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TB0563
Jonas Gamso
Michael H. Moffett
Harley-Davidson 2018:
Trump, Tariffs, and the Future
Surprised that Harley-Davidson, of all companies, would be the first to wave the White Flag. I fought
hard for them and ultimately they will not pay tariffs selling into the EU, which has hurt us badly on
trade. Taxes just a Harley excuse—be patient!
President Donald Trump, Twitter, June 25, 2018
In June 2018, Harley-Davidson, Inc. (NYSE: HOG), the iconic American manufacturer of motorcycles—hogs as
they were affectionately referred to—announced that it would shift some United States-based productionto
a foreign country. Harley explained it had little choice if it was to remain competitive in foreign markets,
specifically, Europe. The European Union (EU) had, the previous month, announced an increase in the import
duty imposed on Harley-Davidson motorcycles manufactured in the U.S. in retaliation for President Donald
Trump’s imposition of increased tariffs on European steel and aluminum. But Harley’s problems went much deeper
than simply European import duties. Harley was suffering from a decade-long slump in sales and profitability.
Would shifting production out of the U.S. be the solution?
Harley-Davidson
William S. Harley held, from an early age, a fascination with the bicycle and ways to develop it. In 1901, he
completed a blueprint of how to fit an engine into a bicycle frame. Two years later, Harley-Davidson motorcycles
was founded in a small shed in Milwaukee, Wisconsin, a business venture between Harley and two brothers,
Arthur and Walter Davidson.
Corporate Evolution
Incorporating in 1907, Harley-Davidson thrived. Production volumes rose rapidly in the early years, including
large-scale sales to the U.S. military during World War I. Although a number of competitors arose in the 1920s,
only two U.S. motorcycle companies survived the depression of the 1930s: Harley-Davidson and Hendee
Manufacturing, maker of the Indian. Enjoying more military sales throughout World War II, Harley gained
increasing dominance in mass market sales and racing. When Hendee entered bankruptcy in 1953, HarleyDavison became the single surviving U.S. motorcycle manufacturer for the next 46 years.
Harley has, however, had to constantly compete in an international marketplace, one where it had to not
only fight in foreign markets, but in its home market as well. In 1952, Harley filed a complaint with the U.S.
Tariff Commission for protection from imports, namely Triumph (United Kingdom), requesting a 40% tax on
imported motorcycles. The Commission denied Harley’s request and, in a surprising turn, found Harley guilty of
unfair business practices. Harley had tried to shut out foreign competitors from the U.S. market by only selling
to dealerships that would not carry competitor products.1
1
This resulted in a1954 consent order (agreement between two parties that can be enforced by the court) that prohibited HarleyDavidson from requiring its dealers to sell only Harley-Davidson brand motorcycles, parts, and accessories. The consent order
was terminated in 1995 at Harley’s request under sunset provisions, laws in effect for more than 20 years.
Copyright © 2019 Thunderbird School of Global Management, a unit of the Arizona State University Knowledge Enterprise.
This case was written by Professor Jonas Gamso and Professor Michael H. Moffett for the sole purpose of providing material fo r
class discussion. It is not intended to illustrate either effective or ineffective handling of a managerial situation. Any reproduction,
in any form, of the material in this case is prohibited unless permission is obtained from the copyright holder.
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Harley continued to grow and innovate. In 1965, the company went public, listing its shares under the
stock exchange symbol of HOG, an acronym for the Harley Ownership Group. 2 In that same year, the company
launched the Electra Glide, the first Harley motorcycle with an electric starter. But in 1969, Harley was acquired
by American Machine and Foundry (AMF). AMF moved quickly to cut costs and streamline production,
including slashing the Harley workforce. What followed was a period of labor strife and a decline in product
quality. In 1971, as part of a growing market desire for customization, Harley launched the Super Glide, the first
cruiser, combining a sporty front wheel with the traditional power chassis. But AMF still refused to reinvest in
the Harley brand and product. Sales declined.
