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Harley-Davidson Reports Third-Quarter and Nine-Month Results

         Harley-Davidson Reports Third-Quarter and Nine-Month Results

Company Reaches Restructuring Milestone with ERP Launch at York

PR Newswire

MILWAUKEE, Oct. 23, 2012

MILWAUKEE, Oct. 23, 2012 /PRNewswire/ -- Harley-Davidson, Inc. (NYSE: HOG)
reported earnings per share of $0.59 for the third quarter of 2012, in line
with Company expectations. Earnings were lower than the year-ago period due to
a previously announced plan for lower third-quarter motorcycle shipments
during the launch of an ERP production system at the Company's largest
assembly plant. For the full year 2012, Harley-Davidson continues to forecast
a five-to seven-percent increase in motorcycle shipments compared to 2011.

Third-quarter income from continuing operations was $134.0 million on
consolidated revenue of $1.25 billion, compared to income from continuing
operations of $183.6 million, or $0.78 per share, on consolidated revenue of
$1.40 billion in the year-ago quarter.

Through nine months, Harley-Davidson income from continuing operations
increased 12.1 percent year-over-year to $553.3 million, or $2.40 per share,
on consolidated revenue of $4.41 billion, compared to income from continuing
operations of $493.4 million, or $2.09 per share, on consolidated revenue of
$4.13 billion in the year-ago period.

"The third quarter marked a pivotal milestone in Harley-Davidson's
transformation. With the launch of the ERP production system at York, a major
piece of our restructuring work is behind us. We are now focused on optimizing
the system and look forward to the start of seasonal surge production early
next year," said Keith Wandell, Chairman, President and Chief Executive
Officer.

"From our market leadership in U.S. outreach segments to our global expansion
to the effective launch of ERP at York, we continued to see the evidence of
the successful execution of our strategic plan," said Wandell. "We believe
Harley-Davidson is on track to deliver growth through our strategy, with
investments in new markets, new products, and improved manufacturing and
retail capabilities. Our entire team of employees, dealers and suppliers has
done a great job of delivering on the many changes throughout the business
that are important to Harley-Davidson's long-term success."

Retail Harley-Davidson Motorcycle Sales

Through nine months, retail sales of new Harley-Davidson motorcycles grew 6.0
percent overall, 6.2 percent in the U.S. and 5.4 percent internationally
compared to the year-ago period. In the third quarter, retail sales of new
Harley-Davidson motorcycles decreased 1.3 percent worldwide compared to the
prior-year period, with unit sales down 5.2 percent in the U.S. and up 7.6
percent in international markets.

"We believe our U.S. dealers' third-quarter new motorcycle sales were
adversely affected by a limited availability of new motorcycles in July,
August and early September resulting from the ERP implementation at York
combined with the move of Harley-Davidson's annual new model launch to late
August from late July. As U.S. dealer inventory returned to more appropriate
levels and the new 2013 motorcycles became more available, retail sales
responded positively and gained momentum as we exited the quarter," Wandell
said.

"Harley-Davidson had a lot of exciting news for customers in the third
quarter, with the launch of the 110^th Anniversary year and Anniversary
Edition motorcycles, and the rollout of our exciting full line of 2013 bikes.
While we see great untapped opportunity at retail, we continue to temper our
expectations in light of continued softness in the global economy," said
Wandell.

On a worldwide basis, dealers sold 61,053 new Harley-Davidson motorcycles in
the third quarter of 2012 compared to 61,838 motorcycles sold in the year-ago
period. Dealers sold 40,402 new Harley-Davidson motorcycles in the U.S.
compared to sales of 42,640 units in last year's third quarter. In
international markets, dealers sold 20,651 new Harley-Davidson motorcycles
during the third quarter compared to sales of 19,198 units in the year-ago
period. During the quarter, retail unit sales increased 32.3 percent in the
Latin America region, 9.8 percent in the Asia Pacific region and 1.8 percent
in the EMEA region and decreased 4.7 percent in North America (U.S. and
Canada) compared to last year's third quarter.

