Good morning, ladies and gentlemen. My name is Aaron, and I'll be your operator today. At this time, I would like to welcome everyone to the first quarter 2013 earnings conference call. [Operator Instructions] I would like to turn the call over to Ms. Amy Giuffre, Director of Investor Relations. Ms. Giuffre, you may begin your conference.

Thank you, Aaron, and welcome to Harley-Davidson's First Quarter 2013 Earnings Conference Call. The audio for today's call is being webcast live on harley-davidson.com. The supporting slides can be accessed on our website by clicking on Company, Investor Relations, then Events and Presentations. 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. So let's get started. Keith?

Thank you, Amy. Good morning, and thanks to all of you for joining us today. We appreciate your interest and your investment in Harley-Davidson. Before we get to the discussion of the quarter, I just want to expand on the news that we shared earlier this week about our continued market leadership in our U.S. customer segments. As you know, we've been highly focused on positioning the company for long-term success, like growing sales to new groups of customers in the U.S. and internationally while also growing sales among our traditional customer base. Just this past January, we reported that in 2012, Harley-Davidson sales grew faster for the first time to our U.S. outreach customers, which consist of young adults, 18 to 34; female riders; African-American and Hispanic riders, then to our traditional U.S. customer base of Caucasian men ages 34 plus. In fact, in 2012, sales to outreach customers grew at more than twice the rate as sales to our traditional core customers. And just this past Monday, we provided further proof of Harley-Davidson's brand appeal when we released newly available 2012 data for each of these U.S. market segments. Among the highlights were that last year, for the fifth straight year, Harley-Davidson was the #1 seller across all CCs of new street motorcycles in the U.S. to each of these outreach segments as well as to our traditional customers. And among young adults, we sold nearly twice as many new street motorcycles as the nearest competitor. We sold nearly half of all new street motorcycles purchased by African-Americans and by Hispanics in the U.S. And we sold more new street motorcycles to women than all other brands combined. These facts demonstrate the strength and broad appeal of our products and that the Harley-Davidson brand across all of these…

Thanks, Keith, and good morning, everyone. I'll review the first quarter financial results, starting on Slide 9. During the quarter, Harley-Davidson, Inc. consolidated revenue was up 9.9% to $1.6 billion. Our first quarter net income improved to $224.1 million, an increase of $52.1 million or 30.3%. Similarly, diluted earnings per share rose to $0.99 per share, up 33.8% from the year-ago quarter. Operating income for the Motorcycles segment was $276.8 million, up 33.0% compared to last year's first quarter. The strong increase at the Motorcycle business was driven by an 11.1% increase in revenue, as shipments were up 17.1%. Additionally, Motorcycles segment operating income benefited from higher gross margin and lower restructuring spending. Operating income at Harley-Davidson Financial Services was up 6.1%, behind higher net interest income. We are very pleased with our first quarter results. Now let's take a look at retail on Slide 10. Worldwide retail sales of new Harley-Davidson motorcycles were down 9.1%, reflecting weather in the U.S. and macroeconomic challenges that continue in Europe. Despite these factors, the Harley-Davidson brand is strong and is benefiting from the success of our key growth strategies. We, along with our dealers, continue to invest in the Harley-Davidson experience, including our remarkable products, expanding the reach of the brand to new customers in the U.S. and expanding our international distribution. We continue to gain momentum and market share in many key markets. And we believe we are on track to deliver our full year shipment guidance of 259,000 to 264,000 units or up approximately 4.5% to 6.5%. On Slide 11, you'll see dealers in the U.S. posted solid Q1 2013 retail sales results, especially when considering the tough year-over-year comparison of about 25.5%, as well as the challenging economic environment. Last year's sales results during the first quarter were driven…

Thanks, John, and good morning. During the first quarter, HDFS retail motorcycle loan originations decreased 7.9% or $43.7 million compared to the same period last year. The decrease was primarily driven by lower year-over-year new retail motorcycle sales and a 1.2-percentage-point decrease in retail financing market share. For the first quarter, HDFS's retail financing market share of new Harley-Davidson motorcycles sold in the U.S. was 45.8% compared to 47.0% in the first quarter of 2012. This decrease was primarily due to increased competition in the prime segment. As a result, we reduced pricing in certain prime credit tiers late in the quarter to position ourselves more competitively in the market. Finance receivables outstanding increased 2.3% compared to a year ago, driven by growth in the wholesale portfolio. We believe the overall loan portfolio is solid, comprised of profitable loans funded in both the prime and sub-prime segments. In the first quarter of 2013, between 75% and 80% of our new loan originations were prime. Moving on to credit performance on Slide 20. The 30-day delinquency rate for retail motorcycle loans at March 31, 2013, was 2.92%, or 36 basis points higher than 2012. This is consistent with consumers' willingness to take on more debt as well as our actions over the last several years to modestly increase approval rates in the near-prime and sub-prime categories as we fund additional loans that we believe are prudently structured. To put this delinquency percentage in proper perspective, this is only the second time in at least the last 12 years where HDFS has finished the first quarter with retail delinquency below 3%. Annual retail credit losses increased by 9 basis points to 1.09% in the first quarter compared to 2012, primarily driven by lower levels of recoveries. We are pleased with the progress at HDFS as we continued to maintain a solid liquidity position, reduced our cost of funds and delivered strong profitability. We remain focused on enabling sales of Harley-Davidson motorcycles while providing an attractive return to Harley-Davidson, Inc. Now let me turn it back to John.

