Cyclerides.com Weekly Update
7/15/09
 
Greetings Riders,
 
For those of you that are new to the Valley, welcome to the "bowels" of a Phoenix summer. And for those of us that have lived here for a while, we know what is coming. Scorching heat, likely record temperatures followed by higher humidity in the mornings and evenings with chances of monsoon storms. Just another July and August in Southern Arizona. The problem is for us is that riding in this type of weather pretty much sucks. If you are going to try and ride in this, which we have done, be sure and take along two things. Number 1 is water. Don't go far on your bike without some water to drink. You never know when you might need that for survival. Number 2, Rain gear. Especially if you are riding up North, because it is almost certain you will run into rain at some point of the day.
 
If you love to ride and are about to give up a weekend opportunity because of the re-entry burn into the valley, here is another idea for you. If you are affected by extreme temps, like most people are, put your bike on a trailer, drive to Camp Verde, Flagstaff or Payson, and start your trip from there. You can easily put 200-300 miles on the bike in much cooler weather, still get in a bunch of riding and not risk heat exhaustion coming back home. And don't worry about the ridicule from your buddies about being a "trailer queen". You will be out putting on 300 miles while your buddies are sitting at home because they won't want to ride in the heat, but yet won't trailer. I've personally ridden many miles in this heat, just did it about 3 weeks ago in 110-114 for 3 hours. It can be done, however it is not real smart and not much fun. But the older I get, the smarter I tend to think. Don't let the heat stop you, make other arrangements. Don't cave in to peer pressure and Don't put off a chance to ride just because of what someone else thinks. Find YOUR way to get out and ride. Take it from me, riding from 72 - 88 degrees in Flagstaff last weekend was very nice.  Give it a try. I think U-Haul rents bike trailers for as little as $20-$30 per day.
 
(Personal Note: Sorry if I have not gotten to reply to your emails. Have been very busy with other business this time of year. Thanks for your patience.)
 
This week I was going to present our ride to Big Bear Lake, but Harley-Davidson's earnings were just released today and I found the news astounding and also a reflection on just how bad our economy is how it is affecting a giant in the motorcycle industry. I realize not everyone rides a Harley, but it is the giant in the industry and tends to be a good representation of what is happening in the rest of the industry. It is almost hard to believe the decline in motorcycle sales when you think back to the hey days of just a couple of years ago, but when you look at almost 10% unemployment and the housing declines in price, it does start to be expected. I think you will find this both enlightening and interesting as a look into the near future of the giant in the manufacturing world of our passion. 
 
The following is taken from the July 16th/PRNewswire-First Call:
 
MILWAUKEE, July 16 /PRNewswire-FirstCall/ -- Harley-Davidson, Inc. (NYSE: HOG) reported decreased revenue, net income and diluted earnings per share for the second quarter of 2009 compared to the year-ago period.
 
Net income of $19.8 million and diluted earnings per share of $0.08 were primarily affected by the planned 27.6 percent reduction in motorcycle shipments compared to the year-ago period and by two non-cash charges related to HDFS: a $72.7 million credit loss provision for a one-time reclassification of motorcycle loan receivables; and a one-time $28.4 million charge to write off the total goodwill associated with HDFS.
 
Worldwide retail unit sales of new Harley-Davidson(R) motorcycles were down 30.1 percent compared to the year-ago quarter. Retail new Harley-Davidson motorcycle sales in the U.S. were down 35.1 percent and declined 18.2 percent in international markets compared to last year's second quarter. Industry-wide retail sales of heavyweight motorcycles in the U.S. declined 48.1 percent for the same period.
 
"While the underlying fundamentals of the Harley-Davidson brand remain strong and our dealers' retail motorcycle sales declined less than our competitors, it is obviously a very tough environment for us right now, given the continued weak consumer spending in the overall economy for discretionary purchases," said Harley-Davidson, Inc. President and CEO Keith Wandell.
 
In light of the decline in retail motorcycle sales, the Company also lowered its 2009 shipment expectations for Harley-Davidson motorcycles. The Company now plans to ship between 212,000 and 228,000 Harley-Davidson motorcycles to dealers and distributors worldwide in 2009, or 25 percent to 30 percent fewer than the 303,479 shipped in 2008. Prior 2009 guidance was for shipments of 264,000 to 273,000 motorcycles. In the third quarter of 2009, the Company expects to ship 52,000 to 57,000 Harley-Davidson motorcycles.
 
