Good morning. My name is Melissa, and I will be your conference operator today. At this time, I would like to welcome everyone to the Fourth Quarter 2011 Earnings Conference Call. [Operator Instructions] Amy Giuffre, Director of Investor Relations, you may begin your conference.

Thank you, Melissa, and welcome to Harley-Davidson's Fourth Quarter 2011 Earnings Conference Call. The audio for today's call is being webcast live on www.harley-davidson.com. The slides, which are generally available at least 30 minutes prior to the call, can be accessed by clicking on Company, Investor Relations, then Events and Presentations. Our comments today will include forward-looking statements that are subject to risks that could cause actual results to be materially different. Those risks include, among others, matters we have noted in our latest earnings release and filings with the SEC. Harley-Davidson disclaims any obligation to update information in this call. This morning, you'll hear from Harley-Davidson's CEO, Keith Wandell; CFO, John Olin; and President of Harley-Davidson Financial Services, Larry Hund. Then we'll open the call for your questions. So let's get started. Keith?

Well, thank you, Amy. Good morning, and thanks for joining us on the call. Throughout 2011, everyone at Harley-Davidson has been hard at work transforming our company. We've come a long way and I couldn't be more proud of our team. And I know our entire team finds it gratifying to see these efforts reflected in the financial results that we reported today. Our fourth quarter continued the positive trend of this year. We had strong improvement earnings in Q4, capping off a year in which earnings more than doubled from 2010. And the year finished strong at retail as well. New Harley-Davidson motorcycles were up almost 11% worldwide compared to last year's fourth quarter and up almost 6% for the full year. And sales were strong in both the U.S. and the international markets. Once again, we gained market share. For the fourth quarter, Harley-Davidson held a 59.4% share of the U.S. heavyweight market, and our 2011 full-year market share was 55.7%. These results are a demonstration of the dedication and hard work of all of our employees and our dealers to be customer-led and to fulfill customers' dreams through remarkable motorcycles and extraordinary customer experiences. We are committed to be world class in everything we do to be more agile, more efficient and more effective at developing and building great motorcycles and delivering them to customers around the world. Let's take a look at some of the key milestones along our journey. In 2011, we made great strides in the transformation of our York operations. All the motorcycles there are now built under one roof on one assembly line. But even more powerful than the bricks-and-mortar change is the change in the culture, where the employees in the line are creating and implementing operating improvements on a daily…

Thanks, Keith, and good morning, everyone. I will review the financial results, starting on Slide 9 with the fourth quarter results. During the quarter, Harley-Davidson, Inc. consolidated revenue was up 9.3% behind a 14.0% increase in shipments of Harley-Davidson motorcycles. Our fourth quarter income from continuing operations improved to $54.6 million, an increase of $96.7 million. Similarly earnings -- diluted earnings per share rose to $0.24 per share, up from the year-ago quarter, which was a negative $0.18 per share. Operating income from the Motorcycle business was up $35.6 million, up $42.3 million compared to last year's fourth quarter. The strong increase in the Motorcycle business was driven by increased motorcycle shipments and a higher gross margin as compared to last year, partially offset by higher SG&A and restructuring spending. Operating income at Harley-Davidson Financial Services was up 30.7% behind improved credit loss performance. Finally, our improved financial performance for the quarter was also driven by a lower year-over-year interest expense as a result of the December 2010 repurchase of $297 million of high interest notes. We are very pleased with the fourth quarter's results and continued progress against our growth strategies and the transformation of our business. Now let's take a look at retail sales on Slide 10. Overall, worldwide retail sales of new Harley-Davidson motorcycles were up nearly 11% in the fourth quarter, the largest quarter-over-quarter increase in the past 25 quarters. For the full year, worldwide retail sales were up 5.9% compared to 2010. This reflects global product appeal -- strong global product appeal, worldwide dealer efforts and our continued investment in growth opportunities around the world. In the U.S., retail sales in the quarter were up double digits despite the challenging but slightly improving economic environment. Sales in the U.S. during the quarter were supported by…

