MILWAUKEE, April 19, 2011 /PRNewswire/ -- Harley-Davidson,
Inc. (NYSE: HOG) generated increased earnings and worldwide dealer
new motorcycle sales grew for the first quarter of 2011.
The Company reported first quarter income from continuing
operations of $119.3 million, or
$0.51 per share, compared to income
from continuing operations of $68.7
million, or $0.29 per share in
the year-ago period.
Worldwide retail sales of new Harley-Davidson motorcycles grew
3.5 percent in the first quarter, compared to last year's first
quarter.
"We are pleased by the growth of our dealers' new motorcycle
sales on a worldwide basis, led by strength in Europe, even as we continue to encounter some
headwinds in the U.S. related to the challenging macro-economic
conditions," said Harley-Davidson, Inc. President and CEO
Keith Wandell.
The Company's improved first-quarter earnings performance was
driven by operating income from financial services, which climbed
154.6 percent compared to the first quarter of 2010. Operating
income from motorcycles and related products was flat with the
year-ago quarter and was impacted by expected inefficiencies
related to the restructuring and implementation of the new
operating system underway at the Company's manufacturing
operations.
"Our entire team remains focused on transforming our company to
be leaner, more agile and more effective than ever at delivering
great products and experiences to an increasingly global community
of customers," said Wandell. "Harley-Davidson's results for the
quarter reflect the continued improvement at HDFS, as well as the
near-term inefficiencies related to the transformation underway in
manufacturing operations at York. We expect to continue to see an
impact on our motorcycles segment financial performance in the
coming quarters as we complete the transformation of our York
operations. When this manufacturing transition is completed next
year, we will have a best-in-class, flexible, lean operating
structure that we expect will yield substantial ongoing
savings.
"While we continue to be encouraged by our overall progress, we
are maintaining a cautious outlook for the year," Wandell said. "I
would like to thank all our employees, dealers and suppliers for
their dedication and commitment to the transformation of our
business."
Retail New Harley-Davidson Motorcycle Sales
On a worldwide basis, first-quarter Harley-Davidson retail new
motorcycle sales grew 3.5 percent compared to last year's first
quarter. Dealers sold 17,904 new Harley-Davidson motorcycles in
international markets, an 11.3 percent increase compared to last
year's first quarter, and 31,691 new motorcycles in the U.S., down
0.5 percent, compared to the year-ago period. Industry-wide U.S.
heavyweight new motorcycle (651cc-plus) retail unit sales increased
3.1 percent in the first quarter of 2011 compared to the year-ago
period.
First-quarter data are listed in the accompanying tables.
Harley-Davidson Motorcycles and Related Products Segment
Financial Results
Revenue from Harley-Davidson motorcycles in the first quarter of
2011 was $833.4 million, up 3.0
percent compared to the year-ago period. The Company shipped 53,827
Harley-Davidson motorcycles to dealers and distributors worldwide
during the quarter, compared to shipments of 53,674 motorcycles in
the first quarter of 2010.
Revenue from Parts and Accessories totaled $164.3 million during the quarter, up 10.2
percent, and revenue from General Merchandise, which includes
MotorClothes® apparel, was $62.6
million, down 5.6 percent, compared to the year-ago
period.
Gross margin was 33.1 percent in the first quarter, compared to
36.6 percent in the year-ago period. Gross margin was adversely
affected by temporary production inefficiencies related to the
restructuring and transformation of production operations,
and by foreign exchange and raw materials costs.
First-quarter operating margin was 11.8 percent, compared to 12.2
percent in last year's first quarter.
Financial Services Segment
The financial services segment recorded operating income of
$67.9 million in the quarter,
compared to operating income of $26.7
million in the year-ago quarter. The increase in
year-over-year operating income is largely the result of continued
improvement in credit performance.
Guidance
In a move related to what it believes will be a modest level of
supply chain interruption to the Company arising from the
March 11 earthquake and tsunami in
Japan, Harley-Davidson is widening
full-year shipment guidance. The Company now expects to ship
215,000 to 228,000 Harley-Davidson motorcycles to dealers and
distributors worldwide in 2011, compared to prior shipment guidance
of 221,000 to 228,000 motorcycles.
In the second quarter of 2011, Harley-Davidson expects to ship
62,000 to 67,000 motorcycles.
