Harley-Davidson Reports 1Q Loss, Continues to Support Finance Division
Harley-Davidson Inc. reported decreased revenue and net income for the first quarter of 2009 compared to the year-ago period.
MILWAUKEE — Harley-Davidson Inc. reported decreased revenue and net income for the first quarter of 2009 compared to the year-ago period.
The company posted net income of $117.3 million for the first quarter, down from $187.6 million recorded in the year-ago period. The company reported revenue of $1.29 billion, down from $1.31 billion in the first quarter 2008.
Harley-Davidson attributed the decreased income to one-time costs it incurred during the first quarter. The company recorded pre-tax restructuring costs of $34.9 million during the period. The company also incurred a one-time $22.5 million tax charge related to a change in Wisconsin tax law, which was enacted mid-quarter without public hearings and applied retroactively to Jan. 1, 2009.
Harley-Davidson Financial Services (HDFS) recorded first quarter operating income of $11.2 million, a decrease of $23.7 million or 67.9 percent from the year-ago quarter. This decrease was primarily due to a $17.1 million write-down of retained securitization interests and an $8.6 million write-down to fair market value of finance receivables held for sale due to higher projected credit losses.
Harley-Davidson took several steps to obtain funds, including raising $600 million through the issuance of senior unsecured notes, to support the lending activities of HDFS.
In addition, the company intends to access the term asset-backed securitization market in the second quarter of 2009, as it expects to be eligible for the Federal Reserve Bank's Term Asset-Backed Securities Loan Facility (TALF) program.
"We continue to make good progress on funding the needs of HDFS through the paths we have identified previously and anticipate that we will be able to obtain the needed liquidity," said Tom Bergmann, chief financial officer of Harley-Davidson Inc. and interim president of HDFS.
In the U.S., retail sales of Harley-Davidson motorcycles decreased 9.7 percent from the year-ago period. In the first quarter 2008, U.S. retail sales of Harley-Davidson motorcycles decreased 12.8 percent compared to the previous year.
"While we are mildly encouraged by the fact that the U.S. retail sales rate declined less in the first quarter than in the prior two quarters, we remain cautious and continue to expect 2009 to be an extremely challenging business environment," said Jim Ziemer, president and chief executive officer of Harley-Davidson Inc. "We continue to make good progress in executing our strategy for the economic downturn, and we will continue to manage our business with strong discipline."
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