Company Marks Continued Progress on Transformation Strategy

Company Repurchases Shares

MILWAUKEE, Oct. 18, 2011 — Harley-Davidson, Inc. (NYSE: HOG) reported continued strong improvement in earnings and dealer retail sales in the third quarter of 2011 and through nine months, compared to 2010.

Income from continuing operations in the third-quarter 2011 rose 95.9 percent to $183.6 million, or $0.78 per share, compared to income of $93.7 million, or $0.40 per share from continuing operations in the year-ago quarter. Third-quarter operating income from Motorcycles and Related Products grew 78.0 percent on higher shipment volume and operating margin improvement, while operating income from Financial Services grew 21.9 percent on continued improvement in credit performance, compared to the third quarter of 2010.    

Retail sales of new Harley-Davidson motorcycles grew 5.1 percent worldwide in the third quarter compared to the prior-year period, led by a 5.4 percent rise in the U.S.

For the first nine months of 2011, Harley-Davidson income from continuing operations was up 63.5 percent compared to the year-ago period to $493.4 million, or $2.09 per share. Retail sales of new Harley-Davidson motorcycles through nine months grew 4.9 percent worldwide compared to the year-ago period.


“We are pleased with our sustained progress and we continue to realize strong momentum in the transformation our business,” said Keith Wandell, President and Chief Executive Officer of Harley-Davidson, Inc.


“Two years ago we embarked on our strategy to focus solely on the Harley-Davidson brand, provide the flexibility required in today’s market and make Harley-Davidson lean, agile and more effective than ever at delivering remarkable products and extraordinary customer experiences. Today, we continue to see the positive results of the course we have charted,” Wandell said. “The changes underway in manufacturing, product development and retail capability will increasingly enable Harley-Davidson to be customer-led like never before.


“Harley-Davidson’s transformation involves a tremendous amount of highly complex, challenging work across every part of the organization. While much remains to be done, we are well down the road and everyone involved deserves much credit for bringing these changes to life,” Wandell said. “I continue to be impressed by the willingness of all employees, including the union leadership, to do the necessary things to transform our business to be a world class, sustainable operation.” 

Retail Harley-Davidson Motorcycle Sales

On a worldwide basis, third-quarter retail Harley-Davidson new motorcycle sales grew 5.1 percent compared to last year’s third quarter to 61,838 units. Dealers sold 42,640 new Harley-Davidson motorcycles in the U.S., a 5.4 percent increase compared to last year’s third quarter. In international markets, dealers sold 19,198 new Harley-Davidson motorcycles during the third quarter, an increase of 4.4 percent compared to the year-ago period.

Through nine months, worldwide retail sales of new Harley-Davidson motorcycles increased 4.9 percent compared to the prior-year period to 194,829 units. U.S. retail sales of new Harley-Davidson motorcycles increased 4.7 percent to 127,930 units through three quarters compared to the year-ago period. In international markets, retail sales of new Harley-Davidson motorcycles increased 5.2 percent to 66,899 units for the first nine months of 2011 compared to 2010. Through nine months, industry-wide U.S. heavyweight new motorcycle (651cc-plus) retail unit sales increased 3.7 percent, compared to the year-ago period.


Third-quarter and nine-month data are listed in the accompanying tables.


Harley-Davidson Motorcycles and Related Products Segment Financial Results

Third-Quarter Segment Results: Revenue from Harley-Davidson Motorcycles during the third quarter of 2011 of $922.3 million was up 15.5 percent compared to the year-ago period. The Company shipped 61,745 Harley-Davidson motorcycles to dealers and distributors worldwide during the quarter, compared to shipments of 53,293 motorcycles in the third quarter of 2010.

Revenue from Motorcycle Parts and Accessories (P&A) totaled $235.7 million during the quarter, up 7.6 percent, and revenue from General Merchandise, which includes MotorClothes® Apparel and Accessories, was $69.3 million, up 8.2 percent compared to the year-ago period.

Gross margin was 33.7 percent in the third quarter of 2011, compared to 34.9 percent in the third quarter of 2010. Third-quarter operating margin was 14.7 percent, compared to 9.3 percent in the third quarter of 2010.

Nine-Month Segment Results: Through the first nine months of 2011, the Company shipped 182,387 Harley-Davidson motorcycles to dealers and distributors, a 9.9 percent increase compared to last year’s 166,013 units for the period.

Revenue from Harley-Davidson Motorcycles through nine months was $2.76 billion, a 13.2 percent increase compared to the year-ago period. Nine-month P&A revenue was $655.4 million, a 9.3 percent increase from the first nine months of 2010. General Merchandise revenue was $204.8 million, a 3.6 percent increase compared to the same period in 2010.

Gross margin through nine months was 34.0 percent and operating margin was 14.5 percent, compared to 35.5 percent and 11.8 percent respectively through nine months last year.

