For Release at 7:00 am EST
Financial Contact: Patrick Davidson (414) 343-8002
Media Contact: Joe Hice (414) 343-7118
HARLEY-DAVIDSON REPORTS RECORD FOURTH QUARTER
AND 17th CONSECUTIVE RECORD YEAR
Net Income of $580 million on Revenue of $4.1 billion
Milwaukee, Wis., January 21, 2003 -- Harley-Davidson, Inc. (NYSE: HDI)
today announced record revenue and earnings for its fourth quarter and year
ended December 31, 2002. Revenue for the quarter was $1.03 billion compared with
$905.9 million in the year-ago quarter, a 13.3 percent increase. Net income for
the quarter was $150.9 million, an increase of 27.5 percent over the year ago
quarter. Fourth quarter diluted earnings per share (EPS) were 49 cents, a 25.6
percent increase compared with last year's 39 cents. Revenue for the full year
was $4.1 billion, compared with $3.4 billion in 2001, a 20.1 percent increase.
Net income for the year was $580.2 million, a 32.5 percent increase versus last
year's $437.7 million, while diluted EPS for the full year were $1.90, a 32.9
percent increase compared with $1.43 in 2001.
"The year 2002 was our 17th consecutive year of record revenue and net
income," said Jeffrey L. Bleustein, chairman and chief executive officer of
Harley-Davidson, Inc. "Worldwide retail sales of Harley-Davidson(R) motorcycles
were strong in 2002 with 15.9 percent unit growth over the prior year. Strong
demand for our products gives us confidence in maintaining our production goal
of 289,000 Harley-Davidson motorcycles for 2003."
"We believe that the excitement surrounding our 100th Anniversary
celebration combined with the strength of the underlying fundamentals of our
motorcycle business are helping us continue to grow - even in the face of a weak
global economy. We are fulfilling the dreams of many new customers as we welcome
them into the Harley-Davidson family," said Bleustein.
Motorcycles and Related Products Segment - Fourth Quarter Results
- -----------------------------------------------------------------
Revenue from Harley-Davidson motorcycles was $820.3 million, an increase of
$86.1 million or 11.7 percent over the same period last year. Fourth quarter
shipments of Harley-Davidson motorcycles totaled 65,970 units. The Company had
four fewer workdays in the fourth quarter of 2002 compared with 2001, yet
shipped 2,435 more units, or 3.8 percent more than the same period last year.
Revenue from Parts and Accessories (P&A), which consists of Genuine Motor
Parts and Genuine Motor Accessories, totaled $129.9 million, an increase of
$18.5 million, or 16.6 percent over the year-ago quarter. Revenue from General
Merchandise, which consists of MotorClothes(TM) apparel and collectibles,
totaled $54.8 million, an increase of $7.3 million or 15.4 percent. Revenue from
100th Anniversary P&A products was $12.7 million and revenue
Harley-Davidson, Inc. - 4th Quarter 2002 Press Release Text - page 1
from General Merchandise associated with the 100th Anniversary was $12.5
million. "We are very pleased with sales of our 100th Anniversary products, but
we realize that not all of these were incremental because some substitution from
standard offerings to commemorative anniversary products did occur," said
Bleustein.
Fourth quarter gross margin was 36.1 percent of revenue, up from 34.5
percent last year. Gross margin improved primarily due to wholesale motorcycle
price increases, favorable product mix and foreign exchange effects.
Fourth quarter operating margin for the Motorcycles and Related Products
Segment was 20.7 percent of revenue, which was better than last year's fourth
quarter operating margin of 18.6 percent. The increase in operating margin was
driven primarily by the increase in gross margin.
Retail Sales Data
- -----------------
Harley-Davidson retail motorcycle sales for the year grew in the U.S. (18.3
percent), Europe (7.6 percent) and Japan (5.9 percent) compared to the same
period last year. The most recent available data is listed in the accompanying
tables.
Financial Services Segment - Fourth Quarter Results
- ---------------------------------------------------
Harley-Davidson Financial Services, Inc. (HDFS), a subsidiary of
Harley-Davidson, Inc., reported fourth quarter operating income of $25.4
million, up $8.4 million or 49 percent compared to the year-ago quarter.
"Harley-Davidson Financial Services had a fantastic quarter and year,
both in financial performance and in helping to make the dream of owning a
Harley-Davidson motorcycle a reality," said Bleustein. The subsidiary benefited
from the increase in Harley-Davidson's U.S. motorcycle sales, growing acceptance
of its consumer financing program and decreased cost of funds due to lower
market interest rates.
Pension Plan Activities
- -----------------------
During the quarter, the Company contributed $100 million to its various
pension plans, which brought the total year contribution to $154 million,
compared with a contribution of $19 million in 2001. The Company also responded
to current market conditions by lowering its pension plan discount rate from 8.0
to 7.25 percent.
