What do you think led to the bankruptcy?

[wistech]

Ive been doing a lot of research lately and I came across Cannondales financial statements. After looking thruogh the mounds of documents, In my opinion I think the motorsports division had very little to do with the losses in 2001 and 2002. It looks like Cannondale was blaming lack of bike sales. Also failure to ship bikes due to parts problems and the economy. They were selling nearly $40,000,000 less bikes in 2002 than they were in 1999. They actually sold $22,000,000 in quads/motorcycles for 2002 as opposed to only $5,000,000 in 2001.

They made a profit of $6 million in 1999
lost $2.5 million in 2000
lost $20 million in 01
lost $15 million 02
So in 2002 when bike sales went down $40 million dollars and motorsports increased $15 million dollars, what division should they have focused on selling more of? When quad and motorcycle sales triple in one year that was a good indicator that had they been able to continue the motorsport division could have potentially (at the rate of increasing sales) at least broke even in 2003. When 2004 rolled around and the 450 quad market took off, look at the position Cannondale quads would have been in to compete. The jap quads didn't catch up to the technology for another 5 years. That's if they quit losing sales money in the bicycle division.

On a side note here are some funny stastistics they published:
R@D costs Motorsports Bicycles
2000 4.7 mil 3.8mil
2001 3.7mil 2.9mil
2002 2.5mil 3.3mil

How complicated are bicycles that they cost the same to R@D as 2 separate lines of quads and atv's? Atv money was less in 2002 due to them being done with initial R@D.

Another side note the report also listed some of the interest free loans for executives to buy houses when they relocated and purchases of aircraft and property which were far in excess of what they spent on R@D. Did they really need a 3 million dollar jet to ferry the handfull of executives between the plants? Maybe they should have thrown that $3 million towards figuring out what was failing in the cranks and a couple drums of locktite. LOL

[gml1998]

Does anyone remember what the MSRP was for the different bike and quad models was? Also what were the main differences of the different models of ATV's and Dirt Bikes ?

[big.elk.hunter]

When I bought my Speed in '02 they retailed for $7999. I think the Cannibal was $6999, the Blaze around $9999 and the Moto was $11,999 or something close to that. Not sure about the bike models.

Chris

[MX Quad Dad]

QUOTE (big.elk.hunter @ Apr 4 2010, 06:07 PM) <{POST_SNAPBACK}>

when I bought my Speed in "02 they retailed for $7999. I think the Cannibal was $6999, the blaze around $9999 and the Moto was $11,999. or something close to that. not sure about the bike models.

chris

I'm not sure but think the Blaze was $10,999. The Moto was $11,999. I thought I got a great deal at $11,120 plus 20% off on everything else I bought that day and all the parts I bought from them after the sale.

So I wonder why ATK can't do anything with them with no R&D cost.

[2000ex]

Well, I guess looking at those numbers we can extrapolate a few things. Bicycles of course will have high R&D as that was their bread and butter product. Look at the number of bikes sold as units and you will see why the R&D would be almost as high as ATV and Motorcycle R&D. You cannot merely look at those numbers and compare the two apples to apples.

Also there is one major component missing from what you provided. Cost of goods sold. It looks great that they sold 5 million in 2001 then 22,000,000 in 2002 from the Motorsports division, but at what cost? We are only looking at one side of the equation. They could have spent 35 million on materials, R&D, Labor, and took a huge loss which I am sure was the case. It could have been far more than that if you have access to that info.

[wistech]

In the grand sceme of things R@D was a pittance of what it cost to actually get these machines into production. I have the reciept for my Moto which was $12,500 and my Speed was $8000. The ones who wrote the financial report indicated the lack of bike sales was what was causing the loss.

[MX Quad Dad]

2000ex, what you say does sound right, but I can't help to think about the direction the sales were going. If the bicycle sales were droping that fast and the motorsport going up.

[wistech]

I didn't find any info on how they did after the bancruptcy but I guess moving bicycle production elsewhere must be an indicator. How do you design a 4 wheeler complete with thousands of parts all custom designed for a couple million a year? I thought they were spending tens of millions but apparently not. Geeze, one superbowl commercial for soda could have paid to redesign the engine from the ground up. LOL

[cannondale27]

Another thing to look at was the downfall of almost all the USA bike manufacturers which had a good start at just about the same time all this happened. It's a shame that it happened but you have to ask yourself even if the Motorsports division did succeed would the eventual loss of the bicycles division have led to the failure of the Motorsports division eventually anyway?It does seem like the end was in the making either way mostly due to all of us just expecting a product for nothing and the willingness to overlook that it would actually cost us much more than $.

[2000ex]

These numbers could also be creative accounting, as I don't see how R&D costs are so low for both sides. Sales numbers are great, however profitability is the end all that keeps the lights on and companies in business. Too many years of having sales and no profit = bankruptcy.

The US government's balance sheet is playing with this problem now