Thanks, John, and good morning. During the fourth quarter, HDFS retail motorcycle loan originations increased 14.2% or $43 million. This increase was driven by higher new motorcycle loan originations behind a strong increase in retail sales and a 2.6 percentage point increase in market share. Used motorcycle loan originations also increased compared to last year. For the full year, HDFS retail market share of new Harley-Davidson motorcycles sold in the U.S. was 51.0%, up 3.1 percentage points compared to last year. In 2011, 80% to 85% of our new loan originations were prime, in line with last year. At year end, 74% of our total portfolio was comprised of loans originated post underwriting changes made in January 2009. However, with the higher level of receivables originated prior to the start of the economic downturn rolling off the books, finance receivables outstanding decreased 4.5% compared to a year ago. This declining receivables pool reflects the lower U.S. retail sales through the downturn and will continue to impact HDFS net interest income. During 2011, HDFS was focused on prudently increasing overall credit application approval rates, and we saw a modest increase in the fourth quarter. Our goal is to have a portfolio that continues to perform well over time and delivers an appropriate return on equity. We are very pleased with the improved retail delinquency rate and retail credit losses compared to last year, which you will see on Slide 19. The 30-day delinquency rates for retail motorcycle loans at December 31, 2011, was 3.85%, or 122 basis points better than the same date last year. Annualized retail credit losses improved by 91 basis points to 1.20% for 2011 compared to last year, driven by the impact of changes in underwriting implemented 3 years ago, as well as a lower frequency of loss and improvement in the recovery value of repossessed motorcycles. A portion of this loss improvement is due to recoveries on loans written off in prior years. Given the strong credit performance of loans originated since 2009, we expect lower levels of recoveries in future periods. We are pleased with the progress at HDFS in 2011. During the year, we maintained a strong liquidity position, reduced our cost of funds and delivered strong profitability. We remain focused on enabling sales at Harley-Davidson motorcycles while providing an attractive return to Harley-Davidson, Inc. The most recent example of this is a $225 million dividend HDFS paid to Harley-Davidson, Inc. earlier this month. Now let me turn it back to John.

Thanks, Larry. Now let's take a look at cash and liquidity on Slide 20. You'll see that at the end of the quarter, we had nearly $1.7 billion of cash and marketable securities, which includes the impact of a $525 million asset-backed securitization transaction that HDFS completed during the quarter at a weighted average rate of 0.99%. In addition, HDFS had $920 million of available liquidity through bank credit and conduit facilities. We currently have and intend to continue to maintain a minimum of 12 months of projected liquidity needs in cash and/or committed credit facilities. Earlier this month, there were 2 significant transactions related to cash in 2012. Larry just mentioned the dividend HDFS paid to H-D Inc. We also made a $200 million contribution to our qualified pension plans, which will reduce our year-end pension and post-retirement liability of $571 million. I'm also very pleased to report that during the quarter, we repurchased approximately 3.5 million shares of Harley-Davidson stock for $127 million. As we have stated, returning value to our shareholders through dividends and share repurchases is a top priority. We will continue to evaluate opportunities to enhance value for our shareholders. Now I'll review the remaining Harley-Davidson, Inc. financials on Slide 21. I'd like to highlight 2 items on this slide. First, with regards to continuing operations, the company generated operating cash of $885 million during 2011 after a $200 million contribution to our pension plans. The motorcycle business continued to generate strong cash flow of $673 million of operating cash during the year. And second, for the full year, the company's effective tax rate from continuing operations was 30.9% compared to 33.5% in 2010. In 2012, we expect full-year effective income tax rate will be approximately 35.5%. As noted on Slide 22, during the fourth…

[Operator Instructions] Your first question comes from the line of Felicia Hendrix from Barclays Capital.

You guys kind of touched on this a little bit, but I just wanted to talk about your unit guidance for 2012, just to understand it a little bit more clearly. You mentioned that it's heavily weighted through the first quarter. You booked in inventory in the fourth quarter, you built funding in the first half just to kind of compensate for potential disruptions. I'm just wondering, I just want to make sure that I'm interpreting this correctly, based on that comment, would you expect unit growth to be up again in the second quarter? And then is it possible for us to see units down for the rest of the year? And then just one follow-up with gross margins, I was wondering if you could just walk us through the components of the $17.9 million improvement related to manufacturing, because that was the biggest difference between your actual and our estimates.

