Harley-Davidson, Inc. Reports Record Third Quarter Performance
13 October 1999
Harley-Davidson, Inc. Reports Record Third Quarter Performance and Announces Unit Production Increases
MILWAUKEE, Oct. 11 -- Harley-Davidson, Inc. today
announced record sales and earnings for its third quarter ended September 26,
1999. The Company's third quarter sales were $623.2 million, an increase of
20.5 percent over the third quarter last year. Earnings per share for the
third quarter were 42 cents, a 25.0 percent increase compared with last year.
"During the third quarter we launched a completely redesigned Softail(R)
family consisting of seven models, all of which are powered by our new Twin
Cam 88B(TM) counterbalanced engine, " said Jeffrey L. Bleustein, chairman and
chief executive officer of Harley-Davidson, Inc.
"Based upon the positive reception of our new model year 2000 products by
the motorcycle press, our dealers and our customers, and the continuing
strength of the worldwide heavyweight motorcycle market, we have increased our
Harley-Davidson(R) motorcycle production target for 1999 to 175,000 units,"
said Bleustein. "With this same confidence in the motorcycle market and our
production capabilities, we are establishing a production target of 193,000
Harley-Davidson motorcycles for the 2000 calendar year."
Motorcycles and Related Products Segment -- Third Quarter Results
Third quarter sales of Harley-Davidson motorcycles were $455.7 million, an
increase of 18.9 percent over the third quarter last year. Shipments of
Harley-Davidson motorcycles totaled 42,615 units, up 6,187 units or 17.0
percent over last year.
Buell(R) motorcycle sales for the quarter totaled $16.7 million on
shipments of 1,984 units, an increase of $7.5 million or 915 units relative to
last year.
Sales of Parts and Accessories (P&A), which consist of Genuine Motor
Parts(TM) and Genuine Motor Accessories(TM), totaled $109.6 million, a
21.5 percent increase from the year-ago quarter. Third quarter sales of
General Merchandise, which consists of MotorClothes(R) apparel and
collectibles, totaled $40.9 million, up 22.2 percent over the same period last
year.
Third quarter gross margin was 32.8 percent of revenue, down slightly from
33.1 percent of revenue last year. Additional costs associated with the most
extensive product launch in recent company history and the effect of a higher
proportion of lower margin Sportster(R) motorcycles resulted in a lower gross
margin.
Third quarter operating margin for the Motorcycles and Related Products
Segment was 15.4 percent of revenue, which is identical to last year's record
third quarter operating margin. "These record earnings and margin are
noteworthy considering the significant investments that we are making in our
future and the aggressive product launch that we executed during the quarter,"
said Bleustein.
The worldwide heavyweight motorcycle market continues to grow rapidly. In
the U.S., total industry retail registrations have grown at 22.7 percent,
while registrations of Harley-Davidson and Buell motorcycles have grown at
25.7 percent through August, increasing the Company's market share. Harley-
Davidson and Buell are also gaining market share in both the Europe and
Asia/Pacific markets. (See table that follows for more detail.)
Financial Services Segment
Harley-Davidson Financial Services, Inc. (formerly Eaglemark Financial
Services, Inc.), a subsidiary of Harley-Davidson, Inc., reported third quarter
operating income of $7.5 million, up $3.9 million compared to the year-ago
quarter. The subsidiary financed 22.5 percent of the Company's U.S.
motorcycle retail sales compared with 19.9 percent during the year ago period.
It has further benefited from the increase in Harley-Davidson's U.S. retail
sales volume.
Share Repurchase
During the third quarter, Harley-Davidson repurchased approximately
1.4 million shares of its common stock. This brings the 1999 year-to-date
repurchase to a total of 2.4 million shares.
Nine Month Results
For the nine month period, sales totaled $1,790 million, a 19.3 percent
increase over the year-ago period. Diluted earnings per share were $1.24, an
increase of 26.0 percent compared to the first nine months last year.
Through the first nine months of this year, Harley-Davidson motorcycle
revenue was $1,361 million, an 18.8 percent increase, while Buell motorcycle
revenue was $45.3 million, a 29.9 percent increase compared with the same
period in 1998.
For the first nine months of 1999, P&A revenue totaled $284.4 million, a
22.1 percent increase, while General Merchandise revenue totaled $97.6
million, a 14.6 percent increase compared with the same period in 1998.
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 be statements that describe the Company's
future plans, objectives, targets or goals. 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 depends
upon, among other factors, (i) continued realization of production
efficiencies at its manufacturing facilities; (ii) successful implementation
of production capacity increases in its facilities; (iii) the sale of all
motorcycles the Company has the capacity to produce; (iv) product
availability; and (v) successful introduction of new products. 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 securities documents previously
filed by the Company with the Securities and Exchange Commission.
