Ducati Motor Holding Announces Preliminary Full Year and Fourth Quarter 2006 Financial Results

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Ducati Motor (NYSE:DMH)
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BOLOGNA, Italy, February 14 /PRNewswire-FirstCall/ -- 2006 2005 Var% 4Q06 4Q05 Var% Revenues 304.8 308.5 -1.2% 80.1 88.3 -9.3% EBITDA 27.0 (0.3) n.s 2.9 (14.7) n.s Net result (8.5) (41.5) n.s (3.9) (24.9) n.s Net Debt (54.2) (137.0) -60.4% (Million Euro) The Board of Directors of Ducati Motor Holding SpA (Borsa Italiana: DMH, NYSE: DMH) examined today the preliminary 2006 results and approved the 4th quarter 2006 financial results. The preliminary full year 2006 results show a significant reversal of the 2005 trend with a return to a positive operating result and a substantial improvement of the net financial position. The results are due to a successful relaunch strategy implemented at the end of 2005 which focused on the improvement of gross margin, reduction of dealer stock, reduction of fixed costs and working capital. Revenues for 2006 are Euro 304.8 million, down 1.2% compared to 2005 with a decrease in the number of bikes sold and revenues partially offset by an improvement in bike mix and by an increase in sales of accessories and apparel. 32.312 bikes were sold in 2006 yielding revenues of Euro 239.7 million (bike units -6.4% with revenues down 3% versus 2005) while sales of spare parts, accessories and apparel and reached revenues of Euro 60.1 million (up 3.4% on 2005) The decrease in the number of bikes sold, and the increase in the number of registrations (35.286 units, up by 2.1% over 2005), generated a network stock reduction of 3000 bikes equivalent to approximately 1 month of sales and in line with the relaunch strategy. Registrations increased notably in the USA (+16.3%), in the non-subsidiary countries (+9.4%), in France (+1.5%), and in Japan (+0.5%) whilst they decreased in the UK (-16.5%), Benelux (-12.5%), Germany (-8.8%) and Italy (-3.9%). It is important to consider that the new Superbike 1098 has had very little impact on the 2006 registrations due to being distributed only during the last months of the year. Gross margin for 2006 amounted to Euro 72.7 million or 23.9% of revenues versus Euro 47.3 million or 15.3% in 2005. The consistent increase is due to an improved product mix, fewer amortizations and the extraordinary devaluation in 2005. EBITDA was Euro 27 million or 8.9% of revenues compared to a negative EBITDA in 2005 of Euro 0.3 million. The increase is due to the improved bike mix and to extraordinary accruals in 2005. The operating result (EBIT) was positive at Euro 4.8 million versus a loss of euro 33.6 million the previous year, thanks to the improved EBITDA and lower accruals. EBT was negative at Euro 1.6 million versus a loss of Euro 41 million the previous year, thanks to the improved operating result and reduced financial charges. Net result was negative at Euro 8.5 million compared to a loss of Euro 41.5 million the previous year and includes the accrual of deferred taxes. Federico Minoli, Ducati's President and CEO commented on the 2006 results: "I am extremely satisfied with the results brought by Ducati's relaunch plan which is living up to our expectations and is producing results earlier than anticipated. In particular the decrease of dealer inventory is a good preparation for the sale of new products in 2007. The new Superbike 1098, Hypermotard, and Desmosedici are creating high expectations in the market and a significant number of orders. These products will further increase the gross margin". On the race track 2006 was a year of unprecedented successes: World Champions of Superbike, and 4 victories and 9 podium places in the MotoGP Championship; a result that no other European manufacturer has ever achieved". "2006 marks a return to operating profit after