UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
(X) Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the quarterly period ended September 25, 1994
or
( ) Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period from ______________ to ______________
Commission File Number 1-10793
Harley-Davidson, Inc.
(Exact name of registrant as specified in its Charter)
Wisconsin 39-1382325
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization)
Identification No.)
3700 West Juneau Avenue, Milwaukee, Wisconsin 53208
(Address of principal executive offices) (Zip Code)
(414) 342-4680
(Registrant's telephone number, including area code)
None
(Former name, former address and former
fiscal year, if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that
the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes X
No ____
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.
Common Stock Outstanding as of November 1, 1994: 76,294,901 Shares
Page 1 of 27 Pages
Exhibit index is on page 17
<PAGE>
HARLEY-DAVIDSON, INC.
Form 10-Q Index
For the Quarter Ended September 25, 1994
Page
Part I. Financial Information
Item 1. Financial Statements
Condensed Consolidated Statements of Income 3
Condensed Consolidated Balance Sheets 4
Condensed Consolidated Statements of Cash Flows 5
Notes to Condensed Consolidated Financial Statements 6-7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 8-14
Part II. Other Information
Item 1. Legal Proceedings 15
Item 6. Exhibits and Reports on Form 8-K 15
Signatures 16
Exhibit Index 17
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements
<TABLE>
Harley-Davidson, Inc.
Condensed Consolidated Statements of Income
(Unaudited)
(In thousands, except per share amounts)
<CAPTION>
Three months ended Nine months ended
Sept. 25, Sept. 26, Sept 25, Sept 26,
1994 1993 1994 1993
<S> <C> <C> <C> <C>
Sales $384,026 $284,376 $1,129,103 $888,339
Cost of goods sold 277,514 208,201 818,943 645,856
-------- --------- --------- -------
Gross profit 106,512 76,175 310,160 242,483
Selling, administrative and engineering
expenses 68,745 48,320 190,638 149,393
------- ------- ------- -------
Income from operations 37,767 27,855 119,522 93,090
Interest expense - net 137 (73) (230) (815)
Other expense - net 61 (696) 2,021 (6)
------- -------- ------- -------
Income from operations before provision
for income taxes, extraordinary item,
and accounting changes 37,965 27,086 121,313 92,269
Provision for income taxes 14,192 10,661 42,106 36,908
------- -------- -------- --------
Income before accounting changes 23,773 16,425 79,207 55,361
Cumulative effect of accounting changes:
Postretirement benefits other than
pensions, net of tax - - - (32,124)
Income taxes - - - 1,796
------- -------- --------- --------
Net income $ 23,773 $ 16,425 $ 79,207 $ 25,033
======= ======= ========= ========
Weighted average common shares outstanding,
assuming no dilution 76,249 75,936 76,160 75,884
Earnings per common share, assuming no
dilution:
Income before cumulative effect of
accounting changes $0.31 $0.22 $1.04 $0.73
Cumulative effect of accounting changes:
Post-retirement benefits, net of tax - - - (0.42)
Income taxes - - - 0.02
------ ------ ------ ------
Net income $0.31 $0.22 $1.04 $0.33
====== ====== ====== ======
Cash dividends per share $0.04 $0.03 $0.10 $0.06
====== ====== ====== ======
</TABLE>
<PAGE>
<TABLE>
Harley-Davidson, Inc.
Condensed Consolidated Balance Sheets
(In thousands)
<CAPTION>
ASSETS
Sept. 25, Dec. 31,<F1> Sept. 26,
1994 1993 1993
(Unaudited) (Unaudited)
<S> <C> <C> <C>
Current assets:
Cash and cash equivalents $ 63,293 $ 77,709 $ 49,836
Accounts receivable, net of allowance
for doubtful accounts 156,754 86,031 110,059
Inventories (Note 2) 159,473 140,151 138,293
Deferred income taxes 20,296 20,296 18,105
Prepaid expenses 8,261 9,571 8,879
-------- --------- ---------
Total current assets 408,077 333,758 325,172
Property, plant and equipment, net 228,339 205,768 190,390
Deferred income taxes 16,276 11,676 10,306
Goodwill - - 54,318
Other assets 43,393 32,083 31,534
--------- --------- ---------
$696,085 $583,285 $611,720
========= ========= ========
<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY
<S> <C> <C> <C>
Current liabilities:
Notes payable 15,103 20,580 $ 13,450
Current maturities of long-term debt 433 789 497
Accounts payable 64,083 56,350 64,320
Accrued expenses and other liabilities 133,015 113,043 104,847
------- -------- --------
Total current liabilities 212,634 190,762 183,114
Postretirement benefits 58,985 54,999 53,953
Other long-term liabilities 22,230 12,612 12,129
Contingencies (Note 3)
Stockholders' equity:
Common stock 771 385 385
Additional paid-in capital 141,565 137,150 134,545
Retained earnings 260,997 189,410 228,603
Cumulative foreign currency
translation ajustment 1,500 186 1,453
------- -------- --------
404,833 327,131 364,986
Less treasury stock, at cost (1,581) (1,583) (1,584)
Unearned compensation (1,016) (636) (878)
-------- -------- --------
Total stockholders' equity 402,236 324,912 362,524
-------- -------- ---------
$696,085 $583,285 $611,720
======== ======== ========
<FN>
<F1>Condensed from audited financial statements.
