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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-K
ý
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended: December€31, 2014
¨
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from€€€€€€€€€€€€ to €€€€€€€€€€€€
Commission file number 1-9183
Harley-Davidson, Inc.
(Exact name of registrant as specified in its charter)
Wisconsin 39-1382325
(State of organization) (I.R.S. Employer Identification No.)
3700 West Juneau Avenue
Milwaukee, Wisconsin
53208
(Address of principal executive offices) (Zip code)
Registrants telephone number: (414)€342-4680
Securities registered pursuant to Section€12(b) of the Act:
Title of each class
Name of each exchange on which registered
COMMON STOCK, $.01 PAR VALUE PER SHARE NEW YORK STOCK EXCHANGE
Securities registered pursuant to Section€12(g) of the Act: NONE
Indicate by check mark whether the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities
Act.€€€€Yes€€ý€€€€No€€¨
Indicate by check mark if the registrant is not required to file reports pursuant to Section€13 or Section€15(d) of the Act.
€€€€Yes€€¨€€€€No€€ý
Indicate by check mark whether the registrant (1)€has filed all reports required to be filed by Section€13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months and (2)€has been subject to such requirements for the past 90 days.€€€€Yes€€ý€€€€No€€¨
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every
Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (232.405 of this chapter) during the
preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).€€€€Yes€€ý€€€€No€€¨
Indicate by check mark if disclosure of delinquent filers pursuant to Item€405 of Regulation S-K is not contained herein, and will not
be contained, to the best of the registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of
this Form 10-K or any amendment to this Form€10-K. €€ý
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller
reporting company as defined in Rule 12b-2 of the Exchange Act (check one).
Large€accelerated€filer ýAccelerated€filer ¨
Non-accelerated filer ¨Smaller€reporting€company ¨
Indicate by check mark whether the registrant is a shell company, as defined in Rule 12b-2 of the Exchange Act.€€€€Yes€€¨€€€€No€€ý
Aggregate market value of the voting stock held by non-affiliates of the registrant at June 29, 2014: $14,907,688,941
Number of shares of the registrant’s common stock outstanding at January€30, 2015: 211,524,478 shares
Documents Incorporated by Reference
Part III of this report incorporates information by reference from registrant’s Proxy Statement for the annual meeting of its shareholders
to be held on April€25, 2015.

Table of contents

  • Page 1
    ...Wisconsin (Address of principal executive offices) 53208 (Zip code) Registrants telephone number: (414) 342-4680 Securities registered pursuant to Section 12(b) of the Act: Title of each class COMMON STOCK, $.01 PAR VALUE PER SHARE Name of each exchange on which registered NEW YORK STOCK EXCHANGE...

  • Page 2
    Harley-Davidson, Inc. Form 10-K For The Year Ended December 31, 2014 Page Part I Item 1. Item 1A. Item 1B. Item 2. Item 3. Item 4. Part II Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Selected Financial Data Management's Discussion ...

  • Page 3
    ...insurance and insurance-related programs primarily to Harley-Davidson dealers and their retail customers. HDFS conducts business principally in the United States and Canada. See Note 19 of Notes to Consolidated Financial Statements for financial information related to the Company's business segments...

  • Page 4
    ...markets accounted for approximately 78% of the total annual independent dealer retail sales of new Harley-Davidson motorcycles. The Company also competes in other markets around the world. The most significant other markets for the Company, based on the Company's retail sales data, are Japan, Canada...

  • Page 5
    ... located outside of the United States was approximately $1.79 billion, $1.70 billion and $1.58 billion, or approximately 32%, 32% and 32% of net revenue of the Motorcycles segment, during 2014, 2013 and 2012, respectively. Patents and Trademarks - The Company strategically manages its portfolio...

  • Page 6
    ... market share leader in U.S. new motorcycle registrations (all cc's) within the core-customer segment and in each outreach customer segment. (Source: R. L. Polk & Co. 2013 motorcycle registration data from IHS Automotive) In 2014, the average U.S. retail purchaser of a new Harley-Davidson motorcycle...

  • Page 7
    ... an online storefront, product merchandising, digital marketing, inventory management and order fulfillment, returns processing, and customer care. Retail internet orders are fulfilled and shipped by the Company, which acts as an agent for participating authorized HarleyDavidson dealers who sell the...

