Harley Davidson 2012 Annual Report Download - page 36

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36
The following table includes the estimated impact of the significant factors affecting the comparability of net revenue,
cost of goods sold and gross profit from 2010 to 2011 (in millions):
Net
Revenue
Cost of
Goods
Sold Gross
Profit
2010 $ 4,177 $ 2,749 $ 1,428
Volume 365 250 115
Price 15 — 15
Foreign currency exchange rates and hedging 89 84 5
Shipment mix 16 15 1
Raw material prices — 32 (32)
Manufacturing costs — (24) 24
Total 485 357 128
2011 $ 4,662 $ 3,106 $ 1,556
The following factors affected the comparability of net revenue, cost of goods sold and gross profit from 2010 to 2011:
• Volume increases were driven by the 10.7% increase in wholesale shipments of Harley-Davidson motorcycle units as
well as higher sales volumes for Parts & Accessories and General Merchandise.
• On average, wholesale prices on the Company’s 2012 model year motorcycles are higher than the prior model year
resulting in the favorable impact on revenue and gross profit during the period.
• Foreign currency exchange rates during 2011 relative to 2010 resulted in a positive impact on net revenue. Gains and
losses associated with the revaluation of foreign-denominated assets and liabilities and foreign currency hedging
(included in cost of goods sold) were unfavorable when compared to 2010 which offset the majority of the positive
impact of currency included in net revenue.
• Shipment mix changes positively impacted net revenue and resulted primarily from product mix changes both between
and within the Company’s motorcycle families. However, the impact of these mix changes on cost of goods sold
mostly offset the benefits included in revenue.
• Raw material prices were higher in 2011 relative to 2010 due to increased metals and fuel costs.
• Manufacturing costs were favorably impacted by savings related to restructuring and continuous improvement
initiatives, partially offset by temporary inefficiencies associated with the Company’s restructuring and transformation
at its York facility. During 2011, the Company experienced $32 million in temporary inefficiencies compared to $9
million in 2010.
The increase in selling, administrative and engineering expense was primarily due to increased spending on growth
initiatives and higher recall expenses offset by savings realized from the Company’s restructuring efforts and continuous
improvement initiatives. In addition, during 2010 the Company incurred approximately $15 million of non-recurring costs in
connection with the Company’s efforts to expand its presence in Brazil. Restructuring expense was lower in 2011 than in 2010.
For further information regarding the Company’s previously announced restructuring activities, refer to Note 4 of Notes to
Condensed Consolidated Financial Statements.
Financial Services Segment
Segment Results
The following table includes the condensed statements of operations for the Financial Services segment (in thousands):