HARLEY-DAVIDSON EARNINGS, RETAIL MOTORCYCLE SALES RISE IN THIRD QUARTER

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.

Guidance

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.

Sprint Phone Recycling Goal Gets a Boost With Vespa USA Relationship

OVERLAND PARK, Kan.–(BUSINESS WIRE)–Today, Sprint Nextel [NYSE:S] and Vespa USA announced a new customer contest to drive greater participation in Sprint’s Buybackprogram by offering customers a chance to win a new fuel-efficient Vespa LX 50 motor scooter. Between June 26 and August 20, wireless users who return their old or unused cell phones to Sprint can receive up to $250 instant credit toward the purchase of a new wireless device and will be able to enter to win one of six Vespa scooters athttp://sprint.com/govespa.

Winners of the Vespa scooters also will receive the new Samsung Replenish™, the fourth eco-friendly device from Sprint, one of its latest Android devices. All devices returned through the Buyback program either will be recycled or re-purposed to continue Sprint’s momentum toward its zero waste policy and 2017 goal to recycle nine mobile devices for every 10 sold.

With its recently announced Electronics Stewardship Policy, a key component of the company’s efforts to reduce improperly disposed e-waste, Sprint is providing customers responsible end-of-life solutions for their mobile devices. Since 2001, Sprint has collected more than 24 million phones for reuse and recycling. Currently, only 10 percent of phones in this country are recycled, leaving more than 140 million mobile phones in landfills each year.

“We are excited to join with Vespa to make this special offer available to new and existing Sprint customers,” said Matt Gunter, Sprint vice president of consumer marketing. “Our aim is to address the entire lifecycle of the mobile devices we buy and sell – it’s a win-win for our customers, for Sprint and for the environment. While we continue to educate customers on responsible ways to manage e-waste, this relationship with Vespa will draw greater attention and enthusiasm to our efforts. We hope to drive greater participation in our Buyback program and to encourage new customers to join us in this initiative.”

As part of Sprint’s loyalty program, Premier customers were able to participate in the sweepstakes in advance of the national promotion that started in April. The Premier customer sweepstakes offered 10 lucky winners a Vespa LX 50 and received a significant response, with more than 300,000 entries submitted. The Premier customer contest ended June 10.

While most participation in the Buyback program will occur in Sprint stores across the nation, customers will also have a chance to trade in their phones as part of the Sprint/Vespa “Green on the Go” Tour. The tour will start on July 2 in San Francisco and travel through Los Angeles, Seattle, Chicago and Boston before ending in New York on Aug. 13. The events, with more information on location and times at www.VespaUSA.com are as follows:

– San Francisco: July 2, 3
– Los Angeles: July 9, 10
– Seattle: July 16, 17
– Chicago: July 23, 24
– Boston: July 30, 31
– New York: Aug. 6 and 13

At the events, customers can:

  • Trade in their phones to be recycled to see whether they can earn an instant credit toward the purchase of a new device or donate their phone through Project Connect.
  • Demo Sprint’s first eco-friendly Android powered device – the Samsung Replenish made partially from recycled materials and recyclable packaging.
  • Participate in a Vespa photo experience.
  • Learn more about the benefits of using a Vespa as an alternative mode of transportation – as part of Vespa’s Vespanomics program.
  • Enter for a chance to win a Vespa LX 50 scooter, Samsung Replenish and three months of Sprint wireless service at each of the six city stops.

“The decision to partner with Sprint was an easy one as we have the same goal: find ways to conserve resources for the betterment of our planet,” said Melissa R. MacCaull, vice president, Piaggio Group Americas. “Sprint’s popular phone recycling program and the use of Vespas as a viable form of alternative transportation to reduce oil and gas consumption, pollution and traffic congestion are two solutions Sprint and Vespa are putting forth and that Americans are embracing.”

Vespa USA, through its Vespanomics program, promotes the use of fuel-efficient motor scooters as an alternative form of transportation that can greatly reduce gasoline consumption and put more money back into the pockets of Americans. Vespa estimates that in the year 2020, if a fraction of licensed U.S. drivers converted a small percentage of their miles to a Vespa, gasoline consumption would be reduced by 3.9 billion gallons per year, resulting in a savings to Americans of more than $21 billion.

