Harley-Davidson, Inc. Reports Record Third Quarter
12 October 2000
Harley-Davidson, Inc. Reports Record Third Quarter
MILWAUKEE, Oct. 11 Harley-Davidson, Inc. today
announced record sales and earnings for its third quarter ended September 24,
2000. The Company's third quarter sales were $714.1 million, an increase of
14.6 percent over the third quarter last year. Diluted earnings per share for
the third quarter were 27 cents, a 27.7 percent increase compared with last
year. "Demand for our motorcycles has continued to exceed supply, even as we
continue to increase our production capacity," said Jeffrey L. Bleustein,
chairman and chief executive officer of Harley-Davidson, Inc.
"An important step in continuing the growth of the Company was the
ratification of a new labor agreement by the union employees at our production
facility in York, Pennsylvania," said Bleustein. "This new agreement runs
until February 2007 and is an example of the strong collaborative relationship
we have with our union partners."
Motorcycles and Related Products Segment -- Third Quarter Results
Third quarter sales of Harley-Davidson(R) motorcycles were $528.1 million,
an increase of 15.9 percent over the third quarter last year. Shipments
totaled 48,077 units, up 5,462 units or 12.8 percent over last year. The
Company has revised its production target upward to 203,000 Harley-Davidson
motorcycles in 2000 and to 225,000 motorcycles for 2001.
Buell(R) motorcycle sales for the quarter totaled $10.4 million, down
$6.3 million. Total shipments of 2,631 units during the quarter were
comprised of 227 Buell V-Twin models and 2,404 Buell(R) Blast(TM) models.
Buell's V-Twin production was temporarily interrupted due to parts
availability issues and a voluntary recall in June of this year. Buell's
V-Twin production is expected to resume during the month of October. The
Company now estimates that it will produce 10,000 Buell units in 2000.
Sales of Parts and Accessories (P&A), which consist of Genuine Motor Parts
and Genuine Motor Accessories, totaled $133.4 million, a 21.7 percent increase
from the year-ago quarter. Third quarter sales of General Merchandise, which
consists of MotorClothes apparel and collectibles, totaled $41.2 million, up
0.7 percent over the same period last year. The Company believes that the
nine month growth rate for General Merchandise, 13.5 percent, is more
indicative of the product line's expected growth rate for 2000.
Third quarter gross margin was 33.6 percent of revenue, up slightly from
32.8 percent of revenue last year. Gross margin improved primarily due to
favorable product line mix, favorable motorcycle mix and model year price
increases, despite negative effects of European currencies and some
manufacturing inefficiencies.
Third quarter operating margin for the Motorcycles and Related Products
Segment was 16.3 percent of revenue, an improvement on last year's third
quarter margin of 15.4 percent. The increase in gross margin drove the
commensurate increase in operating margin.
Harley-Davidson/Buell retail registrations have grown in all major
markets, with the U.S. up 19.1 percent through August, Europe up 7.4 percent
through July and Japan/Australia up 3.3 percent through May. (See table that
follows for more detail.)
Financial Services Segment -- Third Quarter Results
Harley-Davidson Financial Services, Inc.(HDFS), a subsidiary of
Harley-Davidson, Inc., reported third quarter operating income of
$9.6 million, a 27.9 percent increase compared to the year-ago quarter. The
subsidiary continues to benefit from the increase in Harley-Davidson's U.S.
retail sales volume. HDFS also completed a $228 million asset-backed
securitization during the third quarter.
Harley-Davidson, Inc. -- Nine Month Results
For the nine month period ended September 24, 2000, sales totaled
$2.15 billion, a 20.1 percent increase over the year-ago period. Diluted
earnings per share were 82 cents, an increase of 32.7 percent. When the first
quarter sale of the Harley-Davidson(R) Chrome VISA(R) card is excluded,
diluted earnings per share were 80 cents, an increase of 28.8 percent.
Through the first nine months of this year, Harley-Davidson(R) motorcycle
revenue was $1.64 billion, a 20.5 percent increase, while Buell(R) motorcycle
revenue was $47.4 million, a 4.6 percent increase compared with the same
period in 1999.
For the first nine months of 2000, P&A revenue totaled $349.4 million, a
22.9 percent increase, while General Merchandise revenue totaled
$110.8 million, a 13.5 percent increase compared with the same period in 1999.
Through the first nine months of 2000, HDFS operating income was
$24.2 million, a 25.7 percent increase over last year.