Okay, Felicia. Again, as you had mentioned, in the fourth quarter we were running very well at York and we produced 7,000 more units of product from York that will hold that inventory for shipment in the second quarter. Our guidance for the first quarter is up, I believe, 8% to 17%. And with that, we hope to build a little bit extra in the first quarter too to bring that into the second quarter. We're not providing specific guidance for the second quarter at this time. But to say that given the implementation of the ERP system, production will be affected quite a bit, probably during the quarter down about 40%. So again, we're not going to provide second quarter but we should have inventory to cover the implementation of the ERP system or the downtime caused by that. And the second question, Felicia, I believe was the $18 million of manufacturing favorability in the fourth quarter. And that was driven largely by the restructuring savings that we've had coming in. So when we look at restructuring on a full-year basis, we had $45 million of favorability, and a lot of that came in, in the second half, in the second quarter and the -- I'm sorry, in the second half, in the third and fourth quarter, and that's largely the $18 million. Also benefiting manufacturing in the fourth quarter was the incremental volume that we produce.

Okay. So maybe I missed this, but you guys missed the guidance. So I'm just trying to figure out where that -- well, I guess the quarter came in lower than we would have expected based on your guidance. So I was just trying to understand where the difference was.

Yes. So overall -- so on a full-year basis, let's talk about full year, we had gross margin of 33.4%. Our guidance as of the third quarter was 33.5% to 34.5%. And so that would put -- we missed a little bit expectations in the fourth quarter because we gave that guidance in the third quarter. Two things that affected our profitability in the fourth quarter in terms of gross margin, and one of them was raw materials. Raw materials increased in its unfavorability from 7.9% to 9. -- $7.9 million to $9 million dollars. Given the fact that our shipments went down by about 20%, we had expected raw materials to come down a little bit on a quarter-over-quarter basis. So that was a little bit of it, it takes time for the raw material increases to flow through the system. And we would expect the raw materials cost to start to mitigate at this point going forward. The second area is mix. So coming out of the third quarter, we had an unfavorable mix of about $27 million driven by the disruptions at York at that time. We said we expected mix to be favorable in the fourth quarter and it is by $1 million. However, we did expect a little bit more favorability out of mix. Good news is, is that the mix was not driven by our Touring production. Matter of fact, Touring production was 42.6% of our overall production for the quarter, and over the last 3 years, that's the highest production of Touring that we had. I think one other quarter, we're also at 42.6%. So again the plant was working very well. So where mix was a little bit less than expectations was on model mix, and an example of that would have been high-content CVO and very high profitable CVO models. So we pushed some of that off and we'll make it up in ensuing months, given the high content and the complexity of that. Another example of mix being a little bit less than anticipated was in our Parts and Accessories business. I mentioned in the third quarter that we've got to focus on increasing our share of market in consumables, which tend to have a lower margin, and those sales were up quite considerably in the fourth quarter, which is great news but it did affect our mix a little bit negatively.

Your next question comes from the line of Craig Kennison from Robert W. Baird. Craig R. Kennison - Robert W. Baird & Co. Incorporated, Research Division: John, you said that you plan to retail more than you ship in the U.S. What is the worldwide expectation?

The worldwide would be the same. In aggregate, we would expect shipments to be lower, given our capability to move production closer to demand. However, given the shipment of international at the time it takes to get the bikes to international markets, we would not expect a big move in international inventories. But on a worldwide basis they'll be down, led by the U.S. Craig R. Kennison - Robert W. Baird & Co. Incorporated, Research Division: So on a worldwide basis you expect to reduce inventory?

Yes. Craig R. Kennison - Robert W. Baird & Co. Incorporated, Research Division: And then a quick follow-up, on SAP, could you give us any milestones to focus on for 2012 as you make progress on that initiative?

Well, right now, we're -- we feel great about where we're at. We're in the final phases of testing and we will begin the implementation in the second quarter. So we'll know a lot more by the time we report earnings at the end of the second quarter. So we feel good about where we're at. We've built up inventories so that we don't disrupt the flow of product to our dealers and customers. And it'll be installed by the end of the second quarter is the plan.

Your next question comes from the line of James Hardiman from Longbow Research.

