HOG - 12.31-2012 - 11K - 401(K)

 

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 11-K
 
ý
ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934:
For the fiscal year ended December 31, 2012.
OR
 
¨
TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934:
For the transition period from             to             .
Commission File No. 1-9183
 
A.
Full title of the plan and the address of the plan, if different from that of the issuer named below:
Harley-Davidson Retirement Savings Plan for Salaried Employees
Harley-Davidson Retirement Savings Plan for Milwaukee & Tomahawk Hourly Bargaining Unit Employees
Harley-Davidson Retirement Savings Plan for Kansas City Hourly Bargaining Unit Employees
Harley-Davidson Retirement Savings Plan for York Hourly Bargaining Unit Employees
 
B.
Name of issuer of the securities held pursuant to the plan and the address of its principal executive office:
Harley-Davidson, Inc.
3700 West Juneau Avenue
Milwaukee, Wisconsin 53208

 



REQUIRED INFORMATION
 
1.
Not applicable.
2.
Not applicable.
3.
Not applicable.
4.
The Harley-Davidson Retirement Savings Plans (the “Plans”) are subject to the requirements of the Employee Retirement Income Security Act of 1974 (ERISA). Attached hereto are copies of the most recent financial statements and schedule of the Plans prepared in accordance with the financial reporting requirements of ERISA.
Exhibits
23
Consent of Independent Registered Public Accounting Firm





SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the trustees (or other persons who administer the Plans) have duly caused this annual report to be signed on its behalf by the undersigned hereunto duly authorized.
 
 
 
 
 
 
Harley-Davidson
 
Retirement Savings Plan for Salaried Employees
 
 
 
Date: June 20, 2013
By:
 
/s/ Perry A. Glassgow
 
 
 
Perry A. Glassgow
 
Administrative Committee Member
 
 
 
Harley-Davidson
 
Retirement Savings Plan for Milwaukee &
Tomahawk Hourly Bargaining Unit Employees
 
 
 
Date: June 20, 2013
By:
 
/s/ Perry A. Glassgow
 
 
 
Perry A. Glassgow
 
Administrative Committee Member
 
 
 
Harley-Davidson
 
Retirement Savings Plan for Kansas City Hourly
Bargaining Unit Employees
 
 
 
Date: June 20, 2013
By:
 
/s/ Perry A. Glassgow
 
 
 
Perry A. Glassgow
 
Administrative Committee Member
 
 
 
Harley-Davidson
 
Retirement Savings Plan for York Hourly Bargaining
Unit Employees
 
 
 
Date: June 20, 2013
By:
 
/s/ Perry A. Glassgow
 
 
 
Perry A. Glassgow
 
Administrative Committee Member





Harley-Davidson Retirement Savings Plans
Financial Statements and Supplemental Schedule
Years Ended December 31, 2012 and 2011
Contents
 
Report of Independent Registered Public Accounting Firm
Financial Statements
 
Statements of Net Assets Available for Benefits
Statements of Changes in Net Assets Available for Benefits
Notes to Financial Statements
Supplemental Schedule
 
Schedule H, Line 4i – Schedule of Assets (Held at End of Year)



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Harley-Davidson Retirement Plans Committee
Harley-Davidson, Inc.
We have audited the accompanying statements of net assets available for benefits of the Harley-Davidson Retirement Savings Plans as of December 31, 2012 and 2011, and the related statements of changes in net assets available for benefits for the years then ended. These financial statements are the responsibility of the Plans’ management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. We were not engaged to perform an audit of the Plans’ internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Plans’ internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the net assets available for benefits of the Harley-Davidson Retirement Savings Plans at December 31, 2012 and 2011, and the changes in its net assets available for benefits for the years then ended, in conformity with U.S. generally accepted accounting principles.
Our audits were conducted for the purpose of forming an opinion on the financial statements taken as a whole. The accompanying supplemental schedule of assets (held at end of year) as of December 31, 2012 is presented for purposes of additional analysis and is not a required part of the financial statements but is supplementary information required by the Department of Labor’s Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. Such information has been subjected to the auditing procedures applied in our audits of the financial statements and, in our opinion, is fairly stated in all material respects in relation to the financial statements taken as a whole.
/s/ Ernst & Young, LLP
Milwaukee, Wisconsin
June 20, 2013

1

Harley-Davidson Retirement Savings Plans
Statements of Net Assets Available for Benefits
December 31, 2012
 
 
 
Harley-Davidson
Retirement
Savings Plan
for Salaried
Employees
(Plan No. 002)
 
Harley-Davidson
Retirement Savings
Plan for Milwaukee
& Tomahawk
Hourly Bargaining
Unit Employees
(Plan No. 005)
 
Harley-Davidson
Retirement
Savings Plan
for Kansas City
Hourly Bargaining
Unit Employees
(Plan No. 006)
 
