<PAGE>
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
(Mark One)
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarter period ended March 31, 1999
----------------------------------------------------
OR
( ) TRANSITION PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from_______________to____________________________
Commission File Number 0-2642
------------------------------------------------------
TRIDENT ROWAN GROUP, INC.
(Exact name of registrant as specified in its charter)
Maryland 52-0466460
- ---------------------------------------------- -------------------
(State or other jurisdiction of incorporation) (I.R.S. Employer
Identification No.)
Two Worlds Fair Drive, Somerset, NJ 08873
- --------------------------------------------------------------------------------
(Address of principal executive offices - Zip Code)
(732) 868-9000
------------------------------------------------------
(Registrant's telephone number, including area code)
- --------------------------------------------------------------------------------
(Former name, former address and former fiscal year, if changed since last
report)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all documents
and reports required to be filed by Sections 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by court. Yes __ No __
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date. Common Stock $0.01
par value, 4,419,900 shares.
<PAGE>
INDEX
PART I FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
<TABLE>
<S> <C>
Balance Sheets as of March 31, 1999 and December 31, 1998.......................................4
Statements of operations for the three months ended March 31, 1999 and 1998.....................6
Statements of stockholders' equity and comprehensive income/(loss) for the
three months ended March 31, 1999...............................................................7
Statements of cash flows for the three months ended March 31, 1999 and 1998.....................8
Notes to Financial Statements...................................................................9
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS............................................................12
PART II OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K...............................................................22
</TABLE>
<PAGE>
PART I
FINANCIAL INFORMATION
3
<PAGE>
TRIDENT ROWAN GROUP, INC
Consolidated Condensed Balance Sheets
March 31, 1999
<TABLE>
<CAPTION>
MARCH 31 MARCH 31 DEC. 31
1999 1999 1998
US$'000 LIRE M. LIRE M.
UNAUDITED UNAUDITED NOTE
<S> <C> <C> <C>
ASSETS
CASH AND CASH EQUIVALENTS............................................. $ 5,875 LIT. 10,522 LIT. 3,436
MARKETABLE SECURITIES, AT COST....................................... 533 955 955
RECEIVABLES........................................................... 24,090 43,146 35,254
TRADE, LESS ALLOWANCE LIT. 2,137 (LIT.2,037)........................ 17,570 31,467 24,881
RECEIVABLES FROM RELATED PARTIES.................................... 3,368 6,032 3,852
OTHER RECEIVABLES................................................... 3,152 5,647 6,521
INVENTORIES........................................................... 22,208 39,774 41,170
RAW MATERIALS, PARTS AND WORK-IN-PROCESS............................ 13,114 23,488 22,469
FINISHED PRODUCTS................................................... 9,093 16,286 18,701
PREPAID EXPENSES...................................................... 345 618 982
------------- ------------- -----------
TOTAL CURRENT ASSETS 53,051 95,015 81,797
------------- ------------- -----------
PROPERTY, PLANT AND EQUIPMENT......................................... 10,404 18,634 18,168
AT COST............................................................. 25,583 45,819 44,625
LESS ALLOWANCES FOR DEPRECIATION.................................... (15,179) (27,185) (26,007)
TRADEMARKS AND OTHER INTANGIBLE ASSETS, NET OF
AMORTIZATION OF LIT. 1,375 (LIT. 1,350 - 1998)...................... 349 625 650
GOODWILL, NET OF AMORTIZATION OF LIT. 579 (1998 - LIT. 561)........... 122 218 236
REAL ESTATE FOR DEVELOPMENT, NET OF RESERVE OF LIT. 2,500 ............ 1,954 3,500 3,500
CONCESSION RIGHTS..................................................... 893 1,600 1,600
TAX RECEIVABLES....................................................... 1,717 3,075 9,185
OTHER ASSETS.......................................................... 788 1,412 1,579
------------- ------------- -----------
TOTAL ASSETS $ 69,278 LIT. 124,079 LIT. 117,165
------------- ------------- -----------
------------- ------------- -----------
</TABLE>
Note: The balance sheet as at December 31, 1998 has been derived from the
audited financial statements at that date but does not include all of
the information and footnotes required by generally accepted accounting
principles.
SEE NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
4
<PAGE>
TRIDENT ROWAN GROUP, INC.
Consolidated Condensed Balance Sheets
March 31, 1999
<TABLE>
<CAPTION>
MARCH 31 MARCH 31 DEC. 31
1999 1999 1998
US$'000 LIRE M. LIRE M.
UNAUDITED UNAUDITED NOTE
<S> <C> <C> <C>
LIABILITIES
ADVANCES FROM BANKS................................................... $ 20,418 LIT. 36,569 LIT. 32,619
CURRENT PORTION OF LONG-TERM DEBT.................................... 7,055 12,636 13,288
LOANS DUE TO RELATED PARTIES.......................................... 3,767 6,746 6,312
ACCOUNTS PAYABLE...................................................... 16,891 30,252 35,360
ACCRUED EXPENSES AND OTHER PAYABLES................................... 5,946 10,650 9,715
------------- ------------- ----------
TOTAL CURRENT LIABILITIES 54,077 96,853 97,294
------------- ------------- ----------
LONG-TERM DEBT, LESS CURRENT PORTION.................................. 2,323 4,160 4,257
TERMINATION INDEMNITIES............................................... 4,915 8,802 8,581
PROVISION FOR CLAIMS.................................................. 1,742 3,120 3,120
MINORITY INTERESTS.................................................... 8,323 14,909 10,907
PREFERRED STOCK OF SUBSIDIARY......................................... - - 13,132
SHAREHOLDERS' (DEFICIT)/EQUITY (2,102) (3,765) (20,126)
COMMON STOCK, PAR VALUE $0.01 PER SHARE:
AUTHORIZED 50,000,000 SHARES;
4,419,900 (1998 - 4,419,900) SHARES ISSUED AND OUTSTANDING; 59 106 106
ADDITIONAL PAID IN CAPITAL.......................................... 58,186 104,211 104,032
TREASURY STOCK, AT COST............................................. (25,609) (45,865) (45,865)
CUMULATIVE TRANSLATION ADJUSTMENT.................................. (236) (422) 24
DEFICIT............................................................. (34,502) (61,795) (78,423)
------------- ------------- ----------
$ 69,278 LIT. 124,079 LIT. 117,165
------------- ------------- ----------
------------- ------------- ----------
</TABLE>
Note: The balance sheet as at December 31, 1998 has been derived from the
audited financial statements at that date but does not include all of
the information and footnotes required by generally accepted accounting
principles.