Financial Services Segment

The Financial Services segment recorded operating income of $62.0 million in the third quarter, compared to operating income of $50.9 million in the year-ago quarter. The increase in year-over-year operating income was largely the result of continued improvement in credit performance at Harley-Davidson Financial Services. Through nine months, operating income from financial services was $212.0 million, compared to operating income of $138.4 million in the first three quarters of 2010.


Harley-Davidson continues to expect to ship 228,000 to 235,000 Harley-Davidson motorcycles to dealers and distributors worldwide in 2011, including 45,500 to 52,500 motorcycles in the fourth quarter.

For the full year, Harley-Davidson now expects gross margin to be between 33.5 percent and 34.5 percent, compared to previous guidance of 34.0 percent to 35.0 percent.  The Company continues to expect capital expenditures of between $210 million and $230 million, which includes $70 million to $85 million to support restructuring activities.   

Restructuring Update

Harley-Davidson has lowered cost estimates related to the restructuring of its production operations and now expects all previously announced company-wide restructuring activities to result in one-time charges of $480 million to $495 million, including 2011 charges of $70 million to $80 million. The Company continues to expect to realize savings on a cumulative basis in 2011 of $210 million to $230 million from restructuring activities initiated since early 2009, and annual ongoing savings of $305 million to $325 million when the restructuring is fully implemented. Through the first nine months of 2011, the Company incurred restructuring charges of $49.0 million, including $12.4 million in the third quarter. During the third quarter, Harley-Davidson completed the consolidation of final assembly operations at York,Pa. Final assembly of all Touring, Softail, Trike and Custom Vehicle Operations (CVO) motorcycles now occurs on a single assembly line.

Income Tax Rate

Through nine months, the Company’s effective tax rate was 30.4 percent, compared to 34.0 percent in the year-ago period. The 2011 effective tax rate through the third quarter was favorably impacted by a settlement of an IRS audit, as well as a change in the Wisconsin income tax law associated with certain net operating losses. In 2011, the Company now expects its full-year effective tax rate from continuing operations to be approximately 31 percent.

Cash Flow

Cash and marketable securities totaled $1.61 billion at the end of the quarter, compared to $1.55 billion at the end of last year’s third quarter. During the first nine months of 2011, Harley-Davidson generated $901.6 million of cash from operating activities. In the first nine months of 2010, the Company generated $1.17 billion of cash from operating activities. Capital expenditures through the first nine months of 2011 were $106.1 million.

Share Repurchase

The Company repurchased 2.5 million shares of Harley-Davidson, Inc. common stock at a cost of $90.8 million during the third quarter of 2011. At the end of the third quarter, there were approximately 232 million shares of Harley-Davidson common stock outstanding and 22.4 million shares remaining on board-approved share repurchase authorizations.

Company Background

Harley-Davidson, Inc. is the parent company of Harley-Davidson Motor Company and Harley-Davidson Financial Services. Harley-Davidson Motor Company produces heavyweight custom, cruiser and touring motorcycles and offers a complete line of Harley-Davidson motorcycle parts, accessories, riding gear and apparel, and general merchandise. Harley-Davidson Financial Services provides wholesale and retail financing, insurance, extended service and other protection plans and credit card programs to Harley-Davidson dealers and riders in the U.S., Canada and select European countries. For more information, visit Harley-Davidson’s Web site at www.harley-davidson.com.

Conference Call and Webcast Presentation

Harley-Davidson will discuss third-quarter results on a Webcast at 8:00 a.m. CT today. The Webcast presentation will be posted prior to the call and can be accessed at http://investor.harley-davidson.com/. Click “Events and Presentations” under “Resources.”

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 generally be identified as such because the context of the statement will include words such as the Company “believes,” “anticipates,” “expects,” “plans,” or “estimates” or words of similar meaning. Similarly, statements that describe future plans, objectives, outlooks, targets, guidance or goals are also forward-looking statements. 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 disclaims any obligation to publicly update such forward-looking statements to reflect subsequent events or circumstances.

