Good morning. My name is Alicia, and I will be your conference operator today. At this time, I would like to welcome everyone to the Second Quarter 2011 Earnings Conference call. [Operator Instructions] Ms. Amy Giuffre, Director of Investor Relations, you may begin your conference.

Thank you, Alicia, and welcome to Harley-Davidson's Second Quarter 2011 Earnings Conference Call. Today’s call is being webcast live on harley-davidson.com, where you will also find slides containing supporting details. These slides are generally available at least 30 minutes prior to the start of our call, and can be accessed by clicking on Investor Relations, then Events and Presentations on our website. Our comments today 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, you'll hear from Harley-Davidson's CEO, Keith Wandell; CFO, John Olin; and President of Harley-Davidson Financial Services, Larry Hund. Then we'll open the call for your questions. To ensure we get to as many callers as possible, I ask that you limit yourselves to one question, and we'll do our best to get back to you in the queue, I promise. Thanks, everyone. So let's get started. Keith?

Thank you, Amy, and good morning. We're in Anaheim, California, with our Harley-Davidson dealers from around the world for the Annual Summer Dealer Meeting and new model launch. This is just one of the many ways that we stay close to what's happening at retail, and it gives us the chance to hear what our dealers are thinking. But this morning, we're here to talk about Harley-Davidson's second quarter and 6 months results, and we truly appreciate all of you joining us on today's call. Over the past 27 months, we have been focused on making changes that we believe will lead to long-term sustainable success for the business and for our dealers around the world. So let me begin by thanking our employees, our dealers and our suppliers for all the hard work and dedication that has gone into delivering the kind of results that we announced in our press release earlier today. The company saw strong improvement in many areas, including income, in both the Motorcycle and Financial Services segments. We are pleased by the 7.5% growth in new motorcycle retail sales in the U.S., as well as the growth of Harley-Davidson retail sales on a worldwide basis. With strong second quarter retail sales performance, we have raised our shipment guidance for the year as we look to support our retail sales activity. The change in shipment guidance also reflects our confidence in being able to maintain continuity of supply for several subcomponents in the aftermath of the March earthquake in Japan. Our supply management team has done an outstanding job of mitigating supply chain risks resulting in no expected downtime or interruption in our production due to these issues. And while we remain cautious about consumer confidence and the economy in general, we are pleased with the…

Thanks, Keith, and good morning, everyone. I'll review the financial results starting on Slide 11 with the second quarter results. During the quarter, Harley-Davidson Inc. consolidated revenue was up 15%, behind a 13.2% increase in shipments of Harley-Davidson motorcycles. Our second quarter income from continuing operations improved to $190.6 million, an increase of 36.8%. Similarly, diluted earnings per share rose to $0.81 per share, up from the year-ago quarter, which was $0.59 per share. Operating income for the Motorcycle business was up over 39% compared to last year's second quarter. The strong increase in Motorcycle business was driven by increased motorcycle shipments and lower spending on ongoing restructuring activities, partially offset by increased spending on our growth initiatives. Our improved financial performance for the quarter was also driven by strong operating income at HDFS and lower year-over-year interest expense as a result of last December's repurchase of $297 million of high-interest notes, partially offset by a higher effective tax rate as compared to last year. We are very pleased with the second quarter results and our continued progress against our growth strategies and the transformation of our business. Now let's take a look at retail sales on Slide 12. Overall, worldwide retail sales of new Harley-Davidson motorcycles were up 5.6% in the second quarter. The big news for the second quarter was that retail sales in the U.S. were up 7.5% compared to last year. We are very pleased to report these positive results for the U.S. market, which represent the first quarterly growth in the past 17 quarters. Market share in the U.S. was 53.9%, up 1.5 percentage points compared to last year's second quarter, as the Harley-Davidson brand continues to show strength, while the competition continues to aggressively discount prices to move aging inventory. International markets grew 2.4%…