Just wanted to delve in a little bit more with the shipment guidance for 2012. As we think about that 3% to 5% growth rate, obviously, there are a lot of puts and takes with what you're doing. I guess, my question is from a production standpoint, should we think about that 5% as ultimately the maximum amount of shipments we could get from your production given the inefficiencies at York? Or is that 5% more indicative of where you think retail is going to be once you've sort of account for some of those puts and takes?

Well, James, overall, 3% to 5% is driven by the 3 things: Concerns over the macroeconomics, in particular in Europe; Some capacity constraints that we have in the first half; and the fact that we will be taking inventory out of the overall system, which suggests that retail will be a little bit higher than year ago. When we specifically look at the production constraints, they're huge in the second quarter. We were able to build forward in the fourth quarter. So from a shipment perspective, we're hoping to cover that. But from an upside perspective, the first half is very limited. Back half, we have a little bit more flexibility. But again our selling season is largely in the spring and the summer season. So we could go over the 5% but it would be more in the back half production versus first half. We are very constrained in the first half in terms of production.

So ultimately, I guess, put another way, if retail -- and obviously you don't give guidance on the retail. But if retail came in much better than your expectations, you could do more than that 5% from a shipment standpoint, assuming that it was -- at least a good chunk of that came in the second half.

Yes. We have more production capability in the second half of the year.

Okay. And then just a quick follow-up, I didn't hear -- I don't know if you really detailed it, but there was the big recall within the quarter. Can you quantify that for us? And where did that show up on your income statement?

The recall, we announced sometime during the fourth quarter. We booked a charge of $11.8 million and that was to provide for a rear tail light switch that we needed to replace on a little over 300,000 motorcycles. I believe it was a $2 to $3 part, but with labor, the total charge is $11.8 million. And James, that falls into SG&A. So you see for the quarter, SG&A was up $6 million. It was driven by that charge of about $12 million that we took.

Your next question comes from the line of Tim Conder from Wells Fargo Securities.

John, if you could just kind of go over, if you could, a little bit at the timeline, you'd outlined how the inefficiencies from York occurred in each of the quarters in 2011. Can you kind of talk about us -- to us how that should look as far as where you should see the peak inefficiencies? I would guess it would potentially be in the second quarter. You did comment that for the full year, those inefficiencies, I think York, but I thought the way you phrased it would be -- for the whole system, would be comparable year-over-year. So that's question one. And then maybe a question here for Larry regarding market share for HDFS. Larry, looking to 2012, would you anticipate holding share or could -- given the increased competitiveness, especially in the super prime categories, could you see that share potentially erode a little bit?

I'll take the first part of that question, Tim. With regards to the temporary inefficiencies timing, this year, we -- number one, is we do expect temporary inefficiencies to be in line with last year. Last year, the aggregate temporary inefficiencies were $32 million, and that was driven by the first quarter of last year at $11 million, and they kind of tapered off and ended the fourth quarter at $6 million. We're not going to provide the timing of the overall inefficiencies next year, but certainly the second quarter would be a time where we would see an increase. And -- but we'll also have temporary inefficiencies in the back half of the year, as we do the transformations at KC and Wisconsin in terms of the training that needs to be done there, as well as we move our wheel supply to alternate suppliers. So those will affect our backhalf temporary inefficiencies.

So just to clarify on that, John, the second quarter could actually be up year-over-year on the inefficiencies standpoints, just given the magnitude of things that are occurring in that quarter.

Yes, it certainly could be.

And then this is Larry, Tim. On HDFS market share, our market share for the year was 51%, and we picked up 3 points a share this year. I would not expect to see significant growth beyond that. We are seeing some competition in the prime space. But I also think we're out there with competitive programs and we should have a reasonable share next year.

Your next question comes from the line of Ed Aaron from RBC Capital Markets.

It sounds like you're expecting just only a modest mix benefit in 2012. And I'm wondering how much do you expect that the capacity constraints will affect that mix number this year? In other words, is the inventory depletion that you're expecting to see in 2012 with retail increasing faster than wholesale shipments, is that depletion going to come from products that are more favorable from a mix perspective?

