Harley-Davidson Announces Third Quarter 2019 Results

Published

MILWAUKEE, Oct. 22, 2019 /PRNewswire/ -- Harley-Davidson, Inc. (NYSE:HOG) today reported third quarter 2019 results. During the quarter, the company delivered earnings per share and Motorcycles segment operating margin ahead of expectations. The company was encouraged by global retail sales results driven by its actions and tempered U.S. industry rate of decline. The company also advanced its brand amplification efforts and developed capabilities to invigorate the Harley-Davidson experience and build committed riders.

Third Quarter 2019 Highlights

  • Delivered GAAP diluted EPS of $0.55
  • Repurchased $112.5 million of shares; paid dividends of $0.375 per share
  • Improved worldwide year-over-year retail sales rate
  • Launched new model year 2020 motorcycles, including Low Rider® S, CVO™ Tri Glide® and LiveWire™ – the company's first electric motorcycle
  • Introduced the Harley-Davidson IRONe™ electric-powered two-wheelers for kids
  • Realized significant savings from manufacturing optimization initiative
  • Progressed More Roads to Harley-Davidson accelerated plan for growth
  • Activated Amplify Brand as fourth More Roads growth catalyst to build committed riders

Third quarter 2019 GAAP diluted EPS was $0.55. Year-ago GAAP diluted EPS was $0.68. Excluding restructuring plan costs and the impact of recent EU and China tariffs, adjusted third quarter 2019 diluted EPS was $0.70 compared to $0.82 in the third quarter of 2018. Third quarter 2019 net income was $86.6 million on consolidated revenue of $1.27 billion versus net income of $113.9 million on consolidated revenue of $1.32 billion in 2018.

Harley-Davidson international retail sales were up 2.7 percent. The U.S. retail sales rate of decline tempered compared to recent quarters and was down 3.6 percent.

"We are driving stability in our business and bringing data insights and intensified consumer focus to guide our efforts to build committed riders and meet our near and long-term objectives," said Matt Levatich, president and chief executive officer of Harley-Davidson. "We'll continue to fuel all aspects of the riding experience and add new solutions to fully develop, engage and retain riders through their journey, starting with the very first spark of interest" said Levatich.

Strategy to Build the Next Generation of Riders

Building committed ridersDuring the quarter, Harley-Davidson sharpened its U.S. and international objectives through 2027 to better align with its expanded efforts to build committed riders.

Harley-Davidson's strategic objectives through 2027 are: expand to 4 million total Harley-Davidson riders in the U.S., grow international business to 50 percent of annual HDMC revenue, launch 100 new high impact motorcycles and do so profitably and sustainably.

Accelerated plan for growth More Roads to Harley-Davidson is the company's accelerated plan for growth that drives the company's strategy to deliver sustainable growth and build the next generation of riders from 2018 through 2022. The company is focusing investment and building new capabilities to invigorate the Harley-Davidson brand to spark passion that deepens rider commitment. To reflect this, Amplify Brand was added as a growth catalyst in the More Roads plan and will bolster the other growth catalysts of New Products, Broader Access and Stronger Dealers.

The company plans to maintain its investment and return profile and capital allocation strategy, while it funds strategic opportunities expected to drive revenue growth and expand operating margin, through 2022.

During the third quarter, Harley-Davidson continued to advance its More Roads plan initiatives:

  • Realized improvements in retail sales, service revenue and website visits for dealers participating in Harley-Davidson performance consulting
  • Strengthened its leadership in the electrification of motorcycles
  • Launched high impact new models and added significant technology to its class-leading model year 2020 motorcycles to inspire new and existing riders
  • Announced the presenting partnership with 2020 Hella Mega music experience tour

Manufacturing Optimization

Harley-Davidson realized total savings of $16.7 million and incurred costs of $10.0 million in the third quarter from its manufacturing optimization initiative, which was designed to further improve manufacturing operations and cost structure. Since the first quarter of 2018, the company closed its wheel manufacturing facility in Australia and consolidated its motorcycle assembly plant in Kansas City, Mo. into its plant in York, Pa. The company continues to expect 2019 full year costs of $40 million to $50 million, 2019 full year savings of $25 million to $30 million and ongoing annual cash savings of $65 million to $75 million after 2020.

Harley-Davidson Retail Motorcycle Sales

Vehicles 3rd Quarter 9 months
2019 2018 Change 2019 2018 Change
U.S. 34,903 36,220 (3.6)% 105,756 112,019 (5.6)%
EMEA 10,483 10,543 (0.6)% 36,899 39,249 (6.0)%
Asia Pacific 8,078 7,433 8.7 % 21,822 21,480 1.6 %
Latin America 2,498 2,577 (3.1)% 7,255 7,652 (5.2)%
Canada 2,560 2,453 4.4 % 7,787 8,340 (6.6)%
International Total 23,619 23,006 2.7 % 73,763 76,721 (3.9)%
Worldwide Total 58,522 59,226 (1.2)% 179,519 188,740 (4.9)%

The U.S. 601+cc industry was down 1.7 percent in the third quarter compared to the same period in 2018. Harley-Davidson's third quarter U.S. market share was 49.8 percent. Harley-Davidson's year-to-date Europe market share was 8.9 percent through September.

Motorcycles and Related Products Segment Results

Vehicles 3rd Quarter 9 months $ in thousands 3rd Quarter 9 months
2019 2018 Change 2019 2018 Change 2019 2018 Change 2019 2018 Change
U.S. 34,903 36,220 (3.6)% 105,756 112,019 (5.6)% Motorcycle Shipments (vehicles) 45,837 48,639 (5.8)% 173,485 185,176 (6.3)%
EMEA 10,483 10,543 (0.6)% 36,899 39,249 (6.0)% Revenue $1,068,942 $1,123,945 (4.9)% $3,698,583 $4,013,013 (7.8)%
Asia Pacific 8,078 7,433 8.7 % 21,822 21,480 1.6 %    Motorcycles $779,344 $821,670 (5.2)% $2,871,982 $3,144,796 (8.7)%
Latin America 2,498 2,577 (3.1)% 7,255 7,652 (5.2)%    Parts & Accessories $203,173 $212,406 (4.3)% $584,134 $612,495 (4.6)%
Canada 2,560 2,453 4.4 % 7,787 8,340 (6.6)%    General Merchandise $60,334 $58,266 3.5% $180,379 $183,520 (1.7)%
International Total 23,619 23,006 2.7 % 73,763 76,721 (3.9)% Gross Margin 29.9% 30.9% (1.0) pts. 30.3% 33.7% (3.4) pts.
Worldwide Total 58,522 59,226 (1.2)% 179,519 188,740 (4.9)% Operating Income $46,971 $65,662 (28.5)% $336,080 $481,906 (30.3)%
Operating Margin 4.4% 5.8% (1.4) pts. 9.1% 12.0% (2.9) pts.

Revenue from the Motorcycles and Related Products (Motorcycles) segment was down in the third quarter behind lower shipments. Operating income decreased primarily due to lower revenues and increased tariff costs, partially offset by savings realized from the company's manufacturing optimization initiative.

Financial Services Segment Results

Vehicles 3rd Quarter 9 months $ in thousands 3rd Quarter 9 months $ in thousands 3rd Quarter 9 months
2019 2018 Change 2019 2018 Change 2019 2018 Change 2019 2018 Change 2019 2018 Change 2019 2018 Change
U.S. 34,903 36,220 (3.6)% 105,756 112,019 (5.6)% Motorcycle Shipments (vehicles) 45,837 48,639 (5.8)% 173,485 185,176 (6.3)% Revenue $203,577 $191,724 6.2% $590,935 $558,000 5.9%
EMEA 10,483 10,543 (0.6)% 36,899 39,249 (6.0)% Revenue $1,068,942 $1,123,945 (4.9)% $3,698,583 $4,013,013 (7.8)% Operating Income $72,873 $83,754 (13.0)% $207,133 $227,874 (9.1)%
Asia Pacific 8,078 7,433 8.7 % 21,822 21,480 1.6 %    Motorcycles $779,344 $821,670 (5.2)% $2,871,982 $3,144,796 (8.7)%
Latin America 2,498 2,577 (3.1)% 7,255 7,652 (5.2)%    Parts & Accessories $203,173 $212,406 (4.3)% $584,134 $612,495 (4.6)%
Canada 2,560 2,453 4.4 % 7,787 8,340 (6.6)%    General Merchandise $60,334 $58,266 3.5% $180,379 $183,520 (1.7)%
International Total 23,619 23,006 2.7 % 73,763 76,721 (3.9)% Gross Margin 29.9% 30.9% (1.0) pts. 30.3% 33.7% (3.4) pts.
Worldwide Total 58,522 59,226 (1.2)% 179,519 188,740 (4.9)% Operating Income $46,971 $65,662 (28.5)% $336,080 $481,906 (30.3)%
Operating Margin 4.4% 5.8% (1.4) pts. 9.1% 12.0% (2.9) pts.

Financial Services segment third quarter operating income of $72.9 million was down 13.0 percent.

Other Results

Cash and marketable securities were $862.4 million at the end of the third quarter of 2019, compared to $937.0 million in 2018. Through September, Harley-Davidson generated $848.6 million of cash from operating activities in 2019 compared to $1.12 billion in 2018. The company paid a cash dividend of $0.375 per share in the third quarter, and a cumulative total of $1.125 per share for the first nine months of 2019. On a discretionary basis, Harley-Davidson repurchased 3.3 million shares of its common stock during the quarter for $112.5 million. During the quarter, there were approximately 156.9 million weighted-average diluted common shares outstanding. At the end of the quarter, 10.4 million shares remained on a board-approved share repurchase authorization.

Harley-Davidson's year-to-date effective tax rate was 24.6 percent. 

2019 Outlook 

For the full year 2019, the company continues to expect:

  • Motorcycle shipments to be approximately 212,000 to 217,000. In the fourth quarter, the company expects to ship approximately 38,500 to 43,500 motorcycles
  • Motorcycles segment operating margin as a percent of revenue to be approximately 6 to 7 percent
  • Financial Services segment operating income to be down year-over-year
  • Effective tax rate of approximately 24 to 25 percent

Additionally, the company now expects:

  • Capital expenditures of $205 million to $225 million (including approximately $20 million to support manufacturing optimization); $20 million less than prior quarter guidance

Company Background

Harley-Davidson, Inc. is the parent company of Harley-Davidson Motor Company and Harley-Davidson Financial Services. Since 1903, Harley-Davidson has fulfilled dreams of personal freedom by leading the innovation of two-wheeled mobility. The company offers an expanding range of leading-edge, distinctive and customizable motorcycles and brings the brand to life through Harley-Davidson riding experiences and exceptional motorcycle parts, accessories, riding gear and apparel. Harley-Davidson Financial Services provides financing, insurance and other programs to help get Harley-Davidson riders on the road. Learn more about how Harley-Davidson is Building the Next Generation of Riders at www.harley-davidson.com.

Webcast Presentation

Harley-Davidson will discuss third quarter results and its outlook on an audio webcast at 8:00 a.m. CT today. The webcast login and supporting slides can be accessed at http://investor.harley-davidson.com/news-and-events/events-and-presentations. The audio replay will be available by approximately 10:00 a.m. CT.

Non-GAAP Measures

This press release includes financial measures that have not been calculated in accordance with U.S. generally accepted accounting principles (GAAP) and are therefore referred to as non-GAAP financial measures. The non-GAAP measures described below are intended to be considered by users as supplemental information to the equivalent GAAP measures, to aid investors in better understanding the company's financial results. The company believes that these non-GAAP measures provide useful perspective on underlying business results and trends, and a means to assess period-over-period results. These non-GAAP measures should not be considered as a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP. These non-GAAP measures may not be the same as similarly titled measures used by other companies due to possible differences in method and in items or events being adjusted.

The non-GAAP measures included in this press release are adjusted net income and adjusted diluted EPS excluding restructuring plan costs and the impact of recent EU and China tariffs. Restructuring plan costs include restructuring expenses as presented in the consolidated statements of income and costs associated with temporary inefficiencies incurred in connection with the manufacturing optimization initiative included in Motorcycles and Related Products cost of goods sold. The impact of recent EU and China tariffs includes incremental European Union and China tariffs imposed beginning in 2018 on the company's products shipped from the U.S., as well as incremental U.S. tariffs imposed beginning in 2018 on certain items imported from China. The impact of recent EU and China tariffs excludes higher metals cost resulting from the U.S. steel and aluminum tariffs. These adjustments are consistent with the approach used for 2018 to determine performance relative to financial objectives under the company's incentive compensation plans. A reconciliation of these non-GAAP measures from the comparable GAAP measure is included later in this press release.

Forward-Looking Statements

The company intends that certain matters discussed in this release 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 because the context of the statement will include words such as the company "believes," "anticipates," "expects," "plans," "may," "will," "estimates," or words of similar meaning. Similarly, statements that describe future plans, strategies, objectives, outlooks, targets, guidance, commitments, 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 release. Certain of such risks and uncertainties are described below. 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 release are only made as of the date of this release, and the company disclaims any obligation to publicly update such forward-looking statements to reflect subsequent events or circumstances.

