Harley Davidson 2009 Annual Report Download - page 2

COURAGE, FOCUS
AND DIRECTION.
We wasted no time in bringing this strategy
to life, moving quickly to focus our resourc-
es behind the unique strengths and growth
potential of the Harley-Davidson brand.
In light of the 2009 landscape and the
actions we took, our 2009 fi nancial results
were not surprising. Income from con-
tinuing operations of $70.6 million, or
$0.30 per share, decreased 89.7 percent
from the prior year, on a 23.1 percent
drop in revenue from motorcycles and
related products to $4.29 billion. These
results primarily refl ect the impact of re-
duced motorcycle shipments, restructuring
and Buell exit costs, and non-cash charges
related to Harley-Davidson Financial Ser-
vices. When the loss from MV Agusta
discontinued operations is included, the
Company reported a full-year net loss of
$55.1 million. At the same time, even with
the decrease in profitability due to the
reduction in motorcycle shipments and
restructuring spending, the Company’s
continuing operations generated $609 mil-
lion in cash fl ow from operating activities
in 2009. This speaks well for the ability
to generate cash, even in a challenging
business environment.
ADDRESSING THE IMMEDIATE CHALLENGES
To address the immediate challenges of
2009 and the deep recession, we decreased
Harley-Davidson motorcycle shipments to
dealers by nearly 27 percent compared
to 2008. Managing supply in line with
demand remains a top priority as a key
underpinning of brand strength.
We embarked on a major consolidation
and restructuring of our production
operations to get our cost structure right
at lower volumes.
We also succeeded in obtaining the fund-
ing needed to support the lending activities
of Harley-Davidson Financial Services
—
another priority for us in 2009. Our ability
to fund motorcycle loans for customers was
a key strategic advantage in 2009 and was
one of the reasons for our market share
growth during the year. As a result of our
actions, HDFS is on much stronger footing,
and we believe we have provided for its
anticipated funding needs for 2010.
STRATEGIC FOCUS
Looking out across a longer horizon, in
October we unveiled our long-term “Deliv-
ering Results Through Focus” business
strategy, with its four pillars: growth,
continuous improvement, leadership de-
velopment and sustainability. As part of
this strategy to focus our efforts, we
announced we would exit from the Buell
product line and sell MV Agusta, focusing
our resources on the Harley-Davidson
brand, which includes continuing to
expand the brand globally.
HIGH-POTENTIAL BRAND
The heart of our strategy is our strong
belief that focusing our investment behind
the powerful Harley-Davidson brand pro-
vides a superior path to tapping the full
potential of the brand and to sustained
long-term growth. The Harley-Davidson
brand consistently ranks among the stron-
gest globally, across many demographic
groups. Even in today’s more practical,
cautious consumer environment, people
of all ages and backgrounds still dream
about the Harley-Davidson experience.
We see great potential to drive growth
globally and in the U.S. through unique
products and experiences, both through
outreach to new customers and our com-
mitment to core customers.
Our strategy is multi-generational and
multi-cultural. It calls for us to grow sales
to our core customers, while growing sales
to outreach customers at a faster rate.
Our Dark Custom products, including
the Iron 883, are a strong draw for young
adults, and motorcycles like the Street
Glide, Tri Glide and Electra Glide Ultra
Limited have earned the ongoing com-
mitment of core riders.
In international markets we plan to add
100 to 150 dealer points through 2014,
and in the same period increase inter-
national retail unit sales to more than 40
percent of total retail unit sales, up from
about 33 percent in 2009.
DEAR FELLOW SHAREHOLDERS: In the worst economic downturn in decades, 2009 was a year
that required Harley-Davidson to respond with tough, courageous decisions.
We had two key priorities. First, we executed on our strategy to manage the business
effectively in the near term and address the immediate challenges. But we needed to
do more than simply persevere. We needed to establish a bold, clear strategic direction
that would maximize our opportunities going forward and restore the Company as a
strong business that could consistently grow over the long haul. We set that direction,
and the word that best describes our new strategy is “focus.”
CONTINUOUS IMPROVEMENT
We also believe we have signifi cant oppor-
tunity to run our business more effec-
tively and effi ciently through continuous
improvement in manufacturing, product
development and business operations.
Our focus on continuous improvement
goes beyond simply reducing costs. It
extends to our ability to deliver the right
bikes to the right markets at the right
time, an essential capability when it comes
to customer satisfaction and effectively
managing supply in line with demand.
The transformation currently underway
at our vehicle operations in York, Pa., dem-
onstrates our commitment to reshaping
the face of Harley-Davidson manufacturing,
with much greater fl exibility and signifi cant
savings from a more effi cient operation.
Just as important is the transformation
under way in Harley-Davidson product
development. Our work focuses on product
selection, cost reduction and time compres-
sion, to reduce time to market and consis-
tently deliver on customer expectations.
These actions represent important early
steps in what will be an ongoing journey
in continuous improvement.
THE ROAD AHEAD
2009 was indeed a year that tested our
company, but it was also a year of genuine
achievement as we embarked on a new
course. It was a year in which we took
many courageous actions to position
Harley-Davidson for the future.
Our accomplishments were possible only
through the hard work, unwavering spirit
and dedication of our employees, dealers
and suppliers, who focus every day on
delivering an outstanding experience for
our customers. I thank all the members
of our team for their many contributions.
As we execute on our strategy, we do not
promise easy solutions. Consumers will
likely continue to be cautious in an economic
environment that remains challenging.
However, we believe our strategy and
the performance measures we have laid out
are based on an appropriate and prudent
approach to the market. Delivering on our
plans will take discipline, determination and
intense focus, but we are confi dent we can
achieve our goals through our strategy.
ONE COMPANY, ONE TEAM, ONE DIRECTION
When my journey here at Harley-Davidson
began last May, it was obvious that people
were passionate about the brand. As I have
had the opportunity to get to know our cus-
tomers, dealers and employees, join them at
rallies and events and ride with them, it is
clear the passion is far stronger and deeper
than anything I could ever have imagined.
All of us at Harley-Davidson are fully
committed
— as one company, working as
one team and pulling in one direction
— to
doing the right things for this company
and for the collective future of all stake-
holders. By aligning the organization
behind a clear strategic direction, we are
moving with appropriate urgency and mak-
ing great progress toward our goal to do
just that. We appreciate the trust you have
placed in us to move this company forward.
While there is still plenty of hard work
ahead, I could not feel better about the
progress we have made and the path we
have chosen.
Sincerely,
KEITH E. WANDE LL
PRESIDENT AND
CH I EF EXECUTIVE OFFICER
T
H E
.
WANDE L
L
S
IDENT AND