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

D.

External Audit

CPM Competitive Profile Matrix

HarleyDavidson
Critical Success Factors Weigh t Ratin g Weighte d Score

Honda
Ratin g Weighte d Score

Yamaha
Ratin g Weighted Score

Advertising Top Management Customer Service Technological Advances International Market Sales Global Expansion Financial Position Customer Loyalty Market Share Product Quality Marketing Price Competitiveness Total

0.08 0.05 0.10 0.09 0.07 0.06 0.07 0.11 0.09 0.10 0.10 0.08 1.00

4 2 4 3 3 2 2 4 2 4 2 1

0.32 0.10 0.40 0.27 0.21 0.12 0.14 0.44 0.18 0.40 0.20 0.08 2.86

2 2 3 1 4 4 4 3 4 3 3 3

0.16 0.10 0.30 0.09 0.28 0.24 0.28 0.33 0.36 0.30 0.30 0.24 2.98

3 3 2 2 2 3 3 2 3 2 1 2

0.24 0.15 0.20 0.18 0.14 0.18 0.21 0.22 0.27 0.20 0.10 0.16 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

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

Weight

Rating

Weighted Score

0.08 0.06 0.09 0.05

4 3 3 4

0.32 0.18 0.27 0.2

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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

0.05 0.04 0.07

2 3 3

0.1 0.12 0.21

0.06

0.24

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
0.09 2 0.18

0.07 0.07 0.06 0.07 0.05 0.05 0.04 1.00

3 2 2 1 2 1 1

0.21 0.14 0.12 0.07 0.1 0.05 0.04 2.55

Total

Positioning Map

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Price (High)

HarleyDavidson, Inc. BMW Honda Yamaha

Brand Loyalty (Low) Brand Loyalty (High)

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)
Growth Rates % HarleyDavidson Industry S&P 500

Sales (Qtr vs year ago qtr) Net Income (YTD vs YTD) Net Income (Qtr vs year ago qtr) Sales (5-Year Annual Avg.) Net Income (5-Year Annual Avg.) Dividends (5-Year Annual Avg.)
Price Ratios

-18.00 -71.60 -84.10 4.02 -2.96 45.92

HarleyDavidson

-13.00 15.80 6.40 0.78 -7.50 34.93

Industry

-4.80 -6.00 26.80 12.99 12.69 11.83

S&P 500

Current P/E Ratio P/E Ratio 5-Year High P/E Ratio 5-Year Low Price/Sales Ratio Price/Book Value Price/Cash Flow Ratio
Profit Margins %

24.3 21.9 3.0 1.12 2.58 11.90

HarleyDavidson

25.6 4.3 0.8 1.12 3.36 15.40

Industry

26.7 68.0 9.9 2.25 3.48 13.70

S&P 500

Gross Margin Pre-Tax Margin

29.1 9.2

23.1 6.0

38.9 10.3

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Net Profit Margin 5Yr Gross Margin (5-Year Avg.) 5Yr PreTax Margin (5-Year Avg.) 5Yr Net Profit Margin (5-Year Avg.)
Financial Condition

4.6 37.9 23.8 15.3

HarleyDavidson

2.4 29.4 17.4 11.2

Industry

7.1 38.6 16.6 11.5

S&P 500

Debt/Equity Ratio Current Ratio Quick Ratio Interest Coverage Leverage Ratio Book Value/Share
Adapted from www.moneycentral.msn.com

2.26 1.4 1.3 46.2 4.1 9.77

1.53 1.8 1.4 27.4 3.5 9.22

1.09 1.5 1.3 23.7 3.4 21.63

Avg P/E

Price/ Sales

Price/ Book

Net Profit Margin (%)

12/08 12/07 12/06 12/05 12/04 12/03 12/02 12/01 12/00 12/08

12.20 15.50 14.60 15.50 19.00 17.80 26.80 32.10 36.40 12.20
Debt/ Equity

0.67 1.90 3.02 2.55 3.39 2.95 3.28 4.64 3.96 0.67
Return on Equity (%)

1.87 4.69 6.60 4.58 5.56 4.85 6.26 9.36 8.54 1.87
Return on Assets (%)

11.0 15.2 16.9 16.9 16.7 15.5 13.5 12.2 11.3 11.0
Interest Coverage

Book Value/ Share

12/08 12/07 12/06 12/05 12/04 12/03 12/02 12/01 12/00 12/08

$9.09 $9.96 $10.68 $11.25 $10.94 $9.81 $7.38 $5.80 $4.65 $9.09

1.86 0.90 0.62 0.39 0.40 0.34 0.34 0.34 0.32 1.86

30.9 39.3 37.8 31.1 27.6 25.7 26.0 24.9 24.7 30.9

8.4 16.5 18.9 18.3 16.2 15.5 15.0 14.0 14.3 8.4

226.6 NA NA NA NA NA NA NA NA 226.6

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Adapted from www.moneycentral.msn.com

