false--12-31 Q2 2019 0000793952 P3Y P2Y P1Y 0.0035 0.0050 0.0094 0.241 0 60000000 0 0 0 0000793952 2019-01-01 2019-06-30 0000793952 2019-08-02 0000793952 2019-04-01 2019-06-30 0000793952 us-gaap:FinancialServiceMember 2018-04-02 2018-07-01 0000793952 2018-04-02 2018-07-01 0000793952 2018-01-01 2018-07-01 0000793952 us-gaap:FinancialServiceMember 2019-04-01 2019-06-30 0000793952 hog:MotorcyclesandRelatedProductsMember 2018-04-02 2018-07-01 0000793952 us-gaap:FinancialServiceMember 2019-01-01 2019-06-30 0000793952 hog:MotorcyclesandRelatedProductsMember 2019-04-01 2019-06-30 0000793952 hog:MotorcyclesandRelatedProductsMember 2019-01-01 2019-06-30 0000793952 hog:MotorcyclesandRelatedProductsMember 2018-01-01 2018-07-01 0000793952 us-gaap:FinancialServiceMember 2018-01-01 2018-07-01 0000793952 us-gaap:VariableInterestEntityPrimaryBeneficiaryMember 2019-06-30 0000793952 us-gaap:VariableInterestEntityPrimaryBeneficiaryMember 2018-12-31 0000793952 us-gaap:VariableInterestEntityPrimaryBeneficiaryMember 2018-07-01 0000793952 2018-07-01 0000793952 2019-06-30 0000793952 2018-12-31 0000793952 2017-12-31 0000793952 2018-04-01 0000793952 us-gaap:TreasuryStockMember 2018-01-01 2018-04-01 0000793952 us-gaap:TreasuryStockMember 2018-07-01 0000793952 us-gaap:RetainedEarningsMember 2018-01-01 2018-04-01 0000793952 us-gaap:AdditionalPaidInCapitalMember 2019-03-31 0000793952 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2019-04-01 2019-06-30 0000793952 us-gaap:AdditionalPaidInCapitalMember 2018-07-01 0000793952 us-gaap:RetainedEarningsMember 2018-04-02 2018-07-01 0000793952 us-gaap:CommonStockMember 2018-12-31 0000793952 2018-01-01 2018-04-01 0000793952 us-gaap:CommonStockMember 2019-06-30 0000793952 us-gaap:CommonStockMember 2019-03-31 0000793952 us-gaap:TreasuryStockMember 2019-04-01 2019-06-30 0000793952 us-gaap:CommonStockMember 2019-04-01 2019-06-30 0000793952 2019-03-31 0000793952 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2018-04-02 2018-07-01 0000793952 us-gaap:AdditionalPaidInCapitalMember 2018-04-02 2018-07-01 0000793952 us-gaap:AdditionalPaidInCapitalMember 2018-04-01 0000793952 us-gaap:RetainedEarningsMember 2019-04-01 2019-06-30 0000793952 us-gaap:RetainedEarningsMember 2019-01-01 2019-03-31 0000793952 us-gaap:CommonStockMember 2019-01-01 2019-03-31 0000793952 us-gaap:TreasuryStockMember 2019-03-31 0000793952 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2019-03-31 0000793952 us-gaap:AdditionalPaidInCapitalMember 2019-01-01 2019-03-31 0000793952 us-gaap:TreasuryStockMember 2019-01-01 2019-03-31 0000793952 us-gaap:CommonStockMember 2018-04-02 2018-07-01 0000793952 2019-01-01 2019-03-31 0000793952 us-gaap:CommonStockMember 2018-01-01 2018-04-01 0000793952 us-gaap:CommonStockMember 2018-04-01 0000793952 us-gaap:AdditionalPaidInCapitalMember 2017-12-31 0000793952 us-gaap:RetainedEarningsMember 2019-03-31 0000793952 2018-01-01 0000793952 us-gaap:AdditionalPaidInCapitalMember 2018-01-01 2018-04-01 0000793952 us-gaap:TreasuryStockMember 2018-04-02 2018-07-01 0000793952 us-gaap:AdditionalPaidInCapitalMember 2019-06-30 0000793952 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2019-06-30 0000793952 us-gaap:TreasuryStockMember 2019-06-30 0000793952 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2017-12-31 0000793952 us-gaap:CommonStockMember 2018-07-01 0000793952 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2018-12-31 0000793952 us-gaap:CommonStockMember 2017-12-31 0000793952 us-gaap:RetainedEarningsMember 2018-07-01 0000793952 us-gaap:RetainedEarningsMember 2018-12-31 0000793952 us-gaap:RetainedEarningsMember 2018-04-01 0000793952 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2018-01-01 2018-04-01 0000793952 us-gaap:AdditionalPaidInCapitalMember 2019-04-01 2019-06-30 0000793952 us-gaap:TreasuryStockMember 2018-12-31 0000793952 us-gaap:TreasuryStockMember 2018-04-01 0000793952 us-gaap:RetainedEarningsMember 2019-06-30 0000793952 us-gaap:TreasuryStockMember 2017-12-31 0000793952 us-gaap:AdditionalPaidInCapitalMember 2018-12-31 0000793952 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2018-04-01 0000793952 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2018-07-01 0000793952 us-gaap:RetainedEarningsMember 2017-12-31 0000793952 us-gaap:RetainedEarningsMember 2018-01-01 0000793952 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2019-01-01 2019-03-31 0000793952 2019-01-01 0000793952 2019-07-01 2019-06-30 0000793952 2020-01-01 2019-06-30 0000793952 hog:MotorcyclesandRelatedProductsMember 2018-01-01 2018-07-01 0000793952 hog:SecuritizationandservicingincomeMember hog:FinancialServicesMember 2018-04-02 2018-07-01 0000793952 hog:FinancialServicesInterestincomeMember hog:FinancialServicesMember 2019-01-01 2019-06-30 0000793952 hog:GeneralMerchandiseMember hog:MotorcyclesandRelatedProductsMember 2019-01-01 2019-06-30 0000793952 hog:MotorcyclesandRelatedProductsMember 2019-04-01 2019-06-30 0000793952 hog:OtherMember hog:MotorcyclesandRelatedProductsMember 2019-01-01 2019-06-30 0000793952 hog:MotorcyclesandRelatedProductsMember 2019-01-01 2019-06-30 0000793952 hog:GeneralMerchandiseMember hog:MotorcyclesandRelatedProductsMember 2018-04-02 2018-07-01 0000793952 hog:MotorcyclesMember hog:MotorcyclesandRelatedProductsMember 2019-01-01 2019-06-30 0000793952 hog:FinancialServicesMember 2018-01-01 2018-07-01 0000793952 hog:FinancialServicesInterestincomeMember hog:FinancialServicesMember 2019-04-01 2019-06-30 0000793952 hog:OtherMember hog:MotorcyclesandRelatedProductsMember 2019-04-01 2019-06-30 0000793952 hog:PartsAccessoriesMember hog:MotorcyclesandRelatedProductsMember 2019-04-01 2019-06-30 0000793952 hog:FinancialServicesOtherincomeMember hog:FinancialServicesMember 2018-04-02 2018-07-01 0000793952 hog:PartsAccessoriesMember hog:MotorcyclesandRelatedProductsMember 2018-04-02 2018-07-01 0000793952 hog:FinancialServicesMember 2018-04-02 2018-07-01 0000793952 hog:LicensingMember hog:MotorcyclesandRelatedProductsMember 2019-04-01 2019-06-30 0000793952 hog:OtherMember hog:MotorcyclesandRelatedProductsMember 2018-04-02 2018-07-01 0000793952 hog:FinancialServicesMember 2019-01-01 2019-06-30 0000793952 hog:MotorcyclesMember hog:MotorcyclesandRelatedProductsMember 2018-01-01 2018-07-01 0000793952 hog:FinancialServicesOtherincomeMember hog:FinancialServicesMember 2018-01-01 2018-07-01 0000793952 hog:FinancialServicesMember 2019-04-01 2019-06-30 0000793952 hog:MotorcyclesMember hog:MotorcyclesandRelatedProductsMember 2018-04-02 2018-07-01 0000793952 hog:LicensingMember hog:MotorcyclesandRelatedProductsMember 2019-01-01 2019-06-30 0000793952 hog:MotorcyclesMember hog:MotorcyclesandRelatedProductsMember 2019-04-01 2019-06-30 0000793952 hog:FinancialServicesInterestincomeMember hog:FinancialServicesMember 2018-04-02 2018-07-01 0000793952 hog:PartsAccessoriesMember hog:MotorcyclesandRelatedProductsMember 2019-01-01 2019-06-30 0000793952 hog:FinancialServicesOtherincomeMember hog:FinancialServicesMember 2019-01-01 2019-06-30 0000793952 hog:SecuritizationandservicingincomeMember hog:FinancialServicesMember 2018-01-01 2018-07-01 0000793952 hog:GeneralMerchandiseMember hog:MotorcyclesandRelatedProductsMember 2018-01-01 2018-07-01 0000793952 hog:SecuritizationandservicingincomeMember hog:FinancialServicesMember 2019-01-01 2019-06-30 0000793952 hog:LicensingMember hog:MotorcyclesandRelatedProductsMember 2018-04-02 2018-07-01 0000793952 hog:GeneralMerchandiseMember hog:MotorcyclesandRelatedProductsMember 2019-04-01 2019-06-30 0000793952 hog:FinancialServicesOtherincomeMember hog:FinancialServicesMember 2019-04-01 2019-06-30 0000793952 hog:OtherMember hog:MotorcyclesandRelatedProductsMember 2018-01-01 2018-07-01 0000793952 hog:FinancialServicesInterestincomeMember hog:FinancialServicesMember 2018-01-01 2018-07-01 0000793952 hog:LicensingMember hog:MotorcyclesandRelatedProductsMember 2018-01-01 2018-07-01 0000793952 hog:PartsAccessoriesMember hog:MotorcyclesandRelatedProductsMember 2018-01-01 2018-07-01 0000793952 hog:SecuritizationandservicingincomeMember hog:FinancialServicesMember 2019-04-01 2019-06-30 0000793952 hog:MotorcyclesandRelatedProductsMember 2018-04-02 2018-07-01 0000793952 us-gaap:EmployeeSeveranceMember hog:MotorcyclesandRelatedProductsMember 2019-06-30 0000793952 hog:A2018ReorganizationPlanMember hog:MotorcyclesAndRelatedProductsOperationsMember 2018-12-31 0000793952 hog:A2018ReorganizationPlanMember hog:MotorcyclesAndRelatedProductsOperationsMember 2019-01-01 2019-06-30 0000793952 hog:AcceleratedDepreciationMember hog:MotorcyclesandRelatedProductsMember 2019-01-01 2019-06-30 0000793952 hog:ProjectImplementationCostsMember hog:MotorcyclesandRelatedProductsMember 2019-01-01 2019-06-30 0000793952 hog:MotorcyclesandRelatedProductsMember 2019-06-30 0000793952 hog:ProjectImplementationCostsMember hog:MotorcyclesandRelatedProductsMember 2018-12-31 0000793952 hog:MotorcyclesAndRelatedProductsOperationsMember 2019-06-30 0000793952 hog:MotorcyclesAndRelatedProductsOperationsMember 2018-12-31 0000793952 us-gaap:EmployeeSeveranceMember hog:MotorcyclesandRelatedProductsMember 2019-01-01 2019-06-30 0000793952 hog:AcceleratedDepreciationMember hog:MotorcyclesandRelatedProductsMember 2018-12-31 0000793952 hog:MotorcyclesAndRelatedProductsOperationsMember 2019-01-01 2019-06-30 0000793952 hog:MotorcyclesandRelatedProductsMember 2018-12-31 0000793952 hog:AcceleratedDepreciationMember hog:MotorcyclesandRelatedProductsMember 2019-06-30 0000793952 hog:ProjectImplementationCostsMember hog:MotorcyclesandRelatedProductsMember 2019-06-30 0000793952 hog:A2018ReorganizationPlanMember hog:MotorcyclesAndRelatedProductsOperationsMember 2019-06-30 0000793952 us-gaap:EmployeeSeveranceMember hog:MotorcyclesandRelatedProductsMember 2018-12-31 0000793952 hog:A2018AdelaideRestructuringPlanMember 2019-01-01 2019-06-30 0000793952 srt:MinimumMember hog:TemporaryInefficienciesMember hog:MotorcyclesandRelatedProductsMember 2019-06-30 0000793952 us-gaap:CostOfSalesMember hog:TemporaryInefficienciesMember hog:MotorcyclesandRelatedProductsMember 2018-01-01 2018-07-01 0000793952 hog:A2018KansasCityRestructuringPlanMember 2019-01-01 2019-06-30 0000793952 us-gaap:CostOfSalesMember hog:TemporaryInefficienciesMember hog:MotorcyclesandRelatedProductsMember 2019-04-01 2019-06-30 0000793952 srt:MinimumMember us-gaap:EmployeeSeveranceMember hog:MotorcyclesandRelatedProductsMember 2019-06-30 0000793952 us-gaap:CostOfSalesMember hog:TemporaryInefficienciesMember hog:MotorcyclesandRelatedProductsMember 2019-01-01 2019-06-30 0000793952 srt:MaximumMember hog:ProjectImplementationCostsMember hog:MotorcyclesandRelatedProductsMember 2019-06-30 0000793952 srt:MaximumMember hog:RestructuringExpenseMember hog:MotorcyclesandRelatedProductsMember 2019-06-30 0000793952 us-gaap:CostOfSalesMember hog:TemporaryInefficienciesMember hog:MotorcyclesandRelatedProductsMember 2018-04-02 2018-07-01 0000793952 hog:A2018ReorganizationPlanMember hog:MotorcyclesAndRelatedProductsOperationsMember 2018-01-01 2018-12-31 0000793952 srt:MinimumMember hog:ProjectImplementationCostsMember hog:MotorcyclesandRelatedProductsMember 2019-06-30 0000793952 srt:MaximumMember hog:AcceleratedDepreciationMember hog:MotorcyclesandRelatedProductsMember 2019-06-30 0000793952 srt:MinimumMember hog:AcceleratedDepreciationMember hog:MotorcyclesandRelatedProductsMember 2019-06-30 0000793952 srt:MaximumMember hog:TemporaryInefficienciesMember hog:MotorcyclesandRelatedProductsMember 2019-06-30 0000793952 srt:MaximumMember us-gaap:EmployeeSeveranceMember hog:MotorcyclesandRelatedProductsMember 2019-06-30 0000793952 srt:MinimumMember hog:MotorcyclesandRelatedProductsMember 2019-06-30 0000793952 srt:MinimumMember hog:RestructuringExpenseMember hog:MotorcyclesandRelatedProductsMember 2019-06-30 0000793952 srt:MaximumMember hog:MotorcyclesandRelatedProductsMember 2019-06-30 0000793952 us-gaap:EmployeeSeveranceMember hog:MotorcyclesandRelatedProductsMember 2018-07-01 0000793952 hog:MotorcyclesAndRelatedProductsOperationsMember 2018-07-01 0000793952 hog:MotorcyclesAndRelatedProductsOperationsMember 2018-04-02 2018-07-01 0000793952 hog:A2018ReorganizationPlanMember hog:MotorcyclesAndRelatedProductsOperationsMember 2018-07-01 0000793952 us-gaap:EmployeeSeveranceMember hog:MotorcyclesandRelatedProductsMember 2018-04-02 2018-07-01 0000793952 hog:A2018ReorganizationPlanMember hog:MotorcyclesAndRelatedProductsOperationsMember 2018-04-02 2018-07-01 0000793952 hog:MotorcyclesAndRelatedProductsOperationsMember 2018-04-01 0000793952 hog:AcceleratedDepreciationMember hog:MotorcyclesandRelatedProductsMember 2018-04-01 0000793952 hog:AcceleratedDepreciationMember hog:MotorcyclesandRelatedProductsMember 2018-04-02 2018-07-01 0000793952 hog:MotorcyclesandRelatedProductsMember 2018-07-01 0000793952 hog:MotorcyclesandRelatedProductsMember 2018-04-01 0000793952 hog:AcceleratedDepreciationMember hog:MotorcyclesandRelatedProductsMember 2018-07-01 0000793952 hog:ProjectImplementationCostsMember hog:MotorcyclesandRelatedProductsMember 2018-07-01 0000793952 hog:ProjectImplementationCostsMember hog:MotorcyclesandRelatedProductsMember 2018-04-02 2018-07-01 0000793952 hog:ProjectImplementationCostsMember hog:MotorcyclesandRelatedProductsMember 2018-04-01 0000793952 hog:A2018ReorganizationPlanMember hog:MotorcyclesAndRelatedProductsOperationsMember 2018-04-01 0000793952 us-gaap:EmployeeSeveranceMember hog:MotorcyclesandRelatedProductsMember 2018-04-01 0000793952 hog:MotorcyclesAndRelatedProductsOperationsMember 2019-04-01 2019-06-30 0000793952 hog:AcceleratedDepreciationMember hog:MotorcyclesandRelatedProductsMember 2019-04-01 2019-06-30 0000793952 us-gaap:EmployeeSeveranceMember hog:MotorcyclesandRelatedProductsMember 2019-03-31 0000793952 hog:A2018ReorganizationPlanMember hog:MotorcyclesAndRelatedProductsOperationsMember 2019-04-01 2019-06-30 0000793952 hog:A2018ReorganizationPlanMember hog:MotorcyclesAndRelatedProductsOperationsMember 2019-03-31 0000793952 hog:MotorcyclesAndRelatedProductsOperationsMember 2019-03-31 0000793952 hog:MotorcyclesandRelatedProductsMember 2019-03-31 0000793952 hog:ProjectImplementationCostsMember hog:MotorcyclesandRelatedProductsMember 2019-03-31 0000793952 us-gaap:EmployeeSeveranceMember hog:MotorcyclesandRelatedProductsMember 2019-04-01 2019-06-30 0000793952 hog:ProjectImplementationCostsMember hog:MotorcyclesandRelatedProductsMember 2019-04-01 2019-06-30 0000793952 hog:AcceleratedDepreciationMember hog:MotorcyclesandRelatedProductsMember 2019-03-31 0000793952 hog:ProjectImplementationCostsMember hog:MotorcyclesandRelatedProductsMember 2017-12-31 0000793952 us-gaap:EmployeeSeveranceMember hog:MotorcyclesandRelatedProductsMember 2017-12-31 0000793952 us-gaap:EmployeeSeveranceMember hog:MotorcyclesandRelatedProductsMember 2018-01-01 2018-07-01 0000793952 hog:MotorcyclesAndRelatedProductsOperationsMember 2018-01-01 2018-07-01 0000793952 hog:MotorcyclesandRelatedProductsMember 2017-12-31 0000793952 hog:ProjectImplementationCostsMember hog:MotorcyclesandRelatedProductsMember 2018-01-01 2018-07-01 0000793952 hog:AcceleratedDepreciationMember hog:MotorcyclesandRelatedProductsMember 2017-12-31 0000793952 hog:A2018ReorganizationPlanMember hog:MotorcyclesAndRelatedProductsOperationsMember 2018-01-01 2018-07-01 0000793952 hog:AcceleratedDepreciationMember hog:MotorcyclesandRelatedProductsMember 2018-01-01 2018-07-01 0000793952 hog:MotorcyclesAndRelatedProductsOperationsMember 2017-12-31 0000793952 hog:A2018ReorganizationPlanMember hog:MotorcyclesAndRelatedProductsOperationsMember 2017-12-31 0000793952 us-gaap:EmployeeStockOptionMember 2019-01-01 2019-06-30 0000793952 us-gaap:EmployeeStockOptionMember 2018-04-02 2018-07-01 0000793952 us-gaap:EmployeeStockOptionMember 2018-01-01 2018-07-01 0000793952 us-gaap:EmployeeStockOptionMember 2019-04-01 2019-06-30 0000793952 2019-03-04 2019-03-04 0000793952 hog:MotorcyclesMember 2019-06-30 0000793952 hog:MotorcyclesMember 2018-07-01 0000793952 hog:MotorcyclesMember 2018-12-31 0000793952 hog:PartsAndAccessoriesAndGeneralMerchandiseMember 2019-06-30 0000793952 hog:PartsAndAccessoriesAndGeneralMerchandiseMember 2018-07-01 0000793952 hog:PartsAndAccessoriesAndGeneralMerchandiseMember 2018-12-31 0000793952 us-gaap:CommercialPortfolioSegmentMember 2019-06-30 0000793952 us-gaap:CommercialPortfolioSegmentMember us-gaap:RiskLevelLowMember 2019-06-30 0000793952 us-gaap:CommercialPortfolioSegmentMember us-gaap:SubstandardMember 2019-06-30 0000793952 us-gaap:CommercialPortfolioSegmentMember us-gaap:RiskLevelLowMember 2018-07-01 0000793952 us-gaap:CommercialPortfolioSegmentMember us-gaap:SpecialMentionMember 2018-07-01 0000793952 us-gaap:CommercialPortfolioSegmentMember us-gaap:RiskLevelMediumMember 2018-07-01 0000793952 us-gaap:CommercialPortfolioSegmentMember us-gaap:RiskLevelMediumMember 2018-12-31 0000793952 us-gaap:CommercialPortfolioSegmentMember us-gaap:DoubtfulMember 2018-12-31 0000793952 us-gaap:CommercialPortfolioSegmentMember 2018-07-01 0000793952 us-gaap:CommercialPortfolioSegmentMember us-gaap:RiskLevelMediumMember 2019-06-30 0000793952 us-gaap:CommercialPortfolioSegmentMember us-gaap:SpecialMentionMember 2019-06-30 0000793952 us-gaap:CommercialPortfolioSegmentMember us-gaap:SubstandardMember 2018-07-01 0000793952 us-gaap:CommercialPortfolioSegmentMember us-gaap:SpecialMentionMember 2018-12-31 0000793952 us-gaap:CommercialPortfolioSegmentMember us-gaap:DoubtfulMember 2019-06-30 0000793952 us-gaap:CommercialPortfolioSegmentMember us-gaap:SubstandardMember 2018-12-31 0000793952 us-gaap:CommercialPortfolioSegmentMember 2018-12-31 0000793952 us-gaap:CommercialPortfolioSegmentMember us-gaap:DoubtfulMember 2018-07-01 0000793952 us-gaap:CommercialPortfolioSegmentMember us-gaap:RiskLevelLowMember 2018-12-31 0000793952 us-gaap:ConsumerPortfolioSegmentMember us-gaap:PrimeMember 2018-07-01 0000793952 us-gaap:ConsumerPortfolioSegmentMember us-gaap:SubprimeMember 2018-12-31 0000793952 us-gaap:ConsumerPortfolioSegmentMember us-gaap:SubprimeMember 2019-06-30 0000793952 us-gaap:ConsumerPortfolioSegmentMember 2018-07-01 0000793952 us-gaap:ConsumerPortfolioSegmentMember us-gaap:SubprimeMember 2018-07-01 0000793952 us-gaap:ConsumerPortfolioSegmentMember 2019-06-30 0000793952 us-gaap:ConsumerPortfolioSegmentMember us-gaap:PrimeMember 2018-12-31 0000793952 us-gaap:ConsumerPortfolioSegmentMember 2018-12-31 0000793952 us-gaap:ConsumerPortfolioSegmentMember us-gaap:PrimeMember 2019-06-30 0000793952 us-gaap:CommercialPortfolioSegmentMember us-gaap:FinancingReceivables1To29DaysPastDueMember 2018-07-01 0000793952 us-gaap:CommercialPortfolioSegmentMember us-gaap:FinancingReceivables1To29DaysPastDueMember 2019-06-30 0000793952 us-gaap:CommercialPortfolioSegmentMember hog:FinancingReceivables31To60DaysPastDueMember 2019-06-30 0000793952 us-gaap:FinancingReceivablesEqualToGreaterThan90DaysPastDueMember 2018-07-01 0000793952 us-gaap:CommercialPortfolioSegmentMember us-gaap:FinancingReceivablesEqualToGreaterThan90DaysPastDueMember 2018-12-31 0000793952 hog:FinancingReceivables61To90DaysPastDueMember 2018-12-31 0000793952 us-gaap:ConsumerPortfolioSegmentMember us-gaap:FinancingReceivablesEqualToGreaterThan90DaysPastDueMember 2019-06-30 0000793952 us-gaap:FinancingReceivablesEqualToGreaterThan90DaysPastDueMember 2019-06-30 0000793952 hog:FinancingReceivables31To60DaysPastDueMember 2018-12-31 0000793952 us-gaap:ConsumerPortfolioSegmentMember hog:FinancingReceivables31To60DaysPastDueMember 2019-06-30 0000793952 us-gaap:ConsumerPortfolioSegmentMember hog:FinancingReceivables61To90DaysPastDueMember 2018-12-31 0000793952 us-gaap:ConsumerPortfolioSegmentMember hog:FinancingReceivables61To90DaysPastDueMember 2019-06-30 0000793952 us-gaap:CommercialPortfolioSegmentMember hog:FinancingReceivables61To90DaysPastDueMember 2018-12-31 0000793952 us-gaap:ConsumerPortfolioSegmentMember hog:FinancingReceivables31To60DaysPastDueMember 2018-07-01 0000793952 us-gaap:CommercialPortfolioSegmentMember hog:FinancingReceivables61To90DaysPastDueMember 2019-06-30 0000793952 us-gaap:CommercialPortfolioSegmentMember hog:FinancingReceivables61To90DaysPastDueMember 2018-07-01 0000793952 us-gaap:CommercialPortfolioSegmentMember hog:FinancingReceivables31To60DaysPastDueMember 2018-07-01 0000793952 us-gaap:ConsumerPortfolioSegmentMember hog:FinancingReceivables31To60DaysPastDueMember 2018-12-31 0000793952 hog:FinancingReceivables61To90DaysPastDueMember 2019-06-30 0000793952 us-gaap:ConsumerPortfolioSegmentMember us-gaap:FinancingReceivablesEqualToGreaterThan90DaysPastDueMember 2018-12-31 0000793952 us-gaap:CommercialPortfolioSegmentMember hog:FinancingReceivables31To60DaysPastDueMember 2018-12-31 0000793952 us-gaap:ConsumerPortfolioSegmentMember us-gaap:FinancingReceivables1To29DaysPastDueMember 2018-07-01 0000793952 us-gaap:CommercialPortfolioSegmentMember us-gaap:FinancingReceivablesEqualToGreaterThan90DaysPastDueMember 2019-06-30 0000793952 us-gaap:FinancingReceivables1To29DaysPastDueMember 2018-07-01 0000793952 us-gaap:ConsumerPortfolioSegmentMember us-gaap:FinancingReceivables1To29DaysPastDueMember 2019-06-30 0000793952 us-gaap:ConsumerPortfolioSegmentMember hog:FinancingReceivables61To90DaysPastDueMember 2018-07-01 0000793952 us-gaap:CommercialPortfolioSegmentMember us-gaap:FinancingReceivables1To29DaysPastDueMember 2018-12-31 0000793952 us-gaap:FinancingReceivables1To29DaysPastDueMember 2019-06-30 0000793952 us-gaap:FinancingReceivablesEqualToGreaterThan90DaysPastDueMember 2018-12-31 0000793952 hog:FinancingReceivables31To60DaysPastDueMember 2019-06-30 0000793952 us-gaap:ConsumerPortfolioSegmentMember us-gaap:FinancingReceivablesEqualToGreaterThan90DaysPastDueMember 2018-07-01 0000793952 us-gaap:CommercialPortfolioSegmentMember us-gaap:FinancingReceivablesEqualToGreaterThan90DaysPastDueMember 2018-07-01 0000793952 hog:FinancingReceivables31To60DaysPastDueMember 2018-07-01 0000793952 us-gaap:FinancingReceivables1To29DaysPastDueMember 2018-12-31 0000793952 us-gaap:ConsumerPortfolioSegmentMember us-gaap:FinancingReceivables1To29DaysPastDueMember 2018-12-31 0000793952 hog:FinancingReceivables61To90DaysPastDueMember 2018-07-01 0000793952 us-gaap:CommercialPortfolioSegmentMember 2018-04-02 2018-07-01 0000793952 us-gaap:CommercialPortfolioSegmentMember 2018-01-01 2018-07-01 0000793952 us-gaap:ConsumerPortfolioSegmentMember 2018-04-02 2018-07-01 0000793952 us-gaap:ConsumerPortfolioSegmentMember 2018-04-01 0000793952 us-gaap:ConsumerPortfolioSegmentMember 2019-04-01 2019-06-30 0000793952 us-gaap:CommercialPortfolioSegmentMember 2019-01-01 2019-06-30 0000793952 us-gaap:ConsumerPortfolioSegmentMember 2019-01-01 2019-06-30 0000793952 us-gaap:CommercialPortfolioSegmentMember 2019-04-01 2019-06-30 0000793952 us-gaap:CommercialPortfolioSegmentMember 2017-12-31 0000793952 us-gaap:ConsumerPortfolioSegmentMember 2019-03-31 0000793952 us-gaap:CommercialPortfolioSegmentMember 2019-03-31 0000793952 us-gaap:ConsumerPortfolioSegmentMember 2018-01-01 2018-07-01 0000793952 us-gaap:ConsumerPortfolioSegmentMember 2017-12-31 0000793952 us-gaap:CommercialPortfolioSegmentMember 2018-04-01 0000793952 us-gaap:AccruedLiabilitiesMember us-gaap:ForeignExchangeContractMember us-gaap:CashFlowHedgingMember us-gaap:DesignatedAsHedgingInstrumentMember 2019-06-30 0000793952 us-gaap:OtherCurrentAssetsMember us-gaap:ForeignExchangeContractMember us-gaap:CashFlowHedgingMember us-gaap:DesignatedAsHedgingInstrumentMember 2018-12-31 0000793952 us-gaap:AccruedLiabilitiesMember us-gaap:InterestRateCapMember us-gaap:NondesignatedMember 2018-07-01 0000793952 us-gaap:AccruedLiabilitiesMember us-gaap:ForeignExchangeContractMember us-gaap:NondesignatedMember 2019-06-30 0000793952 us-gaap:AccruedLiabilitiesMember us-gaap:CashFlowHedgingMember us-gaap:DesignatedAsHedgingInstrumentMember 2018-07-01 0000793952 us-gaap:ForeignExchangeContractMember us-gaap:NondesignatedMember 2018-07-01 0000793952 us-gaap:AccruedLiabilitiesMember us-gaap:CommodityContractMember us-gaap:NondesignatedMember 2018-12-31 0000793952 us-gaap:AccruedLiabilitiesMember us-gaap:InterestRateSwapMember us-gaap:CashFlowHedgingMember us-gaap:DesignatedAsHedgingInstrumentMember 2019-06-30 0000793952 us-gaap:CommodityContractMember us-gaap:CashFlowHedgingMember us-gaap:DesignatedAsHedgingInstrumentMember 2018-12-31 0000793952 us-gaap:OtherCurrentAssetsMember us-gaap:CommodityContractMember us-gaap:CashFlowHedgingMember us-gaap:DesignatedAsHedgingInstrumentMember 2018-07-01 0000793952 us-gaap:AccruedLiabilitiesMember us-gaap:CommodityContractMember us-gaap:CashFlowHedgingMember us-gaap:DesignatedAsHedgingInstrumentMember 2018-07-01 0000793952 us-gaap:AccruedLiabilitiesMember us-gaap:ForeignExchangeContractMember us-gaap:CashFlowHedgingMember us-gaap:DesignatedAsHedgingInstrumentMember 2018-07-01 0000793952 us-gaap:ForeignExchangeContractMember us-gaap:CashFlowHedgingMember us-gaap:DesignatedAsHedgingInstrumentMember 2019-06-30 0000793952 us-gaap:AccruedLiabilitiesMember us-gaap:CommodityContractMember us-gaap:NondesignatedMember 2019-06-30 0000793952 us-gaap:InterestRateSwapMember us-gaap:CashFlowHedgingMember us-gaap:DesignatedAsHedgingInstrumentMember 2018-12-31 0000793952 us-gaap:AccruedLiabilitiesMember us-gaap:CommodityContractMember us-gaap:CashFlowHedgingMember us-gaap:DesignatedAsHedgingInstrumentMember 2019-06-30 0000793952 us-gaap:OtherCurrentAssetsMember us-gaap:CommodityContractMember us-gaap:CashFlowHedgingMember us-gaap:DesignatedAsHedgingInstrumentMember 2019-06-30 0000793952 us-gaap:OtherCurrentAssetsMember us-gaap:CashFlowHedgingMember us-gaap:DesignatedAsHedgingInstrumentMember 2019-06-30 0000793952 us-gaap:CashFlowHedgingMember us-gaap:DesignatedAsHedgingInstrumentMember 