Harley-Davidson Earnings Call Nuggets: Retail Sales, Innovation Insight
Ed Aaron – RBC Capital Markets: I apologize if I missed this, but are you still committed to (under-shipping) retail sales in 2012 and then I have just a follow-up after that?
John A. Olin – SVP and CFO: Yes, Ed. We would expect that on a full year basis, our dealers in the U.S. will retail more than we ship by a slight amount.
Ed Aaron – RBC Capital Markets: Then just as far as Q3 is concerned leaving some sales on the table just given the temporary production issues. Did that meaningfully affect your mix of outreach versus core customers since core riders tend to be more inclined to buy touring bikes? And then secondly, when do you expect those lost sales to be recovered? I’m just trying to understand if that business comes back in Q4 or if maybe it’s all just gets pushed into next year?
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John A. Olin – SVP and CFO: As we talked about, retail sales in the quarter were certainly affected by the low retail inventories and basically we had retail sales down in July, August and the first part of September. The reason being, as inventories were extremely low during that period of time, as inventories at York came back, certainly, retail sales came back as well. You had asked about the type of mix in the system; the answer is, yes the mix skewed more toward outreach customers in the third quarter. So, lot of out touring bikes are sold – well, some of them are sold to outreaches, well actually Street Glide is the top selling bike to our outreach use, as well as women. Most of the touring bikes are to core customers. So, that would have an impact. We did sales to outreach customers outstrip that of core in the third quarter. As Keith had mentioned, we’ve seen that for the last three quarters.
Keith E. Wandell – President and CEO: When we talk about the sales, they were clearly affected by retail inventory. Let me put a little bit more to that. if you look at the 13 weeks within the quarter and if you look at our product of York, the bikes we make our York and inventory, of those 13 weeks, 11 of those weeks were below prior year levels. Remember, a year ago we said that interest in the third quarter was very tight and lower than desired. Of those 11 weeks, Ed, 9 of them were down double-digit, and touring bikes, which has been our hottest seller and the most in demand and the most constrained, inventory fell 1 point during the quarter to over 40% down. So, clearly the pump ran dry in the third quarter and it took us since the time we started reshipping in the third week of August, about eight weeks to catch up on inventory at York, but once inventory started to approach year ago levels, especially of York product, we saw retail sales really come back.
Sharon Zackfia – William Blair: I think on several the Analyst Days, Keith, you’ve talked about kind of getting back to Harley’s roots in innovation and kind of how that would impact models in years going forward. I guess, this model year changeover it looks more like tweak to existing models rather than what I would call real innovations. So, I was hoping you could give us some insight to what we should be expecting in the next two or three years and whether you think that innovation will be more critical to the U.S. consumer or more gear towards the international consumer?
Keith E. Wandell – President and CEO: That’s a great question. First of all, let me just sort of set the backdrop again. So, the year is 2009, sales are up 40%, revenues are down significantly, and so we’ve got a reduced budget around spending in the whole business including product development, so that’s number one. Number two is, we are taking the reduced amount of money that we’re spending on product development and we’re developing products for Buell, (indiscernible) as well as Harley. So, I think you can sort of get the idea that we were sort of constraining the amount of development, innovation and new products that were pertinent to the Harley-Davidson brand, number one. So, and you lay over that the fact that at the time for these new products that you’re talking about, which are the new innovative products, not just the tweaks or the sort of model refreshes. It was about 5 to 5.5 year product development process. So 2009 that takes us out to 2014.5 before you would see any new products coming through. But remember that we were constrained on what we were developing in that time. So what we’ve done is in addition to focusing strictly on the Harley-Davidson brand by getting out of (indiscernible) etc. putting more money in the product development. We’ve also shortened the development time through a lot of really hard diligent work and so the answer to your question is, if you think about the timeframe of the new product development process being late 2010-2011, we’re in the 2015 timeframe before we really start to see a lot of these products with the new innovation that are focused on international markets outreach customers and customers and we do have products in development that are exciting that I think and we all believe will inspire every one of those markets that we just mentioned. And so just so you know Sharon, this is one of our biggest frustrations in the Company because we would like to have these products here today, but given all the things that I just mentioned it just simply isn’t possible. All I can tell you is while we don’t talk about specific products that are in development, all I can tell you is I think that we, our employees here I think we’re more excited today about the array of products that we have under development that we’re going to be bringing to market than maybe we’ve ever been in the history of our company.
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