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It's been almost a year since our last newsletter, and what
a year it was. Good-bye 2002, here's to 2003!
In October we invested $5 million alongside management to
form Schott High-Reliability LLC in a spin-off transaction
from its parent company. Headquartered in Wayzata, MN, Schott
High-Reliability manufactures magnetic components, antenna
coils and power supplies for the military electronics, implantable
medical device and commercial avionics markets. The Company
has strong relationships with key players in its end use markets
including Lockheed Martin, Guidant and Honeywell. We are working
closely with management on several growth initiatives including
reviewing potential acquisitions.
With an American (Bode Miller); on top of the current World
Cup standings for the first time in about 20 years, it only
seems fair that Spyder would continue to out-perform its competition.
Sales have increased nearly 25% and profits will achieve record
levels in Spyder's fiscal 2003. Now, we're not sure how much
Spyder's racing suits have to do with Bode's success but we
are sure that the exposure - especially in Europe, helps bolster
Spyder's position as the technical, performance leader in
the ski apparel market.
In October, Champion Technologies was sold to M-Tron (a division
of publicly traded Lynch Corporation). Given the extremely
difficult telecommunications environment, we all feel fortunate
to have completed a deal that preserved some operating continuity
in a business that we worked so hard to build.
Alternative Technology had record sales and EBITDA in 2002
despite the continued slowdown in IT spending that has resulted
in a decline of 20% to 30% in competitors' revenues over the
last two years. Growing at all in a down market is very tough,
growing fast in an up market is a lot more fun - will someone
please let us know when IT spending is going to grow again?
With the Schott investment, we have reached the point where
we need to raise a new fund. We hope to be in the market sometime
in April and would welcome any thoughts or recommendations
you may have on this topic. There will be more on our fund
raising effort in the next newsletter.
Please call us with interesting investment opportunities within
the closely held and family owned business market. We look
for transactions where we can invest equity capital in established
companies with $20 million or more in revenue. Should you
call, we guarantee you a thoughtful and timely response.
Tad Kelly, John Flanigan, Blake Morris, Grant Clayton, Sean
McClenaghan, Kyle McNeal & Allison Kissling
511
Sixteenth Street, Suite 600 Denver, CO 80202
Telephone: (303) 571-0100 Facsimile: (303) 571-0114
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