Harley Davidson 2013 Annual Report Download - page 24

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24
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations
Harley-Davidson, Inc. is the parent company for the groups of companies doing business as Harley-Davidson Motor
Company (HDMC) and Harley-Davidson Financial Services (HDFS). HDMC produces cruiser and touring motorcycles.
HDMC manufactures six platforms of motorcycles: Touring, Dyna®, Softail®, Sportster®, V-Rod® and Street. HDFS provides
wholesale and retail financing and insurance programs primarily to Harley-Davidson dealers and customers.
The Company operates in two business segments: Motorcycles & Related Products (Motorcycles) and Financial Services
(Financial Services). The Company’s reportable segments are strategic business units that offer different products and services.
They are managed separately based on the fundamental differences in their operations.
The “% Change” figures included in the “Results of Operations” section were calculated using unrounded dollar amounts
and may differ from calculations using the rounded dollar amounts presented.
Overview
During 2013, the Company delivered strong financial results while it continued to make progress against its business
objectives. During 2013, the Company introduced Project RushmoreTM, a completely new line of touring motorcycles,
completed its multi-year restructuring program, implemented flexible surge production capabilities at its largest production
facility and continued to make significant investments in future products and new markets. The Company’s net income for
2013 was $734.0 million, or $3.28 per diluted share compared to $623.9 million, or $2.72 per diluted share, in 2012. The
increase in 2013 net income was driven by strong financial performance at the Motorcycles segment. Operating income from
the Motorcycles segment was up $155.1 million over 2012 led by a 5.2% increase in wholesale shipments of Harley-Davidson
motorcycles. In addition, Motorcycles operating income benefited during 2013 from model-year price increases, a stronger
product mix and lower manufacturing and restructuring costs. These positive impacts were partially offset by an adverse
change in foreign currency exchange rates during 2013 and higher selling, administrative and engineering expenses as the
Company continued to invest in its strategic initiatives. Operating income from the Financial Services segment was down
slightly from the prior year, falling $1.6 million, or 0.6%, due to a higher provision for credit losses which was mostly offset by
a decrease in interest expense.
In 2013, worldwide independent dealer retail sales of new Harley-Davidson motorcycles grew 4.4% compared to 2012,
including a 4.4% increase in the U.S. and a 4.3% increase in international markets. The Company believes the improvement in
retail sales of new Harley-Davidson motorcycles reflects the strength of the Harley-Davidson brand, strong appeal for its
products, including its 2014 model year motorcycles introduced in 2013, worldwide dealer efforts, and continued investment in
growth opportunities around the world.
Please refer to the “Results of Operations 2013 Compared to 2012” for additional details concerning the results for 2013.
(1) Note Regarding Forward-Looking Statements
The Company intends that certain matters discussed in this report are “forward-looking statements” intended to qualify for the
safe harbor from liability established by the Private Securities Litigation Reform Act of 1995. These forward-looking
statements can generally be identified as such by reference to this footnote or because the context of the statement will include
words such as the Company “believes,” “anticipates,” “expects,” “plans,” or “estimates” or words of similar meaning.
Similarly, statements that describe future plans, objectives, outlooks, targets, guidance or goals are also forward-looking
statements. Such forward-looking statements are subject to certain risks and uncertainties that could cause actual results to
differ materially from those anticipated as of the date of this report. Certain of such risks and uncertainties are described in
close proximity to such statements or elsewhere in this report, including under the caption “Risk Factors” in Item 1A and under
“Cautionary Statements” in Item 7 of this report. Shareholders, potential investors, and other readers are urged to consider these
factors in evaluating the forward-looking statements and cautioned not to place undue reliance on such forward-looking
statements. The forward-looking statements included in this report are made only as of the date of the filing of this report
(February 20, 2014), and the Company disclaims any obligation to publicly update such forward-looking statements to reflect
subsequent events or circumstances.