IN THE UNITED STATES BANKRUPTCY COURT

FOR THE SOUTHERN DISTRICT OF OHIO

WESTERN DIVISION

In re:

HUFFY CORPORATION,

)

Chapter 11

an Ohio corporation, et al.¹

)

Honorable Lawrence S. Walter

Debtor

s.

)

)

Case Nos. 04-39148 through 04-39167

)

Jointly Administered

)

04-39148

DISCLOSURE STATEMENT FOR DEBTORS

JOINT PLAN OF REORGANIZATION

DINSMORE & SHOHL LLP

Kim Martin Lewis, Esq.

John B. Persiani, Esq

Donald W. Mallory, Esq.

Attorneys for Debtors and

Debtors in Possession

255 East Fifth Street

Suite 1900

Cincinnati, Ohio 45202

513-977-8200

Dated: Cincinnati, Ohio

July      , 2005

DISCLAIMER

THE INFORMATION CONTAINED IN THIS DISCLOSURE STATEMENT (THE DISCLOSURE STATEMENT) AND APPENDICES HERETO RELATE TO THE DEBTORS JOINT PLAN OF REORGANIZATION (AS IT MAY BE AMENDED, SUPPLEMENTED OR OTHERWISE MODIFIED, THE PLAN) AND ARE INCLUDED HEREIN FOR PURPOSES OF SOLICITING ACCEPTANCES OF THE PLAN AND MAY NOT BE RELIED UPON FOR ANY PURPOSE OTHER THAN TO DETERMINE HOW TO VOTE ON SUCH PLAN.  NO PERSON MAY GIVE ANY INFORMATION OR MAKE ANY REPRESENTATIONS, OTHER THAN THE INFORMATION AND REPRESENTATIONS CONTAINED IN THIS DISCLOSURE STATEMENT, REGARDING THE PLAN OR THE SOLICITATION OF ACCEPTANCES OF THE PLAN.

ALL CREDITORS ARE ADVISED AND ENCOURAGED TO READ THIS DISCLOSURE STATEMENT AND THE PLAN IN ITS ENTIRETY BEFORE VOTING TO ACCEPT OR REJECT THE PLAN.  SUMMARIES OF THE PLAN AND STATEMENTS MADE IN THIS DISCLOSURE STATEMENT ARE QUALIFIED IN THEIR ENTIRETY BY REFERENCE TO THE PLAN, OTHER EXHIBITS ANNEXED OR REFERRED TO IN THE PLAN AND THIS DISCLOSURE STATEMENT.

THIS DISCLOSURE STATEMENT HAS BEEN PREPARED IN ACCORDANCE WITH 11 U.S.C. 1125 AND RULE 3016(c) OF THE FEDERAL RULES OF BANKRUPTCY PROCEDURE (THE BANKRUPTCY RULES) AND NOT NECESSARILY IN ACCORDANCE WITH FEDERAL OR STATE SECURITIES LAWS OR OTHER LAWS GOVERNING DISCLOSURE OUTSIDE THE CONTEXT OF TITLE 11 OF THE UNITED STATES CODE 101 ET. SEQ. (THE BANKRUPTCY CODE).  NEITHER THE SECURITIES TO BE DISTRIBUTED NOR THIS DISCLOSURE STATEMENT HAS BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION (THE SEC) OR ANY STATE SECURITIES COMMISSION, NOR HAS THE SEC APPROVED OR DISAPPROVED OF THE ACCURACY OR ADEQUACY OF THE STATEMENTS CONTAINED HEREIN.

AS TO CONTESTED MATTERS, ADVERSARY PROCEEDINGS, AND OTHER ACTIONS OR POTENTIAL ACTIONS, THIS DISCLOSURE STATEMENT AND APPENDICES HERETO WILL NOT CONSTITUTE OR BE CONSTRUED AS AN ADMISSION OF ANY FACT OR LIABILITY, STIPULATION, OR WAIVER, BUT RATHER AS A STATEMENT MADE IN SETTLEMENT NEGOTIATIONS.  THIS DISCLOSURE STATEMENT WILL NOT BE ADMISSIBLE IN ANY NON-BANKRUPTCY PROCEEDING NOR WILL IT BE CONSTRUED TO BE CONCLUSIVE ADVICE ON THE TAX, SECURITIES, OR OTHER LEGAL EFFECTS OF THE REORGANIZATION AS TO HOLDERS OF CLAIMS AGAINST, OR EQUITY INTERESTS IN, THE DEBTORS.

NO PARTY IS AUTHORIZED TO PROVIDE TO ANY OTHER PARTY ANY INFORMATION CONCERNING THE PLAN OTHER THAN THE CONTENTS OF THIS DISCLOSURE STATEMENT.  THE DEBTORS HAVE NOT AUTHORIZED ANY REPRESENTATIONS CONCERNING THE DEBTORS OR THE VALUE OF THEIR

PROPERTY OTHER THAN THOSE SET FORTH IN THIS DISCLOSURE STATEMENT.  HOLDERS OF CLAIMS AND EQUITY INTERESTS SHOULD NOT RELY ON ANY INFORMATION, REPRESENTATIONS OR INDUCEMENTS MADE TO OBTAIN THEIR ACCEPTANCE OF THE PLAN THAT ARE OTHER THAN, OR INCONSISTENT WITH, THE INFORMATION CONTAINED HEREIN AND IN THE PLAN.

