EXPERIENCEBUSINESS - Harley-Davidson

HARLEY- DAVIDSON, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
4. HARLEY-DAVIDSON
FINANCIAL SERVICES, INC. (CONTINUED)
Certain transactions between the Motorcycles and
Financial Services segments are not eliminated and are reflected
in the condensed statements of operations above. Included
in interest income is approximately $9.2 million, $6.3 million
and $5.3 million of interest on wholesale finance receivables
paid by HDMC to HDFS in 2000, 1999 and 1998,
respectively. This interest is paid on behalf of HDMC’s independent
dealers as an incentive to hold inventory during the
winter months. Included in other income is approximately
$1.8 million, $1.5 million and $1.3 million of fees HDMC
paid to HDFS for credit and collection activities on receivables
purchased from HDMC during 2000, 1999, and 1998,
respectively. The offsetting transactions recorded by HDMC
are included in selling, administrative and engineering in the
consolidated statement of operations.
Finance receivables, included in the current and non-current
sections of the consolidated balance sheets, originated or purchased
by HDFS and owned at December 31, were as follows:
(In thousands)
2000 1999
Wholesale $456,926 $358,052
Retail 218,534 228,433
Retail revolving charge — 149,818
Investment in retained
securitization interests 100,437 73,481
775,897 809,784
Allowance for credit losses 10,947 13,945
$764,950 $795,839
Finance receivables include wholesale loans to dealers and
retail loans to consumers. Wholesale loans to dealers are generally
secured by financed inventory or property. Consumer
loans consist of secured installment sales contracts and revolving
charge receivables. Title to vehicles financed by installment
sales contracts are held by HDFS. HDFS owns finance receivables
originated in the United States and Canada.
Wholesale finance receivables, related primarily to
motorcycles and related parts and accessories sales, are contractually
due within one year. Retail finance receivables are
primarily related to sales of motorcycles, aircraft and watercraft.
On December 31, 2000, contractual maturities of
finance receivables were as follows:
(In thousands)
2001 $530,859
2002 47,836
2003 36,591
2004 31,780
2005 30,449
Thereafter 98,382
Total $775,897
The allowance for credit losses is comprised of individual
components relating to wholesale and retail finance receivables.
Changes in the allowance for credit losses for the year
ended December 31 were as follows:
(In thousands)
2000 1999 1998
Balance at beginning of year $13,945 $ 9,978 $ 6,867
Provision for credit losses 9,919 17,919 10,338
Charge-offs (7,282) (13,952) (7,227)
Sale of allowance related to
revolving charge receivables (5,635) — —
Balance at end of year $10,947 $13,945 $ 9,978
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