Cash Flow
- ---------
Operations generated cash of more than $779 million in 2002, providing the
Company the ability to invest $324 million in capital expenditures, repurchase
1.1 million shares of company stock for $57 million, pay $41 million in
dividends and contribute $154 million to the Company's pension plans, even as
the Company increased cash and marketable securities by $160 million.
Twelve Month Results
- --------------------
For the fiscal year ended 2002, total Harley-Davidson motorcycle shipments
were 263,653 units compared with 234,461 units in 2001, a 12.5 percent increase.
Harley-Davidson motorcycle revenue was $3.16 billion, an increase of $489.7
million or 18.3 percent.
P&A revenue totaled $629.2 million, a 23.5 percent increase, while General
Merchandise revenue totaled $231.5 million, a 41.2 percent increase compared
with 2001.
On a longer-term basis, the Company expects the growth rate for P&A
revenues to be
Harley-Davidson, Inc. - 4th Quarter 2002 Press Release Text - page 2
slightly higher than the Harley-Davidson motorcycle unit growth rate. The
General Merchandise growth rate is expected to be lower than the motorcycle unit
growth rate over the long term.
Full year operating income for HDFS was $104.2 million, an increase of
$43.0 million or 70.1 percent compared to 2001. The Company expects 2003 HDFS
operating income to grow approximately 20 percent over 2002 performance.
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.
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" or "estimates" or words of similar meaning. Similarly,
statements that describe future plans, objectives, outlooks, targets 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 undertakes
no 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) continue to realize
production efficiencies at its production facilities through the implementation
of innovative manufacturing techniques and other means, (ii) successfully
implement production capacity increases in its facilities, (iii) successfully
introduce new products and services, (iv) avoid unexpected P&A /general
merchandise supplier backorders, (v) sell all of the motorcycles it has the
capacity to produce, (vi) continue to develop the capacity of its distributor
and dealer network, (vii) avoid unexpected changes in the regulatory environment
for its products, (viii) successfully adjust to foreign currency exchange rate
fluctuations, (ix) successfully adjust to interest rate fluctuations, and (x)
successfully manage changes in the credit quality of HDFS's loan portfolio.
In addition, the Company could experience delays in the operation of
manufacturing facilities as a result of work stoppages, difficulty with
suppliers, natural causes or other factors. Risk factors are also disclosed in
documents previously filed by the Company with the Securities and Exchange
Commission.
TABLES FOLLOW
Harley-Davidson, Inc. - 4th Quarter 2002 Press Release Text - page 3
Harley-Davidson, Inc.
Condensed Consolidated Statements of Income
(In thousands, except per share amounts)
(Unaudited)
Three Months Ended Twelve Months Ended
------------------ -------------------
Dec. 31, Dec. 31, Dec. 31, Dec. 31,
2002 2001 2002 2001
---- ---- ---- ----
Net revenue $ 1,026,532 $ 905,887 $4,090,970 $ 3,406,786
Gross profit 370,626 312,883 1,417,841 1,152,971
Operating expenses 157,768 144,457 626,720 539,660
----------- --------- ---------- -----------
Operating income from
motorcycles & related products 212,858 168,426 791,121 613,311
Financial services income 53,991 49,064 211,500 181,545
Financial services operating expense 28,634 32,094 107,273 120,272
----------- --------- ---------- -----------
Operating income from financial services 25,357 16,970 104,227 61,273
Corporate expenses 3,027 2,944 12,646 12,083
----------- --------- ---------- -----------
Total operating income 235,188 182,452 882,702 662,501
Interest income, net 4,986 3,386 16,541 17,478
Other income (expense), net (9,852) (3,762) (13,416) (6,524)
----------- --------- ---------- -----------
Income before provision for taxes 230,322 182,076 885,827 673,455
Provision for income taxes 79,461 63,726 305,610 235,709
----------- --------- ---------- -----------
Net income $ 150,861 $ 118,350 $ 580,217 $ 437,746
=========== ========= ========== ===========
Earnings per common share:
Basic $ 0.50 $ 0.39 $ 1.92 $ 1.45
Diluted $ 0.49 $ 0.39 $ 1.90 $ 1.43
Weighted-average common shares:
Basic 302,395 302,343 302,297 302,506
Diluted 305,037 305,512 305,158 306,248
Harley-Davidson, Inc. - 4th Quarter 2002 Press Release Financial Tables - page 1
Harley-Davidson, Inc.
