The Sale of Schwinn/GT Assets
GT Cycling & Fitness Divisions Sold For
on September 11, 2001 and September 12, 2001
In a U.S. District Court bankruptcy auction in Denver Co.
As a Acceptance Tender Joint Bid for the assets.
The successful bidders to acquire the assets of Schwinn/GT are set as :
The Schwinn /
GT Cycling Divisions Sold for $86
Pacific Cycle, LLC
4902 Hammersley Road
Madison, WI 53711
General line: 608-268-2468
Consumer hotline: 1-800-SCHWINN
The parent company of
( Changes at Schwinn and GT is the elimination of the parts and accessories
( The earliest Pacific Cycles will introduce Schwinn to mass retail would be
fall 2002. )
( Schwinn/GT "BMX" Bikes at Bike Shops Only! )
BMX Racing/Freestyle Bikes are NOT! in the mass retail at this time.
The Schwinn Fitness Divisions Sold
for $65 million to
Direct Focus,Inc | The Nautilus Group
1400 NE 136th Ave
Vancouver, WA 98684
Phone: (800) 618-8853
The parent company of Bowflex Fitness Equipment.
( Schwinn Fitness will remain in Boulder Co. for the near future. )
Nautilus/Schwinn Fitness - Retail
1690 38th Street
Boulder, CO 80301
The Schwinn/GT news/press releases are dated
from December 31, 2002 back to the purchase of GT Bicycles in 1998
Please recognize the dates on the top of each news/press release
All news/press releases from the sources of:
Direct Focus,Inc /
Bankruptcy and Other Court Case Files at NARA's Rocky Mountain Region in Denver*
2002 ARCHIVED /
News 2002 ARCHIVED
GT-BMX News 2002
GT-BMX 2000/2001 ARCHIVED
Direct Focus - The Nautilus
Group Inc. Press Releases ARCHIVED
December 31, 2002
Pacific Cycle Licenses Brand Names To Torpedo Sports
MADISON, WI. Pacific Cycle signed a five-year licensing
deal with Torpedo Sports USA, a wholly owned subsidiary
of Torpedo Sports of Quebec, Canada, allowing the snow
sports company to use the Flexible Flyer, Mongoose and Schwinn
brand names on products such as sleds, toboggans and snowboards.
The agreement stipulates that Torpedo has the exclusive rights
to market Flexible Flyer and Mongoose snow products and the
non-exclusive rights to the Schwinn name.
November 27, 2002
Pacific Creates New Sales Territory, Adds Staff
MADISON, WI. - Pacific carved out a new sales territory,
hired new sales reps and brought on a new warranty manager.
The new territory will include parts of upstate New York,
Vermont, Massachusetts and Connecticut. Pacific hired
Adam Andrade as the territory's sales manager. Andrade,
who lives in Poughkeepsie, New York, most recently
worked for Bikeway in Wappingers Falls, New York.
He also worked as a Pacific customer service assistant.
Pacific hired Dave Carson as its new outside sales rep for Oregon,
Washington, Alaska, Western Montana and northern Idaho.
Carson, who lives in Woodinville, Washington,
most recently was director of parts and accessories at Raleigh USA.
Lee Emmons is the company's new warranty manager for IBD
and mass-merchant product. Emmons most recently managed
the customer service call center for WPS Insurance in Madison,Wisconsin.
November 05, 2002
Pacific Cycles built up a smooth operation
"until it bought one of America's best-known brands".
Forbes Magazine- Reports:
Christopher Hornung had just nosed out a rival for the deal of his life.
The founder of Pacific Cycles put in an $86 million bid for
the venerable --but twice-bankrupted--Schwinn/GT Bicycle Co.
The offer was $3 million higher than the previous day's bid and
$22 million more than the starting price. But Hornung needed to knock
out his competition, Dayton, Ohio-based Huffy, and do it quickly.
Seven minutes after the judge approved his price, the bankruptcy
court was evacuated; it was the morning of Sept. 11.
Schwinn gave Hornung control of a premium brand and boosted
his share of the bicycle market to a dominant 30%. With the acquisition,
Pacific Cycles would rack up $280 million in revenues for 2001,
up from just $140 million the year before. It also gave him the additional
heft to start squeezing suppliers and getting better deals from retailers.
Just one problem. Schwinn, though down on its luck,
maintained its marquee image through 2,700 finicky dealers,
many of whom provided personal service. Pacific Cycles, by contrast,
sold mid-tier bikes through the largest retail chains --Toys "R" Us,Target,Wal-Mart.
How to meld two very distinct businesses --and keep the Schwinn name from
splattered by the mass market?
Hornung had spent 25 years building a lean operation that imported
bikes from China and shipped them directly to the chains,
which account for 80% of the bikes sold in America.
The business grew out of a promotional scheme by an electronics
store in sleepy Madison, Wis.--free bikes to buyers of high-end
TVs and stereos; Hornung, the bike store's manager at the time,
sourced the wheels in Asia. Deciding to go off on his own in 1979,
Hornung began importing low-end bikes from China, up to 150,000 a year,
to 60 markets across the U.S.
"We were a manufacturer's dream," he laughs.
"We just wanted one size and one color."
He played the trends well, switching from ten-speeds in the
1980s to mountain bikes by 1990. Hornung also caught onto
mass merchants early, hooking up with Toys "R" Us during an
Asian trip and becoming its top supplier. To keep his business
humming, he sold 55% to Wind Point Partners, a Chicago
private equity firm, for $12.5 million in 1995; a year later,
sales hit $52 million. When Brunswick Bicycles came up for
sale in 2000, Wind Point provided $3 million for the $60 million
purchase. With the acquisition, Hornung got two proven mid-tier
brands (Roadmaster and Mongoose) and access to Wal-Mart and
Byron Smith, who reorganized Brunswick and later joined Pacific Cycles as
Schwinn, meantime, had been skidding since the late 1980s.
It missed the mountain-bike trend, dismissing it as a fad,
and filed for Chapter 11 in 1993. Recovering four years
later, the company spent $170 million for the flashy high-end
bikemaker GT. Plagued by at least $7 million in losses,
as well as flat companywide sales and production problems,
Schwinn, founded in 1895, was forced into bankruptcy again last year.
But by picking up the Boulder, Colo.-based bicycle maker,
Smith and Hornung saw a chance to improve both their volume and sales.
At the same time that ridership was dropping off, the number of serious
bikers--those who owned two or more sets of wheels--was on the rise,
growing from 870,000 in 1991 to 3.7 million a decade later.
And they were willing to spend money, shelling out an average $389
to service-oriented dealers, compared with $77 for a chain-store bike.
Once the deal closed Sept. 11, Hornung set about cleaning house.
Aside from low inventory and some quality problems,
Schwinn seemed okay. But GT, which accounted for more than one-third
of Schwinn's sales, was a mess. It had a separate management and
headquarters in Foothills Ranch, Calif. Accounts receivable were in
disarray; it was virtually impossible to tell which dealers had paid in
full and who qualified for credits on returns or for conducting marketing
programs. Hundreds of accounts had to be reconstructed.
Pacific began a rapid cost-cutting program, closing headquarters
buildings and seven warehouses. That saved $4 million on rent.
Smith canned more than 300 people, most of them in administrative jobs,
and scaled back Schwinn's $12 million marketing budget. He and Hornung
renegotiated prices with Schwinn's domestic manufacturers, shaving 8%
from their costs. By year-end, Schwinn's operating costs were trimmed
to $5 million from $59 million.
Tougher yet was solving the problem of Schwinn's unwieldy dealer
network. A month after the buyout, Hornung and Smith headed to
Las Vegas for the Interbike show, hoping to persuade dealers that
while Schwinn would be sold in chain stores, dealers would have
exclusive rights to particular upscale models. Among them:
the Moab and Delta 88 lines, which have dual suspension systems
that allow riders to shift between off- and on-road conditions
(price: $500 to $1,600), and the Voyager GSX line with dual-drive
hubs that decrease pesky shifting problems ($550).
Less pricey models would go to mass retailers.
October 17, 2002
Pacific Cycle Partners With German Distributor
Pacific Cycle signed a multi-year agreement with
Epple Zwetrad to distribute GT Bicycles in Germany.
"We are excited to be working with Epple," said Pete Garski, director
of GT's international sales. "Manfred Neun and his team have a
proven track record of building brands in the German market.
They know bicycles and they know the market--two important elements of success."
Former GT parent company Schwinn/GT distributed GT bicycles
in Germany prior to filing for bankruptcy in July 2001.
"GT has been a powerful brand in the German market and we look
forward restoring it to its former glory," said Martin Buchta,
Epple's GT project manager.
Epple has manufactured and distributed trekking bikes for more than
70 years in Germany. The company has warehouses in Memmingen
and Bayreuth and more than 120 employees to serve its 3,800
German dealers. For information visit
October 02, 2002
TJ LAVIN TO RIDE FOR SCHWINN IN 2003
Vernon Hills, IL, -- Three-time X-Games gold medallist
TJ Lavin has signed with Schwinn for 2003. TJ has won everything in BMX
jumping; one of the world’s fastest-growing extreme sports. He was the BMX
dirt championship gold medallist in ESPN’s 1997, ’98 and ’99 X-Games. He
took the prestigious King of Dirt title in 1999, and also won the gold medal at
the ’99 Gravity Games. It’s an impressive win list, especially since the
25-year-old has only ridden pro since 1995.
“We’re very excited to have TJ riding for Schwinn,” said Travis Chipres,
Schwinn’s team director. “TJ’s accomplishments on and off the bike have been
phenomenal, he’s always pushing himself and the sport, and I have all the
confidence in the world in him and his abilities. He’s a great role model,”
added Chipres, who signed TJ to his previous sponsor six years ago and has
worked with him four of the past six years.
In addition to his television appearances during the X-Games and Gravity
Games broadcasts, Lavin’s high-flyin’ stunts have been featured on MTV’s
Backyard BBQ, in advertising for Ford and Mountain Dew and in video
games. He starred in this year’s IMAX film, “Ultimate X,” and he’s a frequent
host on ESPN, MTV and Fox Sports Net. In his spare time, the multi-talented
Las Vegas native plays piano (“Everything from classical to the Beatles and
hip-hop”) and composes music.
“BMX has given me confidence to pursue things I wouldn’t have thought
possible otherwise, and helped me learn more about myself, ” said Lavin. “I
want to keep the sport of BMX dirt jumping headed in the right direction, to
help it grow so more kids can enjoy the sport and everything it has to offer,
and the Schwinn brand adds a lot of horsepower.”
TJ Lavin adds tremendous marquee value to the venerable Schwinn brand, but
more importantly, he brings valuable expertise to Schwinn’s product
development team. TJ’s help with product design continues a company
tradition of pro-level excellence that dates back to Schwinn’s founding 107
TJ is just one more superstar who’s flying the Schwinn banner, joining the
roster of Schwinn BMX pros that has included Brian Foster, Dave Osato and
Jay Miron—all gold medal winners in the X-Games and Gravity Games.
September 27, 2002
Genesis Cycle Of Toronto Will Handle GT In Canada
TORONTO, Ontario --Genesis Cycle of Toronto will distribute
GT in Canada, focusing on the independent retail channel.
"We are extremely pleased to be able to bring this brand back to Canada.
Our plan is to rebuild the GT line to its former status in Canada,
through the IBD channel," said Elio Moracci, owner of Genesis Cycle.
The GT brand will strengthen the company's position in the Canadian
wholesale and bicycle and accessories market, he added.
Pete Garski, international sales director for Pacific Cycle/GT Bicycles,
said Genesis Cycle's enthusiasm for the brand and focus on the Canadian
independent channel impressed him. "We want to assure the Canadian dealers
that every effort will be made to keep the GT brand within the IBD channel in
Canada," he said.
GT's previous Canadian distributor was Norco, also headquartered in Toronto.
Norco executives last fall declined to order GT's 2002 line, citing potential
delivery delays and uncertainties surrounding Schwinn/GT's bankruptcy and
subsequent purchase by Pacific Cycle. Veltec Canada had handled the
Schwinn brand for Schwinn/GT prior to the company's sale and continued
Schwinn distribution under Pacific Cycle.
Genesis has been in the cycling business for more than 30 years, and began
distributing bikes, parts and accessories to Canadian retailers in 1996,
Moracci said. Pacific Cycle/GT and Genesis signed the distribution agreement
just prior to the Canadian bicycle expo in Toronto earlier this month.
September 16, 2002
NEW LICENSEE FOR SCHWINN CLASSIC PARTS
Vernon Hills, IL, -- Under the new agreement, Pacific Cycle
has licensed the rights to manufacture and distribute Classic Schwinn
bicycle parts for such icon bikes as the Sting-Ray, Phantom and other Classic
Schwinn models. Parts for which rights have been assigned include fenders,
handlebars, chainguards, forks, pedals, hubs, tires, reflectors, saddles, tanks
and other Classic parts and components. The parts will be available early in
and offered for sale through independent bicycle dealers.
“We are very pleased to have the opportunity to reproduce Classic Schwinn
parts,” said Chad Kellenberger, CEO of Maple Island Sales, LLC. “Schwinn’s
rich 107-year history of quality bike parts nicely compliments our existing
business of supplying parts to the classic bike collectors. I’m very excited
about getting these parts back into production.”
The agreement is in response to Pacific Cycle’s ongoing commitment to the
independent bicycle dealers and their need for Schwinn Classic parts.
Active Schwinn Dealers are welcome to contact: email@example.com
for product and ordering information.
September 12, 2002
Pacific Expands Madison Offices, Employees
MADISON, WI. Pacific on Friday will break ground on an addition to its Madison
offices. The new wing will be twice as large as Pacific's existing building and
bump the total space to 35,000 square feet. The wing will house Pacific's
executive offices, service department and some logistic department personnel.
The current 12,000 square foot space will be used primarily as a design space.
Chris Hornung, Pacific's chief executive officer, said the growth of its IBD
program forced Pacific to add more space. "We also are bringing 90 percent of
our design team into the building," Hornung said. Pacific's design team is
currently scattered in three locations--two in Madison and one in Southern
California. Pacific's California team will remain there. As part of its
expansion, Pacific is working with the Wisconsin Department of Transportation to
open additional parking spaces for a bike trail system adjacent to Pacific's
September 12, 2002
Job Opeings at Pacific Cycle - Schwinn/GT Mongoose
Your job search has just gotten more exciting...
By applying for employment with Pacific Cycle LLC,
you are opening up a world of opportunity. A fun, casual work
environment, a philosophy of teamwork, and great benefits including health,
dental, vision, life, disability, 401k, vacation, and sick/personal leave,
and are only a few of the many reasons why Pacific Cycle is an
employer-of-choice in the bicycle industry.
To apply for these opportunities or others available with Pacific Cycle,
please send us your resume, cover letter and salary requirement.
Pacific Cycle, LLC
4902 Hammersley Rd.
Madison, WI 53711
fax: 608 268-2452
Opportunities currently available are
(Opportunities are updated periodically as soon as possible):
Product Line Manager Located in Madison, WI
As a Product Line Manager, you will be responsible for managing the new
model introduction process for select bicycle lines. Duties include new
product presentation planning, working with suppliers, purchasing and graphics
departments to execute new models, graphics management, product testing
coordination, and managing timelines for delivery to customers.
Qualified candidates will have excellent independent decision making skills,
be highly detail oriented, and be skilled in MS Office applications.
Experience in product development management, sales management or related field
Warranty Manager Located in Madison, WI or Olney, IL
This position is responsible for overseeing both of our two call centers
to ensure quality service to all customers including mass retail customers,
independent bike dealers, and consumers. This position will play an
integral role in developing and implementing procedures and tools to
make call centers optimally efficient and cost effective,
while acting as a liaison between service, parts and sales to achieve
total customer satisfaction.
IBD Warranty Representative Located in Madison, WI
This position provides bicycle dealers with technical and warranty support,
primarily over the phone. Ideal candidates will have good knowledge of
bicycle maintenance and repair, be highly organized and customer service
SAP/ABAP Programmer Located in Vernon Hills, IL
In this position you will build and maintain various reports and
business forms as needed by employees throughout the company.
Other responsibilities include writing and rewriting function modules
to bring data into and out of SAP as needed by Pacific Cycle.
This position requires a minimum of 2 years SAP experience and
4 years IT experience, a strong background in SAP/ABAP
FI/CO and SD module, and you must be a team player with good analytical
problem solving, excellent communication skills and proven project management
International Coordinator Located in Vernon Hills, IL
This position manages the daily operations for the Schwinn, Mongoose
and GT International distributors (ID's), and facilitates communications
with IDs,vendors and Pacific Cycle. Also manages the accounts of the IDs
(orders, invoicing, collection, warranties, etc.).
Qualified individuals will have experience in international
a good knowledge of MS Office. Knowledge of SAP extremely helpful.
Mass Warranty Representative Located in Olney, IL
This position provides mass retailers and consumers with technical and
warranty support, primarily over the phone. Ideal candidates will have
knowledge of bicycle maintenance and repair, be highly organized and customer
For more info see there website at:
August 13, 2002
Schwinn Enters Mass, Specialty Retailers Shrug Shoulders
VERNON HILLS, IL Without much hoopla, Schwinn bikes arrived at
Target and Toys R Us last week.
Reactions vary widely across the industry, and it may be too early to predict
what effect the move may have on specialty retailers, but officials at Schwinn
are pleased. "We are happy with the launch, and the consumer acceptance is well
beyond expectations," said Richard Whittenberg, Pacific's vice president of
marketing and business development. Pacific owns Schwinn, GT, Mongoose, and
other brands. He added that mass merchant's told Pacific that sales of Schwinn
have been "brisk" so far. Retailers who spoke with Bicycle Retailer & Industry
News said their business was not immediately affected. Mike Abel owns Huntington
Beach Bicycle in Huntington Beach, California. The shop stocks a few Schwinns
and has a Wal-Mart and Toys R Us store down the street. He said no one has asked
about Schwinns in the mass market. "We don't think our business has been
affected by it," he said. Pacific's Whittenberg said Schwinn's specialty
retailers had mixed reactions so far. "Some are impressed by the quality and
pleased that we aren't tarnishing the Schwinn brand; others are more emotional
and worried that they can't compete against mass merchants," he said. Pacific
declined to say how many bikes mass merchants ordered, but Chris Hornung, the
company's president has said he expects sales of $150 million this year, 60
percent above last year's $90 million. Last year, however, Schwinn was
struggling through bankruptcy and eventual sale to Pacific. Whittenberg said
Pacific's Schwinn sales of are at capacity right now, but additional mass
merchants may begin carrying the line this fall.
August 09, 2002
Schwinn's New Chains
The Classic Bike Brand Ends Its Exclusive Reliance on Specialty-Shop Sales
The gold standard of traditional American bicycles started appearing
in Wal-Mart, Target and Toys R Us stores this month, stunning the U.S.
cycling industry and promising to transform the way bicycles are sold.
Schwinn, the premier brand of Pacific Cycle LLC, has long been a
staple of specialty bike shops, which sell its family, off-road and sleek
racing bikes for up to $2,800 apiece.The line has always been withheld
from mass retailers. But Schwinn's new parent company is determined
to get the brand in front of more shoppers -- in order to dodge what one
researcher calls the "age-induced recession" that threatens the entire bicycle
The concern has everything to do with aging baby boomers.
Once among the most avid of riders, boomers abandoned their
bikes in alarming numbers in the past decade. Bicycle riding,
once the third most popular sport in the country, dropped to
seventh last year. And suddenly there's a danger of an
oversupply of bicycles because of the dwindling demand.
"We need to get as many people as we can interested in cycling again,"
said Richard Wittenberg, Pacific's vice president of marketing and business
development. "We need to go where America shops." The three chains are
the nation's largest bicycle retailers.
The decision is bold but controversial. Never before has a top-tier bicycle
brand been sold in both the specialty shops and big-box chains.
Independent dealers are grumbling about possibly losing market share to their
"It's a fundamental change in the way bicycles have been marketed
and distributed since the end of World War II," said Jay Townley,
an industry consultant in Lyndon Station, Wis. "It's a paradigm shift."
Pacific is no stranger to big-box retailers. When the Madison, Wis.-based
company purchased Brunswick Bicycles in December 2000, it acquired the
Mongoose and Roadmaster brands. Both were lower-end makes that Pacific
immediately marketed to Wal-Mart.
Pacific told dealers early on that it would do the same with the Schwinn
brand soon after it acquired it this past September. Though Schwinn has
a distinguished history that dates back to 1895, it also suffered two
bankruptcy filings under previous owners.
This month, Wal-Mart, Target and Toys R Us began stocking some of the nine
styles of Schwinn bikes for men, women and children, ranging in price from $79
to $249. But the specialty shops carry a wider variety, including the highest
quality and most expensive styles.
Admirers say the deals were a coup that will help ensure Schwinn's survival.
The deals were needed, they say, given the changing demographics
and ridership patterns. The National Sporting Goods Association
reports that the bicycle-riding public
(those who rode at least six times in a year) peaked at 56
million people in 1995, then plummeted to 39 million last year.
The decline is likely to continue. Adults are the problem,
said David Lockwood at Mintel International Group,
a research group that released a market study last month.
Adults 35 to 44 years old still make up the most enthusiastic group of
bike riders, Lockwood said. But the size of that group is expected to
shrink by 5.5 million between 2000 and 2010.
Meanwhile, the 55 to 64 age group should swell by 11.4 million.
That's bad news for the industry because bicycle ownership
and ridership rates dip sharply among that age group, Lockwood said.
Pacific appears to be responding to the changes.
But it's going to be a tough -- and risky -- transition,
because the independent retailers are uneasy about the arrangement.
Consider Dan Park's predicament. When he got wind earlier this year
that Schwinn might go to Wal-Mart, he dropped the brand from his
Adventure Bicycle Co. store in Bel Air, Md.
Pacific's decision, he said, is going to create a lot of confusion,
particularly among uneducated consumers unable to distinguish
between the different styles.
"They will see the Schwinn name at Wal-Mart and they
will see it in my shop," Park said. "If you don't know anything
about bikes, what would that tell you?
Probably that I'm over-priced."
Park also believes the mass merchandisers ultimately will demand
lower prices from Pacific in exchange for moving huge volumes of
Schwinn bikes through their stores.
When that happens, Park said, bike prices will plummet across the board,
creating a "world of hurt" for the independent dealers and some of
Schwinn's competitors, such as Trek and Specialized.
Not if Jason Miller can help it.
The 28-year-old has been biking seriously for six years and plans to
compete in a 100-mile bike race in Harrisonburg, Va., on Labor Day weekend.
He is willing to spend his money for a premier model.
Would he ever consider buying a bike -- a Schwinn or any other
-- at Wal-Mart or Target or Toys R Us? "No way," said Miller.
"The quality of bike there would never hold up to the kind of biking I do,"
the Falls Church resident said. Besides, the mass merchants don't have
the know-how to assemble or properly maintain the bikes, he added.
Anna Wesley, an administrative assistant in Washington, said she's not
inclined to buy a bike anywhere at this point. Not at a mass retailer and
not at a specialty shop.
The 29-year-old recently lived in Japan, a society where bikes
are plentiful and parking is easy to find.
"It seems dangerous to be on a bike around here," Wesley said.
"Besides, where would I park it if I rode it to work?"
For Carole Blackburn, commuting regularly from Silver Spring
to a job in the District is out of the question.
The 57-year-old legal secretary uses her bicycle for errands or
a leisurely ride around her neighborhood. But the bike is a
Sure, she says, she'd go to Wal-Mart, if it's cheap enough.
That's the problem, the National Bicycle Dealers Association warned in a recent
The discount mass retailers will train shoppers to make their purchasing
decisions based on price and availability, the report said.
Consumers will begin to substitute one mass-merchant bicycle for another.
That, the report said, will make the bicycle a throw-away commodity.
August 07, 2002
Schwinn Bicycles Launch in Mass Retail
Schwinn Bicycles for the Entire Family to be Sold at
Toys 'R' Us and Target
as Pacific Cycle Markets Brand Where Families Shop
ADISON, Wis., Pacific Cycle announced that its Schwinn Bicycles
-- the American icon of premium-quality bicycles
-- will now be available for the entire family at mass-merchandising
Toys 'R' Us and
Pacific Cycle, the world's largest distributor of bicycles since buying Schwinn
in September 2001, is launching a line of premium Schwinn bicycles for adults
and children at mass-merchandising retailers to make them easily accessible
where families shop for other goods. Until now, bicycles sold at mass
merchandisers primarily have been for children and young teenagers.
"Cycling is a family sport, and our move into the mass-market channel simply
recognizes that Schwinn -- the premium bike brand -- must be available where
most families shop today," said Chris Hornung, Pacific Cycle's founder and
chief executive officer. "Our goal is to provide consumers with the signature
Schwinn quality, at a price that fits their budget."
Schwinn's entry into the mass-retailing market comes at a time when family
recreation is on the rise, but bike sales have not kept pace with the upswing.
Industry experts have questioned whether bikes are fighting for presence of
mind among consumers as effectively as other recreational products because of
their limited distribution. "The strong appeal of the Schwinn brand, combined
with much broader distribution and excellent customer value, should help expand
the overall bicycle market," Hornung said.
Pacific Cycle emphasized that its much broader assortment of higher-end Schwinn
models targeted to bike enthusiasts will continue to be sold in independent
bike stores. Generations of Americans grew up riding the classic Stingray and
Phantom models that Schwinn marketed in neighborhood bike shops, which have
carried the brand since it was introduced in 1895.
"Independent bike dealers will continue to offer the Schwinn brand that their
customers have come to expect, and our partnership with those dealers continues
to be an important part of our success," Hornung added.
Schwinn bicycles are renowned for their top-quality materials, innovations and
performance. Hornung said that the Schwinn bikes sold at mass retail are
crafted to last a lifetime and will provide the superior riding experience
expected from a premium brand. With models aimed at adults, as well as
children, the brand's entry into mass retail is expected to broaden the bike
choice for the whole family, as well as expand overall bike demand.
"Mass merchandisers have told us that this is one of the biggest launches they
have ever been involved with," said Hornung. "Schwinn is an icon that parents
grew up with and continue to buy for their kids. Now each family member will
be able to find the perfect affordable Schwinn where they shop everyday."
The retail bicycle business is a $3 billion-a-year industry and Pacific Cycle
-- which also owns two of the other biggest brand names of GT and Mongoose - is
the leading bike distributor with a 30 percent industry share and anticipated
2002 sales of more than $380 million. Pacific launched its Mongoose brand into
mass retail in 1998, a move that helped to double the company's sales in the
past two years. Pacific also has plans to expand its licensing program for
Schwinn and Mongoose into areas such as bicycle accessories, in-line skates,
skate boards and clothing.
About Pacific Cycle
Pacific Cycle LLC, established in 1983, is the nation's largest importer of
quality bicycles. It designs, markets and imports a full range of bicycles
under the brand names of Schwinn, GT, Pacific, Roadmaster, Mongoose, Mongoose
Pro and Dyno. The company is based in Madison, Wis., with distribution centers
in Olney, Ill., and Vacaville, Calif.