</TABLE>
<PAGE>
Harley-Davidson, Inc.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
(In thousands)
Nine months ended
Sept. 25, Sept. 26,
1994 1993
Cash flows from operating activities:
Net income $79,207 $25,033
Depreciation and amortization 26,846 25,974
Long-term employee benefits 5,661 55,717
Deferred income taxes (4,600) (22,333)
Other 162 454
Change in current assets and
current liabilities:
Accounts receivable (70,723) (16,881)
Inventory (19,322) (36,122)
Prepaid expenses 1,310 738
Accounts payable and accrued liabilities 27,705 16,871
------- -------
Net cash provided by operating activities 46,246 49,451
Cash flows from investing activities:
Purchase of property and equipment (49,090) (30,712)
Investments in joint ventures 0 (10,350)
Other - net (3,076) 169
------- --------
Net cash used in investing activities (52,166) (40,893)
Cash flows from financing activities:
Reductions of long-term debt (328) (1,017)
Net decrease in notes payable (5,477) (2,483)
Dividends paid (7,620) (2,280)
Issuance of stock under employee
stock plans 4,929 2,936
------- ------
Net cash used in by financing activities (8,496) (2,844)
------- ------
Net increase (decrease) in cash and cash
equivalents (14,416) 5,714
Cash and cash equivalents:
At beginning of period 77,709 44,122
------- -------
At end of period $63,293 $49,836
======= =======
<PAGE>
HARLEY-DAVIDSON, INC.
Notes to Condensed Consolidated Financial Statements
(In thousands, except share amounts)
Note 1 - Basis of Presentation
------------------------------
The condensed interim consolidated financial statements included herein
have been prepared by Harley-Davidson, Inc. (the Company) without audit.
However, the foregoing statements contain all adjustments (consisting only
of normal recurring adjustments) which are, in the opinion of Company
management, necessary to present fairly the consolidated financial
position as of September 25, 1994 and September 26, 1993, and the results
of operations for the three and nine month periods then ended.
Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted pursuant to the rules
and regulations of the Securities and Exchange Commission. For further
information, refer to the consolidated financial statements and footnotes
thereto included in the Company's annual report on Form 10-K for the year
ended December 31, 1993.
On August 17, 1994, The Company's Board of Directors declared a two-for-
one stock split effected in the form of a 100 percent stock dividend to
shareholders of record on August 29, 1994, payable on September 12, 1994.
Stock options agreements, have been adjusted to reflect the split. An
amount equal to the par value of the shares issued has been transferred
from additional paid-in capital to the common stock account. All
references to number of shares, except shares authorized, have been
adjusted to reflect the stock split on a retroactive basis.
Note 2 - Inventories
--------------------
The Company values its inventories at the lower of cost, using the
last-in, first-out (LIFO) method, or market. Inventories consist of the
following:
Sept. 25, Dec. 31, Sept. 26,
1994 1993 1993
Components at the lower of cost,
first-in, first-out, (FIFO),
or market:
Raw material & work-in-process $ 60,910 $ 54,155 $ 58,474
Finished goods 68,607 66,865 59,112
Parts & accessories 49,069 35,366 36,763
------- ------- -------
178,586 156,386 154,349
Excess of FIFO over LIFO 19,113 16,235 16,056
------- -------- --------
Inventories as reflected in the
accompanying condensed
consolidated balance sheets $159,473 $140,151 $138,293
======= ======= =======
Note 3 - Contingencies
-----------------------
The Company is involved with government agencies in various environmental
matters, including a matter involving soil and groundwater contamination
at its York, Pennsylvania facility (the Facility). The Facility was
formerly used by the U.S. Navy and AMF (the predecessor corporation of
Minstar). The Company purchased the facility from AMF in 1981. Although
the Company is not certain as to the extent of the environmental
contamination at the Facility, it is working with the Pennsylvania
Department of Environmental Resources. The Company is currently pursuing
cost recovery litigation against the Navy and believes that the Navy, by
virtue of its ownership and operation of the Facility, will ultimately be
responsible for a substantial portion of the environmental remediation
costs at the Facility. In addition, in March 1991 the Company entered into
a settlement agreement with Minstar related to certain indemnification
obligations assumed by Minstar in connection with the Company's purchase
of the Facility. Pursuant to this settlement, Minstar is obligated to
reimburse the Company for a portion of its investigation and remediation
costs at the Facility. Although substantial uncertainty exists concerning
the nature and scope of the environmental remediation that will ultimately
be required at the Facility, based on preliminary information currently
available to the Company and taking into account the Company's estimate of
the probable liability of the Navy, and the settlement agreement with
Minstar, the Company estimates that it will incur approximately $4 million
of additional remediation and related costs at the Facility. The Company
has established reserves for this amount. The Company has also put certain
of its insurance carriers on notice that it intends to make claims
relating to the environmental contamination at the Facility. However, the
Company is currently unable to determine the probable amount of recovery
available, if any, under insurance policies.
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Results of Operations for the Three Months Ended September 25, 1994
Compared to the Three Months Ended September 26, 1993
Motorcycle Units and Consolidated Net Sales
For the Three Month Periods Ended September 25, 1994
and September 26, 1993
Incr
1994 1993 (Decr) %
Motorcycle units 22,503 17,963 4,540 25.3%
Net sales (in millions):
Motorcycles $213.6 $161.7 $51.9 32.1%
Motorcycle Parts and
Accessories 78.3 59.1 19.2 32.5
Total Motorcycles and
Related Products 291.9 220.8 71.1 32.2
Recreational Vehicles 68.0 43.7 24.3 55.5
Commercial Vehicles 20.8 16.8 4.0 24.0
Other 3.3 3.1 .2 7.0
Total Transportation
Vehicles 92.1 63.6 28.5 44.9
Harley-Davidson, Inc.
Consolidated Net Sales $384.0 $284.4 $99.6 35.0%
The Company reported third quarter consolidated net sales of $384.0
million, a $99.6 million (35.0%) increase over the same quarter in 1993.
