MILWAUKEE, Oct. 19 /PRNewswire-FirstCall/ -- Harley-Davidson, Inc.
(NYSE: HOG) today announced its results for the third quarter ended
September 30, 2007. Revenue for the quarter was $1.54 billion compared to
$1.64 billion in the year ago quarter, a 5.8 percent decrease. Net income
for the quarter was $265.0 million compared to $312.7 million, a decrease
of 15.3 percent versus the third quarter of 2006. Third quarter diluted
earnings per share were $1.07, a 10.8 percent decrease compared to last
year's $1.20. During the third quarter the Company repurchased $509 million
of its common stock.
"Harley-Davidson's third quarter financial results are disappointing
but not unexpected. In early September, we announced that we would reduce
planned motorcycle shipments for the rest of 2007, and our results for the
quarter are consistent with the Company's revised guidance," said Jim
Ziemer, Chief Executive Officer of Harley-Davidson, Inc.
"Worldwide retail sales of Harley-Davidson(R) motorcycles during the
third quarter were virtually flat with the third quarter of 2006, down 0.2
percent. U.S. retail sales continued to be sluggish, finishing down 2.5
percent for the quarter, while retail sales in our international markets
grew 8.8 percent during the period," said Ziemer.
For the full year of 2007, the Company expects a shipment range of
328,000 to 332,000 Harley-Davidson motorcycles, compared to 349,196 units
in 2006. The Company also expects a modest decline in revenue and lower
operating margin in 2007. Diluted earnings per share for the full year are
expected to decrease 4 to 6 percent compared to 2006.
Looking ahead to 2008, the Company anticipates that the U.S. retail
motorcycle environment will continue to be challenging. It expects moderate
revenue growth, lower operating margin and diluted earnings per share to
grow between 4 and 7 percent compared to 2007.
"For the longer term, I am optimistic and confident about our future,"
said Ziemer. "Harley-Davidson has a strong business model, and we will
continue to manage the Company in a manner that strengthens our brand and
contributes to lasting success for all of our stakeholders," said Ziemer.
Motorcycles and Related Products Segment - Third Quarter Results
Revenue from Harley-Davidson motorcycles was $1.18 billion, a decrease
of $110.7 million or 8.6 percent versus the same period last year.
Shipments of Harley-Davidson motorcycles totaled 86,535 units, a decrease
of 10,511 units or 10.8 percent compared to last year's third quarter.
Revenue from Parts and Accessories (P&A), which consists of Genuine
Motor Parts and Genuine Motor Accessories, totaled $251.5 million, an
increase of $3.1 million or 1.2 percent over the year-ago quarter. Revenue
from General Merchandise, which consists of MotorClothes(R) apparel and
collectibles, totaled $83.2 million, an increase of $11.9 million or 16.7
percent over the year-ago quarter.
Gross margin for the third quarter of 2007 was 38.4 percent of revenue
compared to 39.9 percent for the third quarter last year. Third quarter
operating margin decreased to 23.2 percent from 26.5 percent in the third
quarter of 2006.
Motorcycle Retail Sales Data
During the third quarter, worldwide retail sales of Harley-Davidson
motorcycles decreased 0.2 percent compared to the third quarter of 2006.
U.S. retail sales of Harley-Davidson motorcycles decreased 2.5 percent for
the quarter. The heavyweight motorcycle market in the U.S. decreased 4.4
percent for the same period.
Retail sales of Harley-Davidson motorcycles grew 8.8 percent in the
Company's international markets during the third quarter of 2007 compared
to the third quarter of 2006. Third quarter retail sales increased 10.7
percent in Europe; Canada was down 7.7 percent; and Japan was up 9.1
percent. All other international markets combined were up 20.8 percent.
During the first nine months of 2007, worldwide retail sales of Harley-
Davidson motorcycles decreased 0.9 percent compared to the prior year. In
the U.S., Harley-Davidson dealer retail sales decreased 4.7 percent for the
first nine months of the year; international sales increased by 12.9
percent for the same period. The U.S. heavyweight motorcycle market was
down 4.4 percent for the first nine months of 2007.
Data is listed in the accompanying tables.
Financial Services Segment
Harley-Davidson Financial Services (HDFS) reported third quarter
operating income of $49.5 million, a decrease of $5.7 million or 10.4
percent, compared to the year ago quarter. The decrease is primarily due to
a lower securitization gain in the third quarter of 2007 versus the third
quarter of 2006.
