|
|
x
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
¨
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
|
|
Wisconsin
|
|
39-1382325
|
(State of organization)
|
|
(I.R.S. Employer Identification No.)
|
|
|
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3700 West Juneau Avenue
Milwaukee, Wisconsin
|
|
53208
|
(Address of principal executive offices)
|
|
(Zip code)
|
|
Large accelerated filer
|
|
x
|
Accelerated filer
|
|
¨
|
|
|
|
|
|
|
Non-accelerated filer
|
|
¨
|
Smaller reporting company
|
|
¨
|
Part I
|
||
|
|
|
Item 1.
|
||
|
||
|
||
|
||
|
||
|
||
|
|
|
Item 2.
|
||
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|
|
Item 3.
|
||
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|
|
Item 4.
|
||
|
|
|
Part II
|
||
|
|
|
Item 1.
|
||
|
|
|
Item 2.
|
||
|
|
|
Item 6.
|
||
|
|
|
|
|
Three months ended
|
|
Six months ended
|
||||||||||||
|
June 28,
2015 |
|
June 29,
2014 |
|
June 28,
2015 |
|
June 29,
2014 |
||||||||
Revenue:
|
|
|
|
|
|
|
|
||||||||
Motorcycles and Related Products
|
$
|
1,650,783
|
|
|
$
|
1,834,285
|
|
|
$
|
3,161,353
|
|
|
$
|
3,405,973
|
|
Financial Services
|
173,609
|
|
|
166,414
|
|
|
335,984
|
|
|
320,774
|
|
||||
Total revenue
|
1,824,392
|
|
|
2,000,699
|
|
|
3,497,337
|
|
|
3,726,747
|
|
||||
Costs and expenses:
|
|
|
|
|
|
|
|
||||||||
Motorcycles and Related Products cost of goods sold
|
1,003,569
|
|
|
1,110,146
|
|
|
1,923,864
|
|
|
2,089,703
|
|
||||
Financial Services interest expense
|
41,188
|
|
|
40,741
|
|
|
79,724
|
|
|
79,598
|
|
||||
Financial Services provision for credit losses
|
15,175
|
|
|
15,961
|
|
|
41,422
|
|
|
36,292
|
|
||||
Selling, administrative and engineering expense
|
301,944
|
|
|
286,156
|
|
|
579,693
|
|
|
562,577
|
|
||||
Total costs and expenses
|
1,361,876
|
|
|
1,453,004
|
|
|
2,624,703
|
|
|
2,768,170
|
|
||||
Operating income
|
462,516
|
|
|
547,695
|
|
|
872,634
|
|
|
958,577
|
|
||||
Investment income
|
1,450
|
|
|
1,772
|
|
|
2,772
|
|
|
3,431
|
|
||||
Interest expense
|
9
|
|
|
393
|
|
|
18
|
|
|
4,070
|
|
||||
Income before provision for income taxes
|
463,957
|
|
|
549,074
|
|
|
875,388
|
|
|
957,938
|
|
||||
Provision for income taxes
|
164,147
|
|
|
194,921
|
|
|
305,724
|
|
|
337,868
|
|
||||
Net income
|
$
|
299,810
|
|
|
$
|
354,153
|
|
|
$
|
569,664
|
|
|
$
|
620,070
|
|
Earnings per common share:
|
|
|
|
|
|
|
|
||||||||
Basic
|
$
|
1.44
|
|
|
$
|
1.63
|
|
|
$
|
2.72
|
|
|
$
|
2.84
|
|
Diluted
|
$
|
1.44
|
|
|
$
|
1.62
|
|
|
$
|
2.71
|
|
|
$
|
2.82
|
|
Cash dividends per common share
|
$
|
0.310
|
|
|
$
|
0.275
|
|
|
$
|
0.620
|
|
|
$
|
0.550
|
|
|
Three months ended
|
|
Six months ended
|
||||||||||||
|
June 28,
2015 |
|
June 29,
2014 |
|
June 28,
2015 |
|
June 29,
2014 |
||||||||
Net income
|
$
|
299,810
|
|
|
$
|
354,153
|
|
|
$
|
569,664
|
|
|
$
|
620,070
|
|
Other comprehensive (loss) income, net of tax
|
|
|
|
|
|
|
|
||||||||
Foreign currency translation adjustments
|
4,251
|
|
|
5,733
|
|
|
(22,770
|
)
|
|
8,681
|
|
||||
Derivative financial instruments
|
(13,286
|
)
|
|
3,150
|
|
|
(2,214
|
)
|
|
2,923
|
|
||||
Marketable securities
|
(128
|
)
|
|
(74
|
)
|
|
(195
|
)
|
|
(116
|
)
|
||||
Pension and postretirement benefit plans
|
8,798
|
|
|
6,069
|
|
|
17,596
|
|
|
12,137
|
|
||||
Total other comprehensive (loss) income, net of tax
|
$
|
(365
|
)
|
|
$
|
14,878
|
|
|
$
|
(7,583
|
)
|
|
$
|
23,625
|
|
Comprehensive income
|
$
|
299,445
|
|
|
$
|
369,031
|
|
|
$
|
562,081
|
|
|
$
|
643,695
|
|
|
(Unaudited)
|
|
|
|
(Unaudited)
|
||||||
|
June 28,
2015 |
|
December 31,
2014 |
|
June 29,
2014 |
||||||
ASSETS
|
|
|
|
|
|
||||||
Current assets:
|
|
|
|
|
|
||||||
Cash and cash equivalents
|
$
|
1,247,579
|
|
|
$
|
906,680
|
|
|
$
|
999,346
|
|
Marketable securities
|
52,516
|
|
|
57,325
|
|
|
57,814
|
|
|||
Accounts receivable, net
|
277,569
|
|
|
247,621
|
|
|
289,940
|
|
|||
Finance receivables, net
|
2,331,723
|
|
|
1,916,635
|
|
|
2,281,512
|
|
|||
Inventories
|
395,044
|
|
|
448,871
|
|
|
371,597
|
|
|||
Restricted cash
|
136,760
|
|
|
98,627
|
|
|
154,681
|
|
|||
Deferred income taxes
|
94,778
|
|
|
89,916
|
|
|
90,348
|
|
|||
Other current assets
|
160,421
|
|
|
182,420
|
|
|
128,460
|
|
|||
Total current assets
|
4,696,390
|
|
|
3,948,095
|
|
|
4,373,698
|
|
|||
Finance receivables, net
|
4,816,772
|
|
|
4,516,246
|
|
|
4,537,405
|
|
|||
Property, plant and equipment, net
|
873,007
|
|
|
883,077
|
|
|
826,467
|
|
|||
Prepaid pension costs
|
—
|
|
|
—
|
|
|
256,279
|
|
|||
Goodwill
|
26,105
|
|
|
27,752
|
|
|
30,252
|
|
|||
Deferred income taxes
|
66,755
|
|
|
77,835
|
|
|
2,915
|
|
|||
Other long-term assets
|
85,843
|
|
|
75,092
|
|
|
49,280
|
|
|||
|
$
|
10,564,872
|
|
|
$
|
9,528,097
|
|
|
$
|
10,076,296
|
|
LIABILITIES AND SHAREHOLDERS’ EQUITY
|
|
|
|
|
|
||||||
Current liabilities:
|
|
|
|
|
|
||||||
Accounts payable
|
$
|
407,636
|
|
|
$
|
196,868
|
|
|
$
|
388,342
|
|
Accrued liabilities
|
448,737
|
|
|
449,317
|
|
|
500,769
|
|
|||
Short-term debt
|
114,983
|
|
|
731,786
|
|
|
619,622
|
|
|||
Current portion of long-term debt
|
1,551,368
|
|
|
1,011,315
|
|
|
944,915
|
|
|||
Total current liabilities
|
2,522,724
|
|
|
2,389,286
|
|
|
2,453,648
|
|
|||
Long-term debt
|
4,560,349
|
|
|
3,761,528
|
|
|
3,794,396
|
|
|||
Pension liability
|
66,786
|
|
|
76,186
|
|
|
38,174
|
|
|||
Postretirement healthcare liability
|
196,369
|
|
|
203,006
|
|
|
209,312
|
|
|||
Deferred income taxes
|
—
|
|
|
—
|
|
|
38,919
|
|
|||
Other long-term liabilities
|
195,017
|
|
|
188,805
|
|
|
175,587
|
|
|||
Commitments and contingencies (Note 16)
|
|
|
|
|
|
||||||
Shareholders’ equity:
|
|
|
|
|
|
||||||
Preferred stock, none issued
|
—
|
|
|
—
|
|
|
—
|
|
|||
Common stock
|
3,448
|
|
|
3,442
|
|
|
3,439
|
|
|||
Additional paid-in-capital
|
1,304,855
|
|
|
1,265,257
|
|
|
1,231,913
|
|
|||
Retained earnings
|
8,898,959
|
|
|
8,459,040
|
|
|
8,352,168
|
|
|||
Accumulated other comprehensive loss
|
(522,526
|
)
|
|
(514,943
|
)
|
|
(309,051
|
)
|
|||
Treasury stock, at cost
|
(6,661,109
|
)
|
|
(6,303,510
|
)
|
|
(5,912,209
|
)
|
|||
Total shareholders' equity
|
3,023,627
|
|
|
2,909,286
|
|
|
3,366,260
|
|
|||
|
$
|
10,564,872
|
|
|
$
|
9,528,097
|
|
|
$
|
10,076,296
|
|
|
(Unaudited)
|
|
|
|
(Unaudited)
|
||||||
|
June 28,
2015 |
|
December 31,
2014 |
|
June 29,
2014 |
||||||
Balances held by consolidated variable interest entities (Note 5)
|
|
|
|
|
|
||||||
Current finance receivables, net
|
$
|
409,198
|
|
|
$
|
312,645
|
|
|
$
|
359,085
|
|
Other assets
|
$
|
3,067
|
|
|
$
|
3,409
|
|
|
$
|
2,521
|
|
Non-current finance receivables, net
|
$
|
1,740,420
|
|
|
$
|
1,113,801
|
|
|
$
|
1,495,171
|
|
Restricted cash - current and non-current
|
$
|
149,418
|
|
|
$
|
110,017
|
|
|
$
|
141,146
|
|
Current portion of long-term debt
|
$
|
462,008
|
|
|
$
|
366,889
|
|
|
$
|
403,891
|
|
Long-term debt
|
$
|
1,555,071
|
|
|
$
|
904,644
|
|
|
$
|
1,308,964
|
|
|
Six months ended
|
||||||
|
June 28,
2015 |
|
June 29,
2014 |
||||
Net cash provided by operating activities (Note 3)
|
$
|
613,944
|
|
|
$
|
570,592
|
|
Cash flows from investing activities:
|
|
|
|
||||
Capital expenditures
|
(85,180
|
)
|
|
(74,523
|
)
|
||
Origination of finance receivables
|
(1,976,563
|
)
|
|
(1,904,577
|
)
|
||
Collections on finance receivables
|
1,570,431
|
|
|
1,518,186
|
|
||
Sales and redemptions of marketable securities
|
4,500
|
|
|
41,010
|
|
||
Other
|
5,111
|
|
|
145
|
|
||
Net cash used by investing activities
|
(481,701
|
)
|
|
(419,759
|
)
|
||
Cash flows from financing activities:
|
|
|
|
||||
Repayments of senior unsecured notes
|
—
|
|
|
(303,000
|
)
|
||
Proceeds from issuance of medium-term notes
|
595,386
|
|
|
—
|
|
||
Repayments of medium-term notes
|
—
|
|
|
(7,220
|
)
|
||
Proceeds from securitization debt
|
1,195,668
|
|
|
847,126
|
|
||
Repayments of securitization debt
|
(454,332
|
)
|
|
(393,655
|
)
|
||
Net decrease in credit facilities and unsecured commercial paper
|
(616,586
|
)
|
|
(48,134
|
)
|
||
Borrowings of asset-backed commercial paper
|
40,209
|
|
|
36,800
|
|
||
Repayments of asset-backed commercial paper
|
(35,730
|
)
|
|
(37,317
|
)
|
||
Net change in restricted cash
|
(40,159
|
)
|
|
(9,874
|
)
|
||
Dividends paid
|
(129,745
|
)
|
|
(120,631
|
)
|
||
Purchase of common stock for treasury
|
(358,425
|
)
|
|
(223,736
|
)
|
||
Excess tax benefits from share-based payments
|
2,401
|
|
|
8,652
|
|
||
Issuance of common stock under employee stock option plans
|
15,664
|
|
|
27,907
|
|
||
Net cash provided by (used by) financing activities
|
214,351
|
|
|
(223,082
|
)
|
||
Effect of exchange rate changes on cash and cash equivalents
|
(5,695
|
)
|
|
4,983
|
|
||
Net increase (decrease) in cash and cash equivalents
|
$
|
340,899
|
|
|
$
|
(67,266
|
)
|
Cash and cash equivalents:
|
|
|
|
||||
Cash and cash equivalents—beginning of period
|
$
|
906,680
|
|
|
$
|
1,066,612
|
|
Net increase (decrease) in cash and cash equivalents
|
340,899
|
|
|
(67,266
|
)
|
||
Cash and cash equivalents—end of period
|
$
|
1,247,579
|
|
|
$
|
999,346
|
|
|
June 28,
2015 |
|
December 31,
2014 |
|
June 29,
2014 |
||||||
Available-for-sale: Corporate bonds
|
$
|
52,516
|
|
|
$
|
57,325
|
|
|
$
|
57,814
|
|
Trading securities: Mutual funds
|
37,698
|
|
|
33,815
|
|
|
33,567
|
|
|||
|
$
|
90,214
|
|
|
$
|
91,140
|
|
|
$
|
91,381
|
|
|
June 28,
2015 |
|
December 31,
2014 |
|
June 29,
2014 |
||||||
Components at the lower of FIFO cost or market
|
|
|
|
|
|
||||||
Raw materials and work in process
|
$
|
137,151
|
|
|
$
|
151,254
|
|
|
$
|
118,720
|
|
Motorcycle finished goods
|
186,326
|
|
|
230,309
|
|
|
179,314
|
|
|||
Parts and accessories and general merchandise
|
121,469
|
|
|
117,210
|
|
|
122,289
|
|
|||
Inventory at lower of FIFO cost or market
|
444,946
|
|
|
498,773
|
|
|
420,323
|
|
|||
Excess of FIFO over LIFO cost
|
(49,902
|
)
|
|
(49,902
|
)
|
|
(48,726
|
)
|
|||
|
$
|
395,044
|
|
|
$
|
448,871
|
|
|
$
|
371,597
|
|
|
Six months ended
|
||||||
|
June 28,
2015 |
|
June 29,
2014 |
||||
Cash flows from operating activities:
|
|
|
|
||||
Net income
|
$
|
569,664
|
|
|
$
|
620,070
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
||||
Depreciation
|
93,640
|
|
|
87,123
|
|
||
Amortization of deferred loan origination costs
|
47,524
|
|
|
45,713
|
|
||
Amortization of financing origination fees
|
4,820
|
|
|
4,284
|
|
||
Provision for employee long-term benefits
|
24,635
|
|
|
16,854
|
|
||
Contributions to pension and postretirement plans
|
(12,725
|
)
|
|
(14,035
|
)
|
||
Stock compensation expense
|
16,734
|
|
|
20,768
|
|
||
Net change in wholesale finance receivables related to sales
|
(418,969
|
)
|
|
(510,200
|
)
|
||
Provision for credit losses
|
41,422
|
|
|
36,292
|
|
||
Loss on debt extinguishment
|
—
|
|
|
1,145
|
|
||
Deferred income taxes
|
(1,195
|
)
|
|
(3,894
|
)
|
||
Foreign currency adjustments
|
11,041
|
|
|
(5,084
|
)
|
||
Other, net
|
(1,964
|
)
|
|
9,332
|
|
||
Changes in current assets and liabilities:
|
|
|
|
||||
Accounts receivable, net
|
(43,309
|
)
|
|
(25,643
|
)
|
||
Finance receivables—accrued interest and other
|
(270
|
)
|
|
(993
|
)
|
||
Inventories
|
38,012
|
|
|
58,741
|
|
||
Accounts payable and accrued liabilities
|
232,357
|
|
|
226,233
|
|
||
Derivative instruments
|
1,185
|
|
|
968
|
|
||
Other
|
11,342
|
|
|
2,918
|
|
||
Total adjustments
|
44,280
|
|
|
(49,478
|
)
|
||
Net cash provided by operating activities
|
$
|
613,944
|
|
|
$
|
570,592
|
|
|
June 28,
2015 |
|
December 31,
2014 |
|
June 29,
2014 |
||||||
Retail
|
$
|
5,962,685
|
|
|
$
|
5,607,924
|
|
|
$
|
5,603,187
|
|
Wholesale
|
1,325,041
|
|
|
952,321
|
|
|
1,338,085
|
|
|||
|
7,287,726
|
|
|
6,560,245
|
|
|
6,941,272
|
|
|||
Allowance for credit losses
|
(139,231
|
)
|
|
(127,364
|
)
|
|
(122,355
|
)
|
|||
|
$
|
7,148,495
|
|
|
$
|
6,432,881
|
|
|
$
|
6,818,917
|
|
|
Three months ended June 28, 2015
|
||||||||||
|
Retail
|
|
Wholesale
|
|
Total
|
||||||
Balance, beginning of period
|
$
|
123,777
|
|
|
$
|
9,043
|
|
|
$
|
132,820
|
|
Provision for credit losses
|
16,890
|
|
|
(1,715
|
)
|
|
15,175
|
|
|||
Charge-offs
|
(21,003
|
)
|
|
—
|
|
|
(21,003
|
)
|
|||
Recoveries
|
12,239
|
|
|
—
|
|
|
12,239
|
|
|||
Balance, end of period
|
$
|
131,903
|
|
|
$
|
7,328
|
|
|
$
|
139,231
|
|
|
Three months ended June 29, 2014
|
||||||||||
|
Retail
|
|
Wholesale
|
|
Total
|
||||||
Balance, beginning of period
|
$
|
106,776
|
|
|
$
|
7,753
|
|
|
$
|
114,529
|
|
Provision for credit losses
|
16,258
|
|
|
(297
|
)
|
|
15,961
|
|
|||
Charge-offs
|
(19,018
|
)
|
|
—
|
|
|
(19,018
|
)
|
|||
Recoveries
|
10,883
|
|
|
—
|
|
|
10,883
|
|
|||
Balance, end of period
|
$
|
114,899
|
|
|
$
|
7,456
|
|
|
$
|
122,355
|
|
|
Six months ended June 28, 2015
|
||||||||||
|
Retail
|
|
Wholesale
|
|
Total
|
||||||
Balance, beginning of period
|
$
|
122,025
|
|
|
$
|
5,339
|
|
|
$
|
127,364
|
|
Provision for credit losses
|
39,433
|
|
|
1,989
|
|
|
41,422
|
|
|||
Charge-offs
|
(53,736
|
)
|
|
—
|
|
|
(53,736
|
)
|
|||
Recoveries
|
24,181
|
|
|
—
|
|
|
24,181
|
|
|||
Balance, end of period
|
$
|
131,903
|
|
|
$
|
7,328
|
|
|
$
|
139,231
|
|
|
Six months ended June 29, 2014
|
||||||||||
|
Retail
|
|
Wholesale
|
|
Total
|
||||||
Balance, beginning of period
|
$
|
106,063
|
|
|
$
|
4,630
|
|
|
$
|
110,693
|
|
Provision for credit losses
|
33,466
|
|
|
2,826
|
|
|
36,292
|
|
|||
Charge-offs
|
(46,361
|
)
|
|
—
|
|
|
(46,361
|
)
|
|||
Recoveries
|
21,731
|
|
|
—
|
|
|
21,731
|
|
|||
Balance, end of period
|
$
|
114,899
|
|
|
$
|
7,456
|
|
|
$
|
122,355
|
|
|
June 28, 2015
|
||||||||||
|
Retail
|
|
Wholesale
|
|
Total
|
||||||
Allowance for credit losses, ending balance:
|
|
|
|
|
|
||||||
Individually evaluated for impairment
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Collectively evaluated for impairment
|
131,903
|
|
|
7,328
|
|
|
139,231
|
|
|||
Total allowance for credit losses
|
$
|
131,903
|
|
|
$
|
7,328
|
|
|
$
|
139,231
|
|
Finance receivables, ending balance:
|
|
|
|
|
|
||||||
Individually evaluated for impairment
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Collectively evaluated for impairment
|
5,962,685
|
|
|
1,325,041
|
|
|
7,287,726
|
|
|||
Total finance receivables
|
$
|
5,962,685
|
|
|
$
|
1,325,041
|
|
|
$
|
7,287,726
|
|
|
December 31, 2014
|
||||||||||
|
Retail
|
|
Wholesale
|
|
Total
|
||||||
Allowance for credit losses, ending balance:
|
|
|
|
|
|
||||||
Individually evaluated for impairment
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Collectively evaluated for impairment
|
122,025
|
|
|
5,339
|
|
|
127,364
|
|
|||
Total allowance for credit losses
|
$
|
122,025
|
|
|
$
|
5,339
|
|
|
$
|
127,364
|
|
Finance receivables, ending balance:
|
|
|
|
|
|
||||||
Individually evaluated for impairment
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Collectively evaluated for impairment
|
5,607,924
|
|
|
952,321
|
|
|
6,560,245
|
|
|||
Total finance receivables
|
$
|
5,607,924
|
|
|
$
|
952,321
|
|
|
$
|
6,560,245
|
|
|
June 29, 2014
|
||||||||||
|
Retail
|
|
Wholesale
|
|
Total
|
||||||
Allowance for credit losses, ending balance:
|
|
|
|
|
|
||||||
Individually evaluated for impairment
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Collectively evaluated for impairment
|
114,899
|
|
|
7,456
|
|
|
122,355
|
|
|||
Total allowance for credit losses
|
$
|
114,899
|
|
|
$
|
7,456
|
|
|
$
|
122,355
|
|
Finance receivables, ending balance:
|
|
|
|
|
|
||||||
Individually evaluated for impairment
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Collectively evaluated for impairment
|
5,603,187
|
|
|
1,338,085
|
|
|
6,941,272
|
|
|||
Total finance receivables
|
$
|
5,603,187
|
|
|
$
|
1,338,085
|
|
|
$
|
6,941,272
|
|
|
June 28, 2015
|
||||||||||||||||||||||
|
Current
|
|
31-60 Days
Past Due
|
|
61-90 Days
Past Due
|
|
Greater than
90 Days
Past Due
|
|
Total
Past Due
|
|
Total
Finance
Receivables
|
||||||||||||
Retail
|
$
|
5,819,279
|
|
|
$
|
96,982
|
|
|
$
|
28,150
|
|
|
$
|
18,274
|
|
|
$
|
143,406
|
|
|
$
|
5,962,685
|
|
Wholesale
|
1,324,174
|
|
|
513
|
|
|
181
|
|
|
173
|
|
|
867
|
|
|
1,325,041
|
|
||||||
Total
|
$
|
7,143,453
|
|
|
$
|
97,495
|
|
|
$
|
28,331
|
|
|
$
|
18,447
|
|
|
$
|
144,273
|
|
|
$
|
7,287,726
|
|
|
December 31, 2014
|
||||||||||||||||||||||
|
Current
|
|
31-60 Days
Past Due
|
|
61-90 Days
Past Due
|
|
Greater than
90 Days
Past Due
|
|
Total
Past Due
|
|
Total
Finance
Receivables
|
||||||||||||
Retail
|
$
|
5,427,719
|
|
|
$
|
113,007
|
|
|
$
|
38,486
|
|
|
$
|
28,712
|
|
|
$
|
180,205
|
|
|
$
|
5,607,924
|
|
Wholesale
|
951,660
|
|
|
383
|
|
|
72
|
|
|
206
|
|
|
661
|
|
|
952,321
|
|
||||||
Total
|
$
|
6,379,379
|
|
|
$
|
113,390
|
|
|
$
|
38,558
|
|
|
$
|
28,918
|
|
|
$
|
180,866
|
|
|
$
|
6,560,245
|
|
|
June 29, 2014
|
||||||||||||||||||||||
|
Current
|
|
31-60 Days
Past Due
|
|
61-90 Days
Past Due
|
|
Greater than
90 Days
Past Due
|
|
Total
Past Due
|
|
Total
Finance
Receivables
|
||||||||||||
Retail
|
$
|
5,469,796
|
|
|
$
|
90,617
|
|
|
$
|
28,088
|
|
|
$
|
14,686
|
|
|
$
|
133,391
|
|
|
$
|
5,603,187
|
|
Wholesale
|
1,337,437
|
|
|
501
|
|
|
113
|
|
|
34
|
|
|
648
|
|
|
1,338,085
|
|
||||||
Total
|
$
|
6,807,233
|
|
|
$
|
91,118
|
|
|
$
|
28,201
|
|
|
$
|
14,720
|
|
|
$
|
134,039
|
|
|
$
|
6,941,272
|
|
|
June 28, 2015
|
|
December 31, 2014
|
|
June 29, 2014
|
||||||
Prime
|
$
|
4,718,363
|
|
|
$
|
4,435,352
|
|
|
$
|
4,407,364
|
|
Sub-prime
|
1,244,322
|
|
|
1,172,572
|
|
|
1,195,823
|
|
|||
Total
|
$
|
5,962,685
|
|
|
$
|
5,607,924
|
|
|
$
|
5,603,187
|
|
|
June 28, 2015
|
|
December 31, 2014
|
|
June 29, 2014
|
||||||
Doubtful
|
$
|
—
|
|
|
$
|
954
|
|
|
$
|
4,916
|
|
Substandard
|
7,739
|
|
|
7,025
|
|
|
4,192
|
|
|||
Special Mention
|
15,343
|
|
|
—
|
|
|
—
|
|
|||
Medium Risk
|
3,245
|
|
|
11,557
|
|
|
16,202
|
|
|||
Low Risk
|
1,298,714
|
|
|
932,785
|
|
|
1,312,775
|
|
|||
Total
|
$
|
1,325,041
|
|
|
$
|
952,321
|
|
|
$
|
1,338,085
|
|
|
June 28, 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
|
$
|
2,199,018
|
|
|
$
|
(49,400
|
)
|
|
$
|
149,418
|
|
|
$
|
2,857
|
|
|
$
|
2,301,893
|
|
|
$
|
2,017,079
|
|
Asset-backed U.S. commercial paper conduit facility
|
—
|
|
|
—
|
|
|
—
|
|
|
210
|
|
|
210
|
|
|
—
|
|
||||||
Unconsolidated VIEs
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Asset-backed Canadian commercial paper conduit facility
|
176,730
|
|
|
(2,657
|
)
|
|
12,793
|
|
|
340
|
|
|
187,206
|
|
|
160,940
|
|
||||||
Total on-balance sheet assets and liabilities
|
$
|
2,375,748
|
|
|
$
|
(52,057
|
)
|
|
$
|
162,211
|
|
|
$
|
3,407
|
|
|
$
|
2,489,309
|
|
|
$
|
2,178,019
|
|
|
December 31, 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-backed securitizations
|
$
|
1,458,602
|
|
|
$
|
(32,156
|
)
|
|
$
|
110,017
|
|
|
$
|
2,987
|
|
|
$
|
1,539,450
|
|
|
$
|
1,271,533
|
|
Asset-backed U.S. commercial paper conduit facility
|
—
|
|
|
—
|
|
|
—
|
|
|
422
|
|
|
422
|
|
|
—
|
|
||||||
Unconsolidated VIEs
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Asset-backed Canadian commercial paper conduit facility
|
185,099
|
|
|
(2,965
|
)
|
|
12,035
|
|
|
262
|
|
|
194,431
|
|
|
166,912
|
|
||||||
Total on-balance sheet assets and liabilities
|
$
|
1,643,701
|
|
|
$
|
(35,121
|
)
|
|
$
|
122,052
|
|
|
$
|
3,671
|
|
|
$
|
1,734,303
|
|
|
$
|
1,438,445
|
|
|
June 29, 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-backed securitizations
|
$
|
1,893,585
|
|
|
$
|
(39,329
|
)
|
|
$
|
141,146
|
|
|
$
|
2,342
|
|
|
$
|
1,997,744
|
|
|
$
|
1,712,855
|
|
Asset-backed U.S. commercial paper conduit facility
|
—
|
|
|
—
|
|
|
—
|
|
|
179
|
|
|
179
|
|
|
—
|
|
||||||
Unconsolidated VIEs
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Asset-backed Canadian commercial paper conduit facility
|
203,800
|
|
|
(3,235
|
)
|
|
13,535
|
|
|
240
|
|
|
214,340
|
|
|
173,224
|
|
||||||
Total on-balance sheet assets and liabilities
|
$
|
2,097,385
|
|
|
$
|
(42,564
|
)
|
|
$
|
154,681
|
|
|
$
|
2,761
|
|
|
$
|
2,212,263
|
|
|
$
|
1,886,079
|
|
|
June 28, 2015
|
||||||||||||||
|
Balance
|
|
Quoted Prices in
Active Markets for Identical Assets (Level 1) |
|
Significant
Other Observable Inputs (Level 2) |
|
Significant
Unobservable Inputs (Level 3) |
||||||||
Assets:
|
|
|
|
|
|
|
|
||||||||
Cash equivalents
|
$
|
1,030,928
|
|
|
$
|
558,660
|
|
|
$
|
472,268
|
|
|
$
|
—
|
|
Marketable securities
|
90,214
|
|
|
37,698
|
|
|
52,516
|
|
|
—
|
|
||||
Derivatives
|
26,501
|
|
|
—
|
|
|
26,501
|
|
|
—
|
|
||||
|
$
|
1,147,643
|
|
|
$
|
596,358
|
|
|
$
|
551,285
|
|
|
$
|
—
|
|
Liabilities:
|
|
|
|
|
|
|
|
||||||||
Derivatives
|
$
|
986
|
|
|
$
|
—
|
|
|
$
|
986
|
|
|
$
|
—
|
|
|
December 31, 2014
|
||||||||||||||
|
Balance
|
|
Quoted Prices in
Active Markets for Identical Assets (Level 1) |
|
Significant
Other Observable Inputs (Level 2) |
|
Significant
Unobservable Inputs (Level 3) |
||||||||
Assets:
|
|
|
|
|
|
|
|
||||||||
Cash equivalents
|
$
|
737,024
|
|
|
$
|
482,686
|
|
|
$
|
254,338
|
|
|
$
|
—
|
|
Marketable securities
|
91,140
|
|
|
33,815
|
|
|
57,325
|
|
|
—
|
|
||||
Derivatives
|
32,244
|
|
|
—
|
|
|
32,244
|
|
|
—
|
|
||||
|
$
|
860,408
|
|
|
$
|
516,501
|
|
|
$
|
343,907
|
|
|
$
|
—
|
|
Liabilities:
|
|
|
|
|
|
|
|
||||||||
Derivatives
|
$
|
2,027
|
|
|
$
|
—
|
|
|
$
|
2,027
|
|
|
$
|
—
|
|
|
June 29, 2014
|
||||||||||||||
|
Balance
|
|
Quoted Prices in
Active Markets for Identical Assets (Level 1) |
|
Significant
Other Observable Inputs (Level 2) |
|
Significant
Unobservable Inputs (Level 3) |
||||||||
Assets:
|
|
|
|
|
|
|
|
||||||||
Cash equivalents
|
$
|
660,520
|
|
|
$
|
482,780
|
|
|
$
|
177,740
|
|
|
$
|
—
|
|
Marketable securities
|
91,381
|
|
|
33,567
|
|
|
57,814
|
|
|
—
|
|
||||
Derivatives
|
3,159
|
|
|
—
|
|
|
3,159
|
|
