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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended: December 31, 2015
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 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
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 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 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.
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 Accelerated 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
Aggregate market value of the voting stock held by non-affiliates of the registrant at June 28, 2015: $11,663,564,377
Number of shares of the registrant’s common stock outstanding at January 29, 2016: 184,026,026 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 30, 2016.

Table of contents

  • Page 1
    ...663,564,377 Number of shares of the registrant's common stock outstanding at January 29, 2016: 184,026,026 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...

  • Page 2
    ... The Year Ended December 31, 2015 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 and Analysis of Financial Condition...

  • Page 3
    ...manufactures and sells at wholesale on-road HarleyDavidson motorcycles as well as a line of motorcycle parts, accessories, general merchandise and related services. The Company's products are sold to retail customers through a network of independent dealers. The Company conducts business on a global...

  • Page 4
    ... revenue by product line for the Motorcycles and Related Products segment: 2015 2014 2013 Motorcycles Parts & Accessories General Merchandise Other 77.8% 16.2% 5.5% 0.5% 100.0% 78.8% 15.7% 5.1% 0.4% 100.0% 77.4% 16.6% 5.6% 0.4% 100.0% Harley-Davidson manufactures cruiser and touring motorcycles...

  • Page 5
    ... of the Harley-Davidson brand among its customers and the non-riding public through a wide range of products for enthusiasts by licensing the name "Harley-Davidson" and other trademarks owned by the Company. Royalty revenues from licensing, included in Motorcycles segment net revenue, were $46...

  • Page 6
    ... Tours program allows motorcyclists/enthusiasts to experience riding opportunities worldwide. Riders can also rent Harley-Davidson motorcycles worldwide from participating dealers through the Company's Authorized Rentals Program. The Company operates the Harley-Davidson Museum (Museum) in Milwaukee...

  • Page 7
    ... products to a network of independent dealers located in over 95 countries worldwide. The following table includes the number of worldwide Harley-Davidson independent dealerships by geographic region as of December 31, 2015: United States Americas Region Canada Latin America EMEA Region Asia-Pacific...

  • Page 8
    ... of new and used Harley-Davidson motorcycles. HDFS' retail financial services are available through most HarleyDavidson dealerships 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 9
    ..., service, brand association, dealer relations, industry experience, terms and price. In the United States, HDFS financed 62.2% of the new Harley-Davidson motorcycles retailed by independent dealers during 2015, compared to 56.8% in 2014. In Canada, HDFS financed 39.2% of the new Harley-Davidson...

  • Page 10
    ... used as market reference points for various components of compensation as reported in the Company's Notice of Annual Meeting and Proxy Statement filed with the SEC on March 16, 2015, which compensation relates to the Company's named executive officers; (m) the California Transparency in Supply...

  • Page 11
    ... 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 12
    ... available for sale at Harley-Davidson dealers in the U.S. may result in an increased supply or decreased demand in the market for used Harley-Davidson-branded motorcycles, which could result in declining prices for used motorcycles, and prior model-year new motorcycles. Also, while the Company has...

  • Page 13
    ... state laws that more specifically affect general financial and lending institutions. The financial services operations originate the majority of its consumer loans through its subsidiary, Eaglemark Savings Bank, a Nevada state thrift chartered as an industrial loan company. Congress has previously...

  • Page 14
    ... in and successfully implement new information systems and technology. The Company is continually modifying and enhancing its systems and technology to increase productivity and efficiency and to mitigate failure risks from older/aged technologies currently in its portfolio. The Company has several...

  • Page 15
    ... limit access to roads and highways. Expanding international sales is a part of the Company's long-term business strategy. A number of countries have tiered motorcycle licensing requirements that limit the ability of new and younger riders to obtain licenses to operate the Company's motorcycles, and...

  • Page 16
    ... independent dealers, to meet the terms of any contract with the Company'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...

  • Page 17
    ... in resale values for Harley-Davidson branded motorcycles could contribute to increased delinquencies and credit losses. • The Company's Motorcycles segment is dependent upon unionized labor. Substantially all of the hourly production employees working in the Motorcycles segment are represented...

  • Page 18
    ...principal operating properties of the Company as of December 31, 2015: Motorcycles & Related Products Segment Type of Facility Location Approximate Square Feet Status Corporate Office Museum Manufacturing(1) Product Development Center Manufacturing(2) Manufacturing(3) Manufacturing(4) Manufacturing...

