Cannondale Corp – ‘424B3’ on 11/13/01

On:  Tuesday, 11/13/01   ·   Accession #:  932440-1-500255   ·   File #:  333-63088

in

this entire Filing. an “Entity” Search.

Show

Documents searched

and

each “hit”. the 1st “hit”.

↓↑Hints

Prospectus   —   Rule 424(b)(3)
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: 424B3       Prospectus                                            11     59K 

Document Table of Contents

424B3
1st Page of 11
TOC
↑Top
Previous
Next
↓Bottom
Just 1st
 
                                                                  Rule 424(b)(3)
                                               Securities Act File No. 333-63088

PROSPECTUS                                                                      

977,777 SHARES

CANNONDALE CORPORATION

COMMON STOCK

       These shares may be offered and sold from time to time by the selling
stockholders identified in this prospectus. The selling stockholders will       
receive all of the net proceeds from the sale of the shares. These stockholders 
will pay all underwriting discounts and selling commissions, if any, applicable 
to the sale of the shares. We will not receive any proceeds from the sale of the
shares.                                                                         

    Our common stock is traded on the Nasdaq National Market under the
symbol "BIKE." On November 8, 2001, the closing sale price of our common stock  
was $2.22 per share.                                                            

 -----------------------------

         INVESTING IN OUR COMMON STOCK INVOLVES A HIGH DEGREE OF RISK. SEE "RISK
FACTORS" BEGINNING ON PAGE 6 FOR A DISCUSSION OF CERTAIN FACTORS THAT YOU SHOULD
CONSIDER BEFORE BUYING THESE SHARES.                                            

 -----------------------------

         NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS
PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A     
CRIMINAL OFFENSE.                                                               

 -----------------------------

 The date of this prospectus is November 9, 2001

424B3
2nd Page of 11
TOC
1st
Previous
Next
↓Bottom
Just 2nd
 TABLE OF CONTENTS

                                                                    Page
                                                                    ----

Where You Can Find More Information.......................................3     
The Company...............................................................4     
Risk Factors..............................................................6     
Cautionary Note Regarding Forward-Looking Statements.....................10     
Use of Proceeds..........................................................11     
Selling Stockholders.....................................................11     
Plan of Distribution.....................................................11     
Legal Matters............................................................12     
Experts..................................................................12     

      YOU SHOULD RELY ONLY UPON THE INFORMATION INCORPORATED BY REFERENCE OR
CONTAINED IN THIS PROSPECTUS. WE AND THE SELLING STOCKHOLDERS HAVE NOT          
AUTHORIZED ANYONE TO PROVIDE YOU WITH DIFFERENT INFORMATION FROM THAT CONTAINED 
IN THIS PROSPECTUS. IF ANYONE PROVIDES YOU WITH DIFFERENT OR INCONSISTENT       
INFORMATION, YOU SHOULD NOT RELY ON IT. THE SELLING STOCKHOLDERS ARE NOT MAKING 
AN OFFER TO SELL THESE SHARES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT
PERMITTED. THE INFORMATION CONTAINED IN THIS PROSPECTUS IS ACCURATE ONLY AS OF  
THE DATE ON THE FRONT COVER OF THIS PROSPECTUS, REGARDLESS OF THE TIME OF       
DELIVERY OF THIS PROSPECTUS OR ANY SALE OF OUR COMMON STOCK. OUR BUSINESS,      
FINANCIAL CONDITION, OPERATING RESULTS AND PROSPECTS MAY HAVE CHANGED SINCE THAT
DATE. IN THIS PROSPECTUS, "CANNONDALE" MEANS CANNONDALE CORPORATION ONLY.       
CANNONDALE IS THE ISSUER OF THE PUBLICLY TRADED COMMON STOCK COVERED BY THIS    
PROSPECTUS. "WE," "US" AND "OUR" EACH MEANS CANNONDALE AND ITS SUBSIDIARIES     
COLLECTIVELY.                                                                   

 WHERE YOU CAN FIND MORE INFORMATION

     We file annual, quarterly and current reports, proxy statements and
other documents with the Securities and Exchange Commission. You may read and   
copy any document we file at the SEC's public reference rooms at Judiciary      
Plaza, 450 Fifth Street, N.W., Room 1024, Washington, D.C. 20549 and at the     
SEC's regional offices. Please call the SEC at 1-800-SEC-0330 for further       
information on public reference rooms. Our reports, proxy statements and other  
information filed with the SEC are also available to the public from the SEC's  
web site at http://www.sec.gov.                                                 

        This prospectus is part of a registration statement that we filed with
the SEC. The registration statement contains more information than this         
prospectus regarding Cannondale and our common stock, including certain exhibits
and schedules. You can get a copy of the registration statement from the sources
listed above.                                                                   

         The SEC allows us to "incorporate by reference" the information we file
with them, which means that we can disclose important information to you by     
referring you to those documents. The information incorporated by reference is  
considered to be part of this prospectus, and later information that we file    
with the SEC will automatically update and supersede this information. We       
incorporate by reference the documents listed below and any future filings made 
by us with the SEC under Section 13(a), 13(c), 14 or 15(d) of the Securities    
Exchange Act of 1934 until this offering is completed:                          

       o        Annual Report on Form 10-K for the year ended June 30, 2001;
and                                         

     o        The descriptions of our common stock and of certain rights
                  associated with our common stock contained in our Registration
                  Statements on Form 8-A, as filed with the SEC on September 29,
               1994 (with respect to our common stock) and on December 23,
            1997 (with respect to the related rights), including any
                amendments or reports filed for the purpose of updating such
descriptions.                               

