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): July 23, 2019
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)
 
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
  
Trading Symbol
  
Name of exchange on which registered
COMMON STOCK, $0.01 par value per share
  
HOG
  
NEW YORK STOCK EXCHANGE
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 July 23, 2019, Harley-Davidson, Inc. (the “Company”) issued a press release (the “Press Release”) announcing the Company’s second quarter results for the financial period ended June 30, 2019. A copy of the Press Release is being furnished as Exhibit 99.1 to this Current Report on Form 8-K.


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 July 23, 2019

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: July 23, 2019
 
 
 
By:
 
/s/ Paul J. Krause
 
 
 
 
 
 
Paul J. Krause
 
 
 
 
 
 
Assistant Secretary

2
Exhibit


Harley-Davidson Announces Second Quarter 2019 Results

MILWAUKEE, July 23, 2019 - Harley-Davidson, Inc. (NYSE:HOG) today reported second quarter 2019 results. The company made progress towards its plan to build more riders through its More Roads to Harley-Davidson accelerated plan for growth and expects to substantially mitigate incremental EU and China tariffs early in the second quarter of 2020.

Second Quarter 2019 Highlights
Delivered GAAP diluted EPS of $1.23 per share
Repurchased $42.9 million of shares; paid dividends of $0.375 per share
Obtained regulatory approvals required to mitigate the majority of incremental EU tariffs
Completed key milestones in its manufacturing optimization initiative
Reduced U.S. retail motorcycle inventory, believe positioned well for cutover to model year 2020
Drove year-over-year retail sales growth of 77 percent in its ASEAN markets through Thailand manufacturing strategy
Confirmed highest ever Harley-Davidson U.S. ridership; over 3 million riders in 2018
Announced a broader access initiative for Asia with a small displacement motorcycle planned for 2020

Second quarter 2019 GAAP diluted EPS was $1.23. Year-ago GAAP diluted EPS was $1.45. Excluding restructuring plan costs and the impact of incremental tariffs, second quarter 2019 diluted EPS was $1.46 compared to $1.52 in the second quarter of 2018. Second quarter 2019 net income was $195.6 million on consolidated revenue of $1.63 billion versus net income of $242.3 million on consolidated revenue of $1.71 billion in 2018.
Harley-Davidson worldwide retail sales decreased 8.4 percent in the second quarter. U.S. retail sales were down 8.0 percent in the quarter driven largely by continued weak industry sales. Harley-Davidson international retail sales were down 8.9 percent driven by weakness in developed international markets on the lapping of strong initial sales of new models introduced last year.

“In the second quarter we achieved significant advancements under our More Roads plan and we continued to lay a solid foundation for future growth,” said Matt Levatich, president and chief executive officer, Harley-Davidson, Inc. “The decisions and investments we’re making, within a highly dynamic and competitive global marketplace, demonstrate our intense focus to build the next generation of riders and maximize shareholder value.”

Strategy to Build the Next Generation of Riders

Building riders
Harley-Davidson continues to inspire diverse, new riders around the globe. Harley-Davidson ridership in the U.S. has been up each year since 2001 and was at an all-time high of over 3 million riders in 2018. The company increased its reach and impact in the second quarter and delivered the following:
More, younger riders - U.S. rider training participation was up, with the greatest increase among 18-34 year-olds
Of total U.S. new retail sales in Q2, the mix of 18-34 year-olds was up 2.7 percentage points
Emerging market year-over-year retail sales growth of 7.6 percent was aided by more accessible pricing from local manufacturing in Thailand

More Roads to Harley-Davidson accelerated plan for growth

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Harley-Davidson’s strategic objectives through 2027 are 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.
The More Roads to Harley-Davidson accelerated plan for growth drives the company’s strategy to deliver sustainable growth and build the next generation of riders by delivering exciting products in existing and new spaces, broader access to Harley-Davidson and an optimized customer experience through an even stronger dealer network. The company plans to maintain its investment and return profile and capital allocation strategy, while it funds strategic opportunities expected to drive revenue growth and expand operating margin through 2022.
During the second quarter, Harley-Davidson made further progress on its More Roads plan, most notably announcing a collaboration that joins Harley-Davidson’s global motorcycle leadership with the capabilities of Qianjiang Motorcycle Company Limited to launch a smaller, more accessible Harley-Davidson motorcycle planned for China in 2020 with additional Asian markets to follow. This move is intended to expand access to the Harley-Davidson brand to more riders in Asia. During the second quarter, the company’s efforts to increase access in emerging Asian markets, including through its Thailand manufacturing strategy, drove sales increases of 77 percent in its ASEAN (Association of Southeast Asian Nations) markets.