Thanks, John, and good morning. During the second quarter, HDFS retail motorcycle loan originations increased 19% or $125 million compared to the same period last year. The increase was driven by higher new motorcycle loan originations behind a strong increase in retail sales and a 2.3 percentage point increase in market share. Used motorcycle loan originations also increased compared to last year. However, as receivables originated prior to the start of the economic downturn rolled off the books, finance receivables outstanding decreased 6.8% compared to a year ago. This declining receivable pool reflects the lower U.S. retail sales over the last 2 years, and that will continue to impact HDFS net interest income. Over the past several quarters, HDFS has been focused on prudently increasing overall credit application approval rates. And we saw a modest increase in the second quarter, including a slight increase in the percentage of non-prime originations. We are leveraging our nearly 20 years of motorcycle lending experience and looking for opportunities to approve more good, well-structured loans. Our goal is to have a portfolio that continues to perform well over time that delivers an appropriate return on equity. Moving to portfolio quality. We are very pleased with the improved retail delinquency rate and retail credit losses compared to last year, which you will see on Slide 21. The 30-day delinquency rate for retail motorcycle loans at the end of the second quarter was 3.53% or 97 basis points better than the same date last year. Annualized retail credit losses improved by 98 basis points to 1.06% in the first 6 months compared to the first half of last year. This improvement was driven by the impact of changes in underwriting implemented 2 years ago, as well as a lower frequency of loss and improvement in the recovery values of repossessed motorcycles. As John mentioned, during the quarter, we reduced the total allowance for credit losses by $15.3 million to reflect lower anticipated credit losses and lower receivable balances. We will continue to evaluate the allowance each quarter using our disciplined process and make adjustments as appropriate. We are pleased with the continued improvement in credit performance, and we will continue to monitor the unemployment picture, motorcycle recovery values and the pace of the recovery in the U.S. economic environment and manage HDFS appropriately. During the second quarter, HDFS delivered increased profits and maintained a strong liquidity position. We remain focused on enabling retail sales of Harley-Davidson motorcycles while providing an appropriate return to Harley-Davidson Inc. Now let me turn it back to John.

Thanks, Larry. Now let's take a look at cash and liquidity on Slide 22. You'll see that at the end of the quarter, we had just over $1.2 billion of cash and marketable securities. In addition, HDFS had approximately $1 billion of available liquidity through bank credit and conduit facilities. In April, the expiring 364-day credit facility was replaced with a new 4-year $675 million facility. We continue to maintain a minimum of 12 months of projected liquidity needs in cash and/or committed credit facilities. I am also pleased to report that we increased the second quarter dividend 25% as compared to the first quarter of 2011. Now I'll review the remaining Harley-Davidson Inc. financials on Slide 23. I would like to highlight 2 items on this Slide. First, with regards to continuing operations, the company generated operating cash of $473 million during the first half of 2011, which included a $200 million contribution to our pension plan. And second, our effective income tax rate from continuing operations was 34.8%, compared to 36.4% in the first half of 2010. The 2010 effective tax rate through the second quarter was negatively impacted by the healthcare reform legislation, offset by a favorable settlement of an IRS audit. We continue to expect full year effective income tax rate will be approximately 35% for 2011. Now turning to guidance on Slide 24. We are increasing our expected worldwide motorcycle shipments for the full year 2011. This adjusted rate reflects our comprehensive view of the business, including strong year-to-date retail sales performance and our increased confidence in our ability to minimize the impact from the anticipated subcomponent supply issue related to the aftermath of the earthquake in Japan that we talked about last quarter. Our guidance also takes into consideration the temporary capacity limitations at…

[Operator Instructions] Our first question comes from the line of Ed Aaron with RBC Capital Markets.

I'm actually interested in your comments, Keith, about the Retail 2020 message that you're delivering to your dealers this week. And the reason I say that is that I think that there's a perception out there that most of the story around Harley is about operational changes. And you guys really haven't talked a whole lot about expectations for innovation to come in and really drive growth. So you've been spending a lot more on product development and shortening your lead times. And I'm just kind of wondering how long it will really take for that to show up in terms of your product innovation.

