Document


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549 
FORM 8-K 
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): October 23, 2018
Harley-Davidson, Inc.
(Exact name of registrant as specified in its charter)

 
 
 
 
 
Wisconsin
 
      1-9183
 
39-1382325
(State or other jurisdiction
of incorporation)
 
     (Commission
     File Number)
 
(IRS Employer
Identification No.)
3700 West Juneau Avenue, Milwaukee, Wisconsin 53208
(Address of principal executive offices, including zip code)
(414) 342-4680
(Registrant’s telephone number, including area code)
Not Applicable
(Former name or former address, if changed since last report)
 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
o
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 
o
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 
o
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
 
o
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)
 
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company o

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o





Item 2.02
Results of Operations and Financial Condition.

On October 23, 2018, Harley-Davidson, Inc. (the “Company”) issued a press release (the “Press Release”) announcing the Company’s third quarter results for the financial period ended September 30, 2018. A copy of the Press Release is being furnished as Exhibit 99.1 to this Current Report on Form 8-K.


Item 8.01
Other Events.

The Company is announcing that yesterday it notified its dealers of a voluntary safety recall for a hydraulic clutch assembly on all model year 2017 and 2018 Touring, Trike and CVO Touring models and certain 2017 Softail models (the "Recall"). The Recall includes approximately 238,300 motorcycles globally. The Company estimates the total cost of the Recall to the Company to be approximately $35 million, which will be charged to the fourth quarter of 2018.

Forward-Looking Statements

The statement regarding the likely financial impact of the Recall constitutes a “forward-looking statement” intended to qualify for the safe harbor from liability established by the Private Securities Litigation Reform Act of 1995. Such forward-looking statement is subject to certain risks and uncertainties that could cause actual results to differ materially from those anticipated as of the date of this Form 8-K. One factor that might cause such a difference is the recall completion rate. Other factors that might cause such a difference are described in risk factors that the Company has disclosed in its most recent annual report and in other documents previously filed with the Securities and Exchange Commission. Shareholders, potential investors, and other readers are urged to consider these factors in evaluating the forward-looking statement and cautioned not to place undue reliance on such forward-looking statement. The forward-looking statement included in this Form 8-K is made only as of the date of this Form 8-K, and the Company disclaims any obligation to publicly update such forward-looking statement to reflect subsequent events or circumstances.


Item 9.01
Financial Statements and Exhibits.

(a)
Not applicable.
(b)
Not applicable.
(c)
Not applicable.
(d)
Exhibits. The following exhibit is being furnished herewith:

    (99.1) Press Release of Harley-Davidson, Inc., dated October 23, 2018.


SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 
 
 
 
 
 
 
 
 
                              HARLEY-DAVIDSON, INC.
 
 
 
 
 
 
 
                                                                       Date: October 23, 2018
 
 
 
By:
 
/s/ Paul J. Krause
 
 
 
 
 
 
Paul J. Krause
 
 
 
 
 
 
Assistant Secretary

2
Exhibit



Harley-Davidson Announces Third Quarter Results


MILWAUKEE, October 23, 2018 - Harley-Davidson, Inc. (NYSE:HOG) today reported third quarter 2018 results. During the quarter, earnings per share was up year-over-year and the company made progress on the initiatives included in its More Roads to Harley-Davidson accelerated plan for growth.

Third Quarter 2018
More Roads accelerated plan for growth unveiled and progress made
EPS $0.68, up vs prior year ($0.78 excluding manufacturing optimization costs)
HDFS earnings up year-over-year on improved loss performance
Repurchased 1.9 million shares; paid $0.37 per share dividend, up 1.4 percent versus prior year quarter
International retail sales growth accelerated
Manufacturing optimization initiative on track, reduced total cost estimate
Confirmed full-year shipment and operating margin guidance
2019 motorcycle innovation enhances product leadership in Touring and Cruiser segments
115th anniversary celebrations demonstrated power of iconic global brand

Third quarter 2018 GAAP diluted EPS was $0.68, up 70.0 percent. Excluding manufacturing optimization costs, diluted EPS was $0.78. Year ago GAAP diluted EPS was $0.40. Third quarter 2018 net income was $113.9 million on consolidated revenue of $1.32 billion versus net income of $68.2 million on consolidated revenue of $1.15 billion in 2017.
Harley-Davidson international retail motorcycle sales were up 2.6 percent in the third quarter of 2018 compared to 2017 and U.S. retail sales were down 13.3 percent. Worldwide retail sales decreased 7.8 percent.