Both the Motorcycles and Related Products segment (the Motorcycle segment)
and the Transportation Vehicles segment contributed to the increase.
The Motorcycle segment's third quarter net sales increased 32.2% on
approximately 32% increases in both motorcycle unit and parts and
accessories sales. Motorcycle unit shipments increased 25.3% over the same
quarter in 1993, primarily as the result of a higher production rate
during the third quarter of 1994 ( 380 units-per-day) compared to the
third quarter of 1993 (365 units-per-day). The third quarter of 1994 also
benefitted from three additional work days, compared to the same quarter
in 1993.
The Motorcycle division recently announced that it would increase its
daily production rate to 395 motorcycle units per day early in the fourth
quarter. Although scheduled daily motorcycle production rates are ahead of
plan, this does not necessarily indicate that the Company is significantly
ahead of its plan to attain a daily production rate of 425 units per day
(100,000 units per year) sometime in 1996.
The Parts and Accessories division recorded a 32.5% increase in net sales
during the third quarter of 1994 compared to the same quarter in 1993. A
portion of the increase reflects an improvement in the timing of
shipments, over the prior year, for orders received in July at the
Motorcycle segment's annual dealer show.
The Transportation Vehicles segment recorded 1994 third quarter net sales
of $92.1 million, a $28.5 million (44.8%) increase over the same period
during 1993. The Recreational Vehicles division generated $24.3 million of
the change primarily through volume increases. Higher priced "Class A"
(motorized) units comprised a majority of the increase. The Company
continues to be pleased with the performance of the Recreational Vehicles
division, but remains cautious pending customer reaction to the 1995
models introduced at the Recreational Vehicles division's dealer meeting
at the end of August. The 1995 model introductions represent the largest
new model launch in recent history.The manufacturing phase-in of the new
models began in July and runs through November. Accordingly, many of the
new models were not available for shipment until the end of the third
quarter or early in the fourth quarter.
The Commercial Vehicles division recorded third quarter net sales of $20.8
million, a $4.0 million (24.0%) increase over the third quarter of 1993.
The division was awarded two large contracts during the third quarter
totaling $17.6 million. Production under these contracts is expected to
occur during the first and second quarters of 1995.
Consolidated Gross Profit
For the Three Month Periods Ended September 25, 1994
and September 26, 1993
(Dollars in Millions)
Gross Gross
Profit Profit
Dollars Dollars Percent Percent
1994 1993 Change 1994 1993
Motorcycles and
Related Products $90.3 $66.7 $23.6 30.9% 30.2%
Transportation
Vehicles 16.2 9.5 6.7 17.6 14.9
Consolidated Harley-
Davidson, Inc. $106.5 $76.2 $30.3 27.7% 26.8%
The Company recorded consolidated third quarter gross profit of $106.5
million, a $30.3 million (39.8%) increase.
The Motorcycle segment contributed $23.6 million to the third quarter
increase in consolidated gross profit related primarily to volume
increases in motorcycle unit shipments and parts and accessories business.
The Transportation Vehicles segment recorded a $6.7 million improvement in
gross profit during the third quarter of 1994 compared to the same quarter
in 1993. The Recreational Vehicles division was responsible for a
majority of this improvement, which relates primarily to volume increases.
Third quarter volume increases occurred primarily in the motorized Class
A products resulting in a favorable shift in product mix (away from lower
margin towable products).
Consolidated Operating Expenses
For the Three Month Periods Ended September 25, 1994
and September 26, 1993
(Dollars in Millions)
Dollars Dollars Percent
1994 1993 Change Change
Motorcycles and
Related Products $52.5 $35.5 $17.0 47.8%
Transportation
Vehicles 14.1 11.6 2.5 21.4
Corporate 2.1 1.2 0.9 79.9
Consolidated Harley-
Davidson, Inc. $68.7 $48.3 $20.4 42.3%
Consolidated operating expenses increased $20.4 million (42.3%) over the
third quarter of 1993, primarily in the Motorcycle segment.
Increases in the Motorcycle segment were primarily volume related.
Specific areas of increase beyond general volume related spending included
product warranty and liability, variable compensation, MotorClothes
advertising costs, and the VR Racing (road racing) program.
The Transportation Vehicles segment recorded a $2.5 million (21.4%)
increase in operating expenses during the third quarter of 1994 compared
to the third quarter of 1993. The primary area of increase was selling and
promotional programs. 1994 third quarter operating expense benefitted
from the elimination of goodwill amortization ($.7 million during the
third quarter of 1993) that resulted from the goodwill write-down recorded
by the Company during the fourth quarter of 1993.
<PAGE>
Results of Operations for the Nine Months Ended September 25, 1994
Compared to the Nine Months Ended September 26, 1993
Motorcycle Units and Consolidated Net Sales
For the Nine Month Periods Ended September 25, 1994 and September 26, 1993
Incr
1994 1993 (Decr) %
Motorcycle units 70,565 60,416 10,149 16.8%
Net sales (in
millions):
Motorcycles $655.1 $535.2 $119.9 22.4%
Motorcycle Parts
and Accessories 192.3 147.8 44.5 30.1
Total Motorcycles
and Related Products 847.4 683.0 164.4 24.1
Recreational
Vehicles 202.2 140.9 61.3 43.4
Commercial Vehicles 69.9 55.0 14.9 27.2
Other 9.6 9.4 0.2 2.2
Total Transportation
Vehicles 281.7 205.3 76.4 37.2
Harley-Davidson, Inc.