Well, Ed, when we look at overall mix, we expect it to be flat. We got to remember that all kinds of things affect mix, and within motorcycle mix, there's location, there's family, there's model. And then there's parts and accessories. So one it says it's a tough thing to zero in on. But when we look at overall mix, we take in to consider new product offerings, incremental growth that we've got in our international markets and our outreach efforts that are tend to be more toward the lower end product, and then we certainly got the strong demand for a higher end. The capacity constraints will affect a little bit our mix, but in aggregate, when we take it all and blend it all together, it looks to be that mix will be pretty flat versus year ago.

Great. And then just one follow-up, if I could, on HDFS. You released, I think the number was $40 million of reserves in 2011. I know you're not expecting to replicate that in 2012, but do you see any room to release additional reserves this year even if it's more modest than what you had in 2012?

Right now, we feel great about where we're at with the reserves. And based on where we're at right today is, no, we would not. But we'll continue to read the situation in what credit losses due next year and continue to evaluate the overall portfolio and make adjustments as we see at that time. But at this time, we feel very good about where we're at with regards to our reserves.

Your next question comes from the line of Sharon Zackfia from William Blair. Sharon Zackfia - William Blair & Company L.L.C., Research Division: I wanted to maybe go a little bit off in left field and talk about India. As you've been ramping up there, kind of that there any benchmarks you can share with us about the performance in India so far and ultimately how you think that market developed versus a market like China, which probably hasn't been as strong of a market as you might have hoped initially?

Okay. Sharon, we feel very good about India. We put up an initial, I believe, it's 7 dealerships in the first year of operation. We expect to add another 3 dealerships next year. We're bringing more models in to do CKD, which provides a much more favorable pricing environment. So we were doing 3 CKD units and we're going to add 2 more as we look forward and, again, lower the price of those units that we're assembling in country. So overall, we feel very good. When we look at it from India and China, I think we probably would expect to see both of them as tremendous long-term growth for the company, and probably a little bit quicker in India than China. But both of them are going to be a good long-term investment and we're not expecting to see huge gains in terms of moving the overall company needle in the near term. But those markets are growing at extreme rates on a year-over-year basis at this point. Sharon Zackfia - William Blair & Company L.L.C., Research Division: And, I guess, John, when would you expect those markets to actually be material, the results? Is it 2015? Is it 2020? I mean, what's kind of the game plan?

Sharon, we can't provide anything that far out. What we're doing -- what we know today is we're doing the right things. We're building the right dealer and distribution network. We've got the right teams landed to build the markets and we're building the leisure sport of motorcycling as we go along. So I don't think it's going to be way off into the future, but it will be in the future.

Your next question comes from the line of Rod Lache from Deutsche Bank.

I was just wanting to dive a little bit into these production constraints a little bit more. Just wondering first of all, does it -- does the fact that you are going to be constrained, does that affect your pricing strategy at all? And then as we look beyond 2012, as this increased flexibility comes online in 2013, can you talk about what your theoretical capacity might be at that point? Would it be 260 or 280? And also in 2014, it sounds like additional flexibility comes online. How should we be thinking about not necessarily what you're going to produce but what you theoretically can have the flexibility to produce once you're done?

Rod, with regards to the production constraints as we've talked about for the last year and certainly in the first half of next year, we'll have production constraints. Does that affect our overall pricing strategy? The answer is that temporary constraints do not affect our overall pricing strategy. What we're working now to do is to build on long-term pricing power, and we feel good about where we're at and that's making sure that we've got the right products in the market at the right time. We feel great about the fact that in July of this year, we were able to raise prices in a very difficult economy, 1% in the United States and 0.75% in Europe, brought it down actually a little bit in Asia Pacific. So the temporary constraints do not affect our pricing strategy. But certainly our strategy is to improve our pricing power of our overall products. The second question was with relationship to our flexible manufacturing strategy. So part of the overall York restructuring and the new contracts that we've got is to be able to flex our production capability in the high season or the selling season. And we're going to ease into that capability next year, and we'll have that capability for York. And then in 2014, we'll be able to do it across the system, including the engine plant here in Wisconsin. With regards to capacity, it gives us a tremendous amount of capacity on a much smaller footprint that we had previously. We're not going to provide an exact amount of capacity. But what we've said is that we will have enough capacity without any huge investments to get back to where we were -- in a ballpark, where we were pre-recession.

