Ducati Motor Holding Announces 2005 Nine-Month Results

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Ducati Motor (NYSE:DMH)
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BOLOGNA, Italy, November 11 /PRNewswire-FirstCall/ -- The Board of Directors of Ducati Motor Holding S.p.A. approved yesterday the nine months 2005 financial results, which have been prepared under International Financial Reporting Standards (IFRS). Revenues for the first nine months 2005 were Euro 240.3 million, down 10.0% including forex effects (or 9.2% excluding forex effects) versus the same period in 2004 . This was due to the reduction in motorcycle volumes, combined with an unfavourable mix and adverse forex effects. Revenues from motorcycles for the period decreased 10.5% to Euro 181.8 million and accounted for 75.6% of revenues. Motorcycle-related products, including spare parts, accessories and apparel, were down by 4.7% to Euro 56.1 million over the comparable period in the previous year. Gross margin for the first nine months of 2005 amounted to Euro 57.4 million or 23.9% of revenues versus Euro 69.6 million or 26.1% in the same period in 2004, caused by a reduction in motorcycle volumes, a negative mix and adverse forex effects, only partially offset by product cost reductions. EDITDA was Euro 14.4 million or 6.0% of revenues against Euro 24.1 million or 9.0% of revenues, due to the above-mentioned factors and down 40.2% at current exchange rates and 35.2% at constant exchange rates. With regard to depreciation and amortisation, please note that following the adoption of IFRS, the amortisation of intangible assets no longer includes brand and goodwill amortisation. Operating result (EBIT) amounted to a loss of Euro 6.9 million versus a profit of Euro 2.5 million for the same period 2004. At EBT level, the result was a loss of Euro 13.0 million versus a loss of Euro 4.3 million due to lower EBIT. Net result for the period was a loss of Euro 16.6 million compared to a loss of Euro 9.0 million in the first nine months of 2004. Company net debt at September 30, 2005 was Euro 129.9 million versus Euro 133.4 million at September 30, 2004 and Euro 150.5 million at December, 31 2004. The company's gearing ratio was 92.2% compared to 87.0% on September 30, 2004 and 95.4% on December 31, 2004. For the first nine months of 2005, unofficial Ducati registrations were down by 5.3% on the same period last year. Registrations were up in the US (+21%), in the non-subsidiary countries (+5%), and in France (+4%) and down in Japan (-9%), in Italy (-15%), in the UK (-16%), in Benelux (-17%) and in Germany (-18%). "Despite a recovery in terms of sales, third quarter results were unsatisfactory", said Federico Minoli, Ducati's Chairman and Chief Executive Officer. "While the third quarter helped reduce the gap on last year in terms of sales, the unfavourable mix and the delay in the production of the Sport Classic bikes had a negative impact on the company's profitability. Our aim is to reverse this trend in the last quarter by the shipment of approximately 3,500 pre-sold Sport Classic bikes". "Our cash control resulted in a reduction in the net financial position despite lower EBITDA", said Enrico D'Onofrio, Chief Financial Officer of Ducati. "Anyway, market trends and Company results force us to rethink our cost structure and product mix through a restructuring and relaunch plan whose details and expected results will be presented soon". As for the third quarter, revenues were Euro 52.2 million, up 12.2% over the same period in 2004 thanks to a 31% bikes sales increase. Gross margin was Euro 11.5 Million, or 22.1% of revenues, up 12.6% versus Euro 10.5 Million of the same period a year ago. Operating result (EBIT) for the third quarter of 2005 was a loss of Euro 11.5 million versus a loss of Euro 9.6 million last year due to higher sales costs. Net result for the third quarter was a loss of Euro 13.0 million against a loss of Euro 11.6 million last year. As of September 30, 2005, the Company had re-purchased 3,769,249 shares, equivalent to Euro 4,267,510 or 2.37% of its stock capital. Subsequentely the Company has sold 1.924.580 shares. Founded in 1926, Ducati develops racing-inspired motorcycles characterized by unique engine features, innovative design, advanced engineering and overall technical excellence. The Company produces motorcycles in six market segments