Harley Davidson 2012 Annual Report Download - page 76

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76
motorcycle finance receivables. Each term asset-backed securitization SPE is a separate legal entity and the U.S. retail
motorcycle finance receivables included in the term asset-backed securitizations are only available for payment of the
secured debt and other obligations arising from the term asset-backed securitization transactions and are not available to
pay other obligations or claims of the Company’s creditors until the associated secured debt and other obligations are
satisfied. Cash and cash equivalent balances held by the SPEs are used only to support the securitizations.
In 2012 and 2011, HDFS transferred $715.7 million and $1.21 billion, respectively, of U.S. retail motorcycle
finance receivables to three separate SPEs. The SPEs in turn issued $675.3 million and $1.09 billion, respectively, of
secured notes. At December 31, 2012, the Company's consolidated balance sheet included outstanding balances related
to the following secured notes with the related maturity dates and interest rates (in thousands):
Issue Date
Principal
Amount at Date of
Issuance
Weighted-Average
Rate at Date of
Issuance Contractual Maturity Date
July 2012 $ 675,306 0.59% August 2013 - June 2018
November 2011 $ 513,300 0.88% November 2012 - February 2018
August 2011 $ 573,380 0.76% September 2012 - August 2017
November 2010 $ 600,000 1.05% December 2011 - April 2018
December 2009 $ 562,499 1.55% December 2010 - June 2017
In addition, during 2012, the Company issued $89.5 million of secured notes through the sale of notes that had
been previously retained as part of the December 2009, August 2011 and November 2011 term asset-backed
securitization transactions. These notes were sold at a premium and have contractual maturities ranging from June 2017
to April 2019.
Outstanding balances related to the following secured notes were included in the Company's consolidated balance
sheet at December 31, 2011 (in thousands) and the Company completed repayment of those balances during 2012:
Issue Date
Principal
Amount at Date of
Issuance
Weighted-Average
Rate at Date of
Issuance Contractual Maturity Date
October 2009 $ 700,000 1.16% October 2010 - April 2017
July 2009 $ 700,000 2.11% July 2010 - February 2017
May 2009 $ 500,000 2.77% May 2010 - January 2017
February 2008 $ 486,000 3.94% February 2009 - December 2013
August 2007 $ 782,000 5.50% September 2008 - May 2015
May 2007 $ 950,000 5.20% May 2008 - August 2015
There are no amortization schedules for the secured notes; however, the debt is reduced monthly as available
collections on the related U.S. retail motorcycle finance receivables are applied to outstanding principal.
For the year ended December 31, 2012 and 2011, the SPEs recorded interest expense on the secured notes of
$25.8 million and $60.2 million, respectively, which is included in financial services interest expense. The weighted
average interest rate of the outstanding term asset-backed securitization transactions was 1.09% and 1.96% at
December 31, 2012 and 2011, respectively.
Asset-Backed U.S. Commercial Paper Conduit Facility VIE
In September 2012, the Company amended and restated its third-party bank sponsored asset-backed commercial
paper conduit facility (U.S. Conduit) which provides for a total aggregate commitment of up to $600.0 million based
on, among other things, the amount of eligible U.S. retail motorcycle finance receivables held by the SPE as collateral.
The amended agreement has similar terms as the prior agreement and is for the same amount. Under the facility, HDFS
may transfer U.S. retail motorcycle finance receivables to a SPE, which in turn may issue debt to third-party bank-
sponsored asset-backed commercial paper conduits.
The assets of the SPE are restricted as collateral for the payment of the debt or other obligations arising in the
transaction and are not available to pay other obligations or claims of the Company’s creditors. The terms for this debt
provide for interest on the outstanding principal based on prevailing commercial paper rates, or LIBOR plus a specified
margin to the extent the advance is not funded by a conduit lender through the issuance of commercial paper. The U.S.