HARLEY DAVIDSON
HARL E Y- DAVIDSON, I NC.
2007 Annual Report
TOWN TO TOWN, COUNTRY TO COUNTRY
OUR GROWING
T HR OUG HOU T THE WORLD, HARL EY- DAV I D SON UN ITE S P EOP L E D E E P LY, PAS S IONAT E LY AND AUTH E N T I CAL LY.
AND IN THIS UN ITY T HER E IS A RICH AND UNENDING VARIETY OF PERSONAL EXPERIENCES. FROM TOWN TO TOWN
AND COUNTRY TO COUNT RY, HARL EY- DAV ID SON TRANSCENDS CULTURES IN WAYS THAT R ESONATE LOCAL LY.
W ITH BOTH G LOB AL S IG N I F I CAN CE AND LOC A L R E L EVAN C E , IT ’S N O S URP R I S E THAT HARL EY- DAV ID SON R A NK S
AS O N E O F THE STRON GEST BRANDS I N T H E WORL D. SUC H AC C O L A DE S ARE G R ATI F Y IN G OF COU R SE . BUT
I G N I TI NG T HE F I R E W I T H I N P EOP L E A L L OV E R T H E WOR L D I S M UCH M OR E I M P ORTANT.
FINANCIAL HIGHLIGHTS
Harley -Davidson, Inc. President
and Chief Executive Officer, Jim Ziemer,
on a ride to Fairbanks, Alaska
for the 2007 Alaska State H.O.G. Rally.
WORLDWIDE
NET REVENUE BY REGION
Dollars in millions
2007 (1)(2)
In thousands, except per-share amounts
Income statement data:
Net Revenue
Cost of goods sold
Gross Profit
2006 (1)(2)
2005 (1)
2004
2003
$ 5,726 , 848
$ 5,800,686
$ 5,342,214
$ 5,015,190
$ 4,624,274
3,612 ,748
3,567,839
3,301,715
3,115,655
2,958,708
2 ,114 ,100
2,232,847
2,040,499
1,899,535
1,665,566
Financial services income
Financial services expense
416 ,196
384,891
331,618
305,262
279,459
204 , 027
174,167
139,998
116,662
111,586
Operating income from financial services
Selling, administrative and engineering expense
212 , 169
210,724
191,620
188,600
167,873
900, 708
846,418
767,157
731,750
690,492
Income from operations
Investment income, net
1, 425, 561
1,597,153
1,464,962
1,356,385
1,142,947
13.8 % EUROPE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 790.2
22 , 258
27,087
22,797
23,101
23,088
4.0 % JAPAN . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 229.8
Income before provision for income taxes
Provision for income taxes
1, 447, 819
1,624,240
1,487,759
1,379,486
1,166,035
4.7 % REST OF WORLD . . . . . . . . . . . . . . . . . . . . . . 268.6
513 , 976
581,087
528,155
489,720
405,107
TOTAL NET REVENUE . . . . . . . . . . . . . . . $ 5,726.8
$ 933 , 843
$ 1,043,153
Net income
Weighted-average common shares:
Basic
Diluted
Earnings per common share:
Basic
Diluted
Dividends paid per common share
Balance sheet data:
Working capital
Finance receivables held for sale
Finance receivables held for investment, net
Total assets
Current finance debt
Long-term finance debt
Total finance debt
Shareholder equity
$
959,604
$
889,766
73.5 % UNITED STATES . . . . . . . . . . . . . . . . . . . . $4,208.0
4.0 % CANADA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 230.2
760,928
$
249, 205
264,453
280,303
295,008
302,271
WORLDWIDE
249, 882
265,273
281,035
296,852
304,470
Dollars in millions
$ 3.75
$ 3.94
$ 3.42
$ 3.02
$ 2.52
$ 3 . 74
$ 3.93
$ 3.41
$ 3.00
$ 2.50
$ 1. 060
$ 0.810
$ 0.625
$ 0.405
$ 0.195
$ 1, 562 , 235
$ 1,954,956
$ 2,272,125
$ 2,510,490
$ 2,087,056
781,280
547,106
299,373
456,516
347,112
2 ,420,327
2,280,217
1,943,224
1,655,784
1,390,737
5 ,656 , 606
5,532,150
5,255,209
5,483,293
4,923,088
1,119,955
832,491
204,973
495,441
324,305
980,000
870,000
1,000,000
800,000
670,000
2 ,099,955
1,702,491
1,204,973
1,295,441
994,305
$ 2 ,375, 491
$ 2,756,737
$ 3,083,605
$ 3,218,471
$ 2,957,692
NET REVENUE BY PRODUCT LINE
77.6 % HARLEY-DAVIDSON MOTORCYCLES . . $4,446.6
DEAR FELLOW SHAREHOLDERS :
2 007 W A S A L O T L I K E T H A T M OTO R C Y C L E T R I P Y O U T A K E I N E A R L Y S U M M E R I N T H E M O U N T A I N S — T H E O N E W H E R E T H E F O R E C A ST
I S F O R B L U E S K I E S A N D D R Y R OADS A N D , A L L O F A S U D D E N A T 9 , 5 0 0 F E E T O F E L E V AT I O N , Y O U F I N D Y O U R S E L F I N T H E M I D D L E O F A
SNOWSTORM. YOU KNOW THAT WITH CAUTION AND PERSEVERANCE YOU’LL REACH YOUR DESTINATION. BUT IN THE MEANTIME, IT’S
SURE TOUGH TO GET MUCH TRACTION AND IT MAKES FOR SOME UNCOMFORTABLE RIDING!
