As you know by now, Harley-Davidson (NYSE:HOG) reported its 2008 earnings numbers on Friday. The news was hardly unexpected -- and it was hardly good. Here's what soon-to-be-ex-CEO Jim Ziemer paused to tell us on his way out the door:

  • Overall, fiscal 2008 revenue dropped 2%, while profits declined 25%. Per-share profits for the year totaled $2.79.
  • But the declines seen earlier this year accelerated in Q4. Revenue dropped 7% year over year; earnings declined 56% to $0.34 per share

...and that's not all
Predicting further tough times ahead, Ziemer announced a series of seatbelt-tightening measures. Among other things, the company plans double-digit percentage reductions in shipments in 2009, and it will consolidate multiple plants and warehouses, reduce capital spending roughly 20%, and lay off 1,100 employees.

These measures could cost shareholders some $125 million or more in restructuring charges before they're finished. Combined with management's prediction of a 350-basis-point decline in gross margins, it should all add up to a series of grim earnings reports in 2009.

Yet everyone in the automotive world is slashing costs these days. Even after the steep fall in gross margins that Harley promises (to about 31%), it will continue to trump the numbers at international automakers Honda (NYSE:HMC), Toyota (NYSE:TM), and Nissan (NASDAQ:NSANY) -- not to mention struggling domestics like Ford (NYSE:F) and General Motors (NYSE:GM), or even recreational vehicle company Polaris (NYSE:PII). Profitwise, even in tough times, Harley has no equal in the automotive world.

Or does it?
Viewed from the perspective of GAAP, Harley still looks healthy. But if you examine the firm's cash flow statement, a different picture emerges. In 2008, Harley burned through more than $900 million in free cash flow, and ended the year with less than $600 million in the bank, versus nearly $2.2 billion in debt.

Dividend flame-out
Read that last paragraph again, Fools. If Harley keeps driving in the direction it's going, the company will be out of cash before the year is out. Sales keep dropping, so don't look for help there. Restructuring costs could hit $100 million this year alone, 75% of which will be cash. In fact, it looks like Harley's cash loss could be worse in 2009 than what we saw in 2008.

Meanwhile, the firm's still paying a dividend that amounts to an 11.5% yield on the stock. The payout's currently draining away $300 million of badly needed cash, annually. Last week, CFO Tom Bergmann promised to "continue to evaluate paying that dividend as we go forward." (Emphasis mine.)

My translation: "The dividend is toast." Bet on it.

Do you enjoy rubbernecking at auto accidents? Do you thrill to the sight of a plummeting Dow? Enjoy the sound of children crying? Then you'll surely love reading more about Harley:

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Fool contributor Rich Smith does not own shares of any company named above. The Motley Fool has a disclosure policy.