Okay. And just on the restructuring that you're doing, there's some companies that have implemented these SAP systems pretty successfully and others have bid and tripped up a bit. And you guys are implementing all of this while there's a lot of, I guess, you could say instability or restructuring going on within your existing manufacturing. Could you just talk a little bit about what key items you see that kind of determine success or issues within the implementation of this? Do you see this as a significant risk for 2012 or would you expect things to go relatively smoothly?

Our expectation is for them to go relatively smoothly. Having said that, any system implementation is subject to learning things on the fly. We've tested the system dramatically. We've been working on it for over 2 years. And what we know today, we feel very comfortable, and all the testing that we've done, we feel good about where we're at. It doesn't mean that there won't be hiccups. But what we believe is that any hiccups that we might have will not come through and affect our customers and dealers given the inventory that we have. And -- but the answer is the confidence is driven by the vast amount of testing that we've been doing.

Your next question comes from the line of Robin Farley from UBS.

Great. Just kind of circling back to the gross margin issue, and I knew you talked about you had lower guidance on October and kind of reiterated that lower guidance in November. And then when you came below here, you've mentioned FX -- you mentioned currency impacting $9 million instead of the $7.9 million. I guess, it doesn't look like that would be enough to have to account for the miss in gross margin unless raw materials' prices changed so much in the last month of the quarter. But even that $9 million versus the $7.9 million, if you could just give a little bit more color on what else may have been behind that, and then I do have a follow-up question as well.

So as I had mentioned earlier, the 2 things that missed our expectations were a little bit on mix. We expected a slightly more favorable mix and slightly less on unfavorable raw materials. Actually currency, Robin, for the quarter was favorable $3.9 million. And certainly exiting the third quarter, we saw our currency rates falling quite dramatically. The euro continued to fall a bit but we saw some recovery in the real and the Australian dollar. So currency was not an issue for us in the fourth quarter, it was the raw materials. And again raw materials, given our shipments down, we were expecting more of a plateauing in the fourth quarter. And now we'll expect that plateauing in raw material costs in the first quarter.

And I might have misspoken when I said FX, I know it was a positive for the quarter, but I guess the raw materials you're mentioning impacting $9 million instead of the $7.9 million, and that's the delta I was talking about wouldn't really explain -- wouldn't be enough to explain the gross margin miss. But I guess you're saying it's -- mix is the other piece of it.

Well, it's not just the $1.1 million on raw materials because shipments were down from about, I don't know, 60-some thousand units to 50,000 units. We would have expected raw materials to be down at the same rate level. So what we saw was a continuing rate increase as things flow through the system on raw materials. So it wasn't just the $7.9 million versus the $9 million. It's the fact that we didn't ship in -- our shipments were much less in the fourth quarter, we would expect that raw materials to be a little bit lower.

And my -- the follow-up question I have with your comment earlier about the 3% to 5% shipment growth in 2012 being more limited by -- it sounds like that's more limited by your if you have retail demand than by your production constraint. Can you talk about being able to maybe go above that in the second half? So if that's more limited by your retail demand, I wonder if you can comment on kind of, I guess, confirm that I guess and how does that tie into your expectation of U.S. dealerships closing? I think at one point you had said 5% and I don't know if that was for 2012 or for sort of a 12-month forward from the fall.

Okay. I did not say that the shipments was more driven by retail. I said there's 3 things that we were watching closely, and one of them was the macroeconomics. We feel great about where we see retail sales in the U.S. but certainly remain cautious as we look forward given the tentative nature of the overall economy in consumer confidence. But we're pleased the consumer confidence is up. We are more concerned about retail sales in Europe, given the fact that they may already be in recession or may slip into recession there. The temporary capacity constraints is holding our production down certainly in the first half of the year. And then the other piece of it is that we intend to take inventories down and that would suggest that retail sales would be higher than our shipment estimate. So again there is -- we've not weighted them in any different way except to say all 3 of them, as we look forward, provides a shipment guidance of 3% to 5%. And we'll respond on the activities throughout the period. The other piece that you had mentioned, Robin, is the dealership closings. We do not expect this to have a big impact on our sales at all. The overall strategy was to help improve dealer profitability. We've been very successful there. And we've seen a great rebound in dealer profits in 2011. When we look at dealer closings, during the year, I believe we closed 22 dealerships or consolidated 22 dealerships in 2011. I think the previous 2 years, we had done about 60 in total. So about 80 dealerships overall, which represents probably about 9% of the dealer network from pre-recession levels.

