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 June 29, 1997
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 1-9183
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)
(Registrant's telephone number, including area code) (414) 342-4680
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 August 1, 1997 75,888,881 Shares
<PAGE>
HARLEY-DAVIDSON, INC.
Form 10-Q Index
For the Quarter Ended June 29, 1997
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 4. Submission of Items to a Vote of
Security Holders 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
Harley-Davidson, Inc.
Condensed Consolidated Statements of Income
(Unaudited)
(In thousands, except per share amounts)
Three months ended Six months ended
June 29, June 30, June 29, June 30,
1997 1996 1997 1996
Sales $444,085 $392,804 $871,180 $763,855
Cost of goods sold 293,766 267,943 582,647 523,217
------- ------- ------- -------
Gross profit 150,319 124,861 288,533 240,638
Operating income from
financial services 3,346 1,990 5,565 3,722
Operating expenses (79,875) (63,742) (157,660) (127,226)
------- ------- ------- -------
Income from operations 73,790 63,109 136,438 117,134
Interest income - net 2,092 835 3,666 430
Other income (expense) - net 2,188 (532) 2,003 (1,781)
------- ------- ------- -------
Income before provision
for income taxes 78,070 63,412 142,107 115,783
Provision for income taxes 28,886 23,464 52,581 42,841
------- ------- ------- -------
Net income $ 49,184 $ 39,948 $ 89,526 $ 72,942
======= ======= ======= =======
Weighted average common
shares outstanding 75,779 75,475 75,737 75,294
======= ======= ======= =======
Net income per common share $0.65 $0.53 $1.18 $0.97
==== ==== ==== ====
Cash dividends per share $0.07 $0.05 $0.13 $0.10
==== ==== ==== ====
<PAGE>
Harley-Davidson, Inc.
Condensed Consolidated Balance Sheets
(In thousands)
ASSETS
June 29, Dec. 31, June 30,
1997 1996 1996
(Unaudited) (Unaudited)
Current assets:
Cash and cash equivalents $ 144,474 $ 142,479 $ 96,273
Accounts receivable, net 198,707 141,315 159,256
Inventories (Note 2) 101,437 101,386 80,316
Notes receivable - - 10,689
Other current assets 40,898 44,141 29,715
Net assets from
discontinued operations - - 15,752
------- ------- -------
Total current assets 485,516 429,321 392,001
Finance receivables, net 396,290 338,072 251,542
Property, plant and
equipment, net 454,058 409,434 308,186
Goodwill 39,801 40,900 42,029
Other assets 97,708 102,258 84,512
Net assets from
discontinued operations - - 26,105
--------- --------- ---------
$1,473,373 $1,319,985 $1,104,375
========= ========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable $ - $ 2,580 $ 1,197
Accounts payable 117,405 100,699 96,565
Accrued expenses and
other 170,716 160,315 137,988
------- ------- -------
Total current
liabilities 288,121 263,594 235,750
Finance debt 306,325 258,065 180,089
Postretirement health care
benefits 67,167 65,801 64,514
Other long-term liabilities 70,021 69,805 51,006
Contingencies (Note 4)
Total shareholders' equity 741,739 662,720 573,016
--------- --------- ---------
$1,473,373 $1,319,985 $1,104,375
========= ========= =========
<PAGE>
Harley-Davidson, Inc.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
(In thousands)
Six months ended
June 29, June 30,
1997 1996
Cash flows from operating activities:
Net income $ 89,526 $ 72,942
Depreciation and amortization 33,370 25,668
Long-term employee benefits 2,557 2,168
Other-net 2,256 3,145
Net change in discontinued operations - 11,103
Net change in other current assets
and current liabilities (27,093) (23,735)
------- -------
Net cash provided by operating
activities 100,616 91,291
Cash flows from investing activities:
Purchase of property and equipment (76,279) (47,542)
Finance receivables acquired or
originated (577,542) (548,530)
Finance receivables collected/sold 518,042 517,590
Proceeds from disposition of
discontinued segment - 24,661
Net change in discontinued operations - (1,207)
Other - net (2,914) (13,956)
------- -------
Net cash used in investing activities (138,693) (68,984)
Cash flows from financing activities:
Net decrease in notes payable (2,580) (1,494)
Net increase in finance debt 48,260 15,759
Dividends paid (10,108) (7,806)
Issuance of stock under employee
stock and option plans 4,500 14,592
Net change in discontinued
operations - 21,453
------- -------
Net cash provided by financing
activities 40,072 42,504
------- -------
Net increase in cash and cash
equivalents 1,995 64,811
Cash and cash equivalents:
At beginning of period 142,479 31,462
------- -------
At end of period $144,474 $ 96,273
======= =======
<PAGE>
HARLEY-DAVIDSON, INC.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Note 1 - Basis of Presentation and Use of Estimates
The condensed interim consolidated financial statements included herein
have been prepared by Harley-Davidson, Inc. (the "Company") without audit.