2018-12-31 0000793952 us-gaap:AccruedLiabilitiesMember us-gaap:InterestRateCapMember us-gaap:NondesignatedMember 2018-12-31 0000793952 us-gaap:InterestRateCapMember us-gaap:NondesignatedMember 2018-07-01 0000793952 us-gaap:CommodityContractMember us-gaap:CashFlowHedgingMember us-gaap:DesignatedAsHedgingInstrumentMember 2018-07-01 0000793952 us-gaap:OtherCurrentAssetsMember us-gaap:CommodityContractMember us-gaap:NondesignatedMember 2019-06-30 0000793952 us-gaap:OtherCurrentAssetsMember us-gaap:InterestRateSwapMember us-gaap:CashFlowHedgingMember us-gaap:DesignatedAsHedgingInstrumentMember 2018-12-31 0000793952 us-gaap:OtherCurrentAssetsMember us-gaap:CashFlowHedgingMember us-gaap:DesignatedAsHedgingInstrumentMember 2018-07-01 0000793952 us-gaap:OtherCurrentAssetsMember us-gaap:CommodityContractMember us-gaap:NondesignatedMember 2018-07-01 0000793952 us-gaap:CommodityContractMember us-gaap:NondesignatedMember 2019-06-30 0000793952 us-gaap:OtherCurrentAssetsMember us-gaap:InterestRateCapMember us-gaap:NondesignatedMember 2018-07-01 0000793952 us-gaap:ForeignExchangeContractMember us-gaap:CashFlowHedgingMember us-gaap:DesignatedAsHedgingInstrumentMember 2018-12-31 0000793952 us-gaap:OtherCurrentAssetsMember us-gaap:CommodityContractMember us-gaap:NondesignatedMember 2018-12-31 0000793952 us-gaap:AccruedLiabilitiesMember us-gaap:InterestRateCapMember us-gaap:NondesignatedMember 2019-06-30 0000793952 us-gaap:AccruedLiabilitiesMember us-gaap:ForeignExchangeContractMember us-gaap:NondesignatedMember 2018-07-01 0000793952 us-gaap:CashFlowHedgingMember us-gaap:DesignatedAsHedgingInstrumentMember 2018-07-01 0000793952 us-gaap:InterestRateCapMember us-gaap:NondesignatedMember 2019-06-30 0000793952 us-gaap:AccruedLiabilitiesMember us-gaap:CashFlowHedgingMember us-gaap:DesignatedAsHedgingInstrumentMember 2018-12-31 0000793952 us-gaap:OtherCurrentAssetsMember us-gaap:CashFlowHedgingMember us-gaap:DesignatedAsHedgingInstrumentMember 2018-12-31 0000793952 us-gaap:AccruedLiabilitiesMember us-gaap:NondesignatedMember 2019-06-30 0000793952 us-gaap:ForeignExchangeContractMember us-gaap:CashFlowHedgingMember us-gaap:DesignatedAsHedgingInstrumentMember 2018-07-01 0000793952 us-gaap:AccruedLiabilitiesMember us-gaap:ForeignExchangeContractMember us-gaap:NondesignatedMember 2018-12-31 0000793952 us-gaap:InterestRateSwapMember us-gaap:CashFlowHedgingMember us-gaap:DesignatedAsHedgingInstrumentMember 2018-07-01 0000793952 us-gaap:AccruedLiabilitiesMember us-gaap:InterestRateSwapMember us-gaap:CashFlowHedgingMember us-gaap:DesignatedAsHedgingInstrumentMember 2018-07-01 0000793952 us-gaap:OtherCurrentAssetsMember us-gaap:InterestRateCapMember us-gaap:NondesignatedMember 2019-06-30 0000793952 us-gaap:AccruedLiabilitiesMember us-gaap:InterestRateSwapMember us-gaap:CashFlowHedgingMember us-gaap:DesignatedAsHedgingInstrumentMember 2018-12-31 0000793952 us-gaap:AccruedLiabilitiesMember us-gaap:CommodityContractMember us-gaap:CashFlowHedgingMember us-gaap:DesignatedAsHedgingInstrumentMember 2018-12-31 0000793952 us-gaap:CommodityContractMember us-gaap:NondesignatedMember 2018-12-31 0000793952 us-gaap:CommodityContractMember us-gaap:NondesignatedMember 2018-07-01 0000793952 us-gaap:AccruedLiabilitiesMember us-gaap:NondesignatedMember 2018-07-01 0000793952 us-gaap:NondesignatedMember 2018-12-31 0000793952 us-gaap:OtherCurrentAssetsMember us-gaap:ForeignExchangeContractMember us-gaap:CashFlowHedgingMember us-gaap:DesignatedAsHedgingInstrumentMember 2019-06-30 0000793952 us-gaap:OtherCurrentAssetsMember us-gaap:ForeignExchangeContractMember us-gaap:NondesignatedMember 2018-12-31 0000793952 us-gaap:InterestRateSwapMember us-gaap:CashFlowHedgingMember us-gaap:DesignatedAsHedgingInstrumentMember 2019-06-30 0000793952 us-gaap:NondesignatedMember 2018-07-01 0000793952 us-gaap:InterestRateCapMember us-gaap:NondesignatedMember 2018-12-31 0000793952 us-gaap:AccruedLiabilitiesMember us-gaap:CommodityContractMember us-gaap:NondesignatedMember 2018-07-01 0000793952 us-gaap:OtherCurrentAssetsMember us-gaap:NondesignatedMember 2019-06-30 0000793952 us-gaap:OtherCurrentAssetsMember us-gaap:InterestRateSwapMember us-gaap:CashFlowHedgingMember us-gaap:DesignatedAsHedgingInstrumentMember 2018-07-01 0000793952 us-gaap:CashFlowHedgingMember us-gaap:DesignatedAsHedgingInstrumentMember 2019-06-30 0000793952 us-gaap:AccruedLiabilitiesMember us-gaap:CashFlowHedgingMember us-gaap:DesignatedAsHedgingInstrumentMember 2019-06-30 0000793952 us-gaap:ForeignExchangeContractMember us-gaap:NondesignatedMember 2019-06-30 0000793952 us-gaap:CommodityContractMember us-gaap:CashFlowHedgingMember us-gaap:DesignatedAsHedgingInstrumentMember 2019-06-30 0000793952 us-gaap:OtherCurrentAssetsMember us-gaap:ForeignExchangeContractMember us-gaap:NondesignatedMember 2019-06-30 0000793952 us-gaap:OtherCurrentAssetsMember us-gaap:ForeignExchangeContractMember us-gaap:CashFlowHedgingMember us-gaap:DesignatedAsHedgingInstrumentMember 2018-07-01 0000793952 us-gaap:OtherCurrentAssetsMember us-gaap:InterestRateCapMember us-gaap:NondesignatedMember 2018-12-31 0000793952 us-gaap:ForeignExchangeContractMember us-gaap:NondesignatedMember 2018-12-31 0000793952 us-gaap:OtherCurrentAssetsMember us-gaap:ForeignExchangeContractMember us-gaap:NondesignatedMember 2018-07-01 0000793952 us-gaap:OtherCurrentAssetsMember us-gaap:CommodityContractMember us-gaap:CashFlowHedgingMember us-gaap:DesignatedAsHedgingInstrumentMember 2018-12-31 0000793952 us-gaap:AccruedLiabilitiesMember us-gaap:ForeignExchangeContractMember us-gaap:CashFlowHedgingMember us-gaap:DesignatedAsHedgingInstrumentMember 2018-12-31 0000793952 us-gaap:OtherCurrentAssetsMember us-gaap:InterestRateSwapMember us-gaap:CashFlowHedgingMember us-gaap:DesignatedAsHedgingInstrumentMember 2019-06-30 0000793952 us-gaap:NondesignatedMember 2019-06-30 0000793952 us-gaap:OtherCurrentAssetsMember us-gaap:NondesignatedMember 2018-12-31 0000793952 us-gaap:AccruedLiabilitiesMember us-gaap:NondesignatedMember 2018-12-31 0000793952 us-gaap:OtherCurrentAssetsMember us-gaap:NondesignatedMember 2018-07-01 0000793952 us-gaap:CommodityContractMember us-gaap:NondesignatedMember hog:MotorcycleCostofGoodsSoldMember 2019-04-01 2019-06-30 0000793952 us-gaap:NondesignatedMember 2018-04-02 2018-07-01 0000793952 us-gaap:ForeignExchangeContractMember us-gaap:NondesignatedMember hog:MotorcycleCostofGoodsSoldMember 2019-01-01 2019-06-30 0000793952 us-gaap:InterestRateCapMember us-gaap:NondesignatedMember hog:FinancialServicesInterestExpenseMember 2018-01-01 2018-07-01 0000793952 us-gaap:InterestRateCapMember us-gaap:NondesignatedMember hog:FinancialServicesInterestExpenseMember 2018-04-02 2018-07-01 0000793952 us-gaap:CommodityContractMember us-gaap:NondesignatedMember hog:MotorcycleCostofGoodsSoldMember 2018-01-01 2018-07-01 0000793952 us-gaap:NondesignatedMember 2018-01-01 2018-07-01 0000793952 us-gaap:CommodityContractMember us-gaap:NondesignatedMember hog:MotorcycleCostofGoodsSoldMember 2018-04-02 2018-07-01 0000793952 us-gaap:CommodityContractMember us-gaap:NondesignatedMember hog:MotorcycleCostofGoodsSoldMember 2019-01-01 2019-06-30 0000793952 us-gaap:InterestRateCapMember us-gaap:NondesignatedMember hog:FinancialServicesInterestExpenseMember 2019-04-01 2019-06-30 0000793952 us-gaap:NondesignatedMember 2019-01-01 2019-06-30 0000793952 us-gaap:ForeignExchangeContractMember us-gaap:NondesignatedMember hog:MotorcycleCostofGoodsSoldMember 2018-04-02 2018-07-01 0000793952 us-gaap:InterestRateCapMember us-gaap:NondesignatedMember hog:FinancialServicesInterestExpenseMember 2019-01-01 2019-06-30 0000793952 us-gaap:ForeignExchangeContractMember us-gaap:NondesignatedMember hog:MotorcycleCostofGoodsSoldMember 2018-01-01 2018-07-01 0000793952 us-gaap:ForeignExchangeContractMember us-gaap:NondesignatedMember hog:MotorcycleCostofGoodsSoldMember 2019-04-01 2019-06-30 0000793952 us-gaap:NondesignatedMember 2019-04-01 2019-06-30 0000793952 us-gaap:InterestRateSwapMember us-gaap:CashFlowHedgingMember us-gaap:DesignatedAsHedgingInstrumentMember 2018-04-02 2018-07-01 0000793952 us-gaap:ForeignExchangeContractMember us-gaap:CashFlowHedgingMember us-gaap:DesignatedAsHedgingInstrumentMember hog:MotorcycleCostofGoodsSoldMember 2019-04-01 2019-06-30 0000793952 us-gaap:CommodityContractMember us-gaap:CashFlowHedgingMember us-gaap:DesignatedAsHedgingInstrumentMember hog:MotorcycleCostofGoodsSoldMember 2018-04-02 2018-07-01 0000793952 us-gaap:CommodityContractMember us-gaap:CashFlowHedgingMember us-gaap:DesignatedAsHedgingInstrumentMember 2019-04-01 2019-06-30 0000793952 us-gaap:ForeignExchangeContractMember us-gaap:CashFlowHedgingMember us-gaap:DesignatedAsHedgingInstrumentMember hog:MotorcycleCostofGoodsSoldMember 2018-04-02 2018-07-01 0000793952 us-gaap:CommodityContractMember us-gaap:CashFlowHedgingMember us-gaap:DesignatedAsHedgingInstrumentMember hog:MotorcycleCostofGoodsSoldMember 2019-04-01 2019-06-30 0000793952 us-gaap:CashFlowHedgingMember us-gaap:DesignatedAsHedgingInstrumentMember 2018-04-02 2018-07-01 0000793952 us-gaap:TreasuryLockMember us-gaap:CashFlowHedgingMember us-gaap:DesignatedAsHedgingInstrumentMember us-gaap:InterestExpenseMember 2018-04-02 2018-07-01 0000793952 us-gaap:TreasuryLockMember us-gaap:CashFlowHedgingMember us-gaap:DesignatedAsHedgingInstrumentMember hog:FinancialServicesInterestExpenseMember 2019-04-01 2019-06-30 0000793952 us-gaap:TreasuryLockMember us-gaap:CashFlowHedgingMember us-gaap:DesignatedAsHedgingInstrumentMember us-gaap:InterestExpenseMember 2019-04-01 2019-06-30 0000793952 us-gaap:InterestRateSwapMember us-gaap:CashFlowHedgingMember us-gaap:DesignatedAsHedgingInstrumentMember hog:FinancialServicesInterestExpenseMember 2019-04-01 2019-06-30 0000793952 us-gaap:TreasuryLockMember us-gaap:CashFlowHedgingMember us-gaap:DesignatedAsHedgingInstrumentMember 2018-04-02 2018-07-01 0000793952 us-gaap:CashFlowHedgingMember us-gaap:DesignatedAsHedgingInstrumentMember 2019-04-01 2019-06-30 0000793952 us-gaap:TreasuryLockMember us-gaap:CashFlowHedgingMember us-gaap:DesignatedAsHedgingInstrumentMember 2019-04-01 2019-06-30 0000793952 us-gaap:InterestRateSwapMember us-gaap:CashFlowHedgingMember us-gaap:DesignatedAsHedgingInstrumentMember hog:FinancialServicesInterestExpenseMember 2018-04-02 2018-07-01 0000793952 us-gaap:InterestRateSwapMember us-gaap:CashFlowHedgingMember us-gaap:DesignatedAsHedgingInstrumentMember 2019-04-01 2019-06-30 0000793952 us-gaap:TreasuryLockMember us-gaap:CashFlowHedgingMember us-gaap:DesignatedAsHedgingInstrumentMember hog:FinancialServicesInterestExpenseMember 2018-04-02 2018-07-01 0000793952 us-gaap:CommodityContractMember us-gaap:CashFlowHedgingMember us-gaap:DesignatedAsHedgingInstrumentMember 2018-04-02 2018-07-01 0000793952 us-gaap:ForeignExchangeContractMember us-gaap:CashFlowHedgingMember us-gaap:DesignatedAsHedgingInstrumentMember 2019-04-01 2019-06-30 0000793952 us-gaap:ForeignExchangeContractMember us-gaap:CashFlowHedgingMember us-gaap:DesignatedAsHedgingInstrumentMember 2018-04-02 2018-07-01 0000793952 us-gaap:TreasuryLockMember us-gaap:CashFlowHedgingMember us-gaap:DesignatedAsHedgingInstrumentMember hog:FinancialServicesInterestExpenseMember 2018-01-01 2018-07-01 0000793952 us-gaap:CommodityContractMember us-gaap:CashFlowHedgingMember us-gaap:DesignatedAsHedgingInstrumentMember hog:MotorcycleCostofGoodsSoldMember 2018-01-01 2018-07-01 0000793952 us-gaap:ForeignExchangeContractMember us-gaap:CashFlowHedgingMember us-gaap:DesignatedAsHedgingInstrumentMember hog:MotorcycleCostofGoodsSoldMember 2019-01-01 2019-06-30 0000793952 us-gaap:ForeignExchangeContractMember us-gaap:CashFlowHedgingMember us-gaap:DesignatedAsHedgingInstrumentMember 2018-01-01 2018-07-01 0000793952 us-gaap:TreasuryLockMember us-gaap:CashFlowHedgingMember us-gaap:DesignatedAsHedgingInstrumentMember us-gaap:InterestExpenseMember 2019-01-01 2019-06-30 0000793952 us-gaap:TreasuryLockMember us-gaap:CashFlowHedgingMember us-gaap:DesignatedAsHedgingInstrumentMember 2018-01-01 2018-07-01 0000793952 us-gaap:InterestRateSwapMember us-gaap:CashFlowHedgingMember us-gaap:DesignatedAsHedgingInstrumentMember 2019-01-01 2019-06-30 0000793952 us-gaap:ForeignExchangeContractMember us-gaap:CashFlowHedgingMember us-gaap:DesignatedAsHedgingInstrumentMember hog:MotorcycleCostofGoodsSoldMember 2018-01-01 2018-07-01 0000793952 us-gaap:TreasuryLockMember us-gaap:CashFlowHedgingMember us-gaap:DesignatedAsHedgingInstrumentMember us-gaap:InterestExpenseMember 2018-01-01 2018-07-01 0000793952 us-gaap:CashFlowHedgingMember us-gaap:DesignatedAsHedgingInstrumentMember 2018-01-01 2018-07-01 0000793952 us-gaap:TreasuryLockMember us-gaap:CashFlowHedgingMember us-gaap:DesignatedAsHedgingInstrumentMember hog:FinancialServicesInterestExpenseMember 2019-01-01 2019-06-30 0000793952 us-gaap:CommodityContractMember us-gaap:CashFlowHedgingMember us-gaap:DesignatedAsHedgingInstrumentMember 2018-01-01 2018-07-01 0000793952 us-gaap:CommodityContractMember us-gaap:CashFlowHedgingMember us-gaap:DesignatedAsHedgingInstrumentMember hog:MotorcycleCostofGoodsSoldMember 2019-01-01 2019-06-30 0000793952 us-gaap:TreasuryLockMember us-gaap:CashFlowHedgingMember us-gaap:DesignatedAsHedgingInstrumentMember 2019-01-01 2019-06-30 0000793952 us-gaap:InterestRateSwapMember us-gaap:CashFlowHedgingMember us-gaap:DesignatedAsHedgingInstrumentMember hog:FinancialServicesInterestExpenseMember 2019-01-01 2019-06-30 0000793952 us-gaap:ForeignExchangeContractMember us-gaap:CashFlowHedgingMember us-gaap:DesignatedAsHedgingInstrumentMember 2019-01-01 2019-06-30 0000793952 us-gaap:CashFlowHedgingMember us-gaap:DesignatedAsHedgingInstrumentMember 2019-01-01 2019-06-30 0000793952 us-gaap:CommodityContractMember us-gaap:CashFlowHedgingMember us-gaap:DesignatedAsHedgingInstrumentMember 2019-01-01 2019-06-30 0000793952 us-gaap:InterestRateSwapMember us-gaap:CashFlowHedgingMember us-gaap:DesignatedAsHedgingInstrumentMember 2018-01-01 2018-07-01 0000793952 us-gaap:InterestRateSwapMember us-gaap:CashFlowHedgingMember us-gaap:DesignatedAsHedgingInstrumentMember hog:FinancialServicesInterestExpenseMember 2018-01-01 2018-07-01 0000793952 srt:MaximumMember 2019-01-01 2019-06-30 0000793952 srt:MinimumMember 2019-01-01 2019-06-30 0000793952 us-gaap:CommercialPaperMember 2018-07-01 0000793952 us-gaap:CommercialPaperMember 2018-12-31 0000793952 us-gaap:CommercialPaperMember 2019-06-30 0000793952 us-gaap:RevolvingCreditFacilityMember hog:VariableRateNotesMaturingMay112020Member 2019-05-01 2019-05-31 0000793952 us-gaap:RevolvingCreditFacilityMember hog:VariableRateNotesMaturingMay112020Member 2019-05-31 0000793952 us-gaap:MediumTermNotesMember 2019-06-30 0000793952 hog:TwoPointFourPercentMediumTermNotesDue2019Member us-gaap:MediumTermNotesMember 2018-12-31 0000793952 hog:TwoPointFourPercentMediumTermNotesDue2020Member us-gaap:MediumTermNotesMember 2019-06-30 0000793952 hog:AssetBackedU.S.CommercialPaperConduitFacilityVIEMember us-gaap:SecuredDebtMember 2019-06-30 0000793952 hog:ThreePointThirtyfivePercentMediumTermNotesdue2023Member us-gaap:MediumTermNotesMember 2019-06-30 0000793952 hog:TwoPointTwentyfivePercentMediumTermNotesdue2019Member us-gaap:MediumTermNotesMember 2019-06-30 0000793952 us-gaap:SecuredDebtMember 2018-12-31 0000793952 hog:TwoPointEightyfivePercentMediumTermNotesDue2021Member us-gaap:MediumTermNotesMember 2018-07-01 0000793952 hog:AssetBackedU.S.CommercialPaperConduitFacilityVIEMember us-gaap:SecuredDebtMember 2018-12-31 0000793952 hog:FloatingRateMediumTermNotesdue2020Member us-gaap:MediumTermNotesMember 2019-06-30 0000793952 hog:TwoPointFiftyfivePercentMediumTermNotesDue2022Member us-gaap:MediumTermNotesMember 2018-12-31 0000793952 hog:FloatingRateMediumTermNotesdue2021Member us-gaap:MediumTermNotesMember 2018-12-31 0000793952 hog:TwoPointEightyfivePercentMediumTermNotesDue2021Member us-gaap:MediumTermNotesMember 2019-06-30 0000793952 hog:FourPointSixTwoFivePercentSeniorUnsecuredNotesDue2045Member us-gaap:SeniorNotesMember 2018-12-31 0000793952 hog:TwoPointFiftyfivePercentMediumTermNotesDue2022Member us-gaap:MediumTermNotesMember 2019-06-30 0000793952 hog:TwoPointTwentyfivePercentMediumTermNotesdue2019Member us-gaap:MediumTermNotesMember 2018-07-01 0000793952 hog:FourPointZerofivePercentMediumTermNotesDue2019Member us-gaap:MediumTermNotesMember 2018-07-01 0000793952 hog:ThreePointFiftyfivePercentMediumTermNotesdue2021Member us-gaap:MediumTermNotesMember 2019-06-30 0000793952 hog:FloatingRateMediumTermNotesdue2021Member us-gaap:MediumTermNotesMember 2018-07-01 0000793952 hog:TermAssetBackedSecuritizationVIEsMember us-gaap:SecuredDebtMember 2018-07-01 0000793952 hog:TwoPointFourPercentMediumTermNotesDue2020Member us-gaap:MediumTermNotesMember 2018-12-31 0000793952 us-gaap:MediumTermNotesMember 2018-07-01 0000793952 us-gaap:UnsecuredDebtMember 2018-07-01 0000793952 hog:FourPointSixTwoFivePercentSeniorUnsecuredNotesDue2045Member us-gaap:SeniorNotesMember 2019-06-30 0000793952 hog:TermAssetBackedSecuritizationVIEsMember us-gaap:SecuredDebtMember 2019-06-30 0000793952 us-gaap:SeniorNotesMember 2018-12-31 0000793952 hog:TwoPointEightyfivePercentMediumTermNotesDue2021Member us-gaap:MediumTermNotesMember 2018-12-31 0000793952 hog:ThreePointFiftyfivePercentMediumTermNotesdue2021Member us-gaap:MediumTermNotesMember 2018-07-01 0000793952 hog:ThreePointThirtyfivePercentMediumTermNotesdue2023Member us-gaap:MediumTermNotesMember 2018-07-01 0000793952 us-gaap:SecuredDebtMember 2018-07-01 0000793952 hog:TermAssetBackedSecuritizationVIEsMember us-gaap:SecuredDebtMember 2018-12-31 0000793952 us-gaap:UnsecuredDebtMember 2019-06-30 0000793952 hog:TwoPointFourPercentMediumTermNotesDue2019Member us-gaap:MediumTermNotesMember 2018-07-01 0000793952 hog:AssetBackedCanadianCommercialPaperConduitFacilityMember us-gaap:SecuredDebtMember 2018-12-31 0000793952 us-gaap:SeniorNotesMember 2018-07-01 0000793952 us-gaap:SecuredDebtMember 2019-06-30 0000793952 hog:TwoPointFiftyfivePercentMediumTermNotesDue2022Member us-gaap:MediumTermNotesMember 2018-07-01 0000793952 hog:TwoPointFourPercentMediumTermNotesDue2020Member us-gaap:MediumTermNotesMember 2018-07-01 0000793952 hog:AssetBackedU.S.CommercialPaperConduitFacilityVIEMember us-gaap:SecuredDebtMember 2018-07-01 0000793952 hog:FourPointZerofivePercentMediumTermNotesDue2019Member us-gaap:MediumTermNotesMember 2019-06-30 0000793952 hog:TwoPointFifteenPercentMediumTermNotesDue2020Member us-gaap:MediumTermNotesMember 2018-12-31 0000793952 us-gaap:MediumTermNotesMember 2018-12-31 0000793952 hog:ThreePointFivePercentSeniorUnsecuredNotesDue2025Member us-gaap:SeniorNotesMember 2018-07-01 0000793952 hog:FourPointSixTwoFivePercentSeniorUnsecuredNotesDue2045Member us-gaap:SeniorNotesMember 2018-07-01 0000793952 hog:AssetBackedCanadianCommercialPaperConduitFacilityMember us-gaap:SecuredDebtMember 2019-06-30 0000793952 hog:FloatingRateMediumTermNotesdue2019Member us-gaap:MediumTermNotesMember 2018-07-01 0000793952 hog:TwoPointFourPercentMediumTermNotesDue2019Member us-gaap:MediumTermNotesMember 2019-06-30 0000793952 hog:ThreePointThirtyfivePercentMediumTermNotesdue2023Member us-gaap:MediumTermNotesMember 2018-12-31 0000793952 hog:TwoPointFifteenPercentMediumTermNotesDue2020Member us-gaap:MediumTermNotesMember 2018-07-01 0000793952 hog:TwoPointTwentyfivePercentMediumTermNotesdue2019Member us-gaap:MediumTermNotesMember 2018-12-31 0000793952 hog:FloatingRateMediumTermNotesdue2020Member us-gaap:MediumTermNotesMember 2018-07-01 0000793952 us-gaap:SeniorNotesMember 2019-06-30 0000793952 hog:FourPointZerofivePercentMediumTermNotesDue2019Member us-gaap:MediumTermNotesMember 2018-12-31 0000793952 hog:AssetBackedCanadianCommercialPaperConduitFacilityMember us-gaap:SecuredDebtMember 2018-07-01 0000793952 hog:ThreePointFiftyfivePercentMediumTermNotesdue2021Member us-gaap:MediumTermNotesMember 2018-12-31 0000793952 hog:FloatingRateMediumTermNotesdue2021Member us-gaap:MediumTermNotesMember 2019-06-30 0000793952 hog:TwoPointFifteenPercentMediumTermNotesDue2020Member us-gaap:MediumTermNotesMember 2019-06-30 0000793952 hog:FloatingRateMediumTermNotesdue2019Member us-gaap:MediumTermNotesMember 2018-12-31 0000793952 hog:FloatingRateMediumTermNotesdue2019Member us-gaap:MediumTermNotesMember 2019-06-30 0000793952 hog:ThreePointFivePercentSeniorUnsecuredNotesDue2025Member us-gaap:SeniorNotesMember 2019-06-30 0000793952 hog:FloatingRateMediumTermNotesdue2020Member us-gaap:MediumTermNotesMember 2018-12-31 0000793952 us-gaap:UnsecuredDebtMember 2018-12-31 0000793952 hog:ThreePointFivePercentSeniorUnsecuredNotesDue2025Member us-gaap:SeniorNotesMember 2018-12-31 0000793952 hog:FloatingRateMediumTermNotesdue2020Member us-gaap:UnsecuredDebtMember 2019-06-30 0000793952 hog:FloatingRateMediumTermNotesdue2019Member us-gaap:UnsecuredDebtMember 2019-06-30 0000793952 hog:FloatingRateMediumTermNotesdue2021Member us-gaap:UnsecuredDebtMember 2019-06-30 0000793952 us-gaap:VariableInterestEntityNotPrimaryBeneficiaryMember 2016-06-26 0000793952 us-gaap:VariableInterestEntityNotPrimaryBeneficiaryMember 2016-03-28 2016-06-26 0000793952 hog:AssetBackedSecuritization2Member us-gaap:AssetBackedSecuritiesSecuritizedLoansAndReceivablesMember us-gaap:SecuredDebtMember us-gaap:VariableInterestEntityPrimaryBeneficiaryMember 2019-04-01 2019-06-30 0000793952 hog:AssetBackedSecuritization1Member us-gaap:AssetBackedSecuritiesSecuritizedLoansAndReceivablesMember us-gaap:SecuredDebtMember us-gaap:VariableInterestEntityPrimaryBeneficiaryMember 2019-06-30 0000793952 us-gaap:DomesticLineOfCreditMember hog:AssetBackedU.S.CommercialPaperConduitFacilityVIEFacilityOneMember us-gaap:SecuredDebtMember us-gaap:VariableInterestEntityPrimaryBeneficiaryMember 2018-11-30 0000793952 us-gaap:DomesticLineOfCreditMember hog:AssetBackedU.S.CommercialPaperConduitFacilityVIEFacilityTwoMember us-gaap:SecuredDebtMember us-gaap:VariableInterestEntityPrimaryBeneficiaryMember 2018-11-30 0000793952 us-gaap:ForeignLineOfCreditMember hog:AssetBackedCanadianCommercialPaperConduitFacilityMember us-gaap:SecuredDebtMember us-gaap:VariableInterestEntityNotPrimaryBeneficiaryMember 2019-06-30 0000793952 hog:AssetBackedSecuritization2Member us-gaap:AssetBackedSecuritiesSecuritizedLoansAndReceivablesMember us-gaap:SecuredDebtMember us-gaap:VariableInterestEntityPrimaryBeneficiaryMember 2019-06-30 0000793952 us-gaap:DomesticLineOfCreditMember hog:AssetBackedU.S.CommercialPaperConduitFacilityVIEMember us-gaap:SecuredDebtMember us-gaap:VariableInterestEntityPrimaryBeneficiaryMember 2019-01-01 2019-06-30 0000793952 us-gaap:DomesticLineOfCreditMember hog:AssetBackedU.S.CommercialPaperConduitFacilityVIEFacilityTwoMember us-gaap:SecuredDebtMember us-gaap:VariableInterestEntityPrimaryBeneficiaryMember 2019-05-31 0000793952 hog:AssetBackedSecuritization1Member us-gaap:AssetBackedSecuritiesSecuritizedLoansAndReceivablesMember us-gaap:SecuredDebtMember us-gaap:VariableInterestEntityPrimaryBeneficiaryMember 2019-04-01 2019-06-30 0000793952 us-gaap:ForeignLineOfCreditMember hog:AssetBackedCanadianCommercialPaperConduitFacilityMember us-gaap:SecuredDebtMember us-gaap:VariableInterestEntityNotPrimaryBeneficiaryMember 2019-01-01 2019-06-30 0000793952 us-gaap:DomesticLineOfCreditMember hog:AssetBackedU.S.CommercialPaperConduitFacilityVIEMember us-gaap:SecuredDebtMember us-gaap:VariableInterestEntityPrimaryBeneficiaryMember 2019-04-01 2019-06-30 0000793952 us-gaap:DomesticLineOfCreditMember hog:AssetBackedU.S.CommercialPaperConduitFacilityVIEMember us-gaap:SecuredDebtMember us-gaap:VariableInterestEntityPrimaryBeneficiaryMember 2018-04-02 2018-07-01 0000793952 us-gaap:DomesticLineOfCreditMember hog:AssetBackedU.S.CommercialPaperConduitFacilityVIEMember us-gaap:SecuredDebtMember us-gaap:VariableInterestEntityPrimaryBeneficiaryMember 2018-01-01 2018-07-01 0000793952 us-gaap:DomesticLineOfCreditMember hog:AssetBackedU.S.CommercialPaperConduitFacilityVIEMember us-gaap:SecuredDebtMember us-gaap:VariableInterestEntityPrimaryBeneficiaryMember 2018-01-01 2018-04-01 0000793952 us-gaap:DomesticLineOfCreditMember hog:AssetBackedU.S.CommercialPaperConduitFacilityVIEMember us-gaap:SecuredDebtMember us-gaap:VariableInterestEntityPrimaryBeneficiaryMember 2019-01-01 2019-03-31 0000793952 us-gaap:ForeignLineOfCreditMember hog:AssetBackedCanadianCommercialPaperConduitFacilityMember us-gaap:SecuredDebtMember us-gaap:VariableInterestEntityPrimaryBeneficiaryMember 2019-01-01 2019-03-31 0000793952 us-gaap:ForeignLineOfCreditMember hog:AssetBackedCanadianCommercialPaperConduitFacilityMember us-gaap:SecuredDebtMember us-gaap:VariableInterestEntityPrimaryBeneficiaryMember 2018-04-02 2018-07-01 0000793952 us-gaap:ForeignLineOfCreditMember hog:AssetBackedCanadianCommercialPaperConduitFacilityMember us-gaap:SecuredDebtMember us-gaap:VariableInterestEntityPrimaryBeneficiaryMember 2018-01-01 2018-04-01 0000793952 us-gaap:ForeignLineOfCreditMember hog:AssetBackedCanadianCommercialPaperConduitFacilityMember us-gaap:SecuredDebtMember us-gaap:VariableInterestEntityPrimaryBeneficiaryMember 2019-04-01 2019-06-30 0000793952 us-gaap:ForeignLineOfCreditMember hog:AssetBackedCanadianCommercialPaperConduitFacilityMember us-gaap:SecuredDebtMember us-gaap:VariableInterestEntityPrimaryBeneficiaryMember 2018-01-01 2018-07-01 0000793952 us-gaap:ForeignLineOfCreditMember hog:AssetBackedCanadianCommercialPaperConduitFacilityMember us-gaap:SecuredDebtMember us-gaap:VariableInterestEntityPrimaryBeneficiaryMember 2019-01-01 2019-06-30 0000793952 us-gaap:AssetsTotalMember 2019-06-30 0000793952 hog:RestrictedCashMember 2019-06-30 0000793952 us-gaap:OtherAssetsMember hog:TermAssetBackedSecuritizationsMember