Thanks, Larry. And now we'll take a look at cash and liquidity on Slide 21. You'll see that at the end of the quarter, we had $1.15 billion of cash and marketable securities. In addition, we had $1.26 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 quarter, there were several transactions related to cash. First, HDFS paid $185 million dividend to H-D, Inc. We also made $175 million contribution to our qualified pension plans. This contribution reduces the $221 million Q4 2012 increase in our long-term pension and postretirement liability, which was driven by the pension discount rate assumptions changing from 5.3% to 4.2%. I'm very pleased to report that during the quarter, Harley-Davidson increased our quarterly dividend from $0.155 to $0.21 per share, an increase of 35.5%. We also repurchased approximately 2 million shares of Harley-Davidson stock for $105 million during the quarter. As we have stated, returning value to our shareholders through increasing dividends and share repurchases is a top priority. We will continue to evaluate opportunities to enhance value for our shareholders. Last week, we also completed a $650 million asset-backed securitization transaction with the weighted average interest rate of 0.71%. Now I'll review the remaining Harley-Davidson, Inc. financials on Slide 22. I'd like to highlight 2 items on this slide. First, with regards to operating cash flows, the company used operating cash of $109 million during the first quarter, driven by increased wholesale lending and $175 million contribution to our pension plans in January. And second, the tax rate for the first quarter was 33.8%. This reflects the benefit of the full year of 2012 and the first…

[Operator Instructions] Your first question comes from the line of Sharon Zackfia from William Blair. Sharon Zackfia - William Blair & Company L.L.C., Research Division: I had 2 questions. I guess, first, the gross margin was a nice positive surprise in the quarter, and I think it's better that you had kind of led us to believe earlier in January. So what surprised you on the gross margin side, was it York functioning more smoothly than expected or what have you? And then, secondly, I think currency is always a little bit opaque to those of us on the outside, and with the yen devaluing during the quarter, how do we think about currency through the remainder of the year versus all we just saw in the first quarter?

Okay, Sharon. First of all, gross margin, we had a gross margin of 36.7% in the quarter. And yes, when we gave guidance on our last conference call, we said that we'd be slightly ahead of a year-ago quarter, which was 35.9%. So we were looking at 10, 20 basis points ahead. So we came in favorable to that. And the reason largely was just how smoothly the surge manufacturing at York came off. So we experienced lower temporary inefficiencies than we had anticipated. Again, as Keith had mentioned, that was just an absolute tremendous execution. We took production up at capacity utilization. We improved overall quality. Safety was the best quarter that we've ever had in York, and we hit our production targets. So the driver of the increase in gross margin was due to that. The second question, Sharon, that you had asked is with regards to currency. What we said is on a full year basis, that currency would be unfavorable. We certainly saw that come through in the first quarter. And so basically, in the first quarter, as I've mentioned in the prepared remarks, is that the foreign currency devalued by 4%, and that was really driven by 2 of them: the yen fell 15% from a year ago, and the real fell 11%. And that drove revenue to be down about $14 million, and cost of goods sold was a little bit unfavorable as well as we lapped gains of a year ago on the hedges that now turned into losses. So first quarter was in line with what we expected. It was down about $15 million. As we look forward on a full year basis, expect it to continue to be unfavorable. And as we look to the second quarter, we would expect currency to be unfavorable as well, however, not to the same magnitude as we saw in the first quarter.

Your next question comes from the line of Craig Kennison from Robert W. Baird. Craig R. Kennison - Robert W. Baird & Co. Incorporated, Research Division: Just interested in whether you can help us understand how weather impacted your sales in Q1 in markets that really don't require much of a difference in weather or much -- show much of a difference in weather.

