<PAGE> 1
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For Quarter Ended March 31, 1996
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OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
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Commission file number 1-5325
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Huffy Corporation
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(Exact name of registrant as specified in its charter)
Ohio 31-0326270
- ------------------------------ -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
225 Byers Road, Miamisburg, Ohio 45342
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(Address of principal executive offices) (Zip Code)
(513) 866-6251
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(Registrant's telephone number, including area code)
No Change
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(Former name, former address and former fiscal year, if changed since last
report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
---- ----
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all documents
and reports required to be filed by Sections 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court.
Yes No
---- ----
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
Outstanding Shares: 13,509,703 as of April 30, 1996
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"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:
--------------------
HUFFY CORPORATION
CONSOLIDATED STATEMENTS OF EARNINGS
(Dollar Amounts in Thousands, Except Per Share Data)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
----------------------------------------------
1996 1995
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<S> <C> <C>
Net sales $ 186,533 $ 200,653
Cost of sales 151,710 164,227
------------------- --------------------
Gross profit 34,823 36,426
Selling, general and
administrative expenses 28,005 27,006
------------------- --------------------
Operating profit 6,818 9,420
Other expense
Interest expense 1,797 2,309
Interest income (17) (43)
Other 62 (53)
------------------- --------------------
Earnings before income taxes 4,976 7,207
Income taxes 2,056 2,792
------------------- --------------------
Net earnings 2,920 4,415
=================== ====================
Earnings per common share:
Weighted average
number of common
shares 13,461,328 13,409,386
=================== ====================
Net earnings per $ 0.22 $ 0.33
common share
=================== ====================
</TABLE>
See accompanying notes to interim consolidated financial statements.
Page 2 of 10
<PAGE> 3
HUFFY CORPORATION
CONSOLIDATED BALANCE SHEETS
(Dollar Amounts In Thousands)
<TABLE>
<CAPTION>
March 31, December 31,
1996 1995
---------------------- ----------------------
ASSETS
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 420 $ 2,558
Accounts and notes receivable, net 137,864 81,242
Inventories 75,734 65,175
Prepaid expenses and federal income taxes 13,275 14,463
---------------------- ----------------------
Total current assets 227,293 163,438
---------------------- ----------------------
Property, plant and equipment, at cost 216,166 214,240
Less accumulated depreciation and amortization (125,360) (121,149)
---------------------- ----------------------
Net property, plant and equipment 90,806 93,091
Excess of cost over net assets acquired, net 24,754 24,953
Deferred federal income taxes 9,166 9,166
Other assets 7,336 7,898
---------------------- ----------------------
$ 359,355 $ 298,546
====================== ======================
LIABILITIES AND SHAREHOLDERS' EQUITY
- ------------------------------------
Current liabilities:
Notes payable 33,840 5,750
Current installments of long-term obligations 7,731 7,685
Accounts payable 66,886 39,856
Accrued expenses and other current liabilities 48,270 47,058
---------------------- ----------------------
Total current liabilities 156,727 100,349
---------------------- ----------------------
Long-term obligations, less current installments 51,150 51,236
Other long-term liabilities 33,237 30,857
---------------------- ----------------------
Total liabilities 241,114 182,442
---------------------- ----------------------
Shareholders' equity:
Preferred stock -- --
Common stock 16,256 16,213
Additional paid-in capital 60,888 60,644
Retained earnings 77,551 75,701
Less: cost of treasury shares (36,454) (36,454)
---------------------- ----------------------
Total shareholders' equity 118,241 116,104
---------------------- ----------------------
$ 359,355 $ 298,546
====================== ======================
</TABLE>
See accompanying notes to interim consolidated financial statements.
