| Statement Of Income (USD $) | ||||
| In Thousands, except Per Share data | 3 Months Ended
Jun. 28, 2009 | 3 Months Ended
Jun. 29, 2008 | 6 Months Ended
Jun. 28, 2009 | 6 Months Ended
Jun. 29, 2008 |
| Net revenue | $1,153,645 | $1,572,569 | $2,444,293 | $2,878,882 |
| Cost of goods sold | 767,367 | 1,010,645 | 1,581,232 | 1,840,821 |
| Gross profit | 386,278 | 561,924 | 863,061 | 1,038,061 |
| Financial services income | 123,967 | 106,840 | 228,634 | 200,129 |
| Financial services expense | 186,086 | 69,693 | 279,548 | 128,075 |
| Operating (loss) income from financial services before goodwill impairment | (62,119) | 37,147 | (50,914) | 72,054 |
| Goodwill impairment | 28,387 | 0 | 28,387 | 0 |
| Operating (loss) income from financial services | (90,506) | 37,147 | (79,301) | 72,054 |
| Selling, administrative and engineering expense | 209,893 | 241,659 | 430,973 | 461,650 |
| Restructuring expense | 15,131 | 11,549 | 49,993 | 11,549 |
| Income from operations | 70,748 | 345,863 | 302,794 | 636,916 |
| Investment income | 317 | 2,240 | 2,270 | 4,282 |
| Interest expense | 1,538 | 0 | 11,798 | 0 |
| Income before provision for income taxes | 69,527 | 348,103 | 293,266 | 641,198 |
| Provision for income taxes | 49,777 | 125,316 | 156,169 | 230,830 |
| Net income | $19,750 | $222,787 | $137,097 | $410,368 |
| Earnings per common share: | ||||
| Basic | 0.08 | 0.95 | 0.59 | 1.74 |
| Diluted | 0.08 | 0.95 | 0.59 | 1.74 |
| Cash dividends per common share | 0.1 | 0.33 | 0.2 | 0.63 |
| Statement Of Financial Position Classified (USD $) | |||
| In Thousands | Jun. 28, 2009
| Dec. 31, 2008
| Jun. 29, 2008
|
| Current assets: | |||
| Cash and cash equivalents | $1,031,194 | $593,558 | $803,400 |
| Marketable securities | 0 | 0 | 524 |
| Accounts receivable, net | 287,494 | 296,258 | 290,139 |
| Finance receivables held for sale | 0 | 2,443,965 | 1,617,817 |
| Finance receivables held for investment, net | 1,651,700 | 1,378,461 | 1,246,325 |
| Inventories | 435,043 | 400,908 | 341,396 |
| Prepaid expenses and other current assets | 358,663 | 264,731 | 206,624 |
| Total current assets | 3,764,094 | 5,377,881 | 4,506,225 |
| Finance receivables held for investment, net | 3,472,325 | 817,102 | 934,534 |
| Property, plant and equipment, net | 1,027,191 | 1,094,487 | 1,059,897 |
| Prepaid pension costs | 0 | 0 | 77,809 |
| Goodwill | 114,308 | 138,579 | 63,103 |
| Other long-term assets | 386,768 | 400,576 | 142,185 |
| Assets, Total | 8,764,686 | 7,828,625 | 6,783,753 |
| Current liabilities: | |||
| Accounts payable | 293,908 | 323,736 | 322,449 |
| Accrued liabilities | 558,635 | 541,372 | 518,814 |
| Short-term debt | 1,690,910 | 1,738,649 | 526,898 |
| Current portion of long-term debt | 0 | 0 | 401,036 |
| Total current liabilities | 2,543,453 | 2,603,757 | 1,769,197 |
| Long-term debt | 3,038,387 | 2,176,238 | 2,050,000 |
| Pension liability | 491,021 | 484,003 | 64,080 |
| Postretirement healthcare benefits | 263,712 | 274,408 | 205,848 |
| Other long-term liabilities | 175,330 | 174,616 | 161,791 |
| Commitments and contingencies (Note 18) | 0 | 0 | 0 |
| Total shareholders' equity | 2,252,783 | 2,115,603 | 2,532,837 |
| Liabilities and Stockholders' Equity, Total | $8,764,686 | $7,828,625 | $6,783,753 |
| Statement Of Cash Flows Indirect (USD $) | ||
| In Thousands | 6 Months Ended
Jun. 28, 2009 | 6 Months Ended
Jun. 29, 2008 |
| Net cash used by operating activities (Note 3) | ($164,442) | ($39,016) |
| Cash flows from investing activities: | ||
| Capital expenditures | (57,323) | (99,597) |
| Origination of finance receivables held for investment | (281,486) | (330,088) |
| Collections on finance receivables held for investment | 255,387 | 256,723 |
| Collection of retained securitization interests | 26,904 | 18,607 |
| Sales and redemptions of marketable securities | 0 | 2,019 |
| Other, net | (3,598) | 1,193 |
| Net cash used by investing activities | (60,116) | (151,143) |
| Cash flows from financing activities: | ||
| Proceeds from issuance of medium-term notes | 0 | 993,550 |
| Proceeds from issuance of senior unsecured notes | 589,255 | 0 |
| Proceeds from securitization debt | 497,771 | 0 |
| Repayments of securitization debt | (13,907) | 0 |
| Net decrease in credit facilities and unsecured commercial paper | (392,366) | (116,621) |
| Net borrowings of asset-backed commercial paper | 87,706 | 0 |
| Net change in restricted cash | (76,658) | 0 |
| Dividends | (46,913) | (148,591) |
| Purchase of common stock for treasury | (296) | (150,134) |
| Excess tax benefits from share-based payments | 147 | 252 |
| Issuance of common stock under employee stock option plans | 10 | 736 |
| Net cash provided by financing activities | 644,749 | 579,192 |
| Effect of exchange rate changes on cash and cash equivalents | 17,445 | 11,513 |
| Net increase in cash and cash equivalents | 437,636 | 400,546 |
| Cash and cash equivalents: | ||
| At beginning of period | 593,558 | 402,854 |
| At end of period | $1,031,194 | $803,400 |
| Notes to Financial Statements | |
| 6 Months Ended
Jun. 28, 2009 USD / shares | |
| Notes to Financial Statements [Abstract] | |
| 1.Basis of Presentation and Use of Estimates | 1. Basis of Presentation and Use of Estimates The condensed consolidated financial statements include the accounts of Harley-Davidson, Inc. and its wholly-owned subsidiaries (the Company), including the accounts of the groups of companies doing business as Harley-Davidson Motor Company (HDMC), Buell Motorcycle Company (Buell), MV Agusta (MV) and Harley-Davidson Financial Services (HDFS). In addition, certain variable interest entities (VIEs) related to secured financing are consolidated as the Company is the primary beneficiary. All intercompany accounts and material transactions are eliminated. In the opinion of management, the accompanying unaudited condensed consolidated financial statements contain all adjustments (consisting only of normal recurring adjustments) necessary to present fairly the condensed consolidated balance sheets as of June28, 2009 and June29, 2008, the condensed consolidated statements of income for the three and six month periods then ended and the condensed consolidated statements of cash flows for the six month periods then ended. The Companys management has evaluated subsequent events after June28, 2009 through July31, 2009, which is the date the Companys financial statements were issued. 