Great. Thanks, Greg. So again, as everyone is well aware of, last year's first quarter was up 25.5%. And to really understand the extent of that is you kind of get into the -- some of the numbers. And 25 states, last year's first quarter were at all-time highs in 118 years, the warmest ever. Another 13 states were the top 5 warmest in 118 years. Of those 38 states, Craig, they virtually accounted for 100% of the decline in year-over-year retail sales. And if you take a state like California, where weather was pretty similar on a year-over-year basis, we see that California had solid growth between 2012 and 2013. So again, we're confident that this year's decline of 12.7% is weather-driven, and it just happens to be that March is a large month. It's about half of that volume for the first quarter. It's really a swing month. And we always say at Harley-Davidson, "Spring always comes," and it just didn't come in this year's first quarter. And we were lapping last year's very high numbers.

You're next question comes from the line of Tim Conder from Wells Fargo Securities.

On the gross margin, I wanted to circle back to that. Given that you said that the real reason for the upside versus your expectations was the better execution on the operational side there in York, what would preclude us from thinking that that should continue going forward here in the second quarter? And I know you mentioned that the currency was a little bit worse than your expectations. I think your expectations had been about $13 million. You said it came in at a negative $15 million and expect this will still be negative going forward. But all that together, why wouldn't you raise the gross margin, I guess, at this point, is question number one. And number two, is there any type of sensitivity you can give us on foreign exchange, say, if you put on any new hedges folding all of that in and x percent change in revenue in this basket of countries will impact the EPS that much, x, y amounts?

Okay. Tim, I think your first question was, "Why don't we raise full year gross margin?" That's an easy answer. It's because we think it's going to be between 35.25% and 36.25%. What we saw in the first quarter is largely the onetime temporary inefficiencies. And that's what drove us favorable to what we had anticipated 3 months ago, and that was driven by the York piece, which you also saw in the first quarter is higher production. And I will say that when we look at overall production for this year, that 100% of our production increases are going to come in the first half. And you saw some of that in the first quarter. You'll see a little bit more in the second quarter. But by and large, we're on track. We're right on track with not only our retail sales -- and I didn't mention that before is, from an internal plant perspective actually, we had retail sales falling a little bit more in the first quarter. So in the U.S., we're a little bit ahead of our plans there, and our financial plans were right on track. A little bit better in gross margin for the quarter, but that was more of a onetime deal.

And the sensitivity of foreign currency?

I'm sorry. The second question, Tim, is sensitivity on foreign currency and rules of thumb. And we don't have any rules of thumb that are very easy to translate. And when you do the accounting for currency, it is very complicated. You've got a couple of pieces. The revenue piece, which is more straightforward, which is a year-over-year impact of average exchange rates and how it affects revenue. In the cost of goods sold, though, is you have hedges that you put on in prior periods and how they relate. So those are always changing. You've got a balance sheet revaluation, which in this quarter, the first quarter, was significantly negative because of the rapidly declining yen. And that's a mark from the beginning of the quarter through the end of the quarter. And then you have the offset of natural hedges of products that you're producing and bringing in from those markets. And with all those moving pieces, there is no common rule of thumb that you can say that if this happens, that will happen. It has to do with previous hedges and the timing of weather fall in. So I wish there was a way we can say that, "Here's the way to really make it simple." But the accounting is, in fact, the matter is it's not all that simple. But again, on a full year basis, we expect currency to be unfavorable. And as I just mentioned, when we look at the second quarter, we would expect currency to be unfavorable but not to the same magnitude as we saw in the first quarter.

And your next question comes from the line of Ed Aaron from RBC Capital Markets.

I'd like to get your thoughts on the impact of the recent change of the dollar-yen relationship. In addition to just kind of understanding the -- now the translation and transaction impact, I also want to get your sense for how you think your Japanese competitors might respond from a pricing perspective since weaker yen, obviously, helps their overall competitiveness.

Okay. So Ed, as I've mentioned, on a year-over-year basis, the Japanese yen has devalued 15%. And so if you're manufacturer producing in Japan and selling your products in the U.S., that is very favorable. So the question, Ed, I think, is "Will we expect the Japanese to take any pricing actions here in the United States?" The answer is they run their business, and we don't have a lot of insight. What I can say, though, is as the yen strengthen, we did not see the Japanese lower prices to any great extent. I'm sorry, they didn't raise prices to any great extent. The Japanese competitors have always been in it for the long term, and they've been pretty steady in their overall pricing. So I don't know if they would now take prices down, given the fact that they took a lot more profits over the last few years. But again, we don't know what they're going to do.

Your next question comes from the line of Rod Lache from Deutsche Bank.

It's actually Pat Nolan on for Rod. Just a quick follow-up. I missed the total manufacturing and efficiency number when you're going through it. What was that in the quarter?

