Harley Davidson 2015 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). Unless the context otherwise requires, all references to
the "Company" includes Harley-Davidson, Inc. and all its subsidiaries. The Company operates in two business segments:
Motorcycles & Related Products (Motorcycles) and Financial Services. The Company’s reportable segments are strategic
business units that offer different products and services and are managed separately based on the fundamental differences in
their operations.
The Motorcycles segment consists of HDMC which designs, manufactures and sells at wholesale on-road Harley-
Davidson motorcycles as well as a line of motorcycle parts, accessories, general merchandise and related services. The
Company's products are sold to retail customers through a network of independent dealers. The Company conducts business on
a global basis, with sales in the following regions: Americas, Europe/Middle East/Africa (EMEA) and Asia-Pacific.
The Financial Services segment consists of HDFS which provides wholesale and retail financing and insurance and
insurance-related programs primarily to Harley-Davidson dealers and their retail customers. HDFS conducts business
principally in the United States and Canada.
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
The Company’s net income for 2015 was $752.2 million, or $3.69 per diluted share, compared to $844.6 million, or
$3.88 per diluted share, in 2014. Operating income from the Motorcycles segment was down $127.7 million compared to 2014.
Motorcycles segment operating income was negatively impacted by unfavorable currency exchange rates, lower wholesale
shipment volume, unfavorable product mix and higher selling, administrative and engineering expenses. These unfavorable
impacts were partially offset by model-year price increases and lower raw material and manufacturing costs. Operating income
from the Financial Services segment was up modestly from the prior year, increasing $2.4 million, or 0.9%, on higher net
interest income partially offset by a higher provision for credit losses.
Worldwide independent dealer retail sales of new Harley-Davidson motorcycles decreased 1.3% compared to 2014.
Retail sales of new Harley-Davidson motorcycles decreased 1.7% in the U.S. and 0.5% in international markets. Retail sales
were below the Company's expectations in 2015. In 2015, retail sales were adversely impacted by a significant increase in
competitiveness behind currency-driven discounting and the introduction of new products by a number of our competitors as
well as a challenging macro-economic environment.
Please refer to the “Results of Operations 2015 Compared to 2014” for additional details concerning the results for 2015.
(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, unfavorably or favorably, 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 the Outlook section are only made as
of January 28, 2016 and the remaining forward looking statements in this report are only made as the date of the filing of this
report (February 18, 2016), and the Company disclaims any obligation to publicly update such forward-looking statements to
reflect subsequent events or circumstances.