  • Page 19
    ... of conformity for motorcycle emissions and related designations and labels, (ii) aftermarket parts, and (iii) warranty claims on emissions related components. The Company promptly submitted written responses to the EPA's inquiry and has engaged in discussions with the EPA. Since that time, the EPA...

  • Page 20
    ... of Equity Securities Harley-Davidson, Inc. common stock is traded on the New York Stock Exchange, Inc. The high and low market prices for the common stock, reported as New York Stock Exchange, Inc. Composite Transactions, were as follows: 2015 Low High 2014 Low High First quarter Second quarter...

  • Page 21
    ... share price, trading volume and general market conditions, as well as on working capital requirements, general business conditions and other factors. The repurchase authority has no expiration date but may be suspended, modified or discontinued at any time. The Harley-Davidson, Inc. 2014 Incentive...

  • Page 22
    2010 ($) 2011 ($) 2012 ($) 2013 ($) 2014 ($) 2015 ($) Harley-Davidson, Inc. Standard & Poor's MidCap 400 Index Standard & Poor's 500 Index 100 100 100 114 98 102 145 116 118 208 152 157 201 165 178 142 159 181 22

  • Page 23
    ...Selected Financial Data 2015 2014 2013 2012 2011 (In thousands, except per share amounts) Statement of income data: Revenue: Motorcycles & Related Products Financial Services Total revenue Income from continuing operations Income from discontinued operations, net of tax Net income Weighted-average...

  • Page 24
    ...manufactures and sells at wholesale on-road HarleyDavidson motorcycles as well as a line of motorcycle parts, accessories, general merchandise and related services. The Company's products are sold to retail customers through a network of independent dealers. The Company conducts business on a global...

  • Page 25
    ...the number of riders trained annually through the Harley-Davidson Riding Academy to 100,000 globally by 2020, with the majority in the U.S. Increase and enhance brand access. The Company intends to continue to expand and enhance its global dealer network, develop new retail formats for urban centers...

  • 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 decreased 1.3% during 2015 compared to 2014. Retail sales of Harley-Davidson motorcycles decreased 1.7% in the United...

  • Page 27
    ... and new competitor products as well as a challenging macro-economic environment. The Company's U.S. market share of 601+cc motorcycles for 2015 was 50.2%, down 3.1 percentage points compared to 2014 (Source: Motorcycle Industry Council). The Company anticipated some level of market share loss...

  • Page 28
    ... models include dual purpose models, three-wheeled motorcycles and autocycles. Autocycles were included in the U.S. and Europe data beginning in 2014 and 2015, respectively. Registration data for Harley-Davidson Street 500® motorcycles is not included in this table. (b) United States industry data...

  • Page 29
    ... and general merchandise. Raw material prices were lower in 2015 compared to 2014. Manufacturing costs for 2015 benefited from increased manufacturing efficiencies and the absence of Street motorcycles start-up costs that were incurred in 2014. • • • • The net increase in operating...

  • Page 30
    ... Company's 6.80% medium-term notes than in 2014, partially offset by higher average outstanding debt. The provision for credit losses increased $20.4 million compared to 2014. The retail motorcycle provision increased $18.2 million during 2015 as a result of higher credit losses and portfolio growth...

  • Page 31
    ... 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 States and 5.4% internationally in 2014. The Company believes U.S. retail sales for 2014 benefited...

  • Page 32
    ... industry retail motorcycle registration data: 2014 2013 Increase % Change United States(b) Europe(c) 313,627 319,801 305,852 281,844 7,775 37,957 2.5% 13.5% (a) Data includes on-road 601+cc models. On-road 601+cc models include dual purpose models, three-wheeled motorcycles and beginning...

  • Page 33
    ... Street motorcycle units began in the first quarter of 2014. During 2014, wholesale shipments of Harley-Davidson motorcycles were up 3.9% compared to the prior year. International shipments as a percentage of the total were down slightly in 2014 as compared to 2013. In addition, shipments of touring...

  • Page 34
    ... the 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...

  • Page 35
    ...-year production, restructuring savings, lower temporary inefficiencies and lower pension costs compared to 2013. The manufacturing cost benefits were partially offset by start-up costs of approximately $15.3 million associated with the launch of the Street platform of motorcycles. The net increase...

