Harley-Davidson, Inc.

- 2009
Case Notes Prepared by: Dr. Mernoush Banton
Case Authors: Carol Pope and Joanne Mack

A. Case Abstract
Harley-Davidson, Inc. (www.harley-davidson.com) is a comprehensive strategic
management case that includes the company’s calendar December 31, 2008
financial statements, competitor information and more. The case time setting is
the year 2009. Sufficient internal and external data are provided to enable
students to evaluate current strategies and recommend a three-year strategic
plan for the company. Headquartered in Milwaukee, WI, Harley-Davidson, Inc. is
traded on the New York Stock Exchange under ticker symbol HOG.

B. Vision Statement (Actual)

Harley-Davidson is an action-oriented, international company, a leader in its

commitment to continuously improve its mutually beneficial relationships with
stakeholders (customers, suppliers, employees, shareholders, government, and
society). Harley-Davidson believes the key to success is to balance stakeholders’
interests through the empowerment of all employees to focus on value-added
activities.

Vision Statement (Proposed)

We want to make your motorcycle ride a safe and a lifetime experience.

C. Mission Statement (Actual)

We fulfill dreams through the experiences of motorcycling, by providing to

motorcyclists and to the general public an expanding line of motorcycles,
branded products and services in selected market segments.

Mission Statement (Proposed)

Harley-Davidson is committed to providing the highest quality products and

financial services to men and women worldwide (1, 3). The Harley name stands
for customer satisfaction (7) and we would like all Harley customers to relay their
satisfaction to all motorcycle dreamers. Harley-Davidson uses advanced
technology to produce the superior motorcycles (4). Our philosophy is to conduct
business with utmost integrity while serving our customers, employees, and

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shareholders (6). We appreciate the hard work of our employees (9). We push
excellence though our Harley-Davidson bar and shield logo and the Harley
Owners Group (HOG) (7). We continue to do our part in supporting all
environmental laws in every country we do business (8). Harley-Davidson
intends to stay committed and determined.

1. Customer
2. Products or services
3. Markets
4. Technology
5. Concern for survival, profitability, growth
6. Philosophy
7. Self-concept
8. Concern for public image
9. Concern for employees

D. External Audit
CPM – Competitive Profile Matrix

Harley-
Davidson Honda Yamaha
Weigh Ratin Weighte Ratin Weighte Ratin Weighted
Critical Success Factors t g d Score g d Score g Score
Advertising 0.08 4 0.32 2 0.16 3 0.24
Top Management 0.05 2 0.10 2 0.10 3 0.15
Customer Service 0.10 4 0.40 3 0.30 2 0.20
Technological Advances 0.09 3 0.27 1 0.09 2 0.18
International Market Sales 0.07 3 0.21 4 0.28 2 0.14
Global Expansion 0.06 2 0.12 4 0.24 3 0.18
Financial Position 0.07 2 0.14 4 0.28 3 0.21
Customer Loyalty 0.11 4 0.44 3 0.33 2 0.22
Market Share 0.09 2 0.18 4 0.36 3 0.27
Product Quality 0.10 4 0.40 3 0.30 2 0.20
Marketing 0.10 2 0.20 3 0.30 1 0.10
Price Competitiveness 0.08 1 0.08 3 0.24 2 0.16
Total 1.00 2.86 2.98 2.25

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 Opportunities
1. Economy in Europe and other regions is growing at a better rate than
United States
2. Gasoline price has been stabilized in 2009
3. Competition has reduced their production of motorcycle in 2009
4. Currently, Yamaha has seen decreasing motorcycle sales in Japan, the
United States, and Europe, but is doing better in Southeast Asia and Latin
America
5. Honda, Yamaha and Suzuki are more diversified than Harley in terms of
product offerings
6. Female riders are on the rise
7. Honda, Yamaha and Suzuki focus on ATVs, scooters, and marine and
watercraft in addition to various motorcycle product lines
8. Motorcycles typically are considered a good replacement for automobiles
when gas prices are on the rise

