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Feb 20, 2003

Struggles In North America Affect Ducati's Financial State

From a press release issued by Ducati Motor Holding S.p.A.:<BR><BR>DUCATI MOTOR HOLDING ANNOUNCES 2002 RESULTS<BR>Bologna, Italy – Ducati Motor Holding S.p.A. (NYSE: DMH and Borsa Italiana S.p.A: DMH), a leading manufacturer of high performance motorcycles, announced full year 2002 results for the period ended December 31, 2002.<BR>2002 revenues were Euro 413.0 million representing a growth of 1.3% versus Euro 407.8 million in 2001. Revenues from motorcycle sales for the period decreased 1.1% to Euro 341.5 million and represented 82.7% of revenues. Motorcycle-related products rose 13.9% to Euro 69.9 million versus 2001, mainly thanks to the success of Ducati Performance accessory sales, which grew 27.0% versus year ago.<BR><BR>In 2002, gross margin was 39.6% of revenues versus 40.8% the year earlier, reflecting the negative impact of exchange rates and a negative country mix effect (due to lower shipments in the US), partly offset by a positive effect from related product sales.<BR><BR>EBITDA (earnings before interest, tax, depreciation and amortization) was Euro 52.3 million and represented 12.7% of revenues compared to Euro 66.1 million, or 16.2% of revenues, a year earlier. This is mostly due to costs related to the first full year of investments for the development of the Ducati Desmosedici GP motorcycle, the restructuring of Ducati's US business, the negative impact of foreign exchange rates and promotional activities.<BR><BR>Net earnings were Euro 6.5 million, compared to Euro 10.6 million in 2001. The decrease was due to the factors mentioned above, partly compensated by lower interest and lower taxes.<BR><BR>"2002 has been a difficult year for Ducati," said Carlo Di Biagio, Ducati Chief Executive Officer. "In particular, we were – and are – burdened by the restructuring of our US subsidiary and the continued devaluation of the dollar versus the Euro. In addition, it was a year in which, for the first time in fifteen years, we were confronted with a decline in our reference market. The motorcycle industry, especially in Italy, has been under great pressure. But despite this, it is a year in which Ducati grew revenues and delivered bottom line profit, while concentrating, more than ever, on product innovation.<BR><BR>"Despite this scenario, the company has moved forward with conviction," continued Di Biagio. "For model year 2003, we launched important innovations across the board, including the all new, prize-winning 999 Testastretta Superbike, new engines in the Super Sport and Monster families and an ABS system in the top Sport Touring model."<BR><BR>"There have been some serious challenges this year for Ducati," said Enrico D'Onofrio, Ducati Chief Financial Officer. "In this light, and given the uncertainty of the current political, economic and market conditions, we believe we should assume a cautious position and, for the time being, refrain from giving numerical forwardlooking guidance to the financial markets. As soon as visibility improves, we will return to our previous practice of providing annual guidance."<BR><BR>"Looking forward, 2003 is signalling that it will be at least as challenging as 2002," added Di Biagio. "The market is down and the Euro is up. In particular, it is essential that we complete the turnaround of our US business. We are putting in place measures and will track improvements carefully. At the same time, we are eager to face our competitors in both the Moto GP and Superbike Championships this year, and to get the new Multistrada into dealerships and onto the road. More than anything, however, we will work with determination to grow the business, build the brand and pay particular attention to cutting costs."<BR><BR>Ducati's net debt at December 31, 2002 was Euro 112.4 million, in line with the Euro 112.9 million at the same date a year earlier. The company's net debt to total capitalization ratio was 41% at December 31, 2002 versus 42% at the same date a year earlier.<BR><BR>These results have been approved by the Ducati Board of Directors, pending review by Company auditors.<BR><BR><BR><BR><BR><BR>