Worldwide Retail Sales of Motorcycles Climb 8.9 Percent
New Share Repurchase Program Authorized
MILWAUKEE, Oct. 12 /PRNewswire-FirstCall/ -- Harley-Davidson, Inc.
(NYSE: HOG) today announced record revenue and earnings per share for its
third quarter ended September 24, 2006. Revenue for the quarter was $1.64
billion compared to $1.43 billion in the year-ago quarter, a 14.3 percent
increase. Net income for the quarter was $312.7 million compared to $265.0
million, an increase of 18.0 percent over the third quarter of 2005. Third
quarter diluted earnings per share (EPS) were $1.20, a 25.0 percent
increase compared to last year's $0.96.
"Harley-Davidson delivered record results for both revenue and earnings
per share during the third quarter," said Jim Ziemer, Chief Executive
Officer, Harley-Davidson, Inc. "In addition, worldwide retail sales of
Harley- Davidson(R) motorcycles grew 8.9 percent during the quarter. With
four new models and an all-new Twin Cam 96(TM) engine with 6-speed
transmission on Big Twin motorcycles, the 2007 model line has been a big
hit with customers," he said.
For the first nine months of 2006, the Company's worldwide wholesale
shipments were 256,348 Harley-Davidson motorcycles. For the full year, the
Company now expects to ship between 349,000 and 351,000 units.
During the first nine months of 2006, the Company repurchased 17.2
million shares of its common stock at a cost of $911.0 million. On October
11, 2006, the board of directors of Harley-Davidson, Inc. authorized a new
share repurchase program for up to 20 million additional shares.
"As we look to the future, the Company believes it will continue to
deliver EPS growth in the range of 11 - 17 % annually through 2009. We
expect earnings growth to be driven by solid revenue growth, margin
improvement and the benefits of strong free cash flow," said Ziemer.
Motorcycles and Related Products Segment - Third Quarter Results
Revenue from Harley-Davidson motorcycles was $1.29 billion, an increase
of $183.2 million or 16.5 percent over the same period last year. Shipments
of Harley-Davidson motorcycles totaled 97,046 units, an increase of 9,461
units or 10.8 percent over last year's third quarter.
Revenue from Parts and Accessories (P&A), which consists of Genuine
Motor Parts and Genuine Motor Accessories, totaled $248.4 million, an
increase of $17.3 million or 7.5 percent over the year-ago quarter. Revenue
from General Merchandise, which consists of MotorClothes(R) apparel and
collectibles, totaled $71.3 million, an increase of $6.7 million or 10.5
percent over the year-ago quarter.
Gross margin for the third quarter of 2006 was 39.9 percent of revenue
compared to 39.2 percent gross margin for the third quarter last year.
Third quarter operating margin increased to 26.5 percent from 25.6 percent
in the third quarter of 2005.
Motorcycle Retail Sales Data
During the third quarter, worldwide retail sales of Harley-Davidson
motorcycles increased 8.9 percent over the prior year quarter. In the U.S.,
retail sales of Harley-Davidson motorcycles increased 6.7 percent for the
quarter. The heavyweight motorcycle industry in the U.S. increased 0.2
percent for the same period.
Retail sales of Harley-Davidson motorcycles grew 18.7 percent in
international markets during the third quarter of 2006 compared to the
third quarter of 2005. Third quarter retail sales increased 13.7 percent in
Japan; Europe was up 9.9 percent; Canada was up 30.2 percent and all other
international markets combined were up 35.4 percent.
During the first nine months of 2006, worldwide retail sales of Harley-
Davidson motorcycles increased 8.9 percent compared to the same period in
2005.
Data is listed in the accompanying tables.
Financial Services Segment
Harley-Davidson Financial Services (HDFS) reported third quarter
operating income of $55.2 million, an increase of $7.6 million or 16.0
percent compared to the year-ago quarter. The increase is primarily due to
higher net interest income and a higher securitization gain compared to the
prior year.
Income Tax Rate
The Company's third quarter effective income tax rate was 36.0 percent
compared to 35.5 percent in the same quarter last year. This increase was
due to the expiration of the federal research and development tax credit as
of December 31, 2005. Assuming the retroactive reinstatement of this tax
credit, the Company expects its full year effective tax rate in 2006 will
be 35.5 percent.
Harley-Davidson, Inc. - Nine Month Results
For the first nine months of 2006, revenue totaled $4.30 billion, a 7.5
percent increase over the year-ago period. EPS were $2.96, an increase of
15.2 percent compared to the same period last year.