  • Page 8
    ..., high-finish wheels. Research and Development - The objective of the Company's product development strategy is to ensure that the Company delivers relevant products for an increasingly diverse customer base while reducing cost and time to market. The strategy is supported by a product development...

  • Page 9
    ... refer to the Note 3 of Item 8, "Consolidated Financial Statements and Supplementary Data" for further discussion of the Company's restructuring activities. Internet Access - The Company's internet website address is www.harley-davidson.com. The Company makes available free of charge (other than an...

  • Page 10
    ... of new and used Harley-Davidson motorcycles. HDFS' retail financial services are available through most HarleyDavidson dealers in the United States and Canada. HDFS' retail finance operations are principally located in Carson City, Nevada and Plano, Texas. Insurance Services - HDFS operates as...

  • Page 11
    ... offer retail products with many common characteristics across the United States and to similarly service loans to U.S. retail customers. Employees - As of December 31, 2014, the Financial Services segment had approximately 600 employees. Item 1A. Risk Factors An investment in Harley-Davidson, Inc...

  • Page 12
    ..., commodity prices and interest rates. The Company sells its products internationally and in most markets those sales are made in the foreign country's local currency. Shifting foreign exchange rates can adversely affect the Company's revenue and margin, and cause volatility in results of operations...

  • Page 13
    ... and the legal systems of foreign courts or tribunals. These laws and policies governing operations of foreign-based companies may result in increased costs or restrictions on the ability of the Company to sell its products in certain countries. The Company's international sales operations may also...

  • Page 14
    ...tier suppliers adhere to product development and manufacturing processes, to ensure high quality products are sold to retail customers. If product designs or manufacturing processes are defective, the Company could experience delays in new model launches, product recalls, inquiries or investigations...

  • Page 15
    ... been successful in marketing its products in large part by promoting the experience of Harley-Davidson motorcycling. To sustain and grow the business over the long-term, the Company must continue to be successful selling products and promoting the experience of motorcycling to both core customers...

  • Page 16
    ... to balance production volumes for its new motorcycles with demand, those steps may not be effective, or the Company's competitors could choose to supply new motorcycles to the market in excess of demand at reduced prices which could also have the effect of reducing demand for new Harley-Davidson...

  • Page 17
    ...'s financial services operations. Credit losses are influenced by general business and economic conditions, including unemployment rates, bankruptcy filings and other factors that negatively affect household incomes, as well as contract terms, customer credit profiles and the new and used motorcycle...

  • Page 18
    ... to increase over time due to changing consumer credit behavior and HDFS' efforts to increase prudently structured loan approvals in the sub-prime lending environment. Increases in the frequency of loss and decreases in the value of repossessed Harley-Davidson branded motorcycles also adversely...

  • Page 19
    ...principal operating properties of the Company as of December 31, 2014: Motorcycles & Related Products Segment Type of Facility Location Approximate Square Feet Status Corporate Office Museum Manufacturing(1) Manufacturing(2) Product Development Center Manufacturing(3) Manufacturing(4) Manufacturing...

  • Page 20
    ...administers the payment of the Response Costs incurred at the York facility as covered by the Agreement. The Company has a reserve for its estimate of its share of the future Response Costs at the York facility which is included in accrued liabilities in the Condensed Consolidated Balance Sheets. As...

  • Page 21
    ... of Harley-Davidson, Inc. common stock. The following table contains detail related to the repurchase of common stock based on the date of trade during the quarter ended December 31, 2014: Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Maximum Number of Shares that...

  • Page 22
    ... quarter of 2014, the Company acquired 581 shares of common stock that employees presented to the Company to satisfy withholding taxes in connection with the vesting of restricted stock awards. Item 12 of this Annual Report on Form 10-K contains certain information relating to the Company's equity...

  • Page 23
    ... 205 Selected Financial Data 2014 2013 2012 2011 2010(1) (In thousands, except per share amounts) Statement of income data: Revenue: Motorcycles & Related Products Financial Services Total revenue Income from continuing operations Income (loss) from discontinued operations, net of tax Net income...

  • Page 24
    ... for most of 2014. Retail sales of new Harley-Davidson motorcycles increased 1.3% in the U.S. and 5.4% in international markets. As the Company looks forward to 2015, it believes the Harley-Davidson brand and core demand fundamentals remain strong.(1) In 2015, the Company expects continued momentum...

