7. Asset-Backed Financing

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.

In 2011, 2010 and 2009, HDFS transferred $1.21 billion, $670.8 million and $3.08 billion, respectively, of U.S. retail motorcycle finance receivables to seven separate SPEs. The SPEs in turn issued the following secured notes with the related maturity dates and interest rates (in thousands):


Issue Date	Principal Amount		Weighted-Average Rate at Date of Issuance			Maturity Date
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
December 2009	$	562,499		1.55	%	December 2010- June 2017
October 2009	$	700,000		1.16	%	October 2010- April 2017
July 2009	$	700,000		2.11	%	July 2010- February 2017
May 2009	$	500,000		2.77	%	May 2010- January 2017

As discussed in Note 1, the Company adopted new accounting guidance within ASC Topic 810 and ASC Topic 860 as of January 1, 2010 that ultimately required the Company to consolidate its formerly off-balance sheet QSPEs. As a result, the following secured notes, which were issued by the former QSPEs, are included in the Company's condensed consolidated balance sheets at December 31, 2011 (in thousands):


Issue Date	Principal Amount		Weighted-Average Rate at Date of Issuance			Maturity Date
Issue Date	Principal Amount		Weighted-Average Rate at Date of Issuance			Maturity Date
February 2008	$	486,000		3.94	%	February 2009- December 2013
August 2007	$	782,000		5.50	%	September 2008- May 2015
May 2007	$	950,000		5.20	%	May 2008- August 2015

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. Cash and cash equivalent 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 following table presents the assets and liabilities of the consolidated term asset-backed securitization SPEs at December 31 (in thousands):


	2011			2010
Assets:
Finance receivables	$	2,916,219		$	3,458,274
Allowance for credit losses		(65,735	)		(102,967	)
Restricted cash		228,776			287,336
Other assets		6,772			11,630

Total assets	$	3,086,032		$	3,654,273

Liabilities
Term asset-backed securitization debt		2,087,346			2,755,234

For the year ended December 31, 2011 and 2010, the SPEs recorded interest expense on the secured notes of $60.2 million and $106.3 million, respectively, which is included in financial services interest expense. The weighted average interest rate of the outstanding term asset-backed securitization transactions was 1.96% and 3.11% at December 31, 2011 and 2010, respectively.

Asset-Backed Commercial Paper Conduit Facility VIE

On September 9, 2011, the Company amended and restated its third-party bank sponsored asset-backed commercial paper conduit facility 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. The amended agreement has similar terms as the prior agreement and is for the same amount. 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 conduit facility 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 conduit facility, 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 conduit facility has an expiration date of September 7, 2012.

The following table presents the assets of the consolidated asset-backed commercial paper conduit facility SPEs at December 31 (in thousands):


	2011			2010
Finance receivables	$	13,455		$	28,907
Allowance for credit losses		(302	)		(859	)
Restricted cash		879			1,626
Other assets		449			937

Total assets	$	14,481		$	30,611

The SPE had no borrowings outstanding under the conduit facility at December 31, 2011 or 2010; 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, 2011 and 2010, the SPE recorded interest expense of $1.5 million and $9.3 million, respectively, related to the unused portion of the total aggregate commitment of $600.0 million. Interest expense on the conduit facility is included in financial services interest expense. There was no weighted average interest rate at December 31, 2011 or 2010 as HDFS had no outstanding borrowings under the conduit facility during 2011 or 2010.