CERTAIN OF THE STATEMENTS CONTAINED IN THIS DISCLOSURE STATEMENT ARE FORWARD-LOOKING PROJECTIONS AND FORECASTS BASED UPON CERTAIN ESTIMATES AND ASSUMPTIONS.  THERE CAN BE NO ASSURANCE THAT SUCH STATEMENTS WILL BE REFLECTIVE OF ACTUAL OUTCOMES, AND ACTUAL RESULTS MAY DIFFER MATERIALLY FROM THE PROJECTIONS AND FORECASTS SET FORTH HEREIN.  NOTHING CONTAINED IN THIS DISCLOSURE STATEMENT, EXPRESS OR IMPLIED, IS INTENDED TO GIVE RISE TO ANY COMMITMENT OR OBLIGATION OF THE DEBTORS OR WILL CONFER UPON ANY PERSON ANY RIGHTS, BENEFITS OR REMEDIES OF ANY NATURE WHATSOEVER.

THE STATEMENTS CONTAINED IN THIS DISCLOSURE STATEMENT ARE MADE ONLY AS OF THE DATE HEREOF, AND THERE CAN BE NO ASSURANCE THAT THE STATEMENTS CONTAINED HEREIN WILL BE CORRECT AT ANY TIME AFTER THE DATE HEREOF.  NEITHER THE DELIVERY OF THIS DISCLOSURE STATEMENT NOR THE CONFIRMATION OF THE PLAN WILL CREATE ANY IMPLICATION, UNDER ANY CIRCUMSTANCES, THAT THE INFORMATION CONTAINED IN THIS DISCLOSURE STATEMENT IS CORRECT AT ANY TIME AFTER THE DATE HEREOF OR THAT THE DEBTORS WILL BE UNDER ANY OBLIGATION TO UPDATE SUCH INFORMATION IN THE FUTURE.

THE PROJECTIONS PROVIDED IN THIS DISCLOSURE STATEMENT HAVE BEEN PREPARED BY THE DEBTORS MANAGEMENT AND THEIR FINANCIAL ADVISORS.  THESE PROJECTIONS, WHILE PRESENTED WITH NUMERICAL SPECIFICITY, ARE NECESSARILY BASED ON A VARIETY OF ESTIMATES AND ASSUMPTIONS WHICH, THOUGH CONSIDERED REASONABLE AT THE TIME THEY WERE MADE, MAY NOT BE ACHIEVED AND ARE INHERENTLY SUBJECT TO SIGNIFICANT BUSINESS, ECONOMIC, COMPETITIVE, INDUSTRY, REGULATORY, MARKET AND FINANCIAL UNCERTAINTIES AND CONTINGENCIES, MANY OF WHICH ARE BEYOND THE DEBTORS CONTROL.  THE DEBTORS CAUTION THAT NO REPRESENTATIONS CAN BE MADE AS TO THE ACCURACY OF THESE PROJECTIONS OR TO THE DEBTORS ABILITY TO ACHIEVE THE PROJECTED RESULTS.  SOME ASSUMPTIONS INEVITABLY WILL NOT MATERIALIZE.  FURTHER, EVENTS AND CIRCUMSTANCES OCCURRING SUBSEQUENT TO THE DATE ON WHICH THESE PROJECTIONS WERE PREPARED MAY BE DIFFERENT FROM THOSE ASSUMED AND/OR MAY HAVE BEEN UNANTICIPATED, AND THUS THE OCCURRENCE OF THESE EVENTS MAY AFFECT FINANCIAL RESULTS IN A MATERIALLY ADVERSE OR MATERIALLY BENEFICIAL MANNER. THE PROJECTIONS, THEREFORE, MAY NOT BE RELIED UPON AS A GUARANTY OR OTHER ASSURANCE OF THE ACTUAL RESULTS THAT WILL OCCUR.

SEE ARTICLE VI. OF THIS DISCLOSURE STATEMENT, CERTAIN RISK FACTORS TO BE CONSIDERED, FOR A DISCUSSION OF CERTAIN RISK FACTORS WHICH SHOULD BE CONSIDERED IN CONNECTION WITH A DECISION BY A HOLDER OF AN IMPAIRED CLAIM OR IMPAIRED EQUITY INTEREST TO ACCEPT THE PLAN.

I.
INTRODUCTION

Huffy Corporation, an Ohio corporation (Huffy), and its wholly-owned subsidiaries Huffy Risk Management, Inc., HUFCO-Ohio, Inc., HCAC, Inc., Hufco-Delaware Company, Huffy Sports, Inc., American Sports Design Company, Huffy Sports Washington, Inc., Huffy Sports Outlet, Inc., Huffy Sports Canada, Inc., Lehigh Avenue Property Holdings, Inc., Tommy Armour Golf Company, Lamar Snowboards, Inc., Huffy Sports Delaware, Inc., First Team Sports, Inc., Hespeler Hockey Holding, Inc., HUFCO-Georgia I, Inc., HUFCO-Georgia II, Inc., HUFCO-New Brunswick, Inc., and HUF Canada, Inc., debtors and debtors in possession in these jointly administered Chapter 11 Cases (collectively with Huffy, the Debtors), submit this Disclosure Statement pursuant to section 1125 of the Bankruptcy Code to holders of Claims against and Equity Interests in the Debtors in connection with (i) the solicitation of acceptances of the Debtors Joint Plan of Reorganization Under Chapter 11 of the Bankruptcy Code dated July     , 2005, (as amended, supplemented or otherwise modified, the Plan) filed by the Debtors with the United States Bankruptcy Court for the Southern District of Ohio, Western Division (the Bankruptcy Court) and (ii) the hearing to consider confirmation of the Plan (the Confirmation Hearing) scheduled for , 2005 at  __.m. (Eastern Daylight Time).  Unless otherwise defined herein, all capitalized terms contained herein have the meanings ascribed to them in the Plan.

A.

