Paul D'Aloia, Huffy president and CEO, said:
"Although we will not have final results from all business units until later in the month, preliminary indications are that fourth quarter sales are within the $120.0 million to $125.0 million range that we previously indicated, but the loss from continuing operations for the quarter will be substantially higher than previously anticipated and will likely result in a modest loss from continuing operations for the full year. Factors contributing to the higher loss include lower gross margins in the basketball backboard segment, action sport and in-line skate segment, and higher than anticipated expense levels at Gen-X.
"It is disappointing to report that our fourth quarter results will be worse than anticipated, yet I am optimistic that the actions that are currently underway will have a favorable impact on earnings. Our management team is focused on a variety of strategic initiatives designed to move the Company to a more profitable operating platform and will provide more detail regarding these strategic initiatives during our earnings call in early February."
Robert W. Lafferty, vice president and Chief Financial Officer said:
"We have had on-going discussions with our lenders, led by Congress Financial Corporation, related to amending certain financial covenants in our loan agreement to reflect lower sales and earnings projections. A recently negotiated amendment to our revolving loan agreement includes revised financial covenants that reflect the lower projections, a phased decrease of the loan limit under the facility consistent with initiatives to reduce working capital, as well as confirmation that the lenders will not test compliance with certain existing financial covenants at December 31, 2003."