Additional Balance Sheet and Cash Flow Information

12 Months Ended

Dec. 31, 2020

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Additional Balance Sheet and Cash Flow Information

Additional Balance Sheet and Cash Flow Information

Investments in marketable securities consisted of the following at December 31, (in thousands): 

	2020		2019
Mutual funds	$	52,061	$	52,575

Mutual funds, included in Other long-term assets on the Consolidated balance sheets, are carried at fair value with gains and losses recorded in income. Mutual funds are held to support certain deferred compensation obligations.

Inventories, net consisted of the following as of December 31, (in thousands):

	2020		2019
Raw materials and work in process	$	211,979	$	235,433
Motorcycle finished goods	281,132		280,306
Parts & Accessories and General Merchandise	84,469		144,258
Inventory at lower of FIFO cost or net realizable value	577,580		659,997
Excess of FIFO over LIFO cost	(54,083)		(56,426)
	$	523,497	$	603,571

Inventory obsolescence reserves deducted from FIFO cost were $72.0 million and $49.3 million as of December 31, 2020 and 2019, respectively.

Property, plant and equipment, net consisted of the following as of December 31, (in thousands):

	2020		2019
Land and related improvements	$	69,518	$	75,798
Buildings and related improvements	428,171		507,178
Machinery and equipment	1,577,337		1,609,582
Software	759,675		750,978
Construction in progress	188,823		148,805
	3,023,524		3,092,341
Accumulated depreciation	(2,279,740)		(2,244,959)
	$	743,784	$	847,382

Software, net of accumulated amortization, included in Property, plant and equipment, net, was $100.7 million and $138.9 million as of December 31, 2020 and 2019, respectively.

Accrued liabilities consisted of the following as of December 31, (in thousands):

	2020		2019
Payroll, employee benefits and related expenses	$	107,511	$	113,621
Sales incentive programs	52,820		73,354
Warranty and recalls	44,415		57,068
Accrued interest	65,590		49,213
Tax-related accruals	24,238		29,871
Leases	17,081		19,013
Fair value of derivative financial instruments	25,521		13,934
Restructuring	23,920		867
Other	196,118		225,347
	$	557,214	$	582,288

Deposits – During 2020, HDFS began offering brokered certificates of deposit to customers indirectly through contractual arrangements with third-party banks and/or securities brokerage firms through its bank subsidiary. At December 31, 2020, the Company had $80.0 million, net of fees, of short-term interest-bearing brokered certificates of deposit outstanding. Each separate brokered certificate of deposit is issued under a master certificate and, as such, all outstanding brokered certificates of deposit are considered below the Federal Deposit Insurance Corporation insurance coverage limits.

Operating Cash Flow – The reconciliation of Net income to Net cash provided by operating activities for the years ended December 31, was as follows (in thousands):

	2020		2019		2018
Cash flows from operating activities:
Net income	$	1,298	$	423,635	$	531,451
Adjustments to reconcile Net income to Net cash provided by operating activities:
Depreciation and amortization	185,715		232,537		264,863
Amortization of deferred loan origination costs	71,142		76,326		81,315
Amortization of financing origination fees	14,435		9,823		8,367
Provision for long-term employee benefits	40,833		13,344		36,481
Employee benefit plan contributions and payments	(20,722)		(13,256)		(10,544)
Stock compensation expense	23,494		33,733		35,539
Net change in wholesale finance receivables related to sales	531,701		(5,822)		(56,538)
Provision for credit losses	181,870		134,536		106,870
Deferred income taxes	(44,079)		21,547		(33,981)
Other, net	13,826		298		37,554
Changes in current assets and liabilities:
Accounts receivable, net	127,657		44,902		9,143
Finance receivables – accrued interest and other	7,418		(11,119)		773
Inventories, net	80,858		(47,576)		(31,059)
Accounts payable and accrued liabilities	(43,087)		(18,462)		196,192
Derivative financial instruments	(3,481)		1,936		473
Other	9,012		(28,110)		29,022
	1,176,592		444,637		674,470
Net cash provided by operating activities	$	1,177,890	$	868,272	$	1,205,921

Cash paid during the years ended December 31, for interest and income taxes was as follows (in thousands):

	2020		2019		2018
Interest	$	245,961	$	229,678	$	207,484
Income taxes	$	30,675	$	149,828	$	149,436

Interest paid represents interest payments of HDFS and interest payments of the Company, included in Financial Services interest expense and Interest expense on the Consolidated statements of operations.