Trident Rowan Group Announces First Quarter 1999 Results
23 June 1999
Trident Rowan Group Announces First Quarter 1999 Results
NEW YORK--June 22, 1999--Merger of Moto Guzzi Subsidiary with North Atlantic Acquisition Corp.
Generates US$ 14 Million Gain and Significantly Strengthens
TRG Balance Sheet
Trident Rowan Group, Inc. (OTC BB: TRGI) today announced results for the first quarter ended March 31, 1999. Net profit was Lit. 16.6 billion (US$ 9.3 million), compared with a net loss of Lit. 2.4 billion (US$ 1.4 million net loss) for the same period last year.
The merger completed on March 5, 1999 with the Company's Moto Guzzi Corp. subsidiary and North Atlantic Acquisition Corporation generated a gain of Lit. 25.8 billion (US$ 14.4 million) in the first quarter of 1999. TRG still holds, through its OAM S.p.A. subsidiary, approximately 60 percent of the merged company, Moto Guzzi Corporation (OTC BB: GUZI), following the merger. Based on Friday's closing price of US$ 7.75, the holding has a value of Lit. 46.6 billion (US$ 26 million).
Before the merger was completed, operating performance in the first quarter was held back by liquidity shortages at Moto Guzzi, leading to decreased production and sales compared with 1998. Decreased gross margins in 1999 resulted from lower levels of production and sales to cover fixed costs at Moto Guzzi. The comparable quarter of 1998 had also been enhanced by an exceptional public administration order that contributed Lit 3.8 billion of net sales and Lit. 1.0 billion of margin. With improved liquidity as a result of the merger, Moto Guzzi has accelerated production and sales in the second quarter.
Also, following the merger, Ing. Mario Scandellari, an engineer with over 10 years of industry experience, was appointed as Managing Director of Moto Guzzi SpA., and subsequently in May as Chief Operating Officer of Moto Guzzi Corporation.
Trident Rowan continues to realize receivables and non-strategic assets, while reducing corporate costs. Corporate overhead in the first quarter of 1999 decreased 23.1 percent compared with the corresponding 1998 quarter. Also, TRG received Lit. 6.1 billion (US$3.4 million) in cash from a tax related receivable.
Trident Rowan Chief Executive Officer Mark Hauser stated, "The gain on the merger with North Atlantic demonstrates the real value of Moto Guzzi's business compared to the historic values recorded in TRG's balance sheet. We still hold 60 percent of Guzzi and are committed to growing the value of this asset.
"Since a major part of TRG's value is represented by its stake in Guzzi, we will be examining strategies to expedite our corporate cost reduction and asset realization programs, as well as simplifying TRG's corporate structure," continued Mr. Hauser. "For historic reasons, our structure is complex and may take some time to unwind, but we believe this is the best way to realize value for our shareholders."
TRGI, through subsidiaries, is a manufacturer of luxury and high-performance motorcycles and welded steel tubes. The Company also provides temporary management and capital and merchant banking services to troubled businesses.
"Safe Harbor" statement under the Private Securities Litigation Reform Act of 1995: Statements in this release which are not historical facts are forward-looking and involve risks and uncertainties, including, but not limited to, the impact of competitive products and pricing, increased investment to support product introductions, market acceptance of products, product transitions by the company and its competitors, currency fluctuations, changes in product sales mix, and other risks described in the company's registration statement and other Securities and Exchange Commission filings.
TRIDENT ROWAN GROUP, INC.
Operating Highlights
For the three months ended March 31, 1999
In millions of Italian In thousands of US
Lire Dollars
except loss per share except loss per share(a)
Quarter ended Quarter ended
March 31 March 31
-------- --------
1999 1998 1999 1998
Net sales 23,561 33,106 13,155 18,485
Gross margin 1,130 5,920 631 3,395
Operating loss (5,165) (389) (2,884) (217)
Gain on merger of
subsidiary 25,837 - 14,426 -
Finance costs, net (1,384) (634) (772) (354)
Net profit/loss 16,628 (2,352) 9,285 (1,313)
Net profit/loss per share - 3,882 (472) 2.17 (0.26)
basic (b)
Net profit/loss per share - 3,777 (472) 2.11 (0.26)
fully diluted (b)
(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
the period.