July 10, 2002
Pacific Licenses Brands To Parts Maker PTI
MADISON, WI. Pacific signed a multi-year licensing deal with parts and accessory
maker PTI in which PTI will produce and distribute Schwinn, GT and
Mongoose-brand parts and accessories to mass merchants, sporting goods chains
and specialty retailers. Pacific will handle the distribution to specialty
retailers. The agreement covers a wide range of parts and accessories, including
helmets, locks, pumps, water bottles, bags, gloves and saddles. The deal could
help PTI compete with Bell Sports for mass merchant floor space. Bell is a
leading supplier of bike accessories to mass merchants and specialty retailers.
Pacific and PTI will sell the same product line to specialty retailers and mass
merchants. In related news, bike rack and accessory maker Graber signed a
licensing agreement with Schwinn to sell Schwinn-brand roof racks to the mass
Pti Holding Inc. Profile /
Market Guide - PTI Holdings Inc.
June 17, 2002
Currie To Sell Schwinn/GT Electric Scooters
VAN NUYS, CA. Electric bike and scooter maker Currie Technologies is licensing
the Schwinn, GT and Mongoose brand names from Pacific Cycle for a new line of
electric scooters it will introduce this summer. Malcolm Currie, chairman and
chief executive officer of Currie, said in a statement that his company will
"follow Pacific Cycle's brand styling direction and focused distribution into
the market place." Representatives from Currie and Pacific were unavailable for
comment. "Currie Technologies brings Pacific a solid company with strong, proven
electric-vehicle expertise and valuable resources. Currie will offer the highest
quality and innovative products under the Schwinn, Mongoose and GT brands,"
Byron Smith, Pacific's president, said in a statement.
June 14, 2002
GT Bicycles Revives BMX Airshow
MADISON, WI. GT Bicycles is reviving its Airshow, a traveling BMX stunt team. GT
Airshow was once the largest and busiest of its kind, performing at NBA halftime
shows and large country fairs. When Pacific purchased GT last year, many riders
and team managers left and formed a new team under Satellite Sports. "We always
felt the Airshow was an important aspect to promoting the sport and had
intentions going forward with it all along. But when some key employees decided
they wanted to look for opportunities we had to put it on the back burner for a
while," said Richard Whittenberg, Pacific's vice president. Pacific, however,
retained rights to the Airshow name and its equipment, including trailers and
ramps. The team will perform its first show on June 15 in Los Angeles,
California. The team plans on performing at retailers, fairs and regional
June 12, 2002
Cantilever frame styled from 1955 Schwinn design.
Madison, WI, Remember the Schwinn Twinn and Town & Country tandems? The glory
days are back, this time under the guise of the new Schwinn Tango tandem, based
on the classic Schwinn cantilever frame design. Features include Schwinn
unicrown fork, 7-speed Shimano Revo twist shifting and Mega-Range gearing,
linear-pull brakes, whitewall Schwinn Typhoon balloon tires, swept-back steel
Cruiser handlebars, ultra-comfortable Schwinn Sofa spring saddles and
full-length chainguard. Manufacturer’s suggested retail price: $549.95. “This is
the first time Schwinn has offered a Cruiser tandem since the popular Twinn
models of the 1970s,” said Lance Bohlen, Schwinn’s Director of Product
Development. “Schwinn offered the Twinn Sport ten-speed in the early `80s and
some Paramount models way back when. The Tango acknowledges our past while
respecting available technology and creature comforts.” Schwinn Bicycle Company,
based in Madison, WI, has been designing, marketing and distributing bicycles
and related products in the U.S. since 1895.
June 11, 2002
GT Flaunts its BMX Stuff with the Bestwick for 2003.
Ride BMX UK Raves Over NEW Jamie Bestwick Team Bike
GT Flaunts its BMX Stuff with the Bestwick for 2003. Listen up. This is a
pre-production GT flown in direct from the factory, a 2003 model, for this bike
test - it’s so new that the stickers weren’t even ready for it…this is the top
of the line, no holds barred, Team Model. GT reckon that this is the bike that
Jamie will ride straight out of the box. GT have obviously had a whole load of
problems over the past two years or so, with their bankruptcy and subsequent
buyout and the UK market being flooded with cheap warehouse clearance bikes, but
now is the time for GT to come back. Will GT cut it?
Jamie’s frame is largely the same, although the 2003 model has a slightly
shorter back end compared to 2001 models, which tightens up the rear handling a
lot, and of course it’s full 4130 cromoly throughout. It features the original
design in terms of being super-low slung, with low toptube, low bottom bracket,
just low all over. Otherwise it’s a very simple frame - no gussets at the
headtube (the headtube is machined and thicker to prevent flaring), plain
chainstays (which slightly ovalise at the machined BB shell) with no chainstay
wishbone, plain 6mm thick dropouts, though the low toptube is pierced by the
seattube and then forms a small and neat chainstay wishbone.
Overall, Jamie’s frame is an extremely clean and fuss-free design with no
gimmicks - just what we like. The forks are new for 2003, they are 4130 cromoly,
with 1.3” OD legs, 6mm dropouts, and u-brake lugs - they feature a quick rake
design with cut-outs for the pegs. The welding is good quality throughout, tube
fit is excellent, and the finish on this sample was great - painted in
near-black, with red forks and red bars, though we can’t comment on the stickers
because at the time of writing this test, they were still in a FedEx box
somewhere across the Atlantic coming in from the factory.
This is the Team Model, and it does knock out the shop door at close to seven
hundred pounds as possible, so what do you get for your money? The design team
behind GT have spent the past year or so refining current products, designing
all new ones, and generally wiping the slate clean. They’ve come out with some
new gear for the team bikes that would stand alone as products in any bike shop
- though it comes fitted to this complete bike. If that makes any sense. What we
have is some killer stuff.
GT’s new thick aluminum machined sprocket, which is small-drive at 39 teeth.
GT’s new platform pedals are pretty large, with a dual-concave platform and
allen-bolt teeth for making foot grip secure and firm.
Above the cranks is the seat set-up, and one of the more innovative designs that
GT have come out with - although anyone who remembers Uni seats will have seen
this before. GT’s new padded seat is actually welded to the seatpost, doing away
with guts or micro-adjust designs completely. The steel subframe of the seat is
welded to the top of the seatpost. A good idea in principle because it’ll be way
stronger than a standard set-up, thought the seat itself is at a funny angle and
is slightly forward compared to most rider’s setups. So, if you don’t like the
position of the seat, tough. If you do like it though, great - it’ll be the
strongest seat and post you’ll ever ride.
Up front we have a set of GT 4-piece bars, which are totally superb - great bend
and sweep, though once again these bars are way too wide so you will have to cut
them down, no question, unless you’re armed like King Kong. Once cut, these bars
are the best. The stem is a GT clamp-on, with steel hardware - steel nuts and
allen bolts mean that you won’t thread this thing in a hurry and really can
crank down on the bars. GT’s new flangeless grips are great, complete with
end-plugs, and the brake levers are Dia Compe’s Tech 99, a proper brake lever.
These in turn pull on a matching pair of top-of-the-line Dia Compe Hombre
u-brakes, through an SST Oryg, so the brakes really couldn’t be better. Also up
front is a bona fide FSA Sky Pilot a-headset, just about one of the best
headsets money can buy.
Wheel-wise, GT have again pulled out the stops - Alex Supra J Pro wheels,
48-spoke, which are laced into GT’s new sealed hubs with 14mm axles front and
back. These rims are black chrome, so they have the all-important black look
with the braking power of a chrome rim. GT’s Air Bag tyres are on this bike, and
they ride so well - high pressure, fast rolling, and tread from rim to rim
making the sidewalls tougher. The pegs are excellent - GT's new aluminum pegs
with cromoly sleeves are light and fast, just like T1 or Demolition pegs.
So that’s a typical example of the quality of this bike - the fact that GT have
specced something like alu/cromoly pegs is a sing that GT are doing things right
again. Gone are the old days, let’s ring in the new - the Team Series Jamie
Bestwick model for 2003 is a leap forward in terms of GT’s bike range. It reeks
of quality and rider input from start to finish. The rumours that GT would only
be mass producing cheap bikes for Toys R Us and K-Mart have been shattered in
one swoop - this is a pro level bike. GT is back.
May 29, 2002
Pacific Cycle Promotes, Hires Employees
MADISON, WI. Since taking over Schwinn/GT, Pacific Cycle has been on a promotion
and hiring spree, which has affected its product development, distribution,
finance, sales and marketing departments. "We're very excited to announce some
organizational changes that are designed to improve Pacific's overall operating
efficiency and performance as we continue to grow our business," said Chris
Hornung, Pacific's chairman and chief executive offier. "Specifically, these
changes are designed to increase Pacific's selling efforts, further enhance our
already strong logistics performance, initiate a productive new product
development process and improve internal and external communications," Hornung
added. Jim Coninx was named executive vice president finance/chief financial
officer: Eric Lane's title was changed to assistant treasurer; Rob Gooze was
named executive vice president supply chain; Bob Ippolito was named executive
vice president product and services; and Bruno Maier was named vice president
sales. Bob Habersaat was promoted to vice president sporting goods chains sales
Richard Wittenberg was named vice president of marketing and new business
development; and Toni Pabon was named Wal-Mart planner. Ed Matthews was named
director of information services and Brian Louther was named director of
information technology. Recently hired employees include: Lance Bohlen, director
of Schwinn product development: Alice Tillett, vice president sales: Nick
Andrade, vice president IBD sales: Jeff Frehner, vice president human resources
and associate general counsel; Rick Castle, director of planning and
procurement: and Stacy Martin, vendor management inventory analyst.
May 28, 2002
New titles, new employees abound for Schwinn's parent company
Madison, WI,-- Several Pacific Cycle employees have been promoted and hired
recently, according to the company. “We’re very excited to announce some
organizational changes that are designed to improve Pacific’s overall operating
efficiency and performance as we continue to grow our business,” said Chris
Hornung, Pacific’s chairman and CEO. “Specifically, these changes are designed
to a) increase Pacific’s selling efforts, b) further enhance our already strong
logistics performance (particularly planning, forecasting and replenishment), c)
initiate a productive new product development process and, d) improve internal
and external communications.” Jim Coninx was named Executive Vice President -
Finance/CFO; Rob Gooze was named Executive Vice President - Supply Chain; Bob
Ippolito was named Executive Vice President - Product and Services; Bruno Maier
was named a Vice President - Sales; Bob Habersaat was promoted to Vice President
of Sales - Sporting Goods Chains; Richard Wittenberg was named Vice President of
Marketing and New Business Development; Ed Matthews was named Director of
Information Services, and Brian Louther is the Director of Information
Technology. In the Finance department, Eric Lane’s title changes to Assistant
Treasurer. Toni Pabon was named Wal-Mart Planner. Recently hired employees
include: Lance Bohlen, Director of Schwinn Product Development; Alice Tillett,
Vice President – Sales; Nick Andrade, Vice President - IBD Sales; Jeff Frehner,
Vice President of Human Resources and Associate General Counsel; Rick Castle,
Director of Planning and Procurement. Stacy Martin was hired as Pacific’s new
VMI (Vendor Management Inventory) Analyst. “We are confident these individuals
will provide our company the necessary talent to grow the position of Pacific
Cycle as the number one bike company in the world,” added Byron Smith, Pacific’s
president and COO. For more information, contact Gary Boulanger @ firstname.lastname@example.org.
Pacific Cycle LLC, the largest importer of quality bicycles in the United
States, designs, distributes and markets a full range of bicycles and related
products worldwide under the Schwinn, GT, and Mongoose Pro names.
May 22, 2002
Pacific Cycle LLC and Unicycle.com have signed an exclusive distribution
Madison, WI, -- for Schwinn unicycles worldwide. Under the terms of the
agreement, Unicycle.com will manufacture and distribute Schwinn Black Phantom®
unicycles and replacement parts. Pacific Cycle owns the Schwinn brand. Being
associated with the Schwinn name is an honor," said John Drummond, president of
Unicycle.com. "We have traded on the Schwinn reputation for quality and
individual service. Schwinn has earned a respectable following among
unicyclists, and we are committed to the retailers who serve those loyal
customers." According to Chris Hornung, chairman and CEO of Pacific Cycle, this
agreement is part of Schwinn’s plan to return the brand to prominence through
effective partnerships. “We’re pleased to be working with Unicycle.com on this
agreement,” he said. “Schwinn enthusiasts will be excited to see this product.”
The new Schwinn unicycle will be available at bike, juggling and skate shops in
fall 2002. Schwinn Bicycle Company, based in Madison, WI, has been designing,
marketing and distributing bicycles and related products in the U.S. since 1895.
Unicycle.com, based in Marietta, GA, also distributes Coker, DM Engineering,
Miyata, Pashley, Profile, Savage, Semcycle, United and Wilder brand unicycles.
They can be reached at 1-800-UNICYCLE. Contact: Gary Boulanger 937-602-374 or
May 21, 2002
Direct Focus Changes Names, Launchs New Website
Vancouver,Wa. Direct Focus, Inc. Changes Names To The Nautilus Group The
Nautilus Group Rings Opening Bell to Announce Move to NYSE. They officially
launched Nautilus Group new Website today.
The Nautilus Group, Inc., a leading marketer, developer, and manufacturer of
branded health and fitness products, is ushering in a new corporate identity
with a bell-ringing ceremony that marks the company's name change and move to
the New York Stock Exchange. The company was formerly known as Direct Focus,
The Nautilus Group, Inc is a leading marketer, developer, and manufacturer of
branded health and fitness products sold under such well-known names as
Nautilus, Bowflex, Schwinn and StairMaster. The Company markets and sells its
Bowflex home fitness equipment and Nautilus Sleep Systems through its
direct-marketing channel, using an effective combination of television
commercials, infomercials, response mailings, the Internet, and inbound/outbound
call centers. The Company sells its Nautilus, Schwinn and StairMaster commercial
fitness equipment through its sales force and selected dealers to health clubs,
government agencies, hotels, corporate fitness centers, colleges, universities,
and assisted living facilities. They also markets and sells a complete line of
consumer fitness equipment, under its Nautilus, Schwinn and StairMaster brands,
through a network of specialty dealers, distributors, and retailers worldwide.
The Company is headquartered in Vancouver, Washington.
May 20, 2002
Pacific Employees Bike To Work, Celebrate Bike Month
Olney, Vernon Hills, Lake Forest and Madison locations compete for trophy,
Madison, WI, -- Employees of Pacific Cycle, the parent company of GT, Schwinn
and Mongoose, proved their mettle by riding their bikes to work May 17. A
friendly competition between four locations (Olney, IL; Madison, WI; Vernon
Hills, IL and Lake Forest, CA) brought an average 70 percent of Pacific
employees riding to work. Olney won the competition by having the highest
percentage of people riding to work. All of the offices were close, however:
Olney came in with 72% (52 out of 72 possible), Vernon Hills with 69% (24 out of
35 possible) and Madison with 70% (21 out of 30 possible). Lake Forest had just
one of five, although GT’s Barry Burke commuted 120 miles to and from his office
last week. “Our company is full of cycling enthusiasts who ride regularly,” said
Jeff Frehner, Pacific’s vice president of Human Resources. “We challenged all
Pacific employees to try out the bicycle as transportation for just one day, and
we’re pleased with the turnout. We believe in the environmental benefits of
bicycles as transportation, and everyone here believes in our brands and the
benefits of bicycling. Pacific is home to a handful of former pro racers and
several who participate in lunch rides every day at all locations.” Employees at
the Olney facility will reap the benefits: Vernon Hills will be supplying them
with Chicago style pizza and Madison will send brats and cheese. In true SoCal
style, Lake Forest shall provide avocados and tofu. Olney will also be receiving
a customized traveling trophy (designed by Pacific’s Senior Creative Marketing
Manager Art Abasolo) to display in their office until next year's event. For
more information, contact Gary Boulanger @ email@example.com. Pacific
Cycle LLC, the largest importer of quality bicycles in the United States,
designs, distributes and markets a full range of bicycles and related products
worldwide under the GT, Schwinn and Mongoose Pro brands.
May 14, 2002
Pacific Lays Out Plan For Schwinn, GT
MADISON, WI. Since the Interbike Expo, Pacific Cycles has been
reshuffling its distribution plan for Schwinn and GT.
Now it's laying its cardson the table and asking retailers to ante up.
The ace in Pacific's hand is that it will not sell GT bikes through mass
merchants such as Wal-Mart or Target for at least another year. The bikes,
however, will be sold through sporting-good chain stores.
"Since taking over GT we have a new appreciation for why GT customers
are so loyal to the brand. They aspire to it because it represents
high-performance. Mass consumers don't have this kind of brand
identification," said Chris Hornung, Pacific's president.
"We want to increase our support to our GT retailers and keep the image of GT
high-end," he said.
Here are some highlights of Pacific's plan:
The company will cease using model years for its bikes
Dyno will be sold through mass merchants, sporting-goods chains and specialty
Pacific will offer distinct Schwinn bike lines for specialty retailers and mass
The Plan. GT is positioned as the high-end, technology-driven brand in
Pacific's portfolio. Hornung said specialty retailers are a necessary component
to the brand strategy.
"Staying with the IBD will allow us to preserve the legacy of GT's performance
image," he said.
Pacific is relying on the support of retailers to keep GT out of the mass
If too few retailers pick up the brand, Pacific may consider other distribution
Nick Andrade, the new head of Pacific's IBD sales team,
said GT needs about 1,000 retailers to remain viable in the specialty retail
"We need a lot of sales to keep GT out of the mass," Andrade said.
Currently, there are 350 GT dealers, a significant decline from the 3,000
retailers that once sold GT bikes. There are about 800 Schwinn retailers.
Pacific made GT available to sporting-goods chains because too few retailers
immediately supported the brand.
"During Interbike I stood up in front of hundreds of people and said that given
enough support from IBD retailers we would keep the brand out of sports
boxes. Well, we didn't receive enough support so GT will be sold into the
sporting-goods channel," Hornung said.
Bikes sold through sporting-goods chain stores will likely retail for less than
The Product. Pacific designed two distinct Schwinn lines for next year. One,
with price points mostly below $300, will go to mass retailers this fall.
Specialty retailers and sporting-goods chains will have a dedicated line that
contains traditional models such as the Mesa and Sierra. Prices range from $200
The line destined for mass merchants will have new model names and styles.
In both channels, Schwinn bikes will be family oriented.
The specialty line has a full-range of comfort bikes with some mountain,
road and BMX bikes. Former Specialized product manager Lance Bohlen designed
Schwinn's specialty bike line.
"Lance did an incredible job with the line. He brings a level of knowledge that
is second to none. All the bikes are family oriented. Who better to own that
category that Schwinn," said Richard Wittenberg, Pacific's vice president of
The line will have fewer models than last year and they will come in a full
range of sizes and colors.
"We understand that you need sizes and colors in an IBD market that is what
makes it a specialty market," Wittenberg said.
Instead of sponsoring athletes under the Schwinn brand,
Schwinn will sponsor family cycling events and promotions.
"Schwinn will be the industry's poster child for family-oriented events.
It will be the focal point for enlarging rider population.
We are losing people as an industry and Schwinn is the brand that is
going to bring them back. We haven't finalized all the plans yet,
but they will be grand," Wittenberg said.
While Schwinn is focusing on the needs of family cyclists,
GT is aimed at enthusiast customers looking for performance and technology.
Several models of I-drive bikes mark GT's 2003 line with prices topping $2,000.
The line also includes a full range of BMX bikes, but GT will no longer
produce road bikes.
Pacific executives have yet to iron out a distribution strategy for high-end
bikes. They initially wanted to ship bikes directly to retailers from the
but it may now need to stock some high-end bikes.
"Pacific is still looking at how to put together a plan that brings the most
benefits to retailers," Andrade said.
Dyno will be sold through mass retailers and the line will contain BMX bikes
and some cruisers. Specialty retailers also can sell the line.
"We have a bunch of retailers that are doing great with Dyno," Andrade said.
Pacific has yet to decide what to do with Powerlite. The company is selling
2001 closeouts through retailers but it did not produce a 2002 line and likely
will not make a 2003 line.
"Right now Powerlite is on hold," Wittenberg said.
New Year. Pacific will roll out the next generation of bikes in June and July.
After the roll out, the company will discontinue using models years.
Instead, it will adjust models, spec and pricing as the market dictates as well
as add and discontinue models.
"The only group model years really serve is parts suppliers. We feel you need
to be responsive to the market, not the calendar. We will update our product
as new, relevant parts come to market," Wittenberg said.
Glitches And Hiccups. Some retailers are still hesitant about signing with
Pacific. Several said they had trouble receiving bikes on time.
Chris Hornung admitted there have been delivery problems. "Schwinn has
been a great success for us and we have exceeded all our forecast goals
since last fall, but there have been glitches getting some products to dealers.
I apologize for that. We should have been better at executing the integration
of our computer systems, which slowed us down more than we expected."
Other retailers complained that Pacific under-delivered on its promises of
keystone margins on its bikes.
"I don't think we were as good as we could have been this year, but I assure
you we will have keystones on our low-end product for next year," Andrade said.
Andrade said his goal is to boost customer service to specialty retailers for
Schwinn, GT and Mongoose.
Some warranty and invoice issues still hang over Pacific.
When Pacific bought Schwinn/GT from Questor it also assumed its accounts
totaling several million dollars.
Pacific, however, is finding it hard to collect those receivables.
Many retailers are offering to pay Pacific discounted invoices.
"Legally, we own the receivables and legally we are going to get paid for it.
We will be prosecuting and taking people to court to pay we are not
letting this thing go by the wayside. We want to work with retailers and do
what is right, but what is right is they owe us money," Wittenberg said.
Schwinn/GT's bankruptcy voided warranties on bikes purchased from
Schwinn/GT under Questor. Retailers claim that without warranties the bikes
are devalued. Pacific, however, is making some concessions.
Pacific honors warranties on products purchased from Questor-owned
Schwinn/GT that are less than one year old. It's handling warranty
issues on older products on a case-by-case basis.
"We are trying to help as many customers as possible. We have no legal
obligation to warrantee product that was purchased under Questor, but we
do have brands to maintain and that requires some flexibility on our part,"
May 14, 2002
In Wake Of Schwinn/GT, 2003 Intros Will Come Earlier
VISTA, CA. Several bike suppliers found themselves in a sticky situation
earlier this year. With their bike inventories depleting rapidly,
just how long could they wait to introduce next year's bikes?
The answer for most is not as long as they did last year.
Many suppliers are pushing their introductions up at least
a month this year to feed retailer demand.
As usual, BMX and price-point bikes will lead the way. Those bikes change
less from year to year and are less sensitive to changes in componetry.
But inventories of high-end bikes also are running low.
Suppliers must choose between releasing mid-season intros
or waiting for the latest components to become available
before releasing their 2003 bikes.
"We can either roll the dice and re-order 2002 or go balls to the wall
and bring in 2003," said Joe Hawk, Haro's vice-president of sales.
Haro is bringing in its first shipment of lower priced BMX bikes in
May month early than usual to fill demand,
but it will wait until components are ready to introduce its high-end models.
Most bike suppliers are using a similar strategy this year,
though even high-end bikes should hit retail floors earlier this year.
Several suppliers report that high-end mountain and road bikes sold
more heavily than they expected in 2002. Strong Christmas sales also caught them
Specialized will introduce several road bikes this year using components that
are already available. K2 is bringing bikes in its adult line up to $800
early and Trek is introducing a big chunk of its line in May.
While sales of high-end bikes surprised some suppliers,
Schwinn/GT's bankruptcy and a soft economy at the end
of last year turned forecasting into a weird science. Many ordered cautiously.
"Most Schwinn/GT dealers were in a wait-and-see mode.
There was no crystal ball and our inventories have depleted
at greater levels than we anticipated," said Haro's Hawk.
While 2002 certainly was an atypical year for selling bikes,
several suppliers said they intentionally are running leaner inventories.
K2 Bike and Specialized instituted better controls on inventory
and are placing smaller, more frequents orders to China and Taiwan.
"We kept our inventory levels really low with the intention of being out of
models we could introduce earlier and move seamlessly into new product,"
said Bob Margevicius, Specialized's executive vice president.
"Nobody is laying inventory for nine months anymore,"
added Sandy Liman, director of K2 Bike.
While empty warehouses are playing a heavy hand in early intros,
good old-fashioned competition also is sitting at the table.
"Everyone tries to get jump on market, we are doing the same Trek,
Raleigh, everybody is doing the same. Our objective is to establish time-value
relationship with our retailers," Margevicius said.
MAY 06, 2002
Schwinn, Mongoose Bikes Featured In Gap TV Spots
MADISON, WI. The Gap is running 30-second television commercials nationwide
featuring actors riding Schwinn and Mongoose bicycles down a deserted city
street. "I didn't even realize The Gap was using our products in the commercials
until I saw them myself," said Gary Boulanger, public relations director for
Schwinn and Mongoose. "I'm pleased to see the Gap using our products to promote
their products and image. We consider ourselves lifestyle merchants as well, so
it is a good fit." Roman Coppola directed the commercial, which features actors
and actresses from recent movies and television shows. They are riding Schwinn
cruisers and a Mongoose 24-inch BMX bike. To view the commercial online, go to
MAY 03, 2002
Direct Focus Changes Name to the Nautilus Group
VANCOUVER, WA. Direct Focus, owners of Bowflex, Nautilus, Schwinn Fitness and
StairMaster fitness equipment brands, will change its name to The Nautilus
Group, Inc. and move its shares from the Nasdaq National Market to the New York
Stock Exchange under the new ticker symbol NLS. The changes will take effect May
21. "With our acquisition of Nautilus, Schwinn and StairMaster and the success
of Bowflex, we have some of the most recognized brand names in the fitness
industry," said Brian Cook, the company's chief executive officer. "The
acquisition of these powerful brands, combined with our name change to The
Nautilus Group is the culmination of a long-term strategic diversification
plan." Analysts estimated that sales of personal and commercial fitness
equipment in the United States topped $6.5 billion last year. Direct Focus'
sales and earnings growth has exceeded analysts' expectations for the past 13
quarters, Cook said.
APRIL 25, 2002
GT Signs Exclusive Australian Distributor
MADISON, WI. Pacific Cycles and The Bicycle Authority of Melbourne, Australia,
signed an exclusive distributor agreement for GT Bicycles on the southern
continent. "We all have worked extremely hard over the past six months to
present Pacific Cycle with a credible and practical plan to re-launch GT
Bicycles in Australia," said Tom Sherlock, managing director of The Bicycle
Authority. The Bicycle Authority will help reconstruct Team GT by targeting
riders from all areas to rebuild the bike brand's presence in Australia,
Sherlock said. The Bicycle Authority also distributes Bell, Blackburn, Giro,
VistaLite, Profile, Snafu and Mongoose accessories.
APRIL 18, 2002
Direct Focus Net Income, Sales Jump After Acquisitions
DIRECT FOCUS ANNOUNCES RECORD FIRST
VANCOUVER, WA. Direct Focus reported net sales of $135.9 million for its first
an 82 percent increase from $74.9 million for the first quarter of 2001.
The company bought Schwinn Fitness last summer then acquired
StairMaster for $25.8 million in cash during the quarter.
Its net income was $24.0 million, up 63 percent from $14.7 million for the same
period of 2001.