Threats
1. Unemployment is on the rise in the United States among middle class who
could afford to buy a motorcycle
2. Competitors are reducing their prices so they can improve sales
3. Disposable income is falling among professionals between the age of 35
and 54
4. Competition is strong in markets outside the United States
5. Increase in fuel price could impact the industry sales
6. Rise in interest rate could impact the buyers from purchasing and
financing high ticket items
7. Environmental protection laws could impact product design and cost
8. Shifts in buyers’ needs and tastes

External Factor Evaluation (EFE) Matrix

Key External Factors Weight Rating Weighted

Score

Opportunities
1. Economy in Europe and other regions is growing at 0.08 4 0.32
a better rate than United States
2. Gasoline price has been stabilized in 2009 0.06 3 0.18

3. Competition has reduced their production of 0.09 3 0.27

motorcycle in 2009
4. Currently, Yamaha has seen decreasing 0.05 4 0.2
motorcycle sales in Japan, the United States, and
Europe, but is doing better in Southeast Asia and
Latin America

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5. Honda, Yamaha and Suzuki are more diversified 0.05 2 0.1
than Harley in terms of product offerings
6. Female riders are on the rise 0.04 3 0.12

7. Honda, Yamaha and Suzuki focus on ATVs, 0.07 3 0.21

scooters, and marine and watercraft in addition to
various motorcycle product lines
8. Motorcycles typically are considered a good 0.06 4 0.24
replacement for automobiles when gas prices are
on the rise
Threats
1. Unemployment is on the rise in the United States 0.09 2 0.18
among middle class who could afford to buy a
motorcycle
2. Competitors are reducing their prices so they can 0.07 3 0.21
improve sales
3. Disposable income is falling among professionals 0.07 2 0.14
between the age of 35 and 54
4. Competition is strong in markets outside the United 0.06 2 0.12
States
5. Increase in fuel price could impact the industry 0.07 1 0.07
sales
6. Rise in interest rate could impact the buyers from 0.05 2 0.1
purchasing and financing high ticket items
7. Environmental protection laws could impact 0.05 1 0.05
product design and cost
8. Shifts in buyers' needs and tastes 0.04 1 0.04

Total 1.00 2.55

Positioning Map

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 Price (High)

Harley-
Davidson, Inc.

BMW

Honda
Yamaha

Brand Brand Loyalty

Loyalty (High)
(Low)

Price (Low)

E. Internal Audit

Strengths
1. Additional job cuts has helped the company to improve its profit margin
2. Harley-Davidson motorcycles have led the industry in the United
States for retail unit registrations of new heavyweight motorcycles
3. Harley-Davidson operates in two segments: (1) financial services and
(2) motorcycles and related products.
4. Harley-Davidson has 5 divisions: (1) Parts & Accessories (P&A); (2)
General Merchandise; (3) Licensing; and (4) Motorcycles
5. The Company offers a wide range of families of motorcycles: (1)
Touring, (2) Dyna, (3) Softail, (4) Sportster, and (5) VRSC
6. In terms of non-U.S. distribution, Harley-Davidson has 71 full service
dealerships in Canada, 383 in Europe, 201 in Asia Pacific, and 32 in
Latin America
7. Strong brand recognition and customer loyalty
8. International retail sales were up 10.3 percent as compared to 2007
9. Total current asset increased by $1.9 billion dollars from 2007 to 2008
10. Harley offers financing of its bikes through HDFS

Weaknesses

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 1. The Harley-Davidson motorcycle share of the heavyweight market was
45.5 percent and 48.7 percent in 2008 and 2007, respectively
2. Only 12 percent of U.S. retail motorcycle sales of new Harley-Davidson
motorcycles are to female buyers
3. A typical buyer of Harley bike has an average of median household
income of approximately $87,000
4. For the full year 2009, Harley-Davidson plans to ship between 264,000
and 273,000 new Harley-Davidson motorcycles, a 10 to 13 percent
reduction from 2008
5. Total worldwide retail sales dropped by 7.15 in 2008 from previous
year
6. International retail sales growth slowed to 0.7 percent during the fourth
quarter of 2008 as a result of deteriorating economic conditions outside
the United States
7. In the United States, retail sales of Harley-Davidson motorcycles in
2008 were down 13.0 percent
8. Total operating income dropped by about $400 million from 2007 to
2008