Through nine months, dealers sold 206,444 new Harley-Davidson motorcycles
worldwide, with retail unit sales up 47.5 percent in the Latin America region,
14.1 percent in the Asia Pacific region and 6.0 percent in North America and
down 2.9 percent in the EMEA region compared to the year-ago period.

Industry-wide U.S. heavyweight new motorcycle (651cc-plus) retail unit sales
increased 3.8 percent through nine months of 2012 compared to the prior-year
period.

Third-quarter and nine-month data are listed in the accompanying tables.

Harley-Davidson Motorcycles and Related Products Segment Results

Third-Quarter Results: Third-quarter operating income from motorcycles and
related products was $144.8 million, a 19.9 percent decrease compared to
operating income of $180.7 million in the year-ago period.

Revenue from motorcycles during the third quarter of 2012 of $774.0 million
was down 16.1 percent compared to the year-ago period. The Company shipped
52,793 motorcycles to dealers and distributors worldwide during the quarter,
down 14.5 percent and in line with prior guidance, compared to shipments of
61,745 motorcycles in the third quarter of 2011.

Revenue from motorcycle parts and accessories totaled $233.7 million during
the quarter, down 0.8 percent, and revenue from general merchandise, which
includes MotorClothes® apparel and accessories, was $75.6 million, up 9.1
percent compared to the year-ago period.

Gross margin was 34.7 percent in the third quarter of 2012, compared to 33.7
percent in the third quarter of 2011. Third-quarter operating margin from
motorcycles and related products was 13.3 percent, compared to operating
margin of 14.7 percent in last year's third quarter.

Nine-Month Results: Through the first nine months of 2012 the Company shipped
200,558 motorcycles to dealers and distributors, a 10.0 percent increase
compared to the year-ago period. Through nine months, revenue from motorcycles
grew 8.4 percent to $2.99 billion, revenue from parts and accessories grew 6.6
percent to $698.4 million and revenue from general merchandise grew 10.0
percent to $225.4 million, compared to the year-ago period. Gross margin
through nine months was 35.6 percent and operating margin was 16.8 percent,
compared to 34.0 percent and 14.5 percent respectively through nine months
last year.

Financial Services Segment Results

Operating income from financial services was $72.4 million in the third
quarter of 2012, compared to operating income of $62.0 million in last year's
third quarter. Through nine months, operating income from financial services
was $221.7 million, compared to operating income of $212.0 million in the
year-ago period. Results for the third quarter and the first nine months of
2012 reflect continued improvement in credit performance year over year and
lower interest expense.During the same periods in 2011, financial services
results benefited from the release of significant credit loss reserves.

Guidance

Harley-Davidson continues to expect to ship 245,000 to 250,000 motorcycles to
dealers and distributors worldwide in 2012, a five-to seven-percent increase
from 2011. In the fourth quarter of 2012, the Company expects to ship 44,500
to 49,500 motorcycles, a two-to twelve-percent decrease from the year-ago
period. This is consistent with the Company's previously announced plans for
lower shipments in the fourth quarter of 2012 related to the implementation of
surge production at York in the first half of 2013. The Company believes surge
production provides the flexibility to produce more motorcycles in the first
half of 2013, closer to customer demand during the prime selling season. The
Company continues to expect full-year 2012 gross margin of 34.75 percent to
35.75 percent. The Company also continues to expect capital expenditures of
between $190 million and $210 million in 2012.  

Restructuring Update

In the third quarter of 2012, the Company incurred restructuring charges of
$9.2 million. The Company now expects to incur full-year 2012 restructuring
costs of $35 million to $45 million, a reduction of $5 million from the range
previously provided. Upon the anticipated completion of restructuring in 2013,
Harley-Davidson continues to expect restructuring activities initiated since
2009 to result in one-time overall costs of $490 million to $510 million
through 2013. The Company continues to expect cumulative savings of $275
million to $295 million in 2012 from restructuring activities initiated since
2009, rising to cumulative annual ongoing savings of $315 million to $335
million beginning in 2014.

Income Tax Rate

Through nine months, the Company's effective tax rate was 35.3 percent
compared to 30.4 percent in the year-ago period.The 2011 effective tax rate
was favorably impacted by a settlement of an IRS audit as well as a change in
the Wisconsin income tax law associated with certain net operating losses.
The Company continues to expect its full-year 2012 effective tax rate from
continuing operations will be approximately 35.5 percent.