Certain information and footnote disclosures normally included in complete
financial statements have been condensed or omitted pursuant to the rules
and regulations of the Securities and Exchange Commission and generally
accepted accounting principles for interim financial information. 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 June 29, 1997 and June 30, 1996, and the results of
operations for the three- and six-month periods then ended. Certain
prior-year balances have been reclassified in order to conform to current-
year presentation. 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, 1996.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements
and accompanying notes. Actual results could differ from those estimates.
Note 2 - Inventories
The Company values its inventories at the lower of cost, principally using
the last-in, first-out (LIFO) method, or market. Inventories consist of
the following (in thousands):
June 29, Dec. 31, June 30,
1997 1996 1996
Components at the lower of cost,
first-in, first-out (FIFO), or
market:
Raw material & work-in-
process $ 32,759 $ 33,275 $ 28,458
Finished goods 31,648 26,331 18,492
Parts & accessories 59,006 62,502 54,195
------- ------- -------
123,413 122,108 101,145
Excess of FIFO over LIFO 21,976 20,722 20,829
------- ------- -------
Inventories as reflected in
the accompanying condensed
consolidated balance sheets $101,437 $101,386 $ 80,316
======= ======= =======
Note 3 - Supplemental noncash investing activities
During 1996, the Company completed the sale of the Transportation Vehicles
segment resulting in a $22.6 million gain, net of applicable income taxes,
or $.30 per share, which was recorded in the fourth quarter. During the
first quarter of 1996, a division of the Transportation Vehicles segment
was sold for approximately $23 million in cash, $3 million in preferred
stock of the buyer, Monaco Coach Corporation ("Monaco"), a $12 million
note from a Monaco subsidiary guaranteed by Monaco and assumption by
Monaco of certain liabilities of the acquired operations in the
approximate amount of $47 million. The note was paid in full during the
third quarter of 1996.
Note 4 - 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 in undertaking certain investigation
and remediation activities. In March 1995, the Company entered into a
settlement agreement (the Agreement) with the Navy. The Agreement calls
for the Navy and the Company to contribute amounts into a trust equal to
53% and 47%, respectively, of future costs associated with investigation
and remediation activities at the Facility (response costs). The trust
will administer the payment of the future response costs at the Facility
as covered by the Agreement. 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 response 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 settlement
agreement with the Navy and the settlement agreement with Minstar, the
Company estimates that it will incur approximately $6 million of net
additional response costs at the Facility. The Company has established
reserves for this amount. The Company's estimate of additional response
costs is based on reports of environmental consultants retained by the
Company, the actual costs incurred to date and the estimated costs to
complete the necessary investigation and remediation activities. Response
costs are expected to be incurred over a period of approximately 10 years.
