Harley-Davidson

Harley to fund additional share buy-back program with $750m of new debt

IN a June 17 Securities and Exchange Commission 8-K filing in the United States (SEC) Harley-Davidson announced that its board had authorized the extension of its share buy-back program announced in February.

The plan is for Harley to acquire and retire a further 15 million shares of its common stock - some 7.2 percent of its outstanding common stock.

This new repurchase authorization is in addition to the buy-back launched by Harley-Davidson's board in February 2014 - one which saw the company bid for 20 million of its shares last year.

However, what wasn't revealed in February was that Harley-Davidson is to issue $750 million of long-term debt in the third quarter this year to fund the repurchase.

From trading at around $54.50 the day before the announcement, Harley-Davidson common stock saw some upward momentum by around 4 percent, to the $59.00 a share mark the day afterwards. As this edition of AMD Magazine went to press though, a week later, the share price had started to soften again - trading in the region of $57.85 and appearing to be headed south again; though at this stage analysts are still marking Harley's prospects as "stable" (Fitch responded with an 'F1' Issuer Default Rating) and as a stock "buy".


improving value to fend off raiders?
 
There are several reasons why a company will launch share buy-back programs and one of the primary ones is as a tax efficient way of returning cash and value to shareholders.

However, share buy-backs are also used to signal that management regard the share price as undervalued - if that was in Harley management's thinking then, so far, it would appear that the investor community needs more convincing. Buy-backs undertaken at a time when it transpires that the share price was actually over-valued destroys shareholder value, especially where debt has been used.

Another reason for share buy-backs can be because a company may take the view that of all the options it has for use of available resources, investing in its own shares is a better bet than acquisitions, R&D or new activity investments.

In Harley's case, given the needs of their dealers to see the sluggish performance of key product areas re-energized, given where their sales and market share numbers have been headed recently (especially domestically), that clearly cannot be one of the factors in their thinking.

Sometimes buy-backs are used to improve ratios, but adding debt rarely does that and even though it is a relatively cheap form of capital currently, it won't remain so for much longer, and using debt suggests that Harley does not have the spare resources needed for a value-return strategy.

Corporate America has been obsessed with share buy-backs the past 24 months; near record levels of buy-backs have been happening - The Economist reports that in the 12 months to September 2014 American firms had bought back more than $500 billion of their own shares.

If buy-backs are used to artificially prop-up a share price, especially if debt is being used, then investment in the activity of the business is probably being shorted and any short-term benefit from improved share prices or ratios is likely to unravel. The recent addiction to buy-backs has been described as "corporate cocaine".

There is one other reason why a company may buy back its own shares, especially with debt - and that is to prepare itself for fending off raiders.

As at the time of this new filing, 15.9 million shares remained outstanding under Harley's 2014 authorization, suggesting that the repeated absence of a Dollar limit on the price Harley pay for their shares, and the fact that they are now eyeing authority for repurchase of at least 30.9 million (15 percent) of its shares, suggests they may well be lining up ammunition for a fight, and seeking to dissuade unwelcome attention and to improve earnings per share and share value in order to keep existing investors "on-side".

Fuelling a pre-emptive strike theory, having bought back nearly 9.1 million of its shares last year, Harley spent $182.5 million to buy back 2.9 million shares in the first quarter of this year - an average of nearly $63.00 a share, meaning that Harley is prepared to pay those investors who are prepared to sell a healthy premium. Following 35.5 percent and 31 percent hikes in its dividend in 2013 and 2014 respectively, this year's increase to 31 cents represents an increase of 12.7 percent - more reason for the company to be conscious of shareholder value in advance of hostile share buying.

AIMExpo (American International Motorcycle Expo)

AIMExpo announces additional custom market initiative

THE third annual AIMExpo (American International Motorcycle Expo) at Orlando, Florida, (October 15 - 18) is headed for further growth this year and now includes added v-twin aftermarket features.

The event continues to differentiate itself from prior 'mainstream' trade show formulas in the United States and delivers on former MIC Chairman Larry Little's vision of bringing a European style Milan or Cologne Show motorcycle industry experience to the North American motorcycle market.
Bob Kay, v-twin industry event director, says that AIMExpo has "created a new paradigm for motorcycling. A way to come together at one place, at one time, at the right time adjacent to an existing major rally - Biketoberfest - in a grand celebration of the riding lifestyle and business.

"The first and only combined trade, media and consumer enthusiast bike event in the United States, AIMExpo has already changed what an event could and should look like. This year we will show how the v-twin and custom influence has been seamlessly integrated into AIMExpo. The AIMExpo platform has been designed from the ground up to respond to the direction provided by the industry and the needs of exhibitors, dealers and enthusiasts in the 21st century."

