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Interesting:

The Italian firm produced about 5,800 bikes last year, compared with 330,619 that Harley shipped to its dealers...

Through September, MV Agusta posted sales of $42.9 million and a loss of $52.6 million. The loss includes an $18.9 million goodwill impairment charge linked to the fact that the value of the business has dropped with the European economic downturn and its impact on the sport bike market, company chief financial officer John Olin said an investor conference call last month.
 

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Hmm.... a goodwill charge, eh?

In accounting terms, Harley's essentially saying that the value of the MV brand itself has been damaged to the tune of $18.9m
 

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So, is that $18.9M goodwill charge a deduction from MV's loss - meaning the really lost $71.5M?
No, it says loss includes goodwill charge.
 

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Hmm.... a goodwill charge, eh?

In accounting terms, Harley's essentially saying that the value of the MV brand itself has been damaged to the tune of $18.9m
no, they have deducted a portion of what they "overpaid" for the company as a loss.
 

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no, they have deducted a portion of what they "overpaid" for the company as a loss.
yes, goodwill impairment is a loss and in hindsight they're saying MV used to be worth 18.9 million more
 

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The following table presents information about the Company’s assets measured at fair value on a non-recurring basis as of September 27, 2009 and September 28, 2008 (in thousands):

Balance as of
September 27, 2009
Quoted Prices in
Active Markets for
Identical Assets
(Level 1)
Significant
Other
Observable
Inputs
(Level 2)
Significant
Unobservable
Inputs

(Level 3) Assets:
Goodwill (MV)
$ 66,703 $ $ $ 66,703 Property, plant and equipment (Buell)
3,610 3,610 $ 70,313 $ $ $ 70,313
As discussed in Note 6, the Company performed an impairment test of MV’s goodwill during the third quarter of 2009 and recorded a goodwill impairment charge of $18.9 million. In addition, as discussed in Note 5, the Company performed an evaluation of the carrying value of Buell fixed assets during the third quarter of 2009 and recorded a fixed asset impairment charge of $14.2 million. The Company determined the implied fair value of MV goodwill and the fair value of Buell fixed assets using discounted cash flow and other methodologies incorporating assumptions that, in management’s judgment, reflect assumptions marketplace participants would use at September 27, 2009.

this isn't formatting correctly

the 10q is herehttp://investor.harley-davidson.com/EdgarList.cfm?bmLocale=en_US page 21

there's a lot more goodwill which hasn't been written off yet
 

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Obviously the figures are provided for US financial reporting & taxation purposes.

Whilst I am not completely au fait with US legaslative requirements. The accounting principles don't change.

The $18.9m is a 'book cost' and a provison, it is not 'real', so in simple terms it's not like you have bank account and $18.9m has been taken from it. It is like flagging the posibility that such a withdrawl may be made in future (namely in a sale), it becomes a crystalised loss if the sale reflects a price $18.9M lower than they paid or valued it at in their last set of figures.

However, if the situaution turns around there would be a revaluation which may very well be reduce that figure or even become a credit input to the balance sheet.

When one presents a set of figures they are effectively crystalised at a point in time for instance the the 30th June here in Australia representing the end of the financial year. If the company lands a $100m deal the next day, 1st July...the previous figures remain the prevailing ones until the next financial reporting period.

I hope I have expalined this sufficiently so that it takes on a clarity which is slightly better than that of mud. :ahhh: :flash:
 

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That's right. A goodwill charge is a non-cash impairment. It just means in today's economy a willing buyer would not pay $109 million for MV, but would pay an approximately $90 million at 9/30. This is based on an appraisal generally done by a third-party.

This isn't surprising since many companies have had to take goodwill impairments recently. Harley will probably end up selling MV for less than $90 and taking a loss on the sale. If it is not sold by year-end, I wouldn't be surprised if they impair the goodwill again.:blah:
 

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Gentlemen:

The Italian firm will undoubtedly conduct a fairness valuation as they try to source the deal-my vote is for Stellikan Limited- a UK private equity firm that specializes in refurbishing brands of recreational motorsports who have lost their sheen or gloss.
http://www.motorcyclecruiser.com/newsandupdates/indian_motorcycle_company_bought/index.html

Stellikan was quite successful with their exits for both Indian Motorcycle and Criss-craft, both companies were healthy viable operating entities upon exit, not the usual vampire hemoglobin source that some private equity firms can render.

As for the financial statement attributes, as I recall, current accounting rules do not allow Goodwill to be amortized and therefore a likely buyer will purchase MV for under 90M leaving Harley with the loss.

Perikles
 
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