Derby’s SEC filing for the Fiscal Quarter ended April 1, 2001 was released yesterday.
The report shows that sales at Ralegh picked up a touch: 71 000 bikes in the first quarter of this year compared to 67 000 in Q1 of 2000.
“Sales…grew by 4 thousand units in the U.K. with the recovery of most of the sales to national retailers [aka Halfords] from the abnormally low level in the first quarter of 2000… Sales in the U.K. included 25 thousand units of obsolete models sold at low promotional prices to generate cash compared with 12 thousand units in the first quarter of 2000.”
Many of these 25 000 bikes were sold at “substantially below cost” said the Q1 filing to SEC, impacting on gross margin.
“Together with a recovery in low margin playbikes from last year's poor performance and softness in demand for higher end products, this reduced gross margin by 11.8 percentage points in the U.K. compared with the first quarter of 2000. As a result, consolidated margins were at the same level as last year.”
As of April 1, 2001 Derby as a whole was $265.2 million in the red, and was most in debt to its sponsors, Thayer and Perseus. Bank debt stood at $87.4 m.
The SEC filing warns that:
“The Banks have expressed a strong preference for the Company to repay the Revolving Credit Facility during the second half of 2001… The Company is currently in the process of reviewing its business and exploring all alternatives available in order to repay the Revolving Credit Facility. The Company has engaged Lazard to render financial advisory services to the Company in this regard. Lazard is exploring all alternatives available to the Company in order to repay the Revolving Credit Facility, including refinancing the Revolving Credit Facility with asset based lenders, the sale of certain assets and operations and the restructuring of other indebtedness. While management presently has no firm plans to dispose of significant assets or operations, it is possible that the sale of certain assets and operations may involve the disposal of a significant part of the Company's operations.”
Alan Finden-Crofts is confident the refinancing package will be in place by the end of the grace period the banks are giving Derby.