Harley-Davidson had a challenging year
in 2007 as growing troubles in the U.S.
economy increasingly impacted major discretionary purchases like motorcycles.
In that environment, Harley-Davidson
full-year revenue and earnings declined
year-over-year, as did the number of new
Harley-Davidson® motorcycles our U.S.
dealers sold at retail. Even so, except for
2006, it was the biggest year in our history
for revenue, earnings and worldwide retail
motorcycle sales. Revenue for the year was
$5.73 billion, compared to $5.80 billion in
2006 and $5.34 billion in 2005. Dealers sold
337,774 new Harley-Davidson motorcycles
worldwide in 2007, compared to 343,981 in
2006 and 317,169 in 2005. Diluted earnings
per share were $3.74, compared to $3.93 in
2006 and $3.41 in 2005.
A major factor affecting revenue and
earnings in 2007 was our decision to reduce
fourth-quar ter motorcycle shipments, in
keeping with our commitment to ship fewer
Harley-Davidson motorcycles than we anticipated dealers would sell at retail worldwide.
For the full year 2007, we shipped 330,619
Harley-Davidson motorcycles, which was
5.3 % less than the prior year.
Our decision to reduce shipments underscores the priority we place on brand strength.
Our strong brand is the backbone of our
business and the value proposition of our
motorcycles. We will continue to be careful
guardians of the brand by managing the
relationship between supply and demand
and managing the business for the long term.
Turning to Harley-Davidson Financial
Services, we all know what a challenging
year 2007 was in the consumer credit
industry. However, HDFS is a premier financial services company with a reputation
understanding of how to effectively serve the
needs of dealers and their retail customers.
I N T E R N AT I O NA L S T R E N G T H A major bright
spot in 2007 was the continued success of
Harley-Davidson on the international stage,
where dealers’ retail sales grew 13.7%
compared to the prior year. Our international
“OUR STRONG BRAND IS THE BACKBONE OF OUR
BUSINESS AND THE VALUE PROPOSITION OF OUR
MOTORCYCLES. WE WILL CONTINUE TO BE CAREFUL
GUARDIANS OF THE BRAND…BY MANAGING THE
BUSINESS FOR THE LONG TERM.”
for a disciplined and prudent approach to
lending, and for the full year, HDFS realized
a 0.7% increase in operating income compared to 2006. HDFS also grew its market
share for loans for new Harley-Davidson
motorcycles in the U.S. to 55% in 2007,
up from 49 % in 2006. HDFS continues
to serve a broad range of customers,
lending across all credit tiers and appropriately balancing for risk and reward.
And although HDFS was not immune to
some of the pressures in the credit
markets in 2007, its results demonstrate its
strength is the result of a well-orchestrated,
strategic approach we embarked on a number of years ago to grow Harley-Davidson’s
international retail motorcycle sales faster
than U.S. sales. Our international strategy has
resulted in sound investments in marketing
and products that are attuned to local customer preferences, improved distribution at
the wholesale level, dealer network strength,
and assuming ownership and management
of business operations in an increasing
number of key markets.
Perhaps more than anything, our inter-
national growth is a sign of the incredible
strength of the Harley -Davidson brand
abroad — and the ability of the brand to
transcend cultures and languages. As you’ll
see from the examples in this annual report,
Harley-Davidson consistently delivers
culturally -relevant experiences in the 72
international countries in which we sell our
motorcycles. Our international employees —
the vast majority of whom are local market
nationals — and our dealers understand the
challenges and opportunities and how
to fine tune our approach to the cultural
expectations of each market .
Going forward, we believe international
markets will continue to be an area of
strength and we are continuing to refine our
business and marketing strategies for
Europe, Asia, Australia, Latin America and
Africa to leverage those opportunities.
Looking ahead, we
anticipate that weakness in the U.S. economy will continue to make 2008 challenging
for Harley-Davidson and we have again
committed to ship fewer Harley-Davidson
motorcycles than we expect dealers to sell
worldwide. At this time, we believe this is
the right course for the brand, our business,
for dealers and for customers.
At the same time, we continue to devote
major resources to drive our business forward, investing heavily in marketing, product
THE
R OA D
AHEAD
15.2 % PARTS & ACCES SORIES . . . . . . . . . . . . . . . 868.3
(1) 2007, 2006
(2) 2007
and 2005 results include the adoption of Statement of Financial Accounting Standards (SFAS) No. 123(R), “Share-Based Payment” effective January 1, 2005.
and 2006 results include the adoption of SFAS No. 158 , “Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans” as of December 31, 2006.
As of Feb. 18 , 2008, there were 90,748 shareholders of record of Harley -Davidson, Inc. common stock.
development and our people. We believe
there will be solid opportunities to grow when
the U.S. economy rebounds and we intend
to be well-positioned to take advantage of
those opportunities.
C US T OM E R F O CU S Customer relationships,
market - defining products and extraordinary
customer experiences are the not-so secrets
to our success. We intend to keep it that
way through a continued focus on these
strengths, connecting with core customers,
crossover prospects and non-riders like never
before, and staying ten steps ahead of our
competitors. From unmatched events like
our upcoming 105th Anniversary Celebration
or an exclusive Nightster ® motorcycle
launch party for young adults to our Dark
Custom™ family of motorcycles (check them
out at www.Harley-Davidson.com), we continue to make our brand more relevant to
more people.
L E A D E R S H I P F OCU S Harley-Davidson has
achieved its success over the years through
the talent and dedication of our employees,
growing the Company from less than $2 billion
in revenue a decade ago to nearly $6 billion
in 2007. Today, more than ever, having capable leaders is crucial to our success.