Cash Flow

Cash and marketable securities totaled $1.93 billion at the end of the third
quarter, compared to $1.61 billion at the end of last year's third quarter.
During the first nine months of 2012, Harley-Davidson generated $712.5 million
of cash provided by operating activities of continuing operations, compared to
$901.6 million in the year-ago period. On a discretionary basis, the Company
repurchased 1.9 million shares of Harley-Davidson, Inc. common stock during
the third quarter of 2012 at a cost of $84.9 million. At the end of the
quarter, there were approximately 225 million shares of Harley-Davidson common
stock outstanding and 15.3 million shares remaining on board-approved share
repurchase authorizations.

Company Background

Harley-Davidson, Inc. is the parent company of Harley-Davidson Motor Company
and Harley-Davidson Financial Services. Harley-Davidson Motor Company produces
heavyweight custom, cruiser and touring motorcycles and offers a complete line
of Harley-Davidson motorcycle parts, accessories, riding gear and apparel, and
general merchandise. Harley-Davidson Financial Services provides wholesale and
retail financing, insurance, extended service and other protection plans and
credit card programs to Harley-Davidson dealers and riders in the U.S., Canada
and other select international markets. For more information, visit
Harley-Davidson's Web site at www.harley-davidson.com.

Conference Call and Webcast Presentation

Harley-Davidson will discuss third-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." The audio portion of today's call will also
be posted at harley-davidson.com beginning approximately two hoursafter the
conclusion of the call for one year. The audio may also be accessed until Nov.
6, 2012 by calling 404-537-3406 or 855-859-2056 in the US, pin number
32462414#.

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) execute its business
strategy, (ii) effectively execute the Company's restructuring plans within
expected costs and timing, (iii) adjust to fluctuations in foreign currency
exchange rates, interest rates and commodity prices, (iv) manage through
inconsistent economic conditions, including changing capital, credit and
retail markets, (v)implement and manage enterprise-wide information
technology solutions, including solutions at its manufacturing facilities, and
secure data contained in those systems, (vi) anticipate the level of consumer
confidence in the economy, (vii) continue to realize production efficiencies
at its production facilities and manage operating costs including materials,
labor and overhead, (viii) manage production capacity and production changes,
(ix) manage changes and prepare for requirements in legislative and regulatory
environments for its products, services and operations, (x) 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, (xi) manage risks that
arise through expanding international operations and sales, (xii) manage
supply chain issues, including any unexpected interruptions or price increases
caused by raw material shortages or natural disasters, (xiii) provide
products, services and experiences that are successful in the marketplace,
(xiv) develop and implement sales and marketing plans that retain existing
retail customers and attract new retail customers in an increasingly
competitive marketplace, (xv) manage the risks that our independent dealers
may have difficulty obtaining capital and managing through changing economic
conditions and consumer demand, (xvi) continue to have access to reliable
sources of capital funding and adjust to fluctuations in the cost of capital,
(xvii)manage the credit quality, the loan servicing and collection
activities, and the recovery rates of HDFS' loan portfolio, (xviii) sell all
of its motorcycles and related products and services to its independent
dealers, (xix) continue to develop the capabilities of its distributor and
dealer network, (xx) adjust to healthcare inflation and reform, pension reform
and tax changes, (xxi) retain and attract talented employees, and (xxii)
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.

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.



