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Debt Debt
 9 Months Ended
Sep. 27, 2015
Debt Disclosure [Abstract]  
Debt Disclosure [Text Block]
Asset-Backed Financing
The Company participates in asset-backed financing through both term asset-backed securitization transactions and through asset-backed commercial paper conduit facilities. The Company treats these transactions as secured borrowings because either they are transferred to consolidated variable interest entities (VIEs) or the Company maintains effective control over the assets and does not meet the accounting sale requirements under ASC Topic 860, "Transfers and Servicing" (ASC Topic 860). In the Company's asset-backed financing programs, the Company transfers retail motorcycle finance receivables to special purpose entities (SPE), which are considered VIEs under U.S. GAAP. Each SPE then converts those assets into cash, through the issuance of debt.
The Company is required to consolidate any VIE in which it is deemed to be the primary beneficiary through having power over the significant activities of the entity and having an obligation to absorb losses or the right to receive benefits from the VIE which are potentially significant to the VIE. The Company is considered to have the power over the significant activities of its term asset-backed securitization and asset-backed U.S. commercial paper conduit facility VIEs due to its role as servicer. Servicing fees are typically not considered potentially significant variable interests in a VIE. However, the Company retains a residual interest in the VIEs in the form of a debt security, which gives the Company the right to receive benefits that could be potentially significant to the VIE. Therefore, the Company is the primary beneficiary and consolidates all of these VIEs within its consolidated financial statements.
The Company is not the primary beneficiary of the asset-backed Canadian commercial paper conduit facility VIE; therefore, the Company does not consolidate this VIE. However, the Company treats the conduit facility as a secured borrowing as it maintains effective control over the assets transferred to the VIE and therefore does not meet the requirements for sale accounting under ASC Topic 860. As such, the Company retains the transferred assets and the related debt within its Consolidated Balance Sheet.
Servicing fees paid by VIEs to the Company are eliminated in consolidation and therefore are not recorded on a consolidated basis. The Company is not required, and does not currently intend, to provide any additional financial support to its VIEs. Investors and creditors only have recourse to the assets held by the VIEs.

The following table shows the assets and liabilities related to the asset-backed financings that were included in the financial statements (in thousands):
 
September 27, 2015
 
Finance receivables
 
Allowance for credit losses
 
Restricted cash
 
Other assets
 
Total assets
 
Asset-backed debt
On-balance sheet assets and liabilities
 
 
 
 
 
 
 
 
 
 
 
Consolidated VIEs
 
 
 
 
 
 
 
 
 
 
 
Term asset-backed securitizations
$
1,875,571

 
$
(42,679
)
 
$
125,561

 
$
4,383

 
$
1,962,836

 
$
1,706,431

Asset-backed U.S. commercial paper conduit facility
—

 
—

 
—

 
109

 
109

 
—

Unconsolidated VIEs
 
 
 
 
 
 
 
 
 
 
 
Asset-backed Canadian commercial paper conduit facility
175,173

 
(3,090
)
 
11,656

 
473

 
184,212

 
158,712

Total on-balance sheet assets and liabilities
$
2,050,744

 
$
(45,769
)
 
$
137,217

 
$
4,965

 
$
2,147,157

 
$
1,865,143

 
 
 
 
 
 
 
 
 
 
 
 
 
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

 
 
 
 
 
 
 
 
 
 
 
 
 
September 28, 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
$
1,651,552

 
$
(35,115
)
 
$
129,828

 
$
3,313

 
$
1,749,578

 
$
1,475,148

Asset-backed U.S. commercial paper conduit facility
—

 
—

 
—

 
532

 
532

 
—

Unconsolidated VIEs
 
 
 
 
 
 
 
 
 
 
 
Asset-backed Canadian commercial paper conduit facility
203,933

 
(3,259
)
 
12,458

 
213

 
213,345

 
165,166

Total on-balance sheet assets and liabilities
$
1,855,485

 
$
(38,374
)
 
$
142,286

 
$
4,058

 
$
1,963,455

 
$
1,640,314


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 transaction 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. 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. The secured notes’ contractual lives have various maturities ranging from 2016 to 2022.
The following table includes quarterly issuances of secured notes, each through one term asset-backed securitization transaction (in thousands):
 