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 (the SEC) and U.S. generally accepted accounting principles (U.S. GAAP) for interim financial information. These condensed consolidated financial statements should be read in conjunction with the audited financial statements and notes included in the Companys Annual Report on Form 10-K for the year ended December31, 2008. In connection with term asset-backed securitization transactions prior to 2009, HDFS utilized Qualifying Special Purpose Entities (QSPEs) as defined by Statement of Financial Accounting Standards (SFAS) No.140 Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities. Assets and liabilities of the QSPEs are not consolidated in the financial statements of the Company. For further discussion of QSPEs and off-balance sheet securitization transactions see Note 7. The Company operates in two business segments: Motorcycles Related Products (Motorcycles) and Financial Services (Financial Services). The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and the accompanying notes. Actual results could differ from those estimates. Certain prior year amounts related to debt have been reclassified to conform to the current year presentation. |
| 2.New Accounting Standards | 2. New Accounting Standards Accounting Standards Recently Adopted In December 2007, the Financial Accounting Standards Board (FASB) issued SFAS No.141 (revised 2007), Business Combinations. SFAS No.141(R) changes the accounting for business combinations in a number of areas including the treatment of contingent consideration, pre-acquisition contingencies, transaction costs, in-process research and development and restructuring costs. In addition, under SFAS No.141(R), changes in an acquired entitys deferred tax assets and uncertain tax positions after the measurement period will impact income tax expense. SFAS No.141(R) is effective for the Company beginning in fiscal year 2009. This standard will change the Companys accounting treatment for business combinations on a prospective basis. In March 2008, the FASB issued SFAS No.161, Disclosures about Derivative Instruments and Hedging Activities, an amendment of FASB Statement No.133. SFAS No.161 requires enhanced disclosures about an entitys derivative and hedging activities. Entities will be required to provide enhanced disclosures about: (a)how and why an entity uses derivative instruments; (b)how derivative instruments and related hedge items are accounted for under SFAS No.133 and its related interpretations; and (c)how derivative instruments and related hedge items affect an entitys financial position, financial performance and cash flows. The Company adopted SFAS No.161 as of January1, 2009; see Note 11 for further discussion. In June 2008, the FASB issued FASB Staff Position (FSP) Emerging Issues Task Force (EITF) 03-6-1. Determining Whether Instruments Granted in Share-Based Payment Transactions Are Participating Securities. FSP EITF 03-6-1 addresses whether instruments granted in share-based payment transactions are participating securities prior to vesting and, therefore, need to be included in the earnings allocation in computing earnings per share under the two-class method as described in SFAS No.128, Earnings Per Share. Under the guidance of FSP EITF 03-6-1, unvested share-based payment awards that contain non-forfeitable rights to dividends or dividend equivalents (whether paid or unpaid) are participating securities and must be included in the computation of earnings per share pursuant to the two-class method. All prior period earnings per share information must be adjusted retrospectively. The Company adopted FSP EITF 03-6-1 as of January1, 2009; see Note 14 for further discussion. In April 2009, the FASB issued three FSPs intended to provide additional application guidance and enhance disclosures regarding fair value measurements and impairments of securities: FSP No. FAS 157-4, Determining Fair Value When the Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly FSP No. FAS 107-1 and APB 28-1, Interim Disclosures about Fair Value of Financial Instruments and FSP No. FAS 115-2 and FAS 124-2, Recognition and Presentation of Other-Than-Temporary Impairments. FSP No. FAS 157-4 provides additional guidance for estimating fair value in ac |
| 3.Additional Balance Sheet and Cash Flow Information | 3. Additional Balance Sheet and Cash Flow Information Finance receivables held for investment, net consist of the following (in thousands): June28, 2009 December31, 2008 June29, 2008 Wholesale $ 1,084,709 $ 1,164,236 $ 969,121 Retail 3,877,424 740,721 785,970 4,962,133 1,904,957 1,755,091 Allowance for credit losses 114,335 40,068 35,889 4,847,798 1,864,889 1,719,202 Investment in retained securitization interests 276,227 330,674 461,657 $ 5,124,025 $ 2,195,563 $ 2,180,859 During the second quarter of 2009, the Company reclassified $3.14 billion of finance receivables held for sale at fair value to finance receivables held for investment, net due to the structure of its May 2009 term asset-backed securitization transaction and the Companys intent to structure future securitization transactions in a manner that will not qualify for accounting sale treatment under the provisions of SFAS No.140. As a result of the reclassification, the Company recorded a $72.7 million increase to the allowance for credit losses in order to establish the initial reserve for the reclassified receivables. Of the $72.7 million increase, $10.9 million related to the reclassification of finance receivables securitized in May 2009 and $61.8 million related to the reclassification of the remaining finance receivables held for sale. Inventories are valued at the lower of cost or market. Substantially all inventories located in the United States are valued using the last-in, first-out (LIFO) method. Other inventories are valued at the lower of cost or market using the first-in, first-out (FIFO) method. Inventories consist of the following (in thousands): June28, 2009 December31, 2008 June29, 2008 Components at the lower of FIFO cost or market Raw materials and work in process $ 136,786 $ 151,896 $ 142,261 Motorcycle finished goods 229,137 185,464 114,590 Parts and accessories and general merchandise 105,711 103,682 118,318 Inventory at lower of FIFO cost or market 471,634 441,042 375,169 Excess of FIFO over LIFO cost 36,591 40,134 33,773 $ 435,043 $ 400,908 $ 341,396 The reconciliation of net income to net cash (used by) provided by operating activities is as follows (in thousands): Six months ended June 28, 2009 June 29, 2008 Cash flows from operating activities: Net income $ 137,097 $ 410,368 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 126,892 102,619 Provision for employee long-term benefits 46,286 41,403 Contributions to pension and postretirement plans (14,510 ) (8,518 ) Stock compensation expense 6,622 12,110 Loss on current year securitizations 5 |