Consolidated Net Sales $1,129.1 $888.3 $240.8 27.1%
The Company reported record nine month consolidated net sales results of
$1.1 billion compared to $888.3 million during the same period in 1993.
The Motorcycle segment and the Transportation Vehicles segment both
contributed to the net sales improvement.
The Motorcycle segment recorded net sales of $847.4 million during the
first nine months of 1994 compared to $683.0 million during the same
period in 1993. Worldwide demand for the Company's motorcycles continues
to outweigh supply. Dealer inventories of motorcycles in most major
markets remain virtually non-existent. The most recent information
available (through August) indicates a U.S. heavyweight (751+cc) market
share of 53.7% compared to 56.1% for the same period in 1993. The decrease
in market share is attributable to the Motorcycle division's capacity
constraints in a growing market. As mentioned earlier, the Motorcycle
division increased its daily motorcycle unit production rate to 395 units
early in the fourth quarter of 1994. Including this most recent increase,
the Motorcycle division has increased its daily motorcycle production rate
by over 40% since the beginning of 1992.
Parts and accessories net sales also exhibited strong growth during the
first three quarters of 1994. Overall, net sales of parts and accessories
increased 30.1% compared to the first nine months of 1993. The
MotorClothes products continue to be the fastest growing portion of the
parts and accessories' product lines, currently comprising approximately
35% of parts and accessories net sales.
The Transportation Vehicles segment recorded net sales of $281.7 million
during the first nine months of 1994, an increase of $76.4 million (37.2%)
compared to the first nine months of 1993. The Recreational Vehicles
division generated the majority of the increase, primarily through volume
increases. The most recent Class A market share information available
(through July) indicates that industry registrations have increased 21.3%
compared to registrations of the Recreational Vehicles division's products
which are up 43.8% during the same period. Most of the volume increases
were generated by the division's lower-end Class A Endeavor and Vacationer
models. The division has not seen the same result in its towable product
registrations, which are up 14.5% for the first seven months of 1994,
compared to industry registrations, which are up 19.9%.
The Commercial Vehicles division generated net sales of $69.9 million
during the first three quarters of 1994, a $14.9 million (27.2%) increase
over the same period in 1993. The division benefitted from a 9.1% volume
increase and a shift in mix toward higher priced walk-in units.
Consolidated Gross Profit
For the Nine Month Periods Ended September 25, 1994 and September 26, 1993
(Dollars in Millions)
Gross Gross
Profit Profit
Dollars Dollars Percent Percent
1994 1993 Change 1994 1993
Motorcycles and
Related Products $260.7 $209.7 $51.0 30.8% 30.7%
Transportation
Vehicles 49.4 32.8 16.6 17.6 16.0
Consolidated Harley-
Davidson, Inc. $310.1 $242.5 $67.6 27.5% 27.3%
The Company recorded consolidated gross profit of $310.1 million during
the first nine months of 1994, an increase of $67.6 million (27.9%).
The Motorcycle segment reported a $51.0 million (24.3%) increase for the
period. The segment's gross profit percentage remained virtually unchanged
at 30.8% for the period compared to the first nine months of 1993. This
margin stability occurred despite weather related overtime during the
first quarter of 1994 and additional costs throughout all of 1994
associated with the reorganizations and enhancements of the Motorcycle
segment's manufacturing facilities. The reorganizations and enhancements
are part of the Company's three year manufacturing strategy announced
during the third quarter of 1993.
The Transportation Vehicles segment recorded gross profit of $49.4 million
during the first six months of 1994, an increase of $16.6 million (50.8%)
compared to the first nine months of 1993. The Recreational Vehicles
division generated the majority of the increase, primarily through volume
increases. The Commercial Vehicles division benefitted from an increase in
volume and a shift in mix toward higher-margin walk-in units.
<PAGE>
Consolidated Operating Expenses
For the Nine Month Periods Ended September 25, 1994 and September 26, 1993
(Dollars in Millions)
Dollars Dollars Percent
1994 1993 Change Change
Motorcycles and
Related Products $140.8 $109.4 $31.4 28.7%
Transportation
Vehicles 42.4 35.2 7.2 20.5
Corporate 7.4 4.8 2.6 55.8
Consolidated Harley-
Davidson, Inc. $190.6 $149.4 $41.2 27.6%
Consolidated Operating expenses of $190.6 million for the first nine
months of 1994 increased $41.2 million (27.6%) compared to the first nine
months of 1993. The Motorcycle segment generated the majority of the
increase.
The Motorcycle segment recorded a $31.4 million (28.7%) increase in
operating expenses related primarily to volume increases. Other areas of
increase include product warranty, product liability and the VR Racing
(road racing) program.
The Transportation Vehicles segment increase was generally the result of
additional research and development and promotional programs. The
Recreational Vehicles division has been investing in research and
development and has added engineering expertise to its workforce in an
effort to update its current product lines. 1994 operating expense
benefitted from the elimination of approximately $2 million of goodwill
amortization related to the write-off of goodwill in the fourth quarter of
1993.
Consolidated income taxes
--------------------------
The Company's 1994 tax provision includes a one-time benefit of $4.6
million related to the legal reorganization of the Transportation Vehicles
segment which resulted in an effective tax rate for the first nine months
of 1994 of 34.7%. Excluding this benefit, the Company's effective tax rate
would have been approximately 38.5% compared to 40% for all of 1993.
Environmental
-------------
The Company's policy is to comply with applicable environmental laws and
regulations. The Company has a compliance program in place to monitor, and
report on, environmental issues. The Company is currently involved with
its former parent (Minstar) and the U.S. Navy in cost recovery litigation
surrounding the remediation of the Company's manufacturing facility in
York, PA. The Company currently estimates that it will be responsible for
approximately $4 million related to the remediation of the York facility.