General

Huffy and each of the other Debtors filed a voluntary petition for relief under Chapter 11 of title 11, United States Code (the Bankruptcy Code), on October 20, 2004.  Since that time, the Debtors have continued in the possession of their properties and in the management of their businesses as debtors in possession pursuant to sections 1107 and 1108 of the Bankruptcy Code.  Huffy Sports Canada, Inc., Huffy Sports Outlet Inc., HUF Canada, Inc., and Hufco-New Brunswick, Inc. (collectively, the "Canadian Subsidiaries") are wholly-owned Canadian subsidiaries of Huffy; each of the Debtors including the Canadian Subsidiaries filed for a Recognition Order under the Companies' Creditors Arrangement Act (the "CCAA") on October 20, 2004 in Toronto, Ontario.

Chapter 11 is the principal business reorganization chapter of the Bankruptcy Code.  Under Chapter 11, a debtor is authorized to reorganize its business for the benefit of itself, its creditors and equity interest holders. In addition to permitting rehabilitation of a debtor, another goal of Chapter 11 is to promote equality of treatment for similarly situated creditors and similarly situated equity interest holders with respect to the distribution of a debtors assets.

The commencement of a Chapter 11 case creates an estate that is comprised of all of the legal and equitable interests of the debtor as of the filing date.  The Bankruptcy Code provides that the debtor may continue to operate its business and remain in possession of its property as a debtor in possession."

The consummation of a plan of reorganization is the principal objective of a Chapter 11 reorganization case.  A plan of reorganization sets forth the terms for satisfying claims against and interests in a debtor.  Upon confirmation of a plan of reorganization, the plan is binding upon a debtor, any issuer of securities under the plan, any person acquiring property under the plan and any creditor or equity interest holder of a debtor.  Subject to certain limited exceptions, the confirmation order discharges a debtor from any debts that arose prior to the date of confirmation of the plan and substitutes the obligations specified under the confirmed plan.

After a plan of reorganization has been filed, holders of certain claims against or equity interests in a debtor are permitted to vote to accept or reject the plan.  Before soliciting acceptances of the proposed plan, however, section 1125 of the Bankruptcy Code requires a debtor to prepare a disclosure statement containing adequate information of a kind, and in sufficient detail, to enable a hypothetical reasonable investor to make an informed judgment about the plan.  The Debtors are submitting this Disclosure Statement to holders of Claims against and Equity Interests in the Debtors to satisfy the requirement of section 1125 of the Bankruptcy Code.

Under the Plan, the Debtors will be reorganized on a stand-alone basis.  Holders of Allowed Secured Claims will be paid in full or have their debt reinstated. Holders of Allowed Administrative or Priority Claims will be paid in full.   Holders of Equity Interests in Huffy will have their interests cancelled and will receive no distribution under the Plan. Holders of Convenience Class Claims will receive twelve (12%) of their Allowed Claims in cash.

Holders of Allowed Sinosure Group Claims will receive their pro rata share of (i) one hundred percent (100%) of the issued New Class A Common Stock of Reorganized Parent which is equivalent to thirty percent (30%) of the aggregate New Class A Common Stock and New Class B Common Stock, subject to dilution by shares of New Class C Common Stock reserved for issuance in connection with the Management Incentive Plan, (ii) Distribution Notes A and (iii) their pro-rata interest (shared with general unsecured creditors) in the net proceeds of the Recovery Trust.

 Holders of Allowed General Unsecured Claims will receive through the Unsecured Claims Trust their pro rata share of (i) one hundred percent (100%) of the issued New Class B Common Stock which is equivalent to seventy percent (70%) of the aggregate New Class A Common Stock and New Class B Common Stock of the Reorganized Parent, subject to dilution by shares of: (a) New Class C Common Stock to be issued in connection with the Management Incentive Plan and (b) additional New Class A Common Stock issued as Sinosure Performance Shares, (ii) their pro-rata share of the distribution of Distribution Note B and (iii) their pro-rata interest (shared with the Sinosure Group Claims) in the net proceeds of the Recovery Trust.  

The Sinosure Group's ability to earn Sinosure Performance Shares will increase their overall percentage of ownership in the Reorganized Parent.  If the Sinosure Group earns all the Sinosure Performance Shares as is made possible under the Plan, the New Class B Common Stock shareholders' interest in the Reorganized Parent will be diluted over time to 49% of the aggregate equity interest of entity while the Sinosure Group's interest will increase to 51%, in both cases subject to dilution by New Class C Common Stock distributed in connection with the Management Incentive Plan.

As holders of all outstanding New Class A Common Stock, the Sinosure Group will be able to elect a majority of the Board of Directors of the Reorganized Parent and to exercise control of the Reorganized Debtors. Other general unsecured creditors will receive all outstanding New Class B Common Stock and will have the right to elect two members of the Reorganized Parent's Board of Directors and other rights as set forth in detail in the Plan. In accordance with the Supply Principles constituting a part of the Plan, the Reorganized Debtors will place orders  for the supply of bicycles and golf products from the Chinese market with members of the Sinosure Group and with other Chinese companies with the benefit of export credit insurance provided by Sinosure, and the Sinosure Group will be able to increase its shareholdings in the Reorganized Parent through the issuance of Sinosure Performance Shares in exchange for providing extended trade credit on favorable terms to the Reorganized Debtors which shall be fair and adequate consideration for the Sinosure Performance Shares.

B.

Disclosure Statement Overview

Attached as exhibits to this Disclosure Statement are copies of the following:

?

Exhibit A The Plan;

?

Exhibit B  Huffy Corporation et. al., Projected Financial Information;

?

Exhibit C  Huffy Corporation, et al. Liquidation Analysis;

?

Exhibit D Term Sheet for Distribution Notes A;

?

Exhibit E Term Sheet for Distribution Note B;

?

Exhibit F Supply Principles; and

?