  • Page 25
    ... Harley-Davidson motorcycles that it expects to ship in the first quarter of 2015, down approximately 2% at the low end of the range to up 4% at the high end of the range over the first quarter of 2014. The Company believes the underlying worldwide demand fundamentals for Harley-Davidson motorcycles...

  • Page 26
    ...information concerning the Company's share repurchase activity. Motorcycle Retail Sales and Registration Data Worldwide independent dealer retail sales of Harley-Davidson motorcycles increased 2.7% during 2014 compared to 2013. Retail sales of Harley-Davidson motorcycles increased 1.3% in the United...

  • Page 27
    Harley-Davidson Motorcycle Retail Sales(a) The following table includes retail unit sales of Harley-Davidson motorcycles: 2014 2013 Increase (Decrease) % Change North America Region United States Canada Total North America Region Europe, Middle East and Africa Region (EMEA) Europe(b) Other Total ...

  • Page 28
    ... was appropriate going into 2015(1). Segment Results The following table includes the condensed statement of operations for the Motorcycles segment (in thousands): 2014 2013 Increase (Decrease) % Change Revenue: Motorcycles Parts & Accessories General Merchandise Other Total revenue Cost of goods...

  • Page 29
    ... comparability of net revenue, cost of goods sold and gross profit from 2013 to 2014: • Volume increases were driven by the increase in wholesale motorcycle shipments and parts and accessories sales, partially offset by lower sales volumes for general merchandise. General merchandise revenue was...

  • Page 30
    ... finance receivables is generally based on the Company's past loan loss experience, known and inherent risks in the portfolio, current economic conditions and the estimated value of any underlying collateral. Please refer to Note 5 of Notes to Consolidated Financial Statements for further discussion...

  • Page 31
    ...sales of Harley-Davidson motorcycles increased 4.4% during 2013 compared to 2012. Retail sales of Harley-Davidson motorcycles increased 4.4% in the United States and 4.3% internationally in 2013. The Company believes U.S. retail sales for 2013 were positively impacted by the launch of its 2014 model...

  • Page 32
    Harley-Davidson Motorcycle Retail Sales(a) The following table includes retail unit sales of Harley-Davidson motorcycles: 2013 2012 Increase (Decrease) % Change North America Region United States Canada Total North America Region Europe, Middle East and Africa Region (EMEA) Europe(b) Other Total ...

  • Page 33
    ...850 units lower than at the end of 2012. Segment Results The following table includes the condensed statement of operations for the Motorcycles & Related Products segment (in thousands): 2013 2012 Increase (Decrease) % Change Revenue: Motorcycles Parts & Accessories General Merchandise Other Total...

  • Page 34
    ... units as well as higher sales volumes for Parts & Accessories partially offset by lower General Merchandise sales volumes. On average, wholesale prices on the Company's 2013 and 2014 model-year motorcycles were higher than the preceding model-years resulting in the favorable impact on revenue...

  • Page 35
    ... finance receivables is generally based on the Company's past loan loss experience, known and inherent risks in the portfolio, current economic conditions and the estimated value of any underlying collateral. Please refer to Note 5 of Notes to Consolidated Financial Statements for further discussion...

  • Page 36
    ... accounting policies that currently affect the Company's financial condition and results of operations. Management has discussed the development and selection of these critical accounting estimates with the Audit Committee of the Board of Directors. Allowance for Credit Losses on Finance Receivables...

  • Page 37
    ... to those discussed here. This information should be considered in combination with the information provided in Note 13 of Notes to Consolidated Financial Statements. Stock Compensation Costs - The total cost of the Company's share-based equity awards is equal to the grant date fair value per award...

  • Page 38
    ...in 2015.(1) Also, the Company expects it will continue to make on-going contributions related to current benefit payments for SERPA and postretirement healthcare plans.(1) The Company's expected future contributions to these plans are provided in Note 13 of Notes to Consolidated Financial Statements...

  • Page 39
    ... accruals and insurance coverage are adequate and that product liability suits will not have a material adverse effect on the Company's consolidated financial statements.(1) Liquidity and Capital Resources as of December 31, 2014 Over the long-term, the Company expects that its business model will...

  • Page 40
    ...the cash flow activity of continuing operations for the years ended December 31, 2014, 2013 and 2012 (in thousands): 2014 2013 2012 Net cash provided by operating activities Net cash used by investing activities Net cash used by financing activities Effect of exchange rate changes on cash and cash...