Right. Well, one of the things I mentioned, I talked about the strategic plan and the intent all along has been to, in a very thoughtful and meaningful way, transform our business. But we really started with the internals, okay? So manufacturing, product development, getting our house in order. And then the third major component is what we call Retail 2020, and Matt Levatich and his team are really leading that initiative. And it's really all about helping our dealers to deliver a great customer-led experience every day. And so, we're working hard on what are the programs, the support-type programs that we need to roll out to our dealers to help them do that? What are the metrics and the accountabilities that we need to put in place to make sure that we're driving all of our dealers' behaviors to where we want them to be, which is really a simple 2-by-2 matrix. It's profitable dealers, great customer experience. And so we're investing in that. We're investing in our international expansion, which is a major part of our strategic plan. And we're also investing more in product development, while at the same time leaning the process. So if you think about 2 years ago, when we were investing in 3 different brands and the results of the business were, at that time, deteriorating, we were spending less money on product development and we were diluting the investment because we were investing in, like I mentioned, 3 different brands. So now, we're able to spend more money on product development, focus it in Harley-Davidson brand to bring some really new, wow, exciting products to our dealer show floors. But our product development process is, at best, today, a 5-year process. And we're leaning that to where it'd be more like a 3- to 3.5-year process. So in the very near future, we'll be seeing some of these new products hit our dealers show floor that are intended to do just what our strategic plan mentions, to anchor our existing customer base but to really bring new customers into our dealers' show floors, and new customers into the Harley-Davidson brand.

Our next question comes from the line of Craig Kennison with Robert W. Baird. Craig Kennison - Robert W. Baird & Co. Incorporated: I want to reference Slide 21, which looks like a great slide. How much of that improved credit loss experience was driven by higher recovery values? And then, where do you think used bike values are relative to maybe optimal level you'd like to see it at?

This is Larry. I would say the majority is really due to better underwriting that we've done in the portfolio over the last couple of years. If you think about it, about 2/3 of our book today is loans we've originated since the beginning of 2009, and that portfolio has performed very, very well. And I'll say a second thing is that a lot of the motorcycles we repossessed are from 2007, 2008. So that's sort of an older motorcycle. It's got more equity in it at that at this point. That's helped drive recovery values. And then, recovery values at auction have improved, but I would say somewhat modestly. But we have seen continued improvement certainly over the last year.

Our next question comes from the line of Tim Conder with Wells Fargo Securities.

Regarding the new models in the price mix, John, you commented in your preamble that you're looking at about a 50 basis points on average global price increase. How do you feel with the new engines that are in the models that are already introduced? And collectively, how do you feel that, that mix will go relative to what you saw with the power pack, the substantial acceptance of the power pack add-on option for model year '11? I guess the root of the question is for the balance of this year and then maybe looking into next year, could mix potentially be better? The comp of the new engines and so forth versus that power pack of last year as it relates to margin mix.

Okay, let me address 2 things. One is pricing. As you had mentioned, we have increased pricing 1/2 of 1% for the year on a worldwide basis. As we look to that, most of that is coming in the United States. U.S. is up about 1%, and Canada's up about 1%, 3/4 of 1% in Europe and largely flat in Latin America and lower in Asia-Pacific by about 2.5%. And that's largely due to the very strong yen and Australian dollar. So we feel very great and very good about our ability to price our motorcycles at this point. And so with that, Tim, let's move on to your second question, which is with regards to mix. Last year, you're absolutely right, we had offered a 103 engine, ABS and a security system, bundled in what we called power pack. And we offered that as standard equipment on 3 models last year. It was the Ultra Limited, the Road Guide Ultra and the Road King Class X. In addition, we offered the power pack as an option on 5 models, and we saw a strong take rate on this option, which drove mix favorability over the last year. So with model year 2012, product lineup, the 103 engine is going to be offered standard on our Touring motorcycles. And we'll also be offering what we call the security pack, which is now bundling ABS and the security system together. So when we talk about mix, we expect the second -- we expect mix to be largely flat, given the introduction of the 103 engine as standard.