Exhibit G Order of the Bankruptcy Court Approving Disclosure Statement

In addition, a Ballot for the acceptance or rejection of the Plan is enclosed with the Disclosure Statement submitted to the holders of Claims that the Debtors believe are entitled to vote to accept or reject the Plan.

On _____________, 2005, after notice and a hearing, the Bankruptcy Court entered an order approving this Disclosure Statement as containing adequate information of a kind and in sufficient detail to enable hypothetical, reasonable investors typical of the Debtors creditors and equity interest holders to make an informed judgment whether to accept or reject the Plan, and

establishing certain procedures with respect to the solicitation of votes to accept or reject the Plan (the Disclosure Statement Order).  A copy of the Disclosure Statement Order is being delivered with this Disclosure Statement.  APPROVAL OF THIS DISCLOSURE STATEMENT DOES NOT, HOWEVER, CONSTITUTE A DETERMINATION BY THE BANKRUPTCY COURT AS TO THE FAIRNESS OR MERITS OF THE PLAN.

The Disclosure Statement Order sets forth in detail the deadlines, procedures and instructions for voting to accept or reject the Plan and for filing objections to confirmation of the Plan, the record date for voting purposes, and the applicable standards for tabulating Ballots.  In addition, detailed voting instructions accompany each Ballot.  Each holder of a Claim entitled to vote on the Plan should read the Disclosure Statement, the Plan, the Disclosure Statement Order and the instructions accompanying the Ballots in their entirety before voting on the Plan.  These documents contain, among other things, important information concerning the classification of Claims and Equity Interests for voting purposes and the tabulation of votes.  No solicitation of votes to accept the Plan may be made except pursuant to section 1125 of the Bankruptcy Code.

C.

Holders of Claims and Equity Interests Entitled to Vote

Pursuant to the provisions of the Bankruptcy Code, only holders of allowed claims or equity interests in classes of claims or equity interests that are impaired within the meaning of section 1124 of the Bankruptcy Code (Impaired) and are entitled to receive distributions under a proposed Chapter 11 plan are entitled to vote to accept or reject such plan.  Classes of claims or equity interests in which the holders of such claims or equity interests are unimpaired under a Chapter 11 plan are deemed to have accepted the plan and are not entitled to vote to accept or reject the plan.  Classes of claims or equity interests in which the holders of such claims or equity interests are Impaired and are not entitled to receive any distributions under a proposed Chapter 11 plan are deemed to have rejected the plan and are not entitled to vote to accept or reject the plan.

Under the Plan, holders of Allowed Claims in Class 3 (Convenience Claims), Class 4 (Sinosure Group Claims), Class 5 (General Unsecured Claims), and Class 6 (De Minimis Litigation Claims) (collectively, the Voting Classes) are treated as Impaired and entitled to vote on the Plan.  Holders of Claims in Class 8 (Subordinated Claims) and Class 10 (Old Parent Equity Interests), who will receive no distributions under the Plan, are deemed to have rejected the Plan pursuant to section 1126(g) of the Bankruptcy Code and are not entitled to vote.  Claims in Class 1 (Other Priority Claims), Class 2 (Other Secured Claims), Class 7 (Intercompany Claims), Class 9 (Subsidiary Equity Interest), Allowed Administrative Claims, Professional Fee Claims, and Priority Tax Claims are not Impaired under the Plan and thus holders of Claims in such Classes and categories are presumed to have accepted the Plan pursuant to section 1126(f) of the Bankruptcy Code and are not entitled to vote.

D.

Voting Procedures

If you are entitled to vote to accept or reject the Plan, a Ballot is enclosed for the purpose of voting on the Plan.  If you hold Claims in more than one Class and you are entitled to vote Claims in more than one Class, you may receive separate Ballots which must be used for each separate Class of Claims.  Please vote and return your Ballot(s) to:

IF BY MAIL

Huffy Corporation Vote Tabulation Center

c/o The Trumbull Group

P.O. Box 721

Windsor, CT 06095-0721

IF BY HAND OR OVERNIGHT DELIVERY

Huffy Corporation Vote Tabulation Center

c/o The Trumbull Group

4 Griffin Road North

Windsor, CT 06095-0721

DO NOT RETURN YOUR SECURITIES WITH YOUR BALLOT

TO BE COUNTED, YOUR BALLOT INDICATING ACCEPTANCE OR REJECTION OF THE PLAN MUST BE RECEIVED NO LATER THAN 4:00 P.M., EASTERN DAYLIGHT TIME, ON , 2005.  ANY BALLOT RECEIVED BY TELECOPIER, FACSIMILE OR OTHER ELECTRONIC COMMUNICATION, INCLUDING BUT NOT LIMITED TO E-MAIL, SHALL NOT BE COUNTED.  ANY EXECUTED BALLOT RECEIVED THAT DOES NOT INDICATE EITHER AN ACCEPTANCE OR REJECTION OF THE PLAN SHALL BE DEEMED TO CONSTITUTE AN ACCEPTANCE OF THE PLAN.

Any Claim in an impaired Class as to which an objection or request for estimation is pending or which is scheduled by the Debtors as unliquidated, disputed or contingent is not entitled to vote unless the holder of such Claim has obtained an order of the Bankruptcy Court temporarily allowing such Claim for the purpose of voting on the Plan.

The Bankruptcy Court entered an order setting _____________, 2005 as the record date for voting on the Plan.  Accordingly, only holders of record as of ___________, 2005 that are otherwise entitled to vote under the Plan will receive a Ballot and may vote on the Plan.

If you are a holder of a Claim entitled to vote on the Plan and did not receive a Ballot, received a damaged Ballot or lost your Ballot, or if you have any questions concerning the Disclosure Statement, the Plan or the procedures for voting on the Plan, please call the Trumbull Group at 860-687-7567.