Yes, it was $3 million in the quarter compared to $7 million in the year-ago quarter.

Got it. And are you still expecting -- I know you previously thought the $33 million impact of that in 2012. You basically cut that in half in 2013. Do you expect that now that you can keep that kind of out-performance you saw in Q1, and it actually comes -- it reduces by more than 50% on a full year basis?

Given the favorability, Pat, in the first quarter, we would expect temporary inefficiencies to come in a little bit favorable on a full year basis. It doesn't carry through to the second quarter. Those were largely startup costs of getting people in, trained and what we thought -- slower line speeds. But again, they got up to speed very quickly, and everything went extremely well. So that would be viewed more as a onetime favorability in the first quarter. And overall, on a full year basis, we'll bring the number down a little, but again, it does not repeat throughout the year.

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

Question on the second quarter guidance. Basically, you're saying you're guiding wholesale to be flat, but it sounds like you're saying inventories are going to be up. The only way that math really works is if retail is down. I know you don't give any sort of guidance on retail, but just connecting the dots, you've basically given some indications. I guess, first, how should I think about the second quarter from a retail perspective? Obviously, a big decline in the first quarter, but you got much easier comparisons. And then, I guess, just secondly, what's the range of retail growth that you think your production is capable of handling at this point? Is there any sort of upper limit to what you could handle in terms of satisfying your retail demand with your production?

James, I'll start with the last question first. Is -- you know I'm not going to provide retail growth, but we have got the capacity we need to do to satisfy market demands. And that's what restructuring has been all about over the last several years. And this fourth quarter was a big piece of that, including the surge production into play and into operation. So overall, capacity is not a near-term concern for us. With regard to the second quarter, the shipment guidance is for 80,000 to 85,000, which is in line with what we did last year at 83,500. Now remember, last year's 83,500 had 7,000-ish coming out of inventory. And this year, we'll look to produce -- well, we don't have them in inventory to release them, so that will be increased production. And when you look at inventories growing, remember, the launching spot that we're taking off in the first quarter is much higher than it was a year ago. So it doesn't necessarily preclude retail from growing. We don't provide any retail guidance. But what I can tell you is we're all looking forward to much easier comps in the second and third quarter than we had in the first quarter. And again, in the first quarter, we had retail sales up a year ago of 4% and down 5.2% in the second -- or in the third quarter, driven by the ERP implementation. So the next 2 quarters, which represent about 60% of our retail sales, is we're going to have comps that are about flat to a year ago. So we're very excited and looking forward to that. But beyond that, I can't provide any guidance on retail sales, but feel good about our shipment guidance of about 4.5% to 6.5%.

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

Actually, I just wanted to go back to kind of a larger strategic question tying into some of the competitive actions. You guys have consistently seen share gains in the United States, and this quarter was no exception. Can you talk a little bit about what you see really driving that? And also, tying it into the yen question, what's the discounting activity been by some of your competitors? Has they pulled back? Has that created some opportunity? A little bit more color on that would be great.

From a discounting standpoint, we have -- we continue to see a lot of discounting by competitors, not only Japanese. And looking in the range of 750 to 2,000 a unit, we have not seen any big difference in discounting by Japanese competitors, but we continue to see overall discounting. Yes, the other question was with regards to...

Yes, this is Keith. The question about the market share gains. Clearly, we've put a strategy in place several years ago that said, "We want to develop, bring new products to market more quickly." Those are starting to come to the pipeline now. We wanted to be more efficient and effective in how we manufacture closer to the customer. We're doing that. And we want our dealers to provide a great customer experience every time, every day, every place in the world, and that's well underway as well. So you asked me, why are we gaining market share? I think those are the reasons. We're living on our strategy, we're making it happen. We're focused on -- as we talked about earlier today, we're focused on bringing new riders into the family. 4 out of every 10 bikes sold in the U.S., that was the case. 1 out of every 2 around the world, that was the case. And we're gaining market share in those outreach segments where we think it's very important. John talked about some of the demographics going forward and what that looks like over the next several years. We just believe that that strategy we've put in place is the reason that we're winning those market share gains.

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

Sometimes, you guys give us a change in total demand, including pre-owned. How did that look this quarter? Was there a big difference between what was moving preowned versus new?

Gerrick, this is John. The new used data is a month lag. So on January and February, which is a very small data point in a very small part of the year, suggests that used fell faster than new. So overall total demand in those 2 months for Harley-Davidson motorcycles was down about 11.7 -- well, not exactly 11.7% and largely driven by declining new -- I'm sorry, declining used. New was much stronger in January and February timeframe. Again, I wouldn't put too much reliance on 2 months of winter data.