us-gaap:VariableInterestEntityPrimaryBeneficiaryMember 2019-06-30 0000793952 us-gaap:FinanceReceivablesMember hog:TermAssetBackedSecuritizationsMember us-gaap:VariableInterestEntityPrimaryBeneficiaryMember 2018-07-01 0000793952 us-gaap:LongTermDebtMember hog:TermAssetBackedSecuritizationsMember us-gaap:VariableInterestEntityPrimaryBeneficiaryMember 2018-07-01 0000793952 hog:RestrictedCashMember hog:AssetBackedCanadianCommercialPaperConduitFacilityMember us-gaap:VariableInterestEntityNotPrimaryBeneficiaryMember 2018-12-31 0000793952 hog:RestrictedCashMember hog:TermAssetBackedSecuritizationsMember us-gaap:VariableInterestEntityPrimaryBeneficiaryMember 2019-06-30 0000793952 us-gaap:FinanceReceivablesMember hog:TermAssetBackedSecuritizationsMember us-gaap:VariableInterestEntityPrimaryBeneficiaryMember 2019-06-30 0000793952 us-gaap:FinanceReceivablesMember hog:AssetBackedCanadianCommercialPaperConduitFacilityMember us-gaap:VariableInterestEntityNotPrimaryBeneficiaryMember 2018-12-31 0000793952 us-gaap:AssetsTotalMember hog:TermAssetBackedSecuritizationsMember us-gaap:VariableInterestEntityPrimaryBeneficiaryMember 2019-06-30 0000793952 us-gaap:LongTermDebtMember hog:TermAssetBackedSecuritizationsMember us-gaap:VariableInterestEntityPrimaryBeneficiaryMember 2019-06-30 0000793952 us-gaap:LongTermDebtMember hog:AssetBackedUSCommercialPaperConduitFacilityMember us-gaap:VariableInterestEntityPrimaryBeneficiaryMember 2018-07-01 0000793952 us-gaap:FinanceReceivablesMember hog:TermAssetBackedSecuritizationsMember us-gaap:VariableInterestEntityPrimaryBeneficiaryMember 2018-12-31 0000793952 us-gaap:FinanceReceivablesMember hog:AssetBackedUSCommercialPaperConduitFacilityMember us-gaap:VariableInterestEntityPrimaryBeneficiaryMember 2018-12-31 0000793952 hog:RestrictedCashMember 2018-12-31 0000793952 us-gaap:OtherAssetsMember 2019-06-30 0000793952 us-gaap:FinanceReceivablesMember hog:AssetBackedUSCommercialPaperConduitFacilityMember us-gaap:VariableInterestEntityPrimaryBeneficiaryMember 2019-06-30 0000793952 us-gaap:OtherAssetsMember hog:AssetBackedUSCommercialPaperConduitFacilityMember us-gaap:VariableInterestEntityPrimaryBeneficiaryMember 2019-06-30 0000793952 us-gaap:FinanceReceivablesMember 2019-06-30 0000793952 us-gaap:AssetsTotalMember hog:AssetBackedCanadianCommercialPaperConduitFacilityMember us-gaap:VariableInterestEntityNotPrimaryBeneficiaryMember 2018-12-31 0000793952 hog:RestrictedCashMember hog:TermAssetBackedSecuritizationsMember us-gaap:VariableInterestEntityPrimaryBeneficiaryMember 2018-07-01 0000793952 us-gaap:OtherAssetsMember hog:AssetBackedUSCommercialPaperConduitFacilityMember us-gaap:VariableInterestEntityPrimaryBeneficiaryMember 2018-12-31 0000793952 us-gaap:LongTermDebtMember hog:AssetBackedCanadianCommercialPaperConduitFacilityMember us-gaap:VariableInterestEntityNotPrimaryBeneficiaryMember 2018-12-31 0000793952 us-gaap:LongTermDebtMember 2018-07-01 0000793952 us-gaap:AssetsTotalMember hog:AssetBackedUSCommercialPaperConduitFacilityMember us-gaap:VariableInterestEntityPrimaryBeneficiaryMember 2018-12-31 0000793952 us-gaap:FinanceReceivablesMember hog:AssetBackedUSCommercialPaperConduitFacilityMember us-gaap:VariableInterestEntityPrimaryBeneficiaryMember 2018-07-01 0000793952 us-gaap:OtherAssetsMember hog:AssetBackedUSCommercialPaperConduitFacilityMember us-gaap:VariableInterestEntityPrimaryBeneficiaryMember 2018-07-01 0000793952 us-gaap:LongTermDebtMember 2019-06-30 0000793952 us-gaap:AssetsTotalMember 2018-07-01 0000793952 us-gaap:OtherAssetsMember hog:AssetBackedCanadianCommercialPaperConduitFacilityMember us-gaap:VariableInterestEntityNotPrimaryBeneficiaryMember 2019-06-30 0000793952 us-gaap:FinanceReceivablesMember 2018-07-01 0000793952 us-gaap:FinanceReceivablesMember 2018-12-31 0000793952 us-gaap:AssetsTotalMember hog:AssetBackedCanadianCommercialPaperConduitFacilityMember us-gaap:VariableInterestEntityNotPrimaryBeneficiaryMember 2019-06-30 0000793952 hog:RestrictedCashMember hog:AssetBackedUSCommercialPaperConduitFacilityMember us-gaap:VariableInterestEntityPrimaryBeneficiaryMember 2019-06-30 0000793952 us-gaap:OtherAssetsMember hog:TermAssetBackedSecuritizationsMember us-gaap:VariableInterestEntityPrimaryBeneficiaryMember 2018-12-31 0000793952 us-gaap:AssetsTotalMember hog:TermAssetBackedSecuritizationsMember us-gaap:VariableInterestEntityPrimaryBeneficiaryMember 2018-07-01 0000793952 us-gaap:LongTermDebtMember hog:AssetBackedCanadianCommercialPaperConduitFacilityMember us-gaap:VariableInterestEntityNotPrimaryBeneficiaryMember 2018-07-01 0000793952 us-gaap:AssetsTotalMember hog:AssetBackedCanadianCommercialPaperConduitFacilityMember us-gaap:VariableInterestEntityNotPrimaryBeneficiaryMember 2018-07-01 0000793952 hog:RestrictedCashMember hog:AssetBackedCanadianCommercialPaperConduitFacilityMember us-gaap:VariableInterestEntityNotPrimaryBeneficiaryMember 2019-06-30 0000793952 us-gaap:LongTermDebtMember hog:AssetBackedUSCommercialPaperConduitFacilityMember us-gaap:VariableInterestEntityPrimaryBeneficiaryMember 2019-06-30 0000793952 hog:RestrictedCashMember hog:AssetBackedCanadianCommercialPaperConduitFacilityMember us-gaap:VariableInterestEntityNotPrimaryBeneficiaryMember 2018-07-01 0000793952 us-gaap:FinanceReceivablesMember hog:AssetBackedCanadianCommercialPaperConduitFacilityMember us-gaap:VariableInterestEntityNotPrimaryBeneficiaryMember 2018-07-01 0000793952 us-gaap:LongTermDebtMember hog:AssetBackedUSCommercialPaperConduitFacilityMember us-gaap:VariableInterestEntityPrimaryBeneficiaryMember 2018-12-31 0000793952 us-gaap:OtherAssetsMember 2018-12-31 0000793952 us-gaap:OtherAssetsMember hog:TermAssetBackedSecuritizationsMember us-gaap:VariableInterestEntityPrimaryBeneficiaryMember 2018-07-01 0000793952 us-gaap:OtherAssetsMember hog:AssetBackedCanadianCommercialPaperConduitFacilityMember us-gaap:VariableInterestEntityNotPrimaryBeneficiaryMember 2018-07-01 0000793952 us-gaap:OtherAssetsMember 2018-07-01 0000793952 us-gaap:LongTermDebtMember hog:TermAssetBackedSecuritizationsMember us-gaap:VariableInterestEntityPrimaryBeneficiaryMember 2018-12-31 0000793952 hog:RestrictedCashMember 2018-07-01 0000793952 us-gaap:AssetsTotalMember hog:TermAssetBackedSecuritizationsMember us-gaap:VariableInterestEntityPrimaryBeneficiaryMember 2018-12-31 0000793952 hog:RestrictedCashMember hog:AssetBackedUSCommercialPaperConduitFacilityMember us-gaap:VariableInterestEntityPrimaryBeneficiaryMember 2018-07-01 0000793952 us-gaap:LongTermDebtMember hog:AssetBackedCanadianCommercialPaperConduitFacilityMember us-gaap:VariableInterestEntityNotPrimaryBeneficiaryMember 2019-06-30 0000793952 us-gaap:FinanceReceivablesMember hog:AssetBackedCanadianCommercialPaperConduitFacilityMember us-gaap:VariableInterestEntityNotPrimaryBeneficiaryMember 2019-06-30 0000793952 hog:RestrictedCashMember hog:AssetBackedUSCommercialPaperConduitFacilityMember us-gaap:VariableInterestEntityPrimaryBeneficiaryMember 2018-12-31 0000793952 us-gaap:LongTermDebtMember 2018-12-31 0000793952 us-gaap:AssetsTotalMember hog:AssetBackedUSCommercialPaperConduitFacilityMember us-gaap:VariableInterestEntityPrimaryBeneficiaryMember 2019-06-30 0000793952 us-gaap:AssetsTotalMember hog:AssetBackedUSCommercialPaperConduitFacilityMember us-gaap:VariableInterestEntityPrimaryBeneficiaryMember 2018-07-01 0000793952 us-gaap:OtherAssetsMember hog:AssetBackedCanadianCommercialPaperConduitFacilityMember us-gaap:VariableInterestEntityNotPrimaryBeneficiaryMember 2018-12-31 0000793952 hog:RestrictedCashMember hog:TermAssetBackedSecuritizationsMember us-gaap:VariableInterestEntityPrimaryBeneficiaryMember 2018-12-31 0000793952 us-gaap:AssetsTotalMember 2018-12-31 0000793952 us-gaap:ChangeDuringPeriodFairValueDisclosureMember us-gaap:FairValueMeasurementsNonrecurringMember 2018-12-31 0000793952 us-gaap:FairValueInputsLevel2Member us-gaap:EstimateOfFairValueFairValueDisclosureMember us-gaap:FairValueMeasurementsNonrecurringMember 2019-06-30 0000793952 us-gaap:ChangeDuringPeriodFairValueDisclosureMember us-gaap:FairValueMeasurementsNonrecurringMember 2018-07-01 0000793952 us-gaap:FairValueInputsLevel2Member us-gaap:EstimateOfFairValueFairValueDisclosureMember us-gaap:FairValueMeasurementsNonrecurringMember 2018-07-01 0000793952 us-gaap:ChangeDuringPeriodFairValueDisclosureMember us-gaap:FairValueMeasurementsNonrecurringMember 2019-06-30 0000793952 us-gaap:FairValueInputsLevel2Member us-gaap:EstimateOfFairValueFairValueDisclosureMember us-gaap:FairValueMeasurementsNonrecurringMember 2018-12-31 0000793952 us-gaap:FairValueMeasurementsRecurringMember 2018-07-01 0000793952 us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember 2019-06-30 0000793952 us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember 2018-07-01 0000793952 us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember 2018-12-31 0000793952 us-gaap:FairValueMeasurementsRecurringMember 2019-06-30 0000793952 us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember 2018-12-31 0000793952 us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember 2018-07-01 0000793952 us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember 2019-06-30 0000793952 us-gaap:FairValueMeasurementsRecurringMember 2018-12-31 0000793952 us-gaap:CarryingReportedAmountFairValueDisclosureMember us-gaap:MediumTermNotesMember 2018-12-31 0000793952 hog:AssetBackedU.S.CommercialPaperConduitFacilityVIEMember us-gaap:EstimateOfFairValueFairValueDisclosureMember us-gaap:SecuredDebtMember 2018-07-01 0000793952 us-gaap:CarryingReportedAmountFairValueDisclosureMember 2018-07-01 0000793952 hog:AssetBackedU.S.CommercialPaperConduitFacilityVIEMember us-gaap:CarryingReportedAmountFairValueDisclosureMember us-gaap:SecuredDebtMember 2019-06-30 0000793952 us-gaap:CarryingReportedAmountFairValueDisclosureMember us-gaap:MediumTermNotesMember 2018-07-01 0000793952 hog:AssetBackedU.S.CommercialPaperConduitFacilityVIEMember us-gaap:CarryingReportedAmountFairValueDisclosureMember us-gaap:SecuredDebtMember 2018-12-31 0000793952 us-gaap:CarryingReportedAmountFairValueDisclosureMember us-gaap:CommercialPaperMember 2018-12-31 0000793952 us-gaap:CarryingReportedAmountFairValueDisclosureMember us-gaap:SeniorNotesMember 2018-12-31 0000793952 hog:AssetBackedCanadianCommercialPaperConduitFacilityMember us-gaap:CarryingReportedAmountFairValueDisclosureMember us-gaap:SecuredDebtMember 2018-12-31 0000793952 hog:AssetBackedU.S.CommercialPaperConduitFacilityVIEMember us-gaap:CarryingReportedAmountFairValueDisclosureMember us-gaap:SecuredDebtMember 2018-07-01 0000793952 us-gaap:EstimateOfFairValueFairValueDisclosureMember us-gaap:MediumTermNotesMember 2018-07-01 0000793952 hog:AssetBackedCanadianCommercialPaperConduitFacilityMember us-gaap:EstimateOfFairValueFairValueDisclosureMember us-gaap:SecuredDebtMember 2019-06-30 0000793952 hog:TermAssetBackedSecuritizationVIEsMember us-gaap:EstimateOfFairValueFairValueDisclosureMember us-gaap:SecuredDebtMember 2019-06-30 0000793952 us-gaap:EstimateOfFairValueFairValueDisclosureMember us-gaap:CommercialPaperMember 2018-07-01 0000793952 us-gaap:EstimateOfFairValueFairValueDisclosureMember us-gaap:MediumTermNotesMember 2018-12-31 0000793952 us-gaap:EstimateOfFairValueFairValueDisclosureMember 2018-12-31 0000793952 hog:AssetBackedCanadianCommercialPaperConduitFacilityMember us-gaap:CarryingReportedAmountFairValueDisclosureMember us-gaap:SecuredDebtMember 2019-06-30 0000793952 hog:AssetBackedCanadianCommercialPaperConduitFacilityMember us-gaap:CarryingReportedAmountFairValueDisclosureMember us-gaap:SecuredDebtMember 2018-07-01 0000793952 us-gaap:EstimateOfFairValueFairValueDisclosureMember us-gaap:SeniorNotesMember 2018-12-31 0000793952 us-gaap:EstimateOfFairValueFairValueDisclosureMember us-gaap:SeniorNotesMember 2019-06-30 0000793952 us-gaap:CarryingReportedAmountFairValueDisclosureMember us-gaap:CommercialPaperMember 2019-06-30 0000793952 hog:AssetBackedU.S.CommercialPaperConduitFacilityVIEMember us-gaap:EstimateOfFairValueFairValueDisclosureMember us-gaap:SecuredDebtMember 2018-12-31 0000793952 us-gaap:EstimateOfFairValueFairValueDisclosureMember us-gaap:SeniorNotesMember 2018-07-01 0000793952 us-gaap:CarryingReportedAmountFairValueDisclosureMember 2019-06-30 0000793952 us-gaap:EstimateOfFairValueFairValueDisclosureMember us-gaap:MediumTermNotesMember 2019-06-30 0000793952 hog:AssetBackedU.S.CommercialPaperConduitFacilityVIEMember us-gaap:EstimateOfFairValueFairValueDisclosureMember us-gaap:SecuredDebtMember 2019-06-30 0000793952 us-gaap:CarryingReportedAmountFairValueDisclosureMember us-gaap:SeniorNotesMember 2018-07-01 0000793952 hog:TermAssetBackedSecuritizationVIEsMember us-gaap:CarryingReportedAmountFairValueDisclosureMember us-gaap:SecuredDebtMember 2018-12-31 0000793952 hog:AssetBackedCanadianCommercialPaperConduitFacilityMember us-gaap:EstimateOfFairValueFairValueDisclosureMember us-gaap:SecuredDebtMember 2018-12-31 0000793952 us-gaap:CarryingReportedAmountFairValueDisclosureMember us-gaap:SeniorNotesMember 2019-06-30 0000793952 us-gaap:EstimateOfFairValueFairValueDisclosureMember us-gaap:CommercialPaperMember 2019-06-30 0000793952 us-gaap:CarryingReportedAmountFairValueDisclosureMember 2018-12-31 0000793952 hog:TermAssetBackedSecuritizationVIEsMember us-gaap:EstimateOfFairValueFairValueDisclosureMember us-gaap:SecuredDebtMember 2018-07-01 0000793952 hog:AssetBackedCanadianCommercialPaperConduitFacilityMember us-gaap:EstimateOfFairValueFairValueDisclosureMember us-gaap:SecuredDebtMember 2018-07-01 0000793952 hog:TermAssetBackedSecuritizationVIEsMember us-gaap:CarryingReportedAmountFairValueDisclosureMember us-gaap:SecuredDebtMember 2019-06-30 0000793952 us-gaap:CarryingReportedAmountFairValueDisclosureMember us-gaap:MediumTermNotesMember 2019-06-30 0000793952 us-gaap:CarryingReportedAmountFairValueDisclosureMember us-gaap:CommercialPaperMember 2018-07-01 0000793952 hog:TermAssetBackedSecuritizationVIEsMember us-gaap:EstimateOfFairValueFairValueDisclosureMember us-gaap:SecuredDebtMember 2018-12-31 0000793952 us-gaap:EstimateOfFairValueFairValueDisclosureMember 2018-07-01 0000793952 us-gaap:EstimateOfFairValueFairValueDisclosureMember us-gaap:CommercialPaperMember 2018-12-31 0000793952 us-gaap:EstimateOfFairValueFairValueDisclosureMember 2019-06-30 0000793952 hog:TermAssetBackedSecuritizationVIEsMember us-gaap:CarryingReportedAmountFairValueDisclosureMember us-gaap:SecuredDebtMember 2018-07-01 0000793952 us-gaap:OperatingExpenseMember 2019-01-01 2019-06-30 0000793952 hog:MotorcyclesMember hog:AllCountriesExcludingJapanMember 2019-01-01 2019-06-30 0000793952 hog:PartsAndAccessoriesAndGeneralMerchandiseMember 2019-01-01 2019-06-30 0000793952 hog:MotorcyclesMember country:JP 2019-01-01 2019-06-30 0000793952 us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember 2018-01-01 2018-07-01 0000793952 us-gaap:DefinedBenefitPostretirementHealthCoverageMember 2018-01-01 2018-04-01 0000793952 us-gaap:DefinedBenefitPostretirementHealthCoverageMember 2019-01-01 2019-03-31 0000793952 hog:PensionPlansandSupplementalEmployeeRetirementPlanDefinedBenefitMember 2019-01-01 2019-03-31 0000793952 hog:PensionPlansandSupplementalEmployeeRetirementPlanDefinedBenefitMember 2018-01-01 2018-07-01 0000793952 hog:PensionPlansandSupplementalEmployeeRetirementPlanDefinedBenefitMember 2019-01-01 2019-06-30 0000793952 us-gaap:DefinedBenefitPostretirementHealthCoverageMember 2018-01-01 2018-07-01 0000793952 us-gaap:DefinedBenefitPostretirementHealthCoverageMember 2019-01-01 2019-06-30 0000793952 hog:PensionPlansandSupplementalEmployeeRetirementPlanDefinedBenefitMember 2018-01-01 2018-04-01 0000793952 hog:YorkPennsylvaniaFacilityMember 2019-01-01 2019-06-30 0000793952 hog:NavyMember hog:YorkPennsylvaniaFacilityMember 2019-01-01 2019-06-30 0000793952 us-gaap:AociDerivativeQualifyingAsHedgeExcludedComponentParentMember 2019-04-01 2019-06-30 0000793952 us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember 2019-03-31 0000793952 us-gaap:AociDerivativeQualifyingAsHedgeExcludedComponentParentMember 2018-04-02 2018-07-01 0000793952 us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember 2019-04-01 2019-06-30 0000793952 us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember 2018-04-01 0000793952 us-gaap:AccumulatedDefinedBenefitPlansAdjustmentNetPriorServiceCostCreditMember 2019-04-01 2019-06-30 0000793952 us-gaap:AociDerivativeQualifyingAsHedgeExcludedComponentParentMember 2019-06-30 0000793952 us-gaap:AccumulatedTranslationAdjustmentMember 2018-04-01 0000793952 us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember 2018-04-02 2018-07-01 0000793952 us-gaap:AccumulatedTranslationAdjustmentMember 2019-04-01 2019-06-30 0000793952 us-gaap:AociDerivativeQualifyingAsHedgeExcludedComponentParentMember 2018-04-01 0000793952 us-gaap:AccumulatedTranslationAdjustmentMember 2018-04-02 2018-07-01 0000793952 us-gaap:AccumulatedTranslationAdjustmentMember 2019-06-30 0000793952 us-gaap:AccumulatedDefinedBenefitPlansAdjustmentNetUnamortizedGainLossMember 2019-04-01 2019-06-30 0000793952 us-gaap:AociDerivativeQualifyingAsHedgeExcludedComponentParentMember 2018-07-01 0000793952 us-gaap:AociDerivativeQualifyingAsHedgeExcludedComponentParentMember 2019-03-31 0000793952 us-gaap:AccumulatedDefinedBenefitPlansAdjustmentNetPriorServiceCostCreditMember 2018-04-02 2018-07-01 0000793952 us-gaap:AccumulatedTranslationAdjustmentMember 2018-07-01 0000793952 us-gaap:AccumulatedDefinedBenefitPlansAdjustmentNetUnamortizedGainLossMember 2018-04-02 2018-07-01 0000793952 us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember 2018-07-01 0000793952 us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember 2019-06-30 0000793952 us-gaap:AccumulatedTranslationAdjustmentMember 2019-03-31 0000793952 us-gaap:AociDerivativeQualifyingAsHedgeExcludedComponentParentMember 2019-01-01 2019-06-30 0000793952 us-gaap:AccumulatedDefinedBenefitPlansAdjustmentNetUnamortizedGainLossMember 2019-01-01 2019-06-30 0000793952 us-gaap:AccumulatedTranslationAdjustmentMember 2019-01-01 2019-06-30 0000793952 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2019-01-01 2019-06-30 0000793952 us-gaap:AccumulatedDefinedBenefitPlansAdjustmentNetPriorServiceCostCreditMember 2019-01-01 2019-06-30 0000793952 us-gaap:AociDerivativeQualifyingAsHedgeExcludedComponentParentMember 2018-12-31 0000793952 us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember 2019-01-01 2019-06-30 0000793952 us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember 2018-12-31 0000793952 us-gaap:AccumulatedTranslationAdjustmentMember 2018-12-31 0000793952 us-gaap:AociDerivativeQualifyingAsHedgeExcludedComponentParentMember 2018-01-01 2018-07-01 0000793952 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2018-01-01 2018-07-01 0000793952 us-gaap:AccumulatedDefinedBenefitPlansAdjustmentNetUnamortizedGainLossMember 2018-01-01 2018-07-01 0000793952 us-gaap:AociDerivativeQualifyingAsHedgeExcludedComponentParentMember 2017-12-31 0000793952 us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember 2017-12-31 0000793952 us-gaap:AccumulatedTranslationAdjustmentMember 2018-01-01 2018-07-01 0000793952 us-gaap:AccumulatedTranslationAdjustmentMember 2017-12-31 0000793952 us-gaap:AccumulatedDefinedBenefitPlansAdjustmentNetPriorServiceCostCreditMember 2018-01-01 2018-07-01 0000793952 us-gaap:OperatingSegmentsMember hog:MotorcyclesandRelatedProductsMember 2019-04-01 2019-06-30 0000793952 us-gaap:OperatingSegmentsMember hog:MotorcyclesandRelatedProductsMember 2018-04-02 2018-07-01 0000793952 us-gaap:OperatingSegmentsMember hog:FinancialServicesMember 2019-01-01 2019-06-30 0000793952 us-gaap:OperatingSegmentsMember hog:MotorcyclesandRelatedProductsMember 2019-01-01 2019-06-30 0000793952 us-gaap:OperatingSegmentsMember hog:MotorcyclesandRelatedProductsMember 2018-01-01 2018-07-01 0000793952 us-gaap:OperatingSegmentsMember hog:FinancialServicesMember 2018-04-02 2018-07-01 0000793952 us-gaap:OperatingSegmentsMember hog:FinancialServicesMember 2018-01-01 2018-07-01 0000793952 us-gaap:OperatingSegmentsMember hog:FinancialServicesMember 2019-04-01 2019-06-30 0000793952 srt:ConsolidationEliminationsMember 2019-01-01 2019-06-30 0000793952 srt:ReportableLegalEntitiesMember hog:FinancialServicesOperationsMember 2019-04-01 2019-06-30 0000793952 srt:ConsolidationEliminationsMember 2019-04-01 2019-06-30 0000793952 srt:ReportableLegalEntitiesMember hog:MotorcyclesAndRelatedProductsOperationsMember 2019-01-01 2019-06-30 0000793952 srt:ReportableLegalEntitiesMember hog:MotorcyclesandRelatedProductsMember hog:FinancialServicesOperationsMember 2019-04-01 2019-06-30 0000793952 srt:ReportableLegalEntitiesMember hog:FinancialServicesOperationsMember 2019-01-01 2019-06-30 0000793952 srt:ReportableLegalEntitiesMember hog:MotorcyclesandRelatedProductsMember hog:MotorcyclesAndRelatedProductsOperationsMember 2019-01-01 2019-06-30 0000793952 srt:ReportableLegalEntitiesMember hog:MotorcyclesAndRelatedProductsOperationsMember 2019-04-01 2019-06-30 0000793952 srt:ReportableLegalEntitiesMember us-gaap:FinancialServiceMember hog:MotorcyclesAndRelatedProductsOperationsMember 2019-01-01 2019-06-30 0000793952 srt:ConsolidationEliminationsMember us-gaap:FinancialServiceMember 2019-04-01 2019-06-30 0000793952 srt:ConsolidationEliminationsMember us-gaap:FinancialServiceMember 2019-01-01 2019-06-30 0000793952 srt:ReportableLegalEntitiesMember hog:MotorcyclesandRelatedProductsMember hog:MotorcyclesAndRelatedProductsOperationsMember 2019-04-01 2019-06-30 0000793952 srt:ReportableLegalEntitiesMember us-gaap:FinancialServiceMember hog:FinancialServicesOperationsMember 2019-04-01 2019-06-30 0000793952 srt:ReportableLegalEntitiesMember us-gaap:FinancialServiceMember hog:FinancialServicesOperationsMember 2019-01-01 2019-06-30 0000793952 srt:ConsolidationEliminationsMember hog:MotorcyclesandRelatedProductsMember 2019-04-01 2019-06-30 0000793952 srt:ReportableLegalEntitiesMember us-gaap:FinancialServiceMember hog:MotorcyclesAndRelatedProductsOperationsMember 2019-04-01 2019-06-30 0000793952 srt:ReportableLegalEntitiesMember hog:MotorcyclesandRelatedProductsMember hog:FinancialServicesOperationsMember 2019-01-01 2019-06-30 0000793952 srt:ConsolidationEliminationsMember hog:MotorcyclesandRelatedProductsMember 2019-01-01 2019-06-30 0000793952 srt:ConsolidationEliminationsMember 2018-12-31 0000793952 srt:ReportableLegalEntitiesMember hog:FinancialServicesOperationsMember 2018-12-31 0000793952 srt:ReportableLegalEntitiesMember hog:MotorcyclesAndRelatedProductsOperationsMember 2018-12-31 0000793952 srt:ReportableLegalEntitiesMember hog:MotorcyclesAndRelatedProductsOperationsMember 2018-04-02 2018-07-01 0000793952 srt:ReportableLegalEntitiesMember hog:MotorcyclesAndRelatedProductsOperationsMember 2018-01-01 2018-07-01 0000793952 srt:ReportableLegalEntitiesMember hog:FinancialServicesOperationsMember 2018-01-01 2018-07-01 0000793952 srt:ConsolidationEliminationsMember 2018-04-02 2018-07-01 0000793952 srt:ReportableLegalEntitiesMember hog:FinancialServicesOperationsMember 2018-04-02 2018-07-01 0000793952 srt:ReportableLegalEntitiesMember hog:MotorcyclesandRelatedProductsMember hog:MotorcyclesAndRelatedProductsOperationsMember 2018-01-01 2018-07-01 0000793952 srt:ConsolidationEliminationsMember 2018-01-01 2018-07-01 0000793952 srt:ConsolidationEliminationsMember us-gaap:FinancialServiceMember 2018-04-02 2018-07-01 0000793952 srt:ConsolidationEliminationsMember hog:MotorcyclesandRelatedProductsMember 2018-01-01 2018-07-01 0000793952 srt:ReportableLegalEntitiesMember us-gaap:FinancialServiceMember hog:FinancialServicesOperationsMember 2018-01-01 2018-07-01 0000793952 srt:ReportableLegalEntitiesMember us-gaap:FinancialServiceMember hog:MotorcyclesAndRelatedProductsOperationsMember 2018-01-01 2018-07-01 0000793952 srt:ConsolidationEliminationsMember us-gaap:FinancialServiceMember 2018-01-01 2018-07-01 0000793952 srt:ReportableLegalEntitiesMember us-gaap:FinancialServiceMember hog:FinancialServicesOperationsMember 2018-04-02 2018-07-01 0000793952 srt:ReportableLegalEntitiesMember us-gaap:FinancialServiceMember hog:MotorcyclesAndRelatedProductsOperationsMember 2018-04-02 2018-07-01 0000793952 srt:ReportableLegalEntitiesMember hog:MotorcyclesandRelatedProductsMember hog:MotorcyclesAndRelatedProductsOperationsMember 2018-04-02 2018-07-01 0000793952 srt:ConsolidationEliminationsMember hog:MotorcyclesandRelatedProductsMember 2018-04-02 2018-07-01 0000793952 srt:ReportableLegalEntitiesMember hog:MotorcyclesandRelatedProductsMember hog:FinancialServicesOperationsMember 2018-01-01 2018-07-01 0000793952 srt:ReportableLegalEntitiesMember hog:MotorcyclesandRelatedProductsMember hog:FinancialServicesOperationsMember 2018-04-02 2018-07-01 0000793952 hog:FinancialServicesOperationsMember 2019-01-01 2019-06-30 0000793952 srt:ReportableLegalEntitiesMember hog:MotorcyclesAndRelatedProductsOperationsMember 2019-06-30 0000793952 srt:ReportableLegalEntitiesMember hog:FinancialServicesOperationsMember 2019-06-30 0000793952 srt:ConsolidationEliminationsMember 2019-06-30 0000793952 srt:ReportableLegalEntitiesMember hog:MotorcyclesAndRelatedProductsOperationsMember 2017-12-31 0000793952 srt:ReportableLegalEntitiesMember hog:MotorcyclesAndRelatedProductsOperationsMember 2018-07-01 0000793952 srt:ConsolidationEliminationsMember 2018-07-01 0000793952 srt:ReportableLegalEntitiesMember hog:FinancialServicesOperationsMember 2017-12-31 0000793952 srt:ReportableLegalEntitiesMember hog:FinancialServicesOperationsMember 2018-07-01 0000793952 srt:ConsolidationEliminationsMember 2017-12-31 hog:Employees xbrli:shares iso4217:USD xbrli:pure iso4217:USD xbrli:shares hog:segment hog:employee utreg:Rate iso4217:CAD