Through the first nine months of this year, shipments of
Harley-Davidson motorcycles were 256,348 units, a 6.2 percent increase
compared to last year's 241,429 units. Harley-Davidson motorcycle revenue
was $3.33 billion, up 7.6 percent compared to last year's $3.10 billion.
P&A revenue totaled $683.1 million, a 5.8 percent increase over last year's
$645.8 million. General Merchandise revenue totaled $206.9 million, a 10.4
percent increase compared to $187.4 million during the same period in 2005.
HDFS operating income was $163.1 million, a 7.2 percent increase over
last year's $152.2 million.
Cash Flow
Cash and marketable securities totaled $952.7 million as of September
24, 2006. Cash flow from operations was $1.29 billion and capital
expenditures were $137.5 million during the first nine months of 2006.
Stock Repurchase
The Company repurchased 7.4 million shares of its common stock at a
cost of $411.4 million during the third quarter of 2006. For the first nine
months of 2006, the Company has repurchased 17.2 million shares of its
common stock at a cost of $911.0 million. On October 11, 2006, the board of
directors authorized a new share repurchase program for up to 20 million
shares, in addition to the 2.8 million shares outstanding under the
previous authorization.
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
their retail 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, 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) continue to
realize production efficiencies at its production facilities and manage
operating costs including materials, labor and overhead, (ii) manage
production capacity and production changes, (iii) manage supply chain
issues, (iv) provide products, services and experiences that are successful
in the marketplace, (v) develop and implement sales and marketing plans
that retain existing retail customers and attract new retail customers in
an increasingly competitive marketplace, (vi) sell all of its motorcycles
and related products and services to its independent dealers and
distributors, (vii) continue to develop the capacity of its distributor and
dealer network, (viii) manage changes and prepare for requirements in
legislative and regulatory environments for its products, services and
operations, (ix) adjust to fluctuations in foreign currency exchange rates,
interest rates and commodity prices, (x) adjust to worldwide economic and
political conditions, including changes in fuel prices, (xi) manage the
credit quality and recovery rates of HDFS's loan portfolio, (xii) retain
and attract talented employees and (xiii) detect any defects in our
motorcycles to minimize 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.
The Company's ability to sell all of its motorcycles and related
products and services also depends on the ability of the Company's
independent dealer network to sell them to retail customers. The Company
depends on the capability 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 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 Income
(Unaudited)
(In thousands, except per share amounts)
Three months ended Nine months ended
Sept 24, Sept 25, Sept 24, Sept 25,
2006 2005 2006 2005
Net revenue $1,635,916 $1,431,151 $4,298,053 $3,999,879
Gross profit 652,255 561,272 1,661,795 1,525,989
Operating expenses 218,243 194,270 590,503 540,780
Operating income from
motorcycles & related
products 434,012 367,002 1,071,292 985,209
Financial services income 97,344 81,444 291,812 255,558
Financial services expense 42,154 33,869 128,734 103,403
Operating income from
financial services 55,190 47,575 163,078 152,155
Corporate expenses 5,215 3,715 16,723 18,001
Total operating income 483,987 410,862 1,217,647 1,119,363
Investment income and
other, net 4,659 (79) 17,861 11,739
Income before provision
for income taxes 488,646 410,783 1,235,508 1,131,102
Provision for income taxes 175,912 145,829 444,781 401,542
Net income $312,734 $264,954 $790,727 $729,560
Earnings per common share:
Basic $1.20 $0.97 $2.96 $2.58
Diluted $1.20 $0.96 $2.96 $2.57
Weighted-average common
shares:
Basic 260,270 274,415 266,772 282,519
Diluted 261,229 275,460 267,525 283,406
Cash dividends per common
share $0.21 $0.16 $0.60 $0.445
Harley-Davidson, Inc.