In 1980, AMF hired Goldman Sachs to find a buyer for Harley. After finding little interest, management
proposed a leveraged buyout. (A leveraged buyout is when a group of investors borrows heavily in order to acquire
control of a company. A management buyout is when the investor group includes current management of the
firm.) Years before, AMF had hired Vaughn L. Beals, Jr. to run Harley. Beals was an MIT graduate in aeronautical
engineering with more than 15 years’ experience in the aerospace industry and another decade in diesel engines
manufacturing. In 1981, Beals led a group of 13 company executives including Willie G. Davidson, a descendant
of the founding family, in a management buyout for $81.5 million.3 As is typical of management buyouts, this
left the company with a large level of debt.
Japanese Influence
Turning the company around would prove challenging for the new owners—with both good and bad forces arising
from Japan. In terms of production, Harley adopted a number of Japanese manufacturing quality practices (quality
circles) and inventory and production cycle practices (just-in-time production). Just-in-time production, also known
as the Toyota Production System, given its development by the auto manufacturer, is a manufacturing method
aimed at reducing flow times within manufacturing. This is partly achieved by reducing the response and services
times between suppliers and customers. For example, parts inventories are reduced and sourced only as needed.
Japanese producers also created new problems for Harley. In 1982, Harley applied to the U.S. government
for protection from Japanese imports. Harley claimed that Japanese manufacturers were exporting motorcycles
into the U.S. at such a rapid rate that U.S. manufacturers were being “harmed.” The U.S. International Trade
Commission agreed and recommended to President Ronald Reagan in 1983 that a 45% tariff be imposed on
imported bikes with engine capacities of 700 cc or more.4 The tariff put in place was to last for five years, a period
considered sufficient for Harley to reorganize and return to competitiveness. Given that Harley was the only U.S.
manufacturer of large-engine motorcycles, the law was openly referred to as “the Harley Law.” Harley quickly
revived its quality and cost competitiveness, and the company itself requested that the tariff be removed before
three years had passed. Part of Harley’s motivation for having the tariff eliminated was, however, in recognition
of how fruitless it had proven. Within six months of the tariff launch, the Japanese motorcycle makers introduced
a motorcycle with a 696 cc engine for the U.S. market.
By 1985, the Harley Owners Group (HOG) became the largest factory-sponsored motorcycle owners’
group in the world. This was followed in 1986 by the company once again publicly listing its shares. In an effort
to grow, Harley acquired a recreational vehicle manufacturer, Holiday Rambler. Intended to diversify Harley’s
revenues, the $155 million acquisition failed. Holiday Rambler was sold in 1996 for $50 million.
In 1983, a former Harley-Davidson engineer, Erik Buell, created his own independent motorcycle
manufacturing company. The Buell Motorcycle Company built smaller and sportier motorcycles, also in Wisconsin,
and gained a share of the market quickly. Harley acquired a 49% ownership interest in Buell in 1993, and one
decade later, the entire company. Buell continued as a wholly owned subsidiary of Harley until 2009 when it
stopped production of the Buell line.
2
The origin of the hog term was thought to be the practice in the 1920s of winning motorcycle riders picking up a hog to be
carried on the victory lap.
3
Vaughn Beals was CEO of Harley-Davidson from 1981-1989, and subsequently chairman of Harley’s board from 19811996. Willie G. Davidson is still active in Harley-Davidson’s management today. The original 13 investors paid 25 cents per
share in the buyout. When Harley went public again in 1986, initial shares were sold for $11 per share.
4
U.S. tariffs imposed raised the existing import duty on this class of motorcycles from 4.4% to 49.4% the first year, to 39.4%
the second year, 24.4% in the third year, 14.4% in the fourth year, returning to the original 4.4% in the fifth year.
2
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Markets
Harley evolved with motorcycle markets, but in many ways, it was difficult to say which had influenced which,
as Harley was credited with developing new segments. Today’s motorcycle market comprises four segments:
1.
2.
3.
4.
Standard—focusing on simplicity and cost
Performance—emphasizing handling and acceleration
Custom—promoting style and individual owner customization
Touring—highlight comfort and amenities for long-distance travel
At one time, Harley was widely known for its competitiveness in both flat track and road racing categories
of performance. Today, Harley largely competes in the custom and touring segments. In fact, the company is
often credited with creating the touring segment. Harley’s cruiser motorcycles, powered by air-cooled V-Twin
engines, established the segment. It was only after 2000 that the company introduced liquid-cooled powered
products, a departure from its historical demographic customer segment.5
Harley’s other major segment, custom, was a reflection of the long-term customer base’s preference for
individualism. A growing part of motorcycle culture beginning in the 1950s, Harley increasingly promoted
individual customization of its products for a demanding customer base.
