The Huffy Corporation Board of Directors has elected John A. “Jay” Muskovich as Chief Operating Officer of the company.
Mr. Muskovich was the President and Chief Executive Officer of DoubleSights Displays, LLC until its sale to a leading manufacturer and distributor of monitors and plasma televisions in 2004.
Thomas C. Sullivan, Lead Director of the Board of Directors, commented, “We are pleased to have Jay join the Company as the Chief Operating Officer. His extensive experience in the retail industry, his strong financial background, and his extensive experience in operations will be an invaluable asset to Huffy in guiding the Company through the operational and financial restructuring process.”
The Company also stated that in the course of its review of the Corporation's financial statements for the first quarter of 2004, it recently determined that certain accounting entries, estimated in the range of $3.5 to $5.0 million related primarily to customer deductions, credits and reserves for inventory valuation and doubtful account receivables for Huffy Sports Canada (formerly known as Gen-X Sports) are more properly reflected in the period ended December 31, 2003 rather than in the first quarter of 2004.
In reviewing its financial results for the quarter ended April 3, 2004, the Company initially determined that it was necessary to record both a write- off of certain intangible assets and a full valuation allowance for deferred tax assets, estimated at $53.0 million. These entries will now be reviewed to determine if a portion of or all of these amounts should be included in the Company's restated 2003 results. The Company intends to file its amended financial statements on Form 10-K/A as soon as practicable and its previously reported 2003 annual loss of $7.5 million will be adjusted to reflect the appropriate changes.
The restatement of 2003 results will affect the timing of the release of financial statements for both the first and second quarters of 2004. Based on current estimates, the Company anticipates that it will report losses for the first quarter of 2004 in the range of $70.0 to $72.0 million, which includes the $53.0 million of non-cash charges described above.
The Company had previously announced its non-compliance under the continued listing criteria of the New York Stock Exchange for average market capitalization and stockholders' equity of less than $50.0 million. If the stock of a listed company trades at an average closing price of less than $1.00 a share over a consecutive thirty day trading period and the stock does not trade at above $1.00 by six months following receipt of the notification, the NYSE will commence suspension and delisting procedures. Huffy stock is currently trading at less than $1.00 per share and there can be no assurance that the stock price will move to over $1.00 or that the Company's common shares will continue to trade on the NYSE.
The Company is continuing the process of exploring strategic alternatives with Lazard Freres & Co. LLC. Such strategic alternatives include, but are not limited to, discussions with both strategic and financial buyers who have indicated an interest in acquiring either a portion of or all of the remaining businesses through a court-supervised sale free and clear of the Company's claims. All interested buyers have indicated a desire to continue to operate the business in partnership with the Company's existing suppliers and customers. The Company has not made any conclusive decisions regarding these alternatives.