| 4.Acquisition | 4. Acquisition On August8, 2008, the Company announced the completion of its purchase of privately-held Italian motorcycle maker MV Agusta (MV). The Company acquired 100 percent of MV shares for total consideration of 68.3million ($105.1 million), which includes the satisfaction of existing bank debt for 47.5million ($73.2 million). In addition, the agreement provides for a contingent payment to the former owner of MV in 2016, if certain financial targets are met during 2013 through 2015. The contingent payment, which could be a material component of the final consideration, will be recorded as goodwill when the amount is determinable. The Company financed the transaction and MVs initial working capital requirements through 130.0million of debt under existing credit facilities. The Company believes the acquisition of MV will enhance the Companys presence in Europe and its penetration into the performance segment of the motorcycle market. In conjunction with the acquisition of MV, the Company recorded goodwill of $82.4 million. The operating results of MV, which is part of the Motorcycles segment, have been included in the Companys consolidated financial statements from the date of acquisition. Pro forma information reflecting this acquisition has not been disclosed as the pro forma impact on consolidated net income would not be material. |
| 5.Restructuring Costs | 5. Restructuring Costs 2009 Restructuring Plan During 2009, in response to the U.S. economic recession and worldwide slowdown in consumer demand, the Company committed to a volume reduction and a combination of restructuring actions (2009 Restructuring Plan) in the Motorcycles segment. The 2009 Restructuring Plan is designed to reduce excess capacity, exit certain business operations and lower the Companys cost structure. The Companys planned actions include: consolidating its two engine and transmission plants in the Milwaukee area into its facility in Menomonee Falls, Wisconsin; consolidating paint and frame operations at its assembly facility in York, Pennsylvania into existing operations at that site; closing its distribution facility in Franklin, Wisconsin and consolidating Parts and Accessories and General Merchandise distribution through a third party; and discontinuing the domestic transportation fleet. In addition, as of June28, 2009, the 2009 Restructuring Plan included a reduction of approximately 1,400 to 1,500 positions over 2009 and 2010. This included approximately 1,100 to 1,200 hourly production positions and approximately 300 non-production, primarily salaried positions. The Company expected that approximately 1,100 to 1,200 positions (800 to 900 hourly production and 300 non-production) of the total will be eliminated in 2009. The remaining 300 jobs will be eliminated during 2010. See Note 19 for disclosure of additional restructuring announcements made after June28, 2009. Restructuring charges consist of employee severance and termination costs, accelerated depreciation on the long lived assets that will be exited as part of the 2009 Restructuring Plan and other related costs. As of June28, 2009, approximately 800 employees have left the Company under the 2009 Restructuring Plan. The following table summarizes the Companys 2009 Restructuring Plan reserve recorded in accrued liabilities as of June28, 2009 (in thousands): EmployeeSeveranceand Termination Costs Accelerated Depreciation Other Total Original reserve $ 30,816 $ 3,786 $ 261 $ 34,863 Utilized - cash (1,047 ) $ (261 ) (1,308 ) Utilized - noncash (4,533 ) $ (3,786 ) (8,319 ) Balance, March29, 2009 $ 25,236 $ 25,236 Additional provision 8,636 $ 5,355 $ 1,140 15,131 Utilized - cash (7,140 ) $ (1,140 ) (8,280 ) Utilized - noncash $ (5,355 ) (5,355 ) Balance, June28, 2009 $ 26,732 $ 26,732 The Companys 2009 Restructuring Plan reserve includes an estimated amount for contingencies related to uncertainty surrounding the cost and execution of these planned actions. Other restructuring costs include items such as the exit costs for terminating supply contracts, lease termination and moving costs. 2008 Restructuring Plan During the second quarter of 2008, the Company finalized a plan to ship fewer motorcycles to its wo |
| 6.Goodwill | 6. Goodwill Goodwill represents the excess of acquisition cost over the fair value of the net assets purchased. Goodwill is tested for impairment, based on financial data related to the reporting unit to which it has been assigned, at least annually or whenever events or changes in circumstances indicate that the carrying value may not be recoverable. The impairment test involves comparing the estimated fair value of the reporting unit associated with the goodwill to its carrying amount, including goodwill. If the carrying amount of the reporting unit exceeds its fair value goodwill must be adjusted to its implied fair value. As a result of the Companys lower shipment volume projections and the decrease in operating performance at HDFS during 2009 due to significant write-downs of its loan portfolio and investment in retained securitization interests, the Company performed an impairment test of the goodwill balance associated with HDFS as of June 28, 2009. The results of the impairment test indicated the current fair value of HDFS had declined below its carrying value and as such the Company recorded an impairment charge of $28.4 million which represents the portion of the Companys total goodwill balance associated with the Financial Services segment. |
