Good morning. My name is Susan, and I will be your conference operator today. At this time, I’d like to welcome everyone to the Fourth Quarter and Full-Year 2014 Earnings Conference Call. [Operator Instructions] Thank you. Amy Giuffre, Director of Investor Relations, you may begin your conference.

Thank you, Sue, and welcome to Harley-Davidson’s fourth quarter 2014 earnings conference call. The audio for our call is webcast live on harleydavidson.com and you can access the supporting slides on our site by clicking About Harley-Davidson at the bottom of the homepage, then Investor Relations and Events and Presentations. Our comments will include forward-looking statements that are subject to risks that could cause actual results to be materially different. Those risks include, among others, matters we have noted in our latest earnings release and filings with the SEC. Harley-Davidson disclaims any obligation to update information in this call. This morning we’ll hear from Harley-Davidson's CEO, Keith Wandell; CFO, John Olin; and President of Harley-Davidson Financial Services, Larry Hund. Then, we’ll take some questions. So let’s get started, Keith?

Good morning, and thanks for joining us on the call. John will provide the details on the quarter and the year, but first, I want to highlight some of our major achievements for 2014 and then briefly touch on some of our future opportunities. Full year diluted EPS grew more than 18%, making this the fifth consecutive year of double digit EPS increases. Consolidated revenue topped the $6 billion mark for the first time since 2006. Gross and operating margins were up strongly, driven by our focus on operational efficiencies and our commitment to continuous improvement in every aspect of our business. A big piece of these improved efficiencies came from manufacturing. 2014 marked our second year of flexible Surge Production. The financial impacts of Surge and all the other improvements in manufacturing in recent years have been remarkable to say nothing of the added flexibility that Surge gives us to capitalize on changing market conditions. On the product side, our new 2015 motorcycles have been extremely well received. Retail sales of new Project Rushmore motorcycles, including the return of the Road Glide, the introduction of Classic Low and Ultra Limited Low touring bikes, CVO Street Glide and the Freewheeler have been very strong. We also rolled out the Street 750 and 500 last year, designed for a new generation of global riders and the response has been outstanding. And in the fourth quarter, retail sales of Street drove double digit gains in Harley-Davidson’s small cruisers in the United States. To date, the majority of initial US Street purchases have been new to the Harley-Davidson brand. In the international markets, Street is selling very well. And in India, the Street 750 was recently named Motorcycle of the Year. In 2015, Street will be available in nearly all of our markets…

Thanks, Keith, and good morning, everyone. I'll discuss our fourth quarter and full-year financial results starting on slide 10. During the quarter, Harley-Davidson, Inc. consolidated revenue was $1.20 billion, net income in the quarter was $74.5 million, and diluted earnings per share were $0.35 per share. Operating income for the Motorcycle segment was $35.9 million, 40.9% lower than last year's fourth quarter. Segment revenue was flat to prior year. The decrease in the Motorcycle business operating income was driven by a lower gross margin percent and higher year-over-year SG&A spending. Operating income at Harley-Davidson Financial Services was up 1.8% year-over-year. Also during the quarter, we had lower year-over-year interest expense behind the retirement of our high interest debt last February and a lower effective tax rate. We will continue to focus on delivering strong margins and strong returns over the long term. Now, let’s take a closer look at fourth quarter performance, starting with retail sales on slide 11. Q4 worldwide retail sales of new Harley-Davidson motorcycles were up 2.8% over last year’s increase of 5.7%. This year’s Q4 results were driven by strong increases in our international markets, partially offset by a decline in the US. Fourth quarter worldwide retail sales reflected an outstanding consumer response to our new 2015 model year motorcycles, including Street, which sold very well in initial rollout markets. Retail sales gains from the new model year bikes were partially offset by a year-over-year decline in retail sales of our initial Rushmore models as we lapped the enthusiastic customer response after the initial launch of Rushmore in 2013. For the full year, worldwide retail sales were up 2.7% compared to 2013. 2014 retail sales reflected very challenging US weather conditions in the first half of the year and the absence of the popular Road Glide…