Harley-Davidson
Retirement
Savings Plan
for York
Hourly Bargaining
Unit Employees
(Plan No. 008)
Assets:
 
 
 
 
 
 
 
 
Investment in Harley-Davidson Retirement Savings Plan Master Trust (Note 3)
 
$
423,078,399

 
$
152,738,660

 
$
11,730,983

 
$
69,867,859

Receivables:
 
 
 
 
 
 
 
 
Notes receivable from participants
 
4,119,176

 
3,388,307

 
741,406

 
1,487,994

Company contribution receivable
 
3,332,414

 
24,444

 
4,481

 
37,750

Total receivables
 
7,451,590

 
3,412,751

 
745,887

 
1,525,744

Net assets available for benefits
 
$
430,529,989

 
$
156,151,411

 
$
12,476,870

 
$
71,393,603

See accompanying notes to financial statements.

2

Harley-Davidson Retirement Savings Plans
Statements of Net Assets Available for Benefits
December 31, 2011
 
 
 
Harley-Davidson
Retirement
Savings Plan
for Salaried
Employees
(Plan No. 002)
 
Harley-Davidson
Retirement Savings
Plan for Milwaukee
& Tomahawk
Hourly Bargaining
Unit Employees
(Plan No. 005)
 
Harley-Davidson
Retirement
Savings Plan
for Kansas City
Hourly Bargaining
Unit Employees
(Plan No. 006)
 
Harley-Davidson
Retirement
Savings Plan
for York
Hourly Bargaining
Unit Employees
(Plan No. 008)
Assets:
 
 
 
 
 
 
 
 
Investment in Harley-Davidson Retirement Savings Plan Master Trust (Note 3)
 
$
357,074,281

 
$
150,300,030

 
$
9,995,554

 
$
65,521,445

Receivables:
 
 
 
 
 
 
 
 
Notes receivable from participants
 
4,097,809

 
3,942,570

 
641,371

 
1,253,174

Company contribution receivable
 
2,399,212

 
—

 
—

 
—

Total receivables
 
6,497,021

 
3,942,570

 
641,371

 
1,253,174

Net assets available for benefits
 
$
363,571,302

 
$
154,242,600

 
$
10,636,925

 
$
66,774,619

See accompanying notes to financial statements.


3

Harley-Davidson Retirement Savings Plans
Statements of Changes in Net Assets Available for Benefits
Year Ended December 31, 2012
 
 
 
Harley-Davidson
Retirement
Savings Plan
for Salaried
Employees
(Plan No. 002)
 
Harley-Davidson
Retirement Savings
Plan for Milwaukee
& Tomahawk
Hourly Bargaining
Unit Employees
(Plan No. 005)
 
Harley-Davidson
Retirement
Savings Plan
for Kansas City
Hourly Bargaining
Unit Employees
(Plan No. 006)
 
Harley-Davidson
Retirement
Savings Plan
for York
Hourly Bargaining
Unit Employees
(Plan No. 008)
Additions:
 
 
 
 
 
 
 
 
Income:
 
 
 
 
 
 
 
 
Investment income of Harley-Davidson Savings Master Trust (Note 3)
 
$
59,205,071

 
$
19,980,602

 
$
1,568,885

 
$
10,500,395

Interest on notes receivable from participants
 
172,342

 
192,449

 
26,922

 
74,739

Total Income
 
59,377,413

 
20,173,051

 
1,595,807

 
10,575,134

Contributions:
 
 
 
 
 
 
 
 
Participant
 
22,679,057

 
6,713,030

 
1,065,005

 
2,862,552

Participant rollovers
 
1,447,860

 
55,263

 
6,916

 
—

Company
 
11,222,452

 
946,800

 
189,834

 
958,656

Total contributions
 
35,349,369

 
7,715,093

 
1,261,755

 
3,821,208

Total additions
 
94,726,782

 
27,888,144

 
2,857,562

 
14,396,342

Deductions:
 
 
 
 
 
 
 
 
Benefit payments and withdrawals
 
29,887,421

 
24,062,840

 
864,925

 
9,678,356

Administrative expenses
 
16,365

 
17,079

 
5,674

 
9,743

Total deductions
 
29,903,786

 
24,079,919

 
870,599

 
9,688,099

Net increase (decrease)
 
64,822,996

 
3,808,225

 
1,986,963

 
4,708,243

Transfers from (to) other Plans
 
2,135,691

 
(1,899,414
)
 
(147,018
)
 
(89,259
)
Net increase (decrease)
 
66,958,687

 
1,908,811

 
1,839,945

 
4,618,984

Net assets available for benefits at beginning of year
 
363,571,302

 
154,242,600

 
10,636,925

 
66,774,619

Net assets available for benefits at end of year
 
$
430,529,989

 
$
156,151,411

 
$
12,476,870

 
$
71,393,603

See accompanying notes to financial statements.