Winners of the contest will be announced following Aug. 20 no later than October 1. For more information on the tour dates and the contest, please visit www.VespaUSA.com. To learn more about Sprint programs that protect the environment, go to www.sprint.com/responsibility or follow @SprintGreenNews on Twitter. To learn more about Vespa motor scooters, Vespanomics or to find a Vespa dealer in your area, please visit www.VespaUSA.com or like them on Facebook (http://www.facebook.com/VespaUSA) or follow them on Twitter @VespaUSA.

Sprint GREEN ON THE GO VESPA SWEEPSTAKES

ABBREVIATED RULES

NO PURCHASE OR PAYMENT NECESSARY TO ENTER OR WIN. A PURCHASE OR PAYMENT WILL NOT INCREASE YOUR CHANCES OF WINNING. Void where prohibited. Open to legal residents of fifty (50) United States or the District of Columbia, who are eighteen (18) years of age or older at the time of entry. Sweepstakes begins at 12:00a.m. EST on June 26, 2011 and ends at 11:59:59 p.m. EST August 20, 2011. For complete Official Rules, including entry instructions and prize details, visit Sprint.com/govespa. Sponsor: Sprint Communications Company L.P.

“Green On The Go” Tour Sweepstakes

ABBREVIATED RULES

No purchase necessary to enter or win. Void where prohibited. Open to legal U.S. residents who are at least 18 years of age or the age of majority in jurisdiction of residence (whichever is older) at time of entry. Sweepstakes is offered only in San Francisco, California, Los Angeles, California, Seattle, Washington, Chicago, Illinois, Boston, Massachusetts and New York, New York. Sweepstakes begins at the dates and times as specified for each live event in the Official Rules. For Official Rules, including entry instructions and prize details, visit the Green on the Go booth at the live event. Sponsor: Sprint Communications Company L.P.

Sprint’s Sustainability Program

Sprint’s industry-leading role in corporate responsibility and environmental sustainability continues to receive recognition. For the second year in a row, Sprint ranked highest among all U.S. telecom companies on Newsweek’s 2010 Rankings of America’s Greenest Companies at No. 6, up from No. 15 in 2009. Sprint was also ranked highest among the wireless carrier industry on the Carbon Disclosure Project’s “Carbon Disclosure Leadership Index.” Sprint also received Frost & Sullivan’s 2010 North American Green Excellence of the Year Award in Mobile & Wireless for its demonstrated leadership and commitment to the reduction of greenhouse gas emissions, proactive approach to the deployment of renewable energy, and aggressive cell-phone recycling efforts. To learn more about Sprint programs that protect the environment, go to www.sprint.com/responsibility or follow@SprintGreenNews on Twitter.

 

Law Firm Investigating Harley-Davidson Takeover Rumors

PRLog (Press Release)After a media report said that Harley-Davidson, Inc. might be taken over an investigation on behalf of investors of Harley-Davidson, Inc. (NYSE: HOG) over possible breaches of fiduciary duties was announced.

If you are a current investor in Harley-Davidson, Inc. (NYSE HOG) shares, and/or have any information relating the investigation, you have certain options and you should contact the Shareholders Foundation at mail@shareholdersfoundation.com or call +1(858) 779 – 1554.

The investigation by a law firm is at a preliminary stage and monitors the takeover rumors. It concerns whether Harley-Davidson Inc, certain of its officers and directors, and/or others breach their fiduciary duties owed to Harley-Davidson, Inc. (NYSE:HOG) investors in connection with the takeover rumors or in the event of a takeover.

Following a media report concerning a potential buyout of the motorcycle manufacture shares of Harley Davidson, Inc. (NYSE:HOG) rose from a close of $35.87 on Friday June 3, 2011 to $37.78 on Monday.

However, Harley Davidson has performed well for its investors in the past. Harley-Davidson was able to invested its annual Total Revenue from $4.781billion in 2009 to $4.859billion in 2010. Its Net Income rose from a Net Loss of $55.12million in 2009 to a Net Income of $146.54million in 2010. For the first quarter in 2011 Harley-Davidson, Inc. reported a quarterly Revenue of $1.224billion compared to a quarterly Revenue of $1.207billion for the first quarter in 2010. Harley-Davidson reported a quarterly Net Income of $119.26million for the first quarter in 2011 compared to a quarterly Net Income of $33.33million in 2010.

Additionally NYSE: HOG shares rose from as low as $8.33 in March 09 to as high as as $43.11 per shares in February 201, respectively as high as $42.49 per share in the end of March.