  • Page 36
    ... to defer and present debt issuance costs associated with a line of credit arrangement as an asset, regardless of whether there are any outstanding borrowings on the line of credit arrangement. The Company plans to adopt both ASUs for fiscal years beginning after December 15, 2015 and for interim...

  • Page 37
    ... experience, current economic conditions as well as the value of the underlying collateral. Product Warranty - Estimated warranty costs are reserved for motorcycles, motorcycle parts and motorcycle accessories at the time of sale. The warranty reserve is based upon historical Company claim data used...

  • Page 38
    ... the fair value of option awards as of the grant date using a lattice-based option valuation model which utilizes ranges of assumptions over the expected term of the options, including stock price volatility, dividend yield and risk-free interest rate. The valuation model uses historical data to...

  • Page 39
    ...in 2016.(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 40
    ... return value to shareholders.(1) The Company believes the Motorcycles operations will continue to be primarily funded through cash flows generated by operations.(1) The Company's Financial Services operations have been funded with unsecured debt, unsecured commercial paper, asset-backed commercial...

  • Page 41
    ... contributions related to current benefit payments for SERPA and postretirement healthcare plans. The Company's expected future contributions to these plans are provided in Note 13 of Notes to Consolidated Financial Statements. The increase in operating cash flow in 2014 compared to 2013 was due...

  • Page 42
    ... February 2016, the Company's Board of Directors separately authorized the Company to buy back up to an additional 20 million shares of its common stock with no dollar limit or expiration date. The Company's total outstanding debt consisted of the following as of December 31, 2015, 2014 and 2013 (in...

  • Page 43
    ... have an annual interest rate of 1.55%. During 2015, 2014 and 2013, the Company repurchased an aggregate $9.3 million, $22.6 million, and $23.0 million, respectively, of its 6.80% medium-term notes which mature in June 2018. As a result, the Company recognized in financial services interest expense...

  • Page 44
    ... first quarter of 2015. 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 term loan balances and related interest are eliminated in the Company's consolidated financial statements. During 2014...

  • Page 45
    ... regarding data security, drive demand by executing the Company's marketing strategy of appealing to and growing sales to multigenerational and multi-cultural customers worldwide in an increasingly competitive marketplace, develop and introduce products, services and experiences that are successful...

  • Page 46
    ... develop and implement effective retail sales plans to create demand for the motorcycles and related products and services they purchase from the Company. In addition, the Company's independent dealers may experience difficulties in operating their businesses and selling Harley-Davidson motorcycles...

  • Page 47
    ...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 Notes to consolidated financial statements Supplementary data Quarterly financial...

  • Page 48
    ...management has concluded that the Company's internal control over financial reporting was effective as of December 31, 2015. 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 49
    ... 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, 2015. Management has concluded that...

  • Page 50
    ...of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets of Harley-Davidson, Inc. as of December 31, 2015 and 2014, and the related consolidated statements of income, comprehensive income, shareholders' equity and cash flows for each of the three years in the...

  • Page 51
    ...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 as of December 31, 2015, based...

  • Page 52
    HARLEY-DAVIDSON, INC. CONSOLIDATED STATEMENTS OF INCOME Years ended December 31, 2015, 2014 and 2013 (In thousands, except per share amounts) 2015 2014 2013 Revenue: Motorcycles and Related Products Financial Services Total revenue Costs and expenses: Motorcycles and Related Products cost of goods ...

  • Page 53
    HARLEY-DAVIDSON, INC. CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME Years ended December 31, 2015, 2014 and 2013 (In thousands) 2015 2014 2013 Net income Other comprehensive (loss) income, net of tax Foreign currency translation adjustment Derivative financial instruments Marketable securities ...

  • Page 54
    HARLEY-DAVIDSON, INC. CONSOLIDATED BALANCE SHEETS December 31, 2015 and 2014 (In thousands, except share amounts) 2015 2014 ASSETS Current assets: Cash and cash equivalents Marketable securities Accounts receivable, net Finance receivables, net Inventories Restricted cash Deferred income taxes ...

  • Page 55
    ...31, 2015 and 2014 (In thousands, except share amounts) 2015 2014 Balances held by consolidated variable interest entities (Note 6) Current finance receivables, net Other assets Non-current finance receivables, net Restricted cash - current and non-current Current portion of long-term debt Long-term...

  • Page 56
    ... 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 changes on cash and cash...

