Harley-DavidsonReports Record Q2 Sales and Earnings
12 July 2000
Production Goal Increased to 202,000 Units
MILWAUKEE - Harley-Davidson, Inc. today announced record sales and earnings
for its second quarter ended June 25, 2000. The Company's second quarter
sales were $755.0 million, an increase of 24.0 percent over the second quarter
last year. Diluted earnings per share for the second quarter were 29 cents,
a 33.4 percent increase compared to last year.
"The market for Harley-Davidson(R) motorcycles continues to roar," said
Jeffrey L. Bleustein, chairman and chief executive officer of Harley-Davidson,
Inc. "Our U.S. registrations are up 20 percent for the first five months of
the year, and they would be higher if not for short term production
constraints. The U.S. heavyweight market has grown by over 25 percent during
the same period, making increased capacity for Harley-Davidson motorcycles
more important than ever.
"We continue to work diligently with our suppliers and our employees to
increase motorcycle production while meeting the quality expectations of our
customers," said Bleustein. "I am pleased to announce that through these
efforts we are increasing our target to 202,000 Harley-Davidson units for this
year. This means that we will have accomplished our goal of producing 200,000
units per year by 2003 a full three years ahead of our original schedule.
Additionally, we are setting a target of 223,000 units for 2001."
Motorcycles and Related Products Segment - Second Quarter Results
Second quarter sales of Harley-Davidson motorcycles were $576.9 million,
an increase of 23.1 percent over the second quarter last year. Shipments of
Harley-Davidson motorcycles in the second quarter totaled 53,329 units, up
8,558 units or 19.1 percent over last year. Based on the Company's revised
annual target, third quarter production is expected to be 48,500 units.
Buell(R) motorcycle sales for the second quarter totaled $20.2 million on
shipments of 3,280 units (including 1,325 new Buell Blast(TM) models),
compared to $12.5 million on shipments of 1,512 units last year. The Company
is increasing Buell's production target to 11,000 units for the year 2000.
Second quarter sales of Parts and Accessories (P&A), which consist of
Genuine Motor Parts and Genuine Motor Accessories, totaled $121.1 million, a
21.4 percent increase from the year-ago quarter. General Merchandise second
quarter sales, which consist of MotorClothes(R) apparel and collectibles,
totaled $36.1 million, up 32.3 percent over the same period last year.
"The strength of our P&A and General Merchandise sales continues to
surprise and delight us," commented Bleustein. "On a longer term basis, we
expect growth rates for P&A revenues to continue to increase slightly faster
than Harley-Davidson's motorcycle unit growth rate. We expect General
Merchandise to grow slightly slower than the motorcycle unit growth rate."
Second quarter gross margin was 34.1 percent of revenue, down from
35.0 percent of revenue last year. Gross margin was unfavorably impacted by
approximately $7 million in foreign exchange due to weakening European
currencies and a higher mix of lower margin product lines such as General
Merchandise and Buell motorcycles.
Second quarter operating margin for the Motorcycles and Related Products
Segment was 16.9 percent of revenue, compared to 16.5 percent of revenue for
the same period last year. The improvement in operating margin was the result
of operating expenses growing slower than the record second quarter sales.
Harley-Davidson/Buell retail registrations are growing in all major
markets, with the U.S. up 20.0 percent through May, Europe up 7.8 percent
through April and Japan/Australia up 2.4 percent through April.
Financial Services Segment - Second Quarter Results
Harley-Davidson Financial Services, Inc. (HDFS) reported second quarter
operating income of $11.3 million, up 23.7 percent compared to the year-ago
quarter.
Income tax rate
The income tax rate for the second quarter of 2000 has been decreased to
35.2 percent versus 36.5 percent in 1999. The Company expects an income tax
rate of 35.5 percent for the remainder of the year.
Share Repurchase
During the second quarter, Harley-Davidson repurchased approximately
1.5 million shares of its common stock, which brings the year-to-date total to
just under 1.8 million shares.
Harley-Davidson, Inc. - Six Month Results
For the six month period, sales totaled $1.44 billion, a 23.0 percent
increase over the year-ago period. Diluted earnings per share were 55 cents,
an increase of 35.3 percent compared to the first six months last year. When
the first quarter sale of the Harley-Davidson(R) Chrome VISA(R) card is
excluded, diluted earnings per share are 53 cents, an increase of
29.9 percent.
Through the first six months of this year, Harley-Davidson motorcycle
revenue was $1.11 billion, a 22.9 percent increase while Buell motorcycle
revenue was $37.0 million, a 29.4 percent increase, compared with the same
period in 1999.
