Cannondale Denies Bankruptcy Rumors

BETHEL, CT./USA (21 September 2000) -- For the last few days strong rumors have been circulating, especially in Europe, that US bike maker Cannondale is on the verge of bankruptcy. So strong were the rumors in fact that during this year's IFMA Show a number of candidates for a possible takeover were being named. "It's all bullshit," says Cannondale's communications manager Tom Armstrong, acknowledging that the rumors had reached the manufacturer's headquarters in Bethel, Connecticut. "We are a publicly traded company and there are strict regulations on disclosure. If there was any truth at all to the rumors we would be obligated to inform our investors and the press." Armstrong points to the company's aggressive investment in its motorcycle project * the MX400 -- as a possible spark to the rumors. "We've invested heavily no doubt," he says, "but the project promises to pay dividends in the future." The company is currently in the process of developing two additional motorcycle models and a four-wheeled ATV (All-Terrain Vehicle). Cannondale recently refinanced its multi-currency credit facility for five years, a deal Armstrong says clearly would not have been approved had the company been suffering financial troubles. For the year ended 1 July 1 2000, Cannondale's overall net sales came to approximately US$160.52 million, down 9% compared to the same period the year before. The net loss for fiscal 2000 was US$2,292,000, compared to net income of US$5,923,000 recorded during the prior-year period. Cannondale attributes the decreases to the impact of dealer inventory adjustments in the European market and the resulting changes in the seasonality of shipments to European retailers, expenses related to the development of the motorsports products and the weakening of the euro compared to the US dollar. The company's bicycle business produced pre-tax earnings of US$6,827,000 during fiscal 2000. In the US, shipments of bicycles and cycling products increased 2% compared to the prior fiscal year. (JW)