"During the quarter, we continued to build on our position as a leader
in the health and fitness markets. Specifically we completed the
acquisition of StairMaster, which will enable us to extend our
customer base and expand our commercial and retail market
opportunities," said Brian Cook, the company's chief executive officer.
Direct Focus also owns Bowflex and Nautilus.
April 01, 2002
Pacific Hires Boulanger To Lead Public Relations
MADISON, WI. Pacific Cycles hired industry veteran Gary Boulanger to lead its
public relations efforts. He started at the end of March. "Pacific has a great
group of people and I like Chris Hornung's openness. They have some great plans
and strategies; they just have a hard time verbalizing what's going on. The
company never had to do any of this before. When they were strictly in the mass
they didn't have to do any media or marketing," Boulanger said Boulanger
formerly was executive director of Bike Miami Valley, an advocacy association in
Dayton, Ohio. Boulanger resigned when the organization ran into financial
trouble. He also was Airborne's communications director until 2001. Boulanger
also consulted for Trek's family of brands and worked at a bike shop in
Milwaukee, Wisconsin. Boulanger will work from his home in Dayton for three
months. After that Pacific may move him to its corporate offices in Madison or
Olney, Illinois, but that has yet to be decided, he said. Boulanger's phone
number is (937) 602-3274.
March 20, 2002
The 2002 GT Bicycles Pro Team
Vernon Hills, IL - 2002 marks a new beginning for Team GT.
This season we have the best pound-for-pound team with four of the
most talented riders in the world. These riders are proud to be flying
the GT wings around the world, winning events, and keeping
GT Bicycles the #1 team in all disciplines.
Christophe Leveque, 2001 UCI World Champion and ABA Pro
of the Year, joins the GT BMX Pro team for 2002. Arguably the
best BMX'er ever to race, Christophe comes to the #1 BMX
company, a match that just made sense. With a busy season up
ahead of him, look for Christophe to once again dominate in
BMX racing in 2002. Christophe is sure to show his skills at the
X-Games where he was the fastest qualifier in 2001, and take on
a new challenge -- Mountain Cross and Dual Slalom racing.
If Christophe can catapult to the front of mountain bike racing like
he did with BMX, it will be quite a show. Christophe brings his
sponsors Fox Racing, Smith Eye Wear, ATI Plates and Pads,
Sinister Forks, Sun Ringle, Chris King, Troy Lee Designs, and
Marwi Spokes with him to Team GT.
Brian Lopes returns to the GT program in 2002.
Winner of the 2001 UCI Dual World Championship and the
2001 UCI World Cup Dual Titles, Brian was a dominant force
in 2001. Brian did just one BMX race in 2001, and took a huge
AA Pro win at one of the biggest ABA races. Brian has more wins
in the UCI World Cup and Norba series than any other male rider
in the sport of mountain biking.
He has achieved many great athletic accomplishments: Athlete of the
Month by the U.S. Olympic Committee, seven U.S. National titles,
two World Cup titles, one UCI World Title, and Third Place at the
recent AMA Supercross crossover event.
GT is proud to have one of the greatest all around athletes on Team GT.
Brian brings his sponsors Fox Racing, Fox Forks, Oakley, Easton, Bell,
Maxxis, Kicker, Troy Lee Designs, and THE.
Jamie Bestwick returns to the GT squad for 2002 with a lot of hardware
from 2001: Gravity Games Gold Medallist in Pro Vert; BS Pro Vert title;
and the CFB Pro Vert title. He also brings with him the 2002 X-Games
gold medal and the 1999 Gravity Games medal in Pro Vert. Jamie had a
lot of wins in 2001 until a broken elbow slowed him down and kept him
from taking back the X-Games title. For 2002, GT has released a Bestwick
signature line of bikes and frames. Jamie has tremendous engineering
skills and lives close to the world famous Woodward Park. This makes
him one of the most qualified R&D guys around to design and test a line of BMX
Hans Rey, multiple Trials National and World Champion, is one of the
pioneers of Trials and Extreme Mountain Biking. Through his spectacular
mountain bike trials shows and adventures, Hans has made himself a name
far beyond the mountain bike scene. His skills and image are constantly
opening the doors to media coverage all over the world.
With four of the best riders in their sports, you will be seeing a lot
of news from Team GT in 2002.
Pacific Cycle -- the largest importer of quality bicycles in the
United States -- designs, markets, and imports a full range of
bicycles under the GT, Schwinn, Mongoose Pro, Mongoose,
Roadmaster, and Pacific brand names.
January 28, 2002
Pacific Signs With Riteway Products-Japan
TOKYO, Japan - Pacific Cycle inked long-term exclusive distribution agreement
with Tom Takashima, the new majority owner of Riteway Products-Japan, a
distributor of GT bicycles and parts and accessories. Takashima, Riteway
Products-Japan's general manager, bought the company in January from Schwinn/GT.
The agreement means GT's business in Japan will continue uninterrupted, helping
GT retain its strong presence in the market, company officials said. "GT has had
a long and successful relationship with Riteway Products-Japan and we are happy
to see that continue," said Chris Hornung, Pacific's chief executive officer.
Terms of the agreement were not disclosed, but Pacific owns 10 percent of
January 16, 2002
Nick Andrade Joins Pacific To Lead IBD Sales
MADISON, WI. Starting Feb.1, Nick Andrade will direct Pacific Cycle's specialty
retail sales. He is charged with visiting retailers and developing specialty
retail offerings from GT, Mongoose and Schwinn. "There are a number of concerns
and a bit of confusion within the dealer base since the acquisition. Chris has
charged me to solve problems and make things happen. I will be spending the vast
majority of my time in the field working with our reps and customers creating a
conduit between our dealers and upper management," said Andrade, Pacific Cycle's
vice president of IBD Sales. Pacific strengthened its specialty retail strategy
since announcing its plans at Interbike. It will keep a GT design and sales team
in California rather than consolidating that division into its Madison or
Chicago offices. "Pacific is committed to making our business with the IBDs a
success and we cannot imagine one individual more capable of making that a
reality than Nick Andrade," said Chris Hornung, Pacific's chief executive
officer. Andrade, who has 45 years of industry experience, will be based in San
Francisco. He began his career at West Coast Cycle and worked at Giant, Bianchi
and Trek. He can be reached at (800) 666-8813.
November 20, 2001
Will Pacific Reshape The Bike Industry?
MADISON, WI—Executives at Pacific Cycles,
the new owner of Schwinn and GT, will know on Nov. 15 how many
Schwinn and GT dealers will stick with the brand, as the company
attempts to redefine the industry's distribution system.
On that date Pacific will begin taking orders for bikes to be built to
order and delivered to retailers 90 days later.
Although Pacific, which also owns Mongoose and Roadmaster,
plans to sell GT and Schwinn bikes to mass market retailers
sometime in the next 12 to 18 months, company executives said the
specialty retail channel is important to the future of the Pacific.
They also assert that Pacific brings advantages to specialty bike
retailers that the traditional bike suppliers can not.
Pacific sells 4.5 million bikes in the United States and it specializes
in getting bikes to retailers when they need them, said Byron Smith,
"Schwinn's bicycle business was not profitable for the last 20 years, it
was only the fitness division that was keeping them afloat," Byron
"We want to support Schwinn and GT dealers, but the old supplier
model is broken. If we continued to run Schwinn and GT as they were
run—which was running with operating expenses 2 percent more
than gross margins—we would be bankrupt again," he said.
Smith worked for Schwinn from 1987 to 1993, during the Schwinn
family ownership and just prior to its first bankruptcy. After leaving the
industry, he joined Brunswick Bicycles in 1999. He landed at Pacific
when it bought Brunswick Bicycles last December.
Pacific has grown from being a single-brand supplier to Sears,
Target and Toys R' Us into the largest bike supplier in the United
The financial muscle behind the growth is Chicago-based Wind
Point Partners, a private equity group that invested in Pacific in 1998.
Besides buying Schwinn/GT in September, Wind Point also recently
licensed the Murray brand for bike sales. The company is not looking
at more acquisitions.
"The biggest difference between our investment into the bike market
and those of other investment firms is that we began our investment
with profitable businesses. Pacific and Mongoose are making
money," said Rich Kracum, Wind Point's managing director.
"Just as important, we began investing after the bike market switched
from a domestic manufacturing business to an importing business.
That was a gut-wrenching change for the business to go through but
that is behind us and the market is stable now.
"We fully support the management team that is in place at Pacific. We
will make resources available for Pacific's management to grow
value in the business," Kracum said.
Wind Point focuses on companies doing between $50 to $250
million in sales annually. It generally expects to resell its acquisitions
in four to six years.
After taking ownership of the company, Pacific moved Schwinn out of
its Boulder, Colorado, offices as well as GT's new offices in Foothill
Ranch, California. It also closed all Schwinn/GT warehouses and
Schwinn/GT's customer service, product development and
warehousing were integrated into Pacific's headquarters in Madison,
Wisconsin, its offices in Vernon Hills and Olney, Illinois, or in
Schwinn Fitness is owned by Direct Focus and is operating
separately from the bike division, even though Direct Focus and
Pacific placed a joint bid of $151 million for the company.
Schwinn Fitness remains in Boulder, and Kevin Lamar, a former
Schwinn president, is running the company as president of Nautilus
and Schwinn Fitness. Nautilus is one of the many fitness brands
Direct Focus owns
Direct Focus posted increased sales and revenues in its third
quarter, which ended Sept. 30. Since Sept. 20 Schwinn Fitness
contributed $4.3 million in sales to the company.
Next year, Schwinn Fitness is expected to contribute more than $120
million in revenue, the company said.
November 20, 2001
Schwinn/GT To Get Facelift Under Pacific
LAS VEGAS, NV—Chris Hornung, Pacific
Cycles' chief executive officer, and Byron Smith, the company's
president met with retailers at the Interbike Expo to explain their plan
for the future of Schwinn and GT Bicycles.
Having purchased Schwinn/GT just two weeks prior, Pacific
executives outlined their basic strategy for dual-channel distribution,
but left some questions unanswered.
While some details of Pacific's plan for Schwinn and GT remain up in
the air, the 4.5-million-unit-per-year company is moving forward.
Hornung and others went to Asia in mid-October to bang out pricing
with possible suppliers. And order forms are being shipped to
Here is a look at what we know about Pacific's plan.
The Product. The number of models in both lines will be reduced.
Schwinn's line will be predominantly lower end, while GT will
continue with products like its I-Drive.
"There will be Schwinn products to halo the brand, but offerings
above $500 will be limited," said Richard Wittenberg, Pacific's vice
president of sales and marketing.
Pacific executives stressed that both lines will be more in proportion
with sales, meaning sub-$500 bikes, which constitute 97 percent of
the U.S. bike market, will be Pacific's focus.
Pacific planned cut GT's high end more deeply, but altered course
after sales reps and retailers complained.
"Our sales reps sensitized us of the importance of higher price
points in GT's line. While 74 percent of units sold are $500 and
lower, much of the profits come from the I-Drive and similar product,"
What little domestic manufacturing that existed under former owner
Questor partners Fund will cease. Production will continue with
Pacific's 12 Asian vendors and perhaps Merida, one of Schwinn/GT's
"We have been in discussion with Merida. And we are already a big
Giant customer, so we will definitely go ahead with them. Ace Trike
and Sampa are others we are very familiar with. They are all good
suppliers," Smith said.
Place Your Orders. Pacific will bring its Built to Order model from the
mass to specialty retailers. Instead of ordering bikes en masse,
storing them in a warehouse and shipping to retailers as they are
ordered, Pacific places the forecasting burden on its dealers.
"We see a very inefficient business model in how brand distributors
sell in the United States. This is epitomized by Cannondale and the
old Schwinn. Far too much inventory is bought up front and held by
the dealer or in the distributor's warehouse," Smith said.
"At the end of the season the market is exposed to lots of closeouts.
Year-end blowouts eat into your profitability. Our plan is to do away
with that," he added.
Pacific requires that minimum orders of 25 bikes are placed 90 days
in advance, six times a year and with 60-day invoicing. The first order
date is Nov. 15, with delivery on Feb. 15. Only core SKUs will be
available for order between the fixed dates, but with a price penalty.
"If you don't have the cost of holding, storing and moving inventory
your overhead is lower. This means lower wholesale prices,"
Pacific will use its two warehouses—250,000 square feet in
Bacaville, California, and 800,000 in Olney, Illinois—to house limited
supplies of core models and to repack mixed orders.
Going To Mass. When Schwinn goes mass it will be with a few
models in a single size and color for each. Price points for those
bikes remain undetermined, Wittenberg said.
"It is not our intention to go to the mass or to sporting goods stores
before 12 to 18 months. That's part of the strategy. We have to give
dealers more distance and exclusivity. It's currently our intention to
provide separate product," Wittenberg said.
"We believe there is a way for everybody to live happily. It is our job to
determine how. Sony, Makita and De Walt have all been successful,"
Wittenberg said, referring to electronics and tool suppliers that
successfully sell in multi-channels.
"There is a distinct opportunity for people who carry our products to
also service what we carry in the mass. Our goal is to take the
volume of bikes sold through mass and focus them though our IBD
partners," Wittenberg said.
Pacific has yet to develop specific plans as to how to do this, but
Wittenberg said retailers could pick up parts and accessories
business from mass customers who came to retailers for service
P&A And Warranty. Selling parts and accessories is one thing Pacific
has no interest in.
"Non-proprietary P&A is a losing business. Proprietary P&A could be
an option, if we license it out," Wittenberg said.
Many retailers named the loss of Schwinn parts and accessories as
one of their biggest problems with Pacific. Conversely, other parts
distributors of all sizes are having a field day picking up the slack.
Pacific will honor warranties on Schwinn and GT bikes sold under
previous owners, however, but future replacement parts will be
stocked only for unique Pacific parts.
Pacific still has a large inventory of parts and accessories and bikes
acquired from Schwinn/GT to sell through, Wittenberg said.
November 9, 2001
Police Find 16 Pallets Of Stolen Pacific Goods
VACAVILLE, CA. Law enforcement officers found a Southern Californian warehouse
full of allegedly stolen containers, including 16 pallets of bike components
taken from a Pacific Cycles semi trailer. Three trailers—one packed with
high-end Shimano parts—were stolen as Pacific relocated the inventory from GT/Riteway's
warehouses to its own. "We received a call saying the police found 16 pallets
full of bike stuff with GT stickers all over it in a warehouse. While we are
still missing quite a bit more, it seems from their description that the missing
Shimano wheels may be on a few of those pallets," said Wayne Thompson, Pacific's
director of logistics. "I guess it was a big find for the police because they
said the warehouse was full of containers, many of which were not yet unloaded,
from other mass retailers," Thompson said. The first trailer was stolen after
leaving GT/Riteway's distribution center in Fontana, California, and on its way
to Pacific's warehouse centers in Vacaville, California, and Olney, Illinois. A
few days later two trailers were stolen from Pacific's Vacaville warehouse
parking lot. In their place, the thieves left behind two semi trailers full of
rice, which the FBI confiscated.
November 8, 2001
Contents Of Three Pacific Trailers Stolen
MADISON, WI. Pacific Cycle employees loaded 215 semi trailers at GT/Riteway's
Fontana, California, distribution center, stuffing one with high-end Shimano
components. That trailer was stolen in route to Pacific's warehouses while two
others filled with accessories were swiped and replaced with dummy trailers full
of rice at Pacific's Vacaville, California, warehouse. "We found the stolen
trailer and it was cleaned out. They even took the tractor pulling the trailer.
How they knew to target just that trailer out of the hundreds heading out is a
mystery. But it seems like they had some pretty detailed information about our
plans," said Chris Hornung, Pacific Cycle's chief executive officer. Pacific
employees had another surprise opening two trailers full of rice in their
storage yard outside the Vacaville warehouse. "We are right on the freeway. It
looks like two tractors got off the freeway, dumped their rice filled trailers,
hooked up two trailers full of bike parts and took off. The FBI is involved now
since the thefts have happened so close together," said Wayne Thompson,
Pacific's director of logistics. Some of the products on the three trailers were
Shimano Ultegra and Dura Ace wheel sets and headsets, Syncros stems and
seatposts, Kryptonite locks, Schwinn messenger bags, Saris racks and
accessories, Enduro 2 computers, BMX gloves branded Team GT and Stingray,
helmets, GT aprons and Schwinn hats. "The wholesale value of this was $250,000.
Things like the aprons are fairly inexpensive but there are 220 in a box and
that's worth $3,000," Thompson said. Hornung is asking retailers for help
finding the culprits. "If any dealers are offered any incredible deals on
Shimano or these other components we would appreciate a call so we can figure
out what happened," Hornung said.
October 30, 2001
Schwinn Bonus Plan Public, Exec's Walk With Almost $1 Million
DENVER, CO. Schwinn/GT's $2 million retention plan was made public last week
despite Questor's efforts to keep details of the plan confidential. The top 10
managers received about 40 percent of the $2 million bonus package with the
remainder distributed among 51 other employees.
Executive bonuses were calculated as a percent of their annual salaries. Trevor
Bell, Schwinn/GT's fitness division president, received a $161,860 bonus based
on his $350,696 salary. Bell worked as the head of Schwinn/GT's European
operations before assuming the new role this year. Tom Soper, Schwinn/GT's
senior vice president of corporate relations, received a $113,077 bonus based on
his salary of $245,000. Larry Pizzi, Schwinn/GT's vice president and general
manager of sales, received a $92,308 bonus based on his salary of $200,000.
Compensation for Jeff Sinclair, Schwinn/GT's chief executive officer, was not
included in the plan.
U.S. Bankruptcy Judge Sidney Brooks questioned Schwinn/GT's bonus plan in
August, saying it addressed the executives but did not adequately compensate the
company's rank-and-file employees. Brooks also challenged the company's attempts
to keep the plan confidential, ruling that the details would be made public
after the Chapter 11 auction.
Pacific Cycle and Direct Focus purchased Schwinn/GT's assets in September.
Pacific bought the cycling assets for $86 million and Direct Focus took the
fitness assets for $65 million.
October 22, 2001
Mad Dogg Separates From Schwinn
VENICE, CA. Mad Dogg Athletics, owners of the Spinning program, legally
separated from Schwinn Fitness and its new owner Direct Focus. On Oct. 15 the
American Arbitration Association granted Mad Dogg's request for contract
termination that it filed before Schwinn went into bankruptcy proceedings. "Schwinn
is no longer in the Spinning business. Terminating our contract enables us to
get back to the business of providing Spinning training and Spinning bikes to
facilities in the United States and abroad," said John Baudhuin, Mad Dogg's
president and chief executive officer. The arbitration court judge ruled that
both Schwinn and Direct Focus are "enjoined from using the Spinning materials,
Spinning instructor lists, Spinning master instructors and the licensed Spinning
facilities to directly compete with Mad Dogg's Spinning program." Schwinn had
been a licensee of Mad Dogg's patented Johnny G Spinner bikes since 1995.
October 17, 2001
Direct Focus' Sales, Earnings Up In Third Quarter
VANCOUVER, WA. Direct Focus, who recently purchased Schwinn's fitness division,
announces that its sales and earnings are up more than 50 percent for the third
quarter ended September 30, 2001, compared with the same quarter last year.
"Despite the generally weak economic environment, we are very pleased with our
record sales and earnings, and our completion of a major acquisition of Schwinn
Fitness in the third quarter. With Schwinn Fitness we are positioned as a
worldwide leader in the fitness and healthy lifestyle markets," said Brian Cook,
Direct Focus' chief executive officer.
The company reported net sales of $88.7 million, an increase of 53 percent from
$57.8 million from the third quarter of 2000. Net income for the third quarter
of 2001 was $16.8 million, up 51 percent from $11.1 million for the same period
of 2000. For the first nine months of 2001, Direct Focus reported net sales of
$238.6 million, up 56 percent from $153.3 million for the same period of 2000.
During the quarter, Direct Focus completed the acquisition of Schwinn Fitness
for approximately $65 million. From September 20, 2001, Schwinn Fitness
contributed $4.3 million in sales to the company's commercial and retail
division. In 2002, Schwinn Fitness is expected to contribute over $120 million
October 16, 2001
DIRECT FOCUS ANNOUNCES RECORD THIRD QUARTER RESULTS
QUARTERLY SALES UP 53% AND EARNINGS UP 51% FROM PREVIOUS YEAR
Vancouver, WA–October 16, 2001--Direct Focus, Inc. (Nasdaq: DFXI), a leading
marketing company for fitness and healthy lifestyle products, today announced
its results for the quarter ended September 30, 2001.
For the third quarter of 2001, Direct Focus reported net sales of $88.7 million,
an increase of 53% from $57.8 million for the third quarter of 2000. Net income
for the third quarter of 2001 was $16.8 million or $0.46 per diluted share, up
51% from $11.1 million or $0.31 per diluted share for the same period of 2000.
eCommerce sales for the third quarter were $16.7 million, up 45% from $11.5
million for the same period of 2000.
For the first nine months of 2001, Direct Focus reported net sales of $238.6
million, up 56% from $153.3 million for the same period of 2000. Net income for
the first nine months of 2001 was $46.1 million, or $1.28 per diluted share, up
63% from $28.2 million or $0.78 per diluted share for the same period of 2000.
During the quarter, Direct Focus completed its acquisition of the fitness
division of Schwinn/GT (“Schwinn Fitness”) for approximately $65 million. From
the date of acquisition on September 20, 2001, Schwinn Fitness contributed $4.3
million in sales to the Company’s commercial and retail division. Total sales
from the commercial and retail division were $14.7 million, or 17% of total
revenue. With the acquisition of Schwinn Fitness, the commercial and retail
division is expected to represent about 33% of total sales in 2002.
Schwinn Fitness was accretive to earnings in the third quarter of 2001 and is
again expected to be accretive in the fourth quarter. In 2002, Schwinn Fitness
is expected to contribute over $120 million in revenue and be strongly accretive
“Despite the generally weak economic environment, we are very pleased with our
record sales and earnings, and our completion of a major acquisition in the
third quarter,” said Brian Cook, chief executive officer. “Our combination with
Schwinn Fitness has positioned us as a worldwide leader in the fitness and
healthy lifestyle markets.”
“In our direct business, we continue to see sustained sales growth as we
leverage our direct business model and powerful brand names. Our Bowflex and
Nautilus Sleep System products continue to address the fitness and healthy
lifestyles needs of our direct customers. We are also pleased with the continued
growth of our eCommerce channel, which has proven to be a strong complement to
our data-driven business model.”
“In our retail and commercial business, we saw strength in sales for our
Nautilus Nitro commercial products and the growing popularity of our retail
products. We believe that the addition of Schwinn’s popular line of
cardiovascular equipment will complement our consumer Nautilus line of
strength-building products. We have also significantly enhanced our global
distribution and product development capabilities.”
“Looking ahead, we believe that our powerful combination of distribution
channels and branded product lines—Bowflex, Nautilus, and Schwinn—gives us an
unmatched platform for continued growth in sales, earnings and market share.”
During the quarter, the Company repurchased 354,300 shares of its common stock
for approximately $6.5 million. The Company ended the quarter with cash and
short-term investments of $44.1 million. The “Proforma Balance Sheets” for the
combined company as of September 30, 2001 represent a current estimate and are
not final because Direct Focus has not yet completed its purchase accounting
analysis of the Schwinn Fitness acquisition. The Company expects to report final
numbers for the third quarter on Form 10-Q.
You can find more info and the charts of some tpp layouts at:
DIRECT FOCUS ANNOUNCES
RECORD THIRD QUARTER RESULTS
October 5, 2001
Pacific Meets Schwinn/GT Dealers At Interbike
LAS VEGAS, NV. Chris Hornung, Pacific Cycles's chief executive officer, and
Byron Smith, the company's president, met with Schwinn/GT dealers throughout the
Interbike Expo, to outline their plan for the two brands. They said Pacific will
take both brands into the mass market next fall, but they intend to stick with
specialty bike retailers, too. "Next fall would be the earliest time for
introducing Schwinn and GT into the mass market, but that doesn't mean that we
will be bringing them into that channel at that time. Many of Schwinn's current
dealers have years invested in the brand and we will be going forward with their
input. More than 40 percent of all bicycle dollars are still spent within that
channel and we want to do business there," Hornung said. Hornung praised
specialty bike retailers for their service, assembly and ability to up-sell. He
said specialty retailers will play an important part in Pacific's business. "I
know speaking here will not have every one of you running to sign orders. But I
am hopeful that most of you can work with us in the future," Hornung said at the
first dealer meeting on Sept. 30. Among the company's new policies are: o A
25-bike minimum order o 60-day invoicing o 50 percent gross margins o The
elimination of factory warehousing o Bimonthly ordering o The elimination of all
service parts and accessories "We are not trying to eliminate small dealers, we
are just asking you to plan better than you may have in the past," Hornung said.
Pacific will honor Schwinn and GT warrantees, but a plan has yet to be put into
place. The company also will reposition the Schwinn and GT lines, focusing on
the sub-$500 retail price range. Plans also are in place to will revive Schwinn/GT-owned
brands such as Auburn, Dyno, Powerlite and Syncros. And Pacific plans to have
fewer dealers, some of whom executives said they expect will walk away from the
Schwinn and GT. "We will reduce the number of dealers. We will have less than
the 3,000 Schwinn/GT had a year or so ago, but we will work with both large and
small shops," Smith said.
September 24, 2001
COMPLETES ACQUISITION OF FITNESS DIVISION OF SCHWINN
VANCOUVER, WA – September 24, 2001 – Direct Focus, Inc. (Nasdaq: DFXI), a
leading marketing company for fitness and healthy lifestyle products, announced
today that it has received final court approval to acquire substantially all of
the assets of Schwinn/GT’s fitness equipment division (“Schwinn Fitness”)
through a bankruptcy auction in the U.S. Bankruptcy Court for the District of
Colorado. In addition, the Company announced that it has closed the transaction.
Under the terms of the bid, Direct Focus is paying approximately $65 million in
cash for Schwinn Fitness. The Direct Focus bid was linked to a successful bid
submitted by Pacific Cycle LLC for the purchase of substantially all of the
assets of Schwinn/GT’s bicycle division. Direct Focus expects Schwinn Fitness to
contribute over $120 million to sales in 2002 and to be accretive to earnings.
“We are very pleased with the success of our bid,” said Brian Cook, CEO of
Direct Focus. “The acquisition is a very important part of our strategy to
become the leader in the $6.2 billion domestic fitness market and expand our
international sales. We have enhanced our retail distribution capabilities on a
global basis and gained additional R&D capabilities. We now have another great
brand name in the fitness area and offer our customers a powerful combination of
Bowflex, Nautilus, and Schwinn product lines.”
“Our management team is very familiar with Schwinn Fitness. Kevin Lamar, who
joined us as our President in June, was instrumental in growing the Schwinn
Fitness business from $20 million in annual sales to over $100 million in annual
sales from 1989 to 2000. At the end of the second quarter, we reported $94.7
million in cash and short term investments. We believe this acquisition is an
excellent use of our financial and management resources, and offers significant
“We believe Schwinn Fitness’ strong brand and quality fitness products will be
an excellent fit with our growing portfolio of fitness and healthy lifestyle
products,” said Kevin Lamar, President of Direct Focus. “Schwinn Fitness offers
a popular line of cardiovascular equipment, which includes treadmills,
stationary bikes, steppers and ellipticals sold under the Schwinn and Trimline
brands. These products will complement our Nautilus line of strength-building
products, and we expect to gain powerful distribution synergies through our
combined product lines and sales efforts.”
