Dec. 8, 2003 – Finance Digest

Edelbrock sales gain, earnings slip
Edelbrock Corp., Torrance, Calif., reported improved sales but lower earnings for its first quarter ended Sept. 25, 2003. Revenues improved 6.9% to $27.6 million, up from $25.8 million in the first quarter last year. Net income for the quarter was $467,000, off from $854,000 in the same period last year.
Edelbrock said revenue gains this year came primarily from growth in sales at its aluminum foundry to third-party customers; aggressive marketing and promotional activities for automotive and motorcycle aftermarket performance products; the successful introduction of a series of new products; and an improvement in U.S. weather that had been hampering sales since early spring 2003.
At the same time, the company declared a three cent per share dividend on the company’s common stock. The dividend is payable Dec. 9, 2003, to shareholders of record Dec. 1, 2003. On Nov. 3, 2003, Edelbrock had approximately 101 shareholders of record of its common stock and approximately 5.5 million shares outstanding.

Japan motorcycle Production drops
Motorcycle production in Japan during September 2003 was 157,307 units, a 16% drop from the 187,344 registered for September 2002, according to figures compiled by the Japan Automobile Manufacturers Association (JAMA).
The figures for September represent the eighth straight month of decline in production and bring production from January 2003 through September 2003 to 1,372,047 units, down from the 1,568,428 units produced during the same period last year.
The OEMs with September 2003 production totals and September 2002 production totals are:
OEM Sept ’03 Sept ’02
Honda: 60,399 72,463
Yamaha 43,266 59,087
Suzuki 33,319 33,707
Kawasaki 20,190 21,932
Others 133 155
JAMA says 95,195 units were exported during the month, down 29,537 units or 23.7% from the 124,732 units recorded for the same month of the previous year.

Redline Signs deal with Mclaren
Redline Performance Products, Inc. has signed an agreement with McLaren Performance Technologies, Inc. under which McLaren will perform final assembly and testing of the 800cc twin engine that will power Redline’s 800 Revolt snowmobile.
McLaren has begun assembly and testing of the Redline engine at its facilities in Livonia, Mich. McLaren will ship the assembled and tested engines to Redline’s contract assembler, Interstate Companies, Inc., for integration into the 800 Revolt snowmobile and shipment to Redline's dealer network. No other terms of the agreement were disclosed.
McLaren Performance was acquired by Linamar Corporation, headquartered in Guelph, Ontario, Canada, in September. Linamar is a major automotive supplier of precision-machined engine, transmission and chassis components and sub-assemblies.

Deere Keeps Buy Recommendation
In its most recent company report, Merrill Lynch analyst Stephen Haggerty continued to give Deere & Co. a BUY rating, noting that its price objective for Deere common stock is $63.
Haggerty’s 10/27/2003 report is based upon his visit to Deere’s 2004 product rollout in Sarasota, Fla. Haggerty notes that Deere's Commercial and Consumer Equipment (C&CE) division, which sells the popular Gator utility vehicle, represents about 23% of Deere's annual manufacturing revenues. C&CE will sell two new Gator models next year, as well as two models of ATVs made by Bombardier for Deere.
“We estimate that these two new (Gator) models could contribute an additional $50 million in revenue in 2004,” says Haggerty. The U.S. utility market is estimated to be about $850 million, says Haggerty, and is growing by more than 10% annually. Deere’s Gator accounts for about 21% of the market, he says.
On the ATV side, Haggerty says that Deere’s target market of sportsmen and large landowners represents about 45% of the $5.5 billion U.S. ATV market.
Haggerty estimates that the two moves could boost C&CE 2004 profit by $26 million.

Harley Workers Approve Contract
Harley-Davidson workers have approved contract changes that are expected to save jobs but increase health care costs for some of the 2,000 union laborers.
The Paper, Allied-Industrial, Chemical & Energy Workers union and the International Association of Machinists and Aerospace Workers approved the changes. The unions and company officials reportedly would not reveal details of the changes, but the Milwaukee Journal Sentinel reported that some workers would have to pay more for health care, including co-payments for medical services and prescription drugs.
Union officials told the newspaper that workers accepted the changes in an effort to save jobs tied to the production of motorcycle transmission components. In September, the company gave the union 60 days to create a plan that would reduce the costs of building motorcycle transmissions or risk having the work sent elsewhere.

MMI adds Lightspeed
Motorcycle & Marine Mechanics Institute (MMI) has selected the Lightspeed Windows dealer management system for use in its new computer systems and parts management class. Lightspeed is produced by ProQuest Powersports, a unit of ProQuest Company (NYSE: PQE), Salt Lake City, Utah. MMI is a subsidiary of Universal Technical Institute, Inc.
In the new class, students at MMI campuses in Phoenix, Ariz. and Orlando, Fla. will be trained to use Lightspeed, which is widely used among motorcycle and marine dealerships nationwide.
MMI offers training for individuals studying to become motorcycle or marine technicians. The Institute has focused on specialized OEM training in the past, but with an increasing number of dealers turning to integrated dealer management systems (DMS) to run their businesses and OEMs encouraging electronic order transfer, computer training is a critical part of technician education. A recent industry poll reports that 81% of powersports dealers rely on management software, of these 69% use Lightspeed.

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