Therefore the investigation by a law firm questions whether a potential sale process and the potential price would be unfair to the shareholders of Harley-Davidson, Inc. (NYSE:HOG). The investigation focuses whether the Harley-Davidson board of directors will undertake an adequate and fair sales process to obtain fair consideration for all shareholders of Harley-Davidson (NYSE:HOG) and will breach their fiduciary duties to Harley Davidson, Inc. (HOG) shareholder by failing to adequately shop the Company before entering into any transaction. In addition the investigation seeks also to determine if any officer, director or any insiders violated any laws in connection with the takeover rumors. The investigation concerns also whether the acquirer would underpay for NYSE:HOG shares, thus unlawfully harming Harley-Davidson (NYSE HOG) investors. A potential class action lawsuit would seek to maximize the amount of money and information NYSE HOG shareholders would receive in a buyout, so the law firm.

Those who are current investors in Harley-Davidson, Inc. (Public, NYSE:HOG) common shares, and/or have any information relating the investigation, have certain options and should contact the Shareholders Foundation at mail@shareholdersfoundation.com or call +1(858) 779 – 1554.

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.

 

Polaris Reports Record First Quarter 2011 Results; EPS Increased 127% to $1.34 on 49% Sales Growth

MINNEAPOLIS, Apr 20, 2011 (BUSINESS WIRE) — Polaris Industries Inc. (NYSE:PII) today reported record first quarter net income of $47.3 million, or $1.34 per diluted share, for the quarter ended March 31, 2011. By comparison, 2010 first quarter net income was $19.8 million, or $0.59 per diluted share. Sales for the first quarter 2011 totaled $537.2 million, an increase of 49 percent from last year’s first quarter sales of $361.7 million.

“Given our excellent start to the year we are significantly raising our expectations for sales and earnings for the full year 2011,” continued Wine. “We will continue to make prudent strategic investments and our strong balance sheet, with $346 million in cash on hand and only $200 million in debt at March 31, 2011, gives us the strength and flexibility to remain aggressive in identifying opportunities to accelerate growth. In addition, product innovation remains at the forefront of our strategy, as evidenced by our January launch of the all-new RANGERRZR XP(TM) 900 recreational vehicle and the Victory High-Ball(TM) custom cruiser, in addition to the March introduction of our model year 2012 snowmobiles.”

Read more …

Harley-Davidson Performance Shows Continued Improvement

MILWAUKEE, April 19, 2011 — Harley-Davidson, Inc. (NYSE: HOG) generated increased earnings and worldwide dealer new motorcycle sales grew for the first quarter of 2011.

The Company reported first quarter income from continuing operations of $119.3 million, or $0.51 per share, compared to income from continuing operations of $68.7 million, or $0.29 per share in the year-ago period.

Worldwide retail sales of new Harley-Davidson motorcycles grew 3.5 percent in the first quarter, compared to last year’s first quarter.

“We are pleased by the growth of our dealers’ new motorcycle sales on a worldwide basis, led by strength in Europe, even as we continue to encounter some headwinds in the U.S. related to the challenging macro-economic conditions,” said Harley-Davidson, Inc. President and CEO Keith Wandell.

The Company’s improved first-quarter earnings performance was driven by operating income from financial services, which climbed 154.6 percent compared to the first quarter of 2010. Operating income from motorcycles and related products was flat with the year-ago quarter and was impacted by expected inefficiencies related to the restructuring and implementation of the new operating system underway at the Company’s manufacturing operations.

“Our entire team remains focused on transforming our company to be leaner, more agile and more effective than ever at delivering great products and experiences to an increasingly global community of customers,” said Wandell. “Harley-Davidson’s results for the quarter reflect the continued improvement at HDFS, as well as the near-term inefficiencies related to the transformation underway in manufacturing operations at York. We expect to continue to see an impact on our motorcycles segment financial performance in the coming quarters as we complete the transformation of our York operations. When this manufacturing transition is completed next year, we will have a best-in-class, flexible, lean operating structure that we expect will yield substantial ongoing savings.

“While we continue to be encouraged by our overall progress, we are maintaining a cautious outlook for the year,” Wandell said. “I would like to thank all our employees, dealers and suppliers for their dedication and commitment to the transformation of our business.”

Retail New Harley-Davidson Motorcycle Sales

On a worldwide basis, first-quarter Harley-Davidson retail new motorcycle sales grew 3.5 percent compared to last year’s first quarter. Dealers sold 17,904 new Harley-Davidson motorcycles in international markets, an 11.3 percent increase compared to last year’s first quarter, and 31,691 new motorcycles in the U.S., down 0.5 percent, compared to the year-ago period. Industry-wide U.S. heavyweight new motorcycle (651cc-plus) retail unit sales increased 3.1 percent in the first quarter of 2011 compared to the year-ago period.

