<PAGE> 1
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For Quarter Ended June 30, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from _____________ to __________________
Commission file number 1-5325
Huffy Corporation
(Exact name of registrant as specified in its charter)
Ohio 31-0326270
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
225 Byers Road, Miamisburg, Ohio 45342
(Address of principal executive offices) (Zip Code)
(513) 866-6251
(Registrant's telephone number, including area code)
No Change
(Former name, former address and former fiscal year, if changed
since last report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
--- ---
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all documents
and reports required to be filed by Sections 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court.
Yes No
--- ---
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
Outstanding Shares: 13,471,542 as of August 5, 1996
------------------- -----------------------
"Index of Exhibits" is page 10 herein Page 1 of 10
<PAGE> 2
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS (UNAUDITED). COMPANY FOR WHICH REPORT IS FILED:
<TABLE>
<CAPTION>
HUFFY CORPORATION
CONSOLIDATED STATEMENTS OF EARNINGS
(Dollar Amounts in Thousands, Except Per Share Data)
Three Months Ended Six Months Ended
June 30, June 30,
------------------------------ ------------------------------
1996 1995 1996 1995
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Net sales $ 199,555 $ 200,401 $ 386,088 $ 401,054
Cost of sales 162,333 170,545 314,043 334,772
------------ ------------ ------------ ------------
Gross profit 37,222 29,856 72,045 66,282
Selling, general and
administrative expenses 28,834 24,818 56,839 51,824
Restructuring costs -- 2,115 -- 2,115
------------ ------------ ------------ ------------
Operating profit 8,388 2,923 15,206 12,343
Other expense (income)
Interest expense 2,022 2,232 3,819 4,541
Interest income (21) (23) (38) (66)
Other (279) 53 (217) --
------------ ------------ ------------ ------------
Earnings before income taxes 6,666 661 11,642 7,868
Income taxes 2,068 312 4,124 3,104
------------ ------------ ------------ ------------
Net earnings 4,598 349 7,518 4,764
============ ============ ============ ============
Earnings per common share:
Weighted average
number of common
shares 13,513,558 13,419,071 13,487,457 13,414,229
============ ============ ============ ============
Net earnings per $0.34 $0.03 $0.56 $0.36
common share ============ ============ ============ ============
</TABLE>
See accompanying notes to interim consolidated financial statements.
Page 2 of 10
<PAGE> 3
<TABLE>
<CAPTION>
HUFFY CORPORATION
CONSOLIDATED BALANCE SHEETS
(Dollar Amounts In Thousands)
June 30, December 31,
1996 1995
----------- ------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 112 $ 2,558
Accounts and notes receivable, net 116,256 81,242
Inventories 74,942 65,175
Prepaid expenses and federal income taxes 13,097 14,463
----------- ----------
Total current assets 204,407 163,438
----------- ----------
Property, plant and equipment, at cost 220,086 214,240
Less accumulated depreciation and amortization (130,767) (121,149)
----------- ----------
Net property, plant and equipment 89,319 93,091
Excess of cost over net assets acquired, net 24,555 24,953
Deferred federal income taxes 9,166 9,166
Other assets 7,467 7,898
----------- ----------
$ 334,914 $ 298,546
=========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Notes payable 8,670 5,750
Current installments of long-term obligations 7,625 7,685
Accounts payable 57,644 39,856
Accrued expenses and other current liabilities 53,769 47,058
----------- ----------
Total current liabilities 127,708 100,349
----------- ----------
Long-term obligations, less current installments 51,132 51,236
Other long-term liabilities 33,964 30,857
----------- ----------
Total liabilities 212,804 182,442
----------- ----------
Shareholders' equity:
Preferred stock -- --
Common stock 16,298 16,213
Additional paid-in capital 61,251 60,644
Retained earnings 81,015 75,701
Less: cost of treasury shares (36,454) (36,454)
----------- ----------
Total shareholders' equity 122,110 116,104
----------- ----------
$ 334,914 $ 298,546
=========== ==========
</TABLE>
See accompanying notes to interim consolidated financial statements.