  • Page 41
    ... during 2014. Net cash flows from finance receivables for 2013, which consisted primarily of retail finance receivables, were $321.4 million lower than in 2012 as a result of an increase in retail motorcycle loan originations during 2013. Changes in the Company's investment in marketable securities...

  • Page 42
    ... used to support the Company's unsecured commercial paper program. Unsecured Commercial Paper - Subject to limitations, the Company could issue unsecured commercial paper of up to $1.35 billion as of December 31, 2014 supported by the Global Credit Facilities. Outstanding unsecured commercial...

  • Page 43
    ... the Company. The outstanding intercompany term loan balance was $250.0 million and $450.0 million at December 31, 2014 and 2013, respectively. The term loan balances and related interest are eliminated in the Company's consolidated financial statements. Support Agreement - The Company has a support...

  • Page 44
    ... customers in an increasingly competitive marketplace, implement and manage enterprise-wide information technology solutions, including solutions at its manufacturing facilities, and secure data contained in those systems, develop and introduce products, services and experiences that are successful...

  • Page 45
    ...regularly reviewed policies and procedures, which prohibit the use of financial instruments for speculative trading purposes. Sensitivity analysis is used to manage and monitor foreign exchange and interest rate risk. The Company sells its products internationally and in most markets those sales are...

  • Page 46
    ... on Internal Control over Financial Reporting Report of Independent Registered Public Accounting Firm Consolidated statements of income Consolidated statements of comprehensive income Consolidated balance sheets Consolidated statements of cash flows Consolidated statements of shareholders' equity...

  • Page 47
    ...management has concluded that the Company's internal control over financial reporting was effective as of December 31, 2014. Ernst & Young LLP, an independent registered public accounting firm, has audited the Consolidated Financial Statements included in this Annual Report on Form 10-K and, as part...

  • Page 48
    ... requirements of the New York Stock Exchange, Inc. The Audit Committee of the Board of Directors has reviewed and discussed with management its assessment of the effectiveness of the Company's internal control system over financial reporting as of December 31, 2014. Management has concluded that...

  • Page 49
    ... internal control over financial reporting as of December 31, 2014, based on the COSO criteria. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets of Harley-Davidson, Inc. as of December 31, 2014...

  • Page 50
    ... statements taken as a whole, presents fairly in all material respects the information set forth therein. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), Harley-Davidson, Inc.'s internal control over financial reporting...

  • Page 51
    HARLEY-DAVIDSON, INC. CONSOLIDATED STATEMENTS OF INCOME Years ended December 31, 2014, 2013 and 2012 (In thousands, except per share amounts) 2014 2013 2012 Revenue: Motorcycles and Related Products Financial Services Total revenue Costs and expenses: Motorcycles and Related Products cost of ...

  • Page 52
    HARLEY-DAVIDSON, INC. CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME Years ended December 31, 2014, 2013 and 2012 (In thousands) 2014 2013 2012 Net income Other comprehensive (loss) income, net of tax Foreign currency translation adjustment Derivative financial instruments Marketable securities ...

  • Page 53
    ...CONSOLIDATED BALANCE SHEETS December 31, 2014 and 2013 (In thousands, except share amounts) 2014 2013 ASSETS Current assets: Cash and cash equivalents Marketable securities Accounts receivable, net Finance receivables, net Inventories Restricted cash Deferred income taxes Other current assets Total...

  • Page 54
    HARLEY-DAVIDSON, INC. CONSOLIDATED BALANCE SHEETS (continued) December 31, 2014 and 2013 (In thousands, except share amounts) 2014 2013 Balances held by consolidated variable interest entities (Note 6) Current finance receivables, net Other assets Non-current finance receivables, net Restricted ...

  • Page 55
    ... credit facilities and unsecured commercial paper Net change in restricted cash Dividends paid Purchase of common stock for treasury Excess tax benefits from share-based payments Issuance of common stock under employee stock option plans Net cash used by financing activities Effect of exchange rate...

  • Page 56
    HARLEY-DAVIDSON, INC. CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY Years ended December 31, 2014, 2013 and 2012 (In thousands, except share amounts) Common Stock Issued Shares Balance December 31, 2011 Net Income Total other comprehensive loss, net of tax (Note 10) Dividends Repurchase of common ...