International Expansion
Although Harley’s manufacturing was primarily U.S.-based, the company had exported internationally for
a century, with the largest markets being Australia, Japan, and Germany. The oldest continuously operating
dealership outside the U.S. was in Australia, established in 1918. Harley manufactured in Japan under license for
a few years, but that ended in 1958. The major populous emerging markets—Brazil, China, India—were
believed to represent the company’s future. Harley licensed its first sales distributorship in China in 2006.
Harley’s international strategy was export-based. The company would forecast sales volumes for the target
market, then manufacture to forecast. The motorcycles would then be stocked and distributed in-country—often
termed “off the shelf ”—by a Harley dealership. Dealerships were both company-owned and independently owned.
Although this export strategy was a low capital cost approach, it allowed little customization or responsiveness
to customer preferences. It did, however, avoid the time and cost associated with a pure manufacturing-to-order
structure.
Over time, Harley recognized that to compete in individual international markets, it had to provide a wider
product portfolio offered at different price points. Brazil was once such a market. After concluding that building
a complete manufacturing plant in Brazil was too costly, it chose a hybrid approach. It would manufacture the
motorcycle components in the U.S. and then assemble the motorcycle in-country. Harley opened its Brazilian
assembly facility in 1999. The process, known as complete knockdown kits (CKDs), utilized cheaper local labor
for the final assembly of motorcycle kits, allowing the company to reach lower price points. The CKD process
had been widely used by automobile manufacturers globally for years.
India
While India was a promising populous market with a high per capita motorcycle consumption rate, it was arguably
a poor fit for Harley’s product line. The first challenge was emissions. Harley’s motorcycles used an engine much
larger than common in India, and as a result, did not meet emission requirements. The company chose a unique
approach: change the regulation, not the product. Harley launched an intense lobbying campaign with the
Indian government in 2007 to change emission standards by promoting the adoption of European Union-like
emission standards which it could meet.
5
In 2009, Harley replaced its stamped and welded single-piece frame used for more than 30 years with a cast single-spar rigidbackbone frame. The company also converted to a wider and longer swing arm, the primary component of the rear wheel
suspension holding the wheel, to improve ride comfort. The swing arm’s ability to pivot vertically allowed the motorcycle
to absorb bumps and vibrations more comfortably.
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A second challenge was expanding the market segment consistent with Harley’s traditional product. India
was experiencing a rapidly emerging middle class, an income segment which the company thought might fit well
with its larger engine product line. Harley seeded the market segment, establishing and sponsoring Harley clubs
and owner groups to create image, identity, and demand.
Serving India would be difficult. Harley explored three different entry structures for the Indian market: (1)
manufacturing in the U.S. and exporting to Harley dealerships in India, either company-owned or independently
owned; (2) assembly of Harley motorcycles in India from kits manufactured in the U.S.; or (3) manufacturing
in India for the Indian market. The first approach allowed the most control, but also suffered the highest costs,
making price points unachievable. The third approach was by far the most capital-intensive approach, but would
also allow the highest degree of localization and customization.
In the end, Harley chose the second option. In 2009, Harley began importing kits from the U.S. for
final assembly in India as it had done in Brazil. This was a compromise, as the CKDs would allow U.S.-based
manufacturing for controlling costs and quality but allow the use of lower-cost Indian labor for final assembly.
The biggest problem was that the kits were subject to a 30% import duty. Harley also grudgingly acknowledged
the different engine requirements of the Indian market, choosing to focus on the assembly and sale of smallersized engines—at least small for Harley. It also chose to use a dealership network in India that was locally owned,
minimizing its own capital, while forming what it hoped would be the largest commitment to effective sales.
Sales in India to date have been promising but not material to global results.
Today, Harley manufactures and assembles motorcycles in the United States (York, Pennsylvania, Milwaukee,
Wisconsin, and Kansas City, Missouri), Manaus, Brazil, and Bawal, India, and in late 2018, it opened a new
manufacturing plant in Thailand. It is currently in the process of closing its Kansas City facility. Harley utilizes
an independently owned dealership network in the U.S., Europe, and Asia, via subsidiaries in Oxford, England,
Tokyo, Japan, Sydney, Australia, Mexico, and Brazil.
