Harley-Davidson Reports 14th Consecutive Record Year
19 January 2000
Harley-Davidson Reports 14th Consecutive Record Year and Another Record Fourth Quarter; 1999 Net Income Increased 25.2% on 18.8% Higher Revenue
MILWAUKEE, Jan. 18 -- Harley-Davidson, Inc. today
announced record sales and earnings for its fourth quarter and year ended
December 31, 1999. Revenue for the quarter was $662.5 million compared with
$563.1 million in the year-ago quarter. Fourth quarter diluted earnings per
share (EPS) were 48 cents, a 22.8 percent increase compared with last year's
39 cents. Revenue for the full year was $2,453 million, compared with
$2,064 million in 1998. Diluted EPS for the full year were $1.73, a
25.0 percent increase compared with $1.38 in 1998
"We pride ourselves in delivering consistent financial performance while
fulfilling the dreams of our customers," said Jeffrey L. Bleustein, chairman
and chief executive officer of Harley-Davidson, Inc. "For the fourteenth
consecutive year, Harley-Davidson's dedicated employees, dealers, and
suppliers have once again made this possible.
"During 1999, we increased our production capacity; introduced a totally
redesigned Softail family of motorcycles; launched a new Twin Cam 88B engine;
invested heavily in the development of future products and services; and at
the same time, achieved another year of record earnings. These
accomplishments, together with the strength of the worldwide motorcycle
market, give us confidence to increase our production target to 196,000
Harley-Davidson(R) motorcycles for the 2000 calendar year," said Bleustein.
Motorcycles and Related Products Segment - Fourth Quarter Results
Fourth quarter sales of Harley-Davidson motorcycles were $530.2 million,
an increase of 17.9 percent over the fourth quarter last year. Shipments of
Harley-Davidson motorcycles totaled 48,620 units, up 6,465 units or
15.3 percent. Buell(R) motorcycle sales for the quarter totaled $18.2 million
on shipments of 2,258 units.
Sales of Parts and Accessories (P&A), which consist of Genuine Motor
Parts(TM) and Genuine Motor Accessories(TM), totaled $78.2 million, a
21.7 percent increase from the year-ago quarter. Fourth quarter sales of
General Merchandise, which consists of MotorClothes(R) apparel and
collectibles, totaled $35.1 million, up 19.6 percent over the same period last
year.
Fourth quarter gross margin was 34.6 percent of revenue, up from 34.1
percent of revenue last year. Improved margins were driven primarily by
increased motorcycle production and favorable market mix.
Fourth quarter operating margin for the Motorcycles and Related Products
Segment was 16.6 percent of revenue, which surpassed last year's record fourth
quarter operating margin of 16.0 percent. Higher operating margins were
driven by improvement in gross margin.
The worldwide heavyweight motorcycle market continued its double-digit
growth in 1999. Through November, U.S. heavyweight retail registrations grew
at 22.0 percent, while registrations of Harley-Davidson(R) and Buell(R)
motorcycles grew at 24.4 percent, increasing the Company's market share.
Harley-Davidson and Buell also gained market share in both the Europe and
Japan/Australia markets. Based on interim results for 1999, Harley-Davidson
is expected to gain market share in Europe for the first time in four years.
(See table that follows for more detail.)
"We are pleased to be gaining market share and growing at double-digit
rates in our major markets of the U.S., Europe and Japan/Australia. This is
especially encouraging given the soft year that other heavyweight motorcycle
manufacturers have experienced in Japan in 1999," commented Bleustein.
Financial Services Segment
Harley-Davidson Financial Services, Inc. (HDFS), a subsidiary of
Harley-Davidson, Inc., reported fourth quarter operating income of
$8.4 million, up $0.7 million compared to the year-ago quarter.
Twelve Month Results
For the fiscal year ended 1999, Harley-Davidson motorcycle revenue was
$1,891 million, an 18.5 percent increase, while Buell motorcycle revenue was
$63.5 million, an 18.6 percent increase compared to 1998.
Total Harley-Davidson motorcycle shipments were 177,187 units compared
with 150,818 units in 1998, a 17.5 percent gain. Total Buell motorcycle
shipments were 7,767 units compared with 6,334 units in 1998, a 22.6 percent
gain.