Internal Factor Evaluation (IFE) Matrix

Key Internal Factors

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

Weight

Rating

Weighted Score

0.05 0.08

3 4

0.15 0.32

0.05

0.15

0.03

0.12

0.06

0.18

0.05

0.15

0.07 0.07 0.06 0.06

4 3 3 3

0.28 0.21 0.18 0.18

Weaknesses
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 Harley0.07 1 0.07

0.05

0.05

0.05

0.05

0.05

0.05

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5. 6.

7. 8.

Davidson motorcycles, a 10 to 13 percent reduction from 2008 Total worldwide retail sales dropped by 7.15 in 2008 from previous year 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 In the United States, retail sales of HarleyDavidson motorcycles in 2008 were down 13.0 percent Total operating income dropped by about $400 million from 2007 to 2008

0.06 0.03

2 2

0.12 0.06

0.05

0.05

0.06 1.00

0.06 2.43

Total

F.

SWOT Strategies
Strengths Weaknesses

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)

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

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Touring, (2) Dyna, (3) Softail, (4) Sportster, and (5) VRSC 6. In terms of non-U.S. distribution, HarleyDavidson 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
Opportunities S-O Strategies
1.

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 HarleyDavidson motorcycles in 2008 were down 13.0 percent 8. Total operating income dropped by about $400 million from 2007 to 2008

W-O Strategies

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

Develop a lower price / light weight bike, efficient in fuel consumption for individuals who are interested in riding a bike but cant afford or ride the current models (S3, S4, S5, S6, S7, S8, S8, S9, S10, O1, O2, O5, O6, O8) 2. Create a new line for female riders to be promoted in US and foreign markets (S5, S7, O8, S9, S10, O1, O4, O6)

1. Offer a better discount for retailers to sell / promote Harley merchandise such as clothes, mugs, etc. (W5, W6, O) 2. Offer better financing rate to new / first time buyers (W1, W3, W5, W7, O3, O4)

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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 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

a. Increase current promotional campaign (product placement, advertising, Online newsgroup / press releases, media ads, etc.) both in the U.S. and abroad (S1, S2, SS7, S9, S10, T3, T8)

1. Introduce a new product

line Harley2 suitable for female riders, light weight and priced lower to be marketed to a new segment (W2, W3, W4, W5, T1, T2, T3, T5, T6, T7)

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G.

SPACE Matrix FS
Conservative
7 6 5 4 3 2 1

Aggressive

CS

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

Defensive

-7

Competitive

ES

Financial Stability (FS) Return on Investment Leverage Liquidity Working Capital Cash Flow Financial Stability (FS) Average Competitive Stability (CS) Market Share Product Quality Customer Loyalty Competitions Capacity Utilization Technological Know-How

6 5 4 4 4

Environmental Stability (ES) Unemployment Technological Changes Price Elasticity of Demand Competitive Pressure Barriers to Entry Environmental Stability (ES) Average Industry Stability (IS) Growth Potential Financial Stability Ease of Market Entry Resource Utilization Profit Potential

-5 -2 -1 -4 -5

-2 -1 -1 -3 -2

5 1 5 4 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 II Quadrant I

Weak Competitive Position

Strong Competitive Position

Quadrant III

Slow Market Growth

Quadrant IV

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

High 3.0 to 3.99

IV

IV

VI

The EFE Total Weighted Score

Harley-Davidson Medium 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 riding a bike but cant afford or ride

Offer better financing rate to new / first time buyers

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Key Factors Opportunities Economy in Europe and other regions is growing at a better rate than United States Gasoline price has been stabilized in 2009 Competition has reduced their production of motorcycle in 2009 Currently, Yamaha has seen decreasing 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 than Harley in terms of product offerings Female riders are on the rise Honda, Yamaha and Suzuki focus on ATVs, scooters, and marine and watercraft in addition to various motorcycle product lines Motorcycles typically are considered a good replacement for automobiles when gas prices are on the rise Threats Unemployment is on the rise in the United States among middle class who could afford to buy a motorcycle Competitors are reducing their prices so they can improve sales Disposable income is falling among professionals between the age of 35 and 54 Competition is strong in markets outside the United States Increase in fuel price could impact the industry sales Rise in interest rate could impact the buyers from purchasing and financing high ticket items Environmental protection laws could impact product design and cost Shifts in buyers' needs and tastes TOTAL Strengths Additional job cuts has helped the company to improve its profit margin Harley-Davidson motorcycles have led the industry in the United States for retail unit registrations of new heavyweight motorcycles