which vary in their technical and design features and intended customers: Superbike, Supersport; Monster, Sport Touring, Multistrada and Sport Classic. The Company's motorcycles are sold in more than 60 countries worldwide, with a primary focus in the Western European and North American markets. Ducati has won thirteen of the last fifteen World Superbike Championship titles and more individual victories than the competition put together. For more information about the Company, please visit our web site at http://www.ducati.com/ This press release contains statements that are forward-looking and are subject to a number of risks and uncertainties that could cause actual results to differ materially from those anticipated, as described in documents previously filed by the Company with CONSOB and with the U.S. Securities and Exchange Commission. These materials are not an offer of securities for sale in the United States. The securities may not be offered or sold in the United States absent registration with the United States Securities and Exchange Commission or an exemption from registration under the U.S. Securities Act of 1933, as amended. Any public offering of the company's securities to be made in the United States will be made by means of a prospectus that may be obtained from the company and that will contain detailed information about the company and its management, including financial statements. Ducati Motor Holding S.p.A. and Subsidiaries Net Sales and Shipment Data Three Months Ended Three Months Ended September,30 September,30 September,30 September,30 2005 2004 2005 2004 Net Revenues (Euro in thousands, US$ in thousands) Motorcycles EUR 34,373 EUR 28,446 $ 41,392 $ 34,255 Spare Parts, Accessories, Apparel 17,104 16,612 20,597 20,004 Other 744 1,482 896 1,785 Total Net Revenues EUR 52,221 EUR 46,540 $ 62,885 $ 56,044 Ducati Units Motorcycle shipments: % Change North America 1,276 657 94.2% Main European market 1,904 1,622 17.4% Japan 491 438 12.1% Rest of World 718 644 11.5% Total 4,389 3,361 30.6% Motorcycle product mix: % Change Superbike 969 1,118 (13.3%) Supersport 170 118 44.1% Sport Naked 2,372 1,589 49.3% Sport Touring 221 245 (9.8%) Multistrada 657 291 125.8% Total 4,389 3,361 30.6% Unofficial Motorcycle Registrations: % Change North America 1,824 1,441 26.6% Main European market 4,008 4,660 (14.0%) Japan 708 676 4.7% Rest of World 1,249 1,092 14.4% Total 7,789 7,869 (1.0%) Ducati Motor Holding S.p.A. Consolidated Statements of Operations Data (Euro in thousands, US$ in thousands, except per share and share amounts) Nine Months Ended Nine Months Ended Sept- Sept- Sept- Sept- Percent ember,30 ember,30 ember,30 ember,30 Change 2005 2004 2005 2004 Revenues (net) EUR240,326 EUR266,908 $289,401 $321,411 (10.0%) Cost of goods sold (182,891) (197,306) (220,237) (237,596) Gross Margin 57,435 69,602 69,164 83,815 (17.5%) Other operating revenues 27,630 26,839 33,272 32,320 SG&A expenses (91,141) (92,586) (109,752) (111,492) Other operating income and expenses (881) (1,340) (1,061) (1,614) Operating result (6,957) 2,515 (8,377) 3,029 (376.6%) Financing expense, net (6,075) (6,841) (7,316) (8,238) Profit/(loss) before income taxes and min.interest (13,032) (4,326) (15,693) (5,209) 201.2% Income Tax (3,538) (4,676) (4,260) (5,631) (24.3%) Net Result including minority interests (16,570) (9,002) (19,953) (10,840) 84.1% Minority Interests (1) (11) (1) (13) -90.9% Net Result for the Group (16,571) (9,013) (19,954) (10,853) 83.9% Shares outstanding 159,360,037 158,826,407 159,360,037 158,826,407 Percent Other Change Financial Data Motorcycles Produced (Units) 25,977 29,029 (10.5%) Motorcycles Sold (Units) 24,417 25,240 (3.3%) Unofficial Registrations (Units) 29,756 31,412 (5.3%) EBITDA 14,435 24,132 17,383 29,059 (40.2%) EBITDA Margin 6.0% 9.0% Note: On September 30, 2005 US$1= 0,8304 Euros Ducati Motor Holding S.p.A. Consolidated Statements of Operations Data (Euro in thousands, US$ in thousands, except per share and share amounts) Three Months Ended Three Months Ended Sept- Sept- Sept- Sept- Percent ember,30 ember,30 ember,30 ember,30 Change 2005 2004 2005 2004 Revenues (net) EUR 52,221 EUR 46,540 $ 62,885 $ 56,043 12.2% Cost of goods sold (40,678) (36,289) (48,984) (43,699) Gross Margin 11,543 10,251 13,901 12,344 12.6% Other operating revenues 8,086 9,114 9,737 10,975 SG&A expenses (31,753) (28,875) (38,237) (34,771) Other operating