|
—
|
|
||||
|
$
|
755,060
|
|
|
$
|
516,347
|
|
|
$
|
238,713
|
|
|
$
|
—
|
|
Liabilities:
|
|
|
|
|
|
|
|
||||||||
Derivatives
|
$
|
1,478
|
|
|
$
|
—
|
|
|
$
|
1,478
|
|
|
$
|
—
|
|
|
June 28, 2015
|
|
December 31, 2014
|
|
June 29, 2014
|
||||||||||||||||||
|
Fair Value
|
|
Carrying Value
|
|
Fair Value
|
|
Carrying Value
|
|
Fair Value
|
|
Carrying Value
|
||||||||||||
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Cash and cash equivalents
|
$
|
1,247,579
|
|
|
$
|
1,247,579
|
|
|
$
|
906,680
|
|
|
$
|
906,680
|
|
|
$
|
999,346
|
|
|
$
|
999,346
|
|
Marketable securities
|
$
|
90,214
|
|
|
$
|
90,214
|
|
|
$
|
91,140
|
|
|
$
|
91,140
|
|
|
$
|
91,381
|
|
|
$
|
91,381
|
|
Derivatives
|
$
|
26,501
|
|
|
$
|
26,501
|
|
|
$
|
32,244
|
|
|
$
|
32,244
|
|
|
$
|
3,159
|
|
|
$
|
3,159
|
|
Finance receivables, net
|
$
|
7,251,671
|
|
|
$
|
7,148,495
|
|
|
$
|
6,519,500
|
|
|
$
|
6,432,881
|
|
|
$
|
6,917,698
|
|
|
$
|
6,818,917
|
|
Restricted cash
|
$
|
162,211
|
|
|
$
|
162,211
|
|
|
$
|
122,052
|
|
|
$
|
122,052
|
|
|
$
|
154,681
|
|
|
$
|
154,681
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Derivatives
|
$
|
986
|
|
|
$
|
986
|
|
|
$
|
2,027
|
|
|
$
|
2,027
|
|
|
$
|
1,478
|
|
|
$
|
1,478
|
|
Unsecured commercial paper
|
$
|
114,983
|
|
|
$
|
114,983
|
|
|
$
|
731,786
|
|
|
$
|
731,786
|
|
|
$
|
619,622
|
|
|
$
|
619,622
|
|
Asset-backed Canadian commercial paper conduit facility
|
$
|
160,940
|
|
|
$
|
160,940
|
|
|
$
|
166,912
|
|
|
$
|
166,912
|
|
|
$
|
173,224
|
|
|
$
|
173,224
|
|
Medium-term notes
|
$
|
4,077,952
|
|
|
$
|
3,933,698
|
|
|
$
|
3,502,536
|
|
|
$
|
3,334,398
|
|
|
$
|
3,049,735
|
|
|
$
|
2,853,232
|
|
Term asset-backed securitization debt
|
$
|
2,016,232
|
|
|
$
|
2,017,079
|
|
|
$
|
1,270,656
|
|
|
$
|
1,271,533
|
|
|
$
|
1,717,287
|
|
|
$
|
1,712,855
|
|
|
June 28, 2015
|
|
December 31, 2014
|
|
June 29, 2014
|
||||||||||||||||||||||||||||||
Derivatives Designated As Hedging
Instruments Under ASC
Topic 815
|
Notional
Value
|
|
Asset
Fair Value
(a)
|
|
Liability
Fair Value
(b)
|
|
Notional
Value
|
|
Asset
Fair Value
(a)
|
|
Liability
Fair Value
(b)
|
|
Notional
Value
|
|
Asset
Fair Value
(a)
|
|
Liability
Fair Value
(b)
|
||||||||||||||||||
Foreign currency contracts
(c)
|
$
|
367,309
|
|
|
$
|
23,136
|
|
|
$
|
—
|
|
|
$
|
339,077
|
|
|
$
|
32,244
|
|
|
$
|
—
|
|
|
$
|
398,338
|
|
|
$
|
3,091
|
|
|
$
|
1,461
|
|
Commodity
contracts
(c)
|
1,166
|
|
|
—
|
|
|
98
|
|
|
1,728
|
|
|
—
|
|
|
414
|
|
|
1,411
|
|
|
—
|
|
|
17
|
|
|||||||||
Treasury rate locks
(c)
|
300,000
|
|
|
3,365
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||||
Total
|
$
|
668,475
|
|
|
$
|
26,501
|
|
|
$
|
98
|
|
|
$
|
340,805
|
|
|
$
|
32,244
|
|
|
$
|
414
|
|
|
$
|
399,749
|
|
|
$
|
3,091
|
|
|
$
|
1,478
|
|
|
June 28, 2015
|
|
December 31, 2014
|
|
June 29, 2014
|
||||||||||||||||||||||||||||||
Derivatives Not Designated As Hedging
Instruments Under ASC
Topic 815
|
Notional
Value
|
|
Asset
Fair Value
(a)
|
|
Liability
Fair Value
(b)
|
|
Notional
Value
|
|
Asset
Fair Value
(a)
|
|
Liability
Fair Value
(b)
|
|
Notional
Value
|
|
Asset
Fair Value
(a)
|
|
Liability
Fair Value
(b)
|
||||||||||||||||||
Commodity contracts
|
$
|
8,218
|
|
|
$
|
—
|
|
|
$
|
888
|
|
|
$
|
11,804
|
|
|
$
|
—
|
|
|
$
|
1,613
|
|
|
$
|
7,754
|
|
|
$
|
68
|
|
|
$
|
—
|
|
|
$
|
8,218
|
|
|
$
|
—
|
|
|
$
|
888
|
|
|
$
|
11,804
|
|
|
$
|
—
|
|
|
$
|
1,613
|
|
|
$
|
7,754
|
|
|
$
|
68
|
|
|
$
|
—
|
|
(a)
|
Foreign currency and commodity contract fair value included in other current assets and Treasury rate lock fair value included in other long-term assets
|
(b)
|
Included in accrued liabilities
|
(c)
|
Derivative designated as a cash flow hedge
|
|
Amount of Gain/(Loss) Recognized in OCI, before tax
|
||||||||||||||
|
Three months ended
|
|
Six months ended
|
||||||||||||
Cash Flow Hedges
|
June 28,
2015 |
|
June 29,
2014 |
|
June 28,
2015 |
|
June 29,
2014 |
||||||||
Foreign currency contracts
|
$
|
(4,458
|
)
|
|
$
|
3,931
|
|
|
$
|
28,210
|
|
|
$
|
2,493
|
|
Commodity contracts
|
(3
|
)
|
|
(24
|
)
|
|
(123
|
)
|
|
191
|
|
||||
Treasury rate locks
|
3,365
|
|
|
—
|
|
|
3,365
|
|
|
—
|
|
||||
Total
|
$
|
(1,096
|
)
|
|
$
|
3,907
|
|
|
$
|
31,452
|
|
|
$
|
2,684
|
|
|
Amount of Gain/(Loss) Reclassified from AOCL into Income
|
|
|
||||||||||||||||
|
Three months ended
|
|
Six months ended
|
|
Expected to be Reclassified
|
||||||||||||||
Cash Flow Hedges
|
June 28,
2015 |
|
June 29,
2014 |
|
June 28,
2015 |
|
June 29,
2014 |
|
Over the Next Twelve Months
|
||||||||||
Foreign currency contracts
(a)
|
$
|
20,131
|
|
|
$
|
(1,183
|
)
|
|
$
|
35,407
|
|
|
$
|
(2,241
|
)
|
|
$
|
23,461
|
|
Commodity contracts
(a)
|
(125
|
)
|
|
87
|
|
|
(439
|
)
|
|
283
|
|
|
(98
|
)
|
|||||
Treasury rate locks
(b)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
191
|
|
|||||
Total
|
$
|
20,006
|
|
|
$
|
(1,096
|
)
|
|
$
|
34,968
|
|
|
$
|
(1,958
|
)
|
|
$
|
23,554
|
|
(a)
|
Gain/(loss) reclassified from accumulated other comprehensive loss (AOCL) to income is included in cost of goods sold
|
(b)
|
Gain/(loss) reclassified from accumulated other comprehensive loss (AOCL) to income will be included in interest expense
|
|
Amount of Gain/(Loss) Recognized in Income on Derivative
|
||||||||||||||
|
Three months ended
|
|
Six months ended
|
||||||||||||
Derivatives Not Designated As Hedges
|
June 28,
2015 |
|
June 29,
2014 |
|
June 28,
2015 |
|
June 29,
2014 |
||||||||
Commodity contracts
(a)
|
$
|
14
|
|
|
$
|
184
|
|
|
$
|
(526
|
)
|
|
$
|
(144
|
)
|
Total
|
$
|
14
|
|
|
$
|
184
|
|
|
$
|
(526
|
)
|
|
$
|
(144
|
)
|
(a)
|
Gain/(loss) recognized in income is included in cost of goods sold.
|
|
|
Three months ended June 28, 2015
|
||||||||||||||||||
|
|
Foreign currency translation adjustments
|
|
Marketable securities
|
|
Derivative financial instruments
|
|
Pension and postretirement benefit plans
|
|
Total
|
||||||||||
Balance, beginning of period
|
|
$
|
(30,503
|
)
|
|
$
|
(767
|
)
|
|
$
|
30,114
|
|
|
$
|
(521,005
|
)
|
|
$
|
(522,161
|
)
|
Other comprehensive income (loss) before reclassifications
|
|
5,040
|
|
|
(204
|
)
|
|
(1,096
|
)
|
|
—
|
|
|
3,740
|
|
|||||
Income tax
|
|
(789
|
)
|
|
76
|
|
|
406
|
|
|
—
|
|
|
(307
|
)
|
|||||
Net other comprehensive income (loss) before reclassifications
|
|
4,251
|
|
|
(128
|
)
|
|
(690
|
)
|
|
—
|
|
|
3,433
|
|
|||||
Reclassifications:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Realized (gains) losses - foreign currency contracts
(a)
|
|
—
|
|
|
—
|
|
|
(20,131
|
)
|
|
—
|
|
|
(20,131
|
)
|
|||||
Realized (gains) losses - commodities contracts
(a)
|
|
—
|
|
|
—
|
|
|
125
|
|
|
—
|
|
|
125
|
|
|||||
Prior service credits
(b)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(695
|
)
|
|
(695
|
)
|
|||||
Actuarial losses
(b)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
14,670
|
|
|
14,670
|
|
|||||
Total before tax
|
|
—
|
|
|
—
|
|
|
(20,006
|
)
|
|
13,975
|
|
|
(6,031
|
)
|
|||||
Income tax expense (benefit)
|
|
—
|
|
|
—
|
|
|
7,410
|
|
|
(5,177
|
)
|
|
2,233
|
|
|||||
Net reclassifications
|
|
—
|
|
|
—
|
|
|
(12,596
|
)
|
|
8,798
|
|
|
(3,798
|
)
|
|||||
Other comprehensive income (loss)
|
|
4,251
|
|
|
(128
|
)
|
|
(13,286
|
)
|
|
8,798
|
|
|
(365
|
)
|
|||||
Balance, end of period
|
|
$
|
(26,252
|
)
|
|
$
|
(895
|
)
|
|
$
|
16,828
|
|
|
$
|
(512,207
|
)
|
|
$
|
(522,526
|
)
|
|
|
Three months ended June 29, 2014
|
||||||||||||||||||
|
|
Foreign currency translation adjustments
|
|
Marketable securities
|
|
Derivative financial instruments
|
|
Pension and postretirement benefit plans
|
|
Total
|
||||||||||
Balance, beginning of period
|
|
$
|
36,274
|
|
|
$
|
(318
|
)
|
|
$
|
(1,907
|
)
|
|
$
|
(357,978
|
)
|
|
$
|
(323,929
|
)
|
Other comprehensive income (loss) before reclassifications
|
|
6,945
|
|
|
(117
|
)
|
|
3,907
|
|
|
—
|
|
|
10,735
|
|
|||||
Income tax
|
|
(1,212
|
)
|
|
43
|
|
|
(1,448
|
)
|
|
—
|
|
|
(2,617
|
)
|
|||||
Net other comprehensive income (loss) before reclassifications
|
|
5,733
|
|
|
(74
|
)
|
|
2,459
|
|
|
—
|
|
|
8,118
|
|
|||||
Reclassifications:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Realized (gains) losses - foreign currency contracts
(a)
|
|
—
|
|
|
—
|
|
|
1,183
|
|
|
—
|
|
|
1,183
|
|
|||||
Realized (gains) losses - commodities contracts
(a)
|
|
—
|
|
|
—
|
|
|
(87
|
)
|
|
—
|
|
|
(87
|
)
|
|||||
Prior service credits
(b)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(684
|
)
|
|
(684
|
)
|
|||||
Actuarial losses
(b)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
10,323
|
|
|
10,323
|
|
|||||
Total before tax
|
|
—
|
|
|
—
|
|
|
1,096
|
|
|
9,639
|
|
|
10,735
|
|
|||||
Income tax benefit
|
|
—
|
|
|
—
|
|
|
(405
|
)
|
|
(3,570
|
)
|
|
(3,975
|
)
|
|||||
Net reclassifications
|
|
—
|
|
|
—
|
|
|
691
|
|
|
6,069
|
|
|
6,760
|
|
|||||
Other comprehensive income (loss)
|
|
5,733
|
|
|
(74
|
)
|
|
3,150
|
|
|
6,069
|
|
|
14,878
|
|
|||||
Balance, end of period
|
|
$
|
42,007
|
|
|
$
|
(392
|
)
|
|
$
|
1,243
|
|
|
$
|
(351,909
|
)
|
|
$
|
(309,051
|
)
|
|
|
Six months ended June 28, 2015
|
||||||||||||||||||
|
|
Foreign currency translation adjustments
|
|
Marketable securities
|
|
Derivative financial instruments
|
|
Pension and postretirement benefit plans
|
|
Total
|
||||||||||
Balance, beginning of period
|
|
$
|
(3,482
|
)
|
|
$
|
(700
|
)
|
|
$
|
19,042
|
|
|
$
|
(529,803
|
)
|
|
$
|
(514,943
|
)
|
Other comprehensive (loss) income before reclassifications
|
|
(24,951
|
)
|
|
(310
|
)
|
|
31,452
|
|
|
—
|
|
|
6,191
|
|
|||||
Income tax
|
|
2,181
|
|
|
115
|
|
|
(11,650
|
)
|
|
—
|
|
|
(9,354
|
)
|
|||||
Net other comprehensive (loss) income before reclassifications
|
|
(22,770
|
)
|
|
(195
|
)
|
|
19,802
|
|
|
—
|
|
|
(3,163
|
)
|
|||||
Reclassifications:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Realized (gains) losses - foreign currency contracts
(a)
|
|
—
|
|
|
—
|
|
|
(35,407
|
)
|
|
—
|
|
|
(35,407
|
)
|
|||||
Realized (gains) losses - commodities contracts
(a)
|
|
—
|
|
|
—
|
|
|
439
|
|
|
—
|
|
|
439
|
|
|||||
Prior service credits
(b)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,390
|
)
|
|
(1,390
|
)
|
|||||
Actuarial losses
(b)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
29,340
|
|
|
29,340
|
|
|||||
Total before tax
|
|
—
|
|
|
—
|
|
|
(34,968
|
)
|
|
27,950
|
|
|
(7,018
|
)
|
|||||
Income tax expense (benefit)
|
|
—
|
|
|
—
|
|
|
12,952
|
|
|
(10,354
|
)
|
|
2,598
|
|
|||||
Net reclassifications
|
|
—
|
|
|
—
|
|
|
(22,016
|
)
|
|
17,596
|
|
|
(4,420
|
)
|
|||||
Other comprehensive (loss) income
|
|
(22,770
|
)
|
|
(195
|
)
|
|
(2,214
|
)
|
|
17,596
|
|
|
(7,583
|
)
|
|||||
Balance, end of period
|
|
$
|
(26,252
|
)
|
|
$
|
(895
|
)
|
|
$
|
16,828
|
|
|
$
|
(512,207
|
)
|
|
$
|
(522,526
|
)
|
|
|
Six months ended June 29, 2014
|
||||||||||||||||||
|
|
Foreign currency translation adjustments
|
|
Marketable securities
|
|
Derivative financial instruments
|
|
Pension and postretirement benefit plans
|
|
Total
|
||||||||||
Balance, beginning of period
|
|
$
|
33,326
|
|
|
$
|
(276
|
)
|
|
$
|
(1,680
|
)
|
|
$
|
(364,046
|
)
|
|
$
|
(332,676
|
)
|
Other comprehensive income (loss) before reclassifications
|
|
8,700
|
|
|
(184
|
)
|
|
2,684
|
|
|
—
|
|
|
11,200
|
|
|||||
Income tax
|
|
(19
|
)
|
|
68
|
|
|
(994
|
)
|
|
—
|
|
|
(945
|
)
|
|||||
Net other comprehensive income (loss) before reclassifications
|
|
8,681
|
|
|
(116
|
)
|
|
1,690
|
|
|
—
|
|
|
10,255
|
|
|||||
Reclassifications:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Realized (gains) losses - foreign currency contracts
(a)
|
|
—
|
|
|
—
|
|
|
2,241
|
|
|
—
|
|
|
2,241
|
|
|||||
Realized (gains) losses - commodities contracts
(a)
|
|
—
|
|
|
—
|
|
|
(283
|
)
|
|
—
|
|
|
(283
|
)
|
|||||
Prior service credits
(b)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,368
|
)
|
|
(1,368
|
)
|
|||||
Actuarial losses
(b)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
20,645
|
|
|
20,645
|
|
|||||
Total before tax
|
|
—
|
|
|
—
|
|
|
1,958
|
|
|
19,277
|
|
|
21,235
|
|
|||||
Income tax benefit
|
|
—
|
|
|
—
|
|
|
(725
|
)
|
|
(7,140
|
)
|
|
(7,865
|
)
|
|||||
Net reclassifications
|
|
—
|
|
|
—
|
|
|
1,233
|
|
|
12,137
|
|
|
13,370
|
|
|||||
Other comprehensive income (loss)
|
|
8,681
|
|
|
(116
|
)
|
|
2,923
|
|
|
12,137
|
|
|
23,625
|
|
|||||
Balance, end of period
|
|
$
|
42,007
|
|
|
$
|
(392
|
)
|
|
$
|
1,243
|
|
|
$
|
(351,909
|
)
|
|
$
|
(309,051
|
)
|
(a)
|
Amounts reclassified to net income are included in Motorcycles and Related Products cost of goods sold.
|
(b)
|
Amounts reclassified are included in the computation of net periodic period cost. See Note 14 for information related to pension and postretirement benefit plans.
|
|
|
June 28,
2015 |
|
December 31,
2014 |
|
June 29,
2014 |
||||||
Unsecured commercial paper
|
|
$
|
114,983
|
|
|
$
|
731,786
|
|
|
$
|
619,622
|
|
|
|
June 28,
2015 |
|
December 31,
2014 |
|
June 29,
2014 |
||||||
Secured debt
|
|
|
|
|
|
|
||||||
Asset-backed Canadian commercial paper conduit facility
|
|
$
|
160,940
|
|
|
$
|
166,912
|
|
|
$
|
173,224
|
|
Term asset-backed securitization debt
|
|
2,017,079
|
|
|
1,271,533
|
|
|
1,712,855
|
|
|||
Unsecured notes
|
|
|
|
|
|
|
||||||
5.75% Medium-term notes due in 2014 ($500.0 million par value)
|
|
—
|
|
|
—
|
|
|
499,946
|
|
|||
1.15% Medium-term notes due in 2015 ($600.0 million par value)
|
|
599,954
|
|
|
599,817
|
|
|
599,680
|
|
|||
3.88% Medium-term notes due in 2016 ($450.0 million par value)
|
|
449,964
|
|
|
449,937
|
|
|
449,910
|
|
|||
2.70% Medium-term notes due in 2017 ($400.0 million par value)
|
|
399,972
|
|
|
399,963
|
|
|
399,955
|
|
|||
1.55% Medium-term notes due in 2017 ($400.0 million par value)
|
|
399,557
|
|
|
399,464
|
|
|
—
|
|
|||
6.80% Medium-term notes due in 2018 ($888.0 million par value)
|
|
887,467
|
|
|
887,381
|
|
|
903,741
|
|
|||
2.40% Medium-term notes due in 2019 ($600.0 million par value)
|
|
598,066
|
|
|
597,836
|
|
|
—
|
|
|||
2.15% Medium-term notes due in 2020 ($600.0 million par value)
|
|
598,718
|
|
|
—
|
|
|
—
|
|
|||
Gross long-term debt
|
|
6,111,717
|
|
|
4,772,843
|
|
|
4,739,311
|
|
|||
Less: current portion of long-term debt
|
|
(1,551,368
|
)
|
|
(1,011,315
|
)
|
|
(944,915
|
)
|
|||
Long-term debt
|
|
$
|
4,560,349
|
|
|
$
|
3,761,528
|
|
|
$
|
3,794,396
|
|
|
Three months ended
|
|
Six months ended
|
||||||||||||
|
June 28,
2015 |
|
June 29,
2014 |
|
June 28,
2015 |
|
June 29,
2014 |
||||||||
Balance, beginning of period
|
$
|
71,073
|
|
|
$
|
69,336
|
|
|
$
|
69,250
|
|
|
$
|
64,120
|
|
Warranties issued during the period
|
21,843
|
|
|
19,824
|
|
|
36,954
|
|
|
37,186
|
|
||||
Settlements made during the period
|
(23,554
|
)
|
|
(16,921
|
)
|
|
(37,119
|
)
|
|
(28,494
|
)
|
||||
Recalls and changes to pre-existing warranty liabilities
|
14,054
|
|
|
3,798
|
|
|
14,331
|
|
|
3,225
|
|
||||
Balance, end of period
|
$
|
83,416
|
|
|
$
|
76,037
|
|
|
$
|
83,416
|
|
|
$
|
76,037
|
|
|
Three months ended
|
|
Six months ended
|
||||||||||||
|
June 28,
2015 |
|
June 29,
2014 |
|
June 28,
2015 |
|
June 29,
2014 |
||||||||
Numerator
:
|
|
|
|
|
|
|
|
||||||||
Net income used in computing basic and diluted earnings per share
|
$
|
299,810
|
|
|
$
|
354,153
|
|
|
$
|
569,664
|
|
|
$
|
620,070
|
|
Denominator
:
|
|
|
|
|
|
|
|
||||||||
Denominator for basic earnings per share - weighted-average common shares
|
207,650
|
|
|
217,762
|
|
|
209,115
|
|
|
218,367
|
|
||||
Effect of dilutive securities - employee stock compensation plan
|
940
|
|
|
1,399
|
|
|
1,050
|
|
|
1,453
|
|
||||
Denominator for diluted earnings per share - adjusted weighted-average shares outstanding
|
208,590
|
|
|
219,161
|
|
|
210,165
|
|
|
219,820
|
|
||||
Earnings per common share:
|
|
|
|
|
|
|
|
||||||||
Basic
|
$
|
1.44
|
|
|
$
|
1.63
|
|
|
$
|
2.72
|
|
|
$
|
2.84
|
|
Diluted
|
$
|
1.44
|
|
|
$
|
1.62
|
|
|
$
|
2.71
|
|
|
$
|
2.82
|
|
|
Three months ended
|
|
Six months ended
|
||||||||||||
|
June 28,
2015 |
|
June 29,
2014 |
|
June 28,
2015 |
|
June 29,
2014 |
||||||||
Pension and SERPA Benefits
|
|
|
|
|
|
|
|
||||||||
Service cost
|
$
|
10,010
|
|
|
$
|
7,874
|
|
|
$
|
20,020
|
|
|
$
|
15,748
|
|
Interest cost
|
21,836
|
|
|
21,731
|
|
|
43,672
|
|
|
43,462
|
|
||||
Expected return on plan assets
|
(36,232
|
)
|
|
(34,184
|
)
|
|
(72,465
|
)
|
|
(68,368
|
)
|
||||
Amortization of unrecognized:
|
|
|
|
|
|
|
|
||||||||
Prior service cost
|
109
|
|
|
279
|
|
|
218
|
|
|
558
|
|
||||
Net loss
|
13,677
|
|
|
9,141
|
|
|
27,354
|
|
|
18,281
|
|
||||
Net periodic benefit cost
|
$
|
9,400
|
|
|
$
|
4,841
|
|
|
$
|
18,799
|
|
|
$
|
9,681
|
|
Postretirement Healthcare Benefits
|
|
|
|
|
|
|
|
||||||||
Service cost
|
$
|
2,065
|
|
|
$
|
1,754
|
|
|
$
|
4,130
|
|
|
$
|
3,508
|
|
Interest cost
|
3,541
|
|
|
4,220
|
|
|
7,082
|
|
|
8,439
|
|
||||
Expected return on plan assets
|
(2,877
|
)
|
|
(2,607
|
)
|
|
(5,754
|
)
|
|
(5,215
|
)
|
||||
Amortization of unrecognized:
|
|
|
|
|
|
|
|
||||||||
Prior service credit
|
(804
|
)
|
|
(963
|
)
|
|
(1,608
|
)
|
|
(1,927
|
)
|
||||
Net loss
|
993
|
|
|
1,182
|
|
|
1,986
|
|
|
2,364
|
|
||||
Net periodic benefit cost
|
$
|
2,918
|
|
|
$
|
3,586
|
|
|
$
|
5,836
|
|
|
$
|
7,169
|
|
|
Three months ended
|
|
Six months ended
|
||||||||||||
|
June 28,
2015 |
|
June 29,
2014 |
|
June 28,
2015 |
|
June 29,
2014 |
||||||||
Motorcycles net revenue
|
$
|
1,650,783
|
|
|
$
|
1,834,285
|
|
|
$
|
3,161,353
|
|
|
$
|
3,405,973
|
|
Gross profit
|
647,214
|
|
|
724,139
|
|
|
1,237,489
|
|
|
1,316,270
|
|
||||
Selling, administrative and engineering expense
|
266,611
|
|
|
250,883
|
|
|
511,432
|
|
|
495,322
|
|
||||
Operating income from Motorcycles
|
380,603
|
|
|
473,256
|
|
|
726,057
|
|
|
820,948
|
|
||||
Financial Services revenue
|
173,609
|
|
|
166,414
|
|
|
335,984
|
|
|
320,774
|
|
||||
Financial Services expense
|
91,696
|
|
|
91,975
|
|
|
189,407
|
|
|
183,145
|
|
||||
Operating income from Financial Services
|
81,913
|
|
|
74,439
|
|
|
146,577
|
|
|
137,629
|
|
||||
Operating income
|
$
|
462,516
|
|
|
$
|
547,695
|
|
|
$
|
872,634
|
|
|
$
|
958,577
|
|
|
Three months ended June 28, 2015
|
||||||||||||||
|
Motorcycles & Related
Products Operations
|
|
Financial
Services Operations
|
|
Eliminations
|
|
Consolidated
|
||||||||
Revenue:
|
|
|
|
|
|
|
|
||||||||
Motorcycles and Related Products
|
$
|
1,653,759
|
|
|
$
|
—
|
|
|
$
|
(2,976
|
)
|
|
$
|
1,650,783
|
|
Financial Services
|
—
|
|
|
174,147
|
|
|
(538
|
)
|
|
173,609
|
|
||||
Total revenue
|
1,653,759
|
|
|
174,147
|
|
|
(3,514
|
)
|
|
1,824,392
|
|
||||
Costs and expenses:
|
|
|
|
|
|
|
|
||||||||
Motorcycles and Related Products cost of goods sold
|
1,003,569
|
|
|
—
|
|
|
—
|
|
|
1,003,569
|
|
||||
Financial Services interest expense
|
—
|
|
|
41,188
|
|
|
—
|
|
|
41,188
|
|
||||
Financial Services provision for credit losses
|
—
|
|
|
15,175
|
|
|
—
|
|
|
15,175
|
|
||||
Selling, administrative and engineering expense
|
267,149
|
|
|
38,309
|
|
|
(3,514
|
)
|
|
301,944
|
|
||||
Total costs and expenses
|
1,270,718
|
|
|
94,672
|
|
|
(3,514
|
)
|
|
1,361,876
|
|
||||
Operating income
|
383,041
|
|
|
79,475
|
|
|
—
|
|
|
462,516
|
|
||||
Investment income
|
1,450
|
|
|
—
|
|
|
—
|
|
|
1,450
|
|
||||
Interest expense
|
9
|
|
|
—
|
|
|
—
|
|
|
9
|
|
||||
Income before provision for income taxes
|
384,482
|
|
|
79,475
|
|
|
—
|
|
|
463,957
|
|
||||
Provision for income taxes
|
134,633
|
|
|
29,514
|
|
|
—
|
|
|
164,147
|
|
||||
Net income
|
$
|
249,849
|
|
|
$
|
49,961
|
|
|
$
|
—
|
|
|
$
|
299,810
|
|
|
Six months ended June 28, 2015
|
||||||||||||||
|
Motorcycles & Related
Products Operations
|
|
Financial
Services Operations
|
|
Eliminations
|
|
Consolidated
|
||||||||
Revenue:
|
|
|
|
|
|
|
|
||||||||
Motorcycles and Related Products
|
$
|
3,166,641
|
|
|
$
|
—
|
|
|
$
|
(5,288
|
)
|
|
$
|
3,161,353
|
|
Financial Services
|
—
|
|
|
336,837
|
|
|
(853
|
)
|
|
335,984
|
|
||||
Total revenue
|
3,166,641
|
|
|
336,837
|
|
|
(6,141
|
)
|
|
3,497,337
|
|
||||
Costs and expenses:
|
|
|
|
|
|
|
|
||||||||
Motorcycles and Related Products cost of goods sold
|
1,923,864
|
|
|
—
|
|
|
—
|
|
|
1,923,864
|
|
||||
Financial Services interest expense
|
—
|
|
|
79,724
|
|
|
—
|
|
|
79,724
|
|
||||
Financial Services provision for credit losses
|
—
|
|
|
41,422
|
|
|
—
|
|
|
41,422
|
|
||||
Selling, administrative and engineering expense
|
512,284
|
|
|
73,550
|
|
|
(6,141
|
)
|
|
579,693
|
|
||||
Total costs and expenses
|
2,436,148
|
|
|
194,696
|
|
|
(6,141
|
)
|
|
2,624,703
|
|
||||
Operating income
|
730,493
|
|
|
142,141
|
|
|
—
|
|
|
872,634
|
|
||||
Investment income
|
102,772
|
|
|
—
|
|
|
(100,000
|
)
|
|
2,772
|
|
||||
Interest expense
|
18
|
|
|
—
|
|
|
—
|
|
|
18
|
|
||||
Income before provision for income taxes
|
833,247
|
|
|
142,141
|
|
|
(100,000
|
)
|
|
875,388
|
|
||||
Provision for income taxes
|
256,149
|
|
|
49,575
|
|
|
—
|
|
|
305,724
|
|
||||
Net income
|
$
|
577,098
|
|
|
$
|
92,566
|
|
|
$
|
(100,000
|
)
|
|
$
|
569,664
|
|
|
Three months ended June 29, 2014
|
||||||||||||||
|
Motorcycles & Related
Products Operations |
|
Financial
Services Operations |
|
Eliminations
|
|
Consolidated
|
||||||||
Revenue:
|
|
|
|
|
|
|
|
||||||||
Motorcycles and Related Products
|
$
|
1,836,974
|
|
|
$
|
—
|
|
|
$
|
(2,689
|
)
|
|
$
|
1,834,285
|
|
Financial Services
|
—
|
|
|
166,963
|
|
|
(549
|
)
|
|
166,414
|
|
||||
Total revenue
|
1,836,974
|
|
|
166,963
|
|
|
(3,238
|
)
|
|
2,000,699
|
|
||||
Costs and expenses:
|
|
|
|
|
|
|
|
||||||||
Motorcycles and Related Products cost of goods sold
|
1,110,146
|
|
|
—
|
|
|
—
|
|
|
1,110,146
|
|
||||
Financial Services interest expense
|
—
|
|
|
40,741
|
|
|