| 7.Off-Balance Sheet Finance Receivable Securitizations | 7. Off-Balance Sheet Finance Receivable Securitizations Prior to 2009, HDFS sold U.S. retail motorcycle loans through term asset-backed securitization transactions that qualified for accounting sale treatment under SFAS No.140. Under the terms of these off-balance sheet term asset-backed securitization transactions, HDFS sold retail loans to a securitization trust. The securitization trust issued notes to investors, with various maturities and interest rates, secured by future collections of purchased retail loans. The proceeds from the issuance of the term asset-backed securities were utilized by the securitization trust to purchase retail loans from HDFS. Upon sale of the retail loans to the securitization trust, HDFS received cash, recorded a gain or loss on the transaction and also retained an interest in excess cash flows, subordinated securities, and the right to receive cash reserve account deposits in the future, collectively referred to as investment in retained securitization interests. The investment in retained securitization interests relating to off-balance sheet term asset-backed securitization transactions is included with finance receivables held for investment in the consolidated balance sheets. The interest in excess cash flows reflects the expected cash flows arising from U.S. retail motorcycle loans sold to the securitization trust less expected servicing fees, credit losses and contracted payment obligations owed to securitization trust investors. As part of the first quarter 2008 off-balance sheet term asset-backed securitization transaction, HDFS retained $54.0 million of the subordinated securities issued by the securitization trust. These securities have a stated principal and fixed interest rate and are subordinated to the senior securities within the securitization trust. Reserve account deposits represent interest-earning cash deposits which collateralize the trust securities. The funds are not available for use by HDFS until the reserve account balances exceed thresholds specified in the securitization agreements. HDFS retains servicing rights on the U.S. retail motorcycle loans that it has sold to the securitization trust and receives annual servicing fees approximating 1% of the outstanding securitized retail loans. HDFS serviced $2.46 billion of U.S. retail motorcycle loans securitized in off-balance sheet term asset-backed securitization transactions as of June28, 2009. The servicing fee paid to HDFS is considered adequate compensation for the services provided and is included in financial services income as earned. HDFS earned $22.2 million from contractually specified servicing fees, late fees, and ancillary fees during the first six months of 2009. These fees are recorded in financial services income. Gains or losses on off-balance sheet term asset-backed securitizations from the sale of the U.S. retail motorcycle loans are recognized in the period in which the sale occurs. The amount of the gain or loss depends on the proceeds received and the original carrying amount of the transferred U.S. retail motorcycle loans, allocated between the assets sold and the retained interests |
| 8.Secured Borrowings | 8. Secured Borrowings Asset-Backed Commercial Paper Conduit Facility In December 2008, HDFS transferred $666.7 million of U.S. retail motorcycle finance receivables to a special purpose entity (SPE), which in turn, issued $500.0 million of debt to third-party bank-sponsored asset-backed commercial paper conduits. The SPE funded the purchase of the finance receivables from HDFS primarily with cash obtained through the issuance of the debt. In April 2009, HDFS replaced its December 2008 asset-backed commercial paper conduit facility agreement (2008 Loan Agreement) with a new revolving agreement (2009 Conduit Loan Agreement). As part of the April 2009 transaction, HDFS transferred an additional $354.4 million of U.S. retail motorcycle loans to the SPE and increased the debt issued to the third-party bank sponsored conduits from $500.0 million to $640.2 million. HDFS is the primary and sole beneficiary of the SPE, and the finance receivables transfer does not satisfy the requirements for accounting sale treatment under SFAS No.140. Therefore, the assets and associated debt are included in the Companys financial statements. The SPE is a separate legal entity and as such the assets of the SPE are restricted as collateral for the payment of the debt or other obligations arising in the transaction and are not available to pay other obligations or claims of the Companys creditors. The 2009 Conduit Loan Agreement provides for a total aggregate commitment of up to $1.20 billion based on, among other things, the amount of eligible U.S. retail motorcycle loans held by the SPE as collateral. The interest rates for this debt provide for interest on outstanding principal based on prevailing commercial paper rates, or LIBOR plus a specified margin to the extent the advance is not funded by a conduit lender through the issuance of commercial paper. The 2009 Conduit Loan Agreement also provides for an unused commitment fee based on the unused portion of the total aggregate commitment of $1.20 billion. There is no amortization schedule; however, the debt is reduced monthly as available collections on the related finance receivables are applied to outstanding principal with the balance due at maturity. Unless earlier terminated or extended by mutual agreement of HDFS and the lenders, the 2009 Conduit Loan Agreement will expire on April29, 2010, at which time HDFS will be obligated to repay any amounts outstanding in full. The assets of the SPE totaled $916.8 million at June28, 2009 and are included primarily in other current assets and finance receivables held for investment in the Companys Condensed Consolidated Balance Sheet. At June28, 2009, the SPE held finance receivables of $848.1 million restricted as collateral for the payment of $600.5 million short-term asset-backed conduit facility debt, which is included in the Companys Condensed Consolidated Balance Sheet. The SPE also held $43.6 million of cash collections from the finance receivables held by the SPE restricted for payment on the outstanding debt at June28, 2009. During the six-months ended June28, 2009, the SPE recorded interest expense on the debt of $28.3 million, which is |