Harley-Davidson also strengthened its leadership in the electrification of motorcycling. Company and dealer preparations continued for the targeted September retail delivery of LiveWire™, the company’s first electric motorcycle. Harley-Davidson’s commitment includes helping to enable a strong global charging network. Dealers are installing public DC fast charging stations and the company is working with global partners to support charging infrastructure development.

“There are more riders on Harleys in the U.S. than at any point in our history, and the number of young riders continues to grow. The strength of the Harley-Davidson brand, and bare knuckle grit of this company and our global dealers, will continue to be leveraged and sharpened to make riding matter to more people,” said Levatich.

Manufacturing Optimization
Key milestones of the company’s multi-year manufacturing optimization initiative, designed to further improve its manufacturing operations and cost structure, were completed during the quarter. Starting in the first quarter of 2018 the company began work to close its wheel manufacturing facility in Australia and consolidate its motorcycle assembly plant in Kansas City, Mo. into its plant in York, Pa. Full year savings of $25 million to $30 million for 2019 and ongoing annual cash savings of $65 million to $75 million after 2020 are still expected. In the second quarter 2019, costs related to the manufacturing optimization were $14.4 million. For the full year, the company now expects to incur $40 million to $50 million of operating expense for this initiative, $10 million less than previously expected.

Harley-Davidson Retail Motorcycle Sales

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Vehicles
2nd Quarter
6 months
2019
2018
Change
2019
2018
Change
U.S.
 42,762
46,490
(8.0)%
 70,853
75,799
(6.5)%
EMEA
 15,619
17,844
(12.5)%
 26,416
28,706
(8.0)%
Asia Pacific
 7,670
7,718
(0.6)%
 13,744
14,047
(2.2)%
Latin America
 2,516
2,569
(2.1)%
 4,757
5,075
(6.3)%
Canada
 3,279
3,807
(13.9)%
 5,227
5,887
(11.2)%
International Total
 29,084
31,938
(8.9)%
 50,144
53,715
(6.6)%
Worldwide Total
71,846
78,428
(8.4)%
120,997
129,514
(6.6)%

The U.S. 601+cc industry was down 4.9 percent in the second quarter compared to the same period in 2018. Harley-Davidson’s second quarter U.S. market share was 46.6 percent. Harley-Davidson’s year-to-date Europe market share was 8.8 percent through June.

Motorcycles and Related Products Segment Results
$ in thousands
2nd Quarter
6 months
2019
2018
Change
2019
2018
Change
Motorcycle Shipments (vehicles)
 68,757
 72,593
(5.3)%
 127,648
 136,537
(6.5)%
Revenue
$1,434,004
$1,525,121
(6.0)%
$2,629,641
$2,889,068
(9.0)%
   Motorcycles
$1,128,063
$1,201,453
(6.1)%
$2,092,638
$2,323,126
(9.9)%
   Parts & Accessories
$221,258
$231,014
(4.2)%
$380,961
$400,089
(4.8)%
   General Merchandise
$64,644
$68,653
(5.8)%
$120,045
$125,254
(4.2)%
Gross Margin
31.7%
34.9%
(3.2) pts.
30.5%
34.8%
(4.3) pts.
Operating Income
$180,728
$243,406
(25.8)%
$289,109
$416,244
(30.5)%
Operating Margin
12.6%
16.0%
(3.4) pts.
11.0%
14.4%
(3.4) pts.

Revenue from the Motorcycles segment was down in the second quarter behind lower shipments. Operating income decreased primarily due to lower revenues and increased tariff costs, partially offset by lower SG&A.

Financial Services Segment Results
$ in thousands
2nd Quarter
6 months
2019
2018
Change
2019
2018
Change
Revenue
$198,615
$188,102
       5.6%
$387,358
$366,276
       5.8%
Operating Income
$75,529
$80,541
(6.2)%
$134,260
$144,120
(6.8)%

Financial Services segment second quarter operating income of $75.5 million was down 6.2 percent.