Weight
0.08 0.06 0.09 0.05

the current models AS TAS 4 4 4 --0.32 0.24 0.36 ---

AS 2 1 3 ---

TAS 0.16 0.06 0.27 ---

0.05 0.04 0.07

--3 --4

--0.12 --0.24

--1 --2

--0.04 --0.12

0.06

0.09

2 3 3 3 4 4 -----

0.18 0.21 0.21 0.18 0.28 0.20 ----2.54 --0.24

4 1 1 2 2 3 -----

0.36 0.07 0.07 0.12 0.14 0.15 ----1.56 --0.08

0.07 0.07 0.06 0.07 0.05 0.05 0.04

1.00
0.05 0.08

--3

--1

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Harley-Davidson operates in two segments: (1) financial services and (2) motorcycles and related products. Harley-Davidson has 5 divisions: (1) Parts & Accessories (P&A); (2) General Merchandise; (3) Licensing; and (4) Motorcycles The Company offers a wide range of families of motorcycles: (1) Touring, (2) Dyna, (3) Softail, (4) Sportster, and (5) VRSC In terms of non-U.S. distribution, HarleyDavidson 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 International retail sales were up 10.3 percent as compared to 2007 Total current asset increased by $1.9 billion dollars from 2007 to 2008 Harley offers financing of its bikes through HDFS Weaknesses The Harley-Davidson motorcycle share of the 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 new Harley-Davidson motorcycles are to female buyers A typical buyer of Harley bike has an average of median household income of approximately $87,000 For the full year 2009, Harley-Davidson plans to ship between 264,000 and 273,000 new HarleyDavidson motorcycles, a 10 to 13 percent reduction from 2008 Total worldwide retail sales dropped by 7.15 in 2008 from previous year 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 In the United States, retail sales of HarleyDavidson motorcycles in 2008 were down 13.0 percent Total operating income dropped by about $400 million from 2007 to 2008 SUBTOTAL SUM TOTAL ATTRACTIVENESS SCORE

0.05

------2

------0.1

------3

------0.15

0.03

0.06

0.05

0.07 0.07 0.06 0.06 0.07

3 3 --1 --3 1 ---

0.21 0.21 --0.06 --0.15 0.05 ---

2 2 --4 --1 3 ---

0.14 0.14 --0.24 --0.05 0.15 ---

0.05

0.05

0.05

0.06 0.03

1 ---

0.06 ---

3 ---

0.18 ---

0.05

1 1

0.05 0.06 1.19 3.73

4 3

0.2 0.18 1.51 3.07

0.06

1.00

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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 Recession Normal Boom $1,000,000,000 $1,500,000,000 $1,800,000,000 0 0 0 1,000,000,000 1,500,000,000 1,800,000,000 36,700,000,000 55,050,000,000 66,060,000,000 35,700,000,000 53,550,000,000 64,260,000,000 240,352,381 240,352,381 240,352,381 148.53 222.80 267.36 70 Percent Stock - 30 Percent Debt Recession $1,000,000,000 8,364,000 991,636,000 36,393,041,200 35,401,405,200 238,566,667 148.39 Recession $1,000,000,000 10,455,000 989,545,000 36,316,301,500 35,326,756,500 234,400,000 150.71 70 Percent Debt - 30 Percent Stock Recession $1,000,000,000 2,091,000 997,909,000 36,623,260,300 35,625,351,300 236,185,714 150.84 Debt Financing Normal Boom $1,500,000,000 $1,800,000,000 10,455,000 10,455,000 1,489,545,000 1,789,545,000 54,666,301,500 65,676,301,500 53,176,756,500 63,886,756,500 234,400,000 234,400,000 226.86 272.55

EBIT Interest EBT Taxes EAT # Shares EPS

EBIT Interest EBT Taxes EAT # Shares EPS

Normal $1,500,000,000 8,364,000 1,491,636,000 54,743,041,200 53,251,405,200 238,566,667 223.21

Boom $1,800,000,000 8,364,000 1,791,636,000 65,753,041,200 63,961,405,200 238,566,667 268.11

Normal $1,500,000,000 2,091,000 1,497,909,000 54,973,260,300 53,475,351,300 236,185,714 226.41

Boom $1,800,000,000 2,091,000 1,797,909,000 65,983,260,300 64,185,351,300 236,185,714 271.76

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.

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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 companys bottom line. For 2009, the company announced 27% down from 2008 and ended up with a $55 million loss its first loss since 1993.

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