The Company’s ability to meet the targets and expectations noted depends upon, among other factors, the Company’s ability to (i) execute its business strategy, (ii) effectively execute the Company’s restructuring plans within expected costs and timing, (iii) implement and manage enterprise-wide information technology solutions, including solutions at its manufacturing facilities, and secure data contained in those systems, (iv) adjust to fluctuations in foreign currency exchange rates, interest rates and commodity prices,  (v) anticipate the level of consumer confidence in the economy, (vi) manage through inconsistent economic conditions, including changing capital, credit and retail markets, (vii) continue to realize production efficiencies at its production facilities and manage operating costs including materials, labor and overhead, (viii) successfully implement with our labor unions the agreements that we have executed with them that we believe will provide flexibility and cost-effectiveness to accomplish restructuring goals and long-term competitiveness, (ix) manage supply chain issues, including the ability of several Company suppliers to execute short-term and long-term contingency plans for maintaining supply, or obtaining alternate supply, of certain components and sub-components currently manufactured in Japan, (x) manage production capacity and production changes, (xi) provide products, services and experiences that are successful in the marketplace, (xii) develop and implement sales and marketing plans that retain existing retail customers and attract new retail customers in an increasingly competitive marketplace, (xiii) manage the risks that our independent dealers may have difficulty obtaining capital and managing through unfavorable economic conditions and consumer demand, (xiv) continue to have access to reliable sources of capital funding and adjust to fluctuations in the cost of capital, (xv) manage the credit quality, the loan servicing and collection activities, and the recovery rates of HDFS’ loan portfolio, (xvi) sell all of its motorcycles and related products and services to its independent dealers, (xvii) continue to develop the capabilities of its distributor and dealer network, (xviii) manage changes and prepare for requirements in legislative and regulatory environments for its products, services and operations, (xix) adjust to healthcare inflation and reform, pension reform and tax changes, (xx) retain and attract talented employees, and (xxi) detect any issues with our motorcycles or manufacturing processes to avoid delays in new model launches, recall campaigns, increased warranty costs or litigation. 

In addition, the Company could experience delays or disruptions in its operations as a result of work stoppages, strikes, natural causes, terrorism or other factors. Other factors are described in risk factors that the Company has disclosed in documents previously filed with the Securities and Exchange Commission.

The Company’s ability to sell its motorcycles and related products and services and to meet its financial expectations also depends on the ability of the Company’s independent dealers to sell its motorcycles and related products and services to retail customers. The Company depends on the capability and financial capacity of its independent dealers and distributors to develop and implement effective retail sales plans to create demand for the motorcycles and related products and services they purchase from the Company. In addition, the Company’s independent dealers and distributors may experience difficulties in operating their businesses and selling Harley-Davidson motorcycles and related products and services as a result of weather, economic conditions or other factors.

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Harley’ Davidson’s CEO Elected to Constellation Brands, Inc. Board of Directors

To learn more about Constellation, visit the company's website at www.cbrands.com.

VICTOR, N.Y., July 25, 2011 – Constellation Brands, Inc. (NYSE: STZ), the world’s leading premium wine company, announced today that its board of directors increased the size of the board from eight to nine members. In addition, the board elected Keith Wandell, 61, president and chief executive officer (CEO) of Harley- Davidson, Inc., effective the close of business on July 21, 2011.

“We are very pleased to welcome Keith to the board of directors and believe his experience in a diversified, consumer-driven industry, will provide excellent guidance as Constellation continues to focus on building its premium wine and spirits brands,” said Constellation’s Chairman of the Board, Richard Sands. “We look forward to the contributions he will make to the organization.”

Wandell joined Harley-Davidson, Inc. as CEO in 2009. Previously, he spent 21 years with Johnson Controls, Inc. in a variety of leadership roles including president and chief operating officer. Wandell earned his Bachelor of Science in Business Administration from Ohio University and Master of Business Administration from the University of Dayton.

California Scooter Company Donating CSC Motorcycle To In-N-Out Burger Foundation


California Scooter Company is donating a custom motorcycle to the In-N-Out Burger Foundation for auction at the In-N-Out Burger 24th Annual Children’s Benefit Golf Tournament.

May 19, 2011 – California Scooter Company announced it is donating a custom motorcycle to the In-N-Out Burger Foundation for auction at the In-N-Out Burger 24th Annual Children’s Benefit Golf Tournament.  This is the second year in a row CSC Motorcycles has prepared and donated a custom motorcycle for the iconic In-N-Out restaurant chain’s annual charitable event.

“We’re proud we can support the In-N-Out Foundation,”said Steve Seidner, the CSC Motorcycles chief executive officer.  “This is a worthy charity and we are pleased we can help.   Last year, our California Scooter raised $8,000 for the In-N-Out Foundation, and we hope our 2011 bike brings as much or more.    In-N-Out is a great organization, and we’re glad we can help their magnificent charitable work.”

This year’s custom In-N-Out California Scooter has a paint theme based on In-N-Out’s funny car drag racer, including the In-N-Out logo, crossed palm trees, and deep ruby red metalflake paint.   Last year, the California Scooter was one of the most exciting items auctioned at the annual In-N-Out Annual Children’s Benefit Golf Tournament, and it brought one of the highest prices at the In-N-Out fund raiser.

California Scooter Company has prepared several corporate-themed bikes for various companies, including one most recently built for Go Go Gear (a Los Angeles-based apparel manufacturer; www.gogogearla.com).  “We enjoy building corporate customs along with our standard motorcycles,” Seidner said.  “We like helping companies promote their image, and the California Scooter platform provides a great palette for doing do.”

