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March 14, 2005 – Distributor Report

March 14, 2005
Filed under Features

CYCLE COUNTRY TARGETS SUPPLIER FOR ACQUISITION
Officials at Cycle Country Accessories Corp., Milford, Iowa, say the company has reached an agreement in principle to purchase Simonsen Iron Works, Inc., Cycle Country’s largest supplier. Under the terms of the agreement, Cycle Country is to pay $7 million in cash and issue 1.2 million shares of stock to the founders of Simonsen.

Simonsen, Spencer, Iowa, is a 99-year-old fourth-generation family-run contract manufacturer offering metal fabrication, CNC machining, powder coating, laser cutting and tool and die services. The company is led by Alan Bailey, president.

“We feel the addition of Simonsen will allow us to continue to drive our gross margins and overall profits,” said Ron Hickman, CEO and president of Cycle Country Accessories. “The fact that we have worked with them for years should allow for a seamless transition.”

Cycle Country has been manufacturing ATV accessories for 20 years. The company expanded into foreign markets in 1995, and today distributes to more than 40 countries. The company recently reported revenue for its first quarter ended December 31, 2004, was $5,623,739, and said Net income increased 32% to $532,101.

Cycle Country revenues for the year ended September 30, 2004, increased 48.8% to $20,665,674 from revenues of $13,891,993 in 2003. Earnings per fully diluted share rose to $0.35 from $0.05 in the prior year.

HELMET HOUSE RELEASES ‘05 CATALOG
Expanded to 226 pages, the 2005 Helmet House catalog features helmets, apparel, soft bags, gloves, boots, and rainsuits from Shoei, HJC, Tour Master and Cortech.

Helmet House says it hopes users find the newly designed catalog useful. In it, you’ll find new section summaries, section color-coding, a new size and spec reference chart, and an all-new section devoted to product for women.

To receive a copy of the new catalog, contact Helmet House at 26855 Malibu Hills Rd., Calabasas Hills, Calif. 91301; 800/421-7247.

ADVANTAGE REVEALS ‘05 PRODUCTS
Advantage Performance Distributing, Riverside, Calif., recently released its new full-color 320-page catalog, dubbed the 2005 Flight Manual.

Advantage says it has expanded its selection to better serve the multiple markets within the powersports industry. New items include Trail Tech flywheels and kick-stands, Bel Ray V-Twin Oil, new Bridgestone and Kenda tires, Kenda tubes, Master Lock towing/truck accessories, Carbon Fiber Works pipe protectors, Full Bore hoods, No Toil vent caps/rim locks, Excel/RK chain kits, a Laser Star number plate, Silent Sport exhaust packing, a TRX510cc kit from DASA, and products from Hot Rods, Talon Wheels, Nelson Rigg, Outerwears, UM Products and Douglas Wheels.

Advantage Performance also is the exclusive manufacturer and distributor of DMC Exhausts. At the recent Dealer Expo, the company showcased a number of new items, including the DMC Afterburner and popular applications for the TRX450R and YFZ450.

DMC is currently seeking riders in Southern California willing to have their bikes become involved with the research & development of new exhaust systems. Bikes needed for research include the 2004-05 Honda CRF450R, CRF450X, CRF250R and CRF250X, the 2004-05 Yamaha YZ450F, WR450F, YZ250F and WR250F; the 2004-05 Kawasaki KXF250 and KXF450; and the 2005 Suzuki RMZ250F and RMZ450F.

For more information, call 951/300-2250 or visit www.DMC-On-Line.com

NICHOLS EXPANDS FOR 2005
Nichols Motorcycle Supply has entered 2005 with more than 5,000 new products numbers and three new catalogs offering a total of 1,600 pages.

The Main catalog features items for dirt, sport and cruiser motorcycles and ATVs; the Sport catalog highlights streetbike products; and the Cruiser catalog documents parts and accessories for American V-twin and Metric applications.

“We’ve made a concentrated effort to expand with the product we feel is most sought after by dealers,” Andy Kolodziej, Nichols marketing manager, told Powersports Business. “We’re looking forward to a big year.”