SEE NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
5
<PAGE>
TRIDENT ROWAN GROUP, INC.
Unaudited Consolidated Condensed Statements of Operations
3 Months Ended March 31, 1999 and 1998
<TABLE>
<CAPTION>
MARCH 31 MARCH 31 MARCH 31
1999 1999 1998
US $'000 LIRE M. LIRE M.
<S> <C> <C> <C>
NET SALES.......................................................... $ 13,155 LIT. 23,561 LIT. 33,106
COST OF SALES...................................................... (12,524) (22,431) (27,186)
------------ ------------ ------------
631 1,130 5,920
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES....................... (3,255) (5,829) (5,435)
RESEARCH AND DEVELOPMENT........................................... (260) (466) (874)
------------ ------------ ------------
(2,884) (5,165) (389)
INTEREST EXPENSE................................................... (788) (1,412) (1,085)
INTEREST INCOME.................................................... 16 28 451
GAIN ON MERGER OF SUBSIDIARY 14,426 25,837 -
OTHER INCOME/(EXPENSE), NET........................................ 75 134 (119)
------------ ------------ ------------
PROFIT/(LOSS) BEFORE INCOME TAXES AND MINORITY INTERESTS.......... 10,845 19,422 (1,142)
INCOME TAXES....................................................... 28 51 (345)
MINORITY INTERESTS................................................. (1,588) (2,845) 108
AMORTIZATION OF PREMIUM FOR REDEMPTION OF
PREFERRED STOCK OF SUBSIDIARY.................................... - - (973)
------------ ------------ ------------
NET PROFIT/(LOSS) ................................................. $ 9,285 LIT. 16,628 LIT. (2,352)
------------ ------------ ------------
------------ ------------ ------------
PROFIT/(LOSS) PER SHARE US $ LIRE LIRE
BASIC.............................................................. $ 2.17 LIT. 3,882 LIT. 472
------------ ------------ ------------
------------ ------------ ------------
DILUTED............................................................ $ 2.11 LIT. 3,777 LIT. 472
------------ ------------ ------------
------------ ------------ ------------
WEIGHTED AVERAGE NUMBER OF COMMON SHARES
OUTSTANDING DURING THE PERIOD
BASIC ............................................................. NO. 4,283,233 NO. 4,283,233 NO. 4,987,780
------------ ------------ ------------
------------ ------------ ------------
DILUTED NO. 4,402,001 NO. 4,402,001 NO. 4,987,780
------------ ------------ ------------
------------ ------------ ------------
</TABLE>
SEE NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
6
<PAGE>
TRIDENT ROWAN GROUP, INC.
Unaudited Consolidated Condensed Statements of Cash Flows
3 Months Ended March 31, 1999 and 1998
<TABLE>
<CAPTION>
MARCH 31 MARCH 31 MARCH 31
1999 1999 1998
US$'000 LIRE M. LIRE M.
<S> <C> <C> <C>
NET PROFIT/(LOSS).................................................. $ 9,285 LIT. 16,628 LIT. (2,352)
ADJUSTMENTS TO RECONCILE NET LOSS TO NET
CASH USED BY OPERATING ACTIVITIES:................................ (15,380) (27,542) (10,169)
------------ ------------ ------------
NET CASH USED IN OPERATING ACTIVITIES.............................. (6,095) (10,914) (12,521)
------------ ------------ ------------
INVESTING ACTIVITIES:
NET INCREASE IN INVESTMENTS AND SECURITIES......................... - - (771)
PROCEEDS FROM DISPOSAL OF FIXED ASSETS............................. - - 67
PURCHASES OF PROPERTY, PLANT AND EQUIPMENT......................... (617) (1,105) (966)
------------ ------------ ------------
NET CASH USED BY INVESTING ACTIVITIES.............................. (617) (1,105) (1,737)
------------ ------------ ------------
FINANCING ACTIVITIES:
INCREASE IN ADVANCES FROM BANKS.................................... 2,168 3,882 9,021
CASH FROM MERGER OF SUBSIDIARY..................................... 8,937 16,006 -
PRINCIPAL PAYMENTS OF LONG-TERM DEBT............................... (449) (804) (670)
------------ ------------ ------------
NET CASH PROVIDED BY FINANCING ACTIVITIES.......................... 10,656 19,084 8,351
------------ ------------ ------------
INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS................... 3,944 7,065 (5,907)
EFFECT OF EXCHANGE RATE CHANGE ON CASH AND
CASH EQUIVALENTS 13 21 43
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD..................... 1,918 3,436 10,407
------------ ------------ ------------
CASH AND CASH EQUIVALENTS, END OF PERIOD........................... $ 5,875 LIT. 10,522 LIT. 4,543
------------ ------------ ------------
------------ ------------ ------------
</TABLE>
SEE NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
7
<PAGE>
TRIDENT ROWAN GROUP, INC.
