exceed Benefits
Accumulated Exceed Accumulated Exceed
Benefits Assets Benefits Assets
<S> <C> <C> <C> <C>
Actuarial present value
of benefit obligations:
Vested benefit obligation $ 24,925 $ 38,466 19,846 $ 27,587
---------- ---------- ---------- ---------
Accumulated benefit obligation 26,688 42,954 21,302 32,612
---------- ---------- ---------- ---------
Projected benefit obligation for
service rendered to date 32,161 45,526 25,360 34,278
Plan assets at fair value 32,803 30,485 26,324 22,477
---------- ---------- ---------- ---------
Plan assets in excess of (less than)
projected benefit obligation 642 (15,041) 964 (11,801)
Unamortized transition asset (2,037) (557) (2,300) (597)
Unrecognized prior service cost (656) 3,595 (763) 6,044
Unrecognized net loss 3,704 7,378 3,331 4,941
Adjustment required to recognize
minimum liability -- (7,922) -- (8,780)
---------- ---------- ---------- ---------
Pension costs prepaid (accrued)
at year end $ 1,653 (12,547) $ 1,232 (10,193)
---------- ---------- ---------- ---------
</TABLE>
23
<PAGE> 17
Net pension cost included the following components:
<TABLE>
<CAPTION>
1995 1994 1993
<S> <C> <C> <C>
Service cost benefits earned during the period $ 2,506 $ 3,256 $ 1,994
Interest cost on projected benefit obligation 5,292 4,882 4,215
Actual return on plan assets (9,066) 629 (4,812)
Net amortization and deferral 4,907 (4,759) 592
----------- ---------- ---------
Net periodic pension cost $ 3,639 $ 4,008 $ 1,989
----------- ---------- ---------
ACTUARIAL ASSUMPTIONS:
Weighted average discount rate 7.25% 8.5% 7.25%
Rate of return on assets 9.5% 9.5% 10.0%
Rate of increase in compensation 5.0% 5.0% 5.0%
</TABLE>
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 $755, $920, and $834 in 1995, 1994, and 1993,
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.
For measurement purposes, in 1996, a 10.0% health care cost trend rate was
assumed for expenses of participants under age 65; this rate was assumed to
decrease gradually to 5.5% by the year 2002 and remain at that level
thereafter. In addition, for 1996 an 8.0% health care cost trend rate was
assumed for expenses of participants over age 65; this rate was assumed to
decrease gradually to 5.5% 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, 1995 by $1,849 and the
aggregate of the service and interest cost components of net periodic
postretirement benefit cost for the year ended December 31, 1995 by $240.
The following table presents the plans' funded status reconciled with
amounts recognized in the Company's Consolidated Balance Sheets at December 31,
1995 and 1994 and the net periodic postretirement benefit cost recorded in the
Company's 1995 and 1994 Consolidated Statements of Operations:
<TABLE>
<CAPTION>
Health Care and Deferred
Life Insurance Compensation
Plans Plan Total
<S> <C> <C> <C>
ACCUMULATED POSTRETIREMENT BENEFIT OBLIGATION:
Retirees $ 5,290 $ 2,022 $ 7,312
Fully eligible active plan participants 1,081 1,601 2,682
Other active plan participants 6,927 -- 6,927
----------- ----------- ------------
13,298 3,623 16,921
(360) (345) (705)
UNRECOGNIZED NET LOSS ----------- ----------- ------------
Postretirement benefits other than pensions
accrued at year end $ 12,938 $ 3,278 $ 16,216
----------- ----------- ------------
NET PERIODIC POSTRETIREMENT BENEFIT COST:
Service cost $ 504 $ -- $ 504
Interest cost 979 262 1,241
Net amortization (3) -- (3)
----------- ----------- ------------
Net periodic postretirement benefit cost $ 1,480 $ 262 $ 1,742
----------- ----------- ------------
ACTUARIAL ASSUMPTIONS:
Weighted average discount rate used to
determine postretirement benefit obligation 7.25% 7.25%
Health care cost trend rate for expenses of
participants under age 65 10.75%
Health care cost trend rate for expenses of
participants over age 65 8.75%
</TABLE>
24
<PAGE> 18
<TABLE>
<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 used to determine
postretirement benefit obligation 8.50% 8.50%
Health care cost trend rate for expenses of
participants under age 65 12.00%
Health care cost trend rate for expenses of
participants over age 65 10.00%
</TABLE>
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 $1,668 ($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 before cumulative effect of accounting change
consist of:
<TABLE>
<CAPTION>
1995 1994 1993
<S> <C> <C> <C>
Current tax
expense
(benefit):
Federal $ (4,399) $ 2,971 $ 9,458
State 498 1,150 1,598
Foreign 8 26 105
--------- --------- --------
(3,893) 4,147 11,161
Deferred tax
expense
(benefit) (689) 6,062 (10,406)
--------- --------- --------
Total tax
expense
(benefit) $ (4,582) $ 10,209 $ 755
========= ========= ========
</TABLE>
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
1991.