Note 5 - Pending Accounting Change - Earnings per share
In February 1997, the Financial Accounting Standards Board issued
Statement No. 128, Earnings Per Share, which is required to be adopted on
December 31, 1997. At that time, the Company will be required to change
the method currently used to compute earnings per share and to restate all
prior periods. Under the new requirements for calculating basic earnings
per share, the dilutive effect of stock options will be excluded. The
impact of Statement 128 on the calculation of basic and diluted earnings
per share for the quarters ended June 29, 1997 and June 30, 1996 is not
expected to be material.
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Certain matters discussed in this Quarterly Report on Form 10-Q are
"forward-looking statements" intended to qualify for the safe harbors from
liability established by the Private Securities Litigation Reform Act of
1995. These forward-looking statements can generally be identified as
such because the context of the statement will include words such as the
Company "believes," "anticipates," "expects," or "estimates" or words of
similar meaning. Similarly, statements that describe the Company's future
plans, objectives or goals are also forward-looking statements. Such
forward-looking statements are subject to certain risks and uncertainties
which are described in close proximity to such statements and which could
cause actual results to differ materially from those anticipated as of the
date of this report. Shareholders, potential investors and other readers
are urged to consider these factors in evaluating the forward-looking
statements and are cautioned not to place undue reliance on such forward-
looking statements. The forward-looking statements included herein are
only made as of the date of this report and the Company undertakes no
obligation to publicly update such forward-looking statements to reflect
subsequent events or circumstances.
Results of Operations for the Three Months Ended June 29, 1997
Compared to the Three Months Ended June 30, 1996
For the quarter ended June 29, 1997, consolidated net sales totaled $444.1
million, a $51.3 million or 13.1% increase over the same period last year.
Net income and earnings per share for 1997 were $49.2 million and $.65 on
75.8 million shares outstanding versus $39.9 million and $.53 on 75.5
million shares outstanding in 1996, increases of 23.1% and 22.6%,
respectively. All Harley-Davidson, Inc. sales are generated by the
Motorcycles and Related Products ("Motorcycles") segment.
Motorcycle Unit Shipments and Net Sales
For the Three-Month Periods Ended June 29, 1997 and June 30, 1996
Incr
1997 1996 (Decr) %
Motorcycle units (excluding
Buell) 33,965 30,852 3,113 10.1%
Net sales (in millions):
Motorcycles (excluding Buell) $351.3 $305.2 $46.1 15.1%
Motorcycle Parts and
Accessories 63.0 59.8 3.2 5.3
General Merchandise 19.4 18.5 .9 4.5
Other 10.4 9.3 1.1 11.1
Total Motorcycles and
Related Products $444.1 $392.8 $51.3 13.1%
The Motorcycles segment reported record second quarter net sales primarily
driven by a 10.1% increase in motorcycle unit shipments. The increase in
motorcycle unit shipments over the second quarter of 1996 was due to
higher average daily production rates and improved operating efficiencies.
During the second quarter of 1997, motorcycle production averaged 535
units per day versus 485 units per day in the same period last year. The
Company announced that it expects daily motorcycle production to average
approximately 540 units per day starting in the third quarter.
Parts and Accessories (P & A) revenue of $63.0 million was up $3.2 million
or 5.3% compared to the second quarter of 1996. At the annual dealer
meeting at the end of July, the largest P & A new product introduction was
well received by the Company's dealer network. The Company anticipates
that the P & A revenue growth for 1997 will approximate the growth rate in
motorcycle revenue.
General Merchandise sales, which includes clothing and collectibles,
totaled $19.4 million, up $.9 million, or 4.5%, compared to the second
quarter of 1997. The Company does not anticipate any further growth in
General Merchandise in 1997.
Buell Distribution Corporation, a wholly-owned subsidiary of the Company,
and the exclusive distributor of Buell Motorcycle Company (a 49% owned
subsidiary), increased sales (included in "Other" in the above table) to
approximately $10 million (1,020 units) in the second quarter of 1997 as
compared to approximately $8 million (899 units) during the same period in
1996. Buell motorcycles were introduced in Japan during the second
quarter of 1996 and were introduced in Europe during the first quarter of
1997.