Thanks, John, and good morning. During the fourth quarter, HDFS retail motorcycle loan originations increased 4.7% or $22.3 million compared to the same period last year. The increase was primarily driven by a 1.6 percentage point increase in retail financing market share for the fourth quarter compared to last year and a higher average amount financed per motorcycle. For the full year, HDFS continued to have a strong retail financing market share of new Harley-Davidson motorcycles sold in the US. Our market share increased to 56.8%, compared to 54.5% in 2013. Finance receivables outstanding increased 7.4% compared to a year ago, driven by growth in both the retail and wholesale portfolios. We believe the overall loan portfolio was solid, comprised of profitable loans funded in both the prime and subprime segments. In 2014, approximately 80% of our new retail loan originations were prime. Moving on to credit performance on slide 20, the 30-day delinquency rate for retail motorcycle loans at December 31, 2014 was 3.61%, or 10 basis points lower than year end 2013. This is the lowest year-end 30-day delinquency level in at least 13 years. Annual retail credit losses increased by 13 basis points to 1.22% compared to 2013, primarily driven by lower levels of recoveries from accounts charged off in prior years and modestly higher credit losses as a result of changing consumer behavior. We are pleased with the progress at HDFS in 2014, as we continue to contribute strong profitability, delivered solid credit performance and maintained a strong liquidity position. We remain focused on enabling sales of Harley-Davidson motorcycles, while providing an attractive return to Harley-Davidson, Inc., as demonstrated by the $100 million dividend HDFS paid to Harley-Davidson, Inc. this month. Now let me turn it back to John.

Thanks, Larry. Now let's take a look at cash and liquidity on slide 21. You'll see at the end of the quarter, we had $964.2 million of cash and marketable securities. In addition, we had $1.22 billion of available liquidity through bank credit and conduit facilities. We currently have and intend to continue to maintain a minimum of 12 months of projected liquidity needs in cash and/or committed credit facilities. During the fourth quarter, we successfully completed a $400 million 3-year medium term note offering with a coupon rate of 1.55%. Also this month, we completed a $700 million asset-backed securitization transaction with a weighted average interest rate of 1.19%. We further demonstrated our efforts to return value to our shareholders by repurchasing 3.3 million shares of Harley-Davidson stock for $222.1 million during the quarter. As we have stated, returning value to our shareholders is a top priority. We will continue to evaluate opportunities to enhance value for our shareholders through increasing dividends and repurchasing shares. Now I'll review the remaining Harley-Davidson, Inc. financials on slide 22. I'd like to highlight two items. First, with regards to operating cash flow, the company generated operating cash of $1.15 billion in 2014. Operating cash flow was up $169.6 million from last year, primarily driven by lapping of last year’s pension contribution of $175 million and increased earnings, partially offset by higher wholesale finance originations And second, the full-year tax rate was 34.2%, compared to 34.1% in the year-ago period. During the quarter, the R&D tax credit was reinstated for 2014, so full year benefit was recognized entirely in the fourth quarter. The summary for the full-year 2014 is on slide 23. We had net income of $844.6 million in 2014, which was up 15.1% compared to 2013 and earnings per share was…

[Operator Instructions] Your first question comes from the line of Rod Lache. Your line is open.

Good morning, everyone. It’s actually Pat Nolan on for Rod. Just wanted to clarify a couple of points on the walk. So John, I think you said it was 3.25% would be the impact of FX at current spot rates and you expect you’ve got half of that impact to your next year?

Yes.

So if I’m doing the math right, that’s approximately like $15 million or so drag year-over-year?

No, Pat, it would be significantly more than that, so let’s take – let’s understand what’s happening; we’ve seen tremendous devaluation starting back in the third quarter, devalued 7%, another 6% in the fourth quarter. And if you look from January 1 of this year through January 28th yesterday’s rates, there was another 4% devaluation. And that’s taking our basket of currencies, our major four currencies which in the euro, the yen, the Australian dollar and the Brazilian real, and the mix that we have, we’re down quite considerably. So what we’re saying here is that if the rates held at yesterday’s, where the exchange rates finished yesterday and they held throughout the year that would take our expected revenue for 2015 and reduce it by 3.25 percentage points. So you take motorcycles segment revenue and take it down by 3.25 points. Now with that obviously we have hedges on during the year and we talked about that. We typically hedge in a stair step fashion, so we have some hedges on, but those will diminish as the year goes on and we would expect out of that revenue hit, 3.25% of our Motorcycle segment revenue, half of that would fall and be negative impact to gross margin in terms of the dollar, gross margin dollar impact.

Your next question comes from the line of James Hardiman. Your line is open.

So obviously you’re not going to give us margin, I’m sorry, segment level guidance and I do appreciate the shipment guidance of four to six. I guess my question is it seems like Road Glide is going to be a pretty sizable benefit to the shipment guide and it sounds like you’re saying Street is going to be up pretty meaningfully as well. I guess the question is, A, can you quantify those benefits to the shipment guide and B, if not, how are you thinking about everything else, right, your non-Road Glide, non-Street guidance, because it seems like for those of us that are [indiscernible] on the numbers that four to six represents flat to maybe even down shipments of everything else, how should we think about that?