The Company has established reserves for this amount (refer to footnote 3
to the accompanying condensed consolidated financial statements).
Recurring costs associated with managing hazardous substances and
pollution in on-going operations are not material.
The Company regularly invests in equipment to support and improve its
various manufacturing processes. While the Company considers environmental
matters in capital expenditure decisions, and while some capital
expenditures also act to improve environmental compliance, only a small
portion of the Company's annual capital expenditures relate to equipment
which has the sole purpose of environmental compliance. The Company
anticipates that capital expenditures for equipment used to limit
hazardous substances/ pollutants during 1994 will approximate $2 million.
Harley-Davidson, Inc.
Management's Discussion and Analysis of
Financial Condition and Results of Operations
Liquidity and Capital Resources as of September 25, 1994
Liquidity and Capital Resources as of September 25, 1994
--------------------------------------------------------
The Company generated $46.2 million of cash from operating activities
during the first nine months of 1994 compared to $49.5 million during the
same period in 1993. Cash flow from higher earnings during the first nine
months of 1994 was largely offset by a net increase in working capital
items, primarily accounts receivable. A majority of the increase in
accounts receivable is the result of typical shipping patterns during the
year. Accounts receivable as of the end of the third quarter of 1994
increased approximately 42% over the balance at the close of the third
quarter of 1993. This increase is the result of a 27% increase in
consolidated revenues and additional foreign receivables which generally
have longer terms. Additionally, during August, 1994, the Motorcycle
segment discontinued the practice of granting a 2% cash discount on
domestic parts and accessories sales. This change has resulted in the
slower collection of domestic parts and accessories balances.
Investing activities utilized approximately $52.2 million during the first
nine months of 1994, compared to $40.9 million for the same period in
1993. Capital expenditures amounted to $49.1 million and $30.7 million
during the first nine months of 1994 and 1993, respectively. The Company
anticipates 1994 capital expenditures will approximate $75-85 million. The
Company anticipates funding these expenditures with internally generated
funds.
The Company believes that available cash, cash flow from operations and
existing lines of credit will be sufficient to meet its normal operating
requirements.
The Company's Board of Directors declared three cash dividends during the
first nine months of 1994 including, most recently, a $.08 ($.04 on a
post-split basis) cash dividend declared on August 17, 1994, paid
September 12, 1994 to shareholders of record on August 29.
<PAGE>
Part II - OTHER INFORMATION
HARLEY-DAVIDSON, INC.
FORM 10-Q
September 25, 1994
Item 1. Legal Proceedings
--------------------------
The Company is involved with government agencies in various environmental
matters, including a matter involving soil and groundwater contamination
at its York, Pennsylvania motorcycle production facility (the Facility).
The Facility was formerly used by the U.S. Navy and AMF (the predecessor
corporation of Minstar Corporation), from whom the Company was purchased
in 1981. The Company has been investigating environmental contamination
at certain areas of the Facility in conjunction with the Pennsylvania
Department of Environmental Resources and believes it will be required to
investigate further and remediate contamination at these areas, and
possibly at other areas, of the Facility. Although considerable
uncertainty remains over the nature and scope of environmental remediation
that will ultimately be required at the Facility, based on the information
currently available to the Company, the Company does not believe its
potential liability relating to this matter will have a material effect on
the Company's financial condition. In addition, the Company has continued
to litigate against the Navy and Minstar/AMF over the extent of their
liability to the Company for this matter. While ultimate shares of
responsibility have not yet been established, the Company believes that
the Navy and Minstar/AMF will be liable for a substantial portion of the
on-going investigation and future cleanup of the Facility.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
3.1 Bylaws of the Registrant
27 Financial Data Schedules
(b) Reports on Form 8-K
None
<PAGE>
Part II - Other Information
HARLEY-DAVIDSON, INC.
Form 10-Q
September 25, 1994
Signatures
Pursuant to the requirements of the Securities and Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.
HARLEY-DAVIDSON, INC.
Date: November 8, 1994 /s/ James L. Ziemer
James L. Ziemer
Vice President and Chief Financial
Officer (Principal Financial Officer)
November 8, 1994 /s/ James M. Brostowitz
James M. Brostowitz
Vice President, Controller (Principal
Accounting Officer) and Treasurer
<PAGE>
Exhibit Index
Exhibit No. Description Page
3 Bylaws of the Registrant 18-
27 Financial Data Schedules ____
BY-LAWS
OF
HARLEY-DAVIDSON, INC.
(a Wisconsin corporation)
(as amended through August 17, 1994)
ARTICLE I. SHAREHOLDERS
1.01. Annual Meeting. The annual meeting of the shareholders of
the corporation (the "Annual Meeting") shall be held at such time and date
as may be fixed by or under the authority of the Board of Directors, for
the purpose of electing directors and for the transaction of such other
business as may properly come before the Annual Meeting. If the election
of directors shall not be held on the day fixed as herein provided for any
Annual Meeting, or at any adjournment thereof, the Board of Directors
shall cause the election to be held at a special meeting of the
shareholders (a "Special Meeting") as soon thereafter as conveniently may
be. In fixing a meeting date for any Annual Meeting, the Board of
Directors may consider such factors as it deems relevant within the good
faith exercise of its business judgment.
1.02. Special Meetings.
(a) A Special Meeting may be called only by the Board of Directors
pursuant to a resolution adopted by a majority of the entire Board of
Directors and shall be called by the Board of Directors upon the demand,
in accordance with this Section 1.02, of the holders of record of shares
representing at least 10% of all the votes entitled to be cast on any
issue proposed to be considered at the Special Meeting.