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-Q

☒ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2019

☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to
Commission file number 1-9183
Harley-Davidson, Inc.
(Exact name of registrant as specified in its charter)

Wisconsin |  |  | 39-1382325
(State of organization) |  |  | (I.R.S. Employer Identification No.)
3700 West Juneau Avenue | Milwaukee | Wisconsin | 53208
(Address of principal executive offices) |  |  | (Zip code)

Registrant's telephone number, including area code: (414) 342-4680
None
(Former name, former address and former fiscal year, if changed since last report)
Securities Registered Pursuant to Section 12(b) of the Act:

Title of each class | Trading Symbol | Name of each exchange on which registered
Common Stock Par Value $.01 PER SHARE | HOG | New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer | ☒ | Accelerated filer | ☐
Non-accelerated filer | ☐ | Smaller reporting company | ☐
|  | Emerging growth company | ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☒
The registrant had outstanding 156,731,690 shares of common stock as of August 2, 2019.

Harley-Davidson, Inc.
Form 10-Q
For The Quarter Ended June 30, 2019

Part I | Financial Information | 3
Item 1. | Financial Statements | 3
| Consolidated Statements of Income | 3
| Consolidated Statements of Comprehensive Income | 4
| Consolidated Balance Sheets | 5
| Consolidated Statements of Cash Flows | 7
| Consolidated Statements of Shareholders' Equity | 8
| Notes to Consolidated Financial Statements | 9
Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 46
Item 3. | Quantitative and Qualitative Disclosures About Market Risk | 66
Item 4. | Controls and Procedures | 67
Part II | Other Information | 68
Item 1. | Legal Proceedings | 68
Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | 68
Item 6. | Exhibits | 68
Signatures |  | 70

Table of Contents
PART I – FINANCIAL INFORMATION
Item 1. Financial Statements
HARLEY-DAVIDSON, INC.
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share amounts)
(Unaudited)

| Three months ended |  | Six months ended
| June 30, 2019 |  | July 1, 2018 |  | June 30, 2019 |  | July 1, 2018
Revenue: |  |  |  |  |  |  |
Motorcycles and Related Products | $ | 1,434,004 |  |  | $ | 1,525,121 |  |  | $ | 2,629,641 |  |  | $ | 2,889,068 |
Financial Services | 198,615 |  |  | 188,102 |  |  | 387,358 |  |  | 366,276 |
Total revenue | 1,632,619 |  |  | 1,713,223 |  |  | 3,016,999 |  |  | 3,255,344 |
Costs and expenses: |  |  |  |  |  |  |
Motorcycles and Related Products cost of goods sold | 979,266 |  |  | 993,036 |  |  | 1,827,464 |  |  | 1,883,210 |
Financial Services interest expense | 52,673 |  |  | 51,943 |  |  | 104,997 |  |  | 100,393 |
Financial Services provision for credit losses | 26,383 |  |  | 18,880 |  |  | 60,874 |  |  | 48,932 |
Selling, administrative and engineering expense | 307,617 |  |  | 313,047 |  |  | 576,242 |  |  | 603,233 |
Restructuring expense | 10,423 |  |  | 12,370 |  |  | 24,053 |  |  | 59,212 |
Total costs and expenses | 1,376,362 |  |  | 1,389,276 |  |  | 2,593,630 |  |  | 2,694,980 |
Operating income | 256,257 |  |  | 323,947 |  |  | 423,369 |  |  | 560,364 |
Other income (expense), net | 4,037 |  |  | 645 |  |  | 8,697 |  |  | 865 |
Investment income | 3,571 |  |  | 2,533 |  |  | 9,929 |  |  | 3,736 |
Interest expense | 7,784 |  |  | 7,728 |  |  | 15,515 |  |  | 15,418 |
Income before provision for income taxes | 256,081 |  |  | 319,397 |  |  | 426,480 |  |  | 549,547 |
Provision for income taxes | 60,450 |  |  | 77,059 |  |  | 102,904 |  |  | 132,446 |
Net income | $ | 195,631 |  |  | $ | 242,338 |  |  | $ | 323,576 |  |  | $ | 417,101 |
Earnings per common share: |  |  |  |  |  |  |
Basic | $ | 1.23 |  |  | $ | 1.45 |  |  | $ | 2.03 |  |  | $ | 2.49 |
Diluted | $ | 1.23 |  |  | $ | 1.45 |  |  | $ | 2.03 |  |  | $ | 2.48 |
Cash dividends per common share | $ | 0.375 |  |  | $ | 0.370 |  |  | $ | 0.750 |  |  | $ | 0.740 |

The accompanying notes are an integral part of the consolidated financial statements.
3

Table of Contents
HARLEY-DAVIDSON, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(In thousands)
(Unaudited)

| Three months ended |  | Six months ended
| June 30, 2019 |  | July 1, 2018 |  | June 30, 2019 |  | July 1, 2018
Net income | $ | 195,631 |  |  | $ | 242,338 |  |  | $ | 323,576 |  |  | $ | 417,101 |
Other comprehensive income, net of tax: |  |  |  |  |  |  |
Foreign currency translation adjustments | 11,270 |  |  | (26,482 | ) |  | 11,601 |  |  | (19,567 | )
Derivative financial instruments | (11,923 | ) |  | 23,920 |  |  | (12,364 | ) |  | 24,685 |
Pension and postretirement benefit plans | 7,743 |  |  | 12,402 |  |  | 15,486 |  |  | 98,167 |
Total other comprehensive income, net of tax | 7,090 |  |  | 9,840 |  |  | 14,723 |  |  | 103,285 |
Comprehensive income | $ | 202,721 |  |  | $ | 252,178 |  |  | $ | 338,299 |  |  | $ | 520,386 |

The accompanying notes are an integral part of the consolidated financial statements.
4

Table of Contents
HARLEY-DAVIDSON, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands)

| (Unaudited) |  |  |  | (Unaudited)
| June 30, 2019 |  | December 31, 2018 |  | July 1, 2018
ASSETS |  |  |  |  |
Current assets: |  |  |  |  |
Cash and cash equivalents | $ | 924,638 |  |  | $ | 1,203,766 |  |  | $ | 978,749 |
Marketable securities | — |  |  | 10,007 |  |  | — |
Accounts receivable, net | 325,306 |  |  | 306,474 |  |  | 335,594 |
Finance receivables, net | 2,362,125 |  |  | 2,214,424 |  |  | 2,252,956 |
Inventories | 470,610 |  |  | 556,128 |  |  | 465,373 |
Restricted cash | 82,248 |  |  | 49,275 |  |  | 44,386 |
Other current assets | 147,234 |  |  | 144,368 |  |  | 166,362 |
Total current assets | 4,312,161 |  |  | 4,484,442 |  |  | 4,243,420 |
Finance receivables, net | 5,232,280 |  |  | 5,007,507 |  |  | 5,060,246 |
Property, plant and equipment, net | 855,998 |  |  | 904,132 |  |  | 904,113 |
Prepaid pension costs | — |  |  | — |  |  | 131,497 |
Goodwill | 64,449 |  |  | 55,048 |  |  | 55,451 |
Deferred income taxes | 134,639 |  |  | 141,464 |  |  | 67,505 |
Lease assets | 54,913 |  |  | — |  |  | — |
Other long-term assets | 85,876 |  |  | 73,071 |  |  | 83,790 |
| $ | 10,740,316 |  |  | $ | 10,665,664 |  |  | $ | 10,546,022 |
LIABILITIES AND SHAREHOLDERS’ EQUITY |  |  |  |  |
Current liabilities: |  |  |  |  |
Accounts payable | $ | 324,464 |  |  | $ | 284,861 |  |  | $ | 287,214 |
Accrued liabilities | 615,905 |  |  | 601,130 |  |  | 572,440 |
Short-term debt | 405,695 |  |  | 1,135,810 |  |  | 1,327,307 |
Current portion of long-term debt, net | 2,396,188 |  |  | 1,575,799 |  |  | 945,463 |
Total current liabilities | 3,742,252 |  |  | 3,597,600 |  |  | 3,132,424 |
Long-term debt, net | 4,650,176 |  |  | 4,887,667 |  |  | 4,868,346 |
Lease liabilities | 38,365 |  |  | — |  |  | — |
Pension liabilities | 92,750 |  |  | 107,776 |  |  | 55,819 |
Postretirement healthcare liabilities | 92,539 |  |  | 94,453 |  |  | 113,464 |
Other long-term liabilities | 213,593 |  |  | 204,219 |  |  | 214,443 |
Commitments and contingencies (Note 17) |  |  |  |  |
Shareholders’ equity: |  |  |  |  |
Preferred stock, none issued | — |  |  | — |  |  | — |
Common stock | 1,827 |  |  | 1,819 |  |  | 1,818 |
Additional paid-in-capital | 1,474,819 |  |  | 1,459,620 |  |  | 1,442,580 |
Retained earnings | 2,210,318 |  |  | 2,007,583 |  |  | 1,906,015 |
Accumulated other comprehensive loss | (614,961 | ) |  | (629,684 | ) |  | (396,764 | )
Treasury stock, at cost | (1,161,362 | ) |  | (1,065,389 | ) |  | (792,123 | )
Total shareholders’ equity | 1,910,641 |  |  | 1,773,949 |  |  | 2,161,526 |
| $ | 10,740,316 |  |  | $ | 10,665,664 |  |  | $ | 10,546,022 |