Competition Today
Over the past century, Harley has seen many competitors come and go. In 1920, for example, Harley was the
largest motorcycle manufacturer in the world. But over time, other manufacturers, first from the United Kingdom
and then Japan, posed substantial competition to Harley’s market share. As Harley focused more on large engine
cycles (greater than 650 cc), the competitor list narrowed.
If Harley ever had a true American competitor, it was Indian. Hendee, which changed its name to the Indian
Motorcycle Manufacturing Company in 1928, continued producing until 1953 when it went into bankruptcy. 6
Despite a number of attempts by other companies to restart the brand, Polaris Industries was finally able to
relaunch the Indian in 2011. Polaris launched its own competitive line, Victory, in 1998. Unable to establish
the brand image and loyalty enjoyed by Harley, Polaris discontinued the Victory in 2017 to focus exclusively
on the Indian.
Other global manufacturers—Suzuki, BMW, Yamaha, Honda, Kawasaki, Triumph—all continue to
compete intensely in the U.S. large engine cruiser market. But despite the competition, Harley’s market share in
the U.S. has held amazingly steady at 50% for many years. Harley’s second largest market, Europe, was highly
competitive with a number of both European and foreign cycle manufacturers. Harley struggled to gain and hold
a 10% share. The leaders in Europe—Suzuki (16%), BMW (15%), Yamaha (14%), Honda (12%), and Kawasaki
(11%)—were large, established, and intensely competitive. Triumph (7%) and Ducati (6%) were always pushing
Harley for pieces of its European market share as well.
6
In the 1960s, Burt Munro of New Zealand used a modified 1920s Indian Scout to set a number of land speed records on
the Bonneville Salt Flats in the U.S., a story dramatized in the 2005 film The World’s Fastest Indian.
4
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Harley’s Fortunes
Harley-Davidson’s fortunes have changed over the past decade. As illustrated in Exhibit 1, revenues grew steadily
from 2009 through 2014.7 But 2014 proved to be a peak, and while the rest of the U.S. economy boomed over the
2015-2017 period, Harley slid. On the positive side, Harley’s profitability (net income) remained steadyuntil
recently.
An additional concern, financially, was the company’s growing level of debt. Harley’s net debt (debt – cash)
to EBITDA (earnings before interest, taxes, depreciation, and amortization) ratio had grown consistently and
rapidly over the previous four years. A net debt to EBITDA ratio over 4.0 was considered cause for concern.
Harley was now over 5.0.
Harley’s revenue challenges arose from volume sales. As seen in Exhibit 2, although international volume
sales grew over the past decade, U.S. sales volumes never really recovered from the 2008-2009 financial crisis.
U.S. volume sales were now on the decline.
As a publicly traded company, Harley-Davidson’s investors depended upon both dividend distributions and
share price appreciation for their returns. As illustrated in Exhibit 3, Harley’s share price hit a number of
potholes in the recent decade. Falling as far as $8 per share during the midst of the 2009 financial crisis, shares
recovered to over $70 a share in late 2016. Recent declines in volumes, revenues, and profits had, however, driven
share prices down 30% since that time.
Harley tried to do its best in returning money to shareholders, working to maintain a healthy dividend
over the past decade. Although it slashed the dividend from $1.29 per share in 2008 to $0.40 per share in 2009
(2009 was the single year in which the company actually lost money), the dividend grew back over time. At
$1.46 per share in 2017, Harley offered a solid 3.2% dividend yield to investors.
In addition to the dividend, the company also returned capital to shareholders via large share repurchases
in recent years. Share repurchases totaled $4.4 billion over the past decade, and reduced shares outstanding by
25%, an extremely large number by any measure. Although it was difficult to say how much of an impact the
share repurchase program had on share price, it clearly increased earnings per share (EPS) reported dramatically.
7
In addition to motorcycles, Harley also generates income from the licensing and sale of merchandise using the HarleyDavidson brand, including apparel, ornaments, accessories, and video games.
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The Mission, The Brand, The Image
We fulfill dreams through the experiences of motorcycling, by providing to motorcyclists and to the
general public an expanding line of motorcycles and branded products and services in selected
market segments.