About Direct Focus, Inc. Direct Focus is a marketing company for fitness and
healthy lifestyle products with direct, retail, and commercial sales channels
worldwide. The Company currently markets its Bowflex line of home fitness
equipment and Nautilus Sleep Systems directly to consumers, using an effective
combination of television advertising, 800-call centers and Web sites. The
Company sells its Schwinn Fitness products, under the Schwinn and Trimline brand
names, and its Nautilus consumer fitness products through retail athletic
stores. In addition, Direct Focus sells its Nautilus commercial fitness
equipment directly to health clubs and other institutions. The Company is
headquartered in Vancouver, Washington. Direct Focus is located on the Web at
This press release contains forward-looking statements relating to anticipated
sales and the development of Direct Focus' products and services, including
statements regarding its Nautilus and Schwinn businesses. Factors that could
affect Direct Focus' actual results include its reliance on a limited product
line, fluctuations in advertising rates, market acceptance of its existing and
future products, growth management challenges, and general economic conditions.
A more detailed description of certain factors that could affect actual results
include, but are not limited to, those discussed in Direct Focus' annual report
on Form 10-K for the fiscal year ended December 31, 2000.
September 24, 2001
Schwinn, GT Brand Building All Over Again
BOULDER, CO. Pacific Cycle and Direct Fitness closed their joint $151 million
deal to purchase all the assets of Schwinn/GT Cycling and Fitness on Friday.
Schwinn Fitness will remain in Boulder for the near future. However, Pacific
Cycle hopes to have Schwinn Cycling moved from Boulder, and GT moved from
Foothill Ranch, California, and integrated into its headquarters in Madison,
Wisconsin and Vernon Hills, Illinois by the end of October. Pacific was
considering bids for the sale of GT but none reflected the value Pacific
officials felt the brand had. It now plans to market GT in the mass-market and
specialty retail channels. The mood around Boulder and Foothill Ranch is subdued
as many long-time Schwinn and GT employees clean out their desks and stow years
of memories into boxes headed for home. Pacific is offering about 50 Schwinn/GT
employees jobs at the new company. Of Schwinn/GT's 300-plus employees, few will
have a job with the new company. And for many the thought of the brand they
built in Wal-Mart and Target is almost too much to bear. Pacific's first change
at Schwinn and GT is the elimination of the parts and accessories business. And
although 2002 models are pretty much as Schwinn/GT's current product managers
spec'd them, Pacific in the future hopes to focus on fewer models, mostly
retailing for less than $500. Pacific is hoping to keep many current GT and
Schwinn retailers and is planing a series of seminars for Interbike where it
will unveil its plans for the specialty channel.
September 18, 2001
Judge Extends Schwinn Financing, Keeps Retention Private
DENVER, CO. Judge Sidney Brooks approved Schwinn/GT's plan to continue using
cash flow financing for day-to-day operations of the company this week and next,
if needed. Schwinn/GT could close the sale of its cycling and fitness divisions
to Pacific Cycling and Direct Focus by the end of the week. Brooks also
postponed until next week a ruling on whether all aspects of Schwinn/GT's
retention plan should be made public. Schwinn/GT officials have argued
individual employee names and their specific remuneration should remain private.
Byron Smith, Pacific Cycle's president, is visiting GT in California and Schwinn
in Boulder this week to let employees know how many positions will be available
with the new company. According to Schwinn employees, last week they were
informed that the cycling division would be relocated to Madison, Wisconsin,
September 18, 2001
Huffy Predicts Lower Earnings For Remainder Of 2001
MIAMISBURG, OH. Huffy reduced its earnings forecast for the third quarter 2001,
and expects to report a loss of $0.26 to $0.30 a share compared to earnings of
$0.48 a share for the third quarter last year. It also expects earnings for the
year 2001 to be less than $0.12 a share, compared to its forecast of up to $0.70
a share. Back-to-school sales were disappointing, Huffy officials said. Many
retailers are predicting a weak selling season during the coming holidays and
have moderated their buying patterns to reflect lower sales expectations. "The
second half of 2000 was one of the strongest in our history. We were fortunate
to have recognized the market potential of the micro-scooter very early. We now
foresee that the challenges of the first half of 2001 will continue throughout
the year," said Don Graber, Huffy's chairman, president and chief executive
officer. "Despite repeated cuts in interest rates and the recent tax rebate, the
overall economy softness continues and the retail environment remains a
challenge. Additionally, to our great sorrow, the unprecedented terrorists
attacks on America and the uncertainty of the longer-term impact of these
unconscionable actions is concerning," he said. Huffy anticipates that the
expenses incurred since the Schwinn/GT sale process started in April 2001, for
legal fees, due diligence and financing commitments, will exceed the $1.25
million break-up fee Pacific Cycle will pay for breaking Huffy's contract to buy
Schwinn/GT. These additional costs are factored into its reduced earnings
forecast. Nevertheless, the company plans to add products and services to its
current business mix and expects to have cash and short-term investments of $25
million by year-end.
September 13, 2001
Schwinn/GT Cycling, Fitness Divisions Sold For $151 Million
DENVER, CO. Schwinn/GT's strategy to maintain control of the Schwinn Fitness
business has failed as Judge Sidney Brooks allowed the sale of both divisions in
U.S. Bankruptcy Court today. The divisions went for a combined bid of $151
million. Of the final bid, $86 million will be allocated to cycling, while $65
million will go for fitness. Though Pacific took control of the cycling division
yesterday, it also had a partnering bid with Direct Focus. The partnering bid
opened at $145 million. Only a few hours after the sale to Direct Focus and
Pacific was confirmed, it was unknown what strategy both companies will take
with the divisions. Pacific already has stated that it will take Schwinn to the
mass, but will also work with independent retailers. Interbike officials are
scrambling to find space at the upcoming trade show for Schwinn and GT. Pacific,
meanwhile, is scrambling to get samples to exhibit.
September 13, 2001
DIRECT FOCUS ANNOUNCES SUCCESSFUL BID TO ACQUIRE FITNESS DIVISION OF SCHWINN FOR
APPROXIMATELY $65 MILLION
Inc. press release
VANCOUVER,WA – September 13, 2001 – Direct Focus, Inc. (Nasdaq: DFXI), a
marketing company for fitness and healthy lifestyle products with a direct
business model, announced today that it was the successful bidder to acquire
substantially all of the assets of Schwinn/GT’s fitness equipment division (“Schwinn
Fitness”) through a bankruptcy auction, pending a final court order by the U.S.
Bankruptcy Court for the District of Colorado. The Direct Focus bid was linked
to a successful bid submitted by Pacific Cycle LLC for the purchase of
substantially all of the assets of Schwinn/GT’s bicycle division. Under the
terms of the bid, Direct Focus anticipates it will pay approximately $65 million
in cash for Schwinn Fitness, which will be accounted for under the purchase
accounting method. The Company expects the transaction to close on or before
September 21, 2001, subject to the final court order and expiration of the
Hart-Scott-Rodino waiting period. Schwinn Fitness had annual revenue in 2000 in
excess of $100 million and strong positive operating cash flows. Direct Focus
expects this acquisition to be accretive to revenue and earnings in 2002 and
beyond. “We are very pleased with the success of our bid,” said Brian Cook, CEO
of Direct Focus. “Our management team is very familiar with Schwinn Fitness.
Kevin Lamar, who joined us as our President in June, was instrumental in growing
the Schwinn Fitness business from $20 million in annual sales to over $100
million in annual sales from 1989 to 2000.” “Like our purchase of the assets of
Nautilus International, Inc. in January 1999 and the subsequent turnaround and
growth of those operations, expansion through acquisitions is an important part
of our strategy. At the end of the second quarter, we reported $94.7 million in
cash and short term investments. We believe this acquisition is an excellent use
of our financial and management resources, and offers significant growth
opportunities.” “We believe Schwinn Fitness’ strong brand and quality fitness
products will be an excellent fit with our growing portfolio of fitness and
healthy lifestyle products,” said Kevin Lamar, President of Direct Focus.
“Schwinn Fitness offers a popular line of cardio-equipment, which includes
treadmills, stationary bikes and steppers sold under the Schwinn and Trimline
brands. These products will complement our Nautilus line of strength-building
products, and we expect to gain powerful distribution synergies through the
combined product lines and sales effort.” Due to the recent national tragedy and
the timing of this transaction, Direct Focus is not scheduling an immediate
conference call. The Company expects to hold a special conference call to
discuss the acquisition in more detail on Monday, September 17, 2001 (2:00 PM
Pacific/5:00 PM Eastern). Further instructions will be announced. About Direct
Focus, Inc. Direct Focus, Inc. is a marketing company for fitness and healthy
lifestyle products with a direct business model. The Company currently markets
its Bowflex line of home fitness equipment and Nautilus Sleep Systems directly
to consumers, using an effective combination of television advertising, 800-call
centers and Web sites. The Company also sells its Nautilus commercial fitness
equipment directly to health clubs and other institutions, and its Nautilus
consumer fitness products through retail athletic stores. The Company is
headquartered in Vancouver, Washington. Direct Focus is located on the Web at
This press release contains forward-looking statements relating to anticipated
sales and the development of Direct Focus' products and services, including
statements regarding its Nautilus business. Factors that could affect Direct
Focus' actual results include its reliance on a limited product line,
fluctuations in advertising rates, market acceptance of its existing and future
products, growth management challenges, and general economic conditions. A more
detailed description of certain factors that could affect actual results
include, but are not limited to, those discussed in Direct Focus' annual report
on Form 10-K for the fiscal year ended December 31, 2000.
September 12, 2001
Schwinn News PRESS RELEASES!
Press Release &
PowerliteBikes.com Press Release
Boulder,CO. September 12, 2001 - Schwinn/GT Corp.
said today that the Court and interested parties have fully considered and
reviewed all bids made in regard to the sale of Schwinn/GT’s Cycling and Fitness
Divisions as part of the court-supervised auction held this week. The joint
presented by Direct Focus, Inc. (Nasdaq: DFXI) and Pacific Cycle LLC for $151
million was considered to be the highest and best offer for the assets of the
Company. The sale is subject to satisfaction of certain conditions, including
the expiration of waiting periods under the Hart-Scott-Rodino Act, which is
expected by Monday, September 17, 2001. The sale of both the Cycling and Fitness
Divisions is expected to close no later than Friday, September 21, 2001.
At the close of the auction, Jeff Sinclair, Schwinn/GT’s Chief Executive Officer
stated, “By stimulating the competitive bidding process, Schwinn/GT has
attempted to ensure that its creditors will receive the greatest possible
recovery. We will begin working with Direct Focus and Pacific immediately to
achieve an orderly transition of the businesses.” The proceeds from the sale
transaction will be held in escrow pending further order of the Court and will
be used to discharge liabilities and satisfy creditors= claims in accordance
with the Bankruptcy Code. Schwinn/GT filed voluntary petitions for
reorganization under Chapter 11 on July 16, 2001, in the United States
Bankruptcy Court for the District of Colorado in Denver.
September 11, 2001
Pacific's Acquisition of Schwinn/GT
Pacific Cycle LLC, Press release
MADISON, Wis--Sept. 11, 2001--Pacific Cycle LLC today announced that it has
acquired the bicycle assets of Schwinn/GT Corp. for $86 million.
The purchase was made at a U.S. District Court bankruptcy auction in Denver,
Judge Sidney Brooks ruled in favor of Pacific's bid.
"This is a landmark day for Pacific and for Schwinn/GT dealers," said Chris
Pacific Cycle's chief executive officer. "The Schwinn name is an American icon.
It is the brand that many Americans grew up with and aspired to own.
We feel that we offer the best opportunity in a generation to restore vitality
to the Schwinn brand." Hornung said the acquisition will mean an increase in
sales to Pacific of approximately 1 million bicycles annually.
Pacific plans to bring "new life" to Schwinn/GT, said Hornung.
"One of the biggest benefits of the brand is the strong dealer network.
While it's extremely unfortunate that the bankruptcy process resulted in the
dissolving of dealer agreements, it's our intention to quickly restore the
network of independent Schwinn and GT dealers.
We also plan to immediately establish clear and open communication,
and hope to begin meeting with a group of dealers this week.
" Hornung said that the company will immediately begin re-establishing the
flow of 2002 model year product of both Schwinn and GT bicycles from Asia.
Financial constraints prevented the former company from receiving shipments
since spring of this year.
Pacific will also begin working closely with existing Schwinn dealers, both
focus groups and through the establishment of a dealer advisory council to
and serve their needs. Specific programs will be unveiled later this month at
Interbike convention in Las Vegas, the largest bicycle trade show in the United
Anticipating dealer concern of possible expansion of Schwinn distribution to
merchandisers, Hornung said: "While we are considering our options, the earliest
would introduce Schwinn to mass retail would be fall 2002. We want to speak with
dealers to determine how we can best support them using our high-volume,
business model. "We are dedicated to maintaining the Schwinn dealer network,
essence and positioning, which is embodied in quality, value and family
Hornung also said the company will continue to support the GT brand while it
a long-term strategy.
The acquisition of Schwinn/GT brings to a close a decade of uncertainty in the
history. Schwinn entered Chapter 11 bankruptcy in 1992, and the Schwinn family
the company to Scott Sports Group in 1993. In 1997, Schwinn was sold to Questor
Partners. The company entered Chapter 11 again in July of this year.
According to industry sources, Americans purchase approximately 17 million
each year and spend more than $2 billion on bicycle purchases. In December 2000,
Pacific Cycle LLC successfully acquired the assets and trademark of Brunswick
About Pacific Cycle LLC
Pacific Cycle LLC, the largest importer of quality bicycles in America, designs,
markets and imports a full range of bicycles under the Pacific, Roadmaster,
Mongoose and Mongoose Pro brand names.
September 11, 2001
PACIFIC/MONGOOSE WIN SCHWINN/GT IN BIDDING WAR
News Clip Via-BMX Mania News
DENVER, CO—In the wild and crazy bidding for the now bankrupt
GT cycling empire,
Judge Sidney Brooks turned down a cash and credit offer from
Huffy this morning,
Giving the winning bid to Pacific Cycles,
the parent company of
Brooks evacuated the courtroom as a precaution in light of
this morning's terrorist attacks in New York and Washington, D.C.
September 11, 2001
Pacific Takes Schwinn As Courthouse Is Evacuated
DENVER, CO. Minutes after declaring Pacific's $86 million bid the winner in the
Schwinn/GT cycling auction, Judge Sidney Brooks evacuated the Federal Bankruptcy
Court for the District of Colorado. Federal buildings around the nation were
evacuated shortly after several terrorist attacks this morning. Today bidding
for the company opened at approximately 8:50 a.m. with a bid from Huffy for
$82.5 million in cash and another $1.25 million in credit. The credit amount was
based on the break-up fee Pacific would have to pay Huffy for breaking its
earlier deal to buy the bicycle division for approximately $63 million. Pacific
immediately countered Huffy's opening offer this morning with a bid of $85
million. Huffy then countered with $84 in cash, plus the $1.25 million break-up
fee. Pacific again wasted no time and offered $86 million. Huffy declined to bid
further and Judge Brooks declared the Pacific's winning bid. When the building
was evacuated, those attendin g the hearing adjourned to the courthouse steps to
wait for the final word on whether or not the evacuation was indeed real. Many
on the steps were on cell phones calling to check on friends, relatives and
co-workers in lower Manhattan where two airplanes crashed into the World Trade
Center buildings several hours earlier. Judge Brooks tentatively scheduled a
hearing on the sale of Schwinn's fitness division for tomorrow morning, should
federal courthouses be open for business. Direct Focus and Pacific have combined
forces to buy the entire company. Schwinn executives and the creditors
committee, however, are hoping to retain control of the company in order to
increase its value for sale at a later time. Byron Smith, president of Mongoose
Bicycles, a division of Pacific, said he was confident that today's events put
his company in a good position to also acquire the fitness business with Direct
September 11, 2001
Huffy Withdraws Bid For Schwinn/GT
MIAMISBURG, Ohio, Sep 11, 2001 /PRNewswire/ -- Huffy Corporation (NYSE: HUF)
confirmed today that it withdrew from the bidding in the auction in the United
States Bankruptcy Court for the District of Colorado. Don R. Graber, Chairman,
CEO and President of Huffy Corporation said, "While we are disappointed that we
will not be able to add the Schwinn/GT brands to our current brand portfolio, I
would like to thank all of the employees of Schwinn/GT for their dedication
during an extremely trying time and for their assistance during the sale
process. Unfortunately, the levels of bids reached a point at which Huffy
Corporation believes that the price exceeded the value of the assets and
trademarks. While we remain confident that our business model for the
integration of the Schwinn/GT would have ultimately been very successful, the
current economic environment simply will not allow for significant overpayment
in a business that has proven to be very difficult over the past three years."
Graber concluded by saying, "In our view, in the current economic environment,
we will continue to see a variety of opportunities to add to our existing
portfolio of products and services. With a debt free balance sheet and
anticipated increase in cash and investments as we move through the end of the
fiscal year, we are well positioned to pursue opportunities to add to
shareholder value." Huffy Corporation (NYSE: HUF) is a leading provider of
consumer and retail services and a leading supplier of bicycles and home
basketball equipment. The discussion in this press release contains
forward-looking statements and is qualified by the cautionary statements
contained in the Company's report on Form 8-K, dated March
6, 2001. MAKE YOUR OPINION COUNT - Click Here
SOURCE Huffy Corporation
CONTACT: Robert W. Lafferty, V.P. - Finance, CFO and Treasurer of Huffy
Huffy Corporation Reduces Earnings Forecast Sep 14, 2001
Schwinn/GT cycling assets Huffy not the successful bidder.
"we are disappointed!We will continue to work with our external
financial advisors as we evaluate additional alternatives."
September 10, 2001
Schwinn/GT Ownership Is Still Up In The Air
DENVER, CO. Judge Sidney Brooks, who is overseeing the Schwinn/GT sale in U.S.
Bankruptcy Court for the District of Colorado, ended the Sept. 10 hearing at 5
p.m. after disqualifying Huffy's last bid of the day. He scheduled the bidding
to reconvene the next day at 8:30 a.m. mountain time. At the close of court,
Pacific Cycles led the bidding process with a bid of $82.56 million in cash.
Huffy had countered that with a bid of $81.022 million in cash and another $1.25
million in credit plus 500,000 shares of Huffy stock. Judge Brooks, however,
declared the bid as non-qualifying, ruling that the use of shares was outside
the bidding rules, which stipulate that all bids must be in cash or the cash
equivalency in a registered stock. Earlier in the day Huffy placed a bid of
$76.25 million in cash plus 1 million shares of its stock. The company placed a
value of $7 on each share and said the 1 million shares represented nine to 10
percent of all outstanding shares. Judge Brooks ad journed court at 3 p.m. to
enable those involved to determine the value of the shares. When court
re-adjourned, attorneys argued over the validity of the bid for nearly two
hours. Pacific's attorneys argued that such a bid was outside the rules. Huffy
voluntarily withdrew the bid, replacing it with a cash offer. Pacific countered
that bid, and the bidding process went on until Huffy made the final bid of the
day. Judge Brooks ruled that the bid was unqualified. The creditors committee,
however, argued that Huffy's bid held greater value than the all-cash bid from
Pacific. Judge Brooks then adjourned for the day. When the auction reconvenes
(Sept. 11) he will permit the creditor's committee to present witnesses and
argue in favor of accepting the Huffy bid. Should that occur, the bidding
process will begin again and Pacific will be able to make a counter offer. If
the court rejects the Huffy bid, the company will have the opportunity to make
another cash bid, again restarting the bidding war. Brooks will hear offers for
the full companyóthe bicycle and fitness divisionsóonce bidding for the bike
division is closed. Last week, Direct Focus and Pacific offered a combined bid
of $133 million for the entire company. Direct Focus will be the only company
involved in the bidding for all of Schwinn/GT.
September 10, 2001
Huffy Leads Bidding For Schwinn/GT
DENVER, CO. As of 3 p.m. mountain time, with a bid of $76.25 million in cash
plus one million shares that would go to Schwinn/GT's secured creditors, Huffy
led the in the bidding for Schwinn/GT's bicycle division. Placing a value for
the shares at $7, Huffy said the one million shares represent nine to 10 percent
of all outstanding shares. Judge Sidney Brooks, in the U.S Bankruptcy Court for
the District of Colorado, is overseeing the final bidding for the bicycle
division. Throughout the hearing, which started at 1:30 p.m., Huffy and Pacific
Cycles traded eleven bids. Court adjourned just before 3 p.m. to enable those
involved to determine the value of the shares. Pacific officials said they want
to remain in the bidding, but are unable to place a counter bid until a value is
determined. Brooks said he will hear offers for the full company—the bicycle and
fitness divisions—once bidding for the bike division is closed, which Brooks
said he would like to complete within in a couple of hours. Last week, Direct
Focus and Pacific offered a combined bid of $130 million for the entire company.
Brooks said he also hopes to have that sale completed by the end of the day.
Earlier, at 2:20 p.m. Judge Brooks adjourned the hearing, allowing the competing
companies to meet privately to discuss their strategies. Officials representing
Pacific and Huffy are seated next to each other in the courthouse, making it
difficult to talk openly. Bidding resumed at 2:30. At that time, Huffy led the
bidding at $74 million. Pacific, in August, offered to bid as much as $73
million for the bike division, but that was adjusted down to $64.5 million
because Schwinn/GT has been using the sale of inventory and cash on hand to run
its day-to-day operations, consequently lowering its value. The auction started
with that bid this afternoon. Among the estimated 70 attorneys in the courtroom,
attorneys representing Merida, Belgium's Lotto pro race team and former GT
suspension designer James Busby were present. Prior to the bidding getting
underway, Judge Brooks awarded Busby $71,000 to cover royalties owed to him by
September 8, 2001
Schwinn/GT Spells Out Bids Prior To Monday's Sale
DENVER, CO. Schwinn/GT informed the U.S. Bankruptcy Court Friday that it
received bids from Direct Focus, Pacific Cycle and Huffy in connection with the
upcoming Court-supervised auction that is scheduled to take place on Monday,
Sept. 10. Huffy's bid is currently valued at approximately $59.4 million, based
on a valuation as of Aug. 31, 2001. The bid was adjusted down because the
company is using sales of inventory and cash on hand to run its day to day
operations, consequently lowering its value. Pacific Cycle's bid is valued at
$64.5 million. Pacific promised the court it would bid $5 million more than
Huffy in return for the later auction date. Schwinn/GT also said it received a
joint bid of approximately $133 million from Direct Focus and Pacific Cycle,
which encompasses both the cycling and fitness divisions . In Friday's hearing
the Court set forth the procedures for the auction, which will take place on
Monday, Sept. 10. The Court indicated that it would initially consider bids for
the cycling division. Once the cycling division auction has been completed it
will then consider bids for fitness. The court also overruled Merida's motion
claiming title to some disputed inventory. And a decision in Mad Dogg Fitness'
attempt to terminate its Spinning licensing agreement with Schwinn/GT is yet to
be made by the American Arbitration Association.
September 8, 2001
I-Drive Inventor Sues Schwinn/GT
SANTA ANA, CA. I-Drive designer Jim Busby is suing Schwinn/GT over the rights to
his suspension designs used on GT's popular full-suspension bikes. "When the
list of assets and contracts came out I noticed that my contract concerning
royalty payments for I-Drive was not included. I didn't feel GT should be sold
without establishing who owns the I-Drive technology and who would be paying
royalties. "I'm not a big attorney fan but I have produced many good designs for
GT during the past 10 years and it just seemed wrong that they could be selling
GT and its I-Drive bikes without resolving these royalty issues," Busby said.
Busby is hopeful for a quick resolution to the problem and trusts he will be
able to work out a new royalty agreement with Schwinn/GT's new owner.
September 7, 2001
Direct Focus, Pacific Tender Joint Bid For Schwinn/GT
BOULDER, CO. Schwinn/GT's plan to sell only its cycling division at auction
Monday could be foiled with a combined bid from Direct Focus and Pacific Cycles.
The two companies teamed up yesterday and will make a bid for the entire
company. Direct Focus is bidding for the company's fitness division and Pacific
is biddding for the cycling division. By linking the bids together, the two
companies have provided the opportunity for the court, banks and creditor
committee to sell off the company at once. Pacific also submitted an independent
bid for the cycling division that is $5 million more than Huffy's. This increase
was promised when Pacific requested pushing the auction date back a few weeks.
"We have a strong interest in Schwinn's fitness division assets and we have
linked our bid to that of Pacific Cycle, which is interested in acquiring the
bicycle division assets. Acceptance of our joint bid will provide Direct Focus
and Pacific the best opportunity to protect the integrity of the Schwinn brand,
and will provide Schwinn with the option of selling substantially all of its
assets in one transaction," said Brian Cook, Direct Focus' chief executive
officer. Schwinn/GT officials have been quite vocal about their intention to
separate fitness from the cycling division and reestablish fitness for growth
and sale sometime next year. However, many industry analysts point out that the
management team's track record with cycling, its inability to offer retailers
Airdynes and its licensing problems with Spinning compromise its ability to grow
fitness in the short term. Though the U.S. Bankruptcy Court for the District of
Colorado approved a bid and auction procedure for all the assets of Schwinn/GT,
it noted in court transcripts that it would be difficult to evaluate bids for
the cycling division compared with bids for the entire company. One of the
court's mandates is to return as much money through the auction process as it
can to Schwinn/GT's creditors.
