Harley Davidson 2012 Annual Report Download - page 68

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2012 2011 2010
Revenue $ — $ — $ 48,563
Loss before income taxes $ — $ (407) $ (131,034)
Net income (loss) $ — $ 51,036 $ (113,124)
Earnings (loss) per common share $ — $ 0.22 $ (0.48)
4. Restructuring Expense and Other Impairments
2011 Restructuring Plans
In December 2011, the Company made a decision to cease operations at New Castalloy, its Australian subsidiary and
producer of cast motorcycle wheels and wheel hubs, and source those components through other existing suppliers (2011 New
Castalloy Restructuring Plan). The Company expects the transition of supply from New Castalloy to be complete in 2013. The
decision to close New Castalloy comes as part of the Company’s overall long term strategy to develop world-class
manufacturing capability throughout the Company by restructuring and consolidating operations for greater competitiveness,
efficiency and flexibility. In connection with this decision, the Company will reduce its workforce by approximately 200
employees by the end of 2013.
Under the 2011 New Castalloy Restructuring Plan restructuring expenses consist of employee severance and termination
costs, accelerated depreciation and other related costs. The Company expects to incur about $31 million in restructuring charges
related to the transition through 2013. Approximately 35% of the $31 million will be non-cash charges. On a cumulative basis,
the Company has incurred $22.2 million of restructuring expenses under the 2011 New Castalloy Restructuring Plan through
2012, of which $12.8 million were incurred in the year ended December 31, 2012.
In February 2011, the Company’s unionized employees at its facility in Kansas City, Missouri ratified a new seven-year
labor agreement. The new agreement took effect on August 1, 2011. The new contract is similar to the labor agreements ratified
at the Company’s Wisconsin facilities in September 2010 and its York, Pennsylvania facility in December 2009, and allows for
similar flexibility, increased production efficiency and the addition of a flexible workforce component.
The actions to implement the new ratified labor agreement (2011 Kansas City Restructuring Plan) result in approximately
145 fewer full-time hourly unionized employees in its Kansas City facility than would have been required under the previous
contract.
Under the 2011 Kansas City Restructuring Plan, restructuring expenses consist of employee severance and termination
costs and other related costs. On a cumulative basis, the Company has incurred $6.9 million of restructuring expenses under the
2011 Kansas City Restructuring Plan through 2012, of which approximately10% are non-cash . During the year ended
December 31, 2012, the Company released a portion of its Kansas City Restructuring Plan reserve related to severance costs as
these costs are no longer expected to be incurred.
The following table summarizes the Motorcycle Segment’s 2011 Kansas City Restructuring Plan and 2011 New Castalloy
Restructuring Plan reserve activity and balances as recorded in accrued liabilities for the year ended December 31 (in
thousands):
2012
Kansas City New Castalloy Consolidated
Employee
Severance
and
Termination
Costs Other Total
Employee
Severance
and
Termination
Costs Accelerated Depreciation Other Total Total
Balance, beginning of
period $ 4,123 $ — $4,123 $ 8,428 $ — $ 305 $ 8,733 $ 12,856
Restructuring expense — — — 3,180 8,212 1,427 12,819 12,819
Utilized - cash ———(2,302) — (1,587)(3,889)(3,889)
Utilized - noncash — — — — (8,212) — (8,212)(8,212)
Non-cash reserve
release (1,864) — (1,864) — — — — (1,864)
Balance, end of period $ 2,259 $ — $2,259 $ 9,306 $ — $ 145 $ 9,451 $ 11,710