We are currently in the process of
transforming our internal culture to maximize
the talent and contributions of our existing
workforce, making leadership development
a key priority. And we’re bringing in new
people for the fresh perspectives and
capabilities they can provide.
I want to make sure that our people — and
especially our leaders at all levels of the
organization— are well-prepared to meet the
challenges we face and to make the most of
Harley-Davidson’s many business opportunities. My goal is to make sure that we are
world class when it comes to leadership,
just as we’re world class when it comes to
our motorcycles.
Mark-Hans Richer joined the organization in
the newly-established role of Senior Vice
President and Chief Marketing Officer, with
overall responsibility for the brand and motorcycle product planning, and for U.S. marketing
and customer relationships.
I’m expecting a
challenging year in 2008 but it’s also going
to be an incredible year.
Anticipation is building for the opening of
the Harley-Davidson Museum this summer.
The Museum is much more than our collection
of memorabilia and bikes. It will be an
2 00 8 – A N E XC I T I N G Y E A R
To make
Harley-Davidson more agile and adept
going forward, we made major changes
in our organizational structure in 2007.
Our new, more streamlined structure promotes faster decision making, greater
O R G AN I Z AT I ON A L
S T R UC T U R E
“OUR INTERNATIONAL STRENGTH IS THE RESULT OF A
WELL- ORCHESTRATED, STRATEGIC APPROACH
WE EMBARKED ON A NUMBER OF YEARS AGO TO
GROW HARLEY - DAVIDSON’S INTERNATIONAL RETAIL
MOTORCYCLE SALES FASTER THAN U.S. SALES.”
responsiveness to rapid change, and clearer
accountability and responsibility for results.
Karl Eberle now serves in the newlycreated position of Senior Vice President,
Manufacturing, responsible for companywide manufacturing strategy and operations.
Ron Hutchinson is now in the newly-created
position of Senior Vice President, Product
Development, responsible for engineering,
materials management and Parts & Accessories. They bring 47 combined years of
experience at Harley-Davidson to these
key operational areas. And mid-year,
exciting destination for connecting, sharing a
road story or a meal, celebrating and fueling
Harley-Davidson dreams!
This summer, H.O.G.® celebrates its 25th
anniversary. So does Buell Motorcycle Company. Our police motorcycles business marks
its 100th anniversary. Buell is also pumping
out lots of excitement and reaching new
customers with the launch of its all-new,
liquid-cooled 1125R motorcycle, delivering
a true balance of street and track performance in the superbike category.
What else is going on? Way more than I
5.3 % GENER AL MERCHANDISE . . . . . . . . . . . . . 305.4
1.8 % BUELL MOTORCYC LES . . . . . . . . . . . . . . . . 100.5
OTHER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.0
TOTAL NE T RE VENUE . . . . . . . . . . . . . . . $ 5,726.8
can cover in this letter! We’ve doubled the
size of our demo motorcycle fleet, bringing
the Harley-Davidson experience to more
riders than ever. Our event teams will be
putting on more and better consumer events
around the globe. And in July, we’ll have
a major injection of adrenaline with the
introduction of the 2009 motorcycles.
A few weeks later we celebrate our
great future, not to mention 105 years of
riding proud, with the biggest anniversary
ride in company history and four days of
celebration in Milwaukee. With the entertainment and activities we’ve got in store,
our 105th Anniversary Celebration will
deepen the passion of current customers
and ignite the dreams of new ones like only
Harley-Davidson can.
I can’t think of another consumer products
company that can lay claim to that level of
customer activity and excitement in one year.
So even though the economy has hit a
rough patch, I am very enthusiastic about our
future. With the most passionate employees,
customers and dealers anywhere, our
powerful brand and our great motorcycles, I
believe there is outstanding opportunity for
Harley-Davidson throughout the world for
years to come.
JAMES ZIEMER%
President and Chief Executive Officer,
Harley-Davidson, Inc.
JAPAN
OVE RCOMING BAR R IERS
IN JAPAN
OVER THE PAST DECADE, JAPANESE CULTURE HAS CHANGED. WOMEN
A R E E NC OU R AG E D TO A S SUM E L E SS TR A D ITI ON A L R OL E S A ND
FOL L OW THE IR DRE AM S. DUR ING THI S SA ME T IME FRAME, THE COUNTRY
HA S EXP ER IE NCED A SIG N IFIC A N T INCR E A SE IN THE NUMBER OF
WOMEN RIDING HARLEY ® MOTORCYCLES THANKS TO HARLEY - DAV IDSON’S
More than ever before, Japanese women have
an interest in riding motorcycles, and it’s now
socially permissible for them to do so. Yet for
many women, there are barriers to getting
involved. Limited product knowledge and an
absence of riding skills can be huge obstacles.
But above all, Japanese women tend to be
apprehensive about approaching a traditionally
male-oriented sport. To conquer these
barriers, Harley-Davidson offered an event for
women only — the Ladies Debut Ride.
Women learned the basics about HarleyDavidson motorcycles and customization
techniques and had the chance to demo all
Harley models in a private area, closed
to traffic. Female employees led the event,
demonstrating riding techniques and raising
the confidence of the guests. Combining a
safe learning environment with the camaraderie
of a ladies-only get together, aspiring
female riders enjoyed an experience pertinent
to their preferences.
Most importantly, Japanese women felt
more confident about riding and connected
to the brand.