September 6, 2001
DIRECT FOCUS SUBMITS BID TO ACQUIRE FITNESS DIVISION OF SCHWINN
DIRECT FOCUS SUBMITS BID TO ACQUIRE FITNESS DIVISION OF SCHWINN
VANCOUVER, WA – September 6, 2001 – Direct Focus, Inc. (Nasdaq: DFXI), a
marketing company for fitness and healthy lifestyle products with a direct
business model, announced today that it has submitted a bid for an upcoming
bankruptcy auction to acquire substantially all of the assets of Schwinn/GT’s
fitness equipment division. The Direct Focus bid is linked to a bid submitted by
Pacific Cycle LLC for the purchase of substantially all of the assets of Schwinn/GT’s
bicycle division. In August of 2001, the U.S. Bankruptcy Court for the District
of Colorado approved a bid and auction procedure for all of the assets of
Schwinn/GT’s bicycle division. Although the bankruptcy court’s bid and auction
procedure directly addresses sale of the bicycle division, it also allows bids
for the entire Schwinn/GT business, including both the bicycle and fitness
assets. Therefore, Direct Focus has submitted this joint bid with Pacific Cycle
for consideration by Schwinn/GT at the upcoming auction to be held on September
10, 2001, in Denver, Colorado, under the supervision of Bankruptcy Judge Sidney
B. Brooks. The purchase price for such an acquisition has not yet been
determined and will be subject to court approval. “We have a strong interest in
Schwinn’s fitness division assets,” said Brian Cook, CEO of Direct Focus. “We
have linked our bid to that of Pacific Cycle, which is interested in acquiring
the bicycle division assets. Acceptance of our joint bid will provide Direct
Focus and Pacific the best opportunity to protect the integrity of the Schwinn
brand, and will provide Schwinn with the option of selling substantially all of
its assets in one transaction.” “Like our purchase of the assets of Nautilus
International, Inc. in January 1999 and the subsequent turnaround and growth of
those operations, expansion through acquisitions is an important part of our
strategy. We feel that the bankruptcy auction provides us with a unique
opportunity to expand our business. Our management team is very familiar with
Schwinn, and we believe its strong brand name and quality fitness products can
be an excellent fit with our growing portfolio of fitness and healthy lifestyle
products.” About Direct Focus, Inc. Direct Focus, Inc. is a marketing company
for fitness and healthy lifestyle products with a direct business model. The
Company currently markets its Bowflex line of home fitness equipment and
Nautilus Sleep Systems directly to consumers, using an effective combination of
television advertising, 800-call centers and Web sites. The Company also sells
its Nautilus commercial fitness equipment directly to health clubs and other
institutions, and its Nautilus consumer fitness products through retail athletic
stores. The Company is headquartered in Vancouver, Washington. Direct Focus is
located on the Web at www.directfocusinc.com. This press release contains
forward-looking statements relating to anticipated sales and the development of
Direct Focus' products and services, including statements regarding its Nautilus
business. Factors that could affect Direct Focus' actual results include its
reliance on a limited product line, fluctuations in advertising rates, market
acceptance of its existing and future products, growth management challenges,
and general economic conditions. A more detailed description of certain factors
that could affect actual results include, but are not limited to, those
discussed in Direct Focus' annual report on Form 10-K for the fiscal year ended
December 31, 2000
September 3, 2001
Court Issues Temporary Stay Of Disclosure Of Retention Plan
DENVER, CO. On Friday, Judge Sidney Brooks issued a temporary stay of his
previous order, which would have released the individual details of Schwinn/GT's
employee retention program. Brooks had planed to make those details public at
noon Friday, Aug. 31. A hearing is set for Sept. 17, 2001, at which time the
Court will consider additional testimony and evidence on the matter. The sale
date for Schwinn/GT's cycling division is set for September 10, so even if the
details of the plan are posted it will have a minimal effect on cycling
employees. There are Schwinn/GT fitness employees involved in the plan who could
still be impacted. "We greatly appreciate the Court's decision to grant us an
opportunity to further demonstrate the need for confidentiality," said Jeff
Sinclair, Schwinn/GT's chief executive officer.
September 3, 2001
Yeti Unaffected By Volant Factory Closure
WHEATRIDGE, CO. Yeti Cycles is unaffected by the closure of ski maker Volant
Sports, which continues to look for a buyer. The two companies share a principle
investor in Mike Markkula, a co-founder of Apple Computers. "Though we are owned
by the same investor we are two separate companies. We did share some human
resources and accounting people, but we will be pulling those responsibilities
in house," said Chris Conroy, Yeti's general manager. Markkula purchased Yeti
from Schwinn in August 1999 partly because it complimented Volants' ski
business. However the skiing business, like the bicycle business, has moved
offshore during the past five years and Volant was one of the last remaining
manufacturers to make substantial numbers of skis here. "Yeti in comparison has
done very well since the purchase. The company's dealer base declined to 15 or
so under Schwinn, now we have well over 100 dealers. And sales this year look to
be up 80 percent," Conroy said. The company has also been building it sales in
Europe and Japan, two strong markets for the brand. Yeti will be showing
retailers a new component line, as well as new downhill bikes, at the upcoming
Interbike trade show.
August 31, 2001
Judge Approves Schwinn/GT's Retention Plan
DENVER, CO. Judge Sidney Brooks approved Schwinn/GT's $1.9 million retention
plan for 61 employees, set September 17, for the final debtor-in-possession
(DIP) hearing and ruled that the list of retention plan participants be made
public on Friday. "While today's action by the Court will provide a great sense
of relief to the program's participants, we are somewhat disappointed by the
decision to make the names of the individual participants public. The retention
program has been a matter of public record since the Company filed to reorganize
under Chapter 11, and we are not trying to hide its contents. Our concern is
that the disclosure of the names of individual participants is an unnecessary
invasion of their personal privacy. For that reason we hope to be able to
demonstrate compelling reasons to the judge to re-address this issue and to stay
his order," said Jeff Sinclair, Schwinn/GT's chief executive officer. Schwinn/GT's
attorneys have until Friday at noon to convince the judge Brooks that Schwinn/GT
employees participating in the program should remain private. Brooks approved
Schwinn/GT's retention plan, calling it fair and appropriate. He noted that
because the sale of the Cycling division appears imminent, he authorized $1.1
million of the proceeds from the sale of the division to be used to fund
incentive bonuses to Cycling employees and certain corporate employees. The
Court deferred a decision on the funding of the remaining $800,000 of the
retention program concerning fitness employees, pending finalization of the DIP
post-petition financing arrangement. Representatives from Schwinn/GT's secured
lenders and its creditors committee said in court that they have made
significant progress resolving their one remaining DIP funding issue.
August 28, 2001
Schwinn/GT's DIP Financing, Retention Plan Ruling Postponed
DENVER, CO. Final rulings on Schwinn/GT's request for debtor-in-possession (DIP)
financing and its $2 million employee retention plan were postponed in
Bankruptcy Court on Monday. Instead, the court scheduled a final hearing for
Aug. 30 to rule on the employee retention program. The Court did grant Schwinn/GT
an extension to use cash collateral on an interim basis until September 14, in
order to allow the secured lenders and creditors' committee additional time to
resolve remaining issue relating to the proposed debtor-in possession (DIP)
financing. "While we would have preferred to have our post-petition financing
arrangement finalized at today's hearing, it is important to note that as of
today we have approximately $15.8 million in cash. This is more than sufficient
to enable us to meet our financing needs for the immediate future, including the
ramping-up process that was begun at our Fitness Division to meet seasonal
demand, " said Jeff Sinclair, Schwinn/GT's chief executive officer. Much of
Monday's court session revolved around the future of $2.5 million coming to
Schwinn/GT from asset sales in Europe and an escrow account for its recently
vacated Santa Ana facility. The creditor's committee, composed of Schwinn/GT's
many unsecured creditors, was at odds with Schwinn/GT's banks over the future of
August 27, 2001
Corrected: Schwinn/GT Readies To End Dealer Agreements
BOULDER, CO. In preparation for the pending sale of its businesses, Schwinn/GT
company officials last week notified its cycling retailers that their Authorized
Dealer Agreements with the company would be rejected upon completion of the
sale. Until the sale is completed, however, the terms and conditions of existing
contracts remain in effect and retailers may continue to sell and represent the
Schwinn/GT brands in accordance with the original agreements. After the sale is
finalized, retailers may continue selling Schwinn/GT product they purchased
prior to the sale. If a sale is not completed for either the cycling or fitness
divisions, the agreements with retailers for either respective division would
not be terminated. The move stems from the purchase agreement Schwinn/GT signed
with Huffy in July. Part of that agreement requires Schwinn/GT to reject its
dealer agreements and opens the door for Huffy, or another buyer, to implement
their own agreements with Schwinn/GT retailers if they wish to do so upon
completion of the sale. The move was also required by the U.S. Bankruptcy Code.
August 23, 2001
Judge Questions Schwinn/GT's Employee Retention Plan
DENVER, CO. Bankruptcy Judge Sidney Brooks on Aug. 21 postponed final rulings on
Schwinn/GT's request on debtor-in-possession (DIP) financing and its employee
retention plan until Monday, Aug. 27. The company requested more time to finish
its DIP procedural paper work and Judge Brooks wanted more time to study the
company's retention plan. Judge Brooks questioned the company's $2 million
retention plan, which was developed to encourage 63 critical employees to remain
with Schwinn/GT during its restructuring. According to reports in several Denver
area newspapers, Brooks questioned the high bonuses for certain individuals and
the plan's overall fairness to other Schwinn/GT employees. Schwinn/GT requested
that individual employee benefits provided by the plan be kept confidential so
as not to adversely effect employee moral, a motion Brooks also questioned. The
company's request of $30 million in DIP financing has the support of its banks
and creditors. Schwinn/GT will use this money to reorganize its fitness division
after the cycling division is sold. The company could keep the fitness division,
but may also sell it at a later date. Since its DIP financing and employee
retention plans have the support of Schwinn/GT's banks and creditors, the
company expects that both will be approved on Aug. 27. "We are extremely pleased
that we are nearing completion of a financing arrangement. Schwinn/GT has
performed ahead of financial projections during the first month of its
restructuring, which has allowed the company to negotiate a more favorable
long-term financing arrangement. This allows us to normalize our business with a
long-term view which will allow the company to recognize the substantial value
we believe exists in the fitness division," said Jeff Sinclair, Schwinn/GT's
chief executive officer. Schwinn/GT has more than $15 million to fund and
stabilize its cycling and fitness businesses pending the final approval of its
financing arrangement. The sale of Schwinn/GT's cycling division will proceed,
as previously announced, on Sept.10.
August 6, 2001
Schwinn/GT Employees, Fitness, Big Winners In Court
DENVER, CO. Judge Sidney Brooks granted Schwinn/GT's requests to settle certain
pre-bankruptcy debt and use cash collateral to continue operating the company.
"It was a very good day for Schwinn/GT. All our pre-petition payments and all
the issues with our riders can be taken care of and we can put that behind us.
It was all good news today," said Jeff Sinclair, Schwinn/GT's chief executive
officer. After its bankruptcy filing, Schwinn/GT still had to pay some bills
including taxes and tariffs, wages, salaries and medical expenses. Under the
terms of the bankruptcy, the court and Schwinn/GT's creditors were responsible
for releasing money to enable the company to pay its bills. None at the hearing
objected to Schwinn/GT paying these bills. The ruling holds until an Aug. 21
debtor-in-possession (DIP) financing hearing. Schwinn/GT, its banks and
unsecured creditors committee are still working out the terms of Schwinn/GT's
DIP financing and were not ready to finalize anything as of the Aug. 3 hearing.
Schwinn/GT's attorney said a payment of $280,000 to finish the relocation of its
Santa Ana office would free up $2.5 million it has in escrow. And being able to
pay U.S. Custom s $150,000 would free up millions of dollars of inventory. This
was sufficient cash to pay its next payroll, keep the lights on in its buildings
as well as pay its pre-petition obligations. The company also has cash to
restart servicing warrantee claims on fitness equipment. The company noted that
its inability to service warrantee claims from fitness dealers was cutting
income from that division. Schwinn officials said they intend to seek court
approval to honor cycling warrantees, but are unable to do so currently. Schwinn/GT
also accepted the terms of Pacific Cycle's proposed $73.5 million offer and its
desire to move the auction date back to Sept. 10. Pacific is putting $1.5
million in escrow that will be forfeited to Schwinn/GT if the bid, which it will
offer during the auction, does not equal or exceed $73.5 million. Pacific's
previous bid for Schwinn/GT's cycling division in May was a joint bid with Trek,
however, this latest offer is its own. Pacific officials stressed that the
company is still committed to the specialty retail channel. "Schwinn/GT are
concerned about building the value of the fitness division after the cycling
division is sold. I think even if Pacific Cycle bids the same amount as Huffy,
our commitment to support the IBD for a period of time is an additional value.
We already do a substantial amount of IBD business. If we win the bid it will be
less disruptive to their current fitness and cycling retailers," said Risa
Wolf-Smith, an attorney with Holland and Hart, which represents Pacific. Bids
for Schwinn/GT's assets will be accepted until Sept. 6. Potential buyers may bid
on cycling or both the cycling and fitness divisions as Direct Focus requested.
Schwinn/GT and its creditors will discuss the bids and present its decision for
court approval on Sept. 10. Next week Schwinn/GT will make a motion requesting
funding for a retention plan to be able to pay key cycling and fitness employees
to help with splitting the cycling and fitness divisions and to help the cycling
division transition to a new owner. Sinclair said this would involve about 63
August 03, 2001
Contact:Huffy Bid and Bidding Projections Request Accepted
Contact: Huffy Bid and Bidding Projections Request Accepted
Contact:Robert W. Lafferty
V.P. – Finance, CFO and Treasurer
HUFFY BID AND BIDDING PROTECTIONS REQUEST ACCEPTED
HART- SCOTT- RODINO WAITING PERIOD EXPIRES WITHOUT COMMENT
DAYTON, OHIO, AUG 03, 2001 – HUFFY CORPORATION
(NYSE-HUF) confirmed today that the United States Bankruptcy Court for the
District of Colorado has issued an order accepting Huffy Corporation’s contract
with Schwinn/GT Corp. as the baseline bid for certain cycling assets of Schwinn/GT
Corp. and approving the bidding protections and breakup fee requested by Huffy
Corporation. The order authorizes an auction for the sale of the cycling assets
and establishes the timetable and guidelines for the submission of additional
bids. Concurrently, the accelerated waiting period required under the
Hart-Scott-Rodino Act expired at 11:59 PM Thursday, August 2, 2001 without
comment, allowing a sale to Huffy Corporation to proceed without further Federal
Trade Commission or Department of Justice action or approval.
Commenting on the decision by the Bankruptcy Court, Don Graber, Chairman,
President and CEO said, “We are pleased by the Court’s decision. We are
particularly sensitive to Schwinn and GT employees, customers and suppliers in
this time of uncertainty. The apparent rapid deterioration of business
fundamentals is concerning to all involved. Huffy Corporation is dedicated to
continuing to work closely with the Court and creditors to bring this process to
a speedy conclusion.” Chris Snyder, President of Huffy Bicycle Company added,
“We are excited about our multi-channel distribution strategy for Schwinn® and
GT® products and are confident that both customers and consumers will benefit
from enhanced distribution.” Huffy Corporation (NYSE-HUF) is a leading provider
of consumer and retail services and a leading supplier of bicycles and home
August 3, 2001
Court Delays Schwinn/GT Auction
DENVER, CO. Judge Sidney Brooks yesterday delayed the auction of Schwinn/GT
until Sept. 10 to allow Pacific Cycle time to secure financing and bid on the
company. The judge delayed a ruling on Direct Focus' request to make a combined
bid on the Schwinn/GT cycling and fitness division, however. He is expected to
rule on Direct Focus' request today. Judge Brooks indicated he was willing to
consider Direct Focus's request, but the company had an obligation to
demonstrate its bid would be in the best interest of Schwinn/GT's creditors,
which he said it was not able to do on Thursday. Pacific's counsel said it would
bid approximately $73 million for the cycling division—about $5 million more
than Huffy's current offer. Judge Brooks required Pacific to make a $1 million
deposit on the bid. Jeff Sinclair, Schwinn/GT's chief executive officer said
Schwinn/GT had enough money to carry on until the new auction date, noting that
the company has access to all accounts receivable. "Our cash position is really
positive right now," Sinclair said. He added, however, that the decision to
delay the auction was detrimental to the estate and its creditors as it would
require Schwinn/GT to pay day-to-day expenses for a longer period of time. Chris
Hornung, however, said the ruling would benefit the creditors, as Pacific's bid
may yield them an additional $5 million.
August 1, 2001
Court Filing Shows Breakdown Of Huffy Bid
DENVER, CO. While Huffy's bid in excess $60 million for Schwinn/GT does little
to clear up the issue of who will own Schwinn/GT, it does shed some light on the
value of the bankrupt company. In Schwinn/GT's bankruptcy filings, the company
offers a detailed account of Huffy's bid, which places a monetary value on
Schwinn and GT's brand names, among other things. Here is how Huffy broke down
its bid: o $41 million for the Schwinn intellectual property including its brand
name o $4 million for GT intellectual property including its brand name o 63
percent of the value of Schwinn/GT's cycling division's inventory o 52 percent
of the value of inventory in transit o 45 percent of the value of certain
warranty parts o 45 percent of the value of parts and accessories inventory o 40
percent of the value of accounts receivable by domestic debtors o 20 percent of
the value of receivables by domestic accounts that are from one to 60 days past
due o 20 percent of the value of some Schwinn/GT equipment The values of Schwinn
and GT have decreased dramatically in the three years Questor Partners Fund
owned the brands. Questor Partners Fund paid more than $50 million f or Schwinn
in August 1997 and $183 million for GT in September 1998. Still, many in the
industry feel Huffy officials overbid for Schwinn/GT and would have trouble
earning a profit on the investment if they were to own the company. Chris
Snyder, president of Huffy's bicycle division said he thought his company's bid
was justified. "Our bid was calculated and based on the value of assets,
inventory and a set amount for the brand names. We wouldn't have bid what we did
if we didn't think it was worth it," he said. Noting the discrepancy between
Huffy's valuation of Schwinn and GT, Snyder would only say, "We have a reason
for bidding exactly what we did." Huffy's bid totaled $68.3 million, based on
the value of Schwinn/GT's assets and inventory on July 16, less professional
fees, escrow contribution and retention bonuses. Schwinn/GT anticipated that the
final purchase price, minus those charges, would yield $61.8 million.
August 1, 2001
Breaking News: Pacific And Direct Focus Show Their Hands
DENVER, CO. Pacific offered to bid more than $70 million for Schwinn/GT during
bankruptcy proceedings in the U.S. District Court in Denver yesterday. Direct
Focus officials also chimed in and said the company is interested in buying the
cycling and fitness divisions, if the court would allow them to do so. Sidney
Brooks, the bankruptcy judge presiding over the case, is expected to rule on
motions Thursday afternoon. Pacific officials asked the court to delay the
auction of Schwinn/GT until the middle of September while the company gets its
financing in place. Pacific officials said if their motion is granted the
company is willing to pay in excess of $73 million for Schwinn/GT. The
court-supervised auction for Schwinn/GT is currently slated for late August.
Direct Focus's bid for the entire Schwinn/GT group could eliminate Huffy,
Pacific and any other buyer interested solely in the cycling division from the
bidding process. "Frankly, that would be the smartest thing for the judge to do,
because that would bring the most for the divisions," said Chris Hornung,
Pacific's chief executive officer. "For Schwinn/GT to think they can get more
money for the fitness division next year is lunacy," Hornung said. "Right now
that division is in a free-for-all," he added. Huffy's bid in excess of $60
million, as it is written in the company's purchase agreement with Schwinn/GT,
is good until September 16. After that date, Huffy may walk away from the bid.
In a recent interview with Bicycle Retailer & Industry News, Chris Snyder,
president of Huffy's division, said Huffy would likely increase its bid for
Schwinn/GT if they were outbid.
AUGUST 01, 2001
Cannondales, Schwinns Land In Cali Costcos
IRVINE, CA.An irate customer stormed into Cycle Werks in Laguna Beach demanding
to return the Schwinn bike he bought there after finding the same bike at Costco
for hundreds of dollars less. Cycle Werks reluctantly took the bike back, but
that led them and others to look into the matter further. What they found were a
handful of Schwinns and Cannondales at multiple Costco locations in California.
Bikes ranged in price from $799 for a Schwinn Rocket 3 to $2,999 for a
Cannondale 4000. Costco managers declined to comment on the identity of their
suppliers. While the Santa Barbara, California, assembler Omnium admitted to
selling several hundred Schwinns to Costco after Schwinn/GT declined to pay for
them, Cannondale executives are unsure how their bikes landed in the stores. "We
haven't figure out if it's a dealer or a redirected shipment. We heard there are
about six locations with bikes, mostly on the West Coast," said Scott
Montgomery, a Cannondale vice president. "The small numbers makes me think it
might be a dealer because in the past redirects usually involved bigger
shipments, like a container," he said. While most mass merchants sell bikes at
reduced prices, Cannondale is exceriencing something new. "One place had them
priced higher than suggested retail. They don't understand what they have, or
how to deal with them," Montgomery said. Specialty bikes occasionally show up in
such stores, said Tom Armstrong, Cannondale's marketing manager. "Once Costco
got their hands on bikes from an Israeli distributor, then brought them back to
the United States. When they show that kind of determination it's difficult to
prevent them from getting bikes," Armstrong said. In mid-July, an Irvine,
California, Costco had five Cannondale Jekyls and six Cannondale 4000s. A Long
Beach location had five Schwinn Rocket 3s, five Cannondale Multisport 600s and
five Silk Road bikes. Managers at the Costco stores cursed in suprise at how
high the retail prices on the bikes were.Ben Delaney
July 26, 2001
Schwinn Debt Hurts Merida's Earnings Forecast
TAIPEI, Taiwan Merida officials last week said they slashed the company's 2001
pretax profit forecasts by 43 percent due to bankruptcy filings by Schwinn/GT.
Merida officials said they estimated the company would lose $4.02 million in
money owed to it and its Hong Kong subsidiary. That money is presumably owed by
Schwinn/GT. Schwinn/GT, however, stated in several of its bankruptcy filings
that it owes Merida more than twice that amountó$10,845,472.33. Merida's legal
councel in a recent Schwinn/GT bankruptcy hearing also calculated Merida is owed
more than $10 million. Merida officials said Schwinn/GT's chapter 11 filing will
affect Merida's accounts receivable, increased losses from bad debt and reduced
July 26, 2001
Schwinn/GT Can Handle Day-To-Day Operations
BOULDER, CO. When Schwinn/GT filed for Chapter 11 bankruptcy July 16 its cash
and bank accounts were frozen by its lenders. BRAIN inaccurately reported
yesterday, however, that the banks still controlled Schwinn/GT's day-to-day
spending and that all incoming monies would be used to pay secured creditors.
More accurately, it was revealed during an emergency hearing on July 18 with
interim judge Marcia S. Krieger, that Schwinn/GT has net receivables of $5.715
million and net expenses of $5.678 million over the next several weeks. This
includes $1.171 million in payroll expenses to be paid at the end of July. The
court also said the company could not pay a variety of anticipated
"pre-petition" expenses, including due tariffs and taxes, lawyer fees, freight
fees, outstanding employee travel expenses, certain warranty claims and other
bills. This will free up an additional $1.2 million for day-to-day expenses.
Consequently no emergency borrowing is required as the company has adequate f
unding for day-to-day operations. What the court did deny was Schwinn/GT's
request for immediate additional loans, or debtor-in-possession (DIP) financing.
The court said the company was receiving sufficient cash to run its business and
avoid imminent and irreparable harm pending a final hearing on the company's
motion for DIP funding, scheduled for Aug. 3. Schwinn/GT also is spinning off
fitness as a separate business division. As a result, it informed retailers that
they should send checks to a different account with its bank. In the past
Schwinn retailers could use a single check to pay for fitness and cycling
purchases. "Funds from dealer payments have always gone directly to Comerica
Bank. These lock-box addresses insure the most timely deposit of funds into our
accounts. The only change is that separate Fitness Accounts have been
established for our accounts that sell both bike and fitness. This was necessary
to carve out the Fitness business as a stand-alone business," said Larry Pizzi,
Schwinn/GT's vice president and general manager of sales. Although Huffy already
has a $60 million bid in for Schwinn/GT Cycling, because of its bankruptcy
filing, the courts require that the company and its assets go up for public
auction. A hearing will be held concerning the auction and bidding procedures on
Monday, July 30. The date for the auction will be set at the Aug. 3, hearing.
July 25, 2001
Schwinn/GT Debt Could Cripple Industry
DENVER, CO. Schwinn/GT's $30 million in industry debt could pose serious
headaches for the bike industry, and everyone from Taiwanese suppliers to U.S.
retailers may feel the pain. Schwinn/GT recently filed a list of its 37 largest
unsecured creditors in the U.S. Bankruptcy Court in Denver. That list reveals
the company owes nearly $30 million to Taiwanese bike manufacturers. Leading the
list is Merida, which is owed $10,845,472. Schwinn/GT owes Ideal $3,597,626 and
it is in debt to Acetrikes to the tune of $1,935,361. Schwinn/GT also revealed
that it owes its secu red creditors more than $135 million — twice the company's
current selling price. It will be all but impossible for industry creditors,
which are all unsecured, to recoup their losses. The company owes money to more
than 1,500 companies Pulling that much money out of the already struggling
Taiwanese bike industry could severely weaken many companies. While Merida and
Acetrikes may have the capital to cover their losses, many parts suppliers may
not. Many of these suppliers like Merida aren't personally accountable for that
money. It just goes down the chain to the tire guys, saddle guys and all the
small component makers. Those are the ones that will feel the brunt of this,
said Brad Hughes, president of Brad Hughes marketing. Taiwan's bike industry is
already in bad shape, Hughes said. He expects bike shipments from the island to
drop from 6 million to 4 million units this year. The entire country, not just
the bike industry, is doing poorly. The stock market there is slipping and banks
aren't going to extend more credit to anyone, Hughes said. While Taiwanese
companies may suffer, U.S. retailers may feel the hurt as well. Schwinn/GT's
massive debt will surely force Taiwanese suppliers to tighten credit extended to
U.S. suppliers, which will likely create tighter credit for retailers. These
events will tighten the credit level overall and will extend to retail level,
but to what extent I don't know, said Mike Sinyard, Specialized's chief
executive officer. Schwinn/GT's debt will put some good companies in serious
risk of survival, he added.
July 25, 2001
Court Denies Schwinn/GT Request For Additional Funds
DENVER, CO. Schwinn/GT requested an emergency hearing with the United States
Bankruptcy Court District of Colorado. During the July 18 hearing attorneys for
Schwinn/GT requested interim relief from making payments to the banks so that it
could continue operating until the court makes a final ruling on the company's
future on Aug. 3. The hearing was held before interim Judge Marcia S. Krieger.
"Funding is absolutely necessary, Your Honor, in order to preserve the going
concern of business that's here, as well as preserve the ability of the debtors
to consummate the sale of the cycling business," said Tonny Ho, one of four
Schwinn/GT attorneys attending the hearing. "If there is no financing, the
debtors will have absolutely no access to any cash, in which event the debtors
will essentially have to shut down and terminate its employees. The prospects of
being able to proceed with the cycling sale diminishes dramatically. It, in
fact, will enable the purchas er, Huffy Corporation, to have potential rights to
walk away from the transaction," Ho argued. included in Schwinn/GT's request for
relief, or debtor-in-possession (DIP) funding, was a motion that money be made
available to pay outstanding employee payroll and expense checks and service
warrantee claims. Judge Krieger denied this request. "The Court recognizes that
this means that there may be some employees who have not cashed their checks
that will not be able to do so, and there may be some employees that have
incurred debt on credit cards that are not going to get paid immediately, and
some employees that are expecting reimbursement of medical expenses," Krieger
said. "Were it up to the Court to fashion an equitable remedy that suits my
sense of fairness, I would choose to have those people paid. But the fairness
that has to be imposed in the bankruptcy process is in accordance with the
statute and the rules," Krieger added. In the end, the court granted Schwinn/GT
just enough money to allow it to operate until the final hearing Aug. 3. With
these additional funds, the Judge said the company could make its July 27,
payroll and fund the ramp-up costs for its fitness division. The judge accepted
a low estimation of Schwinn/GT's assets from attorney Christopher Kurins, of $80
million for the entire company—this includes Huffy's $60 million bid for the
cycling business—meaning that the chances that the company's more than 1,500
unsecured creditors will see any money are slim. Before any unsecured creditors
see a dime of Schwinn/GT money, the company will first have to pay off the $135
million it owes its secured creditors. Schwinn/GT could go on the auction block
the week of Aug. 20. The courts will likely set the sale date Aug. 3, when it
makes its final ruling. Schwinn/GT is still hopeful that the final auction price
for the cycling division will exceed Huffy's offer, allowing it to continue
running the fitness division profitably.