Page 3 of 10
<PAGE> 4
<TABLE>
<CAPTION>
HUFFY CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollar Amounts in Thousands)
Six Months Ended
June 30,
-------------------------
1996 1995
----------- ----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings $ 7,518 $ 4,764
Adjustments to reconcile net earnings to net cash
used in operating activities:
Provision for restructuring -- 2,115
Depreciation and amortization 12,155 11,682
Loss on sale of property, plant and equipment -- 7
Changes in assets and liabilities:
Accounts and notes receivable, net (35,014) (19,068)
Inventories (9,767) (2,559)
Prepaid expenses and Federal income taxes 1,366 882
Other assets (286) (596)
Accounts payable 17,788 11,501
Accrued expenses and other current liabilities 6,704 (6,564)
Other long-term liabilities 3,107 604
Other 94 109
---------- --------
Net cash provided by operating activities 3,665 2,877
=======================================================================================================
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (7,284) (15,477)
Proceeds from sale of property, plant and equipment 16 12
---------- --------
Net cash used in investing activities (7,268) (15,465)
=======================================================================================================
CASH FLOWS FROM FINANCING ACTIVITIES:
Net increase (decrease) in short-term borrowings 2,920 17,890
Issuance of long-term obligations 3 38
Reduction of long-term debt (167) (49)
Issuance of common shares 692 308
Purchase of treasury shares -- (2,447)
Dividends paid (2,291) (2,290)
---------- --------
Net cash provided by financing activities 1,157 13,450
=======================================================================================================
Net change in cash and cash equivalents (2,446) 862
Cash and cash equivalents:
Beginning of the year 2,558 1,604
---------- --------
End of the six month period $ 112 $ 2,466
=======================================================================================================
</TABLE>
See accompanying notes to interim consolidated financial statements.
Page 4 of 10
<PAGE> 5
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
(Dollar Amounts in Thousands)
Note 1: Footnote disclosure which would substantially duplicate the
disclosure contained in the Annual Report to Shareholders for the
year ended December 31, 1995 has not been included. The unaudited
interim consolidated financial statements reflect all adjustments
which, in the opinion of management, are necessary to a fair
statement of the results for the periods presented and to present
fairly the consolidated financial position of Huffy Corporation
as of June 30, 1996. All such adjustments are of a normal
recurring nature.
Note 2: Inventories of Huffy Bicycle Company and Huffy Sports Company are
valued using the dollar value LIFO method and, as a result, it is
impractical to separate inventory values between raw materials,
work-in-process and finished products on an interim basis.
Page 5 of 10
<PAGE> 6
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
THREE AND SIX MONTHS ENDED JUNE 30, 1996
COMPARED TO THE
THREE AND SIX MONTHS ENDED JUNE 30, 1995
(Dollar Amounts in Thousands, Except Per Share
Data)
NET EARNINGS
Net earnings for Huffy Corporation ("Huffy" or "Company") for the quarter ended
June 30, 1996 were $4,598, compared to $349 for the same period last year. Net
earnings per share for the second quarter of 1996 were $0.34 per common share
compared to $0.03 per share for the same period in 1995. Earnings for the second
quarter of 1995 included a charge of $2,115, or $0.10 per common share, to
reflect the cost to reduce the fixed cost employment structure at Huffy Bicycle
Company, and to reengineer and reduce the Company's corporate office staff. The
increase in net earnings is primarily due to a company-wide focus on low cost
production and increased sales of both lawn and garden and juvenile products.
Net earnings for the six months ended June 30, 1996 were $7,518, compared to
$4,764 for the same period last year. Net earnings per common share for the six
months ended June 30, 1996 were $0.56 per common share, compared to $0.36 per
common share for the same period last year. Net earnings for 1995 include a
one-time restructuring charge of $2,115, or $0.10 per common share.
NET SALES
Net sales for the quarter ended June 30, 1996 were $199,555, down slightly from
the net sales level of $200,401 for the same quarter in 1995. Net sales for the
six months ended June 30, 1996 were $386,088, a 3.7% decrease from net sales of
$401,054 for the same period last year. During the second quarter and for the
six months ended June 30, 1996, net sales in the Consumer Products segment were
positively impacted by increased sales at both True Temper Hardware Company and
Gerry Baby Products Company reflecting market share gains as a result of new
product introductions and increased market penetration in existing product
lines. Net sales in this segment were negatively impacted by a heavier mix of
juvenile and promotional products at Huffy Bicycle Company and lower demand at
Huffy Sports Company, resulting from unseasonal weather during the Spring
selling season. In the Services for Retail segment, net
Page 6 of 10
<PAGE> 7
sales increased primarily as a result of continued market share gains in the
non-bike and in-home assembly business at Huffy Service First and increased
market penetration at Washington Inventory Service.