some difficult years. As for the future, the next few fiscal years will prove the effectiveness of the investments in the product area that have been made in previous years, especially in terms of increased sales and a return to profit" added Enrico D'Onofrio, CFO, "in particular 2007 will see a double-digit increase over 2006 revenues, EBITDA of around 12% of revenues and return to net profit, one year earlier than predicted in the relaunch plan. Net debt at the end of 2006 - in substantial decline versus 2005 thanks to the capital increase and improvement of working capital -- will stabilise in 2007 maintaining a 30% ratio on equity. In the fourth quarter sales revenues were Euro 80.1 million, a decrease of 9.3% versus previous year, due mainly to the reduced sales of bikes. Gross margin was 18.2% of revenues, an improvement on the same period of 2005 as a result of a better bike mix and extraordinary accruals in 2005. EBITDA was Euro 2.9 million compared to a negative EBITDA of Euro 14.7 million in the fourth quarter of 2005. The increase is due to accruals and extraordinary devaluations, in addition to the other factors stated previously. In the fourth quarter 2006 the operating result (EBIT) was negative for Euro 4.2 million compared to a negative result in the same period in 2005 of Euro 26.7 million. The improvement is due to the higher gross margin, as stated above, and the restructuring reserve of Euro 13 million that was put aside in 2005. Results before tax were negative by Euro 5.5 million versus a loss of Euro 27.9 million the previous year. Founded in 1926, Ducati builds racing-inspired motorcycles characterized by unique engine features, innovative design, advanced engineering and overall technical excellence. The Company produces motorcycles in seven market segments which vary in their technical and design features and intended customers: Superbike, Supersport, Monster, Sport Touring, Multistrada SportClassic and the new Hypermotard. The Company's motorcycles are sold in more than 60 countries worldwide, with a primary focus in the Western European, Japan and North American markets. Ducati has won fourteen of the last sixteen World Superbike Championship titles and more individual victories than the competition put together. Since 2003 Ducati has also been taking part in the MotoGP World Championship. For more information about the Company, please visit our web site at http://www.ducati.com/ This press release is not an offer to invest in Italy, according to Art. 1, lett (t) of the Italian Legislative Decree no. 58 of February 24th, 1998, or in any other country. This press release cannot be transmitted or distributed to any persons in the United States or in any country where its distribution is not allowed without the express approval from the relevant authorities. These materials are not an offer of securities for sale in the United States. 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. 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. Ducati Motor Holding S.p.A. and Subsidiaries Net Sales and Shipment Data Three Months Ended Three Months Ended December 31 December 31 December 31 December 31 2006 2005 2006 2005 Net Revenues (Euro in thousands, US$ in thousands) Motorcycles EUR65,653 EUR76,189 $86,465 $ 100,340 Spare Parts, Accessories, Apparel 13,537 11,318 17,828 14,906 Other 906 765 1,193 1,008 Total Net Revenues EUR80,096 EUR88,272 $105,486 $ 116,254 Ducati Units Motorcycle shipments: %Change North America 2,081 2,225 (6.5%) Main European market 3,756 4,946 (24.1%) Japan 649 924 (29.8%) Rest of World 1,917 2,024 (5.3%) Total 8,403 10,119 (17.0%) Motorcycle product mix: % Change Superbike 1,479 1,345 10.0% Supersport 106 335 (68.4%) Sport Naked 3,952 3,731 5.9% Sport Touring 366 321 14.0% Multistrada 1,115 1,113 0.2% Sport Classic 1,385 3,274 (57.7%) Total 8,403 10,119 (17.0%) Unofficial