The company's ability to meet the targets and expectations noted above depends upon, among other factors, the company's ability to (i) execute its business plans and strategies, including the elements of the More Roads to Harley-Davidson accelerated plan for growth that the company disclosed on July 30, 2018 and updated September 24, 2019, and strengthen its existing business while enabling growth, (ii) manage and predict the impact that new or adjusted tariffs may have on the company's ability to sell product internationally, and the cost of raw materials and components, (iii) execute its strategy of growing ridership, globally, (iv) effectively execute the company's manufacturing optimization initiative within expected costs and timing and successfully carry out its global manufacturing and assembly operations, (v) accurately analyze, predict and react to changing market conditions and successfully adjust to shifting global consumer needs and interests, (vi) successfully launch a smaller displacement motorcycle in India, (vii) develop and introduce products, services and experiences on a timely basis that the market accepts, that enable the company to generate desired sales levels and that provide the desired financial returns, (viii) perform in a manner that enables the company to benefit from market opportunities while competing against existing and new competitors, (ix) realize expectations concerning market demand for electric models, which will depend in part on the building of necessary infrastructure, (x) prevent, detect, and remediate any issues with its motorcycles or any issues associated with the manufacturing processes to avoid delays in new model launches, recall campaigns, regulatory agency investigations, increased warranty costs or litigation and adverse effects on its reputation and brand strength, and carry out any product programs or recalls within expected costs and timing, (xi) manage supply chain issues, including quality issues and any unexpected interruptions or price increases caused by raw material shortages or natural disasters, (xii) manage the impact that prices for and supply of used motorcycles may have on its business, including on retail sales of new motorcycles, (xiii) reduce other costs to offset costs of the More Roads to Harley-Davidson plan and redirect capital without adversely affecting its existing business, (xiv) balance production volumes for its new motorcycles with consumer demand, (xv) manage risks that arise through expanding international manufacturing, operations and sales, (xvi) manage through changes in general economic and business conditions, including changing capital, credit and retail markets, and the changing political environment, (xvii) successfully determine, implement on a timely basis, and maintain a manner in which to sell motorcycles in the European Union, China, and ASEAN countries that does not subject its motorcycles to incremental tariffs, (xviii) accurately estimate and adjust to fluctuations in foreign currency exchange rates, interest rates and commodity prices, (xix) continue to develop the capabilities of its distributors and dealers, effectively implement changes relating to its dealers and distribution methods and manage the risks that its independent dealers may have difficulty obtaining capital and managing through changing economic conditions and consumer demand, (xx) retain and attract talented employees, (xxi) prevent a cybersecurity breach involving consumer, employee, dealer, supplier, or company data and respond to evolving regulatory requirements regarding data security, (xxii) manage the credit quality, the loan servicing and collection activities, and the recovery rates of HDFS' loan portfolio, (xxiii) adjust to tax reform, healthcare inflation and reform and pension reform, and successfully estimate the impact of any such reform on the company's business, (xxiv) manage through the effects inconsistent and unpredictable weather patterns may have on retail sales of motorcycles, (xxv) implement and manage enterprise-wide information technology systems, including systems at its manufacturing facilities, (xxvi) manage changes and prepare for requirements in legislative and regulatory environments for its products, services and operations, (xxvii) manage its exposure to product liability claims and commercial or contractual disputes, (xxviii) successfully access the capital and/or credit markets on terms (including interest rates) that are acceptable to the company and within its expectations, (xxix) manage its Thailand corporate and manufacturing operation in a manner that allows the company to avail itself of preferential free trade agreements and duty rates, and sufficiently lower prices of its motorcycles in certain markets, (xxx) continue to manage the relationships and agreements that the company has with its labor unions to help drive long-term competitiveness, (xxxi) accurately predict the margins of its Motorcycles & Related Products segment in light of, among other things, tariffs, the cost associated with the More Roads to Harley-Davidson plan, the company's manufacturing optimization plan, and the company's complex global supply chain, and (xxxii) develop and maintain a productive relationship with Zhejiang Qianjiang Motorcycle Co., Ltd. and launch related products in a timely manner.

The company could experience delays or disruptions in its operations as a result of work stoppages, strikes, natural causes, terrorism or other factors. Other factors are described in risk factors that the company has disclosed in documents previously filed with the Securities and Exchange Commission. Many of these risk factors are impacted by the current changing capital, credit and retail markets and the company's ability to manage through inconsistent economic conditions.

The company's ability to sell its motorcycles and related products and services and to meet its financial expectations also depends on the ability of the company's independent dealers to sell its motorcycles and related products and services to retail customers. The company depends on the capability and financial capacity of its independent dealers to develop and implement effective retail sales plans to create demand for the motorcycles and related products and services they purchase from the company. In addition, the company's independent dealers and distributors may experience difficulties in operating their businesses and selling Harley-Davidson motorcycles and related products and services as a result of weather, economic conditions or other factors. In recent years, HDFS has experienced historically low levels of retail credit losses, but there is no assurance that this will continue. The company believes that HDFS' retail credit losses may increase over time due to changing consumer credit behavior and HDFS' efforts to increase prudently structured loan approvals to sub-prime borrowers, as well as actions that the company has taken and could take that impact motorcycle values. Refer to "Risk Factors" under Item 1A of the company's Annual Report on Form 10-K for the year ended December 31, 2018 for a discussion of additional risk factors and a more complete discussion of some of the cautionary statements noted above.

### (HOG-F)

Vehicles 3rd Quarter 9 months $ in thousands 3rd Quarter 9 months $ in thousands 3rd Quarter 9 months Harley-Davidson, Inc.
2019 2018 Change 2019 2018 Change 2019 2018 Change 2019 2018 Change 2019 2018 Change 2019 2018 Change Condensed Consolidated Statements of Income
U.S. 34,903 36,220 (3.6)% 105,756 112,019 (5.6)% Motorcycle Shipments (vehicles) 45,837 48,639 (5.8)% 173,485 185,176 (6.3)% Revenue $203,577 $191,724 6.2% $590,935 $558,000 5.9% (In thousands, except per share amounts)
EMEA 10,483 10,543 (0.6)% 36,899 39,249 (6.0)% Revenue $1,068,942 $1,123,945 (4.9)% $3,698,583 $4,013,013 (7.8)% Operating Income $72,873 $83,754 (13.0)% $207,133 $227,874 (9.1)%
Asia Pacific 8,078 7,433 8.7 % 21,822 21,480 1.6 %    Motorcycles $779,344 $821,670 (5.2)% $2,871,982 $3,144,796 (8.7)% (Unaudited) (Unaudited) (Unaudited) (Unaudited)
Latin America 2,498 2,577 (3.1)% 7,255 7,652 (5.2)%    Parts & Accessories $203,173 $212,406 (4.3)% $584,134 $612,495 (4.6)% Three months ended Nine months ended
Canada 2,560 2,453 4.4 % 7,787 8,340 (6.6)%    General Merchandise $60,334 $58,266 3.5% $180,379 $183,520 (1.7)% September 29, September 30, September 29, September 30,
International Total 23,619 23,006 2.7 % 73,763 76,721 (3.9)% Gross Margin 29.9% 30.9% (1.0) pts. 30.3% 33.7% (3.4) pts. 2019 2018 2019 2018
Worldwide Total 58,522 59,226 (1.2)% 179,519 188,740 (4.9)% Operating Income $46,971 $65,662 (28.5)% $336,080 $481,906 (30.3)%
Operating Margin 4.4% 5.8% (1.4) pts. 9.1% 12.0% (2.9) pts. Motorcycles and Related Products revenue $ 1,068,942 $ 1,123,945 $ 3,698,583 $ 4,013,013
Gross profit 320,064 347,415 1,122,241 1,353,273
Selling, administrative and engineering expense 265,464 266,921 754,479 797,323
Restructuring expense  7,629 14,832 31,682 74,044
  Operating income from Motorcycles and Related Products 46,971 65,662 336,080 481,906
Financial Services revenue 203,577 191,724 590,935 558,000
Financial Services expense 130,704 107,970 383,802 330,126
  Operating income from Financial Services 72,873 83,754 207,133 227,874
Operating income 119,844 149,416 543,213 709,780
Other income (expense), net 3,160 644 11,857 1,509
Investment income (loss) 2,041 (1,106) 11,970 2,630
Interest expense 7,789 7,762 23,304 23,180
Income before income taxes 117,256 141,192 543,736 690,739
Provision for income taxes 30,693 27,337 133,597 159,783
Net income $    86,563 $  113,855 $   410,139 $   530,956
Earnings per share:
  Basic $        0.55 $        0.69 $         2.59 $         3.18
  Diluted $        0.55 $        0.68 $         2.58 $         3.17
Weighted-average shares:
  Basic 156,239 165,927 158,117 166,885
  Diluted 156,944 166,664 158,794 167,681
Cash dividends per share: $      0.375 $      0.370 $      1.125 $      1.110

 

Vehicles 3rd Quarter 9 months $ in thousands 3rd Quarter 9 months $ in thousands 3rd Quarter 9 months Harley-Davidson, Inc. Harley-Davidson, Inc.
2019 2018 Change 2019 2018 Change 2019 2018 Change 2019 2018 Change 2019 2018 Change 2019 2018 Change Condensed Consolidated Statements of Income Reconciliation of GAAP Amounts to Non-GAAP Amounts
U.S. 34,903 36,220 (3.6)% 105,756 112,019 (5.6)% Motorcycle Shipments (vehicles) 45,837 48,639 (5.8)% 173,485 185,176 (6.3)% Revenue $203,577 $191,724 6.2% $590,935 $558,000 5.9% (In thousands, except per share amounts) (In thousands, except per share amounts) 
EMEA 10,483 10,543 (0.6)% 36,899 39,249 (6.0)% Revenue $1,068,942 $1,123,945 (4.9)% $3,698,583 $4,013,013 (7.8)% Operating Income $72,873 $83,754 (13.0)% $207,133 $227,874 (9.1)%
Asia Pacific 8,078 7,433 8.7 % 21,822 21,480 1.6 %    Motorcycles $779,344 $821,670 (5.2)% $2,871,982 $3,144,796 (8.7)% (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited)
Latin America 2,498 2,577 (3.1)% 7,255 7,652 (5.2)%    Parts & Accessories $203,173 $212,406 (4.3)% $584,134 $612,495 (4.6)% Three months ended Nine months ended Three months ended Nine months ended
Canada 2,560 2,453 4.4 % 7,787 8,340 (6.6)%    General Merchandise $60,334 $58,266 3.5% $180,379 $183,520 (1.7)% September 29, September 30, September 29, September 30, September 29, September 30, September 29, September 30,
International Total 23,619 23,006 2.7 % 73,763 76,721 (3.9)% Gross Margin 29.9% 30.9% (1.0) pts. 30.3% 33.7% (3.4) pts. 2019 2018 2019 2018 2019 2018 2019 2018
Worldwide Total 58,522 59,226 (1.2)% 179,519 188,740 (4.9)% Operating Income $46,971 $65,662 (28.5)% $336,080 $481,906 (30.3)% NET INCOME EXCLUDING RESTRUCTURING PLAN COSTSAND THE IMPACT OF RECENT EU AND CHINA TARIFFS
Operating Margin 4.4% 5.8% (1.4) pts. 9.1% 12.0% (2.9) pts. Motorcycles and Related Products revenue $ 1,068,942 $ 1,123,945 $ 3,698,583 $ 4,013,013 Net income (GAAP) $   86,563 $  113,855 $  410,139 $  530,956
Gross profit 320,064 347,415 1,122,241 1,353,273 Restructuring plan costs 10,091 21,038 41,715 83,370
Selling, administrative and engineering expense 265,464 266,921 754,479 797,323 Impact of recent EU and China tariffs 21,594 10,312 76,971 10,312
Restructuring expense  7,629 14,832 31,682 74,044 Tax effect of adjustments(1) (8,063) (7,602) (29,160) (22,718)
  Operating income from Motorcycles and Related Products 46,971 65,662 336,080 481,906 Adjustments net of tax 23,622 23,748 89,526 70,964
Adjusted net income (non-GAAP) $  110,185 $  137,603 $  499,665 $  601,920
Financial Services revenue 203,577 191,724 590,935 558,000
Financial Services expense 130,704 107,970 383,802 330,126 DILUTED EPS EXCLUDING RESTRUCTURING PLAN COSTS AND THE IMPACT OF RECENT EU AND CHINA TARIFFS
  Operating income from Financial Services 72,873 83,754 207,133 227,874 Diluted earnings per share (GAAP) $       0.55 $       0.68 $       2.58 $       3.17
Adjustments net of tax, per share 0.15 0.14 0.56 0.42
Operating income 119,844 149,416 543,213 709,780 Adjusted diluted earnings per share (non-GAAP) $       0.70 $       0.82 $       3.14 $       3.59
Other income (expense), net 3,160 644 11,857 1,509
Investment income (loss) 2,041 (1,106) 11,970 2,630
Interest expense 7,789 7,762 23,304 23,180
Income before income taxes 117,256 141,192 543,736 690,739
Provision for income taxes 30,693 27,337 133,597 159,783
Net income $    86,563 $  113,855 $   410,139 $   530,956
Earnings per share:
  Basic $        0.55 $        0.69 $         2.59 $         3.18
  Diluted $        0.55 $        0.68 $         2.58 $         3.17
Weighted-average shares:
  Basic 156,239 165,927 158,117 166,885
  Diluted 156,944 166,664 158,794 167,681
Cash dividends per share: $      0.375 $      0.370 $      1.125 $      1.110