July 23, 2001
GT Continues With Product Development
SANTA ANA, CA. While the fate of Schwinn/GT is still unclear, it's employees are
preparing for the best, hoping that the company will continue supplying bikes to
independent retailers. GT's product designers unveiled its 2002 line in Japan
and Europe last week and showed pre-production samples to Bicycle Retailer &
Industry News. "We have never stopped, in spite of what is going on," said Mark
Peterman, Schwinn/GT's director of product development. "The people here really
want GT to go forward and we are making sure it can happen." The company already
is selling 2002 models in Japan and Europe, where Schwinn/GT's affiliates are
separate companies and are buying bikes on their own. With the bikes already
designed, GT's product team is waiting for the new owner to give them the
go-ahead on the 2002 line. They also said they could have bikes to retailers by
the holidaysówith a lead-time of some 60 days, juvenile and BMX bikes could be
available by November. Lead times on adult bikes are longer. The company has
significantly reduced the number of SKU's for the 2002 GT line. The adult line
will have four categoriesóadventure, comfort, trails and race. The trails line
includes a new 6-inch travel I-Drive with a downhill-inspired 150-millimeter
spacing rear hub. Schwinn/GT likely will be sold at the end of August or
beginning of September. While Huffy put in a $60 million bid, another buyer
could make a higher offer.
July 19, 2001
Schwinn/GT's $260 Million Debt Revealed
BOULDER, CO. Schwinn/GT officials, in the company's bankruptcy filings, revealed
the company's debt to be more than $260 million as of May 31. The company's
assets total $200 million and include accounts receivables, brand names and
inventory. Schwinn also gave termination notices to its more than 300 employees.
Employees will continue on the payroll until Sept. 15, when the sale of the
company should be completed. "Everyone here is reacting incredibly well," said
Larry Pizzi, Schwinn's general manager and vice president of sales and
marketing. "They are disappointed of course—these are somber times—but they have
a great attitude," Pizzi said. In the interim, Schwinn/GT received $30 million
of high-interest financing to cover its overhead costs through the sale. Some of
that money will be used to buy products for Schwinn's fitness division. Sinclair
also said that as many as 20 employees in the cycling division may be offered
jobs within the fitness division. Schwinn/GT separated the operations of the
fitness and cycling divisions. It also put the sale of the fitness division on
hold until sale of the cycling division was complete. Bike retailers who also
purchase fitness equipment from Schwinn/GT will be given separate accounts for
July 18, 2001
Huffy's Second Quarter Earnings Suffer
MIAMISBURG, OH. With Huffy's $60 million bid for Schwinn/GT, its dismal second
quarter report went unnoticed yesterday. Its second-quarter earnings plunged
about 82 percent from the previous year's same period. The loss comes in part
because of restructuring costs, the sale of some divisions and a soft retail
environment. Huffy's net income dropped to about $800,000, or 7 cents per
diluted share, from $4.5 million, or 44 cents per diluted share, in the second
quarter 2000. But exclude results from the garden tools and inventory divisions,
which are no longer part of the company, and earnings rose 33 percent. Net sales
fell 29 percent to $86.9 million from $122 million a year earlier.
July 17, 2001
Huffy Poised To Snap Up Schwinn/GT
BOULDER, CO. Schwinn/GT voluntarily filed for Chapter 11 bankruptcy July 16 in a
deal that could leave Huffy owner of Schwinn/GTís cycling divisions. Huffy is
bidding $60 million for the division, which will be auctioned in late August or
early September. "As part of the selling process we had to seek the protection
of the courts to lessen our debt load because Schwinn/GTís debt is greater than
the market value of its assets," said Jeff Sinclair, Schwinn/GTís chief
executive officer. While Huffyís early bid gives the company an advantage, other
companies could outbid Huffy and wind up owning one or more of the brands.
Sinclair called Huffyís early bid a "stalking horse." In other words, if no one
bids higher, Huffy gets the company. "There could be some interesting
maneuvering in the final six weeks of this sale," Sinclair said. If Huffy gets
Schwinn, it could spark cutthroat competition between mass merchant suppliers
Huffy, Pacific and Dynacraft. Any money from the sale of Schwinn/GTís asse ts
goes to pay off creditors. The companyís only secured creditors are the banks.
It is unlikely anyone in the industry will get much, if any money. Schwinn/GT
will not purchase any more products until the sale is final. Schwinn/GT has no
space booked at Interbike. Pending court approval, which Sinclair expected to
get Tuesday morning, Schwinn/GT will have $30 million in financing to cover
operating costs through the sale. Schwinnís 300 employees will stay on the
payroll through Sept. 15. Huffyís bid would cover the remaining assetsóincluding
accounts receivable, inventory and intellectual property rightsóof the Schwinn
Cycling, GT, Riteway, Dyno and Powerlite brands in the United States. It also
would have rights to the Schwinn brand name. The Schwinn fitness division will
be sold separately. The cycling division buyer will license the name to the
fitness buyer in perpetuity.
Monday July 16,2001 6:44 pm Eastern Time
Huffy Corporation Confirms Offer for Cycling Assets of Schwinn/GT
Huffy Corporation Confirms Offer for Cycling
Assets of Schwinn/GT
MIAMISBURG, Ohio, July 16 /PRNewswire/-- HUFFY CORPORATION (NYSE: HUF - news)
confirmed today that the Company has executed a definitive agreement to purchase
the trademarks and selected cycling assets of Schwinn/GT Corp. Under the terms
of the agreement, Huffy will pay an amount estimated to be in excess of $60.0
million for the brands and trademarks of Schwinn/GT and for the inventory,
accounts receivable and certain other assets of the cycling business.
Schwinn/GT has commenced proceedings under Chapter 11 of the U.S. Bankruptcy
Code. This filing is necessary to allow Schwinn/GT to complete the sale of the
cycling business. In accordance with Section 363 of the Bankruptcy Code, other
companies will have an opportunity to submit bids through a court supervised
competitive bidding process. Additionally, expiration of the Hart-Scott-Rodino
waiting period is required prior to closing of the transaction.
Don Graber, Chairman, President and CEO said, ``An opportunity such as this
comes along only rarely. The Schwinn® brand is one of the most widely recognized
brand names in the world and together with GT® and other brands would strengthen
our existing brand portfolio. The Schwinn and GT brands are ideal candidates for
multi-channel distribution, capitalizing on Huffy's marketing and brand
management expertise.'' ``The Schwinn/GT cycling business would be an excellent
strategic fit within our existing bicycle business model and another example of
Huffy's continuing commitment to exploring and implementing a variety of
strategic alternatives to enhance earnings and maximize value for our
shareholders. We will continue to work with our external financial advisors as
we evaluate additional alternatives,'' Graber concluded.
Huffy Corporation (NYSE: HUF - news) is a leading provider of consumer and
retail services and the leading supplier of bicycles and home basketball
The discussion in this press release contains forward-looking statements and is
qualified by the cautionary statements contained in the Company's report on Form
10-K, dated March 6, 2001.
SOURCE: Huffy CorporationNews
HUFFY CORPORATION ANNOUNCES SECOND QUARTER EARNINGS JULY 17, 2001
Schwinn News PRESS RELEASES!
SCHWINN/GT TO SELL CYCLING DIVISION TO HUFFY CORPORATION
Boulder,Co.July 16, 2001 - Schwinn/GT Corp. announced today that it has entered
into a sale agreement with Huffy Corporation (NYSE: HUF) for the purchase of its
Cycling Division. Schwinn/GT also announced it has commenced proceedings under
Chapter 11 of the U.S. Bankruptcy Code.This filing is necessary to allow Schwinn/GT
to complete the sale of the cycling business. The Company filed its Chapter 11
petition in the United States Bankruptcy Court for the District of Colorado in
Denver. In accordance with Section 363 of the Bankruptcy Code, other companies
will have an opportunity to submit bids for the cycling division through a Court
supervised competitive bidding process. Consummation of the proposed transaction
is subject to, among other things, expiration of the statutory Hart-Scott-Rodino
Act waiting period applicable to acquisitions in bankruptcy. The Chapter 11
filing includes Schwinn Cycling & Fitness Inc., GT Bicycles,Inc., Riteway
Distribution, Inc., Hebb Industries, Inc. and certain other U. S.affiliates. The
Company’s subsidiaries in Switzerland, France and Japan are not included in the
filing. Under the terms of the current sale agreement, Huffy will pay in excess
of $60 million subject to adjustment to acquire substantially all of the assets
of Schwinn/GT’s Cycling Division. The Company has reached an agreement with a
group of lenders led by Comerica Bank to provide up to $30 million in
debtor-in-possession (DIP) financing. The funding will be used to maintain
normal business operations in the Fitness Division and to ensure the orderly
sale of the cycling business to Huffy. Don Graber, Chairman, President and CEO
of Huffy Corporation, said, “An opportunity such as this comes along only
rarely. The SchwinnÒ brand is one of the most widely recognized brand names in
the world and together with GTÒ and other brands would strengthen our existing
brand portfolio. The Schwinn and GT brands are ideal candidates for
multi-channel distribution, capitalizing on Huffy’s marketing and brand
management expertise.” Jeff Sinclair, Schwinn’s Chief Executive Officer, stated,
“With the sale of the Cycling Division well on its way, we are now turning our
attention to the Fitness Division. Operations at Fitness are continuing without
interruption. Although it will take a little time to return the Fitness Division
to business as usual, we expect to make substantial progress in the coming
weeks. “With the priority status provided under the Bankruptcy Code for goods
and services that are delivered after the filing, we anticipate the continued
support of our vendors to meet the product needs of our fitness customers,” Mr.
Sinclair added.Mr. Sinclair also noted that since the Company’s operations in
Switzerland,France and Japan are not included in the Chapter 11 filing, it will
be "business as usual for these entities. Our overseas subsidiaries are
financially independent from our domestic operations and are continuing to
operate without interruption.” In anticipation of the Cycling Division sale, the
Company announced it will downsize its Cycling Division workforce. The Company
will deliver letters to 300 Cycling Division employees to fulfill any
obligations the Company may have under the Workers Adjustment and Retraining
Notification Act. “I am mindful of the impact these actions will have on our
cycling employees and we will make every reasonable effort to make this as
smooth a transition for them as possible. I recognize the many contributions our
employees have made to the Company over the years and regret the loss of
employment that may be associated with this transaction,” Mr. Sinclair said.
June 15, 2001
Schwinn/GT Settles Lawsuit With Omnium Cycle Works
BOULDER, CO. Schwinn/GT and its U.S. assembler Omnium Cycle Works settled a
lawsuit charging Schwinn/GT with breach of contract. The two companies also
negotiated a factory authorized sale and Schwinn/GT is urging its retailers to
purchase GT bikes remaining in Omnium's warehouse to help control its
distribution. "This isn't an ideal situation, but we think this settlement is
the best action available under the circumstances because it enables us and our
dealers to control the disposition of these products," said Larry Pizzi, Schwinn/GT's
senior vice president, sales and marketing and general manager. Omnium has in
inventory approximately 4,500 GT bicycles that Schwinn/GT cannot pay for. GT,
until June 22, will facilitate the sale of this product from Omnium to GT
retailers. Only GT retailers of adult bicycles are eligible. After June 22,
under terms of the settlement, Omnium has the right to sell Schwinn/GT product
to anyone, including mass merchants. Pizzi, however, expects most or all the
product to be bought by GT retailers before then. The bikes are GT's Avalanche
1.0 and 2.0 and I-Drive 2.0, 3.0 and 4.0. Omnium is only accepting advance cash,
certified check or wire transfer payments for the bikes. GT, however, is
processing all sales. Schwinn/GT will also handle the warrantee on bikes bought
from Omnium. Before the settlement was reached, Omnium had sold about 300
high-end Schwinn bicycles to Costco, a move that prompted Schwinn/GT to act
quickly to reach a settlement.
June 6, 2001
Kevin Lamar Takes Helm At Direct Focus
VANCOUVER, WA. Former Schwinn/GT President Kevin Lamar is the new president of
Direct Focus. The company, which makes Bowflex and Nautilus fitness equipment,
has been named as a possible buyer of Schwinn/GT, or just its fitness division.
Lamar worked at Schwinn/GT from 1989 to 2000 in several senior management roles,
including president from 1999 to 2000. During his tenure, revenues at the
company's fitness division rose from $20 million to more than $100 million. He
was director of marketing at Bowflex from 1987 to 1989. Bowflex later became
Direct Focus. "I am very excited about joining the Direct Focus team," Lamar
said. "I am quite familiar with the Bowflex and Nautilus product lines, their
strong position in the fitness and healthy lifestyle marketplace and the winning
Direct Focus formula. I believe there is tremendous opportunity for growth here
and I'm pleased to be a part of it."
May 29, 2001
Schwinn Receives Additional -Financing, Nears Sale
BOULDER, CO. Schwinn/GT received additional financing that company officials
said will allow the company to fill in 2001 inventory holes and to move forward
on the 2002 model year. "The financing came at an important time for the
company," said Jeff Sinclair, Schwinn/GT's chief executive officer. The
additional financing will allow the company to complete its sale in an orderly
fashion by the end of the summer. Schwinn could possibly announce a buyer for
the cycling division by early June. It will receive offers this week, with a
possible second round of bidding next week, industry sources said. "The process
of selling the company is ongoing and has attracted a number of highly motivated
potential purchasers," Sinclair said. "We are gratified by how well the process
of marketing the company for sale is going and the number and interest level of
high quality participants."
May 21, 2001
Schwinn/GT Entertains -Prospective Buyers
SANTA ANA, CA. Schwinn/GT executives spent much of last week showing the company
to prospective buyers. Despite the early presentation schedule, company
officials said they don't expect a quick sale. "There were so many interested
and eager buyers that we showed a few around last week. And we will be showing
the company a few more times in the upcoming weeks," said Jeff Sinclair,
Schwinn/GT's chief executive officer. "We have been pleasantly surprised by the
interest in the brands. A few of the bidders are interested in both sides of the
business. We will be finalizing bids at the end of June and hope to be
transitioning to a new owner in August," he said. Some of those familiar with
the company wondered if its cash flow problem was the reason Schwinn/GT pushed
the bidding process forward a few weeks. Without additional cash, there is
little chance the company can pull together a full 2002 line. Sinclair alluded
to as much, saying its banks have indicated a willingne ss to work with the
company through the sale given high prices the company is receiving as bids.
This should give the company the cash flow necessary to keep going through the
summer selling season. Industry insiders also report that in order to speed up
the sale, Questor Partners Fund, Schwinn/GT's owner may sell only the company's
assets, keeping the debt—which is estimated to be quite high. Much of
Schwinn/GT's debt in Taiwan is unsecured. It will be up to Questor, not the
future owner, to make good on the debt.
May 18, 2001
Omnium -Sues Schwinn/GT Over 6,000 Bikes
SANTA MARIA, CA. Bicycle assembler Omnium Cycle Works filed a breach of contract
lawsuit against Schwinn/GT in a California court Wednesday, seeking payment for
more than 6,000 bicycles Omnium built for the troubled company, but that it has
yet to ship. "Schwinn/GT has repeatedly informed us that they would be paying
for the bicycles and take delivery, but have failed to do so," said Monie Gaba,
Omnium's general manager. The lawsuit alleges the breach of contract occurred on
April 13, although some deliveries and negotiations continued for several weeks
afterward. When payment negotiations failed, Omnium offered to sell the bikes
directly to Schwinn/GT dealers, but Schwinn/GT would not agree to that. Schwinn
earlier headed off moves by Taiwanese manufacturers wanting to sell excess
inventory in the United States. "I would love to sell the bikes to Schwinn/GT,
but if they can't take them, I have to sell them somewhere," Gaba said, adding
that while he understands Schwinn/GT's c ash flow problems, he has his own
difficulties. "I have to sell these bikes. I need to pay off suppliers. We owe
RockShox and Answer, for instance. They have been working with us and have been
incredibly understanding, but they have their own creditors. They want to be
paid and they want to know when I can pay them," Gaba said. Omnium has 6,000
complete Schwinn and GT-branded bikes in storage, and between 500 and 800 more
in the pipeline, Gaba said. The bikes are all adult front and full-suspension
mountain and road bikes with retail prices starting at around $800. Omnium filed
the lawsuit Wednesday in Santa Barbara County's Cook Division Superior Court of
California. Schwinn/GT officials were unaware of the suit as of Thursday
May 17, 2001
Schwinn/GT U.K. Attracts -Offer
LONDON, England Schwinn/GT's bankrupted U.K. distributorship has attracted the
attention of a serious potential buyer and could be in new hands by the end of
May, the company handling its sales and operations has confirmed. "All I can
tell you is that we are very close to concluding a deal for a new U.K.
distributor, but that until this is signed we will continue to trade as normal.
Likely conclusion to the deal would be within 14 days," said Lee Manning, the
administrative receiver running the company for Kroll, Buchler, Phillips of
London, the receivership group. This spring's initial advertisement of the sale
drew about a dozen responses, but none was realistic. Manning has consistently
said he wanted to sell the operation as a going concern. Ideally that would
include a license to sell the Schwinn and GT brands. Schwinn/GT U.K. Sales Ltd.
and its German subsidiary went into voluntary receivership on March 1, similar
to filing for Chapter 11 protection from creditors in the United States. Its
debts were frozen and the receiver ran the company while negotiating its sale.
The subsidiary had about $14.7 million in debt and $8.8 million in bicycle
inventory at the time. It owed about $4.8 million to European banks and about
$3.3 million to third party suppliers, including Asian bicycle manufacturers.
May 10, 2001
Schwinn/GT Warns Of Black -Market Bikes
BOULDER, CO. Schwinn/GT is advising retailers that it is possible un-named
Taiwan-based manufacturers may sell excess Schwinn or GT branded inventory
through unauthorized liquidators. The company warned its dealers against buying
any bikes sold outside its Riteway Products distribution division. "Schwinn/GT
must authorize the sale of any branded goods by its vendors. It has not
authorized its manufacturers to sell its products," wrote Larry Pizzi, senior
vice president and general manager of marketing and sales for Schwinn/GT Cycling
Division, in a letter to Schwinn/GT dealers dated April 19. "Schwinn/GT
sincerely hopes that this situation does not come to fruition. However, the
actions of a few of our vendors have given us reasonable cause to be concerned.
Therefore, we thought it prudent to warn you about the drastic consequences
associated with any purchase of these products," he wrote. The letter asks
retailers to alert Schwinn/GT officials if anyone but a Riteway rep attempt s to
sell them branded bikes. The company contends that bikes sold outside its
authorized channel would not be legally gray-marketed, but an unauthorized sale
of a trademarked product by a vendor. Schwinn/GT said it would pursue charges of
U.S. trademark law violations and trademark infringements, possibly seeking to
get injunctions, receive monetary damages and have product destroyed, if the
bikes began appearing on the market. Retailers who might purchase bikes from an
unauthorized liquidator would violate their contracts with Schwinn/GT and risk
having their dealer agreement terminated, the letter said. Warranties also would
be void. Many of the bikes the company is concerned about were slated for
European delivery. They are spec'd differently than those for the U.S. market.
Brake setup could be reversed, for instance, putting U.S. consumers at greater
risk for injury. Pizzi was unavailable for comment.
May 7, 2001
Schwinn/GT Promotes -Pizzi
Boulder, CO . Schwinn /GT promoted Larry Pizzi to senior vice president and
general manager of marketing and sales for its global cycling business. Pizzi
joined Schwinn/GT earlier this year as vice president of sales for its U.S.
division. "Larry's appointment recognizes not only his contributions and
talents, but also our desire to take a more integrated approach to the IBD
channel. Under Larry's leadership, we expect to sharpen our respective Schwinn
and GT brand building and sales initiatives around each brand's strengths and
targeted consumer segments," said Jeff Sinclair, Schwinn/GT's president and
chief executive officer. Andrew Herrick, vice president of the GT brand group,
and Rob Mossman, vice president of the Schwinn brand group, will report to
Pizzi. He will continue to lead the U.S. Schwinn and GT sales operations, and
the international distributor sales business. The company appointed of Brian
Searchinger as director of consumer insight. He will research consumer and
market trends to guide the design and mar keting of Schwinn/GT's product. The
company also will use consumer insights developed by Searchinger's group to
develop more effective merchandizing, point-of-sale and other marketing tools to
better support its dealer network.
May 2, 2001
Huffy Picks Up Sponsorship Of Core Tour
MISSION VIEJO, CA. Huffy is the new bike sponsor of the Core Tour. GT had been
the bike sponsor of the tour for its first three years but declined to renew its
contract. The Core Tour is a four-stop national sports and music tour with
dirt-jumping, skateboarding, mini-scooter, in-line skate and mountain board
competitions. It will make four stops this summer, two in California and two in
New York. Total attendance is expected to reach 500,000 for the four events.
Panasonic is the Tour's title sponsor. Chevy, another sponsor, will be giving
away a Chevy Tracker ZR 2 to the winner of the Tour's King Of Dirt competition.
April 19, 2001
Huffyís Earnings -Grow Despite Slowed Sales
MIAMISBURG, OH. Huffy earned $1 million in the first quarter of 2001. The
company lost $1.1 million for the first quarter of 2000. Net sales, however,
were down for the quarter at $81.2 million compared to $100.1 million for the
first quarter last year, a loss of 18.8 percent. "Although we are disappointed
by sales for the first quarter, we were not surprised," said Don Graber, Huffy's
president and chief executive officer. "It was clear in late 2000 that retail
sales were slowing due to weakness in the economy." "However, the actions taken
over the past two years have clearly helped position Huffy to generate
acceptable earnings during the economic down cycles," he added. During the past
24 months, Huffy worked its way out of debt. As of March 31, Huffy had no debt
and $19.7 million in cash and short-term investments. After the first quarter of
2000, Huffy was in debt $98.7 million and had no cash or investments.
April 12, 2001
Schwinn/GT Denies Bike -Shortage Speculation
BOULDER, CO. Jeff Sinclair, Schwinn/GT's chief executive officer, is
contradicting speculation that the pending sale of the business will affect bike
supply to specialty retailers. He also criticized industry speculation that the
new owner could take Schwinn into the mass market. "We have been very open and
candid over the last few months so we are very disappointed to read
unsubstantiated speculation about shortages of Schwinn and GT bicycles. We have
an ample supply of bikes to meet the needs of our customers through the summer
and plan to begin shipping 2002 models in the fall. We gave these facts to the
trade press but they have chosen to ignore them," Sinclair said. Sinclair said
on-time delivery and order-fill rates on Schwinn and GT bicycles remain very
high. "Although we have had a few stock-outs on certain 2001 models, we have
made significant progress to strive for continued supply chain and service level
improvements for our dealers," he said. "I am amaz ed at the wild rumors that
are circulating in the industry about the sale of the company. The fact of the
matter is that even though the sale process started last week, we have received
many inquiries from companies, the majority of which only do business in the IBD
channel. It is impossible to predict who will buy the company and irresponsible
to speculate what could happen after the sale."
April 11, 2001
Schwinn/GT Returns To -CABDA
HOMEWOOD, IL. Schwinn/GT announced it will return to the CABDA Cycling Expo,
citing the earlier date as among the main reasons for attendance. "For the last
several years, both Schwinn and GT have done summer road shows but this year, we
see the CABDA show as the best way to spend quality time with our customers and
show the 2002 line for both brands," said Larry Pizzi, Schwinn/GT's vice
president and general manager of global sales. The company will offer incentives
to get its dealers to go to the show. CABDA's Greg Byron said many manufacturers
told him the October dates of previous CABDA shows were too late. The show has
moved to August 7-9. "Getting companies like Schwinn and GT to return to the
CABDA Cycling Expo is exactly why we moved the show to August," Byron said.
Schwinn and GT will be among other doing technical seminars on product. An
educational seminar series with retailer-pertinent topics also will be held
during the Expo. An On Dirt Demo Day also has been added to this year's lineup.
April 9, 2001
Schwinn/GT Sale Could Mean Bike-Shortages
BOULDER, CO. Questor Partners Fund's sale of Schwinn/GT could negatively impact
the specialty retail bike supply pipeline. The company supplies approximately 1
million units annually, or one of every three bikes sold by specialty retailers.
If Schwinn/GT stays on the market into the summer or if the new owner takes one
or both of the bike brands into the mass market, specialty retailers may find
other suppliers unable to make up the short fall. Some of Schwinn/GT's Taiwan
suppliers have already stopped shipping bikes until the company pays off some
its debt. Schwinn reportedly owes suppliers in Taiwan $25 to $50 million.
Schwinn/GT officials said they have enough 2001 bikes on hand, the company. But
even under new ownership, it could have difficulty delivering 2002 bikes, which
generally go into production in the spring for delivery to retailers in May and
June. This could result in a windfall for brands with Taiwan ownership such as
Fuji, Giant, Haro, KHS, Marin, Voodoo and ot hers, or Cannondale and Trek, which
own U.S. factories. In theory, these companies can open their supply lines
faster than suppliers without manufacturing. Even so, lengthy lead times will
likely ensure delays of six weeks or more.
April 6, 2001
Questor -Partners To Sell Schwinn/GT
BOULDER, CO. Questor Partners Fund, a Michigan-based investment firm and
Schwinn/GT's parent company, is selling the GT Bicycle, Schwinn Bicycle and
Schwinn Fitness divisions. The company will sell the divisions as a group or
separately. Jeff Sinclair, Schwinn's chief executive officer, said he expects
the sale to be completed within four or five months. Questor retained Credit
Suisse First Boston as its advisor and is in discussions with several potential
buyers. Sinclair declined to disclose that asking price as well as who the
potential buyers are. Industry analysts, however, have named Huffy or Magna as
possible buyers. Both American companies sell bikes to mass merchants and could
use the Schwinn brand name to compete with Pacific Cycle, which recently bought
Mongoose from Brunswick for $60 million. Merida, one of Schwinn/GT's Taiwan
suppliers, also has been named as a leading candidate. Schwinn/GT reportedly
owes the company tens of millions of dollars. Health and fitness supplier Na
utilus has been mentioned as a possible buyer of the Schwinn Fitness division,
which is widely considered to be the healthiest part of the company with an
estimated value of about $100 million. The past 10 years have been bad for
Schwinn and GT. In 1992 Schwinn filed for bankruptcy. The Zell/Chilmark Fund
with the Scott Sports Group bought it the following year for $50 million.
Questor bought Schwinn in 1997 from Zell/Chilmark and then acquired a nearly
bankrupt GT Bicycles in 1998, forming Schwinn/GT. Schwinn/GT Europe was placed
into receivership in March and is currently for sale.
March 8, 2001
Schwinn/GT- Europe Debt Near $15 Million
LONDON, England Schwinn/GT UK Sales Ltd. had about $14.7 million in debt against
only about $8.8 million in product inventory when it went into voluntary
receivership in London last week, said Lee Manning, administrative receiver with
Kroll, Buchler, Phillips of London, the receivership company now operating the
business. "We are running it with a view to selling its business and assets as a
going concern. Potentially, we could sell the company itself, but it's not
likely any one would want it. It's horribly insolvent," Manning said. The
English company and its German branch office owe about $3.3 million to
third-party suppliers and $4.84 million to European banks, Manning said.
