|Huffy Corporation announced yesterday that it "expects to report, excluding restructuring charges and the impact of a subsequent charge to earnings related to the announcement on January 22, 2002 that Kmart has filed for protection under Chapter 11 of the U.S. Bankruptcy Code, earnings from continuing operations for the fourth quarter of 2001 within the $0.17 - $0.21 range anticipated." |
Huffy Corporation had indicated in earlier announcements that it anticipated a loss from continuing operations for the fourth quarter. To insure that there is no confusion as to expected results for the fourth quarter, an amended first paragraph and full text of the press release follows:
HUFFY CORPORATION (NYSE: HUF) expects to report, excluding restructuring charges and the impact of a subsequent charge to earnings related to the announcement on January 22, 2002 that Kmart has filed for protection under Chapter 11 of the U.S. Bankruptcy Code, a loss from continuing operations for the fourth quarter of 2001 of $0.17 - $0.21 per common share as anticipated. The loss from continuing operations for the full year ending December 31, 2001 excluding the impact of restructuring charges taken in the fourth quarter and the subsequent event charge related to Kmart mentioned above, is expected to be within the previously announced range of $0.27 - $0.31 per common share with a net loss for the year $0.72 - $0.76 per common share.
Don Graber, Chairman, President and CEO said, "While we are disappointed that Huffy has not been able to achieve our targeted results for this year, we have allowed neither the events of 2001 nor the uncertainty of the economic environment to prevent Huffy from taking action to position the Corporation for stronger earnings in 2002. The on-going annual savings from the reduction of staffing levels at Huffy Bicycle Company and consolidating the finance and information technology groups will exceed the $1.0 million of restructuring charges taken during the fourth quarter. Following our most recent discussions with our suppliers in the Far East, we fully expect to recover the one-time $2.7 million cost associated with termination of the Shelter Services Agreement with Elamex, S. A. de C. V. in less than a year. We are pleased that we have continued to strengthen our balance sheet and reduce working capital needs. We expect to end the year with the lowest inventory levels in the Corporation's history and cash and short-term investments will exceed the forecasted $20.0 million level. In our current business configuration we do not foresee any borrowings under our revolving credit facility throughout 2002.
"The economic environment continues to be challenging. We were pleased with sales in the fourth quarter as the basketball backboard business and the service business exceeded the sales levels attained in the fourth quarter of 2000 and the bicycle business reported solid sales in the quarter, assisted by Micro(TM) Monkey Bike and pogo stick sales. However, we are concerned by recent events and by indications that an economic recovery in the near term remains uncertain.
"We have followed the recent news and developments leading to the announcement by Kmart that it has filed for reorganization under Chapter 11 of the U.S. Bankruptcy Code closely. Kmart has been a valued customer for many years and we wish Kmart's management success in its efforts to restore Kmart to profitability. As a result of our continued effort to reduce working capital, our current account receivable exposure to Kmart is at a seasonal low level; however, we will take a net after tax charge to earnings of approximately $2.7 million, or approximately $0.26 per common share. It is too early to assess the long-term impact on 2002 earnings, but the potential of Kmart store closures could result in a reduction of sales.
"It is increasingly difficult to forecast changes in the retail environment and in the overall economy for the next several months. Given that uncertainty and the impact of all of the foregoing, we are nonetheless cautiously optimistic that earnings in 2002 should be better than in 2001. Our current estimate is that earnings from continuing operations in the first half of 2002 should be in the range of $0.10 - $0.20 per share. We currently hope to see the economy in the second half of 2002 beginning to recover and estimate that for the full year, earnings should be in the range of $0.40 - $0.60 per share. We remain well positioned to pursue opportunities to add to shareholder value. We will continue to work with Sheffield Merchant Banking Group, our external financial advisors, as we evaluate additional alternatives to re-deploy assets to enhance shareholder value."
Huffy Corporation will release its fourth quarter and year 2001 results Tuesday, February 12, 2002. The company will hold a conference call at 4:30 p.m. (ET) on Tuesday, February 12, 2002. Those wishing to participate should call (800) 715-9263 five minutes prior to the call. A replay of the conference call will be available two hours after the completion of the conference call through February 18, 2002 by calling 800-642-1687 and entering pin number - 2343232. The press release will be available on Huffy Corporation's website: http://www.huffy.com .www.huffy.com