income and expenses 610 (52) 735 (63) Operating result (11,514) (9,562) (13,864) (11,515) 20.4% Financing expense, net (783) (2,211) (943) (2,662) Profit/(loss) before income taxes and min. interest (12,297) (11,773) (14,807) (14,177) 4.5% Income Tax (724) 208 (857) 275 18% Net Result including minority interests (13,021) (11,565) (15,664) (13,902) 12.6% Minority Interests (1) (14) (1) (17) -90.9% Net Result for the Group (13,022) (11,579) (15,665) (13,919) 12.5% Shares outstanding 159,360,037 158,826,407 159,360,037 158,826,407 Percent Other Financial Change Data Motorcycles Produced ( Units) 5,711 5,852 (2.4%) Motorcycles Sold (Units) 4,389 3,361 30.6% Unofficial Registrations (Units) 7,789 7,869 (1.0%) EBITDA (4,744) (2,524) (5,713) (3,039) 88.0% EBITDA Margin (9.1%) (5.4%) Note: On September 30, 2005 US$1= 0,8304 Euros Ducati Motor Holding S.p.A. Consolidated Statements of Operations Data (Euro in thousands) Nine months ended Period ended 30/09/05 31/12/04 EUR 000 % EUR 000 % Current assets Cash and cash equivalents 47,058 49,327 Trade receivables, net 77,513 118,622 Inventories 102,514 92,293 Other current assets 7,559 10,787 Current assets - Credit Link - 15,000 Total current assets 234,644 52.2% 286,029 56.9% Non current assets Property, plant and equipment -net 66,149 70,288 Goodwill and intangible assets with indefinite useful lives 86,050 86,050 Other intangible fixed assets net 40,704 38,268 Equity investments 20 20 Deferred tax assets 21,264 21,665 Other long-term assets 384 403 Total non current assets 214,571 47.8% 216,694 43.1% Total assets 449,215 100% 502,723 100% Current liabilities Short-term bank borrowings 48,406 93,738 Current portion of long-term debt 3,200 57,342 Accounts payable - trade 77,567 77,463 Income and other taxes payables 5,382 8,298 Other current liabilities 19,326 15,936 Provisions for risks and charges - current portion 4,726 4,726 Total current liabilities 158,607 35.3% 257,503 51.2% Long-term liabilities Long-term debt, net of current portion 115,912 51,913 Employee benefits 9,096 8,482 Deferred income taxes 13,628 12,207 Income and other taxes payables- long term portion - 1,292 Other long-term liabilities 9,405 11,869 Provision for risks and charges - long term portion 1,663 1,663 Total long-term liabilities 149,704 33.3% 87,426 17.4% Total liabilities 308,311 68.6% 344,929 68.6% Shareholders' equity Capital stock 82,867 82,590 Share premium reserve 16,769 16,662 Revaluation reserve 46,265 46,265 Reserve IFRS conversion 3,642 3,578 Other reserves 4,130 5,546 Retained earnings (losses) 3,785 6,606 Results for the period (16,571) (3,469) Total Group Shareholders' equity 140,887 31.4% 157,778 31.4% Minority interests 17 16 Total liabilities and shareholders' equity 449,215 100% 502,723 100% Ducati Motor Holding S.p.A. Consolidated Statements of Operations Data (US$ in thousands) Nine months ended Period ended 30/09/05 31/12/04 $ 000 % $ 000 % Current assets Cash and cash equivalents 56,667 59,399 Trade receivables, net 93,341 142,846 Inventories 123,447 111,139 Other current assets 9,103 12,990 Current assets - Credit Link - 18,063 Total current assets 282,558 52.2% 344,437 56.9% Non current assets Property, plant and equipment -net 79,657 84,641 Goodwill and intangible assets with indefinite useful lives 103,621 103,621 Other intangible fixed assets net 49,016 46,082 Equity investments 24 24 Deferred tax assets 25,606 26,089 Other long-term assets 462 485 Total non current assets 258,386 47.8% 260,942 43.1% Total assets 540,944 100% 605,379 100% Current liabilities Short-term bank borrowings 58,291 112,879 Current portion of long-term debt 3,853 69,051 Accounts payable - trade 93,407 93,282 Income and other taxes payables 6,481 9,992 Other current liabilities 23,272 19,190 Provisions for risks and charges - current portion 5,691 5,691 Total current liabilities 190,995 35.3% 310,085 51.2% Long-term liabilities Long-term debt, net of current portion 139,581 62,514 Employee benefits 10,953 10,214 Deferred income taxes 16,411 14,700 Income and other taxes payables- long term portion - 1,556 Other long-term liabilities 11,326 14,293 Provision for risks and charges - long term portion 2,003 2,002 Total long-term liabilities 180,274 33.3% 105,279 17.4% Total liabilities 371,269 68.6% 415,364 68.6% Shareholders' equity Capital stock 99,788 99,455 Share premium reserve 20,193 20,064 Revaluation reserve 55,712 