P&A revenue totaled $362.6 million, a 22.0 percent increase, while General
Merchandise revenue totaled $132.7 million, a 15.9 percent increase compared
to 1998.
Full year operating income for HDFS was $27.7 million, an increase of $7.5
million compared to 1998, for a 37.0 percent increase. The subsidiary
financed 22 percent of the Company's U.S. motorcycle retail sales compared to
21 percent during 1998. It has further benefited from the increase in
Harley-Davidson's U.S. retail sales volume.
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 the group of companies
doing business as 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
(In thousands, except per share amounts)
Three Months Ended Twelve Months Ended
December 31, December 31,
1999 1998 1999 1998
(unaudited)
Net sales $662,463 $563,067 $2,452,939 $2,063,956
Gross profit 228,900 192,128 835,686 690,670
Operating income
Motorcycles and
related products 110,077 90,281 397,601 324,448
Financial services 8,411 7,672 27,685 20,211
Corporate expenses (1,977) (2,522) (9,427) (11,043)
Total operating income 116,511 95,431 415,859 333,616
Interest income, net 2,443 1,386 8,014 3,828
Other expense, net (2,062) (707) (3,080) (1,215)
Income before provision
for taxes 116,892 96,110 420,793 336,229
Provision for income taxes 42,668 35,082 153,592 122,729
Net income $74,224 $61,028 $267,201 $213,500
Earnings per common share:
Basic $.49 $.40 $1.75 $1.40
Diluted $.48 $.39 $1.73 $1.38
Weighted-average common shares:
Basic 151,264 152,675 152,374 152,227
Diluted 153,622 155,051 154,857 154,703
Harley-Davidson, Inc.
Condensed Consolidated Balance Sheets
(In thousands)
December 31,
1999 1998
ASSETS
Current assets:
Cash and cash equivalent $183,415 $165,170
Accounts receivable, net 101,708 113,417
Finance receivables, net 440,951 360,341
Inventories 168,616 155,616
Other current assets 54,304 50,419
Total current assets 948,994 844,963
Finance receivables, net 354,888 319,427
Other long-term assets 808,195 755,819
Total assets $2,112,077 $1,920,209
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current portion of finance debt $181,163 $146,742
Other current liabilities 336,991 321,773
Total current liabilities 518,154 468,515
Finance debt 280,000 280,000
Other long-term liabilities 77,124 69,700
Postretirement health care benefits 75,719 72,083
Total shareholders' equity 1,161,080 1,029,911
Total liabilities and
shareholders' equity $2,112,077 $1,920,209
Harley-Davidson, Inc.
Net Sales and Motorcycle
Shipment Data
Three Months Ended Twelve Months Ended
December 31, December 31,
1999 1998 1999 1998
NET SALES (in thousands)
Harley-Davidson(R)
motorcycles $530,199 $449,861 $1,890,932 $1,595,415
Buell(R) motorcycles 18,160 18,634 63,474 53,527
Parts & Accessories 78,245 64,314 362,598 297,140
General Merchandise 35,080 29,320 132,705 114,484
Other 779 938 3,230 3,390
Total net sales $662,463 $563,067 $2,452,939 $2,063,956
HARLEY-DAVIDSON UNITS
Motorcycle shipments:
United States 38,074 31,126 135,614 110,902
Export 10,546 11,029 41,573 39,916
Total 48,620 42,155 177,187 150,818
Motorcycle product mix:
Touring 25.7% 29.1% 26.8% 26.1%
Custom 50.6 48.8 49.6 51.3
Sportster 23.7 22.1 23.6 22.6
Total 100.0% 100.0% 100.0% 100.0%
BUELL UNITS
Motorcycle shipments 2,258 2,418 7,767 6,334
Available 651cc+ Motorcycle Retail Registrations (Units).
1999 1998 % change
UNITED STATES (November YTD) 261,368 214,194 +22.0
HDI 129,268 103,908 +24.4
EUROPE (October YTD) 291,084 255,310 +14.0
HDI 18,732 15,906 +17.8
JAPAN/AUSTRALIA (October YTD) 54,712 60,384 -9.4
HDI 10,409 8,975 +16.0
HDI includes both Harley-Davidson and Buell motorcycles
Sources: Motorcycle Industry Council, Giral S.A., JAMA, ABS