May 16, 2005 – Finance Digest
May 16, 2005
Filed under Features
GE, BOMBARDIER PLAN $2.4 BILLION DEAL
General Electric Co.’s commercial finance unit, GE Commercial Finance, plans to pay $2.4 billion in cash and assumed debt to purchase Bombardier Capital’s inventory finance division (BCIFD).
The financing arm of Montreal-based Bombardier, Inc., BCIFD employees about 280 people at its headquarters in Colchester, Vermont. The company provides floor plan financing for powersports, boats, trailers and manufactured housing to more than 4,500 retailers in the United States and Canada.
GE Commercial Finance, Stamford, Conn., will pay $1.4 billion cash. Another $1 billion of the purchase price is assumed debt. Bombardier said it plans to receive cash proceeds of $825 million at the close of the deal.
The companies say the deal may close prior to the end of the second quarter. Bombardier Capital said it would continue interim financing.
Following the announcement, shares of GE were up 25 cents to $36.01 on the New York Stock Exchange. The company’s 52-week high is $37.75. Stock in Bombardier was up 9 cents to C$2.63 on the Toronto Stock Exchange.
BRP REVENUES, ENGINE SALES DOWN
Bombardier Recreational Products, Inc., the privately-held powersports company branded as “BRP,” says consolidated revenues for its fourth quarter ended January 31, 2005, were C$634.3 million, a decrease of C$91.9 million compared to consolidated revenues of C$726.2 million for the combined three-month period ended January 31, 2004.
BRP operates in two segments: the Power Sports segment designs, develops, manufactures and sells snowmobiles, watercraft, ATVs, sport boats and Rotax engines; the Marine Engines segment designs, develops, manufactures and sells outboard engines.
BRP says fourth quarter results stem from a lower number of units sold and the unfavorable impact of the strengthening of the Canadian dollar. The decreased number of units sold is primarily due to a management decision to postpone production and deliveries of watercraft from the fourth quarter of fiscal 2005 to the first quarter of fiscal 2006 to better align shipments with the retail business cycle, and due to lower sales of engines to motorcycle manufacturers, the company said.
BRP’s consolidated gross profit for the three-month period ended Jan. 31 was C$105.4 million, up from C$85.9 million in last year’s fourth quarter.
Power Sports segment revenues for the fourth quarter were C$530.8 million compared to C$612.2 million for the prior year period. BRP says the decrease was primarily caused by a reduction in watercraft deliveries, the strengthening of the Canadian dollar, and from lower sales of engines to motorcycle manufacturers.
For the year ended January 31, 2005, consolidated revenues were C$2.467 billion, up 2.4% compared to C$2.409 billion reported for prior year. Consolidated gross profit for the year ended Jan. 31 was C$422.1 million, down from C$423.6 million.
Power Sports segment revenues were C$1.951 billion for the year, up 3.3% from C$1.888 billion last year.
Marine Engines segment revenues remained relatively stable at $561.1 million for the year ended January 31, 2005 compared to $559.8 million for the combined year ended January 31, 2004. Increased deliveries in the international market were offset by a reduction in deliveries in the North American market mainly due to the impact of import duties, subsequently removed, on Japanese-manufactured engines sold in the United States.
During the fourth quarter of fiscal 2005, the company repaid US$158.3 million on the Term Facilities and shortly thereafter, on February 9, 2005, fully repaid the remaining outstanding balance of US$118.9 million on the Term Facilities. The US$280 million Term Facilities have been replaced by a new Term Facility of US$50 million, under an amended and restated Senior Secured Credit Agreement, which will mature January 31, 2011.
“FY04/05 was a transition year. When you look at the structural changes we implemented, the cost reduction plan we introduced, and the adverse conditions we dealt with, such as the strengthening of the Canadian dollar and the increased in costs of raw materials, I am satisfied with the results our team achieved,” said Jose Boisjoli, BRP’s president and CEO.
UTI 2Q NET INCOME UP 13.6%
Universal Technical Institute, Inc. (UTI), a provider of technical education training, says net income for its second quarter of fiscal 2005, ended March 31, was $9.2 million, or $0.32 per diluted share, a 13.6% increase from $8.1 million, or $0.28 per diluted share, for the same quarter in fiscal 2004.
UTI's net revenues for the second quarter were $77.5 million, a 21.7% increase from $63.7 million for the same quarter last year. Income from operations for the second quarter of fiscal 2005 was $14.4 million, a 6.9% increase from $13.5 million for the second quarter of fiscal 2004.
Net income for the six months ended March 31, 2005 was $19.0 or $0.67 per diluted share, a 22.4% increase from net income of $15.5 million or $0.58 per diluted share, for the same period in fiscal 2004. Net income margin for the first six months of fiscal 2005 and fiscal 2004 was 12.6%.
Net revenues for the first half of 2005 were $150.8 million, a 22.9% increase from $122.7 million for the same period in the previous year. Income from operations was $29.9 million, an increase of 8.7% as compared to the same period in the previous year.
Kimberly McWaters, UTI president and CEO, says UTI’s average undergraduate enrollment for the three months ended March 31, 2005 was 15,517 students, representing an increase of 19.3% from 13,006 students for the same period a year ago. Average undergraduate enrollment for the six months ended March 31, 2005 was 15,521, an increase of 20.0% from 12,931 for the same period a year ago.
UTI is targeting a 21% to 23% increase in net revenue for the fiscal year ending September 30, 2005, unchanged from the company’s prior guidance.
H-D BOARD INCREASES DIVIDEND
The Board of Directors of Harley-Davidson, Inc. (HDI) elected James L. Ziemer as company Chef Executive Officer, increased the dividend, and also approved an additional share repurchase authorization at the Annual Shareholder Meeting in Milwaukee on April 30, 2005.
The Board of Directors approved a cash dividend of $0.16 per share payable June 24, 2005, to shareholders of record as of June 14, 2005. This represents a 28% increase over the previous dividend paid on March 25, 2005.
The Board of Directors also authorized the repurchase of up to 20 million shares of HDI stock. This authorization is in addition to the previous 20 million share repurchase authorization approved by the Board of Directors on April 24, 2004. HDI repurchased 2.9 million common shares for $175.8 million during the first quarter of 2005.
“Harley-Davidson’s exceptional business performance has generated a strong cash flow, enabling the company to return value to shareholders through increasing its dividend and authorizing the repurchase of additional shares of stock,” said Ziemer.
Harley-Davidson shares dropped to a 52-week low of $45.12 in mid-April after the company reduced its profit outlook for the year because of high dealer inventory and weak first-quarter sales. The stock is down from a 52-week high of $63.75 in July.
Shareholders at the meeting also approved the reelection of George Conrades, Sara Levinson and George Miles as Class II Directors; approved the Employee Short Term Incentive Plan; and ratified Ernst & Young, LLP as the company’s independent auditor for calendar year 2005.