Motorcycle Registrations: % Change North America 1,205 1,372 (12.2%) Main European market 1,856 1,714 8.3% Japan 636 638 (0.3%) Rest of World 1,295 1,218 6.3% Total 4,992 4,942 1.0% Ducati Motor Holding S.p.A. and Subsidiaries Net Sales and Shipment Data Twelve Months Ended Twelve Months Ended December, 31 December, 31 December, 31 December, 31 2006 2005 2006 2005 Net Revenues (Euro in thousands, US$ in thousands) Motorcycles EUR239,697 EUR247,236 $ 315,682 $ 325,609 Spare Parts, Accessories, Apparel 60,061 58,068 79,100 76,476 Other 5,036 3,214 6,632 4,233 Total Net Revenues EUR304,794 EUR308,518 $ 401,414 $ 406,318 Ducati Units Motorcycle shipments: % Change North America 8,269 7,070 17.0% Main European market 15,523 18,158 (14.5%) Japan 2,361 2,575 (8.3%) Rest of World 6,159 6,733 (8.5%) Total 32,312 34,536 (6.4%) Motorcycle product mix: % Change Superbike 4,755 6,094 (22.0%) Supersport 556 1,030 (46.0%) Sport Naked 18,023 16,585 8.7% Sport Touring 1,562 1,397 11.8% Multistrada 2,997 6,156 (51.3%) Sport Classic 4,419 3,274 35.0% Total 32,312 34,536 (6.4%) Unofficial Motorcycle Registrations: % Change North America 8,185 7,040 16.3% Main European market 17,893 18,961 (5.6%) Japan 2,777 2,754 0.8% Rest of World 6,431 5,876 9.4% Total 35,286 34,631 1.9% 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 December 31 December 31 December 31 December 31 2006 2005 2006 2005 % Change Revenues (net) EUR80,096 EUR88,272 $ 105,486 $116,254 (9.3%) Cost of goods sold (65,502) (81,173) (86,266) (106,905) Gross Margin 14,594 7,099 19,220 9,349 105.6% Other operating revenues 10,995 7,147 14,480 9,413 SG&A expenses (29,977) (26,829) (39,479) (35,334) Other operating income and expenses 151 (1,097) 199 (1,445) Restructuring Reserve 0 (13,000) 0 (17,121) Operating result (4,237) (26,680) (5,580) (35,138) (84.1%) Financing expense, net (1,234) (1,240) (1,625) (1,633) Profit/(loss) before income taxes and min.interest (5,471) (27,920) (7,205) (36,771) (80.4%) Income Tax 1,520 3,027 2,002 3,987 (49.8%) Net Result including minority interests (3,951) (24,893) (5,203) (32,784) (84.1%) Minority Interests 7 9 0 Net Result for the Group (3,944) (24,893) (5,194) (32,784) (84.2%) Shares outstanding 320,687,920 159,360,037 320,687,920 159,360,037 % Change Other Financial Data Motorcycles Produced (Units) 6,393 7,604 (15.9%) Motorcycles Sold (Units) 8,403 10,119 (17.0%) Unofficial Registrations (Units) 4,992 4,942 1.0% EBITDA 2,949 (14,708) 3,884 (19,370) EBITDA Margin 3.7% (16.7%) Note: On December 31, 2006 1 Euro = 1,317 US$ Ducati Motor Holding S.p.A. Consolidated Statements of Operations Data (Euro in thousands, US$ in thousands, except per share and share amounts) Twelve Months Ended Twelve Months Ended December 31 December 31 December 31 December 31 2006 2005 2006 2005 % Change Revenues (net) EUR304,794 EUR 308,518 $ 401,414 $ 406,318 (1.2%) Cost of goods sold (232,046) (261,187) (305,605) (343,983) Gross Margin 72,748 47,331 95,809 62,335 53.7% Other operating revenues 34,715 30,414 45,720 40,055 SG&A expenses (102,519) (96,404) (135,018) (126,964) Other operating income and expenses (177) (1,978) (233) (2,605) Restructuring Reserve 0 (13,000) 0 (17,121) Operating result 4,767 (33,637) 6,278 (44,300) (114.2%) Financing expense, net (6,337) (7,315) (8,346) (9,634) Profit/(loss)before income taxes and min.interest (1,570) (40,952) (2,068) (53,934) (96.2%) Income Tax (6,956) (511) (9,161) (673) 1261.3% Net Result including minority interests (8,526) (41,463) (11,229) (54,607) (79.4%) Minority Interests 3 (1) 4 (1) Net Result for the Group (8,523) (41,464) (11,225) (54,608) (79.4%) Shares outstanding 320,687,920 159,360,037 320,687,920 159,360,037 % Change Other Financial Data Motorcycles Produced (Units) 31,193 33,581 (7.1%) Motorcycles Sold (Units) 32,312 34,536 (6.4%) Unofficial Registrations (Units) 35,286 34,631 1.9% EBITDA 26,982 (273) 35,535 (361) EBITDA Margin 8.9% (0.1%) Note: On December 31, 2006 1 Euro = 1,317 US$ Ducati Motor Holding S.p.A. Consolidated Statements of Operations Data (Euro in thousands, except per share and share amounts) Period ended Period ended 31.12.2006 31.12.2005 EUR 000 % EUR 000 % Current assets Cash and cash equivalents 75,054 53,017 Trade receivables, net 88,641 102,232 Inventories 69,846 81,380 Other current assets 9,055 9,217 Total current assets 242,596 51.2% 245,846 53.1% Non current assets Property, plant and equipment -net 66,536 66,556 Goodwill and intangible assets with indefinite useful lives 86,050 86,050 Other intangible fixed assets net 51,419 39,665 Equity investments 320 20 Deferred tax assets 26,494 24,662 Other long-term assets 373 386 Total non current assets 231,192 48.8% 217,339 46.9% Total assets 473,788 100% 463,185 100% Current liabilities Short-term bank borrowings 3,834 64,148 Accounts payable - trade 91,180 85,203 Income and other taxes payables 5,342 5,537 Other current liabilities 19,572 20,202 Provisions for risks and charges - current portion 7,154 18,621 Totale passivita correnti 127,082 26.8% 193,711 41.8% Long-term liabilities Long-term debt, net of current portion 125,374 125,824 Employee benefits 9,079 9,669 Deferred income taxes 20,507 13,697 Provision for risks and charges - long term portion 1,356 1,525 Totale passivita a medio-lungo termine 156,316 33.0% 150,715 32.5% Total liabilities 283,398 59.8% 344,426 74.4% Shareholders' equity Capital stock 163,311 82,867 Other reserves 75,272 75,559 Retained earnings (losses) (39,684) 1,780 Results for the period (8,523) (41,464) Total Group Shareholders' equity 190,376 40.2% 118,742 25.6% Minority interests 14 17 Total liabilities and shareholders' equity 473,788 100% 463,185 100% Ducati Motor Holding S.p.A. Consolidated Statements of Operations Data (US$ in thousands, except per share and share amounts) Period ended Period ended 31.12.2006 31.12.2005 $ 000 % $ 000 % Current assets Cash and cash equivalents 98,846 69,823 Trade receivables, net 116,740 134,640 Inventories 91,987 107,177 Other current assets 11,926 12,139 Total current assets 319,499 51.2% 323,779 53.1% Non current assets Property, plant and equipment -net 87,628 87,654 Goodwill and intangible assets with indefinite useful lives 113,328 113,328 Other intangible fixed assets net 67,719 52,239 Equity investments 421 26 Deferred tax assets 34,893 32,480 Other long-term assets 491 508 Total non current assets 304,480 48.8% 286,235 46.9% Total assets 623,979 100% 610,014 100% Current liabilities Short-term bank borrowings 5,049 84,483 Accounts payable - trade 120,084 112,212 Income and other taxes payables 7,035 7,292 Other current liabilities 25,776 26,606 Provisions for risks and charges - current portion 9,422 24,524 Totale passivita correnti 167,366 26.8% 255,117 41.8% Long-term liabilities Long-term debt, net of current portion 165,118 165,710 Employee benefits 11,957 12,735 Deferred income taxes 27,008 18,039 Provision for risks and charges - long term portion 1,786 2,008 Total long-term liabilities 205,869 33.0% 198,492 32.5% Total liabilities 373,235 59.8% 453,609 74.4% Shareholders' equity Capital stock 215,081 109,136 Other reserves 99,133 99,511 Retained earnings (losses) (52,264) 2,344 Results for the period (11,224) (54,608) Total Group Shareholders' equity 250,726 40.2% 156,383 25.6% Minority interests 18 22 Total liabilities and shareholders' equity 623,979 100% 610,014 100% Ducati Motor Holding S.p.A. Consolidated Statements of Cash Flow (Euro in thousands) Period ended Period ended 31/12/06 31/12/05 EUR 000 EUR 000 Cash flow generated by operating activities Net profit (loss) for the year (8,523) (41,464) Change in cumulative translation adjustment (796) 1,799 Adjustments to reconcile net profit (loss) with the movements of funds generated by (used in) operating activities - Non