Unaudited Consolidated Statements of Shareholders' Equity Comprehensive
Income/(Loss)
3 Months Ended March 31, 1999
<TABLE>
<CAPTION>
ADDITIONAL ACCRETION
COMMON PAID-IN TREASURY TRANSLATION EXPENSE,
LIRE MILLION STOCK CAPITAL STOCK ADJUSTMENT NET
--------- ----------- -----------------------------------
<S> <C> <C> <C> <C> <C>
AT JANUARY 1, 1998 LIT.M 88 90,357 (29,921) (154) (2,474)
Net loss -- -- -- -- --
Translation adjustment -- -- -- 178 --
Accretion expense, net of exchange movements -- -- -- -- (253)
Repurchase of shares 14 13,203 (15,944) -- 2,727
Issuance of shares 4 1,680 -- -- --
Less: Shares not vested as at Dec. 31, 1998 -- (1,208) -- -- --
-------- -------- -------- -------- --------
AT DEC. 31, 1998 LIT.M 106 104,032 (45,865) 24 --
Net profit -- -- -- -- --
Translation adjustment -- -- -- (446) --
Vesting of shares subject to forfeit -- 179 -- -- --
-------- -------- -------- -------- --------
AT MAR. 31, 1999 LIT.M 106 104,211 (45,865) (422) --
AT DEC. 31, 1998 $'000 59 58,186 (25,609) (236) --
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------
</TABLE>
<TABLE>
<CAPTION>
TOTAL SHARES COMPREHENSIVE
ACCUMULATED SHAREHOLDERS' SUBJECT TO INCOME/
DEFICIT EQUITY REPURCHASE (LOSS)
---------- ------------ -------------- ------------
<S> <C> <C> <C> <C>
AT JANUARY 1, 1998 (53,404) 4,492 15,691
Net loss (25,019) (25,019) -- (25,019)
Translation adjustment -- 178 -- 178
Accretion expense, net of exchange movements -- (253) 253 (253)
Repurchase of shares -- -- (15,944) --
Issuance of shares -- 1,684 -- --
Less: Shares not vested as at Dec. 31, 1998 -- (1,208) -- --
-------- -------- -------- --------
AT DEC. 31, 1998 (78,423) (20,126) -- (25,094)
Net profit 16,628 16,628 -- 16,628
Translation adjustment -- (446) -- (446)
Vesting of shares subject to forfeit -- 179 -- --
-------- -------- -------- --------
AT MAR. 31, 1999 (61,795) (3,765) -- 16,182
AT DEC. 31, 1998 (34,503) (2,102) -- 9,035
-------- -------- -------- --------
-------- -------- -------- --------
</TABLE>
SEE NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
8
<PAGE>
TRIDENT ROWAN GROUP, INC.
Notes to the Consolidated Condensed Financial Statements
March 31, 1999
NOTE 1 - BASIS OF PRESENTATION
The accompanying unaudited consolidated condensed financial statements have been
prepared in accordance with the instructions to Form 10-Q. Certain information
and footnote disclosures normally included in financial statements prepared in
accordance with generally accepted accounting principles have been condensed or
omitted. For a summary of the Registrant's accounting principles, and other
footnote information, reference is made to the Registrant's 1998 Annual Report
on Form 10-K. All adjustments necessary for the fair presentation of the results
of operations for the interim periods covered by this report have been included.
All of such adjustments are of a normal and recurring nature. The results of
operations for the three months ended March 31, 1999 are not necessarily
indicative of the operating results for the full year.
The primary financial statements are shown in Italian lire because all of the
Company's material operating entities are based and operate in Italy.
Translation of lire amounts into U.S. Dollar amounts is included solely for the
convenience of the readers of the financial statements and has been made at the
rate of Lire 1,791 to U.S. $1, the approximate exchange rate at March 31, 1999.
It should not be construed that the assets and liabilities, expressed in US
dollar equivalents, can actually be realized in or extinguished by U.S. dollars
at that or any other rate.
NOTE 2 - LOSS PER SHARE
In 1997, the Financial Accounting Standards Board issued Statement No. 128,
"Earnings per Share" ("SFAS No. 128"). SFAS No. 128 replaced the calculation of
primary and diluted earnings per share with basic and diluted earnings per
share. Basic earnings per share excludes any dilutive effects of options,
warrants and convertible securities. Diluted earnings per share gives effect to
all potentially dilutive common shares that were outstanding during the period.
All loss per share amounts for all periods have been presented to conform to
SFAS No. 128 requirements.
NOTE 3 - MERGER OF MOTO GUZZI SUBSIDIARY WITH NORTH ATLANTIC
On August 18, 1998, TRG's subsidiary, Moto Guzzi Corp., and for limited
purposes. TRG, entered into a merger agreement to merge with North Atlantic
Acquisition Corp. ("North Atlantic"). The merger consummated on March 5, 1999.
North Atlantic was organized in August 1995 as a specialized merger and
acquisition allocated risk company with the objective of acquiring an operating
business and had not engaged in any substantive commercial business. At the
effective time of the merger, North Atlantic had approximately $8.9 million
(Lit. 16.0 billion) in cash, from which merger expenses of $0.8 million (Lit.
1.4 billion) were subsequently paid, to finance the operations of Moto Guzzi. On
completion of the merger, North Atlantic changed its name to Moto Guzzi
Corporation and is listed on the over-the-counter market in New York under the
ticker "GUZI". TRG owns, through its 84.35% OAM S.p.A. subsidiary, approximately
60.1% of Moto Guzzi Corporation. As a result of the merger, TRG recorded a gain
of Lit. 25.8 billion (US$ 14.4 million) in the first quarter of 1999, including
the effects of the exchange of redeemable preferred stock of Moto Guzzi Corp.
into common stock of North Atlantic. Through December 31, 1998, TRG had
accounted for the contingent redemption of such preferred stock and included
Lit. 13.1 billion in the balance sheet at December 31, 1998 to reflect such
contingent obligation.
9
<PAGE>
TRIDENT ROWAN GROUP, INC.
Notes to the Consolidated Condensed Financial Statements
March 31, 1999
NOTE 4 - LIQUIDITY AND BRIDGE LOANS FROM AFFILIATES
Moto Guzzi has suffered recurring losses from operations and negative cash flows
during the last three years. The merger with North Atlantic in March 1999 raised
approximately $8 million which, however, is not sufficient to fund its
operations and cash flow needs through 1999. Moto Guzzi is also not in
compliance with certain covenants related to a Lit. 10,000 million credit
facility which facility has been classified as a current liability in the
consolidated balance sheet. Moto Guzzi is in negotiations with the lender to
define revised terms of this loan. There can be no assurance that such
negotiations will conclude on terms satisfactory to Moto Guzzi. The foregoing
information is incorporated by reference at Item 3 of Part II of this Report.
Excluding any requirement to repay this Lit. 10,000 million loan facility on
demand, management estimates that Moto Guzzi's financing requirements through
the end of the first quarter of 2000, if it is to continue to make minimum
necessary investments, will be approximately Lit. 10,000 million to Lit 12,000
million. A substantial part of this amount will be required before the end of
the third quarter of 1999 to finance working capital in the seasonal liquidity
low point which is expected in August and September. Moto Guzzi is actively
discussing equity and debt financing options with a number of parties but there
can be no assurance that it will be able to raise finance on satisfactory terms,
or at all.