  • Page 57
    ...31, 2014 and 2013, respectively. Accounts receivable are written down once management determines that the specific customer does not have the ability to repay the balance in full. The Company's sales of motorcycles and related products in the U.S. and Canada are financed by the purchasing dealers or...

  • Page 58
    .... The Company's wholesale allowance evaluation is first based on a loan-by-loan review. A specific allowance for credit losses is established for wholesale finance receivables determined to be individually impaired when management concludes that the borrower will not be able to make full payment of...

  • Page 59
    ... to regularly reviewed policies and procedures, which prohibit the use of financial instruments for speculative trading purposes. All derivative instruments are recognized on the balance sheet at fair value (see Note 7). In accordance with ASC Topic 815, "Derivatives and Hedging," the accounting for...

  • Page 60
    ... date the related sales are recorded or the date the incentive program is both approved and communicated. Financial Services Revenue Recognition - Interest income on finance receivables is recorded as earned and is based on the average outstanding daily balance for wholesale and retail receivables...

  • Page 61
    ... of cash flows for the years ended December 31. Balance Sheet Information: Inventories, net (in thousands): 2014 2013 Components at the lower of FIFO cost or market Raw materials and work in process Motorcycle finished goods Parts and accessories and general merchandise Inventory at lower of FIFO...

  • Page 62
    ... liabilities (in thousands): 2014 2013 Payroll, employee benefits and related expenses Restructuring reserves Warranty and recalls Sales incentive programs Tax-related accruals Fair value of derivative financial instruments Other Total accrued liabilities Cash Flow Information: $ $ 165,448 - 48...

  • Page 63
    ... the second quarter of 2013 in connection with the decision to retain a limited operation at the New Castalloy facility, as described above. In February 2011, the Company's unionized employees at its facility in Kansas City, Missouri ratified a new seven-year labor agreement. The new agreement took...

  • Page 64
    ... activities and exiting the Buell product line. In addition, the Company completed projects under this plan involving the outsourcing of select information technology activities and the consolidation of an administrative office in Michigan into its corporate headquarters in Milwaukee, Wisconsin. 64

  • Page 65
    ... Motorcycles segment for the following years ended December 31 (in thousands): Motorcycles Balance, December 31, 2011 Currency translation Balance, December 31, 2012 Currency translation Balance, December 31, 2013 Currency translation Balance, December 31, 2014 The Financial Services segment did...

  • Page 66
    ... 31, 2014 and 2013. Approved but unfunded retail finance loans totaled $168.7 million and $149.8 million at December 31, 2014 and 2013, respectively. Wholesale finance receivables are related primarily to motorcycles and related parts and accessories sales to independent Harley-Davidson dealers and...

  • Page 67
    .... Changes in the allowance for credit losses on finance receivables by portfolio for the year ended December 31 were as follows (in thousands): Retail 2014 Wholesale Total Balance, beginning of period Provision for credit losses Charge-offs Recoveries Balance, end of period $ 106,063 $ 80...

  • Page 68
    ...investment of retail and wholesale finance receivables, excluding non-accrual status finance receivables, that were contractually past due 90 days or more at December 31 for the past five years was as follows (in thousands): 2014 2013 2012 2011 2010 United States Canada Total $ $ 27,800 1,118 28...

  • Page 69
    ... and the estimated value of any collateral. Dealer risk rating classifications are reviewed and updated on a quarterly basis. The recorded investment of wholesale finance receivables, by internal credit quality indicator, at December 31 was as follows (in thousands): 2014 2013 Doubtful Substandard...

  • Page 70
    ... the Company's asset-backed financings that were included in its financial statements at December 31 (in thousands): 2014 Finance receivables Allowance for credit losses Restricted cash Other assets Total assets Asset-backed debt On-balance sheet assets and liabilities Consolidated VIEs Term asset...

  • Page 71
    ... maturities ranging from January 2019 to April 2019. Outstanding balances related to the following secured notes were included in the Company's consolidated balance sheet at December 31, 2013 and the Company completed repayment of those balances during 2014 (in thousands): Principal Amount at Date...

  • Page 72
    ... retail motorcycle finance receivables for proceeds of $85.0 million and $88.6 million, respectively. This transaction is treated as a secured borrowing, and the transferred assets are restricted as collateral for payment of the debt. For the years ended December 31, 2014 and 2013, the Company...