For the first six months of 2000, P&A revenue totaled $216 million, a
23.6 percent increase while General Merchandise revenue totaled $69.6 million,
a 22.7 percent increase compared with the same period in 1999.
For the first six months, HDFS operating income was $14.6 million, a
24.3 percent increase over last year.
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 and insurance programs to Harley-Davidson
dealers and customers.
Harley-Davidson, Inc.
Condensed Consolidated Statements of Income
(Unaudited)
(In thousands, except per share amounts)
Three Months Ended Six Months Ended
June 25, June 27, June 25, June 27,
2000 1999 2000 1999
Net sales $754,973 $608,716 $1,436,086 $1,167,283
Gross profit 257,146 212,994 488,451 402,128
Operating income
Motorcycles and
related products 127,228 100,140 239,868 191,617
Financial services 11,282 9,118 14,614 11,760
Corporate expenses (2,259) (2,624) (5,264) (5,426)
Total operating income 136,251 106,634 249,218 197,951
Interest income, net 3,424 1,992 6,296 3,481
Gain on sale of
credit card business -- -- 18,915 --
Other income (expense),
net 189 (641) (136) (463)
Income before provision
for taxes 139,864 107,985 274,293 200,969
Provision for income
taxes 49,277 39,415 103,479 73,355
Net income $ 90,587 $ 68,570 $ 170,814 $ 127,614
Earnings per common share:
Basic $.30 $.22 $.56 $.42
Diluted $.29 $.22 $.55 $.41
Weighted-average common shares:
Basic 303,337 306,162 303,123 306,128
Diluted 308,104 311,212 307,914 311,292
Harley-Davidson, Inc.
Condensed Consolidated Balance Sheets
(In thousands)
June 25, Dec 31, Jun 27,
2000 1999 1999
(unaudited) (unaudited)
ASSETS
Current assets:
Cash and cash equivalents $297,917 $183,415 $209,984
Accounts receivable, net 115,743 101,708 100,813
Finance receivables, net 451,983 440,951 369,218
Inventories 157,415 168,616 149,060
Other current assets 50,760 54,304 49,745
Total current assets 1,073,818 948,994 878,820
Finance receivables, net 329,082 354,888 426,000
Other long-term assets 782,326 808,195 757,370
Total assets $2,185,226 $2,112,077 $2,062,190
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current portion of finance
debt $48,163 $181,163 $217,655
Other current liabilities 422,066 336,991 324,273
Total current liabilities 470,229 518,154 541,928
Finance debt 280,000 280,000 280,000
Other long-term liabilities 81,749 77,124 62,895
Postretirement health care
benefits 78,222 75,719 73,934
Shareholders' equity 1,275,026 1,161,080 1,103,433
Total liabilities and
shareholders' equity $2,185,226 $2,112,077 $2,062,190
Harley-Davidson, Inc.
Net Sales and Motorcycle
Shipment Data
Three Months Ended Six Months Ended
June 25, June 27, June 25, June 27,
2000 1999 2000 1999
NET SALES (in thousands)
Harley-Davidson(R)
motorcycles $576,949 $468,559 $1,112,199 $905,083
Buell(R) motorcycles 20,188 12,518 36,950 28,565
Parts & Accessories 121,101 99,714 215,967 174,749
General Merchandise 36,067 27,255 69,562 56,706
Other 668 670 1,408 2,180
Total net sales $754,973 $608,716 $1,436,086 $1,167,283
HARLEY-DAVIDSON UNITS
Motorcycle shipments:
United States 42,252 35,641 78,576 65,776
Export 11,077 9,130 23,810 20,176
Total 53,329 44,771 102,386 85,952
Motorcycle product mix:
Touring 30.0% 27.1% 28.9% 27.0%
Custom 48.4 49.8 49.6 50.1
Sportster(R) 21.6 23.1 21.5 22.9
Total 100.0 100.0 100.0 100.0
BUELL UNITS
Motorcycle shipments:
Buell
(excluding Blast(TM)) 1,955 1,512 3,802 3,525
Buell Blast(TM) 1,325 -- 1,816 --
3,280 1,512 5,618 3,525
Year-to-date Heavyweight (651+ cc)
Motorcycle Retail Registrations (Units),
2000, through month indicated
2000 1999 % change
through May
United States - Market 158,407 126,607 +25.1
- HDI 71,264 59,408 +20.0
through April
Europe - Market 128,176 128,312 -0.1
- HDI 8,201 7,605 +7.8
through April
Japan/Australia - Market 20,809 21,795 -4.5
- HDI 4,056 3,962 +2.4
HDI includes both Harley-Davidson and Buell motorcycles
Sources: Motorcycle Industry Council, Giral S.A., JAMA, ABS