-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, DjDjZ8ppDV0CzLkdD4tEgFF3eN+w6jwznNiFyWH+9MSvgLesA1ttxqD+n9fTeipF 2T4wkHKkReUiDL9eTuiUVw== 0000897069-96-000231.txt : 19960808 0000897069-96-000231.hdr.sgml : 19960808 ACCESSION NUMBER: 0000897069-96-000231 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19960630 FILED AS OF DATE: 19960807 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: HARLEY DAVIDSON INC CENTRAL INDEX KEY: 0000793952 STANDARD INDUSTRIAL CLASSIFICATION: MOTORCYCLES, BICYCLES & PARTS [3751] IRS NUMBER: 391382325 STATE OF INCORPORATION: WI FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-09183 FILM NUMBER: 96604952 BUSINESS ADDRESS: STREET 1: 3700 W JUNEAU AVE CITY: MILWAUKEE STATE: WI ZIP: 53208 BUSINESS PHONE: 4143424680 10-Q 1 HARLEY-DAVIDSON, INC. FORM 10-Q 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 30, 1996 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 2, 1996 75,551,273 Shares HARLEY-DAVIDSON, INC. Form 10-Q Index For the Quarter Ended June 30, 1996 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 8-13 Part II. Other Information Item 1. Legal Proceedings 14 Item 4. Submission of Items to a Vote of Security Holders 14 Item 6. Exhibits and Reports on Form 8-K 14 Signatures 15 Exhibit Index 16 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 30, June 25, June 30, June 25, 1996 1995 1996 1995 Sales $392,804 $355,631 $763,855 $650,517 Cost of goods sold 267,943 245,890 523,217 450,385 -------- ------- ------- ------- Gross profit 124,861 109,741 240,638 200,132 Operating income from financial services 1,990 1,001 3,722 1,652 Selling, administrative and engineering expenses (63,742) (57,339) (127,226) (109,124) -------- -------- -------- -------- Income from operations 63,109 53,403 117,134 92,660 Interest income (expense) - net 835 (281) 430 58 Other income (expense) - net (532) (868) (1,781) (2,831) -------- -------- -------- -------- Income from continuing operations before provision for income taxes 63,412 52,254 115,783 89,887 Provision for income taxes 23,464 19,061 42,841 32,879 -------- -------- -------- -------- Income from continuing operations 39,948 33,193 72,942 57,008 Gain from discontinued operations, net of tax - 189 - 4 ------- ------- ------- ------- Net income $ 39,948 $ 33,382 $ 72,942 $ 57,012 ======= ======= ======= ======= Weighted average common shares outstanding 75,475 74,751 75,294 75,379 ====== ====== ====== ====== Net income per common share: Income from continuing operations $0.53 $0.45 $0.97 $0.76 Gain from discontinued operations, net of tax - - - - ----- ----- ----- ----- Net income $0.53 $0.45 $0.97 $0.76 ===== ===== ===== ===== Cash dividends per share $0.05 $0.04 $0.10 $0.08 ===== ===== ===== ===== Harley-Davidson, Inc. Condensed Consolidated Balance Sheets (In thousands) ASSETS June 30, Dec. 31, June 25, 1996 1995 1995 (Unaudited) (Unaudited) Current assets: Cash and cash equivalents $ 96,273 $ 31,462 $ 64,595 Accounts receivable, net 159,256 134,210 161,390 Inventories (Note 2) 80,316 84,427 83,485 Notes receivable 10,689 - - Other current assets 29,715 30,591 24,393 Net assets from discontinued operations 15,752 56,548 36,481 ------- ------- ------- Total current assets 392,001 337,238 370,344 Finance receivables, net 251,542 213,444 - Property, plant and equipment, net 308,186 284,775 229,325 Goodwill 42,029 43,256 - Other assets 84,512 66,949 68,865 Net assets from discontinued operations 26,105 55,008 56,044 --------- --------- -------- $1,104,375 $1,000,670 $724,578 ========= ========= ======== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Notes payable $ 1,006 $ 2,327 $ 7,892 Current maturities of long-term debt 191 364 225 Accounts payable 96,565 102,563 63,247 Accrued expenses and other 137,988 127,956 110,187 ------- ------- ------- Total current liabilities 235,750 233,210 181,551 Finance debt 180,089 164,330 - Postretirement health care benefits 64,514 63,570 61,960 Other long-term liabilities 51,006 44,991 33,670 Contingencies (Note 5) Total shareholders' equity 573,016 494,569 447,397 --------- --------- ------- $1,104,375 $1,000,670 $724,578 ========= ========= ======= Harley-Davidson, Inc. Condensed Consolidated Statements of Cash Flows (Unaudited) (In thousands) Six months ended June 30, June 25, 1996 1995 Cash flows from operating activities: Net income $ 72,942 $57,012 Depreciation and amortization 25,668 19,237 Long-term employee benefits 2,168 2,768 Other-net 3,145 (9) Net change in discontinued operations 11,103 17,077 Net change in other current assets and current liabilities (23,735) (20,185) ------- ------- Net cash provided by operating activities 91,291 75,900 Cash flows from investing activities: Purchase of property and