Organizations interested in developing corporate-themed custom California Scooters can contact CSC Motorcycles at 909 445 0900.

California Scooter Company manufactures 150cc street-legal motorcycles. The company sells in all 50 US states and Australia, and is in the process of certifying its bikes in Europe and Canada.

Polaris to Acquire Global Electric Motorcars LLC

MINNEAPOLIS (April 25, 2011) — Polaris Industries Inc. (NYSE:  PII) today announced an agreement to acquire Global Electric Motorcars LLC (GEM), a wholly owned Fargo, N.D. based subsidiary of Chrysler Group LLC and manufacturer of premium electric-powered vehicles.  GEM is the recognized leader within the low-speed vehicle market, with a well-respected brand and approximately $30 million in sales during the 2010 calendar year.  Since the company was established in 1998, they have placed over 45,000 electric-powered vehicles on the road worldwide.  GEM has developed business-to-business sales expertise within the fleet and government vehicle markets, and has created a competitive advantage with core competencies in make-to-order vehicle fulfillment and mobile service support.


“GEM provides Polaris with an established position in the low-emission small vehicle market and supports Polaris’ strategy of penetrating on-roadmarket segments poised for growth,” said Scott Wine, Polaris chief executive officer. “We are excited about the outlook for growth within this market space, and are looking forward to developing even stronger growth prospects for the GEM business.”


“Our vision is to accelerate profitable sales growth for GEM, by combining Polaris’ strength in new product innovation with the most-recognized brand in the low speed vehicle market space,” said Mike Jonikas, Vice President of the On-Road Vehicle Division.  “These new product efforts for GEM will be supported by an expanded distribution presence within select domestic and international markets.”


The agreement to acquire GEM will officially close within the next 60 days once Polaris secures the required state sales certifications to sell GEM products.  During this interim period, since Polaris will not yet have officially acquired GEM, operations will proceed as usual and Polaris will continue to learn and understand the GEM business through information exchange.  Following this interim period, Polaris will be in a position to outline specific plans for the GEM business.


Union Accepts Contract Terms;Harley Stays in Wisconsin

The vote was close, but local union members have agreed to thecontract terms put forth by Harley-Davidson management and the company will stay in Milwaukee, for the time being.

Harley-Davidson management said in a press release that  the union made the right decision.

“Change is never easy, and we have asked our employees to make difficult decisions. However, we are pleased to be keeping production operations in our hometown of Milwaukee and in Tomahawk,” said Keith Wandell, President and Chief Executive Officer. “Together, we are making the necessary changes across our entire company to succeed in a competitive, global marketplace while continuing to meet and exceed the expectations of our customers.”

Harley officials said that even with the concessions the Unions were forced to give up, their members still are earning pay and benefits that are “some of the best in the area.”

Some 1,140 union members from a suburban Milwaukee plant voted, approving the contract by a 55 to 45 percent margin.

Mike Masik, president of the local chapter of the United Steel Workers, said the close vote reveals how unhappy workers were about the deal.

“It shows people are really getting sick of being threatened,” he said

However, in northern Wisconsin, the 293 workers at the Tomahawk plant approved the contract by a broader margin of 73 to 27 percent.

The Associated Press reported that the Milwaukee contract ratification may have been swayed by the company’s inclusion of a one-time lump-sum payment of $12,000,  to all active employees and to laid-off workers who were eligible to be called back.

“I was laid off, I had no chance of being called back so yeah, I wanted the $12,000,” said Greg Kuehn, 49, a machinist who has since taken a job a printing company. “If I still worked there, though, I would have voted no.”

While the vote guarantees that the company will stop looking for alternate sites to relocate its production, the contract does not stipulate that Harley must remain in Milwaukee for the entire 7 year deal.

Observers say it’s unlikely that with this new contract, Harley-Davidson would move out of Wisconsin during the contract term.

The new contract allows Harley to slash the workforce by up to 50% and to use seasonal “non-union” workers to fill in and meet demand.  Those workers will be paid considerably less for doing essentially the same work as the union workers.

Based on the new ratified labor agreements, Harley-Davidson expects to have about 700 full-time hourly unionized employees in its Milwaukee-area facilities when the contracts are implemented in 2012, about 250 fewer than would be required under the existing contract. In Tomahawk, the number of full-time hourly unionized workforce will reach 200 when the contract is implemented, about 75 fewer than would be required under the current contract. Harley also expects its Wisconsin production workforce to include 150 to 250 casual employees on an annualized basis to cover seasonal volume spikes, vacations and other absences as the new labor agreements are implemented.

Harley says the new contracts are expected to generate about $50 million in annual operating savings in 2013, the first full year of the agreements.