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July 25, 2005 – Finance Digest

July 25, 2005
Filed under Features

BRP 1Q Revenue Down 5%
Bombardier Recreational Products Inc. (BRP), Valcourt, Quebec, says consolidated revenue for the company’s first quarter ended April 30, 2005, was C $594.0 million (all figures in Canadian Dollars), down 5% or $29.9 million compared to revenue of $623.9 million for the same period in the last fiscal year.
BRP reported a net loss for the three-month period ended April 30, 2005, amounted to $2.8 million, an improvement of $45.4 million compared to the net loss of $48.2 million for the three-month period ended April 30, 2004.
BRP posted a consolidated gross profit of $115.3 million for the three-month period ended April 30, up 28% compared to $90.2 million for the same period last fiscal year. The company says the increase is primarily due to favorable product and pricing and reduced production costs.
Consolidated Adjusted EBITDA reached $43.1 million for the three-month period ended April 30, an increase of 22% compared to $35.3 million for the same period last fiscal year. The improvement in consolidated adjusted EBITDA resulted mainly from the increased gross profit.
Operating expenses – comprised of selling and marketing, research and development and general and administrative expenses – were $100.4 million for the three-month period ended April 30, 2005, a $2.5 million decrease when compared to $102.9 million for the same period last fiscal year.
Foreign exchange losses were $9.8 million for the three-month period ended April 30, down from $35.4 million for the same three-month period in 2004.
“I am pleased with our results because our cost reduction plan is working and we expect it to continue,” said Jose Boisjoli, BRP’s president and CEO. “Product complexity reduction and changes in our operational structure have greatly improved our cost structure and also our ability to offset the fluctuations of the Canadian dollar against the U.S. dollar and the Euro.”
BRP’s portfolio of brands and products includes: Ski-Doo and Lynx snowmobiles, Sea-Doo watercraft and sport boats, Johnson and Evinrude outboard engines, direct injection technologies such as Evinrude E-TEC, Bombardier ATVs, and Rotax engines and karts.
BRP operates in two segments: the Powersports segment includes snowmobiles, watercraft, ATVs, sport boats and Rotax engines; the Marine Engines segment includes outboard engines.
Powersports segment revenue was $471.8 million for the three-month period ended April 30, 2005, down from $484.2 million for the same period last fiscal year.
BRP says the decrease in revenue was caused by an unfavorable impact of the strengthening of the Canadian dollar. The company also said an increased number of personal watercraft sold was offset by a decrease in the number of ATVs sold and also by a reduction in the number of Rotax engines delivered to OEMs.
The Powersports segment operating income was $33.0 million for the three-month period ended April 30, 2005, up from $6.6 million for the same period last fiscal year.
Marine Engines segment revenues were $138.6 million for the three-month period ended April 30, 2005, down from $151.1 million for the same period last fiscal year.
Marine Engines segment operating loss was $4.8 million for the three-month period ended April 30, 2005, down from $11.6 million for the same period last fiscal year.

Bank of America to Buy MBNA for $35 Billion
Bank of America Corp. plans to acquire MBNA Corp. in a $35 billion cash and stock deal.
MBNA, Wilmington, Del., is one of the largest stand-alone credit card issuers in the world. Bank of America Corp., Charlotte, N.C., is the second-largest bank in the country in terms of assets.
The transaction values MBNA at $27.50 per share. MBNA shareholders will receive 0.5009 of a Bank of America share plus $4.125 in cash for each MBNA share.
MBNA shares were up 27% after the announcement, gaining $5.31 to $26.38 in early trading on the New York Stock Exchange. The company’s shares peaked at $28.78 in March 2004.
The planned purchase would make Bank of America a formidable rival to Citigroup Inc. and JPMorgan Chase & Co. in credit cards. It also would result in 6,000 job cuts at Bank of America.
Bank of America Corp. is led by Chief Executive Officer Kenneth Lewis.
MBNA President and CEO Bruce L. Hammonds would become CEO and president of Bank of America Card Services and report to Liam E. McGee, president of Bank of America global consumer and small business banking. Another move involves Frank P. Bramble, Sr., a vice chairman of MBNA, who will be appointed to the Bank of America’s board of directors.

Kawasaki Suppliers Meet in Missouri
Kawasaki Motors Manufacturing Corp. held its 2005 Suppliers Conference on June 30 in Maryville, Mo. More than 123 suppliers attended the conference, where they were informed of changes expected to occur throughout the upcoming year.
Shinichi Tamba, president of Kawasaki Motors Manufacturing of Maryville and its sister company in Lincoln, Neb., addressed the conference and stressed the need for improvement in quality, cost and delivery.
In other news related to Kawasaki’s Maryville location, the State of Missouri recently announced the approval of development tax credits to facilitate the expansion of the facility. The development tax credits will be used to offset a $150,000 donation to the Nodaway County Economic Development, Inc.
Kawasaki wants to use the $75,000 in credits to invest in a production training line to provide real-time assembly and quality training to produce more skilled workers for production manufacturing jobs, according to a report by the Maryville Daily Forum. The expansion plan would add an estimated 150 new employees to the existing 690 workers at the plant.
Missouri’s Development Tax Credit Program offers state tax credits – up to 50% of a donation – to eligible donors who make contributions to a not-for-profit corporation, which uses the cash to purchase certain assets and then leases them to a business.
Kawasaki Motors Manufacturing Corp. USA’s Maryville plant opened in 1989 to produce general purpose engines. Since then, the Maryville plant has grown to more than 694,744 sq. ft. on 113.7 acres of land.

Japanese OEMs to Invest $450 million in Indonesia
Japan’s motorcycle and automobile manufacturers plan to invest nearly $450 million in Indonesia during the next two years, mainly for raising their motorcycle production capacities amid strong demand there, Bisnis Indonesia reported, quoting Minister of Industry Andung Nitimihardja.
Nitimihardja said Japanese firms expressed their interest to invest in Indonesia during his recent visit to Japan.
Nitimihardja said Suzuki Motor Corp. plans to invest $200 million to raise its motorcycle production capacity in Indonesia to 2 million units a year by 2006 or 2007; Yamaha Motor Co. plans to open its second motorcycle plant in Indonesia next January with a capacity of 600,000 units a year and an investment of $80 million; and Honda Motor Co., which controls about half of Indonesia’s motorcycle market, has plans to start operating its third motorcycle plant in October following an investment of $100 million.

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