“Harley-Davidson’s third-quarter financial results are disappointing but not unexpected. In early September, we announced that we would reduce planned motorcycle shipments for the rest of 2007, and our results for the quarter are consistent with the Company’s revised guidance,” said Jim Ziemer, chief executive officer of Harley-Davidson, Inc. “Worldwide retail sales of Harley-Davidson motorcycles during the third quarter were virtually flat with the third quarter of 2006, down 0.2 percent. U.S. retail sales continued to be sluggish, finishing down 2.5 percent for the quarter, while retail sales in our international markets grew 8.8 percent during the period."
For the full year of 2007, the company expects a shipment range of 328,000 to 332,000 Harley-Davidson motorcycles, compared to 349,196 units in 2006. The company also expects a modest decline in revenue and lower operating margin in 2007. Diluted earnings per share for the full year are expected to decrease 4 to 6 percent compared to 2006.
Looking ahead to 2008, the company anticipates that the U.S. retail motorcycle environment will continue to be challenging. It expects moderate revenue growth, lower operating margin and diluted earnings per share to grow between 4 and 7 percent compared to 2007.
“For the longer term, I am optimistic and confident about our future,” said Ziemer. “Harley-Davidson has a strong business model, and we will continue to manage the company in a manner that strengthens our brand and contributes to lasting success for all of our stakeholders.”
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Harley-Davidson, Inc. | ||||
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Condensed Consolidated Statements of Income | ||||
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(Unaudited) | ||||
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(In thousands, except per share amounts) | ||||
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Three months ended |
Nine months ended | |||
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September 30, |
September 24, |
September 30, |
September 24, | |
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2007 |
2006 |
2007 |
2006 | |
| Net revenue | $1,541,401 | $1,635,916 | $4,340,494 | $4,298,053 |
| Gross profit | 591,353 | 652,255 | 1,619,566 | 1,661,795 |
| Operating expenses | 233,068 | 218,243 | 639,512 | 590,503 |
| Operating income from motorcycles & related products | 358,285 | 434,012 | 980,054 | 1,071,292 |
| Financial services income | 98,471 | 97,344 | 319,964 | 291,812 |
| Financial services expense | 49,002 | 42,154 | 146,349 | 128,734 |
| Operating income from financial services | 49,469 | 55,190 | 173,615 | 163,078 |
| Corporate expenses | 2,292 | 5,215 | 13,763 | 16,723 |
| Income from operations | 405,462 | 483,987 | 1,139,906 | 1,217,647 |
| Investment income and other, net | 5,353 | 4,659 | 19,432 | 17,861 |
| Income before provision for income taxes | 410,815 | 488,646 | 1,159,338 | 1,235,508 |
| Provision for income taxes | 145,849 | 175,912 | 411,572 | 444,781 |
| Net income | $264,966 | $312,734 | $747,766 | $790,727 |
| Earnings per common share: | ||||
| Basic | $1.07 | $1.20 | $2.96 | $2.96 |
| Diluted | $1.07 | $1.20 | $2.95 | $2.96 |
| Weighted-average common shares: | ||||
| Basic | 247,057 | 260,270 | 252,513 | 266,772 |
| Diluted | 247,614 | 261,229 | 253,263 | 267,525 |
| Cash dividends per common share | $0.30 | $0.21 | $0.76 | $0.60 |
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Harley-Davidson, Inc. |
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Condensed Consolidated Balance Sheets |
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(In thousands) |
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| (Unaudited) | (Unaudited) | |||
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September 30, |
December 31, |
September 24, |
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2007 |
2006 |
2006 |
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| ASSETS | ||||
| Current Assets: | ||||
| Cash and cash equivalents | $401,385 | $238,397 | $506,139 | |
| Marketable securities | 55,355 | 658,133 | 446,543 | |
| Accounts receivable, net | 185,208 | 143,049 | 149,951 | |
| Finance receivables held for sale | 431,843 | 547,106 | 100,109 | |
| Finance receivables held for investment, net | 1,275,590 | 1,554,260 | 1,273,841 | |
| Inventories | 376,950 | 287,798 | 281,536 | |
