Burley In Trouble
 

I posted a Register Guard article a couple of days ago, and just got this 'second half' piece today ....
check it out:

http://www.registerguard.com/news/20...de.0805.p1.php

Too bad that they had to incorporate to save themselves .... sounds like a real mess developed in the past two or three years with poor management from a few within the 'upper' levels of the business.

RON

That's a shame, and I'm sorry to hear it.

Their driving goal in life has just shifted from a healthy work environment and good bikes to doing whatever it takes to provide shareholder payouts for the top 5% of society.

It's a shame, really. I wonder what happened? I always love the co-op success stories, and I thought that Burley would always be one of them.

Now that they've incorporated, your next Burley product will be made in Taiwan; it's all in the name of corporate profits, after all.

i just spent the weekend in eugene, and the fact that anyone in that town can bang their brain cells together long enough to get ANYTHING done, much less keep a company going for a couple of decades, is amazing enough....

glad to hear they are carrying on one way or another, though.

Heh, heh, noticed that, too, did you?

It's definitely a bummer about the incorporation, though.

Well, when you discrimated against compaines that make a certian amount of money a year, you end up with problems like this. I work for a large resort company, and tried to buy trailers for the company's bike rentals from them, knowing they were a good company that makes a high quality product. The sales rep told me Burley does NOT sell to large companies and refused to support them. I though that was kind of backwards, as I was the one with the money trying to support them.

Perhaps this is related to the earlier comment about Eugene? ;)

I had never read this opinion about Eugene before... My late step father was from that area, and we would travel down there from Seattle/Tacoma for family vacations... I always thought it was an "interesting" area, but I figured it was just the specific family...

It is its own little world.... I mean, you will find plenty of irrationality everywhere you go, and the amount you find there is not that much higher than in any other small city... but the way it manifests itself and basically whacks you in the face is just something else.

Really, only the top 5% of people have stocks? Why can't a corporation have a healthy work environment? In fact, the best companies I have worked for were huge corporations. Small companies have too many politics, too few opportunities, and pay & benefits are lousy. You can have your poorly managed mom and pop stand.

I think there's a difference between a big corporation and a blind one. I interned at a pretty big corporation, and probably would have built a life there if my choice of major hadn't taken me in another direction. The company, despite some bad apples in the HR department, still did a great job of taking care of its employees, and for being a chemical company had better environmental policies than any of the colleges I've been to.

the problem comes when a company divorces itself from any notion of the word community because someone in the board room feels it isn't profitable.

As for the only the top 5% holding stock options, that's not true. I hold some and are faaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaar from the top 5%.

Incorporating isn't the same as going public, they don't *have* to go straight to Taiwan (tangent: watched last week's 30 Days last night, was a cool episode); there's always ownership stake/shares in any enterprise, whether a collective w/ equal ownership among all workers, any private company or partnership, w/ ownership distributed according to investment, and on out to crazy public markets. You can still be an incorporated collective, just each member of the collective has an equal number of shares that would presumably vote equally to ratify (or not) whatever the board wants. Companies put restrictions on shares all the time, even public ones, to restrict/protect voting rights. Either way, if the environment is changing w/ change in ownership structure, that can be a bummer.

Incorporating is just a way to sever the financial connection to the owners. Most businesses are started as a sole proprietorship or a partnership. This means that the owner's are legally responsible for any losses or profits. The taxes are filed under the individuals.

A corporation has stocks, but they may only be owned by one or two people or thousands. One must keep more records(meeting minutes for example) and taxes are filed as a corporation. There is usually a negative financial aspect to filing taxes as a corporation.

A limited liability company is the happy medium with the owners able to simplify their taxes, but removes some responsibility for losses. An LLC is also temporary. A sole proprietorship, partnership, or a corporation can be permanent.

you forgot s-corporations

Have dealth with Burley for over 18 years: was, and still is, a great outfit to do business with!

A couple of your statements aren't true or need clarification.
Sole proprietorships file as an attachment (Schedule C) to the 1040, however partnerships have a separate tax return - Form 1065.

The shield provided by incorporating isn't foolproof. In many cases, the tax courts have ruled that corporation owners were liable for damages when the damages are caused by gross negligence or misconduct. This is likely to happen if the owners are also company officers.

I'm pretty sure that LLCs aren't temporary.

The incorporation seems to have been pursued as a remedy for several issues, the most compelling of which appears to be dealing with their debt. Although the following is cross-posted from another thread that's running along the same lines, it may be of some benefit to this thread as well. Please note, this is armchair analysis from watching what's been playing out in the public domain... I'm not an insider.

Anywhat, the reported $2M in withheld (aka, retained) dividends that are associated with Burley's former "cooperative structure" appears to be the crux of the drama playing out as Burley's current leadership team tries to find a way to get itself out of the ditch. Again, in reading the quotes provided from the internal correspondence, it's fairly clear that Burley was making the case for its members support in converting their withheld dividends (and possibly past-due interest payments related thereto) into stock concurrent with the move from a co-op to a privately held corporation.

As a cooperative, those withheld dividends had to be carried on the books as a liability. However, once converted to "stock" in conjunction with the change from co-op to a privately held corporation, that $2M became stockholder equity. The reference to the 1990's underscores that in the past, Burley was probably not as heavily leveraged as it is now and was therefore more attractive to investors.

Although the newspaper article indicated that 8.5 million shares of stock were issued by Burley, unless that was actually the par value of all shares of stock issued -- noting that it wasn't stated that way -- it's hard to know just what the associated value of the company was placed at given that the individual par value of the shares seems to vary, e.g., a non-voting preferred series A has a par value of $250 whereas the series G have a par value of $1. Therefore, it's hard to know the percentage of debt that was moved off the books by this company restructure.

[QUOTEyou forgot s-corporations
][/QUOTE]

I didn't forget...this is bike forums not business forums. I could write a 40 page report on it, but do you really want to read it? Just trying to point out some of the basics of business ownership and I mean basics.

No, it isn't fool proof, especially in cases of fraud or criminal activity. But as far as debts are concerned, that is where the limited liability comes in. It is the whole point of being an LLC. But because it may be harder to drum up money, you may need to sign a personal guarantee. Banks don't like business' having no liability.

Yes, they are temporary. When a member dies, the LLC is dissolved.

And, the taxes ARE filed under the individual's taxes. It may take additional forms but this doesn't mean it isn't under the individual.