Vehicles 3rd Quarter 9 months $ in thousands 3rd Quarter 9 months $ in thousands 3rd Quarter 9 months Harley-Davidson, Inc. Harley-Davidson, Inc.
2019 2018 Change 2019 2018 Change 2019 2018 Change 2019 2018 Change 2019 2018 Change 2019 2018 Change Condensed Consolidated Statements of Income Reconciliation of GAAP Amounts to Non-GAAP Amounts (1) The income tax effect of adjustments has been computed using the company's effective income tax rate
U.S. 34,903 36,220 (3.6)% 105,756 112,019 (5.6)% Motorcycle Shipments (vehicles) 45,837 48,639 (5.8)% 173,485 185,176 (6.3)% Revenue $203,577 $191,724 6.2% $590,935 $558,000 5.9% (In thousands, except per share amounts) (In thousands, except per share amounts) 
EMEA 10,483 10,543 (0.6)% 36,899 39,249 (6.0)% Revenue $1,068,942 $1,123,945 (4.9)% $3,698,583 $4,013,013 (7.8)% Operating Income $72,873 $83,754 (13.0)% $207,133 $227,874 (9.1)%
Asia Pacific 8,078 7,433 8.7 % 21,822 21,480 1.6 %    Motorcycles $779,344 $821,670 (5.2)% $2,871,982 $3,144,796 (8.7)% (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited)
Latin America 2,498 2,577 (3.1)% 7,255 7,652 (5.2)%    Parts & Accessories $203,173 $212,406 (4.3)% $584,134 $612,495 (4.6)% Three months ended Nine months ended Three months ended Nine months ended
Canada 2,560 2,453 4.4 % 7,787 8,340 (6.6)%    General Merchandise $60,334 $58,266 3.5% $180,379 $183,520 (1.7)% September 29, September 30, September 29, September 30, September 29, September 30, September 29, September 30,
International Total 23,619 23,006 2.7 % 73,763 76,721 (3.9)% Gross Margin 29.9% 30.9% (1.0) pts. 30.3% 33.7% (3.4) pts. 2019 2018 2019 2018 2019 2018 2019 2018
Worldwide Total 58,522 59,226 (1.2)% 179,519 188,740 (4.9)% Operating Income $46,971 $65,662 (28.5)% $336,080 $481,906 (30.3)% NET INCOME EXCLUDING RESTRUCTURING PLAN COSTSAND THE IMPACT OF RECENT EU AND CHINA TARIFFS
Operating Margin 4.4% 5.8% (1.4) pts. 9.1% 12.0% (2.9) pts. Motorcycles and Related Products revenue $ 1,068,942 $ 1,123,945 $ 3,698,583 $ 4,013,013 Net income (GAAP) $   86,563 $  113,855 $  410,139 $  530,956
Gross profit 320,064 347,415 1,122,241 1,353,273 Restructuring plan costs 10,091 21,038 41,715 83,370
Selling, administrative and engineering expense 265,464 266,921 754,479 797,323 Impact of recent EU and China tariffs 21,594 10,312 76,971 10,312
Restructuring expense  7,629 14,832 31,682 74,044 Tax effect of adjustments(1) (8,063) (7,602) (29,160) (22,718)
  Operating income from Motorcycles and Related Products 46,971 65,662 336,080 481,906 Adjustments net of tax 23,622 23,748 89,526 70,964
Adjusted net income (non-GAAP) $  110,185 $  137,603 $  499,665 $  601,920
Financial Services revenue 203,577 191,724 590,935 558,000
Financial Services expense 130,704 107,970 383,802 330,126 DILUTED EPS EXCLUDING RESTRUCTURING PLAN COSTS AND THE IMPACT OF RECENT EU AND CHINA TARIFFS
  Operating income from Financial Services 72,873 83,754 207,133 227,874 Diluted earnings per share (GAAP) $       0.55 $       0.68 $       2.58 $       3.17
Adjustments net of tax, per share 0.15 0.14 0.56 0.42
Operating income 119,844 149,416 543,213 709,780 Adjusted diluted earnings per share (non-GAAP) $       0.70 $       0.82 $       3.14 $       3.59
Other income (expense), net 3,160 644 11,857 1,509
Investment income (loss) 2,041 (1,106) 11,970 2,630
Interest expense 7,789 7,762 23,304 23,180
Income before income taxes 117,256 141,192 543,736 690,739
Provision for income taxes 30,693 27,337 133,597 159,783
Net income $    86,563 $  113,855 $   410,139 $   530,956
Earnings per share:
  Basic $        0.55 $        0.69 $         2.59 $         3.18
  Diluted $        0.55 $        0.68 $         2.58 $         3.17
Weighted-average shares:
  Basic 156,239 165,927 158,117 166,885
  Diluted 156,944 166,664 158,794 167,681
Cash dividends per share: $      0.375 $      0.370 $      1.125 $      1.110

 

Vehicles 3rd Quarter 9 months $ in thousands 3rd Quarter 9 months $ in thousands 3rd Quarter 9 months Harley-Davidson, Inc. Harley-Davidson, Inc. Harley-Davidson, Inc.
2019 2018 Change 2019 2018 Change 2019 2018 Change 2019 2018 Change 2019 2018 Change 2019 2018 Change Condensed Consolidated Statements of Income Reconciliation of GAAP Amounts to Non-GAAP Amounts (1) The income tax effect of adjustments has been computed using the company's effective income tax rate Condensed Consolidated Balance Sheets
U.S. 34,903 36,220 (3.6)% 105,756 112,019 (5.6)% Motorcycle Shipments (vehicles) 45,837 48,639 (5.8)% 173,485 185,176 (6.3)% Revenue $203,577 $191,724 6.2% $590,935 $558,000 5.9% (In thousands, except per share amounts) (In thousands, except per share amounts)  (In thousands)
EMEA 10,483 10,543 (0.6)% 36,899 39,249 (6.0)% Revenue $1,068,942 $1,123,945 (4.9)% $3,698,583 $4,013,013 (7.8)% Operating Income $72,873 $83,754 (13.0)% $207,133 $227,874 (9.1)%
Asia Pacific 8,078 7,433 8.7 % 21,822 21,480 1.6 %    Motorcycles $779,344 $821,670 (5.2)% $2,871,982 $3,144,796 (8.7)% (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited)
Latin America 2,498 2,577 (3.1)% 7,255 7,652 (5.2)%    Parts & Accessories $203,173 $212,406 (4.3)% $584,134 $612,495 (4.6)% Three months ended Nine months ended Three months ended Nine months ended September 29, December 31, September 30,
Canada 2,560 2,453 4.4 % 7,787 8,340 (6.6)%    General Merchandise $60,334 $58,266 3.5% $180,379 $183,520 (1.7)% September 29, September 30, September 29, September 30, September 29, September 30, September 29, September 30, 2019 2018 2018
International Total 23,619 23,006 2.7 % 73,763 76,721 (3.9)% Gross Margin 29.9% 30.9% (1.0) pts. 30.3% 33.7% (3.4) pts. 2019 2018 2019 2018 2019 2018 2019 2018
Worldwide Total 58,522 59,226 (1.2)% 179,519 188,740 (4.9)% Operating Income $46,971 $65,662 (28.5)% $336,080 $481,906 (30.3)% NET INCOME EXCLUDING RESTRUCTURING PLAN COSTSAND THE IMPACT OF RECENT EU AND CHINA TARIFFS ASSETS
Operating Margin 4.4% 5.8% (1.4) pts. 9.1% 12.0% (2.9) pts. Motorcycles and Related Products revenue $ 1,068,942 $ 1,123,945 $ 3,698,583 $ 4,013,013 Net income (GAAP) $   86,563 $  113,855 $  410,139 $  530,956 Current assets:
Gross profit 320,064 347,415 1,122,241 1,353,273 Restructuring plan costs 10,091 21,038 41,715 83,370     Cash and cash equivalents $   862,381 $ 1,203,766 $   926,992
Selling, administrative and engineering expense 265,464 266,921 754,479 797,323 Impact of recent EU and China tariffs 21,594 10,312 76,971 10,312     Marketable securities - 10,007 10,011
Restructuring expense  7,629 14,832 31,682 74,044 Tax effect of adjustments(1) (8,063) (7,602) (29,160) (22,718)     Accounts receivable, net 307,616 306,474 332,309
  Operating income from Motorcycles and Related Products 46,971 65,662 336,080 481,906 Adjustments net of tax 23,622 23,748 89,526 70,964     Finance receivables, net 2,210,001 2,214,424 2,116,386
Adjusted net income (non-GAAP) $  110,185 $  137,603 $  499,665 $  601,920     Inventories 489,098 556,128 516,247
Financial Services revenue 203,577 191,724 590,935 558,000     Restricted cash 79,115 49,275 36,471
Financial Services expense 130,704 107,970 383,802 330,126 DILUTED EPS EXCLUDING RESTRUCTURING PLAN COSTS AND THE IMPACT OF RECENT EU AND CHINA TARIFFS     Other current assets 140,786 144,368 151,042
  Operating income from Financial Services 72,873 83,754 207,133 227,874 Diluted earnings per share (GAAP) $       0.55 $       0.68 $       2.58 $       3.17 4,088,997 4,484,442 4,089,458
Adjustments net of tax, per share 0.15 0.14 0.56 0.42
Operating income 119,844 149,416 543,213 709,780 Adjusted diluted earnings per share (non-GAAP) $       0.70 $       0.82 $       3.14 $       3.59 Finance receivables, net 5,305,579 5,007,507 5,187,176
Other income (expense), net 3,160 644 11,857 1,509 Other long-term assets 1,181,654 1,173,715 1,227,166
Investment income (loss) 2,041 (1,106) 11,970 2,630 $10,576,230 $10,665,664 $10,503,800
Interest expense 7,789 7,762 23,304 23,180
Income before income taxes 117,256 141,192 543,736 690,739 LIABILITIES AND SHAREHOLDERS' EQUITY
Provision for income taxes 30,693 27,337 133,597 159,783 Current liabilities:
Net income $    86,563 $  113,855 $   410,139 $   530,956     Accounts payable and accrued liabilities $   905,941 $   885,991 $   875,799
    Short-term debt 1,013,137 1,135,810 1,373,859
Earnings per share:     Current portion of long-term debt, net 1,779,673 1,575,799 1,526,156
  Basic $        0.55 $        0.69 $         2.59 $         3.18 3,698,751 3,597,600 3,775,814
  Diluted $        0.55 $        0.68 $         2.58 $         3.17
Long-term debt, net 4,607,041 4,887,667 4,196,517
Weighted-average shares: Pension and postretirement healthcare liabilities 171,593 202,229 166,936
  Basic 156,239 165,927 158,117 166,885 Other long-term liabilities 262,626 204,219 211,561
  Diluted 156,944 166,664 158,794 167,681
Shareholders' equity 1,836,219 1,773,949 2,152,972
Cash dividends per share: $      0.375 $      0.370 $      1.125 $      1.110 $10,576,230 $10,665,664 $10,503,800

 