As a result of the lowered shipment volume, the Company will implement a further reduction this year of approximately 700 positions in the hourly production workforce. Harley-Davidson will also be reducing the non-production, primarily salaried headcount by an approximate 300 additional positions, including a reduction at HDFS. The Company plans to offer a voluntary separation incentive package to eligible salaried employees. Earlier this year, the Company had announced workforce reductions totaling about 1,400 to 1,500 hourly production positions in 2009 and 2010 and about 300 non-production, primarily salaried positions.
 
"We continue to take these difficult actions to manage through the current challenges and we also continue to take major steps in creating the operational effectiveness that is essential to our long-term future," said Wandell. "We are committed to doing what is required to enable Harley-Davidson to operate as a competitive business and employer over the long haul." The Company continues to expect full-year gross margins to be between 30.5 percent and 31.5 percent. 
 
I will link to the full report below, but here are some interesting excerpts that I wanted to display in the letter.
 
Here is a comment that could be good for the resale value of Harley's.
 
Reductions in Harley-Davidson's motorcycle shipment plans for 2009 reflect the Company's intense focus on maintaining brand strength. "When it comes to protecting and enhancing the brand, managing supply in line with demand is one of the most important things we can do. We plan to ship fewer Harley-Davidson motorcycles worldwide this year than we anticipate dealers will sell at retail," Wandell said.
 
York Study Underway.
Since the announcement of the original consolidation plans in January, Harley-Davidson has determined that the Company's York operations are not currently competitive or sustainable. The Company has undertaken a "two path" study to determine whether major, additional restructuring at York can achieve cost and efficiency targets to make the operations viable, or alternatively, whether the Company will relocate the York operations to another U.S. location. The Company expects to make a decision on the status of the York operations later this year.
 
Sportster(R) and V-Rod(R) motorcycle final assembly operations and V-Rod motorcycle powertrain production in Kansas City, and production of Sportster motorcycle powertrains in Wauwatosa will be shut down for approximately 14 weeks in 2009, including the entire fourth quarter. The Company anticipates that other production operations will be shut down for a total of approximately five weeks over the rest of 2009.
 
Motorcycle Retail Sales
 
Second Quarter. During the second quarter, worldwide retail sales of Harley-Davidson motorcycles decreased 30.1 percent compared to the prior-year quarter. In the U.S., retail sales of Harley-Davidson motorcycles decreased 35.1 percent from the year-ago period. Industry-wide retail sales of heavyweight motorcycles in the U.S. declined 48.1 percent during the quarter.
 
Motorcycles and Related Products Segment
 
Second Quarter. Revenue from Harley-Davidson motorcycles during the second quarter of 2009 was $808.7 million, a decrease of $375.7 million or 31.7 percent versus the same period last year. The Company shipped 58,179 Harley-Davidson motorcycles in the second quarter of 2009 compared to 80,326 motorcycles shipped in the year-ago period and within the Company's guidance for this year's first quarter.
 
Revenue from Parts and Accessories (P&A), which consists of Genuine Motor Parts and Genuine Motor Accessories, totaled $231.5 million, a decrease of $34.2 million or 12.9 percent versus the year-ago quarter. Revenue from General Merchandise, which includes MotorClothes apparel, totaled $69.6 million, a decrease of $7.2 million or 9.4 percent from the year-ago quarter.
 
Click Here to view the entire report and details.
 
This report is a sobering look at how the entire world economy has affected many things in our life including the health of the motorcycle industry. I don't think HD is going anywhere, but this report shows how they are having to restructure to make it through these tough times. And will likely come out of it stronger than ever.
 

 
Bike Nights This Week
 
Thursday Night
 
The Bike Night At The Billet Bar The Billet Bar is the place to be for the Summer nights and weekends. Set on the patio and watch the action. Voted "BEST BIKER BAR IN PHOENIX" by New Times. There is no better place to watch all the Bikes ride down Scottsdale road than from The Billet Bar Patio. The Billet is ALWAYS packed with bikes Every Day. Stop by and take a look at the New Flamed Booths on the Paradise Patio. The new bars front and rear provide spacious seating, fresh air atmosphere, perfect temperature and courteous staff. The food is amazing and always the latest in cold libations await. You can sit at the back bar and watch your favorite TV on any of the seven big inch televisions. Play pool, listen to the latest music and socialize. The front patio seats over 75 people and is perfect for people watching on Scottsdale Rd. The Billet Bar is located on 3752 N. Scottsdale Rd. Check it out this Thursday night and all weekend long. Info: at 480-941-1876. Click Here for the New Billet Bar Page with pictures.
 
