| 08/13/2001 | Cannondale Net Sales Fall During the Fourth QuarterFor the three months ended June 30, 2001, net sales were $42,781,000 compared to $44,057,000 recorded for the same period last year. Included in the net sales amount for the fourth quarter of fiscal 2001 is approximately $2.1 million in motorsports sales, compared to $57,000 for the prior year. Net sales were negatively affected by approximately $1.6 million relating to foreign exchange fluctuations. The loss for the fourth quarter of fiscal 2001, prior to the recognition of $2,041,000 to record a valuation allowance for net deferred tax assets, was $728,000 compared to the loss before extraordinary item of $699,000 recorded during the same period last year. Although the Company expects to ultimately utilize its net deferred tax assets, a valuation allowance was recorded in accordance with Statement of Financial Accounting Standards No. 109. The Company's bicycle business achieved pre-tax earnings of $3,662,000 for the fourth quarter of fiscal 2001 compared to pre-tax earnings of $2,931,000 for the fourth quarter of fiscal 2000. Increased bicycle profits for the fourth quarter of fiscal 2001 were primarily attributable to lower operating expenses, offset by unfavorable foreign exchange fluctuations and a less favorable product mix compared to the prior year period.
The loss per share for the fourth quarter of fiscal 2001 was $0.10, exclusive of the deferred tax asset valuation provision ($0.27 per share), compared to the loss per share before extraordinary item of $0.09 recorded for the same period last year. The net loss per share for the fourth quarter of fiscal 2001 was $0.37 per share.
For the fiscal year ended June 30, 2001, net sales were $146,791,000, including approximately $5.3 million of motorsports shipments, compared to net sales of $162,450,000 recorded for the same period last year. Net sales were negatively affected by approximately $8.1 million relating to foreign exchange fluctuations. Net sales were also lower due to dealers' cautious buying patterns relating to the weakening economy and adverse weather conditions. In addition, the loss for fiscal 2001, prior to an extraordinary loss of $552,000 relating to the write-off of deferred financing costs resulting from the early repayment of approximately $12,000,000 of long-term debt, and the recognition of $12,931,000 to record a valuation allowance for net deferred tax assets, as noted above, was $6,836,000 compared to the loss before extraordinary item of $2,292,000 recorded during the prior-year period. During fiscal year 2001, the Company's bicycle business produced pre-tax earnings of $8,210,000 compared to the bicycle business pre-tax earnings of $6,827,000 for the same period last year. This increase in the bicycle business profit was attributable to a reduction in operating expenses, which was partially offset by the negative impact of foreign exchange fluctuations and a less favorable product mix compared to the prior year.
The loss per share was $0.91 for fiscal 2001, exclusive of the extraordinary loss ($0.07 per share) and the deferred tax asset valuation provision ($1.72 per share), compared to the net loss per share before extraordinary item of $0.31 recorded for the same period last year prior. The net loss per share for fiscal year 2001 was $2.70.
Prior year net sales and selling, general and administrative expenses have been restated pursuant to EITF Issue 00-10, Accounting for Shipping and Handling Fees and Costs. In accordance with such, all shipping and handling billings to customers have been included in net sales, and all freight costs incurred for product shipments have been included in selling, general and administrative expenses. Previously, the Company offset shipping and handling charges billed to customers and the related freight costs within selling, general and administrative expenses. For the quarterly periods ended June 30, 2001 and July 1, 2000, shipping and handling billings of approximately $546,000 and $563,000, respectively, have been included in net sales. For the fiscal year ended June 30, 2001 and July 1, 2000, shipping and handling billings of approximately $1,732,000 and $1,931,000, respectively, have been included in net sales.
The fourth quarter also saw two products from the Company's bicycle division dominate a pair of magazine tests that compared designs from the bike industry's top suppliers. In May, Cannondale's Jekyll 4000 SL mountain bike was named "Bike Of The Year" by France's Velo Vert magazine. (This was the second time that the Jekyll design had received "Bike Of The Year" honors.) Also in May, the German road magazine Tour conducted a group test of ten component systems that was dominated by Cannondale's CAAD6/Hollowgram designs.
Cannondale also introduced the first models from its 2002 bicycle line in the fourth quarter, including models featuring the Company's new lightweight Scalpel(TM) full-suspension frame. The Scalpel's (TM) launch has coincided with publicity garnered from three wins by three different Volvo/Cannondale mountain bike racers riding the new design. The Company's road racing efforts enjoyed similar success in the fourth quarter, as the Saeco/Cannondale team scored four stage wins at the Giro d'Italia in May and claimed the overall victory at the Tour of Austria in June.
In fourth quarter news from Cannondale's motorsports division, the Company released details of its 2002 product line which is comprised of four off-road motorcycles and four ATVs. All eight 2002 models, which will be introduced during fiscal year 2002, will feature an innovative OPTIMUM GP Control fuel- injection system tuned to maximize the performance of Cannondale's reversed cylinder head, 432cc engine. The first 2002 Cannondale ATV model, the Cannibal, began shipping to dealerships in June.
This press release contains forward-looking statements, as defined under the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those anticipated as a result of various risks and uncertainties, including risks and uncertainties described in this press release, as well as those detailed from time to time in the Company's periodic reports on Forms 10-K, 10-Q and 8-K filed with the Securities and Exchange Commission. Readers are cautioned not to place undue reliance on these forward-looking statements which speak only as of the date hereof. The Company undertakes no obligation to publish revised forward-looking statements to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.
Cannondale Corporation (Nasdaq: BIKE) is the world's leading manufacturer of high-performance bicycles. The Company's bicycles and bicycle accessories, which include HeadShok suspension forks, cycling apparel, and cycling packs and bags, are sold in the U.S. and in more than 60 foreign countries. The Company is also an emerging player in the motorsports industry, designing and manufacturing both off-road motorcycles and four-wheeled ATVs (All-Terrain Vehicles). All of the Company's products are marketed under the Cannondale brand name and "Handmade in USA" logo.www.cannondale.com
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