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Huffy files for bankruptcy

Posted: Thursday, October 21, 2004

 

  A vintage 60's Huffy bicycle owned by Nancy and Tom Thickel at their home Thursday, July 29, 2004 in Dayton, Ohio. AP Photo/David Kohl

A vintage 60's Huffy bicycle owned by Nancy and Tom Thickel at their home Thursday, July 29, 2004 in Dayton, Ohio.

AP Photo/David Kohl

DAYTON, Ohio Huffy Corp., the bicycle maker beloved by generations of American children, filed Wednesday for Chapter 11 bankruptcy protection, citing losses from a Canadian sports equipment company it acquired two years ago.

Huffy's losses have increased steadily in recent years, from $1.4 million in 2002 to $7.5 million in 2003. It has not filed quarterly financial reports in 2004.

The beleaguered company's stock also plummeted from $6.80 a share in December 2003 to 58 cents in August, when the New York Stock Exchange suspended trading because the company's market value had fallen too low.

With roots dating back to 1892, the company said it believes it will rebound by focusing again on bicycles.

''I am confident that Huffy will emerge as a stronger and more competitive organization, well-positioned to succeed,'' said John Muskovich, president and chief operating officer.

Huffy's problems began in the late 1990s, when foreign competition began to take its toll. The company closed its last American bicycle plants and moved production to Asia and Mexico.

Huffy bought the Canadian sports equipment company, Gen-X, in 2002 for $19 million plus 5 million shares of Huffy stock.

But the company said transitional expenses and customer returns had exceeded anticipated levels and in March it sold part of the Gen-X business, which makes equipment for golf, snowboarding, inline skating, skiing and hockey.

Huffy also recently sold its basketball-backboard unit and its customer service division. It will continue making golf products.

Despite its problems, the company said its bicycle division has been performing solidly and has increased its share of the American market in the past two years, now accounting for a third of all bicycles sold in the U.S.

Michael Gamstetter, editor-in-chief of Bicycle Retailer and Industry News, said Huffy's purchase of Gen-X was a mistake.

''It was away from their core business,'' Gamstetter said. ''It's possible they misunderstood who their customers were.''

Other reasons Huffy cited for the Chapter 11 filing include the increasing costs of complying with federal financial reporting regulations and mounting costs associated with former operations, such as cleanup of a polluted California site.

Huffy said daily operations at its U.S. and Canadian subsidiaries will continue during Chapter 11 proceedings. The company said it has obtained $50 million in financing for operating, supplier and em-ployee expenses.

It employs about 140 workers in the Dayton area, Toronto and Carson, Calif.

George Huffman, owner of the Davis Sewing Machine Co., began manufacturing bicycles in Dayton in the 1890s. Horace Huffman sold the company in 1925 and formed the Huffman Manufacturing Co., which eventually became Huffy Corp.

Huffy became a household name following World War II when the company began marketing a bicycle with rear training wheels that had foot steps attached. The Huffy Convertible was instantly popular, branding the company in the hearts of the Baby Boom generation.

Nancy Thickel, 53, of Oakwood, Ohio, bought Huffy bikes as a college student and later for anniversary and birthday gifts for her family.

She said she hopes Huffy successfully reorganizes.

''You have to wonder if they would have stayed true to their product bicycles whether they would be better off today,'' Thickel said.



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