Elana Silverman
J452
Dear Fellow Shareholders,
Though times are tough for sales, we have experienced success. Our sales and revenues are lower than last year; however, they are still the second highest in company history. Though continued economic downturn seems to be on the horizon, our company’s values and strong strategies will carry us through.
International retail sales increased 13.7 percent this year. Though we shipped only 330,619 motorcycles to dealers, 5.3 percent fewer than last year, dealers sold 337,774 new Harley-Davidson motorcycles in 2007, an increase compared to the 317,169 sold in 2005 but a decrease compared to the 343,981 sold in 2006.
Revenue was $5.73 billion, which is lower than last year’s $5.80 billion, but it still represents our growth compared with $5.34 billion revenue in 2005. That translates to a 1.43 billion operating income compared to 1.6 billion in 2006 and 1.46 billion in 2005. The net income was just over $930 million, compared to $1.04 billion in 2006 and $959,604 million in 2005. The diluted earnings per share were $3.74, a decrease from 2006’s $3.93 but still more than 2005’s $3.41.
Declines in revenues and earnings were due in part to the economy. Our customers, both current and potential, have less funding for luxury products such as motorcycles. We chose to ship fewer motorcycles than we sold internationally to maintain the strength of and demand for the Harley-Davidson brand. We expect a continuation of this economic downturn, so we developed strategies to both survive and prosper in these uncertain times. Our strategies include focuses on marketing, product development and our people. In addition, by focusing on growing international sales faster than domestic sales, we can increase total revenue and benefit from selling in more stable and wealthy economies.
We build our success on customer relationships, market-defining products and extraordinary customer experiences. We cannot be thankful enough for the leadership and passion demonstrated by our employees and the passion of our customers and dealers worldwide. We would like to recognize all of our employees and dealers for their outstanding dedication to Harley-Davidson.
The 105th anniversary of Harley-Davidson will be in 2008. We will celebrate this special anniversary with the opening of a Harley-Davidson museum and the July introduction of the 2009 models of Harley-Davidson motorcycles. We look forward to a bright future and continued success.
JAMES ZIEMER
President and Chief Executive Officer,
Harley-Davidson