Financial Ratio Analysis (December 2009)

Harley-
Growth Rates % Industry S&P 500
Davidson
Sales (Qtr vs year ago qtr) -18.00 -13.00 -4.80
Net Income (YTD vs YTD) -71.60 15.80 -6.00
Net Income (Qtr vs year ago qtr) -84.10 6.40 26.80
Sales (5-Year Annual Avg.) 4.02 0.78 12.99
Net Income (5-Year Annual Avg.) -2.96 -7.50 12.69
Dividends (5-Year Annual Avg.) 45.92 34.93 11.83

Harley-
Price Ratios Industry S&P 500
Davidson
Current P/E Ratio 24.3 25.6 26.7
P/E Ratio 5-Year High 21.9 4.3 68.0
P/E Ratio 5-Year Low 3.0 0.8 9.9
Price/Sales Ratio 1.12 1.12 2.25
Price/Book Value 2.58 3.36 3.48
Price/Cash Flow Ratio 11.90 15.40 13.70

Harley-
Profit Margins % Industry S&P 500
Davidson
Gross Margin 29.1 23.1 38.9
Pre-Tax Margin 9.2 6.0 10.3

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Net Profit Margin 4.6 2.4 7.1
5Yr Gross Margin (5-Year Avg.) 37.9 29.4 38.6
5Yr PreTax Margin (5-Year Avg.) 23.8 17.4 16.6
5Yr Net Profit Margin (5-Year Avg.) 15.3 11.2 11.5

Harley-
Financial Condition Industry S&P 500
Davidson
Debt/Equity Ratio 2.26 1.53 1.09
Current Ratio 1.4 1.8 1.5
Quick Ratio 1.3 1.4 1.3
Interest Coverage 46.2 27.4 23.7
Leverage Ratio 4.1 3.5 3.4
Book Value/Share 9.77 9.22 21.63
Adapted from www.moneycentral.msn.com

Net Profit
Avg P/E Price/ Sales Price/ Book
Margin (%)
12/08 12.20 0.67 1.87 11.0
12/07 15.50 1.90 4.69 15.2
12/06 14.60 3.02 6.60 16.9
12/05 15.50 2.55 4.58 16.9
12/04 19.00 3.39 5.56 16.7
12/03 17.80 2.95 4.85 15.5
12/02 26.80 3.28 6.26 13.5
12/01 32.10 4.64 9.36 12.2
12/00 36.40 3.96 8.54 11.3
12/08 12.20 0.67 1.87 11.0

Book Value/ Debt/ Return on Return on Interest

Share Equity Equity (%) Assets (%) Coverage
12/08 $9.09 1.86 30.9 8.4 226.6
12/07 $9.96 0.90 39.3 16.5 NA
12/06 $10.68 0.62 37.8 18.9 NA
12/05 $11.25 0.39 31.1 18.3 NA
12/04 $10.94 0.40 27.6 16.2 NA
12/03 $9.81 0.34 25.7 15.5 NA
12/02 $7.38 0.34 26.0 15.0 NA
12/01 $5.80 0.34 24.9 14.0 NA
12/00 $4.65 0.32 24.7 14.3 NA
12/08 $9.09 1.86 30.9 8.4 226.6

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Adapted from www.moneycentral.msn.com