5

Table of Contents
HARLEY-DAVIDSON, INC.
CONSOLIDATED BALANCE SHEETS (continued)
(In thousands)

| (Unaudited) |  |  |  | (Unaudited)
| June 30, 2019 |  | December 31, 2018 |  | July 1, 2018
Balances held by consolidated variable interest entities (Note 13) |  |  |  |  |
Current finance receivables, net | $ | 320,710 |  |  | $ | 175,043 |  |  | $ | 139,405 |
Other assets | $ | 1,533 |  |  | $ | 1,563 |  |  | $ | 1,280 |
Non-current finance receivables, net | $ | 1,240,081 |  |  | $ | 591,839 |  |  | $ | 392,901 |
Restricted cash - current and non-current | $ | 79,436 |  |  | $ | 47,203 |  |  | $ | 39,757 |
Current portion of long-term debt, net | $ | 360,269 |  |  | $ | 189,693 |  |  | $ | 155,631 |
Long-term debt, net | $ | 1,106,736 |  |  | $ | 488,191 |  |  | $ | 313,799 |

The accompanying notes are an integral part of the consolidated financial statements.
6

Table of Contents
HARLEY-DAVIDSON, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)

| Six months ended
| June 30, 2019 |  | July 1, 2018
Net cash provided by operating activities (Note 8) | $ | 496,232 |  |  | $ | 735,859 |
Cash flows from investing activities: |  |  |
Capital expenditures | (83,229 | ) |  | (69,293 | )
Origination of finance receivables | (2,064,899 | ) |  | (1,999,786 | )
Collections on finance receivables | 1,768,829 |  |  | 1,712,884 |
Sales and redemptions of marketable securities | 10,007 |  |  | — |
Acquisition of business | (7,000 | ) |  | — |
Other | 11,717 |  |  | (11,758 | )
Net cash used by investing activities | (364,575 | ) |  | (367,953 | )
Cash flows from financing activities: |  |  |
Proceeds from issuance of medium-term notes | 546,655 |  |  | 1,144,018 |
Repayments of medium-term notes | (750,000 | ) |  | (877,488 | )
Proceeds from securitization debt | 1,021,353 |  |  | — |
Repayments of securitization debt | (113,806 | ) |  | (183,453 | )
Borrowings of asset-backed commercial paper | 23,373 |  |  | 120,903 |
Repayments of asset-backed commercial paper | (155,286 | ) |  | (100,660 | )
Net (decrease) increase in credit facilities and unsecured commercial paper | (728,606 | ) |  | 56,280 |
Dividends paid | (120,841 | ) |  | (124,680 | )
Purchase of common stock for treasury | (104,621 | ) |  | (111,227 | )
Issuance of common stock under employee stock option plans | 833 |  |  | 1,965 |
Net cash used by financing activities | (380,946 | ) |  | (74,342 | )
Effect of exchange rate changes on cash, cash equivalents and restricted cash | 3,439 |  |  | (10,091 | )
Net (decrease) increase in cash, cash equivalents and restricted cash | $ | (245,850 | ) |  | $ | 283,473 |
Cash, cash equivalents and restricted cash: |  |  |
Cash, cash equivalents and restricted cash—beginning of period | $ | 1,259,748 |  |  | $ | 746,210 |
Net (decrease) increase in cash, cash equivalents and restricted cash | (245,850 | ) |  | 283,473 |
Cash, cash equivalents and restricted cash—end of period | $ | 1,013,898 |  |  | $ | 1,029,683 |
Reconciliation of cash, cash equivalents and restricted cash to the Consolidated Balance Sheet: |  |  |
Cash and cash equivalents | $ | 924,638 |  |  | $ | 978,749 |
Restricted cash | 82,248 |  |  | 44,386 |
Restricted cash included in other long-term assets | 7,012 |  |  | 6,548 |
Total cash, cash equivalents and restricted cash shown in the Statement of Cash Flows | $ | 1,013,898 |  |  | $ | 1,029,683 |

The accompanying notes are an integral part of the consolidated financial statements.
7

Table of Contents
HARLEY-DAVIDSON, INC.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(In thousands, except share amounts)
(Unaudited)

|  | Common Stock |  | Additional Paid-in Capital |  | Retained Earnings |  | Accumulated Other Comprehensive Loss |  | Treasury Balance |  | Total
|  | Issued Shares |  | Balance |
Balance, December 31, 2018 |  | 181,931,225 |  |  | $ | 1,819 |  |  | $ | 1,459,620 |  |  | $ | 2,007,583 |  |  | $ | (629,684 | ) |  | $ | (1,065,389 | ) |  | $ | 1,773,949 |
Net income |  | — |  |  | — |  |  | — |  |  | 127,945 |  |  | — |  |  | — |  |  | 127,945 |
Total other comprehensive income, net of tax (Note 18) |  | — |  |  | — |  |  | — |  |  | — |  |  | 7,633 |  |  | — |  |  | 7,633 |
Dividends |  | — |  |  | — |  |  | — |  |  | (60,859 | ) |  | — |  |  | — |  |  | (60,859 | )
Repurchase of common stock |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | (61,712 | ) |  | (61,712 | )
Share-based compensation |  | 702,687 |  |  | 7 |  |  | 5,961 |  |  | — |  |  | — |  |  | 4,687 |  |  | 10,655 |
Balance, March 31, 2019 |  | 182,633,912 |  |  | $ | 1,826 |  |  | $ | 1,465,581 |  |  | $ | 2,074,669 |  |  | $ | (622,051 | ) |  | $ | (1,122,414 | ) |  | $ | 1,797,611 |
Net income |  | — |  |  | — |  |  | — |  |  | 195,631 |  |  | — |  |  | — |  |  | 195,631 |
Total other comprehensive income, net of tax (Note 18) |  | — |  |  | — |  |  | — |  |  | — |  |  | 7,090 |  |  | — |  |  | 7,090 |
Dividends |  | — |  |  | — |  |  | — |  |  | (59,982 | ) |  | — |  |  | — |  |  | (59,982 | )
Repurchase of common stock |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | (42,908 | ) |  | (42,908 | )
Share-based compensation |  | 9,338 |  |  | 1 |  |  | 9,238 |  |  | — |  |  | — |  |  | 3,960 |  |  | 13,199 |
Balance, June 30, 2019 |  | 182,643,250 |  |  | $ | 1,827 |  |  | $ | 1,474,819 |  |  | $ | 2,210,318 |  |  | $ | (614,961 | ) |  | $ | (1,161,362 | ) |  | $ | 1,910,641 |
|  | Common Stock |  | Additional Paid-in Capital |  | Retained Earnings |  | Accumulated Other Comprehensive Loss |  | Treasury Balance |  | Total
|  | Issued Shares |  | Balance |
Balance, December 31, 2017 |  | 181,286,547 |  |  | $ | 1,813 |  |  | $ | 1,422,808 |  |  | $ | 1,607,570 |  |  | $ | (500,049 | ) |  | $ | (687,865 | ) |  | $ | 1,844,277 |
Net income |  | — |  |  | — |  |  | — |  |  | 174,763 |  |  | — |  |  | — |  |  | 174,763 |
Total other comprehensive income, net of tax (Note 18) |  | — |  |  | — |  |  | — |  |  | — |  |  | 93,445 |  |  | — |  |  | 93,445 |
Dividends |  | — |  |  | — |  |  | — |  |  | (62,731 | ) |  | — |  |  | — |  |  | (62,731 | )
Repurchase of common stock |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | (72,968 | ) |  | (72,968 | )
Share-based compensation |  | 489,896 |  |  | 5 |  |  | 9,884 |  |  | — |  |  | — |  |  | 3,250 |  |  | 13,139 |
Cumulative effect of change in accounting |  | — |  |  | — |  |  | — |  |  | 6,024 |  |  | — |  |  | — |  |  | 6,024 |
Balance, April 1, 2018 |  | 181,776,443 |  |  | $ | 1,818 |  |  | $ | 1,432,692 |  |  | $ | 1,725,626 |  |  | $ | (406,604 | ) |  | $ | (757,583 | ) |  | $ | 1,995,949 |
Net income |  | — |  |  | — |  |  | — |  |  | 242,338 |  |  | — |  |  | — |  |  | 242,338 |
Total other comprehensive income, net of tax (Note 18) |  | — |  |  | — |  |  | — |  |  | — |  |  | 9,840 |  |  | — |  |  | 9,840 |
Dividends |  | — |  |  | — |  |  | — |  |  | (61,949 | ) |  | — |  |  | — |  |  | (61,949 | )
Repurchase of common stock |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | (38,259 | ) |  | (38,259 | )
Share-based compensation |  | 13,644 |  |  | — |  |  | 9,888 |  |  | — |  |  | — |  |  | 3,719 |  |  | 13,607 |
Balance, July 1, 2018 |  | 181,790,087 |  |  | $ | 1,818 |  |  | $ | 1,442,580 |  |  | $ | 1,906,015 |  |  | $ | (396,764 | ) |  | $ | (792,123 | ) |  | $ | 2,161,526 |

8

Table of Contents
HARLEY-DAVIDSON, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. Basis of Presentation and Use of Estimates
The consolidated financial statements include the accounts of Harley-Davidson, Inc. and its wholly-owned subsidiaries (the Company), including the accounts of the groups of companies doing business as Harley-Davidson Motor Company (HDMC) and Harley-Davidson Financial Services (HDFS). In addition, certain variable interest entities (VIEs) related to secured financing are consolidated as the Company is the primary beneficiary. All intercompany accounts and material intercompany transactions are eliminated.
In the opinion of management, the accompanying unaudited consolidated financial statements contain all adjustments (consisting only of normal recurring adjustments) necessary to present fairly the consolidated balance sheets as of June 30, 2019 and July 1, 2018, the consolidated statements of income for the three and six month periods then ended, the consolidated statements of comprehensive income for the three and six month periods then ended, the consolidated statements of cash flows for the six month periods then ended, and the consolidated statements of shareholders' equity for the three and six month periods then ended.
Certain information and footnote disclosures normally included in complete financial statements have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission (SEC) and U.S. generally accepted accounting principles (U.S. GAAP) for interim financial reporting. These consolidated financial statements should be read in conjunction with the audited financial statements and notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018.
The Company operates in two reportable segments: Motorcycles and Related Products (Motorcycles) and Financial Services.
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 financial statements and the accompanying notes. Actual results could differ from those estimates.
2. New Accounting Standards
Accounting Standards Recently Adopted
In February 2016, the FASB issued ASU No. 2016-02 Leases (Topic 842) (ASU 2016-02). ASU 2016-02 amends the lease accounting model by requiring a lessee to recognize the rights and obligations resulting from certain leases as assets and liabilities on the balance sheet. ASU 2016-02 also requires a company to disclose key information about their leasing arrangements. The Company adopted ASU 2016-02 on January 1, 2019 using a modified retrospective approach. Pursuant to ASU 2018-11, Leases (Topic 842): Targeted Improvements, the Company applied the new leases standard at the adoption date and recognized a cumulative effect adjustment to the opening balance sheet on January 1, 2019.
The Company elected the package of practical expedients upon transition that allows entities not to reassess lease identification, classification and initial direct costs for leases that existed prior to adoption. The Company also elected the short-term lease practical expedient that allows entities to recognize lease payments on a straight-line basis over the lease term for leases with a term of 12 months or less. The Company has elected the practical expedient allowing entities to not separate non-lease components from lease components, but instead account for such components as a single lease component for all leases except leases involving assets operated by a third-party.
The adoption of ASU 2016-02 resulted in the initial recognition of right of use assets and lease liabilities related to the Company's leasing arrangements totaling approximately $60 million on January 1, 2019. The adoption of ASU 2016-02 had no impact on opening retained earnings on January 1, 2019 and is not expected to materially impact consolidated net income or cash flows on an on-going basis.
In August 2017, the FASB issued ASU No. 2017-12 Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities (ASU 2017-12). ASU 2017-12 amends ASC 815, Derivatives and Hedging to improve the financial reporting of hedging relationships and to simplify the application of the hedge accounting guidance. The ASU makes various updates to the hedge accounting model, including changing the recognition and presentation of changes in the fair value of the hedging instrument and amending disclosure requirements, among other things. The Company adopted ASU 2017-12 on January 1, 2019. The adoption of ASU 2017-12 did not have a material impact on its financial statements.
9

Table of Contents
Accounting Standards Not Yet Adopted
In July 2016, the FASB issued ASU No. 2016-13 Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (ASU 2016-13). ASU 2016-13 changes how to recognize expected credit losses on financial assets. The standard requires a more timely recognition of credit losses on loans and other financial assets and also provides additional transparency about credit risk. The current credit loss standard generally requires that a loss actually be incurred before it is recognized, while the new standard will require recognition of full lifetime expected losses upon initial recognition of the financial instrument. The Company is required to adopt ASU 2016-13 for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2019 on a modified retrospective basis. Early adoption is permitted for fiscal years beginning after December 15, 2018. An entity should apply the standard by recording a cumulative effect adjustment to retained earnings upon adoption. Adoption of this standard will impact how the Company recognizes credit losses on its financial instruments. The Company is currently evaluating the impact of adoption of ASU 2016-13 but anticipates the adoption will result in an initial increase in the allowance for credit losses, with a decrease in retained earnings. The initial change in the allowance for credit losses at adoption and the ongoing effect of ASU 2016-13 on the provision for credit losses will be impacted by the size and composition of the Company's finance receivables portfolio at each reporting period, as well as other items including economic conditions and forecasts at that time.
In January 2017, the FASB issued ASU No. 2017-04 Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment (ASU 2017-04). ASU 2017-04 simplifies the subsequent measurement of goodwill by eliminating the requirement to calculate the implied fair value of goodwill. Rather, the goodwill impairment is calculated by comparing the fair value of a reporting unit to its carrying value, and an impairment loss is recognized for the amount by which the carrying amount exceeds the fair value, limited to the total goodwill allocated to the reporting unit. All reporting units apply the same impairment test under the new standard. The Company is required to adopt ASU 2017-04 for its annual and any interim goodwill impairment tests in fiscal years beginning after December 15, 2019 on a prospective basis. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017.
In August 2018, the FASB issued ASU No. 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement (ASU 2018-13). ASU 2018-13 amends ASC 820 to eliminate, modify, and add certain disclosure requirements for fair value measurements. The guidance is effective for fiscal years beginning after December 15, 2019 and for interim periods within those fiscal years. Early adoption is permitted in any period, for either the whole standard or only the provisions that eliminate or modify requirements. The amendments are required to be applied retrospectively, with the exception of a few disclosure additions, which are to be applied on a prospective basis. The Company is currently evaluating the impact of adopting ASU 2018-13, but does not believe that it will have a significant impact on its disclosures.
In August 2018, the FASB issued ASU No. 2018-15, Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40) (ASU 2018-15). The new guidance requires a customer in a cloud computing arrangement that is a service contract to follow the existing internal-use software guidance to determine which implementation costs to capitalize as assets or expense as incurred. The guidance is effective for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years. The Company is currently evaluating the impact of adopting ASU 2018-15.
10

Table of Contents
3. Revenue
The following table includes revenue disaggregated by major source (in thousands):

|  | Three months ended |  | Six months ended
|  | June 30, 2019 |  | July 1, 2018 |  | June 30, 2019 |  | July 1, 2018
Motorcycles and Related Products: |  |  |  |  |  |  |  |
Motorcycles |  | $ | 1,128,063 |  |  | $ | 1,201,453 |  |  | $ | 2,092,638 |  |  | $ | 2,323,126 |
Parts & Accessories |  | 221,258 |  |  | 231,014 |  |  | 380,961 |  |  | 400,089 |
General Merchandise |  | 64,644 |  |  | 68,653 |  |  | 120,045 |  |  | 125,254 |
Licensing |  | 9,911 |  |  | 10,407 |  |  | 18,488 |  |  | 18,765 |
Other |  | 10,128 |  |  | 13,594 |  |  | 17,509 |  |  | 21,834 |
Revenue from Motorcycles and Related Products |  | 1,434,004 |  |  | 1,525,121 |  |  | 2,629,641 |  |  | 2,889,068 |
Financial Services: |  |  |  |  |  |  |  |
Interest income |  | 167,077 |  |  | 158,639 |  |  | 326,881 |  |  | 312,680 |
Securitization and servicing fee income |  | 163 |  |  | 304 |  |  | 352 |  |  | 656 |
Other income |  | 31,375 |  |  | 29,159 |  |  | 60,125 |  |  | 52,940 |
Revenue from Financial Services |  | 198,615 |  |  | 188,102 |  |  | 387,358 |  |  | 366,276 |
Total revenue |  | $ | 1,632,619 |  |  | $ | 1,713,223 |  |  | $ | 3,016,999 |  |  | $ | 3,255,344 |

Deferred revenue relates to payments received at contract inception in advance of the Company’s performance under the contract and generally relates to the sale of Harley Ownership Group memberships and extended service plan contracts. Deferred revenue is recognized as revenue as the Company performs under the contract. Deferred revenue, included in Accrued liabilities and Other long-term liabilities on the consolidated balance sheet, was as follows (in thousands):

|  | June 30, 2019 |  | July 1, 2018
Balance, beginning of year |  | $ | 29,055 |  |  | $ | 23,441 |
Balance, end of period |  | 32,568 |  |  | 30,753 |

Previously deferred revenue recognized as revenue in the three months ended June 30, 2019 and July 1, 2018 was $6.2 million and $5.1 million, respectively, and $12.3 million and $9.1 million in the six months ended June 30, 2019 and July 1, 2018. The Company expects to recognize approximately $17.6 million of the remaining unearned revenue over the next 12 months and $15.0 million thereafter.
4. Restructuring Expenses
In January 2018, the Company initiated a plan to further improve its manufacturing operations and cost structure by commencing a multi-year manufacturing optimization plan which included the consolidation of its motorcycle assembly plant in Kansas City, Missouri, into its plant in York, Pennsylvania, and the closure of its wheel operations in Adelaide, Australia (Manufacturing Optimization Plan). The consolidation of operations included the elimination approximately 800 jobs at the Kansas City facility and the addition of approximately 450 jobs at the York facility through 2019. The Adelaide facility closure included the elimination of approximately 90 jobs.
Through June 30, 2019, the Motorcycles segment incurred $134.4 million of restructuring expenses and other consolidation costs for the Manufacturing Optimization Plan since its inception in 2018. The Company expects total restructuring expenses and other consolidation costs of $142 million to $152 million related to the Manufacturing Optimization Plan through 2019, of which approximately 70% will be cash charges.
The current estimate includes $119 million to $124 million of restructuring expense and $23 million to $28 million of costs related to temporary inefficiencies. The Company expects restructuring expenses to include the cost of employee termination benefits, accelerated depreciation, and other project implementation costs of $38 million to $40 million, $48 million to $49 million, and $33 million to $35 million, respectively.
In November 2018, the Company implemented a reorganization of its workforce (Reorganization Plan). As a result, approximately 70 employees left the Company on an involuntary basis.
11

Table of Contents
Restructuring expense related to these plans is recorded in a separate line item in the consolidated statements of income and the accrued restructuring liability is recorded in Accrued liabilities on the consolidated balance sheet. Changes in the accrued restructuring liability (in thousands) were as follows:

| Three months ended June 30, 2019
| Manufacturing Optimization Plan |  | Reorganization Plan |  |
| Employee Termination Benefits |  | Accelerated Depreciation |  | Other |  | Total |  | Employee Termination Benefits |  | Total
Balance, beginning of period | $ | 22,401 |  |  | $ | — |  |  | $ | 187 |  |  | $ | 22,588 |  |  | $ | 1,051 |  |  | $ | 23,639 |
Restructuring expense (benefit) | 8 |  |  | 5,586 |  |  | 4,830 |  |  | 10,424 |  |  | (1 | ) |  | 10,423 |
Utilized - cash | (12,734 | ) |  | — |  |  | (4,294 | ) |  | (17,028 | ) |  | (882 | ) |  | (17,910 | )
Utilized - non cash | — |  |  | (5,586 | ) |  | (696 | ) |  | (6,282 | ) |  | — |  |  | (6,282 | )
Foreign currency changes | (14 | ) |  | — |  |  | (4 | ) |  | (18 | ) |  | (24 | ) |  | (42 | )
Balance, end of period | $ | 9,661 |  |  | $ | — |  |  | $ | 23 |  |  | $ | 9,684 |  |  | $ | 144 |  |  | $ | 9,828 |

| Three months ended July 1, 2018
| Manufacturing Optimization Plan |  | Reorganization Plan |  |
| Employee Termination Benefits |  | Accelerated Depreciation |  | Other |  | Total |  | Employee Termination Benefits |  | Total
Balance, beginning of period | $ | 38,287 |  |  | $ | — |  |  | $ | 63 |  |  | $ | 38,350 |  |  | $ | — |  |  | $ | 38,350 |
Restructuring expense | (1,186 | ) |  | 9,746 |  |  | 3,810 |  |  | 12,370 |  |  | — |  |  | 12,370 |
Utilized - cash | (133 | ) |  | — |  |  | (3,793 | ) |  | (3,926 | ) |  | — |  |  | (3,926 | )
Utilized - non cash | — |  |  | (9,746 | ) |  | — |  |  | (9,746 | ) |  | — |  |  | (9,746 | )
Foreign currency changes | (210 | ) |  | — |  |  | (3 | ) |  | (213 | ) |  | — |  |  | (213 | )
Balance, end of period | $ | 36,758 |  |  | $ | — |  |  | $ | 77 |  |  | $ | 36,835 |  |  | $ | — |  |  | $ | 36,835 |

| Six months ended June 30, 2019
| Manufacturing Optimization Plan |  | Reorganization Plan |  |
| Employee Termination Benefits |  | Accelerated Depreciation |  | Other |  | Total |  | Employee Termination Benefits |  | Total
Balance, beginning of period | $ | 24,958 |  |  | $ | — |  |  | $ | 79 |  |  | $ | 25,037 |  |  | $ | 3,461 |  |  | $ | 28,498 |
Restructuring expense | 17 |  |  | 13,965 |  |  | 10,466 |  |  | 24,448 |  |  | (395 | ) |  | 24,053 |
Utilized - cash | (15,334 | ) |  | — |  |  | (9,822 | ) |  | (25,156 | ) |  | (2,896 | ) |  | (28,052 | )
Utilized - non cash | — |  |  | (13,965 | ) |  | (696 | ) |  | (14,661 | ) |  | — |  |  | (14,661 | )
Foreign currency changes | 20 |  |  | — |  |  | (4 | ) |  | 16 |  |  | (26 | ) |  | (10 | )
Balance, end of period | $ | 9,661 |  |  | $ | — |  |  | $ | 23 |  |  | $ | 9,684 |  |  | $ | 144 |  |  | $ | 9,828 |

| Six months ended July 1, 2018
| Manufacturing Optimization Plan |  | Reorganization Plan |  |
| Employee Termination Benefits |  | Accelerated Depreciation |  | Other |  | Total |  | Employee Termination Benefits |  | Total
Balance, beginning of period | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |
Restructuring expense | 39,605 |  |  | 15,359 |  |  | 4,248 |  |  | 59,212 |  |  | — |  |  | 59,212 |
Utilized - cash | (2,433 | ) |  | — |  |  | (4,167 | ) |  | (6,600 | ) |  | — |  |  | (6,600 | )
Utilized - non cash | — |  |  | (15,359 | ) |  | — |  |  | (15,359 | ) |  | — |  |  | (15,359 | )
Foreign currency changes | (414 | ) |  | — |  |  | (4 | ) |  | (418 | ) |  | — |  |  | (418 | )
Balance, end of period | $ | 36,758 |  |  | $ | — |  |  | $ | 77 |  |  | $ | 36,835 |  |  | $ | — |  |  | $ | 36,835 |

12

Table of Contents
The Company incurred incremental Motorcycles and Related Products cost of goods sold due to temporary inefficiencies resulting from implementing the Manufacturing Optimization Plan during the three months ended June 30, 2019 and July 1, 2018 of $4.0 million and $2.4 million, respectively, and $7.6 million and $3.1 million, respectively, during the six months ended June 30, 2019 and July 1, 2018.
During the three months ended July 1, 2018, the restructuring liability was adjusted to reflect updated assumptions resulting in a reversal of approximately $1.7 million of previously recognized restructuring expense.
5. Income Taxes
The Company’s effective income tax rate for the six months ended June 30, 2019 and July 1, 2018 was 24.1%.
6. Earnings Per Share
The following table sets forth the computation of basic and diluted earnings per share (in thousands, except per share amounts):

| Three months ended |  | Six months ended
| June 30, 2019 |  | July 1, 2018 |  | June 30, 2019 |  | July 1, 2018
Net income | $ | 195,631 |  |  | $ | 242,338 |  |  | $ | 323,576 |  |  | $ | 417,101 |
Basic weighted-average shares outstanding | 158,813 |  |  | 166,589 |  |  | 159,061 |  |  | 167,364 |
Effect of dilutive securities - employee stock compensation plan | 612 |  |  | 615 |  |  | 664 |  |  | 825 |
Diluted weighted-average shares outstanding | 159,425 |  |  | 167,204 |  |  | 159,725 |  |  | 168,189 |
Earnings per common share: |  |  |  |  |  |  |
Basic | $ | 1.23 |  |  | $ | 1.45 |  |  | $ | 2.03 |  |  | $ | 2.49 |
Diluted | $ | 1.23 |  |  | $ | 1.45 |  |  | $ | 2.03 |  |  | $ | 2.48 |