Vehicles 3rd Quarter 9 months $ in thousands 3rd Quarter 9 months $ in thousands 3rd Quarter 9 months Harley-Davidson, Inc. Harley-Davidson, Inc. Harley-Davidson, Inc. Harley-Davidson, Inc.
2019 2018 Change 2019 2018 Change 2019 2018 Change 2019 2018 Change 2019 2018 Change 2019 2018 Change Condensed Consolidated Statements of Income Reconciliation of GAAP Amounts to Non-GAAP Amounts (1) The income tax effect of adjustments has been computed using the company's effective income tax rate Condensed Consolidated Balance Sheets Condensed Consolidated Statements of Cash Flows
U.S. 34,903 36,220 (3.6)% 105,756 112,019 (5.6)% Motorcycle Shipments (vehicles) 45,837 48,639 (5.8)% 173,485 185,176 (6.3)% Revenue $203,577 $191,724 6.2% $590,935 $558,000 5.9% (In thousands, except per share amounts) (In thousands, except per share amounts)  (In thousands)  (In thousands)
EMEA 10,483 10,543 (0.6)% 36,899 39,249 (6.0)% Revenue $1,068,942 $1,123,945 (4.9)% $3,698,583 $4,013,013 (7.8)% Operating Income $72,873 $83,754 (13.0)% $207,133 $227,874 (9.1)%
Asia Pacific 8,078 7,433 8.7 % 21,822 21,480 1.6 %    Motorcycles $779,344 $821,670 (5.2)% $2,871,982 $3,144,796 (8.7)% (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited)
Latin America 2,498 2,577 (3.1)% 7,255 7,652 (5.2)%    Parts & Accessories $203,173 $212,406 (4.3)% $584,134 $612,495 (4.6)% Three months ended Nine months ended Three months ended Nine months ended September 29, December 31, September 30, Nine months ended
Canada 2,560 2,453 4.4 % 7,787 8,340 (6.6)%    General Merchandise $60,334 $58,266 3.5% $180,379 $183,520 (1.7)% September 29, September 30, September 29, September 30, September 29, September 30, September 29, September 30, 2019 2018 2018 September 29, September 30,
International Total 23,619 23,006 2.7 % 73,763 76,721 (3.9)% Gross Margin 29.9% 30.9% (1.0) pts. 30.3% 33.7% (3.4) pts. 2019 2018 2019 2018 2019 2018 2019 2018 2019 2018
Worldwide Total 58,522 59,226 (1.2)% 179,519 188,740 (4.9)% Operating Income $46,971 $65,662 (28.5)% $336,080 $481,906 (30.3)% NET INCOME EXCLUDING RESTRUCTURING PLAN COSTSAND THE IMPACT OF RECENT EU AND CHINA TARIFFS ASSETS
Operating Margin 4.4% 5.8% (1.4) pts. 9.1% 12.0% (2.9) pts. Motorcycles and Related Products revenue $ 1,068,942 $ 1,123,945 $ 3,698,583 $ 4,013,013 Net income (GAAP) $   86,563 $  113,855 $  410,139 $  530,956 Current assets: Net cash provided by operating activities $    848,649 $ 1,122,555
Gross profit 320,064 347,415 1,122,241 1,353,273 Restructuring plan costs 10,091 21,038 41,715 83,370     Cash and cash equivalents $   862,381 $ 1,203,766 $   926,992
Selling, administrative and engineering expense 265,464 266,921 754,479 797,323 Impact of recent EU and China tariffs 21,594 10,312 76,971 10,312     Marketable securities - 10,007 10,011 Cash flows from investing activities:
Restructuring expense  7,629 14,832 31,682 74,044 Tax effect of adjustments(1) (8,063) (7,602) (29,160) (22,718)     Accounts receivable, net 307,616 306,474 332,309   Capital expenditures (121,161) (119,845)
  Operating income from Motorcycles and Related Products 46,971 65,662 336,080 481,906 Adjustments net of tax 23,622 23,748 89,526 70,964     Finance receivables, net 2,210,001 2,214,424 2,116,386   Finance receivables, net (445,708) (474,465)
Adjusted net income (non-GAAP) $  110,185 $  137,603 $  499,665 $  601,920     Inventories 489,098 556,128 516,247   Acquisition of business (7,000) -
Financial Services revenue 203,577 191,724 590,935 558,000     Restricted cash 79,115 49,275 36,471   Other investing activities 22,395 (21,753)
Financial Services expense 130,704 107,970 383,802 330,126 DILUTED EPS EXCLUDING RESTRUCTURING PLAN COSTS AND THE IMPACT OF RECENT EU AND CHINA TARIFFS     Other current assets 140,786 144,368 151,042 Net cash used by investing activities (551,474) (616,063)
  Operating income from Financial Services 72,873 83,754 207,133 227,874 Diluted earnings per share (GAAP) $       0.55 $       0.68 $       2.58 $       3.17 4,088,997 4,484,442 4,089,458
Adjustments net of tax, per share 0.15 0.14 0.56 0.42 Cash flows from financing activities:
Operating income 119,844 149,416 543,213 709,780 Adjusted diluted earnings per share (non-GAAP) $       0.70 $       0.82 $       3.14 $       3.59 Finance receivables, net 5,305,579 5,007,507 5,187,176   Proceeds from issuance of medium-term notes 546,655 1,144,018
Other income (expense), net 3,160 644 11,857 1,509 Other long-term assets 1,181,654 1,173,715 1,227,166   Repayments of medium-term notes (1,350,000) (877,488)
Investment income (loss) 2,041 (1,106) 11,970 2,630 $10,576,230 $10,665,664 $10,503,800   Proceeds from securitization debt 1,021,353 -
Interest expense 7,789 7,762 23,304 23,180   Repayments of securitization debt (244,250) (224,507)
Income before income taxes 117,256 141,192 543,736 690,739 LIABILITIES AND SHAREHOLDERS' EQUITY   Net (decrease) increase in credit facilities and unsecured commercial paper (120,707) 102,154
Provision for income taxes 30,693 27,337 133,597 159,783 Current liabilities:   Borrowings of asset-backed commercial paper 177,950 120,903
Net income $    86,563 $  113,855 $   410,139 $   530,956     Accounts payable and accrued liabilities $   905,941 $   885,991 $   875,799   Repayments of asset-backed commercial paper (240,008) (156,258)
    Short-term debt 1,013,137 1,135,810 1,373,859   Dividends paid (179,409) (186,105)
Earnings per share:     Current portion of long-term debt, net 1,779,673 1,575,799 1,526,156   Repurchase of common stock (217,454) (195,998)
  Basic $        0.55 $        0.69 $         2.59 $         3.18 3,698,751 3,597,600 3,775,814   Issuance of common stock under employee stock option plans 2,180 3,157
  Diluted $        0.55 $        0.68 $         2.58 $         3.17 Net cash used by financing activities (603,690) (270,124)
Long-term debt, net 4,607,041 4,887,667 4,196,517
Weighted-average shares: Pension and postretirement healthcare liabilities 171,593 202,229 166,936 Effect of exchange rate changes on cash, cash equivalents and restricted cash (4,110) (12,567)
  Basic 156,239 165,927 158,117 166,885 Other long-term liabilities 262,626 204,219 211,561
  Diluted 156,944 166,664 158,794 167,681 Net (decrease) increase in cash, cash equivalents and restricted cash $  (310,625) $   223,801
Shareholders' equity 1,836,219 1,773,949 2,152,972
Cash dividends per share: $      0.375 $      0.370 $      1.125 $      1.110 $10,576,230 $10,665,664 $10,503,800 Cash, cash equivalents and restricted cash:
  Cash, cash equivalents and restricted cash, beginning of period $ 1,259,748 $   746,210
  Net (decrease) increase in cash, cash equivalents and restricted cash (310,625) 223,801
  Cash, cash equivalents and restricted cash, end of period $    949,123 $   970,011
Reconciliation of cash, cash equivalents and restricted cash in the Consolidated Balance Sheet to the Consolidated Statements of Cash Flows: 
  Cash and cash equivalents $    862,381 $   926,992
  Restricted cash 79,115 36,471
  Restricted cash included in Other long-term assets 7,627 6,548
  Cash, cash equivalents and restricted cash per the Consolidated Statements of Cash Flows $    949,123 $   970,011
Adoption of New Accounting Standards
On January 1, 2019, the company adopted accounting standards update 2016-02 Leases using the modified retrospective method. As a result, the company recorded a right-of-use lease asset of approximately $60 million and a corresponding lease liability. 

 

Vehicles 3rd Quarter 9 months $ in thousands 3rd Quarter 9 months $ in thousands 3rd Quarter 9 months Harley-Davidson, Inc. Harley-Davidson, Inc. Harley-Davidson, Inc. Harley-Davidson, Inc. Motorcycles and Related Products Revenue
2019 2018 Change 2019 2018 Change 2019 2018 Change 2019 2018 Change 2019 2018 Change 2019 2018 Change Condensed Consolidated Statements of Income Reconciliation of GAAP Amounts to Non-GAAP Amounts (1) The income tax effect of adjustments has been computed using the company's effective income tax rate Condensed Consolidated Balance Sheets Condensed Consolidated Statements of Cash Flows  and Motorcycle Shipment Data
U.S. 34,903 36,220 (3.6)% 105,756 112,019 (5.6)% Motorcycle Shipments (vehicles) 45,837 48,639 (5.8)% 173,485 185,176 (6.3)% Revenue $203,577 $191,724 6.2% $590,935 $558,000 5.9% (In thousands, except per share amounts) (In thousands, except per share amounts)  (In thousands)  (In thousands) (Revenue in thousands) 
EMEA 10,483 10,543 (0.6)% 36,899 39,249 (6.0)% Revenue $1,068,942 $1,123,945 (4.9)% $3,698,583 $4,013,013 (7.8)% Operating Income $72,873 $83,754 (13.0)% $207,133 $227,874 (9.1)%
Asia Pacific 8,078 7,433 8.7 % 21,822 21,480 1.6 %    Motorcycles $779,344 $821,670 (5.2)% $2,871,982 $3,144,796 (8.7)% (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited)
Latin America 2,498 2,577 (3.1)% 7,255 7,652 (5.2)%    Parts & Accessories $203,173 $212,406 (4.3)% $584,134 $612,495 (4.6)% Three months ended Nine months ended Three months ended Nine months ended September 29, December 31, September 30, Nine months ended Three months ended Nine months ended
Canada 2,560 2,453 4.4 % 7,787 8,340 (6.6)%    General Merchandise $60,334 $58,266 3.5% $180,379 $183,520 (1.7)% September 29, September 30, September 29, September 30, September 29, September 30, September 29, September 30, 2019 2018 2018 September 29, September 30, September 29, September 30, September 29, September 30,
International Total 23,619 23,006 2.7 % 73,763 76,721 (3.9)% Gross Margin 29.9% 30.9% (1.0) pts. 30.3% 33.7% (3.4) pts. 2019 2018 2019 2018 2019 2018 2019 2018 2019 2018 2019 2018 2019 2018
Worldwide Total 58,522 59,226 (1.2)% 179,519 188,740 (4.9)% Operating Income $46,971 $65,662 (28.5)% $336,080 $481,906 (30.3)% NET INCOME EXCLUDING RESTRUCTURING PLAN COSTSAND THE IMPACT OF RECENT EU AND CHINA TARIFFS ASSETS MOTORCYCLES AND RELATED PRODUCTS REVENUE
Operating Margin 4.4% 5.8% (1.4) pts. 9.1% 12.0% (2.9) pts. Motorcycles and Related Products revenue $ 1,068,942 $ 1,123,945 $ 3,698,583 $ 4,013,013 Net income (GAAP) $   86,563 $  113,855 $  410,139 $  530,956 Current assets: Net cash provided by operating activities $    848,649 $ 1,122,555   Motorcycles $   779,344 $   821,670 $ 2,871,982 $ 3,144,796
Gross profit 320,064 347,415 1,122,241 1,353,273 Restructuring plan costs 10,091 21,038 41,715 83,370     Cash and cash equivalents $   862,381 $ 1,203,766 $   926,992   Parts & Accessories 203,173 212,406 584,134 612,495
Selling, administrative and engineering expense 265,464 266,921 754,479 797,323 Impact of recent EU and China tariffs 21,594 10,312 76,971 10,312     Marketable securities - 10,007 10,011 Cash flows from investing activities:   General Merchandise 60,334 58,266 180,379 183,520
Restructuring expense  7,629 14,832 31,682 74,044 Tax effect of adjustments(1) (8,063) (7,602) (29,160) (22,718)     Accounts receivable, net 307,616 306,474 332,309   Capital expenditures (121,161) (119,845)   Licensing 8,611 10,680 27,099 29,445
  Operating income from Motorcycles and Related Products 46,971 65,662 336,080 481,906 Adjustments net of tax 23,622 23,748 89,526 70,964     Finance receivables, net 2,210,001 2,214,424 2,116,386   Finance receivables, net (445,708) (474,465)   Other 17,480 20,923 34,989 42,757
Adjusted net income (non-GAAP) $  110,185 $  137,603 $  499,665 $  601,920     Inventories 489,098 556,128 516,247   Acquisition of business (7,000) - $ 1,068,942 $ 1,123,945 $ 3,698,583 $ 4,013,013
Financial Services revenue 203,577 191,724 590,935 558,000     Restricted cash 79,115 49,275 36,471   Other investing activities 22,395 (21,753)
Financial Services expense 130,704 107,970 383,802 330,126 DILUTED EPS EXCLUDING RESTRUCTURING PLAN COSTS AND THE IMPACT OF RECENT EU AND CHINA TARIFFS     Other current assets 140,786 144,368 151,042 Net cash used by investing activities (551,474) (616,063) MOTORCYCLE SHIPMENTS
  Operating income from Financial Services 72,873 83,754 207,133 227,874 Diluted earnings per share (GAAP) $       0.55 $       0.68 $       2.58 $       3.17 4,088,997 4,484,442 4,089,458     United States 25,572 26,213 101,481 108,057
Adjustments net of tax, per share 0.15 0.14 0.56 0.42 Cash flows from financing activities:     International 20,265 22,426 72,004 77,119
Operating income 119,844 149,416 543,213 709,780 Adjusted diluted earnings per share (non-GAAP) $       0.70 $       0.82 $       3.14 $       3.59 Finance receivables, net 5,305,579 5,007,507 5,187,176   Proceeds from issuance of medium-term notes 546,655 1,144,018 45,837 48,639 173,485 185,176
Other income (expense), net 3,160 644 11,857 1,509 Other long-term assets 1,181,654 1,173,715 1,227,166   Repayments of medium-term notes (1,350,000) (877,488)
Investment income (loss) 2,041 (1,106) 11,970 2,630 $10,576,230 $10,665,664 $10,503,800   Proceeds from securitization debt 1,021,353 - MOTORCYCLE PRODUCT MIX
Interest expense 7,789 7,762 23,304 23,180   Repayments of securitization debt (244,250) (224,507)     Touring 19,905 22,204 75,871 84,125
Income before income taxes 117,256 141,192 543,736 690,739 LIABILITIES AND SHAREHOLDERS' EQUITY   Net (decrease) increase in credit facilities and unsecured commercial paper (120,707) 102,154     Cruiser(1) 16,225 16,049 59,367 61,951
Provision for income taxes 30,693 27,337 133,597 159,783 Current liabilities:   Borrowings of asset-backed commercial paper 177,950 120,903     Sportster®/ Street 9,707 10,386 38,247 39,100
Net income $    86,563 $  113,855 $   410,139 $   530,956     Accounts payable and accrued liabilities $   905,941 $   885,991 $   875,799   Repayments of asset-backed commercial paper (240,008) (156,258) 45,837 48,639 173,485 185,176
    Short-term debt 1,013,137 1,135,810 1,373,859   Dividends paid (179,409) (186,105)
Earnings per share:     Current portion of long-term debt, net 1,779,673 1,575,799 1,526,156   Repurchase of common stock (217,454) (195,998)
  Basic $        0.55 $        0.69 $         2.59 $         3.18 3,698,751 3,597,600 3,775,814   Issuance of common stock under employee stock option plans 2,180 3,157
  Diluted $        0.55 $        0.68 $         2.58 $         3.17 Net cash used by financing activities (603,690) (270,124)
Long-term debt, net 4,607,041 4,887,667 4,196,517
Weighted-average shares: Pension and postretirement healthcare liabilities 171,593 202,229 166,936 Effect of exchange rate changes on cash, cash equivalents and restricted cash (4,110) (12,567)
  Basic 156,239 165,927 158,117 166,885 Other long-term liabilities 262,626 204,219 211,561
  Diluted 156,944 166,664 158,794 167,681 Net (decrease) increase in cash, cash equivalents and restricted cash $  (310,625) $   223,801
Shareholders' equity 1,836,219 1,773,949 2,152,972
Cash dividends per share: $      0.375 $      0.370 $      1.125 $      1.110 $10,576,230 $10,665,664 $10,503,800 Cash, cash equivalents and restricted cash:
  Cash, cash equivalents and restricted cash, beginning of period $ 1,259,748 $   746,210
  Net (decrease) increase in cash, cash equivalents and restricted cash (310,625) 223,801
  Cash, cash equivalents and restricted cash, end of period $    949,123 $   970,011
Reconciliation of cash, cash equivalents and restricted cash in the Consolidated Balance Sheet to the Consolidated Statements of Cash Flows: 
  Cash and cash equivalents $    862,381 $   926,992
  Restricted cash 79,115 36,471
  Restricted cash included in Other long-term assets 7,627 6,548
  Cash, cash equivalents and restricted cash per the Consolidated Statements of Cash Flows $    949,123 $   970,011
Adoption of New Accounting Standards
On January 1, 2019, the company adopted accounting standards update 2016-02 Leases using the modified retrospective method. As a result, the company recorded a right-of-use lease asset of approximately $60 million and a corresponding lease liability. 

