Harley Davidson 2015 Annual Report Download - page 71

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In addition to the above transactions, 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. During 2015, the notes related to the August 2011 and
November 2011 term asset-backed securitization transactions were repaid. During 2013, the notes related to the December
2009 term asset-backed securitization transaction were repaid.
Outstanding balances related to the following secured notes were included in the Company's consolidated balance sheet
at December 31, 2014 and the Company completed repayment of those balances during 2015 (in thousands):
Issue Date
Principal
Amount at Date of
Issuance
Weighted-Average
Rate at Date of
Issuance Contractual Maturity Date
November 2011 $513,300 0.88% November 2012 - February 2018
August 2011 $573,380 0.76% September 2012 - August 2017
For the year ended December 31, 2015 and 2014, interest expense on the secured notes was $17.2 million and $13.5
million, respectively, which is included in financial services interest expense. The weighted average interest rate of the
outstanding term asset-backed securitization transactions was 1.04% 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 revolving facility agreement (U.S. Conduit) with a third party
bank-sponsored asset-backed U.S. commercial paper 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 prior facility agreement expired on December 14, 2015 and had similar terms.
Under the facility, the Company 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 to the extent the advance is not funded by a conduit lender through the
issuance of commercial paper plus, in each case, a program fee based on outstanding principal. 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 will be reduced monthly as available collections on the related finance receivables 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, the U.S. Conduit has an expiration date of December 14, 2016.
The SPE had no borrowings outstanding under the U.S. Conduit at December 31, 2015 or 2014; therefore, these assets
are restricted as collateral for the payment of fees associated with the unused portion of the total aggregate commitment of
$600.0 million.
For both years ended December 31, 2015 and 2014, the interest expense was $1.1 million related to the unused portion of
the total aggregate commitment of $600.0 million. Interest expense on the U.S. Conduit is included in financial services interest
expense. There was no weighted average interest rate at December 31, 2015 or 2014 as the Company had no outstanding
borrowings under the U.S. Conduit during 2015 or 2014.
Asset-Backed Canadian Commercial Paper Conduit Facility
In June 2015, the Company amended its facility agreement (Canadian Conduit) with a Canadian bank-sponsored asset-
backed commercial paper conduit. Under the agreement, the Canadian Conduit is contractually committed, at the Company's
option, to purchase eligible Canadian retail motorcycle finance receivables from the Company for proceeds up to C$240
million. The transferred assets are restricted as collateral for the payment of debt. The terms for this debt provide for interest on
the outstanding principal based on prevailing market interest rates plus a specified margin. The Canadian Conduit also provides
for a program fee and an unused commitment fee based on the unused portion of the total aggregate commitment of C$240
million. There is no amortization schedule; however, the debt is reduced monthly as available collections on the related finance
receivables are applied to outstanding principal. Upon expiration of the Canadian 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, the Canadian Conduit expires on June 30, 2016. The contractual maturity of the debt is
approximately 5 years.