4

Harley-Davidson Retirement Savings Plans
Statements of Changes in Net Assets Available for Benefits
Year Ended December 31, 2011
 
 
 
Harley-Davidson
Retirement
Savings Plan
for Salaried
Employees
(Plan No. 002)
 
Harley-Davidson
Retirement Savings
Plan for Milwaukee
& Tomahawk
Hourly Bargaining
Unit Employees
(Plan No. 005)
 
Harley-Davidson
Retirement
Savings Plan
for Kansas City
Hourly Bargaining
Unit Employees
(Plan No. 006)
 
Harley-Davidson
Retirement
Savings Plan
for York
Hourly Bargaining
Unit Employees
(Plan No. 008)
Additions:
 
 
 
 
 
 
 
 
Income:
 
 
 
 
 
 
 
 
Investment income of Harley-Davidson Savings Master Trust (Note 3)
 
$
2,500,394

 
$
2,698,157

 
$
84,554

 
$
945,548

Interest on notes receivable from participants
 
180,519

 
200,016

 
28,801

 
67,600

Total Income
 
2,680,913

 
2,898,173

 
113,355

 
1,013,148

Contributions:
 
 
 
 
 
 
 
 
Participant
 
21,279,444

 
7,370,470

 
1,082,540

 
3,332,847

Participant rollovers
 
1,339,504

 
27,899

 
—

 
63,617

Company
 
9,899,293

 
1,061,745

 
186,320

 
1,172,633

Total contributions
 
32,518,241

 
8,460,114

 
1,268,860

 
4,569,097

Total additions
 
35,199,154

 
11,358,287

 
1,382,215

 
5,582,245

Deductions:
 
 
 
 
 
 
 
 
Benefit payments and withdrawals
 
30,623,082

 
9,398,462

 
702,434

 
8,879,361

Administrative expenses
 
18,729

 
21,991

 
7,062

 
10,169

Total deductions
 
30,641,811

 
9,420,453

 
709,496

 
8,889,530

Net increase (decrease)
 
4,557,343

 
1,937,834

 
672,719

 
(3,307,285
)
Transfers from (to) other Plans
 
111,217

 
—

 
(22,224
)
 
(88,993
)
Net increase (decrease)
 
4,668,560

 
1,937,834

 
650,495

 
(3,396,278
)
Net assets available for benefits at beginning of year
 
358,902,742

 
152,304,766

 
9,986,430

 
70,170,897

Net assets available for benefits at end of year
 
$
363,571,302

 
$
154,242,600

 
$
10,636,925

 
$
66,774,619

See accompanying notes to financial statements.

5

Harley-Davidson Retirement Savings Plans
Notes to Financial Statements
Years Ended December 31, 2012 and 2011
1. Description of Plans
The accompanying financial statements comprise certain retirement savings plans of Harley-Davidson, Inc. and subsidiaries (collectively, the “Company”) that participate in the Harley-Davidson Retirement Savings Plan Master Trust (the “Master Trust”). The Harley-Davidson Financial Services, Inc. 401(k) Profit Sharing Plan (the "Affiliated FSI Plan") also participates, to a limited extent, in the Master Trust. The financial statements of the Affiliated FSI Plan are not included herewith.
The following description of the Harley-Davidson Retirement Savings Plan for Salaried Employees, the Harley-Davidson Retirement Savings Plan for Milwaukee & Tomahawk Hourly Bargaining Unit Employees, the Harley-Davidson Retirement Savings Plan for Kansas City Hourly Bargaining Unit Employees, and the Harley-Davidson Retirement Savings Plan for York Hourly Bargaining Unit Employees (each, a “Plan” and collectively, the “Plans”) provides only general information. Participants should refer to the applicable plan document for a more complete description of each Plan’s provisions. The Plans are subject to and comply with the provisions of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”).
The purpose of the Plans is to encourage eligible employees to regularly save part of their earnings and to assist them in accumulating additional financial security for their retirement. The Plans provide that both participant contributions and Company contributions be held in a trust by an independent trustee for the benefit of participating employees. Except for participant loans, all Plan assets are held in the Master Trust. The trustee of the Master Trust is Fidelity Management Trust Company. Fidelity Workplace Services LLC is the record-keeper for the Plans. Harley-Davidson Motor Company Group, LLC is the plan sponsor for the Plans.
General
Harley-Davidson Retirement Savings Plan for Salaried Employees
The Harley-Davidson Retirement Savings Plan for Salaried Employees (“SSP”) is a defined contribution plan that covers salaried employees of Harley-Davidson, Inc.; Harley-Davidson Motor Company Group, LLC; Harley-Davidson Motor Company, Inc.; Harley-Davidson Motor Company Operations, Inc.; H-D U.S.A., LLC; and Harley-Davidson Dealer Systems, Inc. (“HDDS”) meeting minimum eligibility requirements.
 