Harley-Davidson and its direct suppliers source a limited number
of components and subcomponents, including motorcycle electronics,
through suppliers in Japan, and
the Company has several of these subcomponent parts on close watch
for possible shortages related to the situation there. The Company
has identified a supply issue related to an electronic subcomponent
used in radios for its motorcycles that could affect shipment
volume, and the Company is adjusting shipment guidance accordingly.
Based on currently available information, Harley-Davidson believes
it has viable solutions for the radios and other subcomponents on
its watch list and the Company continues to work closely with its
suppliers to monitor the situation and address issues as
necessary.
"We continue to assess our supply chains and as a precaution we
have decided to modestly reduce the lower end of shipment guidance
following the events in Japan,"
said Wandell. "Our hearts go out to all the people of Japan, including our community of riders
there. We are thankful for the safety of our employees and dealers
in Japan and commend them for
their tremendous resilience through this difficult period."
Harley-Davidson now expects 2011 gross margin to be between 33.5
percent and 35.0 percent, versus previous guidance of 34.0 percent
to 35.0 percent, as a direct result of the anticipated supply chain
interruption. Harley-Davidson continues to expect full-year capital
expenditures of between $210 million and
$230 million, including $60 million
to $75 million to support restructuring activities.
Restructuring Update
Harley-Davidson expects all previously announced company-wide
restructuring activities, including those related to the
ratification of new labor agreements at its vehicle operations in
Kansas City, Mo., to result in
one-time charges of $510 million to $525
million, and annual ongoing savings of $305 million to $325 million when fully
implemented. In 2011, Harley-Davidson expects to incur
restructuring charges of $95 million to $105
million. The Company expects to realize savings on a
cumulative basis in 2011 of $210 million to
$230 million from restructuring activities initiated since
early 2009. In the first quarter of 2011, the Company incurred
restructuring charges of $23
million.
Income Tax Rate
For the first quarter of 2011, the Company's effective income
tax rate from continuing operations was 34.8 percent, compared to
47.2 percent in the same quarter of 2010. The effective tax
rate in the first quarter of 2010 was negatively impacted by a
one-time tax charge of $13.3 million
associated with the enactment of the federal healthcare reform
legislation. In 2011, the Company continues to expect its
full-year effective tax rate from continuing operations to be
approximately 35.0 percent.
Cash Flow
Cash and marketable securities totaled $1.05 billion as of March
27, 2011, compared to $1.48
billion at the end of last year's first quarter. During the
first three months of 2011, the Company contributed $200 million to its pension plans leading to a
cash outflow from operating activities of $104.9 million. This compares to a $200.8 million cash inflow from operating
activities in the year-ago quarter. Capital expenditures were
$27.7 million for the three months
ended in March 2011.
Company Background
Harley-Davidson, Inc. is the parent company of Harley-Davidson
Motor Company (HDMC) and Harley-Davidson Financial Services
(HDFS).
Conference Call and Webcast Presentation
Harley-Davidson will discuss first-quarter results on a Webcast
at 8:00 a.m. CT today. The Webcast
presentation will be posted prior to the call and can be accessed
at http://investor.harley-davidson.com/. Click "Events and
Presentations" under "Resources."
Forward-Looking Statements
The Company intends that certain matters discussed in this
release are "forward-looking statements" intended to qualify for
the safe harbor from liability established by the Private
Securities Litigation Reform Act of 1995. These forward-looking
statements can generally be identified as such because the context
of the statement will include words such as the Company "believes,"
"anticipates," "expects," "plans," or "estimates" or words of
similar meaning. Similarly, statements that describe future plans,
objectives, outlooks, targets, guidance or goals are also
forward-looking statements. Such forward-looking statements are
subject to certain risks and uncertainties that could cause actual
results to differ materially from those anticipated as of the date
of this release. Certain of such risks and uncertainties are
described below. Shareholders, potential investors, and other
readers are urged to consider these factors in evaluating the
forward-looking statements and cautioned not to place undue
reliance on such forward-looking statements. The forward-looking
statements included in this release are only made as of the date of
this release, and the Company disclaims any obligation to publicly
update such forward-looking statements to reflect subsequent events
or circumstances.
