Harley-davidson, Inc. · NYSE:HOG
Harley-davidson — Non-Deal Roadshow (February 2003)
43 slides from Harley-davidson's roadshow presentation, February 2003
Slide 1: Sustainable Growth
Sustainable Growth February 2003 1
Slide 2: Pat Davidson, Director, Investor Relations
Pat Davidson Director, Investor Relations Harley-Davidson, Inc. 2
Slide 3: Today's Agenda
Today’s Agenda • 2002 Results – Harley-Davidson, Inc. – Harley-Davidson Financial Services • Drivers of Success • Outlook for 2003 and Beyond • Q&A 3
Slide 4: Jim Ziemer, Chief Financial Officer
Jim Ziemer Vice President and Chief Financial Officer Harley-Davidson, Inc. 4
Slide 5: Forward-looking statements
This presentation will include forward-looking statements that are subject to risks that could cause actual results to be materially different. Those risks include, among others, matters we have noted in our latest earnings release and filings with the SEC. Harley-Davidson disclaims any obligation t
Slide 6: 2002 Highlights
2002 Highlights • 263,653 H-D Motorcycles Up 12.5% • $4.1 Billion Total Revenue Up 20.1% • $629 Parts & Accessories Up 23.5% • $231 General Merchandise Up 41.2% • $580 Million Net Income Up 32.5% 6
Slide 7: 2002 Highlights
2002 Highlights • $325 Million in capital investments • Strengthened Pension Program – Reduced expected return on assets from 10.5% to 8.5% – Reduced discount rate from 8% to 7.25% – Contributed $153 million • $414 Million free cash flow • Repurchased 1.1 Million shares of stock 7
Slide 8: 2002 Operational Highlights
2002 Operational Highlights • HOG Membership grew to over 750,000 • Rider’s Edge continued to expand • Dyna motorcycle assembly moved from York, PA to Kansas City • Capacity expansion continues • Launch of 100th Anniversary products 8
Slide 9: Harley-Davidson Retail Sales Performance
Harley-Davidson Retail Sales Performance Location ‘02 ‘01 H-D Market Change Change United States 210 177 +18.3% +12.2% Europe 24 22 +7.6% +3.5% Japan 11 10 +5.9% -3.7% Worldwide Estimate 260 225 +15.6% +8.3% (includes other countries) Retail sales (000s of units) at year-end, data are estimates and
Slide 10: Donna Zarcone, President and COO, HDFS
Donna Zarcone President and Chief Operating Officer Harley-Davidson Financial Services, Inc. 10
Slide 11: Harley-Davidson Financial Services
Harley-Davidson Financial Services Harley-Davidson Financial Services, Inc Wholesale Retail Insurance Strategic Alliances U.S. Europe 11
Slide 12: HDFS - Benefits to Company
HDFS - Benefits to Company • Long-term partner in supporting the dealer network • Facilitate the sales of motorcycles • Gateway for the Harley-Davidson experience • Information source • Contributor to the bottom line 12
Slide 13: HDFS - Operating Income
HDFS - Operating Income $120 $104.2 $100 $80 (millions) $61.3 $60 $37.2 $40 $27.7 $20.2 $20 $0 1998 1999 2000 2001 2002 13
Slide 14: HDFS - Total Receivables
HDFS - Total Receivables (Managed Loans Excluding Bankcard) $6.0 $5.6 $5.0 $4.4 $4.0 $3.5 $3.3 (billions) $2.9 $3.0 $2.3 $2.4 $1.6 $1.8 $2.0 $1.2 $1.0 $0.0 1998 1999 2000 2001 2002 Originations Outstandings at Y/E 14
Slide 15: HDFS - Retail Motorcycle Outstandings by Credit Tier
HDFS - Retail Motorcycle Outstandings by Credit Tier 2000 2002 8.5% 8.5% D 30.1% D A 23.2% 43.9% C A 39.8% C B B 21.6% 24.4% 15
Slide 16: HDFS - Credit Losses
HDFS - Credit Losses (Managed Loans Excluding Bankcard) 4.00% 3.00% 2.00% 0.85% 0.90% 0.87% 0.84% 0.72% 1.00% 0.00% 1998 1999 2000 2001 2002 16
Slide 17: HDFS - Gain on Current Year Securitization
HDFS - Gain on Current Year Securitization 8.0% 7.0% 6.0% 5.0% 4.0% 3.0% 2.0% 1.0% 0.0% il il il il ly ly ug ug ec ov ov pr pr pr pr Ju Ju D N N A A A A A A 1 9 9 0 0 1 2 9 0 1 2 '0 '9 '9 '0 '0 '0 '0 '9 '0 '0 '0 17
Slide 18: HDFS - Sales of Retail Installment Loans - Performance
HDFS -Sales of Retail Installment Loans - Performance • Standard & Poor’s again increased ratings on past subordinated classes Upgraded effective Initial Jan. 21, 2003 1998-3 BBB AAA 1999-1 BBB AAA 1999-2 BBB AAA 1999-3 BBB AAA 2000-1 BBB AA- 2000-2 BBB+ A 2000-3 A- A+ • Upgrades based on strong cre
Slide 19: HDFS - 2002 Highlights
HDFS - 2002 Highlights • Record operating income • Improved market shares in retail and insurance • Significantly strengthened systems infrastructure • Effectively managed portfolio quality • Successful European Wholesale financing implementation 19
Slide 20: HDI Operating Income