      You may request a copy of any or all of these documents, at no cost,
by writing or telephoning us at the following address and telephone number:     
16 Trowbridge Drive, Bethel, Connecticut 06801; telephone:  (203) 749-7000;     
attention Judy Maney.                                                           

3 

424B3
3rd Page of 11
TOC
1st
Previous
Next
↓Bottom
Just 3rd
 THE COMPANY

         We are a leading manufacturer of high-performance bicycles. Our bicycle
line has grown from 21 models in our 1992 model year to 84 models in our 2002   
model year, all of which are hand assembled and constructed with hand-welded    
aluminum frames. We also sell other bicycle-related products, which include     
clothing, shoes and bags, and a line of components, some of which are           
manufactured for us by third parties. We have also entered the motorsports      
market with the production and shipment of our MX400 motocross motorcycle and   
our FX400 and Cannibal four-wheeled all-terrain vehicles, or "ATVs." For the    
2002 model year, we expect to produce a total of four off-road motorcycle models
and four ATV models.                                                            

        The bicycle market has matured in recent years and its growth rate has
decreased. We believe that we can leverage our domestic flexible manufacturing  
capabilities, which allow us to consistently provide high quality and innovative
products to the market faster than our competition to take strategic advantage  
of the current market conditions. Additionally, we believe that a marketing     
strategy consistent with our bicycle product line - one that focuses on         
innovation, differentiation, performance and quality leadership - provides us   
with a viable diversification growth strategy in the motorsports market.        

         BICYCLES. Our bicycles are marketed under the Cannondale brand name and
"Handmade in USA" logo. Our 2002 bicycle line offers 84 models, all of which    
feature a lightweight Cannondale hand-welded and hand-assembled aluminum frame. 
Our use of aluminum allows us to produce frames that are generally lighter in   
weight than other frames. Our bicycles feature wide diameter tubing, which      
provides greater frame rigidity as well as a distinctive look. Certain          
Cannondale models also have full or front suspension systems, offering greater  
comfort and control than non-suspended bikes. Our 2002 bicycle line also        
features models with the new Scalpel frame. A high-performance, lightweight full
suspension mountain bike frame, the Scalpel is primarily fabricated from        
aluminum, but has two carbon fiber "chainstays" (the two horizontal tubes       
running parallel to the bicycle's chain) that flex vertically to allow the rear 
wheel to absorb bumps, ruts and impacts. The actual movement of the rear wheel  
is controlled by a small, lightweight shock absorber.                           

    We manufacture and sell bicycle models for the adult market in six
major categories: mountain, road racing, aero and multi-sport, Road Warrior,    
recreational and specialty. Mountain bikes have wide knobby tires and straight  
handlebars and are designed for off-road riding. Road racing bikes are          
lightweight with thin tires and drop (curved) handlebars and are used for       
competitions or fast-paced fitness riding on paved roads. Aero and multi-sport  
bikes, designed for triathlons and other multi-sport races, are crafted from    
aerodynamic tubes. Road Warrior models are targeted toward serious,             
non-competitive road riders, and have somewhat more emphasis on comfort, rather 
than the lightest possible weight, quickest handling, or most aggressive        
aerodynamics. The recreational segment is comprised of Adventure and comfort    
bikes. Adventure models stress performance and comfort more or less equally,    
while comfort bikes are designed for the occasional cyclist who places maximum  
importance on comfort and ease of use. The specialty bicycle market encompasses 
various niche products, including tandem, touring, cyclocross, Bad Boy and      
street models.                                                                  

  We have 12 models in our 2002 line of proprietary HeadShok front
suspension forks. Each HeadShok model provides us an important point of         
differentiation from other bicycle manufacturers, virtually all of whom use the 
same brand-name forks produced by three independent suppliers. Our 2002 HeadShok
line is highlighted by three Lefty fork models. The HeadShok Lefty models each  
feature a single telescoping blade that dramatically reduces weight while       
delivering generous travel. The flagship Lefty Fork, the Lefty Carbon ELO,      
features a carbon fiber telescoping blade and weighs 317 grams less than the    
original Lefty. The newer fork also features ELO (Electronic Lock-Out), a       
handlebar-mounted push-button switch that electronically deactivates the fork's 
suspension on demand to prevent wasteful bobbing during sprints and climbs.     