Gross Profit
Gross profit increased $25.5 million, or 20.4%, compared to the second
quarter of 1996 primarily due to an increase in motorcycle volume. The
gross profit margin was 33.8% in 1997 as compared with 31.8% in 1996. The
increase in the gross profit percentage was primarily due to operating
efficiencies and a favorable product and market mix. Motorcycle shipments
had a greater mix of custom motorcycles as well as a greater mix of
international units sold through wholly owned distributors both of which
generate higher margins.
Operating Expenses
For the Three-Month Periods Ended June 29, 1997 and June 30, 1996
(Dollars in Millions)
Incr
1997 1996 (Decr) %
Motorcycles and Related
Products $77.9 $61.7 $16.2 26.1%
Corporate 2.0 2.0 0.0 0.0
Total operating expenses $79.9 $63.7 $16.2 25.3%
Total operating expenses increased $16.2 million, or 25.3%, compared to
the second quarter of 1996. The increase was largely related to increases
in engineering of approximately $6 million, information systems of
approximately $2 million, international operations of approximately $4
million and other increases due to motorcycle volume when compared to the
same period last year. The Company is in the midst of the most extensive
new product development program in the Company's history which is the
primary reason for the increase in engineering expenses.
Operating income from financial services
The operating income of the Financial Services (Eaglemark Financial
Services) segment was $3.3 million and $2.0 million in 1997 and 1996,
respectively. This increase was primarily due to increased retail
origination volume and corresponding increases in outstanding retail
receivables.
Other income (expense)
Included in other income for the second quarter of 1997 is a one-time
benefit related to the sale of the Monaco preferred stock which was
acquired from the sale of the Transportation Vehicles segment.
Consolidated income taxes
The Company's effective income tax rate was 37.0% for the second quarter
of 1997 and 1996.
Results of Operations for the Six Months Ended June 29, 1997
Compared to the Six Months Ended June 30, 1996
For the six month period ended June 29, 1997, the Company recorded net
sales of $871.2 million, a $107.3 million or 14.1% increase over the same
period last year. Net income and earnings per share were $89.5 million
and $1.18 on 75.8 million shares outstanding versus $72.9 million and $.97
on 75.3 million shares, increases of 22.7% and 21.6%, respectively.
Motorcycle Unit Shipments and Net Sales
For the Six-Month Periods Ended June 29, 1997 and June 30, 1996
Incr
1997 1996 (Decr) %
Motorcycle units (excluding
Buell) 66,825 60,923 5,902 9.7%
Net sales (in millions):
Motorcycles (excluding
Buell) $688.8 $602.2 $86.6 14.4%
Motorcycle Parts and
Accessories 117.5 107.1 10.4 9.7
General Merchandise 43.8 39.4 4.4 11.1
Other 21.1 15.2 5.9 38.9
Total Motorcycles and
Related Products $871.2 $763.9 $107.3 14.1%
The 14.1% increase in revenue was primarily attributable to additional
motorcycle unit shipments as worldwide demand for the Company's
motorcycles continues to exceed supply. The most recent information
available (through May) indicates a U.S. heavyweight (651+cc) market share
of 46.6% compared to 44.7% for the same period in 1996. This same market
has grown at a 9.5% rate year-to-date, while retail registrations for the
Company's motorcycles (excluding Buell motorcycles) increased 14.1%.
European data (through May) show the Company with a 5.8% share of the
heavyweight (651+cc) market, down from 6.5% for the same period in 1996.