The Company is seeking to realize liquidity from certain non-strategic assets in
order to meet its commitments unrelated to Moto Guzzi. At the date of these
financial statements, the Company has sufficient liquidity to meet such other
commitments through available cash and expected further realizations, except for
full and timely repayment of a U.S. $2,000,000 bridge loan provided by Tamarix
Investors LDC in October 1998 which became due in accordance with its terms on
March 5, 1999. In May 1999, the Company repaid the Lit. 3,000 million bridge
loan provided by Dr. G. Bulgari, a former affiliate of Tamarix, and negotiated
an extension of the US$ 2 million Tamarix bridge loan until June 30, 1999.
Available cash and expected realization of TRG's non-strategic assets are not
expected to be sufficient to provide the financial support required by Moto
Guzzi Corporation. If revised terms of existing financing as well as additional
financing are not obtained in timely fashion, the Moto Guzzi creditors may look
to the Company to satisfy these obligations. As the Company does not have the
resources available to finance its consolidated obligations, there is
substantial doubt about its ability to continue as a going concern. The
financial statements do not include any adjustments that might be necessary
should the Company be unable to continue as a going concern.
10
<PAGE>
TRIDENT ROWAN GROUP, INC.
Notes to the Consolidated Condensed Financial Statements
March 31, 1999
NOTE 5 - INDUSTRY SEGMENT ANALYSIS
<TABLE>
<CAPTION>
MANAGEMENT
THREE MONTHS ENDED MARCH 31, 1999 MOTOR- STEEL & CORPORATE
LIRE M. CYCLES TUBES SERVICES ELIMINATIONS TOTAL
<S> <C> <C> <C> <C> <C>
Net sales..................................... 17,573 5,565 423 - 23,561
Cost of sales................................. (17,449) (4,805) (177) - (22,431)
----------- ---------- ---------- ---------- -----------
124 760 246 - 1,130
Selling, general and administrative expenses.. (3,921) (674) (1,234) - (5,829)
Research and development...................... (466) - - - (466)
----------- ---------- ---------- ---------- -----------
Operating profit/(loss)....................... (4,263) 86 (988) - (5,165)
----------- ---------- ---------- ---------- -----------
----------- ---------- ---------- ---------- -----------
</TABLE>
<TABLE>
<CAPTION>
MANAGEMENT
THREE MONTHS ENDED MARCH 31, 1998 MOTOR- STEEL & CORPORATE
LIRE M. CYCLES TUBES SERVICES ELIMINATIONS TOTAL
<S> <C> <C> <C> <C> <C>
Net sales..................................... 25,586 6,271 1,249 (57) 33,106
Cost of sales................................. (20,922) (5,609) (655) - (27,186)
----------- ---------- ---------- ---------- -----------
4,664 662 594 (57) 5,920
Selling, general and administrative expenses.. (3,313) (517) (1,605) 57 (5,435)
Research and development...................... (874) - - - (874)
----------- ---------- ---------- ---------- -----------
Operating profit/(loss)....................... 477 145 (1,011) - (389)
----------- ---------- ---------- ---------- -----------
----------- ---------- ---------- ---------- -----------
</TABLE>
11
<PAGE>
TRIDENT ROWAN GROUP, INC.
Management's Discussion and Analysis of Financial Conditions
and Results of Operations
RESULTS OF OPERATIONS - 3 MONTHS ENDED
MARCH 31, 1999 COMPARED TO MARCH 31, 1998
GENERAL
Since the first quarter of 1998, the Company has focused its energies and
resources on its Moto Guzzi subsidiary.
As a result of the merger of Moto Guzzi Corp. into North Atlantic Acquisition
Corp., which was consummated on March 5, 1999, all of the common stock and
preferred stock of Moto Guzzi Corp. was exchanged for newly issued shares of
common stock of North Atlantic. The Company's subsidiary, OAM S.p.A., which had
owned all of Moto Guzzi Corp.'s common stock before the merger, also contributed
a Lit. 13,362 million intercompany loan it had made to Moto Guzzi Corp. for
additional North Atlantic common stock, and holders of Moto Guzzi Corp. warrants
received additional shares of North Atlantic common stock when submitting their
warrants for cancellation. The aggregate ownership by the former Moto Guzzi
Corp. security holders immediately following the merger was approximately 75%,
while the security holders of the former North Atlantic retained an approximate
25% equity ownership interest in the merged entity, Moto Guzzi Corporation. The
Company owns approximately 60.1% of Moto Guzzi Corporation through its 84.35%
owned OAM S.p.A. subsidiary.
Approximately $8,150,000 (Lit. 14.6 billion) in cash owned by North Atlantic,
net of expenses of the merger, became available for Moto Guzzi capital needs, of
which approximately $7 million was used to pay supplier arrearages caused by
Moto Guzzi's liquidity shortage. The Company has accounted for the transaction
as a sale of shares in its Moto Guzzi Corp. subsidiary and recorded a gain of
Lit. 25.8 billion in the income statement in the first quarter of 1999 based on
such sale. Management believes that this transaction, which results in Moto
Guzzi being a separately traded public company, will enhance Moto Guzzi's
ability to raise further capital and that stock option incentives to Moto Guzzi
management and employees will provide further motivation to enhance the value of
the Moto Guzzi business.
The Company continues to seek to realize its non-strategic assets and to contain
corporate costs. In February 1999, the Company realized a Lit. 6.1 billion tax
receivable and, in April 1999, the Company entered into agreement to sell its
concession rights over parking spaces in Genoa, Italy, for Lit. 1.6 billion,
which sale is expected to be consummated early in the third quarter of 1999. The
Company's steel tube business, L.I.T.A. has continued to expand export sales to
offset falling demand from the domestic (Italian) automobile sector and in the
first quarter of 1999 has broadly maintained margins and operating profits,
despite the difficulties in its home market. The effects of containing corporate
overheads have resulted in a decrease in such expenses of 23.1% in the quarter
to March 31, 1999 compared to the corresponding 1998 quarter.
12
<PAGE>
TRIDENT ROWAN GROUP, INC.
Management's Discussion and Analysis of Financial Conditions
and Results of Operations
OPERATING PROFIT/(LOSS)
Analysis of net sales, cost of sales and operating expenses by industry segment
is given in Note 5 to the condensed financial statements at March 31, 1999.
MOTORCYCLE SEGMENT - MOTO GUZZI
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31,
---------------------------------------------
1999 1998
LIRE M. LIRE M.