“Third quarter progress tracked to our plans with numerous highlights including another quarter of improved international retail sales growth and increased year-over-year earnings per share. We unveiled our More Roads to Harley-Davidson accelerated plan for growth, and made strong progress already through September,” said Matt Levatich, president and chief executive officer, Harley-Davidson, Inc. “As we manage our business with resilience in a challenging time in our history, we are leveraging our strengths for a more promising road ahead. We are investing to build the next generation of Harley-Davidson riders and we are optimizing our business to drive profitability and cash flow. Through September, cash flow was very strong and revenue was up over 3 percent despite lower motorcycle shipments.”

Strategy Acceleration
During the quarter, Harley-Davidson made progress on the initiatives included in its More Roads to Harley-Davidson accelerated plan for growth to build the next generation of riders globally. Leveraging core strengths in the business, brand and dealer network, the company is investing in opportunities that inspire increased ridership sooner and deliver sustainable growth for the future. Harley-Davidson’s More Roads plan supports the company’s strategy and 2027 objectives to: build 2 million new riders in the U.S., grow international business to 50 percent of annual volume, launch 100 new high impact motorcycles and do so profitably and sustainably.
Through 2022, the Company’s More Roads to Harley-Davidson plan will deliver:




New products - Keep current riders engaged and inspire a new generation of Harley-Davidson riders
Broader access - Meet customers where they are and how they want to engage with a multi-channel retail experience
Stronger dealers - Drive a performance framework to improve dealer financial strength and the Harley-Davidson customer experience
The company believes its accelerated plan will drive revenue growth and expand operating margins. The company expects to fund strategic opportunities while maintaining its current investment and return profile and capital allocation strategy.
“In the third quarter, we delivered new products and innovations with our model year 2019 motorcycles and engaged our dealers to support bringing the LiveWire™ electric motorcycle to market in 2019. Our brand and select products are now also accessible through a Harley-Davidson branded Amazon storefront in the U.S and significant support programs and dealer incentives were implemented to strengthen the dealer network - the hub of our customer experience,” said Levatich.

Building Riders
As Harley-Davidson continues to build the next generation of riders globally, the company increased its reach and impact through the third quarter and delivered a wide range of results including:

260,000 visitors to 115th anniversary celebrations in Milwaukee and Prague
43 million social video views and over 200 million media impressions from #FindYourFreedom intern content
Expanded access to Harley-Davidson through an Amazon storefront, new international dealers and new urban apparel stores in Asia

Manufacturing Optimization
To further improve its manufacturing operations and cost structure, in the first quarter of 2018 the Company commenced its multi-year manufacturing optimization initiative anchored by the consolidation of its motorcycle assembly plant in Kansas City, Mo. into its plant in York, Pa. The Company has reduced the cost outlook for this initiative and now expects to incur restructuring and other consolidation costs of $155 million to $185 million compared to the previous expectation of $170 million to $200 million through 2019. The company continues to expect capital investment of approximately $75 million through 2019 and ongoing annual cash savings of $65 million to $75 million after 2020. In the third quarter of 2018, costs related to the manufacturing optimization were $21.0 million and year-to-date were $83.4 million.

Harley-Davidson Retail Motorcycle Sales
Vehicles
3rd  Quarter
9 months
2018
2017
Change
2018
2017
Change
U.S.
36,220
41,793
(13.3)%
112,019
124,777
   (10.2)%
EMEA
10,543
10,078
       4.6%
39,249
37,475
     4.7%
Asia Pacific
7,433
7,457
 (0.3)%
21,480
22,628
      (5.1)%
Latin America
2,577
2,306
     11.8%
7,652
7,003
        9.3%
Canada
2,453
2,575
(4.7)%
8,340
8,763
      (4.8)%
International Total
23,006
22,416
       2.6%
76,721
75,869
      1.1%
Worldwide Total
59,226
64,209
  (7.8)%
188,740
200,646
(5.9)%


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The U.S. 601+cc industry was down 9.8 percent in the third quarter compared to 2017. Harley-Davidson’s third quarter U.S. market share was 50.9 percent. Harley-Davidson’s Europe market share was up 0.8 percentage point to 10.4 percent through September.