—
|
|
|
40,741
|
|
||||
Financial Services provision for credit losses
|
—
|
|
|
15,961
|
|
|
—
|
|
|
15,961
|
|
||||
Selling, administrative and engineering expense
|
251,432
|
|
|
37,962
|
|
|
(3,238
|
)
|
|
286,156
|
|
||||
Total costs and expenses
|
1,361,578
|
|
|
94,664
|
|
|
(3,238
|
)
|
|
1,453,004
|
|
||||
Operating income
|
475,396
|
|
|
72,299
|
|
|
—
|
|
|
547,695
|
|
||||
Investment income
|
1,772
|
|
|
—
|
|
|
—
|
|
|
1,772
|
|
||||
Interest expense
|
393
|
|
|
—
|
|
|
—
|
|
|
393
|
|
||||
Income before provision for income taxes
|
476,775
|
|
|
72,299
|
|
|
—
|
|
|
549,074
|
|
||||
Provision for income taxes
|
168,303
|
|
|
26,618
|
|
|
—
|
|
|
194,921
|
|
||||
Net income
|
$
|
308,472
|
|
|
$
|
45,681
|
|
|
$
|
—
|
|
|
$
|
354,153
|
|
|
Six months ended June 29, 2014
|
||||||||||||||
|
Motorcycles & Related
Products Operations |
|
Financial
Services Operations |
|
Eliminations
|
|
Consolidated
|
||||||||
Revenue:
|
|
|
|
|
|
|
|
||||||||
Motorcycles and Related Products
|
$
|
3,410,941
|
|
|
$
|
—
|
|
|
$
|
(4,968
|
)
|
|
$
|
3,405,973
|
|
Financial Services
|
—
|
|
|
321,649
|
|
|
(875
|
)
|
|
320,774
|
|
||||
Total revenue
|
3,410,941
|
|
|
321,649
|
|
|
(5,843
|
)
|
|
3,726,747
|
|
||||
Costs and expenses:
|
|
|
|
|
|
|
|
||||||||
Motorcycles and Related Products cost of goods sold
|
2,089,703
|
|
|
—
|
|
|
—
|
|
|
2,089,703
|
|
||||
Financial Services interest expense
|
—
|
|
|
79,598
|
|
|
—
|
|
|
79,598
|
|
||||
Financial Services provision for credit losses
|
—
|
|
|
36,292
|
|
|
—
|
|
|
36,292
|
|
||||
Selling, administrative and engineering expense
|
496,197
|
|
|
72,223
|
|
|
(5,843
|
)
|
|
562,577
|
|
||||
Total costs and expenses
|
2,585,900
|
|
|
188,113
|
|
|
(5,843
|
)
|
|
2,768,170
|
|
||||
Operating income
|
825,041
|
|
|
133,536
|
|
|
—
|
|
|
958,577
|
|
||||
Investment income
|
123,431
|
|
|
—
|
|
|
(120,000
|
)
|
|
3,431
|
|
||||
Interest expense
|
4,070
|
|
|
—
|
|
|
—
|
|
|
4,070
|
|
||||
Income before provision for income taxes
|
944,402
|
|
|
133,536
|
|
|
(120,000
|
)
|
|
957,938
|
|
||||
Provision for income taxes
|
288,876
|
|
|
48,992
|
|
|
—
|
|
|
337,868
|
|
||||
Net income
|
$
|
655,526
|
|
|
$
|
84,544
|
|
|
$
|
(120,000
|
)
|
|
$
|
620,070
|
|
|
June 28, 2015
|
||||||||||||||
|
Motorcycles & Related
Products Operations |
|
Financial
Services Operations |
|
Eliminations
|
|
Consolidated
|
||||||||
ASSETS
|
|
|
|
|
|
|
|
||||||||
Current assets:
|
|
|
|
|
|
|
|
||||||||
Cash and cash equivalents
|
$
|
828,289
|
|
|
$
|
419,290
|
|
|
$
|
—
|
|
|
$
|
1,247,579
|
|
Marketable securities
|
52,516
|
|
|
—
|
|
|
—
|
|
|
52,516
|
|
||||
Accounts receivable, net
|
743,341
|
|
|
—
|
|
|
(465,772
|
)
|
|
277,569
|
|
||||
Finance receivables, net
|
—
|
|
|
2,331,723
|
|
|
—
|
|
|
2,331,723
|
|
||||
Inventories
|
395,044
|
|
|
—
|
|
|
—
|
|
|
395,044
|
|
||||
Restricted cash
|
—
|
|
|
136,760
|
|
|
—
|
|
|
136,760
|
|
||||
Deferred income taxes
|
51,667
|
|
|
43,111
|
|
|
—
|
|
|
94,778
|
|
||||
Other current assets
|
126,856
|
|
|
40,441
|
|
|
(6,876
|
)
|
|
160,421
|
|
||||
Total current assets
|
2,197,713
|
|
|
2,971,325
|
|
|
(472,648
|
)
|
|
4,696,390
|
|
||||
Finance receivables, net
|
—
|
|
|
4,816,772
|
|
|
—
|
|
|
4,816,772
|
|
||||
Property, plant and equipment, net
|
841,361
|
|
|
31,646
|
|
|
—
|
|
|
873,007
|
|
||||
Goodwill
|
26,105
|
|
|
—
|
|
|
—
|
|
|
26,105
|
|
||||
Deferred income taxes
|
57,587
|
|
|
10,861
|
|
|
(1,693
|
)
|
|
66,755
|
|
||||
Other long-term assets
|
121,264
|
|
|
43,842
|
|
|
(79,263
|
)
|
|
85,843
|
|
||||
|
$
|
3,244,030
|
|
|
$
|
7,874,446
|
|
|
$
|
(553,604
|
)
|
|
$
|
10,564,872
|
|
LIABILITIES AND SHAREHOLDERS’ EQUITY
|
|
|
|
|
|
|
|
||||||||
Current liabilities:
|
|
|
|
|
|
|
|
||||||||
Accounts payable
|
$
|
306,335
|
|
|
$
|
567,073
|
|
|
$
|
(465,772
|
)
|
|
$
|
407,636
|
|
Accrued liabilities
|
369,467
|
|
|
87,839
|
|
|
(8,569
|
)
|
|
448,737
|
|
||||
Short-term debt
|
—
|
|
|
114,983
|
|
|
—
|
|
|
114,983
|
|
||||
Current portion of long-term debt
|
—
|
|
|
1,551,368
|
|
|
—
|
|
|
1,551,368
|
|
||||
Total current liabilities
|
675,802
|
|
|
2,321,263
|
|
|
(474,341
|
)
|
|
2,522,724
|
|
||||
Long-term debt
|
—
|
|
|
4,560,349
|
|
|
—
|
|
|
4,560,349
|
|
||||
Pension liability
|
66,786
|
|
|
—
|
|
|
—
|
|
|
66,786
|
|
||||
Postretirement healthcare benefits
|
196,369
|
|
|
—
|
|
|
—
|
|
|
196,369
|
|
||||
Other long-term liabilities
|
168,043
|
|
|
26,974
|
|
|
—
|
|
|
195,017
|
|
||||
Shareholders’ equity
|
2,137,030
|
|
|
965,860
|
|
|
(79,263
|
)
|
|
3,023,627
|
|
||||
|
$
|
3,244,030
|
|
|
$
|
7,874,446
|
|
|
$
|
(553,604
|
)
|
|
$
|
10,564,872
|
|
|
December 31, 2014
|
||||||||||||||
|
Motorcycles & Related
Products Operations
|
|
Financial
Services Operations
|
|
Eliminations
|
|
Consolidated
|
||||||||
ASSETS
|
|
|
|
|
|
|
|
||||||||
Current assets:
|
|
|
|
|
|
|
|
||||||||
Cash and cash equivalents
|
$
|
573,895
|
|
|
$
|
332,785
|
|
|
$
|
—
|
|
|
$
|
906,680
|
|
Marketable securities
|
57,325
|
|
|
—
|
|
|
—
|
|
|
57,325
|
|
||||
Accounts receivable, net
|
658,735
|
|
|
—
|
|
|
(411,114
|
)
|
|
247,621
|
|
||||
Finance receivables, net
|
—
|
|
|
1,916,635
|
|
|
—
|
|
|
1,916,635
|
|
||||
Inventories
|
448,871
|
|
|
—
|
|
|
—
|
|
|
448,871
|
|
||||
Restricted cash
|
—
|
|
|
98,627
|
|
|
—
|
|
|
98,627
|
|
||||
Deferred income taxes
|
50,015
|
|
|
39,901
|
|
|
—
|
|
|
89,916
|
|
||||
Other current assets
|
142,278
|
|
|
43,125
|
|
|
(2,983
|
)
|
|
182,420
|
|
||||
Total current assets
|
1,931,119
|
|
|
2,431,073
|
|
|
(414,097
|
)
|
|
3,948,095
|
|
||||
Finance receivables, net
|
—
|
|
|
4,516,246
|
|
|
—
|
|
|
4,516,246
|
|
||||
Property, plant and equipment, net
|
848,661
|
|
|
34,416
|
|
|
—
|
|
|
883,077
|
|
||||
Goodwill
|
27,752
|
|
|
—
|
|
|
—
|
|
|
27,752
|
|
||||
Deferred income taxes
|
75,121
|
|
|
4,863
|
|
|
(2,149
|
)
|
|
77,835
|
|
||||
Other long-term assets
|
113,727
|
|
|
39,309
|
|
|
(77,944
|
)
|
|
75,092
|
|
||||
|
$
|
2,996,380
|
|
|
$
|
7,025,907
|
|
|
$
|
(494,190
|
)
|
|
$
|
9,528,097
|
|
LIABILITIES AND SHAREHOLDERS’ EQUITY
|
|
|
|
|
|
|
|
||||||||
Current liabilities:
|
|
|
|
|
|
|
|
||||||||
Accounts payable
|
$
|
171,098
|
|
|
$
|
436,884
|
|
|
$
|
(411,114
|
)
|
|
$
|
196,868
|
|
Accrued liabilities
|
370,652
|
|
|
83,797
|
|
|
(5,132
|
)
|
|
449,317
|
|
||||
Short-term debt
|
—
|
|
|
731,786
|
|
|
—
|
|
|
731,786
|
|
||||
Current portion of long-term debt
|
—
|
|
|
1,011,315
|
|
|
—
|
|
|
1,011,315
|
|
||||
Total current liabilities
|
541,750
|
|
|
2,263,782
|
|
|
(416,246
|
)
|
|
2,389,286
|
|
||||
Long-term debt
|
—
|
|
|
3,761,528
|
|
|
—
|
|
|
3,761,528
|
|
||||
Pension liability
|
76,186
|
|
|
—
|
|
|
—
|
|
|
76,186
|
|
||||
Postretirement healthcare benefits
|
203,006
|
|
|
—
|
|
|
—
|
|
|
203,006
|
|
||||
Other long-term liabilities
|
164,060
|
|
|
24,745
|
|
|
—
|
|
|
188,805
|
|
||||
Shareholders’ equity
|
2,011,378
|
|
|
975,852
|
|
|
(77,944
|
)
|
|
2,909,286
|
|
||||
|
$
|
2,996,380
|
|
|
$
|
7,025,907
|
|
|
$
|
(494,190
|
)
|
|
$
|
9,528,097
|
|
|
June 29, 2014
|
||||||||||||||
|
Motorcycles & Related
Products Operations
|
|
Financial
Services Operations
|
|
Eliminations
|
|
Consolidated
|
||||||||
ASSETS
|
|
|
|
|
|
|
|
||||||||
Current assets:
|
|
|
|
|
|
|
|
||||||||
Cash and cash equivalents
|
$
|
635,705
|
|
|
$
|
363,641
|
|
|
$
|
—
|
|
|
$
|
999,346
|
|
Marketable securities
|
57,814
|
|
|
—
|
|
|
—
|
|
|
57,814
|
|
||||
Accounts receivable, net
|
1,317,297
|
|
|
—
|
|
|
(1,027,357
|
)
|
|
289,940
|
|
||||
Finance receivables, net
|
—
|
|
|
2,281,512
|
|
|
—
|
|
|
2,281,512
|
|
||||
Inventories
|
371,597
|
|
|
—
|
|
|
—
|
|
|
371,597
|
|
||||
Restricted cash
|
—
|
|
|
154,681
|
|
|
—
|
|
|
154,681
|
|
||||
Deferred income taxes
|
52,348
|
|
|
38,000
|
|
|
—
|
|
|
90,348
|
|
||||
Other current assets
|
95,429
|
|
|
33,031
|
|
|
—
|
|
|
128,460
|
|
||||
Total current assets
|
2,530,190
|
|
|
2,870,865
|
|
|
(1,027,357
|
)
|
|
4,373,698
|
|
||||
Finance receivables, net
|
—
|
|
|
4,537,405
|
|
|
—
|
|
|
4,537,405
|
|
||||
Property, plant and equipment, net
|
792,642
|
|
|
33,825
|
|
|
—
|
|
|
826,467
|
|
||||
Prepaid pension costs
|
256,279
|
|
|
—
|
|
|
—
|
|
|
256,279
|
|
||||
Goodwill
|
30,252
|
|
|
—
|
|
|
—
|
|
|
30,252
|
|
||||
Deferred income taxes
|
2,915
|
|
|
—
|
|
|
—
|
|
|
2,915
|
|
||||
Other long-term assets
|
111,229
|
|
|
14,506
|
|
|
(76,455
|
)
|
|
49,280
|
|
||||
|
$
|
3,723,507
|
|
|
$
|
7,456,601
|
|
|
$
|
(1,103,812
|
)
|
|
$
|
10,076,296
|
|
LIABILITIES AND SHAREHOLDERS’ EQUITY
|
|
|
|
|
|
|
|
||||||||
Current liabilities:
|
|
|
|
|
|
|
|
||||||||
Accounts payable
|
$
|
316,707
|
|
|
$
|
1,098,992
|
|
|
$
|
(1,027,357
|
)
|
|
$
|
388,342
|
|
Accrued liabilities
|
423,312
|
|
|
79,205
|
|
|
(1,748
|
)
|
|
500,769
|
|
||||
Short-term debt
|
—
|
|
|
619,622
|
|
|
—
|
|
|
619,622
|
|
||||
Current portion of long-term debt
|
—
|
|
|
944,915
|
|
|
—
|
|
|
944,915
|
|
||||
Total current liabilities
|
740,019
|
|
|
2,742,734
|
|
|
(1,029,105
|
)
|
|
2,453,648
|
|
||||
Long-term debt
|
—
|
|
|
3,794,396
|
|
|
—
|
|
|
3,794,396
|
|
||||
Pension liability
|
38,174
|
|
|
—
|
|
|
—
|
|
|
38,174
|
|
||||
Postretirement healthcare liability
|
209,312
|
|
|
—
|
|
|
—
|
|
|
209,312
|
|
||||
Deferred income taxes
|
35,597
|
|
|
1,574
|
|
|
1,748
|
|
|
38,919
|
|
||||
Other long-term liabilities
|
152,862
|
|
|
22,725
|
|
|
—
|
|
|
175,587
|
|
||||
Shareholders’ equity
|
2,547,543
|
|
|
895,172
|
|
|
(76,455
|
)
|
|
3,366,260
|
|
||||
|
$
|
3,723,507
|
|
|
$
|
7,456,601
|
|
|
$
|
(1,103,812
|
)
|
|
$
|
10,076,296
|
|
|
Six months ended June 28, 2015
|
||||||||||||||
|
Motorcycles & Related
Products Operations
|
|
Financial
Services Operations
|
|
Eliminations &
Adjustments
|
|
Consolidated
|
||||||||
Cash flows from operating activities:
|
|
|
|
|
|
|
|
||||||||
Net income
|
$
|
577,098
|
|
|
$
|
92,566
|
|
|
$
|
(100,000
|
)
|
|
$
|
569,664
|
|
Adjustments to reconcile net income to cash provided by operating activities:
|
|
|
|
|
|
|
|
||||||||
Depreciation
|
88,996
|
|
|
4,644
|
|
|
—
|
|
|
93,640
|
|
||||
Amortization of deferred loan origination costs
|
—
|
|
|
47,524
|
|
|
—
|
|
|
47,524
|
|
||||
Amortization of financing origination fees
|
—
|
|
|
4,820
|
|
|
—
|
|
|
4,820
|
|
||||
Provision for employee long-term benefits
|
24,635
|
|
|
—
|
|
|
—
|
|
|
24,635
|
|
||||
Contributions to pension and postretirement plans
|
(12,725
|
)
|
|
—
|
|
|
—
|
|
|
(12,725
|
)
|
||||
Stock compensation expense
|
15,415
|
|
|
1,319
|
|
|
—
|
|
|
16,734
|
|
||||
Net change in wholesale finance receivables related to sales
|
—
|
|
|
—
|
|
|
(418,969
|
)
|
|
(418,969
|
)
|
||||
Provision for credit losses
|
—
|
|
|
41,422
|
|
|
—
|
|
|
41,422
|
|
||||
Deferred income taxes
|
5,832
|
|
|
(7,027
|
)
|
|
—
|
|
|
(1,195
|
)
|
||||
Foreign currency adjustments
|
11,041
|
|
|
—
|
|
|
—
|
|
|
11,041
|
|
||||
Other, net
|
(2,671
|
)
|
|
707
|
|
|
—
|
|
|
(1,964
|
)
|
||||
Change in current assets and current liabilities:
|
|
|
|
|
|
|
|
||||||||
Accounts receivable
|
(347,967
|
)
|
|
—
|
|
|
304,658
|
|
|
(43,309
|
)
|
||||
Finance receivables—accrued interest and other
|
—
|
|
|
(270
|
)
|
|
—
|
|
|
(270
|
)
|
||||
Inventories
|
38,012
|
|
|
—
|
|
|
—
|
|
|
38,012
|
|
||||
Accounts payable and accrued liabilities
|
144,784
|
|
|
385,999
|
|
|
(298,426
|
)
|
|
232,357
|
|
||||
Derivative instruments
|
1,185
|
|
|
—
|
|
|
—
|
|
|
1,185
|
|
||||
Other
|
9,625
|
|
|
1,717
|
|
|
—
|
|
|
11,342
|
|
||||
Total adjustments
|
(23,838
|
)
|
|
480,855
|
|
|
(412,737
|
)
|
|
44,280
|
|
||||
Net cash provided by operating activities
|
553,260
|
|
|
573,421
|
|
|
(512,737
|
)
|
|
613,944
|
|
|
Six months ended June 28, 2015
|
||||||||||||||
|
Motorcycles & Related
Products Operations
|
|
Financial
Services Operations
|
|
Eliminations &
Adjustments
|
|
Consolidated
|
||||||||
Cash flows from investing activities:
|
|
|
|
|
|
|
|
||||||||
Capital expenditures
|
(83,282
|
)
|
|
(1,898
|
)
|
|
—
|
|
|
(85,180
|
)
|
||||
Origination of finance receivables
|
—
|
|
|
(4,526,313
|
)
|
|
2,549,750
|
|
|
(1,976,563
|
)
|
||||
Collections of finance receivables
|
—
|
|
|
3,707,444
|
|
|
(2,137,013
|
)
|
|
1,570,431
|
|
||||
Sales and redemptions of marketable securities
|
4,500
|
|
|
—
|
|
|
—
|
|
|
4,500
|
|
||||
Other
|
5,111
|
|
|
—
|
|
|
—
|
|
|
5,111
|
|
||||
Net cash used by investing activities
|
(73,671
|
)
|
|
(820,767
|
)
|
|
412,737
|
|
|
(481,701
|
)
|
||||
Cash flows from financing activities:
|
|
|
|
|
|
|
|
||||||||
Proceeds from issuance of medium-term notes
|
—
|
|
|
595,386
|
|
|
—
|
|
|
595,386
|
|
||||
Intercompany borrowing activity
|
250,000
|
|
|
(250,000
|
)
|
|
—
|
|
|
—
|
|
||||
Proceeds from securitization debt
|
—
|
|
|
1,195,668
|
|
|
—
|
|
|
1,195,668
|
|
||||
Repayments of securitization debt
|
—
|
|
|
(454,332
|
)
|
|
—
|
|
|
(454,332
|
)
|
||||
Net decrease in credit facilities and unsecured commercial paper
|
—
|
|
|
(616,586
|
)
|
|
—
|
|
|
(616,586
|
)
|
||||
Borrowings of asset-backed commercial paper
|
—
|
|
|
40,209
|
|
|
—
|
|
|
40,209
|
|
||||
Repayments of asset-backed commercial paper
|
—
|
|
|
(35,730
|
)
|
|
—
|
|
|
(35,730
|
)
|
||||
Net change in restricted cash
|
—
|
|
|
(40,159
|
)
|
|
—
|
|
|
(40,159
|
)
|
||||
Dividends paid
|
(129,745
|
)
|
|
(100,000
|
)
|
|
100,000
|
|
|
(129,745
|
)
|
||||
Purchase of common stock for treasury
|
(358,425
|
)
|
|
—
|
|
|
—
|
|
|
(358,425
|
)
|
||||
Excess tax benefits from share-based payments
|
2,401
|
|
|
—
|
|
|
—
|
|
|
2,401
|
|
||||
Issuance of common stock under employee stock option plans
|
15,664
|
|
|
—
|
|
|
—
|
|
|
15,664
|
|
||||
Net cash (used by) provided by financing activities
|
(220,105
|
)
|
|
334,456
|
|
|
100,000
|
|
|
214,351
|
|
||||
Effect of exchange rate changes on cash and cash equivalents
|
(5,090
|
)
|
|
(605
|
)
|
|
—
|
|
|
(5,695
|
)
|
||||
Net increase in cash and cash equivalents
|
$
|
254,394
|
|
|
$
|
86,505
|
|
|
$
|
—
|
|
|
$
|
340,899
|
|
Cash and cash equivalents:
|
|
|
|
|
|
|
|
||||||||
Cash and cash equivalents—beginning of period
|
$
|
573,895
|
|
|
$
|
332,785
|
|
|
$
|
—
|
|
|
$
|
906,680
|
|
Net increase in cash and cash equivalents
|
254,394
|
|
|
86,505
|
|
|
—
|
|
|
340,899
|
|
||||
Cash and cash equivalents—end of period
|
$
|
828,289
|
|
|
$
|
419,290
|
|
|
$
|
—
|
|
|
$
|
1,247,579
|
|
|
Six months ended June 29, 2014
|
||||||||||||||
|
Motorcycles & Related
Products Operations
|
|
Financial
Services Operations
|
|
Eliminations &
Adjustments
|
|
Consolidated
|
||||||||
Cash flows from operating activities:
|
|
|
|
|
|
|
|
||||||||
Net income
|
$
|
655,526
|
|
|
$
|
84,544
|
|
|
$
|
(120,000
|
)
|
|
$
|
620,070
|
|
Adjustments to reconcile net income to cash provided by operating activities:
|
|
|
|
|
|
|
|
||||||||
Depreciation
|
83,348
|
|
|
3,775
|
|
|
—
|
|
|
87,123
|
|
||||
Amortization of deferred loan origination costs
|
—
|
|
|
45,713
|
|
|
|
|
|
45,713
|
|
||||
Amortization of financing origination fees
|
59
|
|
|
4,225
|
|
|
—
|
|
|
4,284
|
|
||||
Provision for employee long-term benefits
|
16,854
|
|
|
—
|
|
|
—
|
|
|
16,854
|
|
||||
Contributions to pension and postretirement plans
|
(14,035
|
)
|
|
—
|
|
|
—
|
|
|
(14,035
|
)
|
||||
Stock compensation expense
|
19,393
|
|
|
1,375
|
|
|
—
|
|
|
20,768
|
|
||||
Net change in wholesale finance receivables related to sales
|
—
|
|
|
—
|
|
|
(510,200
|
)
|
|
(510,200
|
)
|
||||
Provision for credit losses
|
—
|
|
|
36,292
|
|
|
—
|
|
|
36,292
|
|
||||
Loss on extinguishment of debt
|
—
|
|
|
1,145
|
|
|
—
|
|
|
1,145
|
|
||||
Deferred income taxes
|
(3,894
|
)
|
|
—
|
|
|
—
|
|
|
(3,894
|
)
|
||||
Foreign currency adjustments
|
939
|
|
|
(6,023
|
)
|
|
—
|
|
|
(5,084
|
)
|
||||
Other, net
|
4,712
|
|
|
4,620
|
|
|
—
|
|
|
9,332
|
|
||||
Change in current assets and current liabilities:
|
|
|
|
|
|
|
|
||||||||
Accounts receivable
|
(363,817
|
)
|
|
—
|
|
|
338,174
|
|
|
(25,643
|
)
|
||||
Finance receivables—accrued interest and other
|
—
|
|
|
(993
|
)
|
|
—
|
|
|
(993
|
)
|
||||
Inventories
|
58,741
|
|
|
—
|
|
|
—
|
|
|
58,741
|
|
||||
Accounts payable and accrued liabilities
|
189,117
|
|
|
375,290
|
|
|
(338,174
|
)
|
|
226,233
|
|
||||
Derivative instruments
|
968
|
|
|
—
|
|
|
—
|
|
|
968
|
|
||||
Other
|
4,962
|
|
|
(2,044
|
)
|
|
—
|
|
|
2,918
|
|
||||
Total adjustments
|
(2,653
|
)
|
|
463,375
|
|
|
(510,200
|
)
|
|
(49,478
|
)
|
||||
Net cash provided by operating activities
|
652,873
|
|
|
547,919
|
|
|
(630,200
|
)
|
|
570,592
|
|
|
Six months ended June 29, 2014
|
||||||||||||||
|
Motorcycles & Related
Products Operations
|
|
Financial
Services Operations
|
|
Eliminations &
Adjustments
|
|
Consolidated
|
||||||||
Cash flows from investing activities:
|
|
|
|
|
|
|
|
||||||||
Capital expenditures
|
(71,395
|
)
|
|
(3,128
|
)
|
|
—
|
|
|
(74,523
|
)
|
||||
Origination of finance receivables
|
—
|
|
|
(4,580,910
|
)
|
|
2,676,333
|
|
|
(1,904,577
|
)
|
||||
Collections of finance receivables
|
—
|
|
|
3,684,319
|
|
|
(2,166,133
|
)
|
|
1,518,186
|
|
||||
Sales and redemptions of marketable securities
|
41,010
|
|
|
—
|
|
|
—
|
|
|
41,010
|
|
||||
Other
|
145
|
|
|
—
|
|
|
—
|
|
|
145
|
|
||||
Net cash used by investing activities
|
(30,240
|
)
|
|
(899,719
|
)
|
|
510,200
|
|
|
(419,759
|
)
|
||||
Cash flows from financing activities:
|
|
|
|
|
|
|
|
||||||||
Repayments of senior unsecured notes
|
(303,000
|
)
|
|
—
|
|
|
—
|
|
|
(303,000
|
)
|
||||
Repayments of medium-term notes
|
—
|
|
|
(7,220
|
)
|
|
—
|
|
|
(7,220
|
)
|
||||
Intercompany borrowing activity
|
(100,000
|
)
|
|
100,000
|
|
|
—
|
|
|
—
|
|
||||
Proceeds from securitization debt
|
—
|
|
|
847,126
|
|
|
—
|
|
|
847,126
|
|
||||
Repayments of securitization debt
|
—
|
|
|
(393,655
|
)
|
|
—
|
|
|
(393,655
|
)
|
||||
Net decrease in credit facilities and unsecured commercial paper
|
—
|
|
|
(48,134
|
)
|
|
—
|
|
|
(48,134
|
)
|
||||
Borrowings of asset-backed commercial paper
|
—
|
|
|
36,800
|
|
|
—
|
|
|
36,800
|
|
||||
Repayments of asset-backed commercial paper
|
—
|
|
|
(37,317
|
)
|
|
—
|
|
|
(37,317
|
)
|
||||
Net change in restricted cash
|
—
|
|
|
(9,874
|
)
|
|
—
|
|
|
(9,874
|
)
|
||||
Dividends paid
|
(120,631
|
)
|
|
(120,000
|
)
|
|
120,000
|
|
|
(120,631
|
)
|
||||
Purchase of common stock for treasury
|
(223,736
|
)
|
|
—
|
|
|
—
|
|
|
(223,736
|
)
|
||||
Excess tax benefits from share-based payments
|
8,652
|
|
|
—
|
|
|
—
|
|
|
8,652
|
|
||||
Issuance of common stock under employee stock option plans
|
27,907
|
|
|
—
|
|
|
—
|
|
|
27,907
|
|
||||
Net cash (used by) provided by financing activities
|
(710,808
|
)
|
|
367,726
|
|
|
120,000
|
|
|
(223,082
|
)
|
||||
Effect of exchange rate changes on cash and cash equivalents
|
4,968
|
|
|
15
|
|
|
—
|
|
|
4,983
|
|
||||
Net (decrease) increase in cash and cash equivalents
|
$
|
(83,207
|
)
|
|
$
|
15,941
|
|
|
$
|
—
|
|
|
$
|
(67,266
|
)
|
Cash and cash equivalents:
|
|
|
|
|
|
|
|
||||||||
Cash and cash equivalents—beginning of period
|
$
|
718,912
|
|
|
$
|
347,700
|
|
|
$
|
—
|
|
|
$
|
1,066,612
|
|
Net (decrease) increase in cash and cash equivalents
|
(83,207
|
)
|
|
15,941
|
|
|
—
|
|
|
(67,266
|
)
|
||||
Cash and cash equivalents—end of period
|
$
|
635,705
|
|
|
$
|
363,641
|
|
|
$
|
—
|
|
|
$
|
999,346
|
|
(1)
|
Note Regarding Forward-Looking Statements
|
|
Three months ended
|
|
|
|
|
|||||||||
(in thousands, except earnings per share)
|
June 28,
2015 |
|
June 29,
2014 |
|
(Decrease) Increase
|
|
% Change
|
|||||||
Operating income from Motorcycles & Related Products
|
$
|
380,603
|
|
|
$
|
473,256
|
|
|
$
|
(92,653
|
)
|
|
(19.6
|
)%
|
Operating income from Financial Services
|
81,913
|
|
|
74,439
|
|
|
7,474
|
|
|
10.0
|
|
|||
Operating income
|
462,516
|
|
|
547,695
|
|
|
(85,179
|
)
|
|
(15.6
|
)
|
|||
Investment income
|
1,450
|
|
|
1,772
|
|
|
(322
|
)
|
|
(18.2
|
)
|
|||
Interest expense
|
9
|
|
|
393
|
|
|
(384
|
)
|
|
(97.7
|
)
|
|||
Income before income taxes
|
463,957
|
|
|
549,074
|
|
|
(85,117
|
)
|
|
(15.5
|
)
|
|||
Provision for income taxes
|
164,147
|
|
|
194,921
|
|
|
(30,774
|
)
|
|
(15.8
|
)
|
|||
Net income
|
$
|
299,810
|
|
|
$
|
354,153
|
|
|
$
|
(54,343
|
)
|
|
(15.3
|
)%
|
Diluted earnings per share
|
$
|
1.44
|
|
|
$
|
1.62
|
|
|
$
|
(0.18
|
)
|
|
(11.1
|
)%
|
|
Three months ended
|
|
|
|
|
||||||
|
June 30,
2015 |
|
June 30,
2014 |
|
(Decrease)
Increase
|
|
%
Change
|
||||
North America Region
|
|
|
|
|
|
|
|
||||
United States
|
57,790
|
|
|
58,225
|
|
|
(435
|
)
|
|
(0.7
|
)%
|
Canada
|
3,737
|
|
|
4,146
|
|
|
(409
|
)
|
|
(9.9
|
)%
|
Total North America Region
|
61,527
|
|
|
62,371
|
|
|
(844
|
)
|
|
(1.4
|
)%
|
Europe, Middle East and Africa Region (EMEA)
|
|
|
|
|
|
|
|
||||
Europe
(b)
|
14,150
|
|
|
15,726
|
|
|
(1,576
|
)
|
|
(10.0
|
)%
|
Other
|
2,029
|
|
|
2,038
|
|
|
(9
|
)
|
|
(0.4
|
)%
|
Total EMEA Region
|
16,179
|
|
|
17,764
|
|
|
(1,585
|
)
|
|
(8.9
|
)%
|
Asia Pacific Region
|
|
|
|
|
|
|
|
||||
Japan
|
2,580
|
|
|
2,510
|
|
|
70
|
|
|
2.8
|
%
|
Other
|
5,937
|
|
|
4,792
|
|
|
1,145
|
|
|
23.9
|
%
|
Total Asia Pacific Region
|
8,517
|
|
|
7,302
|
|
|
1,215
|
|
|
16.6
|
%
|
Latin America Region
|
2,708
|
|
|
2,781
|
|
|
(73
|
)
|
|
(2.6
|
)%
|
Total Worldwide Retail Sales
|
88,931
|
|
|
90,218
|
|
|
(1,287
|
)
|
|
(1.4
|
)%
|
Total International Retail Sales
|
31,141
|
|
|
31,993
|
|
|
(852
|
)
|
|
(2.7
|
)%
|
(a)
|
Data source for retail sales figures shown above is new sales warranty and registration information provided by Harley-Davidson dealers and compiled by the Company. The Company must rely on information that its dealers supply concerning retail sales and this information is subject to revision.
