Harley Davidson's Ticking Time Bomb

Harley Davidson Inc (NYSE:HOG) announced some great Q4 news. Revenues are up 11.9%. Net Income is up 9.7% indicating some corporate friction eating the 2.2% differential. There is no question that the client base loves them and that the employees and dealers are more than engaged. But…

Post Retirement benefits show up on the balance sheet at approximately $210 million. This is triple last years comparable of approximately $61 million. Many companies carry the ticking time bomb and HOG needs to start addressing (funding) the problem. As it now stands these deferred problems would eat approximately one quarter of earnings.

In the meantime the dividend has been increased and a share repurchase program is well underway. (The Q4 repurchase levels clocked in at approximately $151 million). Corporate liquidity has tightened as a very significant portion of finance debt has moved into the current category.

The open road beckons but if this continues HOG will have to pull over for unforeseen maintenance.