The Sale of Schwinn/GT Assets

PRESS RELEASES!

PRESS RELEASES!

***********************************************************
Schwinn / GT Cycling & Fitness Divisions Sold For $151 Million
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 million to
Pacific Cycle, LLC
4902 Hammersley Road
Madison, WI 53711
General line: 608-268-2468
Consumer hotline: 1-800-SCHWINN
The parent company of Mongoose Bicycles.
( Changes at Schwinn and GT is the elimination of the parts and accessories business. )
( 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.
And
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
Consumer Relations
1690 38th Street
Boulder, CO 80301
Phone:(800) 688-9991


********************************************
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:
Schwinn.com / GT-Bicycles.com / Pacific-Cycle.com / Direct Focus,Inc / Huffy.com / BicycleRetailer.com
*Access to Bankruptcy and Other Court Case Files at NARA's Rocky Mountain Region in Denver*
Nasdaq Trader
Schwinn-Bikes News 2002 ARCHIVED / Schwinn-Fitness News 2002 ARCHIVED
GT-BMX News 2002 ARCHIVED / 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 getting
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 president.

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 http://www.epple.org

 

October 02, 2002
TJ LAVIN TO RIDE FOR SCHWINN IN 2003

http://www.schwinnbike.com/news/index.php?id=9
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 years ago.

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 2003
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: sales@mapleislandsales.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 offices.

 

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.
Send to:
Pacific Cycle, LLC
Attn: HR
4902 Hammersley Rd.
Madison, WI 53711
fax: 608 268-2452
email: hrmadison@pacific-cycle.com

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 preferred.

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 oriented.

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 ability.

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 shipping/distribution,
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 service oriented.

For more info see there website at:
http://www.pacific-cycle.com

 

August 13, 2002
Schwinn Enters Mass, Specialty Retailers Shrug Shoulders

VERNON HILLS, IL Without much hoopla, Schwinn bikes arrived at Wal-Mart, 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 trade.

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 new competitors.

"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
20-year-old hand-me-down.

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 report.
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 Wal-Mart, 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
retailers Wal-Mart, Toys 'R' Us and Target.

(Photo: NewsCom: http://www.newscom.com/cgi-bin/prnh/20020807/CGW011 )

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 market.
PTI info:
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 events.

 

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 @ gboulanger@pacific-cycle.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 Schwinn, GT, and Mongoose Pro names.

 

May 22, 2002
Pacific Cycle LLC and Unicycle.com have signed an exclusive distribution agreement
http://www.schwinnbike.com/news/

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 gboulanger@pacific-cycle.com

 

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. http://www.dfxi.com
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, Inc.

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, bragging rites.

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 @ gboulanger@pacific-cycle.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 retailers

Pacific will offer distinct Schwinn bike lines for specialty retailers and mass merchants

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 market.
If too few retailers pick up the brand, Pacific may consider other distribution options.

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 market.
"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 $400.

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 to $1,000.

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 global sales.

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 orient,
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 receivables,
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," Wittenberg said.

 

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 off guard.

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 http://www.gap.com/html/shops/gap/summertv02_com3a.asp

 

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 QUARTER RESULTS
VANCOUVER, WA. Direct Focus reported net sales of $135.9 million for its first quarter,
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.
http://gtbmx-live.gtbikes.com/news/news-story.html?nid=104
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 frames.

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 Riteway Products-Japan.

 

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,
Pacific's president.

"Schwinn's bicycle business was not profitable for the last 20 years, it
was only the fitness division that was keeping them afloat," Byron
said.

"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
States.

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
distribution centers.

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
Bacaville, California.

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
retailers.

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,"
Smith said.

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
main suppliers.

"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,"
Wittenberg said.

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
jobs.

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 in revenue.

 

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 to earnings.

“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
DIRECT FOCUS 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 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 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 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 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, Pacific's home.

 

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

Direct Focus, 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 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 12, 2001
Schwinn .com

Schwinn News PRESS RELEASES!
&
GT Bikes 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, where
Judge Sidney Brooks ruled in favor of Pacific's bid.
"This is a landmark day for Pacific and for Schwinn/GT dealers," said Chris Hornung,
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