Harley-Davidson Retirement Savings Plan for Milwaukee & Tomahawk Hourly Bargaining Unit Employees
The Harley-Davidson Retirement Savings Plan for Milwaukee & Tomahawk Hourly Bargaining Unit Employees (“WHSP”) is a defined contribution plan that covers hourly employees of the Harley-Davidson Motor Company Operations, Inc. Milwaukee area and Tomahawk plants, subject to a collective bargaining agreement and meeting minimum eligibility requirements.
Harley-Davidson Retirement Savings Plan for Kansas City Hourly Bargaining Unit Employees
The Harley-Davidson Retirement Savings Plan for Kansas City Hourly Bargaining Unit Employees (“KCSP”) is a defined contribution plan that covers hourly employees of the Harley-Davidson Motor Company Operations, Inc. Kansas City plant, subject to a collective bargaining agreement and meeting minimum eligibility requirements.
Harley-Davidson Retirement Savings Plan for York Hourly Bargaining Unit Employees
The Harley-Davidson Retirement Savings Plan for York Hourly Bargaining Unit Employees (“YSP”) is a defined contribution plan that covers hourly employees of the Harley-Davidson Motor Company Operations, Inc. York plant, subject to a collective bargaining agreement and meeting minimum eligibility requirements.
Contributions
Participants may defer a portion of their compensation on a pretax basis through contributions to the Plans. The Plans also allow participants to make Roth contributions to the Plans on an after-tax basis. The maximum amount that participants may defer and contribute to the Plans is determined from time to time by the plan administrator and is subject to limitations under the Internal Revenue Code (the “Code”). Rollover contributions to the Plans are permitted under certain circumstances, as defined in the applicable Plans. Participants who attain age 50 before the end of the applicable plan year are eligible to make additional elective deferrals (catch-up contributions), subject to Internal Revenue Service (“IRS”) limits.


6
Harley-Davidson Retirement Savings Plans
Notes to Financial Statements (Continued)

1. Description of Plans (continued)

Harley-Davidson Retirement Savings Plan for Salaried Employees (SSP)
The SSP allows for Company matching contributions in Harley-Davidson, Inc. common stock up to $0.50 or $0.75 per dollar of participant contributions, depending on the participant’s date of hire and/or employment locations. Company matching contributions may vary according to the Company’s financial performance. For the 2012 and 2011 plan years, the matching contributions were made without regard to financial performance. The matching contributions apply only to participant contributions up to 6% of a participant’s eligible compensation. Certain participants with a date of hire or rehire on or after August 1, 2006, and who are not covered under the Retirement Annuity Plan for Salaried Employees of Harley-Davidson (“Retirement Annuity Plan”) during the same period receive an employer retirement contribution of 4% of their eligible pay, which is made regardless of the employee’s participation in the SSP or Company performance. Effective January 1, 2011, HDDS employees were eligible to receive the 4% contribution regardless of hire date. Employees hired on or after January 1, 2007, are automatically enrolled in the SSP unless they affirmatively opt out.
Upon termination of employment, the nonvested portion of the participant’s account, as defined by the SSP, represents a forfeiture. As of December 31, 2012 and 2011, forfeited nonvested accounts totaled $368,753 and $201,242, respectively. Company contributions to the SSP for the years ended December 31, 2012 and 2011, were reduced by forfeited nonvested accounts of $87,546 and $70,090, respectively.
Harley-Davidson Retirement Savings Plan for Milwaukee & Tomahawk Hourly Bargaining Unit Employees (WHSP)
The WHSP allows for Company matching contributions in Harley-Davidson, Inc. common stock up to $0.25 per dollar of participant contributions. Company matching contributions may vary according to the Company’s financial performance. For the 2012 and 2011 plan years, the matching contributions were made without regard to financial performance. The matching contributions apply only to participant contributions up to 6% of a participant’s eligible compensation. Employees hired on or after April 1, 2012, are automatically enrolled into the WHSP unless they affirmatively opt out.
Upon termination of employment, the nonvested portion of the participant’s account, as defined by the WHSP, represents a forfeiture. There were no forfeited nonvested accounts as of December 31, 2012 and 2011.
 
Harley-Davidson Retirement Savings Plan for Kansas City Hourly Bargaining Unit Employees (KCSP)
The KCSP allows for Company matching contributions in Harley-Davidson, Inc. common stock up to $0.25 per dollar of participant contributions. Company matching contributions may vary according to the Company’s financial performance. For the 2012 and 2011 plan years, the matching contributions were made without regard to financial performance. The matching contributions apply only to participant contributions up to 6% of a participant’s eligible compensation. Employees hired on or after August 1, 2011, are automatically enrolled into the KCSP unless they affirmatively opt out.
Upon termination of employment, the nonvested portion of the participant’s account, as defined by the KCSP, represents a forfeiture. There were no forfeited nonvested accounts as of December 31, 2012 and 2011.
Harley-Davidson Retirement Savings Plan for York Hourly Bargaining Unit Employees (YSP)
The YSP allows for Company matching contributions in Harley-Davidson, Inc. common stock up to $0.50 per dollar of participant contributions. Company matching contributions may vary according to the Company’s financial performance. For the 2012 and 2011 plan years, the matching contributions were made without regard to financial performance. The matching contributions apply only to participant contributions up to 6% of a participant’s eligible compensation. Employees hired on or after February 2, 2010, are automatically enrolled into the YSP unless they affirmatively opt out.
Upon termination of employment, the nonvested portion of the participant’s account, as defined by the YSP, represents a forfeiture. There were no forfeited nonvested accounts as of December 31, 2012 and 2011.
 