<S> <C> <C> <C> <C>
Net sales ................................................... 17,573 100.0% 25,586 100.0%
Cost of sales................................................ (17,449) (99.3%) (20,922) (81.8%)
------------ ------------
124 0.7% 4,664 18.2%
Selling, general and administrative expenses ................ (3,921) (22.3%) (3,313) (12.9%)
Research & product development............................... (466) (2.7%) (874) (3.4%)
------------ ------------
Operating loss............................................... (4,263) (24.3%) 477 1.9%
------------ ------------
------------ ------------
</TABLE>
Net sales decreased by Lit. 8.0 billion or 31.3% from Lit. 25.6 billion to Lit.
17.6 billion and sales units decreased 29.1% from 1,717 in 1998 to 1,218 in
1999. The decreases resulted from two factors. First, the first quarter of 1998
included Lit. 3.8 billion of net sales relative to an exceptional public
administration order. Second, sales and production in the first quarter of 1999
were significantly affected by a disruption in supply of components because of
liquidity difficulties. Excluding the exceptional public administration order,
the decrease in unit sales would have been 13.3%. The average unit sales price
fell in 1999 compared to 1998 as a result of a change in the sales mix. In 1998,
Moto Guzzi sold a larger number of units of its more expensive Centauro model,
which is not being produced in 1999.
Gross margins decreased from Lit. 4.7 billion in the first quarter of 1998 to
Lit. 0.1 billion in the first quarter of 1999. The decrease results from a)
gross margin of approximately Lit. 1.0 billion on the exceptional 1998 public
administration order noted above; b) selective promotions of older models were
made in January and February 1999 (continued from the last quarter of 1998) in
an attempt to generate liquidity from sales; and c) significantly decreased
production levels, from 1,465 in 1998 to 1,135 in 1999, due to the disruption in
supply of components, with the consequence that fixed production costs were
absorbed over lower production volumes in 1999.
Selling, general and administrative expenses increased from Lit. 3.3 billion in
1998 to Lit. 3.9 billion in 1999 reflecting increased selling costs and general
management costs, principally at the Company's plant in Italy. Research and
development expense decreased from Lit. 0.9 billion in 1998 to Lit. 0.5 billion
as Moto Guzzi limited expenditures.
13
<PAGE>
TRIDENT ROWAN GROUP, INC.
Management's Discussion and Analysis of Financial Conditions
and Results of Operations
STEEL TUBING SEGMENT - L.I.T.A.
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31,
-------------------------------------------
1999 1998
LIRE M. LIRE M.
<S> <C> <C> <C> <C>
Net sales ................................................... 5,565 100.0% 6,271 100.0%
Cost of sales................................................ (4,805) (86.3%) (5,609) (89.4%)
------------ ------------
760 13.7% 662 10.6%
Selling, general and administrative expenses ................ (674) (12.1%) (517) (8.2%)
------------ ------------
Operating profit/(loss)...................................... 86 1.6% 145 2.3%
------------ ------------
------------ ------------
</TABLE>
Net sales decreased by 11.3% reflecting difficult market conditions in the
domestic (Italian) automobile market. Italian sales volumes fell 15.6% which was
offset by an increase in export sales volumes of 16.7%. Export sales represented
31.7% of net sales in the first quarter of 1999, against 25.1% in the
corresponding 1998 quarter.
MANAGEMENT AND CORPORATE SERVICES
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31,
-------------------------------------------
1999 1998
LIRE M. LIRE M.
<S> <C> <C> <C> <C>
Net sales ................................................... 423 100.0% 1,249 100.0%
Cost of sales................................................ (177) (41.8%) (655) (52.4%)
------------ ------------
246 58.2% 67 47.6%
Selling, general and administrative expenses ................ (1,234) (299.7%) (1,912) (128.5%)
------------ ------------
Operating profit/(loss)...................................... (988) (233.6%) (1,845) (80.9%)
------------ ------------
------------ ------------
</TABLE>
Net sales in the quarter to March 31, 1998 had benefitted from a management
engagement in connection with the purchase of a business in Italy by a Swiss
acquiror. Corporate costs and overheads decreased by 23.1% in the 3 months ended
March 31, 1999 compared to the same period in 1998 as a result of the Company's
focus on cost reduction in connection with its decision to dedicate its energies
and resources on enhancing the value of its Moto Guzzi business and not to
pursue other opportunities.
14
<PAGE>
TRIDENT ROWAN GROUP, INC.
Management's Discussion and Analysis of Financial Conditions
and Results of Operations
INTEREST EXPENSE, INTEREST INCOME AND OTHER INCOME STATEMENT ITEMS
Income statement items below operating profit level are compared below on a
consolidated basis and not by industry segment as their incurrence and
allocation between segments is, in large part, determined by structural
decisions independent of stand-alone operating needs and performance.
INTEREST INCOME AND EXPENSE
Interest expense increased by Lit. 0.3 billion to Lit. 1.4 billion in the three
months ended March 31, 1999 compared to the corresponding 1998 period. The
principal cause was increased indebtedness mainly due to a Lit. 10.0 billion
loan drawn down by Moto Guzzi in April 1998 and increased advances from banks,
which finance working capital. These effects more than offset benefits from
lower interest rates in 1999 compared to 1998. The decrease in interest income
in the 1999 compared to 1998 principally results from decreased liquidity. At
the end of June 1998, the Company utilized fixed interest securities it held to
collateralize share repurchase commitments and other cash, aggregating Lit. 15.9
billion, to satisfy its repurchase obligations.
GAIN ON MERGER OF SUBSIDIARY
As a result of the merger of Moto Guzzi into North Atlantic as described in Note
3 to the Interim Financial Statements, TRG recorded a gain of Lit. 25.8 billion
(US$ 14.4 million) in the first quarter of 1999, including the effects of the
exchange of redeemable preferred stock of Moto Guzzi Corp. into common stock of
North Atlantic. Through December 31, 1998, TRG had accounted for the contingent
redemption of such preferred stock and included Lit. 13.1 billion in the balance
sheet at December 31, 1998 to reflect such contingent obligation.
OTHER INCOME/(EXPENSE), NET
Other income/(expense) in the three months ended March 31, 1999 and 1998 is
principally comprised of exchange gains/(losses).