| 9.Fair Value of Financial Instruments | 9. Fair Value of Financial Instruments The Companys financial instruments consist primarily of cash and cash equivalents, marketable securities, trade receivables, finance receivables held for investment, net, finance receivables held for sale, trade payables, debt, foreign currency contracts and interest rate swaps (derivative instruments are discussed further in Note 11). Under U.S. GAAP certain of these items are required to be recorded in the financial statements at fair value, while others are required to be recorded at historical cost. Cash and Cash Equivalents, Restricted Cash, Trade Receivables and Trade Payables With the exception of certain money-market investments, these items are recorded in the financial statements at historical cost. The historical cost basis for these amounts is estimated to approximate their respective fair values due to the short maturity of these instruments. Marketable Securities Marketable securities are recorded in the financial statements at fair value. The fair value of marketable securities is based primarily on quoted market prices. Changes in fair value are recorded, net of tax, as other comprehensive income and included as a component of shareholders equity. Finance Receivables Held for Investment, Net Finance receivables held for investment are recorded in the financial statements at historical cost. The fair value of retail finance receivables is generally calculated by discounting future cash flows using an estimated discount rate that reflects current credit, interest rate and prepayment risks associated with similar types of instruments. The historical cost basis of wholesale finance receivables approximates fair value because they are either short-term or have interest rates that adjust with changes in market interest rates. The fair value of retail and wholesale finance receivables was $4.88 billion at June28, 2009. The fair value of investment in retained securitization interest is recorded in the financial statements at fair value and is estimated based on the present value of future expected cash flows using managements best estimates of the key assumptions. Finance Receivables Held for Sale Finance receivables held for sale in the aggregate were recorded at the lower of cost or estimated fair value. HDFS used discounted cash flow methodologies to estimate the fair value of finance receivables held for sale that incorporate appropriate assumptions for discount rate, funding costs and credit enhancement, as well as estimates concerning credit losses and prepayments, that in managements judgment, reflected assumptions marketplace participants would have used. Debt Debt is generally recorded in the financial statements at historical cost. The carrying value of debt provided under the Global Credit Facilities approximates fair value since the interest rates charged under this facility are tied directly to market rates and fluctuate as market rates change. The carrying value of commercial paper approximates fair value due to its short maturity. The carrying value of the asset-backed commercial paper conduit facility approximates the fair value since the interes |
| 10.Fair Value Measurements | 10. Fair Value Measurements Certain financial assets and liabilities are recorded at fair value in the financial statements; some of these are measured on a recurring basis while others are measured on a non-recurring basis. Financial assets and liabilities measured on a recurring basis are those that are adjusted to fair value each time a financial statement is prepared. Financial assets and liabilities measured on a non-recurring basis are those that are adjusted to fair value when a significant event occurs. In determining fair value of financial assets and liabilities, the Company uses various valuation techniques. The availability of inputs observable in the market varies from instrument to instrument and depends on a variety of factors including the type of instrument, whether the instrument is actively traded, and other characteristics particular to the transaction. For many financial instruments, pricing inputs are readily observable in the market, the valuation methodology used is widely accepted by market participants, and the valuation does not require significant management discretion. For other financial instruments, pricing inputs are less observable in the market and may require management judgment. The Company assesses the inputs used to measure fair value using a three-tier hierarchy. The hierarchy indicates the extent to which inputs used in measuring fair value are observable in the market. Level 1 inputs include quoted prices for identical instruments and are the most observable. Level 2 inputs include quoted prices for similar assets and observable inputs such as interest rates, foreign currency exchange rates, commodity rates and yield curves. Level 3 inputs are not observable in the market and include managements judgments about the assumptions market participants would use in pricing the asset or liability. The use of observable and unobservable inputs is reflected in the hierarchy assessment disclosed in the table below. The following tables present information about the Companys assets and liabilities measured at fair value on a recurring basis as of June28, 2009 and June29, 2008 (in thousands): Balance as of June28,2009 QuotedPricesin ActiveMarketsfor Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Assets: Cash equivalents $ 799,846 $ 799,846 Derivatives 18,280 $ 18,280 Investment in retained securitization interests 276,227 $ 276,227 $ 1,094,353 $ 799,846 $ 18,280 $ 276,227 Liabilities: Derivatives $ 19,705 $ 19,705 Balance as of June29, 2008 Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Assets: Cash equivalents and marketable securities $ 531,991 $ 531,467 $ 524 Derivatives 7,362 7,362 Investment in retai |