Outstanding options to purchase 1.2 million and 1.5 million shares of common stock for the three months ended June 30, 2019 and July 1, 2018, respectively, and 1.2 million and 1.3 million shares of common stock for the six months ended June 30, 2019 and July 1, 2018, respectively, were not included in the Company’s computation of dilutive securities because the exercise price was greater than the market price, and therefore, the effect would have been anti-dilutive.
The Company has a share-based compensation plan under which employees may be granted share-based awards including restricted stock units (RSUs). Non-forfeitable dividend equivalents are paid on unvested RSUs. As such, RSUs are considered participating securities under the two-class method of calculating earnings per share as described in ASC Topic 260, “Earnings per Share.” The two-class method of calculating earnings per share did not have a material impact on the Company’s earnings per share calculation for the three and six month periods ended June 30, 2019 and July 1, 2018.
7. Acquisition
On March 4, 2019, the Company purchased certain assets and liabilities of StaCyc, Inc. for total consideration of $14.9 million including cash paid at acquisition of $7.0 million. StaCyc produces electric-powered two-wheelers specifically designed for children and supports the Company’s plans to expand its portfolio of electric two-wheeled vehicles.
The Company has completed an allocation of the purchase consideration and valuation of acquired assets and liabilities. The primary assets acquired and included in the Motorcycles segment were goodwill of $9.5 million, which is tax deductible, and intangible assets of $5.3 million.
13

Table of Contents
8. Additional Balance Sheet and Cash Flow Information
Investments in Marketable Securities
The Company’s marketable securities consisted of the following (in thousands):

| June 30, 2019 |  | December 31, 2018 |  | July 1, 2018
Debt securities | $ | — |  |  | $ | 10,007 |  |  | $ | — |
Mutual funds | 51,543 |  |  | 44,243 |  |  | 49,537 |
Total marketable securities | $ | 51,543 |  |  | $ | 54,250 |  |  | $ | 49,537 |

Debt securities, which were included in Marketable securities on the consolidated balance sheets, were carried at fair value with unrealized gains or losses reported in other comprehensive income. Mutual fund investments, which are included in Other long-term assets on the consolidated balance sheets, are carried at fair value with gains and losses recorded in net income. The mutual fund investments are held to support certain deferred compensation obligations.
Inventories
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 net realizable value using the first-in, first-out (FIFO) method. Inventories consisted of the following (in thousands):

| June 30, 2019 |  | December 31, 2018 |  | July 1, 2018
Raw materials and work in process | $ | 161,828 |  |  | $ | 177,110 |  |  | $ | 154,921 |
Motorcycle finished goods | 218,069 |  |  | 301,630 |  |  | 222,711 |
Parts & accessories and general merchandise | 149,352 |  |  | 136,027 |  |  | 140,096 |
Inventory at lower of FIFO cost or net realizable value | 529,249 |  |  | 614,767 |  |  | 517,728 |
Excess of FIFO over LIFO cost | (58,639 | ) |  | (58,639 | ) |  | (52,355 | )
Total inventories, net | $ | 470,610 |  |  | $ | 556,128 |  |  | $ | 465,373 |

14

Table of Contents
Operating Cash Flow
The reconciliation of net income to net cash provided by operating activities is as follows (in thousands):

| Six months ended
| June 30, 2019 |  | July 1, 2018
Cash flows from operating activities: |  |  |
Net income | $ | 323,576 |  |  | $ | 417,101 |
Adjustments to reconcile net income to net cash provided by operating activities: |  |  |
Depreciation and amortization of intangibles | 125,386 |  |  | 130,061 |
Amortization of deferred loan origination costs | 38,036 |  |  | 39,396 |
Amortization of financing origination fees | 4,522 |  |  | 4,133 |
Provision for long-term employee benefits | 6,936 |  |  | 18,954 |
Employee benefit plan contributions and payments | (3,637 | ) |  | (6,422 | )
Stock compensation expense | 17,285 |  |  | 19,081 |
Net change in wholesale finance receivables related to sales | (167,594 | ) |  | (171,195 | )
Provision for credit losses | 60,874 |  |  | 48,932 |
Deferred income taxes | 5,368 |  |  | 1,515 |
Other, net | (10,477 | ) |  | 20,894 |
Changes in current assets and liabilities: |  |  |
Accounts receivable, net | (17,592 | ) |  | (14,882 | )
Finance receivables - accrued interest and other | (4,963 | ) |  | 4,228 |
Inventories | 88,146 |  |  | 63,957 |
Accounts payable and accrued liabilities | 34,370 |  |  | 161,101 |
Derivative instruments | 4,352 |  |  | (136 | )
Other | (8,356 | ) |  | (859 | )
Total adjustments | 172,656 |  |  | 318,758 |
Net cash provided by operating activities | $ | 496,232 |  |  | $ | 735,859 |

9. Finance Receivables
The Company provides retail financial services to customers of the Company’s independent dealers in the United States and Canada. The origination of retail loans is a separate and distinct transaction between the Company and the retail customer, unrelated to the Company’s sale of product to its dealers. Retail finance receivables consist of secured promissory notes and secured installment sales contracts and are primarily related to sales of motorcycles to the dealers' customers. The Company holds either titles or liens on titles to vehicles financed by promissory notes and installment sales contracts.
The Company offers wholesale financing to the Company’s independent dealers. Wholesale loans to dealers are generally secured by financed inventory or property and are originated in the U.S. and Canada. Wholesale finance receivables are related primarily to sales of motorcycles and related parts and accessories to dealers.
Finance receivables, net, consisted of the following (in thousands):

| June 30, 2019 |  | December 31, 2018 |  | July 1, 2018
Retail | $ | 6,549,707 |  |  | $ | 6,328,201 |  |  | $ | 6,373,926 |
Wholesale | 1,239,694 |  |  | 1,083,615 |  |  | 1,133,206 |
Total finance receivables | 7,789,401 |  |  | 7,411,816 |  |  | 7,507,132 |
Allowance for credit losses | (194,996 | ) |  | (189,885 | ) |  | (193,930 | )
Finance receivables, net | $ | 7,594,405 |  |  | $ | 7,221,931 |  |  | $ | 7,313,202 |

15

Table of Contents
A provision for credit losses on finance receivables is charged or credited to earnings in amounts that the Company believes are sufficient to maintain the allowance for credit losses at a level that is adequate to cover losses inherent in the existing portfolio. The allowance for credit losses represents management’s estimate of probable losses inherent in the finance receivable portfolio as of the balance sheet date. However, due to the use of projections and assumptions in estimating the losses, the amount of losses actually incurred by the Company could differ from the amounts estimated.
Changes in the allowance for credit losses on finance receivables by portfolio were as follows (in thousands):

| Three months ended June 30, 2019
| Retail |  | Wholesale |  | Total
Balance, beginning of period | $ | 181,426 |  |  | $ | 9,446 |  |  | $ | 190,872 |
Provision for credit losses | 27,555 |  |  | (1,172 | ) |  | 26,383 |
Charge-offs | (35,741 | ) |  | — |  |  | (35,741 | )
Recoveries | 13,482 |  |  | — |  |  | 13,482 |
Balance, end of period | $ | 186,722 |  |  | $ | 8,274 |  |  | $ | 194,996 |
| Three months ended July 1, 2018
| Retail |  | Wholesale |  | Total
Balance, beginning of period | $ | 182,150 |  |  | $ | 8,200 |  |  | $ | 190,350 |
Provision for credit losses | 20,652 |  |  | (1,772 | ) |  | 18,880 |
Charge-offs | (28,947 | ) |  | — |  |  | (28,947 | )
Recoveries | 13,647 |  |  | — |  |  | 13,647 |
Balance, end of period | $ | 187,502 |  |  | $ | 6,428 |  |  | $ | 193,930 |
| Six months ended June 30, 2019
| Retail |  | Wholesale |  | Total
Balance, beginning of period | $ | 182,098 |  |  | $ | 7,787 |  |  | $ | 189,885 |
Provision for credit losses | 60,387 |  |  | 487 |  |  | 60,874 |
Charge-offs | (80,462 | ) |  | — |  |  | (80,462 | )
Recoveries | 24,699 |  |  | — |  |  | 24,699 |
Balance, end of period | $ | 186,722 |  |  | $ | 8,274 |  |  | $ | 194,996 |
| Six months ended July 1, 2018
| Retail |  | Wholesale |  | Total
Balance, beginning of period | $ | 186,254 |  |  | $ | 6,217 |  |  | $ | 192,471 |
Provision for credit losses | 48,721 |  |  | 211 |  |  | 48,932 |
Charge-offs | (74,028 | ) |  | — |  |  | (74,028 | )
Recoveries | 26,555 |  |  | — |  |  | 26,555 |
Balance, end of period | $ | 187,502 |  |  | $ | 6,428 |  |  | $ | 193,930 |

Finance receivables are considered impaired when management determines it is probable that the Company will be unable to collect all amounts due according to the terms of the loan agreement. Portions of the allowance for credit losses are established to cover estimated losses on finance receivables specifically identified for impairment. The unspecified portion of the allowance for credit losses covers estimated losses on finance receivables which are collectively reviewed for impairment.
The retail portfolio primarily consists of a large number of small balance, homogeneous finance receivables. The Company performs a periodic and systematic collective evaluation of the adequacy of the retail allowance for credit losses. The Company utilizes loss forecast models which consider a variety of factors including, but not limited to, historical loss trends, origination or vintage analysis, known and inherent risks in the portfolio, the value of the underlying collateral, recovery rates, and current economic conditions including items such as unemployment rates. Retail finance receivables are not evaluated individually for impairment prior to charge-off and, therefore, are not reported as impaired loans.
16

Table of Contents
The wholesale portfolio is primarily composed of large balance, non-homogeneous loans. The Company’s evaluation for the wholesale allowance for credit losses is first based on a loan-by-loan review. A specific allowance for credit losses is established for wholesale finance receivables determined to be individually impaired when management concludes that the borrower will not be able to make full payment of the contractual amounts due based on the original terms of the loan agreement. The impairment is determined based on the cash that the Company expects to receive discounted at the loan’s original interest rate or the fair value of the collateral, if the loan is collateral-dependent. Finance receivables in the wholesale portfolio that are not considered impaired on an individual basis are segregated, based on similar risk characteristics, according to the Company’s internal risk rating system and collectively evaluated for impairment. The related allowance for credit losses is based on factors such as the specific borrower’s financial performance and ability to repay, the Company’s past loan loss experience, current economic conditions, and the value of the underlying collateral.
Generally, it is the Company’s policy not to change the terms and conditions of finance receivables. However, to minimize the economic loss, the Company may modify certain finance receivables in troubled debt restructurings. Total restructured finance receivables are not significant.
The allowance for credit losses and finance receivables by portfolio, segregated by those amounts that are individually evaluated for impairment and those that are collectively evaluated for impairment, was as follows (in thousands):

| June 30, 2019
| Retail |  | Wholesale |  | Total
Allowance for credit losses, ending balance: |  |  |  |  |
Individually evaluated for impairment | $ | — |  |  | $ | — |  |  | $ | — |
Collectively evaluated for impairment | 186,722 |  |  | 8,274 |  |  | 194,996 |
Total allowance for credit losses | $ | 186,722 |  |  | $ | 8,274 |  |  | $ | 194,996 |
Finance receivables, ending balance: |  |  |  |  |
Individually evaluated for impairment | $ | — |  |  | $ | — |  |  | $ | — |
Collectively evaluated for impairment | 6,549,707 |  |  | 1,239,694 |  |  | 7,789,401 |
Total finance receivables | $ | 6,549,707 |  |  | $ | 1,239,694 |  |  | $ | 7,789,401 |
| December 31, 2018
| Retail |  | Wholesale |  | Total
Allowance for credit losses, ending balance: |  |  |  |  |
Individually evaluated for impairment | $ | — |  |  | $ | — |  |  | $ | — |
Collectively evaluated for impairment | 182,098 |  |  | 7,787 |  |  | 189,885 |
Total allowance for credit losses | $ | 182,098 |  |  | $ | 7,787 |  |  | $ | 189,885 |
Finance receivables, ending balance: |  |  |  |  |
Individually evaluated for impairment | $ | — |  |  | $ | — |  |  | $ | — |
Collectively evaluated for impairment | 6,328,201 |  |  | 1,083,615 |  |  | 7,411,816 |
Total finance receivables | $ | 6,328,201 |  |  | $ | 1,083,615 |  |  | $ | 7,411,816 |
| July 1, 2018
| Retail |  | Wholesale |  | Total
Allowance for credit losses, ending balance: |  |  |  |  |
Individually evaluated for impairment | $ | — |  |  | $ | 184 |  |  | $ | 184 |
Collectively evaluated for impairment | 187,502 |  |  | 6,244 |  |  | 193,746 |
Total allowance for credit losses | $ | 187,502 |  |  | $ | 6,428 |  |  | $ | 193,930 |
Finance receivables, ending balance: |  |  |  |  |
Individually evaluated for impairment | $ | — |  |  | $ | 220 |  |  | $ | 220 |
Collectively evaluated for impairment | 6,373,926 |  |  | 1,132,986 |  |  | 7,506,912 |
Total finance receivables | $ | 6,373,926 |  |  | $ | 1,133,206 |  |  | $ | 7,507,132 |

17

Table of Contents
There were no wholesale finance receivables at June 30, 2019 or December 31, 2018 that were individually deemed to be impaired under ASC Topic 310, "Receivables". Additional information related to the wholesale finance receivables that were individually deemed to be impaired at July 1, 2018 includes (in thousands):

| July 1, 2018 |  | Three months ended July 1, 2018 |  | Six months ended July 1, 2018
| Recorded Investment |  | Unpaid Principal Balance |  | Related Allowance |  | Average Recorded Investment |  | Interest Income Recognized |  | Average Recorded Investment |  | Interest Income Recognized
Wholesale: |  |  |  |  |  |  |  |  |  |  |  |  |
No related allowance recorded | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |
Related allowance recorded | 251 |  |  | 220 |  |  | 184 |  |  | 251 |  |  | — |  |  | 251 |  |  | — |
Total | $ | 251 |  |  | $ | 220 |  |  | $ | 184 |  |  | $ | 251 |  |  | $ | — |  |  | $ | 251 |  |  | $ | — |

Retail finance receivables are contractually delinquent if the minimum payment is not received by the specified due date. Retail finance receivables are generally charged-off when the receivable is 120 days or more delinquent, the related asset is repossessed, or the receivable is otherwise deemed uncollectible. All retail finance receivables accrue interest until either collected or charged-off. Accordingly, as of June 30, 2019, December 31, 2018 and July 1, 2018, all retail finance receivables were accounted for as interest-earning receivables, of which $30.4 million, $41.2 million and $22.4 million, respectively, were 90 days or more past due.
Wholesale finance receivables are delinquent if the minimum payment is not received by the contractual due date. Wholesale finance receivables are written down once management determines that the specific borrower does not have the ability to repay the loan in full. Interest continues to accrue on past due finance receivables until the date the finance receivable becomes uncollectible and the finance receivable is placed on non-accrual status. The Company will resume accruing interest on these accounts when payments are current according to the terms of the loans and future payments are reasonably assured. While on non-accrual status, all cash received is applied to principal or interest as appropriate. There were no wholesale receivables on non-accrual status at June 30, 2019 or December 31, 2018. The recorded investment in non-accrual status wholesale finance receivables at July 1, 2018 was $0.2 million. At June 30, 2019, December 31, 2018 and July 1, 2018, $2.1 million, $1.1 million, and $0.1 million of wholesale finance receivables were 90 days or more past due and accruing interest, respectively.
An analysis of the aging of past due finance receivables was as follows (in thousands):

| June 30, 2019
| Current |  | 31-60 Days Past Due |  | 61-90 Days Past Due |  | Greater than 90 Days Past Due |  | Total Past Due |  | Total Finance Receivables
Retail | $ | 6,359,499 |  |  | $ | 119,770 |  |  | $ | 40,015 |  |  | $ | 30,423 |  |  | $ | 190,208 |  |  | $ | 6,549,707 |
Wholesale | 1,236,747 |  |  | 577 |  |  | 320 |  |  | 2,050 |  |  | 2,947 |  |  | 1,239,694 |
Total | $ | 7,596,246 |  |  | $ | 120,347 |  |  | $ | 40,335 |  |  | $ | 32,473 |  |  | $ | 193,155 |  |  | $ | 7,789,401 |
| December 31, 2018
| Current |  | 31-60 Days Past Due |  | 61-90 Days Past Due |  | Greater than 90 Days Past Due |  | Total Past Due |  | Total Finance Receivables
Retail | $ | 6,100,186 |  |  | $ | 136,945 |  |  | $ | 49,825 |  |  | $ | 41,245 |  |  | $ | 228,015 |  |  | $ | 6,328,201 |
Wholesale | 1,081,729 |  |  | 522 |  |  | 273 |  |  | 1,091 |  |  | 1,886 |  |  | 1,083,615 |
Total | $ | 7,181,915 |  |  | $ | 137,467 |  |  | $ | 50,098 |  |  | $ | 42,336 |  |  | $ | 229,901 |  |  | $ | 7,411,816 |
| July 1, 2018
| Current |  | 31-60 Days Past Due |  | 61-90 Days Past Due |  | Greater than 90 Days Past Due |  | Total Past Due |  | Total Finance Receivables
Retail | $ | 6,198,906 |  |  | $ | 116,828 |  |  | $ | 35,763 |  |  | $ | 22,429 |  |  | $ | 175,020 |  |  | $ | 6,373,926 |
Wholesale | 1,132,472 |  |  | 516 |  |  | 134 |  |  | 84 |  |  | 734 |  |  | 1,133,206 |
Total | $ | 7,331,378 |  |  | $ | 117,344 |  |  | $ | 35,897 |  |  | $ | 22,513 |  |  | $ | 175,754 |  |  | $ | 7,507,132 |

18

Table of Contents
A significant part of managing the Company's finance receivable portfolios includes the assessment of credit risk associated with each borrower. As the credit risk varies between the retail and wholesale portfolios, the Company utilizes different credit risk indicators for each portfolio.
The Company manages retail credit risk through its credit approval policy and ongoing collection efforts. The Company uses FICO scores, a standard credit rating measurement, to differentiate the expected default rates of retail credit applicants, enabling the Company to better evaluate credit applicants for approval and to tailor pricing according to this assessment. Retail loans with a FICO score of 640 or above at origination are generally considered prime, and loans with a FICO score below 640 are generally considered sub-prime. These credit quality indicators are determined at the time of loan origination and are not updated subsequent to the loan origination date.
The recorded investment in retail finance receivables, by credit quality indicator, was as follows (in thousands):

| June 30, 2019 |  | December 31, 2018 |  | July 1, 2018
Prime | $ | 5,372,712 |  |  | $ | 5,183,754 |  |  | $ | 5,193,641 |
Sub-prime | 1,176,995 |  |  | 1,144,447 |  |  | 1,180,285 |
Total | $ | 6,549,707 |  |  | $ | 6,328,201 |  |  | $ | 6,373,926 |

The Company's credit risk on the wholesale portfolio is different from that of the retail portfolio. Whereas the retail portfolio represents a relatively homogeneous pool of retail finance receivables that exhibit more consistent loss patterns, the wholesale portfolio exposures are less consistent. The Company utilizes an internal credit risk rating system to manage credit risk exposure consistently across wholesale borrowers and individually evaluates credit risk factors for each borrower. The Company uses the following internal credit quality indicators, based on an internal risk rating system, listed from highest level of risk to lowest level of risk for the wholesale portfolio: Doubtful, Substandard, Special Mention, Medium Risk and Low Risk. Based upon management’s review, the dealers classified in the Doubtful category are the dealers with the greatest likelihood of being charged-off, while the dealers classified as Low Risk are least likely to be charged-off. The internal rating system considers factors such as the specific borrower's ability to repay and the estimated value of any collateral. Dealer risk rating classifications are reviewed and updated on a quarterly basis.
The recorded investment in wholesale finance receivables, by internal credit quality indicator, was as follows (in thousands):

| June 30, 2019 |  | December 31, 2018 |  | July 1, 2018
Doubtful | $ | 6,850 |  |  | $ | 2,210 |  |  | $ | 251 |
Substandard | 7,643 |  |  | 9,660 |  |  | 803 |
Special Mention | 12,642 |  |  | 10,299 |  |  | 2,154 |
Medium Risk | 6,170 |  |  | 25,802 |  |  | 37,045 |
Low Risk | 1,206,389 |  |  | 1,035,644 |  |  | 1,092,953 |
Total | $ | 1,239,694 |  |  | $ | 1,083,615 |  |  | $ | 1,133,206 |

10. Derivative Instruments and Hedging Activities
The Company is exposed to certain risks such as foreign currency exchange rate risk, interest rate risk and commodity price risk. To reduce its exposure to such risks, the Company selectively uses derivative financial instruments. All derivative transactions are authorized and executed pursuant to regularly reviewed policies and procedures which prohibit the use of financial instruments for speculative trading purposes.
The Company sells products in foreign currencies and utilizes foreign currency exchange contracts to mitigate the effects of foreign currency exchange rate fluctuations related to the Euro, Australian dollar, Japanese yen, Brazilian real, Canadian dollar, Mexican peso, Indian rupee, and Pound sterling. The foreign currency exchange contracts generally have maturities of less than one year.
The Company utilizes commodity contracts to mitigate the effects of commodity price fluctuations related to metals and fuel consumed in the Company’s motorcycle production and distribution processes. The commodity contracts generally have maturities of less than one year.
19

Table of Contents
The Company periodically utilizes treasury rate lock contracts to fix the interest rate on a portion of the principal related to the anticipated issuance of long-term debt as well as interest rate swaps to reduce the impact of fluctuations in interest rates on floating rate medium-term notes. The Company also utilizes interest rate caps to facilitate certain asset-backed securitization transactions.
All derivative instruments are recognized on the balance sheet at fair value. In accordance with ASC Topic 815, Derivatives and Hedging, the accounting for changes in the fair value of a derivative instrument depends on whether it has been designated and qualifies as part of a hedging relationship and, further, on the type of hedging relationship.
Changes in the fair value of derivatives that are designated as cash flow hedges are initially recorded in other comprehensive income (OCI) and subsequently reclassified into earnings when the hedged item affects income. The Company assesses, both at the inception of each hedge and on an on-going basis, whether the derivatives that are used in cash flow hedging transactions are highly effective in offsetting changes in cash flows of the hedged items. No component of a hedging derivative instrument’s gain or loss is excluded from the assessment of hedge effectiveness. Derivatives not designated as hedges are not speculative and are used to manage the Company’s exposure to foreign currency, commodity risks, and interest rate risks. Changes in the fair value of derivatives not designated in hedging relationships are recorded directly in earnings.
The following tables summarize the notional and recorded fair values of the Company’s derivative financial instruments (in thousands):

|  | Derivatives Designated as Cash Flow Hedging Instruments Under ASC Topic 815
|  | June 30, 2019 |  | December 31, 2018 |  | July 1, 2018
Derivative |  | Notional Value |  | Other Current Assets |  | Accrued Liabil-ities |  | Notional Value |  | Other Current Assets |  | Accrued Liabil-ities |  | Notional Value |  | Other Current Assets |  | Accrued Liabil-ities
Foreign currency contracts |  | $ | 495,736 |  |  | $ | 6,638 |  |  | $ | 3,490 |  |  | $ | 442,976 |  |  | $ | 15,071 |  |  | $ | 313 |  |  | $ | 591,901 |  |  | $ | 13,238 |  |  | $ | — |
Commodity contracts |  | 627 |  |  | — |  |  | 69 |  |  | 827 |  |  | — |  |  | 46 |  |  | 803 |  |  | 4 |  |  | — |
Interest rate swaps |  | 900,000 |  |  | — |  |  | 11,920 |  |  | 900,000 |  |  | — |  |  | 4,494 |  |  | 450,000 |  |  | — |  |  | 597 |
Total |  | $ | 1,396,363 |  |  | $ | 6,638 |  |  | $ | 15,479 |  |  | $ | 1,343,803 |  |  | $ | 15,071 |  |  | $ | 4,853 |  |  | $ | 1,042,704 |  |  | $ | 13,242 |  |  | $ | 597 |
|  | Derivatives Not Designated as Hedging Instruments Under ASC Topic 815
|  | June 30, 2019 |  | December 31, 2018 |  | July 1, 2018
Derivative |  | Notional Value |  | Other Current Assets |  | Accrued Liabil-ities |  | Notional Value |  | Other Current Assets |  | Accrued Liabil-ities |  | Notional Value |  | Other Current Assets |  | Accrued Liabil-ities
Foreign currency contracts |  | $ | 317,344 |  |  | $ | 273 |  |  | $ | 1,816 |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |
Commodity contracts |  | 7,710 |  |  | 5 |  |  | 260 |  |  | 5,239 |  |  | — |  |  | 463 |  |  | 4,421 |  |  | 204 |  |  | 28 |
Interest rate cap |  | 481,509 |  |  | 4 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Total |  | $ | 806,563 |  |  | $ | 282 |  |  | $ | 2,076 |  |  | $ | 5,239 |  |  | $ | — |  |  | $ | 463 |  |  | $ | 4,421 |  |  | $ | 204 |  |  | $ | 28 |