Bob Kay, AIMExpo V-twin Director: "Garage Party is a new feature catering to the unique creativity of the new generation of young entrepreneurs and their garage built bikes and accessories"

New features this year include the 'Made in America' themed exhibitor zone, which will provide domestic US v-twin (and metric/crossover) application parts and accessory manufacturers with a focused showcase for their products.
The Championship of the Americas (COTA) is an all new custom bike competition affiliated to the AMD World Championship of Custom Bike Building. The builder of the Best in Show custom bike will win an expenses-paid trip to go forward to compete at the next AMD World Championship at the INTERMOT Expo at Cologne, Germany, in October 2016.
Bob Kay told AMD that the first competitor entries have been received already. The classes (Freestyle, Retro Custom, Street Custom and Performance Custom) are non-brand specific showcases designed to provide builders with a structure and environment that recognizes and promotes the "emerging and changed approach to what constitutes the real world and affordable custom design and engineering that has emerged from the new generation of custom bike builders.
"Millennial bikers are leading the way when it comes to appreciating motorcycles for their form and function over any particular brand. It is not uncommon to see custom Yamaha Bolts alongside Harley Sportsters or a cool Ducati Cafe cruising around with a Triumph Bobber," says Bob.
Recognition that there is a new generation of young entrepreneurs with a new and unique take on custom creativity and their garage-built bikes and accessories has been behind another new feature - the 'Garage Party'.
With a special after-party at Orlando's new ACE Cafe, Garage Party will be the feature that links customizers to enthusiasts and AIMExpo to the tens of thousands of consumers who will be in the area for Biketoberfest

www.aimexpousa.com

Aeromach USA

Indian Scout rider boards and heel shifter

AEROMACH USA has begun production of rider floorboards and heel shifters for the 2015 Indian Scout. "We have already heard from dealers that buyers of the Scout are looking for floorboards and some are requesting a heel shifter. We are working fast and furious to get these products, and a few others, done," says Paul Aiken, owner of Aeromach.
"We were fortunate to get delivery of our bike from the first run of bikes delivered. The announcement by Polaris that full production and delivery of the new Scout will be delayed until probably the second quarter of 2015 gives us an opportunity to build some inventory before the bikes begin to hit the dealers. We look forward to shipping product to dealers before the bikes are available," continued Aiken.
Aeromach was the first aftermarket manufacturer to deliver accessories for the 2014 Indian Chief when it shipped including a heel shifter, floorboard relocation kit and dual-position passenger floorboards.

AEROMACH USA, LLC
Charlotte, North Carolina, USA
Tel: 704 599 1333
sales@aeromach.net
www.aeromach.net

Belt Drives Ltd

New clutch options from BDL

BELT Drives Ltd is now including its Competitor clutch with its CDC-1-90 chain drive primary kit for use on ’90-’06 Softails. 

BDL’s CDC-1-90 chain drive primary kit for use on ’90-’06 Softails now includes the company’s Competitor clutch

The company states that the Competitor clutch, which was developed for street and high performance applications, offers an instantaneous transfer of power to the rear wheel with a smooth, comfortable lever action. It uses a patented seven-plate Kevlar clutch to provide at least 60 percent more clutch surface than stock and the nine-spring pressure plate is said to provide varying spring pressure for use with both stock and highly modified engines. The plate allows riders to add or subtract springs to achieve the tension that is appropriate for the bike and riding style.
Each BDL CDC-1-90 kit includes: diamond primary chain, compensator sprocket, compensator nut, clutch springs, shoulder bolts (for chain drive only), hardware kit for chain drive, pressure plate, adjusting screw, main shaft hub nut, chain drive clutch kit, and nine-tooth starter pinion gear.

The BPP-500HYD is specifically for late Touring models with an H-D hydraulic clutch (non CVO models)

A second new clutch option offered by BDL is its BPP-500HYD specifically for late Touring models with H-D hydraulic clutch (non CVO models). It features the company’s patented Ball Bearing lock up design that utilizes 45 - 5/16in steel ball bearings and is designed to work with the stock spring, retainer and bolts. Each kit includes an optional .240in thick high performance diaphragm spring which is 30 percent thicker and stronger than the stock H-D diaphragm. 


BELT DRIVES LIMITED
Anaheim, California, USA
Tel: 714 693 1313
info@beltdrives.com
www.beltdrives.com

Black Duck Parts

Covers, grips and style by Black Duck

BLACK Duck Parts has released a 2015 catalog with new parts including ignition covers and knurled grips.

Black Duck’s ignition covers are available in both two- and five-hole styles as direct replacements for the stock part. Machined from brass, finish options include satin brass, chrome, black powder coat, and gold plated. 