(b) In order that the corporation may determine the shareholders
entitled to demand a Special Meeting, the Board of Directors may fix a
record date to determine the shareholders entitled to make such a demand
(the "Demand Record Date"). The Demand Record Date shall not precede the
date upon which the resolution fixing the Demand Record Date is adopted by
the Board of Directors and shall not be more than 10 days after the date
upon which the resolution fixing the Demand Record Date is adopted by the
Board of Directors. Any shareholder of record seeking to have
shareholders demand a Special Meeting shall, by sending written notice to
the Secretary of the corporation by hand or by certified or registered
mail, return receipt requested, request the Board of Directors to fix a
Demand Record Date. The Board of Directors shall promptly, but in all
events within 10 days after the date on which a valid request to fix a
Demand Record Date is received, adopt a resolution fixing the Demand
Record Date and shall make a public announcement of such Demand Record
Date. If no Demand Record Date has been fixed by the Board of Directors
within 10 days after the date on which such request is received by the
Secretary, the Demand Record Date shall be the 10th day after the first
day on which a valid written request to set a Demand Record Date is
received by the Secretary. To be valid, such written request shall set
forth the purpose or purposes for which the Special Meeting is to be held,
shall be signed by one or more shareholders of record (or their duly
authorized proxies or other representatives), shall bear the date of
signature of each such shareholder (or proxy or other representative) and
shall set forth all information about each such shareholder and about the
beneficial owner or owners, if any, on whose behalf the request is made
that would be required to be set forth in a shareholder's notice described
in Article IX of the Restated Articles of Incorporation.
(c) In order for a shareholder or shareholders to demand a Special
Meeting, a written demand or demands for a Special Meeting by the holders
of record as of the Demand Record Date of shares representing at least 10%
of all the votes entitled to be cast on any issue proposed to be
considered at the Special Meeting must be delivered to the corporation.
To be valid, each written demand by a shareholder for a Special Meeting
shall set forth the specific purpose or purposes for which the Special
Meeting is to be held (which purpose or purposes shall be limited to the
purpose or purposes set forth in the written request to set a Demand
Record Date received by the corporation pursuant to paragraph (b) of this
Section 1.02), shall be signed by one or more persons who as of the Demand
Record Date are shareholders of record (or their duly authorized proxies
or other representatives), shall bear the date of signature of each such
shareholder (or proxy or other representative), and shall set forth the
name and address, as they appear in the corporation's books, of each
shareholder signing such demand and the class or series and number of
shares of the corporation which are owned of record and beneficially by
each such shareholder, shall be sent to the Secretary by hand or by
certified or registered mail, return receipt requested, and shall be
received by the Secretary within 70 days after the Demand Record Date.
(d) The corporation shall not be required to call a Special Meeting
upon shareholder demand unless, in addition to the documents required by
paragraph (c) of this Section 1.02, the Secretary receives a written
agreement signed by each Soliciting Shareholder (as defined herein),
pursuant to which each Soliciting Shareholder, jointly and severally,
agrees to pay the corporation's costs of holding the Special Meeting,
including the costs of preparing and mailing proxy materials for the
corporation's own solicitation, provided that if each of the resolutions
introduced by any Soliciting Shareholder at such meeting is adopted, and
each of the individuals nominated by or on behalf of any Soliciting
Shareholder for election as director at such meeting is elected, then the
Soliciting Shareholders shall not be required to pay such costs. For
purposes of this paragraph (d), the following terms shall have the
meanings set forth below:
(i) "Affiliate" shall have the meaning assigned to such term in
Rule 12b-2 promulgated under the Securities Exchange Act of 1934, as
amended (the "Exchange Act").
(ii) "Participant" shall have the meaning assigned to such term
in Rule 14a-11 promulgated under the Exchange Act.
(iii) "Person" shall mean any individual, firm, corporation,
partnership, joint venture, association, trust, unincorporated
organization or other entity.
(iv) "Proxy" shall have the meaning assigned to such term in
Rule 14a-1 promulgated under the Exchange Act.
(v) "Solicitation" shall have the meaning assigned to such term
in Rule 14a-11 promulgated under the Exchange Act.
(vi) "Soliciting Shareholder" shall mean, with respect to any
Special Meeting demanded by a shareholder or shareholders, any of the
following Persons:
(A) if the number of shareholders signing the demand or
demands for a meeting delivered to the corporation pursuant to
paragraph (c) of this Section 1.02 is 10 or fewer, each
shareholder signing any such demand;
(B) if the number of shareholders signing the demand or
demands for a meeting delivered to the corporation pursuant to
paragraph (c) of this Section 1.02 is more than 10, each Person
who either (I) was a Participant in any Solicitation of such
demand or demands or (II) at the time of the delivery to the
corporation of the documents described in paragraph (c) of this
Section 1.02, had engaged or intended to engage in any
Solicitation of Proxies for use at such Special Meeting (other
than a Solicitation of Proxies on behalf of the corporation); or
(C) any Affiliate of a Soliciting Shareholder, if a
majority of the directors then in office determine, reasonably
and in good faith, that such Affiliate should be required to
sign the written notice described in paragraph (c) of this
Section 1.02 and/or the written agreement described in this
paragraph (d) in order to prevent the purposes of this Section
1.02 from being evaded.