|
(b)
|
Includes Austria, Belgium, Denmark, Finland, France, Germany, Greece, Italy, Luxembourg, Netherlands, Norway, Portugal, Spain, Sweden, Switzerland and the United Kingdom.
|
|
Three months ended
|
|
|
|
|
||||||||||||
|
June 28, 2015
|
|
June 29, 2014
|
|
Unit
|
|
Unit
|
||||||||||
|
Units
|
|
Mix %
|
|
Units
|
|
Mix %
|
|
(Decrease) Increase
|
|
%
Change |
||||||
United States
|
55,128
|
|
|
64.7
|
%
|
|
63,043
|
|
|
68.4
|
%
|
|
(7,915
|
)
|
|
(12.6
|
)%
|
International
|
30,044
|
|
|
35.3
|
%
|
|
29,174
|
|
|
31.6
|
%
|
|
870
|
|
|
3.0
|
|
Harley-Davidson motorcycle units
|
85,172
|
|
|
100.0
|
%
|
|
92,217
|
|
|
100.0
|
%
|
|
(7,045
|
)
|
|
(7.6
|
)%
|
Touring motorcycle units
|
34,563
|
|
|
40.6
|
%
|
|
41,095
|
|
|
44.6
|
%
|
|
(6,532
|
)
|
|
(15.9
|
)%
|
Cruiser motorcycle units
(a)
|
29,952
|
|
|
35.2
|
%
|
|
32,231
|
|
|
34.9
|
%
|
|
(2,279
|
)
|
|
(7.1
|
)
|
Sportster
®
/ Street motorcycle units
|
20,657
|
|
|
24.2
|
%
|
|
18,891
|
|
|
20.5
|
%
|
|
1,766
|
|
|
9.3
|
|
Harley-Davidson motorcycle units
|
85,172
|
|
|
100.0
|
%
|
|
92,217
|
|
|
100.0
|
%
|
|
(7,045
|
)
|
|
(7.6
|
)%
|
(a)
|
Category previously referred to as "Custom" motorcycle units, as used in this table, include Dyna
®
, Softail
®
, V-Rod
®
and CVO models.
|
|
Three months ended
|
|
|
|
|
|||||||||
|
June 28, 2015
|
|
June 29, 2014
|
|
(Decrease)
Increase |
|
%
Change |
|||||||
Revenue:
|
|
|
|
|
|
|
|
|||||||
Motorcycles
|
$
|
1,308,837
|
|
|
$
|
1,480,914
|
|
|
$
|
(172,077
|
)
|
|
(11.6
|
)%
|
Parts & Accessories
|
256,840
|
|
|
271,572
|
|
|
(14,732
|
)
|
|
(5.4
|
)
|
|||
General Merchandise
|
77,518
|
|
|
76,386
|
|
|
1,132
|
|
|
1.5
|
|
|||
Other
|
7,588
|
|
|
5,413
|
|
|
2,175
|
|
|
40.2
|
|
|||
Total revenue
|
1,650,783
|
|
|
1,834,285
|
|
|
(183,502
|
)
|
|
(10.0
|
)
|
|||
Cost of goods sold
|
1,003,569
|
|
|
1,110,146
|
|
|
(106,577
|
)
|
|
(9.6
|
)
|
|||
Gross profit
|
647,214
|
|
|
724,139
|
|
|
(76,925
|
)
|
|
(10.6
|
)
|
|||
Selling & administrative expense
|
228,148
|
|
|
218,410
|
|
|
9,738
|
|
|
4.5
|
|
|||
Engineering expense
|
38,463
|
|
|
32,473
|
|
|
5,990
|
|
|
18.4
|
|
|||
Operating expense
|
266,611
|
|
|
250,883
|
|
|
15,728
|
|
|
6.3
|
|
|||
Operating income from Motorcycles
|
$
|
380,603
|
|
|
$
|
473,256
|
|
|
$
|
(92,653
|
)
|
|
(19.6
|
)%
|
|
Net
Revenue
|
|
Cost of
Goods Sold
|
|
Gross
Profit
|
||||||
Three months ended June 29, 2014
|
$
|
1,834.3
|
|
|
$
|
1,110.2
|
|
|
$
|
724.1
|
|
Volume
|
(119.3
|
)
|
|
(73.3
|
)
|
|
(46.0
|
)
|
|||
Price, net of related cost
|
20.4
|
|
|
1.8
|
|
|
18.6
|
|
|||
Foreign currency exchange rates and hedging
|
(80.0
|
)
|
|
(43.9
|
)
|
|
(36.1
|
)
|
|||
Shipment mix
|
(4.6
|
)
|
|
11.9
|
|
|
(16.5
|
)
|
|||
Raw material prices
|
—
|
|
|
(4.3
|
)
|
|
4.3
|
|
|||
Manufacturing and other costs
|
—
|
|
|
1.2
|
|
|
(1.2
|
)
|
|||
Total
|
(183.5
|
)
|
|
(106.6
|
)
|
|
(76.9
|
)
|
|||
Three months ended June 28, 2015
|
$
|
1,650.8
|
|
|
$
|
1,003.6
|
|
|
$
|
647.2
|
|
•
|
Volume decreases were driven by the planned decrease in wholesale motorcycle shipments and lower parts and accessories sales, partially offset by higher sales volumes for general merchandise.
|
•
|
On average, wholesale prices for the Company’s 2015 model-year motorcycles are higher than the prior model-year resulting in the favorable impact on revenue during the period. The impact of revenue favorability resulting from model-year price increases on gross profit was partially offset by an increase in cost related to the additional content added to the 2015 model-year motorcycles.
|
•
|
Gross profit was negatively impacted by changes in foreign currency exchange rates during the second quarter of 2015 compared to the second quarter of 2014. Revenue was negatively impacted by a devaluation in the Euro, Japanese yen, Brazilian real and Australian dollar. On a weighted average basis, these key currencies were weaker by 19% in the second quarter of 2015 compared to the second quarter of 2014. The negative impact to revenue was partially offset by a positive impact to cost of goods sold as a result of natural hedges, benefits of foreign currency exchange contracts and the revaluation of foreign-denominated assets on the balance sheet.
|
•
|
As expected, shipment mix changes negatively impacted net revenue and gross profit in the second quarter of 2015 primarily as a result of the shift in mix between motorcycle families.
|
•
|
Raw material prices were slightly lower in the second quarter of 2015 relative to the second quarter of 2014.
|
•
|
Manufacturing costs in the second quarter of 2015 were higher primarily due to an increase in the cost per unit resulting from the lower production volumes partially offset by strong productivity gains and the absence of Street motorcycle start-up costs that were incurred in the second quarter of 2014.
|
|
Three months ended
|
|
|
|
|
|||||||||
|
June 28, 2015
|
|
June 29, 2014
|
|
Increase
(Decrease) |
|
%
Change |
|||||||
Interest income
|
$
|
150,284
|
|
|
$
|
145,202
|
|
|
$
|
5,082
|
|
|
3.5
|
%
|
Other income
|
23,325
|
|
|
21,212
|
|
|
2,113
|
|
|
10.0
|
|
|||
Financial Services revenue
|
173,609
|
|
|
166,414
|
|
|
7,195
|
|
|
4.3
|
|
|||
Interest expense
|
41,188
|
|
|
40,741
|
|
|
447
|
|
|
1.1
|
|
|||
Provision for credit losses
|
15,175
|
|
|
15,961
|
|
|
(786
|
)
|
|
(4.9
|
)
|
|||
Operating expenses
|
35,333
|
|
|
35,273
|
|
|
60
|
|
|
0.2
|
|
|||
Financial Services expense
|
91,696
|
|
|
91,975
|
|
|
(279
|
)
|
|
(0.3
|
)
|
|||
Operating income from Financial Services
|
$
|
81,913
|
|
|
$
|
74,439
|
|
|
$
|
7,474
|
|
|
10.0
|
%
|
|
Three months ended
|
||||||
|
June 28,
2015 |
|
June 29,
2014 |
||||
Balance, beginning of period
|
$
|
132,820
|
|
|
$
|
114,529
|
|
Provision for finance credit losses
|
15,175
|
|
|
15,961
|
|
||
Charge-offs
|
(21,003
|
)
|
|
(19,018
|
)
|
||
Recoveries
|
12,239
|
|
|
10,883
|
|
||
Balance, end of period
|
$
|
139,231
|
|
|
$
|
122,355
|
|
|
Six months ended
|
|
|
|
|
|||||||||
(in thousands, except earnings per share)
|
June 28,
2015 |
|
June 29,
2014 |
|
(Decrease)
Increase |
|
%
Change |
|||||||
Operating income from Motorcycles & Related Products
|
$
|
726,057
|
|
|
$
|
820,948
|
|
|
$
|
(94,891
|
)
|
|
(11.6
|
)%
|
Operating income from Financial Services
|
146,577
|
|
|
137,629
|
|
|
8,948
|
|
|
6.5
|
|
|||
Operating income
|
872,634
|
|
|
958,577
|
|
|
(85,943
|
)
|
|
(9.0
|
)
|
|||
Investment income
|
2,772
|
|
|
3,431
|
|
|
(659
|
)
|
|
(19.2
|
)
|
|||
Interest expense
|
18
|
|
|
4,070
|
|
|
(4,052
|
)
|
|
(99.6
|
)
|
|||
Income before income taxes
|
875,388
|
|
|
957,938
|
|
|
(82,550
|
)
|
|
(8.6
|
)
|
|||
Provision for income taxes
|
305,724
|
|
|
337,868
|
|
|
(32,144
|
)
|
|
(9.5
|
)
|
|||
Net income
|
$
|
569,664
|
|
|
$
|
620,070
|
|
|
$
|
(50,406
|
)
|
|
(8.1
|
)%
|
Diluted earnings per share
|
$
|
2.71
|
|
|
$
|
2.82
|
|
|
$
|
(0.11
|
)
|
|
(3.9
|
)%
|
|
Six months ended
|
|
|
|
|
||||||
|
June 30,
2015 |
|
June 30,
2014 |
|
(Decrease)
Increase
|
|
%
Change |
||||
North America Region
|
|
|
|
|
|
|
|
||||
United States
|
93,278
|
|
|
93,955
|
|
|
(677
|
)
|
|
(0.7
|
)%
|
Canada
|
5,860
|
|
|
6,155
|
|
|
(295
|
)
|
|
(4.8
|
)
|
Total North America Region
|
99,138
|
|
|
100,110
|
|
|
(972
|
)
|
|
(1.0
|
)
|
Europe, Middle East and Africa Region (EMEA)
|
|
|
|
|
|
|
|
||||
Europe
(b)
|
22,279
|
|
|
24,121
|
|
|
(1,842
|
)
|
|
(7.6
|
)
|
Other
|
3,288
|
|
|
3,583
|
|
|
(295
|
)
|
|
(8.2
|
)
|
Total EMEA Region
|
25,567
|
|
|
27,704
|
|
|
(2,137
|
)
|
|
(7.7
|
)
|
Asia Pacific Region
|
|
|
|
|
|
|
|
||||
Japan
|
4,552
|
|
|
5,403
|
|
|
(851
|
)
|
|
(15.8
|
)
|
Other
|
11,062
|
|
|
9,077
|
|
|
1,985
|
|
|
21.9
|
|
Total Asia Pacific Region
|
15,614
|
|
|
14,480
|
|
|
1,134
|
|
|
7.8
|
|
Latin America Region
|
5,273
|
|
|
5,339
|
|
|
(66
|
)
|
|
(1.2
|
)
|
Total Worldwide Retail Sales
|
145,592
|
|
|
147,633
|
|
|
(2,041
|
)
|
|
(1.4
|
)%
|
Total International Retail Sales
|
52,314
|
|
|
53,678
|
|
|
(1,364
|
)
|
|
(2.5
|
)%
|
(a)
|
Data source for retail sales figures shown above is new sales warranty and registration information provided by Harley-Davidson dealers and compiled by the Company. The Company must rely on information that its dealers supply concerning retail sales and this information is subject to revision.
|
(b)
|
Includes Austria, Belgium, Denmark, Finland, France, Germany, Greece, Italy, Luxembourg, Netherlands, Norway, Portugal, Spain, Sweden, Switzerland and the United Kingdom.
|
|
Six months ended
|
|
|
|
|
||||||
|
June 30,
2015 |
|
June 30,
2014 |
|
Increase
|
|
%
Change |
||||
United States
(b)
|
187,163
|
|
|
173,960
|
|
|
13,203
|
|
|
7.6
|
%
|
Europe
(c)
|
229,469
|
|
|
209,218
|
|
|
20,251
|
|
|
9.7
|
%
|
(a)
|
Data includes on-road 601+cc models. On-road 601+cc models include on-highway, dual purpose models and three-wheeled vehicles. Registration data for Harley-Davidson Street 500
TM
motorcycles is not included in this table.
|
(b)
|
United States industry data is derived from information provided by Motorcycle Industry Council (MIC). This third party data is subject to revision and update.
|
(c)
|
Europe data includes Austria, Belgium, Denmark, Finland, France, Germany, Greece, Italy, Luxembourg, Netherlands, Norway, Portugal, Spain, Sweden, Switzerland, and the United Kingdom. Industry retail motorcycle registration data includes 601+cc models derived from information provided by Association des Constructeurs Europeens de Motocycles (ACEM), an independent agency. This third-party data is subject to revision and update.
|
|
Six months ended
|
|
|
|
|
||||||||||||
|
June 28, 2015
|
|
June 29, 2014
|
|
Unit
|
|
Unit
|
||||||||||
|
Units
|
|
Mix %
|
|
Units
|
|
Mix %
|
|
(Decrease) Increase
|
|
%
Change |
||||||
United States
|
111,792
|
|
|
67.9
|
%
|
|
117,334
|
|
|
67.9
|
%
|
|
(5,542
|
)
|
|
(4.7
|
)%
|
International
|
52,969
|
|
|
32.1
|
%
|
|
55,565
|
|
|
32.1
|
%
|
|
(2,596
|
)
|
|
(4.7
|
)
|
Harley-Davidson motorcycle units
|
164,761
|
|
|
100.0
|
%
|
|
172,899
|
|
|
100.0
|
%
|
|
(8,138
|
)
|
|
(4.7
|
)%
|
Touring motorcycle units
|
73,360
|
|
|
44.5
|
%
|
|
77,273
|
|
|
44.7
|
%
|
|
(3,913
|
)
|
|
(5.1
|
)%
|
Cruiser motorcycle units
(a)
|
53,348
|
|
|
32.4
|
%
|
|
61,380
|
|
|
35.5
|
%
|
|
(8,032
|
)
|
|
(13.1
|
)
|
Sportster
®
/ Street motorcycle units
(b)
|
38,053
|
|
|
23.1
|
%
|
|
34,246
|
|
|
19.8
|
%
|
|
3,807
|
|
|
11.1
|
|
Harley-Davidson motorcycle units
|
164,761
|
|
|
100.0
|
%
|
|
172,899
|
|
|
100.0
|
%
|
|
(8,138
|
)
|
|
(4.7
|
)%
|
(a)
|
Category previously referred to as "Custom" motorcycle units, as used in this table, include Dyna
®
, Softail
®
, V-Rod
®
and CVO models.
|
(b)
|
Initial shipments of Street motorcycle units began during the first quarter of 2014.
|
|
Six months ended
|
|
|
|
|
|||||||||
|
June 28, 2015
|
|
June 29, 2014
|
|
(Decrease)
Increase |
|
%
Change
|
|||||||
Revenue:
|
|
|
|
|
|
|
|
|||||||
Motorcycles
|
$
|
2,563,958
|
|
|
$
|
2,785,953
|
|
|
$
|
(221,995
|
)
|
|
(8.0
|
)%
|
Parts & Accessories
|
440,712
|
|
|
469,707
|
|
|
(28,995
|
)
|
|
(6.2
|
)
|
|||
General Merchandise
|
143,946
|
|
|
140,500
|
|
|
3,446
|
|
|
2.5
|
|
|||
Other
|
12,737
|
|
|
9,813
|
|
|
2,924
|
|
|
29.8
|
|
|||
Total revenue
|
3,161,353
|
|
|
3,405,973
|
|
|
(244,620
|
)
|
|
(7.2
|
)
|
|||
Cost of goods sold
|
1,923,864
|
|
|
2,089,703
|
|
|
(165,839
|
)
|
|
(7.9
|
)
|
|||
Gross profit
|
1,237,489
|
|
|
1,316,270
|
|
|
(78,781
|
)
|
|
(6.0
|
)
|
|||
Selling & administrative expense
|
433,655
|
|
|
429,585
|
|
|
4,070
|
|
|
0.9
|
|
|||
Engineering expense
|
77,777
|
|
|
65,737
|
|
|
12,040
|
|
|
18.3
|
|
|||
Operating expense
|
511,432
|
|
|
495,322
|
|
|
16,110
|
|
|
3.3
|
|
|||
Operating income from Motorcycles
|
$
|
726,057
|
|
|
$
|
820,948
|
|
|
$
|
(94,891
|
)
|
|
(11.6
|
)%
|
|
Net
Revenue |
|
Cost of
Goods Sold |
|
Gross
Profit |
||||||
Six months ended June 29, 2014
|
$
|
3,406.0
|
|
|
$
|
2,089.7
|
|
|
$
|
1,316.3
|
|
Volume
|
(143.0
|
)
|
|
(88.7
|
)
|
|
(54.3
|
)
|
|||
Price, net of related costs
|
38.6
|
|
|
4.0
|
|
|
34.6
|
|
|||
Foreign currency exchange rates and hedging
|
(133.7
|
)
|
|
(58.2
|
)
|
|
(75.5
|
)
|
|||
Shipment mix
|
(6.5
|
)
|
|
0.9
|
|
|
(7.4
|
)
|
|||
Raw material prices
|
—
|
|
|
(6.4
|
)
|
|
6.4
|
|
|||
Manufacturing and other costs
|
—
|
|
|
(17.4
|
)
|
|
17.4
|
|
|||
Total
|
(244.6
|
)
|
|
(165.8
|
)
|
|
(78.8
|
)
|
|||
Six months ended June 28, 2015
|
$
|
3,161.4
|
|
|
$
|
1,923.9
|
|
|
$
|
1,237.5
|
|
•
|
Volume decreases were driven by the decrease in wholesale motorcycle shipments and parts and accessories sales, partially offset by higher sales volumes for general merchandise.
|
•
|
On average, wholesale prices for the Company’s 2015 model-year motorcycles are higher than the prior model-year resulting in the favorable impact on revenue during the period. The impact of revenue favorability resulting from model-year price increases on gross profit was partially offset by increases in costs related to the additional content added to the 2015 model-year motorcycles.
|
•
|
Gross profit was negatively impacted by changes in foreign currency exchange rates during the first six months of 2015 compared to the first six months of 2014. Revenue was negatively impacted by a devaluation in the Euro, Japanese yen, Brazilian real and Australian dollar. The negative impact to revenue was partially offset by a positive impact to cost of goods sold as a result of natural hedges and benefits of foreign currency exchange contracts, partially offset by an unfavorable impact due to the revaluation of foreign-denominated assets on the balance sheet.
|
•
|
Shipment mix changes negatively impacted gross profit primarily due to changes in motorcycle family mix, driven by higher shipments of Street motorcycles. The negative motorcycle family mix was partially offset by positive mix changes within parts and accessories and general merchandise.
|
•
|
Raw material prices were lower in the first
half
of
2015
relative to the first
half
of
2014
.
|
•
|
Manufacturing costs in the first six months of 2015 benefited from increased manufacturing efficiencies and the absence of Street motorcycle start-up costs that were incurred in the first six months of 2014, partially offset by a higher cost per unit resulting from lower production volumes.
|
|
Six months ended
|
|
|
|
|
|||||||||
|
June 28, 2015
|
|
June 29, 2014
|
|
Increase
(Decrease) |
|
%
Change
|
|||||||
Interest income
|
$
|
293,852
|
|
|
$
|
284,254
|
|
|
$
|
9,598
|
|
|
3.4
|
%
|
Other income
|
42,132
|
|
|
36,520
|
|
|
5,612
|
|
|
15.4
|
|
|||
Financial Services revenue
|
335,984
|
|
|
320,774
|
|
|
15,210
|
|
|
4.7
|
|
|||
Interest expense
|
79,724
|
|
|
79,598
|
|
|
126
|
|
|
0.2
|
|
|||
Provision for credit losses
|
41,422
|
|
|
36,292
|
|
|
5,130
|
|
|
14.1
|
|
|||
Operating expenses
|
68,261
|
|
|
67,255
|
|
|
1,006
|
|
|
1.5
|
|
|||
Financial Services expense
|
189,407
|
|
|
183,145
|
|
|
6,262
|
|
|
3.4
|
|
|||
Operating income from Financial Services
|
$
|
146,577
|
|
|
$
|
137,629
|
|
|
$
|
8,948
|
|
|
6.5
|
%
|
|
Six months ended
|
||||||
|
June 28,
2015 |
|
June 29,
2014 |
||||
Balance, beginning of period
|
$
|
127,364
|
|
|
$
|
110,693
|
|
Provision for credit losses
|
41,422
|
|
|
36,292
|
|
||
Charge-offs
|
(53,736
|
)
|
|
(46,361
|
)
|
||
Recoveries
|
24,181
|
|
|
21,731
|
|
||
Balance, end of period
|
$
|
139,231
|
|
|
$
|
122,355
|
|
|
2015
|
|
2016 - 2017
|
|
2018 - 2019
|
|
Thereafter
|
|
Total
|
||||||||||
Principal payments on debt
|
$
|
1,216,387
|
|
|
$
|
1,951,101
|
|
|
$
|
2,367,006
|
|
|
$
|
692,206
|
|
|
$
|
6,226,700
|
|
Interest payments on debt
|
87,666
|
|
|
227,144
|
|
|
94,906
|
|
|
1,940
|
|
|
411,656
|
|
|||||
|
$
|
1,304,053
|
|
|
$
|
2,178,245
|
|
|
$
|
2,461,912
|
|
|
$
|
694,146
|
|
|
$
|
6,638,356
|
|
|
June 28, 2015
|
||
Cash and cash equivalents
|
$
|
1,247,579
|
|
Current marketable securities
|
52,516
|
|
|
Total cash and cash equivalents and marketable securities
|
1,300,095
|
|
|
|
|
||
Global credit facilities
|
1,235,017
|
|
|
Asset-backed U.S. commercial paper conduit facility
(a)
|
600,000
|
|
|
Asset-backed Canadian commercial paper conduit facility
(b)
|
10
|
|
|
Total availability under credit facilities
|
1,835,027
|
|
|
Total
|
$
|
3,135,122
|
|
(a)
|
The U.S. commercial paper conduit facility expires on October 30, 2015. The Company anticipates that it will renew this facility prior to expiration
(1)
.
