Additional Balance Sheet and Cash Flow Information

Marketable Securities

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



	September 30, 2012		December 31, 2011		September 25, 2011
Available-for-sale:
Corporate bonds	$	136,376	$	153,380	$	179,285
U.S. Treasuries	—		—		—
	$	136,376	$	153,380	$	179,285

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 nine months of 2012 and 2011, the Company recognized gross unrealized gains in other comprehensive income of $1.1 million and $1.5 million, respectively, or $0.7 million and $0.9 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):



	September 30, 2012			December 31, 2011			September 25, 2011
Components at the lower of FIFO cost or market
Raw materials and work in process	$	121,184		$	113,932		$	95,957
Motorcycle finished goods	169,515			226,261			154,273
Parts and accessories and general merchandise	132,789			121,340			131,708
Inventory at lower of FIFO cost or market	423,488			461,533			381,938
Excess of FIFO over LIFO cost	(44,359		)	(43,527		)	(35,975		)
	$	379,129		$	418,006		$	345,963

Operating Cash Flow

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



	Nine months ended
	September 30, 2012			September 25, 2011
Cash flows from operating activities:
Net income	$	553,286		$	493,434
Loss from discontinued operations	—			—
Income from continuing operations	553,286			493,434
Adjustments to reconcile income from continuing operations to net cash provided by operating activities:
Depreciation	127,443			131,938
Amortization of deferred loan origination costs	58,438			59,272
Amortization of financing origination fees	7,462			8,171
Provision for employee long-term benefits	50,348			50,983
Contributions to pension and postretirement plans	(220,733		)	(207,829		)
Stock compensation expense	30,287			28,316
Net change in wholesale finance receivables related to sales	5,570			77,519
Provision for credit losses	12,823			5,005
Loss on debt extinguishment	—			8,671
Pension and postretirement healthcare plan curtailment and settlement expense	—			236
Foreign currency adjustments	8,692			11,381
Other, net	9,411			11,036
Changes in current assets and liabilities:
Accounts receivable, net	(37,904		)	(19,473		)
Finance receivables—accrued interest and other	1,597			7,069
Inventories	36,463			(19,451		)
Accounts payable and accrued liabilities	99,642			257,373
Restructuring reserves	(9,177		)	2,664
Derivative instruments	611			(2,279		)
Other	(21,761		)	(2,435		)
Total adjustments	159,212			408,167
Net cash provided by operating activities of continuing operations	$	712,498		$	901,601