Harley-Davidson
The outlaw biker image of motorcycle riders, particularly in the U.S., began with the 1954 movie The Wild
One starring Marlon Brando. Brando, riding a Triumph Thunderbird 6T, was depicted as part of a motorcycle
rally and ensuing riot in Hollister, California. The movie came to symbolize bikers and the biker culture in the
public’s eye for years to come. The image was reinforced in the movie Easy Rider, a 1969 Columbia Pictures
6
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release, staring Peter Fonda. Now considered a counterculture cult classic, the
Our Values
movie featured chopped Harley-Davidson Hydra Glides, four cycles purchased Tell the Truth.
8
at auction and customized for the film.
Be Fair.
Keep Your Promises.
This image has served as Harley’s foundational consumer segment for Respect the Individual.
more than 50 years. But as is the case with all unique value propositions, that Encourage Intellectual Curiosity.
Harley-Davidson
which is its strength may also prove its weakness.
Harley’s Efforts to Diversify its Consumer Base
The model Harley rider has been a white, male, baby boomer, but Harley-Davidson’s management has recognized
for several years that this population is aging and that the company needs to reach new consumers. Harley’s
average customer was 32 years old in 1990; by 2017, the age was estimated to be 47 years old. This aging
consumer profile, although long believed an element of strength and premium pricing power of the brand, was
increasingly seen as a concern.
For Harley, attracting new buyers meant diversifying its products and cultivating stronger brand desirability
from nontraditional consumers. Harley’s heavyweight bikes are well tailored for, and had a high degree of loyalty
from, its traditional consumer base. However, younger consumers in the U.S. prefer smaller, faster, sleeker, and
cheaper sport bikes. While Harley had products in this category, including through its secondary brand Buell
(now discontinued), foreign competitors such as BMW, Ducati, Honda, Kawasaki, Suzuki, and Yamaha dominate
this market. The tendency of young people to see Harley as a boomer-bike that their dads and grandfathers rode
amplifies the problem. Moreover, nontraditional American consumers are often unable to afford Harleys, which
have a high price point and are generally considered a weekend vehicle used for leisure, as opposed to day-to-day
transportation to work or school.9
Consumers in many foreign markets mirror nontraditional U.S. consumers in their desire for cheaper sport
bikes. Additionally, they had little affinity for the U.S.-centric image that Harley cultivated. Harley found some
customers for its heavy bikes in Europe, Japan, and Canada, but there was limited attention to emerging markets
until recently, due to tariffs and other barriers to market entry. Recognizing the problem, Harley took efforts in
the mid-2000s to diversify its product offerings and to conduct outreach efforts to attract new customers in the
U.S. and abroad to the brand. Efforts to reach new U.S. customers included Garage Parties, training programs,
and women-only retreats.
In addition to market outreach, Harley also developed new lower-cost sport bike offerings. Much of this
came through its Buell brand, which was distinct from Harley in terms of visual branding and design. These
motorcycles were meant to appeal to customers that wanted sleeker and cheaper bikes, but they entered a
marketplace dominated by rival producers from Europe and Japan. Buell struggled to gain market share in the
sport bike category, while Harley’s sales of heavy bikes also remained stagnant. Although Harley’s sales in Europe
grew 8.1% from 2016 to 2017, they fell 12% in the U.S. over the same period.10
Despite setbacks, Harley has continued its efforts to develop new bikes for nontraditional customers. This
includes a fleet of sport bikes released in 2014 and a series of electric motorcycles slated for release in 2019. The
latter will include five new electric vehicles, bolstered by the establishment of a new research and development
center in Silicon Valley.11 While the market for electric bikes in the U.S. remains small, a larger market exists
overseas, particularly in China.12 Despite these efforts, considerable challenges remain as Harley contends with
8
Chopped is the term for the radical customization of a motorcycle. The chopper is one of the most extreme custom styles
and can be built from an original motorcycle which is modified (“chopped”) or built from scratch. Some of the characteristic
features of choppers are long front ends with extended forks, often combined with an increased rake angle, hard-tail frames
(frames without rear suspension), very tall hanger handlebars, or very short drag handlebars.