Motorcycles and Related Products Segment Results
$ in thousands
3rd Quarter
9 months
2018
2017
Change
2018
2017
Change
Motorcycle Shipments (vehicles)
48,639
41,662
    16.7%
185,176
194,300

(4.7)%
Revenue
$1,123,945
$962,136
    16.8%
$4,013,013
$3,867,982

     3.7%
   Motorcycles
$821,670
$639,849
    28.4%
$3,144,796
$
2,975,650

     5.7%
   Parts & Accessories
$212,406
$228,993
 (7.2)%
$612,495
$633,532

(3.3)%
   General Merchandise
$58,266
$72,687
(19.8)%
$183,520
$191,540

     (4.2)%
Gross Margin
30.9%
28.5%
2.4 pts.
33.7%
34.2%

(0.5) pts.
Operating Income
$65,662
$17,352
278.4%
$481,906
$571,250

(15.6)%
Operating Margin
5.8%
1.8%
4.0 pts.
12.0%
14.8%

(2.8) pts.

Third quarter revenue from the Motorcycles and Related Products segment (Motorcycles segment) was up versus the prior year. Operating margin as a percent of revenue increased in the quarter compared to 2017 due to higher gross margin and lower SG&A as a percent of revenue.

Financial Services Segment Results
$ in thousands
3rd Quarter
9 months
2018
2017
Change
2018
2017
Change
Revenue
$191,724
$189,059
         1.4%
$558,000
$550,314
1.4%
Operating Income
$83,754
$77,060
8.7%
$227,874
$211,631
7.7%

Financial Services segment operating income increased 8.7 percent in the third quarter compared to 2017.

Income Tax Rate
Harley-Davidson's year-to-date effective tax rate was 23.1 percent compared to 33.2 percent in 2017. The decreased tax rate was primarily due to the favorable impact of the 2017 Tax Cuts and Jobs Act.
    
Other Results
Cash and marketable securities were $937.0 million at the end of the third quarter 2018 compared to $683.1 million in 2017. Through September, Harley-Davidson generated $1.12 billion of cash from operating activities in 2018 compared to $949.1 million in 2017. The company paid a cash dividend of $0.37 per share for the third quarter, and a cumulative total of $1.11 per share for the first nine months of 2018. On a discretionary basis, Harley-Davidson repurchased 1.9 million shares of its common stock during the third quarter for $84.5 million. During the quarter, there were approximately 166.7 million weighted-average diluted common shares outstanding. At the end of the quarter, 21.3 million shares remained on board-approved share repurchase authorizations.

2018 Outlook    
For the full-year 2018, the company continues to expect the following:
Motorcycle shipments to be approximately 231,000 to 236,000 motorcycles. In the fourth quarter, the company expects to ship approximately 45,800 to 50,800 motorcycles
Motorcycles segment operating margin as a percent of revenue to be approximately 9 to 10 percent

The company has adjusted certain expectations and now expects the following:

3



Financial Services segment operating income to be up versus its previous expectation of flat to up slightly
Effective tax rate of approximately 22.5 to 24.0 percent versus its previous expectation of 23.5 to 25.0 percent
Capital expenditures of $230 million to $250 million including approximately $50 million to support manufacturing optimization, compared to its previous expectation of $250 million to $270 million

Company Background
Harley-Davidson, Inc. is the parent company of Harley-Davidson Motor Company and Harley-Davidson Financial Services. Since 1903, Harley-Davidson Motor Company has fulfilled dreams of personal freedom with custom, cruiser and touring motorcycles, riding experiences and events and a complete line of Harley-Davidson motorcycle parts, accessories, general merchandise, riding gear and apparel. Harley-Davidson Financial Services provides wholesale and retail financing, insurance, extended service and other protection plans and credit card programs to Harley-Davidson dealers and riders in the U.S., Canada and other select international markets. For more information, visit Harley-Davidson's Web site at www.harley-davidson.com.