Harley-Davidson, Inc.
Condensed Consolidated Statements of Operations
(In thousands, except per share amounts)
(Unaudited)
                          Three months ended          Nine months ended
                          September 30,  September    September    September
                                         25,          30,          25,
                          2012           2011         2012         2011
Motorcycles and related   $             $           $           $ 
products revenue          1,089,268     1,232,699   3,931,684   3,635,487
Gross profit              377,904        415,391      1,398,231    1,235,525
Selling, administrative   223,982        222,258      709,015      660,890
and engineering expense
Restructuring expense     9,170          12,429       26,841       49,022
 Operating income from
motorcycles & related     144,752        180,704      662,375      525,613
products
Financial services        161,027        164,557      477,962      492,296
revenue
Financial services        88,677         102,573      256,264      280,322
expense
 Operating income from   72,350         61,984       221,698      211,974
financial services
Operating income          217,102        242,688      884,073      737,587
Investment income         1,447          2,479        5,611        5,625
Interest expense          11,438         11,270       34,528       34,101
Income before income      207,111        233,897      855,156      709,111
taxes
Provision for income      73,110         50,303       301,870      215,677
taxes
Income from continuing    134,001        183,594      553,286      493,434
operations
Loss from discontinued    -              -            -            -
operations, net of tax
Net income                $            $          $          $   
                          134,001       183,594     553,286     493,434
Earnings per common
share from continuing
operations:
 Basic                   $         $       $       $     
                          0.59           0.79         2.43         2.11
 Diluted                 $         $       $       $     
                          0.59           0.78         2.40         2.09
Earnings per common
share from discontinued
operations:
 Basic                   $        $       $       $     
                          -              -          -           -
 Diluted                 $        $       $       $     
                          -              -          -           -
Earnings per common
share:
 Basic                   $         $       $       $     
                          0.59           0.79         2.43         2.11
 Diluted                 $         $       $       $     
                          0.59           0.78         2.40         2.09
Weighted-average common
shares:
 Basic                   226,020        233,800      227,953      233,989
 Diluted                 227,989        235,861      230,070      235,981
Cash dividends per        $          $        $        $    
common share              0.155          0.125       0.465       0.350



Harley-Davidson, Inc.
Condensed Consolidated Balance Sheets
(In thousands)
                             (Unaudited)                     (Unaudited)
                             September 30,     December 31,  September 25,
                             2012              2011          2011
ASSETS
Current assets:
 Cash and cash            $   1,795,141   $          $   1,428,753
equivalents                                    1,526,950
 Marketable securities    136,376           153,380       179,285
 Accounts receivable,     256,193           219,039       285,332
net
 Finance receivables,     1,212,977         1,168,603     1,104,056
net
 Restricted finance
receivables held by          513,084           591,864       586,144
variable interest entities,
net
 Inventories              379,129           418,006       345,963
 Restricted cash held by  217,400           229,655       238,208
variable interest entities
 Other current assets     237,396           234,709       217,445
Total current assets         4,747,696         4,542,206     4,385,186
Finance receivables, net     2,285,309         1,754,441     2,095,839
Restricted finance
receivables held by          1,904,297         2,271,773     2,119,789
variable interest entities,
net
Other long-term assets       1,077,881         1,105,744     1,103,545
                             $  10,015,183   $          $   9,704,359
                                               9,674,164
LIABILITIES AND
SHAREHOLDERS' EQUITY
Current liabilities:
 Accounts payable &       $    899,788  $         $   1,021,433
accrued liabilities                            819,885
 Short-term debt          404,693           838,486       774,971
 Current portion of       437,938           399,916       -
long-term debt
 Current portion of
long-term debt held by       559,256           640,331       644,779
variable interest entities
Total current liabilities    2,301,675         2,698,618     2,441,183
Long-term debt               3,339,604         2,396,871     2,804,605
Long-term debt held by       1,132,809         1,447,015     1,350,294
variable interest entities
Pension and postretirement   387,228           571,065       368,891
healthcare liabilities
Other long-term liabilities  150,504           140,339       138,126
Total shareholders' equity   2,703,363         2,420,256     2,601,260
                             $  10,015,183   $          $   9,704,359
                                               9,674,164