|
(b)
|
The Canadian commercial paper conduit facility was due to expire on June 30, 2015 and is limited to Canadian-denominated borrowings. The Company renewed this facility and the new facility expires June 30, 2016.
|
|
Six months ended
|
||||||
|
June 28, 2015
|
|
June 29, 2014
|
||||
Net cash provided by operating activities
|
$
|
613,944
|
|
|
$
|
570,592
|
|
Net cash used by investing activities
|
(481,701
|
)
|
|
(419,759
|
)
|
||
Net cash provided by (used by) financing activities
|
214,351
|
|
|
(223,082
|
)
|
||
Effect of exchange rate changes on cash and cash equivalents
|
(5,695
|
)
|
|
4,983
|
|
||
Net increase (decrease) in cash and cash equivalents
|
$
|
340,899
|
|
|
$
|
(67,266
|
)
|
|
June 28,
2015 |
|
June 29,
2014 |
||||
Unsecured commercial paper
|
$
|
114,983
|
|
|
$
|
619,622
|
|
Asset-backed Canadian commercial paper conduit facility
|
160,940
|
|
|
173,224
|
|
||
Medium-term notes
|
3,933,698
|
|
|
2,853,232
|
|
||
Term asset-backed securitization debt
|
2,017,079
|
|
|
1,712,855
|
|
||
Total debt
|
$
|
6,226,700
|
|
|
$
|
5,358,933
|
|
Principal Amount
|
|
Rate
|
|
Issue Date
|
|
Maturity Date
|
$600,000
|
|
1.15%
|
|
September 2012
|
|
September 2015
|
$450,000
|
|
3.88%
|
|
March 2011
|
|
March 2016
|
$400,000
|
|
2.70%
|
|
January 2012
|
|
March 2017
|
$400,000
|
|
1.55%
|
|
November 2014
|
|
November 2017
|
$887,958
|
|
6.80%
|
|
May 2008
|
|
June 2018
|
$600,000
|
|
2.40%
|
|
September 2014
|
|
September 2019
|
$600,000
|
|
2.15%
|
|
February 2015
|
|
February 2020
|
•
|
assume or incur certain liens;
|
•
|
participate in certain mergers, consolidations, liquidations or dissolutions; and
|
•
|
purchase or hold margin stock.
|
(i)
|
execute its business strategy,
|
(ii)
|
manage through changes in general economic conditions, including changing capital, credit and retail markets, and political events,
|
(iii)
|
accurately estimate and adjust to fluctuations in foreign currency exchange rates, interest rates and commodity prices,
|
(iv)
|
balance production volumes for its new motorcycles with consumer demand, including in circumstances where competitors may be supplying new motorcycles to the market in excess of demand at reduced prices,
|
(v)
|
continue to develop the capabilities of its distributors and dealers and manage the risks that our independent dealers may have difficulty obtaining capital and managing through changing economic conditions and consumer demand,
|
(vi)
|
successfully access the capital and/or credit markets on terms (including interest rates) that are acceptable to the Company and within its expectations,
|
(vii)
|
effect repurchases of its common stock at share prices that are within its expectations,
|
(viii)
|
consummate the Canada Distributor Transaction and complete the transition to the new direct distribution model in Canada on the timing for the costs and at the foreign currency exchange rates that are within its expectations,
|
(ix)
|
prevent a cybersecurity breach involving digital consumer, employee or dealer personal data,
|
(x)
|
manage the impact that prices for used motorcycles may have on retail sales of new motorcycles,
|
(xi)
|
manage risks that arise through expanding international manufacturing, operations and sales,
|
(xii)
|
manage through the effects inconsistent and unpredictable weather patterns may have on retail sales of motorcycles,
|
(xiii)
|
manage changes and prepare for requirements in legislative and regulatory environments for its products, services and operations,
|
(xiv)
|
manage supply chain issues, including quality issues and any unexpected interruptions or price increases caused by raw material shortages or natural disasters,
|
(xv)
|
prevent and detect any issues with the Company's products, components purchased from suppliers, and its suppliers' manufacturing processes to avoid delays in new model launches, recall campaigns, increased warranty costs or litigation, and adverse affects on the Company's reputation and brand strength,
|
(xvi)
|
develop and introduce products, services and experiences that are successful in the marketplace,
|
(xvii)
|
develop and implement sales and marketing plans that retain existing retail customers and attract new retail customers in an increasingly competitive marketplace,
|
(xviii)
|
implement and manage enterprise-wide information technology solutions, including solutions at its manufacturing facilities,
|
(xix)
|
continue to realize production efficiencies at its production facilities and manage operating costs including materials, labor and overhead,
|
(xx)
|
execute its flexible production strategy,
|
(xxi)
|
continue to manage the relationships and agreements that it has with its labor unions to help drive long-term competitiveness,
|
(xxii)
|
adjust to healthcare inflation and reform, pension reform and tax changes,
|
(xxiii)
|
retain and attract talented employees,
|
(xxiv)
|
continue to have access to reliable sources of capital funding and adjust to fluctuations in the cost of capital, and
|
(xxv)
|
manage the credit quality, the loan servicing and collection activities, and the recovery rates of HDFS’ loan portfolio
|
2015 Fiscal Month
|
Total Number of
Shares Purchased (a) |
|
Average Price
Paid per Share |
|
Total Number of Shares
Purchased as Part of Publicly Announced Plans or Programs |
|
Maximum Number of
Shares that May Yet Be Purchased Under the Plans or Programs |
||||
March 30 to May 3
|
1,448,410
|
|
|
60
|
|
|
1,448,410
|
|
|
17,200,902
|
|
May 4 to May 31
|
1,405,461
|
|
|
56
|
|
|
1,405,461
|
|
|
15,929,045
|
|
June 1 to June 28
|
—
|
|
|
—
|
|
|
—
|
|
|
30,952,335
|
|
Total
|
2,853,871
|
|
|
58
|
|
|
2,853,871
|
|
|
|
(a)
|
Includes discretionary share repurchases and shares of common stock that employees surrendered to satisfy withholding taxes in connection with the vesting of restricted stock awards
|
|
HARLEY-DAVIDSON, INC.
|
|
|
Date: 8/6/2015
|
/s/ John A. Olin
|
|
John A. Olin
|
|
Senior Vice President and
|
|
Chief Financial Officer
|
|
(Principal financial officer)
|
Date: 8/6/2015
|
/s/ Mark R. Kornetzke
|
|
Mark R. Kornetzke
|
|
Chief Accounting Officer
|
|
(Principal accounting officer)
|
Exhibit No.
|
|
Description
|
2.1
|
|
Asset Purchase Agreement, dated April 30, 2015, among Harley-Davidson Canada LP, Fred Deeley Imports Ltd. and Harley-Davidson Motor Company, Inc., as amended.
|
10.1*
|
|
Form of Non-competition and Non-solicitation Agreement between Harley-Davidson Canada LP and each of Donald A. James and Fred Deeley Imports Ltd., effective August 4, 2015
|
31.1
|
|
Chief Executive Officer Certification pursuant to Rule 13a-14(a)
|
31.2
|
|
Chief Financial Officer Certification pursuant to Rule 13a-14(a)
|
32.1
|
|
Written Statement of the Chief Executive Officer and the Chief Financial Officer pursuant to 18 U.S.C. §1350
|
101
|
|
Financial statements from the quarterly report on Form 10-Q of Harley-Davidson, Inc. for the quarter ended June 28, 2015, filed on August 6, 2015, formatted in XBRL: (i) the Condensed Consolidated Statements of Income; (ii) the Condensed Consolidated Statements of Comprehensive Income; (iii) the Condensed Consolidated Balance Sheets; (iv) the Condensed Consolidated Statements of Cash Flows; and (v) the Notes to Condensed Consolidated Financial Statements.
|
*
|
Represents a management contract or compensatory plan, contract or arrangement in which a director or named executive officer of the Company participated.
|
|
i
|
|
|
ii
|
|
|
iii
|
|
|
iv
|
|
1.1
|
Definitions
|
(a)
|
“
Abatement
” has the meaning set out in Section 9.1(b)(ii);
|
(b)
|
“
Accounting Records
” means all of the Vendor’s books of account (including the general ledger), records relating to Accounts Receivable, Inventory, Accounts Payable and Prepaid Expenses, accounting records and other financial data and information relating to the Business or the Purchased Assets, including Tax Returns;
|
(c)
|
“
Accounts Payable
” has the meaning set out in Section 3.3(c);
|
(d)
|
“
Accounts Receivable
” means any and all accounts, accounts receivable, trade accounts, notes, notes receivable, book debts or other debts due or accruing to the Vendor from:
|
(i)
|
the Dealers in connection with the Business, including pursuant to the Dealer Agreements, and any programs implemented with Dealers in connection with the Business;
|
(ii)
|
HDFS Canada; and
|
(iii)
|
the receivables set out on Schedule 1.1(d),
|
(iv)
|
the GE Receivables;
|
(v)
|
non-HDFS Canada receivables that are aged in excess of ninety (90) days as of the Closing Date,
|
(e)
|
“
Affiliate
” has the meaning attributed to that term in the
Canada Business Corporations Act
, as amended from time to time;
|
(f)
|
“Advance Ruling Certificate”
means an advance ruling certificate issued by the Commissioner of Competition pursuant to section 102 of the Competition Act;
|
(g)
|
“
Applicable Law
” means any law, statute, ordinance, regulation, rule, by-law, decree, writ or order, protocol, code, guideline, treaty, policy, notice, direction and judicial, arbitral, administrative, ministerial or departmental judgements, awards or requirements of any Authority having jurisdiction over the Vendor or over any part of the Business or the Purchased Assets and includes Environmental Laws;
|
(h)
|
“
Arbitrating Accountant
” has the meaning set out in Section 3.6(c);
|
(i)
|
“
Assumed Contracts
” has the meaning set out in Section 2.1(a);
|
(j)
|
“
Assumed Liabilities
” means the liabilities and obligations of the Vendor assumed by the Purchaser pursuant to Section 3.3;
|
(k)
|
“
Authority
” means any governmental or regulatory authority, department, body or agency or any court, tribunal, bureau, commission, arbitrator or arbitration board or other similar body, whether federal, provincial, state, municipal or other geographic or political subdivision thereof;
|
(l)
|
“
Balance Sheets
”
means, collectively, the audited balance sheet of the Vendor as at December 31, 2013, (the “
Audited Balance Sheet
”) and the unaudited, internally prepared balance sheets of the Vendor as at December 31, 2014 and March 31, 2015 (the “
Unaudited Balance Sheets
”), such balance sheets forming a part of the Financial Statements attached hereto as Schedule 1.1(ccc);
|
(m)
|
“
Books and Records
” means all books, records, files and papers, manuals and data, sales and advertising materials, lists of present and former suppliers, price lists, sales records, personnel, employment and other records (relating only to Hired Employees), customer data, documentary evidence of all licenses, orders and permits, and all other correspondence, data and information, financial or otherwise, in any format or media whatsoever, of the Vendor relating to the Business, including copies of all Accounting Records and books and records required by Applicable Law to be retained by the Vendor (the originals of which shall be retained by the Vendor), but excluding Tax Returns of the Vendor and books and records relating to the Excluded Assets;
|
(n)
|
“
Break-up Fee
” has the meaning set out in Section 9.2(c);
|
(o)
|
“
Business
” means the business carried on by the Vendor as of the date hereof of the exclusive importation and wholesale distribution to Dealers in Canada of Harley-Davidson motorcycles, parts and accessories, apparel and other merchandise in accordance with and pursuant to the Distributorship Agreement, but excludes the Dealership Business;
|
(p)
|
“
Business Day
” means any day, other than a Saturday or a Sunday, on which chartered banks in Toronto, Ontario are open for business;
|
(q)
|
“
Cash
” means, as of the Closing Date, the amount of cash and bank deposits as reflected in the Vendor’s bank statements and certificates of deposit, including cheques and drafts deposited for the account of the Vendor;
|
(r)
|
“
CASL
” means an
Act to promote the efficiency and adaptability of the Canadian economy by regulating certain activities that discourage reliance on electronic means of carrying out commercial activities, and to amend the Canadian Radio-television and Telecommunications Commission Act, the Competition Act, the Personal Information Protection and Electronic Documents Act and the Telecommunications Act
and the regulations thereunder;
|
(s)
|
“
CEM
” means a commercial electronic message as such term is defined in CASL;
|
(t)
|
“
Claim
” has the meaning set out in Section 11.3;
|
(u)
|
“
Closing
” has the meaning set out in Section 10.1;
|
(v)
|
“
Closing Balance Sheet
” means the unaudited, internally prepared balance sheet of the Vendor as at the Closing Date, in respect of the Purchased Assets and Assumed Liabilities (and, for greater certainty, excluding the effect of any Excluded Assets and Excluded Liabilities), prepared pursuant to Section 3.6 and, to the extent applicable, on the same basis and applying the same accounting principles, policies and practices that were used in preparing the Unaudited Balance Sheets;
|
(w)
|
“
Closing Date
”
means August 4, 2015 or such other date as the Vendor and the Purchaser may mutually determine;
|
(x)
|
“
Closing Date Financial Statement
” has the meaning set out in Section 3.6(a);
|
(y)
|
“Commissioner”
means the Commissioner of Competition appointed under subsection 7(1) of the Competition Act or his designee;
|
(z)
|
“Competition Act”
means the
Competition Act
, R.S.C. 1985, c. C-34, as amended, including the regulations promulgated thereunder;
|
(aa)
|
“
Competition Act Approval
” means:
|
(i)
|
the issuance of an Advance Ruling Certificate with respect to the transactions contemplated by this Agreement;
|
(ii)
|
the Purchaser and the Vendor have given the notice required under section 114 of the Competition Act with respect to the transactions contemplated by this Agreement and the applicable waiting period under section 123 of the Competition Act has expired or been waived in accordance with the Competition Act; or
|
(iii)
|
the obligation to give the requisite notice has been waived pursuant to subsection 113(c) of the Competition Act,
|
(bb)
|
“
Concord Lease
”
means the lease in respect of the Concord Property to be entered into by Fred Deeley Investments Ltd., as landlord, and the Purchaser, as tenant, in the form attached as Exhibit A, and includes the lease of the Purchaser Leased Equipment;
|
(cc)
|
“
Concord Property
” means the property municipally known as 830 Edgeley Boulevard in Concord, Ontario;
|
(dd)
|
“
Contract
” means any agreement, indenture, contract, deed of trust, licence, option, right, promise, assurance, undertaking, whether written or oral, express or implied and whether or not legally binding;
|
(ee)
|
“
Dealers
” means the retailers to consumers in the Vendor’s dealer network that are parties to the Dealer Agreements, and “
Dealer
” means any one of them;
|
(ff)
|
“
Dealer Agreements
” means the dealer agreements between the Vendor and the Dealers entered into by the Vendor pursuant to its rights under the Distributorship Agreement and the related trade-mark agreements entered into between the Vendor and the Dealers together with any bundled services agreements entered into between the Vendor and the Dealers and any Buell transition agreements, all as listed in Schedule 1.1(ff), complete copies of which have been provided to the Purchaser as of the date hereof;
|
(gg)
|
“
Dealership Business
” means the business of carrying on the retail sale, lease, rental and servicing by Trev Deeley Motorcycles (1991) Ltd.
of Harley-Davidson branded motorcycles, parts, lease, and accessories, apparel and merchandise, currently operated from its physical showroom facility located at 1875 Boundary Road, Vancouver, British Columbia V5M 3Y7, and shall expressly include the operation of the Deeley Motorcycle Exhibition (the “
Museum
”);
|
(hh)
|
“
Deeley-HDMC Agreement
” means the Deeley-HDMC Agreement to be entered into between HDMC and the Vendor, in respect of the Distributorship Agreement and certain other Harley-Davidson Terminated Agreements between HDMC and the Vendor, in the form attached as Exhibit B;
|
(ii)
|
“
Determination Date
” has the meaning set out in Section 3.6(c);
|
(jj)
|
“
Direct Claim
” has the meaning set out in Section 11.3;
|
(kk)
|
“
Dispute Notice
” has the meaning set out in Section 3.6(c);
|
(ll)
|
“
Dispute Period
” has the meaning set out in Section 3.6(c);
|
(mm)
|
“
Distributorship Agreement
” has the meaning set out in the Recitals;
|
(nn)
|
“
Employee Plans
” has the meaning set out in Section 4.24;
|
(oo)
|
“
Employees
” has the meaning set out in Section 4.23(a);
|
(pp)
|
“
Employment Legislation
” means, collectively, the
Ontario Human Rights Code
, the
Occupational Health and Safety Act
(Ontario), the
Pay Equity Act
(Ontario), the
Employment Standards Act
, 2000 (Ontario) or predecessor to that Act, the
Workplace Safety and Insurance Act
, 1997 (Ontario) or predecessor to that Act,
the Employment Standards Act
(British Columbia) or predecessor to that Act, and the
Employment Insurance Act
(Canada), all as amended from time to time, and the comparable legislation of any other applicable jurisdiction;
|
(qq)
|
“
Encumbrance
” means any financial encumbrance, lien, charge, hypothec, pledge, mortgage, title retention agreement, security interest, reservation of title, easement, right of occupation, any matter capable of registration against title, or any written agreement to create any of the foregoing, but excluding any Taxes not yet due and payable;
|
(rr)
|
“
Environmental Condition
” means the presence of any Hazardous Substance in, on, under, migrating onto or from the Concord Property;
|
(ss)
|
“
Environmental Laws
” means any federal, provincial or municipal law, statute, by-law, order, ordinance, code, regulation, rule, order or permit and all Environmental Permits in effect as of the Closing Date that relate to pollution or protection of the environment, human health and safety, waste disposal, emissions, discharges, Releases or threatened Releases of a Hazardous Substance or other environmental matters, and to the manufacture, processing, distribution, use, treatment, storage, disposal, transport, handling and the like of Hazardous Substances;
|
(tt)
|
“
Environmental Permits
” means all licences, permits, approvals, consents, registrations, certificates, authorizations, exemptions, waivers, variations, clearances, orders, or other similar approvals issued or granted or required by an Authority pursuant to an Environmental Law;
|
(uu)
|
“
Equipment Leases
” means all equipment leases, conditional sales contracts, capital leases, title retention agreements and other similar agreements between the Vendor and third Persons relating to equipment used by the Vendor and related to the Business;
|
(vv)
|
“
Escrow Agent
”
means an independent entity carrying on business as an escrow agent in the Province of Ontario acceptable to the parties hereto acting reasonably;
|
(ww)
|
“
Escrow Agreement
”
means the agreement to be entered into between the Vendor, the Purchaser, and the Escrow Agent, in the form attached hereto as Exhibit C, as contemplated in Section 8.4;
|
(xx)
|
“
Escrow Amount
” has the meaning set out in Section 3.2(a);
|
(yy)
|
“
Estimated Closing Balance Sheet
” means the unaudited, internally prepared estimated balance sheet of the Vendor as at the Closing Date, in respect of the Purchased Assets and Assumed Liabilities (and, for greater certainty, excluding the effect of any Excluded Assets and Excluded Liabilities), prepared pursuant to Section 3.6 on the same basis and applying the same accounting principles, policies and practices to the extent applicable that were used in preparing the Unaudited Balance Sheets;
|
(zz)
|
“
ETA
” means Part IX of the
Excise Tax Act
(Canada), as amended from time to time;
|
(aaa)
|
“
Excluded Assets
”
has the meaning set out in Section 2.2;
|
(bbb)
|
“
Excluded Liabilities
” has the meaning set out in Section 3.4;
|
(ccc)
|
“
Financial Statements
” means, collectively, the audited financial statements of the Vendor for the financial year ended December 31, 2013, consisting of a balance sheet, statement of earnings and retained earnings and cash flow and all notes thereto, and the unaudited, internally prepared financial statements of the Vendor for the financial year ended December 31, 2014, and unaudited, internally prepared balance sheet of the Vendor as at March 31, 2015 and unaudited, internally prepared interim statement of earnings and retained earnings of the Vendor for the quarterly period ended March 31, 2015, copies of which are attached as Schedule 1.1(ccc);
|
(ddd)
|
“
Financing Agreement
” has the meaning set out in the Recitals;
|
(eee)
|
“
Full Term
” has the meaning set out in Section 8.10;
|
(fff)
|
“
Fundamental Representations
” has the meaning set out in Section 6.1(a);
|
(ggg)
|
“
GE Receivables
” means any and all accounts, accounts receivable, trade accounts, notes, notes receivable, book debts or other debts due or accruing to the Vendor from GE Capital Canada or from the Dealers to the Vendor to the extent that such amounts are subject to financing arrangements by GE Capital Canada in favour of the Vendor;
|
(hhh)
|
“
GST/HST
” means all goods and services taxes and harmonized sales taxes payable under the ETA;
|
(iii)
|
“
Gift Card Program
” means a program that the Vendor manages, through a third party, on behalf of Dealers, whereby gift cards are (i) purchased by retail customers at dealership locations with the purchase proceeds thereof credited to the Vendor, and (ii) used by retail customers for credit against the purchase of merchandise or services sold by Dealers;
|
(jjj)
|
“
Hazardous Substances
” means any hazardous, dangerous or toxic substance, material or waste that is prohibited, controlled or regulated under any Environmental Law including pollutants, contaminants, dangerous goods or substances, toxic or hazardous substances or materials, wastes, petroleum hydrocarbons, volatile organic compounds, polyaromatic hydrocarbons, PCBs, UFFI, lead-based materials, asbestos containing materials, and specifically includes underground storage tanks;
|
(kkk)
|
“
HDFS Canada
” means Harley-Davidson Financial Services Canada Inc.;
|
(lll)
|
“
Hired Employees
”
has the meaning ascribed to it in Section 8.13(c);
|
(mmm)
|
“
HOG
” means Harley Owners Group Canada Inc., a wholly-owned subsidiary of the Vendor;
|
(nnn)
|
“
ICA Approval
” means approval or deemed approval of the transactions contemplated by this Agreement by the applicable Minister(s) pursuant to the Investment Canada Act;
|
(ooo)
|
“
including
” (and having correlative meaning “
include
” and “
includes
”) means including without limiting the generality of any description preceding such term;
|
(ppp)
|
“
Indemnified Party
” has the meaning set out in Section 11.3;
|
(qqq)
|
“
Indemnifying Party
”
has the meaning set out in Section 11.3;
|
(rrr)
|
“
Intellectual Property
” means all rights in patents, patent applications, trade-marks, trade-mark applications, trade-names, business names, domain names, inventions, technical data, licensed and unlicensed know-how, copyright and industrial designs;
|
(sss)
|
“
Intellectual Property Assets
” has the meaning set out in Section 2.1(g);
|
(ttt)
|
“
Interim Period
” means the period of time between the close of business on the date of execution hereof and the Time of Closing;
|
(uuu)
|
“
Inventories
” means, collectively, the PAM Inventory and the Motorcycle Inventory;
|
(vvv)
|
“Investment Canada Act”
means the
Investment Canada Act
, as amended;
|
(www)
|
“
ITA
”
means the
Income Tax Act
(Canada), as amended from time to time;
|
(xxx)
|
“
knowledge of the Vendor
” or similar expressions mean the actual knowledge of any of Don James, Malcolm Hunter and Buzz Green after reasonable inquiry;
|
(yyy)
|
“
Leased Richmond Property
” means the leasehold interest of the Vendor in the Richmond Property;
|
(zzz)
|
“
License Agreement
” means the license agreement to be entered into between the Vendor and the Purchaser, in the form attached as Exhibit D, as contemplated in Section 8.16;
|
(aaaa)
|
“
Losses
”, in respect of any matter, means all claims, demands, losses, damages, liabilities, Taxes, deficiencies, costs and expenses (including reasonable legal and other professional fees and disbursements, interest, penalties and amounts paid in settlement) arising as a result of such matter, but excluding any indirect, special, punitive, exemplary or consequential losses or damages and losses of revenue or profit, and excluding legal costs for counsel provided to the Vendor or the Purchaser prior to the Closing Date;
|
(bbbb)
|
“
Material Adverse Change
” means, when used in connection with the Business, any change, event, violation, inaccuracy, circumstance or event that, when considered individually or in the aggregate together with all other adverse effects, is, or could reasonably be expected to be, materially adverse to the business, assets, liabilities, financial condition, or results of operation of the Business, but in each case shall not include the effect of (i) changes in legislation or GAAP or official interpretations of the foregoing, (ii) changes arising from or relating to this Agreement or the transactions contemplated hereby, (iii) arising from any actions or omissions of the Purchaser or the Vendor if consented to in writing by the Purchaser, or (iv) changes in general economic conditions and changes in industry-wide conditions affecting the industry in which the Business operates;
|
(cccc)
|
“
Motorcycle Inventory
” has the meaning ascribed to it in Section 2.1(f);
|
(dddd)
|
“
Museum
” has the meaning ascribed to it in Section 1.1(gg);
|
(eeee)
|
“
New Dealer Agreements
” has the meaning set out in Section 8.10;
|
(ffff)
|
“
New HDFS Documents
” means those HDFS Canada agreements to be presented to the Dealers pursuant to Section 8.10, as set forth more particularly in Schedule 1.1(ffff);
|
(gggg)
|
“
Non-Competition Agreements
” means the non-competition agreements to be entered into by the Vendor, Malcolm Hunter and Don James with the Purchaser and HDMC, in the form attached hereto as Exhibit E, as contemplated in Section 8.7, and “
Non-Competition Agreement
” means any one of them;
|
(hhhh)
|
“
Non-Current Model Target
” has the meaning set out in Section 7.5;
|
(iiii)
|
“
Offer
” has the meaning set out in Section 8.13(c);
|
(jjjj)
|
“
Offered Employees
” has the meaning set out in Section 8.13(c);
|
(kkkk)
|
“
PAM Inventory
” has the meaning ascribed to it in Section 2.1(e);
|
(llll)
|
“
Permits
” has the meaning set out in Section 2.1(c);
|
(mmmm)
|
“
Person
”
means any individual, estate, trust, firm, partnership, joint venture, corporation, unlimited liability company, limited liability company, unincorporated association or organization, government or any agency or ministry of any government, and includes any successor to any of the foregoing;
|
(nnnn)
|
“
Personal Information
” means the information regulated by Privacy Laws and collected, used, disclosed or retained by the Vendor in connection with the Business prior to Closing;
|
(oooo)
|
“
Prepaid Expenses
” has the meaning set out in Section 2.1(l);
|
(pppp)
|
“
Privacy Laws
” means all applicable laws and regulations governing the collection, use, disclosure and retention of information relating to an identifiable individual, including the
Personal Information Protection Electronic Documents Act
(Canada);
|
(qqqq)
|
“
Purchase Price
” has the meaning set out in Section 3.1;
|
(rrrr)
|
“
Purchase Price Adjustment
” means the amount, if any, payable by either the Purchaser or the Vendor to the other pursuant to Sections 3.6(d) or 3.6(e), as applicable;
|
(ssss)
|
“
Purchased Assets
” has the meaning set out in Section 2.1;
|
(tttt)
|
“
Purchaser Employee Plans
” has the meaning set out in Section 8.13(j);
|
(uuuu)
|
“
Purchaser Leased Equipment
” means that portion of the Vendor Equipment that forms a part of the subject matter of the Concord Lease, as set out in Schedule 1.1(uuuu);
|
(vvvv)
|
“
Release
” means release, spill, leak, pump, discharge, inject, escape, dispose, discharge, spray, inoculate, abandon, deposit, seep, pour, emit, and dump, and when used as a noun has a similar meaning;
|
(wwww)
|
“
Richmond Lease
” means the current lease agreement relating to the leasing by the Vendor of the Leased Richmond Property;
|
(xxxx)
|
“
Richmond Occupancy License
” means the license in respect of the Richmond Property to be entered into by the Vendor and the Purchaser, in the form attached as Exhibit E1;
|
(yyyy)
|
“
Richmond Property
” means the property municipally known as 13500 Verdun Place in Richmond, British Columbia;
|
(zzzz)
|
“
Rights
” has the meaning set out in Section 8.13(a);
|
(aaaaa)
|
“
Severance Costs
”
means the costs incurred by the employer in providing an employee with all of his or her legal entitlements upon termination of employment without cause including any outstanding statutory notice or pay in lieu of such notice
|
(bbbbb)
|
“
Tax
” or “
Taxes
” means any and all taxes, charges, fees, levies, imposts, and other assessments, including all income, sales, retail, use, goods and services, harmonized sales, value added, corporation, premium, environmental, stamp, business, social services, royalty, occupancy, property development, capital, capital gains, alternative, net worth, transfer, land transfer, profits, withholding, payroll, employer health, social security, excise, franchise, recapture, real property and personal property taxes, and any other taxes, customs duties, tariffs, fees, assessments, reassessments or similar charges in the nature of a tax, including provincial pension plan contributions, employment insurance contributions and workers’ compensation premiums, together with any instalments with respect thereto, and any interest, surtaxes, fines, penalties or additions to tax, imposed, levied, assessed, reassessed or collected by any Tax Authority;
|
(ccccc)
|
“
Tax Authority
” means, with respect to any Tax, the Authority that imposes, assesses and reassesses such Tax and the Authority charged with the collection of such Tax;
|
(ddddd)
|
“
Tax Return
” means any return, declaration, report, election, form, notice, filing, information return, or other document (whether in tangible, electronic or other form) relating to Taxes, including any amendment thereof and including any attachment or supplements thereto, filed or required to be filed with a Tax Authority, pursuant to Applicable Law in respect of Taxes;
|
(eeeee)
|
“
Terminated Harley-Davidson Agreements
” means, collectively, the subsisting agreements as of the date hereof between HDMC or any of its affiliates and the Vendor including the Distributorship Agreement and the Financing Agreement, as listed in Schedule 1.1(eeeee);
|
(fffff)
|
“
Time of Closing
”
means 10:00 a.m. (Toronto time) on the Closing Date, or such other time on the Closing Date as the Vendor and the Purchaser may mutually determine;
|
(ggggg)
|
“Third Party Claim
” has the meaning set out in Section 11.3;
|
(hhhhh)
|
“
Transitional Services Agreement
” means the transitional services agreement to be entered into between the Purchaser and the Vendor with respect to the provision by the Vendor of services from its data centres at the Concord Property and the Richmond Property, prepared in accordance with the term sheet attached hereto as Exhibit F, as contemplated in Section 8.8;
|
(iiiii)
|
“
Vendor Contracts
” means any and all;
|
(i)
|
written Contracts in connection with the Business under which:
|
(A)
|
the Vendor has or may acquire any rights or benefits,
|
(B)
|
the Vendor has or may become subject to any obligation or liability, or
|
(C)
|
the Vendor or any of the Purchased Assets is or may become bound, and
|
(ii)
|
unwritten purchase arrangements relating to the Business where payment to a supplier in 2014 was in excess of Cdn.$25,000,
|
(jjjjj)
|
“
Vendor Equipment
” means the equipment owned or leased by the Vendor that is used or held for use in the conduct of the Business and has an original cost value in excess of Cdn.$5,000 as set out in Schedule 1.1(jjjjj);
|
(kkkkk)
|
“
Vendor Intellectual Property
” means any and all Intellectual Property owned or licensed by the Vendor and used in the Business; and
|
(lllll)
|
“
Vendor Proceeding
” has the meaning set out in Section 8.12.
|
1.2
|
Currency
|
1.3
|
Sections and Headings
|
1.4
|
Number, Gender and Persons
|
1.5
|
Accounting Principles
|
1.6
|
Entire Agreement
|
1.7
|
Time of Essence
|
1.8
|
Applicable Law
|
1.9
|
Arbitration
|
(a)
|
The arbitration will proceed in accordance with the provisions of the
International Commercial Arbitration Act
(Ontario) or any successor legislation. The arbitrator shall determine all matters of procedure, including the timetable for steps to be taken in the arbitration and the extent of oral and documentary discovery, if any.
|
(b)
|
The arbitration shall be conducted by a single arbitrator. The party commencing the arbitration shall provide a written notice to the other party, which shall include: (i) a description of its claim and the factual and legal basis therefor and (ii) the names of three individuals who are acceptable to it to serve as a sole arbitrator (“
Arbitrator Candidates
”). Within ten (10) days of the receipt of the notice, the party against whom the arbitration is commenced shall give written notice that it accepts the appointment of one of the three Arbitrator Candidates or shall provide the other party with a list of three additional Arbitrator Candidates. If the parties are unable to agree
|
(c)
|
The arbitration will be held in the City of Toronto in the Province of Ontario in the English language.
|
(d)
|
For greater certainty, the parties expressly state that the arbitrator shall have the power to determine all questions of law, fact, fact and law and procedure and shall make all original determinations as to the arbitrators’ own jurisdiction. Any award or determination of the sole arbitrator, including determinations of law, shall be final and binding on the parties and there shall be no appeal on any ground.
|
1.10
|
Severability
|
1.11
|
Successors and Assigns
|
(a)
|
This Agreement shall enure to the benefit of and shall be binding on and enforceable by the parties and, where the context so permits, their respective successors and permitted assigns. Neither this Agreement nor any of the rights or obligations under this Agreement are assignable or transferable by any party without the prior written consent of the other parties.
|
(b)
|
Notwithstanding the foregoing, the Purchaser shall be entitled to assign to any of its Affiliates its right to acquire and assume at Closing all or any portion of the Purchased Assets (including the assumption of the obligation to pay the applicable portion of the Purchase Price allocated to such Purchased Assets); provided that the Purchaser shall continue to be fully bound by and liable for the performance or non-performance of its obligations herein.
|
1.12
|
Amendment and Waivers
|
1.13
|
Exhibits
|
1.14
|
Schedules
|
2.1
|
Transfer of Purchased Assets
|
(a)
|
Assumed Contracts.