AMORTIZATION OF PREMIUM FOR REDEMPTION OF PREFERRED STOCK OF SUBSIDIARY
In the three months ended March 31, 1998, a non-cash expense of Lit. 973 million
had been recorded as amortization of preferred stock redemption premium relating
to the Moto Guzzi Corp. preferred stock issued at the end of 1996 and in early
1997. A significant element of the charge resulted from exchange differences as
the contingent redemption obligation was denominated in U.S. dollars. The issued
and outstanding shares of Moto Guzzi Corp. preferred stock were converted into
shares of common stock of North Atlantic upon consummation of the merger, and
the contingent obligation was accordingly eliminated.
15
<PAGE>
TRIDENT ROWAN GROUP, INC.
Management's Discussion and Analysis of Financial Conditions
and Results of Operations
LIQUIDITY AND CAPITAL RESOURCES
OPERATIONS AND WORKING CAPITAL
The principal components which determine net cash used by operations of Lit.
10.9 billion compared to net profit of Lit. 16.6 billion are as follows:
<TABLE>
<S> <C> <C>
Net profit................................................... 16.6
Gain on merger of subsidiary................................. (25.8)
Minority interests........................................... 2.8
Depreciation................................................. 1.2
--------
(5.2)
Receipt of tax receivable.................................... 6.1
Trade and related party receivables.......................... (7.6)
Inventories.................................................. 1.8
Accounts payable............................................. (5.6)
Other balances............................................... (0.4)
------
Total working capital changes................................ (5.7)
--------
(10.9)
--------
--------
</TABLE>
The gain on merger of subsidiary relates to the merger of Moto Guzzi Corp. and
North Atlantic as described above and in Note 3 to the Interim Financial
Statements.
The Company received Lit. 6.1 billion in February 1999 in respect of a tax
receivable acquired in 1995 for Lit. 5.0 billion. The difference reflects
interest, accrued at legal rates, since the receivable was acquired.
The increase in trade and related party receivables (the 25% affiliate exclusive
importer of Moto Guzzi in Germany) principally reflects increased credit terms
given over the winter months by Moto Guzzi, a normal trade practice. Such
increase is partly financed by advances from banks against such receivables.
Decreases in inventory are principally at Moto Guzzi where purchases were
focused on components to complete motorcycles. Due to a shortage of liquidity at
Moto Guzzi before the closing of the North Atlantic merger, the normal build up
of inventories at the end of the first quarter for seasonal reasons did not
manifest itself in 1999. The decrease in accounts payable principally reflects
payments to Moto Guzzi's suppliers made from the proceeds of the merger, as well
as payment of merger expenses.
INVESTING ACTIVITY
Expenditure on plant and equipment principally relates to Moto Guzzi.
FINANCING ACTIVITIES
The increase in advances from banks of approximately Lit. 3.9 billion is due to
financing of increased accounts receivable, as noted above, at Moto Guzzi. The
Lit. 16.0 billion of cash
16
<PAGE>
TRIDENT ROWAN GROUP, INC.
Management's Discussion and Analysis of Financial Conditions
and Results of Operations
acquired in the merger reflects the approximately $8.9 million of cash in North
Atlantic at the date of merger, of which approximately Lit. 1.4 billion was
applied to pay North Atlantic's merger expenses.
FUTURE LIQUIDITY REQUIREMENTS
Moto Guzzi has suffered recurring losses from operations and negative cash flows
during the last three years. The merger with North Atlantic in March 1999 raised
approximately $8 million which, however, is not sufficient to fund its
operations and cash flow needs through 1999. Moto Guzzi is also not in
compliance with certain covenants related to a Lit. 10.0 billion credit facility
which facility has been classified as a current liability in the consolidated
balance sheet. Moto Guzzi is in negotiations with the lender to define revised
terms of this loan. There can be no assurance that such negotiations will
conclude on terms satisfactory to Moto Guzzi.
Excluding any requirement to repay this Lit. 10.0 billion loan facility on
demand, management estimates that Moto Guzzi's financing requirements through
the end of the first quarter of 2000, if it is to continue to make minimum
necessary investments, will be approximately Lit. 10.0 billion to Lit 12.0
billion. A substantial part of this amount will be required before the end of
the third quarter of 1999 to finance working capital in the seasonal liquidity
low point which is expected in August and September. Moto Guzzi is actively
discussing equity and debt financing options with a number of parties but there
can be no assurance that it will be able to raise finance on satisfactory terms,
or at all.
To enable substantial further growth in production and sales, Moto Guzzi's
strategic plan contemplates total investments in research and product
development of some Lit. 50 billion (approximately $28 million) in the five year
period from 1999 through 2003. The plan also contemplates investments of Lit. 20
billion (approximately $11 million) in production plant and machinery and
information systems. Much of the production machinery at Moto Guzzi's facility
is aged and in need of extensive modification, improvement or replacement. Moto
Guzzi believes that the existing plant at Mandello del Lario, Italy has a
potential production capacity that will be sufficient for its needs for at least
the next three/four years and is not actively seeking any other alternatives at
the present time. Moto Guzzi will have to make significant investments in the
existing plant in order that it can operate competitively. Such required
modernization may result in production interruptions.
The Company expects that, over the next four years, significant further capital
will be required to complete the planned overhaul. While anticipated increases
in sales during the period, if realized, would provide a significant portion of
the needed capital, anticipated internally generated cash and currently
available bank financing, in the aggregate, will not be sufficient to enable
Moto Guzzi to increase production and sales rapidly enough to generate the
remaining needed capital. Moreover, in the four years ended December 31, 1998,
and in the quarter to March 31, 1999, Moto Guzzi has not generated cash from
operations.
The Company is seeking to realize liquidity from certain non-strategic assets in
order to meet its commitments unrelated to Moto Guzzi. At the date of these
financial statements, the Company
17
<PAGE>
TRIDENT ROWAN GROUP, INC.
Management's Discussion and Analysis of Financial Conditions
and Results of Operations
has sufficient liquidity to meet such other commitments through available cash
and expected further realizations, except for full and timely repayment of a
U.S. $2 million bridge loan provided by Tamarix Investors LDC in October 1998
which became due in accordance with its terms on March 5, 1999. In May 1999, the
Company repaid the Lit. 3.0 billion bridge loan provided by Dr. G. Bulgari, a
former affiliate of Tamarix, and negotiated an extension of the US$ 2 million
Tamarix bridge loan until June 30, 1999.