| 11.Derivative Instruments and Hedging Activities | 11. Derivative Instruments and Hedging Activities The Company is exposed to certain risks relating to its ongoing business operations. The primary risks are foreign currency exchange rate risk, interest rate risk and commodity price risk. To reduce such risks, the Company selectively uses derivative financial instruments. All hedging transactions are authorized and executed pursuant to regularly reviewed policies and procedures, which prohibit the use of financial instruments for speculative trading purposes. All derivative instruments are recognized on the balance sheet at fair value (see Note 10). In accordance with SFAS No.133, Accounting for Derivative Instruments and Hedging Activity, the accounting for changes in the fair value of a derivative instrument depends on whether it has been designated and qualifies as part of a hedging relationship and further, on the type of hedging relationship. Changes in the fair value of derivatives that are designated as fair value hedges, along with the gain or loss on the hedged item, are recorded in current period earnings. For derivative instruments that are designated as cash flow hedges, the effective portion of gains and losses that result from changes in the fair value of derivative instruments is initially recorded in other comprehensive income (OCI) and subsequently reclassified into earnings when the hedged item affects income. The Company assesses, at both the inception of each hedge and on an on-going basis, whether the derivatives that are used in its hedging transactions are highly effective in offsetting changes in cash flows of the hedged items. Any ineffective portion is immediately recognized in earnings. No component of a hedging derivative instruments gain or loss is excluded from the assessment of hedge effectiveness. Derivative instruments which do not qualify for hedge accounting are recorded at fair value and any changes in fair value are recorded in current period earnings. The Company sells its products internationally and in most markets those sales are made in the foreign countrys local currency. As a result, the Companys earnings can be affected by fluctuations in the value of the U.S. dollar relative to foreign currency. The Companys most significant foreign currency risk relates to the Euro and the Australian dollar. The Company utilizes foreign currency contracts to mitigate the effect of the Euro and the Australian dollar fluctuations on earnings. The foreign currency contracts are entered into with banks and allow the Company to exchange a specified amount of foreign currency for U.S dollars at a future date, based on a fixed exchange rate. The Company utilizes natural gas contracts to hedge the cost of natural gas consumed in the Companys motorcycle production operations. The Companys earnings are affected by changes in interest rates. HDFS utilizes interest rate swaps to reduce the impact of fluctuations in interest rates on its unsecured commercial paper and on its debt by converting portions of HDFS floating-rate debt to a fixed rate basis. HDFS also entered into derivative contracts to facilitate its first quarter 2008 term asset-backed sec |
| 12.Income Taxes | 12. Income Taxes During the first half of 2009, income tax expense was impacted by an unanticipated change in Wisconsin tax law resulting in a valuation allowance of $22.5 million related to net operating loss carryforwards, a non-deductible goodwill impairment charge and the tax implications of MV. |
| 13.Product Warranty and Safety Recall Campaigns | 13. Product Warranty and Safety Recall Campaigns The Company currently provides a standard two-year limited warranty on all new motorcycles sold worldwide, except for Japan, where the Company currently provides a standard three-year limited warranty on all new motorcycles sold. The warranty coverage for the retail customer includes parts and labor and generally begins when the motorcycle is sold to a retail customer. The Company maintains reserves for future warranty claims using an estimated cost per unit sold, which is based primarily on historical Company claim information. Additionally, the Company has from time to time initiated certain voluntary safety recall campaigns. The Company reserves for all estimated costs associated with safety recalls in the period that the safety recalls are announced. Changes in the Companys warranty and safety recall liability were as follows (in thousands): Three months ended Six months ended June 28, 2009 June 29, 2008 June 28, 2009 June 29, 2008 Balance, beginning of period $ 64,807 $ 77,208 $ 64,543 $ 70,523 Warranties issued during the period 11,123 13,407 23,811 25,648 Settlements made during the period (16,813 ) (15,165 ) (32,937 ) (29,166 ) Recalls and changes to pre-existing warranty liabilities 1,818 5,977 5,518 14,422 Balance, end of period $ 60,935 $ 81,427 $ 60,935 $ 81,427 The liability for safety recall campaigns was $3.0 million and $2.9 million as of June28, 2009 and June29, 2008, respectively. |
| 14.Earnings Per Share | 14. Earnings Per Share As discussed in Note 2, the Company was required to adopt FSP EITF 03-6-1 as of January1, 2009. Under the guidance of FSP EITF 03-6-1, unvested share-based payment awards that contain non-forfeitable rights to dividends or dividend equivalents (whether paid or unpaid) are participating securities and must be included in the computation of earnings per share pursuant to the two-class method as described in SFAS No.128. The Company has a share-based compensation plan under which employees may be granted share-based awards including shares of restricted stock and restricted stock units (RSUs). Non-forfeitable dividends are paid on unvested shares of restricted stock and non-forfeitable dividend equivalents are paid on unvested RSUs. As such, shares of restricted stock and RSUs are considered participating securities under the two-class method of calculating earnings per share. The two-class method of calculating earnings per share did not have a material impact on the Companys earnings per share calculation as of June28, 2009 and June29, 2008. The following table sets forth the computation for basic and diluted earnings per share (in thousands, except per share amounts): Three months ended Six months ended June 28, 2009 June 29, 2008 June 28, 2009 June 29, 2008 Numerator: Net income used in computing basic and diluted earnings per share $ 19,750 $ 222,787 $ 137,097 $ 410,368 Denominator: Denominator for basic earnings per share - weighted-average common shares 232,616 235,067 232,442 236,067 Effect of dilutive securities - employee stock compensation plan 904 247 646 210 Denominator for diluted earnings per share - adjusted weighted-average shares outstanding 233,520 235,314 233,088 236,277 Basic earnings per share $ 0.08 $ 0.95 $ 0.59 $ 1.74 Diluted earnings per share $ 0.08 $ 0.95 $ 0.59 $ 1.74 Outstanding options to purchase 5.1million and 5.4million shares of common stock for the three months ended June28, 2009 and June29, 2008, respectively, and 5.5million and 5.0million shares of common stock for the six months ended June28, 2009 and June29, 2008, respectively, were not included in the Companys computation of dilutive securities because the exercise price was greater than the market price and therefore the effect would have been anti-dilutive. |