Participants’ Accounts
Separate accounts are maintained for each participant. The account balances are adjusted on a daily basis for participants’ contributions, Company contributions, net investment income, loan fees, and distributions of participants’ benefits or withdrawals. Participants have the option of investing their contributions in one or any combination of 31 investment funds, which includes a self-directed brokerage account feature. The Plans are intended to satisfy the requirements under Section 404(c) of ERISA and, therefore, provide that participants may choose to direct their contributions and/or all or part of their account balances among any of their respective Plan’s investment alternatives daily. The benefit to which a participant is entitled is the benefit that can be provided from the participant’s vested account.

7
Harley-Davidson Retirement Savings Plans
Notes to Financial Statements (Continued)

1. Description of Plans (continued)
Vesting
Participants are immediately vested in 100% of their contributions and earnings thereon. Participants vest 100% in Company contributions after completing three years of vesting service, with 1,000 hours of service in each year. Participants are 100% vested in their proportionate share of any dividends received by the Plans after September 1, 2011, on shares of Harley-Davidson, Inc. common stock held by the Plans in the Harley-Davidson, Inc. Common Stock Fund.
Participants who terminate due to death, disability, or retirement immediately become 100% vested in their entire account.
During the year ended December 31, 2011, the WHSP, KCSP and YSP each experienced a significant reduction in their employee work-force. This triggered partial plan terminations under the Code and Department of Labor regulations. As a result, the participants who were terminated in relation to the employee work-force reductions have been 100% vested in their account balances.
Payments of Benefits and Withdrawals
For payments made upon retirement, death, disability, or termination of employment, the balance in a participant’s account is paid to the participant or beneficiary in a lump sum, periodic payments (in certain instances), or other form of payment as allowed under the Plans.
Participants may not withdraw prior to retirement, death, disability, or termination of employment any portion of their account pertaining to contributions made under provisions of Section 401(k) of the Code, except for financial hardships, as defined in the Code, or after the participant attains age 59 1/2 or becomes disabled, as defined by the Social Security Administration. The permissible in-service withdrawals are from participant contributions.
Participant Employee Stock Ownership Plan Dividend Election Rights
Effective September 1, 2011, the portion of the Plans that are at any time invested in Harley-Davidson, Inc. common stock held in the Harley-Davidson, Inc. Common Stock Fund shall be considered an employee stock ownership plan under Section 4975(e)(7) of the Code. Subsequent to September 1, 2011, each participant or beneficiary may elect to have their proportionate share of the Harley-Davidson, Inc. common stock dividends paid to them as cash or reinvested in the Harley-Davidson, Inc. Common Stock Fund.
Participant Loans
Participants may borrow up to 50% of their vested account balances, not to exceed $50,000. A borrower may request a loan only if the borrower’s vested Plan account balance is at least $2,000, and the minimum loan amount shall be $1,000. Loans are not permitted from employer matching contributions or employer retirement contributions regardless of vesting status. Loans bear interest at a rate commensurate with that charged by commercial lenders for similar loans. The term of the loan cannot exceed five years (ten years in the case of a home purchase).
Administrative Expenses
Administrative expenses are shared by the Company and the Plans. Loan application and service fees are paid directly by participants.
Plan Termination
Although it has not expressed any intent to do so, the Company has the right under the Plans to terminate the Plans subject to the provisions of ERISA, and for the WHSP, YSP, and KCSP the applicable collective bargaining agreements. In the event of plan termination, participants will become fully vested in their accounts.
 
2. Summary of Significant Accounting Policies
Basis of Accounting
The financial statements of the Plans are prepared under the accrual method of accounting in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”).