2015
 
2014
First quarter
$
700,000

 
$
—

Second quarter
500,000

 
850,000

Third quarter
—

 
—

 
$
1,200,000

 
$
850,000


Asset-Backed U.S. Commercial Paper Conduit Facility VIE
In September 2014, the Company amended and restated its facility (U.S. Conduit) with a third-party bank sponsored asset-backed commercial paper conduit, which provides for a total aggregate commitment of $600.0 million based on, among other things, the amount of eligible U.S. retail motorcycle loans held by a SPE as collateral. Under the facility, the Company may transfer U.S. retail motorcycle finance receivables to a SPE, which in turn may issue debt to third-party bank-sponsored asset-backed commercial paper conduits.
The assets of the SPE are restricted as collateral for the payment of the debt or other obligations arising in the transaction and are not available to pay other obligations or claims of the Company’s creditors. The terms for this debt provide for interest on the outstanding principal generally based on prevailing commercial paper rates plus a program fee based on outstanding principal, 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 the Company and the lenders, as of September 27, 2015, the U.S. Conduit has an expiration date of October 30, 2015.
The SPE had no borrowings outstanding under the U.S. Conduit at September 27, 2015, December 31, 2014 or September 28, 2014; therefore, U.S. Conduit assets are restricted as collateral for the payment of fees associated with the unused portion of the total aggregate commitment.
Asset-Backed Canadian Commercial Paper Conduit Facility
In June 2015, the Company amended its facility agreement (Canadian Conduit) with a Canadian bank-sponsored asset-backed commercial paper conduit. Under the agreement, the Canadian Conduit is contractually committed, at the Company's option, to purchase eligible Canadian retail motorcycle finance receivables for proceeds up to C$240.0 million. The transferred assets are restricted as collateral for the payment of the debt. The terms for this debt provide for interest on the outstanding principal based on prevailing market interest rates plus a specified margin. The Canadian Conduit also provides for a program fee and an unused commitment fee based on the unused portion of the total aggregate commitment of C$240.0 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 Canadian Conduit, any outstanding principal will continue to be reduced monthly through available collections. Unless earlier terminated or extended by mutual agreement of the Company and the lenders, as of September 27, 2015, the Canadian Conduit has an expiration date of June 30, 2016. The contractual maturity of the debt is approximately 5 years.
As the Company 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, was $25.5 million at September 27, 2015. The maximum exposure is not an indication of the Company's expected loss exposure.
The following table includes quarterly transfers of Canadian retail motorcycle finance receivables to the Canadian Conduit and the respective proceeds (in thousands):
 
2015
 
2014
 
Transfers
 
Proceeds
 
Transfers
 
Proceeds
First quarter
$
19,200

 
$
16,800

 
$
15,727

 
$
13,761

Second quarter
26,761

 
23,416

 
26,400

 
23,100

Third quarter
33,100

 
29,000

 
24,400

 
21,400

 
$
79,061

 
$
69,216

 
$
66,527

 
$
58,261

Debt
Debt with contractual terms less than one year is generally classified as short-term debt and consisted of the following (in thousands):
 
 
September 27,
2015
 
December 31,
2014
 
September 28,
2014
Unsecured commercial paper
 
$
990,049

 
$
731,786

 
$
352,430


Debt with a contractual term greater than one year is generally classified as long-term debt and consisted of the following (in thousands): 
 
 
September 27,
2015
 
December 31,
2014
 
September 28,
2014
Secured debt
 
 
 
 
 
 
Asset-backed Canadian commercial paper conduit facility
 
$
158,712

 
$
166,912

 
$
165,166

Term asset-backed securitization debt
 
1,706,431

 
1,271,533

 
1,475,148

Unsecured notes
 
 
 
 
 
 
5.75% Medium-term notes due in 2014 ($500.0 million par value)
 
—

 
—

 
499,987

1.15% Medium-term notes due in 2015 ($600.0 million par value)
 
—

 
599,817

 
599,749

3.88% Medium-term notes due in 2016 ($450.0 million par value)
 
449,977

 
449,937

 
449,923

2.70% Medium-term notes due in 2017 ($400.0 million par value)
 
399,976

 
399,963

 
399,959

1.55% Medium-term notes due in 2017 ($400.0 million par value)
 
399,603

 
399,464

 
—

6.80% Medium-term notes due in 2018 ($888.0 million par value)
 
887,511

 
887,381

 
903,785

2.40% Medium-term notes due in 2019 ($600.0 million par value)
 
598,181

 
597,836

 
597,721

2.15% Medium-term notes due in 2020 ($600.0 million par value)
 
598,787

 
—

 
—

3.50% Senior unsecured notes due in 2025 ($450.0 million par value)
 
447,555

 
—

 
—

4.625% Senior unsecured notes due in 2045 ($300.0 million par value)
 
299,324

 
—

 
—

Gross long-term debt
 
5,946,057

 
4,772,843

 
5,091,438

Less: current portion of long-term debt
 
(891,710
)
 
(1,011,315
)
 
(1,518,320
)
Long-term debt
 
$
5,054,347

 
$
3,761,528

 
$
3,573,118


In July 2015, the Company issued $450.0 million of senior unsecured notes that mature in July 2025 that have an interest rate of 3.50% and $300.0 million of senior unsecured notes that mature in July 2045 that have an interest rate of 4.625% in an underwritten offering. The senior unsecured notes provide for semi-annual interest payments and principal due at maturity. The Company is using the proceeds from the issuance to repurchase shares of the Company's common stock in 2015.
There were no medium-term notes issued during the second and third quarters of 2015. During the first quarter of 2015, the Company issued $600.0 million of medium-term notes which mature in February 2020 and have an annual interest rate of 2.15%. During the third quarter of 2014, the Company issued $600.0 million of medium-term notes which mature in 2019 and have an annual interest rate of 2.40%. There were no other medium-term notes issued during the nine months ended September 28, 2014.
There were no medium-term note repurchases made during 2015. During the second quarter of 2014, HDFS repurchased an aggregate of $6.1 million of its 6.80% medium-term notes which mature in June 2018. As a result, HDFS recognized in financial services interest expense $1.1 million of loss on the extinguishment of debt, which included unamortized discounts and fees. There were no other repurchases made during 2014. During September 2015, $600.0 million of 1.15% medium-term notes matured, and the principal and accrued interest were paid in full. There were no other medium-term note maturities during the first nine months of 2015, and no maturities during the nine months ended September 28, 2014.
The term asset-backed securitization transactions are further discussed in Note 7.