The Company's ability to meet the targets and expectations noted
depends upon, among other factors, the Company's ability to (i)
manage supply chain issues, including the ability of several
Company suppliers to execute short-term and long-term contingency
plans for maintaining supply, or obtaining alternate supply, of
certain components and sub-components currently manufactured in
Japan, (ii) execute its business
strategy, (iii) effectively execute the Company's restructuring
plans within expected costs and timing, (iv) implement and manage
enterprise-wide information technology solutions, including
solutions at its manufacturing facilities, and secure data
contained in those systems (v) anticipate the level of consumer
confidence in the economy, (vi) continue to realize production
efficiencies at its production facilities and manage operating
costs including materials, labor and overhead, (vii) successfully
implement with our labor unions the agreements that we have
executed with them that we believe will provide flexibility and
cost-effectiveness to accomplish restructuring goals and long-term
competitiveness, (viii) manage production capacity and production
changes, (ix) provide products, services and experiences that are
successful in the marketplace, (x) develop and implement sales and
marketing plans that retain existing retail customers and attract
new retail customers in an increasingly competitive marketplace,
(xi) manage the risks that our independent dealers may have
difficulty obtaining capital and managing through unfavorable
economic conditions and consumer demand, (xii) continue to have
access to reliable sources of capital funding and adjust to
fluctuations in the cost of capital, (xiii) manage the credit
quality, the loan servicing and collection activities, and the
recovery rates of HDFS' loan portfolio, (xiv) sell all of its
motorcycles and related products and services to its independent
dealers, (xv) continue to develop the capabilities of its
distributor and dealer network, (xvi) manage changes and prepare
for requirements in legislative and regulatory environments for its
products, services and operations, (xvii) adjust to fluctuations in
foreign currency exchange rates, interest rates and commodity
prices, (xviii) adjust to healthcare inflation and reform, pension
reform and tax changes, (xix) retain and attract talented
employees, (xx) detect any issues with our motorcycles or
manufacturing processes to avoid delays in new model launches,
recall campaigns, increased warranty costs or litigation.
In addition, the Company could experience delays or disruptions
in its operations as a result of work stoppages, strikes, natural
causes, terrorism or other factors. Other factors are described in
risk factors that the Company has disclosed in documents previously
filed with the Securities and Exchange Commission. Many of these
risk factors are impacted by the changing capital, credit and
retail markets and our ability to manage through inconsistent
economic conditions.
The Company's ability to sell its motorcycles and related
products and services and to meet its financial expectations also
depends on the ability of the Company's independent dealers to sell
its motorcycles and related products and services to retail
customers. The Company depends on the capability and financial
capacity of its independent dealers and distributors to develop and
implement effective retail sales plans to create demand for the
motorcycles and related products and services they purchase from
the Company. In addition, the Company's independent dealers and
distributors may experience difficulties in operating their
businesses and selling Harley-Davidson motorcycles and related
products and services as a result of weather, economic conditions
or other factors.
TABLES FOLLOW
Harley-Davidson, Inc.
|
|
Condensed
Consolidated Statements of Operations
|
|
(In
thousands, except per share amounts)
|
|
(Unaudited)
|
|
|
|
|
|
|
|
Three months
ended
|
|
|
March
27,
|
|
March
28,
|
|
|
2011
|
|
2010
|
|
|
|
|
|
|
Motorcycles and related products
revenue
|
$ 1,063,044
|
|
$ 1,037,335
|
|
Gross profit
|
351,866
|
|
379,547
|
|
Selling, administrative and
engineering expense
|
203,805
|
|
205,204
|
|
Restructuring expense
|
22,999
|
|
48,236
|
|
Operating income from
motorcycles & related products
|
125,062
|
|
126,107
|
|
|
|
|
|
|
Financial services
revenue
|
161,886
|
|
169,837
|
|
Financial services
expense
|
93,951
|
|
143,155
|
|
Operating income from
financial services
|
67,935
|
|
26,682
|
|
|
|
|
|
|
Operating income
|
192,997
|
|
152,789
|
|
Investment income
|
1,398
|
|
876
|
|
Interest expense
|
11,481
|
|
23,455
|
|
Income before income
taxes
|
182,914
|
|
130,210
|
|
Provision for income
taxes
|
63,654
|
|
61,469
|
|
Income from continuing
operations
|
119,260
|
|
68,741
|
|
Loss from discontinued
operations, net of tax
|
-
|
|
(35,416)
|
|
Net income
|
$
119,260
|
|
$
33,325
|
|
|
|
|
|
|
Earnings per common share from
continuing operations:
|
|
|
|
|
Basic
|
$
0.51
|
|
$
0.30
|
|
Diluted
|
$
0.51
|
|
$
0.29
|
|
|
|
|
|
|
Loss per common share from
discontinued operations:
|
|
|
|
|
Basic
|
$
-
|
|
$
(0.15)
|
|
Diluted
|
$
-
|
|
$
(0.15)
|
|
|
|
|
|
|
Earnings per common
share:
|
|
|
|
|
Basic
|
$
0.51
|
|
$
0.14
|
|
Diluted
|
$
0.51
|
|
$
0.14
|
|
|
|
|
|
|
Weighted-average common
shares:
|
|
|
|
|
Basic
|
233,820
|
|
232,864
|
|
Diluted
|
235,903
|
|
234,228
|
|
|
|
|
|
|
Cash dividends per common
share
|
$
0.10
|
|
$
0.10
|
|
|
|
|
|
|
|
|
|
|
|
|
Harley-Davidson, Inc.