E.

Vote Required for Acceptance; Binding Effect

The Bankruptcy Code defines acceptance of a plan by an Impaired class of claims as acceptance by holders of at least two-thirds in dollar amount, and more than one-half in number, of the claims of that class that actually cast ballots.  The Bankruptcy Code defines acceptance of

a plan by an Impaired class of equity interests as acceptance by holders of at least two-thirds in amount of the equity interests of that class that actually cast ballots.  The vote of a holder of a claim or interest may be disregarded if the bankruptcy court determines that the acceptance or rejection was not solicited or procured in good faith.

In addition, the Bankruptcy Code requires that (i) a plan of reorganization be accepted by at least one Impaired class of claims and (ii) that the plan of reorganization is in the best interests of creditors and stockholders that are Impaired under the plan in that it provides the holder with at least as much value on account of the claim or interest as it would receive if the debtor were liquidated under Chapter 7 of the Bankruptcy Code. Further, if a class or equity interests that is Impaired rejects the plan of reorganization, the plan may still be confirmed if the bankruptcy court finds that the plan does not discriminate unfairly and is fair and equitable as to such rejecting Impaired class.

Confirmation of the Plan will make the Plan binding upon the Debtors, holders of Claims against and Equity Interests in the Debtors, and other parties in interest regardless of whether they have accepted the Plan, and such holders of Claims and/or Equity Interests will be prohibited from receiving payment from, or seeking recourse against, the Reorganized Debtors or any assets that are distributed to other holders of Claims and/or Equity Interests under the Plan.  In addition, confirmation of the Plan will enjoin creditors and equity interest holders from taking a wide variety of actions on account of a debt, claim, liability, interest or right that arose prior to the Confirmation Date.  As of the Effective Date of the Plan, confirmation will also operate as a discharge of all Claims against, and Equity Interests in the Debtors, to the fullest extent authorized by section 1141(d) of the Bankruptcy Code.

F.

Confirmation Hearing

Pursuant to section 1128 of the Bankruptcy Code, the Confirmation Hearing will be held on ____________, 2005 at        p.m. (Eastern Daylight Time), before the Honorable Lawrence S. Walter, United States Bankruptcy Judge, at the United States Bankruptcy Court, Southern District of Ohio, Western Division, 120 West Third Street, Dayton, Ohio 45402.  The Bankruptcy Court has directed that objections, if any, to confirmation of the Plan be served and filed so that they are received on or before , 2005 at        p.m. (Eastern Daylight Time) by (i) Dinsmore & Shohl LLP, 255 E. 5^th Street, Suite 1900, Cincinnati, Ohio 45202, attention: Kim Martin Lewis, Esq., and Donald W. Mallory, Esq., counsel for the Debtors, (ii) McDonald Hopkins Co., LPA, 600 Superior Avenue, East, Suite 2100, Cleveland, Ohio 44114, attention: Sean Malloy, Esq., counsel for the Official Committee of Unsecured Creditors, (iii) Otterbourg, Steindler, Houston & Rosen, P.C., 230 Park Avenue, New York, New York 10169, attention: Daniel F. Fiorillo, Esq., counsel to the DIP Loan Agent, (iv) Coudert Brothers LLP, 1114 Avenue of the Americas, New York, New York 10036, attention: Barry Metzger, Esq. and Edward H. Tillinghast, III., Esq., counsel for the Sinosure Group, and (v) the United States Trustee for this district, MaryAnne Wilsbacher, Office of the United States Trustee, Region 9, 170 North High Street, Suite 200, Columbus, Ohio 43215. The Confirmation Hearing may be adjourned from time to time by the Bankruptcy Court without further notice except for the announcement of the adjournment date made at the Confirmation Hearing or any adjourned Confirmation Hearing.

G.

Effective Date

The Plan will not be consummated immediately upon confirmation, but only upon the Effective Date.  The Effective Date will not occur unless various conditions to confirmation and consummation are satisfied (or waived pursuant to, and in accordance with, the terms of the Plan).  Certain of the conditions may only be waived with the consent of the Sinosure Group and the Creditors' Committee.  The Confirmation Order may be vacated if the conditions to the Effective Date are not timely met or waived.

Because of the conditions to the Effective Date provided in the Plan, a delay may occur between confirmation of the Plan and the Effective Date. There is no assurance that the conditions to the Effective Date will be fulfilled, or that any condition that is not fulfilled will be waived.

II.
OVERVIEW OF DISTRIBUTIONS UNDER THE PLAN¹

The following briefly summarizes the classification and treatment of Claims and Equity Interests under the Plan.

¹ This table is only a summary of the classification and treatment of Claims and Equity Interests under the Plan.  The estimated recoveries for Classes of Claims receiving New Common Stock are based upon the mid-point of the range of the estimated equity value of the Reorganized Debtors set forth in Article VII, Valuation of the Reorganized Debtors, hereof.  To the extent that the actual value of the New Common Stock varies from the amounts estimated, the recoveries of holders of such Claims may be higher or lower.  See Article VII. Valuation of Reorganized Debtors.  Reference should be made to the entire Disclosure Statement and the Plan for a complete description of the classification and treatment of Claims and Equity Interests.

¹ This estimated percentage represents the average return assuming the maximum number of Sinosure Performance Shares are earned by the Sinosure Group.  Individual percentages may vary among the members of the Sinosure Group following the provision of trade support by members of the Sinosure Group in accordance with the Supply Principles, depending upon allocation of the Sinosure Performance Shares within the Sinosure Group.  On the Effective Date, before earning and receiving any allocation of the Sinosure Performance Shares, the Sinosure Group creditor recovery is approximately 18%.  For the purpose of such estimates, no control premium has been assigned to the New Class A Common Stock to be received by members of the Sinosure Group.