9
Ell, Kellie. “Harley-Davidson Tries to Regain Its Coolness Factor,” CNBC, 2018; Benjamin Preston. “Harley-Davidson’s
Reputation as an ‘Old, White-Guy Brand’ May Be Its Downfall,” The Guardian, 2015; Alan Rappeport. “Trump’s War with
Harley-Davison Has Divided America’s Bikers,” The New York Times, August 11, 2018.
10
“Kessler, Carson. “Why Harley-Davison Is Moving Production Overseas,” Fortune, 2018.
11
“Harley-Davison Doubles Down on Electric,” Electrek, 2018.
12
Duprey, Rich. “Harley-Davidson Makes Even Deeper Commitment to Electric Motorcycles,” The Motley Fool, 2018.
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fierce competition in the sport bike space, limited brand interest among nontraditional customers, and uncertainty
about the potential market for its electric offerings.
Tariffs and Retaliation 2018
The rise of protectionism in 2018 presented new challenges for Harley-Davidson. U.S. president Donald Trump
initiated a number of trade skirmishes by imposing tariffs on imported steel (25%) and aluminum (10%) from
several countries, including the European Union. These tariffs would create costs for Harley, which imports
steel inputs for their bikes. To make matters worse, the EU retaliated against the U.S. soon after, increasing the
6% import duty on motorcycles with engines greater than 500 cc by 25%—a direct hit on Harley-Davidson.
Harley estimated the new duties would increase the price of the average motorcycle imported into the EU from
the U.S. by $2,200.13
The company sold approximately 39,800 Harley-Davidson motorcycles to Europeans in 2017, making the
EU’s tariffs potentially very costly. After considering a number of strategic options, Harley decided to shift some
U.S. production out of the U.S. in order to gain entry into the EU market at the historically lower 6% import
duty. Although Harley had not yet detailed its plans, analysts believed the new assembly facility in Thailand
might be the primary beneficiary of the production shift.14
Harley’s announcement prompted instant backlash. President Trump, who had up to this point touted
Harley as the quintessential American company (an image Harley’s leadership was happy to embrace),15 tweeted his
opinion about off-shoring production: “A Harley-Davidson should never be built in another country—never!”16
President Trump’s opposition to Harley’s strategic move did not stop there; he went on to encourage a boycott
of Harley-Davidson’s products.17 Harley-Davidson’s leadership now found itself and its future in the crosshairs,
or crossroads, of international politics. It needed to explore additional options.
“HarleyDavidson, StungbyTariffs, Shifts Some Production Outofthe U.S,” Associated Press. 2018;“OnceaTrump Favorite,
Harley Now Feels the Pinch from Trade War,” Bloomberg, 2018.
14
Tit, Bob. “Harley-Davidson to Shift Production Overseas to Offset EU Tariffs,” The Wall Street Journal, June 25, 2018.
15
Lippert, John, and John McCormick. “Trump Welcomes Harley-Davidsonin LatestWhite House Session,” Bloomberg, 2017.
16
Calamur, Krishnadev.”Uneasy Riders: Trump’s War on Harley,” The Atlantic, 2018.
17
Wattles, Jackie. “Trump Encourages Boycott Against Harley-Davison,” CNN, 2018.
13
8
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Appendix 1. Harley-Davidson, Inc., Income Statement
USD in millions
Revenue
Cost of revenue
Gross profit
2008
5,594
3,663
1,931
2009
4,782
2,901
1,881
2010
4,859
3,022
1,838
2011
5,312
3,336
1,976
2012
5,581
3,418
2,162
2013
5,900
3,561
2,338
2014
6,229
3,707
2,521
2015
5,995
3,518
2,477
2016
5,996
3,593
2,403
2017
5,647
3,442
2,205
985
979
224
(55)
1,149
1,020
164
(70)
1,113
1,061
68
(51)
1,078
1,111
28
(6)
1,133
1,127
(2)
62
1,187
1,160
1,220
1,217
1,182
81
1,240
101
1,321
137
1,354
132
1,314
724
90
(243)
390
131
260
(113)
147
898
45
(60)
793
245
548
51
599
1,029
46
(21)
962
338
624
1,152
45
8
1,114
380
734
1,281
4
6
1,283
439
845
1,156
12
7
1,150
398
752
1,049
30
5
1,024
332
692
891
31
4
864
342
522
655
732
305
(248)
179
108
71
(126)
(55)
624
734
845
752
692
522
Earnings per share
Basic
Diluted
2.80
2.79
(0.24)
(0.24)
0.63
0.62
2.57
2.55
2.75
2.72
3.30
3.28
3.90
3.88
3.71
3.69
3.85
3.83
3.03
3.02
Weighted average shares outstanding
Basic
Diluted
234
234
233
234
233
235
233
235
227
229
222
224
216
218
203
204
180
181
172
173
Operating expenses
Sales, General and administrative
Restructuring, merger and acquisition
Other operating expenses
Total operating expenses
Operating income
Interest Expense
Other income (expense)
Income before taxes
Provision for income taxes
Net income from continuing operations
Net income from discontinuing ops
Net income
985
946
299
386
1,034
379
655
Source: Harley-Davidson, Inc., SEC filin gs.