Page 3 of 10
<PAGE> 4
HUFFY CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollar Amounts in Thousands)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
---------------------------------------------------
1996 1995
---------------------- ----------------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings $ 2,920 $ 4,415
Adjustments to reconcile net earnings to net cash used in operating activities:
Depreciation and amortization 6,173 5,795
Loss on sale of property, plant and equipment 8 --
Changes in assets and liabilities:
Accounts and notes receivable, net (56,622) (43,235)
Inventories (10,559) (17,847)
Prepaid expenses and Federal income taxes 1,188 1,089
Other assets 187 (355)
Accounts payable 27,030 27,468
Accrued expenses and other current liabilities 1,209 (5,255)
Other long-term liabilities 2,380 424
Other 76 (69)
---------------------- ----------------------
Net cash used in operating activities (26,010) (27,570)
================================================================================================================================
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (3,328) (8,901)
Proceeds from sale of property, plant and equipment 6 8
---------------------- ----------------------
Net cash used in investing activities (3,322) (8,893)
================================================================================================================================
CASH FLOWS FROM FINANCING ACTIVITIES:
Net increase (decrease) in short-term borrowings 28,090 43,020
Issuance of long-term obligations -- 30
Reduction of long-term debt (40) (19)
Issuance of common shares 287 487
Purchase of treasury shares -- (2,447)
Dividends paid (1,143) (1,138)
---------------------- ----------------------
Net cash provided by financing activities 27,194 39,933
================================================================================================================================
Net change in cash and cash equivalents (2,138) 3,470
Cash and cash equivalents:
Beginning of the year 2,558 1,604
---------------------- ----------------------
End of the three month period $ 420 $ 5,074
================================================================================================================================
</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
March 31, 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
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AND RESULTS OF OPERATIONS
-------------------------
THREE MONTHS ENDED MARCH 31, 1996
COMPARED TO THE
THREE MONTHS ENDED MARCH 31, 1995
(Dollar Amounts in Thousands, Except Per Share Data)
NET EARNINGS
- ------------
Net earnings for Huffy Corporation ("Huffy" or "Company") for the quarter ended
March 31, 1996 were $2,920, compared to $4,415 for the same period last year.
Net earnings per share for the first quarter of 1996 were $.22 per common share
compared to $.33 per share for the same period in 1995. The decrease in net
earnings occurred in the Consumer Products segment, primarily as a result of
lower unit volume at Huffy Bicycle Company. This decrease in the Consumer
Products segment was partially offset by an increase in net earnings in the
Services for Retail segment. Washington Inventory Service had increased earnings
due primarily to the reduction of field operating expenses. Additionally, 1995
net earnings benefitted from a $1,587 pre-tax reduction in environmental
reserves resulting from the favorable resolution of certain contractual issues
in the first quarter of 1995.
NET SALES
- ---------
Net sales for the quarter ended March 31, 1996 were $186,533, down slightly from
the net sales level of $200,653 for the same quarter in 1995. All of the
Company's businesses, with the exception of Huffy Bicycle Company, exceeded 1995
sales levels. Huffy Bicycle Company had decreased sales due primarily to lower
unit volume caused by unit sales for large promotions run in the first quarter
of 1995 which were not repeated in the first quarter of 1996. In the Services
for Retail segment, Huffy Service First had increased sales and market share in
the merchandising and in-home assembly services businesses.
Page 6 of 10
<PAGE> 7
GROSS PROFIT
- ------------
Gross profit for the quarter ended March 31, 1996 was $34,823, down slightly
from the $36,426 achieved in the first quarter of 1995. Expressed as a
percentage of net sales, gross profit for the first quarter of 1996 was 18.7%
compared to 18.2% for the first quarter of 1995. The increase in gross profit as
a percentage of sales in the Consumer Products segment occurred primarily at
Huffy Bicycle Company. Huffy Bicycle Company had lower unit shipments which
decreased gross profit dollars but gross profit as a percentage of net sales
increased with improved productivity at the Farmington, Missouri facility and
lower labor costs at the Celina, Ohio facility. In the Services for Retail
segment, gross margin as a percentage of net sales was higher due primarily to
improved labor efficiency at Washington Inventory Service.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
- --------------------------------------------
Selling, general and administrative expenses were $28,005 for the first quarter
of 1996, compared to $27,006 for the same period of 1995. Expressed as a
percentage of net sales, selling, general and administrative expenses were 15.0%
for the first quarter of 1996 versus 13.5% for the same period in 1995. The
increase in selling, general and administrative expenses is due primarily to
increased advertising expense. This increase was partially offset by reduced
fixed overhead expenses as a result of the 1995 restructure of the fixed
overhead structure of Huffy Bicycle Company and the Company's Corporate staff.
