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Oct. 18, 2004 – Finance Digest

Japan's Motorcycle Production Down
Japan’s motorcycle production during August 2004 was 112,401 units, down 9,007 units or 7.4% compared with the 121,408 units produced during August 2003, according to the Japan Automobile Manufacturers Association (JAMA). August motorcycle unit production, per OEM, was led by Yamaha with 37,339, followed by Honda with 36,086; Suzuki, 23,046, and Kawasaki, 15,907.
The OEMs exported 74,453 units during August. Motorcycle unit exports, per OEM, also was led by Yamaha with 31,280, units, followed by Honda with 18,532 units, Suzuki, 13,196, and Kawasaki, 11,445. Exports to North America during August totaled 34,066 units – 32,049 to the U.S. and 2,017 units to Canada.
JAMA says Japan’s motorcycle production from January 2004 through August 2004 reached 1,128,524 units, down 86,216 units or 7.1% compared with the production of 1,214,740 units recorded in the same period last year.

Cycle Country Continues Growth
Cycle Country Accessories Corp. (ATC), the Milford, Iowa-based manufacturer of ATV accessories and other diversified industry products, reported revenues for the first 11 months of fiscal 2004 of $18,949,910, up 53% compared to the same period in 2003. Company officials say net income has increased 322% to $1,449,967.
Cycle Country net income during August 2004 increased 367% to $313,485 from $67,387 during the same month last year. Revenues of $2,347,718 for the month were up more than a 93% compared to revenues in August 2003.
Ron Hickman, president and CEO of Cycle Country, says sales of snow blades and OEM products were partly responsible for the increased August revenues.

Ducati Opens Factory Store
Italian motorcycle maker Ducati Motor Holdings S.p.A. opened a factory store in Bologna, northern Italy, on Sept. 23, 2004. The shop is close to the company's headquarters. At the store, Ducati fans will be able to buy both used and new motorcycles.

UTI To Add Training Campus
Universal Technical Institute, Inc., a provider of training for powersports and automotive technicians, said it has reached an agreement to purchase a property in the Boston suburb of Norwood, Mass., at which it intends to house a new undergraduate automotive technician training campus. The purchase price will be approximately $12.4 million. The company expects to spend approximately $10-12 million to retrofit the building.
The company expects to open the new campus in the fourth quarter of fiscal 2005. This campus will provide approximately 170,000 square feet of classroom and lab space on a total of 24.5 acres to teach up to approximately 1,900 students.
Universal Technical Institute, Inc., based in Phoenix, Ariz., offers undergraduate degree, diploma and certificate programs at eight campuses across the United States, and manufacturer-sponsored advanced programs at 22 dedicated training centers. UTI offers training through Motorcycle Mechanics Institute and Marine Mechanics Institute (MMI).

Harley Maintains Buy Rating
Tim Conder, analyst with A.G. Edwards, said he’s maintaining his BUY position on Harley-Davidson stock in a report released Sept. 29. Conder said recent interest rate hikes wouldn’t have much impact on Harley sales or its common stock. “(Harley’s) sales and median stock return have outperformed (the market) during the last three interest rate cycles,” he says.
Conder says any sales lost in September and October due to the recent hurricanes will only be deferred not lost permanently. “We believe any HDI/industry retail sales not made as a result of hurricanes are only deferred, at worst until spring 2005.”
Another positive, Conder says, is Harley’s productivity improvements at the York, Pa., plant that should begin to show up in the fourth quarter.

FINANCIAL - Edelbrock Has Gains
Edelbrock Corp., Torrance, Calif., reported revenues for its fourth quarter ended June 30, 2004, of $38,030,000, up from $32,678,000 for the same period of fiscal 2003. Net income for the fourth quarter of fiscal 2004 was $1,320,000, or 24 cents per diluted share, compared to net income of $709,000, or 13 cents per diluted share, for the same quarter of fiscal 2003.
Results for the quarter ended June 30, 2004, reflected professional fees and similar costs associated with the proposed "going-private" transaction totaling $496,000.
For the year ended June 30, 2004, revenues were $125,980,000, an increase over the $115,225,000 posted in fiscal 2003. Net income for fiscal 2004 was $3,979,000, 72 cents per diluted share, compared to net income of $2,970,000, or 54 cents per diluted share, for fiscal 2003.
Results for the year ended June 30, 2004 reflected gains on the sale of real estate assets totaling $445,000 (approximately $282,000 or 5 cents per diluted share, after tax) and professional fees related to the proposed going privatetransaction totaling $496,000.
Edelbrock said the increase in sales for both the fourth quarter and fiscal 2004 to improvements in the national economy, and favorable weather conditions that encouraged enthusiasts to perform desired upgrades.
However, management said that earnings growth continued to be hampered by continuing increases in worker's compensation, utilities, and overall insurance costs.
Edelbrock reported that revenues for the fourth quarter were strong across a broad range of product categories. Sales of Edelbrock's high-performance aluminum automotive cylinder heads rose $1.4 million, or 32.1% over the year-ago period, while sales of Edelbrock's aluminum automotive intake manifolds improved $1.2 million, or 17.2%. Other lines that made notable contributions to Edelbrock's quarterly sales growth included its automotive carburetors, up 4.7%; exhaust systems, up 20.0%; and shock absorbers rose 7.8% for the quarter.
Edelbrock also received a $798,000, or 49.6% quarterly sales increase from its Russell Performance Products division. The Edelbrock Russell brand is a leading provider of performance plumbing and brake lines which includes street legal brake lines, oil lines, fuel lines, and filters for both automotive and motorcycle use, as well as other products for domestic and imported vehicles.
Edelbrock also reported an increase in third party casting work at its aluminum foundry, sales from which improved $263,000, or 25.9% from the fourth quarter of 2003.
Research and development (R&D) expenses, as a percent of revenues, R&D expenses decreased to 3.3% for the fourth quarter of fiscal 2004 from 3.6% in the same quarter of fiscal 2003.
The company operates three production facilities, a distribution center, and an aluminum foundry, and has a motorcycle carburetor division in San Jacinto, Calif.

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