Thanks, James. You know, we’re not going to break it out by segment. And as we talked about in the preamble, we couldn’t feel better about the company’s or the brands fundamentals from market share to industry to outreach to repeat and the new to brand and so on and so forth. So that will be a big driver. We’ve got the model year 2015 motorcycles, which we certainly saw in the fourth quarter, the new ones, perform extremely well, including Road Glide. And then as you mentioned, we got the full year Road Glide and Street coming back, along with international expansion. But we also have some headwinds when we look at next year. Those being one as lapping the Rider Academy [ph] sell in, which was about 2200 units in the United States in the first half of last year. So we got to lap that. And then secondly, as we talked about, in the fourth quarter, we had very significant year-ago enthusiasm for Rushmore and so we got some big gains to lap in the first and second quarters. They tend to taper off each other quarters. And then finally, competitive discounting is coming into play a little bit here. When we take all of that, we couldn’t feel better about our shipment guidance of up 4% to 6%. And we do expect both the new models as well as our core bikes to grow during that to deliver the 4% to 6%.

Your next question comes from the line of Gerrick Johnson.

Good morning. Now that you have full distribution this year of the Street 500 and 750, can you give us the new goalpost for what do you think you can ship in the year? Thank you.

Thanks, Gerrick. We don’t provide guidance on all of our segments. We did provide it for Street in the first year just to get everybody in the ballpark and we provided it’s 7000 to 10000 units, came in at the very high end of that and we couldn’t be more pleased with that. But no, Gerrick, we’re not going to provide another guidance for Street. Suffice it to say is that we would expect Street to be up quite considerably from 2014 levels in 2015, as one we have a full availability in the United States for the selling season as well as our initial four markets last year and we’ll be expanding throughout most of the rest of the world markets through 2015.

Your next question comes from the line of Joseph Spak, RBC Capital Markets.

Hi, this is [indiscernible] signing in for Joe Spak. Just quick question, what is your industry retail growth view for 2015 and what is HOG US retail view that’s embedded in your 2015 shipment guidance?

We don’t provide a forward look at industry retail sales, but what I can tell you is we couldn’t be more excited about the industry growth that we saw in 2014, the increased investment in the industry. So in 2014 we were up 2.5% and that’s with a very slow start to the year. Industry was only up about 1% through the first half due to a very difficult weather conditions, so grew much faster in the back half. But when we talk about the very strong brand fundamentals, certainly the industry growth is one of them and we would expect to see the industry to grow quite well as we move into 2015, but we do not provide a forecast of it. And certainly some of that thought goes into our shipment guidance of up 4% to 6%.

Your next question comes from the line of Tim Conder.

Thank you. John, if you can just give us one shot at - it’s all FX question here, little bit is housekeeping, how much of the fourth quarter 2014 was due to the balance sheet revaluation? And then on a go forward basis with FX, you commented that you of course have your forward 12 months rolling hedges, can you give us any color on those four major currencies, your exposure, what percentage are hedged for your expected 2015 exposure at this point and any levels where you’re hedged?

Great, Tim, thank you. On the fourth quarter currency, let’s just take a run through, we don’t break out specifically the revaluation, but I can give you a sense of magnitude. Revenue was hit by $26 million by that year-over-year 9% devaluation. We did pick up some favorability in cost of goods sold of about $3.5 million and that was driven by very favorable gains in terms of the hedges that we did have in place for the quarter, a lot of those being put on several quarters before at very attractive rates. However, the balance sheet revaluation was very significant. I don’t quantify exactly the number, but it was certainly over $10 million. So that brought the overall impact down and ultimately it hurt operating profits by $23 million, which represented about 1.4 points of gross margin. So ex currency, our gross margin was actually pretty strong and certainly would have been up. Overall revenue in the quarter was hurt by about 2.5%. As we look forward to the first quarter, Tim, we would expect actually more unfavorablities than we saw in the fourth quarter. So we expect more than $23 million that we had in the fourth quarter and we would expect revenues to be down about 3.25% for the first quarter. And you asked about the positions that we have, we don’t provide those, because they change on a regular basis. And as the year goes on, obviously the hedge positions change. Suffice it to say that in the dimentionization of our credit risk in 2015, all of that’s incorporated. So as of today, all of our positions are incorporated and we would expect revenue to be down 3.25% and half of that falling through to impact gross margin. So that’s kind of an all-in number for you.