20

Table of Contents
The following tables summarize the amount of gains and losses related to derivative financial instruments designated as cash flow hedges (in thousands):

|  | Amount of Gain/(Loss) Recognized in OCI, before tax |  | Amount of Gain/(Loss) Reclassified from AOCL into Income |  | Location of Gain/(Loss) Reclassified from AOCL into Income |  | Total Statement of Income Amount for Line Items in which the Effects of Cash Flow Hedges are Recorded
|  | Three months ended |  |  |  | Three months ended
Cash Flow Hedges |  | June 30, 2019 |  | July 1, 2018 |  | June 30, 2019 |  | July 1, 2018 |  | Statement of Income line item |  | June 30, 2019 |  | July 1, 2018
Foreign currency contracts |  | $ | (2,865 | ) |  | $ | 32,635 |  |  | $ | 7,668 |  |  | $ | 956 |  |  | Motorcycles cost of goods sold |  | $ | 979,266 |  |  | $ | 993,036 |
Commodity contracts |  | (70 | ) |  | 4 |  |  | (7 | ) |  | (12 | ) |  | Motorcycles cost of goods sold |  | $ | 979,266 |  |  | $ | 993,036 |
Treasury rate locks |  | — |  |  | — |  |  | (91 | ) |  | (91 | ) |  | Interest expense |  | $ | 7,784 |  |  | $ | 7,728 |
Treasury rate locks |  | — |  |  | 41 |  |  | (32 | ) |  | (34 | ) |  | Financial Services interest expense |  | $ | 52,673 |  |  | $ | 51,943 |
Interest rate swaps |  | (5,856 | ) |  | (886 | ) |  | (830 | ) |  | (289 | ) |  | Financial Services interest expense |  | $ | 52,673 |  |  | $ | 51,943 |
Total |  | $ | (8,791 | ) |  | $ | 31,794 |  |  | $ | 6,708 |  |  | $ | 530 |  |  |  |  |  |  |

|  | Amount of Gain/(Loss) Recognized in OCI, before tax |  | Amount of Gain/(Loss) Reclassified from AOCL into Income |  | Location of Gain/(Loss) Reclassified from AOCL into Income |  | Total Statement of Income Amount for Line Items in which the Effects of Cash Flow Hedges are Recorded
|  | Six months ended |  |  |  | Six months ended
Cash Flow Hedges |  | June 30, 2019 |  | July 1, 2018 |  | June 30, 2019 |  | July 1, 2018 |  | Statement of Income line item |  | June 30, 2019 |  | July 1, 2018
Foreign currency contracts |  | $ | 1,287 |  |  | $ | 26,745 |  |  | $ | 10,121 |  |  | $ | (5,753 | ) |  | Motorcycles cost of goods sold |  | $ | 1,827,464 |  |  | $ | 1,883,210 |
Commodity contracts |  | (40 | ) |  | (12 | ) |  | (17 | ) |  | (85 | ) |  | Motorcycles cost of goods sold |  | $ | 1,827,464 |  |  | $ | 1,883,210 |
Treasury rate locks |  | — |  |  | — |  |  | (181 | ) |  | (181 | ) |  | Interest expense |  | $ | 15,515 |  |  | $ | 15,418 |
Treasury rate locks |  | — |  |  | 41 |  |  | (64 | ) |  | (70 | ) |  | Financial Services interest expense |  | $ | 104,997 |  |  | $ | 100,393 |
Interest rate swaps |  | (8,861 | ) |  | (886 | ) |  | (1,436 | ) |  | (289 | ) |  | Financial Services Interest expense |  | $ | 104,997 |  |  | $ | 100,393 |
Total |  | $ | (7,614 | ) |  | $ | 25,888 |  |  | $ | 8,423 |  |  | $ | (6,378 | ) |  |  |  |  |  |

The amount of net loss included in Accumulated other comprehensive loss (AOCL) at June 30, 2019, estimated to be reclassified into income over the next twelve months was $3.2 million.
The following table summarizes the amount of gains and losses recognized in income related to derivative financial instruments not designated as hedging instruments (in thousands). Foreign currency contracts and commodity contracts were recorded in Motorcycles cost of goods sold and the interest rate cap was recorded in Financial services interest expense.

|  | Amount of Gain (Loss) Recognized in Income on Derivative
|  | Three months ended |  | Six months ended
Derivatives Not Designated as Hedges |  | June 30, 2019 |  | July 1, 2018 |  | June 30, 2019 |  | July 1, 2018
Foreign currency contracts |  | $ | (1,004 | ) |  | $ | — |  |  | $ | (117 | ) |  | $ | — |
Commodity contracts |  | (310 | ) |  | 195 |  |  | 7 |  |  | 201 |
Interest rate cap |  | (141 | ) |  | — |  |  | (141 | ) |  | — |
Total |  | $ | (1,455 | ) |  | $ | 195 |  |  | $ | (251 | ) |  | $ | 201 |

The Company is exposed to credit loss risk in the event of non-performance by counterparties to these derivative financial instruments. Although no assurances can be given, the Company does not expect any of the counterparties to these derivative financial instruments to fail to meet its obligations. To manage credit loss risk, the Company evaluates counterparties based on credit ratings and, on a quarterly basis, evaluates each hedge’s net position relative to the counterparty’s ability to cover its position.
21

Table of Contents
11. Leases
The Company determines if an arrangement is or contains a lease at contract inception. Right-of-use (ROU) assets related to leases are recorded in Lease assets and lease liabilities are recorded in Accrued liabilities and Lease liabilities on the consolidated balance sheet.
ROU assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the obligation to make lease payments arising from the lease. ROU assets and lease liabilities are recognized at lease commencement date based on the present value of future lease payments over the lease term. The ROU asset also includes prepaid lease payments and initial direct costs and is reduced for lease incentives paid by the lessor. The discount rate used to determine the present value is generally the Company's incremental borrowing rate because the implicit rate in the lease is not readily determinable. The lease term used to calculate the ROU asset and lease liability includes periods covered by options to extend or terminate when the Company is reasonably certain the lease term will include these optional periods.
The Company has lease arrangements for sales and administrative offices, manufacturing and distribution facilities, product testing facilities, equipment and vehicles. All of the Company’s lease arrangements are accounted for as operating leases. The Company’s leases have remaining lease terms ranging from 1 to 13 years, some of which include options to extend the leases for periods generally not greater than 5 years and some of which include options to terminate the leases within 1 year. Certain leases also include options to purchase the leased asset. Leases do not contain any material residual value guarantees or material restrictive covenants.
Operating lease expense for the three and six months ended June 30, 2019 was $6.4 million and $12.7 million, respectively. This includes variable lease costs related to leases involving assets operated by a third-party of approximately $2.0 million and $3.2 million for the three and six months ended June 30, 2019, respectively. Other variable and short-term lease costs were not material.
Balance sheet information related to leases was as follows (in thousands):

| June 30, 2019
Lease assets | $ | 54,913 |
Accrued liabilities | $ | 18,133 |
Lease liabilities | 38,365 |
| $ | 56,498 |

Future maturities of lease liabilities were as follows as of June 30, 2019 (in thousands):

| Operating Leases
2019 | $ | 10,474 |
2020 | 16,509 |
2021 | 13,167 |
2022 | 9,326 |
2023 | 3,770 |
Thereafter | 6,899 |
Total present value of lease payments | 60,145 |
Less present value discount | 3,647 |
Total lease liability | $ | 56,498 |

Other lease information is as follows (dollars in thousands):

| Three months ended |  | Six months ended
| June 30, 2019 |  | June 30, 2019
Operating cash outflows for amounts included in the measurement of lease liabilities | $ | 4,510 |  |  | $ | 9,871 |
Right-of-use assets obtained in exchange for lease obligations | $ | 3,964 |  |  | $ | 4,262 |

22

Table of Contents

| June 30, 2019
Weighted average remaining lease term (in years) | 4.44 |
Weighted average discount rate | 3.2 | %

12. Debt
Debt with a contractual term of one year or less is generally classified as short-term debt and consisted of the following (in thousands):

|  | June 30, 2019 |  | December 31, 2018 |  | July 1, 2018
Unsecured commercial paper |  | $ | 405,695 |  |  | $ | 1,135,810 |  |  | $ | 1,327,307 |

Debt with a contractual term greater than one year is generally classified as long-term debt and consisted of the following (in thousands):

|  |  |  | June 30, 2019 |  | December 31, 2018 |  | July 1, 2018
Secured debt (Note 13) |  |  |  |  |  |  |  |
Asset-backed Canadian commercial paper conduit facility |  |  |  | $ | 148,740 |  |  | $ | 155,951 |  |  | $ | 166,638 |
Asset-backed U.S. commercial paper conduit facilities |  |  |  | 464,136 |  |  | 582,717 |  |  | 300,000 |
Asset-backed securitization debt |  |  |  | 1,006,410 |  |  | 95,216 |  |  | 169,632 |
Less: unamortized discount and debt issuance costs |  |  |  | (3,541 | ) |  | (49 | ) |  | (202 | )
Total secured debt |  |  |  | 1,615,745 |  |  | 833,835 |  |  | 636,068 |
Unsecured debt (at par value) |  |  |  |  |  |  |  |
Medium-term notes |  |  |  |  |  |  |  |
Due in 2019, issued January 2016 |  | 2.25 | % |  | — |  |  | 600,000 |  |  | 600,000 |
Due in 2019, issued March 2017 |  | LIBOR + 0.35% |  |  | — |  |  | 150,000 |  |  | 150,000 |
Due in 2019, issued September 2014 |  | 2.40 | % |  | 600,000 |  |  | 600,000 |  |  | 600,000 |
Due in 2020, issued February 2015 |  | 2.15 | % |  | 600,000 |  |  | 600,000 |  |  | 600,000 |
Due in 2020, issued May 2018 |  | LIBOR + 0.50% |  |  | 450,000 |  |  | 450,000 |  |  | 450,000 |
Due in 2020, issued March 2017 |  | 2.40 | % |  | 350,000 |  |  | 350,000 |  |  | 350,000 |
Due in 2021, issued January 2016 |  | 2.85 | % |  | 600,000 |  |  | 600,000 |  |  | 600,000 |
Due in 2021, issued November 2018 |  | LIBOR + 0.94% |  |  | 450,000 |  |  | 450,000 |  |  | — |
Due in 2021, issued May 2018 |  | 3.55 | % |  | 350,000 |  |  | 350,000 |  |  | 350,000 |
Due in 2022, issued February 2019 |  | 4.05 | % |  | 550,000 |  |  | — |  |  | — |
Due in 2022, issued June 2017 |  | 2.55 | % |  | 400,000 |  |  | 400,000 |  |  | 400,000 |
Due in 2023, issued February 2018 |  | 3.35 | % |  | 350,000 |  |  | 350,000 |  |  | 350,000 |
Less: unamortized discount and debt issuance costs |  |  |  | (12,340 | ) |  | (12,993 | ) |  | (14,551 | )
Total medium-term notes |  |  |  | 4,687,660 |  |  | 4,887,007 |  |  | 4,435,449 |
Senior notes |  |  |  |  |  |  |  |
Due in 2025, issued July 2015 |  | 3.50 | % |  | 450,000 |  |  | 450,000 |  |  | 450,000 |
Due in 2045, issued July 2015 |  | 4.625 | % |  | 300,000 |  |  | 300,000 |  |  | 300,000 |
Less: unamortized discount and debt issuance costs |  |  |  | (7,041 | ) |  | (7,376 | ) |  | (7,708 | )
Total senior notes |  |  |  | 742,959 |  |  | 742,624 |  |  | 742,292 |
Total unsecured debt |  |  |  | 5,430,619 |  |  | 5,629,631 |  |  | 5,177,741 |
Gross long-term debt |  |  |  | 7,046,364 |  |  | 6,463,466 |  |  | 5,813,809 |
Less: current portion of long-term debt, net of unamortized discount and debt issuance costs |  |  |  | (2,396,188 | ) |  | (1,575,799 | ) |  | (945,463 | )
Total long-term debt |  |  |  | $ | 4,650,176 |  |  | $ | 4,887,667 |  |  | $ | 4,868,346 |

23

Table of Contents
In May 2019, the Company entered into a $195.0 million 364-day credit facility which bears interest at variable rates and matures on May 11, 2020.
13. Asset-Backed Financing
The Company participates in asset-backed financing both through asset-backed securitization transactions and through asset-backed commercial paper conduit facilities. In the Company's asset-backed financing programs, the Company transfers retail motorcycle finance receivables to special purpose entities (SPEs), which are considered VIEs under U.S. GAAP. Each SPE then converts those assets into cash, through the issuance of debt. The Company retains servicing rights for all of the retail motorcycle finance receivables transferred to SPEs as part of an asset-backed financing. The accounting treatment for asset-backed financings depends on the terms of the related transaction and the Company’s continuing involvement with the VIE.
In transactions where the Company has power over the significant activities of the VIE and has an obligation to absorb losses or the right to receive benefits from the VIE that are potentially significant to the VIE, the Company is the primary beneficiary of the VIE and consolidates the VIE within its consolidated financial statements. On a consolidated basis, the asset-backed financing is treated as a secured borrowing in this type of transaction and is referred to as an on-balance sheet asset-backed financing.
In transactions where the Company is not the primary beneficiary of the VIE, the Company must determine whether it can achieve a sale for accounting purposes under ASC Topic 860, Transfers and Servicing. To achieve a sale for accounting purposes, the assets being transferred must be legally isolated, not be constrained by restrictions from further transfer, and be deemed to be beyond the Company’s control. If the Company does not meet all of these criteria for sale accounting, then the transaction is accounted for as a secured borrowing and is referred to as an on-balance sheet asset-backed financing.
If the Company meets all three of the sale criteria above, the transaction is recorded as a sale for accounting purposes and is referred to as an off-balance sheet asset-backed financing. Upon sale, the retail motorcycle finance receivables are removed from the Company’s balance sheet and a gain or loss is recognized for the difference between the cash proceeds received, the assets derecognized, and the liabilities recognized as part of the transaction. The gain or loss on sale is included in Financial Services revenue in the consolidated statements of income.
The Company is not required, and does not currently intend, to provide any additional financial support to the on- or off-balance sheet VIEs associated with these transactions. Investors and creditors in these transactions only have recourse to the assets held by the VIEs.
The following tables show the assets and liabilities related to the on-balance sheet asset-backed financings included in the financial statements (in thousands):

| June 30, 2019
| Finance receivables |  | Allowance for credit losses |  | Restricted cash |  | Other assets |  | Total assets |  | Asset-backed debt
On-balance sheet assets and liabilities |  |  |  |  |  |  |  |  |  |  |
Consolidated VIEs |  |  |  |  |  |  |  |  |  |  |
Asset-backed securitizations | $ | 1,106,973 |  |  | $ | (32,426 | ) |  | $ | 52,593 |  |  | $ | 277 |  |  | $ | 1,127,417 |  |  | $ | 1,002,869 |
Asset-backed U.S. commercial paper conduit facilities | 500,895 |  |  | (14,651 | ) |  | 26,843 |  |  | 1,256 |  |  | 514,343 |  |  | 464,136 |
Unconsolidated VIEs |  |  |  |  |  |  |  |  |  |  |
Asset-backed Canadian commercial paper conduit facility | 171,944 |  |  | (3,058 | ) |  | 9,824 |  |  | 272 |  |  | 178,982 |  |  | 148,740 |
Total on-balance sheet assets and liabilities | $ | 1,779,812 |  |  | $ | (50,135 | ) |  | $ | 89,260 |  |  | $ | 1,805 |  |  | $ | 1,820,742 |  |  | $ | 1,615,745 |

24

Table of Contents

| December 31, 2018
| Finance receivables |  | Allowance for credit losses |  | Restricted cash |  | Other assets |  | Total assets |  | Asset-backed debt
On-balance sheet assets and liabilities |  |  |  |  |  |  |  |  |  |  |
Consolidated VIEs |  |  |  |  |  |  |  |  |  |  |
Asset-backed securitizations | $ | 158,718 |  |  | $ | (4,691 | ) |  | $ | 17,191 |  |  | $ | 329 |  |  | $ | 171,547 |  |  | $ | 95,167 |
Asset-backed U.S. commercial paper conduit facilities | 631,588 |  |  | (18,733 | ) |  | 30,012 |  |  | 1,234 |  |  | 644,101 |  |  | 582,717 |
Unconsolidated VIEs |  |  |  |  |  |  |  |  |  |  |
Asset-backed Canadian commercial paper conduit facility | 181,774 |  |  | (3,130 | ) |  | 8,779 |  |  | 343 |  |  | 187,766 |  |  | 155,951 |
Total on-balance sheet assets and liabilities | $ | 972,080 |  |  | $ | (26,554 | ) |  | $ | 55,982 |  |  | $ | 1,906 |  |  | $ | 1,003,414 |  |  | $ | 833,835 |
| July 1, 2018
| Finance receivables |  | Allowance for credit losses |  | Restricted cash |  | Other assets |  | Total assets |  | Asset-backed debt
On-balance sheet assets and liabilities |  |  |  |  |  |  |  |  |  |  |
Consolidated VIEs |  |  |  |  |  |  |  |  |  |  |
Asset-backed securitizations | $ | 229,201 |  |  | $ | (6,943 | ) |  | $ | 21,912 |  |  | $ | 465 |  |  | $ | 244,635 |  |  | $ | 169,430 |
Asset-backed U.S. commercial paper conduit facilities | 319,758 |  |  | (9,710 | ) |  | 17,845 |  |  | 815 |  |  | 328,708 |  |  | 300,000 |
Unconsolidated VIEs |  |  |  |  |  |  |  |  |  |  |
Asset-backed Canadian commercial paper conduit facility | 192,979 |  |  | (3,405 | ) |  | 11,176 |  |  | 274 |  |  | 201,024 |  |  | 166,638 |
Total on-balance sheet assets and liabilities | $ | 741,938 |  |  | $ | (20,058 | ) |  | $ | 50,933 |  |  | $ | 1,554 |  |  | $ | 774,367 |  |  | $ | 636,068 |

On-Balance Sheet Asset-Backed Securitization VIEs
The Company transfers U.S. retail motorcycle finance receivables to SPEs which in turn issue secured notes to investors, with various maturities and interest rates, secured by future collections of the purchased U.S. retail motorcycle finance receivables. Each on-balance sheet asset-backed securitization SPE is a separate legal entity, and the U.S. retail motorcycle finance receivables included in the asset-backed securitizations are only available for payment of the secured debt and other obligations arising from the asset-backed securitization transaction and are not available to pay other obligations or claims of the Company’s creditors until the associated secured debt and other obligations are satisfied. Restricted cash balances held by the SPEs are used only to support the securitizations. There are no amortization schedules for the secured notes; however, the debt is reduced monthly as available collections on the related U.S. retail motorcycle finance receivables are applied to outstanding principal. The secured notes have various contractual maturities ranging from 2020 to 2026.
The Company is the primary beneficiary of its on-balance sheet asset-backed securitization VIEs because it retains servicing rights and a residual interest in the VIEs in the form of a debt security. As the servicer, the Company is the variable interest holder with the power to direct the activities of the VIE that most significantly impact the VIE’s economic performance. As a residual interest holder, the Company has the obligation to absorb losses and the right to receive benefits which could potentially be significant to the VIE.
During the second quarter of 2019, the Company issued $500.0 million and $525.0 million, or $498.7 million and $522.6 million net of discount and issuance costs, respectively, of secured notes through on-balance sheet asset-backed securitization transactions. There were no on-balance sheet asset-backed securitization transactions during the first quarter of 2019 or the first half of 2018.
On-Balance Sheet Asset-Backed U.S. Commercial Paper Conduit Facilities VIE
The Company has two separate agreements with third-party bank-sponsored asset-backed U.S. commercial paper conduits under which it may transfer U.S. retail motorcycle finance receivables to an SPE, which in turn may issue debt to those third-party bank-sponsored asset-backed U.S. commercial paper conduits. In November 2018, the Company renewed its existing $600.0 million revolving facility agreement with third-party bank-sponsored asset-backed U.S. commercial paper conduits. Also at that time, the Company amended its existing $300.0 million revolving facility agreement with third-party
25

Table of Contents
bank-sponsored asset-backed U.S. commercial paper conduits, increasing the aggregate commitment to $600.0 million. The aggregate commitment under this agreement is reduced monthly as collections on the related finance receivables are applied to the outstanding principal until the outstanding principal balance is less than or equal to $300.0 million, at which point the aggregate commitment will equal $300.0 million. In May 2019, the Company further amended this revolving facility agreement to allow for incremental borrowings, at the lenders' discretion, of up to an additional $300.0 million in excess of the $300.0 million commitment. Availability under the revolving facilities (together, the U.S. Conduit Facilities) is based on, among other things, the amount of eligible U.S. retail motorcycle finance receivables held by the SPE as collateral.
Under the U.S. Conduit Facilities, the assets of the SPE are restricted as collateral for the payment of the debt or other obligations arising in the transaction and are not available to pay other obligations or claims of the Company’s creditors. The terms for this debt provide for interest on the outstanding principal based on prevailing commercial paper rates or LIBOR to the extent the advance is not funded by a conduit lender through the issuance of commercial paper plus, in each case, a program fee based on outstanding principal. The U.S. Conduit Facilities also provide for an unused commitment fee based on the unused portion of the total aggregate commitment. There is no amortization schedule; however, the debt is reduced monthly as available collections on the related finance receivables are applied to outstanding principal. Upon expiration of the U.S. Conduit Facilities, any outstanding principal will continue to be reduced monthly through available collections. The expected remaining term of the related receivables held by the SPE is approximately 5 years. Unless earlier terminated or extended by mutual agreement of the Company and the lenders, as of June 30, 2019, the U.S. Conduit Facilities have an expiration date of November 29, 2019.
The Company is the primary beneficiary of its U.S. Conduit Facilities VIE because it retains servicing rights and a residual interest in the VIE in the form of a debt security. As the servicer, the Company is the variable interest holder with the power to direct the activities of the VIE that most significantly impact the VIE’s economic performance. As a residual interest holder, the Company has the obligation to absorb losses and the right to receive benefits which could potentially be significant to the VIE.
The following table includes quarterly transfers of U.S. retail motorcycle finance receivables to the U.S. Conduit Facilities and the respective proceeds (in thousands):

| 2019 |  | 2018
| Transfers |  | Proceeds |  | Transfers |  | Proceeds
First quarter | $ | — |  |  | $ | — |  |  | $ | 32,900 |  |  | $ | 29,300 |
Second quarter | — |  |  | — |  |  | 59,100 |  |  | 53,300 |
| $ | — |  |  | $ | — |  |  | $ | 92,000 |  |  | $ | 82,600 |

On-Balance Sheet Asset-Backed Canadian Commercial Paper Conduit Facility
In June 2019, the Company renewed its facility agreement (Canadian Conduit) with a Canadian bank-sponsored asset-backed commercial paper conduit. Under the agreement, the Canadian Conduit is contractually committed, at the Company's option, to purchase eligible Canadian retail motorcycle finance receivables for proceeds up to C$220.0 million. The transferred assets are restricted as collateral for the payment of the debt. The terms for this debt provide for interest on the outstanding principal based on prevailing market interest rates plus a specified margin. The Canadian Conduit also provides for a program fee and an unused commitment fee based on the unused portion of the total aggregate commitment of C$220.0 million. There is no amortization schedule; however, the debt is reduced monthly as available collections on the related finance receivables are applied to outstanding principal. Upon expiration of the Canadian Conduit, any outstanding principal will continue to be reduced monthly through available collections. The expected remaining term of the related receivables is approximately 5 years. Unless earlier terminated or extended by mutual agreement between the Company and the lenders, as of June 30, 2019, the Canadian Conduit has an expiration date of June 26, 2020.
The Company is not the primary beneficiary of the Canadian bank-sponsored, multi-seller conduit VIE; therefore, the Company does not consolidate the VIE. However, the Company treats the conduit facility as a secured borrowing as it maintains effective control over the assets transferred to the VIE and, therefore, does not meet the requirements for sale accounting.
As the Company participates in and does not consolidate the Canadian bank-sponsored, multi-seller conduit VIE, the maximum exposure to loss associated with this VIE, which would only be incurred in the unlikely event that all the finance receivables and underlying collateral have no residual value, was $30.2 million at June 30, 2019. The maximum exposure is not an indication of the Company's expected loss exposure.
26

Table of Contents
The following table includes quarterly transfers of Canadian retail motorcycle finance receivables to the Canadian Conduit and the respective proceeds (in thousands):

| 2019 |  | 2018
| Transfers |  | Proceeds |  | Transfers |  | Proceeds
First quarter | $ | — |  |  | $ | — |  |  | $ | 7,600 |  |  | $ | 6,200 |
Second quarter | 28,200 |  |  | 23,400 |  |  | 38,900 |  |  | 32,200 |
| $ | 28,200 |  |  | $ | 23,400 |  |  | $ | 46,500 |  |  | $ | 38,400 |

Off-Balance Sheet Asset-Backed Securitization VIE
There were no off-balance sheet asset-backed securitization transactions during the first half of 2019 or 2018. During the second quarter of 2016, the Company sold retail motorcycle finance receivables with a principal balance of $301.8 million into a securitization VIE that was not consolidated, recognized a gain of $9.3 million and received cash proceeds of $312.6 million. Similar to an on-balance sheet asset-backed securitization, the Company transferred U.S. retail motorcycle finance receivables to an SPE which in turn issued secured notes to investors, with various maturities and interest rates, secured by future collections of the purchased U.S. retail motorcycle finance receivables. The off-balance sheet asset-backed securitization SPE is a separate legal entity, and the U.S. retail motorcycle finance receivables included in the asset-backed securitization are only available for payment of the secured debt and other obligations arising from the asset-backed securitization transaction and are not available to pay other obligations or claims of the Company’s creditors. In an on-balance sheet asset-backed securitization, the Company retains a financial interest in the VIE in the form of a debt security. As part of this off-balance sheet securitization, the Company did not retain any financial interest in the VIE beyond servicing rights and ordinary representations and warranties and related covenants.
The Company is not the primary beneficiary of the off-balance sheet asset-backed securitization VIE because it only retained servicing rights and does not have the obligation to absorb losses or the right to receive benefits from the VIE which could potentially be significant to the VIE. Accordingly, this transaction met the accounting sale requirements under ASC Topic 860 and was recorded as a sale for accounting purposes. Upon the sale, the retail motorcycle finance receivables were removed from the Company’s balance sheet and a gain was recognized for the difference between the cash proceeds received, the assets derecognized and the liabilities recognized as part of the transaction. The gain on sale was included in Financial Services revenue in the consolidated statements of income.
At June 30, 2019, the assets of this off-balance sheet asset-backed securitization VIE were $54.7 million and represented the current unpaid principal balance of the retail motorcycle finance receivables, which was the Company’s maximum exposure to loss in the off-balance sheet VIE at June 30, 2019. This is based on the unlikely event that all the receivables have underwriting defects or other defects that trigger a violation of certain covenants and that the underlying collateral has no residual value. This maximum exposure is not an indication of expected losses.
Servicing Activities
The Company services all retail motorcycle finance receivables that it originates. When the Company transfers retail motorcycle finance receivables to SPEs through asset-backed financings, the Company retains the right to service the finance receivables and receives servicing fees based on the securitized finance receivables balance and certain ancillary fees. In on-balance sheet asset-backed financings, servicing fees are eliminated in consolidation and therefore are not recorded on a consolidated basis. In off-balance sheet asset-backed financings, servicing fees and ancillary fees are recorded in Financial Services revenue in the consolidated statements of income. The fees the Company is paid for servicing represent adequate compensation, and consequently, the Company does not recognize a servicing asset or liability. The Company recognized servicing fee income of $0.3 million and $0.7 million during the first half of 2019 and 2018, respectively.
The unpaid principal balance of retail motorcycle finance receivables serviced by the Company was as follows (in thousands):

| June 30, 2019 |  | December 31, 2018 |  | July 1, 2018
On-balance sheet retail motorcycle finance receivables | $ | 6,441,261 |  |  | $ | 6,185,350 |  |  | $ | 6,227,634 |
Off-balance sheet retail motorcycle finance receivables | 54,699 |  |  | 79,613 |  |  | 109,578 |
Total serviced retail motorcycle finance receivables | $ | 6,495,960 |  |  | $ | 6,264,963 |  |  | $ | 6,337,212 |