Our next question comes from the line of Sharon Zackfia with William Blair. Sharon Zackfia - William Blair & Company L.L.C.: I was hoping you could update us on the progress of the factory custom that you started this year, kind of how that's taken off among consumers and whether we might see that expanded in the near future to other types of bikes?

Well, this is Keith. I'll start, and then maybe John might want to jump in. But our whole strategy around manufacturing is to be more flexible and to be able to produce products closer to customer demand. There's a lot of reasons in our current structure why we can't do that effectively. And so, our vision for the future is that we want to be customer-led in everything we do. So we want our customer to be able to order a bike, and get the bike they want, the model they want, the color they want, and to some degree, accessorized the way they want it in a reasonable length of time. And that's really what H-D1 is all about. We look at every one of our customers as a unique individual, and we look at them as wanting a very unique bike, an individualized bike. And so H-D1 is all about giving our customers the ability to order a bike from the factory, get it in a very reasonable length of time and get it the way it's ordered. We do intend to expand that product offering as we go forward, as we get the systems in place, the manufacturing transformations completed and those kinds of things. So, and we think it's been well received. Our dealers, for the most part, I think, like the concept. It was an interesting phenomenon because on average, when our customers ordered a bike through H-D1, they ended up doing more accessorization when they took delivery of the bike, on average, than before. So it's been a good concept.

Our next question comes from the line of James Hardiman with Longbow Research.

Obviously, the fact that you're raising guidance sort of beyond the retail strength is indicative of some level of confidence that your production, and most specifically, your production in York is able to keep up with and potentially exceed demand. I guess, can you speak towards that level of confidence? I guess a, do you still expect to ship more into the channel this year than what gets sold out of the channel? And b, what level of retail do you think you could ultimately support from a production standpoint? Are your shipments in the back half of the year basically going to be purely a function of demand? Or is there some ceiling on where those shipments could get if -- in the positive possibility that retail actually accelerates in the back half?

This is John. First of all, James, we're very pleased with our second quarter performance. Business seems to be responding very well to our key growth strategies, and that's including aggressively managing supply in line with demand and expanding the relevance of the brand, and strengthening and expanding the distribution network. We feel great about the total demand that we're seeing through May. Total demand was up 8.2%, and that's in relationship to 2010, which was up 3.2%. So we're seeing total demand accelerate in the first half of this year. As we said, we're certainly concerned about some items in the back half, largely the economy and the fragile nature of the worldwide consumer. But we're very pleased with where we see retail sales. So as we took up guidance, we took several things into consideration. One is our year-to-date performance and again, a lot based on the fact that the brand is strong, our market share is good. And then secondly, we looked at the capacity side, which is the other part of your question. And there are capacity constraints as we are still moving a tremendous amount of pieces of our York facility. But at this time, we're confident that we can deliver shipments of 228,000 to 235,000 units. And again, we feel very good about where we're at.

Our next question comes from the line of Rod Lash with Deutsche Bank.

It's Pat Nolan on for Rod. Just -- One just housekeeping and then one question. The housekeeping question, could you just tell us what the provisioning was in the quarter versus the charge-offs for HDFS? And as far as -- the question would be, can you maybe just expand on how you see the manufacturing efficiencies continuing over the next few quarters? And just when you think we'll see actual gross margins improve on a year-over-year basis just to show some leverage to the volume growth in HP improvement you've been seeing?

So this is Larry. I'll take the first part on the allowance rec [ph]. At the end of the first quarter, we had an allowance of $159.7 million. The provision this quarter was actually a credit of $6.8 million with the reduction in the reserve rate. And then the net charge-offs were about $8.5 million, leaving us with an allowance at the end of the second quarter of $144.4 million.

