OVEROUR HANDLEBARS, WECANSEE THEWORLD.
AnnualReport2009
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FREEDOM.
We fuel
the passion for
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A BOND THAT HAS NO
BOUNDARIES.
COURAGE,FOCUSANDDIRECTIONDEARFELLOWSHAREHOLDERS:Intheworsteconomicdownturnindecades,2009wasayearthatrequiredHarley-Davidsontorespondwithtough,courageousdecisions.Wehadtwokeypriorities.First,weexecutedonourstrategytomanagethebusinesseffectivelyintheneartermandaddresstheimmediatechallenges.Butweneededtodomorethansimplypersevere.Weneededtoestablishabold,clearstrategicdirectionthatwouldmaximizeourop-portunitiesgoingforwardandrestoretheCompanyasastrongbusinessthatcouldconsistentlygrowoverthelonghaul.Wesetthatdirection,andthewordthatbestdescribesournewstrategyis“focus.”
ADDRESSINGTHEIMMEDI-ATECHALLENGESToaddresstheimmediatechal-lengesof2009andthedeeprecession,wedecreasedHarley-Davidsonmotorcycleshipmentstodealersbynearly27percentcomparedto2008.Managingsupplyinlinewithdemandremainsatoppriorityasakeyunderpinningofbrandstrength.Weembarkedonamajorconsolidationandrestructuringofourproductionoperationstogetourcost
structurerightatlowervolumes.WealsosucceededinobtainingthefundingneededtosupportthelendingactivitiesofHarley-DavidsonFinancialServices—anotherpriorityforusin2009.Ourabilitytofundmotorcycleloansforcustomerswasakeystrategicadvantagein2009andwasoneofthereasonsforourmarketsharegrowthduringtheyear.Asaresultofouractions,HDFSisonmuchstrongerfooting,andwebelievewehaveprovidedforitsanticipatedfundingneedsfor2010.
STRATEGICFOCUSLookingoutacrossalongerhorizon,inOctoberweunveiledourlong-term“DeliveringResultsThroughFocus”businessstrategy,withitsfourpillars:growth,continuousimprovement,leadershipdevelopmentandsustainability.Aspartofthisstrategytofocusourefforts,weannouncedwewouldexitfromtheBuellproductlineandsellMVAgusta,focusingourresourcesontheHarley-Davidsonbrand,whichincludescontinuingtoexpandthebrandglobally.
HIGH-POTENTIALBRANDTheheartofourstrategyisourstrongbeliefthatfocusingourinvestmentbehindthepowerfulHarley-Davidsonbrandprovidesasuperiorpathtotappingthefullpotentialofthebrandandtosustainedlong-termgrowth.TheHarley-Davidsonbrandconsistentlyranksamongthestrongestglobally,acrossmanydemographicgroups.Evenin
today’smorepractical,cautiousconsumerenvironment,peopleofallagesandbackgroundsstilldreamabouttheHarley-Davidsonexpe-rience.WeseegreatpotentialtodrivegrowthgloballyandintheU.S.throughuniqueproductsandexperiences,boththroughout-reachtonewcustomersandourcommitmenttocorecustomers.Ourstrategyismulti-generationalandmulti-cultural.Itcallsforustogrowsalestoourcorecustom-ers,whilegrowingsalestooutreachcustomersatafasterrate.OurDarkCustomprod-ucts,includingtheIron883,areastrongdrawforyoungadults,andmotorcyclesliketheStreetGlide,TriGlideandElectraGlideUltraLimitedhaveearnedtheongoingcommitmentofcoreriders.Ininternationalmarketsweplantoadd100to150dealerpointsthrough2014,andinthesameperiodincreaseinternationalretailunitsalestomorethan40percentoftotalretailunitsales,upfromabout33percentin2009.
CONTINUOUSIMPROVE-MENTWealsobelievewehavesignificantopportunitytorunourbusinessmoreeffectivelyandefficientlythroughcontinuousimprovementinmanufacturing,productdevelopmentandbusi-nessoperations.Ourfocusoncontinuousimprovementgoesbeyondsimplyreducingcosts.Itextendstoourabilitytodelivertherightbikestotherightmarketsattherighttime,anessentialcapabilitywhenit
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comestocustomersatisfactionandeffectivelymanagingsupplyinlinewithdemand.ThetransformationcurrentlyunderwayatourvehicleoperationsinYork,Pa.,demonstratesourcommitmenttoreshapingthefaceofHarley-Davidsonmanufacturing,withmuchgreaterflexibilityandsignificantsavingsfromamoreefficientoperation.Justasimpor-tantisthetransformationunderwayinHarley-Davidsonproductdevelopment.Ourworkfocusesonproductselection,costreductionandtimecompression,toreducetimetomarketandconsistentlydeliveroncustomerexpectations.Theseactionsrepresentimportantearlystepsinwhatwillbeanongoingjourneyincontinuousimprovement.
