Harley-Davidson Reports Record First Quarter
MILWAUKEE, April 16 Harley-Davidson, Inc. today announced record revenue and earnings for its first quarter ended March 31, 2002. Revenue for the quarter was $927.8 million compared with $776.9 million in the year-ago quarter, a 19.4 percent increase. First quarter diluted earnings per share (EPS) were 39 cents, a 30.6 percent increase compared with last year's 30 cents.
``We are proud to announce another outstanding quarter and to report that demand for Harley-Davidson products remains strong as we begin our 99th year of operations,'' said Jeffrey L. Bleustein, chairman and chief executive officer of Harley-Davidson, Inc. ``Our worldwide network of independent dealers experienced a growth rate of 20 percent in retail registrations during the first quarter. Based on this demand and ongoing capacity improvements, we are raising our 2002 production target for Harley-Davidson® motorcycles to 261,000 units, up from the previous target of 258,000.
``I am also pleased to announce that our Dyna family of motorcycles is now being assembled exclusively in Kansas City, after successfully transferring these operations from our York, Pa. facility. This comes on the heels of a new five-year labor agreement with our Kansas City unions and is another step in executing our manufacturing strategy,'' added Bleustein.
Motorcycles and Related Products Segment
Financial performance for the entire segment benefited from five percent more scheduled workdays in the first quarter of 2002 compared to last year's first quarter.
First quarter revenue from Harley-Davidson motorcycles was $747.7 million, an increase of 21.9 percent over the first quarter last year. Shipments of Harley-Davidson motorcycles totaled 64,669 units, up 10,515 units or 19.4 percent over last year and approximately 2,100 units over the Company's announced target. ``We worked additional assembly line overtime during the quarter to help meet strong customer demand for our 2002 model year motorcycles,'' said Bleustein. To support the new 2002 calendar year production target of 261,000 units, Harley-Davidson is increasing its second quarter production target to 65,000 units.
First quarter revenue from Parts and Accessories (P&A), which consist of Genuine Motor Parts(TM) and Genuine Motor Accessories(TM), totaled $131.1 million, a 20.4 percent increase over the year-ago quarter. General Merchandise, which consists of MotorClothes® apparel and collectibles, had first quarter revenue of $42.3 million, up 7.9 percent over the same period last year.
For the long term, the Company expects P&A revenue to increase somewhat faster than Harley-Davidson's motorcycle unit growth rate and expects General Merchandise to grow slightly slower than the motorcycle unit growth rate.
First quarter gross margin for the Motorcycles and Related Products Segment was 34.0 percent of revenue compared to 32.7 percent in the first quarter of last year. Gross margin improvements were driven by the effect of the greater number of workdays as well as a stronger product mix and a greater percentage of domestic shipments. Operating margin followed gross margin and was 18.7 percent of revenue, compared to 17.4 percent of revenue for the same period last year.
Financial Services Segment
Harley-Davidson Financial Services, Inc. (HDFS), a subsidiary of Harley-Davidson, Inc., reported first quarter income of $41.7 million, up from $32.9 million in the year-ago quarter. HDFS operating income was $12.2 million, compared with $5.0 million last year. The increase was due in part to continued strong acceptance of its consumer financing programs as well as growth across all product lines. Also contributing to the income growth was the January completion of the remaining $93 million sale of receivables from HDFS' fourth quarter 2001 asset-backed securitization offering. The Company expects HDFS operating income to grow at a rate approaching 25 percent for 2002.
Harley-Davidson Retail Data
Retail sales for Harley-Davidson motorcycles in the United States were up 21.2 percent for the period January through March 2002, when compared to the same period last year. Harley-Davidson retail sales in Europe and Japan were up 16.6 and 3.7 percent, respectively, when compared with 2002. At this time, only limited industry data is available for these markets.
Income Tax Rate
The Company's effective income tax rate was reduced to 34.5 percent for the first quarter of 2002 from last year's rate of 35.0 percent. The Company expects to maintain the improved rate of 34.5 percent for the remainder of the year.
Share Repurchase
During the quarter, the Company repurchased approximately 575,000 shares of its common stock.
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 and sport-touring motorcycles. Harley-Davidson Financial Services, Inc. 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'' 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 reach targeted production objectives and maintain
revenue and income growth 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, (iv) avoid
unexpected P&A /general merchandise supplier backorders, (v) sell all of the
motorcycles it has the capacity 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, and (viii) successfully adjust
to foreign currency exchange rate fluctuations.