The components of the net deferred tax asset as of December 31, 1995 and
1994 were as follows:
<TABLE>
<CAPTION>
1995 1994
<S> <C> <C>
DEFERRED TAX ASSETS:
Allowance for
doubtful accounts $ 603 $ 592
Inventory
obsolescence reserve 795 911
Workers' compensation 1,585 1,567
Product liability 2,063 1,719
Deferred compensation 1,578 1,733
Accrued vacation 1,197 1,256
Restructuring reserves 284 791
Pension liability 2,866 1,724
Postretirement
benefits other
than pensions 5,679 5,413
Environmental reserves 902 1,268
Severance reserves 1,142 --
Other liabilities
and reserves 3,797 3,768
---------- ---------
Total deferred
tax assets 22,491 20,742
---------- ---------
DEFERRED TAX LIABILITIES:
Property, plant, and
equipment 2,416 1,972
Other assets 2,008 1,601
---------- ---------
Total deferred
tax liabilities 4,424 3,573
---------- ---------
Net deferred
tax asset $ 18,067 $ 17,169
========== =========
</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.
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 change.
<TABLE>
<CAPTION> 1995 1994 1993
<S> <C> <C> <C>
Earnings (loss) before income taxes and $ (15,039) $ 27,636 $ (3,078)
cumulative effect of accounting change ----------- ------------ ---------
Tax provision computed at statutory rate
Increase (reduction) in taxes due to: $ (5,264) $ 9,673 $ (1,077)
Impact of foreign losses for which a current
tax benefit is not available
State income taxes (net of federal tax benefit)
Goodwill amortization 220 302 31
Foreign sales corporation 84 748 1,039
Insurance proceeds 270 270 1,615
Non-deductible meals and entertainment (202) (218) (67)
Reduction in liability due to favorable -- (670) --
IRS settlement 323 274 107
Change in statutory tax rate
Intangible asset write-down -- -- (900)
Miscellaneous -- -- (315)
-- -- 499
Actual tax provision (13) (170) (177)
----------- ------------ ---------
$ (4,582) $ 10,209 $ 755
----------- ------------ ---------
</TABLE>
25
<PAGE> 19
(12) BUSINESS SEGMENTS
Huffy Corporation is a diversified manufacturer and supplier of bicycles,
basketball backboards, lawn and garden tools, juvenile products, and inventory,
assembly, and supplier services. Bicycles, basketball and juvenile products
are sold predominantly through national and regional high volume retailers in
the United States. Lawn and garden products are sold both directly and through
wholesale distributors to national and regional high volume retailers in the
United States. In-store assembly, repair, and display services are provided to
major retailers in fifty states, Puerto Rico, Canada and the Virgin Islands.
Merchandising services (product resets and periodic maintenance of displays)
are marketed to manufacturers who supply high volume retailers. Physical
inventory services are marketed on a nationwide basis to mass retailers, drug
stores, home centers, sporting goods stores, specialty stores, and grocery
stores.
As a result of the continued concentration of sales to high volume
retailers in the juvenile products industry, and the similarity and growing
importance of markets, marketing methods, and channels of distribution of all
of the Company's manufactured products, the Company has reclassified its
operations into the following business segments:
o CONSUMER PRODUCTS --juvenile products, bicycles, basketball backboards and
related products, and lawn and garden tools.
o SERVICES FOR RETAIL -- in-store assembly, repair, and display services as
well as inventory counting services.