  • Page 57
    HARLEY-DAVIDSON, INC. CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY Years ended December 31, 2015, 2014 and 2013 (In thousands, except share amounts) Common Stock Issued Shares Balance December 31, 2012 Net income Total other comprehensive loss, net of tax (Note 10) Dividends Repurchase of common ...

  • Page 58
    ... 31, 2015 and 2014, 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...

  • Page 59
    ... experience, current economic conditions as well as the value of the underlying collateral. Impaired finance receivables also include loans that have been modified in troubled debt restructurings as a concession to borrowers experiencing financial difficulty. Generally, it is the Company's policy...

  • Page 60
    ... warranty on all new motorcycles sold. In addition, the Company offers a one-year warranty for Parts & Accessories (P&A). The warranty coverage for the retail customer generally begins when the product is sold to a retail customer. The Company maintains reserves for future warranty claims using...

  • Page 61
    ... when products are shipped to wholesale customers (independent dealers). The Company may offer sales incentive programs to both wholesale and retail customers designed to promote the sale of motorcycles and related products. The total costs of these programs are generally recognized as revenue...

  • Page 62
    ... The Company is currently evaluating the impact of adoption. 2. Additional Balance Sheet and Cash Flow Information The following information represents additional detail for selected line items included in the consolidated balance sheets at December 31, and the statements of cash flows for the years...

  • Page 63
    Balance Sheet Information: Inventories, net (in thousands): 2015 2014 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 cost or market Excess of FIFO over LIFO cost ...

  • Page 64
    ...-term employee benefits Contributions to pension and postretirement plans Stock compensation expense Net change in wholesale finance receivables related to sales Provision for credit losses Loss on debt extinguishment Deferred income taxes Foreign currency adjustments Other, net Changes in current...

  • Page 65
    ... 2015. The Company did not acquire any cash as part of the Transaction. 4. Goodwill and Intangible Assets The following table summarizes changes in the carrying amount of goodwill in the Motorcycles segment for the following years ended December 31 (in thousands): 2015 2014 2013 Balance, beginning...

  • Page 66
    ... dealers. Wholesale loans to dealers are generally secured by financed inventory or property and are originated in the U.S. and Canada. Wholesale finance receivables are related primarily to motorcycles and related parts and accessories sales. HDFS provides retail financial services to customers...

  • Page 67
    ... receivables by portfolio for the year ended December 31 were as follows (in thousands): Retail 2015 Wholesale Total Balance, beginning of period Provision for credit losses Charge-offs Recoveries Balance, end of period $ 122,025 $ 98,826 (123,911) 42,380 139,320 $ $ 5,339 2,519 - - 7,858 2014...

  • Page 68
    ... impairment, this portfolio does not have specifically impaired finance receivables. At December 31, 2015 and 2014, there were no wholesale finance receivables that were on non-accrual status or individually deemed to be impaired under ASC Topic 310, "Receivables". An analysis of the aging of past...

  • Page 69
    ...five years was as follows (in thousands): 2015 2014 2013 2012 2011 United States Canada Total $ $ 31,677 1,192 32,869 $ $ 27,800 1,118 28,918 $ $ 23,770 1,031 24,801 $ $ 26,500 1,533 28,033 $ $ 27,171 1,207 28,378 A significant part of managing the Company's finance receivable portfolios...

  • Page 70
    ... financial statements at December 31 (in thousands): 2015 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-backed securitizations $1,611,624 Asset-backed U.S. commercial...

  • Page 71
    ...services interest expense. The weighted average interest rate of the outstanding term asset-backed securitization transactions was 1.04% and 0.94% at December 31, 2015 and 2014, respectively. Asset-Backed U.S. Commercial Paper Conduit Facility VIE On December 14, 2015, the Company entered into a new...

  • Page 72
    ...Canadian Conduit is included in financial services interest expense. The weighted average interest rate of the outstanding Canadian Conduit was 1.80% and 2.03% at December 31, 2015 and 2014. As the Company participates in and does not consolidate the Canadian bank-sponsored, multi-seller conduit VIE...

  • Page 73
    ... values of repossessed inventory. 8. Fair Value of Financial Instruments The Company's financial instruments consist primarily of cash and cash equivalents, marketable securities, finance receivables, net, debt, foreign currency exchange and commodity contracts (derivative instruments are discussed...

  • Page 74
    ... 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 an estimated discount rate that reflects current credit, interest rate and...