|
|
Condensed
Consolidated Balance Sheets
|
|
(In
thousands)
|
|
|
|
|
|
|
|
|
|
(Unaudited)
|
|
|
|
(Unaudited)
|
|
|
March
27,
|
|
December
31,
|
|
March
28,
|
|
|
2011
|
|
2010
|
|
2010
|
|
|
|
|
|
|
|
|
ASSETS
|
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
|
Cash and cash
equivalents
|
$
932,515
|
|
$ 1,021,933
|
|
$ 1,442,798
|
|
Marketable
securities
|
115,209
|
|
140,118
|
|
39,416
|
|
Accounts
receivable, net
|
297,671
|
|
262,382
|
|
286,518
|
|
Finance receivables
held for investment, net
|
1,276,780
|
|
1,080,432
|
|
1,252,420
|
|
Restricted finance
receivables held by variable interest entities, net
|
637,760
|
|
699,026
|
|
809,779
|
|
Inventories
|
372,323
|
|
326,446
|
|
322,238
|
|
Assets of
discontinued operations
|
-
|
|
-
|
|
151,175
|
|
Restricted cash
held by variable interest entities
|
294,903
|
|
288,887
|
|
401,275
|
|
Other current
assets
|
243,427
|
|
247,402
|
|
315,890
|
|
Total current assets
|
4,170,588
|
|
4,066,626
|
|
5,021,509
|
|
|
|
|
|
|
|
|
Finance receivables held for
investment, net
|
1,806,563
|
|
1,553,781
|
|
1,274,734
|
|
Restricted finance receivables
held by variable interest entities, net
|
2,304,320
|
|
2,684,330
|
|
3,299,070
|
|
Other long-term
assets
|
1,123,671
|
|
1,126,003
|
|
1,107,590
|
|
|
$ 9,405,142
|
|
$ 9,430,740
|
|
$ 10,702,903
|
|
|
|
|
|
|
|
|
LIABILITIES AND SHAREHOLDERS'
EQUITY
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
|
Accounts payable
& accrued liabilities
|
$
872,759
|
|
$
782,017
|
|
$
865,725
|
|
Liabilities of
discontinued operations
|
-
|
|
-
|
|
61,726
|
|
Short-term
debt
|
393,393
|
|
480,472
|
|
160,837
|
|
Current portion of
long-term debt
|
-
|
|
-
|
|
396,169
|
|
Current portion of
long-term debt held by variable interest entities
|
721,179
|
|
751,293
|
|
898,935
|
|
Total current
liabilities
|
1,987,331
|
|
2,013,782
|
|
2,383,392
|
|
|
|
|
|
|
|
|
Long-term debt
|
2,963,375
|
|
2,516,650
|
|
2,862,725
|
|
Long-term debt held by variable
interest entities
|
1,603,584
|
|
2,003,941
|
|
2,707,748
|
|
Pension and postretirement
healthcare liabilities
|
354,132
|
|
536,847
|
|
504,562
|
|
Other long-term
liabilities
|
156,472
|
|
152,654
|
|
157,077
|
|
|
|
|
|
|
|
|
Total shareholders'
equity
|
2,340,248
|
|
2,206,866
|
|
2,087,399
|
|
|
$ 9,405,142
|
|
$ 9,430,740
|
|
$ 10,702,903
|
|
|
|
|
|
|
|
|
|
|
|
|
Harley-Davidson, Inc.