A summary of the Company's 1995, 1994, and 1993 operations by business
segment is as follows:
<TABLE>
<CAPTION>
Earnings (Loss)
Before Income
Taxes and
Cumulative Effect Depreciation
of Accounting Identifiable and Capital
Sales Change Assets Amortization Expenditures
<S> <C> <C> <C> <C> <C>
1995
Consumer Products $ 541,630 $ (6,945)(1) $ 239,623 $ 18,125 $ 20,282
Services for Retail 143,587 4,819 37,060 3,766 3,997
Eliminations (465) (7,996)
Interest expense 90
Interest income (5,007)(1) 21,863 528 86
General corporate
------------- ----------- -------------- ------------ -----------
$ 684,752 $ (15,039) $ 298,546 $ 22,419 $ 24,365
------------- ----------- -------------- ------------ -----------
1994
Consumer Products $ 581,251 $ 29,314 $ 262,157 $ 15,830 $ 31,933
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
Consumer Products $ 637,913 $ 3,316(2) $ 256,592 $ 16,151 $ 17,754
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
------------- ----------- -------------- ------------ -----------
<FN>
(1) Includes a net restructure charge of $4,663 in the Consumer Products
segment related to personnel reductions and the related negotiation of a
concessionary labor contract and $715 in general corporate expenses related to
personnel reductions.
(2) Includes a $28,755 provision to restructure the Company's lawn and garden
tools business, a charge of $858 associated with the disposition of previous
manufacturing facility and move to new facility, and a charge of $502 for asset
write-offs associated with discontinued product.
</TABLE>
In 1995, two customers individually accounted for 13% and 12% of total
consolidated net sales. In 1994 , three customers individually accounted for
12%, 13%, and 10% of total consolidated net sales. In 1993, two customers
individually accounted for 13% and 13% of total consolidated net sales.
26
<PAGE> 20
(13) QUARTERLY FINANCIAL DATA (UNAUDITED)
Quarterly financial data for the years 1995 and 1994 are as follows:
<TABLE>
<CAPTION>
1st 2nd 3rd 4th
Quarter Quarter Quarter Quarter Total(1)
<S> <C> <C> <C> <C> <C>
1995
Net sales $ 200,653 $ 200,401 $ 148,894 $ 134,804 $ 684,752
Gross profit 36,426 29,856 17,402 12,365 96,049
Net earnings (loss)(2) 4,415 349 (4,491) (10,730) (10,457)
EARNINGS (LOSS) PER
COMMON SHARE $ .33 $ .03 $ (.33) $ (.80) $ (.78)
--------- ---------- --------- ----------- ----------
1994
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(3) 4,845 7,961 2,602 2,019 17,427
EARNINGS PER COMMON SHARE $ .33 $ .53 $ .18 $ .14 $ 1.20
--------- ---------- --------- ----------- ----------
<FN>
(1) 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.
(2) Net earnings (loss) includes a restructure charge of $2,115 in the second quarter, a restructure credit of $275 in the
third quarter, and a net restructure charge of $3,538 in the fourth quarter.
(3) Net earnings include a fourth quarter credit to the restructure provision of $934.
</TABLE>
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, 1995 and 1994 were as follows:
YEAR ENDED DECEMBER 31,1995
<TABLE>
<CAPTION>
Common Stock Dividends
Price Range Declared
Quarter High Low
<S> <C> <C> <C>
First $ 15-7/8 $ 15 $ .085
Second 15-3/8 12-1/2 .085
Third 13-1/4 11-1/8 .085
Fourth 11-5/8 10 .085
-------
Total $ .340
--------
</TABLE>
Year ended December 31, 1994
<TABLE>
<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>
As of December 31, 1995 there were 13,437,969 shares of Huffy Corporation
Common Stock outstanding and there were 3,688 shareholders of record.
Management estimates an additional 8,000 shareholders hold their stock in
nominee name. Trading volume of the Company's Common Stock during the twelve
months ended December 31, 1995 totaled 7,238,800 shares. The average number of
common shares outstanding during this period was approximately 13,424,000
shares.
27
<PAGE> 21
SHAREHOLDER INFORMATION
TRANSFER AGENT AND REGISTRAR FOR
ANNUAL MEETING COMMON STOCK
The annual Meeting of Shareholders Society National Bank
will be held April 26, 1996 at KeyCorp Shareholder Services, Inc.
