Harley Davidson 2013 Annual Report Download - page 35

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35
Segment Results
The following table includes the condensed statement of operations for the Motorcycles segment (in thousands):
2012 2011 Increase
(Decrease) %
Change
Revenue:
Motorcycles $ 3,764,794 $ 3,554,547 $ 210,247 5.9%
Parts & Accessories 859,945 816,569 43,376 5.3
General Merchandise 299,403 274,124 25,279 9.2
Other 18,440 17,024 1,416 8.3
Total revenue 4,942,582 4,662,264 280,318 6.0
Cost of goods sold 3,222,394 3,106,288 116,106 3.7
Gross profit 1,720,188 1,555,976 164,212 10.6
Selling & administrative expense 846,894 788,565 58,329 7.4
Engineering expense 129,330 138,243 (8,913)(6.4)
Restructuring expense 28,475 67,992 (39,517)(58.1)
Operating expense 1,004,699 994,800 9,899 1.0
Operating income from motorcycles $ 715,489 $ 561,176 $ 154,313 27.5%
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 2011 to 2012 (in millions):
Net
Revenue
Cost of
Goods
Sold Gross
Profit
2011 $ 4,662 $ 3,106 $ 1,556
Volume 293 197 96
Price 30 — 30
Foreign currency exchange rates and hedging (76)(59)(17)
Shipment mix 34 29 5
Raw material prices — (7) 7
Manufacturing costs — (43) 43
Total 281 117 164
2012 $ 4,943 $ 3,223 $ 1,720
The following factors affected the comparability of net revenue, cost of goods sold and gross profit from 2011 to 2012:
• Volume increases were driven by the increase in wholesale shipments of motorcycle units as well as higher sales
volumes for Parts & Accessories and General Merchandise.
• On average, wholesale prices on the Company’s 2012 and 2013 model year motorcycles are higher than the preceding
model years resulting in the favorable impact on revenue and gross profit during the period.
• Foreign currency exchange rates during 2012 resulted in a negative impact on net revenue, which was partially offset
by the favorable impact of gains associated with foreign currency hedging included in cost of goods sold.
• Shipment mix changes resulted primarily from favorable product mix changes between motorcycle platforms.
• Raw material prices were lower in 2012 relative to 2011 primarily due to lower metal costs.
• Manufacturing costs were favorably impacted by savings related to restructuring initiatives. Temporary inefficiencies
associated with the Company’s restructuring and transformation at its York facility were $33 million in 2012 compared
to $32 million in 2011.
The net increase in operating expense was primarily due to incremental investments to support the Company’s growth
initiatives and increases in employee costs including pension. These cost increases were partially offset by lower restructuring
expense related to the Company’s previously announced restructuring activities as well as lower engineering expense. For
further information regarding the Company’s previously announced restructuring activities, refer to Note 4 of Notes to
Condensed Consolidated Financial Statements.