And Pat, I'll take the second part of the question, which was the manufacturing efficiencies. First of all, in the second quarter, from a manufacturing perspective, we were favorable by $7.2 million. And that follows a first quarter that was unfavorable by $21 million. So we're very pleased with the activities that are going on in manufacturing. So in the first quarter, as we talked about, we felt we hit a high-water mark of temporary inefficiencies, driven by the transformation at York, of $11 million. That came down in the second quarter and posted about $8 million of temporary inefficiencies at York, but we're starting to see the restructuring savings come through. And therefore, it's turned positive. So as we look forward, we're going to have the experience of temporary inefficiencies throughout the remainder of our work at York, which'll take us through the first half of next year. However, the back half, we will be lapping some inefficiencies of about $4 million in the third quarter and $5 million in the fourth quarter. So we expect that to still be negative, but a little bit more favorable. Overall, when you talk about the gross margin percent, again, we're pleased that everything is now positive in the second quarter with the exception of raw materials. And the raw materials has quite a drag on the overall margin percent. The other thing that's pulling the percent down a little bit is the fact that currency, while we've turned positive on currency for the quarter, and we're now $4 million favorable, there was a big impact on revenue for the quarter. So revenue actually during the quarter was positively impacted by $45 million. So that also affects our percent margin on a year-over-year basis and kind of drags it down a little bit because currency is only being added at about an 8% margin versus the Motorcycle business that's in the 35% range.

Our next question comes from the line of Greg Badishkanian from Citigroup.

And I'm just wondering, in terms of -- you had nice acceleration in retail sales, is there any plans to kind of change your targets of slightly increasing dealer levels, maybe a little bit more to accommodate if the growth continues?

Greg, are you referring to inventory levels?

Yes, inventory levels at the dealer level. Yes.

Well, as we've said all along, right now we believe that the inventories are a little bit lower than we would like on a go-forward basis on the size of business that we have. Again, given some of the constraints and how well retail sales are is inventories were down again in the second quarter on a year-over-year basis, about 3,500 units. As we move forward through the remainder of the year, we would hope to build up inventories a little bit to be a little bit ahead of where we were at the end of last year. So and at that time, we felt again on an ongoing business that we were a little bit lower than we needed to be. Actually, inventories at this point in the second quarter go back to about 2002 levels. And..

Let me jump in. This is Keith. This is -- it's consistent with one of the things that we've been saying now for quite some time, and that is we're really focused on managing our supply in line with demand. And so this is something that we look at on a daily basis. But more importantly, as we get through our manufacturing transformation, this is one of the important things to note, is that we'll then have the flexibility to be able to flex up and down much more quickly as these demand patterns and/or seasonal patterns occur.

Our next question comes from the line of Patrick Archambault with Goldman Sachs.

My question, this may be more for Larry. I was wondering about HDFS. Can you give us a sense of how much you can -- now that you're actually seeing sales grow, presumably managed receivables will also grow. And how much of that can you fund with the equity that's currently on the HDFS balance sheet? And how much will need additional cash to service that growth? I think if I remember well, your leverage covenant was something like 10x. Can you just kind of give us a sense of that?

Well, we're, actually, I think, pretty well capitalized at HDFS. We've got over $900 million in equity. Our leverage today, 5x to 6x. So we've got a lot of room from that standpoint. I would say that's not a concern at the moment.

Okay, and you can -- just for clarification, you can go all the way up to 10x?

That is the way the covenant is set. That's correct.

Our next question comes from the line of Robin Farley with UBS.

I know you talked about repo values for HDFS. But talking just outside of HDFS, just sales of the used bikes at the retail level, can you talk about what kind of pricing gap do you see between used and new bike sales at the retail level and kind of what's ideal in your hue?

Yes, this is John. We don't have an exact number because there are so many models. Used bikes have so much parts and accessories on it. So there's no standard look at it. It's something that we monitor. We look across several sources including wholesale, retail, survey data, repo data to understand what's happening with used bike prices. And the good news is, is that over the last several quarters, used bikes continue to firm, and that gap is closing. And as that gap is closing, we're starting to see retail sales start to improve. And certainly, we noted that in the first quarter with the U.S. retail being up 7.5%. So through, again, May, total demand was up 8.2%, and that was really driven by, again, used bikes sales, which were up over 11% during that period of time.