|
|
Condensed
Consolidated Statements of Cash Flows
|
|
(In
thousands)
|
|
(Unaudited)
|
|
|
|
|
|
|
|
Three months
ended
|
|
|
March
27,
|
|
March
28,
|
|
|
2011
|
|
2010
|
|
|
|
|
|
|
Net cash (used by) provided by
operating activities
|
|
|
|
|
of continuing
operations
|
$ (104,918)
|
|
$
200,842
|
|
|
|
|
|
|
Cash flows from investing
activities of continuing operations:
|
|
|
|
|
Capital
expenditures
|
(27,704)
|
|
(14,558)
|
|
Finance receivables held
for investment, net
|
127,752
|
|
198,104
|
|
Net change in marketable
securities
|
24,974
|
|
-
|
|
Net cash provided by investing
activities of continuing operations
|
125,022
|
|
183,546
|
|
|
|
|
|
|
Cash flows from financing
activities of continuing operations:
|
|
|
|
|
Proceeds from issuance of
medium-term notes
|
447,076
|
|
-
|
|
Repayments of
securitization debt
|
(430,471)
|
|
(445,215)
|
|
Net decrease in credit
facilities and unsecured commercial paper
|
(96,174)
|
|
(50,703)
|
|
Net change in restricted
cash
|
(6,016)
|
|
(34,734)
|
|
Dividends
|
(23,643)
|
|
(23,488)
|
|
Purchase of common stock
for treasury
|
(4,699)
|
|
(1,191)
|
|
Excess tax benefits from
share-based payments
|
3,262
|
|
34
|
|
Issuance of common stock
under employee stock option plans
|
3,861
|
|
1,101
|
|
Net cash used by financing
activities of continuing operations
|
(106,804)
|
|
(554,196)
|
|
|
|
|
|
|
Effect of exchange rate changes
on cash and cash equivalents
|
|
|
|
|
of continuing
operations
|
(2,693)
|
|
(606)
|
|
|
|
|
|
|
Net decrease in cash and cash
equivalents of continuing operations
|
(89,393)
|
|
(170,414)
|
|
|
|
|
|
|
Cash flows from discontinued
operations:
|
|
|
|
|
Cash flows from operating
activities of discontinued operations
|
(25)
|
|
(13,723)
|
|
Cash flows from investing
activities of discontinued operations
|
-
|
|
(393)
|
|
Effect of exchange rate
changes on cash and cash equivalents
|
|
|
|
|
of discontinued
operations
|
-
|
|
(635)
|
|
|
(25)
|
|
(14,751)
|
|
|
|
|
|
|
Net decrease in cash and cash
equivalents
|
$
(89,418)
|
|
$
(185,165)
|
|
|
|
|
|
|
Cash and cash
equivalents:
|
|
|
|
|
Cash and cash equivalents
- beginning of period
|
$ 1,021,933
|
|
$ 1,630,433
|
|
Cash and cash equivalents
of discontinued operations - beginning of period
|
-
|
|
6,063
|
|
Net decrease in cash and
cash equivalents
|
(89,418)
|
|
(185,165)
|
|
Less: Cash and cash
equivalents of discontinued operations - end of period
|
-
|
|
(8,533)
|
|
Cash and cash equivalents
- end of period
|
$
932,515
|
|
$ 1,442,798
|
|
|
|
|
|
|
|
|
|
|
Motorcycles
and Related Products Revenue and
|
|
Motorcycle
Shipment Data
|
|
|
|
|
(Unaudited)
|
|
(Unaudited)
|
|
|
Three months
ended
|
|
|
March
27,
|
|
March
28,
|
|
|
2011
|
|
2010
|
|
MOTORCYCLES AND RELATED PRODUCTS
REVENUE (in thousands)
|
|
|
|
|
Harley-Davidson®
motorcycles
|
$
833,388
|
|
$
808,806
|
|
Buell®
motorcycles
|
113
|
|
10,790
|
|
Parts &
Accessories
|
164,333
|
|
149,086
|
|
General
Merchandise
|
62,566
|
|
66,255
|
|
Other
|
2,644
|
|
2,398
|
|
|
