Excelsior-Henderson Motorcycle Announces Q2 1999 Results
18 August 1999
Excelsior-Henderson Motorcycle Manufacturing Company Announces Second Quarter 1999 Results
Business Editors
BELLE PLAINE, Minn.--Aug. 17,
1999--Excelsior-Henderson Motorcycle Manufacturing Company
today announced financial results for the second quarter and six
months ended July 3, 1999.
The Company reported net sales for the second quarter of
$11,359,642 and $13,216,874 for the six months ended July 3, 1999. The
Company shipped 724 motorcycles during the second quarter. Net loss
for the second quarter of 1999 was $6,074,477 or $.45 per common share
compared to a net loss of $4,690,112 or $.36 per common share for the
second quarter of 1998. The Company reported a net loss for the first
six months of 1999 of $13,843,651 or $1.03 per common share compared
to a net loss of $8,294,857 or $.64 per common share for the first six
months of 1998.
"The second quarter represented the first quarter in which we
produced our Super X(R) motorcycles for the entire period," stated
Co-Founders Dan, Dave and Jennie Hanlon. "As a result, we were able to
deliver motorcycles to our dealer network and ultimately to our
customers in larger quantities," added the Hanlons. "We are pleased
with our customers' reception of the 1999 Super X based on our initial
customer feedback," they added, "and look forward to customer
reception of the Year 2000 Super X model and the Year 2000 Limited
Edition Deadwood Special." The Company added that it began producing
its Year 2000 motorcycles during the week of August 9, 1999.
The Company also announced that it expects to maintain production
volumes for the remainder of the fiscal year near the production
volume levels of the second quarter. The Company's focus during the
second quarter of 1999 was to predictably ramp-up production volume
and determine component part cost reductions. The Company now believes
it best to allow the production volume to stabilize for the remainder
of the year while it focuses on expanding and improving the dealer
network and sales process, continuing to create demand for its
motorcycles, component cost reductions, and recruiting and developing
the new senior management team.
The Company announced that in response to customer requests, it
will be focusing on adding significantly to its dealer locations
throughout the United States in order to minimize customer travel time
to purchase the Company's products and allow for more convenient
customer service locations. The Company currently has approximately
105 dealers nationwide.
With the decision to stabilize production volume and focus on
adding to the dealer network, reducing component costs, and recruiting
and developing the new senior management team, the Company expects its
1999 net loss will exceed $23 million. The Company also announced that
its existing resources and estimated negative cash flow from
operations will not be sufficient to fund its cash requirements during
the remainder of 1999. Accordingly, it will need to continue to obtain
significant additional equity and debt financing to fund its capital
and operations requirements based on expected operating results. The
Company added that it has retained an investment-banking firm to seek
the additional financing.
Excelsior-Henderson Motorcycle Manufacturing Company designs,
manufactures, markets and sells a proprietary brand of premium
heavyweight American cruiser motorcycles, as well as related parts,
apparel and accessories branded with a name that evokes an authentic
American motorcycling heritage and lifestyle. The Company distributes
its products through a national dealer network. Excelsior-Henderson is
one of only two authentic American motorcycle companies exclusively
committed to the manufacture of motorcycles. For additional
information, visit the Company's web site at
www.excelsior-henderson.com.
Notes Concerning Forward Looking Statements:
This press release contains forward-looking statements regarding
future production volume, future cost expectations, future results and
obtaining additional financing that involve risks and uncertainties.