Other Results
Cash and cash equivalents were $924.6 million at the end of the second quarter of 2019, compared to $978.7 million in 2018. Harley-Davidson generated $496.2 million of cash from operating activities in the first half of 2019 compared to $735.9 million in the first half of 2018. The company paid a cash dividend of $0.375 per share in the second quarter of 2019. On a discretionary basis, Harley-Davidson repurchased 1.2 million shares of its common stock during the quarter for $42.9 million. During the quarter, there were approximately 159.4 million weighted-average diluted common shares outstanding. At the end of the quarter, 13.7 million shares remained on a board-approved share repurchase authorization.

Harley-Davidson's year-to-date effective tax rate was 24.1 percent, flat to 2018.


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2019 Outlook    
Harley-Davidson recently obtained regulatory approvals confirming that motorcycles shipped from the company’s Thailand operations to the EU would receive more favorable tariff treatment than if they were shipped from the U.S. However, the approval process took considerably longer than the company had planned.

As a result of the timing of these approvals and softer than expected European retail sales as key drivers, the company has adjusted its 2019 outlook and now expects:
Motorcycle shipments to be approximately 212,000 to 217,000 for the full year. In the third quarter, the company expects to ship approximately 43,000 to 48,000 motorcycles
Motorcycles segment operating margin as a percent of revenue to be approximately 6 to 7 percent for the full year

For the full-year 2019, the company continues to expect:
Financial Services segment operating income to be down year-over-year
Effective tax rate of approximately 24 to 25 percent
Capital expenditures of approximately $225 million to $245 million including $20 million to support manufacturing optimization

Company Background
Harley-Davidson, Inc. is the parent company of Harley-Davidson Motor Company and Harley-Davidson Financial Services. Since 1903, Harley-Davidson has fulfilled dreams of personal freedom by leading the innovation of two-wheeled mobility. The company offers an expanding range of leading-edge, distinctive and customizable motorcycles and brings the brand to life through Harley-Davidson riding experiences and exceptional motorcycle parts, accessories, riding gear and apparel. Harley-Davidson Financial Services provides financing, insurance and other programs to help get Harley-Davidson riders on the road. Learn more about how Harley-Davidson is Building the Next Generation of Riders at www.harley-davidson.com.

Webcast Presentation
Harley-Davidson will discuss second quarter results on an audio 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 restructuring plan costs and the impact of incremental tariffs and net income excluding restructuring plan costs and the impact of incremental tariffs. Restructuring plan costs include restructuring expenses as presented in the consolidated statements of income and costs associated with temporary inefficiencies incurred in connection with the manufacturing optimization plan included in Motorcycles and related products cost of goods sold. The impact of incremental tariffs include incremental European Union and China tariffs imposed on the company's products shipped from the U.S., as well as

4



incremental U.S. tariffs on certain items imported from certain international markets. Incremental tariff costs exclude incremental metals cost resulting from the U.S. steel and aluminum tariffs. These adjustments are consistent with adjustments used to determine financial objectives under the company’s incentive compensation plans. 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," “strategy,” “future,” “may,” “goals,” “will,” "estimates," or words of similar meaning. Similarly, statements that describe future plans, strategies, objectives, outlooks, targets, guidance, commitments, 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 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 plan for growth that the company disclosed on July 30, 2018, and strengthen its existing business while enabling growth, (ii) manage and predict the impact that new or adjusted tariffs may have on our ability to sell product internationally, and the cost of raw materials and components, (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) successfully launch a smaller displacement motorcycle in India, (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 will depend in part on the building of necessary infrastructure, (x) prevent, detect, and remediate any issues with its motorcycles or any issues associated with the 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) successfully determine, implement on a timely basis, and maintain a manner in which to sell motorcycles in the European Union, China, and ASEAN countries that does not subject its motorcycles to incremental tariffs, (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,

5



(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, (xxviii) successfully access the capital and/or credit markets on terms (including interest rates) that are acceptable to the company and within its expectations, (xxix) manage its Thailand corporate and manufacturing operation in a manner that allows the company to avail itself of preferential free trade agreements and duty rates, and sufficiently lower prices of its motorcycles in certain markets, (xxx) continue to manage the relationships and agreements that the company has with its labor unions to help drive long-term competitiveness, (xxxi) accurately predict the margins of its Motorcycles & Related Products segment in light of, among other things, tariffs, the cost associated with the More Roads to Harley-Davidson plan, the company’s manufacturing optimization plan, and our complex global supply chain, and (xxxii) develop and maintain a productive relationship with Zhejiang Qianjiang Motorcycle Co., Ltd. and launch related products in a timely manner.