Internal Factor Evaluation (IFE) Matrix

Key Internal Factors Weight Rating Weighted

Score

Strengths

1. Additional job cuts has helped the company to 0.05 3 0.15

improve its profit margin
2. Harley-Davidson motorcycles have led the industry 0.08 4 0.32
in the United States for retail unit registrations of
new heavyweight motorcycles
3. Harley-Davidson operates in two segments: (1) 0.05 3 0.15
financial services and (2) motorcycles and related
products.
4. Harley-Davidson has 5 divisions: (1) Parts & 0.03 4 0.12
Accessories (P&A); (2) General Merchandise; (3)
Licensing; and (4) Motorcycles
5. The Company offers a wide range of families of 0.06 3 0.18
motorcycles: (1) Touring, (2) Dyna, (3) Softail, (4)
Sportster, and (5) VRSC
6. In terms of non-U.S. distribution, Harley-Davidson 0.05 3 0.15
has 71 full service dealerships in Canada, 383 in
Europe, 201 in Asia Pacific, and 32 in Latin
America
7. Strong brand recognition and customer loyalty 0.07 4 0.28

8. International retail sales were up 10.3 percent as 0.07 3 0.21

compared to 2007
9. Total current asset increased by $1.9 billion dollars 0.06 3 0.18
from 2007 to 2008
10. Harley offers financing of its bikes through HDFS 0.06 3 0.18

Weaknesses

1. The Harley-Davidson motorcycle share of the 0.07 1 0.07

heavyweight market was 45.5 percent and 48.7
percent in 2008 and 2007, respectively
2. Only 12 percent of U.S. retail motorcycle sales of 0.05 1 0.05
new Harley-Davidson motorcycles are to female
buyers
3. A typical buyer of Harley bike has an average of 0.05 1 0.05
median household income of approximately
$87,000
4. For the full year 2009, Harley-Davidson plans to 0.05 1 0.05
ship between 264,000 and 273,000 new Harley-

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 Davidson motorcycles, a 10 to 13 percent
reduction from 2008
5. Total worldwide retail sales dropped by 7.15 in 0.06 2 0.12
2008 from previous year
6. International retail sales growth slowed to 0.7 0.03 2 0.06
percent during the fourth quarter of 2008 as a
result of deteriorating economic conditions outside
the United States
7. In the United States, retail sales of Harley- 0.05 1 0.05
Davidson motorcycles in 2008 were down 13.0
percent
8. Total operating income dropped by about $400 0.06 1 0.06
million from 2007 to 2008
Total 1.00 2.43

F. SWOT Strategies

Strengths Weaknesses
1. Additional job cuts has 1. The Harley-Davidson
helped the company to motorcycle share of the
improve its profit margin heavyweight market was
2. Harley-Davidson 45.5 percent and 48.7
motorcycles have led percent in 2008 and
the industry in the 2007, respectively
United States for retail 2. Only 12 percent of U.S.
unit registrations of new retail motorcycle sales of
heavyweight new Harley-Davidson
motorcycles motorcycles are to
3. Harley-Davidson female buyers
operates in two 3. A typical buyer of Harley
segments: (1) financial bike has an average of
services and (2) median household
motorcycles and related income of approximately
products. $87,000
4. Harley-Davidson has 5 4. For the full year 2009,
divisions: (1) Parts & Harley-Davidson plans
Accessories (P&A); (2) to ship between 264,000
General Merchandise; and 273,000 new
(3) Licensing; and (4) Harley-Davidson
Motorcycles motorcycles, a 10 to 13
5. The Company offers a percent reduction from
wide range of families of 2008
motorcycles: (1) 5. Total worldwide retail