  • Page 75
    ...rate swaps outstanding. The following tables summarize the fair value of the Company's derivative financial instruments at December 31 (in thousands): 2015 Derivatives Designated As Hedging Instruments Under ASC Topic 815 Notional Value Asset Fair Value(a) Liability Fair Value(b) Notional Value 2014...

  • Page 76
    ... years ended December 31 (in thousands): 2015 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 other...

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

  • Page 78
    ... paper maturities may range up to 365 days from the issuance date. The weighted-average interest rate of outstanding commercial paper balances was 0.56% and 0.30% at December 31, 2015 and 2014, respectively. In April 2014, the Company entered into a new $675.0 million five-year credit facility to...

  • Page 79
    ... 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 equity...

  • Page 80
    ... the statutory U.S. corporate income tax rate due to the following items for the years ended December 31: 2015 2014 2013 Provision at statutory rate State taxes, net of federal benefit Domestic manufacturing deduction Research and development credit Unrecognized tax benefits including interest and...

  • Page 81
    ... 31, 2015 the Company also had Wisconsin research and development credit carryforwards of $13.1 million expiring in 2028. The Company had a deferred tax asset of $26.0 million as of December 31, 2015 for the benefit of these losses and credits. The Company has foreign net operating losses (NOL...

  • Page 82
    ... beginning of period Actual return on plan assets Company contributions Plan participant contributions Benefits paid Fair value of plan assets, end of period Funded status of the plans, December 31 Amounts recognized in the Consolidated Balance Sheets, December 31: Accrued benefit liability (current...

  • Page 83
    ... for the years ended December 31 (in thousands): Pension and SERPA Benefits 2015 2014 2013 2015 Postretirement Healthcare Benefits 2014 2013 Service cost Interest cost Special early retirement benefits Expected return on plan assets Amortization of unrecognized: Prior service cost (credit) Net loss...

  • Page 84
    ..., corporate bonds from diversified industries and foreign obligations. In addition, 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...

  • Page 85
    ... In addition, 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. The following tables present the fair values of the plan assets...

  • Page 86
    ...$ 4,891 The following table presents a reconciliation of the fair value measurements using significant unobservable inputs (Level 3) as of December 31, 2015 (in thousands): Private Equity/ Real Estate Balance, beginning of period Actual return on plan assets: Relating to assets still held at the...

  • Page 87
    ... the Company's common stock with a market value of $83.9 million at December 31, 2014. The following table presents a reconciliation of the fair value measurements using significant unobservable inputs (Level 3) as of December 31, 2014 (in thousands): Private Equity/ Real Estate Balance, beginning...

  • Page 88
    ... the current view of the longterm investment market. Postretirement Healthcare Cost: The weighted-average healthcare cost trend rate used in determining the accumulated postretirement benefit obligation of the healthcare plans was as follows: 2015 2014 Healthcare cost trend rate for next year Rate...

  • Page 89
    ...-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 $18.0 million, $18.1 million and $14.9 million for Company contributions during 2015, 2014 and 2013, respectively...

  • Page 90
    ... 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 were 184.7 million and 211.9 million common shares outstanding as of December 31, 2015 and 2014, respectively. 90

  • Page 91
    ... $1.00 par value, none of which is outstanding. 17. Share-Based Awards The Company has a share-based compensation plan which was approved by its Shareholders in April 2014 (Plan) under which the Board of Directors may grant to employees share-based awards including nonqualified stock options, stock...

  • Page 92
    Assumptions used in calculating the lattice-based fair value of options granted during 2015, 2014 and 2013 were as follows: 2015 2014 2013 Expected average term (in years) Expected volatility Weighted average volatility Expected dividend yield Risk-free interest rate 6.0 24% - 30% 28% 2.0% 0.1% - ...

  • Page 93
    ... based on the new fair value and the percent vested. The assumptions used to determine the fair value of the SAR awards at December 31, 2015 and 2014 were as follows: 2015 2014 Expected average term (in years) Expected volatility Expected dividend yield Risk-free interest rate 5.3 - 7.4 28% - 30...

  • Page 94
    ... and sells at wholesale on-road Harley-Davidson motorcycles as well as a line of motorcycle parts, accessories, general merchandise and related services. The Company's products are sold to retail customers through a network of independent dealers. The Company conducts business on a global basis...