Vehicles 3rd Quarter 9 months $ in thousands 3rd Quarter 9 months $ in thousands 3rd Quarter 9 months Harley-Davidson, Inc. Harley-Davidson, Inc. Harley-Davidson, Inc. Harley-Davidson, Inc. Motorcycles and Related Products Revenue
2019 2018 Change 2019 2018 Change 2019 2018 Change 2019 2018 Change 2019 2018 Change 2019 2018 Change Condensed Consolidated Statements of Income Reconciliation of GAAP Amounts to Non-GAAP Amounts (1) The income tax effect of adjustments has been computed using the company's effective income tax rate Condensed Consolidated Balance Sheets Condensed Consolidated Statements of Cash Flows  and Motorcycle Shipment Data (1) Includes Softail®, CVOTM, and LiveWireTM
U.S. 34,903 36,220 (3.6)% 105,756 112,019 (5.6)% Motorcycle Shipments (vehicles) 45,837 48,639 (5.8)% 173,485 185,176 (6.3)% Revenue $203,577 $191,724 6.2% $590,935 $558,000 5.9% (In thousands, except per share amounts) (In thousands, except per share amounts)  (In thousands)  (In thousands) (Revenue in thousands) 
EMEA 10,483 10,543 (0.6)% 36,899 39,249 (6.0)% Revenue $1,068,942 $1,123,945 (4.9)% $3,698,583 $4,013,013 (7.8)% Operating Income $72,873 $83,754 (13.0)% $207,133 $227,874 (9.1)%
Asia Pacific 8,078 7,433 8.7 % 21,822 21,480 1.6 %    Motorcycles $779,344 $821,670 (5.2)% $2,871,982 $3,144,796 (8.7)% (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited)
Latin America 2,498 2,577 (3.1)% 7,255 7,652 (5.2)%    Parts & Accessories $203,173 $212,406 (4.3)% $584,134 $612,495 (4.6)% Three months ended Nine months ended Three months ended Nine months ended September 29, December 31, September 30, Nine months ended Three months ended Nine months ended
Canada 2,560 2,453 4.4 % 7,787 8,340 (6.6)%    General Merchandise $60,334 $58,266 3.5% $180,379 $183,520 (1.7)% September 29, September 30, September 29, September 30, September 29, September 30, September 29, September 30, 2019 2018 2018 September 29, September 30, September 29, September 30, September 29, September 30,
International Total 23,619 23,006 2.7 % 73,763 76,721 (3.9)% Gross Margin 29.9% 30.9% (1.0) pts. 30.3% 33.7% (3.4) pts. 2019 2018 2019 2018 2019 2018 2019 2018 2019 2018 2019 2018 2019 2018
Worldwide Total 58,522 59,226 (1.2)% 179,519 188,740 (4.9)% Operating Income $46,971 $65,662 (28.5)% $336,080 $481,906 (30.3)% NET INCOME EXCLUDING RESTRUCTURING PLAN COSTSAND THE IMPACT OF RECENT EU AND CHINA TARIFFS ASSETS MOTORCYCLES AND RELATED PRODUCTS REVENUE
Operating Margin 4.4% 5.8% (1.4) pts. 9.1% 12.0% (2.9) pts. Motorcycles and Related Products revenue $ 1,068,942 $ 1,123,945 $ 3,698,583 $ 4,013,013 Net income (GAAP) $   86,563 $  113,855 $  410,139 $  530,956 Current assets: Net cash provided by operating activities $    848,649 $ 1,122,555   Motorcycles $   779,344 $   821,670 $ 2,871,982 $ 3,144,796
Gross profit 320,064 347,415 1,122,241 1,353,273 Restructuring plan costs 10,091 21,038 41,715 83,370     Cash and cash equivalents $   862,381 $ 1,203,766 $   926,992   Parts & Accessories 203,173 212,406 584,134 612,495
Selling, administrative and engineering expense 265,464 266,921 754,479 797,323 Impact of recent EU and China tariffs 21,594 10,312 76,971 10,312     Marketable securities - 10,007 10,011 Cash flows from investing activities:   General Merchandise 60,334 58,266 180,379 183,520
Restructuring expense  7,629 14,832 31,682 74,044 Tax effect of adjustments(1) (8,063) (7,602) (29,160) (22,718)     Accounts receivable, net 307,616 306,474 332,309   Capital expenditures (121,161) (119,845)   Licensing 8,611 10,680 27,099 29,445
  Operating income from Motorcycles and Related Products 46,971 65,662 336,080 481,906 Adjustments net of tax 23,622 23,748 89,526 70,964     Finance receivables, net 2,210,001 2,214,424 2,116,386   Finance receivables, net (445,708) (474,465)   Other 17,480 20,923 34,989 42,757
Adjusted net income (non-GAAP) $  110,185 $  137,603 $  499,665 $  601,920     Inventories 489,098 556,128 516,247   Acquisition of business (7,000) - $ 1,068,942 $ 1,123,945 $ 3,698,583 $ 4,013,013
Financial Services revenue 203,577 191,724 590,935 558,000     Restricted cash 79,115 49,275 36,471   Other investing activities 22,395 (21,753)
Financial Services expense 130,704 107,970 383,802 330,126 DILUTED EPS EXCLUDING RESTRUCTURING PLAN COSTS AND THE IMPACT OF RECENT EU AND CHINA TARIFFS     Other current assets 140,786 144,368 151,042 Net cash used by investing activities (551,474) (616,063) MOTORCYCLE SHIPMENTS
  Operating income from Financial Services 72,873 83,754 207,133 227,874 Diluted earnings per share (GAAP) $       0.55 $       0.68 $       2.58 $       3.17 4,088,997 4,484,442 4,089,458     United States 25,572 26,213 101,481 108,057
Adjustments net of tax, per share 0.15 0.14 0.56 0.42 Cash flows from financing activities:     International 20,265 22,426 72,004 77,119
Operating income 119,844 149,416 543,213 709,780 Adjusted diluted earnings per share (non-GAAP) $       0.70 $       0.82 $       3.14 $       3.59 Finance receivables, net 5,305,579 5,007,507 5,187,176   Proceeds from issuance of medium-term notes 546,655 1,144,018 45,837 48,639 173,485 185,176
Other income (expense), net 3,160 644 11,857 1,509 Other long-term assets 1,181,654 1,173,715 1,227,166   Repayments of medium-term notes (1,350,000) (877,488)
Investment income (loss) 2,041 (1,106) 11,970 2,630 $10,576,230 $10,665,664 $10,503,800   Proceeds from securitization debt 1,021,353 - MOTORCYCLE PRODUCT MIX
Interest expense 7,789 7,762 23,304 23,180   Repayments of securitization debt (244,250) (224,507)     Touring 19,905 22,204 75,871 84,125
Income before income taxes 117,256 141,192 543,736 690,739 LIABILITIES AND SHAREHOLDERS' EQUITY   Net (decrease) increase in credit facilities and unsecured commercial paper (120,707) 102,154     Cruiser(1) 16,225 16,049 59,367 61,951
Provision for income taxes 30,693 27,337 133,597 159,783 Current liabilities:   Borrowings of asset-backed commercial paper 177,950 120,903     Sportster®/ Street 9,707 10,386 38,247 39,100
Net income $    86,563 $  113,855 $   410,139 $   530,956     Accounts payable and accrued liabilities $   905,941 $   885,991 $   875,799   Repayments of asset-backed commercial paper (240,008) (156,258) 45,837 48,639 173,485 185,176
    Short-term debt 1,013,137 1,135,810 1,373,859   Dividends paid (179,409) (186,105)
Earnings per share:     Current portion of long-term debt, net 1,779,673 1,575,799 1,526,156   Repurchase of common stock (217,454) (195,998)
  Basic $        0.55 $        0.69 $         2.59 $         3.18 3,698,751 3,597,600 3,775,814   Issuance of common stock under employee stock option plans 2,180 3,157
  Diluted $        0.55 $        0.68 $         2.58 $         3.17 Net cash used by financing activities (603,690) (270,124)
Long-term debt, net 4,607,041 4,887,667 4,196,517
Weighted-average shares: Pension and postretirement healthcare liabilities 171,593 202,229 166,936 Effect of exchange rate changes on cash, cash equivalents and restricted cash (4,110) (12,567)
  Basic 156,239 165,927 158,117 166,885 Other long-term liabilities 262,626 204,219 211,561
  Diluted 156,944 166,664 158,794 167,681 Net (decrease) increase in cash, cash equivalents and restricted cash $  (310,625) $   223,801
Shareholders' equity 1,836,219 1,773,949 2,152,972
Cash dividends per share: $      0.375 $      0.370 $      1.125 $      1.110 $10,576,230 $10,665,664 $10,503,800 Cash, cash equivalents and restricted cash:
  Cash, cash equivalents and restricted cash, beginning of period $ 1,259,748 $   746,210
  Net (decrease) increase in cash, cash equivalents and restricted cash (310,625) 223,801
  Cash, cash equivalents and restricted cash, end of period $    949,123 $   970,011
Reconciliation of cash, cash equivalents and restricted cash in the Consolidated Balance Sheet to the Consolidated Statements of Cash Flows: 
  Cash and cash equivalents $    862,381 $   926,992
  Restricted cash 79,115 36,471
  Restricted cash included in Other long-term assets 7,627 6,548
  Cash, cash equivalents and restricted cash per the Consolidated Statements of Cash Flows $    949,123 $   970,011
Adoption of New Accounting Standards
On January 1, 2019, the company adopted accounting standards update 2016-02 Leases using the modified retrospective method. As a result, the company recorded a right-of-use lease asset of approximately $60 million and a corresponding lease liability. 

 