  • Page 73
    ... the fair value and carrying value of the Company's financial instruments at December 31 (in thousands): 2014 Fair Value Carrying Value Fair Value 2013 Carrying Value Assets: Cash and cash equivalents Marketable securities Accounts receivable, net Derivatives Finance receivables, net Restricted...

  • Page 74
    ... or Level 2 inputs. Finance Receivables, Net - The carrying value of retail and wholesale finance receivables in the financial statements is amortized cost less an allowance for credit losses. The fair value of retail finance receivables is generally calculated by discounting future cash flows using...

  • Page 75
    ... years ended December 31 related to derivative financial instruments designated as cash flow hedges (in thousands): Amount of Gain/(Loss) Recognized in OCI, before tax 2013 Cash Flow Hedges 2014 2012 Foreign currency contracts Commodities contracts Interest rate swaps - unsecured commercial...

  • Page 76
    ... the years ended December 31 (in thousands): 2014 Foreign currency translation adjustments Marketable securities Derivative financial instruments Pension and postretirement benefit plans Total Balance, beginning of period Other comprehensive (loss) income before reclassifications Income tax Net...

  • Page 77
    2013 Foreign currency translation adjustments Pension and postretirement benefit plans Marketable securities Derivative financial instruments Total Balance, beginning of period Other comprehensive (loss) income before reclassifications Income tax Net other comprehensive (loss) income before ...

  • Page 78
    ...net periodic cost. See Note 13 for information related to pension and postretirement benefit plans. 11. Debt Debt with contractual terms less than one year is generally classified as short-term debt and consisted of the following as of December 31 (in thousands): 2014 2013 Unsecured commercial...

  • Page 79
    ...range up to 365 days from the issuance date. The weighted-average interest rate of outstanding commercial paper balances was 0.30% and 0.23% at December 31, 2014 and 2013, respectively. On April 7, 2014, the Company entered into a new $675.0 million five-year credit facility to refinance and replace...

  • Page 80
    ... or hold margin stock. Under the current financial covenants of the Global Credit Facilities, the consolidated debt to equity ratio of HDFS cannot exceed 10.0 to 1.0 as of the end of any fiscal quarter. In addition, the ratio of the Company's consolidated debt to the Company's consolidated debt and...

  • Page 81
    ... the statutory U.S. corporate income tax rate due to the following items for the years ended December 31: 2014 2013 2012 Provision at statutory rate State taxes, net of federal benefit Domestic manufacturing deduction Research and development credit Unrecognized tax benefits including interest and...

  • Page 82
    ... which cover employees of the Motorcycles segment. The Company also has unfunded supplemental employee retirement plan agreements (SERPA) with certain employees which were instituted to replace benefits lost under the Tax Revenue Reconciliation Act of 1993. During 2012, the Company consolidated four...

  • Page 83
    ...of net periodic benefit costs for the years ended December 31 (in thousands): Pension and SERPA Benefits 2013 Postretirement Healthcare Benefits 2013 2014 2012 2014 2012 Service cost Interest cost Expected return on plan assets Amortization of unrecognized: Prior service cost (credit) Net loss...

  • Page 84
    ... Pension and SERPA Benefits 2013 Postretirement Healthcare Benefits 2013 2014 2012 2014 2012 Assumptions for benefit obligations: Discount rate Rate of compensation Assumptions for net periodic benefit cost: Discount rate Expected return on plan assets Rate of compensation increase 4.21% 4.00...

  • Page 85
    ...cash equivalent balances are maintained at levels adequate to meet near-term plan expenses and benefit payments. Investment risk is measured and monitored on an ongoing basis through quarterly investment portfolio reviews. Postretirement Healthcare Plan Assets - The Company's investment objective is...

  • Page 86
    ... (Level 3) Balance as of December 31, 2014 Assets: Cash and cash equivalents Equity holdings: U.S. companies Foreign companies Harley-Davidson common stock Pooled equity funds Limited partnership interests Total equity holdings Fixed-income holdings: U.S. Treasuries Federal agencies Corporate...

  • Page 87
    ...fair value measurements using significant unobservable inputs (Level 3) as of December 31, 2014 (in thousands): Limited Partnership Interests Balance, beginning of period Actual return on plan assets: Relating to assets still held at the reporting date Purchases, sales and settlements Balance, end...