equipment (47,542) (34,470) Finance receivables acquired or originated (548,530) - Finance receivables collected/sold 517,590 - Proceeds from disposition of discontinued segment 24,661 - Net change in discontinued operations (1,207) (4,498) Other - net (13,956) 1,979 ------- -------- Net cash used in investing activities (68,984) (36,989) Cash flows from financing activities: Reduction of long-term debt (173) (233) Net increase (decrease) in notes payable (1,321) 6,806 Net increase in finance debt 15,759 - Dividends paid (7,806) (6,068) Stock repurchases - (39,972) Issuance of stock under employee stock and option plans 14,592 1,485 Net change in discontinued operations 21,453 5,782 -------- ------- Net cash provided by (used in) financing activities 42,504 (32,200) -------- ------- Net increase in cash and cash equivalents 64,811 6,711 Cash and cash equivalents: At beginning of period 31,462 57,884 -------- ------- At end of period $ 96,273 $64,595 ======== ======= 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 30, 1996 and June 25, 1995, and the results of operations for the three- and six-month periods then ended. 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, 1995. The operations of Holiday Rambler are classified as discontinued operations. As such, certain prior-year balances have been reclassified in order to conform to current-year presentation. On November 14, 1995, the Company acquired substantially all of the common stock and common stock equivalents of Eaglemark Financial Services, Inc. (Eaglemark) that it did not already own. The Company has included the results of operations of Eaglemark in its statement of operations for the six months ended June 25, 1995 as though it had been acquired at the beginning of the year and deducted the preacquisition earnings as part of non-operating expense. Prior to December 31, 1995, the Company accounted for its investment in Eaglemark using the equity method. The carrying value of its investment in Eaglemark was approximately $9.8 million and is included in other assets at June 25, 1995. 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 30, Dec. 31, June 25, 1996 1995 1995 Components at the lower of cost, first-in, first-out (FIFO), or market: Raw material & work-in-process $ 28,458 $ 32,284 $ 27,696 Finished goods 18,492 19,290 24,497 Parts & accessories 54,195 52,182 50,180 -------- ------- ------- 101,145 103,756 102,373 Excess of FIFO over LIFO 20,829 19,329 18,888 -------- ------- ------- Inventories as reflected in the accompanying condensed consolidated balance sheets $ 80,316 $ 84,427 $ 83,485 ======= ======= ======= Note 3 - Capital Stock The Company has continuing authorization from its Board of Directors to repurchase up to 4 million shares of the Company's outstanding common stock. During the first quarter of 1995, the Company repurchased 1,650,000 shares of its common stock with cash on hand and short-term borrowings. Note 4 - Supplemental noncash investing activities On March 6, 1996, the Company sold substantially all of the assets of its Holiday Rambler Recreational Vehicles Division to Monaco Coach Corporation ("Monaco"). Total consideration consisted of approximately $23 million in cash, $3 million in preferred stock of 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. Note 5 - 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 $5 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. The reserves established by the Company have not been reduced by potential insurance recoveries and are not discounted. The Company has 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. Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Results of Operations for the Three Months Ended June 30, 1996 Compared to the Three Months Ended June 25, 1995 For the quarter ended June 30, 1996, consolidated net sales totaled $392.8 million, a $37.2 million or 10.5% increase over the same period last year. Net income and earnings per share for 1996 were $39.9 million and $.53 on 75.5 million shares outstanding versus $33.4 million and $.45 on 74.8 million shares outstanding in 1995, increases of 19.7% and 17.8%, respectively. All 1995 financial data have been restated to reflect the classification of the Company's Transportation Vehicles segment to that of a discontinued operation, as announced on January 22, 1996. Certain 1995 balances have also been reclassified to reflect the acquisition of substantially all of the remainder of Eaglemark Financial Services. 