Additional unspecified debts include money owed Schwinn/GT in the United States
for inter-company loans, product purchases and royalties. Receivership is
similar to a Chapter 11 filing for bankruptcy protection in the United States.
The receiver advertised the sale in Tuesday's Financial Times and rece ived some
preliminary inquiries the same day. "The best case would be that the business
and assets get sold within four to six weeks, the staff keeps their jobs and the
new company starts on a profitable footing," Manning said. The receiver operates
the company and arranges for its disposition and debt resolution independently
from Schwinn/GT. Manning said his company is supplying product to customers, and
added, "We will liase with Schwinn/GT in the United States to keep product
flowing." The business—its staff, infrastructure, client and order lists—would
add an unknown value to the sale, as would a Schwinn/GT agreement to license and
distribute its product to new owners. Manning was unable to put a value on the
business. Schwinn/GT was negotiating with European distributors to sell the
subsidiaries last month, but a banks' refusal to extend additional time or
credit led to a cash crunch and the voluntary receivership, which freezes
company debts and protects it from creditors. Company officials emphasized that
other Schwinn/GT operations in Europe and North America are independent
corporations and are unaffected by the subsidiaries' problems.
March 2, 2001
Schwinn/-GT Europe In Receivership
LONDON, England Schwinn/GT Europe, serving the British and German markets, is in
the hands of an English receiver. Meanwhile the company is trying to reassure
its Taiwanese creditors and forestall problems in other markets. The receiver,
Kroll, Buchler, Phillips of London, told the European press it will try to sell
the U.K. and German operations as a functioning business. Its obligations are to
creditors, however, and it has wide latitude in how it distributes assets and
meets the company's debts. Tom Soper, Schwinn/GT's senior vice president of
corporate relations, said the receivership is specific to the company's German
and U.K. operations, although its Riteway/France subsidiary is also under
scrutiny. The receivership will not affect U.S. fitness and bicycle businesses,
Riteway/Japan, Schwinn Fitness in Switzerland, or the company's International
Cycling Distributor business throughout the world. "All are separate,
financially sound corporations," Soper said. Jeff Sinclair, Schwinn/GT's ch ief
executive officer traveled to Asia to reassure the company's suppliers, Soper
said. "We are very sensitive to the impact this may have on suppliers that
supply both the U.S. and European subsidiaries. Fortunately, we have some pretty
high quality and, loyal, long-established relationships. But we are sensitive to
working together," he added. When asked if the operation was bankrupt, Soper no.
"This is not an outright liquidation, no. The U.K. makes a clear distinction
between liquidation and receivership. It's a different country, but this is
similar to a Chapter 11 in the United States, where you have the ability to have
an orderly disposition of assets and obligations."
February 21, 2001
Schwinnís Reorganization Leads To-Personnel Changes
BOULDER, CO. Schwinn's announcement that it will move its product development
division to California to join GT's and that it will divide its marketing into
two brand groups has lead to a few personnel changes. Jeff Sinclair is
Schwinn/GT's chief executive officer and Schwinn/GT's bike division president.
Trevor Bell, former president of Schwinn/GT's bike division, is Schwinn Fitness'
president. Mark Schroeder, former director of engineering, now becomes vice
president of product development for Fitness. Cache Mundy, former vice president
of marketing for Schwinn Cycling, becomes vice president of marketing for
Fitness. Barry Burke, former director of GT's research and development
department, will head the new California-based product development facility.
Mark Peterman, former director of GT's product development, is appointed as head
of Schwinn/GT's bike product development. Andrew Herrick leads the GT brand as
vice president, GT brand gro up. Rob Mossman leads the Schwinn brand as vice
president, Schwinn brand group. Mark Pippin, who had been senior product
development manager, is now head of Schwinn/GT's global purchasing department.
February 19, 2001
Schwinn/GT Examines -European Operations
BOULDER, CO. Schwinn/GT may change operations in its UK, French and German
subsidiaries this spring. "We are not happy with performance in those markets,
within the context of our global business. We're looking at options as to what
we want to do with those businesses, but we have not made any decision on what
direction we want to go," said Rob Mossman, director of international sales and
operations for Schwinn/GT. Changes, if any, would begin in April or May.
Possible options include staying with the wholly owned subsidiaries but
improving performance, or working with third-party distributors. Schwinn/GT
consolidated its subsidiaries last year and created an international division to
speed response times. The company distributes worldwide through 100 third-party
distributors with good results. "That might give you a window as to what we're
looking at. They are doing well, and we need to look at what they're doing to
learn from them," Mossman said.
February 16, 2001
Schwinn/GT Sets Up Tech Center -in So.California
BOULDER, CO. Schwinn/GT will open a new technology center in Southern California
to develop adult and juvenile bikes for both brands. Barry Burke will head the
facility and lead a staff of Schwinn and GT product engineers. Schwinn/GT also
is building a dedicated customer care center in Boulder to improve service and
support to bike dealers. The new center will consolidate the company's warrantee
and customer service personnel from its various distribution centers. The two
new facilities represent a multi-million dollar investment by the company.
Schwinn Fitness remains in Boulder. "The new product development and customer
care centers are significant investments and demonstrate better than words
Schwinn/GT's commitment to the bike industry and its dealers," said Jeffery
Sinclair, Schwinn/GT's chief executive officer and president of Schwinn/GT's
February 16, 2001
Huffy Signs Amended Credit Facility-Agreement
MIAMISBURG, OH. Huffy has entered an amended credit agreement with Congress
Financial Corporation extending until December 31, 2002. Under the terms of the
agreement, Congress Financial Corporation will provide Huffy a revolving credit
line of up to $75 million. The prior agreement, which was to expire June 30,
provided Huffy with a $100 million line of credit. The new agreement is
renewable. "We believe that the terms of the amended credit agreement more
appropriately reflect Huffy's reduced financing needs and stronger balance
sheet," said Don Graber, Huffy's chairman, president and chief executive
officer. "Huffy's financial position today is significantly improved from where
we were a year ago. Under the terms of the amended agreement, not only will
Huffy be paying lower interest rates, but a number of operating restrictions and
administrative reporting requirements have been eliminated," Graber said.
February 2, 2001
GT -Bicycles To Move, Combine Warehouses
SANTA ANA, CA. GT Bicycles will move to a new Southern California location by
May 1. GT officials said the new facility is within 15 miles of the current
Santa Ana building. While smaller than Santa Ana, the new building will house a
large product design and technology center. Schwinn/GT also is combining its two
Southern California warehouses—the Riteway Distribution Center that is now part
of GT's Santa Ana building and the Schwinn Fitness warehouse in Rancho
Cucamonga—into one distribution center. Schwinn/GT officials said it would be
near Ontario. Andrew Herrick, GT's director of marketing, said he expects
everyone employed at the Santa Ana building, excluding some warehouse laborers,
to make the move. He added that Schwinn/GT is giving each of its employees the
opportunity to move to the new locations. GT ceased manufacturing and assembling
bikes at the Santa Ana building last spring. The company still manufactures
bikes for its team riders in house, however, and that will continue at the new
January 23, 2001
Larry Pizzi Joins Schwinn/GT -Sales
BOULDER, CO. Larry Pizzi joined Schwinn/GT as vice president and general manager
of its U.S. operations. Will Rafter, interim national sales manager for Schwinn
and Dan Bon, national sales manager for GT, report to Pizzi. Rob Mossman is
Schwinn/GT's international sales director. "I am excited to be returning to the
bicycle industry and to join a company with the stature of Schwinn/GT. I look
forward to working with our dealers towards building strong relationships and a
mutually beneficial business partnership," Pizzi said. He will work out of GT's
Santa Ana, California, and Schwinn's Boulder, Colorado, offices. Pizzi joins
Schwinn/GT from Fogdog Sports where he was general manager. Previously, he was
vice president of marketing and IBD sales for Brunswick Corporation's Bicycle
Division. His past cycling industry experience includes sales and sales
management roles at Bell Sports, Service Cycle and the Derby Cycle Corporation.
December 22, 2000
GT Sells Autostreams In Costco
GT announced to its retailers in early December that the company is selling
several thousand Autostream bike models through mass merchant Costco. No other
models will be sold through Costco, the company said. Company officials said
poor sales in the independent retail channel and a high number of the bikes in
inventory led to the decision to sell through Costco. "It is not a product the
IBD wanted to handle," said Dan Bon, GT's national sales director. Bon said the
majority of dealers he has spoken with understand the move. He also said GT
dealers can potentially make more money on tune-ups and accessory sales with
thousands of Autostreams on the streets.
November 8, 2000
Brian Gass Resigns From GT Bicycles
After six years Brian Gass is leaving GT Bicycles. Gass worked for the company's
marketing department and developed the television show Crank TV and the King of
Dirt BMX jumping series. Crank TV showcases BMX riders and racing as well as
action footage from other sports. The King of Dirt series has become the premier
dirt jumping contest in the country. "The time that I have spent at GT has
proven invaluable and has allowed me to grow as an individual, as well as,
taught me how to be a team player." Gass said. Gass said he will continue to
develop the King of Dirt Series after he departs at the end of November.
November 1, 2000
Schwinn/GT Restructures, Lamar Resigns
Schwinn/GT is restructuring into two businesses—the Schwinn Fitness Division and
the Schwinn/GT Cycling Division. And Kevin Lamar will resign as president of the
combined divisions at the end of the year. His position will not be replaced.
"The establishment of Schwinn Fitness and Schwinn/GT Cycling as separate global
business units—both supported by a common worldwide supply chain organization—is
the final step in a process begun with the October 1998 merger of Schwinn
Cycling & Fitness, GT Bicycles and Hebb Industries to form Schwinn/GT Corp,"
said David Wathen, Schwinn/GT's interim chief executive officer since March of
this year. Wathen, a principal of Questor Partners Fund, is stepping down as
chief executive officer but will continue as a member of the Board of Directors.
Leading both divisions now is Jeffrey Sinclair, the new ch ief executive
officer. Sinclair also is president of the Global Fitness business on an interim
basis. Sinclair joins Schwinn/GT from Honeywell, where he was president of its
Garrett Engine Boosting Systems business. Trevor Bell, managing director of
Schwinn/GT International, becomes president of the company's Global Cycling
Division. The company also appointed Judith Baranowski as senior vice president
of Global Supply Chain Operations. Baranowski is currently a senior associate
with Jay Alix & Associates, the consulting business of Alix, Questor's managing
September 14, 2000
Schwinn, GT Consolidate Call Centers
Schwinn and GT are consolidating the companies' call centers into a new
30,000-square foot center to better serve customers of the two companies and
Riteway. The new center in Boulder, Colorado, will employ a 100-member customer
care team to handle all orders, credit, customer service, warranties and tech
support for the GT, Riteway and Schwinn brands. After the call center becomes
fully operational in early 2001, Schwinn/GT will close existing call centers in
Santa Ana, California, and St. Louis, Missouri. Schwinn/GT gave employees at
those centers the option to transfer to Boulder.
July 18, 2000
GT To Stop Producing Robinson Bikes
In an effort to focus on GT's core BMX brands, Schwinn/GT, will discontinue
production of Robinson BMX bikes indefinitely. Instead the company will
concentrate on the Dyno, GT, Powerlite and Schwinn brands. "Heck, between
Schwinn, GT and Powerlite, we own the whole market. We feel the effort we have
been putting into Robinson can be better used on our core brands," said Andrew
Herrick, GT's director of marketing. GT already notified Robinson retailers of
its decision to cease production. GT is currently selling 1999 and 2000 model
year Robinsons at discounted prices to retailers. Herrick expects GT to be rid
of its entire Robinson stock in the next few weeks. Herrick said GT has no plans
to sell off the brand, at least not yet. "That's number 349 on my list of things
to think about," Herrick said.
June 23, 2000
Schwinn, Velomax Team Up
Schwinn has entered an agreement with high-end wheel maker Velomax to spec
wheels on Schwinn's 2001 high-end road bikes and make Schwinn the exclusive
distributor for Velomax. "For us it's great. It's the barrier we really wanted
to break through," said Brad Hunter, Velomax president. "They have a sales and
marketing network in place. Consumers already know about us. Now we can get that
product inside the IBD." Velomax wheels will be available through Schwinn
starting in July. Velomax, which has more than 200 retailers, has sold its
wheelsets dealer-direct since 1998 and will continue dealer-direct sales to
retailers outside of the Schwinn network. "For the majority of existing Velomax
dealers, it will remain business as usual," Hunter said.
June 5, 2000
Schwinn Works With Jamba Juice
Blending smoothies with bicycles, Schwinn Cycling & Fitness and Jamba Juice have
formed a promotional partnership for the summer in hopes of creating customer
crossover. Jamba Juice's "Squeeze the Most Out of Life" promotion introduces a
new line of seasonal smoothies, including a "Performance Boost" sports
preparation and recovery supplement. The promotion runs from June 14 to Aug. 15.
Schwinn will donate Homegrown and Moab 3 bicycles as sweepstakes prizes.
Returning the favor, Jamba Juice will sponsor the Schwinn Homegrown Team.
Members of the grassroots mountain bike racing team will conduct clinics and
lead weekly rides from Jamba locations. "Jamba Juice is the ideal partner for
Schwinn. We share similar target consumers who engage in a healthy, active
lifestyle," said Julie Kipfer, Schwinn's promotional director.
May 18, 2000
Schwinn/GT Makes More Changes
In the latest round of layoffs and consolidations at Schwinn/GT, Kevin Lamar has
been named president of Schwinn/GT. Previously, he was president of Schwinn
Cycling & Fitness. He replaces Len Chapman at GT. Tom Mason resigned as the
company's president and chief executive officer in April. Dave Wathen, who came
in when Mason resigned, remains Schwinn/GT's chief executive officer. In
addition, three vice presidents lost their jobs in the consolidation: Steve
Cuomo, vice president of engineering and product development; Steve Hjelmstrom,
vice president of manufacturing; and Brian Cox, vice president of distribution.
Bob Hadley, adult marketing manager, also lost his job. The company plans to
keep each of Schwinn and GT's inside sales, outside sales, marketing and product
development departments separate.
April 28, 2000
GT Closes U.S. Bicycle Assembly Plant
GT officials said Thursday that they were closing down assembly in the company's
Southern California facility. They will phase out assembly during the next few
months and close assembly lines for good June 26. The company will lay off about
100 employees, approximately one-third of GT's current staff. "Its a big
announcement for us internally because we took pride in the great job we did
building bikes here. U.S. assembly is why we built this big building anyway. But
the quality of Asian produced bikes has increased so dramatically over the last
36 months that there is no longer any advantage to assembling here," said Andrew
Herrick, GT's director of marketing. GT's move follows similar announcements
from Huffy and Brunswick, who also are phasing out U.S. based assembly.
Cannondale, Derby Cycle Corporation, Murray and Trek are all that remain of
large-scale domestic bicycle production in the United States. GT will use its
assembly area space to warehouse additional bikes and to assemble its line of
limited -edition race bikes.
April 21, 2000
Schwinn/GT Reorganizes European Operations
Schwinn/GT reorganized its European operations and set up an international
division in the United Kingdom for both brands. Trevor Bell is heading up the
new international division as a senior vice president and its general manager.
In the international division, which Bell will run out of Newbury, the company
has two new organizations—GT Europe and Schwinn Cycling Europe. They will
provide product development and marketing for each brand. The company's wholly
owned French and U.K. subsidiaries and its new German subsidiary, Schwinn/GT
Germany, will focus on sales and marketing in their local areas. European supply
chain company IEC will take over distribution across Europe. IEC is
headquartered in Ireland and has warehouses across Europe. Company officials
expect the changes to be completed by July. Bell said the company expects to
layoff some people in the reorganizations, although how many has yet to be
determined. In the new division, Schwinn/GT promoted or hired the following
people: Jurgen Eckmann is the general manager of Schwinn Cycling Europe. He was
general manager for Schwinn Cycling Gmbh. Cees De Witte, who came from Bell
earlier this year, is the general manager of GT Bicycles Europe. Arthur Cook,
formerly finance director for Schwinn/GT U.K. Sales, is financial director for
Schwinn/GT Europe. Scott G. Johnston is the European operations director.
reviously, he was manager of operations for Schwinn/GT UK Sales. Mark Perryman
is the commercial director of Schwinn/GT UK Sales. He was director of European
promotions for Perseco, the company that manages the in-store promotional
activity for McDonald's restaurants. Raymond Chastel is general manager of
Schwinn/GT's French subsidiary, Riteway Products France. He is a principal with
Aton, Ltd., a consulting firm specializing in turnarounds. Christopher Kerfoot
is the interim general manager for Schwinn/GT Gmbh.
April 12, 2000
Schwinn/GT Denies Bike Shortage Speculation
Jeff Sinclair, Schwinn/GT's chief executive officer, is contradicting
speculation that the pending sale of the business will affect bike supply to
specialty retailers. He also criticized industry speculation that the new owner
could take Schwinn into the mass market. "We have been very open and candid over
the last few months so we are very disappointed to read unsubstantiated
speculation about shortages of Schwinn and GT bicycles. We have an ample supply
of bikes to meet the needs of our customers through the summer and plan to begin
shipping 2002 models in the fall. We gave these facts to the trade press but
they have chosen to ignore them," Sinclair said. Sinclair said on-time delivery
and order-fill rates on Schwinn and GT bicycles remain very high. "Although we
have had a few stock-outs on certain 2001 models, we have made significant
progress to strive for continued supply chain and service level improvements for
our dealers," he said. "I am amazed at the wild rumors that are circulating in
the industry about the sale of the company. The fact of the matter is that even
though the sale process started last week, we have received many inquiries from
companies, the majority of which only do business in the IBD channel. It is
impossible to predict who will buy the company and irresponsible to speculate
what could happen after the sale."
April 9, 2000
Schwinn/GT Sale Could Mean Bike Shortages
Questor Partners Fund's sale of Schwinn/GT could negatively impact the specialty
retail bike supply pipeline. The company supplies approximately 1 million units
annually, or one of every three bikes sold by specialty retailers. If Schwinn/GT
stays on the market into the summer or if the new owner takes one or both of the
bike brands into the mass market, specialty retailers may find other suppliers
unable to make up the short fall. Some of Schwinn/GT's Taiwan suppliers have
already stopped shipping bikes until the company pays off some its debt. Schwinn
reportedly owes suppliers in Taiwan $25 to $50 million. Schwinn/GT officials
said they have enough 2001 bikes on hand, the company. But even under new
ownership, it could have difficulty delivering 2002 bikes, which generally go
into production in the spring for delivery to retailers in May and June. This
could result in a windfall for brands with Taiwan ownership such as Fuji, Giant,
Haro, KHS, Marin, Voodoo and others, or Cannondale and Trek, which own U.S.
factories. In theory, these companies can open their supply lines faster than
suppliers without manufacturing. Even so, lengthy lead times will likely ensure
delays of six weeks or more.
February 23, 2000
Schwinn To Unveil Revamped Web Site
Schwinn plans to unveil a revamped web site in March. The site, at
www.schwinn.com, will house three stores; one for bikes, a second for parts and
accessories and fitness equipment, for bikes and accessories and the third for
fitness equipment. Schwinn's current site is set up primarily for its fitness
equipment, though it does offer a few closeout bikes. The revamped site will
offer all of Schwinn's bike models in the bike store and its entire fitness line
in the fitness store. All online bike sales are directed through retailers.
Retailers will receive 100 percent of their margin. Once consumers buy a bike,
they can opt to have it delivered for a fee paid to the retailer. Or they can
pick it up at the nearest store. Schwinn will list all of its retailers on the
site. "We strongly encourage consumers to go to the dealer because they may not
have ordered the correct size or they may see something extra they want," said
Kevin Lamar, Schwinn's president.
February 18, 2000
Schwinn Riders Get Miniature Air
Three of Schwinn's BMX riders will have their own action figures. JAKKS Pacific
Inc. signed licensing agreements with Schwinn riders Jay Miron, Andrew Faris and
Jay Eggleston to manufacture the miniature figures. Jakks, under its Road Champs
BXS brand, will develop, manufacture and market collectible die-cast and plastic
bicycles, action figures, action sport playsets, handheld and tabletop LCD games
and BMX bike keychains based on Team Schwinn. Jay Miron is the current world
champion in both vert and mini-ramp. Andrew Faris was the flatland world
champion in 1997 and 1998. Vert rider Jay Eggleston is a recent addition to Team
February 9, 2000
Tom Mason Resigns From Schwinn/GT
Tom Mason resigned as president and chief executive officer from Schwinn/GT
Tuesday, effective immediately. He will continue to consult on special projects
at the company. "Today we have a strong Schwinn Cycling and Fitness business
under Kevin Lamar and a rapidly recovering GT business poised for renewed growth
under Len Chapman. And our emerging international Schwinn/GT Cycling business is
headed by Trevor Bell. I'm confident they will make dramatic strides over the
next 12 months," Mason said in a letter to employees. "Against this background I
have decided to move on. The 2-year contract I had with Questor is concluded and
they have agreed that the timing is right for change," he said. Schwinn/GT's
parent company, Questor Management Company, hired Mason to head up Schwinn in
December 1997 after the investment group bought the company from Zell Chilmark.
Mason is replaced on an interim basis by Questor's Dave Wathen. The company said
it hopes to announce a permanent replacement in the next several months.
January 31, 2000
Wendyís Sponsors Schwinn Team In 2000
Schwinn's BMX riders will have all the Frosty's they want this year. The team,
consisting of BMX racers and dirt jumpers, teamed up with Wendy's Old Fashioned
Hamburgers for the 2000 season. Wendy's is running a six-week promotion with
Schwinn merchandise. Beginning May 1 kids can win Schwinn BMX playing cards,
sunglasses, stickers, water bottles or bike wallets. The promotion will be
supported with television ads and a sweepstakes. Kids can enter for the
sweepstakes at 4,900 Wendy's across the nation and can win BMX bikes, hats,
finger bikes and autographed team posters. "Wendy's is going to be an incredible
partner. They will gain a tremendous amount of logo exposure in the BMX market
and on TV through races, dirt jumping contests, the X-Games, Gravity Games and
through POP displays at Schwinn retailers. Schwinn will benefit through millions
of impressions at Wendy's restaurants," said Geoff Shaffer, Schwinn's sports
December 29, 1999
Bagni Gives Parting Interview After Leaving Schwinn
When Gregg Bagni, Schwinn's senior vice president of marketing and product
development, revealed his plans to resign, company executives let him announce
his decision any way he wanted. "I said take a blank sheet of paper and write
your own press release. For Gregg, a standard press release about someone
leaving wouldn't do," said Tom Mason, Schwinn's president. "He came back with a
story about his alien abduction." In the release, the industry's most lively
marketing personality joked that after nearly 7 years at Schwinn and 25 years in
marketing, his alien friends were taking him back to his home planet. Bagni
later confessed he needed time off. "My wife Robbie and I will be fueling up our
own little Millennium Falcon, a motor home we bought. Then we'll pack it with
our dogs, a full quiver of snowboards, a laptop for interplanetary e-mail and a
bunch of really good food, books and lots o' love. We plan on chasing the snow
in the U.S. and Canada till at le ast spring," he said. Cache Mundy, Schwinn's
director of marketing, was named vice president of marketing.
October 8, 1999
Schwinn Names New President
Kevin Lamar has been named president of Schwinn Cycling & Fitness. Lamar joined
Schwinn in 1990 as product group manager of the fitness division. He has since
been vice president, senior vice president and manager and president of Schwinn
Fitness Division. He also played professional football for the San Francisco
49ers and the Buffalo Bills. "Kevin's appointment brings the Schwinn Fitness and
Cycling divisions together under common leadership. Kevin is exceptionally well
qualified to lead Schwinn's combined businesses into the new century," said Tom
Mason, Schwinn/GT's chief executive officer.
October 1, 1999
GT Appoints New President
Leonard R. Chapman has been appointed president of GT Bicycles. Chapman joined
Schwinn/GT in 1998 as senior vice president of supply chain operations.
Previously he worked for Monsanto Corporation's Solaris lawn and garden division
as a vice president of retail sales. He has also worked for Specialty Foods
Corporation, Safeway, Inc. and Kraft. "Len is the right person to assure GT
Bicycles realizes its full business potential. Since the acquisition of GT he
has worked closely with our people at GT to lay in the necessary foundation to
fully realize GT's potential as one of the preeminent brands in the IBD
channel," said Tom Mason Schwinn/GT's chief executive officer and president.
September 23, 1999
GT Bicycles, Haro, Schwinn Get Miniature Bikes
BMX is going miniature with a new set of toys from Jakks Pacific. The company
has licensing agreements with GT Bicycles, Haro Bikes, and Schwinn Cycling and
Fitness to manufacture the toys. Under its new Road Champs Bike Xtreme Sports
(BXS) brand, Jakks Pacific will develop, manufacture and market GT, Haro, and
Schwinn collectible die-cast and plastic vehicles and bikes. The company also
will make action sport play sets, finger bikes, action figures based on team
riders, action figure play sets, hand-held and tabletop games and BMX bike key
chains. Jakks Pacific officials said they expect to ship the first products of
the new line by mid-December with full product rollout in spring 2000.
August 27, 1999
Schwinn Bikes Displayed In Old Navy Stores
Schwinn bicycles will be displayed in more than 450 Old Navy stores in
conjunction with the store's back-to-school season. The bikes have been
customized with the Old Navy logo and the slogan "It's Hip to Zip," to support
of the clothing seller's Tec Vest product launch. As part of the promotion, ads
will appear in Teen People, YM, Jump, Seventeen and Rolling Stone magazines. Old
Navy shoppers can win the Schwinn/Old Navy Mesa GSX mountain bikes by
registering through in-store displays. ©Bicycle Retailer & Industry
August 24, 1999
Schwinn Refutes Mass Market Rumor
Schwinn sent a letter to all its retailers, refuting a rumor that it will sell
its bikes in the mass market and explaining its expanded distribution to
Recreational Equipment Inc. (REI). "Frankly, Schwinn has long been far more
conservative than most other suppliers in terms of the scope of our
distribution. This has unquestionably handicapped us in our competition for
share and for exposure to a wide range of customers and potential customers,"
Tom Mason, Schwinn's president and chief executive officer wrote in the letter.
Schwinn announced this month that it will broaden its distribution by selling
through REI and adding more products for sale through its web site. The Aug. 19
letter emphasizes the supplier's commitment to the specialty retailer while
recognizing that increased competition for market share has driven its move for
a broader distribution. Mason also noted in the letter that while bike sales at
Wal-Mart are a threat to retailers, the sales are getting more kids on bikes.
After looking at the situat ion closely, he concluded that Schwinn instead will
work with retailers to strengthen the IBD channel.
August 17, 1999
Riteway No Longer Distributing Kore
Riteway Products/GT has stopped representing and supplying Kore's bike parts to
the retail after market in the United States and Canada. KHS Bicycles is now
distributing Kore's line of mountain, road and BMX parts. Other distributors are
negotiating agreements to supply various North American markets. "For those of
you who have supported Kore through Riteway Products for the past four years,
thank you and we hope that you can arrange to have your orders fulfilled through
KHS and their sales representatives," said Gary May, Kore's vice president. For
information call (800) 814-5673 ext. 29.