First-quarter data are listed in the accompanying tables.

Harley-Davidson Motorcycles and Related Products Segment Financial Results

Revenue from Harley-Davidson motorcycles in the first quarter of 2011 was $833.4 million, up 3.0 percent compared to the year-ago period. The Company shipped 53,827 Harley-Davidson motorcycles to dealers and distributors worldwide during the quarter, compared to shipments of 53,674 motorcycles in the first quarter of 2010.

Revenue from Parts and Accessories totaled $164.3 million during the quarter, up 10.2 percent, and revenue from General Merchandise, which includes MotorClothes® apparel, was $62.6 million, down 5.6 percent, compared to the year-ago period.

Gross margin was 33.1 percent in the first quarter, compared to 36.6 percent in the year-ago period. Gross margin was adversely affected by temporary production inefficiencies related to the restructuring and transformation of production operations,  and by foreign exchange and raw materials costs. First-quarter operating margin was 11.8 percent, compared to 12.2 percent in last year’s first quarter.

Financial Services Segment

The financial services segment recorded operating income of $67.9 million in the quarter, compared to operating income of $26.7 million in the year-ago quarter. The increase in year-over-year operating income is largely the result of continued improvement in credit performance.

Guidance

In a move related to what it believes will be a modest level of supply chain interruption to the Company arising from the March 11 earthquake and tsunami in Japan, Harley-Davidson is widening full-year shipment guidance. The Company now expects to ship 215,000 to 228,000 Harley-Davidson motorcycles to dealers and distributors worldwide in 2011, compared to prior shipment guidance of 221,000 to 228,000 motorcycles.

In the second quarter of 2011, Harley-Davidson expects to ship 62,000 to 67,000 motorcycles.

Harley-Davidson and its direct suppliers source a limited number of components and subcomponents, including motorcycle electronics, through suppliers in Japan, and the Company has several of these subcomponent parts on close watch for possible shortages related to the situation there. The Company has identified a supply issue related to an electronic subcomponent used in radios for its motorcycles that could affect shipment volume, and the Company is adjusting shipment guidance accordingly. Based on currently available information, Harley-Davidson believes it has viable solutions for the radios and other subcomponents on its watch list and the Company continues to work closely with its suppliers to monitor the situation and address issues as necessary.

“We continue to assess our supply chains and as a precaution we have decided to modestly reduce the lower end of shipment guidance following the events in Japan,” said Wandell. “Our hearts go out to all the people of Japan, including our community of riders there. We are thankful for the safety of our employees and dealers in Japan and commend them for their tremendous resilience through this difficult period.”

Harley-Davidson now expects 2011 gross margin to be between 33.5 percent and 35.0 percent, versus previous guidance of 34.0 percent to 35.0 percent, as a direct result of the anticipated supply chain interruption. Harley-Davidson continues to expect full-year capital expenditures of between $210 million and $230 million, including $60 million to $75 million to support restructuring activities.

Restructuring Update

Harley-Davidson expects all previously announced company-wide restructuring activities, including those related to the ratification of new labor agreements at its vehicle operations in Kansas City, Mo., to result in one-time charges of $510 million to $525 million, and annual ongoing savings of $305 million to $325 million when fully implemented. In 2011, Harley-Davidson expects to incur restructuring charges of $95 million to $105 million. The Company expects to realize savings on a cumulative basis in 2011 of $210 million to $230 million from restructuring activities initiated since early 2009. In the first quarter of 2011, the Company incurred restructuring charges of $23 million.

Income Tax Rate

For the first quarter of 2011, the Company’s effective income tax rate from continuing operations was 34.8 percent, compared to 47.2 percent in the same quarter of 2010. The effective tax rate in the first quarter of 2010 was negatively impacted by a one-time tax charge of $13.3 million associated with the enactment of the federal healthcare reform legislation.  In 2011, the Company continues to expect its full-year effective tax rate from continuing operations to be approximately 35.0 percent.

Cash Flow

Cash and marketable securities totaled $1.05 billion as of March 27, 2011, compared to $1.48 billion at the end of last year’s first quarter. During the first three months of 2011, the Company contributed $200 million to its pension plans leading to a cash outflow from operating activities of $104.9 million. This compares to a $200.8 million cash inflow from operating activities in the year-ago quarter.  Capital expenditures were $27.7 million for the three months ended in March 2011.