¹ Assumes dilution by maximum number of Sinosure Performance Shares earned by the Sinosure Group. At emergence, before consideration of the Sinosure  Performance Shares, the Class 5 General Unsecured Creditors recovery is 23%.  For the purpose of such estimates, no control premium has been assigned to the New Class A Common Stock to be received by members of the Sinosure Group.

III.

GENERAL INFORMATION

A.

Description and History of the Debtors and Certain Pre-Petition Claims

1.

Pre-Petition Organizational Structure of the Debtors

Huffy Corporation has twenty subsidiaries, nineteen of which are Debtors in the Chapter 11 Cases before the Bankruptcy Court. Further, four of the subsidiaries are also the subject of ancillary bankruptcy proceedings in Canada. The following chart depicts, as of the Petition Date, the organizational structure of Huffy Corporation and its subsidiaries and the percentage ownership of each subsidiary by its parent.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

2.

Overview of the Debtors Business

The Debtors commenced these cases by the filing of voluntary petitions for relief under Chapter 11 of the Bankruptcy Code on October 20, 2004.  Pursuant to Bankruptcy Code sections 1107(a) and 1108, the Debtors are operating their businesses and managing their affairs as debtors in possession. On November 1, 2004, the Office of the United States trustee appointed a committee of unsecured creditors pursuant to section 1102(a) of the Bankruptcy Code. As of the date hereof, no trustee or examiner has been appointed in any of these Chapter 11 cases.

Huffy was formed as an Ohio corporation in 1928. Huffy has been a leading distributor of bicycles and other wheeled products. During the course of its history, and partly to offset the somewhat seasonal nature of bicycle sales, Huffy expanded into numerous other markets, including, but not limited to, sales of golf, skiing and hockey equipment, snowboards and related accessories, garden tools and implements, baby products, in-line skates, and basketball backboards and other sports accessories. Huffy also entered the retail services industry, providing its customers with marketing and display assembly services, inventory counting, and retail product assembly.

Huffy operates its primary business of selling bicycles through Huffy, a division of Huffy; its other businesses are operated by numerous subsidiaries.  Currently, Huffy has the following subsidiaries in the United States:  Huffy Risk Management, Inc., Hufco-Ohio, Inc., HCAC, Inc., Hufco-Delaware, Inc., Huffy Sports, Inc., American Sports Design Company, Huffy Sports Delaware, Inc. ("Huffy Sports Delaware"), Hufco-Georgia I, Inc., Lehigh Avenue Property Holdings, Inc., Tommy Armour Golf Company, Lamar Snowboards, Inc., Huffy Sports Washington, Inc., First Team Sports, Inc., Hufco-Georgia II, Inc., Hespeler Hockey Holding, Inc. (collectively, the "U.S. Subsidiaries").  In Canada, Huffy operates its businesses through the following subsidiaries:  Huffy Sports Canada Inc. ("Huffy Sports Canada"), Huffy Sports Outlet Inc., HUF Canada, Inc., and Hufco-New Brunswick, Inc. (collectively, the "Canadian Subsidiaries").  Huffy also owns a Switzerland subsidiary, Huffy Sports Srl ("Huffy Srl"), which is not a debtor in these bankruptcy proceedings.

In 1999, Huffy closed its last United States manufacturing plant for bicycles. Huffy contracted with suppliers located in China (collectively, the "Chinese Suppliers") for the manufacture of bicycles, other wheeled products and many of its other sports products.  Since 1999 the Chinese Suppliers have manufactured the products and shipped them by ocean cargo.  The total transit time of the product shipments from China to the port in California is anywhere from 10 to 14 days.  The shipments are then moved into Huffy's Carson, California warehouse for delivery to customers.  Some Huffy customers prefer to make their own shipping arrangements and have product delivered directly to their own warehouses, bypassing Huffy's Carson facility.

Huffy currently manages its affairs from its corporate offices in Miamisburg, Ohio and utilizes a warehouse and storage facility in Springboro, Ohio. Huffy maintains distribution and warehouse facilities in Carson, California and Monroe, Ohio.  

In September 2002, Huffy purchased the Gen-X Sports business in order to expand Huffys presence in the general sporting goods market.  Huffy's subsidiary, Huffy Sports Canada, purchased  the stock of Gen-X Sports, Inc., an Ontario, Canada corporation ("Gen-X Canada") and another of Huffy's subsidiaries, Huffy Sports Delaware, merged with Gen-X Sports, Inc. ("Gen-X US").  Through the share purchase and subsequent merger of Gen-X Canada and the merger of Gen-X US, Huffy also indirectly acquired the stock of the following companies: Huffy Srl; Huffy Sports Outlet Inc., Tommy Armour Golf Company, Lehigh Avenue Property Holdings, Inc., Lamar Snowboards, Inc., Huffy Sports Washington, Inc., First Team Sports, Inc., and Hespeler Hockey Holding, Inc., (collectively, the "Gen-X Operations").  The Gen-X Operations supplied and distributed golf equipment, hockey equipment, snowboards, in-line skates and skateboards in the United States, Canada and Europe under brand names including Tommy Armour and Ram golf equipment, Lamar snowboards, Hespeler hockey equipment, Ultra Wheels in-line skates and Volant skis and accessories.  The Gen-X Operations maintained operations and warehouse facilities in Toronto, Canada, warehouse facilities in Anoka County, Minnesota and Bax, the Netherlands, as well as a direct retail outlet in Canada for its excess inventory.  Soon after the acquisition, the Gen-X Operations began to suffer significant losses which were funded by Huffy's other operations.