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 30, 1996 and June 25, 1995 Incr 1996 1995 (Decr) % Motorcycle units (excluding Buell) 30,852 28,167 2,685 9.5% Net sales (in millions): Motorcycles (excluding Buell) $305.2 $274.8 $30.4 11.1% Motorcycle Parts and Accessories 77.8 75.1 2.7 3.6 Other 9.8 5.7 4.1 71.9 Total Motorcycles and Related Products $392.8 $355.6 $37.2 10.5% The Motorcycles segment reported record second quarter net sales primarily driven by a 9.5% increase in motorcycle unit shipments. The increase in motorcycle unit shipments over the second quarter of 1995 was due to higher average daily production rates. During the second quarter of 1996, motorcycle production averaged 485 units per day versus 430 units per day in the same period last year. The Company announced that it expects daily motorcycle production to average approximately 490 units per day for the third quarter. Second quarter 1996 revenue from the Company's foreign subsidiaries was negatively impacted by the strengthening of the U.S. dollar, resulting in motorcycle and Parts and Accessories revenue decreases totaling approximately $7.3 million and $1.1 million, respectively, from the year- ago quarter. The potential negative effect on earnings was largely offset by the favorable impact of foreign exchange rates on foreign subsidiary operating expenses and foreign currency hedging programs. Sales of Buell motorcycles (which are distributed through select Harley- Davidson dealers) increased to $8.1 million in 1996 as compared to $4.1 million in 1995. (Included in "Other" in the above table.) Parts and Accessories revenue of $77.8 million was up only $2.7 million or $3.6% compared to the second quarter of 1995. The combined sales of Genuine Motor Parts and Genuine Motor Accessories totaled $59.3 million, a $3.8 million or 6.8% increase compared to last year; however, MotorClothes clothing and collectibles sales of $18.5 million were down $1.1 million or 5.4%. The Company anticipates that overall Parts and Accessories revenue growth for 1996 will approximate the growth rate in motorcycle unit shipments. The Company expects 1996 MotorClothes clothing and collectibles sales to be down from 1995. Some changes are being introduced in the third quarter at the annual dealer meeting to spur the MotorClothes clothing and collectibles business. These include altered product offerings and price points as well as increased retail promotions. Gross Profit Gross profit increased $15.1 million, or 13.8%, compared to the second quarter of 1995 primarily due to an increase in motorcycle volume. The gross profit margin was 31.8% in 1996 as compared with 30.9% in 1995. The increase in the gross profit percentage was due primarily to a shift in mix from the entry level Sportster models to the higher-margin custom models and from MotorClothes clothing and collectibles to Genuine Motor Accessories. Operating Expenses For the Three-Month Periods Ended June 30, 1996 and June 25, 1995 (Dollars in Millions) Incr 1996 1995 (Decr) % Motorcycles and Related Products $61.7 $56.0 $5.7 10.2% Corporate 2.0 1.3 .7 52.4 Total operating expenses $63.7 $57.3 $6.4 11.1% Operating expenses increased $6.4 million, or 11.1%, compared to the second quarter of 1995. The increase was largely related to increased motorcycle volumes and increases in engineering and advertising and promotion expenses when compared to the same period last year. Operating income from financial services The operating income of the Financial Services (Eaglemark Financial Services) segment was $2.0 million and $1.0 million in 1996 and 1995, respectively. This increase was primarily due to increased wholesale and retail origination volume and corresponding increases in outstanding wholesale and retail receivables. Consolidated income taxes The Company's effective income tax rate for the second quarter of 1996 approximated 37.0% compared to 36.5% during the second quarter of 1995. Results of Operations for the Six Months Ended June 30, 1996 Compared to the Six Months Ended June 25, 1995 For the six month period ended June 30, 1996, the Company recorded net sales of $763.9 million, a $113.4 million or 17.4% increase over the same period last year. Net income and earnings per share were $72.9 million and $.97 on 75.3 million shares outstanding versus $57.0 million and $.76 on 75.4 million shares, increases of 27.9% and 27.6%, respectively. All 1995 financial data have been restated to reflect the reclassification of the Company's Transportation Vehicles segment to that of a discontinued operation. Certain 1995 balances have also been reclassified to reflect the acquisition of substantially all of the remainder of Eaglemark Financial Services. Motorcycle Unit Shipments and Net Sales For the Six-Month Periods Ended June 30, 1996 and June 25, 1995 Incr 1996 1995 (Decr) % Motorcycle units (excluding Buell) 60,923 51,818 9,105 17.6% Net sales (in millions): Motorcycles (excluding