Webcast Presentation
Harley-Davidson will discuss third quarter 2018 results on a webcast at 8:00 a.m. CT today. The webcast login and supporting slides can be accessed at http://investor.harley-davidson.com/news-and-events/events-and-presentations. The audio replay will be available by approximately 10:00 a.m. CT.

Non-GAAP Measures
This press release includes financial measures that have not been calculated in accordance with U.S. generally accepted accounting principles (GAAP) and are therefore referred to as non-GAAP financial measures. The non-GAAP measures described below are intended to be considered by users as supplemental information to the equivalent GAAP measures, to aid investors in better understanding the Company’s financial results. The Company believes that these non-GAAP measures provide useful perspective on underlying business results and trends, and a means to assess period-over-period results. These non-GAAP measures should not be considered as a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP. These non-GAAP measures may not be the same as similarly titled measures used by other companies due to possible differences in method and in items or events being adjusted.
The non-GAAP measures included in this press release are diluted EPS excluding manufacturing optimization costs and net income excluding manufacturing optimization costs. Manufacturing optimization costs include restructuring expenses and costs associated with temporary inefficiencies incurred in connection with the manufacturing optimization initiative. A reconciliation of these non-GAAP measures to the comparable GAAP measure is included later in this press release.
Forward-Looking Statements
The company intends that certain matters discussed in this release are "forward-looking statements" intended to qualify for the safe harbor 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”, "plans”, or "estimates" or words of similar meaning. Similarly, statements that describe future plans, strategies, objectives, outlooks, targets, guidance or goals are also forward-looking statements. Such forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially, unfavorably or favorably, from those anticipated as of the date of this release. Certain of such risks and uncertainties are described below. Shareholders, potential investors, and other readers are urged to consider these factors in evaluating the forward-looking statements and cautioned not to place undue reliance on such forward-looking statements. The forward-looking statements included in this release are

4



only made as of the date of this release, and the company disclaims any obligation to publicly update such forward-looking statements to reflect subsequent events or circumstances.

The company's ability to meet the targets and expectations noted above depends upon, among other factors, the company's ability to (i) execute its business plans and strategies, including the elements of the More Roads to Harley-Davidson strategy for growth that the company disclosed on July 30, 2018, and strengthen its existing business while enabling growth, (ii) manage the impact that new or adjusted tariffs may have on the cost of raw materials and components and our ability to sell product internationally, (iii) execute its strategy of growing ridership, globally, (iv) effectively execute the company’s manufacturing optimization initiative within expected costs and timing and successfully carry out its global manufacturing and assembly operations, (v) accurately analyze, predict and react to changing market conditions and successfully adjust to shifting global consumer needs and interests, (vi) negotiate and successfully implement a strategic alliance relationship with a local partner in Asia, (vii) develop and introduce products, services and experiences on a timely basis that the market accepts, that enable the company to generate desired sales levels and that provide the desired financial returns, (viii) perform in a manner that enables the company to benefit from market opportunities while competing against existing and new competitors, (ix) realize expectations concerning market demand for electric models, which may depend in part on the building of necessary infrastructure, (x) prevent, detect, and remediate any issues with its motorcycles or any issues associated manufacturing processes to avoid delays in new model launches, recall campaigns, regulatory agency investigations, increased warranty costs or litigation and adverse effects on its reputation and brand strength, and carry out any product programs or recalls within expected costs and timing, (xi) manage supply chain issues, including quality issues and any unexpected interruptions or price increases caused by raw material shortages or natural disasters, (xii) manage the impact that prices for and supply of used motorcycles may have on its business, including on retail sales of new motorcycles, (xiii) reduce other costs to offset costs of the More Roads to Harley-Davidson plan and redirect capital without adversely affecting its existing business, (xiv) balance production volumes for its new motorcycles with consumer demand, (xv) manage risks that arise through expanding international manufacturing, operations and sales, (xvi) manage through changes in general economic and business conditions, including changing capital, credit and retail markets, and the changing political environment, (xvii) continue to manage the relationships and agreements that the company has with its labor unions to help drive long-term competitiveness, (xviii) accurately estimate and adjust to fluctuations in foreign currency exchange rates, interest rates and commodity prices, (xix) continue to develop the capabilities of its distributors and dealers, effectively implement changes relating to its dealers and distribution methods and manage the risks that its independent dealers may have difficulty obtaining capital and managing through changing economic conditions and consumer demand, (xx) retain and attract talented employees, (xxi) prevent a cybersecurity breach involving consumer, employee, dealer, supplier, or company data and respond to evolving regulatory requirements regarding data security, (xxii) manage the credit quality, the loan servicing and collection activities, and the recovery rates of HDFS' loan portfolio, (xxiii) adjust to tax reform, healthcare inflation and reform and pension reform, and successfully estimate the impact of any such reform on the company’s business, (xxiv) manage through the effects inconsistent and unpredictable weather patterns may have on retail sales of motorcycles, (xxv) implement and manage enterprise-wide information technology systems, including systems at its manufacturing facilities, (xxvi) manage changes and prepare for requirements in legislative and regulatory environments for its products, services and operations, (xxvii) manage its exposure to product liability claims and commercial or contractual disputes, and (xxviii) successfully access the capital and/or credit markets on terms (including interest rates) that are acceptable to the company and within its expectations.