Available cash and expected realization of TRG's non-strategic assets are not
expected to be sufficient to provide the financial support required by Moto
Guzzi Corporation. If revised terms of existing financing as well as additional
financing are not obtained in timely fashion, the Moto Guzzi creditors may look
to the Company to satisfy these obligations. As the Company does not have the
resources available to finance its consolidated obligations, there is
substantial doubt about its ability to continue as a going concern. The
financial statements do not include any adjustments that might be necessary
should the Company be unable to continue as a going concern.
POTENTIAL EFFECTS OF THE YEAR 2000 ON THE COMPANY'S BUSINESS
Many older computer systems and electronic devices are based on software systems
which, because of how dates are stored and manipulated, assume that all years
occur only in the 20th century. Consequently, after December 31, 1999, such
devices may not function correctly. The Company, like many other businesses and
individuals, is potentially subject to adverse consequences arising both from
the incorrect functioning of any systems used in its own business such as
accounting, production control, inventory and automated equipment and also from
the incorrect functioning of systems of suppliers, customers, utilities, banks
and financial institutions and others with whom it interacts in the normal
course of its business.
The following discussion of the effect of the Year 2000 on the Company's systems
is based on management's best estimates, which were derived using numerous
assumptions of future events, including the continuing availability of basic
utilities and other resources, the availability of trained personnel at
reasonable cost, and the ability of third parties to cure noncompliant software
and hardware. There can be no guarantee that these assumptions will prove
accurate, and accordingly the actual results may materially differ from those
anticipated.
In analyzing its exposure to operational interruption resulting from the advent
of January 1, 2000, management of the Company segmented its data processing
systems into three segments: Production Planning and Logistics; Accounting; and
Production Equipment.
PRODUCTION PLANNING AND LOGISTICS
Moto Guzzi has completed its assessment of all data processing devices involved
in production planning and logistics and has concluded that these systems are
Year 2000 compliant.
18
<PAGE>
TRIDENT ROWAN GROUP, INC.
Management's Discussion and Analysis of Financial Conditions
and Results of Operations
ACCOUNTING
The Company's operations do not have unique or custom-tailored requirements for
their accounting systems. Nonetheless, their accounting systems are not
currently Year 2000 compliant. In connection partly with routine system upgrade
and maintenance, and partly accelerated upgrade related to the Year 2000
problem, all of Moto Guzzi's accounting systems will be upgraded during the
summer of 1999 to Year 2000 compliant status. Appropriate vendors have already
been secured for this purpose.
PRODUCTION EQUIPMENT
Moto Guzzi believes it has identified all of the items of production machinery
and related equipment which are critical to uninterrupted operations, and, in
December, 1998 began to conduct a comprehensive inventory of all such items
which incorporate electronic devices, or which process dates in their ordinary
operation, to determine whether such operations will be affected by the Year
2000 problem. Moto Guzzi will contact the relevant vendors promptly upon
completion of the inventory assessment to upgrade all deficient items. Because
of the nature of the equipment, it is not expected that modifications other than
more current and readily available circuit boards of BIOS chips will be
required, although that assessment cannot be confirmed until completion of the
inventory in second quarter of 1999.
CUSTOMER OR SUPPLIER COMPLIANCE
The Company's operating businesses do not engage in material electronic data
interchange with any of their respective customers or component suppliers. An
electronic interface is maintained with one of Moto Guzzi's financial
institutions. Moto Guzzi's motorcycle dealers are not believed to be heavily
dependent upon computer systems other than in connection with their accounting
systems.
Nevertheless, promptly following completion of its internal production equipment
compliance assessment, Moto Guzzi will poll its suppliers and customers to
determine their own state of Year 2000 compliance, a process which it expects to
complete by July, 1999, and will at that time evaluate the level of exposure
Moto Guzzi faces should it be determined that Year 2000 compliance has not been
achieved, and does not seem to be timely capable of achievement.
CONTINGENCY PLANNING
Moto Guzzi has not established a contingency plan to deal with the advent of
January 1, 2000 without its own systems having been rendered Year 2000
compliant, because management does not believe that Moto Guzzi faces a material
risk that such an event is likely to occur, or, if it occurs, will result in
significant interruption in its operations. Moto Guzzi has not yet established a
contingency plan in the event a critical service or component supplier or
customer will not achieve Year 2000 compliance. Moto Guzzi will reassess the
need to establish such a contingency plan if, following its assessment of its
customer and suppliers, it appears that one or more critical customers or
suppliers will have to curtail business with Moto Guzzi because of
19
<PAGE>
TRIDENT ROWAN GROUP, INC.
Management's Discussion and Analysis of Financial Conditions
and Results of Operations
that customer or supplier's own Year 2000 exposure. Nevertheless, Moto Guzzi
assumes that if a supplier, whether of utility services, such as electricity, or
of components, cannot provide it with written assurance of compliance, that
compliance will not be achieved. If, in the reasonably possible, if unlikely,
event that critical services are affected, such as utilities, telecommunications
or banking or if components are unavailable and cannot be obtained from other
sources which are compliant, Moto Guzzi will have to curtail its operations.
TOTAL COST TO ACHIEVE YEAR 2000 COMPLIANCE
Moto Guzzi has, to date, spent an inconsequential amount directly attributable
to Year 2000 compliance, exclusive of routine personnel expenses. Moto Guzzi
does not expect that the aggregate cost for Moto Guzzi to achieve Year 2000
compliance will exceed approximately Lit. 500 million ($302,000), an amount
which is not considered material to Moto Guzzi's operations. Because so many
factors are beyond the control of Moto Guzzi, however, there can be no assurance
that these costs will not be exceeded. In the worst case scenario where
essential services are lost or critical components are no longer supplied, Moto
Guzzi will curtail its operations, in which event, the loss of revenues will
greatly exceed Year 2000 remediation expenses.
POTENTIAL EFFECTS OF THE PROPOSED EUROPEAN COMMON CURRENCY ON THE COMPANY'S
BUSINESS
The Company's businesses are substantially located and operate in Italy. On
January 1, 1999, Italy was admitted as one of 11 European countries in a
proposed European common currency, the Euro.