A02-19-0006
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This document is authorized for use only by Joseph Yarbrough in Global Trade Compliance Strategies-Spring I 2024 taught by Daniel Ogden, Baylor University from Dec 2023 to Jun 2024.
For the exclusive use of J. Yarbrough, 2024.
Appendix 2. Harley-Davidson, Inc. (H OG) Balance Sheet
USD in millions
2008
2009
2010
2011
2012
2013
Assets
Total cash
2014
2015
2016
2017
595
1,670
1,162
1,680
1,204
1,166
964
767
766
688
Receivables
296
269
262
219
1,973
2,035
2,164
2,301
2,361
2,436
Inventories
401
323
326
418
394
425
449
586
500
538
Deferred income taxes
123
180
146
132
111
104
90
103
Prepaid expenses
141
282
Other current assets
3,822
1,617
2,169
2,092
370
260
281
226
227
223
Total current assets
5,378
4,341
4,065
4,541
4,052
3,990
3,948
3,983
3,854
3,885
Property, plant and equipment
Gross property, plant and equipment
3,032
2,959
2,772
2,605
2,685
2,803
2,996
3,174
3,262
3,285
Accumulated Depreciation
(1,938)
(2,052)
(1,957)
(1,796)
(1,869)
(1,961)
(2,113)
(2,231)
(2,280)
(2,318)
Net property, plant and equipment
1,094
907
815
809
816
842
883
943
982
967
Goodwill
139
31
30
29
30
30
28
54
53
56
Deferred income taxes
288
178
214
202
172
3
78
100
168
109
Other long-term assets
929
3,698
4,305
4,091
4,103
4,295
4,591
4,912
4,834
4,935
Total non-current assets
2,450
4,814
5,364
5,131
5,121
5,415
5,580
6,009
6,037
6,087
Total assets
7,828
9,155
9,429
9,672
9,173
9,405
9,528
9,992
9,891
9,972
Short-term debt
1,739
1,522
1,232
1,879
732
1,842
1,744
2,045
2,141
2,401
Accounts payable
324
163
225
256
257
240
197
236
235
228
58
20
22
28
19
26
26
557
98
459
399
419
453
461
483
Prepaid pension benefit
245
20
Liabilities and stockholders’ equity
Taxes payable
Accrued liabilities
541
514
408
35
6
2
Total current liabilities
2,604
2,268
2,014
2,699
1,503
2,510
2,389
2,753
2,863
3,158
Long-term debt
2,176
4,114
4,521
3,844
4,371
3,417
3,762
4,845
4,667
4,587
173
70
Other current liabilities
Deferred taxes liabilities
21
49
Pensions and other benefits
758
510
537
571
608
253
279
359
258
Other long-term liabilities
175
155
153
140
131
167
189
195
183
210
Total non-current liabilities
3,109
4,779
5,211
4,555
5,110
3,886
4,230
5,399
5,108
4,970
Total liabilities
5,713
7,047
7,224
7,254
6,613
6,396
6,619
8,152
7,970
8,128
Stockholders’ equity
Common stock
Additional paid-in capital
3
3
3
3
3
3
3
3
2
2
847
871
908
968
1,066
1,175
1,265
1,329
1,382
1,423
Retained earnings
6,459
6,324
6,336
6,823
7,306
7,853
8,459
8,962
1,338
1,608
Treasury stock
(4,671)
(4,672)
(4,676)
(4,899)
(5,207)
(5,689)
(6,303)
(7,839)
(236)
(689)
Accumulated other comprehensive income
(523)
(418)
(366)
(477)
(608)
(333)
(515)
(615)
(565)
Total stockholders’ equity
2,115
2,108
2,205
2,418
2,560
3,009
2,909
1,840
1,921
1,844
Total liabilities and stockholders’ equity
7,828
9,155
9,429
9,672
9,173
9,405
9,528
9,992
9,891
9,972
(500)
Source: Harley-Davidson, Inc., SEC filings.