Blending his passions, Jeremy organized
a crew of snowboarders to ride from
Harley-Davidson of Salt Lake City to western
Nevada to snowboard and film a minidocumentary, “The Morning Out of Austin.”
They covered 1,300 miles on their ride and
encountered every element Mother Nature
could dish out. But they blazed right through—
making the road stories that were detailed
in the film even better. The ride united the
world of action sports with motorcycling,
paving the way to reach a community of young
adults that shares our brand values. The
ride received international media coverage in
key snowboarding magazines and, when
the film was complete, Harley-Davidson of
Salt Lake City threw a premiere party.
The dealership converted the showroom into
a movie theater and entertained Jeremy
and his crew, along with 1,000 fans. Before
the movie was even released, the dealership
began to see new, younger customers.
The word was out among the snowboarding
community and these enthusiasts bought
motorcycles. Best of all, the word on
the street is planting seeds for the future.
INNOVAT I V E EFFORTS TO HELP THEM GE T START ED.
BR EAK ING TH ROUG H
I N THE U. S . A .
J E R EMY JON ES IS ONE OF THE WORL D’S TOP PROF ESSIONAL SNOW BOARDERS. REVERED AMONG FANS FOR HIS REBELLIOUS SNOWBOARDING
ST YLE, HE EP ITOM I Z ES THE K I N D OF COOL TO WHI C H M ANY YOUNG
A DULTS A SP I R E. H E’S AL SO A H A R L E Y - DAV I DSON R I D E R.
US A
.
.
RUSSIA
MERGING W ITH MOSCOW’S
WAY OF L I F E
M USCOVITES H AVE SOL I D SPE NDING P OW ER. WE ALTH IS ON DISP L AY
E VE RY W H E R E YOU L OOK , G I V I NG MOSCOW A SE NS E OF E XT R AVAG AN T
ST Y L E. F IN E R ESTAU R ANTS AND FASH IONABLE SHOPS DE LIVER OVE R -
WH E L M ING LY OP UL E NT E X P E R I E NCES, W H I C H W E L L - H E E L E D RUS SI AN S
HAV E COM E TO E XPECT.
SHAP ING THE S CENE
IN TURKEY
T UR K EY’S BUST L I NG ECONOMY HAS GROWN STEADI LY IN TH E L AST FIVE
YE ARS. MOST OF THE C OUN T RY ’S P O P UL ATI O N I S C O NC E NTRATE D
I N U R BAN AR EAS WH E R E WE STE RN A ND T R ADIT IONAL T UR K IS H L I F E ST Y L E S ME L D TOGE T HE R . T HR OU G H T H E S E CULT UR A L DYNAM ICS,
A N E W CUSTOM E R G R OUP I S E M E R G I NG: A YOU NG G E N E R AT I O N O F
TURK S WITH A WESTE R N M I NDS ET.
In 2005 , the first Harley-Davidson dealership
opened in Moscow and the city’s first
enthusiasts anticipated an indulgent dealership
experience. Harley-Davidson had to find a
way to strike the balance between exclusivity
and Harley-style sensibilities. To meet in
the middle, the urban dealership created a
traditional retail environment with a VIP twist:
a luxuriously furnished waiting area, lavish
food and beverages and a full wait staff.
Soon a second dealership opened in a
suburban luxury shopping village, alongside
high-end auto, jewelry and apparel retailers.
That store featured fine finishes and fixtures,
with the added touch of doormen to cater
more directly to high-income customers.
Growth continues. A new retail outlet opened
last year inside one of the most high-end
department stores in the city. The storewithin-a-store concept is a radical departure
from Harley-Davidson’s traditional retail
strategy. Today, the shop merchandises
motorcycles and apparel to influential
shoppers alongside other exclusive brands.
As the Harley-Davidson brand has come to life,
sales have tripled in Moscow since 2005.
Locals have a stylish new way to express
themselves and, as the middle class
begins to benefit from changing economics,
the future looks exciting.
Harley-Davidson began doing business in
Turkey in 1996 when it established its first
dealership in Istanbul. Since that time, an
enthusiastic following has developed among
the baby boomer demographic, complete with
a H.O.G. Chapter, regular group rides and events.
However, to connect with Turkey’s youth
culture, Harley-Davidson Istanbul
decided to do things a little differently.
The dealership started a riding group
named Night Riders to generate interest
in a trendy, urban motorcycle lifestyle.
The group convenes on Friday nights to ride
to the hottest dance clubs and late night
cafes. Parking, entering and leaving together,
crowds can’t help but notice the group
riding genuine Harley-Davidson motorcycles.
The idea marries an attribute of HarleyDavidson culture — riding together—
to an activity interesting to young Turks—
late night socializing. With more and
more riders joining the ranks of the Night
Riders, the effort has caught the attention of
Turkey’s young adults, giving them an authentic
way to express their lifestyle.
TURKEY
AUSTRALIA
F OST E R I N G AUSTR ALIA’S
R IDI NG COMMUNI TY
F UE L E D BY BUOYAN T E CO NOM IC C ONDI T IONS, AUSTR ALIA’S AP P E T I TE
FOR HARLE Y - DAV IDS ON M OTORCYCL ES HAS BE E N VOR AC I OU S
OVE R T H E PAST F IV E YE AR S. AUSTR AL IAN S IN RUR A L M INI NG STATE S
L IKE W E STE R N AUSTR AL IA AN D QUE E NS L AN D HAVE PART ICUL A R LY
PROSPER ED AS T HE C OUNTRY ’S NATUR A L R E SOURC E S CON T I NUE TO
BE IN H I G H DE MAND G LO BAL LY.