HDI Operating Income Motorcycles and Financial Services (HDFS) Segments $1,000 $900 $800 $700 (millions) $600 $500 $400 $300 $200 $100 $0 '98 '99 '00 '01 '02 Motorcycles Financial Services 20
Slide 21: Jeff Bleustein, Chairman and CEO
Jeff Bleustein Chairman and Chief Executive Officer Harley-Davidson, Inc. 21
Slide 22: Harley-Davidson Motorcycle Unit Growth
Harley-Davidson Motorcycle Unit Growth 600 500 Shipments (000s) 400 300 200 100 0 6 8 0 2 4 6 8 0 2 '8 '8 '9 '9 '9 '9 '9 '0 '0 Year 22
Slide 23: Revenue Grows Faster than Motorcycle Units
Revenue Grows Faster than Motorcycle Units $6,000 17% Compound annual growth rate $5,000 over the last 5 years Revenue (000s) $4,000 $3,000 $2,000 $1,000 $0 6 8 0 2 4 6 8 0 2 '8 '8 '9 '9 '9 '9 '9 '0 '0 Year 23
Slide 24: Earnings Grows Faster than Revenue
Earnings Grows Faster than Revenue $600 Year/year growth rate >20% $500 in 14 of 17 years! Net Income (000s) $400 $300 $200 $100 $0 '86 '87 '88 '89 '90 '91 '92 '93 '94 '95 '96 '97 '98 '99 '00 '01 '02 Year 24
Slide 25: Harley-Davidson's Drivers of Success
Harley-Davidson’s Drivers of Success 25
Slide 26: The Harley-Davidson Brand
The Harley-Davidson Brand 26
Slide 27: Exciting Products & Services
Exciting Products & Services 27
Slide 28: Mutually Beneficial Relationships
Mutually Beneficial Relationships 28
Slide 29: Worldwide Motorcycle Demand
Worldwide Motorcycle Demand Worldwide Heavyweight (651+cc) Motorcycle Market 1000 800 9% CAGR Units (000s) 600 400 200 0 91 92 93 94 95 96 97 98 99 '00 '01 '02 Est Asia-Pacific Europe North America 29
Slide 30: Experienced Management Team Supported by Empowered Workforce
Experienced Management Team Supported by Empowered Workforce 30
Slide 31: Harley-Davidson's Business Process
Harley-Davidson’s Business Process Formalized in the late ‘80s, our Business Process is the foundation for everything we do. 31
Slide 32: Business Process Umbrella
Business Process Umbrella Values Issues Stakeholders Tell the Truth Quality Customers Participation Employees Be Fair Productivity Suppliers Keep Your Flexibility Investors Promises Cash Flow Governments Respect the Society Individual Encourage Intellectual Curiosity 32
Slide 33: Harley-Davidson's Business Process: Our Vision
Harley-Davidson’s Business Process Our Vision Harley-Davidson, Inc. is an action oriented, international company, a leader in its commitment to continually improve our mutually beneficial relationships with stakeholders. Harley-Davidson believes the key to success is to balance stakeholders’ interes
Slide 34: Harley-Davidson's Business Process
Harley-Davidson’s Business Process Values Issues Stakeholders Vision Mission & Operating Philosophies Objectives Strategies Work Unit Plans 34
Slide 35: Governance at Harley-Davidson
Governance at Harley-Davidson • Excellent Governance has been a long standing business practice... ...Because it makes good business sense! • All outside directors except for CEO • Committee Structure / Independence • Term Limits 35
Slide 36: What's Coming in 2003?
What’s Coming in 2003? • Increase H-D motorcycle production to 289,000 • Startup of new facility in York. 36
Slide 37: York Production Facility
York Production Facility Mil a) 4 Om =e —s OE - 37
Slide 38: What's Coming in 2003?
What’s Coming in 2003? • Increase H-D motorcycle production to 289,000 • Startup of new facility in York. • Announce 2004 Model Year Products • 100th Anniversary Rides and Celebration 38
Slide 39: The Next 100 Years
The Next 100 Years 39
Slide 40: Continuing to Grow
Continuing to Grow • Leverage the Brand with Existing Customers • Bring In New Customers 40
Slide 41: Existing Customers
Existing Customers • Among the most loyal in the world – 90% customer retention for over a decade in the US – Lifestyle – HOG • Existing customer opportunity for additional growth – Trade-ups, Multiple motorcycle ownership, Reasons to ride – Services such as HDFS provide benefits to customers & prof
Slide 42: Favorable Demographics
Favorable Demographics US Demographic Trends 50.0 40.95 41.16 39.14 45.0 40.0 30.92 35.0 (millions) 30.0 25.0 20.0 15.0 10.0 5.0 0.0 1990 2000 2010 2020 US Males (35-54) 42
Slide 43: The Next 100 Years
The Next 100 Years LEAS S TENTH ANNUAL TECHNOLOGY & INNOVATION AWARDS FOR 27 YEARS, CHNOLOGY LEADER OF THE YEAR JEFF BLEUSTEIN HAS HELPED HARLEY-DAVIDSON INC. INNOVATE ITS WAY TO THE TOP. VATION _ NOW AS CHAIRMAN AND CEO, HIS GREATEST CONCERN IS HOW TO SUSTAIN AND GROW THAT SUCCESS. BY JOHN TERESKO