Harley continues to post record earnings

Harley-Davidson, Inc. (NYSE: HDI) continued its run of record quarterly financial performances with record sales and earnings in the second quarter ended June 27, 2004. Revenue for the quarter was $1.33
billion compared with $1.22 billion in the
second quarter last year, an 8.9% increase. Second quarter diluted earnings per share (EPS) were 83 cents, a 25.8% increase compared with last year’s 66 cents.
U.S. retail sales of Harley-Davidson motorcycles were 18.8% ahead of last year for the quarter and up 16.5% for the first six months.
Dealers report that floor traffic is brisk, driven by interest across the Harley-Davidson line, especially the Sportster models which were completely redesigned for the 2004 model year.
During the quarter, the company
repurchased approximately 1.3 million shares of its common stock. This brings share repurchases to 9.1 million shares on a year-to-
date basis.
Motorcycle Products
Second quarter revenue from Harley-Davidson motorcycles was $1.02 billion, an increase of 6.8% over last year. Worldwide shipments of Harley-Davidson motorcycles in the second quarter totaled 82,034 units, up 6,009 units or 7.9% over last year. The company’ said its shipment target remains 317,000 Harley-Davidson motorcycles for 2004.
Second quarter revenue from Parts and Accessories (P&A), which consists of Genuine Motor Parts and Genuine Motor Accessories, totaled $230.1 million, a 12.7% increase or $25.9 million more than the year-ago quarter. Over the long term, Harley said it expects P&A revenue to grow at a rate slightly faster than the motorcycle unit growth rate.
Second quarter revenue from General Merchandise, which consists of MotorClothes apparel and collectibles, totaled $53.1 million, up 21.5% or $9.4 million over the same period last year.
Second quarter gross margin for the Motorcycles and related products was 37.9% of revenue compared to 36.4% in the second quarter of last year.

Motorcycle Retail Data
Retail sales of Harley-Davidson motorcycles in the United States were up 16.5%, or nearly 20,000 units for the period January through June 2004, when compared to the same period last year. Harley-Davidson retail sales were up approximately 100 units in Europe or 0.7% and down approximately 380 units in Japan or 7.3%, respectively, when compared with 2003. Harley-Davidson retail sales changes in Europe and Japan are generally tracking with motorcycle sales in the heavyweight markets in those locations, the company said

Financial Services
Harley-Davidson Financial Services, Inc. (HDFS) reported second quarter operating income of $49.0 million, up $4.5 million or 10.2% from the year-ago quarter. Annualized credit losses on its loan portfolio as of the end of the second quarter were lower at 0.63% in 2004, down from 0.75% in 2003.
For the six month period, revenue was $2.49 billion compared with $2.33 billion, a 6.9% increase over the year ago period. Diluted earnings per share were $1.52, compared with $1.28, an increase of 18.8% compared to the same period last year.
Through the first six months of this year, shipments of Harley-Davidson motorcycle units were 156,124, a 6.5% increase over last year’s 146,633. Harley-Davidson motorcycle revenue was $1.94 billion, a 5.8% increase over $1.83 billion in revenue in 2003. P&A revenue totaled $399.3 million, a 9.7% increase over last year’s $364.0 million. General Merchandise revenue totaled $107.5 million, a 7.3% increase compared with $100.1 million during the same period in 2003.
During the same period, HDFS operating income was $99.3 million, a 13.1% increase over last year’s $87.8 million during the first six months. psb

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