Your next question comes from the line of Felicia Hendrix.

Just two quick questions. John, you said earlier in your remarks in your answer to someone else’s question that you’re seeing a little bit of competitive discounting right now, I wanted to see if you could address that? And then just with FX, you have given us good color, thank you very much, at current rates. So I’m just trying to figure out if rates change, is the percentage change, is it linear or is it exponential?

Felicia, on discounting, we talked about this the last couple of quarters and we haven’t seen a dramatic shift in discounting. When we look in the fourth quarter, we have seen a stepped up level of discounting. We always see a lot of volatility in the fourth quarter, one it’s the lowest sales month, right, it’s less than 16% of our retail sales, but also there’s a lot of positioning by competition in clearing out inventories. So we saw two-thirds of the folks that have been discounting dramatically increased the discounting on a year over year basis. So it’s something that we’ll keep a close eye on. But you got to remember that our competitors’ models are little bit different. The majority of motorcycles that they sell in a given year are old model years and the fourth quarter was no different. 55% to 75% of the models that the competition sold were over a year old and so just maybe just cleaning out inventories. But that had a big impact on overall market share in the quarter as well. We saw discounts anywhere from $300 a bike to $2000, so just something for us to watch going forward, but we did see an increase in discounting in the fourth quarter. The second question, Felicia, was the exchange rates. If they move from here, they are not linear, right, because we got revaluation of assets depending on what happens within quarters and we got the fact that we are constantly changing our hedge position. As we talked about, we put on hedges in a steer step fashion over four quarters, we’ll continue to do that. So it is not linear, but certainly with that information should provide a good starting point. But then as the year goes on and things change, that could change a bit.

Your next question comes from the line of Joe Hovorka.

Two questions. Do you anticipate shipping one-to-one wholesale versus retail in 2015? And then secondly, is the FX impact included in the gross margin outlook, the up modestly for 2015?

Joe, let me start with the second one to just finish with FX. It is all incorporated in our operating margin guidance of 18% to 19%. When we look at that currency guidance, we would expect it to be a headwind of about half to three-quarters of gross margin point. So obviously ex currency, operating margin would be a fair amount higher. And again, we couldn’t be more excited about what we’ve done in terms of the manufacturing side of the business to deliver those margins and our ability to price and those types of things. So the underlying cost structure and momentum that we’ve got is fairly significant, we couldn’t be more pleased. Certainly, currency has thrown us here a pretty big headwind. So the second question is with regards to, I’m assuming retail inventory at the end of the year, so this year we were up exactly where we thought. And again, I couldn’t say we couldn’t be more prouder of the way that the organization responded to the soft or the poor weather in the first half and the ability of our flexible manufacturing system to adjust very quickly. At the end of the year, we ended with retail inventories exactly where we expected in the United States. They were up, but almost all driven by the Street dealer fail. As we look forward and feeling very good about where our inventory position is today, we would expect inventory to rise behind just the higher sales, basically holding our days inventory constant year over year. So there would be a modest increase in inventory on a year over year basis as we exit 2015 based on our forward look of retail sales.

Your next question comes from the line of Adam Jonas.

Hi, this is Neil in for Adam Jonas. Just very quickly one last FX housekeeping question. Are you able to tell us your euro-dollar assumption for next year along with any other rate assumptions you’re able to offer? And then finally, can you elaborate on your 2015 outlook in some of the macro troubled markets like LatAm and Canada?

I’m sorry, the second part of the question?

He’s just looking for assumptions on certain currencies going forward.

With regards to our assumption on currencies, we don’t provide that, an economist can get it right. What we’ve done is we typically hedge on a routine basis to give us more time to react to currencies, but we’re no better at guessing those things as anyone else and we’re certainly not going to provide our assumptions going forward. The dimentionalization that we gave just gives you a point in time, but not a forward look at what we expect currencies to do.

And then your thoughts on macro going forward for LatAm and Canada?

Overall, when we look at some of the economies in our international markets, we do have some concerns out there, certainly Brazil has had a tough row to hoe here. We would expect some tough settings still to continue there; Japan and then even Europe. Europe had pretty significant industry growth in motorcycles, but the economy there is something we want to keep a close eye on. And then Canada, given the exchange rates and oil, and Canada has been a little bit tough. So when we look at the world markets, again we couldn’t be more excited about our international opportunity, but are little bit cautious on a few markets out there.

Your next question comes from the line of Jaime Katz.

