According to a statement by the law firm of Lerach Coughlin, etc. published on their web site on May 25 2005, a class action lawsuit has been commenced on behalf of investors in Harley stock against Harley Davidson, Inc. in Federal Court in Wisconsin.
The law firm refers to a disclosure by Harley-Davidson on April 13, 2005 that it would be forced to cut production of new 2005 motorcycles (as previously reported by MD) due to declining demand and increased inventories at its dealers. Here is an excerpt from the May 25 2005 statement by Lerach Coughlin. The entire statement can be found here.
According to the complaint, during the Class Period, as defendants continued reporting quarter after quarter of “record” revenues and earnings, promising mid-teen earnings per share growth rates in fiscal 2005 and that Harley-Davidson would break the psychological barrier of shipping 400,000 new motorcycles by 2007, Harley-Davidson’s stock price traded at inflated levels, increasing to as high as $63.75 on July 14, 2004. During this same period, defendants caused Harley-Davidson to repurchase 10.6 million shares for $564 million in fiscal 2004 and another 2.9 million shares for over $175 million during the first quarter of 2005, further driving up the Company’s stock price. Meanwhile, the Company’s top officers and directors sold almost $92 million worth of their own shares, including the Company’s Chairman and Chief Executive Officer who sold over $50 million worth of Harley-Davidson stock himself. Then, on the April 13, 2005 disclosure, the Company’s stock price plummeted by 16.7% in a single trading session, or $9.84 per share, and would fall a total of 22% by April 15, 2005. Over $3.6 billion in market capitalization was erased.
The complaint alleges that the true facts, which were known by each of the defendants but concealed from the investing public during the Class Period, were as follows: (a) demand for Harley-Davidson motorcycles was declining and the Company’s market share was shrinking; (b) the number of unsold 2004 and 2005 model year motorcycles in dealer inventories was growing exponentially; and (c) over-stocked inventories were running down the price dealers could obtain for new motorcycles.