In 2004, Huffy decided to consolidate its management, sales, marketing, procurement, logistics and customer service functions into one sporting goods platform.  As part of this process, the administrative offices in Toronto were closed, and its operations consolidated at Huffy's office in Miamisburg, Ohio and at the office of Huffy Bicycle Company then located in Springboro, Ohio.  All warehouse and distribution facilities in Canada were likewise closed with all functions being transferred to Huffy's leased warehouses in Carson, California.  The majority of assets and liabilities (if any) of Huffy Srl, including the intellectual property rights held by that company, were transferred to a wholly-owned subsidiary of Huffy Srl, HUF Canada, Inc., a New Brunswick, Canada corporation.

Huffy has decided to focus its efforts on its core business of bicycles, other wheeled products and golf equipment. It has either sold or discontinued all other non-core business segments.  Huffy sold its businesses relating to child safety seats, gardening tools and equipment and inventory counting services several years ago.

Within the year preceding the bankruptcy filing, Huffy also sold certain sporting goods assets and retail service segments in order to more efficiently focus the companys resources on building the business and profitability of its core brands and to increase the companys liquidity.  In December 2003, Huffy Sports Canada sold certain assets comprising its Volant ski products business to Amer Group, PLC.  In March 2004, Huffy sold the Gen-X Opportunity business (a liquidation business) to 1294506 Ontario Limited, an Ontario Canada corporation.  In April 2004, Huffy sold substantially all the assets of its Huffy Service Solutions business, which assembled products for retailers, to National Product Services, Inc.  In July 2004, Huffy sold substantially all the assets of its Huffy Sports Company division, which manufactured and marketed basketball backboards and related products, to Russell Corporation.  The proceeds of such sales were used primarily to reduce the amount of outstanding indebtedness on the Debtors' pre-petition credit facility, as well as to continue to fund operations.

Huffy continued to suffer losses throughout 2003 and 2004.  In 2004, the company announced that it was taking a write-off of deferred tax assets and intellectual property.  The company also determined that certain accounting entries primarily related to customer deductions, credits and reserves for inventory valuation and doubtful accounts receivable for certain of the Gen-X Operations were more properly reflected in the fiscal year ended December 31, 2003.  As a result, the company has announced that it will be restating its financial statements for that fiscal year unless it can obtain a waiver for doing so from the Securities and Exchange Commission.  The company further has been unable to file its Forms 10-Q for the first, second and third quarters of 2004, its Form 10-K for the year ended December 31, 2004, or its Forms 10-Q for the first and second quarters of 2005, and will be unable to do so until it restates its 2003 financial statements.

Huffys common stock historically has been listed on the New York Stock Exchange (NYSE).  In July 2004 Huffy received official notice from the NYSE that it was no longer in compliance with the NYSEs continued listing criteria and in August 2004, the NYSE suspended trading in Huffys common stock and delisted the common stock from the NYSE.  Huffys common stock is now trading in the over-the-counter market by way of the pink sheets under the symbol HUFC.PK.

3.

Customers, Sales and Marketing

(a)

Core Business Line -  Bicycle Products

Huffy maintains strong relationships with the leading mass retailers. Huffy has a significant market share in the mass retailer arena through such customers as Wal-Mart and Kmart.  International business continues to grow with important customers such as Kmart Australia (unrelated to Kmart/USA) and Wal-Mart/Canada, as well as other international customers.  

Huffy maintains a sales and marketing team of approximately 14 employees as well as a product development team of 4 employees.  As to its sales function, Huffy  oversees a network of third-party sales representatives for its core business line of bicycles.  The use of the sales representatives allows Huffy the flexibility to adapt to changing retail dynamics in each category in which it competes, while leveraging its scale to negotiate competitive commission rates. Certain of the sales representatives also maintain a staff of merchandisers that provide inventory and display management services to key retailers.  Certain key accounts such as Wal-Mart, are managed by in-house personnel without the use of external sales representatives.

As for marketing, consumer "takeaway" is driven primarily by brand recognition, product performance and innovation, as well as promotional programs run by retailers to draw in consumers.  Huffy invests in retailer co-op advertising programs through promotional flyers and customer allowances.

(b)

Core Business Line - Golf Products

Huffy's line of golf products consist of four brands: Tommy Armour, RAM, Teardrop and Zebra.  The merchandising of the golf products vary from the "green grass" retailers to specialty retailers, sporting goods chains to the mass retailer. The determination of what products go to which type of retailing concern depend on brand and distribution strategies.  For example, Tommy Armour is a premium brand focused on the golf specialty stores and green grass stores, while RAM is a recreational brand distributed largely to mass retailers.

Huffy's golf sales, marketing and customer service team is composed of 21 employees who manage independent third-party representatives who sell to mass, sporting goods, golf specialty and green grass/off-course dealers.     

Advertising for the golf products utilizes the promotional vehicles of print advertisements which run in major golf publications such as Golf Digest, Golf, Golf World, Golf Week, Links, Golf for Women and Travel & Leisure and on the Golf Channel for Tommy Armour products. Further, numerous articles and product evaluations have created a positive selling environment for Huffy's golf products.

Further, Huffy also takes a "hands-on" approach in promoting its golf product line.  Over 700 elite golf accounts and 50 top media outlets will be visited by Tommy Armour golf senior and middle management in the coming year. In addition, Huffy is scheduled to conduct 900 golf product demonstrations from the period commencing in June, 2005 through November, 2005 at 900 retail locations in 30 sales territories.

4.

Competition

(a)

Bicycles

In the high volume retailer wheeled products business, Huffy bicycle products have numerous competitors in the United States market, two of which are major competitors.  Even though competition in the bicycle industry is intense, Huffy Bicycle Company believes that following its transformation from a single brand manufacturer of bicycles to a multi-brand design, marketing and distribution company, it is cost competitive in the high volume retailer wheeled products market and that its decision to import, rather than manufacture, its wheeled products allows it to profitably maintain a leading market position.  Huffy's ability to provide customers with low cost, innovative new products and high customer service levels has enabled it to maintain its market position despite reduced profit margins imposed by the mass retailers and intense global competition.  