8
Harley-Davidson Retirement Savings Plans
Notes to Financial Statements (Continued)


2. Summary of Significant Accounting Policies (continued)
Investment Valuation and Income Recognition
All investment assets held by the Master Trust are stated at fair value. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price). See Note 4 for further discussion and disclosures related to fair value measurement. The Master Trust is an arrangement that provides for the collective investment of the assets of the Plans (see Note 3).
Purchases and sales of specific Master Trust investments are recorded on a trade-date basis. Interest income is recorded as earned. Dividends are recorded on the ex-dividend date.
Risks and Uncertainties
The Plans invest in various investment securities. Investments are exposed to various risks, such as interest rate, market volatility, and credit risks. Due to the level of risk associated with certain investments and the level of uncertainty related to changes in the value of investments, it is at least reasonably possible that changes in values of investments will occur in the near term and that such changes could materially affect participants’ account balances and the amounts reported in the accompanying financial statements and notes.
Notes Receivable From Participants
Notes receivable from participants represent participant loans that are recorded at their unpaid principal balance plus any accrued but unpaid interest. Interest income on notes receivable from participants is recorded when it is earned. Related fees are recorded as administrative expenses and are expensed when they are incurred. No allowance for credit losses has been recorded as of December 31, 2012 or 2011. If a participant ceases to make loan repayments, the Plan administrator will deem the participant loan to be a distribution in accordance with applicable legal requirements, and the participant’s account balance will be reduced at the earliest permitted date.
Use of Estimates
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the accompanying financial statements and notes. Actual results could differ from those estimates.
Payment of Benefits
Benefits are recorded when paid.
New Accounting Pronouncement
In May 2011, the Financial Accounting Standards Board issued Accounting Standards Update 2011-04, Amendments to Achieve Common Fair Value Measurements and Disclosure Requirements in U.S. GAAP and IFRSs (“ASU 2011-04”). ASU 2011-04 amended Accounting Standards Codification (“ASC”) 820, Fair Value Measurement, to converge the fair value measurement guidance in U.S. GAAP and International Financial Reporting Standards. Some of the amendments clarify the application of existing fair value measurement requirements, while other amendments change a particular principle in ASC 820. In addition, ASU 2011-04 requires additional fair value disclosures, although certain of these new disclosures are not required for nonpublic entities, as defined in ASC 820. The amendments are to be applied prospectively and are effective for annual periods beginning after December 15, 2011. Adoption of ASU 2011-04 did not have an effect on the Plan's net assets available for benefits or their changes in net assets available for benefits.
3. Master Trust
The purpose of the Master Trust is the collective investment of assets of the participating Plans. Each participating Plan’s interest in the Master Trust is based on account balances of the participants and their elected investment options. The Master Trust assets are allocated among the participating Plans by assigning to each Plan those transactions (primarily contributions, benefit payments, and plan-specific expenses) that can be specifically identified and by allocating among all Plans, in proportion to the fair value of the assets assigned to each Plan, income and expenses resulting from the collective investment of the assets of the Master Trust.
Investment income and administrative expenses related to the Master Trust are allocated to the individual Plans daily based on each participant’s account balance within each investment fund option.

9
Harley-Davidson Retirement Savings Plans
Notes to Financial Statements (Continued)

3. Master Trust (continued)
A summary of the Master Trust’s net assets as of December 31, 2012 and 2011 is as follows:
 
 
 
2012
 
2011
Investments at fair value:
 
 
 
 
Mutual funds:
 
 
 
 
U.S. equity funds
 
$
167,124,168

 
$
147,809,370

International equities
 
49,580,085

 
44,276,202

Fixed income
 
57,244,897

 
43,247,051

Balanced funds
 
152,346,671

 
135,341,422

Brokerage accounts
 
8,017,602

 
2,585,955

Money market fund:
 
 
 
 
Fidelity Retirement Money Market Portfolio
 
69,240,505

 
74,378,173

Harley-Davidson, Inc. Common Stock Fund
 
154,011,512

 
135,253,137

Net assets of the Master Trust
 
$
657,565,440

 
$
582,891,310


Investment income has been allocated among the Plans and the Affiliated FSI Plan based on the respective participants’ interest, adjusted for other income and losses. Investment income generated by the investments of the Master Trust for the years ended December 31, 2012 and 2011 are as follows:
 
 
 
2012
 
2011
Interest and dividend income
 
$
15,928,556

 
$
14,051,907

Net appreciation (depreciation) in fair value of mutual funds
 
40,609,946

 
(24,860,136
)
Net appreciation in fair value of brokerage accounts
 
233,087

 
13,917

Net appreciation in fair value of Harley-Davidson, Inc. common stock
 
34,500,322

 
17,022,965

Investment income of the Master Trust
 
$
91,271,911

 
$
6,228,653

The Plans’ and the Affiliated FSI Plan's percentage interests in the Master Trust as of December 31, 2012 and 2011, are as follows:
 
 
 
2012
 
2011
SSP
 
64.0
%
 
61.0
%
WHSP
 
23.4

 
26.0

KCSP
 
1.9

 
2.0

YSP
 
10.7

 
11.0

Affiliated FSI Plan
 
                 <0.1
 
—

Total
 
100.0
%
 
100.0
%
 
The net assets of the Harley-Davidson, Inc. Common Stock Fund consist of the following as of December 31, 2012 and 2011:
 
 
 
2012
 
2011
Harley-Davidson, Inc. common stock
 
$
153,409,126

 
$
134,598,393

Money market fund
 
1,740,298

 
1,962,383

Other payable
 
(1,137,912
)
 
