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Harley-Davidson reports Revenue
and Earnings Growth for 2006
Annual Worldwide Retail Sales Increase
8.5 Percent
Harley-Davidson, Inc. today announced its results for the fourth
quarter and year ended December 31, 2006. Revenue for the quarter
was $1.50 billion compared to $1.34 billion in the year-ago quarter,
an 11.9 percent increase. Net income for the quarter was $252.4
million compared to $230.0 million, an increase of 9.7 percent
over the fourth quarter of 2005. Fourth quarter diluted earnings
per share (EPS) were $0.97, a 15.5 percent increase compared
to last year's $0.84.
Revenue for the full year was $5.80 billion, compared with $5.34
billion in 2005, an 8.6 percent increase. Wholesale shipments
of Harley-Davidson, motorcycles were 349,196 units for the year,
a 6.1 percent increase compared to 2005. Net income for the year
was $1.04 billion, an 8.7 percent increase versus last year's
$959.6 million. Diluted EPS for the full year were $3.93, a 15.2
percent increase compared with $3.41 in 2005.
"After more than two decades of uninterrupted growth at
Harley-Davidson, our dedicated employees and passionate dealers
have once again delivered excellent results," said Jim Ziemer,
Chief Executive Officer. "I couldn't ask for a more committed
workforce and dealer network."
"In 2006, the Company's revenue and earnings surpassed 2005
results demonstrating continued growth. At the same time, our
dealers achieved impressive Harley-Davidson motorcycle sales
volumes. The enthusiastic worldwide response to the changes in
our 2007 models contributed to an 8.5 percent increase in retail
sales during the year," said Ziemer.
"Furthermore, the Company continued to return significant
value to shareholders in 2006. We increased dividend payments
by 22.5 percent over the prior year and repurchased 19.3 million
shares of our common stock during 2006 at a cost of $1.06 billion."
"As we look to the future, we believe Harley-Davidson will
deliver EPS growth in the range of 11 17 percent each year
through 2009. On an annual basis we expect solid revenue growth,
margin improvement, and the benefits of strong free cash flow
to drive this earnings growth," said Ziemer.
The Company also expects to ship between 82,000 and 84,000 Harley-Davidson
motorcycles for the first quarter of 2007.
Motorcycles and Related Products Segment Fourth Quarter
Results
Revenue from Harley-Davidson motorcycles was $1.22 billion, an
increase of $135.6 million or 12.5 percent over the same period
last year. Shipments of Harley-Davidson motorcycles totaled 92,848
units, an increase of 5,260 units or 6.0 percent over last year's
fourth quarter.
Revenue from Parts and Accessories (P&A), which consists
of Genuine Motor Parts and Genuine Motor Accessories, totaled
$179.2 million, an increase of $9.3 million or 5.5 percent over
the year-ago quarter. Revenue from General Merchandise, which
consists of MotorClothes, apparel and collectibles, totaled $70.6
million, an increase of $10.1 million or 16.7 percent over the
year-ago quarter.
Gross margin for the fourth quarter of 2006 was 38.0 percent
of revenue compared to 38.3 percent for the fourth quarter last
year. Fourth quarter operating margin decreased to 22.8 percent
from 23.4 percent in the fourth quarter of 2005.
Motorcycle Retail Sales Data
During the fourth quarter, worldwide retail sales of Harley-Davidson
motorcycles increased 6.4 percent over the prior year quarter.
In the U.S., retail sales of Harley-Davidson motorcycles increased
0.3 percent for the quarter while the heavyweight motorcycle
industry in the U.S. decreased 1.7 percent. Retail sales
of Harley-Davidson motorcycles grew 29.4 percent in international
markets during the fourth quarter of 2006 compared to the fourth
quarter of 2005. Fourth quarter retail sales increased
31.2 percent in Europe; Japan was up 19.6 percent; Canada was
up 37.4 percent and all other international markets combined
were up 34.0 percent.
Worldwide retail sales of Harley-Davidson motorcycles increased
8.5 percent in 2006 compared to 2005. In the U.S., retail
sales of Harley-Davidson motorcycles increased 5.9 percent while
the U.S. heavyweight motorcycle market was up 4.9 percent for
the same period. In our international markets, Harley-Davidson
retail sales for the full year grew 18.6 percent. Retail
sales in Europe increased 14.6 percent; Japan was up 16.3 percent;
Canada was up 15.9 percent and all other international markets
combined were up 34.3 percent.
Financial Services Segment
Harley-Davidson Financial Services (HDFS) reported fourth
quarter operating income of $47.6 million, an increase of $8.1
million or 20.7 percent compared to the year-ago quarter. The
increase is primarily due to higher wholesale and retail net
interest income.
Income Tax Rate
The Company's fourth quarter effective income tax rate was
35.1 percent compared to 35.5 percent in the same quarter last
year. This decrease primarily reflects the retroactive
reinstatement of the federal research and development tax credit.
The Company's full year effective tax rate in 2006 was 35.8 percent.
Harley-Davidson, Inc. - Twelve Month Results
For the fiscal year ended 2006, revenue totaled $5.80 billion,
an 8.6 percent increase over 2005. EPS were $3.93, an increase
of 15.2 percent compared to 2005.
Shipments of Harley-Davidson motorcycles were 349,196 units in
2006, a 6.1 percent increase compared to last year's 329,017
units. Harley-Davidson motorcycle revenue was $4.55 billion,
up 8.8 percent compared to last year's $4.18 billion. P&A
revenue totaled $862.3 million, a 5.7 percent increase over last
year's $815.7 million. General Merchandise revenue totaled $277.5
million, a 12.0 percent increase compared to $247.9 million during
2005.
Motorcycle segment gross margin for the full year was 38.5 percent
of revenue compared to 38.2 percent for 2005. Full year 2006
operating margin increased to 24.4 percent from 24.3 percent
compared to the prior year.
HDFS operating income was $210.7 million, a 10.0 percent increase
over last year's $191.6 million.
Cash Flow
Cash and marketable securities totaled $896.5 million as of December
31, 2006. Cash flow from operations was $761.8 million and capital
expenditures were $219.6 million during 2006. In 2007, capital
expenditures are expected to be between $300 million and $325
million.
Stock Repurchase
The Company repurchased 2.1 million shares of its common
stock at a cost of $151.0 million during the fourth quarter of
2006. For the full year of 2006, the Company repurchased 19.3
million shares of its common stock at a cost of $1.06 billion.
On December 31, 2006, the Company had 258,052,356 shares of common
stock outstanding.
As of December 31, 2006, there are 22.8 million shares remaining
on two board-approved share repurchase authorizations. An additional
board-approved share repurchase authorization is in place to
offset option exercises.
Company Background
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.
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 motorcycles. Harley-Davidson
Financial Services provides wholesale and retail financing and
insurance programs to Harley-Davidson dealers and their retail
customers.
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