10:00 a.m., Eastern Daylight Time, P.O. Box 6477
at the Huffy Service First, Inc. Cleveland, Ohio 44101
facility, 8521 Gander Creek (800) 542-7792
Drive, Miamisburg, Ohio. Share-
holders are cordially invited to DIVIDENDS
attend. Dividends are payable quarterly
as declared by the Board of
STOCK EXCHANGE Directors. Huffy has paid a
New York Stock Exchange, Symbol HUF dividend on its Common Stock
each year since becoming publicly
PRIMARY BUSINESS LOCATIONS traded on November 15, 1966.
Huffy Corporation
225 Byers Road DIVIDEND REINVESTMENT
Miamisburg, Ohio 45342 A dividend reinvestment program
(513) 866-6251 is available to holders of Huffy
Corporation Common Stock. Share-
Huffy Bicycle Company holders interested in partici-
410 Grand Lake Road pating should contact either the
Celina, Ohio 45822 transfer agent or Huffy Corpora-
(419) 586-5171 tion, P.O. Box 1204, Dayton,
Ohio 45401, Attention: Vice
Gerry Baby Products Company President-Treasurer.
1500 East 128th Avenue
Thornton, Colorado 80241 AUDITORS
(303) 457-0926 KPMG Peat Marwick LLP
True Temper Hardware Company FORM 10-K
465 Railroad Avenue Shareholders interested in obtain-
Camp Hill, Pennsylvania 17001 ing Huffy Corporation's Annual
(717) 737-1500 Report or Form 10-K filed with
the Securities and Exchange
Huffy Sports Company Commission may obtain a copy by
2021 MacArthur Road writing Huffy Corporation, P.O.
Waukesha, Wisconsin 53188 Box 1204, Dayton, Ohio 45401,
(414)548-0440 Attention: Vice President-
Treasurer.
Washington Inventory Service
9265 Sky Park Court, Ste. 100
San Diego, California 92123 SHAREHOLDER COMMUNICATIONS
(619) 565-8111 Communications concerning lost
certificates, transfer require-
Huffy Service First, Inc. ments, address changes, and
8521 Gander Creek Drive Common Stock dividend checks
Miamisburg, Ohio 45342 should be sent to Society National
(513) 438-3664 Bank, KeyCorp Shareholder Ser-
vices, Inc., P.O. Box 6477,
ADDITIONAL OPERATING LOCATIONS Cleveland, Ohio 44101, (800)
- -- Cork, Ireland 542-7792.
- -- Farmington, Missouri
- -- Harrisburg, Pennsylvania The Management of Huffy Corporation
- -- North Vernon, Indiana welcomes comments and suggestions
- -- Pine Valley, New York from shareholders and investors.
- -- Suring, Wisconsin Call the Vice President -
- -- Union City, Pennsylvania Treasurer, (513) 866-6251.
- -- Wallingford, Vermont
29
<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:
Christopher W. Snyder
John M. Stoner, Jr.
(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:
Christopher W. Snyder
John M. Stoner, Jr.
<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, 1995 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-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<CASH> 2,558
<SECURITIES> 0
<RECEIVABLES> 75,523
<ALLOWANCES> (1,789)
<INVENTORY> 65,175
<CURRENT-ASSETS> 163,438
<PP&E> 214,240
<DEPRECIATION> (121,149)
<TOTAL-ASSETS> 298,546
<CURRENT-LIABILITIES> 100,349
<BONDS> 51,236
<COMMON> 16,213
0
0
<OTHER-SE> 136,345
<TOTAL-LIABILITY-AND-EQUITY> 298,546
<SALES> 684,752
<TOTAL-REVENUES> 684,752
<CGS> 588,703
<TOTAL-COSTS> 588,703
<OTHER-EXPENSES> 5,378
<LOSS-PROVISION> 726
<INTEREST-EXPENSE> 7,996
<INCOME-PRETAX> (15,039)
<INCOME-TAX> (4,582)
<INCOME-CONTINUING> (10,457)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (10,457)
<EPS-PRIMARY> (.78)
<EPS-DILUTED> (.78)
</TABLE>