Harley-Davidson, Inc. is the parent company for Harley-Davidson Motor
Company, Buell Motorcycle Company and Harley-Davidson Financial Services, Inc.
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,
insurance and credit card programs to Harley-Davidson dealers and customers.
TABLES FOLLOW
Harley-Davidson, Inc.
Condensed Consolidated Statements of Income
(Unaudited)
(In thousands, except per share amounts)
Three Months Ended Nine Months Ended
Sep. 26, Sep. 27, Sep. 26, Sep. 27,
1999 1998 1999 1998
Net sales $623,193 $517,198 $1,790,476 $1,500,889
Gross profit 204,658 171,139 606,786 498,542
Operating income
Motorcycles and related
products 95,907 79,870 287,524 234,167
Financial services 7,514 3,599 19,274 12,539
Corporate expenses (2,024) (3,330) (7,450) (8,521)
Total operating income 101,397 80,139 299,348 238,185
Interest income, net 2,090 1,056 5,571 2,442
Other income (expense), net (556) 1,287 (1,019) (508)
Income before provision
for taxes 102,931 82,482 303,900 240,119
Provision for income taxes 37,569 30,110 110,924 87,647
Net income $65,362 $52,372 $192,976 $152,472
Earnings per common share:
Basic $.43 $.34 $1.26 $1.00
Diluted $.42 $.34 $1.24 $.99
Weighted-average common shares:
Basic 152,196 152,434 152,770 152,069
Diluted 154,604 154,903 155,294 154,558
Harley-Davidson, Inc.
Condensed Consolidated Balance Sheets
(In thousands)
Sep. 26, Dec. 31, Sep. 27,
1999 1998 1998
(unaudited) (unaudited)
ASSETS
Current assets:
Cash and cash equivalent $163,834 $165,170 $122,146
Accounts receivable, net 125,554 113,417 112,305
Finance receivables, net 419,955 360,341 337,924
Inventories 166,812 155,616 145,019
Other current assets 53,369 50,419 52,105
Total current assets 929,524 844,963 769,499
Finance receivables, net 389,263 319,427 352,866
Other long-term assets 766,991 755,819 695,492
Total assets $2,085,778 $1,920,209 $1,817,857
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current portion of finance debt $173,974 $146,742 $132,413
Other current liabilities 388,427 321,773 302,177
Total current liabilities 562,401 468,515 434,590
Finance debt 280,000 280,000 280,000
Other long-term liabilities 66,652 69,700 63,510
Postretirement health care benefits 74,183 72,083 70,605
Total shareholders' equity 1,102,542 1,029,911 969,152
Total liabilities and
shareholders' equity $2,085,778 $1,920,209 $1,817,857
Harley-Davidson, Inc.
Net Sales and Motorcycle
Shipment Data
Three Months Ended Nine Months Ended
Sep. 26, Sep. 27, Sep. 26, Sep. 27,
1999 1998 1999 1998
NET SALES (in thousands)
Harley-Davidson(R)
motorcycles $455,650 $383,336 $1,360,733 $1,145,554
Buell(R) motorcycles 16,749 9,234 45,314 34,893
Parts & Accessories 109,604 90,222 284,353 232,826
General Merchandise 40,919 33,473 97,625 85,164
Other 271 933 2,451 2,452
Total net sales $623,193 $517,198 $1,790,476 $1,500,889
HARLEY-DAVIDSON UNITS
Motorcycle shipments:
United States 31,764 27,126 97,540 79,776
Export 10,851 9,302 31,027 28,887
Total 42,615 36,428 128,567 108,663
Motorcycle product mix:
Touring 27.8% 26.3% 27.2% 25.1%
Custom 47.3 49.9 49.2 52.3
Sportster 24.9 23.8 23.6 22.6
Total 100.0 100.0 100.0 100.0
BUELL UNITS
Motorcycle shipments 1,984 1,069 5,509 3,916
Available 651cc+ Motorcycle Retail Registrations (Units).
1999 1998 % change
UNITED STATES (August YTD) 207,529 169,090 +22.7
HDI 95,755 76,190 +25.7
EUROPE (July YTD) 242,086 213,345 +13.5
HDI 15,156 12,957 +17.0
JAPAN/AUSTRALIA (July YTD) 40,084 39,155 +2.4
HDI 7,067 6,379 +10.8
TOTAL 489,699 421,590 +16.2
HDI 117,978 95,526 +23.5
HDI includes both Harley-Davidson and Buell motorcycles
Sources: Motorcycle Industry Council, Giral S.A., JAMA, ABS