The two-hole cover fits ’70-’99 Big Twins (except Twin Cams), ’70-’03 Sportsters and ‘04’14 Sportsters. Twin Cam models from ’99 to ’14 take the five-hole design. 

Manufactured from solid brass bar using manual lathes and milling machines, Black Duck knurled grips can be used with single or dual throttle cables. Finished in a choice of satin brass of gold plate.

BLACK DUCK PARTS
Barcelona, SPAIN
Tel: +34 654 692 829
info@blackduckparts.com
www.blackduckparts.com

Bad Dad Inc

Stretched bags and fender for Rushmore

BAD Dad has expanded its range of extended saddlebags and matching custom fenders to include an option for use on ’14-’15 H-D Rushmore Touring models.

The bags and fender are a stretched design that adds 4-1/2in to the length of the bike compared to the original fittings. Supplied pre-drilled to make them an easy bolt-on option, the bodywork is finished in a final primer ready to paint.

BAD DAD INC
Fort Wayne, Indiana, USA
Tel:  260 407 2000
sales@baddad.com
www.baddad.com

American Suspension

American Suspension fork tube Air Ride kit

AMERICAN Suspension’s Air Ride Kit has been designed to create an easy conversion of stock Bagger forks to air ride. Each kit contains American Suspension’s Air Ride spring, piston, cap, air fittings and tubing. The kit features everything needed to convert stock or custom 41mm or 49mm fork tubes.

AMERICAN SUSPENSION
Huntington Beach, California, USA
Tel: 321 285 9446
mark@americansuspension.com
www.americansuspension.com  

Paul Milbourn Customs

 
Trends in the custom bike scene come and go. Today wild Choppers with 300 rear tires are a rare sight on the custom bike show scene and the number of board track influenced machines continues to decrease as builder move towards café racer inspired builds as the late ‘50’s and early ’60 are being revisited for styling cues. However, one builder who is ahead of the game is Paul Milbourn whose latest build reinterprets the Digger builds of the ’70

PAUL Milbourn is an established privateer builder in the UK custom bike scene, but the 2014 World Championship of Custom Bike Building was his first international event. While initially unsure about entering his bike – Nut Cracker – in the show, Paul did so on the advice of Wade and Stig at English custom shop Sickboyz Customs and was rewarded with 5th place in the Freestyle class.

Like many of the Digger style bikes originally built in the ‘70s, the starting point for Paul was a Honda motor – am XL600. The initial plan was to leave it basically stock and on the bike’s first outing that was the case. Unfortunately, the cylinder head cracked and unable to find a replacement Paul had to machine the head from a 650 Honda Vigor to fit. This in turn meant a he had to then create a custom inlet manifold for the twin Amal carbs and modify the one-off stainless steel two-into-two exhausts.

Knowing that he wanted to keep the custom cut wheels as clean as possible, Paul then turned his attention to the bike’s transmission where he created a one-off trans brake. He reworked the gearbox casing in order to mount a BMW rotor which is gripped by a six-piston Harris Billet caliper.

The goose necked frame that holds the Honda drivetrain began life as two sheets of 5mm stainless steel, out of which Paul cut the outline he wanted. These pieces were then joined together by a section of 2mm stainless that runs along the center. With the bare frame in place, he then made up the swingarm section for the rear. Using a similar method. The detail work on the stainless panels that adorn the bike was all done by hand. He then turned his metal working skill to crafting the twin mild steel gas tanks that run along either side of the frame’s backbone and the mild steel oil tank underneath the seat.
The seat itself on Nut Cracker is almost impossible to see because it has been made from white leather with red stitching by Zac to match the paint on the frame that was applied by Dave Gunby.

More of Paul’s metal working skills can be seen at the front of the bike, where he fabricated the entire Springer fork and handlebar combination. The front legs of the Springer are each made up of six stainless steel bars braced together at intervals along their length. A similar multiple thin tube design is used for the handlebars too, which finish in one-off grips that include a hidden throttle and hidden twist clutch. The shock at the front of the bike is currently a coil over an oil damper, but Paul is working on an electromagnetic shock of his own design to replace it.
The 21x3in wheel at the front of the bike was cut from a solid blank to Paul’s design by Wynn Engineering who gave the 16x5in rear wheel the same treatment and it’s the only machining work on the bike that Paul didn’t do himself. Both wheels are shod with Avon Speed Master tires.
Having finished the build of Nut Cracker, which was intended to be a bike for his wife, Paul took it to a small UK shows where it took top honors and that led to him being persuaded to enter the European Championship and his fifth place finish in the Freestyle class.

PAUL MILBOURN CUSTOMS
Bognor Regis, West Sussex, UK
Tel: +44 (0)1243 554962
jonnyeighthammers@tiscali.co.uk