CREATIN G A KOR EAN
MOTOR CYC L E LIF EST YL E
UN TI L THE L ATE 1990 s, T WO - WHEE L E D TR ANSP ORTATION IN KORE A WAS
A L L A BOU T G ET T I NG F ROM POI N T A TO P OI N T B. THE IDE A O F A
M OTORCYCLE LI FESTYLE — WE LL U N DE RSTOOD I N THE WESTE R N WOR LD —
WAS COM P L E TE LY FOR E IGN IN THI S C OUNT RY.
Australians living in these remote areas must
travel great distances to reach neighboring
towns —often voyaging hundreds of
miles between cities. To foster the enthusiast
community, Harley-Davidson worked
to enhance every dealership experience in
the country, giving riders first-rate stopping
points along their journeys. Richardson’s
Harley-Davidson in Tasmania updated its
30-year-old business with a massive log
cabin-style store, reflecting the territory’s
tall timber surroundings. Inside, visitors
can browse Harley-Davidson motorcycles
and MotorClothes apparel, as well as
a display of vintage motorcycles. A large,
sit-down restaurant offers fare for the
hungry and a welcoming fire burns all winter,
fostering a gathering spot to meet new friends
and trade stories. And the youngest
enthusiasts can hang out in the Kids’ Club
play area while the grown-ups shop. The
dealership has become a favorite destination
for riders from all over Australia’s sprawling
countryside. And guests who initially came
for coffee and a peek at the Harley-Davidson
lifestyle have become frequent visitors as
the dealership cultivates customers from all
walks of life.
When the Motor Company began doing
business in Korea, overcoming the utilitarian
perception of motorcycles was imperative
to getting consumers to value leisure riding.
Developing the Harley-Davidson lifestyle
was a necessity.
While instilling a desire for the freedom of
touring and the camaraderie of friends
was important to establishing the lifestyle,
Harley-Davidson took the country’s
cultural values into account to ensure a
relevant experience. Knowing that family
life is particularly cherished in the country,
plans evolved with “family” at front and
center. All Korean Harley-Davidson events
provide activities for family members—
regardless of whether they ride or not. One
recent riding event, the Family Tour, invited
riders’ families to join the trip. Motorcycles led
the ride and coaches followed with family
members in tow. Every stop included family
activities—rafting, games, dinner parties
and shopping—to ensure the whole family
had a memorable experience.
Because of events like this, riders consider
Harley-Davidson motorcycles more than a
means of transportation. They consider it an
activity that enhances their family’s lifestyle
in ways they cherish.
KOREA
BRAZIL
CAP TUR I NG AT T ENTIO N
IN BRAZIL
BRA Z I L IS A DA Z Z L ING L AND OF PR I S T I N E B E AC HE S, ST E AMY JUNGL E S
AND E LECTR IF Y ING M ETROPOL ISE S — A COUNT RY OF STAG G E R I N G
BE AU T Y. I T ’ S A P E RFECT PL ACE TO BR ING A GROUND - BR E AK ING NE W
MOTO RCYCL E TO L I FE .
H OW ITAL IAN S P R E F E R
TO S HO P
ITALY I S STE E P E D I N T WO - WHEE LE D TRADITION. E VE RY WHE R E YOU LOOK,
FAS H I ON ABL E YOUNG I TAL I AN S Z I P AROUND TOWN ON N I MBL E C IT Y
M OTOR CYCL E S. WHAT’S MORE , N E AR LY HALF OF THE ADULT P OP UL AT ION
I S L I CENSE D TO R IDE.
When the stunning Harley-Davidson® VRSC
V-Rod® launched in 2001, it presented a
unique opportunity to capture the attention
of the Brazilian market. Stylistically, the
V-Rod was like no other motorcycle in the
world and oozed the kind of contemporary
design that locals coveted. To guarantee
a buzz, Brazil’s Izzo Harley-Davidson boldly
redesigned one of its store environments,
putting the V-Rod in the limelight. With
modern and minimalist decor, a showcase
of fashionable riding gear, cool music and
young, hip staff —all of whom rode V-Rod
motorcycles—the atmosphere seamlessly
conveyed the spirit of the new bike.
Brazilians sensed the V-Rod experience
immediately upon entering the dealership
and the platform has become one of
Harley-Davidson’s top sellers in the country.
Today, each Harley-Davidson motorcycle
family is displayed in a setting that evokes
its soul. And Izzo Harley-Davidson
dealerships are matching the varying
needs of Brazilian riders’ tastes with the right
bikes, capturing them for the long haul.
But the culture presented an interesting
opportunity: most Italians prefer shopping in
their nearest town and they avoid traveling
distances to shop. If an item can’t be found
in town, it isn’t essential.
In this preference was a chance to capture
the attention of customers who may never
have walked into a Harley-Davidson dealership.
Enter the Harley-Davidson Experience Tour.
This mobile street promotion gives locals the
chance to easily demo ride a bike in their
town square during market hours, no
traveling required. Harley-Davidson employees
give shoppers one-on-one attention to
fully understand their riding preferences and
tailor the experience to their needs. Once
a rider is hooked on the experience, a trip to a
dealership becomes an absolute necessity.
Now Italians are finding it easy to hop on a
Harley. And other European countries
such as Sweden and Spain are setting up
similar programs.
ITALY
2007 FINANCIAL PERFORMANCE SUMMARY
HAR L EY- DAV I DSON , INC .
HAR L EY- DAV I DSON , INC .