The European market (651+cc) has grown at a 5.3% rate year-to-date, while
retail registrations for the Company's motorcycles were down 6.5% compared
to last year. The Company has focused, over the last two years, on
upgrading the European infrastructure by installing new information
systems, improving distribution, and developing a European management
team. The Company's sales have plateaued in Europe and the Company
believes it must provide more market specific products to increase its
market share. As a result, the Company is implementing programs to
deliver some market specific products by early 1998. Asia/Pacific (Japan
and Australia) data (through May) show the Company with an 18.0% share of
the heavyweight (651+cc) market, down from 20.2% for the same period in
1996. The Asia/Pacific market has grown at a 37.3% rate year-to-date,
while retail registrations for the Company's motorcycles increased 23.2%.
Parts and Accessories and General Merchandise sales increased 9.7% and
11.1% respectively, compared to the first six months of 1996.
Buell Distribution Corporation increased sales (included in "Other" in the
above table) to approximately $19 million (2,107 units) in the first six
months of 1997 as compared to approximately $12 million (1,421 units) in
the same period in 1996.
Gross Profit
Gross profit for the first six months of 1997 totaled $288.5
million, an increase of $47.9 million (19.9%) over the same period in
1996. The gross profit percentage was 33.1% in 1997 as compared with
31.5% for the first six months of 1996. The increase in the gross profit
percentage was primarily due to operating efficiencies, a decrease in
overtime, and a favorable product and market mix. Motorcycle shipments
had a greater mix of custom motorcycles as well as a greater mix of
international units sold through wholly owned distributors both of which
generate higher margins.
Operating Expenses
For the Six-Month Periods Ended June 29, 1997 and June 30, 1996
(Dollars in Millions)
Incr
1997 1996 (Decr) %
Motorcycles and Related
Products $153.1 $122.7 $30.4 24.7%
Corporate 4.6 4.5 0.1 2.4
Total operating expenses $157.7 $127.2 $30.5 23.9%
Total operating expenses of $157.7 million for the first six months of
1997 increased $30.5 million (23.9%) compared to the first six months of
1996. The increase was largely related to increases in engineering of
approximately $7 million, information systems of approximately $3 million,
international operations of approximately $6 million, product liability of
approximately $3 million and other increases due to motorcycle volume when
compared to the same period last year. The Company is in the midst of the
most extensive new product development program in the Company's history
which is the primary reason for the increase in engineering expenses.
Operating income from financial services
The operating income of the Financial Services segment was $5.6 million
and $3.7 million in 1997 and 1996, respectively. This increase was
primarily due to increased retail origination volume and corresponding
increases in outstanding retail receivables.
Other income (expense)
Included in other income is a one-time benefit related to the sale of the
Monaco preferred stock which was acquired from the sale of the
Transportation Vehicles segment.
Capitalized interest
The Company capitalized approximately $1.8 million of interest during the
first six months of 1997 in connection with its manufacturing expansion
initiatives. The Company anticipates that it will capitalize
approximately $1.9 million of additional interest during 1997.
Consolidated income taxes
The Company's effective income tax rate was 37.0% in the first six months
of 1997 and 1996.
Environmental
The Company's policy is to comply with all applicable environmental laws
and regulations, and the Company has a compliance program in place to
monitor, and report on, environmental issues. The Company has reached
settlement agreements with its former parent (Minstar, successor to AMF
Incorporated) and the U.S. Navy regarding groundwater remediation at the
Company's manufacturing facility in York, Pennsylvania and currently
estimates that it will incur approximately $6 million of net additional
costs related to the remediation effort. The Company has established
reserves for this amount. See Note 4 of the notes to 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 meeting environmental compliance
obligations. The Company anticipates that capital expenditures for
equipment used to limit hazardous substances/pollutants during 1997 will
approximate $1 million. The Company does not expect that these
expenditures related to environmental matters will have a material effect
on future operating results or cash flows.