The Company could experience delays or disruptions in its operations as a result of work stoppages, strikes, natural causes, terrorism or other factors. Further, actual foreign currency exchange rates may vary from underlying assumptions. Other factors are described in risk factors that the Company has disclosed in documents previously filed with the Securities and Exchange Commission. Many of these risk factors are impacted by the current changing capital, credit and retail markets and the Company's ability to manage through inconsistent economic conditions.

The Company’s ability to sell its motorcycles and related products and services and to meet its financial expectations also depends on the ability of the Company’s independent dealers to sell its motorcycles and related products and services to retail customers. The Company depends on the capability and financial capacity of its

5



independent dealers to develop and implement effective retail sales plans to create demand for the motorcycles and related products and services they purchase from the Company. In addition, the Company’s independent dealers and distributors may experience difficulties in operating their businesses and selling Harley-Davidson motorcycles and related products and services as a result of weather, economic conditions or other factors. In recent years, HDFS has experienced historically low levels of retail credit losses, but there is no assurance that this will continue. The Company believes that HDFS' retail credit losses may increase over time due to changing consumer credit behavior and HDFS' efforts to increase prudently structured loan approvals to sub-prime borrowers, as well as actions that the Company has taken and could take that impact motorcycle values. Refer to “Risk Factors” under Item 1A of the Company’s Annual Report on Form 10-K for the year ended December 31, 2017 for a discussion of additional risk factors and a more complete discussion of some of the cautionary statements noted above.

Contacts: Media, Patricia Sweeney, +1-414-343-8199; Financial, Amy Giuffre, +1-414-343-8002



6



Harley-Davidson, Inc.
Condensed Consolidated Statements of Income(1) 
(In thousands, except per share amounts)
 
 
(Unaudited)
 
(Unaudited)
 
(Unaudited)
 
(Unaudited)
 
 
Three months ended
 
Nine months ended
 
 
September 30,
2018
 
September 24,
2017
 
September 30,
2018
 
September 24,
2017
Motorcycles and Related Products revenue
 
$
1,123,945

 
$
962,136

 
$
4,013,013

 
$
3,867,982

Gross profit
 
347,415

 
274,313

 
1,353,273

 
1,322,098

Selling, administrative and engineering expense
 
266,921

 
256,961

 
797,323

 
750,848

Restructuring expense
 
14,832

 

 
74,044

 

  Operating income from Motorcycles and Related Products
 
65,662

 
17,352

 
481,906

 
571,250

 
 
 
 
 
 
 
 
 
Financial Services revenue
 
191,724

 
189,059

 
558,000

 
550,314

Financial Services expense
 
107,970

 
111,999

 
330,126

 
338,683

    Operating income from Financial Services
 
83,754

 
77,060

 
227,874

 
211,631

 
 
 
 
 
 
 
 
 
Operating income
 
149,416

 
94,412

 
709,780

 
782,881

Other income (expense), net
 
644

 
2,296

 
1,509

 
6,887

Investment (loss) income
 
(1,106
)
 