(1,307,639
)
Net assets of the Harley-Davidson, Inc. Common Stock Fund
 
$
154,011,512

 
$
135,253,137


10
Harley-Davidson Retirement Savings Plans
Notes to Financial Statements (Continued)

4. Fair Value Measurements
Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (i.e., an exit price). The fair value hierarchy prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets and liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). The three levels of the fair value hierarchy are described below:
Level 1 – Unadjusted quoted prices in active markets that are accessible to the reporting entity at the measurement date for identical assets and liabilities.
Level 2 – Inputs other than quoted prices in active markets for identical assets and liabilities that are observable either directly or indirectly for substantially the full term of the asset or liability. Level 2 inputs include the following:
•
Quoted prices for similar assets and liabilities in active markets
•
Quoted prices for identical or similar assets or liabilities in markets that are not active
•
Observable inputs other than quoted prices that are used in the valuation of the asset or liabilities (e.g., interest rate and yield curve quotes at commonly quoted intervals)
•
Inputs that are derived principally from or corroborated by observable market data by correlation or other means
Level 3 – Unobservable inputs for assets or liabilities (i.e., supported by little or no market activity). Level 3 inputs include management’s own assumption about the assumptions that market participants would use in pricing the asset or liability (including assumption about risk).
The level in the fair value hierarchy within which the fair value measurement is classified is determined based on the lowest level input that is significant to the fair value measure in its entirety.
The following is a description of the valuation techniques and inputs used as of December 31, 2012 and 2011, for the Master Trust’s assets measured at fair value:
Mutual funds: Valued at quoted market prices, which represent the net asset value (“NAV”) of shares held at year-end.
Money market fund: Valued at cost, which approximates the fair value of the NAV of shares held at year-end.
Harley-Davidson Inc. Common Stock Fund: The fund is tracked on a unitized basis. The fund consists of Harley-Davidson, Inc. common stock and funds held in a money market fund sufficient to meet the fund’s daily cash needs and other miscellaneous assets and liabilities. Unitizing the fund allows for daily trades. The fair value of a unit is based on the combined fair value of Harley-Davidson, Inc. common stock (closing price in an active market on which the securities are traded), the NAV of the money market fund, and other miscellaneous assets and liabilities held by the fund at year-end.
Common stocks: Valued at the closing price reported on the active market on which the individual securities are traded.
 

11
Harley-Davidson Retirement Savings Plans
Notes to Financial Statements (Continued)

4. Fair Value Measurements (continued)

The following tables set forth by level, within the fair value hierarchy, the Master Trust’s assets at fair value as of December 31, 2012 and 2011:

 
 
Assets at Fair Value as of December 31, 2012
 
 
Level 1
 
Level 2
 
Level 3
 
Total
Mutual funds:
 
 
 
 
 
 
 
 
U.S. equity funds
 
$
167,124,168

 
$
—

 
$
—

 
$
167,124,168

International equity
 
49,580,085

 
—

 
—

 
49,580,085

Fixed income
 
57,244,897

 
—

 
—

 
57,244,897

Balanced funds
 
152,346,671

 
—

 
—

 
152,346,671

Brokerage accounts:
 
 
 
 
 
 
 
 
Common stock
 
 
 
 
 
 
 
 
Domestic
 
3,994,092

 
—

 
—

 
3,994,092

International
 
942,307

 
—

 
—

 
942,307

Mutual funds
 
 
 
 
 
 
 
 
U.S. equity funds
 
799,948

 
—

 
—

 
799,948

International equity
 
211,884

 
—

 
—

 
211,884

Fixed income
 
609,727

 
—

 
—

 
609,727

Cash
 
1,459,644

 
—

 
—

 
1,459,644

Money market fund
 
69,240,505

 
—

 
—

 
69,240,505

Harley-Davidson Inc.
 
 
 
 
 
 
 
 
Common Stock Fund
 
154,011,512

 
—

 
—

 
154,011,512

Total assets at fair value
 
$
657,565,440

 
$
—

 
$
—

 
$
657,565,440


 
 
 
Assets at Fair Value as of December 31, 2011
 
 
Level 1
 
Level 2
 
Level 3
 
Total
Mutual funds:
 
 
 
 
 
 
 
 
U.S. equity funds
 
$
147,809,370

 
$
—

 
$
—

 
$
147,809,370

International equity
 
44,276,202

 
—

 
—

 
44,276,202

Fixed income
 
43,247,051

 
—

 
—

 
43,247,051

Balanced funds
 
135,341,422

 
—

 
—

 
135,341,422

Brokerage accounts:
 
 
 
 
 
 
 
 
Common stock
 
 
 
 
 
 
 
 
Domestic
 
1,561,109

 
—

 
—

 
1,561,109

International
 
365,690

 
—

 
—

 
365,690

Mutual funds
 
 
 
 
 
 
 
 
International equity
 
76,727

 
—

 
—

 
76,727

Fixed income
 
28,006

 
—

 
—

 
28,006

Large cap equity
 
92,558

 
—

 
—

 
92,558

Equity precious metals
 
6,014

 
—

 
—

 
6,014

Cash
 
455,851

 
—

 
—

 
455,851

Money market fund
 
74,378,173

 
—

 
—

 
74,378,173

Harley-Davidson Inc.
 