Liquidity and Capital Resources as of June 29, 1997
The Company generated $100.6 million of cash from operating activities
during the first six months of 1997 compared to $91.3 million in the same
period in 1996. Net income adjusted for depreciation contributed $122.9
million. This was offset by an increase in the Motorcycles segment's
accounts receivable of $57.4 million compared to December 31, 1996. The
following is a comparison of accounts receivable balances:
June 29, 1997 Dec. 31, 1996 June 30, 1996 Dec. 31, 1995
Domestic $118.3 $ 59.5 $102.6 $ 53.6
Foreign 80.4 81.8 56.7 75.3
----- ----- ----- -----
$198.7 $141.3 $159.3 $128.9
Historically, worldwide June accounts receivable are higher than worldwide
December accounts receivable as a result of motorcycle volume increases,
the annual shutdown during the last week of December and heavy shipments
in June reflecting the end of the model year. Foreign accounts receivable
increased $23.7 million when compared to June 30, 1996 primarily due to
extended terms granted to European dealers. The Company is reviewing
various European floorplanning programs which would be similar to those
available in the United States.
Capital expenditures amounted to $76.3 million and $47.5 million during
the first six months of 1997 and 1996, respectively. The Company is
pursuing a long-term manufacturing strategy to increase its motorcycle
production capacity with a goal of having the capacity to manufacture in
excess of 200,000 units per year by 2003. The strategy includes expansion
in and near the Company's existing facilities and construction of a new
manufacturing facility in Kansas City, Missouri. Construction of the
Kansas City facility is on schedule and the first production is expected
to occur in the first quarter of 1998.
The following are forward looking statements: Due in part to this long-
term manufacturing strategy, the Company anticipates 1997 capital
expenditures will approximate $190-$210 million. Although the Company
does not know the exact range of capital it will spend, it estimated the
capital required in 1998 and 1999 will be in the range of $160-$180
million and $120-$140 million per year, respectively. The Company
currently estimates it will have the capacity to produce at least 131,000
motorcycles in 1997, more than 145,000 motorcycles in 1998 and more than
160,000 motorcycles in 1999. The Company anticipates it will have the
ability to fund all capital expenditures with internally generated funds
and short-term financing.
The Company's ability to reach these production capacity levels will
depend upon, among other factors, the Company's ability to (i) continue to
realize efficiencies in the utilization of existing facilities through
implementation of innovative manufacturing techniques and other means,
(ii) implement additions and changes to existing facilities, (iii)
construct the new manufacturing facility such that it will be operational
in 1998 and (iv) work with existing and new suppliers to expand their
capacity. However, there is no assurance that the Company will continue
to find means to realize additional efficiencies. In addition, the
Company could experience delays in making additions and changes to
existing facilities and/or constructing the new manufacturing facility as
a result of risks normally associated with the construction and operation
of new manufacturing facilities, including unanticipated problems in
construction, delays in the delivery of machinery and equipment or
difficulties in making such machinery and equipment operational, work
stoppages, difficulties with suppliers, natural causes or other factors.
These risks, potential delays and uncertainties regarding the actual costs
of the measures the Company intends to take to implement its strategy
could also impact adversely the capital expenditure estimates referred to
above. Moreover, there is no assurance that the Company will have the
ability to sell all of the motorcycles it has the capacity to produce.
The Company (excluding Eaglemark Financial Services, Inc.) currently has
nominal levels of long-term debt and has lines of credit of approximately
$46 million, of which approximately $40 million remained available at June
29, 1997.
Eaglemark finances its business through a secured commercial paper
program, a revolving credit facility, a commercial paper conduit facility
and asset-backed securitizations. Eaglemark issues short-term commercial
paper secured by wholesale motorcycle finance receivables with maximum
issuance available of $175 million of which approximately $101 million was
outstanding at June 29, 1997. Maturities of commercial paper issued range
from 1 to 60 days. Eaglemark has in place a $150 million revolving credit
facility, of which approximately $139 million was outstanding at June 29,
1997, to fund primarily United States and Canadian retail loan
originations. Borrowings under the facility are limited to 110% of the
outstanding loan balance of eligible receivables. The amount of net
eligible receivables at June 29, 1997 was approximately $166 million.