1,083

 
2,630

 
2,539

Interest expense
 
7,762

 
7,896

 
23,180

 
23,295

Income before provision for income taxes
 
141,192

 
89,895

 
690,739

 
769,012

Provision for income taxes
 
27,337

 
21,686

 
159,783

 
255,567

Net income
 
$
113,855

 
$
68,209

 
$
530,956

 
$
513,445

 
 
 
 
 
 
 
 
 
Earnings per common share:
 
 
 
 
 
 
 
 
  Basic
 
$
0.69

 
$
0.40

 
$
3.18

 
$
2.96

    Diluted
 
$
0.68

 
$
0.40

 
$
3.17

 
$
2.95

 
 
 
 
 
 
 
 
 
Weighted-average common shares:
 
 
 
 
 
 
 
 
  Basic
 
165,927

 
169,850

 
166,885

 
173,362

    Diluted
 
166,664

 
170,688

 
167,681

 
174,303

 
 
 
 
 
 
 
 
 
Cash dividends per common share
 
$
0.370

 
$
0.365

 
$
1.110

 
$
1.095


(1) See note regarding the adoption of new accounting standards below.










Harley-Davidson, Inc.
Reconciliation of GAAP Amounts to Non-GAAP Amounts
(In thousands, except per share amounts)
 
 
(Unaudited)
 
(Unaudited)
 
 
Three months ended
 
Nine months ended
 
 
September 30,
2018
 
September 30,
2018
Net income excluding manufacturing optimization costs
 
 
 
 
Net income (GAAP)
 
$
113,855

 
$
530,956

Restructuring expense and cost of temporary inefficiencies
 
21,038

 
83,370

Tax effect of adjustments(1)
 
(5,102
)
 
(20,218
)
Adjustments net of tax
 
15,936

 
63,152

Adjusted net income (Non-GAAP)
 
$
129,791

 
$
594,108

 
 
 
 
 
Diluted earnings per share excluding manufacturing optimization costs
 
 
 
 
Diluted earnings per share (GAAP)
 
$
0.68

 
$
3.17

Adjustments net of tax, per share
 
0.10

 
0.38

Adjusted diluted earnings per share (Non-GAAP)
 
$
0.78

 
$
3.55

 
 
 
 
 
Weighted average diluted shares outstanding
 
166,664

 
167,681


(1) The income tax effect of adjustments has been computed using the company's effective income tax rate excluding discrete items.





Harley-Davidson, Inc.
Condensed Consolidated Balance Sheets(1) 
(In thousands)
 
 
(Unaudited)
 
 
 
(Unaudited)
 
 
September 30,
2018
 
December 31,
2017
 
September 24,
2017
ASSETS
 
 
 
 
 
 
Current assets:
 
 
 
 
 
 
Cash and cash equivalents
 
$
926,992

 
$
687,521

 
$
683,134

Marketable securities
 
10,011

 

 

Accounts receivable, net
 
332,309

 
329,986

 
343,124

Finance receivables, net
 
2,116,386

 
2,105,662

 
2,058,168

Inventories
 
516,247

 
538,202

 
469,091

Restricted cash
 
36,471

 
47,518

 
52,209

Other current assets
 
151,042

 
175,853

 
182,416

Total current assets
 
4,089,458

 
3,884,742

 
3,788,142

Finance receivables, net
 
5,187,176

 
4,859,424

 
5,042,857

Other long-term assets
 
1,227,166

 
1,228,506

 
1,257,360

 
 
$
10,503,800

 
$
9,972,672

 
$
10,088,359

LIABILITIES AND SHAREHOLDERS’ EQUITY
 
 
 
 
 
 
Current liabilities:
 
 
 
 
 
 
Accounts payable & accrued liabilities
 
$
875,799

 
$
757,419

 
$
851,075

Short-term debt
 
1,373,859

 
1,273,482

 
834,875

Current portion of long-term debt, net
 
1,526,156

 
1,127,269

 
1,530,401

Total current liabilities
 
3,775,814

 
3,158,170

 
3,216,351

Long-term debt, net
 
4,196,517

 
4,587,258

 
4,607,791

Pension and postretirement healthcare liabilities
 
166,936

 
173,359

 
215,396

Other long-term liabilities
 
211,561

 
209,608

 
192,001

 
 
 
 
 
 
 
Total shareholders’ equity
 
2,152,972

 
1,844,277

 
1,856,820

 
 
$
10,503,800

 
$
9,972,672

 
$
10,088,359


(1) See note regarding the adoption of new accounting standards below.