The European Common Currency is expected to have significant effects on the
Company's business. Among many potential economic factors, the proposed common
currency is expected to increase competition within the common currency zone.
Because the adoption of the Euro will require competitive businesses located in
different participating countries to price their products in a single currency,
the historical ability of such companies to increase or reduce prices without
affecting operating results in their home countries' currencies will be largely
eliminated.
The uniform currency will also likely result in the establishment of new
Euro-based pricing points, e.g., Euro 9,999 or Euro 19,999. These new pricing
points may differ from the current prices charged for such products, which could
be advantageous or disadvantageous to a company, depending upon whether the
Euro-based price point is higher or lower than the prices charged before the
adoption of the uniform currency. Moto Guzzi will have to re-evaluate its
pricing policies and model specifications to most competitively deal with the
new pricing points.
Moto Guzzi also expects that the introduction of the Euro will increase
consolidation within industries and industry sectors, as currency translation
risks and competitive opportunities diminish within the common currency zone.
National regulatory barriers are also likely to fall as participating countries
harmonize their rules to promote intra-member commerce and cross-border
information exchange.
20
<PAGE>
TRIDENT ROWAN GROUP, INC.
Management's Discussion and Analysis of Financial Conditions
and Results of Operations
The combination of pricing transparency and consolidation is likely to increase
competition within the common currency zone generally. To the extent that
competitors of Moto Guzzi participate in the expected consolidation, Moto Guzzi
may in the future face competitors which are even larger and better capitalized
than the competitors it faces now.
Additionally, interest rates are likely to stabilize across the common currency
zone. Interest rates in Italy have fallen since 1997, partly in anticipation and
response to the Euro introduction.
Moto Guzzi has not yet fully evaluated the ramifications of the adoption of the
uniform currency because national European currencies continue to function as
more dominant benchmarks for pricing and commercial transactions with customers
and suppliers in the first months of the phasing in of the Euro. Adoption of the
Euro is expected to take place over a two year transition phase in which both
the Lira and the Euro are valid currencies for business transaction in Italy.
Moto Guzzi also makes significant export sales outside the proposed common
currency zone and the prices of certain commodities used in its manufacturing
processes may be affected by the value of the Euro. The implementation of the
Euro within the common currency zone could have unanticipated consequences on
the economics of participant countries which could affect demand for the
company's products.
Adoption of the Euro is expected to take place over a two year transition phase
in which initially both the Lira and the Euro would be valid currencies for
business transactions in Italy.
The European Common Currency could have a significant effect on Moto Guzzi's
accounting systems which could require significant modification or replacement.
Management believes that Moto Guzzi's businesses do not have unique or
custom-tailored requirements for accounting systems and that it could rapidly
and inexpensively change to "off-the-shelf" systems at an appropriate time if
existing systems prove not to be adequate. The Company is not able to evaluate
these matters or the effects on international financial and payment systems with
which it interacts at the present time. The Company will address these issues
during the current year and in 2000 as further guidelines and information become
available. Adoption of the Euro would also lead to the Company reporting its
results in that currency instead of the Italian Lira from some point in the
future, yet to be defined.
PORTIONS OF THIS REPORT CONTAIN CERTAIN "FORWARD LOOKING" STATEMENTS WHICH
INVOLVE RISKS AND UNCERTAINTIES. THE COMPANY'S ACTUAL RESULTS MAY DIFFER
SIGNIFICANTLY FROM THE RESULTS DISCUSSED IN THE FORWARD LOOKING STATEMENTS.
FACTORS THAT MIGHT CAUSE SUCH A DIFFERENCE INCLUDE, BUT ARE NOT LIMITED TO,
MARKET ACCEPTANCE OF THE COMPANY'S PRODUCTS AND SERVICES, CHANGES IN CURRENCY
EXCHANGE RATES, LACK OF ADEQUATE CAPITAL TO MAINTAIN OPERATIONS, OTHER FACTORS
DISCUSSED IN THE REPORT AS WELL AS FACTORS DISCUSSED IN OTHER FILINGS MADE WITH
THE SECURITIES AND EXCHANGE COMMISSION. ALTHOUGH THE COMPANY BELIEVES THAT THE
ASSUMPTIONS UNDERLYING THE FORWARD LOOKING STATEMENTS CONTAINED HEREIN ARE
REASONABLE, ANY OF THE ASSUMPTIONS COULD PROVE INACCURATE, AND THEREFORE, THERE
CAN BE NO ASSURANCE THAT THE FORWARD LOOKING STATEMENTS INCLUDED HEREIN WILL
PROVE TO BE ACCURATE.
21
<PAGE>
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits
<TABLE>
<CAPTION>
Exhibit No. Description
----------- -----------
<S> <C>
27 Financial Data Schedule
</TABLE>
22
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
TRIDENT ROWAN GROUP, INC.
Dated: June 14, 1999 By: s/Howard E. Chase
---------------------------------
Howard E. Chase,
Principal Financial Officer
Dated: June 14, 1999 By: s/Mark S. Hauser
--------------------------------
Mark S. Hauser
President and Chief Executive Officer
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
unaudited financial statements dated March 31, 1999 and is qualified in its
entirety by reference to such financial statements. Amounts are based on
conversion rate of 1,791 lire to the dollar which prevailed at March 31, 1999.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> MAR-31-1999
<CASH> 5,875,000
<SECURITIES> 533,000
<RECEIVABLES> 18,763,000
<ALLOWANCES> 1,193,000
<INVENTORY> 22,208,000
<CURRENT-ASSETS> 53,051,000
<PP&E> 25,583,000
<DEPRECIATION> 15,179,000
<TOTAL-ASSETS> 69,278,000
<CURRENT-LIABILITIES> 54,077,000
<BONDS> 2,323,000
0
0
<COMMON> 59,000
<OTHER-SE> (2,161,000)
<TOTAL-LIABILITY-AND-EQUITY> 69,278,000
<SALES> 13,155,000
<TOTAL-REVENUES> 13,155,000
<CGS> 12,524,000
<TOTAL-COSTS> 3,515,000
<OTHER-EXPENSES> (25,971,000)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 788,000
<INCOME-PRETAX> 10,845,000
<INCOME-TAX> (288,000)
<INCOME-CONTINUING> 9,285,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 9,285,000
<EPS-BASIC> 2.17
<EPS-DILUTED> 2.11
</TABLE>