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 Touring, (2) Dyna, (3) sales dropped by 7.15 in
Softail, (4) Sportster, 2008 from previous year
and (5) VRSC 6. International retail sales
6. In terms of non-U.S. growth slowed to 0.7
distribution, Harley- percent during the fourth
Davidson has 71 full quarter of 2008 as a
service dealerships in result of deteriorating
Canada, 383 in Europe, economic conditions
201 in Asia Pacific, and outside the United
32 in Latin America States
7. Strong brand 7. In the United States,
recognition and retail sales of Harley-
customer loyalty Davidson motorcycles in
8. International retail sales 2008 were down 13.0
were up 10.3 percent as percent
compared to 2007 8. Total operating income
9. Total current asset dropped by about $400
increased by $1.9 billion million from 2007 to
dollars from 2007 to 2008
2008
10. Harley offers financing
of its bikes through
HDFS
Opportunities S-O Strategies W-O Strategies
1. Economy in Europe and 1. Develop a lower price / 1. Offer a better discount
other regions is growing light weight bike, for retailers to sell / promote
at a better rate than efficient in fuel Harley merchandise such
United States consumption for as clothes, mugs, etc. (W5,
2. Gasoline price has been individuals who are W6, O)
stabilized in 2009 interested in riding a 2. Offer better financing
3. Competition has bike but can’t afford or rate to new / first time
reduced their production ride the current models buyers (W1, W3, W5, W7,
of motorcycle in 2009 (S3, S4, S5, S6, S7, S8, O3, O4)
4. Currently, Yamaha has S8, S9, S10, O1, O2,
seen decreasing O5, O6, O8)
motorcycle sales in 2. Create a new line for
Japan, the United female riders to be
States, and Europe, but promoted in US and
is doing better in foreign markets (S5, S7,
Southeast Asia and O8, S9, S10, O1, O4,
Latin America O6)
5. Honda, Yamaha and
Suzuki are more
diversified than Harley
in terms of product

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 offerings
6. Female riders are on the
rise
7. Honda, Yamaha and
Suzuki focus on ATVs,
scooters, and marine
and watercraft in
addition to various
motorcycle product lines
8. Motorcycles typically are
considered a good
replacement for
automobiles when gas
prices are on the rise
Threats S-T Strategies W-T Strategies
1. Unemployment is on the a. Increase current 1. Introduce a new product
rise in the United States promotional campaign line – Harley2 suitable for
among middle class (product placement, female riders, light weight
who could afford to buy advertising, Online and priced lower to be
a motorcycle newsgroup / press marketed to a new segment
2. Competitors are (W2, W3, W4, W5, T1, T2,
releases, media ads,
reducing their prices so T3, T5, T6, T7)
etc.) both in the U.S.
they can improve sales and abroad (S1, S2,
3. Disposable income is SS7, S9, S10, T3, T8)
falling among
professionals between
the age of 35 and 54
4. Competition is strong in
markets outside the
United States
5. Increase in fuel price
could impact the
industry sales
6. Rise in interest rate
could impact the buyers
from purchasing and
financing high ticket
items
7. Environmental
protection laws could
impact product design
and cost
8. Shifts in buyers’ needs
and tastes

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G. SPACE Matrix

FS
Conservative Aggressive
7

CS IS
-7 -6 -5 -4 -3 -2 -1 1 2 3 4 5 6 7

-1

-2

-3

-4

-5

-6

Defensive -7 Competitive

ES

Financial Stability (FS) Environmental Stability (ES)

Return on Investment 6 Unemployment -5
Leverage 5 Technological Changes -2
Liquidity 4 Price Elasticity of Demand -1
Working Capital 4 Competitive Pressure -4
Cash Flow 4 Barriers to Entry -5

Financial Stability (FS) Average Environmental Stability (ES) Average

Competitive Stability (CS) Industry Stability (IS)

Market Share -2 Growth Potential 5
Product Quality -1 Financial Stability 1
Customer Loyalty -1 Ease of Market Entry 5
Competition’s Capacity Utilization -3 Resource Utilization 4
Technological Know-How -2 Profit Potential 3

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Competitive Stability (CS Average Industry Stability (IS) Average

Y-axis: FS + ES = 4.6 + (-3.4) = 1.2

X-axis: CS + IS = (-1.8) + (3.6) = 1.8

H. Grand Strategy Matrix

Rapid Market Growth

Quadrant I
Quadrant II

Strong
Weak
Competitive
Competitive
Position
Position

Quadrant IV
Quadrant III Slow Market Growth

1. Market development
2. Market penetration
3. Product development
4. Forward integration
5. Backward integration
6. Horizontal integration
7. Related diversification

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 I. The Internal-External (IE) Matrix
The IFE Total Weighted Score