GROSS PROFIT
Gross profit for the quarter ended June 30, 1996 was $37,222, up from the
$29,856 achieved in the second quarter of 1995. Expressed as a percentage of net
sales, gross profit for the second quarter of 1996 was 18.7% compared to 14.9%
for the second quarter of 1995. The increase in gross profit in the Consumer
Products segment occurred primarily at Huffy Bicycle Company. Gross profit at
Huffy Bicycle Company increased with improved productivity at the Farmington,
Missouri facility and lower labor costs at the Celina, Ohio facility. The
increase in gross profit dollars at Huffy Bicycle Company was partially offset
by a decrease in gross profit dollars at Huffy Sports Company resulting from
lower sales volume. In the Services for Retail segment, gross margin increased
primarily due to improved labor efficiency at Washington Inventory Service.
Gross profit for the six months ended June 30, 1996 was $72,045, or 18.7% of net
sales, versus $66,282, or 16.5% of net sales for the same period in 1995. In the
Consumer Products segment the increase was due primarily to lower production
costs at Huffy Bicycle Company and productivity gains at True Temper Hardware
Company. In the Services for Retail segment gross profit margins improved from
1995 levels due primarily to increased productivity at Washington Inventory
Service.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
Selling, general and administrative expenses were $28,834 for the second quarter
of 1996, compared to $24,818 for the same period of 1995. For the six months
ended June 30, 1996, selling, general and administrative expenses were $56,839
versus $51,824 for the same period in 1995. The increase in selling, general and
administrative expense for the quarter and six months ended June 30, 1996 is
primarily due to increased advertising expenditures in the Consumer Products
segment and higher incentive compensation accruals.
LIQUIDITY AND CAPITAL RESOURCES
There have been no other significant changes in the Company's liquidity and
capital resources as of June 30, 1996 from those discussed in the Company's
Annual Report on Form 10-K for the year ended December 31, 1995. The Company's
balance sheet reflects fluctuations in both current assets and current
liabilities attributable to seasonal changes in the operations of its
businesses.
Page 7 of 10
<PAGE> 8
INTEREST EXPENSE
Interest expense for the second quarter of 1996 was $2,022 versus $2,232 for the
same quarter of 1995. Interest expense for the six months ended June 30, 1996
was $3,819, or $722 lower than interest expense for the same period of 1995.
This decrease in interest expense is due primarily to principal reductions in
long-term debt and reduced levels of short-term borrowings.
PART II -- OTHER INFORMATION
ITEM 6: EXHIBITS AND REPORTS ON FORM 8-K
a. Exhibits - The Exhibits, as shown in the "Index of Exhibits",
attached hereto as page 10, are filed as a part of this Report.
b. During the quarter ended June 30, 1996, the Company filed one
report on Form 8-K, dated June 17, 1996, setting forth a
cautionary statement for purposes of the "Safe Harbor"
provisions of the Private Securities Litigation Reform Act of
1995.
Page 8 of 10
<PAGE> 9
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
HUFFY CORPORATION, registrant
August 13, 1996 /s/ Timothy G. Howard
- ------------------------------- ------------------------
Date Timothy G. Howard
Vice President - Corporate Controller
(Principal Accounting Officer)
Page 9 of 10
<PAGE> 10
<TABLE>
<CAPTION>
INDEX OF EXHIBITS
Exhibit
No. Item
<S> <C>
(2) Not applicable
(3) Not applicable
(4) Not applicable
(10) Not applicable
(11) Not applicable
(15) Not applicable
(18) Not applicable
(19) Not applicable
(22) Not applicable
(23) Not applicable
(24) Not applicable
(27) Financial Data Schedule
(99) Not applicable
</TABLE>
Page 10 of 10
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary information extracted from the company's
consolidated financial statements for the six months ended June 30, 1996 and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
<EXCHANGE-RATE> 1
<CASH> 112
<SECURITIES> 0
<RECEIVABLES> 118,346
<ALLOWANCES> (2,090)
<INVENTORY> 74,942
<CURRENT-ASSETS> 204,407
<PP&E> 220,086
<DEPRECIATION> (130,767)
<TOTAL-ASSETS> 334,914
<CURRENT-LIABILITIES> 127,708
<BONDS> 51,132
0
0
<COMMON> 16,298
<OTHER-SE> 105,812
<TOTAL-LIABILITY-AND-EQUITY> 334,914
<SALES> 386,088
<TOTAL-REVENUES> 386,088
<CGS> 314,043
<TOTAL-COSTS> 314,043
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 614
<INTEREST-EXPENSE> 3,819
<INCOME-PRETAX> 11,642
<INCOME-TAX> 4,124
<INCOME-CONTINUING> 7,518
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 7,518
<EPS-PRIMARY> $0.56
<EPS-DILUTED> 0
</TABLE>