Subject to Section 8.13, those Vendor Contracts subsisting in respect of the Business as set out in Schedule 2.1(a), including, for greater certainty, contracts relating to the maintenance, upkeep or support of any of the Purchased Assets (collectively, the “
Assumed Contracts
”);
|
(b)
|
Books and Records.
All Books and Records relating to the Purchased Assets including, subject to Section 2.2(g), all personnel records and other records related to the Hired Employees;
|
(c)
|
Licences and Permits.
To the extent transferable, all licences, permits (including parking permits), approvals, consents, registrations, certificates and other regulatory authorizations and enrolments currently held or necessary, including under Applicable Law, for the lawful operation of the Business as now conducted and the use or ownership of the Purchased Assets, and any pending applications for or renewals of any of the foregoing (collectively, the “
Permits
”), including those described in Schedule 2.1(c);
|
(d)
|
Accounts Receivable.
All Accounts Receivable of the Vendor;
|
(e)
|
PAM Inventory.
The current parts, accessories and core general merchandise (“
PAM
”) inventory indicated as such in HDMC’s CIM system as at June 1, 2015 sold by HDMC and owned by the Vendor relating to the Business (collectively, the “
PAM Inventory
”) at the Closing Date, as detailed in Schedule 2.1(e);
|
(f)
|
Motorcycle Inventory.
The model year 2015 Harley-Davidson motorcycles sold by HDMC and owned by the Vendor relating to the Business at the Closing Date that constitute the: (i) Harley-Davidson motorcycles located at Fairview College set out on Schedule 2.1(f) (comprising three Harley-Davidson Street motorcycles and one Trike), and (ii) the Harley-Davidson motorcycles that constitute the Vendor’s or HOG’s, as applicable, company owned vehicles, press bikes and demo fleet but only to the extent that such motorcycles are used in connection with the Vendor’s “Test Our Metal” program, and are listed by vehicle identification number (VIN) on Schedule 2.1(f) (collectively, the “
Motorcycle Inventory
”)
;
|
(g)
|
Intellectual Property.
All of the Vendor’s right, title and interest in and to all the owned or licensed Intellectual Property listed below:
|
(i)
|
all assumed fictional business names, trade names, registered and unregistered trademarks, service marks and applications for marks, used by the Vendor and any affiliate thereof in connection with the Business or any other activity related to or ancillary to the Business, but expressly excluding the Vendor’s name and any variation thereof, including the “Trev Deeley Motorcycle Collection” trademark and any other trademarks including the “Deeley” name;
|
(ii)
|
all registered and unregistered copyrights and industrial designs in both published works and unpublished works;
|
(iii)
|
all know-how, trade secrets, confidential or proprietary information, software, technical information, data, manufacturing, industrial and business processes and technology, plans, drawings and blue prints;
|
(iv)
|
without limiting paragraph (iii) above, all computer systems operated by the Vendor in the Business, including the Systems (and, without limitation, (i) the UltraComm software system which all Dealers and the Vendor utilize for the purposes of content distribution and consumption, facilitation of transaction processing, referential lookup, authentication to HDMC systems, (ii) all other systems identified in Schedule 4.17, and (iii) all completed enhancements as of the Closing Date), including physical possession of such software, all object code and source code, and copies whether in hard copy or electronic format of any and all supporting documentation or manuals;
|
(v)
|
all rights in product labels and other related materials, including French language translations thereof, and including physical possession of any printed labels (both English and/or French) and any electronic files constituting word processing or desktop publishing files of such labels, and the product label printer and any related hardware, inventory of labels, label stock or related materials;
|
(vi)
|
all rights in marketing materials, including French language translations thereof, and including physical possession of any printed materials (both English and/or French) and any electronic files constituting word processing or desktop publishing files of such materials; and
|
(vii)
|
all other French language translations of the Vendor’s documents and including physical possession of any printed materials (both English and/or French) and any related electronic files,
|
(h)
|
Unexpired Term of the Distribution Agreement.
The benefit of the exclusive right to distribute in Canada Harley-Davidson motorcycles, parts and accessories, apparel and other merchandise for the period from August 4, 2015 to July 31, 2017 (the “
Unexpired Term
”) as granted to the Vendor by the Distributorship Agreement;
|
(i)
|
Customer and Supplier Information.
All data and information relating to the Business related to or in respect of customers and suppliers lists, records, files, and contact details, telephone numbers, information as to purchases, preferences and consumer behaviour whether in hard copy or electronic readable format, including for greater certainty any of such data and information constituting Personal Information, but excluding such information as it relates to the Dealership Business;
|
(j)
|
Harley Owners Group Canada.
The Vendor shall assign or shall cause HOG to assign all of HOG’s assets (which assets for the purposes of this Agreement shall be deemed to be Purchased Assets of the Vendor), including all of HOG’s rights, title and interest in and to (i) any and all data and information comprising its owners membership list and related data and files, including for greater certainty any of such
|
(k)
|
Telephone Numbers.
All telephone and facsimile numbers and other communications numbers, addresses and points of contact of the Business, but expressly excluding the telephone and facsimile numbers and other communications numbers, addresses and points of contact of the Dealership Business;
|
(l)
|
Prepaid Expenses.
Without limiting any of the foregoing, the benefit of prepaid expenses relating to the Purchased Assets whether or not reflected on the Closing Balance Sheet (collectively, the “
Prepaid Expenses
”);
|
(m)
|
Warranty Rights.
All warranty rights accruing to the Vendor in respect of any of the other Purchased Assets;
|
(n)
|
Consents.
All consents related to the Business obtained by the Vendor from a third Person which permit or purport to permit the sending of CEMs to the third Person in compliance with CASL; and
|
(o)
|
Goodwill.
All goodwill relating to the Business, together with the exclusive right for the Purchaser to represent itself as carrying on the Business in succession to the Vendor and the right to use any words indicating that the Business is so carried on.
|
2.2
|
Excluded Assets
|
(a)
|
Dealer Agreements.
All Dealer Agreements;
|
(b)
|
Taxes.
Tax refunds receivable by the Vendor and all Tax Returns pertaining to corporate income taxes of the Vendor;
|
(c)
|
Investments.
All investments of the Vendor in marketable or other securities;
|
(d)
|
Inter-Company Debt.
All indebtedness of any Affiliate of the Vendor to the Vendor;
|
(e)
|
Insurance.
All property and public liability insurance policies of the Vendor and all claims and rights thereunder;
|
(f)
|
Corporate Records.
All minute books, share certificate books, corporate seals and other corporate records of the Vendor;
|
(g)
|
Personnel Records.
All personnel records and other records that the Vendor is required by Applicable Law to retain, provided that the Purchaser shall be provided with copies thereof;
|
(h)
|
Employee Plans.
All rights in connection with the assets of the Employee Plans;
|
(i)
|
Excluded Equipment.
The Vendor Equipment;
|
(j)
|
Cash.
Any Cash in the Business or the Dealership Business;
|
(k)
|
Vendor’s Name.
All right, title, and interest in and to the Vendor’s name and any variation thereof, including the “Deeley” name;
|
(l)
|
Power Sports Services.
The Vendor’s shares in Power Sports Services.
|
(m)
|
E-mail and Domains.
All rights in internet websites and internet domain names owned by or registered in the name of the Vendor, whether or not presently used, and all email addresses presently used by personnel of the Vendor including email addresses provided by third party service providers;
|
(n)
|
Trev Deeley Trademark.
All right, title and interest in and to the Vendor’s trade-mark registration for “Trev Deeley Motorcycle Collection” and all related and associated intellectual property rights; and
|
(o)
|
GE Receivables.
The GE Receivables.
|
2.3
|
Delivery Up of Possession of Purchased Assets to the Purchaser
|
2.4
|
Delivery Up of Possession of Excluded Assets to the Vendor
|
3.1
|
Purchase Price
|
(p)
|
the sum of $50,000,000,
|
(q)
|
plus:
|
(i)
|
the value of the Accounts Receivable, as determined in accordance with the calculation method set out in Schedule 3.1(b)(i) and disclosed in the Estimated Closing Balance Sheet;
|
(ii)
|
the value of the Prepaid Expenses, as determined in accordance with the calculation method set out in Schedule 3.1(b)(ii) and as disclosed in the Estimated Closing Balance Sheet;
|
(iii)
|
the value of the PAM Inventory, as determined in accordance with the calculation method set out in Schedule 3.1(b)(iii) and as disclosed in the Estimated Closing Balance Sheet;
|
(iv)
|
the value of the Motorcycle Inventory, as determined in accordance with the calculation method set out in Schedule 3.1(b)(iv), as disclosed in the Estimated Closing Balance Sheet; and
|
(v)
|
the amount of coop advertising expenses incurred by the Dealers between July 1, 2015 and the Closing Date, inclusive, and paid by the Vendor to the Dealers as a reimbursement of all or part of such expenses, as disclosed in the Estimated Closing Balance Sheet,
|
(r)
|
minus:
|
(i)
|
the returns reserve amount of $72,327;
|
(ii)
|
the amount of any rebates to be paid to the Dealers pursuant to the terms of the Vendor’s Road of Champions program for sales of motorcycles made prior to the Closing Date and not yet paid or credited by the Vendor, as disclosed in the Estimated Closing Balance Sheet; and
|
(iii)
|
the Accounts Payable, as disclosed in the Estimated Closing Balance Sheet.
|
3.2
|
Satisfaction of the Purchase Price and Other Closing Payments
|
(a)
|
the amount of $1
,500,000
of the Purchase Price (the “
Escrow Amount
”) shall be paid by the Purchaser to the Escrow Agent to be held in accordance with the terms of the Escrow Agreement; and
|
(b)
|
the balance of the Purchase Price shall be paid by the Purchaser by wire transfer to the Vendor or as it may otherwise direct.
|
3.3
|
Assumption of Certain Liabilities by the Purchaser
|
(a)
|
the liabilities and obligations of the Vendor that arise from and after the Closing Date under the Assumed Contracts, other than any liabilities or obligations arising out of or relating to a breach that occurred prior to the Closing Date. For greater certainty, the Purchaser shall not assume or be liable for any liabilities and obligations of the Vendor that have accrued, even if not due, or become outstanding or otherwise relate to events that have occurred prior to the Closing Date;
|
(b)
|
any liabilities or obligations of the Vendor under its current return policy provided to customers in the ordinary course of business prior to the Closing Date other than any liabilities or obligations arising out of or relating to any return claims notified to the Vendor prior to the Closing Date;
|
(c)
|
any liabilities or obligations of the Vendor to provide rebates to Dealers in connection with the Road of Champions program;
|
(d)
|
amounts related to the operation of the Business owing to any Person by the Vendor arising out of the Assumed Contracts, the Dealer Agreements, and any programs implemented with Dealers in connection with the Business (excluding coop advertising with Dealers), in the ordinary course of the Business, and due and payable as of the Closing Date (the “
Accounts Payable
”); and
|
(e)
|
the liabilities and obligations of the Vendor that arise from and after the Closing Date under the Intellectual Property, the Licenses, warranty rights, obligations, and
the other ownership and membership assets,
to the extent any such assets are included in the Purchased Assets.
|
3.4
|
Excluded Liabilities
|
3.5
|
Estimated Closing Date Financial Statement
|
3.6
|
Working Capital and Liabilities Adjustment
|
(a)
|
Prior to the date which is 90 days after the Closing Date, the Purchaser shall prepare and deliver to the Vendor a statement (the “
Closing Date Financial Statement
”) including and setting forth: (i) the Closing Balance Sheet; (ii) a calculation of the Purchase Price; and (iii) a calculation of the adjustment, if any, to be made pursuant to this Section 3.6 (the “
Purchase Price Adjustment
”). The Closing Balance Sheet shall be prepared by the Purchaser in accordance with GAAP applied consistently with the Vendor’s past practices used in the preparation of the Balance Sheets. The Vendor shall, as reasonably requested by the Purchaser, cooperate fully in the preparation of the Closing Balance Sheet.
|
(b)
|
If the Vendor disagrees with the Purchaser’s calculation of the Purchase Price Adjustment (the “
Dispute
”), the Vendor shall deliver written notice of the Dispute (the “
Dispute Notice
”) to the Purchaser within thirty (30) days after the Vendor’s receipt of the Closing Balance Sheet (the “
Dispute Period
”). The Dispute Notice shall set forth in reasonable detail the basis for the Vendor’s disagreement with the Purchaser’s determination of the Purchase Price Adjustment, the dollar amounts of the proposed revisions thereto and the Vendor’s good faith estimate of the Purchase Price Adjustment if and to the extent determinable. The Purchaser shall permit the Vendor and its representatives to review all working papers and documentation used or prepared in connection with the preparation of, or which otherwise form the basis of, the Closing Balance Sheet and the Purchaser’s calculation of the Purchase Price Adjustment. If no Dispute Notice is received by the Purchaser during the Dispute Period, then the Closing Balance Sheet (and the calculations reflected therein) shall be deemed to have been accepted and agreed to by the Vendor in the form in which it was delivered to the Vendor and shall be final and binding upon the parties. If the Purchaser receives a Dispute Notice from the Vendor during the Dispute Period, the Purchaser and the Vendor shall attempt to resolve the Dispute and agree in writing upon the final Purchase Price Adjustment within ten (10) days after the Purchaser’s receipt of the Dispute Notice.
|
(c)
|
If the Purchaser and the Vendor are unable to resolve the Dispute within the ten (10) day period after the Purchaser’s receipt of the Dispute Notice, the Purchaser and the Vendor shall jointly engage a mutually agreed nationally recognized accounting firm (the “
Arbitrating Accountant
”). For the purposes of this Section 3.6(c),
if the parties are unable to agree on the appointment of the Arbitrating Accountant within
|
(d)
|
If it is determined pursuant to this Section 3.6 that the amount of the Final Purchase Price is greater than the amount of the Estimated Purchase Price then the Purchaser shall pay to the Vendor the amount which is the difference between the two amounts.
|
(e)
|
If it is determined pursuant to this Section 3.6 that the amount of the Final Purchase Price, is less than the amount of the Estimated Purchase Price the Vendor shall pay to the Purchaser of such amount which is the difference between the two amounts.
|
(f)
|
Any amount to be paid pursuant to this Section 3.6 by one party to another party shall be paid within 30 days after (A) the conclusion of the Dispute Period, if the Vendor does not deliver a Dispute Notice; or (B) the Determination Date, if the Vendor delivers a Dispute Notice.
|
3.7
|
Allocation of the Purchase Price
|
3.8
|
ETA Election
|
3.9
|
ITA Elections
|
(c)
|
If available, the Purchaser and the Vendor shall make and file, in a timely manner, a joint election to have the rules in section 22 of the ITA, and any equivalent or corresponding provision under applicable provincial or territorial tax legislation, apply in respect of the Accounts Receivable that are the subject of that election and shall designate therein that portion of the consideration allocated to the Accounts Receivable that are the subject of such election in accordance with the procedures set out in Section 3.7 of this Agreement as consideration paid by the Purchaser to the Vendor.
|
(d)
|
The Purchaser shall jointly elect with the Vendor in accordance with subsection 56.4(7) of the ITA to have the provisions of subsection 56.4(5) of the ITA apply to the restrictive covenants granted by the Vendor in the Non-Competition Agreement. The foregoing election shall be filed in the manner and within the time prescribed in subsection 56.4(14) of the ITA.
|
(e)
|
The Purchaser and the Vendor shall, if applicable, jointly execute and file an election under subsection 20(24) of the ITA in the manner required by subsection 20(25) of the ITA and under the equivalent or corresponding provisions of any other applicable provincial or territorial statute, in the prescribed forms and within the time period permitted under the ITA and under any other applicable provincial or territorial statute, as to such amount paid by the Vendor to the Purchaser for assuming future obligations. In this regard, the Purchaser and the Vendor acknowledge that a portion of the Purchased Assets transferred by the Vendor pursuant to this Agreement and having a value equal to the amount elected under subsection 20(24) of the ITA and the equivalent provisions of any applicable provincial or territorial statute, is being transferred by the Vendor as a payment for the assumption of such future obligations by the Purchaser.
|
3.10
|
Transfer Taxes
|
4.1
|
Organization
|
4.2
|
Authorization and Enforceability
|
(a)
|
The Vendor has taken all necessary corporate action, steps and proceedings to approve or authorize the transfer of the Purchased Assets to the Purchaser and the execution and delivery of this Agreement and the other agreements and documents contemplated hereby, and the performance by it of its obligations under this Agreement and the other agreements and documents contemplated hereby; and, without limiting the foregoing, has caused all necessary meetings or written corporate actions of its directors and shareholders, as applicable, to be held or executed for such purpose.
|
(b)
|
This Agreement has been duly executed and delivered by the Vendor and constitutes a legal, valid and binding obligation of it, enforceable against it by the Purchaser in accordance with its terms, except as enforcement may be limited by bankruptcy, insolvency and other laws affecting the rights of creditors generally and except that equitable remedies may only be granted in the discretion of a court of competent jurisdiction.
|
4.3
|
Tax Matters
|
(a)
|
The Vendor has duly and timely filed all Tax Returns required to be filed by it with the appropriate Tax Authority so as to prevent any Encumbrance of any nature on the Purchased Assets and has paid all Taxes relating to the Business when due.
|
(b)
|
The Vendor has duly and timely withheld all Taxes and other amounts required by Applicable Law to be collected or withheld by it, including Taxes and other amounts required to be withheld by it in respect of any amount paid or credited or deemed to be paid or credited by it to or for the account or benefit of any Person, including any employees, officers or directors and any non-resident Person, and has duly and timely remitted to the appropriate Tax Authority such Taxes and other amounts required by Applicable Law to be remitted by it.
|
4.4
|
Residency of Vendor
|
4.5
|
No Violation
|
(a)
|
The execution and delivery of this Agreement by the Vendor and, subject to Section 4.6, the consummation of the transactions herein provided for will not result in a breach or violation of any of the provisions of, or constitute a material default under, or conflict with or cause the acceleration of any obligation of the Vendor under: (i) any Contract listed on Schedule 2.1(a); (ii) any provision of the constating documents or by-laws or resolutions of the board of directors (or any committee thereof) or shareholders of the Vendor; (iii) any Permit referred to on Schedule 2.1(c); or (iv) any Applicable Law.
|
(b)
|
The execution and delivery of this Agreement by the Vendor and the consummation of the transactions herein provided for will not result in the creation or imposition of any Encumbrance on any of the Purchased Assets.
|
4.6
|
Consents and Approvals
|
(a)
|
Except as described in Schedule 4.6(a), there is no requirement for the Vendor to make any filing with, give any notice to or obtain any Permit from any Authority as a condition to the lawful consummation of the transactions contemplated by this Agreement, other than those which relate solely to the identity of the Purchaser or the nature of any business carried on by the Purchaser.
|
(b)
|
Except as described in Schedule 4.6(b), there is no requirement under any Contract listed in Schedules 2.1(a) to give any notice to, or to obtain the consent or approval of, any party to such agreement, instrument or commitment relating to the consummation of the transactions contemplated by this Agreement.
|
4.7
|
Accounts Receivable
|
4.8
|
Inventories
|
4.9
|
Title to Personal and other Property
|
4.10
|
No other Agreement to Purchase
|
4.11
|
Location of Real Property
|
4.12
|
Concord Property and Richmond Property
|
(a)
|
To the Vendor’s knowledge, the Richmond Lease is in full force and effect and no party is in breach under the Richmond Lease.
|
(b)
|
To the Vendor’s knowledge, all rental and other payments due and payable by the Vendor as tenant under the Richmond Lease have been duly paid and to the Vendor’s knowledge the Vendor is not otherwise in material default in meeting its obligations under the Richmond Lease.
|
(c)
|
To the Vendor’s knowledge, no event exists which, with the passing of time or the giving of notice, or both, would constitute a default by any party to the Richmond Lease and, to the Vendor’s knowledge, no party to the Richmond Lease is claiming any such default or taking any action purportedly based upon any such default.
|
(d)
|
To the Vendor’s knowledge, all improvements forming part of the Leased Richmond Property are in good operating condition and in a state of good maintenance and repair adequate and suitable for their current use by the Vendor.
|
(e)
|
No notice or proceeding in respect of an expropriation in respect of the Lease Richmond Property by any governmental Authority has been received by the Vendor, and to the Vendor’s knowledge, no part of the Leased Richmond Property has been taken or expropriated by any governmental Authority.
|
4.13
|
Location of the Purchased Assets
|
4.14
|
Compliance with Laws; Permits
|
4.15
|
Litigation
|
4.16
|
Vendor Contracts, Dealer Agreements and Assumed Contracts
|
4.17
|
Computer Systems
|
4.18
|
Warranties and Discounts
|
4.19
|
Insurance
|
4.20
|
Environmental
|
(a)
|
Except as described in Schedule 4.20, the Business is in material compliance with Environmental Laws, and there are no orders under or pursuant to Environmental Laws by any Authority issued, pending or, to the Vendor’s knowledge, threatened with respect to the Business or the Purchased Assets.
|
(b)
|
The Vendor has not received any written notice from any Person of a violation or claim under any Environmental Law, nor any written inquiry, written request for information, or demand letter under any Environmental Law relating to such non-compliance or claim relating to the Business or the Purchased Assets.
|
(c)
|
The Vendor has all material Environmental Permits required under Environmental Laws for the operation of the Business. Each such Environmental Permit is valid, subsisting and in good standing, and the Vendor is not in default or breach of any such Environmental Permit and all such Environmental Permits shall be maintained in full force and effect by the Vendor through the Time of Closing in accordance with Environmental Laws.
|
4.21
|
Intellectual Property
|
4.22
|
Labour Relations and Collective Agreements
|
4.23
|
Employees
|
(a)
|
Schedule 4.23 contains a complete and accurate list of all individuals by employee number who are full-time, part-time or casual employees or individuals engaged on contract to provide employment or consulting services to the Vendor in connection with the Business (including any individuals employed by or providing services to HOG and identified as such, with respect to whom, any reference to the Vendor shall be deemed to be a reference to HOG, the “
Employees
”), other than Don James and Malcolm Hunter, as of the date hereof specifying the length of hire, title or classification and rate of salary or hourly pay and commission or bonus entitlements (if any) for each such Employee. The Purchaser agrees to keep such Employee information confidential.
|
(b)
|
All written employment, management and consulting Contracts pursuant to which Employees have been engaged by the Vendor are set out in Schedule 2.1(a) and, except as disclosed in Schedule 2.1(a), there are no incentives or special compensation arrangements, contracts or agreements with respect to any Employees of the Vendor that would become Assumed Liabilities.
|
(c)
|
The Vendor has duly and timely made all deductions (including Tax deductions) required by Applicable Law or by Contract to be made from employee wages, salaries or benefits relating to a period ending on or prior to the Closing Date and has duly and timely remitted the amounts deducted and all related employer contributions required to the appropriate insurers and Authorities for all periods ending on or prior to the Closing Date.
|
(d)
|
The Vendor is in compliance in all material respects with all applicable Employment Legislation.
|
(e)
|
To the knowledge of the Vendor, there are no circumstances, claims or frequency of claims which may expose the Purchaser to any charges or assessments on account of workplace safety and insurance or workers’ compensation, other than the standard charges or assessments for the rate group and classification of the Business.
|
(f)
|
Except as disclosed in Schedule 4.23, no Employee or former Employee of the Vendor has made and, to the knowledge of the Vendor, no Employee or former employee of the Vendor has threatened to make a claim for any benefits under any indemnity, sickness and accident, long term disability or workers’ compensation plan or arrangement or any other form of disability benefit program. All assessments, penalties, fines, levies, charges, surcharges, Taxes, premiums or other amounts due and payable and relating to any disability insurance arising on or prior to the Closing Date or relating to a period ending on or prior to the Closing Date have been or will be paid by the Vendor on or prior to the Time of Closing.
|
(g)
|
Other than as disclosed in Schedule 4.23, there are no complaints, applications, investigations, orders, prosecutions or proceedings against the Vendor under the
Pay Equity Act
(Ontario) or comparable legislation.
|
4.24
|
Employee Plans
|
(a)
|
Schedule 4.24 identifies each retirement, pension, supplemental pension benefit, bonus, stock purchase, profit sharing, stock option, deferred compensation, severance or termination pay, insurance, medical, hospital, dental, vision care, drug, sick leave, disability, salary continuation, legal benefits, unemployment benefits, vacation, pay equity, incentive or other compensation plan or arrangement or other employee benefit which is maintained, or otherwise contributed to or required to be contributed to, by the Vendor for the benefit of Employees (the “
Employee Plans
”). The Vendor has made available to the Purchaser summaries or current and complete copies of all Employee Plans.
|
(b)
|
To the knowledge of the Vendor, no written or oral representations or promises have been made to the Employees to establish new employee plans or to increase the benefits under the existing Employee Plans.
|
(c)
|
None of the Employee Plans is a “registered pension plan” as that term is defined in the ITA.
|
4.25
|
Books and Records
|
4.26
|
No Undisclosed Liabilities
|
4.27
|
Financial Statements and Financial Books and Records
|
(a)
|
The Financial Statements have been prepared in accordance with GAAP and fairly present:
|
(i)
|
the financial position of the Business as of the dates shown in the Financial Statements; and
|
(ii)
|
the results of operations of the Business for the periods indicated in the Financial Statements.
|
(b)
|
All financial transactions relating to the Business have been accurately recorded in the Books and Records of the Vendor, a true and complete copy of which has been made available to the Purchaser.
