| 02/11/2002 | Cannondale Corporation (Nasdaq: BIKE) today announced results for the second quarter and first six months of fiscal 2002, the period ended December 29, 2001.
For the three months ended December 29, 2001, net sales were $37,783,000, a $3,096,000, or 9%, increase over the $34,687,000 recorded for the same period last year. Included in the above sales amount are motorsports sales of approximately $5,205,000 for the second quarter of fiscal 2002. For the first six months of fiscal 2002, net sales were $71,937,000 compared to $71,374,000 for the same period last year, with motorsports sales of $6,320,000 and $1,443,000, respectively. The sales growth for the second quarter and first six months of fiscal 2002 compared to the same periods last year is attributable to the increase in motorsports shipments during the current year, partially offset by lower bicycle shipments, as bicycle retailers continued to shift their inventory receipts closer to the time of sale in spring. As a result of this shift, the Company expects that bicycle sales will recover in the spring and early summer of 2002. The net loss for the second quarter of fiscal 2002 was $3,406,000 compared to the net loss of $10,571,000 recorded during the prior-year quarter. For the first six months of fiscal 2002, the net loss was $7,529,000 compared to the net loss of $12,198,000 recorded during the prior year period. The net losses for both periods in the prior year include an extraordinary loss of $552,000 and a deferred tax asset valuation provision of $8,813,000. Excluding these items, the loss for the second quarter and first six months of fiscal 2001 was $1,416,000 and $3,043,000, respectively.
The Company's bicycle business continued to be profitable for the second quarter of fiscal 2002 with pre-tax income of $3,023,000, a 17% increase over the bicycle business pre-tax income of $2,573,000 for the second quarter of fiscal 2001. The increase in second quarter profits resulted from stronger bicycle margins coupled with reduced operating expenses. Bicycle margins increased to 35.1% for the second quarter of fiscal 2002 from 33.7% for the prior-year quarter as a result of production efficiencies and more favorable product mix. For the first six months of fiscal 2002, the bicycle business produced pre-tax income of $6,020,000, a 51% increase over the pre-tax income of $3,989,000 from the prior year period. The increase in year-to-date profits also resulted from stronger bicycle margins and reduced operating expenses. The bicycle margin for the first six months of fiscal 2002 was 34.3% compared to the margin of 33.3% for the prior year period; this margin increase is attributable to production efficiencies and more favorable product mix.
The net loss per share for the second quarter of fiscal 2002 was $0.45 per share compared to the net loss per share of $1.41 (inclusive of an extraordinary loss per share of $0.07 and a deferred tax asset valuation provision of $1.15 per share) recorded for the same period last year. For the first six months of fiscal 2002, the net loss per share was $1.00 compared to the net loss per share of $1.62 (inclusive of an extraordinary loss per share of $0.07 and a deferred tax asset valuation provision of $1.15 per share) recorded for the prior-year period.
Cannondale continued to successfully implement its overriding product strategy of introducing a steady stream of innovative new models to the market throughout the second quarter. The Company began shipping a total of seven new bicycle and motorsports models featuring proprietary Cannondale technologies in the second quarter.
The Company's bicycle division introduced the new Gemini 2000 and Gemini 1000 models, as well as the new Easy Rider. The two Gemini models feature extra sturdy frame construction and long-travel suspension for more extreme off-road riding, and are the Company's first legitimate entries into the influential and growing freeride mountain bike category. The Easy Rider marks Cannondale's debut in the growing recumbent road segment. With a wide, generously padded seat featuring an adjustable back support, the Easy Rider places the operator in a comfortable, "feet-forward" position similar to that found in an automobile.
Cannondale's motorsports division began shipping four new 2002 models in the second quarter; the Speed and Blaze 440 ATVs, and the E440 and C440 motorcycles. The Speed is a versatile mid-range model that can be easily upgraded for racing, while the Blaze 440 is the Company's "race-ready" GNCC ATV. The E440 and C440 motorcycles are designed for high-performance enduro riding and cross-country racing, respectively. The Company also began its first shipments of motorsports products to Europe during the second quarter.
Even as the Company was introducing new models, many of its existing products were receiving favorable notice in the press. The November, 2001 issue of Mountain Bike magazine, for example, included a very positive review of the Cannondale full-suspension Scalpel 1000, which noted that "the Scalpel design is all about performance riding and XC racing. It will carry the most serious XC riders as fast as they want to go in any situation."www.cannondale.com
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