55,712 Reserve IFRS conversion 4,386 4,309 Other reserves 4,973 6,678 Retained earnings (losses) 4,558 7,955 Results for the period (19,955) (4,177) Total Group Shareholders' equity 169,655 31.4% 189,996 31.4% Minority interests 20 19 Total liabilities and shareholders' equity 540,944 100% 605,379 100% Ducati Motor Holding S.p.A. Consolidated Statements of Cash Flow (Euro in thousands) Period ended Period ended 30/09/05 31/12/04 EUR 000 EUR 000 Cash flow generated by operating activities Net profit (loss) for the year (16,571) (9,013) Adjustments to reconcile net profit (loss) with the 1,546 260 movements of funds generated by (used in) operating activities - Non cash items for stock options - Amortisation, depreciation and writedowns 968 387 - Interests paid 21,392 21,617 - Taxes paid 2,850 3,916 Change in operating assets and liabilities - Working capital 30,992 15,092 - Other current assets 3,228 2,403 - Other current liabilities 3,390 850 - Due to tax authorities (7,058) (8,989) - Deferred tax liabilties (assets) net 1,822 2,059 - Employee benefits 614 718 - 81 Net cash generated by operating activities (A) 43,173 29,381 Cash flow (used in) generated by investing activities Net change in property, plant and equipment (6,504) (6,653) Net change in intangible fixed assets (13,385) (8,009) Disposal from property, plant and equipment 201 404 Other fixed assets 19 102 Net cash used in investing activities (B) (19,669) (14,156) Cash flow generated from operating activities, net of cash used in investing activities (A-B) 23,504 15,225 Cash flow (used in) generated by financing activities Change in short-term and long-term debt (36,690) 2,440 Financial assets - Credit Link 15,000 - Change in cumulative translation adjustment (1,249) (6,357) Change in minority interests 27 Increase in share capital and reserves 385 235 Change in shareholders' equity due to IAS 32,39 adoption as of 1st January 2005 (3,219) - Change in cash generated by financing activities (25,773) (3,655) Increase (decrease) in cash on hand, bank deposits and securities (2,269) 11,570 Cash and cash equivalents, beginning of year 49,327 33,973 Cash and cash equivalents, end of period/ year 47,058 45,543 Ducati Motor Holding S.p.A. Consolidated Statements of Cash Flow (Dollar in thousands) Period Period ended ended 30/09/05 31/12/04 $ 000 $ 000 Cash flow generated by operating activities Net profit (loss) for the year (19,955) (10,853) Change in cumulative translation adjustment 1,862 313 Adjustments to reconcile net profit (loss) with the movements of funds generated by (used in) operating activities - Non cash items for stock options 1,166 466 - Amortisation, depreciation and writedowns 25,760 26,031 - Taxes paid 3,432 4,715 Change in operating assets and liabilities - Working capital 37,321 18,174 - Other current assets 3,887 2,894 - Other current liabilities 4,082 1,024 - Due to tax authorities (8,499) (10,825) - Deferred tax liabilties (assets) net 2,194 2,479 - Employee benefits 739 865 98 Net cash generated by operating activities (A) 51,989 35,381 Cash flow (used in) generated by investing activities Net change in property, plant and equipment (7,832) (8,012) Net change in intangible fixed assets (16,118) (9,644) Disposal from property, plant and equipment 242 486 Other fixed assets 23 123 Net cash used in investing activities (B) (23,685) (17,047) Cash flow generated from operating activities, net of cash used in investing activities (A-B) 28,304 18,334 Cash flow (used in) generated by financing activities Change in short-term and long-term debt (44,182) 2,938 Financial assets - Credit Link 18,062 - Interests paid (1,504) (7,655) Change in minority interests 33 Increase in share capital and reserves 464 283 Change in shareholders' equity due to IAS 32,39 adoption as of 1st January 2005 (3,876) - Change in cash generated by financing activities (31,036) (4,401) Increase (decrease) in cash on hand, bank deposits and securities (2,732) 13,933 Cash and cash equivalents, beginning of year 59,399 40,910 Cash and cash equivalents, end of period/ year 56,667 54,843 DATASOURCE: Ducati Motor Holding S.p.A. CONTACT: For further information, please contact: Fabrizio Nardi, Director, Investor Relations, Ducati Motor Holding S.p.A., Via Cavalieri Ducati, 3, Bologna 40132, Italy, Main Tel: +39-051-6413-111, Direct Tel: +39-051-6413-213

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