Harley Davidson 2015 Annual Report Download - page 79

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79
to C$240 million. During 2015 and 2014, the Company transferred $100.0 million and $97.1 million, respectively, of Canadian
retail motorcycle finance receivables for proceeds of $87.5 million and $85.0 million, respectively. Approximately $40.3
million and $44.6 million of the debt was classified as current portion of long-term debt at December 31, 2015 and 2014. Refer
to Note 6 for further discussion on the Canadian Conduit.
During 2015, the Company issued $1.20 billion of secured notes through two term asset-backed securitization
transactions. During 2014, the Company issued $850.0 million of secured notes through a term asset-backed securitization
transaction. Approximately $353.4 million and $366.9 million of the obligations under the secured notes were classified as
current at December 31, 2015 and 2014, respectively, based on the contractual maturities of the restricted finance receivables.
The term-asset backed securitization transactions are further discussed in Note 6.
In February 2015, the Company issued $600.0 million of medium-term notes which mature in February 2020 and have an
annual interest rate of 2.15%. In September 2014, the Company issued $600.0 million of medium-term notes which mature in
September 2019 and have an annual interest rate of 2.40%. In November 2014, the Company issued $400.0 million of medium-
term notes which mature in November 2017 and have an annual interest rate of 1.55%. All of the Company's medium-term
notes (collectively, the Notes) provide for semi-annual interest payments and principal due at maturity. Unamortized discounts
on the Notes reduced the balance by $3.6 million at December 31, 2015 and 2014.
During 2015, 2014, and 2013, the Company repurchased an aggregate of $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 $1.1 million, $3.9 million, and $4.9 million of loss on extinguishment of debt, respectively, which
included unamortized discounts and fees. During September 2015, $600.0 million of 1.15% medium-term notes matured, and
the principal and accrued interest were paid in full. During December 2014, $500.0 million of the 5.75% medium-term notes
matured, and the principal and accrued interest were paid in full.
In July 2015, the Company issued $450.0 million of senior unsecured notes that mature in July 2025 that have an interest
rate of 3.50% and $300.0 million of senior unsecured notes that mature in July 2045 that have an interest rate of 4.625% in an
underwritten offering. The senior unsecured notes provide for semi-annual interest payments and principal due at maturity. The
Company is using the proceeds from the issuance to repurchase shares of the Company's common stock. Unamortized
discounts on the senior unsecured notes reduced the balance by $3.1 million at December 31, 2015.
In February 2009, the Company issued $600.0 million of senior unsecured notes in an underwritten offering. The senior
unsecured notes provided for semi-annual interest payments and principal due at maturity. The senior unsecured notes matured
in February 2014 and had an annual interest rate of 15%. During the fourth quarter of 2010, the Company repurchased $297.0
million of the $600.0 million senior unsecured notes and the remaining $303.0 million was repaid at maturity in February 2014.
HDFS and the Company are subject to various operating and financial covenants related to the Global Credit Facilities
and various operating covenants under the Notes and the U.S. and Canadian asset-backed commercial paper conduit facilities.
The more significant covenants are described below.
The operating covenants limit the Company’s and HDFS’ ability to:
• assume or incur certain liens;
• participate in certain mergers, consolidations, liquidations or dissolutions; and
• purchase 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 equity, in each case excluding the debt of HDFS and its subsidiaries, cannot exceed 0.65 to
1.0 as of the end of any fiscal quarter. No financial covenants are required under the Notes or the U.S. or Canadian asset-
backed commercial paper conduit facilities.
At December 31, 2015 and 2014, HDFS and the Company remained in compliance with all of these covenants.