-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, GmSm3qslafyV3izfysHq6eKpIYQ7Wnas/qnhipbEQFAkcL/DNzJuHGcSu5ri5QoP 5oZvrebCdbKAaVSM7+fXcA== 0000898430-98-002079.txt : 19980521 0000898430-98-002079.hdr.sgml : 19980521 ACCESSION NUMBER: 0000898430-98-002079 CONFORMED SUBMISSION TYPE: DEFA14A PUBLIC DOCUMENT COUNT: 1 FILED AS OF DATE: 19980520 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: GLOBAL MOTORSPORT GROUP INC CENTRAL INDEX KEY: 0000879360 STANDARD INDUSTRIAL CLASSIFICATION: WHOLESALE-MOTOR VEHICLE SUPPLIES & NEW PARTS [5013] IRS NUMBER: 941716138 STATE OF INCORPORATION: DE FISCAL YEAR END: 0131 FILING VALUES: FORM TYPE: DEFA14A SEC ACT: SEC FILE NUMBER: 000-19540 FILM NUMBER: 98629210 BUSINESS ADDRESS: STREET 1: 16100 JACQUELINE COURT CITY: MORGAN HILL STATE: CA ZIP: 95037 BUSINESS PHONE: 4087780500 MAIL ADDRESS: STREET 1: 16100 JACQUELINE CT CITY: MORGAN HILL STATE: CA ZIP: 95037 FORMER COMPANY: FORMER CONFORMED NAME: CUSTOM CHROME INC /DE DATE OF NAME CHANGE: 19930328 DEFA14A 1 SOLICITING MATERIAL UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 SCHEDULE 14A INFORMATION Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934 (Amendment No. ) Filed by the Registrant [X] Filed by a Party other than the Registrant [_] Check the appropriate box: [_] Preliminary Proxy Statement [_] CONFIDENTIAL, FOR USE OF THE COMMISSION ONLY (AS PERMITTED BY RULE 14A-6(E)(2)) [_] Definitive Proxy Statement [_] Definitive Additional Materials [X] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12 GLOBAL MOTORSPORT GROUP, INC. - -------------------------------------------------------------------------------- (Name of Registrant as Specified In Its Charter) - -------------------------------------------------------------------------------- (Name of Person(s) Filing Proxy Statement, if other than the Registrant) Payment of Filing Fee (Check the appropriate box): [X] No fee required [_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11. (1) Title of each class of securities to which transaction applies: ------------------------------------------------------------------------- (2) Aggregate number of securities to which transaction applies: ------------------------------------------------------------------------- (3) Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee is calculated and state how it was determined): ------------------------------------------------------------------------- (4) Proposed maximum aggregate value of transaction: ------------------------------------------------------------------------- (5) Total fee paid: ------------------------------------------------------------------------- [_] Fee paid previously with preliminary materials. [_] Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. (1) Amount Previously Paid: ------------------------------------------------------------------------- (2) Form, Schedule or Registration Statement No.: ------------------------------------------------------------------------- (3) Filing Party: ------------------------------------------------------------------------- (4) Date Filed: ------------------------------------------------------------------------- Notes: CONTACTS: - --------- JAMES J. KELLY (408) 778-2271 OR DANIEL H. BURCH OR GRACE PROTOS MACKENZIE PARTNERS, INC. (212) 929-5748/929-5802 FOR IMMEDIATE RELEASE: - ---------------------- GLOBAL MOTORSPORT REPORTS FIRST QUARTER RESULTS; COMPANY HITS FIRST QUARTER TARGETS AS IT CONTINUES TO ACTIVELY EXPLORE ALTERNATIVES TO MAXIMIZE SHAREHOLDER VALUE Morgan Hill, CA May 20, 1998 Global Motorsport Group, Inc. (formerly Custom Chrome, Inc.) (NASDAQ:CSTM) today reported results for its first quarter ended April 30, 1998. Net sales for the three months ended April 30, 1998 rose 41% to $44,796,000 from $31,707,000 in the like period of the prior year. Net sales for the first quarter of 1998 include sales of $10.9 million for its Chrome Specialties unit, which was acquired by the Company in the third quarter of 1997. Net income for the three months ended April 30, 1998, excluding the after tax impact of costs of approximately $254,000 or $0.05 per share related to the Company's defense against the unsolicited tender offer by Golden Cycle to purchase the Company, was $2,715,000 or $0.50 per share. This represents an increase of 16% from net income of $2,343,000, or $0.45 per share on a fully diluted basis in the first quarter of 1997. Net income for the first quarter 1998, including the costs associated with the tender offer defense, was $2,461,000 or $0.46 per share, on a fully diluted basis. Operating Income for the first quarter of 1998 was $6,178,000, excluding the impact of pre-tax costs of $437,000 related to the unsolicited tender offer defense, an increase of 43% from operating income of $4,306,000 in the first quarter of 1997. During the first quarter of 1998 the Company also reduced total debt by $8.1 million, from $70.2 million on January 31, 1998 to $62.1 million at April 30, 1998. The Company also confirmed that it is continuing to actively explore a possible sale of the Company as a potential means of maximizing stockholder value. The Company has entered into confidentiality agreements with multiple parties and has begun management discussions with certain of those parties. The Company also confirmed that it continues to believe that the $18.00 per share price being offered by Golden Cycle to purchase Global Motorsport is inadequate. Joseph F. Keenan, Chairman of the Board of Global Motorsport, stated: "Our commitment to maximizing stockholder value is unflagging and we are pleased that, despite the distractions of the unsolicited bid, that the Company has been able to hit its targets for sales growth and earnings improvement. We have been most gratified by the level of interest shown in our Company by Global Motorsport Group, Inc. First Quarter Results May 20, 1998 Page 2 very qualified potential buyers. We currently anticipate that we will be in a position to announce the results of our efforts no later than the end of June." The Company added that no assurance can be given that a sale transaction will ultimately occur or as to the timing or price of such a transaction. Certain paragraphs of this press release contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1993 and Section 21E of the Securities Exchange Act of 1934. Actual results could differ materially from those projected in the forward-looking statements as a result of certain risks and uncertainties, including without limitation the risk that the Company's sales and earnings will not grow from its current levels and may in fact decline. In addition, the Company's growth is dependent upon, among other things: the growth in demand for Harley-Davidson motorcycles, competition in the market for the Company's products which includes Harley-Davidson, the Company's ability to fill orders on a timely basis, weather conditions - especially in the summer months, the Company's ability to hire and retain key employees, and the Company's relationships with its customers and vendors. There can be no assurance that the Company will be successful in addressing any of these risks or that its sales and earnings will grow in the future as a result of these risks or others. Global Motorsport Group was founded in 1970 and it is the parent organization for an international group of motorcycle after market providers that focus their business on Harley-Davidson motorcycles sold worldwide. Global's organization includes Custom Chrome, the leading aftermarket supplier of Harley-Davidson motorcycle parts and accessories; Chrome Specialties, an aftermarket supplier of Harley-Davidson motorcycle parts and accessories located in Fort Worth, Texas; Custom Chrome Far East, a product development, engineering, tooling management and warehouse of proprietary products for Global, located in Taiwan; Custom Chrome Europe, a distribution company located in Germany that specializes in aftermarket accessories for Harley-Davidson motorcycles and other "cruiser" motorcycles, and Santee Industries, a manufacturer of frames and exhaust systems and other aftermarket components for Harley-Davidson motorcycles, located in California. The persons listed below may be deemed to be participants in the solicitation of proxies, as such terms are defined in the rules of the Securities and Exchange Commission. The Company's Board of Directors: Joseph Piazza Sr., President and Chief Executive Officer of the Company, James J. Kelly, Executive Vice President, Finance, Chief Financial Officer and Secretary of the Company, Joseph F. Keenan, Chairman of the Board and a private attorney, and Lionel M. Allan, President of Allan Advisors, Inc., a legal consulting firm. The Board currently beneficially owns in the aggregate approximately 4.7% of the Company's common stock. - Three pages of First Quarter Financial Tables Follow - GLOBAL MOTORSPORT GROUP, INC. CONSOLIDATED BALANCE SHEETS (In thousands, except share data)