Condensed Consolidated Balance Sheets
(In thousands)
Dec. 31, Dec 31,
2002 2001
---- ----
ASSETS
Current assets:
Cash and cash equivalents $ 280,928 $ 439,438
Marketable securities 514,800 196,011
Accounts receivable, net 108,694 118,843
Finance receivables, net 855,771 656,421
Inventories 218,156 181,115
Other current assets 88,237 73,436
----------- -----------
Total current assets 2,066,586 1,665,264
Finance receivables, net 589,809 379,335
Other long-term assets 1,204,822 1,073,896
----------- -----------
Total assets $ 3,861,217 $3,118,495
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable & accrued expenses $ 607,473 $ 499,059
Current portion of finance debt 382,579 217,051
----------- -----------
Total current liabilities 990,052 716,110
Finance debt 380,000 380,000
Other long-term liabilities 152,831 176,190
Postretirement health care benefits 105,419 89,912
Shareholders' equity 2,232,915 1,756,283
----------- -----------
Total liabilities and shareholders' equity $ 3,861,217 $ 3,118,495
=========== ===========
Harley-Davidson, Inc. - 4th Quarter 2002 Press Release Financial Tables - page 2
Harley-Davidson, Inc.
Condensed Consolidated Statements of Cash Flows
(In thousands, except per share amounts)
Dec. 31, Dec 31,
2002 2001
---- ----
Cash flows from operating activities:
Net income $ 580,217 $ 437,746
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation 175,778 153,061
Non cash expenses 123,360 107,534
Contributions to the pension plans (153,636) (19,294)
Net changes in current assets and current liabilities 53,827 77,761
--------- ---------
Net cash provided by operating activities 779,546 756,808
Cash flows from investing activities:
Capital expenditures (323,866) (290,381)
Finance receivables, net (398,768) (275,754)
Net increase in marketable securities (318,171) (196,011)
Other, net 22,813 (9,361)
--------- ---------
Net cash used in investing activities (1,017,992) (771,507)
Cash flows from financing activities:
Net increase in finance debt 165,528 152,542
Dividends paid (41,457) (35,428)
Purchase of common stock for treasury (56,814) (111,552)
Issuance of common stock under employee stock plans 12,679 28,839
--------- ---------
Net cash used in financing activities 79,936 34,401
Net (decrease) increase in cash and cash equivalents (158,510) 19,702
Cash and cash equivalents:
At beginning of period 439,438 419,736
--------- ---------
At end of period $ 280,928 $ 439,438
========= =========
Harley-Davidson, Inc. - 4th Quarter 2002 Press Release Financial Tables - page 3
Harley-Davidson, Inc.
Net Revenue and Motorcycle
Shipment Data
Three Months Ended Twelve Months Ended
------------------ -------------------
Dec. 31, Dec. 31, Dec. 31, Dec. 31,
2002 2001 2002 2001
---- ---- ---- ----
NET REVENUE (in thousands)
Harley-Davidson(R)motorcycles $ 820,287 $ 734,183 $3,161,046 $ 2,671,314
Buell(R)motorcycles 21,523 12,674 66,949 61,673
Parts & Accessories 129,929 111,454 629,202 509,623
General Merchandise 54,788 47,474 231,503 163,909
Other 5 102 2,270 267
----------- --------- ---------- -----------
Total net sales $ 1,026,532 $ 905,887 $4,090,970 $ 3,406,786
=========== ========= ========== ===========
HARLEY-DAVIDSON UNITS
Motorcycle shipments:
United States 54,235 53,616 212,833 186,915
Export 11,735 9,919 50,820 47,546
----------- --------- ---------- -----------
Total 65,970 63,535 263,653 234,461
=========== ========= ========== ===========
Motorcycle product mix:
Touring 17,911 17,557 70,713 65,403
Custom 30,753 30,584 123,761 116,541
VRSC 4,760 1,703 18,008 1,703
Sportster(R) 12,546 13,691 51,171 50,814
----------- --------- ---------- -----------
Total 65,970 63,535 263,653 234,461
=========== ========= ========== ===========
BUELL UNITS
Motorcycle shipments:
Buell (excluding Blast) 2,519 1,208 6,887 6,436
Buell Blast 612 963 4,056 3,489
----------- --------- ---------- -----------
3,131 2,171 10,943 9,925
=========== ========= ========== ===========
Harley-Davidson, Inc. - 4th Quarter 2002 Press Release Financial Tables - page 4
Year-to-date Heavyweight (651+ cc)
Motorcycle Retail Registrations (Units),
data through month indicated.
2002 2001 % change
---- ---- --------
United States
- - H-D (December) 209,944 177,414 +18.3
- - Industry (December) 442,326 394,325 +12.2
Europe
- - H-D * (December) 24,419 22,704 +7.6
- - Industry (November) 296,611 285,785 +3.8
Japan
- - H-D (December) 9,521 8,989 +5.9
- - Industry (November) 43,798 45,470 -3.7
Only Harley-Davidson(R) motorcycles are included in the Harley-Davidson (H-D)
data.
H-D * Includes Harley-Davidson sales in all European countries.
Industry data for Europe includes sales only in Austria, Belgium, France,
Germany, Italy, Netherlands, Spain, Switzerland and United Kingdom.
Data Sources: (subject to update)
- ---------------------------------
United States: Motorcycle Industry Council,
Europe: Company reports, Giral S.A.
Japan: Company reports, Industry sources
Harley-Davidson, Inc. - 4th Quarter 2002 Press Release Financial Tables - page 5