Vehicles 3rd Quarter 9 months $ in thousands 3rd Quarter 9 months $ in thousands 3rd Quarter 9 months Harley-Davidson, Inc. Harley-Davidson, Inc. Harley-Davidson, Inc. Harley-Davidson, Inc. Motorcycles and Related Products Revenue Worldwide Retail Sales of Harley-Davidson Motorcycles(1)
2019 2018 Change 2019 2018 Change 2019 2018 Change 2019 2018 Change 2019 2018 Change 2019 2018 Change Condensed Consolidated Statements of Income Reconciliation of GAAP Amounts to Non-GAAP Amounts (1) The income tax effect of adjustments has been computed using the company's effective income tax rate Condensed Consolidated Balance Sheets Condensed Consolidated Statements of Cash Flows  and Motorcycle Shipment Data (1) Includes Softail®, CVOTM, and LiveWireTM
U.S. 34,903 36,220 (3.6)% 105,756 112,019 (5.6)% Motorcycle Shipments (vehicles) 45,837 48,639 (5.8)% 173,485 185,176 (6.3)% Revenue $203,577 $191,724 6.2% $590,935 $558,000 5.9% (In thousands, except per share amounts) (In thousands, except per share amounts)  (In thousands)  (In thousands) (Revenue in thousands)  Three months ended Nine months ended
EMEA 10,483 10,543 (0.6)% 36,899 39,249 (6.0)% Revenue $1,068,942 $1,123,945 (4.9)% $3,698,583 $4,013,013 (7.8)% Operating Income $72,873 $83,754 (13.0)% $207,133 $227,874 (9.1)% September 29, September 30, September 29, September 30,
Asia Pacific 8,078 7,433 8.7 % 21,822 21,480 1.6 %    Motorcycles $779,344 $821,670 (5.2)% $2,871,982 $3,144,796 (8.7)% (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) 2019 2018 2019 2018
Latin America 2,498 2,577 (3.1)% 7,255 7,652 (5.2)%    Parts & Accessories $203,173 $212,406 (4.3)% $584,134 $612,495 (4.6)% Three months ended Nine months ended Three months ended Nine months ended September 29, December 31, September 30, Nine months ended Three months ended Nine months ended
Canada 2,560 2,453 4.4 % 7,787 8,340 (6.6)%    General Merchandise $60,334 $58,266 3.5% $180,379 $183,520 (1.7)% September 29, September 30, September 29, September 30, September 29, September 30, September 29, September 30, 2019 2018 2018 September 29, September 30, September 29, September 30, September 29, September 30, United States 34,903 36,220 105,756 112,019
International Total 23,619 23,006 2.7 % 73,763 76,721 (3.9)% Gross Margin 29.9% 30.9% (1.0) pts. 30.3% 33.7% (3.4) pts. 2019 2018 2019 2018 2019 2018 2019 2018 2019 2018 2019 2018 2019 2018
Worldwide Total 58,522 59,226 (1.2)% 179,519 188,740 (4.9)% Operating Income $46,971 $65,662 (28.5)% $336,080 $481,906 (30.3)% NET INCOME EXCLUDING RESTRUCTURING PLAN COSTSAND THE IMPACT OF RECENT EU AND CHINA TARIFFS ASSETS MOTORCYCLES AND RELATED PRODUCTS REVENUE Europe(2) 9,115 9,239 32,326 34,967
Operating Margin 4.4% 5.8% (1.4) pts. 9.1% 12.0% (2.9) pts. Motorcycles and Related Products revenue $ 1,068,942 $ 1,123,945 $ 3,698,583 $ 4,013,013 Net income (GAAP) $   86,563 $  113,855 $  410,139 $  530,956 Current assets: Net cash provided by operating activities $    848,649 $ 1,122,555   Motorcycles $   779,344 $   821,670 $ 2,871,982 $ 3,144,796 EMEA - Other 1,368 1,304 4,573 4,282
Gross profit 320,064 347,415 1,122,241 1,353,273 Restructuring plan costs 10,091 21,038 41,715 83,370     Cash and cash equivalents $   862,381 $ 1,203,766 $   926,992   Parts & Accessories 203,173 212,406 584,134 612,495   Total EMEA 10,483 10,543 36,899 39,249
Selling, administrative and engineering expense 265,464 266,921 754,479 797,323 Impact of recent EU and China tariffs 21,594 10,312 76,971 10,312     Marketable securities - 10,007 10,011 Cash flows from investing activities:   General Merchandise 60,334 58,266 180,379 183,520
Restructuring expense  7,629 14,832 31,682 74,044 Tax effect of adjustments(1) (8,063) (7,602) (29,160) (22,718)     Accounts receivable, net 307,616 306,474 332,309   Capital expenditures (121,161) (119,845)   Licensing 8,611 10,680 27,099 29,445 Asia Pacific(3) 4,889 4,578 13,219 14,126
  Operating income from Motorcycles and Related Products 46,971 65,662 336,080 481,906 Adjustments net of tax 23,622 23,748 89,526 70,964     Finance receivables, net 2,210,001 2,214,424 2,116,386   Finance receivables, net (445,708) (474,465)   Other 17,480 20,923 34,989 42,757 Asia Pacific - Other 3,189 2,855 8,603 7,354
Adjusted net income (non-GAAP) $  110,185 $  137,603 $  499,665 $  601,920     Inventories 489,098 556,128 516,247   Acquisition of business (7,000) - $ 1,068,942 $ 1,123,945 $ 3,698,583 $ 4,013,013   Total Asia Pacific 8,078 7,433 21,822 21,480
Financial Services revenue 203,577 191,724 590,935 558,000     Restricted cash 79,115 49,275 36,471   Other investing activities 22,395 (21,753)
Financial Services expense 130,704 107,970 383,802 330,126 DILUTED EPS EXCLUDING RESTRUCTURING PLAN COSTS AND THE IMPACT OF RECENT EU AND CHINA TARIFFS     Other current assets 140,786 144,368 151,042 Net cash used by investing activities (551,474) (616,063) MOTORCYCLE SHIPMENTS Latin America 2,498 2,577 7,255 7,652
  Operating income from Financial Services 72,873 83,754 207,133 227,874 Diluted earnings per share (GAAP) $       0.55 $       0.68 $       2.58 $       3.17 4,088,997 4,484,442 4,089,458     United States 25,572 26,213 101,481 108,057 Canada 2,560 2,453 7,787 8,340
Adjustments net of tax, per share 0.15 0.14 0.56 0.42 Cash flows from financing activities:     International 20,265 22,426 72,004 77,119   Total international retail sales 23,619 23,006 73,763 76,721
Operating income 119,844 149,416 543,213 709,780 Adjusted diluted earnings per share (non-GAAP) $       0.70 $       0.82 $       3.14 $       3.59 Finance receivables, net 5,305,579 5,007,507 5,187,176   Proceeds from issuance of medium-term notes 546,655 1,144,018 45,837 48,639 173,485 185,176       Total worldwide retail sales 58,522 59,226 179,519 188,740
Other income (expense), net 3,160 644 11,857 1,509 Other long-term assets 1,181,654 1,173,715 1,227,166   Repayments of medium-term notes (1,350,000) (877,488)
Investment income (loss) 2,041 (1,106) 11,970 2,630 $10,576,230 $10,665,664 $10,503,800   Proceeds from securitization debt 1,021,353 - MOTORCYCLE PRODUCT MIX
Interest expense 7,789 7,762 23,304 23,180   Repayments of securitization debt (244,250) (224,507)     Touring 19,905 22,204 75,871 84,125
Income before income taxes 117,256 141,192 543,736 690,739 LIABILITIES AND SHAREHOLDERS' EQUITY   Net (decrease) increase in credit facilities and unsecured commercial paper (120,707) 102,154     Cruiser(1) 16,225 16,049 59,367 61,951
Provision for income taxes 30,693 27,337 133,597 159,783 Current liabilities:   Borrowings of asset-backed commercial paper 177,950 120,903     Sportster®/ Street 9,707 10,386 38,247 39,100
Net income $    86,563 $  113,855 $   410,139 $   530,956     Accounts payable and accrued liabilities $   905,941 $   885,991 $   875,799   Repayments of asset-backed commercial paper (240,008) (156,258) 45,837 48,639 173,485 185,176
    Short-term debt 1,013,137 1,135,810 1,373,859   Dividends paid (179,409) (186,105)
Earnings per share:     Current portion of long-term debt, net 1,779,673 1,575,799 1,526,156   Repurchase of common stock (217,454) (195,998)
  Basic $        0.55 $        0.69 $         2.59 $         3.18 3,698,751 3,597,600 3,775,814   Issuance of common stock under employee stock option plans 2,180 3,157
  Diluted $        0.55 $        0.68 $         2.58 $         3.17 Net cash used by financing activities (603,690) (270,124)
Long-term debt, net 4,607,041 4,887,667 4,196,517
Weighted-average shares: Pension and postretirement healthcare liabilities 171,593 202,229 166,936 Effect of exchange rate changes on cash, cash equivalents and restricted cash (4,110) (12,567)
  Basic 156,239 165,927 158,117 166,885 Other long-term liabilities 262,626 204,219 211,561
  Diluted 156,944 166,664 158,794 167,681 Net (decrease) increase in cash, cash equivalents and restricted cash $  (310,625) $   223,801
Shareholders' equity 1,836,219 1,773,949 2,152,972
Cash dividends per share: $      0.375 $      0.370 $      1.125 $      1.110 $10,576,230 $10,665,664 $10,503,800 Cash, cash equivalents and restricted cash:
  Cash, cash equivalents and restricted cash, beginning of period $ 1,259,748 $   746,210
  Net (decrease) increase in cash, cash equivalents and restricted cash (310,625) 223,801
  Cash, cash equivalents and restricted cash, end of period $    949,123 $   970,011
Reconciliation of cash, cash equivalents and restricted cash in the Consolidated Balance Sheet to the Consolidated Statements of Cash Flows: 
  Cash and cash equivalents $    862,381 $   926,992
  Restricted cash 79,115 36,471
  Restricted cash included in Other long-term assets 7,627 6,548
  Cash, cash equivalents and restricted cash per the Consolidated Statements of Cash Flows $    949,123 $   970,011
Adoption of New Accounting Standards
On January 1, 2019, the company adopted accounting standards update 2016-02 Leases using the modified retrospective method. As a result, the company recorded a right-of-use lease asset of approximately $60 million and a corresponding lease liability. 

Vehicles 3rd Quarter 9 months $ in thousands 3rd Quarter 9 months $ in thousands 3rd Quarter 9 months Harley-Davidson, Inc. Harley-Davidson, Inc. Harley-Davidson, Inc. Harley-Davidson, Inc. Motorcycles and Related Products Revenue Worldwide Retail Sales of Harley-Davidson Motorcycles(1)
2019 2018 Change 2019 2018 Change 2019 2018 Change 2019 2018 Change 2019 2018 Change 2019 2018 Change Condensed Consolidated Statements of Income Reconciliation of GAAP Amounts to Non-GAAP Amounts (1) The income tax effect of adjustments has been computed using the company's effective income tax rate Condensed Consolidated Balance Sheets Condensed Consolidated Statements of Cash Flows  and Motorcycle Shipment Data (1) Includes Softail®, CVOTM, and LiveWireTM (1) Data source for retail sales figures shown above is new sales warranty and registration information provided by Harley-Davidson dealers and compiled by the company. The company must rely on information that its dealers supply concerning new retail sales, and the company does not regularly verify the information that its dealers supply. This information is subject to revision.
U.S. 34,903 36,220 (3.6)% 105,756 112,019 (5.6)% Motorcycle Shipments (vehicles) 45,837 48,639 (5.8)% 173,485 185,176 (6.3)% Revenue $203,577 $191,724 6.2% $590,935 $558,000 5.9% (In thousands, except per share amounts) (In thousands, except per share amounts)  (In thousands)  (In thousands) (Revenue in thousands)  Three months ended Nine months ended
EMEA 10,483 10,543 (0.6)% 36,899 39,249 (6.0)% Revenue $1,068,942 $1,123,945 (4.9)% $3,698,583 $4,013,013 (7.8)% Operating Income $72,873 $83,754 (13.0)% $207,133 $227,874 (9.1)% September 29, September 30, September 29, September 30, (2) Europe data includes Austria, Belgium, Denmark, Finland, France, Germany, Greece, Italy, Luxembourg, Netherlands, Norway, Portugal, Spain, Sweden, Switzerland, and the United Kingdom
Asia Pacific 8,078 7,433 8.7 % 21,822 21,480 1.6 %    Motorcycles $779,344 $821,670 (5.2)% $2,871,982 $3,144,796 (8.7)% (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) 2019 2018 2019 2018
Latin America 2,498 2,577 (3.1)% 7,255 7,652 (5.2)%    Parts & Accessories $203,173 $212,406 (4.3)% $584,134 $612,495 (4.6)% Three months ended Nine months ended Three months ended Nine months ended September 29, December 31, September 30, Nine months ended Three months ended Nine months ended (3) Asia Pacific data includes Japan, Australia, New Zealand and Korea
Canada 2,560 2,453 4.4 % 7,787 8,340 (6.6)%    General Merchandise $60,334 $58,266 3.5% $180,379 $183,520 (1.7)% September 29, September 30, September 29, September 30, September 29, September 30, September 29, September 30, 2019 2018 2018 September 29, September 30, September 29, September 30, September 29, September 30, United States 34,903 36,220 105,756 112,019
International Total 23,619 23,006 2.7 % 73,763 76,721 (3.9)% Gross Margin 29.9% 30.9% (1.0) pts. 30.3% 33.7% (3.4) pts. 2019 2018 2019 2018 2019 2018 2019 2018 2019 2018 2019 2018 2019 2018
Worldwide Total 58,522 59,226 (1.2)% 179,519 188,740 (4.9)% Operating Income $46,971 $65,662 (28.5)% $336,080 $481,906 (30.3)% NET INCOME EXCLUDING RESTRUCTURING PLAN COSTSAND THE IMPACT OF RECENT EU AND CHINA TARIFFS ASSETS MOTORCYCLES AND RELATED PRODUCTS REVENUE Europe(2) 9,115 9,239 32,326 34,967
Operating Margin 4.4% 5.8% (1.4) pts. 9.1% 12.0% (2.9) pts. Motorcycles and Related Products revenue $ 1,068,942 $ 1,123,945 $ 3,698,583 $ 4,013,013 Net income (GAAP) $   86,563 $  113,855 $  410,139 $  530,956 Current assets: Net cash provided by operating activities $    848,649 $ 1,122,555   Motorcycles $   779,344 $   821,670 $ 2,871,982 $ 3,144,796 EMEA - Other 1,368 1,304 4,573 4,282
Gross profit 320,064 347,415 1,122,241 1,353,273 Restructuring plan costs 10,091 21,038 41,715 83,370     Cash and cash equivalents $   862,381 $ 1,203,766 $   926,992   Parts & Accessories 203,173 212,406 584,134 612,495   Total EMEA 10,483 10,543 36,899 39,249
Selling, administrative and engineering expense 265,464 266,921 754,479 797,323 Impact of recent EU and China tariffs 21,594 10,312 76,971 10,312     Marketable securities - 10,007 10,011 Cash flows from investing activities:   General Merchandise 60,334 58,266 180,379 183,520
Restructuring expense  7,629 14,832 31,682 74,044 Tax effect of adjustments(1) (8,063) (7,602) (29,160) (22,718)     Accounts receivable, net 307,616 306,474 332,309   Capital expenditures (121,161) (119,845)   Licensing 8,611 10,680 27,099 29,445 Asia Pacific(3) 4,889 4,578 13,219 14,126
  Operating income from Motorcycles and Related Products 46,971 65,662 336,080 481,906 Adjustments net of tax 23,622 23,748 89,526 70,964     Finance receivables, net 2,210,001 2,214,424 2,116,386   Finance receivables, net (445,708) (474,465)   Other 17,480 20,923 34,989 42,757 Asia Pacific - Other 3,189 2,855 8,603 7,354
Adjusted net income (non-GAAP) $  110,185 $  137,603 $  499,665 $  601,920     Inventories 489,098 556,128 516,247   Acquisition of business (7,000) - $ 1,068,942 $ 1,123,945 $ 3,698,583 $ 4,013,013   Total Asia Pacific 8,078 7,433 21,822 21,480
Financial Services revenue 203,577 191,724 590,935 558,000     Restricted cash 79,115 49,275 36,471   Other investing activities 22,395 (21,753)
Financial Services expense 130,704 107,970 383,802 330,126 DILUTED EPS EXCLUDING RESTRUCTURING PLAN COSTS AND THE IMPACT OF RECENT EU AND CHINA TARIFFS     Other current assets 140,786 144,368 151,042 Net cash used by investing activities (551,474) (616,063) MOTORCYCLE SHIPMENTS Latin America 2,498 2,577 7,255 7,652
  Operating income from Financial Services 72,873 83,754 207,133 227,874 Diluted earnings per share (GAAP) $       0.55 $       0.68 $       2.58 $       3.17 4,088,997 4,484,442 4,089,458     United States 25,572 26,213 101,481 108,057 Canada 2,560 2,453 7,787 8,340
Adjustments net of tax, per share 0.15 0.14 0.56 0.42 Cash flows from financing activities:     International 20,265 22,426 72,004 77,119   Total international retail sales 23,619 23,006 73,763 76,721
Operating income 119,844 149,416 543,213 709,780 Adjusted diluted earnings per share (non-GAAP) $       0.70 $       0.82 $       3.14 $       3.59 Finance receivables, net 5,305,579 5,007,507 5,187,176   Proceeds from issuance of medium-term notes 546,655 1,144,018 45,837 48,639 173,485 185,176       Total worldwide retail sales 58,522 59,226 179,519 188,740
Other income (expense), net 3,160 644 11,857 1,509 Other long-term assets 1,181,654 1,173,715 1,227,166   Repayments of medium-term notes (1,350,000) (877,488)
Investment income (loss) 2,041 (1,106) 11,970 2,630 $10,576,230 $10,665,664 $10,503,800   Proceeds from securitization debt 1,021,353 - MOTORCYCLE PRODUCT MIX
Interest expense 7,789 7,762 23,304 23,180   Repayments of securitization debt (244,250) (224,507)     Touring 19,905 22,204 75,871 84,125
Income before income taxes 117,256 141,192 543,736 690,739 LIABILITIES AND SHAREHOLDERS' EQUITY   Net (decrease) increase in credit facilities and unsecured commercial paper (120,707) 102,154     Cruiser(1) 16,225 16,049 59,367 61,951
Provision for income taxes 30,693 27,337 133,597 159,783 Current liabilities:   Borrowings of asset-backed commercial paper 177,950 120,903     Sportster®/ Street 9,707 10,386 38,247 39,100
Net income $    86,563 $  113,855 $   410,139 $   530,956     Accounts payable and accrued liabilities $   905,941 $   885,991 $   875,799   Repayments of asset-backed commercial paper (240,008) (156,258) 45,837 48,639 173,485 185,176
    Short-term debt 1,013,137 1,135,810 1,373,859   Dividends paid (179,409) (186,105)
Earnings per share:     Current portion of long-term debt, net 1,779,673 1,575,799 1,526,156   Repurchase of common stock (217,454) (195,998)
  Basic $        0.55 $        0.69 $         2.59 $         3.18 3,698,751 3,597,600 3,775,814   Issuance of common stock under employee stock option plans 2,180 3,157
  Diluted $        0.55 $        0.68 $         2.58 $         3.17 Net cash used by financing activities (603,690) (270,124)
Long-term debt, net 4,607,041 4,887,667 4,196,517
Weighted-average shares: Pension and postretirement healthcare liabilities 171,593 202,229 166,936 Effect of exchange rate changes on cash, cash equivalents and restricted cash (4,110) (12,567)
  Basic 156,239 165,927 158,117 166,885 Other long-term liabilities 262,626 204,219 211,561
  Diluted 156,944 166,664 158,794 167,681 Net (decrease) increase in cash, cash equivalents and restricted cash $  (310,625) $   223,801
Shareholders' equity 1,836,219 1,773,949 2,152,972
Cash dividends per share: $      0.375 $      0.370 $      1.125 $      1.110 $10,576,230 $10,665,664 $10,503,800 Cash, cash equivalents and restricted cash:
  Cash, cash equivalents and restricted cash, beginning of period $ 1,259,748 $   746,210
  Net (decrease) increase in cash, cash equivalents and restricted cash (310,625) 223,801
  Cash, cash equivalents and restricted cash, end of period $    949,123 $   970,011
Reconciliation of cash, cash equivalents and restricted cash in the Consolidated Balance Sheet to the Consolidated Statements of Cash Flows: 
  Cash and cash equivalents $    862,381 $   926,992
  Restricted cash 79,115 36,471
  Restricted cash included in Other long-term assets 7,627 6,548
  Cash, cash equivalents and restricted cash per the Consolidated Statements of Cash Flows $    949,123 $   970,011
Adoption of New Accounting Standards
On January 1, 2019, the company adopted accounting standards update 2016-02 Leases using the modified retrospective method. As a result, the company recorded a right-of-use lease asset of approximately $60 million and a corresponding lease liability. 

