3. Additional Balance Sheet and Cash Flow Information

Marketable Securities

The Company's marketable securities consisted of the following (in thousands):


	April 1, 2012		December 31, 2011		March 27, 2011
Available-for-sale:
Corporate bonds	$	134,946	$	153,380	$	55,232
U.S. Treasuries		—		—		59,977

	$	134,946	$	153,380	$	115,209

The Company's available-for-sale securities are carried at fair value with any unrealized gains or losses reported in other comprehensive income. During the first three months of 2012 and 2011, the Company recognized gross unrealized gains in other comprehensive income of $1.6 million and $0.1 million, respectively, or $1.0 million and $0.04 million net of taxes, respectively, to adjust amortized cost to fair value. The marketable securities have contractual maturities that generally come due over the next 12 to 48 months.

Inventories

Inventories are valued at the lower of cost or market. Substantially all inventories located in the United States are valued using the last-in, first-out (LIFO) method. Other inventories are valued at the lower of cost or market using the first-in, first-out (FIFO) method. Inventories consist of the following (in thousands):


	April 1, 2012			December 31, 2011			March 27, 2011
Components at the lower of FIFO cost or market
Raw materials and work in process	$	113,127		$	113,932		$	99,538
Motorcycle finished goods		252,979			226,261			187,687
Parts and accessories and general merchandise		145,362			121,340			119,134

Inventory at lower of FIFO cost or market		511,468			461,533			406,359
Excess of FIFO over LIFO cost		(43,527	)		(43,527	)		(34,036	)

	$	467,941		$	418,006		$	372,323

Operating Cash Flow

The reconciliation of net income to net cash used by operating activities is as follows (in thousands):


	Three months ended
	April 1, 2012			March 27, 2011
Cash flows from operating activities:
Net income	$	172,035		$	119,260
Loss from discontinued operations		—			—

Income from continuing operations		172,035			119,260

Adjustments to reconcile income from continuing operations to net cash used by operating activities:
Depreciation		43,203			42,947
Amortization of deferred loan origination costs		18,547			19,329
Amortization of financing origination fees		2,743			3,107
Provision for employee long-term benefits		17,293			15,563
Contributions to pension and postretirement plans		(206,832	)		(204,816	)
Stock compensation expense		11,744			9,153
Net change in wholesale finance receivables related to sales		(151,046	)		(163,967	)
Provision for credit losses		9,014			5,606
Pension and postretirement healthcare plan curtailment and settlement expense		—			236
Foreign currency adjustments		(2,911	)		29
Other, net		1,505			14,112
Changes in current assets and liabilities:
Accounts receivable, net		(43,745	)		(27,048	)
Finance receivables - accrued interest and other		3,299			3,542
Inventories		(47,168	)		(38,200	)
Accounts payable and accrued liabilities		117,460			98,960
Restructuring reserves		1,296			7,757
Derivative instruments		(486	)		2,157
Other		(19,567	)		(12,645	)

Total adjustments		(245,651	)		(224,178	)

Net cash used by operating activities of continuing operations	$	(73,616	)	$	(104,918	)