So it looks like gross margin is expected to shake up modestly in the year ahead despite FX headwinds, so can you maybe offer more of the positive commentary on where you think your best opportunity is to capture that gross margin expansion is? And then just any additional commentary that you might have on what resonated well in international markets which performed very well in the recent quarter outside of that Street model?

Great. Opportunities on operating margin is very simply – we priced our model year 2015 motorcycles and that’s going to continue to drive margin opportunity both in dollars as well as percent. The other is there’s incremental margin coming from increased sales, that 4% to 6% shipment increase. And Jamie, as we’ve talked about in the past, we’ve had our core margin of about 36%, but for each incremental bike that we put through the system here, it’s an incremental margin of about 47%. So that will drive a lot of benefit in terms of overall gross margin percent as well. And then finally, the business model that we’ve put together and the flexible manufacturing that we’ve got working and the focus that the plans have on continuous improvement, the systems that we’ve put in are all driving fantastic productivity out of the plants and we would expect that to continue into 2015. Again, I can’t say enough about how strong that’s been. The second question that you asked is with regards to our international growth, we’ve talked a lot about international, we’ve invested, we’ve expanded the dealer network and we expect that to continue in 2015. But aside from Street and we’ve talked about Street, three out of four motorcycles in India are Street, in Southern Europe it sold very well, it’s bringing a lot of new people into the brand and we’ll clearly expand that in the first quarter here to many more markets around the world. But we can’t overlook how well our other products are doing internationally. And the core products are all up this year and expected to be up next year, but in particular Project Rushmore motorcycles are selling extremely well internationally. For example, in Europe, we’re well over 20% growth in our Touring product and that’s happening in Asia, in Latin America as well, so we couldn’t be more excited about the overall portfolio internationally.

Your next question comes from the line of Gregory Badishkanian.

Just on the international front, trends were really solid there. With the headwind of currency and maybe some macro issues, how do you see your pricing changing in the first half at retail, Harley motorcycle pricing at retail and then how do you think that will maybe compare versus some of your competition?

Our overall approach to managing currencies has been to sell our products in local currencies, right. And we keep local prices stable that way and then we manage overall currencies kind of back here as a basket of currencies, and then manage that through the P&L. And we believe keeping prices stable at the market level is the best way to build and manage a premium brand and it’s worked very well for us. What we’re seeing here is certainly unprecedented, one to see the magnitude of change and to see everything moving in the same direction, obviously we’ve given some dimentionalization on the impact on our earnings. So we’re certainly concerned and we’ll look at all options to deal with it. But let me tell you, Greg, is that we’re going to do what’s right for this brand in the long term and we’re going to work through it. But whatever we do decide to do, it will be in the best interest of the brand going forward.

Your next question comes from the line of David MacGregor.

Just to build on the international line of questioning, you’ve talked in the past about trying to get 100 to 150 dealers, you’re kind of approaching the high end of that range now, you’re talking a lot about growing international side of the business, can you sort of lay out for us what the plans are in terms of dealer development over the next couple of years?

One, we look to continue to expand the dealer network and you can expect that the dealers that will open up will be in line with what you saw in 2014. But more importantly is making sure that we’re increasing throughput through those dealers and making sure that all our products are there and ready to go when we do open those dealers. And again, we’re very excited about the opportunity and we feel that there’s a lot more to gain in distribution over the next several years.

Your final question for today comes from the line of Patrick Archambault.

It’s actually Dave [indiscernible] on for Pat and glad to make on to the wire here. Just a question circling back to the Q4 shipment, you ended up towards the lower end of your guidance range, can you kind of mention what really drove it into that lower range, was it the competitive pricing, was it a stronger use bike marketers or something else maybe we’re not thinking about?

No, David, our desire and our mandate is aggressively manage supply in line with demand. We knew we’re going to have a tough retail sales quarter in the fourth quarter, given the fact that the non-Road Glide Touring bikes were up 40% on a year-over-year basis. And what we wanted to do is manage to an inventory level that’s appropriate to continue to maintain the premium nature of our brand and we did exactly that. And we ended up exactly where we expected, exactly where we planned a year ago for inventories to end up, which were up driven only by Street. So we shipped in to hit those inventory levels.

All right, thank you, John, and thank you everyone for calling in and thanks for your time this morning. The audio recording and supporting slides will be available at harleydavidson.com. The audio can also be accessed until February 12 by calling 404-537-3406 or 855-859-2056 in the U.S. The pin number is 5737851 and then pound. We appreciate your investment in Harley-Davidson. If you have any questions, please contact Investor Relations at 414-343-8002. Thank you.