 
Next Week
 
July 24-26
18th Annual Too Broke for Sturgis. Too Broke is hosted by ABATE of Arizona and is an Old School Biker Event that is being held for the 7th year at Mormon Lake Lodge Campground and Arena near Flagstaff, Arizona. The 2009 event will be an ADULT ONLY party, attendees must be at least 18 years old to enter. Proof of age will be required, with or without an accompanying adult/guardian. You must be at least 21 years old to drink alcohol on premise. Underage drinking will not be tolerated. The price of admission is $30 for the weekend. If you are an ABATE member the weekend admission is $20. A Saturday only day pass is available for $15. Admission includes: Live music and camping Friday & Saturday nights, ride pins to the first 1000, Ms. Too Broke contest, people games, bike games, bike show, poker walk, 50/50 raffle, tattoo contest, and wet T-shirt contest, plus lots of vendors.  B.Y.O.B. Packaged liquor is available at the lodge bar and general store. Also available cabins, RV spaces w/ hookups, restaurant, and propane. General store: groceries, beverages & ice, coin-op showers & horseback riding. No ATM on property. More info: 602-222-8329 or for vendor space: 520-371-1735.
Here is an excellent FAQ about the event that you will want to read if you are planning on going.  
 
Arrowhead Harley-Davidson Free Appreciation Breakfast. Taking a ride Saturday morning? Stop by Arrowhead HD for a free breakfast on your way out of town. Arrowhead Harley-Davidson wants to invite EVERYONE to a customer appreciation breakfast on the last Saturday of every month from 8:30am till 10:00 am. Join us for a FREE pancake, sausage and egg breakfast served up by Big D's Flippin Cakes. Thank you for all your support and business! Ride by Arrowhead Harley-Davidson the last Saturday of Every Month for a free breakfast. Arrowhead Harley-Davidson is located at 16130 N. Arrowhead Fountain Center Dr. in Peoria. 623-247-5542. 
 
Saturday, July 25th
Hogs and Dogs at Buddy Stubbs Harley-Davidson. The monthly and popular Stubbs Hogs and Dogs is not only going to Feed you, but they are going to help your safety as a rider. Would You Know What to Do at a Motorcycle Accident Scene? The Phoenix Fire Dept. will be here at 12 PM (indoors in our air-conditioned showroom) showing you how you can save a biker's life! All riders welcome! Of course, we'll also have: FREE SANDWICHES, FREE SODAS AND WATER, BIKINI BIKE WASH FROM 11-2, MUSEUM TOURS W/BUDDY, A POOL TOURNAMENT & 15% off any general merchandise item that is RED (some restrictions apply). Plus, your chance to win a ride-along and dinner with Phoenix Fire! ALL THIS AND MORE STARTING AT 11 AM. www.buddystubbshd.com
 
Saturday, July 25th
Foothills Chapter Ladies of Harley presents 5th Annual Ron Morrison's "Christmas in July" Charity Ride. This ride is to benefit Sunshine Acres Children's Home. Registration from 7am - 9am at Chandler Harley-Davidson, located at 6895 W. Chandler Blvd. in Chandler. Donations are a $10 gift card per person. Suggested retailers are Target, Wal-Mart, McDonald's Sonic, Theatres, Bowling, etc. Pancake Breakfast 7am until it is gone. Santa will present gift cards to the children starting at 10am. Help us bring smiles to the faces of these children. Refreshments to be provided by Sunshine Acres. All bikes are welcomed.
 
Extras
If you missed the newsletter last week with the announcement of the Rocky Point Rally being UN-Cancelled, Click Here to Read. It is on an being planned with some very cool additions this year. More will be announced in the coming weeks. Get your passport cards and reservations now.
 
Now this is my kind of fishing, just bring a dog. Click Here to View.
 
Special effects people have been busy at Evian water. This is pretty entertaining. Click Here to View.
Wonder how they did this? Click Here for the making of the Evian Baby commercial.
 
Video of the Week
Ever wonder what happens when a train goes through a tornado? Does the train win or the tornado. This is supposedly the conclusion. Click Here to View.
 
 
Until Next Week,
Blessings and Safe Riding To All,
 
Barry Caraway
"The Road Is Yours - Take The Ride"
www.cyclerides.com
info@cyclerides.com

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