Acquisition of Italian Distributor
On October 2, 2000, Harley-Davidson acquired the assets of its Italian
distributor in a cash transaction. The new wholly owned subsidiary will
distribute Harley-Davidson and Buell motorcycles and related products through
a network of independent dealers in Italy. "We are strengthening our
close-to-the-customer philosophy in this important market -- one of the
largest heavyweight motorcycle markets in Europe," said Bleustein.
Harley-Davidson, Inc. is the parent company for the group of companies
doing
Harley-Davidson, Inc.
Condensed Consolidated Statements of Income
(Unaudited)
(In thousands, except per share amounts)
Three Months Ended Nine Months Ended
Sep. 24, Sep. 26, Sep. 24, Sep. 26,
2000 1999 2000 1999
Net sales $714,119 $623,193 $2,150,205 $1,790,476
Gross profit 239,614 204,658 728,065 606,786
Operating income
Motorcycles and related
products 116,438 95,907 356,306 287,524
Financial services 9,609 7,514 24,223 19,274
Corporate expenses (2,018) (2,024) (7,282) (7,450)
Total operating income 124,029 101,397 373,247 299,348
Interest income, net 5,323 2,090 11,619 5,571
Other income (expense), net (612) (556) 18,167 (1,019)
Income before provision for
taxes 128,740 102,931 403,033 303,900
Provision for income taxes 45,702 37,569 149,181 110,924
Net income $83,038 $65,362 $253,852 $192,976
Earnings per common share:
Basic $.27 $.21 $.84 $.63
Diluted $.27 $.21 $.82 $.62
Weighted-average common shares:
Basic 302,674 304,392 302,969 305,540
Diluted 307,612 309,208 307,809 310,588
Harley-Davidson, Inc.
Condensed Consolidated Balance Sheets
(In thousands)
Sep. 24, Dec. 31, Sep. 26,
2000 1999 1999
(unaudited) (unaudited)
ASSETS
Current assets:
Cash and cash equivalent $410,785 $183,415 $163,834
Accounts receivable, net 125,965 101,708 125,554
Finance receivables, net 467,896 440,951 419,955
Inventories 178,920 168,616 166,812
Other current assets 56,414 54,304 53,369
Total current assets 1,239,980 948,994 929,524
Finance receivables, net 287,363 354,888 389,263
Other long-term assets 788,781 808,195 766,991
Total assets $2,316,124 $2,112,077 $2,085,778
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current portion of finance debt $104,451 $181,163 $173,974
Other current liabilities 419,295 336,991 388,427
Total current liabilities 523,746 518,154 562,401
Finance debt 280,000 280,000 280,000
Other long-term liabilities 81,002 77,124 66,652
Postretirement health care benefits 79,410 75,719 74,183
Total shareholders' equity 1,351,966 1,161,080 1,102,542
Total liabilities and shareholders'
equity $2,316,124 $2,112,077 $2,085,778
Harley-Davidson, Inc.
Net Sales and Motorcycle
Shipment Data
Three Months Ended Nine Months Ended
Sep. 24, Sep. 26, Sep. 24, Sep. 26,
2000 1999 2000 1999
NET SALES (in thousands)
Harley-Davidson(R) motorcycles $528,128 $455,650 $1,640,327 $1,360,733
Buell(R) motorcycles 10,442 16,749 47,392 45,314
Parts & Accessories 133,406 109,604 349,373 284,353
General Merchandise 41,216 40,919 110,778 97,625
Other 927 271 2,335 2,451
Total net sales $714,119 $623,193 $2,150,205 $1,790,476
HARLEY-DAVIDSON UNITS
Motorcycle shipments:
United States 36,206 31,764 114,782 97,540
Export 11,871 10,851 35,681 31,027
Total 48,077 42,615 150,463 128,567
Motorcycle product mix:
Touring 29.0% 27.8% 28.2% 27.2%
Custom 46.9 47.3 49.4 49.2
Sportster 24.1 24.9 22.4 23.6
Total 100.0 100.0 100.0 100.0
BUELL UNITS
Buell (excluding Blast(TM)) 227 1,984 4,029 5,509
Blast 2,404 -- 4,220 --
2,631 1,984 8,249 5,509
Year-to-date Heavyweight (651+ cc)
Motorcycle Retail Registrations (Units),
2000, through month indicated.
2000 1999 % change
through August
United States - Market 260,570 207,529 +25.6
- HDI 113,997 95,755 +19.1
through July
Europe - Market 228,295 238,609 -4.3
- HDI 16,221 15,100 +7.4
through May
Japan/Australia - Market 26,803 27,515 -2.6
- HDI 5,166 5,001 +3.3
HDI includes both Harley-Davidson(R) and Buell(R) motorcycles
Sources: Motorcycle Industry Council, Giral S.A., JAMA, ABS