| Other current assets | 130,126 | 121,890 | 124,837 | |
| Total current assets | 2,856,457 | 3,550,633 | 2,882,956 | |
| Finance receivables held for investment, net | 861,138 | 725,957 | 706,695 | |
| Other long-term assets | 1,253,365 | 1,255,560 | 1,443,411 | |
| $4,970,960 | $5,532,150 | $5,033,062 | ||
| LIABILITIES AND SHAREHOLDERS' EQUITY | ||||
| Current liabilities: | ||||
| Accounts payable & accrued liabilities | $962,250 | $763,186 | $880,294 | |
| Current portion of finance debt | 250,168 | 832,491 | 96,374 | |
| Total current liabilities | 1,212,418 | 1,595,677 | 976,668 | |
| Finance debt | 980,000 | 870,000 | 900,000 | |
| Postretirement healthcare benefits | 207,957 | 201,126 | 70,571 | |
| Other long-term liabilities | 207,582 | 108,610 | 239,452 | |
| Total shareholders' equity | 2,363,003 | 2,756,737 | 2,846,371 | |
| $4,970,960 | $5,532,150 | $5,033,062 | ||
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Harley-Davidson, Inc. | ||||
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Condensed Consolidated Statements of Cash Flows | ||||
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(Unaudited) | ||||
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(In thousands) | ||||
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Nine months ended |
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September 30, |
September 24, |
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2007 |
2006 |
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| Net cash provided by operating activities | $1,368,257 | $1,283,580 | ||
| Cash flows from investing activities: | ||||
| Capital expenditures | (139,437) | (137,468) | ||
| Finance receivables held for investment, net | (92,147) | (75,710) | ||
| Collection of retained securitization interests | 87,827 | 73,974 | ||
| Net change in marketable securities | 604,927 | 464,641 | ||
| Other, net | 1,696 | 2,512 | ||
| Net cash provided by investing activities | 462,866 | 327,949 | ||
| Cash flows from financing activities: | ||||
| Proceeds from issuance of medium term notes | - | - | ||
| Net decrease in finance-credit | ||||
| facilities and commercial paper | (506,938) | (208,996) | ||
| Dividends | (189,093) | (158,738) | ||
| Purchase of common stock for treasury | (1,000,133) | (910,957) | ||
| Excess tax benefits from share-based payments | 3,057 | 3,550 | ||
| Issuance of common stock under employee | ||||
| stock option plans | 21,429 | 25,882 | ||
| Net cash used by financing activities | (1,671,678) | (1,249,259) | ||
| Effect of exchange rate changes on cash | ||||
| and cash equivalents | 3,543 | 2,894 | ||
| Net increase in cash and cash equivalents | 162,988 | 365,164 | ||
| Cash and cash equivalents: | ||||
| At beginning of period | 238,397 | 140,975 | ||
| At end of period | $401,385 | $506,139 | ||
|
Net Revenue and Motorcycle | ||||
|
Shipment Data | ||||
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(Unaudited) | ||||
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Nine months ended | |||
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September 30, |
September 24, |
September 30, |
September 24, | |
|
2007 |
2006 |
2007 |
2006 | |
| NET REVENUE (in thousands) | ||||
| Harley-Davidson® motorcycles | $1,182,628 | $1,293,358 | $3,328,309 | $3,329,700 |
| Buell® motorcycles | 22,527 | 21,423 | 72,795 | 74,826 |
| Parts & Accessories | 251,499 | 248,448 | 703,107 | 683,100 |
| General Merchandise | 83,185 | 71,251 | 232,011 | 206,873 |
| Other | 1,562 | 1,436 | 4,272 | 3,554 |
| $1,541,401 | $1,635,916 | $4,340,494 | $4,298,053 | |
| HARLEY-DAVIDSON UNITS | ||||
| Motorcycle shipments: | ||||
| United States | 65,756 | 80,398 | 182,447 | 198,720 |
| Export | 20,779 | 16,648 | 66,966 | 57,628 |
| Total | 86,535 | 97,046 | 249,413 | 256,348 |
| Motorcycle product mix: | ||||
| Touring | 28,461 | 36,041 | 84,934 | 90,914 |
| Custom | 39,488 | 44,096 | 109,576 | 116,604 |
| Sportster® | 18,586 | 16,909 | 54,903 | 48,830 |
| Total | 86,535 | 97,046 | 249,413 | 256,348 |
| BUELL UNITS | ||||
| Motorcycle shipments: | ||||
| Buell | 2,639 | 2,529 | 8,376 | 9,105 |
|
Retail Sales of Harley-Davidson Motorcycles Year to Date September | ||||
| 2007 | 2006 | |||
| United States | 215,092 | 225,623 | ||
| Europe* | 32,594 | 28,131 | ||
| Japan | 10,028 | 9,707 | ||
| Canada | 12,855 | 12,195 | ||
| All other markets | 13,393 | 10,989 | ||
| Total Retail Sales of Harley-Davidson Motorcycles | 283,962 | 286,645 | ||