Income Tax Rate
The Company's third quarter effective income tax rate was 35.5 percent
compared to 36.0 percent in the same quarter last year. This decrease
primarily reflects the reinstatement of the federal research and
development tax credit.
Harley-Davidson, Inc. - Nine Month Results
For the first nine months of 2007, revenue totaled $4.34 billion, a 1.0
percent increase over the year-ago period. Diluted earnings per share were
$2.95, a decrease of 0.3 percent compared to the same period last year.
Through the first nine months of this year, shipments of
Harley-Davidson motorcycles were 249,413 units, a 2.7 percent decrease
compared to last year's 256,348 units. Harley-Davidson motorcycle revenue
was $3.33 billion, which is flat compared to last year. P&A revenue totaled
$703.1 million, a 2.9 percent increase over last year's $683.1 million.
General Merchandise revenue totaled $232.0 million, a 12.2 percent increase
compared to $206.9 million during the same period in 2006.
HDFS operating income was $173.6 million, a 6.5 percent increase over
last year's $163.1 million.
Cash Flow
Cash and marketable securities totaled $456.7 million as of September
30, 2007. Cash flow from operations was $1.37 billion, and capital
expenditures were $139.4 million during the first nine months of 2007. For
the full year of 2007, capital expenditures are now expected to be between
$250 million and $275 million.
Stock Repurchase
The Company repurchased 9.7 million shares of its common stock at a
cost of $509.0 million during the third quarter of 2007. On a year to date
basis through September 30, 2007, the Company has repurchased 17.3 million
shares for a total cost of $1.00 billion. On September 30, 2007, the
Company has 241.5 million shares of common stock outstanding.
As of September 30, 2007, there are 6.2 million shares remaining on a
board-approved share repurchase authorization. An additional board-approved
share repurchase authorization is in place to offset option exercises.
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 capabilities 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, commodity prices and credit availability, (x) manage
regional and worldwide demographic trends and economic and political
conditions, including healthcare inflation, pension reform and tax changes,
(xi) anticipate consumer confidence in the economy, (xii) manage the credit
quality and recovery rates of HDFS's loan portfolio, (xiii) retain and
attract talented employees, (xiv) detect any issues with our motorcycles or
manufacturing processes to avoid delays in new model launches, recall
campaigns, increased warranty costs or litigation and (xv) implement and
manage enterprise-wide information technology solutions and secure data
contained in those systems.
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.
Harley-Davidson, Inc.
Condensed Consolidated Statements of Income
(Unaudited)
(In thousands, except per share amounts)
Three months ended Nine months ended
September September September September
30, 2007 24, 2006 30, 2007 24, 2006
Net revenue $1,541,401 $1,635,916 $4,340,494 $4,298,053
Gross profit 591,353 652,255 1,619,566 1,661,795
Operating expenses 233,068 218,243 639,512 590,503
Operating income from
motorcycles & related
products 358,285 434,012 980,054 1,071,292
Financial services income 98,471 97,344 319,964 291,812
Financial services expense 49,002 42,154 146,349 128,734
Operating income from
financial services 49,469 55,190 173,615 163,078
Corporate expenses 2,292 5,215 13,763 16,723
Income from operations 405,462 483,987 1,139,906 1,217,647
Investment income and
other, net 5,353 4,659 19,432 17,861
Income before provision
for income taxes 410,815 488,646 1,159,338 1,235,508
Provision for income taxes 145,849 175,912 411,572 444,781
Net income $264,966 $312,734 $747,766 $790,727
Earnings per common share:
Basic $1.07 $1.20 $2.96 $2.96
Diluted $1.07 $1.20 $2.95 $2.96
Weighted-average common shares:
Basic 247,057 260,270 252,513 266,772
Diluted 247,614 261,229 253,263 267,525
Cash dividends per common
share $0.30 $0.21 $0.76 $0.60
Harley-Davidson, Inc.