cash items for stock options 655 1,238 - Amortisation, depreciation 22,215 33,364 - Taxes paid (1,227) (4,230) Change in operating assets and liabilities - Working capital 31,102 35,043 - Effects of IAS 39 and 32 adoption from 1 January 2005 - (3,219) - Other current assets 162 1,570 - Other current liabilities (630) 4,266 - Due to tax authorities 1,032 177 - Deferred tax assets (400) (2,997) - Deferred tax liabilities 6,810 1,490 - Employee benefits (590) 1,187 - Provisions for risks and charges (1,130) 757 - Restructuring reserve (10,506) 13,000 - Other Net cash generated by operating activities(A) 38,174 41,981 Cash flow (used in) generated by investing activities Net change in property, plant and equipment (12,137) (10,928) Net change in intangible fixed assets (21,880) (20,455) Disposal from property, plant and equipment 68 354 Change in equity investments (300) - Other fixed assets 13 17 Net cash used in investing activities (B) (34,236) (31,012) Cash flow generated from operating activities, net of cash used in investing activities (A-B) 3,938 10,969 Cash flow (used in) generated by financing activities Change in short-term and long-term debt (56,892) (7,833) Interests cashed (paid) (3,872) (2,057) Change in minority interests (3) 1 Increase in share capital and reserves 78,866 2,610 Change in cash generated by financing activities 18,099 (7,279) Increase (decrease) in cash on hand, bank deposits and securities 22,037 3,690 Cash and cash equivalents, beginning of year 53,017 49,327 Cash and cash equivalents, end of period/ year 75,054 53,017 Ducati Motor Holding S.p.A. Consolidated Statements of Cash Flow (Dollar in thousands) Period ended Period ended 31/12/06 31/12/05 $ 000 $ 000 Cash flow generated by operating activities Net profit (loss) for the year (11,225) (54,608) Change in cumulative translation adjustment (1,048) 2,369 Adjustments to reconcile net profit (loss) with the movements of funds generated by (used in) operating activities - Non cash items for stock options 863 1,630 - Amortisation, depreciation 29,257 43,940 - Taxes paid (1,616) (5,571) Change in operating assets and liabilities - Working capital 40,961 46,152 - Effects of IAS 39 and 32 adoption from 1 January 2005 (4,239) - Other current assets 213 2,068 - Other current liabilities (829) 5,618 - Due to tax authorities 1,359 233 - Deferred tax assets (527) (3,947) - Deferred tax liabilities 8,968 1,962 - Employee benefits (777) 1,563 - Provisions for risks and charges (1,488) 997 - Restructuring reserve (13,836) 17,121 - Other Net cash generated by operating activities(A) 50,275 55,288 Cash flow (used in) generated by investing activities Net change in property, plant and equipment (15,984) (14,392) Net change in intangible fixed assets (28,816) (26,939) Disposal from property, plant and equipment 90 466 Change in equity investments (395) - Other fixed assets 17 22 Net cash used in investing activities (B) (45,088) (40,843) Cash flow generated from operating activities, net of cash used in investing activities (A-B) 5,187 14,445 Cash flow (used in) generated by financing activities Change in short-term and long-term debt (74,928) (10,315) Interests cashed (paid) (5,099) (2,709) Change in minority interests (4) 1 Increase in share capital and reserves 103,867 3,437 Change in cash generated by financing activities 23,836 (9,586) Increase (decrease) in cash on hand, bank deposits and securities 29,023 4,859 Cash and cash equivalents, beginning of year 69,823 64,964 Cash and cash equivalents, end of period/ year 98,846 69,823 DATASOURCE: Ducati Motor Holding S.p.A. CONTACT: For further information, please contact: Federico Strano, Director Investor Relations, Ducati Motor Holding S.p.A., Via Cavalieri Ducati, 3, Bologna 40132, Italy, e-mail: , Main Tel: +39-051-6413111, Direct Tel: +39-051-6413213

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