| 15.Comprehensive Income | 15. Comprehensive Income The following tables set forth the reconciliation of net income to comprehensive income (in thousands): Three months ended June28, 2009 June29, 2008 Net income $ 19,750 $ 222,787 Other comprehensive income, net of tax: Foreign currency translation adjustment 28,915 (96 ) Investment in retained securitization interest: Unrealized net losses arising during the period (65 ) (13,362 ) Less: net losses reclassified into net income (876 ) 811 (13,362 ) Derivative financial instruments: Unrealized net losses arising during period (9,469 ) (95 ) Less: net losses reclassified into net income (794 ) (8,675 ) (10,321 ) 10,226 Pension and postretirement benefit plans: Amortization of actuarial loss 2,534 1,844 Amortization of net prior service cost 693 3,227 779 2,623 $ 44,028 $ 222,178 Six months ended June28, 2009 June29, 2008 Net income $ 137,097 $ 410,368 Other comprehensive income, net of tax: Foreign currency translation adjustment 9,566 21,374 Investment in retained securitization interest: Unrealized net gains (losses) arising during the period 2,105 (5,442 ) Less: net gains (losses) reclassified into net income (876 ) 2,981 (5,442 ) Derivative financial instruments: Unrealized net gains (losses) arising during period 5,711 (14,344 ) Less: net gains (losses) reclassified into net income 9,227 (3,516 ) (25,113 ) 10,769 Marketable securities Net losses reclassified into net income (68 ) 68 Pension and postretirement benefit plans: Amortization of actuarial loss 5,334 3,688 Amortization of net prior service cost 1,432 1,558 Pension and postretirement plan funded status adjustment 4,147 Less: actuarial loss reclassified into net income due to settlement (232 ) Less: prior service cost reclassified into net income due to curtailment (2,839 ) Less: actuarial loss write-off due to curtailment (8,352 ) 22,336 5,246 $ 168,464 $ 442,383 |
| 16.Employee Benefit Plans | 16. Employee Benefit Plans The Company has several defined benefit pension plans and several postretirement healthcare benefit plans, which cover substantially all employees of the Motorcycles segment. The Company also has unfunded supplemental employee retirement plan agreements (SERPA) with certain employees which were instituted to replace benefits lost under the Tax Revenue Reconciliation Act of 1993. Components of net periodic benefit costs were as follows (in thousands): Three months ended Six months ended June 28, 2009 June 29, 2008 June 28, 2009 June 29, 2008 Pension and SERPA Benefits Service cost $ 12,894 $ 12,841 $ 24,918 $ 25,682 Interest cost 20,526 17,148 39,155 34,296 Expected return on plan assets (24,103 ) (22,015 ) (45,855 ) (44,030 ) Amortization of unrecognized: Prior service cost 1,576 1,540 3,041 3,080 Net loss 3,064 1,604 6,091 3,208 Curtailment loss 4,164 Settlement loss 370 Net periodic benefit cost $ 13,957 $ 11,118 $ 31,884 $ 22,236 Postretirement Healthcare Benefits Service cost $ 2,945 $ 3,270 $ 5,946 $ 6,540 Interest cost 5,845 5,410 11,572 10,820 Expected return on plan assets (2,858 ) (2,808 ) (5,652 ) (5,616 ) Amortization of unrecognized: Prior service credit (297 ) (281 ) (584 ) (562 ) Net loss 1,424 1,375 2,866 2,750 Curtailment loss 369 Special retiree benefits 3,955 3,955 Net periodic benefit cost $ 7,059 $ 10,921 $ 14,517 $ 17,887 As discussed in Note 5, the Company recorded restructuring expense of $50.0 million during the first half of 2009. The restructuring action resulted in a pension and postretirement healthcare plan curtailment loss of $4.5 million, which is included in the $50.0 million restructuring expense, and an increase to equity of $13.3 million, or $8.4 million net of tax, which is included in accumulated other comprehensive income, during the first half of 2009. The plan curtailment also resulted in a plan remeasurement using a discount rate of 6.4% compared to 6.1% at December31, 2008. All other significant assumptions remain unchanged from the December31, 2008 measurement date. As a result of the remeasurement, the Company recognized a funded status adjustment consisting of a $6.6 million decrease to its pension and postretirement healthcare liabilities and an increase to accumulated other comprehensive income of $6.6 million, or $4.1 million net of tax. Due to significant declines in worldwide financial market conditions during 2008, the funded status of the Companys pension and postretirement heal |
| 17.Business Segments | 17. Business Segments The Company operates in two business segments: Motorcycles Related Products (Motorcycles) and Financial Services (Financial Services). The Companys reportable segments are strategic business units that offer different products and services. They are managed separately based on the fundamental differences in their operations. Selected segment information is set forth below (in thousands): Three months ended Six months ended June 28, 2009 June 29, 2008 June 28, 2009 June 29, 2008 Motorcycles net revenue $ 1,153,645 $ 1,572,569 $ 2,444,293 $ 2,878,882 Gross profit 386,278 561,924 863,061 1,038,061 Operating expense 203,581 234,292 416,891 448,825 Restructuring expense 15,131 11,549 49,993 11,549 Operating income from Motorcycles 167,566 316,083 396,177 577,687 Financial Services income 123,967 106,840 228,634 200,129 Financial Services expense 186,086 69,693 279,548 128,075 Operating (loss) income from Financial Services before goodwill impairment (62,119 ) 37,147 (50,914 ) 72,054 Goodwill impairment 28,387 28,387 Operating (loss) income from Financial Services (90,506 ) 37,147 (79,301 ) 72,054 Corporate expense 6,312 7,367 14,082 12,825 Income from operations $ 70,748 $ 345,863 $ 302,794 $ 636,916 As discussed in Note 3, Financial Services expense for the three months ended June28, 2009 includes a $72.7 million charge related to increased provision for credit losses resulting from the one-time reclassification of finance receivables held for sale to finance receivables held for investment. As discussed in Note 6, the Company recorded a $28.4 million goodwill impairment charge related to HDFS during the second quarter of 2009. As discussed in Note 7, Financial Services income for the three and six months ended June28, 2009 includes an impairment charge of $15.0 million and $32.2 million, respectively, related to the investment in retained securitization interests. For the three and six months ended June29, 2008, the impairment charge was $6.3 million. |