$ 1,063,044
|
|
$ 1,037,335
|
|
|
|
|
|
|
MOTORCYCLE SHIPMENTS:
|
|
|
|
|
Harley-Davidson
|
|
|
|
|
United
States
|
34,866
|
|
35,668
|
|
International
|
18,961
|
|
18,006
|
|
Total
Harley-Davidson
|
53,827
|
|
53,674
|
|
|
|
|
|
|
Buell
|
23
|
|
1,774
|
|
|
|
|
|
|
MOTORCYCLE PRODUCT
MIX:
|
|
|
|
|
Harley-Davidson
|
|
|
|
|
Touring
|
22,496
|
|
22,885
|
|
Custom
|
20,670
|
|
22,572
|
|
Sportster®
|
10,661
|
|
8,217
|
|
Total
Harley-Davidson
|
53,827
|
|
53,674
|
|
|
|
|
|
Worldwide
Retail Sales of Harley-Davidson Motorcycles
|
|
|
|
|
|
|
|
Three months
ended
|
|
|
March
27,
|
|
March
28,
|
|
|
2011
|
|
2010
|
|
North America Region
|
|
|
|
|
United States
|
31,691
|
|
31,845
|
|
Canada
|
2,037
|
|
1,895
|
|
Total North America
Region
|
33,728
|
|
33,740
|
|
|
|
|
|
|
Europe Region (Includes Middle
East and Africa)
|
|
|
|
|
Europe*
|
9,167
|
|
7,558
|
|
Other
|
1,246
|
|
931
|
|
Total Europe
Region
|
10,413
|
|
8,489
|
|
|
|
|
|
|
Asia Pacific Region
|
|
|
|
|
Japan
|
1,831
|
|
2,018
|
|
Other
|
2,429
|
|
2,416
|
|
Total Asia Pacific
Region
|
4,260
|
|
4,434
|
|
|
|
|
|
|
Latin America Region
|
1,194
|
|
1,262
|
|
|
|
|
|
|
Total Worldwide
Retail Sales
|
49,595
|
|
47,925
|
|
|
|
|
|
|
|
|
|
|
Data Source (subject to
update)
|
|
Data source for retail sales
figures shown above is new sales warranty and registration
information provided by Harley-Davidson dealers and compiled by the
Company. The Company must rely on information that its
dealers supply concerning new retail sales, and this information is
subject to revision.
|
|
|
|
Only Harley-Davidson®
motorcycles are included in the Harley-Davidson Motorcycle Sales
data.
|
|
|
|
* Europe data includes Austria,
Belgium, Denmark, Finland, France, Germany, Greece, Italy,
Netherlands, Norway, Portugal, Spain, Sweden, Switzerland, and the
United Kingdom.
|
|
|
Heavyweight
Motorcycle Registration Data(1)
|
|
|
Three months
ended
|
|
|
March
31,
|
|
March
31,
|
|
|
2011
|
|
2010
|
|
United States(2)
|
58,817
|
|
57,069
|
|
|
|
|
|
|
|
Two months
ended
|
|
|
February
28,
|
|
February
28,
|
|
|
2011
|
|
2010
|
|
Europe(3)
|
30,311
|
|
27,763
|
|
|
|
|
|
1 - Heavyweight data includes
street legal 651+cc models. Street legal 651+cc models
include on-highway, dual purpose models and three-wheeled
vehicles.
|
|
|
|
2 - United States data is
derived from information provided by Motorcycle Industry Council
(MIC). This third party data is subject to revision and
update. Prior periods have been adjusted to include all dual
purpose models that were previously excluded.
|
|
|
|
3 - Europe data includes
Austria, Belgium, Denmark, Finland, France, Germany, Greece, Italy,
Netherlands, Norway, Portugal, Spain, Sweden, Switzerland, and the
United Kingdom. Industry retail motorcycle registration data
includes 651+cc models derived from information provided by Giral
S.A., an independent agency. Europe market data is reported
on a one-month lag. This third-party data is subject to
revision and update.
|
|
|
SOURCE Harley-Davidson, Inc.