April 30, January 31, 1998 1997 1998 -------- ------- -------- ASSETS (Unaudited) Current assets: Cash and cash equivalents............................. $ 72 $ 645 $ 1,432 Accounts receivable, net.............................. 16,194 12,428 12,958 Merchandise inventories............................... 64,677 47,139 66,338 Deferred income taxes................................. 3,111 1,334 3,079 Prepaid income taxes.................................. 1,076 2,378 1,926 Deposits and prepaid expenses......................... 2,886 2,470 2,614 -------- ------- -------- $ 88,016 $66,394 $ 88,347 Property and equipment, net........................... 19,162 16,249 18,408 Other assets.......................................... 35,128 8,182 35,327 -------- ------- -------- $142,306 $90,825 $142,082 ======== ======= ======== LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Current maturities of long-term debt and capital lease obligations............................ $ 4,160 $ 3,295 $ 4,176 Bank borrowings....................................... 6,600 3,812 13,741 Accounts payable...................................... 9,350 4,493 6,757 Accrued expenses and other liabilities................ 6,794 3,185 4,775 -------- ------- -------- 26,904 14,785 29,449 Long-term debt and capital lease obligations.......... 51,321 16,130 52,302 Deferred income taxes................................. 1,282 817 988 Shareholders' equity: Common stock, $.001 par value; 20,000,000 shares authorized; 5,437,736 issued and 5,161,736 shares outstanding as of April 30, 1998, and 5,298,755 issued and 5,037,755 shares outstanding as of April 30, 1997................................ 5 5 5 Additional paid-in capital........................... 29,972 28,667 28,977 Retained earnings.................................... 32,822 30,421 30,361 -------- ------- -------- 62,799 59,093 59,343 Commitments and contingencies $142,306 $90,825 $142,082 ======== ======= ========
- 3 - GLOBAL MOTORSPORT GROUP, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per share data) (Unaudited)
For the three months ended April 30, 1998 1997 ---- ---- Sales, net........................................ $44,796 $31,707 Cost of sales..................................... 28,029 19,872 ------- ------- Gross profit.................................... 16,767 11,835 ------- ------- Operating expenses: Selling, general & administrative................ 10,337 7,166 Costs associated with unsolicited tender offer... 437 -- Product development.............................. 252 363 ------- ------- 11,026 7,529 ------- ------- Operating income................................. 5,741 4,306 Interest expense.................................. 1,508 457 ------- ------- Income before income taxes....................... 4,233 3,849 Income taxes...................................... 1,772 1,506 ------- ------- Net income........................................ $ 2,461 $ 2,343 ======= ======= Net income per share, basic....................... $ 0.48 $ 0.45 ======= ======= Net income per share, diluted..................... $ 0.46 $ 0.45 ======= ======= Shares outstanding: Basic........................................... 5,111,000 5,218,000 Diluted......................................... 5,393,000 5,224,000
- 4 - GLOBAL MOTORSPORT GROUP, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) (Unaudited)
For the three months ended April 30, 1998 1997 ------- ------- Cash flows from operating activities: Net income................................................... $ 2,461 $ 2,343 Adjustments to reconcile net income to net cash provided (used) by operating activities: Depreciation and amortization............................. 1,047 583 Deferred income tax....................................... 262 -- Changes in items affecting operations: Accounts receivable...................................... (3,235) (1,079) Merchandise inventories.................................. 1,661 2,383 Deposits & prepaid expenses.............................. 577 381 Accounts payable, accrued expenses & other liabilities... 4,612 1,166 ------- ------- Net cash provided (used) by operating activities............... 7,385 5,777 ------- ------- Cash flows from investing activities: Additions to property and equipment.......................... (1,602) (991) ------- ------- Cash flows from financing activities: Bank (repayment) borrowings, net............................. (7,141) (1,066) Borrowing (repayment) on capital lease obligations and long-term debt.............................................. (997) (22) Issuance of common stock..................................... 995 106 Repurchase of common stock................................... -- (3,199) ------- ------- Net cash provided by financing activities...................... (7,143) (4,181) ------- ------- Net change in cash and cash equivalents........................ (1,360) 605 Cash and cash equivalents at beginning of period............... 1,432 40 ------- ------- Cash and cash equivalents at end of period..................... $ 72 $ 645 ======= ======= Supplemental disclosures of cash paid during the period: Interest..................................................... $ 1,508 $ 145 ======= ======= Income taxes (refund)........................................ $ (990) $ 0 ======= =======
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