Harley-Davidson, Inc.
Condensed Consolidated Statements of Cash Flows(1) 
(In thousands)
 
 
(Unaudited)
 
(Unaudited)
 
 
Nine months ended
 
 
September 30,
2018
 
September 24,
2017
Net cash provided by operating activities
 
$
1,122,555

 
$
949,075

 
 
 
 
 
Cash flows from investing activities:
 
 
 
 
Capital expenditures
 
(119,845
)
 
(114,022
)
Finance receivables, net
 
(474,465
)
 
(447,250
)
Other
 
(21,753
)
 
7,272

Net cash used by investing activities
 
(616,063
)
 
(554,000
)
 
 
 
 
 
Cash flows from financing activities:
 
 
 
 
Proceeds from issuance of medium-term notes
 
1,144,018

 
893,668

Repayments of medium-term notes
 
(877,488
)
 
(400,000
)
Repayments of securitization debt
 
(224,507
)
 
(367,298
)
Net increase (decrease) in credit facilities and unsecured commercial paper
 
102,154

 
(225,038
)
Borrowings of asset-backed commercial paper
 
120,903

 
371,253

Repayments of asset-backed commercial paper
 
(156,258
)
 
(129,690
)
Dividends paid
 
(186,105
)
 
(190,121
)
Purchase of common stock for treasury
 
(195,998
)
 
(465,167
)
Issuance of common stock under employee stock option plans
 
3,157

 
7,884

Net cash used by financing activities
 
(270,124
)
 
(504,509
)
 
 
 
 
 
Effect of exchange rate changes on cash, cash equivalents and restricted cash
 
(12,567
)
 
28,817

 
 
 
 
 
Net increase (decrease) in cash, cash equivalents and restricted cash
 
$
223,801

 
$
(80,617
)
 
 
 
 
 
Cash, cash equivalents and restricted cash:
 
 
 
 
Cash, cash equivalents and restricted cash - beginning of period
 
$
746,210

 
$
827,131

Net increase (decrease) in cash, cash equivalents and restricted cash
 
223,801

 
(80,617
)
Cash, cash equivalents and restricted cash - end of period
 
$
970,011

 
$
746,514

 
 
 
 
 
Reconciliation of cash, cash equivalents and restricted cash to the Consolidated Balance Sheet:
 
 
 
 
Cash and cash equivalents
 
$
926,992

 
$
683,134

Restricted cash
 
36,471

 
52,209

Restricted cash included in other long-term assets
 
6,548

 
11,171

Total cash, cash equivalents and restricted cash shown in the Statement of Cash Flows
 
$
970,011

 
$
746,514


(1) See note regarding the adoption of new accounting standards below.











Adoption of New Accounting Standards
On January 1, 2018, the Company adopted the following new accounting standards updates (ASUs):

ASU 2014-09 Revenue from Contracts with Customers was adopted using the modified retrospective method. As a result, the Company recorded a $6.0 million increase to the opening balance of retained earnings as of January 1, 2018.

ASU 2016-18 Statement of Cash Flows (Topic 230): Restricted Cash was adopted on a retrospective basis. As a result, the change in restricted cash has been excluded from financing activities and included in the change in cash, cash equivalents and restricted cash and the prior period has been recast to reflect the new presentation.

ASU 2017-07 Compensation - Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost was adopted on a retrospective basis. As a result, the non-service cost components of net periodic benefit cost have been presented in Other income (expense), net and the prior period has been recast to reflect the new presentation.




