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Cannondale Bicycle Corp. - 2001 Q 3 (Page 1)

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Cannondale Bicycle Corp. - 2001 Q 3
CONTACT:
WILLIAM A. LUCA
CHIEF FINANCIAL OFFICER
(203) 749-7000
FOR IMMEDIATE RELEASE
CANNONDALE CORPORATION
ANNOUNCES FINANCIAL RESULTS FOR
THE THIRD QUARTER OF FISCAL YEAR 2001
Bethel, CT (April 30, 2001) - Cannondale Corporation (Nasdaq: BIKE) today announced results for the third quarter
of fiscal 2001, the period ended March 31, 2001.

For the three months ended March 31, 2001, net sales were $32,636,000 compared to $40,308,000 recorded for the
same period last year. Included in the net sales amount is approximately $1.7 million in motorsports sales. The
reduction in sales was due to dealers' cautious buying patterns relating to the weakening economy, adverse weather
conditions, and a delay in delivery of bicycle accessories from vendors which affected shipments in March. In
addition, net sales were negatively affected by approximately $1.2 million relating to foreign exchange fluctuations.
The loss for the third quarter of fiscal 2001, prior to the recognition of $2,287,000 to record a valuation allowance
for net deferred tax assets, was $3,064,000 compared to the loss of $762,000 recorded during the same period last
year. Although the Company expects to ultimately utilize its net deferred tax assets, a valuation allowance was
established in accordance with Statement of Financial Accounting Standards No. 109. The Company's bicycle
business achieved pre-tax earnings of $559,000 for the third quarter of fiscal 2001 compared to pre-tax earnings of
$2,021,000 for the third quarter of fiscal 2000. The decrease in profits is commensurate with the factors noted above.

The loss per share for the third quarter of fiscal 2001 was 41 cents, exclusive of the deferred tax asset valuation
provision (30 cents per share), compared to the loss per share of 10 cents recorded for the same period last year. The
net loss per share for the third quarter of fiscal 2001 was 71 cents.

For the nine months ended March 31, 2001, net sales were $104,010,000, including approximately $3.2 million of
motorsports shipments, compared to net sales of $118,393,000 recorded for the same period last year. The reduction
in sales was due to dealers' cautious buying patterns relating to the weakening economy, adverse weather conditions,
and a delay in delivery of bicycle accessories from vendors which affected shipments in March. In addition, net
sales were negatively affected by approximately $6.5 million relating to foreign exchange fluctuations. The loss for
the first nine months of fiscal 2001, prior to an extraordinary loss of $552,000 relating to the write-off of deferred
financing costs resulting from the early repayment of approximately $12,000,000 of long-term debt, and the
recognition of $10,890,000 to record a valuation allowance for net deferred tax assets, as noted above, was
$6,107,000 compared to the loss of $1,593,000 recorded during the prior-year period. For the first nine months of
fiscal 2001, the Company's bicycle business produced pre-tax earnings of $4,548,000 compared to the bicycle
business pre-tax earnings of $3,892,000 for the same period last year. This increase in the bicycle business profit was
attributable to the increase in gross margin from 32.03% in the prior year to 32.40% in the current year primarily due
to more favorable product mix, coupled with reduced selling, general and administrative expenses.

The loss per share was 81 cents for the first nine months of fiscal 2001, exclusive of the extraordinary loss (7 cents
per share) and the deferred tax asset valuation provision ($1.45 per share), compared to the net loss per share of 21
cents recorded for the same period last year. The net loss per share for the first nine months of fiscal 2001 was $2.33.

On April 27, 2001, Cannondale sold an aggregate of $4 million of convertible subordinated debentures to two
individual investors, including Cannondale's Chairman, Chief Executive Officer and President, Joseph Montgomery.
The $2 million debenture issued to Mr. Montgomery is due June 28, 2005 and is convertible into shares of
Cannondale's common stock at an initial conversion price of $4.50 per share. The $2 million debenture issued to a
third party investor is due April 28, 2004 and is convertible into shares of Cannondale's common stock at an initial
conversion price of $3.75 per share. Both debentures bear interest at an annual rate of 8%. Cannondale intends to
use the net proceeds from the sale of the debentures for working capital purposes.

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