 

Vehicles 3rd Quarter 9 months $ in thousands 3rd Quarter 9 months $ in thousands 3rd Quarter 9 months Harley-Davidson, Inc. Harley-Davidson, Inc. Harley-Davidson, Inc. Harley-Davidson, Inc. Motorcycles and Related Products Revenue Worldwide Retail Sales of Harley-Davidson Motorcycles(1) Motorcycle Registration Data(1)
2019 2018 Change 2019 2018 Change 2019 2018 Change 2019 2018 Change 2019 2018 Change 2019 2018 Change Condensed Consolidated Statements of Income Reconciliation of GAAP Amounts to Non-GAAP Amounts (1) The income tax effect of adjustments has been computed using the company's effective income tax rate Condensed Consolidated Balance Sheets Condensed Consolidated Statements of Cash Flows  and Motorcycle Shipment Data (1) Includes Softail®, CVOTM, and LiveWireTM (1) Data source for retail sales figures shown above is new sales warranty and registration information provided by Harley-Davidson dealers and compiled by the company. The company must rely on information that its dealers supply concerning new retail sales, and the company does not regularly verify the information that its dealers supply. This information is subject to revision.
U.S. 34,903 36,220 (3.6)% 105,756 112,019 (5.6)% Motorcycle Shipments (vehicles) 45,837 48,639 (5.8)% 173,485 185,176 (6.3)% Revenue $203,577 $191,724 6.2% $590,935 $558,000 5.9% (In thousands, except per share amounts) (In thousands, except per share amounts)  (In thousands)  (In thousands) (Revenue in thousands)  Three months ended Nine months ended Nine months ended
EMEA 10,483 10,543 (0.6)% 36,899 39,249 (6.0)% Revenue $1,068,942 $1,123,945 (4.9)% $3,698,583 $4,013,013 (7.8)% Operating Income $72,873 $83,754 (13.0)% $207,133 $227,874 (9.1)% September 29, September 30, September 29, September 30, (2) Europe data includes Austria, Belgium, Denmark, Finland, France, Germany, Greece, Italy, Luxembourg, Netherlands, Norway, Portugal, Spain, Sweden, Switzerland, and the United Kingdom September 30, September 30,
Asia Pacific 8,078 7,433 8.7 % 21,822 21,480 1.6 %    Motorcycles $779,344 $821,670 (5.2)% $2,871,982 $3,144,796 (8.7)% (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) 2019 2018 2019 2018 2019 2018
Latin America 2,498 2,577 (3.1)% 7,255 7,652 (5.2)%    Parts & Accessories $203,173 $212,406 (4.3)% $584,134 $612,495 (4.6)% Three months ended Nine months ended Three months ended Nine months ended September 29, December 31, September 30, Nine months ended Three months ended Nine months ended (3) Asia Pacific data includes Japan, Australia, New Zealand and Korea United States(2)  213,877 222,468
Canada 2,560 2,453 4.4 % 7,787 8,340 (6.6)%    General Merchandise $60,334 $58,266 3.5% $180,379 $183,520 (1.7)% September 29, September 30, September 29, September 30, September 29, September 30, September 29, September 30, 2019 2018 2018 September 29, September 30, September 29, September 30, September 29, September 30, United States 34,903 36,220 105,756 112,019 Europe(3) 371,412 347,884
International Total 23,619 23,006 2.7 % 73,763 76,721 (3.9)% Gross Margin 29.9% 30.9% (1.0) pts. 30.3% 33.7% (3.4) pts. 2019 2018 2019 2018 2019 2018 2019 2018 2019 2018 2019 2018 2019 2018
Worldwide Total 58,522 59,226 (1.2)% 179,519 188,740 (4.9)% Operating Income $46,971 $65,662 (28.5)% $336,080 $481,906 (30.3)% NET INCOME EXCLUDING RESTRUCTURING PLAN COSTSAND THE IMPACT OF RECENT EU AND CHINA TARIFFS ASSETS MOTORCYCLES AND RELATED PRODUCTS REVENUE Europe(2) 9,115 9,239 32,326 34,967
Operating Margin 4.4% 5.8% (1.4) pts. 9.1% 12.0% (2.9) pts. Motorcycles and Related Products revenue $ 1,068,942 $ 1,123,945 $ 3,698,583 $ 4,013,013 Net income (GAAP) $   86,563 $  113,855 $  410,139 $  530,956 Current assets: Net cash provided by operating activities $    848,649 $ 1,122,555   Motorcycles $   779,344 $   821,670 $ 2,871,982 $ 3,144,796 EMEA - Other 1,368 1,304 4,573 4,282
Gross profit 320,064 347,415 1,122,241 1,353,273 Restructuring plan costs 10,091 21,038 41,715 83,370     Cash and cash equivalents $   862,381 $ 1,203,766 $   926,992   Parts & Accessories 203,173 212,406 584,134 612,495   Total EMEA 10,483 10,543 36,899 39,249
Selling, administrative and engineering expense 265,464 266,921 754,479 797,323 Impact of recent EU and China tariffs 21,594 10,312 76,971 10,312     Marketable securities - 10,007 10,011 Cash flows from investing activities:   General Merchandise 60,334 58,266 180,379 183,520
Restructuring expense  7,629 14,832 31,682 74,044 Tax effect of adjustments(1) (8,063) (7,602) (29,160) (22,718)     Accounts receivable, net 307,616 306,474 332,309   Capital expenditures (121,161) (119,845)   Licensing 8,611 10,680 27,099 29,445 Asia Pacific(3) 4,889 4,578 13,219 14,126
  Operating income from Motorcycles and Related Products 46,971 65,662 336,080 481,906 Adjustments net of tax 23,622 23,748 89,526 70,964     Finance receivables, net 2,210,001 2,214,424 2,116,386   Finance receivables, net (445,708) (474,465)   Other 17,480 20,923 34,989 42,757 Asia Pacific - Other 3,189 2,855 8,603 7,354
Adjusted net income (non-GAAP) $  110,185 $  137,603 $  499,665 $  601,920     Inventories 489,098 556,128 516,247   Acquisition of business (7,000) - $ 1,068,942 $ 1,123,945 $ 3,698,583 $ 4,013,013   Total Asia Pacific 8,078 7,433 21,822 21,480
Financial Services revenue 203,577 191,724 590,935 558,000     Restricted cash 79,115 49,275 36,471   Other investing activities 22,395 (21,753)
Financial Services expense 130,704 107,970 383,802 330,126 DILUTED EPS EXCLUDING RESTRUCTURING PLAN COSTS AND THE IMPACT OF RECENT EU AND CHINA TARIFFS     Other current assets 140,786 144,368 151,042 Net cash used by investing activities (551,474) (616,063) MOTORCYCLE SHIPMENTS Latin America 2,498 2,577 7,255 7,652
  Operating income from Financial Services 72,873 83,754 207,133 227,874 Diluted earnings per share (GAAP) $       0.55 $       0.68 $       2.58 $       3.17 4,088,997 4,484,442 4,089,458     United States 25,572 26,213 101,481 108,057 Canada 2,560 2,453 7,787 8,340
Adjustments net of tax, per share 0.15 0.14 0.56 0.42 Cash flows from financing activities:     International 20,265 22,426 72,004 77,119   Total international retail sales 23,619 23,006 73,763 76,721
Operating income 119,844 149,416 543,213 709,780 Adjusted diluted earnings per share (non-GAAP) $       0.70 $       0.82 $       3.14 $       3.59 Finance receivables, net 5,305,579 5,007,507 5,187,176   Proceeds from issuance of medium-term notes 546,655 1,144,018 45,837 48,639 173,485 185,176       Total worldwide retail sales 58,522 59,226 179,519 188,740
Other income (expense), net 3,160 644 11,857 1,509 Other long-term assets 1,181,654 1,173,715 1,227,166   Repayments of medium-term notes (1,350,000) (877,488)
Investment income (loss) 2,041 (1,106) 11,970 2,630 $10,576,230 $10,665,664 $10,503,800   Proceeds from securitization debt 1,021,353 - MOTORCYCLE PRODUCT MIX
Interest expense 7,789 7,762 23,304 23,180   Repayments of securitization debt (244,250) (224,507)     Touring 19,905 22,204 75,871 84,125
Income before income taxes 117,256 141,192 543,736 690,739 LIABILITIES AND SHAREHOLDERS' EQUITY   Net (decrease) increase in credit facilities and unsecured commercial paper (120,707) 102,154     Cruiser(1) 16,225 16,049 59,367 61,951
Provision for income taxes 30,693 27,337 133,597 159,783 Current liabilities:   Borrowings of asset-backed commercial paper 177,950 120,903     Sportster®/ Street 9,707 10,386 38,247 39,100
Net income $    86,563 $  113,855 $   410,139 $   530,956     Accounts payable and accrued liabilities $   905,941 $   885,991 $   875,799   Repayments of asset-backed commercial paper (240,008) (156,258) 45,837 48,639 173,485 185,176
    Short-term debt 1,013,137 1,135,810 1,373,859   Dividends paid (179,409) (186,105)
Earnings per share:     Current portion of long-term debt, net 1,779,673 1,575,799 1,526,156   Repurchase of common stock (217,454) (195,998)
  Basic $        0.55 $        0.69 $         2.59 $         3.18 3,698,751 3,597,600 3,775,814   Issuance of common stock under employee stock option plans 2,180 3,157
  Diluted $        0.55 $        0.68 $         2.58 $         3.17 Net cash used by financing activities (603,690) (270,124)
Long-term debt, net 4,607,041 4,887,667 4,196,517
Weighted-average shares: Pension and postretirement healthcare liabilities 171,593 202,229 166,936 Effect of exchange rate changes on cash, cash equivalents and restricted cash (4,110) (12,567)
  Basic 156,239 165,927 158,117 166,885 Other long-term liabilities 262,626 204,219 211,561
  Diluted 156,944 166,664 158,794 167,681 Net (decrease) increase in cash, cash equivalents and restricted cash $  (310,625) $   223,801
Shareholders' equity 1,836,219 1,773,949 2,152,972
Cash dividends per share: $      0.375 $      0.370 $      1.125 $      1.110 $10,576,230 $10,665,664 $10,503,800 Cash, cash equivalents and restricted cash:
  Cash, cash equivalents and restricted cash, beginning of period $ 1,259,748 $   746,210
  Net (decrease) increase in cash, cash equivalents and restricted cash (310,625) 223,801
  Cash, cash equivalents and restricted cash, end of period $    949,123 $   970,011
Reconciliation of cash, cash equivalents and restricted cash in the Consolidated Balance Sheet to the Consolidated Statements of Cash Flows: 
  Cash and cash equivalents $    862,381 $   926,992
  Restricted cash 79,115 36,471
  Restricted cash included in Other long-term assets 7,627 6,548
  Cash, cash equivalents and restricted cash per the Consolidated Statements of Cash Flows $    949,123 $   970,011
Adoption of New Accounting Standards
On January 1, 2019, the company adopted accounting standards update 2016-02 Leases using the modified retrospective method. As a result, the company recorded a right-of-use lease asset of approximately $60 million and a corresponding lease liability. 

