Harley Davidson 2014 Annual Report Download - page 28

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Motorcycles and Related Products Segment
Motorcycle Unit Shipments
The following table includes wholesale motorcycle unit shipments for the Motorcycles segment:€
2014
2013
Unit
Unit
Units Mix % Units Mix %
Increase
(Decrease)
%
Change
United States 173,994 64.3%167,016 64.1%6,978 4.2%
International 96,732 35.7%93,455 35.9%3,277 3.5
Harley-Davidson motorcycle units 270,726 100.0%260,471 100.0%10,255 3.9%
Touring motorcycle units 122,481 45.2%107,213 41.2%15,268 14.2%
Custom motorcycle units(a) 91,426 33.8%102,950 39.5%(11,524)(11.2)
Sportster® / Street motorcycle units(b) 56,819 21.0%50,308 19.3%6,511 12.9
Harley-Davidson motorcycle units 270,726 100.0%260,471 100.0%10,255 3.9%
€
(a) Custom motorcycle units, as used in this table, include Dyna®, Softail®, V-Rod® and CVO models.
(b) Initial shipments of Street motorcycle units began during the first quarter of 2014.
During 2014, wholesale shipments of Harley-Davidson motorcycles were up 3.9% compared to the prior year and within
the Company’s most recent expected shipment range of 270,000 to 275,000 motorcycles. International shipments as a
percentage of the total were down slightly in 2014 as compared to 2013. The Company remains committed to investing in
international growth and continues to believe that international retail sales will grow at a faster rate than the rate of growth of
domestic retail sales(1). In addition, shipments of touring motorcycles and Sportster® / Street motorcycles as a percentage of
total shipments increased in 2014 compared to the prior year while shipments of custom motorcycles as a percentage of total
shipments declined. The Company believes the increase in touring motorcycle shipments, as a percentage of total shipments,
was driven by continued demand for model-year 2014 Rushmore motorcycles and demand for model-year 2015 Rushmore
motorcycles. Also, the shipment mix of Sportster® / Street increased as a result of Street shipments which began in 2014 and
totaled approximately 9,900 motorcycles. The Company believes the shipment mix of Sportster® / Street will be higher in 2015
as a result of increased Street shipments(1). As expected, retail inventory in the U.S. at the end of 2014 was approximately 2,900
units higher than at the end of 2013 largely due to the initial dealer fill of Street models for retail. The Company believes the
U.S. year-end 2014 dealer retail inventory level was appropriate going into 2015(1).
Segment Results
The following table includes the condensed statement of operations for the Motorcycles segment (in thousands):€
2014 2013
Increase
(Decrease)
%
Change
Revenue:
Motorcycles $4,385,863 $4,067,510 $318,353 7.8%
Parts€& Accessories 875,019 873,075 1,944 0.2
General Merchandise 284,826 295,854 (11,028)(3.7)
Other 21,973 21,851 122 0.6
Total revenue 5,567,681 5,258,290 309,391 5.9
Cost of goods sold 3,542,601 3,395,918 146,683 4.3
Gross profit 2,025,080 1,862,372 162,708 8.7
Selling€& administrative expense 887,333 847,927 39,406 4.6
Engineering expense 134,600 145,967 (11,367)(7.8)
Restructuring benefit — (2,131)2,131 (100.0)
Operating expense 1,021,933 991,763 30,170 3.0
Operating income from Motorcycles $1,003,147 $870,609 $132,538 15.2%
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