Moto Guzzi Production Up After Merger
14 June 1999
Moto Guzzi Production Levels Accelerate Following Merger Close With North Atlantic; Announces First Quarter 1999 Results NEW YORK--Moto Guzzi Corporation (OTC BB:GUZI) today announced operating results for the first quarter ended March 31, 1999. Net sales for the three months ended March 31, 1999 were Lit. 17.6 billion (US$ 9.8 million), down 31.3 percent from the comparable 1998 period. Net loss was Lit. 5.3 billion (US$ 3.0 million loss) compared with a loss of Lit. 0.8 billion (US$ 0.47 million loss) for the same period last year. The decrease was a result of a) lower production and sales due to non-supply of components consequent to liquidity difficulties prior to the arrival of funds from the merger with North Atlantic Acquisition Corporation on March 5, 1999, and b) an exceptional public administration order for 312 motorcycles during the first quarter of 1998 resulting in net sales of Lit. 3.8 billion (US$ 2.1 million) and margins of Lit. 1.0 billion (US$ 0.6 million) for that period. The closing of the merger with the Company on March 5, 1999 provided needed liquidity to Moto Guzzi. A lack of liquidity had led to component supply shortages in the last quarter of 1998 and the first two months of 1999. Following the arrival of the proceeds of the merger, production and sales were stabilized in May 1999 at more than 30 units per day. The 654 units produced in May were, however, still lower than current demand from the market. In April 1999, Moto Guzzi introduced its California Jackal model. This "stripped down" model extols the basic elegance of Moto Guzzi's unique engine and design. In addition, its reduced weight further enhances handling. Also in April, Moto Guzzi's California Special model was awarded second place in the "cruiser" category by the premier Italian motorcycle magazine Motociclismo. In late March 1999, Mario Scandellari joined the company as Managing Director of Moto Guzzi S.p.A. Mario has had a successful executive career in the motorcycle industry, initially with Harley Davidson and later with Cagiva/Ducati, as well as in turnaround situations. Mario was named COO of Moto Guzzi Corporation in May of this year. Also at the end of March, John Porter joined the company to head up operations in North America. John is an experienced recreation industry executive with many years of experience with Yamaha and in marketing and research studies in the sector. Mr. Scandellari commented: "The past few months have confirmed my strong belief in the tremendous potential of Moto Guzzi. With production now stable and the new Jackal launched, I look forward to initiating actions to strengthen the business and improve results in the coming quarters." Mr. Hauser added: "The closing of the North Atlantic transaction and the arrival of Mario Scandellari represent significant steps forward. I am very pleased with the rapid return to higher production levels and look forward to continuing progress." Moto Guzzi is one of the oldest, most storied motorcycle manufacturers in the world. Headquartered in Mandello del Lario, Italy, the company produces several models of heavyweight and high-performance motorcycles. With unit sales of about 5,700 in 1998, Moto Guzzi sells its products through a network of over 750 wholly and partially owned importers and independent dealers worldwide. In addition to motorcycles for the general consumer, Moto Guzzi also manufactures models targeted at government agencies, national and local police forces and highway patrols. Current Moto Guzzi models include the California, Nevada Club, V10 Centauro, and 1100 Sport Corsa. New models available in 1999 include the California Stripper and the V11 Sport. Some projects on the longer-term horizon include a new generation for the California family and a new line of 750cc's with a new engine and chassis. MOTO GUZZI CORPORATION Operating Highlights For the Three Months Ended March 31, 1999 Three Months Ended Three Months Ended March 31 March 31 March 31 March 31 1999 1998 1999 1998 ------------------- ------------------- In millions of Italian Lire In thousands of US Dollars except loss per share except loss per share (a) ----------------------------------------- Net sales 17,573 25,586 9,812 14,286 Gross margin 124 4,664 70 2,604 Operating (loss)/profit (4,263) 477 (2,380) 266 Finance costs, net (1,064) (986) (594) (551) Net loss (5,305) (835) (2,961) (466) ======= ======= ======= ======= Net loss per share (b) (1,333) (251) (0.74) (0.14) ======= ======= ======= ======= (a) Translated in U.S. Dollar equivalents at the approximate exchange rate prevailing at March 31, 1999 of $1.00 : Lit. 1,791 (b) Calculated on weighted average number of shares outstanding in period.