|
(c)
|
The Closing Balance Sheet will fairly present, in all material respects the financial condition of the Vendor as at the date of such balance sheets, all in accordance with GAAP. The Closing Balance Sheet will reflect the consistent application of such accounting principles throughout the periods involved. The Closing Balance Sheet will be prepared from and are in accordance with the Accounting Records of the Vendor.
|
(d)
|
The Vendor has also delivered to the Purchaser copies of all letters from the Vendor’s accountants to the Vendor or its board of directors or audit committee in connection with or relating to the financial condition and results from operations, Accounting Records, Books and Records, or financial statements of the Vendor, during the five (5) years preceding the execution of this Agreement, together with copies of all responses thereto.
|
4.28
|
Conduct of Business in Ordinary Course
|
(a)
|
the Business has been operated in the ordinary course of business, consistent with past practice, and the Vendor has not;
|
(i)
|
incurred any obligation, entered into any transaction or acquired, encumbered or disposed of any property relating to the Business except in the ordinary course of business; or
|
(ii)
|
been made aware of any anticipated loss from any contract which would be a Material Adverse Change;
|
(b)
|
other than retention arrangements that would not become Assumed Liabilities, there has not been any salary increase or bonus made or promised for the benefit of any Employee, other than annual salary adjustments made in the ordinary course of business;
|
(c)
|
there has not been a Material Adverse Change in the Business or the Purchased Assets; and
|
(d)
|
there has not been any undertaking arrangement, assurance or agreement by the Vendor to do any of the foregoing.
|
4.29
|
Conduct of Business in Accordance with Business Plan
|
4.30
|
No Bankruptcy or Insolvency
|
4.31
|
Compliance With Privacy Laws
|
(a)
|
The Vendor has collected, used, maintained, and disclosed Personal Information in connection with the Business in material compliance with Privacy Laws. Without limiting the foregoing, none of the disclosed Personal Information has been compiled through automatic information assembly or “data harvesting”.
|
(b)
|
There are no investigations, actions, claims or demands, whether statutory or otherwise, pending, or to the knowledge of the Vendor, threatened, with respect to the collection, use, disclosure or retention of the Personal Information by the Vendor.
|
(c)
|
No judgment or order, whether statutory or otherwise, is pending or has been made, and no notice has been given pursuant to any Privacy Laws, requiring the Vendor to take (or to refrain from taking) any action with respect to the Personal Information.
|
4.32
|
GST/HST Registration
|
4.33
|
Equity interests
|
4.34
|
Brokerage Fees
|
5.1
|
Organization
|
(a)
|
The Purchaser is a limited partnership existing under the laws of the Province of Ontario and has the corporate power to enter into this Agreement and to perform its obligations hereunder.
|
(b)
|
HDMC is a corporation existing under the laws of the State of Wisconsin and has the corporate power to enter into this Agreement and to perform its obligations hereunder.
|
5.2
|
Authorization
|
(a)
|
All necessary corporate action has been taken by the Purchaser to authorize the execution and delivery by it of, and the performance of its obligations under, this Agreement. This Agreement has been duly executed and delivered by the Purchaser. This Agreement is a legal, valid and binding obligation of the Purchaser, enforceable against the Purchaser by the Vendor in accordance with its terms, except as enforcement may be limited by bankruptcy, insolvency and other laws affecting the rights of creditors generally and except that equitable remedies may only be granted in the discretion of a court of competent jurisdiction.
|
(b)
|
All necessary corporate action has been taken by HDMC to authorize the execution and delivery by it of, and the performance of its obligations under, this Agreement. This Agreement has been duly executed and delivered by HDMC. This Agreement is a legal, valid and binding obligation of HDMC, enforceable against HDMC by the Vendor in accordance with its terms, except as enforcement may be limited by bankruptcy, insolvency and other laws affecting the rights of creditors generally and except that equitable remedies may only be granted in the discretion of a court of competent jurisdiction.
|
5.3
|
No Violation
|
5.4
|
Consents and Approvals
|
5.5
|
GST/HST Registration
|
5.6
|
Brokerage Fees
|
5.7
|
No Bankruptcy or Insolvency
|
6.1
|
Survival of Representations and Warranties of the Vendor
|
(a)
|
those matters set out in Sections 4.1 (Organization), 4.2 (Authorization and Enforceability), 4.5 (No Violation), 4.9 (Title to Personal and Other Property) and 4.10 (No other Agreement to Purchase) (the “
Fundamental Representations
”) which shall survive the Closing Date indefinitely;
|
(b)
|
those matters set out in Section 4.17 (Computer Systems) which shall survive the Closing for a period of two (2) years from the Closing Date;
|
(c)
|
those matters set out in Section 4.20 (Environmental) which shall survive the Closing for a period of three (3) years from the Closing Date;
|
(d)
|
the Vendor's representations and warranties set out in Sections 4.3 and 4.4 shall survive until the Tax Authorities shall no longer be entitled to assess or reassess liability for the applicable Taxes against the Vendor for that particular period, having regard, without limitation to any waivers given by the Vendor in respect of any taxation year; and
|
(e)
|
fraudulent or willfully false representations and warranties which shall survive indefinitely,
|
6.2
|
Survival of the Representations and Warranties of the Purchaser and HDMC
|
6.3
|
Survival of Covenants
|
7.1
|
Conduct of Business Prior to Closing
|
(a)
|
Use its commercially reasonable efforts to operate the Business only in the ordinary course, and, to the extent consistent with such past practice, use its commercially reasonable efforts to preserve its assets and business organization and its business relationships with clients, customers, suppliers and others having business dealings with it and the Vendor shall not, without the prior written consent of the Purchaser (which consent shall not be unreasonably withheld), (i) enter into any transaction and shall refrain from doing any action which, if effected before the date of this Agreement, would constitute a breach of any representation, warranty, covenant or other obligation of the Vendor contained herein; (ii) sell, lease or grant any option to sell or lease, give a security interest in or otherwise create any Encumbrance on any of the material assets of the Vendor, (iii) make any individual commitment or agreement for capital expenditures in excess of Cdn.$50,000, or (iv) sell, license or transfer any Intellectual Property;
|
(b)
|
not incur any material indebtedness or Liability or make any payment in respect thereof, except in the ordinary course of the Business which: (i) includes advances for working capital purposes from Persons who are not dealing at arm’s length with the Vendor and the repayment thereof by the Vendor, and (ii) excludes any other indebtedness or Liability incurred by the Vendor in favour of Persons who are not dealing at arm’s length with the Vendor;
|
(c)
|
not acquire or agree to acquire any material additional assets except: (i) supplies to the extent necessary to supplement material deficiencies and purchased in the ordinary course of the Business, (ii) equipment purchased in connection with the repair and maintenance of existing equipment, provided that the cost of such new equipment does not exceed Cdn.$50,000 in the aggregate, or (iii) with the prior written approval of the Purchaser, not to be unreasonably withheld or delayed;
|
(d)
|
not sell, agree to sell or otherwise transfer or dispose of any of the material assets of the Vendor other than in the ordinary course of the Business or with the prior written approval of the Purchaser, not to be unreasonably withheld or delayed;
|
(e)
|
not enter into any material forward commitment other than in the ordinary course of the Business without the prior approval of the Purchaser, not to be unreasonably withheld or delayed;
|
(f)
|
not increase the wages or salaries or any other form of remuneration, direct or indirect, of any of the Employees without the prior approval of the Purchaser in its sole discretion;
|
(g)
|
pay, satisfy and discharge its liabilities in the ordinary course of Business;
|
(h)
|
not renew, extend, replace, renegotiate, amend or terminate any material Assumed Contract without the prior approval of the Purchaser, not to be unreasonably withheld or delayed, except in the case of an Assumed Contract that is extended or renewed automatically in accordance with its terms;
|
(i)
|
not renew, extend, replace, renegotiate or terminate any Dealer Agreement or enter into any new Dealer Agreement, other than those Dealer Agreements in the process of being renewed, extended, replaced, renegotiated or terminated as of the date hereof as disclosed in Schedule 1.1(ff) (which transactions are hereby consented to and approved by HDMC), without the prior approval of the Purchaser, in its sole discretion;
|
(j)
|
maintain the insurance currently held by the Vendor in respect of the Business and the Real Property in the same manner as currently held by the Vendor on the date hereof and as disclosed in Schedule 4.19;
|
(k)
|
pay as and when due in accordance with Applicable Laws any and all Taxes capable of causing an Encumbrance of any nature on the Purchased Assets;
|
(l)
|
promptly advise the Purchaser in writing of any Material Adverse Change, financial or otherwise, in the Vendor, the Business or their respective assets and properties;
|
(m)
|
in reasonable consultation with the Purchaser, use all commercially reasonable efforts to give or obtain the contractual waivers, notices, consents, subordination agreements, attornment agreements, acknowledgments and approvals required to consummate the transactions contemplated herein;
|
(n)
|
not, directly or indirectly, do or permit to occur any of the following: (i) adopt a plan of liquidation or resolutions providing for the liquidation or dissolution of the Vendor; (ii) authorize, recommend, propose or agree to any release or relinquishment of any material contractual right under any of the Assumed Contracts or other material right under any governmental authorization of the Vendor; or (iii) waive, release, grant or transfer any rights of value or modify or change in any material respect any existing governmental authorization, in each case without the prior approval of the Purchaser, acting reasonably; and
|
(o)
|
not, directly or indirectly, (i) solicit or consider any inquiries, proposals or offers, or enter into agreements, relating to the disposition of the Purchased Assets, the merger or consolidation of the Vendor with any Person, the sale or exchange of any securities of the Vendor, or any other business combination involving the Vendor, or (ii) divulge or otherwise disclose any confidential information concerning the Business or the assets of the Business to any third Person or any details regarding the terms of this Agreement, in each case without the prior approval of the Purchaser, acting reasonably.
|
7.2
|
Conduct of Business in Accordance with Marketing Plan
|
7.3
|
Material Performance of Distributorship Agreement
|
7.4
|
Motorcycle Target
|
7.5
|
Non-Current Inventory Target
|
7.6
|
PAM Target
|
(a)
|
fifty-six percent (56%) of Users (as defined in the CIM system) in May 2015 (the “
May PAM Target
”);
|
(b)
|
fifty-seven percent (57%) of Users in June 2015 (the “
June PAM Target
”); and
|
(c)
|
forty-eight percent (48%) of Users in July 2015 (the “
July PAM Target
”).
|
7.7
|
Maintenance of Current Pricing
|
7.8
|
Access for Investigation
|
(a)
|
During the Interim Period, the Vendor will permit the Purchaser and its employees, agents, counsel, accountants and other representatives to have access during normal business hours to the premises of the Vendor, and to all Books and Records and will furnish to the Purchaser any information included in the Books and Records as the Purchaser may from time to time reasonably request to enable it to make a full and complete investigation of the Business and the Purchased Assets, and the Vendor will instruct its officers, employees, solicitors, accountants and other advisors to cooperate fully with and assist the Purchaser in that investigation. Notwithstanding the foregoing, the Vendor shall not be required to provide any personnel records or other records relating to its Employees to the Purchaser prior to the Closing Date,
|
(b)
|
Until
the Closing Date, in the event that the Purchaser desires to investigate the Vendor’s operations, the Purchaser and the Vendor shall, acting reasonably, agree on the date and time of such investigation and the scheduling of any meetings with the Vendor’s personnel and shall cause its personnel to cooperate with the Purchaser in connection with its reasonable investigations and information requests, provided that any such visits shall not cause any undue interruption to the operation and conduct of the Business. The Purchaser covenants and agrees with the Vendor that it will not request, directly or indirectly, physical inspection of the Vendor’s operation by governmental Authorities without the consent of the Vendor.
|
(c)
|
If in the course of the Purchaser’s investigations of the Vendor’s operations during the Interim Period, the Purchaser reasonably apprehends a breach of a representation or warranty by the Vendor, the Purchaser shall notify the Vendor and the Vendor shall use it best efforts to resolve such breach or mitigate any damages or negative effects caused by such breach.
|
7.9
|
Performance under the Distributorship Agreement prior to Closing
|
(a)
|
Article 12 – Business Planning Process;
|
(b)
|
Section 14.2 – Succession Plan;
|
(c)
|
Section 15.2 – Termination for Cause (except for subsections 15.2.4, 15.2.8, 15.2.9, and 15.2.11); and
|
(d)
|
Section 15.3 – Conversion of Distributor’s Appointment.
|
7.10
|
Obtaining All Authorizations
|
(a)
|
Each of the Vendor and the Purchaser, as promptly as practicable after the execution of this Agreement, shall use its commercially reasonable efforts to make all filings with, give all notices to, and obtain all authorizations from, governmental Authorities that are necessary for the lawful completion of the transactions contemplated by this Agreement.
|
(b)
|
In the case of the ICA Approval and the Competition Act Approval, each of Vendor and the Purchaser shall make, or cause to be made, all filings and submissions, and
|
(c)
|
The Parties will coordinate and cooperate in exchanging information and supplying assistance that is reasonably requested in connection with this Section 7.10 including providing each other with advanced copies and reasonable opportunity to comment on all notices and information supplied to or filed with any governmental Authority (including notices and information which a Party, acting reasonably, considers highly confidential and sensitive which may be provided on a confidential and privileged basis to outside counsel of the other Party), and all notices and correspondence received from any governmental Authority. To the extent that any information or documentation to be provided by the Vendor to the Purchaser pursuant to this Section 7.10 is competitively sensitive, such information may be provided only to external counsel for the Purchaser on an external counsel only basis.
|
7.11
|
Wind-up of HOG
|
8.1
|
Regulatory Approvals
|
8.2
|
Consents and Approvals
|
8.3
|
Bulk Sales Waiver
|
8.4
|
Escrow Agreement
|
8.5
|
Concord Lease
|
8.6
|
Richmond Occupancy License
|
8.7
|
Non-Competition Agreements
|
8.8
|
Transitional Services Agreement
|
8.9
|
HDFS Discharge
|
8.10
|
Dealer Network Relationships
|
8.11
|
Delivery of Books and Records
|
8.12
|
Litigation Support
|
(a)
|
Subject to Article 11, which the parties acknowledge shall apply exclusively to any legal proceeding to which the Vendor is a party on or following the Closing in relation to the Business (a “
Vendor Proceeding
”) in which a claim for indemnification has been made, each of the Purchaser and HDMC agrees to provide to the Vendor, as soon as practicable, and on an ongoing basis, all information reasonably determined by the Vendor to be necessary or beneficial to it in connection with the Vendor Proceeding.
|
(b)
|
To the extent that the Vendor requires the assistance of any employee of the Purchaser or HDMC in connection with the Vendor Proceeding, the Purchaser or HDMC, as applicable, shall provide the Vendor with access to such employee during normal business hours and the Vendor will use its commercially reasonable efforts to do so without undue interference to the business operations of the Purchaser.
|
(c)
|
Each of the Purchaser and HDMC acknowledges and agrees that the Vendor shall retain full and complete carriage of and control over any such Vendor Proceeding, other than any control the Purchaser may have with regard to indemnified matters pursuant to Article 11 hereof.
|
(d)
|
Any costs and expenses reasonably incurred by the Purchaser in providing information or access to its employees pursuant to the terms of this Section 8.12, including any out-of-pocket expenses and a reasonable reimbursement of employee wages, shall be reimbursed in full by the Vendor within thirty (30) days of receipt of an invoice from the Purchaser setting out the amount of such costs and expenses.
|
8.13
|
Employee Matters
|
(a)
|
Prior to the Closing Date, the Vendor agrees to provide the Purchaser with an up-to-date list of the names of the Employees upon the request of the Purchaser from time to time and not more than four (4) Business Days following any such request.
|
(b)
|
No later than two (2) Business Days after the commencement of the Interim Period, the Vendor shall give notice of termination of employment to all Employees, such termination to be effective upon and conditional upon Closing.
|
(c)
|
With respect to the proposed hiring of Employees by the Purchaser, the Vendor and Purchaser agree as follows:
|
(i)
|
By no later than thirty-five (35) days following the commencement of the Interim Period, the Purchaser shall interview and substantially complete initial offers of employment to such Employees as it chooses (the “
Offered Employees
”); with the offer of employment to be on such terms and conditions as the Purchaser may determine (the “
Offer
”).
|
(ii)
|
The Vendor shall render all reasonable assistance to encourage each Offered Employee to accept the Offer.
|
(iii)
|
Offered Employees who accept the Offer shall be referred to hereinafter as the “
Hired Employees
”.
|
(iv)
|
The Purchaser shall recognize the past service of the Hired Employees with the Vendor and, if applicable, the Vendor’s predecessors for all purposes.
|
(d)
|
The Vendor shall employ all of the Offered Employees until the Time of Closing except for any Employees who prior to the Time of Closing: (i) have their employment terminated for cause; (ii) have their employment terminated with the Purchaser’s consent, which consent shall not be unreasonably withheld; (iii) voluntarily resign; or (iv) retire.
|
(e)
|
Except as otherwise provided in this Agreement, during the Interim Period, the Vendor shall not hire any employees or increase the wages of any Employees, or enter into any new agreements with any Employee, except as required by contract or Applicable Law, or with the written consent of the Purchaser.
|
(f)
|
Within fifteen (15) Business Days following the Closing Date, the Vendor shall settle, and pay to each of the Employees, all salaries, commissions, bonuses, and other amounts that were earned or that may become payable to or receivable by such Employees for all periods ending on or before the Closing Date, including accrued vacation pay in respect of their employment with the Business or any predecessor of the Business, and including pro-rata bonuses for the portion of the current bonus year that the Employees worked for the Vendor prior to the Closing Date.
|
(g)
|
The Purchaser shall indemnify the Vendor and hold it harmless in respect of Severance Costs payable by the Vendor to:
|
(i)
|
Employees who are not Offered Employees;
|
(ii)
|
Offered Employees who do not accept an Offer of comparable employment from the Purchaser, in which case, the indemnity shall be limited to minimum statutory requirements in respect of notice or termination pay, severance pay and benefits;
|
(iii)
|
Offered Employees who do not accept an Offer from the Purchaser that is not comparable; and
|
(iv)
|
Hired Employees who assert a claim against the Vendor in respect of any difference between the compensation and benefits available under the Offer and the compensation and benefits available to them with the Vendor as of the commencement of the Interim Period; it being understood and agreed that, in such case, the Purchaser’s indemnification obligation shall be limited to such difference over the applicable contractual or common law notice period.
|
(h)
|
Notwithstanding the foregoing, the Purchaser’s obligation to indemnify the Vendor pursuant to this Section 8.13 shall be subject to the following:
|
(i)
|
such obligation shall be reduced by fifty percent (50%) of the amount by which the Severance Costs to the Employees would have been reduced had working termination notices been provided to the Employees on March 19, 2015 rather than the actual date of delivery of termination notices by the Vendor;
|
(ii)
|
the Purchaser shall not indemnify the Vendor in respect of its obligations to Lawson Greer or Ann Vandrick under any retirement agreements;
|
(iii)
|
the Vendor’s sole and exclusive obligation to provide Employees with their entitlement to pro-rata bonuses through the Closing Date in respect of the 2015 bonus year;
|
(iv)
|
the Purchaser’s obligation to indemnify the Vendor pursuant to this Section 8.13, subject to the qualifications provided for above, shall be subject to the provisions of Article 11; and
|
(v)
|
the Vendor shall take such steps as the Purchaser may reasonably direct to minimize any severance or related damages claims of the Employees
.
|
(i)
|
Effective as of the Closing Date, the Purchaser shall be solely responsible for, and shall indemnify the Vendor and hold it harmless from and against, all salaries, commissions, bonuses and other amounts payable to Hired Employees earned in relation to any period of employment with the Purchaser, and all Severance Costs claimed by any Hired Employees (including as against the Vendor).
|
(j)
|
The Hired Employees shall cease to participate in, accrue benefits under or be covered by the Employee Plans as of the Closing Date. Effective on the Closing Date, the Purchaser shall establish employee plans (the “
Purchaser Employee Plans
”) which shall provide the Hired Employees with benefits as it determines in its discretion. As of the Closing Date, the Hired Employees shall commence participation in, accrue benefits under and be covered by the Purchaser Employee Plans.
|
(k)
|
The Purchaser will ensure that evidence of insurability or pre-existing conditions and eligibility periods in respect of the Purchaser Employee Plans are waived, except to the extent that such conditions and eligibility periods would have applied to the Hired Employees under the Employee Plans. The Purchaser Employee Plans shall honour any deductible, co-payment, coinsurance, or eligible out-of-pocket expenses paid or incurred by the Hired Employees, including with respect to their covered dependants, under the applicable Employee Plans from the beginning of the current coverage period to the Closing Date, as though such amounts had been paid in accordance with the terms and conditions of the Purchaser Employee Plans.
|
(l)
|
The Purchaser Employee Plans shall recognize service of the Hired Employees as recognized under the applicable Employee Plans for eligibility and determination of benefits under the Purchaser Employee Plans.
|
(m)
|
The Vendor agrees that it is responsible under the Employee Plans for any benefit related claims arising in respect of the Employees prior to the Closing Date, in accordance with the terms of such Employee Plans and Applicable Law. The Purchaser agrees that it is responsible for any benefit related claims arising in respect of the Hired Employees from and after the Closing Date in accordance with the terms of the Purchaser Employee Plans and Applicable Law. For greater certainty, the date on which a benefit claim arose will be:
|
(i)
|
in the case of a death claim, the date of death;
|
(ii)
|
in the case of extended health care benefits, including dental and medical treatments, the date of treatment;
|
(iii)
|
in the case of a claim for drug or vision care benefits, the date the prescription is filled; and
|
(iv)
|
in the case of a disability claim, the date of occurrence of an injury, the diagnosis of an illness, or any other event giving rise to such claim or series of related claims.
|
8.14
|
Non-Transferable and Non-Assignable Assets
|
(a)
|
maintain its existence and hold the Rights as bare trustee and agent for the Purchaser;
|
(b)
|
comply with the terms and provisions of the Rights as bare trustee and agent for the Purchaser at the Purchaser’s cost and for the Purchaser’s benefit;
|
(c)
|
cooperate with the Purchaser in any reasonable and lawful arrangements designed to provide the benefits of such Rights to the Purchaser; and
|
(d)
|
enforce, at the request of the Purchaser and at the expense and for the account of the Purchaser, any rights of the Vendor arising from such Rights against any third Person, including the right to elect to terminate any such rights in accordance with the terms of such rights upon the written direction of the Purchaser.
|
8.15
|
Personal Information
|
(a)
|
for purposes other than those for which such Personal Information was collected by the Vendor prior to the Closing; and
|
(b)
|
which does not relate directly to the carrying on of the Business or to the carrying out of the purposes for which the transactions contemplated by this Agreement were implemented.
|
8.16
|
Use of “Deeley” Name
|
8.17
|
Customer Personal Information and CASL
|
8.18
|
Gift Card Program
|
8.19
|
Infusion Hosting Services
|
9.1
|
Conditions of Closing in Favour of the Purchaser
|
(a)
|
The purchase and sale of the Business and the Purchased Assets is subject to the following terms and conditions for the exclusive benefit of the Purchaser, to be performed or fulfilled at or prior to the Time of Closing:
|
(i)
|
Representations and Warranties.
The representations and warranties of the Vendor contained in this Agreement or any certificate or other document delivered pursuant hereto shall be true and correct at the Time of Closing in all material respects with the same force and effect as if such representations and warranties were made at and as of such time, except for any such representations and warranties that refer to or are expressed to be made as of a specific date, including the date of this Agreement, in which case such representations shall be true and correct in all material respects as of such date, and all representations and warranties that are on their terms qualified by materiality shall be true and correct, and a certificate executed by the Vendor dated the Closing Date, to that effect shall have been delivered to the Purchaser;
|
(ii)
|
Covenants.
All of the terms, covenants and conditions of this Agreement to be complied with or performed by the Vendor at or before the Time of Closing shall have been complied with or performed in all material respects, and a certificate executed by a senior officer of the Vendor, dated the Closing Date, to that effect shall have been delivered to the Purchaser;
|
(iii)
|
No Material Adverse Change.
No Material Adverse Change shall have occurred during the Interim Period;
|
(iv)
|
Regulatory Consents.
There shall have been obtained from all appropriate Authorities such consents and approvals as are required to be obtained by the Vendor and the Purchaser to permit the change of ownership of the Purchased Assets contemplated hereby, including Competition Act Approval and ICA Approval and those other consents and approvals described in Schedule 4.6(a);
|
(v)
|
Infusion Hosting Services.
With respect to the Infusion statement of work between the Vendor and Infusion Development Corp. (“
Infusion
”) whereby Infusion provides managed cloud hosting services for the Vendor’s UltraComm application (the “
SOW
”), the Vendor shall have obtained and delivered to the Purchaser an acknowledgement and consent of Infusion consenting to the assignment to the Purchaser of the SOW and agreeing to a one (1) year extension of the term thereof commencing on the Closing Date on substantially the same terms and conditions, including, for greater certainty, pricing, as currently provided in the SOW;
|
(vi)
|
Required Contractual Consents.
Other than those Contracts specifically contemplated in the Transitional Services Agreement, the Vendor shall have given or obtained those notices, consents and approvals described in Schedule 4.6(b) as the Purchaser reasonably considers to be material to the Business;
|
(vii)
|
No Action or Proceeding.
No legal or regulatory action or proceeding shall be pending or threatened by any person to enjoin, restrict or prohibit the purchase and sale of the Purchased Assets contemplated hereby or the performance of any party’s obligations in this Agreement;
|
(ix)
|
Delivery of Conveyancing Documents.
The Vendor shall deliver to the Purchaser all necessary deeds, conveyances, bills of sale, assurances, transfers, assignments and any other documentation reasonably required by the Purchaser to transfer the Purchased Assets to the Purchaser with a good title, free and clear of all Encumbrances;
|
(x)
|
Closing Documents.
Without limiting the generality of any other provision of this Section 9.1, the Purchaser shall have received at or before the Time of Closing sufficient duly executed original copies of the following:
|
(D)
|
a certificate of an officer of the Vendor attaching:
|
(i)
|
copies of the articles of incorporation of the Vendor;
|
(ii)
|
certificate of status of the Vendor; and
|
(iii)
|
copies of resolutions of the board of directors and shareholders of the Vendor, approving the transfer of the Purchased Assets and entry into this Agreement and the other agreements, documents and transactions contemplated under this Agreement, as applicable;
|
(E)
|
a certificate of an officer of the Vendor confirming the matters contemplated in Section 9.1(a) and confirming that all conditions under this Agreement in favour of the Vendor have been either fulfilled or waived;
|
(F)
|
the Deeley-HDMC Agreement executed by the Vendor;
|
(G)
|
if applicable, termination agreements, in respect of Harley-Davidson Terminated Agreements not terminated under the Deeley-HDMC Agreement, executed by the Vendor;
|
(H)
|
the Escrow Agreement executed by the Vendor;
|
(I)
|
release from the Vendor of all claims it might have against HDMC substantially in the form attached as Exhibit G;
|
(J)
|
the Non-Competition Agreements executed by the Vendor, Don James and Malcolm Hunter;
|
(K)
|
the Concord Lease executed by the landlord of the Concord Property;
|
(L)
|
the Richmond Occupancy License executed by the Vendor;
|
(M)
|
the License Agreement executed by the Vendor;
|
(N)
|
the Transitional Services Agreement executed by the Vendor;
|
(O)
|
if applicable, a general conveyance, in a form reasonably satisfactory to the Purchaser, executed by Harley Owners Group Canada Inc. for the purposes of transferring all of its assets to the Purchaser;
|
(P)
|
an opinion from counsel to the Vendor dated the Closing Date confirming the matters warranted in subsections 4.1 (Organization) and 4.2(a) (Authorizations); and
|
(Q)
|
if applicable, the elections provided for in Section 3.8 and 3.9.
|
(b)
|
In case any condition, obligation or covenant of the Vendor to be performed prior to the Time of Closing shall not have been performed or fulfilled prior to such time, the Purchaser may terminate this Agreement by notice in writing to the Vendor and in such event the Purchaser shall be released from all obligations hereunder relating to this Agreement and unless the condition, obligation or covenant of the Vendor for the non-performance of which the Purchaser has rescinded this Agreement are reasonably capable of being performed or caused to be performed by the Vendor, then the Vendor shall also be released from all obligations hereunder relating to this Agreement; provided, however, that the Purchaser shall be entitled to waive compliance with any of such conditions, obligations or covenants in whole or in part if it sees fit to do so without prejudice to any of its rights of termination in the event
|
(i)
|
the Purchaser may terminate this Agreement by notice in writing to the Vendor and in such event the Purchaser shall be released from all obligations hereunder relating to this Agreement and the Purchaser’s rights to pursue legal remedies against the Vendor will survive such termination unimpaired; and
|
(ii)
|
the Purchaser may elect to complete this Agreement by notice in writing to the Vendor and in such event the Purchaser shall be entitled to require the Vendor to complete the transaction with an abatement of the Purchase Price (the “
Abatement
”) equal to the aggregate of:
|
(A)
|
in the event that the Vendor fails to achieve the Motorcycle Target as provided for in Section 7.4:
|
(i)
|
if the Motorcycle Target is not achieved by an amount of units representing four percent (4%) or more but less than six percent (6%) of the Motorcycle Target, being between 324 and 484 units, the amount of One Thousand Seven Hundred and Fifty Dollars ($1,750) multiplied by the number of units by which the Motorcycle Target is not achieved; or
|
(ii)
|
if the Motorcycle Target is not achieved by six percent (6%) or more of the Motorcycle Target, being 485 or more units, the amount of Two Thousand Dollars ($2,000) multiplied by the number of units by which the Motorcycle Target is not achieved to a maximum of One Million Two Hundred and Fifty Thousand Dollars ($1,250,000); and
|
(B)
|
in the event that the Vendor fails to achieve the Non-Current Model Target as provided for in Section 7.5:
|
(i)
|
if the Non-Current Model Target is not achieved by three percent (3%) or more but less than five percent (5%) of the Non-Current Model Target, being between 46 and 75 units, the amount of Two Thousand Five Hundred Dollars ($2,500) multiplied by the number of units by which the Non-Current Model Target is not achieved; or
|
(ii)
|
if the Non-Current Model Target is not achieved by five percent (5%) or more of the Non-Current Model Target, being 76 or more units, the amount of Three Thousand Dollars
|
(C)
|
in the event that the Vendor fails to achieve the May PAM Target as provided in Section 7.6:
|
(i)
|
if 55% of Users or more, but less than 56% of Users, the amount of Twenty-Five Thousand Dollars ($25,000);
|
(ii)
|
if 54% of Users or more, but less and 55% of Users, Fifty Thousand Dollars ($50,000); and
|
(iii)
|
if less than 54% of Users, Seventy-Five Thousand Dollars ($75,000);
|
(D)
|
in the event that the Vendor fails to achieve the June PAM Target as provided in Section 7.6:
|
(i)
|
if 56% of Users or more, but less than 57% of Users, the amount of Twenty-Five Thousand Dollars ($25,000);
|
(ii)
|
if 55% of Users or more, but less than 56% of Users, Fifty Thousand Dollars ($50,000); and
|
(iii)
|
if less than 55% of Users, Seventy-Five Thousand Dollars ($75,000);
|
(E)
|
in the event that the Vendor fails to achieve the July PAM Target as provided in Section 7.6:
|
(i)
|
if 47% of Users or more, but less than 48% of Users, the amount of Thirty-Three Thousand Dollars ($33,000);
|
(ii)
|
if 46% of Users or more, but less than 47% of Users, Sixty-Seven Thousand Dollars ($67,000); and
|
(iii)
|
if less than 46% of Users, One Hundred Thousand Dollars ($100,000); and
|
(F)
|
the amount of Twelve Million Dollars ($12,000,000) if the condition, obligation or covenant of the Vendor to be performed prior to the Time of Closing and not performed or fulfilled is the covenant set out in Section 7.7,
|
(c)
|
For greater certainty, for the purposes of this Section, a condition shall be deemed reasonably capable of being performed or caused to be performed unless the circumstances giving rise to the non-performance could not reasonably have been anticipated at the date hereof and were beyond the reasonable control of the Vendor at the Time of Closing.
|
9.2
|
Conditions of Closing in Favour of the Vendor
|
(a)
|
The purchase and sale of the Purchased Assets is subject to the following terms and conditions for the exclusive benefit of the Vendor, to be performed or fulfilled at or prior to the Time of Closing:
|
(i)
|
Representations and Warranties.