  • Page 88
    ... (Level 3) Balance as of December 31, 2013 Assets: Cash and cash equivalents Equity holdings: U.S. companies Foreign companies Harley-Davidson common stock Pooled equity funds Limited partnership interests Total equity holdings Fixed-income holdings: U.S. Treasuries Federal agencies Corporate...

  • Page 89
    ... Total of service and interest cost components in 2014 Accumulated benefit obligation as of December 31, 2014 Future Contributions and Benefit Payments: $ $ 747 12,909 $ $ (726) (12,001) No pension plan contributions are required in 2015. The Company expects it will continue to make on-going...

  • Page 90
    ... has various defined contribution benefit plans that in total cover substantially all full-time employees. Employees can make voluntary contributions in accordance with the provisions of their respective plan, which includes a 401 (k) tax deferral option. The Company expensed $18.1 million, $14...

  • Page 91
    ... and insurance coverage are adequate and that product liability suits will not have a material adverse effect on the Company's consolidated financial statements. 16. Capital Stock Common Stock: The Company is authorized to issue 800,000,000 shares of common stock of $0.01 par value. There...

  • Page 92
    ... at the time of grant. Assumptions used in calculating the lattice-based fair value of options granted during 2014, 2013 and 2012 were as follows: 2014 2013 2012 Expected average term (in years) Expected volatility Weighted average volatility Expected dividend yield Risk-free interest rate 6.1 25...

  • Page 93
    ... Company's consolidated balance sheets as a liability until the date of exercise. The fair value of each SAR award is estimated using a lattice-based valuation model. In accordance with ASC Topic 718, "Stock Compensation", the fair value of each SAR award is recalculated at the end of each reporting...

  • Page 94
    ... years ended December 31 (in thousands except per share amounts): 2014 2013 2012 Numerator: Income used in computing basic and diluted earnings per share Denominator: Denominator for basic earnings per share-weighted-average common shares Effect of dilutive securities - employee stock compensation...

  • Page 95
    ... programs primarily to Harley-Davidson dealers and their retail customers. HDFS conducts business principally in the United States and Canada. Information by segment is set forth below for the years ended December 31 (in thousands): 2014 2013 2012 Motorcycles net revenue Gross profit Selling...

  • Page 96
    ...from Motorcycles(a): United States EMEA region Japan Canada Australia Other foreign countries Total revenue from Motorcycles Revenue from Financial Services(a): United States Europe Canada Other foreign countries Total revenue from Financial Services Long-lived assets(b): United States International...

  • Page 97
    ... of the Company's motorcycles in Canada. The Company recorded motorcycles and related products revenue and financial services revenue from Deeley Imports during 2014, 2013 and 2012 of $194.8 million, $204.8 million and $187.1 million, respectively, and had finance receivables balances due from...

  • Page 98
    ... $ Year Ended December 31, 2012 Motorcycles & Related Products Operations Financial Services Operations Eliminations Consolidated Revenue: Motorcycles and Related Products Financial Services Total revenue Costs and expenses: Motorcycles and Related Products cost of goods sold Financial Services...

  • Page 99
    ... Motorcycles & Related Products Operations Financial Services Operations Eliminations Consolidated ASSETS Current assets: Cash and cash equivalents Marketable securities Accounts receivable, net Finance receivables, net Inventories Restricted cash Deferred income taxes Other current assets Total...

  • Page 100
    ... Motorcycles & Related Products Operations Financial Services Operations Eliminations Consolidated ASSETS Current assets: Cash and cash equivalents Marketable securities Accounts receivable, net Finance receivables, net Inventories Restricted cash Deferred income taxes Other current assets Total...

  • Page 101
    ... Amortization of deferred loan origination costs Amortization of financing origination fees Provision for employee long-term benefits Contributions to pension and postretirement plans Stock compensation expense Net change in wholesale finance receivables Provision for credit losses Loss on...

  • Page 102
    ...and unsecured commercial paper Net change in restricted cash Dividends Purchase of common stock for treasury Excess tax benefits from share-based payments Issuance of common stock under employee stock option plans Net cash (used by) provided by financing activities Effect of exchange rate changes on...