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 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, 2018 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, Shannon Burns, +1-414-343-8002

### (HOG-F)



6



Harley-Davidson, Inc.
Condensed Consolidated Statements of Income
(In thousands, except per share amounts)
 
 
(Unaudited)
 
(Unaudited)
 
(Unaudited)
 
(Unaudited)
 
 
Three months ended
 
Six months ended
 
 
June 30,
2019
 
July 1,
2018
 
June 30,
2019
 
July 1,
2018
Motorcycles and Related Products revenue
 
$
1,434,004

 
$
1,525,121

 
$
2,629,641

 
$
2,889,068

Gross profit
 
454,738

 
532,085

 
802,177

 
1,005,858

Selling, administrative and engineering expense
 
263,587

 
276,309

 
489,015

 
530,402

Restructuring expense
 
10,423

 
12,370

 
24,053

 
59,212

  Operating income from Motorcycles and Related Products
 
180,728

 
243,406

 
289,109

 
416,244

 
 
 
 
 
 
 
 
 
Financial Services revenue
 
198,615

 
188,102

 
387,358

 
366,276

Financial Services expense
 
123,086

 
107,561

 
253,098

 
222,156

   Operating income from Financial Services
 
75,529

 
80,541

 
134,260

 
144,120

 
 
 
 
 
 
 
 
 
Operating income
 
256,257

 
323,947

 
423,369

 
560,364

Other income (expense), net
 
4,037

 
645

 
8,697

 
865

Investment income
 
3,571

 
2,533

 
9,929

 
3,736

Interest expense
 
7,784

 
7,728

 
15,515

 
15,418

Income before income taxes
 
256,081

 
319,397

 
426,480

 
549,547

Provision for income taxes
 
60,450

 
77,059

 
102,904

 
132,446

Net income
 
$
195,631

 
$
242,338

 
$
323,576

 
$
417,101

 
 
 
 
 
 
 
 
 
Earnings per common share:
 
 
 
 
 
 
 
 
  Basic
 
$
1.23

 
$
1.45

 
$
2.03

 
$
2.49

    Diluted
 
$
1.23

 
$
1.45

 
$
2.03

 
$
2.48

 
 
 
 
 
 
 
 
 
Weighted-average common shares:
 
 
 
 
 
 
 
 
  Basic
 
158,813

 
166,589

 
159,061

 
167,364

    Diluted
 
159,425

 
167,204

 
159,724

 
168,189

 
 
 
 
 
 
 
 
 
Cash dividends per common share
 
$
0.375

 
$
0.370

 
$
0.750

 
$
0.740













Harley-Davidson, Inc.
Reconciliation of GAAP Amounts to Non-GAAP Amounts
(In thousands, except per share amounts)
 
 
(Unaudited)
 
(Unaudited)
 
(Unaudited)
 
(Unaudited)
 
 
Three months ended
 
Six months ended
 
 
June 30,
2019
 
July 1,
2018
 
June 30,
2019
 
July 1,
2018
Net income excluding restructuring plan costs and the impact of incremental tariffs
 
 
 
 
 
 
 
 
Net income (GAAP)
 
$
195,631

 
$
242,338

 
$
323,576

 
$
417,101

Restructuring plan costs
 
14,414

 
14,758

 
31,624

 
62,332

Impact of incremental tariffs
 
34,400

 

 
55,377

 

Tax effect of adjustments(1)
 
(11,837
)
 
(3,579
)
 
(21,097
)
 
(15,116
)
Adjustments net of tax
 
36,977

 
11,179

 
65,904

 
47,216

Adjusted net income (Non-GAAP)
 
$
232,608

 
$
253,517

 
$
389,480

 
$
464,317

 
 
 
 
 
 
 
 
 
Diluted earnings per share excluding restructuring plan costs and impact of incremental tariffs
 
