Huffy Files for Chapter 11, Cites Losses From Acquisition

From Associated Press

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

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

The Miamisburg, Ohio-based company, with roots dating to 1892, said it believed it would rebound by focusing again on bicycles.

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

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

Huffy bought a Canadian sports equipment company, Gen-X, in 2002 for $19 million plus 5 million shares of Huffy stock. But the company said transitional expenses and customer returns had exceeded anticipated levels, and in March it sold part of the Gen-X business.

Despite its problems, Huffy said, its bicycle division has been performing solidly, now accounting for a third of all bicycles sold in the United States.

Other reasons Huffy cited for the filing include costs associated with former operations, such as cleanup of a polluted California site. It employs about 140 workers in Carson, the Dayton, Ohio, area and Toronto.

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