(e) Except as provided in the following sentence, any Special
Meeting shall be held at such hour and day as may be designated by the
Board of Directors. In the case of any Special Meeting called by the
Board of Directors upon the demand of shareholders (a "Demand Special
Meeting"), the date of the Demand Special Meeting shall be not more than
70 days after the Meeting Record Date (as defined in Section 1.05 of these
by-laws); provided that in the event that the directors then in office
fail to designate an hour and date for a Demand Special Meeting within 10
days after the date that valid written demands for such meeting by the
holders of record as of the Demand Record Date of shares representing at
least 10% of all the votes entitled to be cast on any issue proposed to be
considered at the Special Meeting are delivered to the corporation (the
"Delivery Date"), then such meeting shall be held at 2:00 pm. (local time)
on the 100th day after the Delivery Date or, if such 100th day is not a
Business Day (as defined below), on the first preceding Business Day. In
fixing a meeting date for any Special Meeting, the Board of Directors may
consider such factors as it deems relevant within the good faith exercise
of its business judgment, including, without limitation, the nature of the
action proposed to be taken, the facts and circumstances surrounding any
demand for such meeting, and any plan of the Board of Directors to call an
Annual Meeting or a Special Meeting.
(f) The corporation may engage independent inspectors of elections
to act as an agent of the corporation for the purpose of promptly
performing a ministerial review of the validity of any purported written
demand or demands for a Special Meeting received by the Secretary. For
the purpose of permitting the inspectors to perform such review, no
purported demand shall be deemed to have been delivered to the corporation
until the earlier of (i) 5 Business Days following receipt by the
Secretary of such purported demand and (ii) such date as the independent
inspectors certify to the corporation that the valid demands received by
the Secretary represent at least 10% of all the votes entitled to be cast
on each issue proposed to be considered at the Special Meeting. Nothing
contained in this paragraph shall in any way be construed to limit the
ability of the Board of Directors or any shareholder to contest the
validity of any demand, whether during or after such 5 Business Day
period, or to take any other action (including, without limitation, the
commencement, prosecution or defense of any litigation with respect
thereto).
(g) For purposes of these by-laws, "Business Day" shall mean any day
other than a Saturday, a Sunday or a day on which banking institutions in
the State of Wisconsin are authorized or obligated by law or executive
order to close.
1.03. Place of Meeting. The Board of Directors may designate any
place, either within or without the State of Wisconsin, as the place of
meeting for any Annual Meeting or for any Special Meeting, or for any
postponement thereof. Any meeting may be adjourned to reconvene at any
place designated by vote of the Board of Directors.
1.04. Notice of Meeting. Written notice stating the place, day
and hour of any Annual Meeting or Special Meeting shall be delivered not
less than 10 (unless a longer period is required by law) nor more than 70
days before the date of such meeting. In the event of any Demand Special
Meeting, such notice of meeting shall be sent not more than 30 days after
the Delivery Date. Unless otherwise required by the law, a notice of an
Annual Meeting need not include a description of the purpose for which the
meeting is called. In the case of any Special Meeting, (a) the notice of
meeting shall describe any business that the Board of Directors shall have
theretofore determined to bring before the meeting and (b) in the case of
a Demand Special Meeting, the notice of meeting shall describe any
business set forth in the statement of purpose of the demands received by
the corporation in accordance with Section 1.02 of these by-laws.
1.05. Fixing of Record Date. The Board of Directors may fix in
advance a date not less than 10 days and not more than 70 days prior to
the date of any Annual Meeting or Special Meeting as the record date for
the determination of shareholders entitled to notice of, or to vote at,
such meeting (the "Meeting Record Date"). In the case of any Demand
Special Meeting, (i) the Meeting Record Date shall be not later than the
30th day after the Delivery Date and (ii) if the Board of Directors fails
to fix the Meeting Record Date within 30 days after the Delivery Date,
then the close of business on such 30th day shall be the Meeting Record
Date. The shareholders of record on the Meeting Record Date shall be the
shareholders entitled to notice of and to vote at the meeting.
1.06. Adjournment. In the absence of a quorum, any officer
entitled to preside at or to act as secretary of the meeting shall have
power to adjourn the meeting from time to time until a quorum is present.
1.07. No Nominee Procedures. The corporation has not
established, and nothing in these by-laws shall be deemed to establish,
any procedure by which a beneficial owner of the corporation's shares that
are registered in the name of a nominee is recognized by the corporation
as the shareholder under Section 180.0723 of the Wisconsin Business
Corporation Law.
ARTICLE II. BOARD OF DIRECTORS
2.01. Regular Meetings. Regular meetings of the Board of
Directors shall be held at such times and places as may from time to time
be fixed by the Board of Directors or as may be specified in a notice of
meeting.
2.02. Special Meetings. Special meetings of the Board of
Directors may be held at any time upon the call of the Chief Executive
Officer and shall be called by the Chief Executive Officer or Secretary if
directed by the Board of Directors.
2.03. Quorum. Except as otherwise provided by law or by the
Restated Articles of Incorporation or these by-laws, one-half of the
number of directors then in office shall constitute a quorum for the
transaction of business at any meeting of the Board of Directors, but a
majority of the directors present (though less than such quorum) may
adjourn the meeting from time to time without further notice.
2.04. Manner of Acting. The act of the majority of the directors
present at a meeting at which a quorum is present shall be the act of the
Board of Directors, unless the act of a greater number is required by law,
the Restated Articles of Incorporation, these by-laws or any contract or
agreement to which the corporation is a party.
2.05. Committees. There may be an Executive Committee. There
shall be an Audit Committee composed of independent directors. There
shall be a Compensation Committee composed of independent directors. The
Board of Directors by resolution adopted by the affirmative vote of a
majority of the number of directors then in office may create one or more
additional committees. Each committee shall have two or more members who
shall, unless otherwise provided by the Board of Directors, serve at the
plessure of the Board of Directors. Except as otherwise provided by law,
each committee, to the extent provided in the resolution of the Board of
Directors, shall have and may exercise such power and authority as the
Board of Directors shall specify.