 
 
 
 
 
 
 
Diluted earnings per share (GAAP)
 
$
1.23

 
$
1.45

 
$
2.03

 
$
2.48

Adjustments net of tax, per share
 
0.23

 
0.07

 
0.41

 
0.28

Adjusted diluted earnings per share (Non-GAAP)
 
$
1.46

 
$
1.52

 
$
2.44

 
$
2.76


(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
(In thousands)
 
 
(Unaudited)
 
 
 
(Unaudited)
 
 
June 30,
2019
 
December 31,
2018
 
July 1,
2018
ASSETS
 
 
 
 
 
 
Current assets:
 
 
 
 
 
 
Cash and cash equivalents
 
$
924,638

 
$
1,203,766

 
$
978,749

Marketable securities
 

 
10,007

 

Accounts receivable, net
 
325,306

 
306,474

 
335,594

Finance receivables, net
 
2,362,125

 
2,214,424

 
2,252,956

Inventories
 
470,610

 
556,128

 
465,373

Restricted cash
 
82,248

 
49,275

 
44,386

Other current assets
 
147,234

 
144,368

 
166,362

Total current assets
 
4,312,161

 
4,484,442

 
4,243,420

Finance receivables, net
 
5,232,280

 
5,007,507

 
5,060,246

Other long-term assets
 
1,195,875

 
1,173,715

 
1,242,356

 
 
$
10,740,316

 
$
10,665,664

 
$
10,546,022

LIABILITIES AND SHAREHOLDERS’ EQUITY
 
 
 
 
 
 
Current liabilities:
 
 
 
 
 
 
Accounts payable & accrued liabilities
 
$
940,369

 
$
885,991

 
$
859,654

Short-term debt
 
405,695

 
1,135,810

 
1,327,307

Current portion of long-term debt, net
 
2,396,188

 
1,575,799

 
945,463

Total current liabilities
 
3,742,252

 
3,597,600

 
3,132,424

Long-term debt, net
 
4,650,176

 
4,887,667

 
4,868,346

Pension and postretirement healthcare liabilities
 
185,289

 
202,229

 
169,283

Other long-term liabilities
 
251,958

 
204,219

 
214,443

 
 
 
 
 
 
 
Total shareholders’ equity
 
1,910,641

 
1,773,949

 
2,161,526

 
 
$
10,740,316

 
$
10,665,664

 
$
10,546,022








Harley-Davidson, Inc.
Condensed Consolidated Statements of Cash Flows
(In thousands)
 
 
(Unaudited)
 
(Unaudited)
 
 
Six months ended
 
 
June 30,
2019
 
July 1,
2018
Net cash provided by operating activities
 
$
496,232

 
$
735,859

 
 
 
 
 
Cash flows from investing activities:
 
 
 
 
Capital expenditures
 
(83,229
)
 
(69,293
)
Finance receivables, net
 
(296,070
)
 
(286,902
)
Acquisition of business
 
(7,000
)
 

Other
 
21,724

 
(11,758
)
Net cash used by investing activities
 
(364,575
)
 
(367,953
)
 
 
 
 
 
Cash flows from financing activities:
 
 
 
 
Proceeds from issuance of medium-term notes
 
546,655

 
1,144,018

Repayments of medium-term notes
 
(750,000
)
 
(877,488
)
Proceeds from securitization debt
 
1,021,353

 

Repayments of securitization debt
 
(113,806
)
 
(183,453
)
Net (decrease) increase in credit facilities and unsecured commercial paper
 
(728,606
)
 
56,280

Borrowings of asset-backed commercial paper
 
23,373

 
120,903

Repayments of asset-backed commercial paper
 
(155,286
)
 
(100,660
)
Dividends paid
 
(120,841
)
 
(124,680
)
Purchase of common stock for treasury
 
(104,621
)
 
(111,227
)
Issuance of common stock under employee stock option plans
 
833

 
1,965

Net cash used by financing activities
 
(380,946
)
 
(74,342
)
 
 
 
 
 
Effect of exchange rate changes on cash, cash equivalents and restricted cash
 
3,439

 
(10,091
)
 
 
 
 
 
Net (decrease) increase in cash, cash equivalents and restricted cash
 
$
(245,850
)
 
$
283,473

 
 
