March 14, 2005 – Finance Digest
March 14, 2005
Filed under Features
GIANT FORMS FINANCING UNIT
Giant Motorsports, Inc. has formed a wholly owned subsidiary, Giant Motorsports Acceptance Group, Inc., to provide direct financing to purchasers of the company’s motorcycles and other powersports products.
Giant operates two additional wholly owned subsidiaries — retail outlets W.W. Cycles, doing business as Andrews Cycles in Salem, Ohio, and Chicago Cycles in Chicago.
“This is a potentially important business and strategic step that could generate additional new revenues through its own operations, as well as significantly assist in the growth of our unit sales,” said Greg Haehn, president and COO. “The establishment of Giant Motorsports
Acceptance Group could eventually enable us
to retain significant levels of financing business that previously had been diverted to other financing providers.” Haehn says he anticipates the new venture’s 2005 revenues to exceed $100 million.
“We are currently outsourcing about $22 million on an annual basis in financing for our customers,” he said. “If we execute our strategy effectively we believe we can convert a significant portion to our in-house captive finance arm.”
Giant reported third quarter 2004 unaudited revenues of approximately $26.3 million, up approximately 107% over the comparable period of the previous year. The company said unaudited revenues for the first nine months of 2004 totaled approximately $60.3 million, an increase of approximately 62% compared to the same period last year, and projected fourth-quarter revenues at approximately $12 million.
In other news, Giant also announced the close of a lease agreement that will triple capacity at its Chicago-area location. Also, the retailer was named by American Suzuki Motor Corporation as the nation’s number one volume dealer of Suzuki brand motorcycles and ATVs for the model year 2004.
BRP REPAYS $280 MILLION LOAN
Privately held Bombardier Recreational Products Inc. (BRP) says it has repaid a $280 million (C$347 million) loan, but replaced it with a new term loan facility of $50 million (C$62 million), under the existing Senior Secured Credit Facilities, which will mature Dec. 18, 2010.
BRP, Valcourt, Quebec, designs, develops, manufactures, distributes and markets Ski-Doo and Lynx snowmobiles, Sea-Doo watercraft and sport boats, Johnson and Evinrude outboard engines, Bombardier ATVs, and Rotax engines and karts.
CFO GEORGE LEAVES OAKLEY
Tom George, the chief financial officer of Oakley, Inc., Foothill Ranch, Calif., has resigned to pursue a new opportunity as the chief financial officer of a private emerging growth company in San Diego. George joined Oakley in October 1997.
Until the company hires a replacement, Link Newcomb, Oakley’s chief operating officer, assumes the responsibilities of the chief financial officer. Newcomb previously held the position of Oakley’s chief financial officer from July 1995 through January 1997, at which time he was appointed chief operating officer. Newcomb has been a certified public accountant since 1984.
Oakley’s 12-month net sales through December 31, 2004 totaled $585.5 million and generated net income of $41.6 million.
DUCATI EXPECTS LOSS OF $10.4 MILLION
Ducati Motor Holding S.p.A. says preliminary full year 2004 financial results show revenues of $501.8 million (Euro 382.8 million), up 1.0% excluding foreign exchange (forex) effects and down 1.4% including forex effects, versus last year. “We expect to close 2004 with a net loss of approximately $10.5 million (8 million Euro), due to current and deferred income taxes,” Ducati Chief Financial Officer Enrico D’Onofrio said in a prepared statement.
Revenues from motorcycles decreased 4.4% to $396.2 million (Euro 302.2 million) and represented 78.9% of revenues. Sales of motorcycle-related products, including spare parts, technical accessories and apparel, increased 8.2% to $98.3 million (Euro 75.0 million).
EBITDA (Earnings Before Interest Tax Depreciation and Amortization) was $51.3 million (Euro 39.1 million) — up 2.3% excluding forex effects, down 13.5% including forex effects — versus $59.3 million (Euro 45.2 million) in 2003, mainly due to increased sales costs, the company said.
While partly offset by a negative forex effect, gross margin for 2004 was 36.0% versus last year’s 34.7%, thanks to product cost reduction, operational efficiencies and related product sales increase, the company said.
Unofficial Ducati worldwide registrations were down 5.2% versus last year, with France down 1%, Italy down 6%, UK down 13%, Benelux down 17%, Japan down 19% and Germany down 20%, while Spain was up 33%, the U.S. was up 15% and Australia was up 8%.
“2004 was a challenging year for Ducati,” said Federico Minoli, president and CEO of Ducati Motor Holding. “The continuing weakness of the dollar and the difficult market conditions in Germany, France, UK and Japan together with the delay in the introduction of the new Monster S2R weighed heavily on both sales and registrations.”
D’Onofrio says Ducati is finalizing the refinancing of a bond set to expire at the end of May 2005. “The company is evaluating all possible financial instruments including a new bond issue in the range of $131.1 million (100 Million Euros),” he said.
FAIRCHILD SPORTS HITS $43.1 MILLION
The Fairchild Corporation announced net earnings of $900,000, or 4 cents per share, for its first quarter ended Dec. 31, 2004, up from a net loss of $2.2 million, or 9 cents per share, for the first quarter ended Dec. 31, 2003.
The Fairchild Corporation, McLean, Va., is a distributor in the aerospace industry; owns and operates a shopping center in Farmingdale, New York; and runs a Sports and Leisure segment doing business as Fairchild Sports.
Fairchild’s net earnings for the three months ended Dec. 31, 2004, included gains of $12.5 million on the disposal of discontinued operations. Earnings for the three-month period ended December 31, 2003, included $5.9 million of additional proceeds earned from the sale of its fastener business.
Fairchild Sports posted revenues of about $43.11 million and losses of about $5.52 million for the three months of the first quarter 2005. This compares to revenues of approximately $25.2 million and losses of approximately $3.3 million for two months of the 2003 first quarter.
Located in Tustin, Calif., Fairchild Sports is a designer and distributor of motorcycle protective apparel, boots and helmets, under several labels, including First Gear and Hein Gericke. The company designs and produces protective apparel under private labels for third parties, including Harley-Davidson, and operates PoloExpress retail outlets in Europe.
Fairchild’s overall revenues for the quarter ended Dec. 31, 2004 increased by $25.0 million, or 56.5%, due largely to a 42% increase in revenues from the company’s aerospace business.
The company’s loss from all continuing operations for the quarter ended December 31, 2004 was $12.6 million or 50 cents per share, compared to a loss from continuing operations of $6.6 million, or 26 cents per share, for the quarter ended Dec. 31, 2003.