<PAGE>
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.
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(Name of Registrant as Specified In Its Charter)
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(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:
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(2) Aggregate number of securities to which transaction applies:
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(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):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[_] 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:
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(4) Date Filed:
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Notes:
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CONTACTS:
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JAMES J. KELLY
(408) 778-2271
OR
DANIEL H. BURCH OR GRACE PROTOS
MACKENZIE PARTNERS, INC.
(212) 929-5748/929-5802
FOR IMMEDIATE RELEASE:
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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
<PAGE>
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 -
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GLOBAL MOTORSPORT GROUP, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
<TABLE>
<CAPTION>
April 30, January 31,
1998 1997 1998
-------- ------- --------
<S> <C> <C> <C>
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
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$ 88,016 $66,394 $ 88,347
Property and equipment, net........................... 19,162 16,249 18,408
Other assets.......................................... 35,128 8,182 35,327
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$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
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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
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62,799 59,093 59,343
Commitments and contingencies $142,306 $90,825 $142,082
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</TABLE>
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<PAGE>
GLOBAL MOTORSPORT GROUP, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
<TABLE>
<CAPTION>
For the three
months ended
April 30,
1998 1997
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<S> <C> <C>
Sales, net........................................ $44,796 $31,707
Cost of sales..................................... 28,029 19,872
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Gross profit.................................... 16,767 11,835
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Operating expenses:
Selling, general & administrative................ 10,337 7,166
Costs associated with unsolicited tender offer... 437 --
Product development.............................. 252 363
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11,026 7,529
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Operating income................................. 5,741 4,306
Interest expense.................................. 1,508 457
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Income before income taxes....................... 4,233 3,849
Income taxes...................................... 1,772 1,506
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Net income........................................ $ 2,461 $ 2,343
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Net income per share, basic....................... $ 0.48 $ 0.45
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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
</TABLE>
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<PAGE>
GLOBAL MOTORSPORT GROUP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
<TABLE>
<CAPTION>
For the three months ended
April 30,
1998 1997
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<S> <C> <C>
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
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Net cash provided (used) by operating activities............... 7,385 5,777
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Cash flows from investing activities:
Additions to property and equipment.......................... (1,602) (991)
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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)
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Net cash provided by financing activities...................... (7,143) (4,181)
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Net change in cash and cash equivalents........................ (1,360) 605
Cash and cash equivalents at beginning of period............... 1,432 40
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Cash and cash equivalents at end of period..................... $ 72 $ 645
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Supplemental disclosures of cash paid during the period:
Interest..................................................... $ 1,508 $ 145
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Income taxes (refund)........................................ $ (990) $ 0
======= =======
</TABLE>
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