Is there a kind of a ballpark range you could give us just to have a sense of as that gap is narrowing between used and new bike prices, how much has narrowed versus where you'd kind of like it to be or where you're trying to manage it to be? Are you halfway there, or 10% of the way there or 90% of the way there?

There is no -- it's not that precise of a science. We're making great improvement in that improvement study, and on a -- I mean, a quarter-in-and-quarter-out basis, and we're looking to get back to where we were pre-downturn. And again, everything's moving in the right direction.

Our next question comes from the line of Gerrick Johnson with BMO Capital Markets.

I just had a couple questions on competition. Constraints in Japanese production due to the earthquake, tsunami, are they showing up in the dealer supply yet? And how do you anticipate that affecting your business?

We don't have great visibility to what's happening in the supply disruption to our competition. Certainly, we've seen what a lot of others have seen, is it seems that Honda and Yamaha are probably hit the hardest. And we are getting reports back that there some new models that they have that are backed up. Now having said that, as we look at those competitors, they're selling nearly 70% in the second quarter. We're still old-model-year motorcycles. So I think they are having some troubles. But again, there's still seemingly a lot of old-model-year bikes out there that are being sold.

Our next question comes from the line of Ed Aaron with RBC capital markets.

John, a couple margin-related questions. So on SG&A, I think you mentioned that second half would be similar to first half. Was that in absolute dollar terms or in terms of year-over-year change? And then also, on the gross margin side, I think you made a comment in your prepared remarks about some impact from the contingency plans affecting the full year gross margin. Could you maybe quantify that for us?

SG&A is we're looking at a rate of spend. Through the first half, it was about 5.9%. We expect a similar rate of spend through the back half of the year. And now, Ed, with regards to that, we've talked about in the fourth quarter of 2010, we had a onetime item that affected SG&A by about $15 million. And that is us exiting the exclusive dealer arrangement that we had in Brazil. So the underlying SG&A rate is more similar to the first half. But then, we will benefit from that year-over-year impact of the fourth quarter of last year's spend. With regards to gross margin is, yes, we couldn't be more thrilled with the materials organization and the fact that we are continuing to make touring motorcycles with radios. However, there is a cost with regards to that. As we had mentioned last quarter, we changed our shipping locations, and you can see some of that in the shipment data between the U.S. and Japan. There's some impact on mix. And then there's just a overall cost of retooling other suppliers and so on and so forth. We do not have a number for that, and those costs and expenses continue. I would say that they're an irritant at this point. They're nothing hugely material, but they are what we've also factored in when we look at our gross margin guidance going forward of 34% to 35%.

But, John, to the extent the gross margin guidance didn't come up, at least at the high end, along with your production, is that the main explanation for why that would be?

I think it's certainly a contributor, but from a raw material standpoint, it is much greater than the Japan supply issue would be. But yes, that is a part of it.

Our next question comes from the line of Tim Conder with Wells Fargo Securities.

Actually, just 2 clarifications there. So you're saying, John, that the drop in the international mix that we saw on the quarter year-over-year, was that largely due to the decline in the shipments to Japan? And then, again, just a clarification, the restructuring amount that you have included in COGS or the restructuring expenses portion in COGS this quarter?

Tim, can you repeat the first question?

Yes. I guess the shift of the international sales down as far as the international and domestic mix in the quarter, was the majority of that, what you were explaining in the prior question, the reduction in shipments to Japan? Or is it something else going on internationally?

No. Right when the prices hit, we had more of a demand for touring bikes in the U.S., and we had better inventories in our international markets. So we, at that point, stopped shipping touring bikes to our international markets to make sure that we had enough demand here. So that was a big driver of that. And the second question that you had is restructuring expense in cost of goods sold. Right now, all of restructuring expense comes through in SG&A, and it does not affect the cost of goods sold line item.

Our next question comes from the line of James Hardiman with Longbow Research.