Harley-Davidson, Inc.
Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
                                       Nine months ended
                                       September 30,     September 25,
                                       2012              2011
Net cash provided by operating
activities
 of continuing operations             $    712,498  $     901,601
Cash flows from investing activities
of continuing operations:
 Capital expenditures                 (95,329)          (106,115)
 Finance receivables, net             (197,628)         (33,775)
 Net change in marketable securities  18,053            (37,678)
Net cash used by investing activities  (274,904)         (177,568)
of continuing operations
Cash flows from financing activities
of continuing operations:
 Proceeds from issuance of            993,737           394,277
medium-term notes
 Proceeds from securitization debt    763,895           571,276
 Repayments of securitization debt    (1,161,592)       (1,333,541)
 Net (decrease) increase in credit
facilities and unsecured commercial    (634,874)         182,058
paper
 Net borrowings of asset-backed       182,131           (483)
commercial paper
 Net repayments of asset-backed       (6,538)           -
commercial paper
 Net change in restricted cash        12,255            50,679
 Dividends                            (106,560)         (82,557)
 Purchase of common stock for         (257,981)         (97,456)
treasury
 Excess tax benefits from             16,390            2,702
share-based payments
 Issuance of common stock under       36,342            7,763
employee stock option plans
Net cash used by financing activities  (162,795)         (305,282)
of continuing operations
Effect of exchange rate changes on
cash and cash equivalents
 of continuing operations             (6,608)           (11,857)
Net increase in cash and cash          268,191           406,894
equivalents of continuing operations
Cash flows from operating activities   -                 (74)
of discontinued operations
Net increase in cash and cash          $    268,191  $     406,820
equivalents
Cash and cash equivalents:
 Cash and cash equivalents -          $   1,526,950   $    1,021,933
beginning of period
 Cash and cash equivalents of
discontinued operations - beginning    -                 -
of period
 Net increase in cash and cash        268,191           406,820
equivalents
 Less: Cash and cash equivalents of
discontinued operations - end of       -                 -
period
 Cash and cash equivalents - end of   $   1,795,141   $    1,428,753
period



Motorcycles and Related Products Revenue and
Motorcycle Shipment Data
(Unaudited)
                            Three months ended        Nine months ended
                            September 30,  September  September  September 25,
                                           25,        30,
                            2012           2011       2012       2011
MOTORCYCLES AND RELATED
PRODUCTS REVENUE (in
thousands)
 Motorcycles               $           $      $        $ 
                            773,979       922,469    2,993,657  2,762,563
 Parts & Accessories       233,749        235,676    698,381    655,387
 General Merchandise       75,632         69,333     225,375    204,809
 Other                     5,908          5,221      14,271     12,728
                            $            $       $        $ 
                            1,089,268      1,232,699  3,931,684  3,635,487
MOTORCYCLE SHIPMENTS:
 United States           33,152         41,066     131,119    118,555
 International           19,641         20,679     69,439     63,832
 Total                52,793         61,745     200,558    182,387
MOTORCYCLE PRODUCT MIX:
 Touring                 18,483         22,357     77,859     70,410
 Custom                  20,719         25,638     78,430     71,526
 Sportster®              13,591         13,750     44,269     40,451
 Total                 52,793         61,745     200,558    182,387



Worldwide Retail Sales of Harley-Davidson Motorcycles
                      Three months ended            Nine months ended
                      September      September      September      September
                      30,            30,            30,            30,
                      2012           2011           2012           2011
North America
Region
 United States       40,402         42,640         135,925        127,930
 Canada              2,578          2,458          9,526          9,288
 Total North       42,980         45,098         145,451        137,218
America Region
Europe, Middle
East and Africa
Region (EMEA)
 Europe*             8,146          8,064          31,667         33,337
 Other               1,330          1,243          4,539          3,947
 Total EMEA        9,476          9,307          36,206         37,284
Region
Asia Pacific
Region
 Japan               2,941          2,868          7,915          7,827
 Other               3,083          2,620          9,859          7,745
 Total Asia        6,024          5,488          17,774         15,572
Pacific Region
Latin America         2,573          1,945          7,013          4,755
Region
 Total
Worldwide Retail      61,053         61,838         206,444        194,829
Sales
Data Source
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.
* 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)
                  Nine months ended
                  September 30,  September 30,
                  2012           2011
United States^2  239,940        231,125
                  Eight months ended
                  August 31,     August 31,
                  2012           2011
Europe^3          223,860        241,498

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.
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 Association des
Constructeurs Europeens de Motocycles (ACEM), 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.

Website: http://www.harley-davidson.com
Contact: Media; Bob Klein, +1-414-343-8664, Financial Contact; Amy Giuffre,
+1-414-343-8002
 
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