COM M O N S HAR E S OU TSTAN D I N G
Y E AR - E N D S T O C K P R I C E S
Shares outstanding, in millions
In dollars, adjusted for splits
BAR RY K. AL L E N
80
70.47
23.69
150
60.75
70
46 . 71
47. 53
51. 49
60
30
20
50
10
04
05
06
Senior Advisor, Providence Equity Partners
President, Allen Enterprises, LLC
R I C H A R D I . B E AT T I E
Chairman,
Simpson Thacher & Bartlett LLP
J E FFR EY L. B LE USTE I N
Chairman of the Board,
Harley-Davidson, Inc.
G EORG E H. CON RADES
Executive Chairman,
Akamai Technologies, Inc.
J U DSON C. G R E E N
D O N A L D A . JAM E S
Chairman and Chief Executive Officer,
Deeley Harley-Davidson/Canada
Fred Deeley Imports Ltd.
SA R A L . L E V I N S O N
Chairperson, ClubMom, Inc.
G E O R G E L . M I L E S, J R .
President and Chief Executive Officer,
WQED Multimedia
JA M E S A . N OR L I N G
Chairman of the Board,
Chartered Semiconductor Manufacturing Ltd.
JOCH E N Z E ITZ
Chairman and
Chief Executive Officer, Puma AG
JA M E S L . Z I E M E R
President and Chief Executive Officer,
NAVTEQ Corporation
President and Chief Executive Officer,
Harley-Davidson, Inc.
2007 HARLEY- DAVIDSON
LEADERSHIP
Vice President, Harley Owners Group
C O R P O RATE O F F I C E R S
Vice President,
Engineering Centers of Expertise
0
0
03
50
40
13.63
100
32 .03
200
39.75
250
46. 20
54. 31
238 . 5
Harley-Davidson Financial Services (HDFS)
continued a 14 -year run of earnings growth.
Operating income increased from $211 million in 2006 to $212 million in 2007 as HDFS
benefited from increased wholesale and retail
lending activity.
300
258 .1
H A R L EY-DAVI D S O N F I NA N C IA L S E R VI C E S
2007 B OAR D O F D I R E CTO R S,
HARLEY- DAVIDSON, I N C.
350
294.3
Worldwide
retail sales of Harley-Davidson motorcycles
declined 1.8 % in 2007.
In the United States, 2007 retail sales of
Harley-Davidson motorcycles decreased 6.2 %
compared to 2006 and the overall U.S. heavyweight market declined 5.0 %.
For the full year 2007, retail sales of
Harley-Davidson motorcycles in our international
markets increased 13.7%. In Europe, sales of
Harley-Davidson motorcycles increased 15.0%,
HA R L EY-DAVI DS O N M OTO R CYC L E S
CORPORATE SUMMARY
274.0
and in Japan, retail sales of Harley-Davidson
motorcycles increased 3.6% compared to 2006.
Annual retail sales increased 9.4% in Canada,
and increased 23.7% in the remaining international markets combined.
In 2007, Harley-Davidson motorcycle shipments were 330,619 units, down 5.3% from 2006.
have enjoyed a compound annual total return
growth rate of 27.2%, which includes five 2-for-1
stock splits during that time period.
301. 5
Harley-Davidson continues to effectively
manage its balance sheet and realized a return
on invested capital (ROIC) at the end of 2007 of
26.3%. The Company has maintained an ROIC
over 20% every year since 2000.
The Company’s share price declined 33.7%
during 2007. For the ten-year period ending on
December 31, 2007, compound annual total
return on Harley-Davidson stock was 13.9 %.
The Company increased its dividend twice during
2007 and has increased the annual dividend
for 15 consecutive years. The dividend paid per
share in 2007 was up 30.9 % compared to 2006.
Since the end of 1986, the year Harley-Davidson,
Inc. became a public company, shareholders
In 2007, the Company’s net revenue and net
income decreased 1.3 % and 10.5% , respectively.
Net revenue of $ 5.7 billion was $ 74 million
lower than in 2006 , while 2007 net income
of $ 934 million was $109 million lower than
last year.
Revenue from sales of Harley-Davidson
motorcycles decreased to $ 4.4 billion in 2007,
a decline of 2.3% from 2006. Buell motorcycle
revenue of $101 million was down 1.7%. Revenue from Genuine Parts and Accessories in
2007 totaled $868 million, a 0.7% increase over
the previous year, and General Merchandise
revenue was $305 million, an increase of 10.1%
compared to 2006.
97
07
98
99
00
01
02
03
04
05
06
07
10 -YEAR CAGR 13.1%
HARLEY- DAVIDSON, INC. VS. STANDARD & POOR ’ S 500 COMPOSITE INDEX
In dollars
M ICHAE L D. KE E FE
PAT R I C K D . K E L L E R
30,000
NORTH AMERICA
T H O M AS E . B E R G M A N N
651 + C C M OTOR CY L E R EG I ST RAT IONS H - D V S. I NDUST R Y *
475.0
04
05
06
99.3
1,043
93 4
761
580
500
438
174
200
100
0
0
00
01
02
03
04
05
06
555.0
578.8
553.6
530.8
President and Chief Executive Officer
550
48.0% HARLEY-DAVIDSON
J OA N N E M . B I S C H M A N N
DAV I D P. B O Z E M A N
Vice President, Advanced Manufacturing
266.3
281.6
264.7
255.8
RODN EY J. COPES
Vice President, Asia Pacific
300
250
14.3% HONDA
200
150
100
97
07
98
99
00
01
02
03
04
05
06
12.7% SUZUKI
97
98
99
00
H -D M OTORCYCLES
01
02
03
04
05
06
07
8.3% OTHER
U.S. Source: Motorcycle Industry Council (MIC). Canada Source: Moped & Motorcycle Industry of Canada.
