This case is an extension of Harley-Davidson (A). It shows Harley-Davidson’s financial statements through the end of 2009, when Harley-Davidson reported its first loss in at least 15 years, and when Harley-Davidson could no longer issue additional debt.
The case also shows the details from Harley-Davidson’s last securitization in early 2008 and from Harley-Davidson’s first new securitization in late 2009. In the 2008 securitization, Harley’s securitization trust issued notes equal to about 96.5% of the combined collateral deposited into the trust (motorcycle receivables plus cash). In the 2009 securitization, the securitization trust issued notes equal to about 70% of the combined collateral deposited into the trust. Although that will let Harley-Davidson return to nearly its pre-recession operations, it will either need to stop redeeming stock, or else maintain some level of debt to finance its receivables.
The case can be used with Harley-Davidson (A) to discuss how the availability of financing influences Harley-Davidson’s operations and its market value.