Company Surpasses $5 Billion in Revenue
MILWAUKEE, Jan. 20 /PRNewswire-FirstCall/ -- Harley-Davidson, Inc.
(NYSE: HDI) today announced record revenue and earnings for its fourth quarter
and year ended December 31, 2004. Revenue for the quarter was $1.22 billion
compared with $1.16 billion in the year-ago quarter, a 5.4 percent increase.
Net income for the quarter was $209.0 million compared to $182.4 million, an
increase of 14.5 percent over 2003. Fourth quarter diluted earnings per share
(EPS) was 71 cents, an 18.3 percent increase compared with last year's 60
cents.
Revenue for the full year was $5.02 billion, compared with $4.62 billion
in 2003, an 8.5 percent increase. Net income for the year was $889.8 million,
a 16.9 percent increase versus last year's $760.9 million, while diluted EPS
for the full year was $3.00, a 20.0 percent increase compared with $2.50 in
2003.
"Once again Harley-Davidson achieved record revenue and earnings, making
2004 the nineteenth consecutive record year for the Company," said Jeffrey L.
Bleustein, Chairman and Chief Executive Officer. "We focused on exceeding the
impressive results of our 100th Anniversary year by increasing motorcycle
availability to improve customer satisfaction and by stimulating interest
among prospective customers. U.S. retail sales for Harley-Davidson
motorcycles increased more than 7 percent over last year, demonstrating that
the dream of owning a Harley-Davidson(R) motorcycle remains extremely
powerful," said Bleustein.
"Our fourth quarter retail sales of Harley-Davidson motorcycles were up
6.7 percent in the U.S. over the same period in 2003 and up 14 percent in
international markets," he said.
"We expect to continue to grow in 2005 and ship 339,000 Harley-Davidson
motorcycles during the year to support that growth. This is consistent with
our established goals of satisfying demand for 400,000 motorcycles in 2007 and
generating an annual earnings growth rate in the mid-teens," said Bleustein.
Motorcycles and Related Products Segment - Fourth Quarter Results
Revenue from Harley-Davidson(R) motorcycles was $992.6 million, an
increase of $47.3 million or 5.0 percent over the same period last year.
Shipments of Harley-Davidson motorcycles totaled 80,587 units, an increase of
3,531 units or 4.6 percent over last year's fourth quarter.
Revenue from Parts and Accessories (P&A), which consists of Genuine Motor
Parts and Genuine Motor Accessories, totaled $157.9 million, an increase of
$16.9 million, or 12.0 percent over the year-ago quarter. Revenue from
General Merchandise, which consists of MotorClothes(TM) apparel and
collectibles, totaled $54.9 million, an increase of $4.2 million or 8.2
percent.
Gross margin was 37.8 percent of revenue, up from 35.9 percent in the
prior year. Gross margin was favorably impacted primarily by manufacturing
efficiencies and foreign currency exchange rates. Consistent with the higher
gross margin, operating margin increased from 21.5 percent in 2003 to 23.0
percent in 2004.
Motorcycle Retail Sales Data
Retail sales of Harley-Davidson motorcycles for the year 2004 grew 7.1
percent in the U.S. and 1.5 percent internationally compared with the prior
year. Retail sales of Harley-Davidson motorcycles grew in many of the
Company's international markets. However, overall retail sales in Europe
decreased 5.3 percent.
"In response to the current market conditions and the strong Euro, Harley-
Davidson is reducing suggested retail prices in 2005 on select motorcycle
models in our European markets. This will make our motorcycles more
affordable to a broader range of customers," said Bleustein.
Financial Services Segment
Harley-Davidson Financial Services, Inc. (HDFS), a subsidiary of Harley-
Davidson, Inc., reported fourth quarter operating income of $39.2 million, up
$5.4 million or 15.9 percent compared to the year-ago quarter.
The segment's performance was driven by continued strong marketplace
acceptance of its finance and insurance products as well as positive foreign
currency exchange.
Annualized credit losses net of recoveries on a managed portfolio basis
were 0.81 percent during the year. This is better than the Company's stated
target of 1 percent.