Buell) $602.2 $499.6 $102.6 20.5% Motorcycle Parts and Accessories 145.9 140.6 5.3 3.8 Other 15.8 10.3 5.5 53.4 Total Motorcycles and Related Products $763.9 $650.5 $113.4 17.4% The 17.4% 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 (751cc+) market share of 54.3% compared to 54.4% for the same period in 1995. European data (through May) shows the Company with a 9.0% share of the heavyweight market, down from 10.0% for the same period in 1995. Sales of Buell motorcycles (which are distributed to select Harley- Davidson dealers) contributed approximately $5 million of additional revenues in the first six months of 1996 as compared to the same period in 1995. (Included in "Other" in the above table.) Overall, net sales of the Parts and Accessories business increased 3.8% compared to the first six months of 1995. The combination of Genuine Motor Parts and Genuine Motor Accessories increased $12.6 million or 13.4% while MotorClothes clothing and collectibles was down $7.3 million or 16.0%. Gross Profit Gross profit for the first six months of 1996 totaled $240.6 million, an increase of $40.5 million (20.2%) over the same period in 1995. The gross profit percentage was 31.5% in 1996 as compared with 30.8% for the first six months of 1995. A shift in mix away from the lower-margin Sportster models to the higher-margin custom models and from MotorClothes clothing and collectibles to Genuine Motor Parts and Genuine Motor Accessories contributed to the increase. Operating Expenses For the Six-Month Periods Ended June 30, 1996 and June 25, 1995 (Dollars in Millions) Incr 1996 1995 (Decr) % Motorcycles and Related Products $122.7 $105.9 $16.8 15.9% Corporate 4.5 3.2 1.3 40.9 Total operating expenses $127.2 $109.1 $18.1 16.6% Operating expenses of $127.2 million for the first six months of 1996 increased $18.1 million (16.6%) compared to the first six months of 1995. The increase was largely related to increased motorcycle volumes, as well as increases in warranty, engineering and information systems expenses. Operating income from financial services The operating income of the Financial Services segment was $3.7 million and $1.7 million in 1996 and 1995, respectively. This increase was primarily due to increased wholesale and retail origination volume and corresponding increases in outstanding wholesale and retail receivables. Consolidated income taxes The Company's effective income tax rate approximated 37.0% in the first six months of 1996 compared to 36.6% in the same period in 1995. 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 $5 million of net additional costs related to the remediation effort. The Company has established reserves for this amount. See Note 5 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 1996 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 30, 1996 The Company generated $91.3 million of cash from operating activities during the first six months of 1996 compared to $75.9 million in the same period in 1995. Net income contributed $15.9 million of the increase in cash from operating activities. The Motorcycles segment's receivable balances increased 18.7% compared to December 31, 1995 as a result of motorcycle volume increases, the annual shutdown during the last week of December and heavy shipments in the last two weeks of June reflecting the end of the 1996 model year. The results of discontinued operations, including the sale of the Recreational Vehicles Division, had a positive impact on total cash flows of approximately $56 million. This was partially offset by the Financial Services segment's activity which negatively impacted cash flow by approximately $15 million. Capital expenditures amounted to $47.5 million and $34.5 million during the first six months of 1996 and 1995, 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. During the second quarter, the Company signed an agreement to purchase a manufacturing facility in Menomonee Falls, Wisconsin to expand its powertrain operations; broke ground on the manufacturing facility in Kansas City; began construction of a 250,000 square foot Distribution Center in Franklin, Wisconsin; and announced a 15,000 square foot expansion of its fiberglass facility in Tomahawk, Wisconsin. The following are forward looking statements: Due in part to this long- term manufacturing strategy, the Company anticipates 1996 capital expenditures will approximate $180-$200 million, and the Company currently estimates that 1997 capital expenditures will be in the range of $180-$200 million and 1998 capital expenditures will be in the range of $120-$140 million. The Company currently estimates it will have the capacity to produce at least 118,000 motorcycles in 1996, 125,000-130,000 units in 1997 and 145,000-150,000 units in 1998. 