2.06. Telephonic Meetings. Except as herein provided and
notwithstanding any place set forth in the notice of the meeting or these
by-laws, members of the Board of Directors (and any committee thereof) may
participate in regular or special meetings by, or through the use of, any
means of communication by which all participants may simultaneously hear
each other, such as by conference telephone.
2.07. Retirement. Notwithstanding that directors are elected for
a three year term, a director shall automatically cease to be a director
of the corporation effective upon the commencement of the Annual Meeting
immediately following such director's seventieth (70th) birthday. Each
director, other than a director who is serving or has served as the Chief
Executive Officer of the corporation, whose position of principal
employment, occupation or affiliation changes substantially, and each
director who develops a conflict of interest with the corporation as a
result of changes in the business of the corporation, such director's
personal interests or such director's principal employer, after his or her
most recent election to the Board of Directors shall submit his or her
resignation as a director of the corporation promptly following such
change, and the Board of Directors (without such director present if the
Board of Directors so chooses) shall consider whether to accept such
resignation in the interests of the corporation. A director who has
submitted his or her resignation shall not be entitled to vote upon the
acceptance or rejection of such resignation by the Board of Directors.
Resignations pursuant to this bylaw shall be effective immediately upon
acceptance by the Board of Directors or such later date as determined by
the Board of Directors.
ARTICLE III. OFFICERS
3.01. Officers. The principal officers of the corporation shall
be a Chief Executive Officer, a President, one or more Vice-Presidents, a
Secretary and a Treasurer, each of whom shall be elected by the Board of
Directors. Such other officers and assistant officers as may be deemed
necessary may be elected or appointed by the Board of Directors. The
Board of Directors may also authorize any duly appointed officer to
appoint one or more officers or assistant officers. All officers shall
have the usual powers and shall have the usual duties incident to their
respective offices. All officers shall be subject to the supervision and
direction of the Board of Directors. The authority, duties or
responsibilities of any officer may be suspended by the Chief Executive
Officer or President with or without cause.
3.02. Removal. The Board of Directors may remove any officer
and, unless restricted by the Board of Directors or these by-laws, an
officer may remove any officer or assistant officer appointed by that
officer, at any time, with or without cause.
ARTICLE IV. GENERAL PROVISIONS
4.01. Notices. Whenever any statute, the Restated Articles of
Incorporation or these by-laws requires notice to be given to any director
or shareholder, such notice may be given in writing by mail, addressed to
such director or shareholder at his address as it appears on the records
of the corporation, with postage thereon prepaid. Any such notice shall be
deemed to have been given when it is deposited in the United States mail.
Notice to directors may also be given by telegram.
4.02. Fiscal Year. The fiscal year of the corporation shall be
fixed by the Board of Directors.
ARTICLE V. INDEMNIFICATION
5.01. Provision of Indemnification. The corporation shall, to
the fullest extent permitted or required by Sections 180.0850 to 180.0859,
inclusive, of the Wisconsin Business Corporation Law, including any
amendments thereto (but in the case of any such amendment, only to the
extent such amendment permits or requires the corporation to provide
broader indemnification rights than prior to such amendment), indemnify
its Directors and Officers against any and all Liabilities, and advance
any and all reasonable Expenses, incurred thereby in any Proceedings to
which any such Director or Officer is a Party because he or she is or was
a Director or Officer of the corporation. The corporation shall also
indemnify an employee who is not a Director or Officer, to the extent that
the employee has been successful on the merits or otherwise in defense of
a Proceeding, for all Expenses incurred in the Proceeding if the employee
was a Party because he or she is or was an employee of the corporation.
The rights to indemnification granted hereunder shall not be deemed
exclusive of any other rights to indemnification against Liabilities or
the advancement of Expenses which a Director, Officer or employee may be
entitled under any written agreement, Board of Directors resolution, vote
of shareholders, the Wisconsin Business Corporation Law or otherwise. The
corporation may, but shall not be required to, supplement the foregoing
rights to indemnification against Liabilities and advancement of Expenses
under this Section 5.01 by the purchase of insurance on behalf of any one
or more of such Directors, Officers or employees, whether or not the
corporation would be obligated to indemnify or advance Expenses to such
Director, Officer or employee under this Section 5.01. All capitalized
terms used in this Section 5.01 and not otherwise defined herein shall
have the meaning set forth in Section 180.0850 of the Wisconsin Business
Corporation Law.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS OF HARLEY-DAVIDSON,
INC. AS OF AND FOR THE NINE MONTHS ENDED SEPTEMBER 25, 1994 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-START> JAN-01-1994
<PERIOD-END> SEP-25-1994
<CASH> 63,293
<SECURITIES> 0
<RECEIVABLES> 158,254
<ALLOWANCES> (1,500)
<INVENTORY> 159,473
<CURRENT-ASSETS> 408,077
<PP&E> 459,793
<DEPRECIATION> (231,454)
<TOTAL-ASSETS> 696,085
<CURRENT-LIABILITIES> 212,634
<BONDS> 0
<COMMON> 771
0
0
<OTHER-SE> 401,465
<TOTAL-LIABILITY-AND-EQUITY> 696,085
<SALES> 1,129,103
<TOTAL-REVENUES> 1,129,103
<CGS> 818,943
<TOTAL-COSTS> 818,943
<OTHER-EXPENSES> 190,638
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 230
<INCOME-PRETAX> 121,313
<INCOME-TAX> 42,106
<INCOME-CONTINUING> 79,207
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 79,207
<EPS-PRIMARY> 1.04
<EPS-DILUTED> 1.04
</TABLE>