10
A02-19-0006
This document is authorized for use only by Joseph Yarbrough in Global Trade Compliance Strategies-Spring I 2024 taught by Daniel Ogden, Baylor University from Dec 2023 to Jun 2024.
For the exclusive use of J. Yarbrough, 2024.
Appendix 3. Harley-Davidson, Inc ., State ment of Cash Flow
USD in millions
2008
Cash Flows From Operating Activities
Net income
2009
2010
2011
2012
2013
2014
2015
2016
2017
Depreciation & amortization
655
71
260
548
624
734
845
752
692
522
242
246
275
191
169
167
179
198
210
222
87
79
Amortization of debt
Investment/asset impairment charges
41
Investments losses (gains)
5
92
Deferred income taxes
(49)
7
(18)
88
128
53
(8)
(16)
-
Stock based compensation
24
18
30
38
41
41
38
29
32
32
Change in working capital
(80)
(47)
207
82
(112)
(67)
(120)
(122)
41
(21)
(9)
51
Accounts receivable
(4)
9
3
43
(11)
(8)
(88)
(131)
(51)
16
Inventory
(45)
85
3
(95)
21
(46)
(51)
(155)
85
(21)
(98)
69
(3)
30
Other working capital
(31)
(142)
201
134
(24)
(81)
22
133
7
(16)
Other non-cash items
(1,523)
152
251
(141)
(49)
49
212
259
208
199
(685)
538
1,092
885
801
977
1,147
1,100
1,174
1,005
Investments in property, plant, and equipment
(232)
(117)
(171)
(189)
(189)
(208)
(232)
(260)
(256)
(206)
Acquisitions, net
(96)
Purchases of investments
(609)
(1,418)
(184)
(2,765)
(5)
Sales/Maturities of investments
545
668
84
2,890
23
40
41
12
40
7
Other investing activities
(2)
(16)
416
(91)
(396)
(553)
(607)
(176)
(363)
(393)
(882)
145
(261)
(569)
(745)
(916)
(393)
(562)
Prepaid expenses
Net cash provided by operating activities
Cash Flows From Investing Activities
Net cash used for investing activities
(60)
(64)
(5)
Cash Flows From Financing Activities
Debt issued
2,245
3,505
706
1,827
1,958
1,107
1,988
3,088
1,256
1,576
Debt repayment
(400)
(1,860)
(2,478)
(1,814)
(2,595)
(947)
(1,742)
(1,691)
(1,334)
(1,421)
Common stock issued
1
-
8
8
Common stock repurchased
(250)
(2)
(2)
(225)
(312)
(479)
(616)
(1,537)
(465)
(465)
Dividend paid
(302)
(94)
(94)
(111)
(142)
(188)
(238)
(249)
(252)
(252)
-
(167)
4
6
101
114
72
35
62
20
Net cash provided by (used for) financing activities
1,293
1,382
(1,856)
(309)
(990)
(393)
(536)
(354)
(734)
(542)
Effect of exchange rate changes
(25)
6
4
(8)
(9)
(17)
(26)
(15)
(9)
27
Net change in cash
191
1,043
(615)
505
(459)
(2)
(160)
(184)
38
(72)
Cash at beginning of period
403
594
1,636
1,022
1,527
1,068
1,067
907
722
760
Cash at end of period
594
1,636
1,022
1,527
1,068
1,067
907
722
760
688
Other financing activities
Source: Harley-Davidson, Inc., SEC filings.
A02-19-0006
11
This document is authorized for use only by Joseph Yarbrough in Global Trade Compliance Strategies-Spring I 2024 taught by Daniel Ogden, Baylor University from Dec 2023 to Jun 2024.