Additional Balance Sheet and Cash Flow Information

The following information represents additional detail for selected line items included in the consolidated balance sheets at December 31 and the statements of cash flows for the years ended December 31.

Balance Sheet Information:

Inventories, net (in thousands):



	2012			2011
Components at the lower of FIFO cost or market
Raw materials and work in process	$	111,335		$	113,932
Motorcycle finished goods	205,660			226,261
Parts and accessories and general merchandise	122,418			121,340
Inventory at lower of FIFO cost or market	439,413			461,533
Excess of FIFO over LIFO cost	(45,889		)	(43,527		)
	$	393,524		$	418,006

Inventory obsolescence reserves deducted from FIFO cost were $22.9 million and $24.8 million as of December 31, 2012 and 2011, respectively.

Property, plant and equipment, at cost (in thousands):



	2012		2011
Land and related improvements	57,801		59,995
Buildings and related improvements	417,316		466,652
Machinery and equipment	2,042,484		1,920,485
Construction in progress	167,243		158,237
	2,684,844		2,605,369
Accumulated depreciation	(1,869,380	)	(1,795,910	)
	815,464		809,459

Accrued liabilities (in thousands):



	2012	2011
Payroll, employee benefits and related expenses	215,461	226,381
Restructuring reserves	27,223	43,310
Warranty and recalls	60,263	54,994
Sales incentive programs	43,938	41,448
Tax-related accruals	19,923	57,706
Fair value of derivative financial instruments	7,920	5,136
Other	138,863	135,197
	513,591	564,172

Cash Flow Information:

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



	2012			2011			2010
Cash flows from operating activities:
Net income	$	623,925		$	599,114		$	146,545
Income (loss) from discontinued operations	—			51,036			(113,124		)
Income from continuing operations	623,925			548,078			259,669
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation	168,978			180,408			255,171
Amortization of deferred loan origination costs	78,592			78,695			87,223
Amortization of financing origination fees	9,969			10,790			19,618
Provision for employee long-term benefits	71,347			59,441			79,630
Contributions to pension and postretirement plans	(244,416		)	(219,695		)	(39,391		)
Stock compensation expense	40,815			38,192			30,431
Net change in wholesale finance receivables related to sales	2,513			(2,335		)	81,527
Provision for credit losses	22,239			17,031			93,118
Loss on debt extinguishment	4,323			9,608			85,247
Pension and postretirement healthcare plan curtailment and settlement expense	6,242			236			31,824
Deferred income taxes	128,452			87,873			(17,591		)
Foreign currency adjustments	9,773			10,678			(21,480		)
Other, net	(7,216		)	(15,807		)	11,910
Changes in current assets and liabilities:
Accounts receivable, net	(13,690		)	43,050			2,905
Finance receivables – accrued interest and other	(4		)	5,027			10,083
Inventories	21,459			(94,957		)	2,516
Accounts payable and accrued liabilities	(10,798		)	120,291			215,013
Restructuring reserves	(16,087		)	8,072			(32,477		)
Derivative instruments	2,758			(2,488		)	5,339
Prepaid and other	(97,716		)	3,103			3,133
Total adjustments	177,533			337,213			903,749
Net cash provided by operating activities of continuing operations	$	801,458		$	885,291		$	1,163,418

Cash paid during the period for interest and income taxes (in thousands):



	2012		2011		2010
Interest	$	225,228	$	251,341	$	346,855
Income taxes	$	317,812	$	84,984	$	47,084

Interest paid represents interest payments of HDFS (included in financial services interest expense) and interest payments of the Company (included in interest expense).