Harley Davidson 2012 Annual Report Download - page 44

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44
A credit rating agency may change or withdraw the Company’s ratings based on its assessment of the Company’s current and
future ability to meet interest and principal repayment obligations. The Company’s short-term debt ratings affect its ability to
issue unsecured commercial paper. The Company’s short- and long-term debt ratings as of December 31, 2012 were as follows:
Short-Term Long-Term Outlook
Moody’s P2 Baa1 Positive
Standard & Poor’s A2 BBB+ Positive
Fitch F2 A- Stable
Global Credit Facilities – On April 13, 2012, the Company and HDFS entered into a new $675.0 million five-year credit
facility to refinance and replace a $675.0 million three-year credit facility that was due to mature in April 2013. The new five-
year credit facility matures in April 2017. The Company and HDFS also have a $675.0 million four-year credit facility which
matures in April 2015. The new five-year credit facility and the four-year credit facility (together, the Global Credit Facilities)
bear interest at various variable interest rates, which may be adjusted upward or downward depending on certain criteria, such
as credit ratings. The Global Credit Facilities also require the Company to pay a fee based upon the average daily unused
portion of the aggregate commitments under the Global Credit Facilities. The Global Credit Facilities are committed facilities
and primarily used to support HDFS’ unsecured commercial paper program.
Unsecured Commercial Paper – Subject to limitations, HDFS could issue unsecured commercial paper of up to $1.35
billion as of December 31, 2012 supported by the Global Credit Facilities. Outstanding unsecured commercial paper may not
exceed the unused portion of the Global Credit Facilities. Maturities may range up to 365 days from the issuance date. HDFS
intends to repay unsecured commercial paper as it matures with additional unsecured commercial paper or through other
means, such as borrowing under the Global Credit Facilities, borrowing under its asset-backed U.S. commercial paper conduit
facility or through the use of operating cash flow.(1)
Medium-Term Notes – The Company has the following medium-term notes (collectively, the Notes) issued and
outstanding at December 31, 2012 (in thousands):
Principal Amount Rate Issue Date Maturity Date
$500,000 5.75% November 2009 December 2014
$600,000 1.15% September 2012 September 2015
$450,000 3.875% March 2011 March 2016
$400,000 2.70% January 2012 March 2017
$933,511 6.80% May 2008 June 2018
In January 2012, HDFS issued $400.0 million of medium-term notes which mature in March 2017 and have an annual
interest rate of 2.70%. In September 2012, HDFS issued $600.0 million of medium-term notes which mature in September
2015 and have an annual interest rate of 1.15%. During 2011, HDFS issued $450.0 million of medium-term notes which mature
in March 2016 and have an annual interest rate of 3.875%. All of the Notes provide for semi-annual interest payments and
principal due at maturity.
During 2012 and 2011, HDFS repurchased an aggregate $16.6 million, and $49.9 million, respectively, of its $1.0 billion,
6.80% medium-term notes which mature in June 2018. As a result, HDFS recognized in financial services interest expense $4.3
million and $9.6 million, respectively, in loss on the extinguishment of debt, which included unamortized discounts and fees.
During December 2012, $400.0 million of 5.25% medium-term notes matured, and the principal and accrued interest were
paid in full. Unamortized discounts on the Notes reduced the balance by $2.2 million, $1.9 million, and $2.2 million at
December 31, 2012, 2011 and 2010, respectively.
Senior Unsecured Notes – In February 2009, the Company issued $600.0 million of senior unsecured notes in an
underwritten offering. The senior unsecured notes provide for semi-annual interest payments and principal due at maturity. The
senior unsecured notes mature in February 2014 and have an annual interest rate of 15%. During the fourth quarter of 2010, the
Company repurchased $297.0 million of the $600.0 million senior unsecured notes at a price of $380.8 million. As a result of
the transaction, the Company incurred a loss on debt extinguishment in 2010 of $85.2 million which included unamortized fees.
Asset-Backed U.S. Commercial Paper Conduit Facility VIE – In September 2012, HDFS amended and restated its