And in 2012, your expectations for dealer closings?

We don't have any expectations for dealer closings or providing anything in 2012. It's not our main focus. We feel very good about where the dealer network is today.

Your next question comes from the line of Jamie Katz from the MorningStar.

Can you talk a little bit about what you expect for both raw material costs in the year ahead, if that's going to ease? And also on any trends you've seen in new versus used pricing?

In what pricing?

New versus used.

Sure. Okay, Jamie, raw material costs. Obviously, we've seen a great runoff in raw material costs in fuel over the last year. And most of the metals' complex seemed to kind of peak in April of this year, but it didn't retrace. It just kind of plateaued in April, and as maybe a little bit better in the fourth quarter. Now it takes anywhere from 3 to 6 months for that to flow through our inventory. Where commodity prices are going to go in the future, don't really know. Right now our expectation is that raw materials will be flat versus year ago. And again, we would expect to see raw materials as on a rate-basis peak in the next quarter. And we kind of thought they would peak this quarter and they're still flowing through at higher prices. So year-over-year, we would expect them to be in line with last year. And secondly, with regards to new and used pricing, we look to add some through, I believe, November used sale -- actually, used bike sales is up about 8.6% and total demand's up about 7.6%. So we're still very pleased with the strong total demand for our product. And in the fourth quarter, we started to see a shift. We're closing up the gap between new and used sales growth. So we're starting to see used sales growth come down a little bit and certainly seeing new accelerate. And that's what we've said would happen as we -- as the prices kind of equalized out in the marketplace.

Your next question comes the line of Gerrick Johnson from BMO Capital Markets.

I just wanted to clarify the dealer closings, that 22 dealership number, was that net or gross? And can you break that out between U.S. and international, please?

The -- those are only in the U.S. and those are net. Those are the big dealerships that we consolidated out. So we've always got a churn of dealerships that we're repositioning and replacing and so on and so forth. So the net system was down by 22 dealerships this year. Again, international, I don't even know what the number is. We didn't have the same issue internationally. There was some dealerships that came in and out. What we did from a closing standpoint -- from an opening standpoint, we were able to open 35 new international dealerships in our quest to open 100 to 150 dealerships. And the vast majority of those are in emerging markets. And we feel great about where our emerging market group is today.

Great, very clear. And on the recall charge, you comfortable with $11.0 million reserve? And of the 300-and-somewhat thousand bikes covered, do you have an estimate of how many have actually come in for service for the brake light switch repair?

No. I don't -- we don't -- I don't have an estimate what that percentage is. When we look at the overall $11.8 million, we feel very comfortable with it. We've assumed a very high take rate, a higher take rate than we typically would on recall just because of the size of it. So we feel great about the reserve and making sure that we hit that reserve at $11.8 million. But I don't have the actuals to this point, Gerrick.

Your last question comes from the line of Felicia Hendrix from Barclays Capital.

Just a follow-up, I apologize if you touched on this, but the dividends that you paid from HDFS, did you basically use that to fund your -- sorry, the pension contribution?

Well, I don't know, Felicia, if -- that wasn't the intent. Money is money. So we did have a dividend paid from HDFS to the Motor company. Last year, we had one also. It was $125 million. And as we look at the amount of equity that we need to run HDFS on and to keep a conservative debt-to-equity, we had more funding in HDFS than we needed. So they dividend it back, $225 million. At the same time, we saw our pension liability increase a fair amount. So at the end of the third quarter, our pension liability -- pension and post-retirement liability was about $370 million with falling discount rates, which by the way, helps our Financial Services business, does not help our pension [ph] accounting. And we saw the pension liabilities increase by a little over $200 million, and that's what we funded in the first quarter. They're completely unrelated, but both necessary.

As there are no further questions at this time, I turn the call back over for any closing remarks.

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And ladies and gentlemen, this concludes today's conference call. You may now disconnect.