Harley-Davidson, Inc. - Twelve Month Results
For the fiscal year ended 2004, total Harley-Davidson motorcycle shipments
were 317,289 units compared with 291,147 units in 2003, a 9.0 percent
increase. Harley-Davidson motorcycle revenue was $3.93 billion, an increase
of $306.7 million or 8.5 percent.
P&A revenue totaled $781.6 million, a $68.8 million or 9.7 percent
increase, while General Merchandise revenue totaled $223.7 million, a $12.3
million or 5.8 percent increase compared with 2003.
Full year operating income for HDFS was $188.6 million, an increase of
$20.7 million or 12.3 percent compared to 2003.
Cash Flow - Twelve Month Results
As of December 31, 2004, cash and marketable securities were $1.61
billion. During the year the Company invested $213.6 million in capital
expenditures, repurchased 10.6 million shares of Company stock for $564.1
million, paid $119.2 million in dividends and increased cash and marketable
securities by $289.4 million.
Stock Option Accounting
In December 2004, the Financial Accounting Standards Board issued new
rules requiring companies to recognize the expense of stock option grants in
their income statements. Although the new rules are not effective until the
Company's third quarter of 2005, the Company will implement this change in
accounting as of January 1, 2005. If the Company had elected to expense stock
options in 2004 under the new standard, the effect would have been a $22.5
million pretax charge. The Company expects a similar charge in 2005.
2005 and Beyond
In addition to the previously stated motorcycle unit shipment goal, the
Company expects growth in all of its product lines. Harley-Davidson expects
the growth rate for P&A revenues to be slightly higher than the motorcycle
unit growth rate, and the General Merchandise growth rate is expected to be
lower than the motorcycle unit growth rate. The Company expects the HDFS
growth rate to be slightly higher than the Company's motorcycle unit growth
rate.
Company Background
Harley-Davidson, Inc. is the parent company for the group of companies
doing business as Harley-Davidson Motor Company, Buell Motorcycle Company and
Harley-Davidson Financial Services. Harley-Davidson Motor Company, the only
major U.S.-based motorcycle manufacturer, produces heavyweight motorcycles and
offers a complete line of motorcycle parts, accessories, apparel, and general
merchandise. Buell Motorcycle Company produces sport motorcycles. Harley-
Davidson Financial Services provides wholesale and retail financing and
insurance programs to Harley-Davidson dealers and customers.
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 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 undertakes no 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) continue to realize
production efficiencies at its production facilities through the
implementation of innovative manufacturing techniques and other means, (ii)
successfully implement production capacity increases in its facilities, (iii)
successfully introduce new products and services, (iv) avoid unexpected supply
chain issues, (v) sell all of the Harley-Davidson motorcycles it plans to
produce, (vi) continue to develop the capacity of its distributor and dealer
network, (vii) avoid unexpected changes in the regulatory environment for its
products, (viii) successfully adjust to fluctuations in foreign currency
exchange rates, interest rates and commodity prices, (ix) adjust to worldwide
economic and political conditions, and (x) successfully manage the credit
quality of HDFS's loan portfolio.
In addition, the Company could experience delays in the operation of
manufacturing facilities as a result of work stoppages, natural causes,
terrorism or other factors. Risk factors are also disclosed in documents
previously filed by the Company with the Securities and Exchange Commission.
Harley-Davidson, Inc.
Condensed Consolidated Statements of Income
(In thousands, except per share amounts)
Three Months Ended Twelve Months Ended
(Unaudited) (Unaudited) (Unaudited)
Dec 31, Dec 31, Dec 31, Dec 31,
2004 2003 2004 2003
Net revenue $1,220,997 $1,158,070 $5,015,190 $4,624,274
Gross profit 461,422 416,026 1,899,535 1,665,566
Operating expenses 180,672 167,488 710,016 668,677
Operating income from
motorcycles & related
products 280,750 248,538 1,189,519 996,889
Financial services income 66,224 62,743 305,262 279,459
Financial services expense 27,018 28,906 116,662 111,586
Operating income from
financial services 39,206 33,837 188,600 167,873
Corporate expenses 3,757 3,475 16,628 15,498
Total operating income 316,199 278,900 1,361,491 1,149,264
Investment income and
other, net 7,775 3,936 17,995 16,771
Income before provision
for taxes 323,974 282,836 1,379,486 1,166,035
Provision for income taxes 115,012 100,406 489,720 405,107
Net income $208,962 $182,430 $889,766 $760,928
Earnings per common share:
Basic $0.71 $0.60 $3.02 $2.52
Diluted $0.71 $0.60 $3.00 $2.50
Weighted-average common
shares:
Basic 294,014 302,244 295,008 302,271
Diluted 295,406 304,404 296,852 304,470
Harley-Davidson, Inc.
