Another Record Quarter for Harley

Brent Avis
by Brent Avis
Harley-Davidson, Inc. (NYSE:HDI) today announced record sales and earnings for its fourth quarter andyear ended December 31, 2000. Revenue for the quarter was $756.2 millioncompared with $662.5 million in the year-ago quarter, a 14.1 percentincrease. Fourth quarter diluted earnings per share (EPS) were 31 cents,a 26.5 percent increase compared with last year's 24 cents. Revenue forthe full year was $2.91 billion, compared with $2.45 billion in 1999, an18.5 percent increase. Diluted EPS for the full year were $1.13, a 31.1percent increase compared with $0.86 in 1999.

"Our 15th consecutive record year exceeded our expectations, and despitethe current economic uncertainty in the United States, the outlook forretail sales of Harley-Davidson® motorcycles continues to be verystrong," said Jeffrey L. Bleustein, chairman and chief executive officerof Harley-Davidson, Inc...

"Through the continued introduction of market-defining products, a dealernetwork that is the envy of the industry, and our demonstrated ability tofocus on and to fulfill our customers' dreams, we are confident we willcontinue to deliver record revenues and income."

"Fourth quarter results, current demand and our continued successin expanding motorcycle production, have given us the confidence toincrease our production target to 227,000 Harley-Davidson motorcycles for2001," said Bleustein.

Fourth quarter shipments of Harley-Davidson motorcycles totaled54,129 units, up 5,509 units or 11.3 percent over the same period lastyear. Sales of Harley-Davidson motorcycles were $606.1 million, anincrease of $75.9 million or 14.3 percent.

Sales of Parts and Accessories (P&A), which consist of Genuine MotorParts and Genuine Motor Accessories, totaled $98.5 million, an increaseof $20.2 million or a 25.9 percent increase from the year-ago quarter.Fourth quarter sales of General Merchandise, which consists ofMotorClothesae apparel and collectibles, totaled $40.7 million, anincrease of $5.6 million or 15.9 percent over the same period last year.

"We are very pleased with the outstanding performance of both our Parts &Accessories and General Merchandise businesses during the fourthquarter. These exceptional results are evidence of our customers' strongdesire for the total Harley-Davidson experience," added Bleustein.PLonger term, the Company expects the growth rate for P&A revenues toincrease slightly faster than Harley-Davidson's motorcycle unit growthrate, while it expects the growth rate for General Merchandise to growslightly slower than the motorcycle unit growth rate.

Fourth quarter gross margin was 34.7 percent of revenue, up slightly from34.6 percent of revenue last year.Fourth quarter operating margin for the Motorcycles and Related ProductsSegment was 17.3 percent of revenue, which was better than last year'sfourth quarter operating margin of 16.6 percent. Operating expenses didnot increase as rapidly as revenue, resulting in improved operatingmargins. Included in operating expenses was a charge of $4 millionrelated to the cost of extending the warranty for a rear cam bearing incertain Twin Cam 88ae engines.

Harley-Davidson/Buell retail registrations in 2000 have grown in allmajor markets, with the U.S. up 15.4 percent through November, Europe up8.8 percent through October and Japan/Australia up 3.6 percent throughOctober.

"Our success in international markets is a direct result of theactions we have taken over the last several years, such as accelerateddealer development, new product introductions and focused marketingprograms. In fact, 2000 will mark the second consecutive year that wewill gain market share in Europe and Japan," commented Bleustein.

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