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

And just kind of looking at -- focusing on Europe. You've maintained share. And obviously, it seems like a lot of that was macro-driven. Is there anything else that was notable, whether it's weather, competitive, dynamics going on in that marketplace?

Greg, this is John. The biggest driver is the macroeconomics. And we always say that's going to be sunny somewhere. But now that you mentioned it, is across Europe, it was much colder in the first quarter. Matter of fact, the average temperatures were down about 14 degrees Fahrenheit, 13.5 degrees. So weather was pretty tough in Europe as well, which probably had some impact on the category. Germany was the coldest March in 150 years. And I think the U.K. was at 50-year high in terms of cold. So weather did play into it, but it is more the macroeconomics. And again, where the North was holding up for the first several quarters since the sovereign debt crisis started in the third quarter of 2011, and they were really keeping Europe sales up. The last 2 quarters, we have seen the North turn a little bit negative. France, in particular, for us, was a tough quarter in the first quarter. So it would be macroeconomics. Weather did play in to some extent. Again, that will work itself out in the next couple of months. And then there is more intense competitive activity. We're seeing more discounting by the competition in the first quarter. And yes, Greg, as you had mentioned, we're very pleased to see our share largely flat, given the fact that our price points are typically higher. It is just, again, shows this overall strength of the brand.

Your next question comes from the line of Felicia Hendrix from Barclays.

Just talking about the competitive environment, I was just wondering if you could discuss your thoughts on the prospective new competition from Indian. And then also just to touch on the points that you made in Europe. Obviously, macro is an issue. The weather will get better. You've just said you've maintained your market share, and you're pleased. Just wondering what kind of programs or things that you're doing in Europe to offset some of the weakness there. And then, finally, if I could just reiterate some of the prior request for FX sensitivity, I do think it's important. I recognize that it's difficult to come up with, but a lot of the other companies that we follow do provide such sensitivity, and they face the same difficulties. And I just think it would be helpful removing some of the uncertainty to our modeling.

Okay, Felicia. Let's start with Indian. So from what we understand is Indian is going to relaunch in late or mid to late summer. And Felicia, we take all our competitors very seriously, and we believe competition is good for everyone. In the U.S., we have 11 competitors in the heavyweight segment. And they have fine products, good brands and have been investing in their businesses and distribution systems for decades. Yet the largest of them has 1/8 share of the market, and with most others at less than 3% share. Harley-Davidson has been in the motorcycle business for 110 years. And during that time, we've developed the world's most loyal customers, the strongest and the most profitable dealer network, most remarkable motorcycles and one of the strongest brands bar none. Our focus is on delivering our customers on every level through unrivaled products and experiences. We'll keep an eye on Indian as well as all of our other competitors, but we're going to continue to focus on delivering Harley-Davidson to the world. The second question that you had is in Europe. What we're doing from a market share perspective, number one, is I think that is just, again, the core strength of the brand has served us very well. When we look at the overall situation in Europe, we're managing inventories very tightly. The pipeline, the distribution systems that we have already helps get the right motorcycles to the right place and keeps the inventories at dealerships very low, so the working capital is low. We have rationalized some of the dealer network where appropriate. We've consolidated some dealers, largely in the South. Dealer profitability is a top priority and making sure that our dealers remain profitable. They proved very resilient in the 2008 through 2010 period. And then we continue to work on emerging markets and our growth strategy there of putting up new dealerships. With regards to the ForEx sensitivity, well, we duly note your request.

And your final question comes from the line of Jaime Katz from Morningstar.

Can you talk to just a little bit about how people in Europe are financing their bikes? I know you had mentioned constrained credit. Are you finding that more people are trying to pay cash rather than finance? Or are they using different channels than maybe they have in the past?

Jaime, this is Larry Hund. We haven't seen a significant shift. I would say, in Europe, what you have is -- for the most part, you don't have as well developed what I'll call a sub-prime lending market. And so people who borrow tend to be more in the prime space. You do have, in Europe, a larger percentage that do pay cash for their purchases. But there's a large percentage of finance as well. And -- but I wouldn't say we've seen any dramatic shift in that over recent periods.

All right. Thank you, Larry, and thank you, everyone, for your time this morning. The audio and visual support for today's call will be available at harley-davidson.com. The audio can also be accessed until May 9 by calling (404) 537-3406 or (855) 859-2056 in the U.S. The pin number is 29730809#. We appreciate your investment in Harley-Davidson. And if you have any questions, please contact Investor Relations at (414) 343-8002.

This concludes today's conference call. You may now disconnect.