T I M O T H Y K . H O E LT E R
R O N A L D M . H U TC H I N S O N
5.9
5.9
6.9
7.1
7.1
8.1
7.7
8.5
9.1
9.6
%
10 -YEAR CAGR 20.7 %
01
02
03
04
05
06
07
MARKE T SHARE
97
98
99
00
01
02
03
04
05
06
07
0.810
01
03
05
06
M I C H A E L VA N D E R SA N D E
Vice President and Managing Director,
Harley-Davidson Europe
J E R RY G. WI L KE
Vice President
2007 HARLEY- DAVIDSON
FINANCIAL SERVICES LEADERSHIP
SA I Y I D T. N AQ V I
President, Harley-Davidson Financial Services
2007 BUELL M OTORCYC L E
C OM PANY L EADE RSHIP
E R I K F. B U E L L
Chairman and Chief Technical Officer,
Buell Motorcycle Company
JON R. FLICKI NG E R
President and Chief Operating Officer,
Buell Motorcycle Company
403.0
376.8
350.7
337.1
323.9
333.2
321.3
322.6
292.8
ComputerShare Trust Company
H A R L E Y- DAV I D S O N , I N C .
2 North LaSalle Street
Chicago, IL 60602
866-360-5339 toll-free
3700 West Juneau Avenue
P.O. Box 653
Milwaukee, WI 53201-0653
Internet Addresses:
www.harley-davidson.com
www.buell.com
P L A N T T O U R I N F O R M AT I O N :
13.6% YAM AHA
12 .3% HONDA
11.3% K AWASAKI
38 .7
34 .3
29 .7
25 .9
26 .3
23 .5
22 .8
23 .2
20 .5
18 .1
17. 2
50
0
98
99
00
H -D M OTORCYCLES
01
02
03
04
05
06
07
9.6% HARLEY-DAV IDSON
6.5% TR I UMPH
5.9% DUCATI
9.2% OTHER
INDUSTRY
07
10 -YEAR CAGR 31.6 %
Data includes Austria, Belgium, Denmark, Finland, France, Germany, Greece, Italy, Netherlands, Norway, Portugal, Spain, Sweden, Switzerland, and the United Kingdom.
The Company derives its market registration data and market share calculations from information provided by Giral S.A.
* The Company must rely on data compiled by independent agencies to obtain retail registrations data necessary for calculating market share. The retail
registrations data for Harley-Davidson motorcycles included in these tables may differ slightly from the Harley-Davidson retail sales data presented elsewhere
by the Company. The differences are not significant and generally relate to the timing of data submissions to the independent sources.
R E G I S T R A R A N D T R A N S F E R AG E N T
CO M P UTE R S HAR E I NVE STO R S E R VI C E S, L LC
P.O. Box A3504
Chicago, IL 60690-3504
866-360-5339 toll-free
or 312-360-5339
C O N TAC T I N V E S T O R R E L AT I O N S AT :
York, Pa. motorcycles
Kansas City, Mo. motorcycles
Milwaukee, Wis. engines
877- HDSTOCK toll-free
414-343-4782, or try our e-mail:
The following is a representative sample of trademarks
of H-D Michigan, Inc.: Harley-Davidson, Harley,
the Bar & Shield Logo, MotorClothes, Harley Owners
Group, H.O.G., Nightster, V-Rod, Harley-Davidson
Museum and Buell.
Corporate Governance materials may be obtained via
our website at www.harley-davidson.com
S HAR E H O L D E R I N F O R MATI O N
0.400
0.200
04
PAT R I C K S M I T H
C O M PANY I N F O R MATI O N
877-883-1450
250
97
02
15.1% BMW
300
100
0
00
16.5% SUZUKI
350
150
0.195
99
0.135
98
0.115
97
0.098
0.088
00
0.078
99
0.068
98
400
200
0
0
97
HAR O L D A. S COT T
651 + C C M OTOR CY L E R EG I ST RAT IONS H - D V S. I NDUST R Y *
0.800
0. 405
1. 43
1.13
0.86
0.69
0.57
50
M A R K- H A N S R I C H E R
Senior Vice President and
Chief Marketing Officer
Units in thousands
100
1.00
STEVE N R. PH I LLI PS
Vice President, Quality, Operational Excellence
and Technical Service
EUROPE
0.600
150
JOH N A. OLI N
Vice President and Controller
Senior Vice President, Product Development
0.625
242 .1
219.6
198. 4
213.6
227. 2
203.6
165. 8
182.8
186.2
2.50
1. 90
200
M I C H A E L P. H E E R H O L D
Vice President and General Manager,
Powertrain Operations, Pilgrim Road
Vice President, Government Affairs
1.000
250
Vice President, Engineering Platform Teams
JA M E S E . H A N E Y
335.4
1. 060
290. 4
3.00
300
3.00
2.00
1.200
350
323.9
4.00
3.41
3.74
D I V I D E N DS P E R SHA R E
In dollars, adjusted for splits
3.93
CAPI TAL E XP E N DI T U RE S
Dollars in millions
Senior Vice President, Manufacturing
F R E D C . G AT E S
HAR L EY- DAV I DSON , INC .
DILUTED EARNINGS PER SHARE
Vice President, Core Customer Marketing
Vice President and Chief Information Officer
6.1
In dollars
Senior Vice President and
Chief Styling Officer
Data includes U.S. and Canada.