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 and (iii) construct the new manufacturing facility such that it will be operational in 1998. 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) currently has nominal levels of long- term debt and has available lines of credit of approximately $49 million, of which approximately $44 million remained available at June 30, 1996. Eaglemark finances its business, without guarantees from the Company, through commercial paper, through revolving credit facilities and by securitizing its retail installment loans. Eaglemark issues short-term commercial paper secured by either wholesale or retail motorcycle finance receivables with maximum issuance available of $225 million of which $103.2 million was outstanding at June 30, 1996. Maturities of commercial paper issued range from 1 to 60 days. Eaglemark has in place an $80 million revolving credit facility to fund primarily the United States and Canadian retail loan originations of which approximately $76.9 million was outstanding at June 30, 1996. Borrowings under the facility are secured by, and limited to a percentage of, eligible receivables ranging from 75% to 95% of the outstanding loan balances. During the second quarter, Eaglemark securitized and sold approximately $79.9 million of its retail installment loans to investors with limited recourse, with servicing rights being retained by Eaglemark. The Company expects the future growth of Eaglemark will be financed from additional capital contributions from the Company and a continuation of its programs of commercial paper and securitizations. The Company has continuing authorization from its Board of Directors to repurchase up to 4 million shares of the Company's outstanding common stock. During the first quarter of 1995, the Company repurchased 1,650,000 shares of its common stock with cash on hand and short-term borrowings of $40 million. The Company's Board of Directors declared two cash dividends during the first six months of 1996 including, most recently, a $.05 per share cash dividend declared on May 4, 1996 payable June 24, 1996 to shareholders of record June 14. Part II - OTHER INFORMATION HARLEY-DAVIDSON, INC. FORM 10-Q June 30, 1996 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 5 to the accompanying condensed consolidated financial statements for additional information on the above proceedings. Item 4. Submission of Items to a Vote of Security Holders (a) The Company's Annual Meeting of Shareholders was held on May 4, 1996. (b) At the Company's Annual Meeting of Shareholders, the following directors were elected for terms expiring in 1999 by the vote indicated: Shares Shares Voted Withholding in Favor of Authority Richard J. Hermon-Taylor 65,300,497 685,053 Sara L. Levinson 65,593,636 391,914 Richard F. Teerlink 65,577,909 407,641 (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 65,673,649 119,629 192,272 There were no broker non-votes with respect to the foregoing matters. Item 6. Exhibits and Reports on Form 8-K (a) Exhibits 27.1 Financial Data Schedule for June 30, 1996 27.2 Restated Financial Data Schedule for June 25, 1995 (b) Reports on Form 8-K None Part II - Other Information HARLEY-DAVIDSON, INC. Form 10-Q June 30, 1996 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: 8/7/96 by: /s/ James L. Ziemer James L. Ziemer Vice President and Chief Financial Officer (Principal Financial Officer) 8/7/96 by: /s/ James M. Brostowitz James M. Brostowitz Vice President, Controller (Principal Accounting Officer) and Treasurer Exhibit Index Exhibit No. Description Page 27.1 Financial Data Schedule for June 30, 1996 17 27.2 Restated Financial Data Schedule for June 25, 1995 18 EX-27.1 2 EXHIBIT 27.1 - FINANCIAL DATA SCHEDULE FOR 1996
5 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 30, 1996 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 6-MOS DEC-31-1996 JAN-01-1996 JUN-30-1996 96,273 0 160,844 1,588 80,316 392,001 582,122 273,936 1,104,375 235,750 0 0 0 780 572,236 1,104,375 763,855 763,855 523,217 523,217 1,781 0 (430) 115,783 42,841 72,942 0 0 0 72,942 .97 .97
EX-27.2 3 EX 27.2 - RESTATED FDS FOR 1995
5 THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE RESTATED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS OF HARLEY-DAVIDSON, INC. AS OF AND FOR THE SIX MONTHS ENDED JUNE 25, 1995 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 6-MOS DEC-31-1995 JAN-01-1995 JUN-25-1995 64,595 0 163,283 1,893 83,485 370,344 461,056 231,731 724,578 181,551 0 0 0 772 446,625 724,578 650,517 650,517 450,385 450,385 2,831 0 (58) 89,887 32,879 57,008 4 0 0 57,012 .76 .76
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