LIQUIDITY AND CAPITAL RESOURCES
- -------------------------------
There have been no other significant changes in the Company's liquidity and
capital resources as of March 31, 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.
INTEREST EXPENSE
- ----------------
Interest expense for the first quarter of 1996 was $1,797, which is $512 or
22.2% lower than the first quarter of 1995. This decrease is due primarily to
principal reductions in long-term debt and lower short-term debt balances. Lower
short-term borrowings are a result of reduced inventory and accounts receivable
levels.
Page 7 of 10
<PAGE> 8
PART II -- OTHER INFORMATION
ITEM 4: SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
---------------------------------------------------
The Annual Meeting of Shareholders of the Company was held on April
26, 1996. At such meeting the Shareholders of the Company elected as
Directors Jack D. Michaels, James F. Robeson, and Patrick W. Rooney,
each for a three year term expiring in 1999, and Joseph P. Viviano
for a one year term expiring in 1997. Shares were voted as follows:
FOR: Jack D. Michaels (11,863,590), James F. Robeson (11,868,588),
Patrick W. Rooney (11,861,026), and Joseph P. Viviano (11,862,829);
WITHHELD (INCLUDING BROKER NON-VOTES): Jack D. Michaels (137,907),
James F. Robeson (132,914), Patrick W. Rooney (140,471), and Joseph
P. Viviano (138,668).
In addition, the Shareholders approved a proposal to amend the 1988
Stock Option Plan and Restricted Share Plan to increase the number of
shares available under such Plan in a vote in which 8,383,253 shares
were voted for the amendment, 3,499,809 cast against, and 118,435
cast to abstain (including broker non-votes).
Further, the Shareholders also ratified the appointment of KPMG Peat
Marwick LLP as the Company's independent public accountants for
calendar year 1996. In connection with such ratification, there were
11,908,945 shares voted for ratification, 37,079 cast against, and
55,473 cast to abstain (including broker non-votes).
ITEM 6: EXHIBITS AND REPORTS ON FORM 8-K
--------------------------------
a. Exhibits - The Exhibits, as shown in the "Index of Exhibits",
attached hereto as page 10, are filed as a part of this Report.
b. No reports on Form 8-K have been filed during the quarter
for which this report is filed.
Page 8 of 10
<PAGE> 9
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
HUFFY CORPORATION, registrant
May 8, 1996 /s/ Timothy G. Howard
- -------------------------------- -------------------------------------
Date Timothy G. Howard
Vice President - Corporate Controller
(Principal Accounting Officer)
Page 9 of 10
<PAGE> 10
INDEX OF EXHIBITS
<TABLE>
<CAPTION>
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
<PAGE> 11
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
HUFFY CORPORATION, registrant
May 8, 1996
- --------------------------------- ------------------------------------
Date Timothy G. Howard
Vice President - Corporate Controller
(Principal Accounting Officer)
Page 9 of 10
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
COMPANY'S CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE MONTHS ENDED MARCH 31,
1996 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
<CASH> 420
<SECURITIES> 0
<RECEIVABLES> 139,784
<ALLOWANCES> (1920)
<INVENTORY> 75,734
<CURRENT-ASSETS> 227,293
<PP&E> 216,166
<DEPRECIATION> (125,360)
<TOTAL-ASSETS> 359,355
<CURRENT-LIABILITIES> 156,727
<BONDS> 51,150
<COMMON> 16,256
0
0
<OTHER-SE> 101,985
<TOTAL-LIABILITY-AND-EQUITY> 359,355
<SALES> 186,533
<TOTAL-REVENUES> 186,533
<CGS> 151,710
<TOTAL-COSTS> 151,710
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 396
<INTEREST-EXPENSE> 1,797
<INCOME-PRETAX> 4,976
<INCOME-TAX> 2,056
<INCOME-CONTINUING> 2,920
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,920
<EPS-PRIMARY> $.22
<EPS-DILUTED> 0
</TABLE>