Condensed Consolidated Balance Sheets
(In thousands)
(Unaudited)
Dec 31, Dec 31,
2004 2003
ASSETS
Current assets:
Cash and cash equivalent $1,089,249 $812,449
Marketable securities 522,819 510,211
Accounts receivable, net 121,333 112,406
Finance receivables, net 1,207,124 1,001,990
Inventories 226,893 207,726
Other current assets 98,854 84,345
Total current assets 3,266,272 2,729,127
Finance receivables, net 905,176 735,859
Other long-term assets 1,311,845 1,458,102
Total assets $5,483,293 $4,923,088
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable & accrued expenses $677,255 $631,468
Current portion of finance debt 495,441 324,305
Total current liabilities 1,172,696 955,773
Finance debt 800,000 670,000
Other long-term liabilities 142,278 212,179
Postretirement health care benefits 149,848 127,444
Shareholders' equity 3,218,471 2,957,692
Total liabilities and shareholders'
equity $5,483,293 $4,923,088
Harley-Davidson, Inc.
Net Revenue and Motorcycle
Shipment Data
Three Months Ended Twelve Months Ended
Dec 31, Dec 31, Dec 31, Dec 31,
2004 2003 2004 2003
NET REVENUE (in thousands)
Harley-Davidson(R)
motorcycles $992,611 $945,292 $3,928,232 $3,621,488
Buell(R) motorcycles 15,519 20,079 79,029 76,064
Parts & Accessories 157,906 141,020 781,621 712,829
General Merchandise 54,884 50,730 223,712 211,388
Other 77 949 2,596 2,505
$1,220,997 $1,158,070 $5,015,190 $4,624,274
HARLEY-DAVIDSON UNITS
Motorcycle shipments:
United States 68,902 63,944 260,607 237,656
Export 11,685 13,112 56,682 53,491
Total 80,587 77,056 317,289 291,147
Motorcycle product mix:
Touring 25,052 22,106 93,305 82,577
Custom 38,035 38,146 154,163 151,405
Sportster(R) 17,500 16,804 69,821 57,165
Total 80,587 77,056 317,289 291,147
BUELL UNITS
Motorcycle shipments:
Buell 2,064 2,610 9,857 9,974
Year-to-date Heavyweight (651+ cc)
Motorcycle Retail Registrations (Units),
data through month indicated.
2004 2003 % change
United States
- H-D (December) 244,539 228,393 7.1%
- Industry (December) 494,045 461,154 7.1%
Europe
- H-D (December) 24,594 25,966 -5.3%
- Industry (November) 332,706 318,428 4.5%
Japan
- H-D (December) 11,893 11,802 0.8%
- Industry (November) 40,309 42,068 -4.2%
Only Harley-Davidson(R) motorcycles are included in the Harley-Davidson
(H-D) data.
Data for Europe includes registrations in Austria, Belgium, Denmark,
Finland, France, Germany, Greece, Italy, Netherlands, Norway, Portugal,
Spain, Sweden, Switzerland and United Kingdom.
Data Sources: (subject to update)
United States: Motorcycle Industry Council
Europe: Company reports, Giral S.A.
Japan: Industry sources
SOURCE Harley-Davidson, Inc.
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Related links:
http://www.harley-davidson.com
CONTACT:
Financial Contact, Patrick Davidson,
+1-414-343-8002 or Media Contact, Bob Klein, +1-414-343-4433,
both of Harley-Davidson, Inc.
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