Strong Average Weak

3.0 to 4.0 2.0 to 2.99 1.0 to 1.99
I II III

High
3.0 to 3.99

IV IV VI

The EFE Total Harley-Davidson

Weighted Medium
Score 2.0 to 2.99

VII VIII IX

Low
1.0 to 1.99

J. QSPM

Develop a
lower price /
light weight
bike, efficient
in fuel
consumption
for individuals
who are
interested in Offer better
riding a bike financing rate
but can’t to new / first
afford or ride time buyers

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 the current
models
Key Factors Weight AS TAS AS TAS
Opportunities
Economy in Europe and other regions is growing 0.08 4 0.32 2 0.16
at a better rate than United States
Gasoline price has been stabilized in 2009 0.06 4 0.24 1 0.06
Competition has reduced their production of 0.09 4 0.36 3 0.27
motorcycle in 2009
Currently, Yamaha has seen decreasing 0.05 --- --- --- ---
motorcycle sales in Japan, the United States, and
Europe, but is doing better in Southeast Asia and
Latin America
Honda, Yamaha and Suzuki are more diversified 0.05 --- --- --- ---
than Harley in terms of product offerings
Female riders are on the rise 0.04 3 0.12 1 0.04
Honda, Yamaha and Suzuki focus on ATVs, 0.07 --- --- --- ---
scooters, and marine and watercraft in addition to
various motorcycle product lines
Motorcycles typically are considered a good 0.06 4 0.24 2 0.12
replacement for automobiles when gas prices are
on the rise
Threats
Unemployment is on the rise in the United States 0.09 2 0.18 4 0.36
among middle class who could afford to buy a
motorcycle
Competitors are reducing their prices so they can 0.07 3 0.21 1 0.07
improve sales
Disposable income is falling among professionals 0.07 3 0.21 1 0.07
between the age of 35 and 54
Competition is strong in markets outside the 0.06 3 0.18 2 0.12
United States
Increase in fuel price could impact the industry 0.07 4 0.28 2 0.14
sales
Rise in interest rate could impact the buyers from 0.05 4 0.20 3 0.15
purchasing and financing high ticket items
Environmental protection laws could impact 0.05 --- --- --- ---
product design and cost
Shifts in buyers' needs and tastes 0.04 --- --- --- ---
TOTAL 1.00 2.54 1.56
Strengths
Additional job cuts has helped the company to 0.05 --- --- --- ---
improve its profit margin
Harley-Davidson motorcycles have led the 0.08 3 0.24 1 0.08
industry in the United States for retail unit
registrations of new heavyweight motorcycles

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Harley-Davidson operates in two segments: (1) 0.05 --- --- --- ---
financial services and (2) motorcycles and related
products.
Harley-Davidson has 5 divisions: (1) Parts & 0.03 --- --- --- ---
Accessories (P&A); (2) General Merchandise; (3)
Licensing; and (4) Motorcycles
The Company offers a wide range of families of 0.06 --- --- --- ---
motorcycles: (1) Touring, (2) Dyna, (3) Softail, (4)
Sportster, and (5) VRSC
In terms of non-U.S. distribution, Harley- 0.05 2 0.1 3 0.15
Davidson has 71 full service dealerships in
Canada, 383 in Europe, 201 in Asia Pacific, and
32 in Latin America
Strong brand recognition and customer loyalty 0.07 3 0.21 2 0.14
International retail sales were up 10.3 percent as 0.07 3 0.21 2 0.14
compared to 2007
Total current asset increased by $1.9 billion 0.06 --- --- --- ---
dollars from 2007 to 2008
Harley offers financing of its bikes through HDFS 0.06 1 0.06 4 0.24
Weaknesses
The Harley-Davidson motorcycle share of the 0.07 --- --- --- ---
heavyweight market was 45.5 percent and 48.7
percent in 2008 and 2007, respectively
Only 12 percent of U.S. retail motorcycle sales of 0.05 3 0.15 1 0.05
new Harley-Davidson motorcycles are to female
buyers
A typical buyer of Harley bike has an average of 0.05 1 0.05 3 0.15
median household income of approximately
$87,000
For the full year 2009, Harley-Davidson plans to 0.05 --- --- --- ---
ship between 264,000 and 273,000 new Harley-
Davidson motorcycles, a 10 to 13 percent
reduction from 2008
Total worldwide retail sales dropped by 7.15 in 0.06 1 0.06 3 0.18
2008 from previous year
International retail sales growth slowed to 0.7 0.03 --- --- --- ---
percent during the fourth quarter of 2008 as a
result of deteriorating economic conditions
outside the United States
In the United States, retail sales of Harley- 0.05 1 0.05 4 0.2
Davidson motorcycles in 2008 were down 13.0
percent
Total operating income dropped by about $400 0.06 1 0.06 3 0.18
million from 2007 to 2008
SUBTOTAL 1.00 1.19 1.51
SUM TOTAL ATTRACTIVENESS SCORE 3.73 3.07