| 18.Commitment and Contingencies | 18. Commitment and Contingencies The Company is subject to lawsuits and other claims related to environmental, product and other matters. In determining required reserves related to these items, the Company carefully analyzes cases and considers the likelihood of adverse judgments or outcomes, as well as the potential range of possible loss. The required reserves are monitored on an ongoing basis and are updated based on new developments or new information in each matter. Shareholder Lawsuits: A number of shareholder class action lawsuits were filed between May18, 2005 and July1, 2005 in the United States District Court for the Eastern District of Wisconsin. On February14, 2006, the court consolidated all of the actions into a single case, captioned In re Harley-Davidson, Inc. Securities Litigation, and appointed Lead Plaintiffs and Co-Lead Plaintiffs Counsel. Pursuant to the schedule set by the court, on October2, 2006, the Lead Plaintiffs filed a Consolidated Class Action Complaint, which names the Company and Jeffrey L. Bleustein, James L. Ziemer, and James M. Brostowitz, who are current or former Company officers, as defendants. The Consolidated Complaint alleges securities law violations and seeks unspecified damages relating generally to the Companys April13, 2005 announcement that it was reducing short-term production growth and planned increases of motorcycle shipments from 317,000 units in 2004 to a new 2005 target of 329,000 units (compared to its original target of 339,000 units). On December18, 2006, the defendants filed a motion to dismiss the Consolidated Complaint in its entirety. Briefing of the motion to dismiss was completed in April 2007. Three shareholder derivative lawsuits were filed in the United States District Court for the Eastern District of Wisconsin on June3, 2005,October25, 2005 (this lawsuit was later voluntarily dismissed) and December2, 2005 and two shareholder derivative lawsuits were filed in Milwaukee County Circuit Court on July22, 2005 and November16, 2005 against some or all of the following current or former directors and officers of the Company: Jeffrey L. Bleustein, James L. Ziemer, James M. Brostowitz, Barry K. Allen, Richard I. Beattie, George H. Conrades, Judson C. Green, Donald A. James, Sara L. Levinson, George L. Miles, Jr., James A. Norling, James A. McCaslin, Donna F. Zarcone, Jon R. Flickinger, Gail A. Lione, Ronald M. Hutchinson, W. Kenneth Sutton, Jr. and John A. Hevey. The lawsuits also name the Company as a nominal defendant. In general, the shareholder derivative complaints include factual allegations similar to those in the class action complaints and allegations that officers and directors breached their fiduciary duties to the Company. On February14, 2006, the state court consolidated the two state court derivative actions and appointed Lead Plaintiffs and Lead Plaintiffs counsel, and on April24, 2006, the state court ordered that the consolidated state court derivative action be stayed until after motions to dismiss the federal securities class action are decided. On February15, 2006, the federal court consolidated the federal derivative lawsuits with the securitie |
| 19.Subsequent Events | 19. Subsequent Events On July14, 2009, HDFS transferred $897.4 million of U.S. retail motorcycle finance receivables to a SPE, which in turn issued $700.0 million of secured notes, with various maturities and interest rates, to investors. This term asset-backed securitization transaction was eligible collateral under the TALF program. The notes are secured by future collections of the purchased U.S. retail motorcycle loans. The structure of this term asset-backed securitization transaction did not satisfy the requirements for accounting sale treatment under SFAS No.140; therefore, the securitized U.S. retail motorcycle loans, resulting secured borrowings and other related assets and liabilities of the SPE will be included in the Companys consolidated financial statements as HDFS is the primary and sole beneficiary of the SPE. On July16, 2009, the Company announced it would be reducing Harley-Davidson wholesale motorcycle shipments for the remainder of 2009 due to a decline in retail motorcycle sales. As a result of lower shipment volumes, the Company will implement a further reduction this year of approximately 700 positions in the hourly production workforce. The Company will also be reducing the non-production, primarily salaried headcount by an approximate 300 additional positions, including a reduction at HDFS. On a combined basis with the previously announced 2009 restructuring plans, the Company now expects to incur one-time restructuring charges of approximately $160 million to $190 million during 2009 and 2010, an increase of approximately $40 million from the previous estimate of approximately $120 million to $150 million. The Company expects that approximately 80% of these costs will be paid in cash with the balance consisting of non-cash charges. The Company expects to incur between approximately $130 million and $150 million of these costs in 2009, of which $50.0 million was recorded during the first half of 2009. The remaining restructuring costs are expected to be incurred in 2010. Restructuring costs are disclosed separately in the Companys income statement. |
| Document Information | |
| 6 Months Ended
Jun. 28, 2009 USD / shares | |
| Document Information [Text Block] | |
| Document Type | 10-Q |
| Amendment Flag | false |
| Amendment Description | N.A. |
| Document Period End Date | 2009-06-28 |
| Entity Information (USD $) | |||
| 6 Months Ended
Jun. 28, 2009 | Jul. 24, 2009
| Jun. 27, 2008
| |
| Entity [Text Block] | |||
| Trading Symbol | HOG | ||
| Entity Registrant Name | HARLEY DAVIDSON INC | ||
| Entity Central Index Key | 0000793952 | ||
| Current Fiscal Year End Date | --12-31 | ||
| Entity Well-known Seasoned Issuer | Yes | ||
| Entity Current Reporting Status | Yes | ||
| Entity Voluntary Filers | No | ||
| Entity Filer Category | Large Accelerated Filer | ||
| Entity Common Stock, Shares Outstanding | 234,572,140 | ||
| Entity Public Float | $8,507,041,456 |
