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Jan. 23, 2006 – Finance Digest

January 23, 2006
Filed under Features

Fairchild year-end net loss: $21.3 million
The Fairchild Corp. (NYSE:FA) says results for the year ended Sept. 30, 2005, include a net loss of $21.3 million, or $0.84 per share, as compared to net earnings of $3.4 million, or $0.13 per share, for the year ended Sept. 30, 2004.

The company’s loss from continuing operations was $33.1 million for the year ended Sept. 30, 2005, as compared to a loss from continuing operations of $7.7 million for the year ended Sept. 30, 2004. The results for the year ended Sept. 30, 2005, included a $1 million overall tax provision, as compared to a $24.2 million overall income tax benefit in the year ended Sept. 30, 2004.

The company said revenues were up by $24.4 million, or 7.4%, compared to the year ended Sept. 30, 2004. The improvement was due in part to a 5.9% increase in revenues in the Sports & Leisure segment, by foreign sales benefiting from favorable foreign exchange rates, and by a 12.1% increase in revenues at the company’s Aerospace segment.

The business of Fairchild consists of three segments: sports and leisure, aerospace and real estate operations. Fairchild’s sports and leisure segment, known as Fairchild Sports, is comprised of Hein Gericke and PoloExpress. Fairchild Sports designs and sells motorcycle protective apparel, helmets and technical accessories for motorcyclists. Together, Hein Gericke and PoloExpress operate 232 retail shops in Germany, the United Kingdom, Austria, Belgium, France, Italy, Luxembourg, the Netherlands, and Switzerland. Fairchild Sports’ U.S. office, in Tustin, Calif., is a designer and distributor of motorcycle protective apparel, boots and helmets.

Fairchild reported cash and unrestricted short-term investments of $23.3 million at Sept. 30, 2005. The company recently announced it has signed a definitive agreement to sell its shopping center for approximately $95 million.


Piaggio Signs $295 Million Finance Deal
Piaggio & C. S.p.A. has entered into a seven-year financing agreement for Euro 250 million ($294.98 million) with Italian creditors Banca Intesa and Mediobanca. Piaggio’s board of directors approved the deal Dec. 15.

Tapped to help repay existing borrowings and lines of credit totaling Euro 317 million ($374.1 million), the agreement includes a Euro 150 million ($177 million) term loan and a Euro 100 million ($118 million) revolving credit.

Piaggio’s board of directors was scheduled to meet again Jan. 13 to start searching for advisors and global coordinators capable of assisting the company in launching an initial public offering in 2006.

Piaggio, controlled by Italian holding company IMMSI SpA, is expected to offer 40% of its share capital by August, according to sources close to the deal.


BRP Reports Earnings Drop
Bombardier Recreational Products (BRP), Valcourt, Quebec, reported a sharp decline in net income for the third quarter ended Oct. 31, 2005, but posted improved operating income for its powersports operations.

BRP reported net income for the quarter of $42.3 million (C$48.9 million), down from $62.4 million (C$72.1 million) reported in the same period last year. Revenue for the quarter was $540.5 million (C$624.6 million), down from $546.1 million (C$631.2 million) in the third quarter of 2004.

BRP has two operating segments: Powersports and Marine engines, but does not break out earnings by segment. Operating income for powersports in the third quarter climbed from $36.9 million (C$42.6 million) in the third quarter last year to $50.5 million (C$58.4 million) this year. Revenues for the segment were $427.9 million (C$494.4 million), down from $439.1 million (C$507.4 million) in the third quarter of 2004.

“I’m satisfied with our progress,” said Jose Boisjoli, BRP president and CEO, in a prepared statement, “because gross profit margins and income from operations have increased in both segments.”

The improvements, he said, were the result of cost reductions and changes in product offerings in both segments.


Lehman Trikes Taps GE Consumer Finance
GE Consumer Finance’s Retail Sales Finance unit is partnering with Lehman Trikes, a leading manufacturer of motorcycle three-wheel conversions, to offer a new consumer credit program beginning this month.

About 80 Lehman dealers in the United States will have access to revolving and installment credit through GE’s FUNancing program.

Lehman Trikes, Westlock, Alberta, Canada, was founded in 1985. The company has operations based in Westlock, and in Spearfish, S.D. “A fast, flexible financing program is an important resource for our customers and a vital part of our continued growth,” said Larry Strilchuk, president of Lehman Trikes.

Retail Sales Finance is part of GE Consumer Finance. With $150 billion in assets, GE Consumer Finance, Stamford, Conn., is a provider of credit services to consumers, retailers and auto dealers in 47 countries around the world.


ADP: Dealer Satisfaction at all-time high
The results of a monthly survey fielded for ADP Dealer Services by Forrester Consulting, an independent technology and market research company, state that ADP dealer satisfaction is at an all-time high.

ADP’s survey shows 86% of ADP’s dealer customers are satisfied with ADP — a 14% increase since 2003, when ADP began conducting the survey.

On behalf of ADP, Forrester Consulting surveys 200 unique ADP dealers a month from every region in the United States and Canada. The survey covers all manufacturers and type/size of dealership. As a result, 25% of ADP’s North American client base is surveyed each year. The reported margin of error for the survey is plus or minus 2% on an annual basis, and uses actual, unweighted data to obtain its results.

“We began an independent dealership satisfaction survey in 2003 because we’re committed to improving results for our dealers,” said Bill Heffern, vice president of Client and Technical Services for ADP Dealer Services. “The survey through Forrester Consulting provides us with immediate follow up based on a detailed methodology, so we can quickly and effectively address and resolve our dealers’ issues.”

Additionally, 81% of ADP’s dealer client base would likely recommend ADP to other dealerships — a 31% increase from 2003 — three-quarters of survey respondents rate the training provided by ADP as effective, and more than 80% of the respondents are satisfied with the speed of software changes and modifications.

ADP Dealer Services provides integrated computing solutions to nearly 25,500 auto, truck, motorcycle, marine and recreational vehicle dealers throughout the United States, Canada, Asia, China, Europe and the Middle East. ADP Dealer Services is the third largest business unit of Automatic Data Processing, Inc.


Kinetic Sells Stake to Sanyang
India-based Kinetic Motor Co. Ltd. plans to sell an 11.1% stake to Taiwan’s Sanyang Industry Co., and has entered a technical collaboration agreement to research, develop and manufacture Sanyang product in India.

Kinetic will make a preferential allotment of 2.07 million shares at 66 rupees per share to Sanyang, for a total of 136.3 million rupees ($3.07 million), Kinetic said in a statement.

“This equity participation by Sanyang will enable us to expand our business in India as well as other countries,” Kinetic Director Sulajja Firodia Motwani said in a prepared statement.

India is the second-largest market for two-wheelers behind China.

Kinetic, which makes scooters, was set up in 1984 as a joint venture with Japan’s Honda Motor Co. The relationship changed to a technical collaboration in 1998. Kinetic Engineering Ltd., a Kinetic Motor Co. Ltd. subsidiary that makes motorcycles and mopeds, has a technical collaboration with Korea’s Hyosung Motors.

Sanyang makes more than 600,000 units of motorcycles and 20,000 automobiles a year from three production bases in Taiwan. Kinetic plans to launch the first Sanyang product in India during the next 12 months.

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