HARLEY-DAVIDSON INC
For the period ended Dec 31, 2023. Filed Feb 23, 2024.
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FY2023 · Filed Feb 23, 2024
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5. Additional Balance Sheet and Cash Flow Information
- Additional Balance Sheet and Cash Flow Information
Investments in marketable securities consisted of the following at December 31 (in thousands):
| 2023 | 2022 | |
|---|---|---|
| Mutual funds | $34,079 | $33,071 |
Mutual funds, included in Other long-term assets on the Consolidated balance sheets, are carried at fair value with gains and losses recorded in income. Mutual funds are held to support certain deferred compensation obligations.
Inventories, net consisted of the following as of December 31 (in thousands):
| 2023 | 2022 | |
|---|---|---|
| Raw materials and work in process | $389,221 | $331,380 |
| Motorcycle finished goods | 514,964 | 549,041 |
| Parts and accessories and apparel | 150,844 | 187,039 |
| Inventory at lower of FIFO cost or net realizable value | 1,055,029 | 1,067,460 |
| Excess of FIFO over LIFO cost | (125,078) | (116,500) |
| $929,951 | $950,960 |
Inventory obsolescence reserves deducted from FIFO cost were $110.2 million and $84.6 million as of December 31, 2023 and 2022, respectively.
Property, plant and equipment, net consisted of the following as of December 31 (in thousands):
| 2023 | 2022 | |
|---|---|---|
| Land and related improvements | $66,939 | $71,360 |
| Buildings and related improvements | 431,215 | 411,859 |
| Machinery and equipment | 1,491,448 | 1,507,224 |
| Software | 722,213 | 705,013 |
| Construction in progress | 243,010 | 189,492 |
| 2,954,825 | 2,884,948 | |
| Accumulated depreciation | (2,223,101) | (2,195,062) |
| $731,724 | $689,886 |
Software, net of accumulated amortization, included in Property, plant and equipment, net, was $75.3 million and $59.2 million as of December 31, 2023 and 2022, respectively.
Accrued liabilities consisted of the following as of December 31 (in thousands):
| 2023 | 2022 | |
|---|---|---|
| Payroll, employee benefits and related expenses | $101,955 | $108,980 |
| Sales incentive programs | 116,167 | 50,298 |
| Warranty and recalls | 41,375 | 46,707 |
| Interest | 84,313 | 55,670 |
| Tax-related accruals | 38,219 | 51,730 |
| Contract liability | 23,357 | 17,615 |
| Leases | 18,685 | 16,208 |
| Fair value of derivative financial instruments | 12,806 | 26,022 |
| Other | 209,982 | 247,715 |
| $646,859 | $620,945 |
Deposits– HDFS offers brokered certificates of deposit to customers indirectly through contractual arrangements with third-party banks and/or securities brokerage firms through its bank subsidiary. The Company had $447.8 million and $317.4 million, net of fees, of interest-bearing brokered certificates of deposit outstanding as of December 31, 2023 and December 31, 2022, respectively. The liabilities for deposits are included in Short-term deposits, net or Long-term deposits, net on the Consolidated balance sheets based upon the term of each brokered certificate of deposit issued. Each separate brokered certificate of deposit is issued under a master certificate, and as such, all outstanding brokered certificates of deposit are considered below the Federal Deposit Insurance Corporation insurance coverage limits.
Future maturities of the Company's certificates of deposit as of December 31, 2023 were as follows (in thousands):
| 2024 | $253,720 |
| 2025 | 61,002 |
| 2026 | 79,678 |
| 2027 | 54,158 |
| Thereafter | — |
| Future maturities | 448,558 |
| Unamortized fees | (776) |
| $447,782 |
Operating Cash Flow– The reconciliation of Net income to Net cash provided by operating activities for the years ended December 31, was as follows (in thousands):
| 2023 | 2022 | 2021 | |
|---|---|---|---|
| Cash flows from operating activities: | |||
| Net income | $695,046 | $739,214 | $650,024 |
| Adjustments to reconcile Net income to Net cash provided by operating activities: | |||
| Depreciation and amortization | 158,112 | 151,942 | 165,185 |
| Amortization of deferred loan origination costs | 85,018 | 94,914 | 86,115 |
| Amortization of financing origination fees | 13,208 | 15,105 | 13,810 |
| Provision for long-term employee benefits | (67,624) | (21,891) | 8,317 |
| Employee benefit plan contributions and payments | (5,736) | (14,320) | (17,133) |
| Stock compensation expense | 82,901 | 54,353 | 42,156 |
| Net change in wholesale finance receivables related to sales | (387,743) | (198,623) | 89,001 |
| Provision for credit losses | 227,158 | 145,133 | 25,049 |
| Deferred income taxes | (30,059) | (15,936) | (7,672) |
| Other, net | (39,713) | (13,027) | (9,985) |
| Changes in current assets and liabilities: | |||
| Accounts receivable, net | (11,443) | (82,385) | (53,463) |
| Finance receivables – accrued interest and other | (339) | 414 | 13,316 |
| Inventories, net | 21,257 | (254,170) | (207,550) |
| Accounts payable and accrued liabilities | 28,570 | 4,503 | 173,548 |
| Other current assets | (13,726) | (56,765) | 4,983 |
| 59,841 | (190,753) | 325,677 | |
| Net cash provided by operating activities | $754,887 | $548,461 | $975,701 |
Cash paid during the years ended December 31, for interest and income taxes was as follows (in thousands):
| 2023 | 2022 | 2021 | |
|---|---|---|---|
| Interest | $290,467 | $231,651 | $191,663 |
| Income taxes | $237,658 | $244,374 | $155,579 |
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