  • Page 95
    ... and insurance-related 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): 2015 2014 2013 Motorcycles net revenue Gross...

  • Page 96
    ... to geographic locations for the years ended December 31 (in thousands): 2015 2014 2013 Revenue 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...

  • Page 97
    ... 397,956 752,207 $ $ Year Ended December 31, 2014 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...

  • Page 98
    Year Ended December 31, 2013 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
    ..., 2015 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...

  • Page 100
    ... 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 current assets Finance...

  • Page 101
    ... for long-term employee benefits Contributions to pension and postretirement plans Stock compensation expense Net change in wholesale finance receivables Provision for credit losses Loss on debt extinguishment Deferred income taxes Foreign currency adjustments Other, net Change in current assets and...

  • Page 102
    ...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 cash and cash...

  • Page 103
    ... for long-term employee benefits Contributions to pension and postretirement plans Stock compensation expense Net change in wholesale finance receivables Provision for credit losses Loss on debt extinguishment Deferred income taxes Foreign currency adjustments Other, net Change in current assets and...

  • Page 104
    ...backed 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...

  • Page 105
    ... for long-term employee benefits Contributions to pension and postretirement plans Stock compensation expense Net change in wholesale finance receivables Provision for credit losses Loss on debt extinguishment Deferred income taxes Foreign currency adjustments Other, net Change in current assets and...

  • Page 106
    ...backed 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...

  • Page 107
    ... 29, 2015 Mar 30, 2014 2nd Quarter June 28, 2015 June 29, 2014 3rd Quarter Sep 27, 2015 Sep 28, 2014 4th Quarter Dec 31, 2015 Dec 31, 2014 Motorcycles: Revenue Operating income Financial Services: Revenue Operating income Consolidated: Income before taxes Net income Earnings per common share: Basic...

  • Page 108
    ... Owners and Management" is incorporated by reference herein. The following table provides information about the Company's equity compensation plans (including individual compensation arrangements) as of December 31, 2015: Weightedaverage exercise price of outstanding options Number of securities...

  • 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, 2015 Consolidated balance sheets at December 31, 2015 and December 31, 2014 Consolidated statements of cash flows for each of the three years in the period ended December 31, 2015 Consolidated statements of shareholders' equity for each of the...

  • Page 111
    ... II HARLEY-DAVIDSON, INC. CONSOLIDATED VALUATION AND QUALIFYING ACCOUNTS Years ended December 31, 2015, 2014 and 2013 (In thousands) 2015 2014 2013 Accounts receivable - allowance for doubtful accounts Balance, beginning of period Provision charged to expense Reserve adjustments Write-offs, net of...

  • Page 112
    ... 15(d) 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 18, 2016. HARLEY-DAVIDSON, INC. By: /S/ Matthew S. Levatich Matthew S. Levatich President and Chief Executive Officer 112

  • Page 113
    ... Executive Officer (Principal executive officer) Senior Vice President and Chief Financial Officer (Principal financial officer) Chief Accounting Officer (Principal accounting officer) Director Non-Executive Chairman Director Director Director Director Director Director Director Director...

  • Page 114
    ... 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 (incorporated herein by reference to Exhibit 4.1 to the Registrant's Current Report...

  • Page 115
    ... to the 5-Year Credit Agreement, dates as of April 13, 2012, among the Company, certain subsidiaries of the Company, the financial institutions parties thereto and JPMorgan Chase Bank, N.A., as among other things, global administrative agent. Harley-Davidson, Inc. 1995 Stock Option Plan as amended...

  • Page 116
    ... (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 (File No. 1-9183)) Form of Notice of Grant of Stock Options and...

  • Page 117
    ... Share Units and Performance Share Unit Agreement (Standard International) of Harley-Davidson, Inc. under the Harley-Davidson, Inc. 2014 Incentive Stock Plan Form of Notice of Award of Performance Shares and Performance Shares Agreement (Transition Agreement) of HarleyDavidson, Inc. under the Harley...

  • Page 118
    ... Statement of the Chief Executive Officer and the 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, 2015, filed on February 18, 2016 formatted in XBRL: (i) the Consolidated Statements...

  • Page 119
    ... by signing this report, agrees to furnish the Securities and Exchange Commission, upon its request, with a copy of any such instrument. * Represents a management contract or compensatory plan, contract or arrangement in which a director or named executive officer of the Company participated. 119