 
 
 
 
 
 
 
Common Stock Fund
 
135,253,137

 
—

 
—

 
135,253,137

Total assets at fair value
 
$
582,891,310

 
$
—

 
$
—

 
$
582,891,310



12
Harley-Davidson Retirement Savings Plans
Notes to Financial Statements (Continued)

5. Transactions With Parties-in-Interest
Certain investments are shares of mutual funds and money market funds managed by Fidelity Investments. Fidelity Investments is the trustee as defined by the Plans, and therefore, these transactions qualify as party-in-interest transactions; however, they are exempt from the prohibited transactions rules under ERISA. Fees for certain administrative expenses are generally paid by the Company. The Master Trust also holds investments in Harley-Davidson, Inc. common stock. Transactions in Harley-Davidson, Inc. common stock are party-in-interest transactions under the provisions of ERISA.
As of December 31, 2012 and 2011, the Master Trust held in the Harley-Davidson, Inc. Common Stock Fund 1,856,060 and 2,051,386 shares, respectively, of common stock of Harley-Davidson, Inc., the sponsoring employer, with a fair value of $153,409,126 and $134,598,393, respectively. During the years ended December 31, 2012 and 2011, dividends on Harley-Davidson, Inc. common stock held in the Master Trust’s Harley-Davidson, Inc. Common Stock Fund were paid and/or credited to eligible plan participants’ accounts in the amounts of $2,023,658 and $1,650,775, respectively. 
 
6. Tax Status
The SSP and the YSP have received determination letters from the IRS dated March 6, 2012, and the KCSP and WHSP have received determination letters from the IRS dated September 16, 2011 and December 20, 2011, respectively, stating that each Plan is qualified under Section 401(a) of the Code, and therefore, the related trust is tax-exempt. Subsequent to this determination by the IRS, the KCSP, WHSP, SSP and YSP were amended. Once qualified, the Plans are required to operate in conformity with the Code to maintain their qualified status. Certain insignificant operational errors in the Plans have been identified. These errors can be corrected without penalty or loss of qualification, in accordance with the IRS's corrections procedures. The Plan administrator intends to take the necessary steps to self-correct pursuant to the IRS's correction procedures, and with such corrections, the plan administrator believes that the Plans are qualified and the related trust is tax-exempt.
U.S. GAAP requires plan management to evaluate uncertain tax positions taken by the Plans. The financial statement effects of a tax position are recognized when the position is more likely than not, based on the technical merits to be sustained upon examination by the IRS. The plan administrator has analyzed the tax positions taken by the Plans and has concluded that as of December 31, 2012 and 2011, there were no uncertain positions taken or expected to be taken. The Plans have recognized no interest or penalties related to uncertain tax positions. The Plans are subject to routine audits by taxing jurisdictions; however, there are currently no audits for any tax periods in progress. The plan administrator believes the Plans are no longer subject to income tax examinations for years prior to 2009.

13

Harley-Davidson Retirement Savings Plans
EIN #39-1805420
Schedule H, Line 4i – Schedule of Assets
(Held at End of Year)
December 31, 2012
 
 
 
 
Identity of Issue, Borrower, Lessor,
or Similar Party
Description of Investments, Including
Maturity Date, Rate of Interest,
Collateral, Par, or Maturity Value
Current Value
Harley-Davidson Retirement Savings Plan for Salaried Employees (Plan No. 002)
Various Participants*
Notes receivable from participants, 4.25% to 9.25%, maturing at various dates through 2022, collateralized by applicable participants’ account balances
$
4,119,176

Harley-Davidson Retirement Savings Plan for Milwaukee & Tomahawk Hourly Bargaining Unit Employees (Plan No. 005)
Various participants*
Notes receivable from participants, 4.25% to 9.25%, maturing at various dates through 2022, collateralized by applicable participants’ account balances
$
3,388,307

Harley-Davidson Retirement Savings Plan for Kansas City Hourly Bargaining Unit Employees (Plan No. 006)
Various participants*
Notes receivable from participants, 4.25% to 9.25%, maturing at various dates through 2022, collateralized by applicable participants’ account balances
$
741,406

Harley-Davidson Retirement Savings Plan for York Hourly Bargaining Unit Employees (Plan No. 008)
Various participants*
Notes receivable from participants, 4.25% to 9.25%, maturing at various dates through 2022, collateralized by applicable participants’ account balances
$
1,487,994

 
*
Represents a party-in-interest.


14