Motorcycles and Related Products Revenue and
Motorcycle Shipment Data
(Unaudited)
 
 
Three months ended
 
Nine months ended
 
 
September 30,
2018
 
September 24,
2017
 
September 30,
2018
 
September 24,
2017
MOTORCYCLES AND RELATED PRODUCTS REVENUE(1) (in thousands)
 
 
 
 
 
 
 
 
Motorcycles
 
$
821,670

 
$
639,849

 
$
3,144,796

 
$
2,975,650

Parts & Accessories
 
212,406

 
228,993

 
612,495

 
633,532

General Merchandise
 
58,266

 
72,687

 
183,520

 
191,540

Licensing
 
10,680

 
9,904

 
29,445

 
29,237

Other
 
20,923

 
10,703

 
42,757

 
38,023

 
 
$
1,123,945

 
$
962,136

 
$
4,013,013

 
$
3,867,982

MOTORCYCLE SHIPMENTS:
 
 
 
 
 
 
 
 
United States
 
26,213

 
19,668

 
108,057

 
118,418

International
 
22,426

 
21,994

 
77,119

 
75,882

Total
 
48,639

 
41,662

 
185,176

 
194,300

MOTORCYCLE PRODUCT MIX:
 
 
 
 
 
 
 
 
Touring
 
22,204

 
14,674

 
84,125

 
80,392

Cruiser
 
16,049

 
17,292

 
61,951

 
67,693

Sportster® / Street
 
10,386

 
9,696

 
39,100

 
46,215

Total
 
48,639

 
41,662

 
185,176

 
194,300


(1) In connection with the adoption of ASU 2014-09, the Company has revised its presentation of disaggregated revenue and the prior period has been recast to reflect the new presentation.






Worldwide Retail Sales of Harley-Davidson Motorcycles(1) 
 
 
Three months ended
 
Nine months ended
 
 
September 30,
2018
 
September 30,
2017
 
September 30,
2018
 
September 30,
2017
 
 
 
 
 
 
 
 
 
United States
 
36,220

 
41,793

 
112,019

 
124,777

 
 
 
 
 
 
 
 
 
Europe(2)
 
9,239

 
8,970

 
34,967

 
33,311

EMEA - Other
 
1,304

 
1,108

 
4,282

 
4,164

Total EMEA
 
10,543

 
10,078

 
39,249

 
37,475

 
 
 
 
 
 
 
 
 
Asia Pacific(3)
 
4,578

 
5,136

 
14,126

 
15,782

Asia Pacific - Other
 
2,855

 
2,321

 
7,354

 
6,846

Total Asia Pacific
 
7,433

 
7,457

 
21,480

 
22,628

 
 
 
 
 
 
 
 
 
Latin America
 
2,577

 
2,306

 
7,652

 
7,003

Canada
 
2,453

 
2,575

 
8,340

 
8,763

Total International Retail Sales
 
23,006

 
22,416

 
76,721

 
75,869

Total Worldwide Retail Sales
 
59,226

 
64,209

 
188,740

 
200,646

(1) Data source for retail sales figures shown above is new sales warranty and registration information provided by Harley-Davidson dealers and compiled by the Company. The Company must rely on information that its dealers supply concerning new retail sales, and the Company does not regularly verify the information that its dealers supply. This information is subject to revision.
 
(2) Europe data includes Austria, Belgium, Denmark, Finland, France, Germany, Greece, Italy, Luxembourg, Netherlands, Norway, Portugal, Spain, Sweden, Switzerland, and the United Kingdom.

(3)Asia Pacific data includes Japan, Australia, New Zealand and Korea.
Motorcycle Registration Data(1) 
 
 
Nine months ended
 
 
September 30,
2018
 
September 30,
2017
United States(2)
 
222,468

 
243,718

Europe(3)
 
347,884

 
345,701


(1) Data includes on-road 601+cc models. On-road 601+cc models include dual purpose models, three-wheeled motorcycles and autocycles.

(2) United States data is derived from information provided by Motorcycle Industry Council (MIC). This third-party data is subject to revision and update.

(3) Europe data includes Austria, Belgium, Denmark, Finland, France, Germany, Greece, Italy, Luxembourg, Netherlands, Norway, Portugal, Spain, Sweden, Switzerland, and the United Kingdom. Industry retail motorcycle registration data includes 601+cc models derived from information provided by Association des Constructeurs Europeens de Motocycles (ACEM), an independent agency. This third-party data is subject to revision and update.