Harley Davidson 2014 Annual Report Download - page 43

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This debt provides for interest on outstanding principal based generally on prevailing commercial paper rates plus a
program fee based on outstanding principal, 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 Conduit also provides for an unused commitment fee based
on the unused portion of the total aggregate commitment of $600.0 million. There is no amortization schedule; however, the
debt is reduced monthly as available collections on the related finance receivable collateral are applied to outstanding principal.
Upon expiration of the U.S. Conduit, any outstanding principal will continue to be reduced monthly through available
collections. Unless earlier terminated or extended by mutual agreement of the Company and the lenders, as of December 31,
2014, the U.S. Conduit expires October 30, 2015.
Term Asset-Backed Securitization VIEs – For all of its term asset-backed securitization transactions, the Company
transferred U.S. retail motorcycle finance receivables to separate VIEs, which in turn issued secured notes, with various
maturities and interest rates to investors. All of the notes held by the VIEs are secured by future collections of the purchased
U.S. retail motorcycle finance receivables. The U.S. retail motorcycle finance receivables included in the term asset-backed
securitization transactions are not available to pay other obligations or claims of the Company's creditors until the associated
debt and other obligations are satisfied. Restricted cash balances held by the VIEs are used only to support the securitizations.
There is no amortization schedule for the secured notes; however, the debt is reduced monthly as available collections on the
related retail motorcycle finance receivables are applied to outstanding principal. The secured notes’ contractual lives have
various maturities ranging from 2015 to 2021.
During 2014, the Company issued $850.0 million of secured notes through one term asset-backed securitization
transaction. During 2013, the Company issued $650.0 million of secured notes through one term asset-backed securitization
transaction.
Intercompany Borrowings – Prior to the first quarter of 2013, HDFS had a revolving credit line with the Company
whereby HDFS could have borrowed up to $210.0 million from the Company at a market interest rate. This agreement was
terminated during the first quarter of 2013.
During 2014, HDFS and the Company had in effect the following term loan agreements under which HDFS borrowed
from the Company (in thousands):
Principal Amount Issue Date Maturity Date
$300,000 June 2013 April 2014 *
$150,000 September 2013 April 2014 *
$300,000 April 2014 April 2015 **
$250,000 June 2014 September 2014 *
$150,000 September 2014 April 2015 *
During 2013, HDFS and the Company had in effect the following term loan agreements under which HDFS borrowed
from the Company (in thousands):
Principal Amount Issue Date Maturity Date
$300,000 March 2013 April 2013 *
$100,000 September 2013 November 2013 *
$300,000 June 2013 April 2014
$150,000 September 2013 April 2014
* This loan was repaid on or before the maturity date.
** $50.0 million of this loan was repaid in November 2014
The term loans provide for monthly interest based on the prevailing commercial paper rates and principal due at maturity
or upon demand by 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 agreement with HDFS whereby, if required, the Company agrees to
provide HDFS with financial support in order to maintain HDFS’ fixed-charge coverage at 1.25 and minimum net worth of
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