Condensed Consolidated Balance Sheets
(In thousands)
(Unaudited) (Unaudited)
September December September
30, 2007 31, 2006 24, 2006
ASSETS
Current Assets:
Cash and cash equivalents $401,385 $238,397 $506,139
Marketable securities 55,355 658,133 446,543
Accounts receivable, net 185,208 143,049 149,951
Finance receivables held for sale 431,843 547,106 100,109
Finance receivables held for
investment, net 1,275,590 1,554,260 1,273,841
Inventories 376,950 287,798 281,536
Other current assets 130,126 121,890 124,837
Total current assets 2,856,457 3,550,633 2,882,956
Finance receivables held for
investment, net 861,138 725,957 706,695
Other long-term assets 1,253,365 1,255,560 1,443,411
$4,970,960 $5,532,150 $5,033,062
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable & accrued
liabilities $962,250 $763,186 $880,294
Current portion of finance debt 250,168 832,491 96,374
Total current liabilities 1,212,418 1,595,677 976,668
Finance debt 980,000 870,000 900,000
Postretirement healthcare benefits 207,957 201,126 70,571
Other long-term liabilities 207,582 108,610 239,452
Total shareholders' equity 2,363,003 2,756,737 2,846,371
$4,970,960 $5,532,150 $5,033,062
Harley-Davidson, Inc.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
(In thousands)
Nine months ended
September 30, September 24,
2007 2006
Net cash provided by operating activities $1,368,257 $1,283,580
Cash flows from investing activities:
Capital expenditures (139,437) (137,468)
Finance receivables held for
investment, net (92,147) (75,710)
Collection of retained
securitization interests 87,827 73,974
Net change in marketable securities 604,927 464,641
Other, net 1,696 2,512
Net cash provided by investing activities 462,866 327,949
Cash flows from financing activities:
Net decrease in finance-credit
facilities and commercial paper (506,938) (208,996)
Dividends (189,093) (158,738)
Purchase of common stock for treasury (1,000,133) (910,957)
Excess tax benefits from share-
based payments 3,057 3,550
Issuance of common stock under employee
stock option plans 21,429 25,882
Net cash used by financing activities (1,671,678) (1,249,259)
Effect of exchange rate changes on cash and
cash equivalents 3,543 2,894
Net increase in cash and cash equivalents 162,988 365,164
Cash and cash equivalents:
At beginning of period 238,397 140,975
At end of period $401,385 $506,139
Net Revenue and Motorcycle
Shipment Data
(Unaudited)
Three months ended Nine months ended
September September September September
30, 2007 24, 2006 30, 2007 24, 2006
NET REVENUE (in thousands)
Harley-Davidson(R)
motorcycles $1,182,628 $1,293,358 $3,328,309 $3,329,700
Buell(R) motorcycles 22,527 21,423 72,795 74,826
Parts & Accessories 251,499 248,448 703,107 683,100
General Merchandise 83,185 71,251 232,011 206,873
Other 1,562 1,436 4,272 3,554
$1,541,401 $1,635,916 $4,340,494 $4,298,053
HARLEY-DAVIDSON UNITS
Motorcycle shipments:
United States 65,756 80,398 182,447 198,720
Export 20,779 16,648 66,966 57,628
Total 86,535 97,046 249,413 256,348
Motorcycle product mix:
Touring 28,461 36,041 84,934 90,914
Custom 39,488 44,096 109,576 116,604
Sportster(R) 18,586 16,909 54,903 48,830
Total 86,535 97,046 249,413 256,348
BUELL UNITS
Motorcycle shipments:
Buell 2,639 2,529 8,376 9,105
Retail Sales of Harley-Davidson Motorcycles
Year to Date September
2007 2006
United States 215,092 225,623
Europe* 32,594 28,131
Japan 10,028 9,707
Canada 12,855 12,195
All other markets 13,393 10,989
Total Retail Sales of Harley-Davidson Motorcycles 283,962 286,645
Data Source (subject to update)
Data source for all 2006 and 2007 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.
Only Harley-Davidson(R) motorcycles are included in the Harley-Davidson
Motorcycle Sales data.
* Data for Europe include Austria, Belgium, Denmark, Finland, France,
Germany, Greece, Italy, Netherlands, Norway, Portugal, Spain, Sweden,
Switzerland, and the United Kingdom
Heavyweight Market Data
Data Through Month Indicated
2007 2006
United States(1) (September) 443,511 463,859
Europe(2) (August) 322,102 306,197
(1) United States industry data includes 651+cc models, derived from
submission of motorcycle retail sales by each major manufacturer to an
independent third party.
(2) 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.
SOURCE Harley-Davidson, Inc.
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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.
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