268.7
HAR L EY- DAVI DSON , INC .
LOU IS N. N ETZ
Vice President and Director, Styling
Vice President, General Merchandise
Vice President and General Manager,
York Vehicle Operations
* The Company must rely on data compiled by independent agencies to obtain retail registrations data necessary for calculating market share. The retail
registrations data for Harley-Davidson motorcycles included in these tables may differ slightly from the Harley-Davidson retail sales data presented elsewhere
by the Company. The differences are not significant and generally relate to the timing of data submissions to the independent sources.
J E FFR EY A. M E RTE N
Vice President, North American Sales
W I L L I A M G . DAV I D S O N
R O B E R T S . FA R C H I O N E
INDUSTRY
JA M E S A . M C C AS L I N
President and Chief Operating Officer
Vice President, Human Resources
KAR L M. E B E R LE
7.5% K AWASAKI
M AT T H E W S . L E VAT I C H
Vice President, Parts and Accessories
Executive Vice President,
Chief Organizational Transformation Officer
W I L L I A M J . DAV I D S O N
9.2% YAMAHA
450
HAR L EY- DAV I DSON , INC .
W I L L I A M B . DA N N E H L
K AT H L E E N A . L AW L E R
Vice President, Communication
07
10 -YEAR CAGR 18.3 %
CAGR: COMPOUND ANNUAL GROWTH RATE
0
HAR L EY- DAVI D S O N M OTO R
C O M PANY L EAD E R S H I P
Vice President, Licensing and Special Events
300
500
99
JA M E S L . Z I E M E R
400
267
214
2,000
10 -YEAR CAGR 12.5 %
INTER NAT IONAL
600
348
2,500
1,000
98
600
800
3,000
1,500
97
07
Executive Vice President, General Counsel,
Secretary and Chief Compliance Officer
350
238. 2
206 .1
DOM EST IC
03
900
700
3,500
0
02
1,000
Vice President and Treasurer
650
500
1,100
4,000
3,407
2 ,943
2,453
2 ,064
1,763
4,500
50
01
890
5,000
100
00
6,000
960
5 , 727
5,801
5,342
5,015
4,624
350
MARKE T SHARE
%
50
5,500
4,091
330.6
349.2
329.0
317. 3
291.1
263.7
234.5
204.6
177.2
150.8
132.3
400
99
48.0
450
220 .1
07
HAR L EY- DAV I DSON , INC .
NE T INCOM E
98
48.6
422.8
06
05
185.6
04
Dollars in millions
97
47.8
365.4
981
930
803
766
03
NE T R EVE NUE
150
48.2
15 , 687
16,709
15,133
690
537
0
02
163 .1
01
Dollars in millions
200
48.1
297.9
00
142 . 0
99
WOR L DW I D E S H I PM E N T S
250
46.4
400
246.2
98
Units in thousands
300
43.9
GAI L A. LION E
116 .1
97
HAR L EY- DAVI DSON , INC .
HARLEY- DAVIDSON MOTORCYCLE
44.6
20,000
20 -YEAR COMPARISON OF YEAR - END VALUE OF $ 100 INVESTED DEC. 31, 1987. ASSUMES FOR BOTH HARLEY-DAVIDSON AND S&P THAT ALL DIVIDENDS ARE REINVESTED.
H-D
47.7
495.4
19,476
23,191
10,084
12 ,544
14,645
17,169
S&P 500
96
689
95
782
337
2 ,224
94
47.2
10,000
860
245
2 ,152
7, 434
242
1,686
93
710
220
1,433
92
P E R R Y A . G L AS S G O W
48.2
4,257
204
852
91
553
156
367
90
3,650
161
374
89
414
123
242
88
Executive Vice President and
Chief Financial Officer
Units in thousands
investor.relations@harley-davidson.com
Communication with the Board
c/o the Secretary of Harley-Davidson, Inc.
3700 West Juneau Avenue
P.O. Box 653
Milwaukee, WI 53201-0653
A N N UA L S H A R E H O L D E R M E E T I N G
The Annual Meeting of Shareholders will convene
at 10:30 a.m., CT, on Saturday, April 26, 2008, at
the Pfister Hotel, 424 East Wisconsin, Milwaukee,
Wisconsin, 53202.
SEC FOR M 10-K
A copy of the Annual Report to the Securities and
Exchange Commission on Form 10-K may be
obtained from the Company without charge to
shareholders or via the Company’s website
on or about February 22, 2008.
© 2008 Harley-Davidson, Inc.
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DIVI DE N D R E I NVESTM E NT AN D
S T O C K P U R C H AS E P L A N
To obtain information on our Dividend Reinvestment
and Direct Stock Purchase plans, please contact
ComputerShare.
Design: VSA Partners, Inc.,Chicago
Printing: Anderson Lithograph
Paper: Sappi Opus Matte Text
('
HARL E Y- DAVI DSON, INC. I S A G LOBAL LEADE R
I N FUL F ILL I NG DREAM S AND P R OVI D I N G
E XT R AOR D INARY C USTO M E R E XP E R I E N C E S
T H R OUG H M U T UA L LY B E N E F I C I A L
R E L AT ION S H I P S W ITH OU R STAK E H OL D E RS.
Special thanks to Gunnery Sergeant James A. Schmarje, United States Marine Corps (shown on cover).
H AR L E Y- DAV I D S ON , I N C.
3700 West Juneau Avenue, P.O. Box 653, Milwaukee, Wisconsin 53201-0653 www.harley-davidson.com