THEROADAHEAD2009wasindeedayearthattestedourcompany,butitwasalsoayearofgenuineachievementasweembarkedonanewcourse.ItwasayearinwhichwetookmanycourageousactionstopositionHarley-Davidsonforthefuture.Ouraccomplishmentswerepossibleonlythroughthehardwork,unwaveringspiritanddedicationofouremployees,dealersandsuppliers,whofocuseverydayondeliveringanoutstandingexperienceforourcustomers.Ithankallthemembersofourteamfortheirmanycontributions.Asweexecuteonourstrategy,wedonotpromiseeasysolutions.Consumerswilllikelycontinuetobecautiousinaneconomicenvironmentthat
remainschallenging.However,webelieveourstrategyandtheperformancemeasureswehavelaidoutarebasedonanappropriateandprudentapproachtothemarket.Deliveringonourplanswilltakediscipline,determi-nationandintensefocus,butweareconfidentwecanachieveourgoalsthroughourstrategy.ONECOMPANY,ONETEAM,ONEDIRECTIONWhenmyjourneyhereatHarley-DavidsonbeganlastMay,itwasobviousthatpeoplewerepassionateaboutthebrand.AsIhavehadtheopportunitytogettoknowourcustomers,dealersandemployees,jointhematralliesandeventsandridewiththem,itisclearthepassionisfarstrongeranddeeperthananythingIcouldeverhaveimagined.AllofusatHarley-Davidsonarefullycommitted—asonecompany,workingasoneteamandpull-inginonedirection—todoingtherightthingsforthiscompanyandforthecollectivefutureofallstakeholders.Byaligningtheorganizationbehindaclearstrategicdirection,wearemov-ingwithappropriateurgencyandmakinggreatprogresstowardourgoaltodojustthat.Weappreci-atethetrustyouhaveplacedinustomovethiscompanyforward.Whilethereisstillplentyofhardworkahead,Icouldnotfeelbetterabouttheprogresswehavemadeandthepathwehavechosen.
Sincerely,KEITHE.WANDELLPRESIDENTANDCHIEFEXECUTIVEOFFICER
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HistoryintheMaking
1903 Harley Davidson is founded
1903 The first Harley-Davidson motorcycle is manufactured
1907 The first Harley-Davidsons sold for police duty
1928 Front wheel brake appears
1937 William A. Davidson dies
1942 Walter Davidson dies
1943 Bill Harley dies
1950 Arthur Davidson dies
1960 Harley Davidson teams up with Italian manufacturer Aeronautica MacchiS.p.A. to produce a line of smaller bikes including the Shortster and Sprint
models.
1965 After being privately held for over 60 years, Harley-Davidson goespublic.
1972 First disc brakes on a Harley
1981 Senior executives at Harley-Davidson purchase the company from AMF.Harley-Davidson once again becomes a privately owned company.
1986 By offering common stock and subordinated notes, Harley-Davidson onceagain becomes a publically owned corporation.
1991 All Harleys change to five speed transmission
1992 All Harleys adopt a belt drive
1993 “90th Anniversary” homecoming
1995 First fuel injection models
2005 Harley-Davidson and the Muscular Dystrophy Association mark the 25th anniversary of their partnership.
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STATEMENT OF OPERATIONS DATA: 2009 2008 2007
Motorcycles and related products revenue $ 4,287,130 $ 5,578,414 $ 5,726,848Gross profit 1,386,196 1,931,144 2,114,100Selling, administrative and engineering expense 851,165 942,267 900,708Restructuring expense and other impairments 220,976 12,475 -
Operating income from motorcycles and related products 314,055 976,402 1,213,392
Financial services revenue 494,779 376,970 416,196Financial services expense 581,059 294,205 204,027Restructuring expense 3,302 - -Goodwill impairment 28,387 - -
Operating (loss) income from fifi nancial services (117,969) 82,765 212,169
Operating income 196,086 1,059,167 1,425,561Investment income 4,254 11,296 22,258Interest expense 21,680 4,542 -Income before income taxes 178,660 1,065,921 1,447,819Provision for income taxes 108,019 381,686 513,976Income from continuing operations 70,641 684,235 933,843Loss from discontinued operations, net of tax (125,757) (29,517) -Net (loss) income $ (55,116) $ 654,718 $ 933,843
Earnings per common share from continuing operations: Basic $ 0.30 $ 2.92 $ 3.75 Diluted $ 0.30 $ 2.92 $ 3.74Loss per common share from discontinued operations: Basic $ (0.54) $ (0.13) - Diluted $ (0.54) $ (0.13) -(Loss) earnings per common share: Basic $ (0.24) $ 2.80 $ 3.75 Diluted $ (0.24) $ 2.79 $ 3.74Weighted-average common shares: Basic 232,577 234,225 249,205 Diluted 233,573 234,477 249,882
Cash dividends per common share $ 0.40 $ 1.29 $ 1.06
CONSOLIDATED BALANCE SHEET DATA (AT DECEM-BER 31): Total assets $ 9,155,518 $ 7,828,625 $ 5,656,606 Total debt $ 5,636,129 $ 3,914,887 $ 2,099,955 Total equity $ 2,108,118 $ 2,115,603 $ 2,375,491
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FINANCIALHIGHLIGHTS
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HarleyDavidson,Inc.Year-End Stock Prices
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HARLEY DAVIDSON, INC.3700 West Juneau Avenue
P.O. Box 653Milwaukee, Wisconsin 53201-0653
www.harley-davidson.com
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