 (b)

Golf

In general, the U.S. golf market consists of four major industry giants: TaylorMade, Calloway, Titleist and Nike.  The combined sales of these entitles is in the hundreds of millions of dollars.

Tommy Armour golf products are a leader in the second tier or mid-market with a strong heritage based on the worlds best selling irons, the 845.  Tommy Armour products maintain their competitive position by offering its customers high quality, innovative products with above average margins for its retailers.  The dual brand business model uses Tommy Armour and Ram products to compete in an unusually broad range of golf markets.  Tommy Armour serves golf segments such as green grass and golf specialty while RAM serves primarily sporting goods and mass market channels.

5.

Employees

As of June 1, 2005, the Debtors employed, in the aggregate, approximately 130 employees in Ohio.  The Debtors have no employees covered by a collective bargaining agreement.

6.

Real Property

The Debtors real property assets consist of the lease and ownership of certain non-residential real property as summarized on the chart below:

7.

Patents, Trademarks and Licenses

The Debtors own various patents, trademarks and licenses with regards to its core business lines of golf products and bicycles.  Certain trademarks such as Huffy, RAM and Tommy Armour are material to the operation of the Debtors' businesses.  Additionally, certain of the Debtors' licenses are deemed material to the operation of the businesses.  

8.

Pre-petition Credit Facility Obligations

The significant pre-petition debt of the Debtors generally consists of obligations under a certain pre-petition credit facility.

Prior to the Petition Date, the Huffy Corporation, American Sports Design Company, Huffy Sports Delaware, Inc., formerly known as Gen-X Sports, Inc., formerly known as HSGC, Inc., (HSDI, together with Huffy and American, each individually, a U.S. Borrower and collectively, U.S. Borrowers) and Huffy Sports Canada, Inc., formerly known as Gen-X Sports Canada, Inc., as successor by amalgamation with HSGC Canada, Inc. (the Canadian Borrower) were party to the Second Amended and Restated Loan and Security Agreement, dated as of September 19, 2002, by and among the Debtors and Congress Financial Corporation (Central), an Illinois corporation ("Agent"), in its capacity as agent pursuant to an existing loan agreement acting for itself and on behalf of the financial institutions which are parties to the loan agreement and the financial institutions from time to time parties to the loan agreement as lenders (the "Lenders), as amended by Amendment No. 1 to Second Amended and Restated Loan and Security Agreement, dated as of November 20, 2002, Amendment No. 2 to Second Amended and Restated Loan and Security Agreement, dated as of December 31, 2002, Amendment No. 3 to Second Amended and Restated Loan and Security Agreement, dated as of January 31, 2003, Amendment No. 4 to Second Amended and Restated Loan and Security Agreement, dated March 14, 2003, Amendment No. 5 to Second Amended and Restated Loan and Security Agreement, dated May 2, 2003, Amendment No. 6 to Second Amended and Restated Loan and Security Agreement, dated May 9, 2003,  Amendment No. 7 to Second Amended and Restated Loan and Security Agreement, dated as of July 7, 2003, Amendment No. 8 to Second Amended Loan and Security Agreement, dated July 31, 2003, Amendment No. 9 to Second Amended Loan and Security Agreement, dated January 15, 2004, Amendment No. 10 to Second Amended Loan and Security Agreement, dated February 16, 2004, Amendment No. 11 to Second Amended Loan and Security Agreement, dated March 31, 2004, Amendment No. 12 to Second Amended Loan and Security Agreement, dated as of May 4, 2004, Amendment No. 13 to Second Amended Loan and Security Agreement, dated as of July 16, 2004, and Amendment No. 14 to Second Amended Loan and Security Agreement, dated as of October 19, 2004 (as the same has heretofore been amended, modified, supplemented, extended, renewed, restated or replaced, the "Prepetition Loan Agreement").  

The Prepetition Loan Agreement consisted of a Revolving Loan Facility from Congress which entitled the U.S. Borrowers and the Canadian Borrower to borrow up to a combined $69 million, subject to the borrowing base defined therein and certain reserves, as well as a Term Loan from Abelco Finance, LLC ("Abelco") to the Canadian Borrower in the original amount of $15 million.  The obligations of the U.S. Borrowers were guaranteed by all of the Debtors' U.S. subsidiaries and HUF Canada.  The obligations of the Canadian Borrower were guaranteed by all other Debtors.  Borrowings of the Debtors under the Prepetition Loan Agreement were secured by a first priority lien upon and security interest in favor of Lenders in all of the assets of the Debtors including all inventory, accounts receivable, and the intellectual property rights of the Debtors.  As of October  20, 2004, Lenders were owed the aggregate principal amount of not less than $39,623,054.71 plus C$219,793.69.   

9.

The Sinosure Group

Among Huffy's strategic assets is a set of long-standing relationships with suppliers of bicycles in the China market.  When Huffy began to encounter financial difficulties in 2004, these suppliers and the Chinese government's export credit insurance agency, China Export & Credit Insurance Corporation (generally known as "Sinosure") agreed to continue to provide trade credit to Huffy on favorable terms during Huffy's bankruptcy reorganization.  Such suppliers and Sinosure, in their dealings with Huffy, are often referred to as the "Sinosure Group."

The suppliers which are members of the Sinosure Group are Bailey Cycle Service Ltd. (including Everich Bicycle Co. Ltd.); Clubik Co. Ltd. (including Clubik (J Ann J) Jermany Company Ltd. and Clubik 2 Jermany Compa