The Company's actual results could differ materially from those
anticipated in these forward-looking statements. Potential risks and
uncertainties include the ability of the Company to increase
production volume, while maintaining high quality and controlling
production costs, the ability of the Company to sell all of the
motorcycles it produces, the ability of the Company to lower overall
expense levels and the ability to obtain additional debt and equity
financing. Factors that may affect production volume include the
ability of the Company to maintain adequate quantities of high-quality
components and supplies, to refine its manufacturing processes, and to
solve unanticipated manufacturing problems. Factors that may affect
production costs include the ability of the Company to purchase
motorcycle components and supplies at reasonable costs and to
efficiently utilize personnel. Factors that may affect sales include
the ability of the Company to expand its dealer network, the
effectiveness of the Company's dealer network and internal sales team,
the success of new sales and marketing programs, and ultimately market
demand for the Company's motorcycles. Factors that may affect overall
expense levels include the ability of the Company to improve
management capabilities and improve its sales, marketing and
production processes. Investors are also encouraged to review the
factors described from time to time in the Company's reports on file
with the Securities and Exchange Commission, including but not limited
to the Company's Annual Report on Form 10-K for the fiscal year ended
January 2, 1999 and the Company's Quarterly Report on Form 10-Q for
the quarterly period ended July 3, 1999.
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EXCELSIOR-HENDERSON MOTORCYCLE MANUFACTURING COMPANY
Condensed Financial Statements
(Unaudited)
Balance Sheets July 3, January 2,
1999 1999
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $4,795,911 $4,697,542
Accounts receivable, net 2,197,840 --
Inventory 6,124,697 1,865,251
Other current assets 497,406 541,371
------------- -------------
Total current assets 13,615,854 7,104,164
PROPERTY AND EQUIPMENT, net 31,830,089 30,317,118
RESTRICTED CASH 3,244,446 8,065,727
OTHER ASSETS, net 2,401,060 2,501,123
------------- -------------
$51,091,449 $47,988,132
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES $12,025,867 $10,221,789
LONG-TERM DEBT, less current maturities 23,014,613 20,569,409
------------- -------------
STOCKHOLDERS'EQUITY:
Invested capital 63,812,444 51,114,758
Accumulated deficit (47,761,475) (33,917,824)
------------- -------------
Total stockholders' equity 16,050,969 17,196,934
------------- -------------
$51,091,449 $47,988,132
============= =============
Statements of Operations
Three Months Ended
July 3, July 4,
1999 1998
------------ ------------
NET SALES $11,359,642 $--
COST OF SALES 12,843,942 --
------------ ------------
Gross margin (1,484,300) --
------------ ------------
DEPARTMENTAL EXPENSES:
Research and development 1,096,824 2,623,477
Sales and marketing 1,337,225 752,901
General and administrative 1,358,218 1,202,938
------------ ------------
Total departmental expenses 3,792,267 4,579,316
------------ ------------
OPERATING LOSS (5,276,567) (4,579,316)
INTEREST EXPENSE, net (646,677) (110,796)
------------ ------------
NET LOSS BEFORE PREFERRED
STOCK DIVIDENDS (5,923,244) (4,690,112)
Less: Preferred Stock Dividends (151,233) --
------------ ------------
NET LOSS APPLICABLE TO COMMON
STOCK $(6,074,477) $(4,690,112)
============ ============
NET LOSS PER COMMON SHARE $(0.45) $(0.36)
============ ============
WEIGHTED AVERAGE COMMON
SHARES OUTSTANDING 13,584,736 13,034,553
============ ============
Statements of Operations
Six Months Ended
July 3, July 4,
1999 1998
------------ ------------
NET SALES $13,216,874 $--
COST OF SALES 17,477,168 --
------------ ------------
Gross margin (4,260,294) --
------------ ------------
DEPARTMENTAL EXPENSES:
Research and development 2,512,818 4,162,605
Sales and marketing 2,762,867 1,588,776
General and administrative 2,914,095 2,483,467
------------ ------------
Total departmental expenses 8,189,780 8,234,848
------------ ------------
OPERATING LOSS (12,450,074) (8,234,848)
INTEREST EXPENSE, net (1,242,344) (60,009)
------------ ------------
NET LOSS BEFORE PREFERRED
STOCK DIVIDENDS (13,692,418) (8,294,857)
Less: Preferred Stock Dividends (151,233) --
------------ ------------
NET LOSS APPLICABLE TO COMMON
STOCK $(13,843,651) $(8,294,857)
============ ============
NET LOSS PER COMMON SHARE $(1.03) $(0.64)
============ ============
WEIGHTED AVERAGE COMMON
SHARES OUTSTANDING 13,457,312 13,031,187
============ ============