  • Page 103
    Year Ended December 31, 2013 Motorcycles & Related Products Operations Financial Services Operations Eliminations & Adjustments Consolidated Cash flows from operating activities: Net income Adjustments to reconcile net income to cash provided by operating activities: Depreciation Amortization of ...

  • Page 104
    ... commercial paper Net change in restricted cash Dividends paid Purchase of common stock for treasury, net of issuances Excess tax benefits from share based payments Issuance of common stock under employee stock option plans Net cash (used by) provided by financing activities Effect of exchange rate...

  • Page 105
    Year Ended December 31, 2012 Motorcycles & Related Products Operations Financial Services Operations Eliminations & Adjustments Consolidated Change in current assets and current liabilities: Accounts receivable Finance receivables - accrued interest and other Inventories Accounts payable and ...

  • Page 106
    ... per share data) 1st Quarter Mar 30, 2014 Mar 31, 2013 2nd Quarter June 29, 2014 June 30, 2013 3rd Quarter Sep 28, 2014 Sep 29, 2013 4th Quarter Dec 31, 2014 Dec 31, 2013 Motorcycles: Revenue Operating income(a) Financial Services: Revenue Operating income Consolidated: Income before taxes Net...

  • Page 107
    ... Annual Report on Form 10-K under the heading "Report of Independent Registered Public Accounting Firm on Internal Control over Financial Reporting." Changes in Internal Controls There were no changes in the Company's internal control over financial reporting that occurred during the quarter ended...

  • Page 108
    ... Number of securities to be issued upon the exercise of outstanding options Equity compensation plans approved by shareholders: Management employees Equity compensation plans not approved by shareholders: Union employees: Kansas City, MO York, PA Non employees: Board of Directors Total all plans...

  • Page 109
    ...the share units are payable at that time in actual shares of common stock. The Director Compensation Policy also provides that a non-employee Director may elect to receive 50% or 100% of the annual retainer to be paid in each calendar year in the form of common stock based upon the fair market value...

  • Page 110
    ...each of the three years in the period ended December 31, 2014 Consolidated balance sheets at December 31, 2014 and December 31, 2013 Consolidated statements of cash flows for each of the three years in the period ended December 31, 2014 Consolidated statements of shareholders' equity for each of the...

  • Page 111
    ...II HARLEY-DAVIDSON, INC. CONSOLIDATED VALUATION AND QUALIFYING ACCOUNTS Years ended December 31, 2014, 2013 and 2012 (In thousands) 2014 2013 2012 Accounts receivable - allowance for doubtful accounts Balance, beginning of period Provision charged to expense Reserve adjustments Write-offs, net of...

  • Page 112
    ... of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, on February 19, 2015. HARLEY-DAVIDSON, INC. By: /S/ Keith E. Wandell Keith E. Wandell Chairman, President and Chief Executive Officer 112

  • Page 113
    ... President and Chief Operating Officer Senior Vice President and Chief Financial Officer (Principal financial officer) Chief Accounting Officer (Principal accounting officer) Director Director Presiding Director Director Director Director Director Director Director Director Director 113

  • Page 114
    ... the Registrant's Quarterly Report on Form 10-Q for the quarter ended September, 29, 2013 (File No. 1-9183)) Indenture, dated as of March 4, 2011, among Harley-Davidson Financial Services, Inc., Issuer, Harley-Davidson Credit Corp., Guarantor, and Bank of New York Mellon Trust Company, N.A., Trustee...

  • Page 115
    ... and Restated Harley-Davidson, Inc. Director Stock Plan as amended effective December 1, 2014 Director Compensation Policy effective April 28, 2012 (incorporated herein by reference from Exhibit 10.1 to the Registrant's Quarterly Report on Form 10-Q for the quarter ended April 1, 2012 (File No...

  • Page 116
    ... of Restricted Stock Units and Restricted Stock Unit Agreement (International) of HarleyDavidson, Inc. under the Harley-Davidson, Inc. 2009 Incentive Stock Plan (incorporated herein by reference to Exhibit 10.9 to the Registrant's Quarterly Report on Form 10-Q for the quarter ended March 28, 2010...

  • Page 117
    ... Chief Financial Officer pursuant to 18 U.S.C. §1350 Financial statements from the annual report on Form 10-K of Harley-Davidson, Inc. for the year ended December 31, 2014, filed on February 19, 2015 formatted in XBRL: (i) the Consolidated Statements of Income; (ii) the Consolidated Statements of...