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 K. Recommendations

Develop a product line with 3 to 5 bikes that are light weight, fuel efficient,
lower than average Harley motorcycles, compliance with EPA and other
regulatory agencies to be marketed to 25 to 45 age group with income
level of $65,000 or higher. The brand should be promoted for substitute to
automobile for short distances.

L. EPS/EBIT Analysis
$ Amount Needed: $150 million
Stock Price: $25.20
Tax Rate: 36.7%
Interest Rate: 6.97%
# Shares Outstanding: 234.4 Million

Common Stock Financing Debt Financing

Recession Normal Boom Recession Normal Boom
EBIT $1,000,000,000 $1,500,000,000 $1,800,000,000 $1,000,000,000 $1,500,000,000 $1,800,000,000
Interest 0 0 0 10,455,000 10,455,000 10,455,000
EBT 1,000,000,000 1,500,000,000 1,800,000,000 989,545,000 1,489,545,000 1,789,545,000
Taxes 36,700,000,000 55,050,000,000 66,060,000,000 36,316,301,500 54,666,301,500 65,676,301,500
EAT 35,700,000,000 53,550,000,000 64,260,000,000 35,326,756,500 53,176,756,500 63,886,756,500
# Shares 240,352,381 240,352,381 240,352,381 234,400,000 234,400,000 234,400,000
EPS 148.53 222.80 267.36 150.71 226.86 272.55

70 Percent 70 Percent
Stock - 30 Debt - 30
Percent Debt Percent Stock
Recession Normal Boom Recession Normal Boom
EBIT $1,000,000,000 $1,500,000,000 $1,800,000,000 $1,000,000,000 $1,500,000,000 $1,800,000,000
Interest 8,364,000 8,364,000 8,364,000 2,091,000 2,091,000 2,091,000
EBT 991,636,000 1,491,636,000 1,791,636,000 997,909,000 1,497,909,000 1,797,909,000
Taxes 36,393,041,200 54,743,041,200 65,753,041,200 36,623,260,300 54,973,260,300 65,983,260,300
EAT 35,401,405,200 53,251,405,200 63,961,405,200 35,625,351,300 53,475,351,300 64,185,351,300
# Shares 238,566,667 238,566,667 238,566,667 236,185,714 236,185,714 236,185,714
EPS 148.39 223.21 268.11 150.84 226.41 271.76

M. Epilogue

Harley-Davidson is extending the deadline for some its competitive bike

exchange trade-in program so customers would have more time to take
advantage of the promotion. The company has been trying to stimulate its sales
and financing program due to weak economy and low sales results.

Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall.

They also announced that the Board of Directors approved a cash dividend of
$0.10 per share for the first quarter of 2010. This decision will reduce their cash
flow by approximately $23.7 million.

Harley-Davidson still is suffering from borrowing of $600 million three years ago
at a rate of 15%. The interest of this loan is approximately $90 million a year
which is impacting the company’s bottom line. For 2009, the company
announced 27% down from 2008 and ended up with a $55 million loss – its first
loss since 1993.

Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall.