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Debt | 12 Months Ended
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Dec. 31, 2013
Debt Disclosure [Abstract] |
Debt | Asset-Backed Financing HDFS participates in asset-backed financing through both term asset-backed securitization transactions and through asset-backed commercial paper conduit facilities. HDFS treats these transactions as secured borrowing because assets are either transferred to consolidated VIEs or HDFS maintains effective control over the assets and does not meet the accounting sale requirements under ASC Topic 860. See Note 1 for more information on the Company's accounting for asset-backed financings and VIEs. The following table shows the assets and liabilities related to the Company's asset-backed financings that were included in its financial statements at December 31 (in thousands):
| 2013
| 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 | $ | 1,569,118 |  |  | $ | (31,778 | ) |  | $ | 133,053 |  |  | $ | 3,720 |  |  | $ | 1,674,113 |  |  | $ | 1,256,632 |
Asset-backed U.S. commercial paper conduit facility | — |  |  | — |  |  | — |  |  | 429 |  |  | 429 |  |  | — |
Unconsolidated VIEs |  |  |  |  |  |  |  |  |  |  |
Asset-backed Canadian commercial paper conduit facility | 204,092 |  |  | (3,361 | ) |  | 11,754 |  |  | 589 |  |  | 213,074 |  |  | 174,241 |
| $ | 1,773,210 |  |  | $ | (35,139 | ) |  | $ | 144,807 |  |  | $ | 4,738 |  |  | $ | 1,887,616 |  |  | $ | 1,430,873 |
| 2012
| 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 | $ | 2,143,708 |  |  | $ | (42,139 | ) |  | $ | 176,290 |  |  | $ | 4,869 |  |  | $ | 2,282,728 |  |  | $ | 1,447,776 |
Asset-backed U.S. commercial paper conduit facility | — |  |  | — |  |  | — |  |  | 419 |  |  | 419 |  |  | — |
Unconsolidated VIEs |  |  |  |  |  |  |  |  |  |  |
Asset-backed Canadian commercial paper conduit facility | 194,285 |  |  | (3,432 | ) |  | 11,718 |  |  | 255 |  |  | 202,826 |  |  | 175,658 |
| $ | 2,337,993 |  |  | $ | (45,571 | ) |  | $ | 188,008 |  |  | $ | 5,543 |  |  | $ | 2,485,973 |  |  | $ | 1,623,434 |
Term Asset-Backed Securitization VIEs The Company transfers U.S. retail motorcycle finance receivables to SPEs which in turn issue secured notes to investors, with various maturities and interest rates, secured by future collections of the purchased U.S. retail motorcycle finance receivables. Each term asset-backed securitization SPE is a separate legal entity and the U.S. retail motorcycle finance receivables included in the term asset-backed securitizations are only available for payment of the secured debt and other obligations arising from the term asset-backed securitization transactions and are not available to pay other obligations or claims of the Company’s creditors until the associated secured debt and other obligations are satisfied. Restricted cash balances held by the SPEs are used only to support the securitizations. In 2013 and 2012, HDFS transferred $680.6 million and $715.7 million, respectively, of U.S. retail motorcycle finance receivables to two separate SPEs. The SPEs in turn issued $650.0 million and $675.3 million, respectively, of secured notes. At December 31, 2013, the Company's consolidated balance sheet included outstanding balances related to the following secured notes with the related maturity dates and interest rates (in thousands):
Issue Date |  | Principal Amount at Date of Issuance |  | Weighted-Average Rate at Date of Issuance |  | Contractual Maturity Date
April 2013 |  | $650,000 |  | 0.57% |  | May 2014 - December 2020
July 2012 |  | $675,306 |  | 0.59% |  | August 2013 - June 2018
November 2011 |  | $513,300 |  | 0.88% |  | November 2012 - February 2018
August 2011 |  | $573,380 |  | 0.76% |  | September 2012 - August 2017
November 2010 |  | $600,000 |  | 1.05% |  | December 2011 - April 2018
In addition, during 2012, the Company issued $89.5 million of secured notes through the sale of notes that had been previously retained as part of the December 2009, August 2011 and November 2011 term asset-backed securitization transactions. These notes were sold at a premium. During 2013, the notes related to the December 2009 term asset-backed securitization transaction were repaid. The remaining notes have contractual maturities ranging from January 2019 to April 2019. Outstanding balances related to the following secured notes were included in the Company's consolidated balance sheet at December 31, 2012 (in thousands) and the Company completed repayment of those balances during 2013:
| Issue Date |  | Principal Amount at Date of Issuance |  | Weighted-Average Rate at Date of Issuance |  | Contractual Maturity Date
| December 2009 |  | $562,499 |  | 1.55% |  | December 2010 - June 2017
There are no amortization schedules for the secured notes; however, the debt is reduced monthly as available collections on the related U.S. retail motorcycle finance receivables are applied to outstanding principal. For the year ended December 31, 2013 and 2012, the SPEs recorded interest expense on the secured notes of $14.5 million and $25.8 million, respectively, which is included in financial services interest expense. The weighted average interest rate of the outstanding term asset-backed securitization transactions was 0.99% and 1.09% at December 31, 2013 and 2012, respectively. Asset-Backed U.S. Commercial Paper Conduit Facility VIE In September 2013, the Company amended and restated its third-party bank sponsored asset-backed commercial paper conduit facility (U.S. Conduit) which provides for a total aggregate commitment of up to $600.0 million based on, among other things, the amount of eligible U.S. retail motorcycle finance receivables held by the SPE as collateral. Under the facility, HDFS may transfer U.S. retail motorcycle finance receivables to a SPE, which in turn may issue debt to third-party bank-sponsored asset-backed commercial paper conduits. The assets of the SPE are restricted as collateral for the payment of the debt or other obligations arising in the transaction and are not available to pay other obligations or claims of the Company’s creditors. The terms for this debt provide for interest on the outstanding principal based on prevailing commercial paper rates, or LIBOR plus a specified margin to the extent the advance is not funded by a conduit lender through the issuance of commercial paper. The U.S. Conduit also provides for an unused commitment fee based on the unused portion of the total aggregate commitment of $600.0 million. There is no amortization schedule; however, the debt is reduced monthly as available collections on the related finance receivables are applied to outstanding principal. Upon expiration of the U.S. Conduit, any outstanding principal will continue to be reduced monthly through available collections. Unless earlier terminated or extended by mutual agreement of HDFS and the lenders, the U.S. Conduit has an expiration date of September 12, 2014. The SPE had no borrowings outstanding under the U.S. Conduit at December 31, 2013 or 2012; therefore, these assets are restricted as collateral for the payment of fees associated with the unused portion of the total aggregate commitment of $600.0 million. For the years ended December 31, 2013 and 2012, the SPE recorded interest expense of $1.2 million and $1.4 million, respectively, related to the unused portion of the total aggregate commitment of $600.0 million. Interest expense on the U.S. Conduit is included in financial services interest expense. There was no weighted average interest rate at December 31, 2013 or 2012 as HDFS had no outstanding borrowings under the U.S. Conduit during 2013 or 2012. Asset-Backed Canadian Commercial Paper Conduit Facility In June 2013, HDFS amended its agreement with a Canadian bank-sponsored asset-backed commercial paper conduit facility (Canadian Conduit). The amended agreement has terms that are similar to those of the original agreement, entered into in August 2012, and is for the same amount. Under the agreement, the Canadian Conduit is contractually committed, at HDFS' option, to purchase from HDFS eligible Canadian retail motorcycle finance receivables for proceeds up to C$200 million. The terms for this debt provide for interest on the outstanding principal based on prevailing market interest rates plus a specified margin. The Canadian Conduit also provides for a program fee and an unused commitment fee based on the unused portion of the total aggregate commitment of C$200 million. There is no amortization schedule; however, the debt is reduced monthly as available collections on the related finance receivables are applied to outstanding principal. Upon expiration of the Canadian Conduit, any outstanding principal will continue to be reduced monthly through available collections. Unless earlier terminated or extended by mutual agreement of HDFS and the lenders, the Canadian Conduit expires on June 30, 2014. The contractual maturity of the debt is approximately 5 years. During 2013 and 2012, HDFS transferred $101.1 million and $230.0 million, respectively, of Canadian retail motorcycle finance receivables for proceeds of $88.6 million and $201.3 million, respectively. This transaction is treated as a secured borrowing, and the transferred assets are restricted as collateral for payment of the debt. For the years ended December 31, 2013 and 2012, HDFS recorded interest expense of $3.4 million and $1.1 million, respectively, on the secured notes. Interest expense on the Canadian Conduit is included in financial services interest expense. The weighted average interest rate of the outstanding Canadian Conduit was 2.03% and 1.95% at December 31, 2013 and 2012, respectively. As HDFS participates in and does not consolidate the Canadian bank-sponsored, multi-seller conduit VIE, the maximum exposure to loss associated with this VIE, which would only be incurred in the unlikely event that all the finance receivables and underlying collateral have no residual value, is $38.8 million at December 31, 2013. The maximum exposure is not an indication of the Company's expected loss exposure. Debt with contractual terms less than one year is generally classified as short-term debt and consisted of the following as of December 31 (in thousands):
|  | 2013 |  | 2012
Unsecured commercial paper |  | $ | 666,317 |  |  | $ | 294,943 |
Debt with a contractual term greater than one year is generally classified as long-term debt and consisted of the following as of December 31 (in thousands):
|  | 2013 |  | 2012
Secured debt |  |  |  |
Asset-backed Canadian commercial paper conduit facility |  | $ | 174,241 |  |  | $ | 175,658 |
Term asset-backed securitization debt |  | 1,256,632 |  |  | 1,447,776 |
Unsecured notes |  |  |  |
5.75% Medium-term notes due in 2014 ($500.0 million par value) |  | 499,866 |  |  | 499,705 |
1.15% Medium-term notes due in 2015 ($600.0 million par value) |  | 599,543 |  |  | 599,269 |
3.88% Medium-term notes due in 2016 ($450.0 million par value) |  | 449,883 |  |  | 449,829 |
2.70% Medium-term notes due in 2017 ($400.0 million par value) |  | 399,946 |  |  | 399,929 |
6.80% Medium-term notes due in 2018 ($910.5 million par value) |  | 909,742 |  |  | 932,540 |
15.00% Senior unsecured notes due in 2014 ($600.0 million par value) |  | 303,000 |  |  | 303,000 |
Gross long-term debt |  | 4,592,853 |  |  | 4,807,706 |
Less: current portion of long-term debt |  | (1,176,140 | ) |  | (437,162 | )
Long-term debt |  | $ | 3,416,713 |  |  | $ | 4,370,544 |
Commercial paper maturities may range up to 365 days from the issuance date. The weighted-average interest rate of outstanding commercial paper balances was 0.23% and 0.75% at December 31, 2013 and 2012, respectively. The December 31, 2012 weighted-average interest rate includes the impact of interest rate swap agreements. On April 13, 2012, the Company and HDFS entered into a new $675.0 million five-year credit facility that matures in April 2017. The Company and HDFS also have a $675.0 million four-year credit facility which matures in April 2015. The five-year credit facility and the four-year credit facility (together, the Global Credit Facilities) bear interest at various variable interest rates, which may be adjusted upward or downward depending on certain criteria, such as credit ratings. The Global Credit Facilities also require the Company to pay a fee based upon the average daily unused portion of the aggregate commitments under the Global Credit Facilities. The Global Credit Facilities are committed facilities and primarily used to support HDFS’ unsecured commercial paper program. At December 31, 2013 and 2012, HDFS had no outstanding borrowings under the Global Credit Facilities. On September 13, 2013, the Company amended and restated its revolving asset-backed U.S. Conduit which provides for a total aggregate commitment of $600.0 million. At December 31, 2013 and 2012, HDFS had no outstanding borrowings under the U.S. Conduit. Refer to Note 7 for further discussion on the U.S. Conduit. In June 2013, HDFS amended its agreement with a Canadian bank-sponsored asset-backed commercial paper conduit facility. The amended agreement has terms that are similar to those of the original agreement, entered into in August 2012, and is for the same amount. Under the agreement, the Canadian Conduit is contractually committed, at HDFS' option, to purchase from HDFS eligible Canadian retail motorcycle financial receivables for proceeds up to C$200 million. During 2013 and 2012, HDFS transferred $101.1 million and $230.0 million, respectively, of Canadian retail motorcycle finance receivables for proceeds of $88.6 million and $201.3 million, respectively. Approximately $38.6 million and $37.7 million of the debt was classified as current portion of long-term debt at December 31, 2013 and 2012. Refer to Note 7 for further discussion on the Canadian Conduit. During 2013, the Company issued $650.0 million of secured notes through one term asset-backed securitization transaction. During 2012, the Company issued $675.3 million of secured notes through one term asset-backed securitization transaction. Additionally, during 2012, the Company issued $89.5 million of secured notes through the sale of notes that had been previously retained as part of the December 2009, August 2011, and November 2011 term asset-backed securitization transactions. These notes were sold at a premium, and at December 31, 2013 and 2012, the unaccreted premium associated with these notes was $0.5 million and $1.2 million, respectively. Approximately $334.6 million and $399.5 million of the obligations under the secured notes were classified as current at December 31, 2013 and 2012, respectively, based on the contractual maturities of the restricted finance receivables. The term-asset backed securitization transactions are further discussed in Note 7. No medium-term notes were issued in 2013. In January 2012, HDFS issued $400.0 million of medium-term notes which mature in March 2017 and have an annual interest rate of 2.70%. In September 2012, HDFS issued $600.0 million of medium-term notes which mature in September 2015 and have an annual interest rate of 1.15%. All of HDFS’ medium-term notes (collectively, the Notes) provide for semi-annual interest payments and principal due at maturity. Unamortized discounts on the Notes reduced the balance by $1.5 million and $2.2 million at December 31, 2013 and 2012, respectively. During 2013, 2012, and 2011, HDFS repurchased an aggregate of $23.0 million, $16.6 million, and $49.9 million respectively, of its 6.80% medium-term notes which mature in June 2018. As a result, HDFS recognized in financial services interest expense $4.9 million, $4.3 million, and $9.6 million of loss on extinguishment of debt, respectively, which included unamortized discounts and fees. During December 2012, $400.0 million of the 5.25% medium-term notes matured, and the principal and accrued interest were paid in full. In February 2009, the Company issued $600.0 million of senior unsecured notes in an underwritten offering. The senior unsecured notes provide for semi-annual interest payments and principal due at maturity. The senior unsecured notes mature in February 2014 and have an annual interest rate of 15%. During the fourth quarter of 2010, the Company repurchased $297.0 million of the $600.0 million senior unsecured notes at a price of $380.8 million. As a result of the transaction, the Company incurred a loss on debt extinguishment of $85.2 million which also included $1.4 million of capitalized debt issuance costs that were written-off. The Company used cash on hand for the repurchase and the repurchased notes were canceled. HDFS and the Company are subject to various operating and financial covenants related to the Global Credit Facilities and various operating covenants under the Notes and the U.S. and Canadian asset-backed commercial paper conduit facilities. The more significant covenants are described below. The covenants limit the Company’s and HDFS’ ability to:
• | incur certain additional indebtedness;
• | assume or incur certain liens;
• | participate in certain mergers, consolidations, liquidations or dissolutions; and
• | purchase or hold margin stock.
Under the financial covenants of the Global Credit Facilities, the consolidated debt to equity ratio of HDFS cannot exceed 10.0 to 1.0. In addition, the Company must maintain a minimum interest coverage ratio of at least 2.25 to 1.0 for each fiscal quarter through June 2013 and at least 2.5 to 1.0 for each fiscal quarter thereafter. No financial covenants are required under the Notes or the U.S. or Canadian asset-backed commercial paper conduit facilities. At December 31, 2013 and 2012, HDFS and the Company remained in compliance with all of these covenants.

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- Definition The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=6928386&loc=d3e21475-112644 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 02 -Paragraph 19, 20, 22 -Article 5 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 210 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.5-02.19,20,22) -URI http://asc.fasb.org/extlink&oid=6877327&loc=d3e13212-122682 + Details
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