         We also manufacture other proprietary components to further distinguish
ourselves from our competitors, and to pursue a strategy of "System             
Integration." System Integration is the process by which our designers create   
dedicated frames and components concurrently. The strategy allows our designers 
to aggressively pursue new levels of light weight and performance, without the  
restrictions of pre-set standards imposed by component suppliers. An example of 
System Integration is our CAAD6 road frame, and its dedicated Hollowgram front  
gear assembly. The CAAD6 frame is specially constructed to accommodate the      
Hollowgram components, which are 22% lighter and 4% more efficient (stiffer)    
than the comparable leading parts available to other bicycle manufacturers.     

4 

424B3
4th Page of 11
TOC
1st
Previous
Next
↓Bottom
Just 4th
         We also offer a complete line of men's and women's cycling apparel. The
line features numerous garments, and ranges from traditional cycling shorts and 
jerseys to specialized water and windproof shells cut specifically for cold     
weather cycling. The line includes two main collections: Chrono, a versatile    
line of performance-oriented apparel for riders of all abilities; and Terra,    
more loosely-cut garments for off-road riding.                                  

     In addition to our bicycle, suspension fork, component and clothing
lines, we manufacture and sell bicycle accessories, including bags, shoes and   
other items, some of which are manufactured for us by third parties. These      
products are sold primarily through the same distribution channels as our       
bicycles, forks, components and apparel.                                        

        MOTORSPORTS. In May 2000, we entered the motorsports industry with the
commercial introduction of the Cannondale MX400, a high-performance motocross   
(off-road racing) motorcycle, and followed in February 2001 with shipments of   
our FX400 ATV. We introduced the Cannibal, our second ATV model, in June 2001.  
Our entry into the motorsports industry allows us to extend our brand into a new
market by capitalizing on several of our core competencies, particularly our    
ability to design, test and manufacture welded and heat-treated aluminum-framed 
vehicles for off-road use. Our motorsports products are powered by a proprietary
liquid-cooled, electric-start, 432 cc four-stroke engine with a unique reversed 
cylinder head. The four-valve engine is fuel injected to deliver the proper     
air/fuel mixture to the engine independent of changes in air temperature or     
altitude.                                                                       

    We expect to manufacture and sell a total of eight 2002 model year
motorsports products: four off-road motorcycles and four sport ATVs. The four   
2002 motorcycles are the motocross-specific X440, the C440 for cross-country    
style racing, the E440 enduro, and the entry-level X440S motocrosser. The four  
ATV models are the entry-level Cannibal, the motocross-oriented Moto 440, the   
Blaze 440 cross-country racer and the high-performance Speed.                   

         We also sell a collection of motorcycle apparel which was introduced in
fiscal year 2000 concurrently with the MX400.                                   

INTERNATIONAL OPERATIONS. Our bicycle products are sold in    
approximately 60 foreign countries. Our activities in Europe, Japan and         
Australia are conducted through three wholly-owned subsidiaries, Cannondale     
Europe, Cannondale Japan and Cannondale Australia, respectively. Sales in other 
foreign countries are made from the United States through the use of 45 foreign 
distributors who sell our products to specialty bicycle retailers overseas.     
During fiscal 2001, 2000 and 1999, Cannondale Europe accounted for 39%, 41% and 
48%, respectively, of our consolidated net sales, Cannondale Japan accounted for
4%, 5% and 4%, respectively, and Cannondale Australia accounted for 2%, 2% and  
1%, respectively.                                                               

       Motorsports products are not currently available to the international
market; however, we plan to begin shipping to international dealers in the      
latter half of fiscal 2002.                                                     

   Cannondale Europe, based in Oldenzaal, the Netherlands, assembles
bicycles using frames and components manufactured by us, as well as components  
manufactured by third parties. Cannondale Europe sells bicycles and accessories 
directly to approximately 1,200 specialty bicycle retailer locations in Austria,
Belgium, Denmark, Finland, France, Germany, Italy, Ireland, Luxembourg, the     
Netherlands, Norway, Spain, Sweden, Switzerland and the United Kingdom using    
locally based employee account managers supervised from the Oldenzaal           
headquarters. Distributors are used in Greece, Hungary, Turkey, Greenland,      
India, Bulgaria, Andorra, Malta, Estonia, Lithuania and the Czech Republic.     

        Cannondale Japan, based in Osaka, imports fully-assembled bicycles and
a full line of accessories from us and various components manufactured by third 
parties. Cannondale Japan sells bicycles and accessories directly to            
approximately 300 specialty retailers and sells accessories to an additional 27 
retailers.                                                                      

         Cannondale Australia, based in Sydney, imports fully-assembled bicycles
and a full line of accessories from us and various components manufactured by   
third parties. Cannondale Australia sells bicycles and accessories directly to  
approximately 200 specialty retailers.                                          

We are a Delaware corporation organized in 1971. Our principal
executive offices are located at 16 Trowbridge Drive, Bethel, Connecticut 06801,
and our telephone number is (203) 749-7000.                                     