Vehicles 3rd Quarter 9 months $ in thousands 3rd Quarter 9 months $ in thousands 3rd Quarter 9 months Harley-Davidson, Inc. Harley-Davidson, Inc. Harley-Davidson, Inc. Harley-Davidson, Inc. Motorcycles and Related Products Revenue Worldwide Retail Sales of Harley-Davidson Motorcycles(1) Motorcycle Registration Data(1)
2019 2018 Change 2019 2018 Change 2019 2018 Change 2019 2018 Change 2019 2018 Change 2019 2018 Change Condensed Consolidated Statements of Income Reconciliation of GAAP Amounts to Non-GAAP Amounts (1) The income tax effect of adjustments has been computed using the company's effective income tax rate Condensed Consolidated Balance Sheets Condensed Consolidated Statements of Cash Flows  and Motorcycle Shipment Data (1) Includes Softail®, CVOTM, and LiveWireTM (1) Data source for retail sales figures shown above is new sales warranty and registration information provided by Harley-Davidson dealers and compiled by the company. The company must rely on information that its dealers supply concerning new retail sales, and the company does not regularly verify the information that its dealers supply. This information is subject to revision. (1) Data includes on-road 601+cc models. On-road 601+cc models include dual purpose models, three-wheeled motorcycles and autocycles. 
U.S. 34,903 36,220 (3.6)% 105,756 112,019 (5.6)% Motorcycle Shipments (vehicles) 45,837 48,639 (5.8)% 173,485 185,176 (6.3)% Revenue $203,577 $191,724 6.2% $590,935 $558,000 5.9% (In thousands, except per share amounts) (In thousands, except per share amounts)  (In thousands)  (In thousands) (Revenue in thousands)  Three months ended Nine months ended Nine months ended
EMEA 10,483 10,543 (0.6)% 36,899 39,249 (6.0)% Revenue $1,068,942 $1,123,945 (4.9)% $3,698,583 $4,013,013 (7.8)% Operating Income $72,873 $83,754 (13.0)% $207,133 $227,874 (9.1)% September 29, September 30, September 29, September 30, (2) Europe data includes Austria, Belgium, Denmark, Finland, France, Germany, Greece, Italy, Luxembourg, Netherlands, Norway, Portugal, Spain, Sweden, Switzerland, and the United Kingdom September 30, September 30, (2) United States data is derived from information provided by Motorcycle Industry Council. This third-party data is subject to revision and update.  
Asia Pacific 8,078 7,433 8.7 % 21,822 21,480 1.6 %    Motorcycles $779,344 $821,670 (5.2)% $2,871,982 $3,144,796 (8.7)% (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) 2019 2018 2019 2018 2019 2018
Latin America 2,498 2,577 (3.1)% 7,255 7,652 (5.2)%    Parts & Accessories $203,173 $212,406 (4.3)% $584,134 $612,495 (4.6)% Three months ended Nine months ended Three months ended Nine months ended September 29, December 31, September 30, Nine months ended Three months ended Nine months ended (3) Asia Pacific data includes Japan, Australia, New Zealand and Korea United States(2)  213,877 222,468 (3) Europe data includes Austria, Belgium, Denmark, Finland, France, Germany, Greece, Italy, Luxembourg, Netherlands, Norway, Portugal, Spain, Sweden, Switzerland, and the United Kingdom. Industry retail motorcycle registration data includes 601+cc models derived from information provided by Association des Constructeurs Europeens de Motocycles, an independent agency. This third-party data is subject to revision and update. 
Canada 2,560 2,453 4.4 % 7,787 8,340 (6.6)%    General Merchandise $60,334 $58,266 3.5% $180,379 $183,520 (1.7)% September 29, September 30, September 29, September 30, September 29, September 30, September 29, September 30, 2019 2018 2018 September 29, September 30, September 29, September 30, September 29, September 30, United States 34,903 36,220 105,756 112,019 Europe(3) 371,412 347,884
International Total 23,619 23,006 2.7 % 73,763 76,721 (3.9)% Gross Margin 29.9% 30.9% (1.0) pts. 30.3% 33.7% (3.4) pts. 2019 2018 2019 2018 2019 2018 2019 2018 2019 2018 2019 2018 2019 2018
Worldwide Total 58,522 59,226 (1.2)% 179,519 188,740 (4.9)% Operating Income $46,971 $65,662 (28.5)% $336,080 $481,906 (30.3)% NET INCOME EXCLUDING RESTRUCTURING PLAN COSTSAND THE IMPACT OF RECENT EU AND CHINA TARIFFS ASSETS MOTORCYCLES AND RELATED PRODUCTS REVENUE Europe(2) 9,115 9,239 32,326 34,967
Operating Margin 4.4% 5.8% (1.4) pts. 9.1% 12.0% (2.9) pts. Motorcycles and Related Products revenue $ 1,068,942 $ 1,123,945 $ 3,698,583 $ 4,013,013 Net income (GAAP) $   86,563 $  113,855 $  410,139 $  530,956 Current assets: Net cash provided by operating activities $    848,649 $ 1,122,555   Motorcycles $   779,344 $   821,670 $ 2,871,982 $ 3,144,796 EMEA - Other 1,368 1,304 4,573 4,282
Gross profit 320,064 347,415 1,122,241 1,353,273 Restructuring plan costs 10,091 21,038 41,715 83,370     Cash and cash equivalents $   862,381 $ 1,203,766 $   926,992   Parts & Accessories 203,173 212,406 584,134 612,495   Total EMEA 10,483 10,543 36,899 39,249
Selling, administrative and engineering expense 265,464 266,921 754,479 797,323 Impact of recent EU and China tariffs 21,594 10,312 76,971 10,312     Marketable securities - 10,007 10,011 Cash flows from investing activities:   General Merchandise 60,334 58,266 180,379 183,520
Restructuring expense  7,629 14,832 31,682 74,044 Tax effect of adjustments(1) (8,063) (7,602) (29,160) (22,718)     Accounts receivable, net 307,616 306,474 332,309   Capital expenditures (121,161) (119,845)   Licensing 8,611 10,680 27,099 29,445 Asia Pacific(3) 4,889 4,578 13,219 14,126
  Operating income from Motorcycles and Related Products 46,971 65,662 336,080 481,906 Adjustments net of tax 23,622 23,748 89,526 70,964     Finance receivables, net 2,210,001 2,214,424 2,116,386   Finance receivables, net (445,708) (474,465)   Other 17,480 20,923 34,989 42,757 Asia Pacific - Other 3,189 2,855 8,603 7,354
Adjusted net income (non-GAAP) $  110,185 $  137,603 $  499,665 $  601,920     Inventories 489,098 556,128 516,247   Acquisition of business (7,000) - $ 1,068,942 $ 1,123,945 $ 3,698,583 $ 4,013,013   Total Asia Pacific 8,078 7,433 21,822 21,480
Financial Services revenue 203,577 191,724 590,935 558,000     Restricted cash 79,115 49,275 36,471   Other investing activities 22,395 (21,753)
Financial Services expense 130,704 107,970 383,802 330,126 DILUTED EPS EXCLUDING RESTRUCTURING PLAN COSTS AND THE IMPACT OF RECENT EU AND CHINA TARIFFS     Other current assets 140,786 144,368 151,042 Net cash used by investing activities (551,474) (616,063) MOTORCYCLE SHIPMENTS Latin America 2,498 2,577 7,255 7,652
  Operating income from Financial Services 72,873 83,754 207,133 227,874 Diluted earnings per share (GAAP) $       0.55 $       0.68 $       2.58 $       3.17 4,088,997 4,484,442 4,089,458     United States 25,572 26,213 101,481 108,057 Canada 2,560 2,453 7,787 8,340
Adjustments net of tax, per share 0.15 0.14 0.56 0.42 Cash flows from financing activities:     International 20,265 22,426 72,004 77,119   Total international retail sales 23,619 23,006 73,763 76,721
Operating income 119,844 149,416 543,213 709,780 Adjusted diluted earnings per share (non-GAAP) $       0.70 $       0.82 $       3.14 $       3.59 Finance receivables, net 5,305,579 5,007,507 5,187,176   Proceeds from issuance of medium-term notes 546,655 1,144,018 45,837 48,639 173,485 185,176       Total worldwide retail sales 58,522 59,226 179,519 188,740
Other income (expense), net 3,160 644 11,857 1,509 Other long-term assets 1,181,654 1,173,715 1,227,166   Repayments of medium-term notes (1,350,000) (877,488)
Investment income (loss) 2,041 (1,106) 11,970 2,630 $10,576,230 $10,665,664 $10,503,800   Proceeds from securitization debt 1,021,353 - MOTORCYCLE PRODUCT MIX
Interest expense 7,789 7,762 23,304 23,180   Repayments of securitization debt (244,250) (224,507)     Touring 19,905 22,204 75,871 84,125
Income before income taxes 117,256 141,192 543,736 690,739 LIABILITIES AND SHAREHOLDERS' EQUITY   Net (decrease) increase in credit facilities and unsecured commercial paper (120,707) 102,154     Cruiser(1) 16,225 16,049 59,367 61,951
Provision for income taxes 30,693 27,337 133,597 159,783 Current liabilities:   Borrowings of asset-backed commercial paper 177,950 120,903     Sportster®/ Street 9,707 10,386 38,247 39,100
Net income $    86,563 $  113,855 $   410,139 $   530,956     Accounts payable and accrued liabilities $   905,941 $   885,991 $   875,799   Repayments of asset-backed commercial paper (240,008) (156,258) 45,837 48,639 173,485 185,176
    Short-term debt 1,013,137 1,135,810 1,373,859   Dividends paid (179,409) (186,105)
Earnings per share:     Current portion of long-term debt, net 1,779,673 1,575,799 1,526,156   Repurchase of common stock (217,454) (195,998)
  Basic $        0.55 $        0.69 $         2.59 $         3.18 3,698,751 3,597,600 3,775,814   Issuance of common stock under employee stock option plans 2,180 3,157
  Diluted $        0.55 $        0.68 $         2.58 $         3.17 Net cash used by financing activities (603,690) (270,124)
Long-term debt, net 4,607,041 4,887,667 4,196,517
Weighted-average shares: Pension and postretirement healthcare liabilities 171,593 202,229 166,936 Effect of exchange rate changes on cash, cash equivalents and restricted cash (4,110) (12,567)
  Basic 156,239 165,927 158,117 166,885 Other long-term liabilities 262,626 204,219 211,561
  Diluted 156,944 166,664 158,794 167,681 Net (decrease) increase in cash, cash equivalents and restricted cash $  (310,625) $   223,801
Shareholders' equity 1,836,219 1,773,949 2,152,972
Cash dividends per share: $      0.375 $      0.370 $      1.125 $      1.110 $10,576,230 $10,665,664 $10,503,800 Cash, cash equivalents and restricted cash:
  Cash, cash equivalents and restricted cash, beginning of period $ 1,259,748 $   746,210
  Net (decrease) increase in cash, cash equivalents and restricted cash (310,625) 223,801
  Cash, cash equivalents and restricted cash, end of period $    949,123 $   970,011
Reconciliation of cash, cash equivalents and restricted cash in the Consolidated Balance Sheet to the Consolidated Statements of Cash Flows: 
  Cash and cash equivalents $    862,381 $   926,992
  Restricted cash 79,115 36,471
  Restricted cash included in Other long-term assets 7,627 6,548
  Cash, cash equivalents and restricted cash per the Consolidated Statements of Cash Flows $    949,123 $   970,011
Adoption of New Accounting Standards
On January 1, 2019, the company adopted accounting standards update 2016-02 Leases using the modified retrospective method. As a result, the company recorded a right-of-use lease asset of approximately $60 million and a corresponding lease liability. 

 

 

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SOURCE Harley-Davidson, Inc.

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