The representations and warranties of the Purchaser contained in this Agreement or any certificate or other document delivered pursuant hereto shall be true and correct in all material respects at the Time of Closing with the same force and effect as if such representations and warranties were made at and as of such time, and all representations and warranties that are on their terms qualified by materiality shall be true and correct, and a certificate executed by the Purchaser, dated the Closing Date, to that effect shall have been delivered to the Vendor;
|
(ii)
|
Covenants.
All of the terms, covenants and conditions of this Agreement to be complied with or performed by the Purchaser at or before the Time of Closing shall have been complied with or performed in all material respects, and a certificate executed by a senior officer of the Purchaser, dated the Closing Date, to that effect shall have been delivered to the Vendor;
|
(iii)
|
No Action or Proceeding.
No legal or regulatory action or proceeding shall be pending or threatened by any person to enjoin, restrict or prohibit the purchase and sale of the Purchased Assets contemplated hereby or the performance of any party’s obligations under any agreement contemplated in this Agreement to be executed and delivered by either party at the Time of Closing; and
|
(iv)
|
Closing Documents.
Without limiting the generality of any other provision of this Section 9.2, the Vendor shall have received at or before the Time of Closing sufficient duly executed original copies of the following:
|
(A)
|
a certificate of an officer of Harley-Davidson Canada GP Inc. (the “
GP
”), on behalf of the GP and as general partner of the Purchaser attaching:
|
(i)
|
copies of the articles of incorporation of the GP;
|
(ii)
|
a copy of the declaration of the Purchaser;
|
(iii)
|
a copy of the Purchaser’s limited partnership agreement;
|
(iv)
|
certificate of status of the Purchaser; and
|
(v)
|
copies of resolutions of the board of directors and shareholder of the GP, as general partner of the Purchaser, approving the transfer of the Purchased Assets and entry into this Agreement and the other agreements, documents and transactions contemplated under this Agreement, as applicable; and
|
(B)
|
a certificate of an officer of the GP, as general partner of the Purchaser, confirming the matters contemplated in Section 9.2(a) and confirming that all conditions under this Agreement in favour of the Vendor have been either fulfilled or waived;
|
(C)
|
the Escrow Agreement executed by the Purchaser and the Escrow Agent;
|
(D)
|
release from HDMC and its Affiliates of all claims such entities might have against the Vendor substantially in the form attached as Exhibit H;
|
(E)
|
the Concord Lease executed by the Purchaser and the related indemnity executed by HDMC;
|
(F)
|
the Richmond Occupancy License executed by the Purchaser;
|
(G)
|
the License Agreement executed by the Purchaser;
|
(H)
|
the Deeley-HDMC Agreement executed by HDMC;
|
(I)
|
if applicable, termination agreements, in respect of Harley-Davidson Terminated Agreements not terminated under the Deeley-HDMC Agreement, executed by HDMC or its applicable Affiliates;
|
(J)
|
the Transitional Services Agreement executed by the Purchaser; and
|
(K)
|
if applicable, the elections provided for in Section 3.8 and 3.9.
|
(b)
|
In case any condition, obligation or covenant of the Purchaser to be performed prior to the Time of Closing shall not have been performed or fulfilled prior to such time, the Vendor may terminate this Agreement by notice in writing to the Purchaser and in such event the Vendor shall be released from all obligations hereunder relating to this Agreement and unless the condition, obligation or covenant of the Purchaser for the non-performance of which the Vendor has rescinded this Agreement are
|
(c)
|
If the Purchaser terminates this Agreement by notice in writing to the Vendor and the transaction contemplated by this Agreement is not completed solely at the Purchaser’s election and not because a condition, obligation or covenant of the Vendor to be performed prior to the Time of Closing shall not have been performed or fulfilled prior to such time, the Purchaser will pay to the Vendor an amount equal to Two Million Dollars ($2,000,000)
(the “
Break Up Fee
”), the parties acknowledging the Break Up Fee to be a genuine pre-estimate of the damages that would be suffered by the Vendor in such circumstances, and in full satisfaction thereof (including the rights of the Vendor pursuant to Article 11 and any other indemnification provisions of this Agreement). For greater certainty and without limiting the foregoing, this Section 9.2(c) shall expressly apply, without limitation, to termination by the Vendor in accordance with Section 9.2(b).
|
(d)
|
For greater certainty, for the purposes of this Section, a condition shall be deemed reasonably capable of being performed or caused to be performed unless the circumstances giving rise to the non-performance could not reasonably have been anticipated at the date hereof and were beyond the reasonable control of the Purchaser at the Time of Closing.
|
9.3
|
Survival of Disclosure Provisions
|
10.1
|
Place of Closing
|
10.2
|
Further Assurances
|
11.1
|
Indemnification by the Vendor
|
(a)
|
any breach by the Vendor of any representation or warranty of the Vendor contained in this Agreement;
|
(b)
|
any breach or non-performance by the Vendor of any covenant to be performed by it which is contained in this Agreement;
|
(c)
|
any Excluded Assets or any failure by the Vendor to pay, satisfy, discharge, perform or fulfil any of the Excluded Liabilities; and
|
(d)
|
any claim arising out of the
Bulk Sales Act
(Ontario) or any non-compliance by the Vendor with Section 6 of the
Retail Sales Tax Act
(Ontario), except to the extent that such claim relates to the Assumed Liabilities.
|
11.2
|
Indemnification by the Purchaser
|
(a)
|
any breach by the Purchaser of any representation or warranty contained in this Agreement;
|
(b)
|
any breach or non-performance by the Purchaser of any covenant to be performed by it which is contained in this Agreement; and
|
(c)
|
any failure by the Purchaser to pay, satisfy, discharge, perform or fulfil any of the Assumed Liabilities or any liabilities and obligations of the Business as operated by the Purchaser after Closing.
|
11.3
|
Notice of Claim
|
11.4
|
Direct Claims
|
(a)
|
With respect to any Direct Claim, following receipt of notice from the Indemnified Party of the Claim, the Indemnifying Party shall have twenty (20) Business Days (for the purposes of this Section, the “
Investigation Period
”) to make such investigation of the Claim as is considered necessary or desirable. For the purpose of such investigation, the Indemnified Party shall make available to the Indemnifying Party the information relied upon by the Indemnified Party to substantiate the Claim, together with all such other information as the Indemnifying Party may reasonably request. If both parties agree at or prior to the expiration of the Investigation Period (or any mutually agreed upon extension thereof) to the validity and amount of such Claim, the Indemnifying Party shall immediately pay to the Indemnified Party the full agreed upon amount of the Claim. If the parties are unable to resolve the dispute within a reasonable time of such written request, and in any event prior to the expiration of the Investigation Period (or any mutually agreed upon extension thereof), the dispute shall, at the request of either party, be determined by a court of competent jurisdiction.
|
(b)
|
In connection with a Direct Claim arising out of a breach by the Vendor of its representation and warranty contained in Section 4.7, during the Investigation Period, the parties shall investigate the Claim for the purposes of making a determination as to whether or not any uncollected Accounts Receivable are in fact ultimately collectible. A Direct Claim in respect of such matter shall only be deemed to be valid to the extent that there is not a substantial likelihood that such Accounts Receivable are collectible through reasonable commercial efforts. If the parties are unable to resolve the dispute within a reasonable time, and in any event prior to the expiration of the Investigation Period (or any mutually agreed upon extension thereof), the dispute shall, at the request of either party, be submitted to PriceWaterhouseCoopers, Toronto (the “
Independent Accountants
”) for resolution. If issues are submitted to the Independent Accountants for resolution, (i) the Vendor and the Purchaser shall furnish or cause to be furnished to the Independent Accountants such working papers and other documents and information relating to the disputed issues as the Independent Accountants may request and are available to that party or its agents and shall be afforded the opportunity to present to the Independent Accountants any material relating to the disputed issues and to discuss the issues with the Independent Accountants; (ii) the determination by the Independent Accountants, as set forth in a notice to be delivered to both the Vendor and the Purchaser within thirty (30) days of the submission to the Independent Accountants of the issues remaining in dispute, shall be final, binding and conclusive on the parties and shall be determinative of the amount of the Purchaser’s Direct Claim; and (iii) the unsuccessful party in respect of the aggregate of the issues in dispute shall bear the fees and costs of the Independent Accountants for such determination. The determined amount of the Direct Claim, if any, shall be paid within three (3) Business Days after the Independent Accountant’s determination becomes binding and conclusive on the parties pursuant to this Section 11.4(b).
|
11.5
|
Third Party Claims
|
11.6
|
Settlement of Third Party Claims
|
11.7
|
Co-operation
|
11.8
|
Trustee and Agent
|
11.9
|
Exclusivity
|
11.10
|
Insurance Proceeds and Taxes
|
11.11
|
Right to Claim Escrow Amount
|
11.12
|
Set off
|
11.13
|
Limitations on Claims
|
(a)
|
Monetary Limitation.
|
(b)
|
Damages from the Vendor.
|
11.14
|
Other Limitations
|
11.15
|
GST/HST Gross Up
|
12.1
|
Notices
|
(c)
|
Any notice or other communication required or permitted to be given hereunder shall be in writing and shall be delivered by personal delivery, by overnight courier, by fax or other form of electronic transmission or by registered mail addressed as follows:
|
(d)
|
Any such notice or other communication delivered by personal delivery or overnight courier shall be deemed to have been given and received on the day on which it was delivered (or, if such day is not a Business Day, on the next following Business Day), and if transmitted by fax or other form of electronic transmission, on the day of transmission thereof if such day is a Business Day and is received before 5:00 pm (local time to the recipient) or otherwise on the next Business Day after the day of transmittal, provided that the party so transmitting the notice has received confirmation of its successful transmittal, and if mailed or sent by registered mail, on the fifth Business Day following the date of mailing; provided, however, that if at the time of mailing or within three Business Days thereafter there is or occurs a labour dispute or other event which might reasonably be expected to disrupt the delivery of documents by mail, any notice or other communication hereunder shall be delivered or transmitted by means personal delivery or recorded electronic communication as aforesaid. Any party may at any time change its address for service from time to time by giving notice to the other parties in accordance with this Section 12.1.
|
12.2
|
Announcements
|
12.3
|
Disclosure
|
12.4
|
Reasonable Commercial Efforts
|
12.5
|
Expenses
|
12.6
|
Counterparts
|
|
|
HARLEY-DAVIDSON CANADA LP
,
by its general partner,
HARLEY-DAVIDSON CANADA GP INC.
|
|
Per:
|
/s/ Anoop Prakash
|
||
|
Name: Anoop Prakash
|
||
|
Title: Director
|
||
|
I have the authority to bind the limited partnership
|
|
|
FRED DEELEY IMPORTS LTD.
|
|
Per:
|
/s/ Malcolm Hunter
|
||
|
Name: Malcom Hunter
|
||
|
Title: President
|
||
|
I have the authority to bind the company
|
|
|
HARLEY-DAVIDSON MOTOR COMPANY, INC.
|
|
Per:
|
/s/ John A. Olin
|
||
|
Name: John A. Olin
|
||
|
Title: Senior Vice President and CFO
|
||
|
I have the authority to bind the company
|
Re:
|
Asset purchase agreement dated as of April 30, 2015 amongst Harley-Davidson Canada LP (the “
Purchaser
”), Fred Deeley Imports Ltd. (the “
Vendor
”) and Harley-Davidson Motor Company (the “
Asset Purchase Agreement
”) whereby the Purchaser agreed to acquire and the Vendor agreed to sell the Business and the Purchased Assets (as such terms are defined in the Asset Purchase Agreement).
|
And Re:
|
Capitalized terms otherwise undefined herein shall have the meanings ascribed thereto in the Asset Purchase Agreement.
|
1.
|
Notwithstanding the terms of the Asset Purchase Agreement or any transaction documents contemplated by the Asset Purchase Agreement, the Vendor and the Purchaser agree to the matters set out in Schedule “A” attached hereto.
|
2.
|
No amendment or waiver of this Side Letter shall be binding on any party unless consented to by such party.
|
HARLEY-DAVIDSON CANADA LP, by its general partner, HARLEY-DAVIDSON CANADA GP INC.
|
|
Per:
|
/s/ Anoop Prakash
|
|
Name:Anoop Prakash
|
|
Title:President
|
|
|
|
Fred Deeley Imports Ltd.
|
||
Per:
|
/s/ Malcolm Hunter
|
||
|
Name:Malcolm Hunter
|
||
|
Title:President
|
||
|
I have the authority to bind the Corporation
|
ITEM
|
DESCRIPTION
|
1.
|
The Purchaser has agreed to reimburse the Vendor for the cost of the Vendor’s counsel to review the Escrow Agreement in the amount of $3,000, in satisfaction of such obligation under Section 8.4 of the Asset Purchase Agreement, and its equal share of the cost of the town hall meetings in the amount of $64,223.65, in satisfaction of such obligation under Section 8.10 of the Asset Purchase Agreement
.
Such amounts will be reflected as closing adjustments to the estimated Purchase Price and reflected in the statement of adjustments on Closing.
|
2.
|
The Vendor has agreed to include office furniture and equipment for 20 workstations and 1 conference room in Schedule “B” of the Richmond Occupancy License and such furniture and equipment will be considered “Furniture and Equipment” for the purposes of the Richmond Occupancy License. The Vendor shall be entitled to remove such furniture and equipment from the Richmond Property with advance notice to the Purchaser on any two consecutive days between December 15 and 31, 2015. The Vendor has agreed to allow the Purchaser to use training room tables, or comparable furniture, from the date that the office furniture and equipment for workstations is removed by the Vendor to and until December 31, 2015.
|
3.
|
The Purchaser and the Vendor have agreed to treat the effective closing time as 12:01 a.m. EDT on the Closing Date subject to delivery of purchase price funds and confirmation of the release of any escrow conditions with respect to closing documents by the Purchaser and the Vendor on Closing.
|
4.
|
The Vendor has agreed to provide the Purchaser with full access to its warehouse located at the Concord Property on July 30
th
and 31
st
, 2015 between the hours of 9:00 a.m. and 4:00 p.m. EDT for the purposes of conducting a physical inventory count of the Vendor’s inventory. The Vendor has further agreed that the results of such physical inventory count may be utilized by the Purchaser in the preparation of the Final Closing Date Financial Statement notwithstanding that the inventory count is conducted prior to the Closing Date, provided however, that such agreement does not impact the Vendor’s rights pursuant to Section 3.6(b) of the Asset Purchase Agreement.
|
5.
|
The Vendor and the Purchaser have agreed to use the Bank of Canada’s noon spot exchange rate on July 24, 2015 for the purposes of the conversion of any U.S. dollar amounts into Canadian dollar amounts included in the calculation of Purchase Price and otherwise reflected on the Statement of Proceeds and Adjustments.
|
6.
|
The Purchaser has agreed to accept delivery by the Vendor of an extension to the statement of work related to managed cloud hosting services for the Vendor’s UltraComm application to July 23, 2016 in satisfaction of the Vendor’s obligations contained in sections 8.19 and 9.1(a)(v) of the Asset Purchase Agreement.
|
7.
|
The Purchaser has agreed to assume the obligations under the FreeWheeler Loan Program arising from and after the Closing Date (and all such obligations shall be Assumed Liabilities), provided that any obligations incurred or accrued under the FreeWheeler Loan Program prior to the Closing Date (and for greater certainty, notwithstanding that such amounts may not be due and payable until after the Closing Date) shall be Excluded Liabilities.
|
8.
|
The Purchaser has determined that the transaction is not subject to the pre-notification provisions of the Competition Act, and therefore the Purchaser irrevocably waives the closing condition in Section 9.1(a)(iv) of the Asset Purchase Agreement.
|
9.
|
Attached as Schedule “A” is a list of the Assumed Contracts, which the Purchaser and the Vendor have agreed is true and complete and replaces the Assumed Contracts as defined in the Asset Purchase Agreement. The list of Assumed Contracts shall not be construed as amending or modifying Schedule 1.1(iiiii) (Vendor Contracts).
|
10.
|
The Purchaser shall be responsible for and shall indemnify the Vendor in respect of any damage to property, personal injury or death caused by the acts or omissions of Purchaser, its employees, subcontractors or agents occurring in the course of the Purchaser’s access to the Richmond Property or the Concord Property and to the Systems prior to the Closing. Provided that the Purchaser shall be given prompt written notice of and shall have control over the defense of any third party claims arising out of such damage; the Purchaser may agree, without Vendor’s prior consent, to any settlement that does not impose any liability on Vendor; and the Vendor shall upon the request of the Purchaser provide all reasonable assistance based on the resources available to Deeley in the defense of any third party claims (provided that the Purchaser shall reimburse all reasonable out-of-pocket expenses of the Vendor).
|
1.1
|
Definitions
|
(a)
|
“
Affiliate
” has the meaning given to that term in the
Canada Business Corporations Act
.
|
(b)
|
“
Asset Purchase Agreement
” has the meaning given to it in the recitals.
|
(c)
|
“
Business
” means the business currently carried on by the Vendor as such term is defined in the Asset Purchase Agreement.
|
(d)
|
“
Dealership Business
” has the meaning given to it in the Asset Purchase Agreement.
|
(e)
|
“
Governmental Authority
” means any national, multi-national, federal, provincial, state, municipal, local or other government, and any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government.
|
(f)
|
“
Non-Interference Period
” means the period of five (5) years commencing on the date of this Agreement.
|
(g)
|
“
Parties
” means, collectively, the Restricted Party and the Purchaser and “
Party
” means either of them.
|
(h)
|
“
Person
” means any individual, estate, trust, firm, partnership, joint venture, corporation, unlimited liability company, limited liability company, unincorporated association or organization, government or any agency or ministry of any government, and includes any successor to any of the foregoing.
|
(i)
|
“
Restricted Activities
” means the marketing, distribution and sale of motorcycles, motorcycle parts, and related apparel and merchandise, but explicitly excludes the Dealership Business.
|
(j)
|
“
Territory
” means Canada, being the jurisdiction where the Business is or has been operated.
|
1.2
|
Interpretation
|
(a)
|
Unless specified otherwise, reference to a statute includes any regulations under such statute and refers to that statute and such regulations as they may be amended or to any successor legislation.
|
(b)
|
The division into articles, sections, paragraphs and schedules and the insertion of headings are for convenience of reference only and will not affect the construction or interpretation of this Agreement. The words “hereto”, “herein”, “hereof”, “hereunder” and similar expressions refer to this Agreement and not to any particular portion of it. References to an Article, Section, Paragraph or Schedule refer to the applicable article, section, paragraph or schedule of this Agreement.
|
(c)
|
Words in the singular include the plural and vice versa, words in one gender include all genders, and the words “including”, “include” and “includes” mean “including (or include or includes) without limitation”.
|
(d)
|
This Agreement is the joint product of the Parties, has been subject to mutual consultation, negotiation and agreement and will not be construed for or against any Party.
|
2.1
|
Term
|
3.1
|
Non-Competition
|
(a)
|
The Restricted Party shall not and shall ensure that its Affiliates do not, for the Non-Interference Period, within the Territory, directly or indirectly, in any manner whatsoever including either individually, in partnership, jointly or in conjunction with any other Person, or as employee, consultant, independent contractor, principal, agent, director, officer, investor, owner or shareholder, supply products or services to any customer of the Restricted Activity or:
|
(i)
|
establish, carry on, be engaged in or concerned with or interested in, any undertaking or business;
|
(ii)
|
have any financial interest (including an interest by way of royalty or other compensation arrangements) in or in respect of the business of any Person which carries on, directly or indirectly, an undertaking or business;
|
(iii)
|
advise, lend money to, guarantee the debts or obligations of or give security on behalf of any Person which carries on, directly or indirectly, an undertaking or business;
|
(iv)
|
consent to its name or the trade name(s) to be used or employed by any Person, directly or indirectly, engaged or concerned with or interested in any aspect of an undertaking or business,
|
3.2
|
Exception
|
(a)
|
have an equity investment in any Person whose equity securities are listed on a recognized stock exchange, where the equity investment does not in the aggregate exceed five percent (5%) of the issued equity shares of that Person;
|
(b)
|
continue to provide financial support to Fox Harley-Davidson, including keeping agreements in place relating to security and a term deposit that Fred Deeley Limited has provided to Royal Bank to support Fox Harley-Davidson's operating line, and
|
(c)
|
engage in and operate the Dealership Business; or
|
(d)
|
sell, assist with the marketing and sale of, hire or engage the services of any third party to assist with the marketing and sale of, any Excluded Asset, and any assets or inventory acquired as a result of an obligation to acquire or repurchase such assets or inventory pursuant to the Restricted Party’s Vendor Agreement with GE Commercial Distribution Finance Canada, on such terms as the Restricted Party may determine in its sole and unfettered discretion.
|
3.3
|
Enforceability
|
4.1
|
Non-Solicitation
|
(a)
|
canvass or solicit the business of (or procure or assist the canvassing or soliciting of the business of) any Person that was a customer of the Purchaser or reasonably prospective customer of the Purchaser, as of the date hereof, in connection with activities which are substantially the same as the Restricted Activity or are, in whole or in part, in competition with the Business; or
|
(b)
|
induce or attempt to induce any officer, director, partner, employee or agent of the Purchaser to leave the employ of the Purchaser, or in any way interfere with the relationship between the Purchaser and any such Person, hire directly or indirectly any Person who was an officer, director, partner, employee or agent of the Purchaser for a period of one (1) year from the date such Person was terminated or left the employ of the Purchaser without the prior written permission of the Purchaser; or induce or attempt to induce any customer, supplier, licensee or other business relation of the Purchaser to cease doing business with the Purchaser or in any way interfere with the relationship between any such customer, supplier, licensee or business relation of the Purchaser. For greater certainty, general solicitations of employment
|
4.2
|
Non-Disparagement
|
5.1
|
Proprietary Information
|
(a)
|
The Restricted Party acknowledges and agrees that it had detailed confidential or proprietary information and trade secrets concerning the Business (collectively, the “
Proprietary Information
”). The Restricted Party acknowledges that disclosure of any of the Proprietary Information to competitors of the Purchaser, or the Business or to the general public, or the use of same by any competitor of the Purchaser, or the Business would be highly detrimental to the interests of the Purchaser, and the Business and hereby covenants and agrees that it shall maintain the confidentiality of all Proprietary Information and shall not use such information, howsoever obtained, for any purpose whatsoever until the date, if any, on which (i) the relevant information becomes available to the public without breach of this Agreement or similar agreements or (ii) the Restricted Party is required to disclose such information by any law (including rule or regulation) or any court or governmental or regulatory authority of competent jurisdiction, in which case the Restricted Party shall be entitled to disclose or make use of such information only to the extent it is so required; provided that before disclosure is made, to the extent legally possible, notice of the legal requirement is provided to the Purchaser and, to the extent possible in the circumstances, the Purchaser is afforded the opportunity to dispute the requirement or otherwise protect the subject Proprietary Information.
|
(b)
|
For greater certainty, nothing in this Article 5 shall limit the Restricted Party’s ability to operate the Dealership Business or to utilize any Proprietary Information in connection therewith.
|
(c)
|
The provisions of this Section 5.1 shall survive the termination or expiration of this Agreement.
|
6.1
|
Equitable Remedies
|
(a)
|
a breach or threatened breach by the Restricted Party of any of the provisions of this Agreement would cause the Purchaser irreparable harm not compensable in damages alone; and
|
(b)
|
it is essential to the effective enforcement of this Agreement that, in addition to any other remedies to which the Purchaser may be entitled at law or in equity or otherwise under this Agreement, the Purchaser be entitled to seek and obtain, in a summary manner, from any court having jurisdiction, interim, interlocutory, and permanent injunctive relief, specific performance and other equitable remedies.
|
7.1
|
Restricted Party Acknowledgments
|
(a)
|
having regard to the importance of goodwill of the Business and Purchased Assets purchased under the Asset Purchase Agreement, the purchase price for the Business and Purchased Assets and all of the circumstances of the transactions, it is necessary that the Restricted Party enter into this Agreement in order for the Purchaser to receive the full benefit of the Business and the Purchased Assets and of the goodwill relating to the Business and the Purchased Assets and to protect itself from the irreparable harm that would arise out of any breach of the terms of this Agreement; and
|
(b)
|
the terms of this Agreement are just and reasonable.
|
8.1
|
Notices
|
(a)
|
in the case of the Purchaser to:
|
(b)
|
in the case of the Restricted Party, to:
|
8.2
|
Delivery of Notices
|
8.3
|
Change of Address
|
9.1
|
Severability
|
9.2
|
Amendment and Waiver
|
9.3
|
Time
|
9.4
|
Further Assurances
|
9.5
|
Governing Law and Attornment
|
(a)
|
This Agreement is governed by and will be construed in accordance with the laws of the Province of Ontario and the federal laws of Canada applicable therein.
|
(b)
|
The Parties: (a) hereby irrevocably and unconditionally submit to the non-exclusive jurisdiction of the courts of the Province of Ontario and to any appellate court for the purpose of any suit, action or other proceeding arising out of or based upon this Agreement; (b) agree not to commence any suit, action or other proceeding arising out of or based upon this Agreement except in the courts of the Province of Ontario; and (c) hereby waive, and agree not to assert, by way of motion, as a defense, or otherwise, in any such suit, action or proceeding, any claim that it is not subject personally to the jurisdiction of the above-named courts, that its property is exempt or immune from attachment or execution, that the suit, action or proceeding is brought in an inconvenient forum, that the venue of the suit, action or proceeding is improper or that this Agreement or the subject matter hereof may not be enforced in or by such court.
|
9.6
|
Entire Agreement
|
9.7
|
Benefit of Agreement
|
(a)
|
a corporation which is a holding body corporate, a subsidiary body corporate or an affiliate of the Purchaser (within the meaning of the
Canada Business Corporations Act
);
|
(b)
|
a corporation formed as a result of a merger or amalgamation of the Purchaser with another corporation or corporations; and/or
|
(c)
|
any assignee or purchaser of the majority of the Purchaser’s shares or all or substantially all of its assets.
|
9.8
|
Remedies
|
9.9
|
Counterparts and Electronic Execution
|
|
|
|
|
|
/s/ Don James
|
||
|
DON JAMES
|
||
|
|
||
|
|
|
|
HARLEY-DAVIDSON CANADA LP, by its general partner, HARLEY-DAVIDSON CANADA GP INC.
|
|
Per:
|
/s/ Anoop Prakash
|
||
|
Name: Anoop Prakash
|
||
|
Title: President
|
||
|
I have the authority to bind the Limited Partnership
|
1.
|
I have reviewed this quarterly report on Form 10-Q of Harley-Davidson, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c)
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth quarter in case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors:
|
a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
Date: August 6, 2015
|
/s/ Matthew S. Levatich
|
|
Matthew S. Levatich
|
|
President and Chief Executive Officer
|
1.
|
I have reviewed this quarterly report on Form 10-Q of Harley-Davidson, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c)
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth quarter in case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors:
|
a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
Date: August 6, 2015
|
/s/ John A. Olin
|
|
John A. Olin
|
|
Senior Vice President and
|
|
Chief Financial Officer
|
Date: August 6, 2015
|
/s/ Matthew S. Levatich
|
|
Matthew S. Levatich
|
|
President and Chief Executive Officer
|
|
|
|
/s/ John A. Olin
|
|
John A. Olin
|
|
Senior Vice President and
|
|
Chief Financial Officer
|