 
 
 
Cash, cash equivalents and restricted cash:
 
 
 
 
 Cash, cash equivalents and restricted cash - beginning of period
 
$
1,259,748

 
$
746,210

 Net (decrease) increase in cash, cash equivalents and restricted cash
 
(245,850
)
 
283,473

 Cash, cash equivalents and restricted cash - end of period
 
$
1,013,898

 
$
1,029,683

 
 
 
 
 
Reconciliation of cash, cash equivalents and restricted cash to the Consolidated Balance Sheet:
 
 
 
 
Cash and cash equivalents
 
$
924,638

 
$
978,749

Restricted cash
 
82,248

 
44,386

Restricted cash included in other long-term assets
 
7,012

 
6,548

Total cash, cash equivalents and restricted cash shown in the Statement of Cash Flows
 
$
1,013,898

 
$
1,029,683


Adoption of New Accounting Standards
On January 1, 2019, the Company adopted accounting standards update (ASU) 2016-02 Leases using the modified retrospective method. As a result, the Company recognized a right-of-use lease asset of approximately $60 million and a corresponding lease liability.





Motorcycles and Related Products Revenue and
Motorcycle Shipment Data

 
 
(Unaudited)
 
(Unaudited)
 
(Unaudited)
 
(Unaudited)
 
 
Three months ended
 
Six months ended
 
 
June 30,
2019
 
July 1,
2018
 
June 30,
2019
 
July 1,
2018
MOTORCYCLES AND RELATED PRODUCTS REVENUE (in thousands)
 
 
 
 
 
 
 
 
Motorcycles
 
$
1,128,063

 
$
1,201,453

 
$
2,092,638

 
$
2,323,126

Parts & Accessories
 
221,258

 
231,014

 
380,961

 
400,089

General Merchandise
 
64,644

 
68,653

 
120,045

 
125,254

Licensing
 
9,911

 
10,407

 
18,488

 
18,765

Other
 
10,128

 
13,594

 
17,509

 
21,834

 
 
$
1,434,004

 
$
1,525,121

 
$
2,629,641

 
$
2,889,068

MOTORCYCLE SHIPMENTS:
 
 
 
 
 
 
 
 
United States
 
41,404

 
43,047

 
75,909

 
81,844

International
 
27,353

 
29,546

 
51,739

 
54,693

Total
 
68,757

 
72,593

 
127,648

 
136,537

MOTORCYCLE PRODUCT MIX:
 
 
 
 
 
 
 
 
Touring
 
30,923

 
31,064

 
55,966

 
61,921

Cruiser
 
22,691

 
24,348

 
43,142

 
45,902

Sportster® / Street
 
15,143

 
17,181

 
28,540

 
28,714

Total
 
68,757

 
72,593

 
127,648

 
136,537









Worldwide Retail Sales of Harley-Davidson Motorcycles(1) 
 
 
Three months ended
 
Six months ended
 
 
June 30,
2019
 
June 30,
2018
 
June 30,
2019
 
June 30,
2018
 
 
 
 
 
 
 
 
 
United States
 
42,762

 
46,490

 
70,853

 
75,799

 
 
 
 
 
 
 
 
 
Europe(2)
 
13,703

 
16,012

 
23,211

 
25,728

EMEA - Other
 
1,916

 
1,832

 
3,205

 
2,978

Total EMEA
 
15,619

 
17,844

 
26,416

 
28,706

 
 
 
 
 
 
 
 
 
Asia Pacific(3)
 
4,544

 
5,096

 
8,330

 
9,548

Asia Pacific - Other
 
3,126

 
2,622

 
5,414

 
4,499

Total Asia Pacific
 
7,670

 
7,718

 
13,744

 
14,047

 
 
 
 
 
 
 
 
 
Latin America
 
2,516

 
2,569

 
4,757

 
5,075

Canada
 
3,279

 
3,807

 
5,227

 
5,887

Total International Retail Sales
 
29,084

 
31,938

 
50,144

 
53,715

Total Worldwide Retail Sales
 
71,846

 
78,428

 
120,997

 
129,514

(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) 
 
 
Six months ended
 
 
June 30,
2019
 
June 30,
2018
United States(2)
 
144,623

 
151,989

Europe(3)
 
267,212

 
252,698


(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.