Kolodziej says new products carried in the U.S. exclusively by Nichols include Caberg helmets, Dragon Skins street apparel, RoadKrome apparel and v-twin products sourced from Motovan of Canada, Vicious and Leader eyewear, Ledrie cruiser and sportbike luggage, CirCui sportbike accessories, Dark Star luminescent gauges, Superpole sportbike exhausts, Blade Barz for off-road applications, and Reactor powersports batteries and accessories.

AMERICAN CAPITAL EXITS CYCLE GEAR
American Capital Strategies Ltd., a publicly traded buyout and mezzanine fund based in Bethesda, Md., says it realized a $4 million gain through its recent full exit from Cycle Gear, Inc., one of the companies in its portfolio.

In the last issue of Powersports Business, we reported Harvest Partners, Inc., a leading New York-based private equity investment firm had acquired an equity interest in Benicia, California-based Cycle Gear. Terms of the deal were not disclosed, but Cycle Gear CEO David Bertram, the executive board and management team maintained their significant ownership in the company.

American Capital says it received total proceeds of $21 million upon the exit, earning a 20% compounded annual rate of return on its investment in senior notes, subordinated notes, preferred stock and common stock warrants. The 20% return includes the realized gain and interest, dividends and fees received over the life of American Capital’s investment in the company. The proceeds recognized by American Capital include proceeds to be held in escrow to secure standard representations and warranties for the recapitalization of approximately $1 million. The amount realized by American Capital exceeds the fourth quarter 2004 valuation of the investment by $0.6 million, or 3%.

In September 1998, American Capital invested $6 million senior and junior secured notes and common stock warrants in Cycle Gear. Later, American Capital invested an additional $10 million in junior secured notes, common stock warrants and preferred stock.

“American Capital has been an outstanding partner and has provided Cycle Gear the necessary growth capital and financial expertise for our team to grow our company from six stores to 45 stores over the last six years,” said Bertram. “We look forward to benefiting from Harvest’s strategic financial guidance as we continue our aggressive expansion.”

“Cycle Gear participates in a $5 billion marketplace and is 10 times larger than it its nearest competitor,” said Colin Farmer, principal at Harvest. “We are extremely excited to be investing behind CEO Dave Bertram and his team in a company that has already solidified its first-mover advantage in a fragmented sector.”

Cycle Gear operates 45 stores in 13 states. Merrick Axel, Harvest vice president, says the plan is to continue to back the company, preparing it for “a significant store rollout plan over the next five years.”

BDI SERVICES POWERSPORTS DEALERS
Baltimore Display Industries (BDI) has been assisting retailers with store design and merchandising displays for more than 55 years, and is now making a play for the powersports industry.

Exhibiting at the Dealer Expo in Indianapolis, BDI told powersports dealers that a comprehensive store plan can be developed free of charge. The company then works with retailers on everything from color coordination to installation, and designs, manages, and implements each task.

The company says it stocks more than 4,000 display items and works with more than 100 U.S. based manufacturers that can produce custom-built displays in metal, wood, Lucite or glass. In addition to gridwall and accessories, hangers, racks, showcases, slatwall and accessories, tables and size dividers, other available products include cardholders, easels, forms and mannequins.

BDI is offering powersports dealers special pricing on select merchandise purchased before March 21 — for instance, get an Arrow tagging gun free with the purchase of three boxes of fasteners, get 10% off of showcase and counter units, or get 50% off half-round mens and ladies bust forms.

For more information, contact Baltimore Display Industries, 1900 Bayard St., Baltimore, Md. 21230; 800/638-3764.

SAE WORLD CONGRESS, APRIL 11-14
The 2005 Society of Automotive Engineers World Congress takes place April 11-14, 2005, at the Cobo Center in Detroit.

SAE celebrates its 100th anniversary in 2005. Founded in Manhattan on Jan. 20, 1905, the organization sets the specs for everything from engine-oil viscosity to air-brake standards.

Through the voluntary work of more than 7,000 committee members and participants in over 250 committees, subcommittees, and task groups, SAE maintains more than 8,500 globally accepted technical standards and related documents covering such areas as electronics, materials, components, systems and processes.

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