Condensed Consolidated Balance Sheets
(In thousands)
(Unaudited) (Unaudited)
Sept 24, December 31, Sept 25,
2006 2005 2005
ASSETS
Current Assets:
Cash and cash equivalents $506,139 $140,975 $437,007
Marketable securities 446,543 905,197 580,826
Accounts receivable, net 149,951 122,087 139,759
Finance receivables held for sale 100,109 299,373 223,758
Finance receivables held for
investment, net 1,273,841 1,342,393 1,135,001
Inventories 281,536 221,418 232,240
Other current assets 124,837 113,794 114,568
Total current assets 2,882,956 3,145,237 2,863,159
Finance receivables held for
investment, net 706,695 600,831 587,315
Other long-term assets 1,443,411 1,509,141 1,243,994
$5,033,062 $5,255,209 $4,694,468
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable & accrued
expenses $880,294 $668,139 $863,210
Current portion of finance debt 96,374 204,973 0
Total current liabilities 976,668 873,112 863,210
Finance debt 900,000 1,000,000 776,626
Postretirement healthcare benefits 70,571 60,975 57,732
Other long-term liabilities 239,452 237,517 134,786
Total shareholders' equity 2,846,371 3,083,605 2,862,114
$5,033,062 $5,255,209 $4,694,468
Harley-Davidson, Inc.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
(In thousands)
Nine months ended
Sept 24, Sept 25,
2006 2005
Net cash provided by operating
activities $1,286,474 $1,186,903
Cash flows from investing activities:
Capital expenditures (137,468) (122,128)
Finance receivables held for
investment, net (75,710) (112,398)
Collection of retained
securitization interests 73,974 84,766
Net change in marketable securities 464,641 755,268
Other, net 2,512 (10,586)
Net cash provided by investing
activities 327,949 594,922
Cash flows from financing activities:
Net decrease in finance-credit
facilities and commercial paper (208,996) (510,720)
Dividends (158,738) (124,330)
Purchase of common stock for
treasury (910,957) (1,014,645)
Excess tax benefits from share-
based payments 3,550 5,319
Issuance of common stock under
employee stock option plans 25,882 24,399
Net cash used by financing activities (1,249,259) (1,619,977)
Net increase in cash and cash
equivalents 365,164 161,848
Cash and cash equivalents:
At beginning of period 140,975 275,159
At end of period $506,139 $437,007
Net Revenue and Motorcycle
Shipment Data
(unaudited)
Three Months Ended Nine Months Ended
September 24, September 25, September 24, September 25,
2006 2005 2006 2005
NET REVENUE
(in thousands)
Harley-Davidson(R)
motorcycles $1,293,358 $1,110,173 $3,329,700 $3,095,229
Buell(R) motorcycles 21,423 25,267 74,826 71,241
Parts & Accessories 248,448 231,161 683,100 645,819
General Merchandise 71,251 64,506 206,873 187,375
Other 1,436 44 3,554 215
$1,635,916 $1,431,151 $4,298,053 $3,999,879
HARLEY-DAVIDSON UNITS
Motorcycle shipments:
United States 80,398 72,249 198,720 192,124
Export 16,648 15,336 57,628 49,305
Total 97,046 87,585 256,348 241,429
Motorcycle product mix:
Touring 36,041 29,492 90,914 81,103
Custom 44,096 40,730 116,604 110,376
Sportster(R) 16,909 17,363 48,830 49,950
Total 97,046 87,585 256,348 241,429
BUELL UNITS
Motorcycle shipments:
Buell 2,529 2,914 9,105 8,450
Retail Sales of Harley-Davidson Motorcycles
Year to Date (September 30, 2006)
2006 2005
United States 225,623 210,790
Europe* 28,131 25,172
Japan 9,707 8,428
Canada 12,195 10,700
All other markets 10,989 8,177
Total Retail Sales of Harley-Davidson Motorcycles 286,645 263,267
Data Source (subject to update)
Data source for all 2005 and 2006 retail sales figures shown above is
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 retail sales, and this information is
subject to revision.
*Data for Europe include Austria, Belgium, Denmark, Finland, France,
Germany, Greece, Italy, Netherlands, Norway, Portugal, Spain, Sweden,
Switzerland, and the United Kingdom.
Only Harley-Davidson(R) motorcycles are included in the Harley-Davidson
Motorcycle Sales data.
Heavyweight (651+ cc) Market Data
Data Through Month Indicated
2006 2005
United States (September) 463,940 437,575
Europe* (August) 306,334 290,239
*Data for Europe include Austria, Belgium, Denmark, Finland, France,
Germany, Greece, Italy, Netherlands, Norway, Portugal, Spain, Sweden,
Switzerland, and the United Kingdom.
SOURCE Harley-Davidson, Inc.
 back to top
Related links:
http://www.harley-davidson.com
CONTACT:
Financial, Mark Van Genderen,
+1-414-343-8002, or Media, Bob Klein, +1-414-343-4433, both of
Harley-Davidson, Inc.
|