August 12, 1999
Schwinn Expands Internet Offerings,Announces REI Partnership
Schwinn is opening up sales of its Phantoms, Sting-Rays and Krates as well as
its classic parts line to Internet and direct mail retailers. In addition, the
company said it agreed to let Recreational Equipment, Inc. (REI) sell its bikes
and accessories, making Schwinn the only other bike line available nationwide at
the retail chain in addition to REI's Novara line. REI will continue to carry
bikes from other manufacturers in select locations, as it has done in the past.
In March, Schwinn opened up Internet and direct mail sales of its BMX framesets,
parts and accessories. After doing so, the company experienced a more than
20-percent jump in BMX sales. Company officials said the success encouraged them
to expand the program to include the popular line of vintage reproductions. They
said they want retailers to take advantage of the new policy to increase
exposure of the products for the Christmas season. Schwinn also is gearing up to
supply retailers with assembly instructions, owners manuals and tools required
by customers who bought products through the mail. Retailers wishing to
participate in the program should contact the company.
August 9, 1999
Volant Affiliate Buys Yeti Cycles From Schwinn
Yeti Cycles LLC, a newly formed affiliate of ski manufacturer Volant Sports,
bought the Yeti brand and its assets from Schwinn Cycling and Fitness. Yeti
Cycles will run independently from Volant, but the two companies, owned by the
same investor, will share management and some overhead. Mark Soderberg,
president and chief executive officer of Volant, also will take over those
duties at Yeti. Chris Conroy, previously with Brunswick and Scott USA, joined
Volant as vice president and general manager of Yeti Cycles. In the deal with
Schwinn, Volant acquired key Yeti personnel as well as leftover bikes and
machinery from Yeti's former Durango manufacturing facility. Yeti will open a
high-tech manufacturing facility in Wheat Ridge, Colorado. Conroy said the
company expects to have the facility running in the next two months, with the
first Yeti bikes rolling off the line in December. Yeti will continue its racing
heritage with its ARC hardtail and Mert Lawwill-designed Straight 8 full s
uspension bike. The company also plans to introduce several new models next
spring, including a lightweight full suspension bike.
June 2, 1999
Schwinn/GT Names Lamar As President Of Fitness Division
Schwinn/GT named Kevin T. Lamar as president of its Schwinn Fitness Division, as
of June 1. The company's fitness division has a product line of steppers,
treadmills, recumbent and upright stationary bikes, rowers and weight systems.
Lamar joined Schwinn in 1990 as product group manager. He was appointed vice
president in 1993 and in 1998 became the company's senior vice president and
general manager. "Kevin Lamar's appointment recognizes his leadership in
building our fitness business to the $100 million milestone in revenues it will
attain this year," said Tom Mason, Schwinn/GT's chief executive officer and
April 12, 1999
Schwinn On Grape Crusade In May
Schwinn is releasing a Grape Krate bike to celebrate the millennium. Schwinn
produced a line of various Krate bikes in the 1970s, identified by their ape
hangar handlebars and banana seats. A bit of mystery surrounds the Grape
Krate—no one knows if it ever was produced though some say a limited number were
made in 1969. The limited edition of 1,999 Grape Krates will be sold with ape
hanger handlebars and metal-flake vinyl banana seats. "We wanted to have fun
with this and celebrate the end of the millennium with something uniquely
Schwinn. And any relationship with Prince, the color purple or the 1999 album is
purely coincidental," said Gregg Bagni, senior vice president of marketing and
product development at Schwinn. The bike will be available to consumers
beginning with the Schwinn Cycle Madness Spectacular from May 8-16.
March 29, 1999
Schwinn Encourages Retailers To Sell BMX Parts On Internet
Schwinn is encouraging retailers to sell Schwinn and XS BMX framesets, parts and
clothing on the Internet and via mail order. As part of the new distribution
effort, mega mail order house Dan's Competition also will be authorized to sell
these Schwinn BMX products via mail order and the Internet. "Consumers
purchasing habits have changed dramatically in the past two years and we must
now work with our retailers to address these changes and take advantage of new
distribution opportunities," said Gregg Bagni, Schwinn's vice president of
product development and marketing. Schwinn will offer addendums to dealer
agreements permitting retailers to expand to these distribution channels.
Schwinn will maintain its manufacturer suggested retailer prices for Internet
and mail-order sales and will encourage retailers to make as much profit as
possible. The agreement forbids complete bikes to be sold via the Internet or
mail order and does not allow bikes to b e pre-assembled prior to shipping.
Schwinn's research has shown that most high-end BMX products are not purchased
through retailers. The company cites a survey by Ride Publishing revealing
nearly 70 percent of readers shop for BMX items via mail order. At the same
time, a reader survey conducted by BMX Plus shows that more than 65 percent of
consumers prefer to buy complete bicycles through retailers. "I don't think we
can ignore this thing any longer and that's why we're making this move," Bagni
said, adding that the change will open up retailers to the global market and
allow them to reach a broader consumer base. Bagni would not say whether Schwinn
has plans to expand the distribution agreement to its other product lines.
March 5, 1999
Schwinn Recalls Pro Stock 3 BMX Bike
Schwinn Cycling & Fitness is recalling 2,800 BMX bikes. The bikes are the 1998
Pro Stock 3 in 20 and 24-inch wheel sizes. The junction of the downtube, toptube
and headtube is too narrow to support forces applied to that area of the frame
during riding. Some of the frames also have shown inconsistencies in weld
penetration. Cracking can occur where the top and downtubes join the headtube
and as a result, these tubes could break apart, according to a Consumer Product
Safety Commission release. The frames of the 20-inch model are painted black or
orange while the 24-inch models have black or green painted frames. The date
code "4008" appears on the front of the headtube of each frame. "Schwinn" and "3
Pro Stock" decals are on the frames. Schwinn is aware of 21 reports of Pro Stock
3 frames cracking during use.
No injuries have been reported.
Cycling & Fitness Announce Recall of BMX Bicycles
WASHINGTON, D.C. - In cooperation with the U.S. Consumer Product Safety
Commission (CPSC), Schwinn Cycling & Fitness, of Boulder, Colo., is recalling
approximately 2,800 BMX bicycles. Cracking can occur where the top and down
tubes of the bicycle frame join the head tube, below the handlebar stem. These
tubes could break apart, potentially causing the rider to lose control and fall.
Schwinn is aware of 21 reports of bicycle frames cracking during use. No
injuries have been reported. These are 1998-model Pro Stock 3 bicycles sold in
both the 20-inch and 24-inch wheel sizes. The 20-inch size bicycles were sold
painted black or orange, and the 24-inch size bicycles were sold painted black
or green. The 24-inch model also is known as the BMX Cruiser model. These
bicycles have the date code "4008" printed on a label located on the front of
the head tube, below the handlebar stem. "SCHWINN" and "3 PRO STOCK" are written
on the bicycle frame. Authorized Schwinn dealers nationwide sold these bicycles
from February 1998 through December 1998 for about $300. Consumers should
immediately stop riding these bicycles and take them to an authorized Schwinn
dealer to have a new, replacement frame installed free of charge. To locate your
local Schwinn dealer or for more information, consumers should call Schwinn at
(800) SCHWINN between 8 a.m. and 5 p.m. MST Monday through Friday.
February 22, 1999
Schwinn Launches BMX Internet Site
Schwinn has launched a new BMX web site to showcase a new line of parts—XS—which
is being marketed to hardcore racers, dirt jumpers, street riders and
freestylers. The parts are not for sale over the Internet. The website,
www.xsbmx.com, also showcases Schwinn's BMX riders, Shaun Butler, Sandy Carson,
Mike Griffin, Mike Lausman, Jimmy Levan, Isaac McCrea, Troy McMurray and
"Luscious" Lee Wade. They are featured on the site with photographs and short
bios about each of them. While learning about the riders, web browsers can hear
the latest tunes from the redneck punk band, REO Speedealer. The XS site links
to Schwinn's site, where browsers can find the nearest Schwinn BMX retailer.
February 19, 1999
Schwinn/GT Lays Off 100 Employees
As Schwinn and GT combine distribution systems and warehousing, the company will
lay off 100 employees. The layoffs come as the company moves two Riteway
warehouses and closes two small Colorado factories. The factory closings include
Yeti's factory in Durango, Colorado, and GT's testing facility in Longmont,
Colorado. A new testing facility will open in the Boulder area. The layoffs
include 70 of GT's Riteway employees, 31 Yeti workers and four GT employees from
Longmont. Some employees will have the chance to transfer to new locations, and
the company is helping the others find new jobs. Based on a study by Price
Waterhouse consultants, the company will move Riteway's facilities in Sheboygan,
Wisconsin, to Chicago by April and the facility in Buffalo, New York, to New
Jersey by July. The current Riteway facility in St. Louis, Missouri, will act as
a hub in the supply chain and support the two new warehouses. Schwinn's outside
sales representatives and customer service and credit employees will continue to
service Sc hwinn retailers. GT employees will do the same for GT and Riteway
retailers. "It is our objective to effect these changes without impacting
service to our dealers," said Tom Mason, president and chief executive officer
February 4, 1999
Schwinn Drops Margins on HighEnd Bikes
As of Feb. 1, Schwinn dropped its margins 3 percent to 37 percent for bikes
costing more than $1,000. "We rolled them back because we thought the bikes were
not competitively priced. It was done to match the competition," said Tom Mason,
Schwinn/GT's president and chief executive officer. Margins are now back where
they were a year ago. Schwinn raised retailer margins last year to 40 percent
across the board for all non-juvenile bikes. Following Schwinn's lead and in
response to retailer demands, several companies followed suit. Now, some
suppliers are rethinking the move, saying it makes their bike less price
competitive with big-box sporting goods chains and mass-merchant retailers. Last
November, blaming the high cost of imported Japanese components, Trek raised the
prices of some of its Shimano-equipped bikes. The high cost of shipping is
another reason suppliers are looking to raise prices.
February 3, 1999
Schwinn Promotes Bagni, Names Meyer as National Sales Director
Schwinn promoted Gregg Bagni to senior vice president of marketing and product
development, taking on a role left vacant when Skip Hess resigned in December.
The company also named Carolyn Meyer to replace former national sales manager,
Jeff Feenstra, who left Schwinn in January. Bagni will continue to handle
marketing for Schwinn. His new role will allow him to align marketing with
product development in Schwinn's bicycle division, said Tom Mason, chief
executive officer of Schwinn and GT. "Gregg has made an enormous contribution in
the area of marketing, and he has excellent connections with our current product
development team. By working closely with that team he can help ensure
responsiveness to consumer needs and future expectations," Mason said. Meyer,
who previously worked as Trek's western sales manager, will start her job Feb. 8
as Schwinn's national sales director. Meyer, who has 25 years of management
experience in the in dustry, was the first woman hired as an outside sales
representative for a bike company. "Carolyn Meyer is a first-rate sales
professional known for her effective partnering with customers to profitably
build their business. She's also one heck of a cyclist," Mason said.
December 29, 1998
Duehring to Create New Bike Company
Bill Duehring, former chief operating officer for GT Bicycles, plans to start
his own bike company and develop a new line of bikes for independent retailers.
Duehring resigned from GT in October just days before the Schwinn/GT merger was
final. "I didn't feel my future was with the new ownership and felt it was best
for me to step out," Duehring said. His new company-for now called the Duehring
Company-will market bicycles for retailers under a new brand name, not yet
chosen. The bikes will most likely be sourced in Taiwan or China, he said.
Duehring expects to show the first models at the 1999 Interbike show, although
they will not be produced until 2000. "I felt my love and focus of my life has
been with IBDs. I'll give IBDs a wide range of bicycles to choose from,
something new, something different," he said, adding that he has yet to work out
December 1, 1998
GT Unveils HarleyDavidson Anniversary Bike
GT Bicycles has created the Velo Glide Ultra to help Harley Davidson Celebrate
its 95th anniversary. Only 1,000 of the limited-edition bicycles will be
produced. The Velo Glide Ultra shares features with Harley-Davidson's Softail
Custom motorcycle such as near-scale-model fenders, a mock gas tank, a
laser-etched air cleaner cover, a fired cloisonnÈ medallion set into the gas
tank, grips made of chrome and rubber and Fat Boy-style saddlebags. Unlike a
real Harley, however, the bike features a Shimano Nexus Flip-Fire 7-speed
drivetrain, a Rock Shox Jett suspension fork and Shimano Inter-M Roller Brakes.
Each limited edition Velo Glide Ultra is has a certificate of authenticity. The
head badge ornament will be retired at the end of the production run as will the
custom turquoise-and-cream paint scheme that is accented by red and gold
hand-pin striping. The Harley-Davidson Velo Glide Ultra has a suggested retail
price of $2,499 and is available at Harley-Davidson motorcycle dealers and au
thorized GT Bicycles dealers.
December 1, 1998
Schwinn's Skip Hess Resigns
Skip Hess, Schwinn's senior vice president and head of the company's bicycle
division, resigned Monday and will step down Dec. 31. Hess said he is eager to
tackle new challenges, although he did not say what those challenges are. "I
came here five years ago with an objective for Schwinn and we have accomplished
that objective. I'm ready for a new chapter in my life, a new set of
challenges," he said. Schwinn officials said Hess was largely responsible for
the rejuvenation of the Schwinn brand, product line and market share. Schwinn
has not yet announced who will handle Hess' job as head of the Schwinn bicycle
division. At the same time, Tom Mason, chief executive officer of Schwinn and
GT, is looking to hire someone for the bicycle division head at GT, a post that
has been vacant about two months.
November 23, 1998
Schwinn Promoting Online With Hotbot
Schwinn Cycling and Fitness has joined forces with Wired Digital to design a
large-scale promotion featuring the Schwinn RAV4 mountain bike race team,
Schwinn mountain bikes and the new HotBot free e-mail service. HotBot Mail is a
free e-mail service accessible from any Internet connection in the world. Wired
Digital is a division of Lycos. This is Schwinn's first online promotion. Online
banner ads and Wired Digital's daily newsletter potentially will inform millions
of online readers of the promotion. To enter the HotBot Mail/Schwinn mountain
bike contest, users must sign up for an e-mail account at www.hotbot.com before
Jan. 4, 1999. Winners will receive a 1999 Toyota RAV4L outfitted with a Schwinn
Homegrown mountain bike. Three Schwinn Moab 3 mountain bikes also will be given
October 30, 1998
Schwinn Pays $183 Million for GT Bikes
It's official. Schwinn Holdings' purchase of GT Bicycles, approved by
shareholders Sept. 28, puts the combined operations of the privately held
company neck-and-neck with Trek Bicycles. Schwinn, a unit of Questor Partners
Fund, must pay off stockholders, refinance GT's debt and pay fees that will push
the total price to approximately $183 million. The companies expect to close the
transaction today. Questor's backers are putting up $30 million, while the
Comerica Bank will finance the remaining $153 million. The stock repurchase
alone will cost $79.8 million. That amount buys back 9.9 million shares of
common stock at $8 per share, plus $976,514 in stock options. Bain Capital, GT's
largest shareholder, owned 23 percent of the outstanding shares. When active
trading in GT stock was halted July 31, its per share price was $4.50. A far cry
from earlier highs. The newly combined companies will generate annual revenues
in excess of $400 million, employ about 1,000 people and deliver nearly
one-fifth of all adult bikes sold through specialty retail. And the Schwinn and
GT brands will dominate sales of juvenile bikes, particularly in the BMX market.
Schwinn has about 1,500 dealers, while GT/Riteway sells to more than 4,000.
About 30 percent of GT's 1997 revenues of $217 million were generated outside
the United States.
October 7, 1998
Bill Duehring Resigns From Position at GT Bicycles
Bill Duehring, chief operating officer at GT Bicycles, resigned after the sale
of GT to Schwinn became official late last week. Duehring's resignation was
effective immediately. Schwinn's Tom Mason, who is heading the merged company,
has been at GT all week meeting with each department and working on a new
corporate flow chart. Mason, who was not available for comment, has been in
back-to-back meetings every hour on the hour, GT employees said. Schwinn
Holdings' purchase of GT Bicycles, approved by shareholders Sept. 28, puts the
combined operations of the privately held company neck-and-neck with Trek
Bicycles. Schwinn, a unit of Questor Partners Fund, must pay off stockholders,
refinance GT's debt and pay fees that will push the total price to approximately
$183 million. Questor's backers are putting up $30 million, while the Comerica
Bank will finance the remaining $153 million. The stock repurchase alone will
cost $79.8million. That amount buys back 9.9 mil lion shares of common stock at
$8 per share, plus $976,514 in stock options. Bain Capital, GT's largest
shareholder, owned 23 percent of the outstanding shares.
September 13, 1998
Schwinn Picks Up Distribution of Masi Frames
Schwinn was recently named as the exclusive distributor of Masi bicycle frames
in the United States. Until last week, Torelli Imports had carried the line. The
Masi trademark is owned in the United States by Ted Kirkbride, a former builder
at the now defunked Masi USA, and two investors, Gary Doyle and Bill Kneggi. The
frames continue to be built by Italian frame builder Mondonico, who also builds
frames for Torelli and under the Mondonico brand name. Torelli and Mondonico
frames are distributed by Torelli. Italian builder Guerciotti also will build
some of the lugged steel frames for Masi, said Mark Pippin, director of
Schwinn's product development. A new U.S.-made aluminum frame will be added to
the line, as well. Schwinn will offer the Masi line along side its Paramount and
Schwinn road bike lines. Masi and Paramount framesets will not be available as
complete bikes, but alone or with customized parts kits from Shimano, Campagnolo
and others. Masi will be available to Schwinn and Yeti dealers. "Schwinn is
committed to the road bike segment of the market. Now we have two prestigious
names with Paramount and Masi and two very forward, innovative road designers.
We want to be a player in the road market and we want retailers to think of
Schwinn when they think of road," Pippin said.
August 17, 1998
So How Close Did GT Come to Bankruptcy?
There's no question that GT faced some serious financial problems when the
company began looking for a buyer last January. Whether GT's problems would have
led to bankruptcy is pure speculation. But a report prepared by financial
analysts at Morgan Stanley, retained by GT, made it clear that GT executives
faced some very tough decisions. Here's what analysts told GT: As 1998 began,
company debt totaled $97.3 million with only $3.6 million available under
revolving credit agreements. But GT's revolving credit of $80.7 million, and a
term loan of $11.7 million, were due and payable June 30. Stockholder equity,
however, was only $61.4 million. The company's high degree of leverage could
have important consequences, analysts warned in January. Those consequences
included dedicating a substantial portion of its cash flow to service debt its
ability to obtain additional debt financing for working capital would be limited
its high degree of leverage put it at a competitive disadvantage and as a resu
it GT's ability to refinance its revolving credit and its term loan could be
adversely affected. Despite on-going negotiations to secure long-term financing,
analysts warned GT executives that there can be no assurance that the company
will be able to obtain any such facilities on acceptable terms, or at all. The
failure to obtain acceptable financing would have a material adverse affect on
the company's business, results of operations, financial condition and
liquidity. But that's history now. Next month shareholders will officially
approve GT's buy-out by Questor's wholly-owned subsidiary, Schwinn Holdings
Corp. at $8 per share, and GT will no longer be a publicly traded. Questor will
have to pay stockholders, refinance GT's debt, plus pay fees that will push the
price to $183 million. Questor's backers will put up $30 million, while the
Comerica Bank will finance the remaining $153 million.
Schwinn Buys GT Bicycles 1998
June 23, 1998
QUESTOR PORTFOLIO COMPANY TO ACQUIRE TREADMILL PRODUCER HEBB INSUDTRIES, INC.
TO STRENGTHEN SCHWINN FITNESS DIVISION
For Immediate Release Contact: Garrett Kanechann (248) 213-2200 Harry Savage
(212) 371-2200 QUESTOR PORTFOLIO COMPANY TO ACQUIRE TREADMILL PRODUCER HEBB
INSUDTRIES, INC. TO STRENGTHEN SCHWINN FITNESS DIVISION BOULDER,
Colorado,Schwinn Holdings Corporation, a portfolio company of Questor Partners
Fund, L.P. and the parent of Schwinn Cycling & Fitness Inc., announced today
that it has signed a definitive agreement for the acquisition by an affiliate of
all of the outstanding common stock of Hebb Industries, Inc. a leading producer
of treadmills for the fitness industry. Terms of the cash transaction were not
disclosed. Closing is expected by July 1. Hebb, based in Tyler, Tex., is a
private company formed in 1994 by brothers Joe and Bill Hebb to purchase the
Trimline product line of treadmills from Roadmaster Corporation. Hebb now
produces treadmills under the Trimline and Powertred brand names, distributed in
North America through a network of independent speciality fitness dealers. Hebb
also markets internationally to customers in 40 countries. Approximately 85
percent of the company's sales are domestic. The privately owned Schwinn,
headquartered in Boulder, began business in 1895. Its fitness division designs
and markets a wide range of equipment under the Schwinn name, including
stationary bikes, steppers, rowers and weight equipment. Schwinn's bicycles are
produced and marketed under the Schwinn and Yeti brand names. "Acquiring Hebb
Industries offers Schwinn the opportunity to present a complete line that
includes all of the major products distributed to the fitness industry," said
Kevin Lamar, senior vice president of Schwinn's fitness division. "Hebb offers
one of the most competitive and respected retail treadmill lines available."
"The Hebb brothers' expertise with treadmills is unsurpassed," said Tom Mason,
CEO of Schwinn. "We look forward to Joe and Bill becoming part of the Schwinn
management team." Upon completion of the acquisition, Schwinn will continue to
market the Trimline and Powertred brands, but also will concentrate on the
design and production of a new line of treadmills that will bear the Schwinn
brand name. The new Schwinn line of treadmills will be introduced at Schwinn's
Dealer Road Show and at the National Sporting Goods Show (NSGA),both scheduled
for July in Chicago. Questor acquired Schwinn in September 1997. The company has
made significant progress since emerging from bankruptcy protection in 1994, and
Questor has accelerated the company's recovery by adopting aggressive marketing,
acquisition and expansion programs. On June 22 , Schwinn Holdings announced it
had reached a definitive merger agreement to acquire GT Bicycles, Inc., in a
move that will significantly increase its bicycle business in the US and abroad.
Questor Management Company, Southfield, Mich., manages Questor Partners Fund,
which was established in 1996 to acquire underperforming or special situations
copmanies, including the non-core divisions or subsidiaries of Fortune 1000
corporations. In addition to Schwinn, the fund's portfolio includes AP
Automotive Systems, Toledo, Ohio, and Channel Master, Inc., Smithfield, N.C. The
fund recently sold its Ryder TRS holding to Budget Group, Inc. in a $750 million
June 22, 1998
QUESTOR PORTFOLIO COMPANY AND GT BICYCLES, INC. TO MERGE
BOULDER, Colo.,Schwinn Holdings Corporation, a portfolio company of Questor
Partners Fund, L.P. and the parent of Schwinn Cycling & Fitness Inc., and GT
Bicycles, Inc. (NASDAQ: GTBX) announced today that a definitive agreement has
been reached providing for the merger of GT into a subsidiary of Schwinn, and
the acquisition by Schwinn or an affiliate of all of the outstanding common
stock of GT for a cash consideration of $8.00 per share. Questor will provide
equity and has received ommitments to finance the debt portion of the
transaction. The proposed merger is subject to approval by stockholders of GT
and regulatory agencies and certain other terms and conditions. Certain
investment funds affiliated with Bain Capital, Inc. which holds approximately
22% of the outstanding shares of common stock of GT have agreed to vote their
shares in favor of the proposed merger. Such funds have also granted Schwinn an
option to purchase their shares of GT upon the occurrence of certain events. The
ransaction is expected to be completed in the third quarter of 1998. GT has
about 10 million common shares outstanding. GT, based in Santa Ana, Calif.,
designs, manufacturers and markets bicycles sold under the GT, Powerlite,
Robinson and Dyno brand names. Its Riteway Products distribution network is a
leading distributor of bicycles and related parts and accessories. Approximately
30 percent of GT’s 1997 revenues of $217 million were generated outside the U.S.
The privately owned Schwinn, headquartered in Boulder, Colo., began business in
1895.It designs, produces and markets its bicycles under the Schwinn and Yeti
brands. The company also designs and markets a wide range of fitness equipment
under the Schwinn name, including stationary bikes, steppers, rowers, and weight
equipment. "GT perfectly complements Schwinn and has tremendous distribution
capabilities both domestically and abroad," said Dan Lufkin, a principal of
Questor and chairman of Schwinn. "A combined Schwinn and GT will be ideally
suited to meet the needs of our present dealers and will have significant growth
opportunities in the international market." Lufkin said. "The companies already
have global reputations for their quality brands, and with projected combined
1998 revenues of approximately $400 million, the consolidated company will rank
among the largest companies in the bicycle and fitness equipment market,
worldwide." "The GT management team and employees have done a wonderful job of
building the company and the GT brand image. The two companies have known and
respected each other for many years," said Thomas J. Mason, CEO of Schwinn. "As
partners we can offer the independent dealers an unprecedented range of quality
products and world-class service." "We have closely followed the impressive
turnaround Schwinn has achieved in the past couple of years," said Mike Haynes,
CEO of GT. "We are excited about the prospects of blending the capabilities of
two of the great names in the industry." Lufkin said that the merged companies
would maintain their own unique identity, with separate product development,
marketing, and sales organizations. Questor acquired Schwinn in September 1997.
The company has made significant progress since emerging from bankruptcy
protection in 1994, and Questor has accelerated the company’s recovery by
adopting aggressive marketing, acquisition and expansion programs. Questor
Management Company, Southfield, Mich., manages Questor Partners Fund, which was
established in 1995 to acquire underperforming or "special situation" companies,
including the non-core divisions or subsidiaries of Fortune 1000 corporations.
In addition to Schwinn, the fund’s portfolio includes AP Automotive Systems,
Toledo, Ohio, and Channel Master, Inc., Smithfield, N.C. Questor recently sold
its Ryder TRS holding to Budget Group, Inc. in a $750 million transaction.##
Schwinn Bicycles Timeline/History
Schwinn re-introduces its muscle car inspired Sting-Ray and Krate bicycles,
wildly popular models offered in the late sixties and early seventies.
Nostalgia buffs everywhere shed a collective tear of joy.
Schwinn celebrates 30 years of manufacturing fitness equipment.
From the humble roots of the Deluxe Exerciser stationary bike
now springs a full line of advanced apparati equipped with
the state of the art computers and electromagnetic resistance.
Schwinn introduces the Straight 6TM downhill specific bike,
featuring dossiers full of secret technology.
World Cup points begin accumulating faster than bugs in our race team's teeth.
The radically new Schwinn line includes the new Moab S voted best
of show by Mountain Bike Magazine.Two worlds collide as Schwinn
merges the cycling experience with indoor framing to build the
Johnny G Spinner® bike. The Spinning® program,
the creation of endurance cyclist Johnny G., quickly grows into a global
The Homegrown Series brings high-tech,lightweight mountain bike
production back to the U.S. And that's just the beginning...
Schwinn,The Second Century...
Schwinn moves from Chicago to Boulder, Colorado.
Schwinn files for bankruptcy. New management takes over.
We fell,we got up. End of apology.
You can see more Schwinn history at:
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