Eaglemark also has a $75 million commercial paper conduit facility, of
which approximately $66 million was outstanding at June 29, 1997, secured
by the outstanding loan balance of eligible retail motorcycle receivables.
The amount of net eligible receivables at June 29, 1997 was approximately
$69 million. During the second quarter, Eaglemark securitized and sold
approximately $100 million of its retail motorcycle installment loans to
investors with limited recourse with servicing rights being retained by
Eaglemark. The Company expects that the future growth of Eaglemark will
be primarily financed from internally generated funds, additional capital
contributions from the Company, bank lines of credit, and continuation of
its commercial paper and securitization programs.
The Company has continuing authorization from its Board of Directors to
repurchase up to 2,350,000 shares of the Company's outstanding common
stock.
The Company's Board of Directors declared two cash dividends during the
first six months of 1997 including, most recently, a $.07 per share cash
dividend declared on May 3, 1997 payable June 27, 1997 to shareholders of
record June 16.
<PAGE>
Part II - OTHER INFORMATION
HARLEY-DAVIDSON, INC.
FORM 10-Q
June 29, 1997
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 facility. See footnote 4 to the accompanying
condensed consolidated financial statements.
Item 4. Submission of Items to a Vote of Security Holders
(a) The Company's Annual Meeting of Shareholders was held on May
3, 1997.
(b) At the Company's Annual Meeting of Shareholders, the
following directors were elected for terms expiring in 2000
by the vote indicated:
Shares
Shares Voted Withholding
in Favor of Authority
Vaughn L. Beals, Jr. 64,552,189 2,520,498
Jeffrey L. Bleustein 64,569,241 2,503,446
Donald A. James 64,568,592 2,504,095
James A. Norling 64,691,750 2,380,937
(c) Matters other than election of directors, brought for vote
at the Company's Annual Meeting of Shareholders, passed by
the vote indicated.
Shares Voted
For Against Abstained
Ratification of Ernst & Young LLP
as the Company's independent
auditors 66,771,331 139,428 161,928
There were no broker non-votes with respect to the foregoing
matters.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
27 Financial Data Schedule for June 29, 1997
(b) Reports on Form 8-K
None
<PAGE>
Part II - Other Information
HARLEY-DAVIDSON, INC.
Form 10-Q
June 29, 1997
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: 8/13/97 by: /s/ James L. Ziemer
James L. Ziemer
Vice President and Chief Financial
Officer (Principal Financial Officer)
8/13/97 by: /s/ James M. Brostowitz
James M. Brostowitz
Vice President, Controller (Principal
Accounting Officer) and Treasurer
<PAGE>
Exhibit Index
Exhibit No. Description Page
27 Financial Data Schedule for June 29, 1997 17
<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 SIX MONTHS ENDED JUNE 29,1997 AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> JUN-29-1997
<CASH> 144,474
<SECURITIES> 0
<RECEIVABLES> 200,625
<ALLOWANCES> 1,918
<INVENTORY> 101,437
<CURRENT-ASSETS> 485,516
<PP&E> 783,438
<DEPRECIATION> 329,380
<TOTAL-ASSETS> 1,473,373
<CURRENT-LIABILITIES> 288,121
<BONDS> 0
<COMMON> 783
0
0
<OTHER-SE> 740,956
<TOTAL-LIABILITY-AND-EQUITY> 1,473,373
<SALES> 871,180
<TOTAL-REVENUES> 871,180
<CGS> 582,647
<TOTAL-COSTS> 582,647
<OTHER-EXPENSES> (2,003)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (3,666)
<INCOME-PRETAX> 142,107
<INCOME-TAX> 52,581
<INCOME-CONTINUING> 89,526
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 89,526
<EPS-PRIMARY> 1.18
<EPS-DILUTED> 1.18
</TABLE>