In addition, the Company
could experience delays in the operation of manufacturing facilities, work
stoppages, difficulty with suppliers, natural causes 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
(Unaudited)
(In thousands, except per share amounts)
Three Months Ended
Mar. 31, Mar. 25,
2002 2001(a)
Net sales $927,845 $776,941
Gross profit 315,277 253,898
Operating expenses 142,150 118,342
Operating income from motorcycles and
related products 173,127 135,556
Financial services income 41,691 32,934
Financial services operating expense 29,540 27,955
Operating income from financial services 12,151 4,979
Corporate expenses 3,555 2,802
Total operating income 181,723 137,733
Interest income, net 2,246 4,799
Other expense, net (765) (920)
Income before provision for income taxes 183,204 141,612
Provision for income taxes 63,206 49,564
Net income $119,998 $ 92,048
Earnings per common share:
Basic $.40 $.30
Diluted $.39 $.30
Weighted-average common shares:
Basic 302,475 301,922
Diluted 305,618 306,063
(a) Certain prior year balances have been reclassified in order to conform
with the current year presentation of sales incentives ($9.2 million)
and shipping and handling fees ($14.1 million).
Harley-Davidson, Inc.
Condensed Consolidated Balance Sheets
(In thousands)
Mar. 31, Dec. 31, Mar. 25,
2002 2001 2001
(unaudited) (unaudited)
ASSETS
Current assets:
Cash and cash equivalents $378,535 $439,438 $399,339
Marketable securities 201,193 196,011 --
Accounts receivable, net 152,083 118,843 162,618
Finance receivables, net 738,396 656,421 613,607
Inventories 183,632 181,115 187,982
Other current assets 78,475 73,436 56,888
Total current assets 1,732,314 1,665,264 1,420,434
Finance receivables, net 582,366 379,335 451,873
Other long-term assets 1,084,624 1,073,896 895,445
Total assets $3,399,304 $3,118,495 $2,767,752
LIABILITIES AND
SHAREHOLDERS' EQUITY
Current liabilities:
Other current liabilities $532,183 $499,059 $442,882
Current portion of finance
debt 366,286 217,051 293,553
Total current liabilities 898,469 716,110 736,435
Finance debt 380,000 380,000 355,000
Other long-term liabilities 179,068 176,190 99,564
Postretirement health care
benefits 94,744 89,912 83,122
Total shareholders' equity 1,847,023 1,756,283 1,493,631
Total liabilities and
shareholders' equity $3,399,304 $3,118,495 $2,767,752
Harley-Davidson, Inc.
Net Sales and Motorcycle
Shipment Data
Three Months Ended
Mar. 31, Mar. 25,
2002 2001
NET SALES (in thousands)
Harley-Davidson(R) motorcycles $747,743 $613,517
Buell(R) motorcycles 6,492 15,285
Parts & Accessories 131,143 108,881
General Merchandise 42,269 39,171
Other 198 87
Total $927,845 $776,941
HARLEY-DAVIDSON UNITS
Motorcycle shipments:
United States 51,363 40,267
Export 13,306 13,887
Total 64,669 54,154
Motorcycle product mix:
Touring 26.8% 26.9%
Custom 49.3 52.0
VRSC 4.9 --
Sportster(R) 19.0 21.1
Total 100.0% 100.0%
BUELL UNITS
Motorcycle shipments:
Buell(R) (excluding Blast) 429 1,593
Buell Blast(R) 901 854
Total 1,330 2,447
Year-to-date Heavyweight (651+ cc)
Motorcycle Retail Registrations (Units),
2001, data through month indicated.
2002 2001 % change
United States
-- H-D (March) 49,694 40,988 +21.2
-- Industry (March) 100,782 81,717 +23.3
Europe
-- H-D (March) 4,691 4,023 +16.6
-- Industry (February) 37,670 32,110 +17.3
Japan
-- H-D (March) 1,892 1,824 +3.7
-- Industry (February) 5,402 4,808 +12.4
Only Harley-Davidson® motorcycles are included in the Harley-Davidson (H-D) data.
Sources: Motorcycle Industry Council, Giral S.A., JAMA, Harley-Davidson, Inc. reports.