I guess first just to close off the international conversation, can you speak to the retail in Japan? It actually doesn't look that bad given what's going on over there. And then in Brazil, can you break out the -- is there a way you can break out the Brazil number for the quarter? And I guess it sounds like you're still feeling a drag from the changeover, but I guess coming out of the second quarter, do you feel like you're 100% up to speed in Brazil and ready to go full bore here, from here on out?

Yes. Again, as we had mentioned, Japan, given the downturn of our sales that started on March 11, we ended up in the first quarter down 9.3%. And we couldn't be more pleased with where they're at being down, I think it was only about 3.6% in the second quarter. And the resilience of that market and those customers is incredibly impressive. So our team in Japan has done a wonderful job working through the issues. As we had talked about at that time, we had very few of our dealerships that got directly caught up in it, but I think there was a couple. And we couldn't be more pleased with the retail sales from that despite them being down. With regards to Brazil, as we had talked about, about halfway through the first quarter, we changed out the 9 existing dealers that we had. We terminated them all and started to appoint new dealers. At this point, as we end the second quarter, we've got 10 dealers appointed. 6 of them are off selling products. And of those 6, about half of them are selling products from temporary locations. So we've got a lot more improvement to come from Brazil. But James, we do not break out Brazil from the Latin American numbers, but that is -- the vast majority of the sales are in Brazil. And despite that, we saw sales only down 1% in the second quarter. Again, we couldn't be more pleased with that transition in the team that's working out our business in Brazil.

Okay. And then just momentum within the quarter, I mean, obviously you guys don't break out the quarter in any way. But just qualitatively, I mean the concern throughout the whole consumer discretionary space is that from a macro perspective, things slowed down here in the second quarter. Is what you're seeing, does it corroborate that? Does it counter that? I mean, ultimately, can you give us any qualitative indication of what the momentum looked like within the quarter and if you want to talk about July, that would be great as well.

We can't talk about July, and we do not break out the months within any given quarter. We can say that we've seen in the last several quarters is the momentum in the business continues to improve. And I think from the peak of the worst quarter that we had was in second quarter of 2009. For the 8 ensuing quarters, we've seen improvements on all but one of them. And that was pretty much a flat quarter-over-quarter basis. So the strength of the business continues. As we've talked about the total demand for our products continues to grow, and we continued to narrow the used and new bike prices. So we feel very good about the overall momentum of our business, and this obviously resulting in us taking up the shipment guidance, the 228,000 to 235,000 units.

Our final question comes from the line of Patrick Archambault with Goldman Sachs.

On the back of the envelope, based on your new guidance, if you're planning on building inventories, it still would seem like -- I mean, depending on what level you build, that you're looking for a reasonable back half loaded performance year-on-year from a retail point of view. And I was just wondering, can you just tell us a little bit more about the role of increasing inventories in that? I mean, it is impressive that you guys managed to see such an improvement in Q2 with still pretty big inventory constraints. How much is additional vehicle or additional motorcycle stocks going to help you on that front?

Patrick, this is John. If the question is, is are we losing sales at retail? We do not believe we're losing any significant -- we're not losing sales at retail to our competitors. Low inventories out in the field may be having an effect on retail sales. There's a couple of things that could be happening. We could see consumers that can't find what they want new, that are looking at the value offered by used bikes and moving to used, which certainly supports our strategy to narrow the gap between new and used. And we are seeing at times that customers are waiting a little bit to get the exact color or some of the features and benefits on that bike with the exact model that they want. But I think the important part is, is that we see no evidence, it's certainly reflected in our market share and the gains in the second quarter, that we're losing any sales to the competition.

There are no further questions at this time. I turn the call back over to the presenters.

Thank you for your time this morning. We appreciate your investment in Harley-Davidson.

Thanks, John. The audio and visual support for today's call will be available at harley-davidson.com. The audio can also be accessed until August 2 by calling (706) 645-9291 or (800) 642-1687 in the U.S. The pin number is 75039604#. If you have any questions, please give us a call at (414) 343-8002. Thank you.

And this concludes today's conference call. You may now disconnect.