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History
The Davidson brothers, William D. ... , Walter, and Arthur founded Harley-Davidson, Inc. ... Harley-Davidson was the first producer of motorcycles in America. ... manufacturers, Harley-Davidson, and Indian survived through the 1930’s. The closing of Indian in 1953 made Harley-Davidson the sole survivor in the American motorcycle industry.
In 1965, Harley-Davidson ended family ownership with a public stock offering and then in 1969, merged with American Machine and Foundry Company (AMF). In 1981, 13 members of the Harley-Davidson management team purchased the company from AMF through a leveraged buy-out.
In the early 1980s, Japanese competitors’ heavyweight motorcycles created a real threat for the Harley-Davidson organization. ... By 1986, Harley-Davidson regained the top spot in the U. ...
Today Harley-Davidson operates in domestic and international markets. ... competitors’ current production and sales volumes are much lower than Harley-Davidson and do not hold a significant market share. ... Competitor’s financial and marketing resources for the international marketplace are substantially greater than those of Harley-Davidson. They also have larger worldwide revenue and are more diversified than Harley-Davidson.
Harley-Davidson products include heavyweight street, custom, touring and sport motorcycles, as well as motorcycle parts, accessories, apparel, and general merchandise.
Harley-Davidson’s two main business segments are Motorcycles/ Related Products, and Financial services. ... Buell markets and distributes Harley-Davidson products through independent dealerships in Italy. The company’s financial services unit (HDFS) provides wholesale and retail financing and insurance programs to Harley-Davidson dealers and customers.
Today Harley-Davidson is a strong, financially stable corporation. ...
Emerging Accounting Practices
Activity based costing (ABC), one of some emerging accounting practices, could be used in analyzing software utilization. ...
Other costs could result if there are changes to Harley-Davidson’s current cost accounting procedures and processes. Based on the outcome of the ABC analysis, there may be costs to implement changes to their procurement, development, and accounting for software. ... This pilot project will allow a contained study of how ABC can benefit Harley-Davidson while finding improvements to the high-cost area of software expenditures.
The pilot project also allows Harley-Davidson to learn from the first implementation of ABC. ...
Ratio Analysis
In reviewing Harley-Davidson’s financial ratios, the profitability measures are strong. ...
We have reviewed Harley-Davidson’s financial statements, measures, and ratios. We now need to look at the company from a managerial accounting perspective. We need to drill down into the accounting and costs information from an internal perspective. ... It is crucial for Harley-Davidson to understand the many costs, accurately capture, monitor, and use in cost accounting and product value chains. ... The major activity for Harley-Davidson is the production and selling of motorcycles. ... There are some semivariable costs and we should determine a cost formula for use in our analysis, accounting, planning, and budgeting. ... These concepts, particularly the contribution margin, are important as Harley-Davidson determines the sales mix of their various products. ... Overhead and period costs are often used in relation to accounting purposes. ...
While we have been examining the many costs of Harley-Davidson, the planning and budgeting process starts with sales projections. ...
In reviewing Harley-Davidson’s financial statements, measures and costs, a potential opportunity to reduce costs and improve the financial situation is in their computer software costs. Harley-Davidson is spending over $13 million in software purchases, development, maintenance, and use. ...
Conclusion
We hope the analysis of Harley-Davidson’s financial statements, ratios, and costs provide the background for our recommendation. ...
Appendix A - Financial Statements
HARLEY-DAVIDSON, INC. ... 10
HARLEY-DAVIDSON, INC.
CONSOLIDATED BALANCE STATEMENTS
Years ended December 31, 2002, 2001, and 2000
(In thousands, except per share amounts)
ASSETS 2002 2001 2000
Current assets:
Cash and cash equivalents 280,928 439,438 419,736
Marketable Securities 514,800 196,011
Accounts receivable, net 108,694 118,843 98,311
Finance receivables, net 855,771 656,421 530,859
Inventories 218,156 181,115 191,931
Deferred income taxes 41,430 38,993 28,280
Prepaid expenses 46,807 34,443 28,147
Net assets from discontinued ops — — —
Total current assets 2,066,586 1,665,264 1,297,264
Finance receivables, net 589,809 379,335 234,091
Property, plant and equip, net 1,032,596 891,820 754,115
Deferred income taxes — — —
Goodwill 49,930 49,711 54,331
Other assets 122,296 132,365 96,603
Net assets from discontinued ops — — —
Total assets 3,861,217 3,118,495 2,436,404
LIABILITIES AND SHAREHOLDERS EQUITY
Current liabilities:
Notes payable, including current maturities of long-term debt $— $— $—
Accounts payable 226,977 194,683 169,844
Accrued expenses & other liabilities 380,496 304,376 238,390
Current portion of finance debt 382,579 217,051 89,509
Total current liabilities 990,052 716,110 497,743
Finance debt 380,000 380,000 355,000
Other long-term liabilities 152,831 176,190 97,340
Postretirement health care benefits 105,419 89,912 80,666
Deferred income taxes 29,478 17,816
Shareholders equity:
Common stock 3,254 3,242 3,210
Additional paid in capital 386,284 359,165 285,390
Retained earnings 2,372,095 1,833,335 1,431,017
Accumulated other comprehensive income (loss) (46,266) (13,728) 308
2,715,367 2,182,014 1,719,925
Less:
Treasury stock (22,636,295 and 21,550,923 shares in 2002 and 2001, respectively), at cost (482,360) (425,546) (313,994)
Unearned compensation (92) (185) (276)
Total shareholders equity 2,232,915 1,756,283 1,405,655
Total liabilities and shareholders equity 3,861,217 3,118,495 2,436,404
HARLEY-DAVIDSON, INC.
Approximate Word count = 3423
Approximate Pages = 13.7
(250 words per page double spaced)
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