5 

424B3
5th Page of 11
TOC
1st
Previous
Next
↓Bottom
Just 5th
RISK FACTORS

        YOU SHOULD CAREFULLY CONSIDER THE FOLLOWING RISKS, TOGETHER WITH OTHER
INFORMATION CONTAINED OR INCORPORATED BY REFERENCE IN THIS PROSPECTUS, BEFORE   
MAKING AN INVESTMENT DECISION. OUR BUSINESS, OPERATING RESULTS AND FINANCIAL    
CONDITION COULD BE ADVERSELY AFFECTED BY ANY OF THE FOLLOWING RISKS. THE TRADING
PRICE OF OUR COMMON STOCK COULD DECLINE DUE TO ANY OF THESE RISKS, AND YOU COULD
LOSE ALL OR PART OF YOUR INVESTMENT.                                            

       WE HAVE SUFFERED DECREASED SALES AND SUBSTANTIAL NET LOSSES IN RECENT
YEARS AND WE CANNOT PREDICT WHETHER OUR FUTURE OPERATIONS WILL BE PROFITABLE.   
Our net sales have decreased from $178.8 million in fiscal 1999 to $162.5       
million in fiscal 2000 to $146.8 million in fiscal 2001. In addition, our net   
income has declined from $5.9 million in fiscal 1999, to a net loss of $2.5     
million in fiscal 2000, including the effect of a net extraordinary loss of     
$234,000, to a net loss of $20.3 million in fiscal 2001, including the effect of
a net extraordinary loss of $552,000 and the effect of a deferred tax asset     
valuation of approximately $12.9 million. Our future level of sales and         
potential profitability depend on many factors, including our ability to enhance
existing products and achieve market acceptance of new products, especially our 
motorsports products, the effectiveness of our dealer networks and sales teams  
and various economic conditions and changes affecting discretionary consumer    
spending. As a result, we can give no assurance that we will experience any     
significant growth in net sales or that our future operations will return to    
profitability.                                                                  

       OUR REVENUES AND EARNINGS COULD CONTINUE TO BE NEGATIVELY AFFECTED IF
WE CANNOT ANTICIPATE MARKET TRENDS, ENHANCE EXISTING PRODUCTS AND ACHIEVE MARKET
ACCEPTANCE OF NEW PRODUCTS, ESPECIALLY OUR MOTORSPORTS PRODUCTS. Our ability to 
return to the growth pattern that characterized our operations in prior years is
dependent to a large part on our ability to successfully anticipate and respond 
to changing consumer demands and trends in a timely manner, including the       
introduction of new or updated products at prices acceptable to customers. While
the substantial part of our sales historically has been attributable to mountain
and road bikes, we believe that our introduction of our motorsports product     
lines will provide diversification of our products. Our ability to achieve      
market acceptance for these products will depend upon our ability to:           

o        establish a strong and favorable brand image;        

o        establish a reputation for high quality; and         

     o        continue to develop our network of independent motorsports
dealers to sell these products.             

      The demand for and market acceptance of our motorsports products are
subject to substantial uncertainty. Because the market for our motorsports      
products is new for us and evolving, we cannot predict the size and future      
growth rate, if any, of this market. We also can give you no assurance that the 
market for our motorsports products will develop or that large demand for these 
products will emerge or be sustainable. In addition, we may incur significant   
costs in our attempt to establish market acceptance for our motorsports         
products.                                                                       

        WE FACE SUBSTANTIAL COMPETITION FROM A NUMBER OF MANUFACTURERS IN EACH
OF OUR PRODUCT LINES, INCLUDING IN THE MOTORSPORTS MARKET, WHICH WE MAY NOT BE  
ABLE TO PENETRATE BECAUSE OF THE ESTABLISHED MANUFACTURING CAPABILITIES, MARKET 
POSITION AND BRAND RECOGNITION OF MANY OF OUR COMPETITORS. The worldwide market 
for bicycles and accessories is extremely competitive and we face strong        
competition from a number of manufacturers in each of our product lines. A      
number of our competitors are larger and have greater resources than we have.   
Competition in the high-performance segment of the bicycle industry is based    
primarily on perceived value, brand image, performance features, product        
innovation and price. Competition in foreign markets may also be affected by    
duties, tariffs, taxes and the effect of various trade agreements, import       
restrictions and fluctuations in exchange rates. We may not be successful in the
bicycle market if we cannot compete on:                                         

o        the breadth and quality of our bicycle product lines;

    o        the continued development and maintenance of an effective
specialty bicycle retailer network;         

o        brand recognition; and                               

o        price.                                               

6 

424B3
6th Page of 11
TOC
1st
Previous
Next
↓Bottom
Just 6th
  The motorsports market is also highly competitive. Our principal
competitors in this market are foreign manufacturers that have financial        
resources substantially greater than ours, have established manufacturing       
capabilities, have established market positions and have strong brand           
recognition. As a result, we may not be able to penetrate the motorsports       
market. We may not be successful in the motorsports market if we cannot compete 
on:                                                                             

     o        the design and production of quality motorcycles and ATVs;

      o        the development and maintenance of an effective motorsports
retailer network;                           

o        brand recognition;                                   

o        market presence;                                     

o        timely delivery of motorcycles and ATVs; and         

o        price.                                               

   OUR SALES ARE HIGHLY DEPENDENT ON THE EFFECTIVENESS OF OUR DEALER
NETWORKS AND SALES TEAMS AND OUR DEALERS MAY NOT GIVE PRIORITY TO OUR PRODUCTS  
AS COMPARED TO OUR COMPETITORS' PRODUCTS. Sales of our products are made to     
specialty bicycle and motorsports retailers. Our level of sales depends upon the
effectiveness of these dealer networks and our internal sales teams. Most of our
dealers offer competitive products manufactured by third parties. Our dealers   
may not give priority to our products as compared to our competitors' products. 
In addition, because we have recently entered the motorsports business, we do   
not yet know how successful our dealers and sales team will be in selling our   
motorcycles, ATVs and related products over the long term.                      

        WE RELY ON A SINGLE SUPPLIER FOR MANY OF THE SIGNIFICANT COMPONENTS IN
OUR BICYCLE PRODUCTS AND WE CAN GIVE NO ASSURANCE THAT WE WILL BE ABLE TO       
PURCHASE COMPONENTS FROM OUR CURRENT BICYCLE AND MOTORSPORTS SUPPLIERS AT       
REASONABLE PRICES OR ON A TIMELY BASIS IN THE FUTURE. Our ability to distribute 
our products on schedule is highly dependent on our timely receipt of an        
adequate supply of components and materials. Our bicycles, motorcycles and ATVs 
incorporate numerous components manufactured by other companies. Although there 
are many suppliers for each of our component parts, we rely on a sole source of 
supply for many of the significant components in our bicycle products. This     
reliance involves a number of significant risks, including:                     

     o        temporary unavailability of materials and interruptions in
            delivery of components and materials from our suppliers;

         o        manufacturing delays caused by unavailability or interruptions
of components and materials to us; and      

      o        fluctuations in the quality and the price of components and
materials.                                  

        We have few long-term agreements with our component manufacturers, and
have no long-term agreement with Shimano, our largest single supplier, or with  
the suppliers of many of the materials used in the manufacture of our products. 
As a result, we can provide no guarantee that we will be able to purchase the   
components and materials we need from our current suppliers at reasonable prices
or on a timely basis. Although we believe we have established close             
relationships with our principal suppliers, our future success will depend upon 
our ability to maintain flexible relationships with our suppliers or to         
substitute new suppliers without interruption of supply. The loss of Shimano or 
certain other key suppliers or delays or disruptions in the delivery of         
components or materials could have a material adverse effect on our             
manufacturing operations.                                                       

   WE HAVE LIMITED EXPERIENCE WITH MOTORSPORTS PRODUCT MANUFACTURING
OPERATIONS. While we believe that we can capitalize on many of our core         
competencies in producing our motorsports products, we have limited experience  
in designing and manufacturing motorsports products. This may lead to unforeseen
expenses and delays in manufacturing and selling our motorsports products. For  
example, although we conduct significant testing of our motorsports products,   
these products could contain unforeseen defects. These defects could result in  
costly product recalls, product liability claims and damage to our brand name.  
In addition, we may encounter significant difficulties and incur unforeseen     
expenses in manufacturing our motorsports products in commercial quantities and 
on a timely basis.                                                              

7 

424B3
7th Page of 11
TOC
1st
Previous
Next
↓Bottom
Just 7th
 OUR PRODUCTS COULD CONTAIN DEFECTS CREATING PRODUCT RECALLS AND
WARRANTY CLAIMS THAT COULD MATERIALLY ADVERSELY AFFECT OUR FUTURE SALES AND     
PROFITABILITY. Our products could contain unforeseen defects. These defects     
could give rise to product recalls and warranty claims. A product recall could  
delay or halt production of the affected product until we are able to address   
the reasons for any defects. Recalls may also have a materially negative effect 
on our brand image and public perception of the affected product. This could    
materially adversely affect our future sales. Recalls or other defects would be 
costly and could require substantial expenditures.                              

         Unanticipated defects could also result in product liability litigation
against us. Given the nature of our products, we have in the past and expect in 
the future to be subject to potential product liability claims that, in the     
absence of sufficient insurance coverage, could have a material adverse effect  
on us. Although we currently maintain liability insurance coverage, this        
coverage may not be adequate to cover all product liability claims. Any large   
product liability claim could materially adversely affect our ability to market 
our products.                                                                   

      DISCRETIONARY CONSUMER SPENDING MAY AFFECT PURCHASES OF OUR PRODUCTS
AND IS AFFECTED BY VARIOUS ECONOMIC CONDITIONS AND CHANGES. Purchases of        
bicycles and motorsports products, particularly the high-performance models     
manufactured by us, and our other products are considered discretionary for     
consumers. Our success will be influenced by a number of economic factors       
affecting discretionary consumer spending, including:                           

o        employment levels;                                   

o        business conditions;                                 

o        interest rates;                                      

o        general level of inflation; and                      

o        taxation rates.                                      

        Adverse economic changes affecting these factors may restrict consumer
spending and thereby adversely affect our growth and profitability. For example,
we believe that the weakening of the U.S. economy and the related decline in    
consumer confidence contributed to the decline in our bicycle sales in fiscal   
2001.                                                                           

       WE ARE SUBJECT TO OPERATIONAL, FINANCIAL, POLITICAL AND EXCHANGE RATE
RISKS DUE TO OUR SIGNIFICANT LEVEL OF INTERNATIONAL OPERATIONS AND SALES. A     
substantial portion of our sales is generated by our foreign subsidiaries. As a 
result, our operations are subject to risks inherent in international business  
activities, including:                                                          

o        fluctuations in currency exchange rates;             

o        shipment delays;                                     

o        difficulties in accounts receivable collections;     

o        changes in tariffs and other barriers;               

   o        unexpected changes in legal and regulatory requirements;

o        political and economic instability;                  

o        difficulties in staffing and managing international  
operations; and                             

o        potentially adverse tax consequences.                

       OUR QUARTERLY OPERATING RESULTS MAY FLUCTUATE AND OUR STOCK PRICE MAY
BE VOLATILE AS A RESULT. Our quarterly operating results may fluctuate in the   
future as a result of a number of factors, including:                           

o        the amount and timing of orders from retailers;      

8 

424B3
8th Page of 11
TOC
1st
Previous
Next
↓Bottom
Just 8th
o        the timing and number of new retailer openings;      

 o        the timing of shipments and new product introductions;

       o        the amount and timing of expenditures for key components and
materials;                                  

o        the availability of key components and materials;    

o        manufacturing delays;                                

o        seasonal variations in the sale of our products;     

o        product mix;                                         

o        pricing changes in our products;                     

o        the effect of adverse weather conditions on consumer 
purchases; and                              

o        general economic conditions.                         

       As a result, our operating results in any quarter are not necessarily
indicative of our results for any future period. In the future, we will likely  
experience quarterly or annual fluctuations. In one or more future quarters, our
operating results may fall below the expectations of public market analysts or  
investors, and the price of our common stock could decline significantly.       

   OUR BUSINESS COULD BE ADVERSELY AFFECTED IF WE CANNOT PROTECT OUR
PROPRIETARY TECHNOLOGY OR IF WE INFRINGE ON THE PROPRIETARY TECHNOLOGY OF       
OTHERS. Our proprietary technology aids our ability to compete with other       
companies in the bicycle and motorsports markets. Although we rely on a         
combination of patents, trade secrets, know-how, trademarks and non-disclosure  
agreements to protect our proprietary technology, we may not be able to fully   
protect our technology or competitive position. Our inability to maintain the   
proprietary nature of our technologies could negatively affect our revenues and 
earnings. Further, our competitors may apply for and obtain patents that may    
restrict our ability to make and sell our products.                             

         Although we believe our proprietary technology does not infringe on the
rights of third parties, we can provide no guarantee that third parties will not
assert infringement claims against us in the future. The defense and prosecution
of patent suits are both costly and time consuming, even if the outcome is      
favorable to us. An adverse outcome in the defense of a patent suit could       
subject us to significant liabilities to third parties or require us to cease   
selling our products.                                                           

         WE MAY NOT BE ABLE TO OBTAIN ADDITIONAL EQUITY OR DEBT FINANCING. If we
need to seek additional debt or equity financing in the future, we may not be   
able to obtain sufficient financing on commercially reasonable terms, or at all.
If adequate funds are not available when needed on acceptable terms, or at all, 
we may not be able to take advantage of business opportunities, including       
further development of our motorsports product lines. In April 2001, we amended 
the financing agreements with our primary lenders in order to modify certain    
financial covenants. As a condition to entering into these amendments, we were  
required to receive a cash infusion of at least $7.0 million, of which no more  
than $3.0 million was to be paid by our foreign subsidiaries. In satisfaction of
this condition, our European subsidiary repaid to us $3.0 in intercompany debt  
and we sold an aggregate of $4.0 million of convertible debentures to the       
selling stockholders in this offering. As a result of these amendments, we are  
currently in compliance with all financial covenants. However, our ability to   
continue to comply may be affected by events beyond our control, such as various
economic conditions and changes adversely affecting discretionary consumer      
spending. The breach of any of these covenants, unless waived by the lenders,   
would constitute an event of default under our financing agreements, which would
permit our lenders to accelerate the maturity of our debt. We can give no       
assurance that we would be able to obtain any such waiver on acceptable terms or
at all. In addition, our financing agreements also contain covenants that       
restrict our ability to incur additional indebtedness, which may further limit  
our ability to obtain any necessary financing in the future.                    

9 

424B3
9th Page of 11
TOC
1st
Previous
Next
↓Bottom
Just 9th
       WE DEPEND ON OUR KEY PERSONNEL. Our success depends on the efforts of
key personnel involved in research and development, marketing, sales, finance   
and administration. The loss of the services of one or more of these key        
persons, particularly the loss of the services of Joseph S. Montgomery, our     
Chairman, President and Chief Executive Officer, could have a material adverse  
effect on our operations. Our success also depends upon our ability to hire and 
retain additional qualified research and development, marketing and sales       
personnel. We may not be able to hire or retain necessary personnel.            

         THE DILUTION WHICH MAY RESULT FROM THE CONVERSION INTO SHARES OF COMMON
STOCK OF THE DEBENTURES HELD BY THE SELLING STOCKHOLDERS COULD BE SIGNIFICANT.  
In April 2001, we issued two convertible debentures, each with a principal      
amount of $2 million, to the selling stockholders in this offering. The two     
debentures are convertible, in whole or in part, at the option of the holder    
into shares of our common stock at an initial conversion price of $3.75 and     
$4.50, respectively, or an aggregate of 977,777 shares. We have included all    
977,777 shares in this prospectus, which means that when a debenture is         
converted, in whole or in part, the holder may resell the shares received on the
conversion in the public market. The conversion of a material portion of these  
debentures by the selling stockholders will have a dilutive effect on our       
existing stockholders.                                                          

    THE PROVISIONS OF THE DEBENTURES WOULD SUBJECT OUR STOCKHOLDERS TO
FURTHER DILUTION IF WE WERE TO ISSUE COMMON STOCK AT PRICES BELOW THE CONVERSION
PRICES IN THE DEBENTURES. In addition to provisions providing for proportionate 
adjustments in the event of stock splits, stock dividends and similar events,   
the debentures provide for an adjustment of the applicable conversion prices if 
we issue shares of our common stock at prices lower than these conversion       
prices. This means that if we need to raise equity financing at a time when the 
market price for our common stock is lower than the one or both of the          
applicable conversion prices, then the conversion price of one or both of the   
debentures will be reduced and the potential dilution to stockholders increased.

      IF THE SELLING STOCKHOLDERS ELECT TO SELL A MATERIAL AMOUNT OF THEIR
SHARES OF OUR COMMON STOCK, THE MARKET PRICE OF OUR SHARES MAY DECREASE. It is  
possible that the selling stockholders will offer all of their shares included  
in the prospectus for sale. Further, because it is possible that a significant  
number of these shares could be sold at one time, those sales could reduce the  
market price of our common stock.                                               

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

       This prospectus contains or incorporates "forward-looking statements"
within the meaning of Section 27A of the Securities Act of 1933 and Section 21E 
of the Securities Exchange Act of 1934. These include statements about          
anticipated financial performance, future revenues or earnings, business        
prospects, new products, anticipated market performance, planned production and 
shipping of motorsports products, expected cash needs, availability of          
additional financing, future compliance with the terms and conditions of        
financing facilities and similar matters. In addition, the words "anticipate,"  
"project," "plan," "intend," "estimate," "expect," "may," "believe" and similar 
words are intended to identify the statements that are forward-looking          
statements. All forward-looking statements involve risks and uncertainties.     
Actual results may differ materially from those discussed in, or implied by, the
forward-looking statements as a result of certain factors, including, but not   
limited to, those risks and uncertainties discussed above and in our other      
filings with the SEC. You should not place undue reliance on these              
forward-looking statements. We do not intend to update information contained in 
any of our forward-looking statements except as required by law.                

10

424B3
10th Page of 11
TOC
1st
Previous
Next
↓Bottom
Just 10th
 USE OF PROCEEDS

      We will not receive any proceeds from the sales of the shares by the
selling stockholders. Also, we will bear the costs of registering the shares    
covered by this prospectus. Those costs include registration and Nasdaq listing 
fees and fees and expenses of our counsel and accountants.                      

However, the selling stockholders will be responsible for any 
underwriting discounts and commissions or expenses incurred by the selling      
stockholders for brokerage services.                                            

SELLING STOCKHOLDERS

The following table sets forth certain information known to us
regarding the beneficial ownership of our common stock as of the date of this   
prospectus by each selling stockholder.                                         

                                                        [Enlarge/Download Table]


                                      Shares Beneficially Owned                            Shares Beneficially Owned 
                                         Before the Offering                                   After the  Offering   
                                      --------------------------                           --------------------------
                                                                              Shares                                 
Selling Stockholders                  Number         Percent (1)        Being Offered (2)    Number (3)       Percent
--------------------                  ------         -----------        -----------------    ----------       -------
                                                                                                                     
Joseph S. Montgomery (4)            1,906,494(5)        23.5%                444,444        1,462,050(5)        18.0%

James R. Pyne                         533,333           6.6%                 533,333              0               0  

TOTAL                                                                        977,777                                 

 ---------------                                                                                                     

 (1)     Percentage ownership is based on 7,543,364 shares of common                                                 
         stock outstanding as of October 31, 2001.                                                                   

 (2)     Represents the number of shares that each selling stockholder                                               
         may currently acquire upon conversion of our 8% convertible                                                 
         debentures at the initial conversion price per share of $4.50                                               
         and $3.75 set forth in the debenture issued to Mr. Montgomery                                               
         and Mr. Pyne, respectively. Such number of shares does not                                                  
         include any additional shares that may become issuable in the                                               
         event of a stock split, stock dividend or similar transaction                                               
         involving our common stock.                                                                                 

 (3)     Assumes the sale of all shares of common stock offered hereby.                                              

 (4)     Mr. Montgomery is our founder, Chairman of the Board of                                                     
         Directors, Chief Executive Officer and President.                                                           

 (5)     Includes 128,750 shares issuable upon exercise of options that                                              
         are exercisable within 60 days of the date of this prospectus.                                              


PLAN OF DISTRIBUTION

       The selling stockholders and any of their donees, pledgees, assignees
and successors-in-interest may, from time to time, sell any or all of their     
shares of common stock on any stock exchange, market or trading facility on     
which the shares are traded or in private transactions. These sales may be at   
fixed or negotiated prices. The selling stockholders may use any one or more of 
the following methods when selling shares:                                      

      o      ordinary brokerage transactions and transactions in which the
broker-dealer solicits purchasers;              

         o      block trades in which the broker-dealer will attempt to sell the
            shares as agent but may position and resell a portion of the
 block as principal to facilitate the transaction;

    o      purchases by a broker-dealer as principal and resale by the
broker-dealer for its account;                  

     o      an exchange distribution in accordance with the rules of the
applicable exchange;                            

o      privately negotiated transactions;                     

o      short sales;                                           

11

424B3
Last Page of 11
TOC
1st
Previous
Next
↓Bottom
Just 11th
      o      broker-dealers may agree with a selling stockholder to sell a
                specified number of such shares at a stipulated price per share;

o      a combination of any such methods of sale; and         

o      any other method permitted pursuant to applicable law. 

        The selling stockholders may also sell shares under Rule 144 under the
Securities Act, if available, rather than under this prospectus.                

   The selling stockholders may also engage in puts, calls and other
transactions in our securities or derivatives of our securities and may sell or 
deliver shares in connection with these trades. A selling stockholder may pledge
his shares to his broker under the margin provisions of customer agreements. If 
a selling stockholder defaults on a margin loan, the broker may, from time to   
time, offer and sell the pledged shares. The selling stockholders advised us    
that they have not entered into any agreements, understandings or arrangements  
with any underwriters or broker-dealers regarding the sale of their shares other
than ordinary course brokerage arrangements, nor is there an underwriter or     
coordinating broker acting in connection with the proposed sale of shares by the
selling stockholders.                                                           

    Broker-dealers engaged by the selling stockholders may arrange for
other brokers-dealers to participate in sales. Broker-dealers may receive       
commissions or discounts from the selling stockholders (or, if any broker-dealer
acts as agent for the purchaser of shares, from the purchaser) in amounts to be 
negotiated. The selling stockholders do not expect these commissions and        
discounts to exceed what is customary in the types of transactions involved.    

    The selling stockholders and any broker-dealers or agents that are
involved in selling the shares may be deemed to be "underwriters" within the    
meaning of the Securities Act in connection with such sales. In such event, any 
commissions received by such broker-dealers or agents and any profit on the     
resale of the shares purchased by them may be deemed to be underwriting         
commissions or discounts under the Securities Act.                              

         The selling stockholders and other persons participating in the sale or
distribution of the shares will be governed under applicable provisions of the  
Securities Exchange Act of 1934 and the rules and regulations thereunder,       
including Regulation M. This regulation may limit the timing of purchases and   
sales of any of the shares by the selling stockholders and any other person. The
anti-manipulation rules under the Securities Exchange Act of 1934 may apply to  
sales of shares in the market and to the activities of the selling stockholders 
and their affiliates. Furthermore, Regulation M may restrict the ability of any 
person engaged in the distribution of the shares to engage in market-making     
activities with respect to the particular shares being distributed for a period 
of up to five business days before the distribution. These restrictions may     
affect the marketability of the shares and the ability of any person or entity  
to engage in market-making activities with respect to the shares.               

We are required to pay all fees and expenses incident to the  
registration of the shares. We have agreed to indemnify the selling stockholders
against certain losses, claims, damages and liabilities, including liabilities  
under the Securities Act.                                                       

 LEGAL MATTERS

        Kelley Drye & Warren LLP, of Stamford, Connecticut, will pass upon the
validity of the shares offered by this prospectus.                              

 EXPERTS

The consolidated financial statements and related schedule of 
Cannondale Corporation and Subsidiaries at June 30, 2001 and July 1, 2000, and  
for each of the three years in the period ended June 30, 2001, incorporated by  
reference in this Prospectus and Registration Statement, have been audited by   
Ernst & Young LLP, independent auditors, as set forth in their report appearing 
in our Annual Report on Form 10-K for the year ended June 30, 2001. The         
financial statements referred to above have been so incorporated in reliance    
upon such report given on the authority of such firm as experts in accounting   
and auditing.                                                                   

12

Dates Referenced Herein   and   Documents Incorporated by Reference

				Referenced-On Page
This ‘424B3’ Filing		Date		First		Last			Other Filings
Filed on:		11/13/01							10-Q
		11/9/01		1
		11/8/01		1
		10/31/01		10
		6/30/01		2		11			10-K
		7/1/00		11					10-K
		12/23/97		2					8-A12G,  8-K
		9/29/94		2
									List all Filings