Harley Davidson 2012 Annual Report Download - page 48

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48
the Brazilian Real. The Company utilizes foreign currency contracts to mitigate the effect of the Euro, the Australian dollar and
the Japanese yen fluctuations on earnings. The foreign currency contracts are entered into with banks and allow the Company
to exchange a specified amount of foreign currency for U.S. dollars at a future date, based on a fixed exchange rate. At
December 31, 2012, the notional U.S. dollar value of outstanding Euro, Australian dollar and Japanese yen foreign currency
contracts was $345.0 million. The Company estimates that a uniform 10% weakening in the value of the U.S. dollar relative to
the currencies underlying these contracts would result in a decrease in the fair value of the contracts of approximately $35.2
million as of December 31, 2012. Further disclosure relating to the fair value of derivative financial instruments is included in
Note 9 of the Notes to Consolidated Financial Statements.
The Company’s earnings are affected by changes in interest rates. HDFS utilizes interest rate swaps to reduce the impact
of fluctuations in interest rates on its debt. As of December 31, 2012, HDFS had an interest rate swap outstanding with a
notional value of $35.8 million. HDFS estimates that a 10% decrease in interest rates would result in a $20 thousand decrease
in the fair value of the agreement.