27

Table of Contents
The unpaid principal balance of retail motorcycle finance receivables serviced by the Company 30 days or more delinquent was as follows (in thousands):

| June 30, 2019 |  | December 31, 2018 |  | July 1, 2018
On-balance sheet retail motorcycle finance receivables | $ | 190,208 |  |  | $ | 228,015 |  |  | $ | 175,020 |
Off-balance sheet retail motorcycle finance receivables | 1,065 |  |  | 1,658 |  |  | 1,591 |
Total serviced retail motorcycle finance receivables | $ | 191,273 |  |  | $ | 229,673 |  |  | $ | 176,611 |

Credit losses, net of recoveries for the retail motorcycle finance receivables serviced by the Company were as follows (in thousands):

| Three months ended |  | Six months ended
| June 30, 2019 |  | July 1, 2018 |  | June 30, 2019 |  | July 1, 2018
On-balance sheet retail motorcycle finance receivables | $ | 22,259 |  |  | $ | 15,300 |  |  | $ | 55,763 |  |  | $ | 47,473 |
Off-balance sheet retail motorcycle finance receivables | 161 |  |  | 137 |  |  | 392 |  |  | 498 |
Total serviced retail motorcycle finance receivables | $ | 22,420 |  |  | $ | 15,437 |  |  | $ | 56,155 |  |  | $ | 47,971 |

14. Fair Value
The Company assesses the inputs used to measure fair value using a three-tier hierarchy.
Level 1 inputs include quoted prices for identical instruments and are the most observable.
Level 2 inputs include quoted prices for similar assets and observable inputs such as interest rates, foreign currency exchange rates, commodity prices, and yield curves. The Company uses the market approach to derive the fair value for its Level 2 fair value measurements. Forward contracts for foreign currency, commodities, and treasury rate locks are valued using quoted forward rates and prices; interest rate swaps and caps are valued using quoted interest rates and yield curves; investments in marketable securities and cash equivalents are valued using quoted prices.
Level 3 inputs are not observable in the market and include management’s judgments about the assumptions market participants would use in pricing the asset or liability.
Recurring Fair Value Measurements
The following tables present information about the Company’s assets and liabilities measured at fair value on a recurring basis (in thousands):

| June 30, 2019
| Balance |  | Quoted Prices in Active Markets for Identical Assets (Level 1) |  | Significant Other Observable Inputs (Level 2)
Assets: |  |  |  |  |
Cash equivalents | $ | 619,600 |  |  | $ | 619,600 |  |  | $ | — |
Marketable securities | 51,543 |  |  | 51,543 |  |  | — |
Derivatives | 6,920 |  |  | — |  |  | 6,920 |
Total | $ | 678,063 |  |  | $ | 671,143 |  |  | $ | 6,920 |
Liabilities: |  |  |  |  |
Derivatives | $ | 17,555 |  |  | $ | — |  |  | $ | 17,555 |

28

Table of Contents

| December 31, 2018
| Balance |  | Quoted Prices in Active Markets for Identical Assets (Level 1) |  | Significant Other Observable Inputs (Level 2)
Assets: |  |  |  |  |
Cash equivalents | $ | 998,601 |  |  | $ | 728,800 |  |  | $ | 269,801 |
Marketable securities | 54,250 |  |  | 44,243 |  |  | 10,007 |
Derivatives | 15,071 |  |  | — |  |  | 15,071 |
Total | $ | 1,067,922 |  |  | $ | 773,043 |  |  | $ | 294,879 |
Liabilities: |  |  |  |  |
Derivatives | $ | 5,316 |  |  | $ | — |  |  | $ | 5,316 |
| July 1, 2018
| Balance |  | Quoted Prices in Active Markets for Identical Assets (Level 1) |  | Significant Other Observable Inputs (Level 2)
Assets: |  |  |  |  |
Cash equivalents | $ | 691,983 |  |  | $ | 446,454 |  |  | $ | 245,529 |
Marketable securities | 49,537 |  |  | 49,537 |  |  | — |
Derivatives | 13,446 |  |  | — |  |  | 13,446 |
Total | $ | 754,966 |  |  | $ | 495,991 |  |  | $ | 258,975 |
Liabilities: |  |  |  |  |
Derivatives | $ | 625 |  |  | $ | — |  |  | $ | 625 |

Nonrecurring Fair Value Measurements
Repossessed inventory is recorded at the lower of cost or net realizable value through a nonrecurring fair value measurement. Repossessed inventory was $19.4 million, $20.2 million and $16.4 million at June 30, 2019, December 31, 2018 and July 1, 2018, respectively, for which the fair value adjustment was $5.9 million, $9.7 million and $2.8 million, respectively. Fair value is estimated using Level 2 inputs based on the recent market values of repossessed inventory.
29

Table of Contents
Fair Value of Financial Instruments Measured at Cost
The carrying value of the Company's cash and cash equivalents and restricted cash approximates their fair values.
The following table summarizes the fair value and carrying value of the Company’s remaining financial instruments that are measured at cost or amortized cost (in thousands):

| June 30, 2019 |  | December 31, 2018 |  | July 1, 2018
| Fair Value |  | Carrying Value |  | Fair Value |  | Carrying Value |  | Fair Value |  | Carrying Value
Assets: |  |  |  |  |  |  |  |  |  |  |
Finance receivables, net | $ | 7,672,939 |  |  | $ | 7,594,405 |  |  | $ | 7,304,334 |  |  | $ | 7,221,931 |  |  | $ | 7,375,644 |  |  | $ | 7,313,202 |
Liabilities: |  |  |  |  |  |  |  |  |  |  |
Unsecured commercial paper | $ | 405,695 |  |  | $ | 405,695 |  |  | $ | 1,135,810 |  |  | $ | 1,135,810 |  |  | $ | 1,327,307 |  |  | $ | 1,327,307 |
Asset-backed U.S. commercial paper conduit facilities | $ | 464,136 |  |  | $ | 464,136 |  |  | $ | 582,717 |  |  | $ | 582,717 |  |  | $ | 300,000 |  |  | $ | 300,000 |
Asset-backed Canadian commercial paper conduit facility | $ | 148,740 |  |  | $ | 148,740 |  |  | $ | 155,951 |  |  | $ | 155,951 |  |  | $ | 166,638 |  |  | $ | 166,638 |
Medium-term notes | $ | 4,719,053 |  |  | $ | 4,687,660 |  |  | $ | 4,829,671 |  |  | $ | 4,887,007 |  |  | $ | 4,398,478 |  |  | $ | 4,435,449 |
Senior unsecured notes | $ | 756,243 |  |  | $ | 742,959 |  |  | $ | 707,198 |  |  | $ | 742,624 |  |  | $ | 719,152 |  |  | $ | 742,292 |
Asset-backed securitization debt | $ | 1,007,205 |  |  | $ | 1,002,869 |  |  | $ | 94,974 |  |  | $ | 95,167 |  |  | $ | 168,941 |  |  | $ | 169,430 |

Finance Receivables, Net – The carrying value of retail and wholesale finance receivables in the financial statements is amortized cost less an allowance for credit losses. The fair value of retail finance receivables is generally calculated by discounting future cash flows using an estimated discount rate that reflects current credit, interest rate and prepayment risks associated with similar types of instruments. Fair value is determined based on Level 3 inputs. The amortized cost basis of wholesale finance receivables approximates fair value because they either are short-term or have interest rates that adjust with changes in market interest rates.
Debt – The carrying value of debt in the financial statements is generally amortized cost, net of discounts and debt issuance costs. The carrying value of unsecured commercial paper calculated using Level 2 inputs approximates fair value due to its short maturity. The carrying value of debt provided under the U.S. Conduit Facilities and Canadian Conduit Facility calculated using Level 2 inputs approximates fair value since the interest rates charged under the facility are tied directly to market rates and fluctuate as market rates change. The fair values of the medium-term notes and senior unsecured notes are estimated based upon rates currently available for debt with similar terms and remaining maturities (Level 2 inputs). The fair value of the debt related to on-balance sheet asset-backed securitization transactions is estimated based on pricing currently available for transactions with similar terms and maturities (Level 2 inputs).
30

Table of Contents
15. Product Warranty and Recall Campaigns
The Company currently provides a standard two-year limited warranty on all new motorcycles sold worldwide, except for Japan, where the Company currently provides a standard three-year limited warranty on all new motorcycles sold. In addition, the Company provides a one-year warranty for Parts & Accessories (P&A). The warranty coverage for the retail customer generally begins when the product is sold to a retail customer. The Company accrues for future warranty claims using an estimated cost based primarily on historical Company claim information. Additionally, the Company has from time to time initiated certain voluntary recall campaigns. The Company accrues for the estimated cost associated with voluntary recalls in the period that management approves and commits to the recall. Changes in the Company’s warranty and recall liability were as follows (in thousands):

| Three months ended |  | Six months ended
| June 30, 2019 |  | July 1, 2018 |  | June 30, 2019 |  | July 1, 2018
Balance, beginning of period | $ | 122,387 |  |  | $ | 95,075 |  |  | $ | 131,740 |  |  | $ | 94,202 |
Warranties issued during the period | 17,350 |  |  | 16,904 |  |  | 28,967 |  |  | 31,510 |
Settlements made during the period | (26,768 | ) |  | (21,777 | ) |  | (46,385 | ) |  | (38,415 | )
Recalls and changes to pre-existing warranty liabilities | (4,165 | ) |  | (259 | ) |  | (5,518 | ) |  | 2,646 |
Balance, end of period | $ | 108,804 |  |  | $ | 89,943 |  |  | $ | 108,804 |  |  | $ | 89,943 |

The liability for recall campaigns was $47.6 million, $73.3 million and $27.4 million as of June 30, 2019, December 31, 2018 and July 1, 2018, respectively. The Company recorded supplier recoveries within operating expenses separate from the amounts disclosed above of $28.0 million for the six months ended June 30, 2019.
31

Table of Contents
16. Employee Benefit Plans
The Company has a defined benefit qualified pension plan and postretirement healthcare benefit plans that cover certain employees of the Motorcycles segment. The Company also has unfunded supplemental employee retirement plan agreements (SERPA) with certain employees which were instituted to replace benefits lost under the Tax Revenue Reconciliation Act of 1993. Service cost is allocated among Selling, administrative and engineering expense, Cost of goods sold and Inventory. Amounts capitalized in inventory are not significant. Non-service cost components of net periodic benefit cost are presented in Other income (expense), net. Components of net periodic benefit cost were as follows (in thousands):

| Three months ended |  | Six months ended
| June 30, 2019 |  | July 1, 2018 |  | June 30, 2019 |  | July 1, 2018
Pension and SERPA Benefits: |  |  |  |  |  |  |
Service cost | $ | 6,632 |  |  | $ | 8,063 |  |  | $ | 13,264 |  |  | $ | 16,218 |
Interest cost | 21,371 |  |  | 20,729 |  |  | 42,742 |  |  | 41,319 |
Expected return on plan assets | (35,581 | ) |  | (36,926 | ) |  | (71,162 | ) |  | (73,817 | )
Amortization of unrecognized: |  |  |  |  |  |  |
Prior service credit | (483 | ) |  | (105 | ) |  | (966 | ) |  | (211 | )
Net loss | 11,128 |  |  | 16,318 |  |  | 22,256 |  |  | 32,137 |
Curtailment loss | — |  |  | — |  |  | — |  |  | 1,018 |
Net periodic benefit cost | $ | 3,067 |  |  | $ | 8,079 |  |  | $ | 6,134 |  |  | $ | 16,664 |
Postretirement Healthcare Benefits: |  |  |  |  |  |  |
Service cost | $ | 1,185 |  |  | $ | 1,789 |  |  | $ | 2,369 |  |  | $ | 3,601 |
Interest cost | 2,938 |  |  | 2,886 |  |  | 5,876 |  |  | 5,783 |
Expected return on plan assets | (3,507 | ) |  | (3,541 | ) |  | (7,014 | ) |  | (7,082 | )
Amortization of unrecognized: |  |  |  |  |  |  |
Prior service credit | (595 | ) |  | (460 | ) |  | (1,190 | ) |  | (920 | )
Net loss | 69 |  |  | 454 |  |  | 138 |  |  | 908 |
Special retirement benefits | 1,583 |  |  | — |  |  | 1,583 |  |  | — |
Curtailment gain | (960 | ) |  | — |  |  | (960 | ) |  | — |
Net periodic benefit cost | $ | 713 |  |  | $ | 1,128 |  |  | $ | 802 |  |  | $ | 2,290 |

During the six months ended July 1, 2018, the qualified pension plan and certain postretirement healthcare plan assets and obligations were remeasured as a result of a curtailment of benefits related to the planned closure of the Company's motorcycle assembly plant in Kansas City, Missouri, discussed further in Note 4. As a result of the remeasurement, the Company recorded a benefit of $96.4 million before income taxes in other comprehensive income during the six months ended July 1, 2018.
There are no required or planned qualified pension plan contributions for 2019. The Company expects it will continue to make ongoing benefit payments under the SERPA and postretirement healthcare plans.
17. Commitments and Contingencies
The Company is subject to lawsuits and other claims related to environmental, product and other matters. In determining costs to accrue related to these items, the Company carefully analyzes cases and considers the likelihood of adverse judgments or outcomes, as well as the potential range of possible loss. Any amounts accrued for these matters are monitored on an ongoing basis and are updated based on new developments or new information as it becomes available for each matter.
32

Table of Contents
Environmental Protection Agency Notice:
In December 2009, the Company received formal, written requests for information from the United States Environmental Protection Agency (EPA) regarding: (i) certificates of conformity for motorcycle emissions and related designations and labels, (ii) aftermarket parts, and (iii) warranty claims on emissions related components. The Company promptly submitted written responses to the EPA’s inquiry and has engaged in information exchanges and discussions with the EPA. In August 2016, the Company entered into a consent decree with the EPA regarding these issues, and the consent decree was subsequently revised in July 2017 (the Settlement). In the Settlement, the Company agreed to, among other things, pay a fine, and not sell tuning products unless they are approved by the EPA or California Air Resources Board. In December 2017, the Department of Justice (DOJ), on behalf of the EPA, filed the Settlement with the U.S. District Court for the District of Columbia for the purpose of obtaining court approval of the Settlement. Three amicus briefs opposing portions of the Settlement were filed with the court by the deadline of January 31, 2018. On March 1, 2018, the Company and the DOJ each filed separate response briefs. The Company is awaiting the court's decision on whether or not to finalize the Settlement, and on February 8, 2019 the DOJ filed a status update reminding the court of the current status of the outstanding matter. The Company has an accrual associated with this matter which is included in Accrued liabilities on the consolidated balance sheets, and as a result, if it is finalized, the Settlement would not have a material adverse effect on the Company's financial condition or results of operations. The Settlement is not final until it is approved by the court, and if it is not approved by the court, the Company cannot reasonably estimate the impact of any remedies the EPA might seek beyond the Company's current reserve for this matter.
York Environmental Matters:
The Company is involved with government agencies and groups of potentially responsible parties related to a matter involving the cleanup of soil and groundwater contamination at its York, Pennsylvania facility. The York facility was formerly used by the U.S. Navy and AMF prior to the purchase of the York facility by the Company from AMF in 1981. The Company has been working with the Pennsylvania Department of Environmental Protection (PADEP) since 1986 and with the U.S. Environmental Protection Agency (EPA) in undertaking environmental investigation and remediation activities, including a site-wide remedial investigation/feasibility study (RI/FS).
In January 1995, the Company entered into a settlement agreement (the Agreement) with the Navy, and the parties amended the Agreement in 2013 to address ordnance and explosive waste. The Agreement calls for the Navy and the Company to contribute amounts into a trust equal to 53% and 47%, respectively, of costs associated with environmental investigation and remediation activities at the York facility (Response Costs). The trust administers the payment of the Response Costs incurred at the York facility as covered by the Agreement.
The Company has an accrual for its estimate of its share of the future Response Costs at the York facility which is included in Other long-term liabilities on the consolidated balance sheets. While the work on the RI/FS is now complete and the final remedy was proposed in late 2018, it has not yet been approved, and given the uncertainty that exists concerning the nature and scope of additional environmental remediation that may ultimately be required under the approved final remedy, the Company is unable to make a reasonable estimate of those additional costs, if any, that may result.
The estimate of the Company's future Response Costs that will be incurred at the York facility is based on reports of independent environmental consultants retained by the Company, the actual costs incurred to date, and the estimated costs to complete the necessary investigation and remediation activities.
Product Liability Matters:
The Company is involved in product liability suits related to the operation of its business. The Company accrues for claim exposures that are probable of occurrence and can be reasonably estimated. The Company also maintains insurance coverage for product liability exposures. The Company believes that its accruals and insurance coverage are adequate and that product liability suits will not have a material adverse effect on the Company’s consolidated financial statements.
33

Table of Contents
18. Accumulated Other Comprehensive Loss
The following tables set forth the changes in Accumulated other comprehensive loss (AOCL) (in thousands):

|  | Three months ended June 30, 2019
|  | Foreign currency translation adjustments |  | Derivative financial instruments |  | Pension and postretirement benefit plans |  | Total
Balance, beginning of period |  | $ | (49,277 | ) |  | $ | 1,344 |  |  | $ | (574,118 | ) |  | $ | (622,051 | )
Other comprehensive income (loss) before reclassifications |  | 11,152 |  |  | (8,791 | ) |  | — |  |  | 2,361 |
Income tax benefit |  | 118 |  |  | 1,990 |  |  | — |  |  | 2,108 |
Net other comprehensive income (loss) before reclassifications |  | 11,270 |  |  | (6,801 | ) |  | — |  |  | 4,469 |
Reclassifications: |  |  |  |  |  |  |  |
Net (gains) losses on derivative instruments |  | — |  |  | (6,708 | ) |  | — |  |  | (6,708 | )
Prior service credits(a) |  | — |  |  | — |  |  | (1,078 | ) |  | (1,078 | )
Actuarial losses(a) |  | — |  |  | — |  |  | 11,197 |  |  | 11,197 |
Total reclassifications before tax |  | — |  |  | (6,708 | ) |  | 10,119 |  |  | 3,411 |
Income tax benefit (expense) |  | — |  |  | 1,586 |  |  | (2,376 | ) |  | (790 | )
Net reclassifications |  | — |  |  | (5,122 | ) |  | 7,743 |  |  | 2,621 |
Other comprehensive income (loss) |  | 11,270 |  |  | (11,923 | ) |  | 7,743 |  |  | 7,090 |
Balance, end of period |  | $ | (38,007 | ) |  | $ | (10,579 | ) |  | $ | (566,375 | ) |  | $ | (614,961 | )
|  | Three months ended July 1, 2018
|  | Foreign currency translation adjustments |  | Derivative financial instruments |  | Pension and postretirement benefit plans |  | Total
Balance, beginning of period |  | $ | (14,937 | ) |  | $ | (16,489 | ) |  | $ | (375,178 | ) |  | $ | (406,604 | )
Other comprehensive (loss) income before reclassifications |  | (26,482 | ) |  | 31,794 |  |  | — |  |  | 5,312 |
Income tax expense |  | — |  |  | (7,476 | ) |  | — |  |  | (7,476 | )
Net other comprehensive (loss) income before reclassifications |  | (26,482 | ) |  | 24,318 |  |  | — |  |  | (2,164 | )
Reclassifications: |  |  |  |  |  |  |  |
Net (gains) losses on derivative instruments |  | — |  |  | (530 | ) |  | — |  |  | (530 | )
Prior service credits(a) |  | — |  |  | — |  |  | (565 | ) |  | (565 | )
Actuarial losses(a) |  | — |  |  | — |  |  | 16,772 |  |  | 16,772 |
Total reclassifications before tax |  | — |  |  | (530 | ) |  | 16,207 |  |  | 15,677 |
Income tax benefit (expense) |  | — |  |  | 132 |  |  | (3,805 | ) |  | (3,673 | )
Net reclassifications |  | — |  |  | (398 | ) |  | 12,402 |  |  | 12,004 |
Other comprehensive (loss) income |  | (26,482 | ) |  | 23,920 |  |  | 12,402 |  |  | 9,840 |
Balance, end of period |  | $ | (41,419 | ) |  | $ | 7,431 |  |  | $ | (362,776 | ) |  | $ | (396,764 | )

34

Table of Contents

|  | Six months ended June 30, 2019
|  | Foreign currency translation adjustments |  | Derivative financial instruments |  | Pension and postretirement benefit plans |  | Total
Balance, beginning of period |  | $ | (49,608 | ) |  | $ | 1,785 |  |  | $ | (581,861 | ) |  | $ | (629,684 | )
Other comprehensive income (loss) before reclassifications |  | 11,758 |  |  | (7,614 | ) |  | — |  |  | 4,144 |
Income tax (expense) benefit |  | (157 | ) |  | 1,676 |  |  | — |  |  | 1,519 |
Net other comprehensive income (loss) before reclassifications |  | 11,601 |  |  | (5,938 | ) |  | — |  |  | 5,663 |
Reclassifications: |  |  |  |  |  |  |  |
Net (gains) losses on derivative instruments |  | — |  |  | (8,423 | ) |  | — |  |  | (8,423 | )
Prior service credits(a) |  | — |  |  | — |  |  | (2,156 | ) |  | (2,156 | )
Actuarial losses(a) |  | — |  |  | — |  |  | 22,394 |  |  | 22,394 |
Total reclassifications before tax |  | — |  |  | (8,423 | ) |  | 20,238 |  |  | 11,815 |
Income tax benefit (expense) |  | — |  |  | 1,997 |  |  | (4,752 | ) |  | (2,755 | )
Net reclassifications |  | — |  |  | (6,426 | ) |  | 15,486 |  |  | 9,060 |
Other comprehensive income (loss) |  | 11,601 |  |  | (12,364 | ) |  | 15,486 |  |  | 14,723 |
Balance, end of period |  | $ | (38,007 | ) |  | $ | (10,579 | ) |  | $ | (566,375 | ) |  | $ | (614,961 | )

|  | Six months ended July 1, 2018
|  | Foreign currency translation adjustments |  | Derivative financial instruments |  | Pension and postretirement benefit plans |  | Total
Balance, beginning of period |  | $ | (21,852 | ) |  | $ | (17,254 | ) |  | $ | (460,943 | ) |  | $ | (500,049 | )
Other comprehensive (loss) income before reclassifications |  | (19,567 | ) |  | 25,888 |  |  | 96,374 |  |  | 102,695 |
Income tax expense |  | — |  |  | (6,089 | ) |  | (22,629 | ) |  | (28,718 | )
Net other comprehensive (loss) income before reclassifications |  | (19,567 | ) |  | 19,799 |  |  | 73,745 |  |  | 73,977 |
Reclassifications: |  |  |  |  |  |  |  |
Net (gains) losses on derivative instruments |  | — |  |  | 6,378 |  |  | — |  |  | 6,378 |
Prior service credits(a) |  | — |  |  | — |  |  | (1,131 | ) |  | (1,131 | )
Actuarial losses(a) |  | — |  |  | — |  |  | 33,045 |  |  | 33,045 |
Total reclassifications before tax |  | — |  |  | 6,378 |  |  | 31,914 |  |  | 38,292 |
Income tax expense |  | — |  |  | (1,492 | ) |  | (7,492 | ) |  | (8,984 | )
Net reclassifications |  | — |  |  | 4,886 |  |  | 24,422 |  |  | 29,308 |
Other comprehensive (loss) income |  | (19,567 | ) |  | 24,685 |  |  | 98,167 |  |  | 103,285 |
Balance, end of period |  | $ | (41,419 | ) |  | $ | 7,431 |  |  | $ | (362,776 | ) |  | $ | (396,764 | )

(a) | Amounts reclassified are included in the computation of net periodic benefit cost; refer to Note 16 for information related to pension and postretirement benefit plans

35

Table of Contents
19. Business Segments
Harley-Davidson, Inc. is the parent company for the groups of companies doing business as Harley-Davidson Motor Company (HDMC) and Harley-Davidson Financial Services (HDFS). The Company operates in two segments: the Motorcycles and Related Products (Motorcycles) segment and the Financial Services segment. The Company’s reportable segments are strategic business units that offer different products and services and are managed separately based on the fundamental differences in their operations. Selected segment information is set forth below (in thousands):

| Three months ended |  | Six months ended
| June 30, 2019 |  | July 1, 2018 |  | June 30, 2019 |  | July 1, 2018
Motorcycles and Related Products: |  |  |  |  |  |  |
Motorcycles revenue | $ | 1,434,004 |  |  | $ | 1,525,121 |  |  | $ | 2,629,641 |  |  | $ | 2,889,068 |
Gross profit | 454,738 |  |  | 532,085 |  |  | 802,177 |  |  | 1,005,858 |
Selling, administrative and engineering expense | 263,587 |  |  | 276,309 |  |  | 489,015 |  |  | 530,402 |
Restructuring expense | 10,423 |  |  | 12,370 |  |  | 24,053 |  |  | 59,212 |
Operating income from Motorcycles | 180,728 |  |  | 243,406 |  |  | 289,109 |  |  | 416,244 |
Financial Services: |  |  |  |  |  |  |
Financial Services revenue | 198,615 |  |  | 188,102 |  |  | 387,358 |  |  | 366,276 |
Financial Services expense | 123,086 |  |  | 107,561 |  |  | 253,098 |  |  | 222,156 |
Operating income from Financial Services | 75,529 |  |  | 80,541 |  |  | 134,260 |  |  | 144,120 |
Operating income | $ | 256,257 |  |  | $ | 323,947 |  |  | $ | 423,369 |  |  | $ | 560,364 |

20. Supplemental Consolidating Data
The supplemental consolidating data for the periods noted is presented for informational purposes. The supplemental consolidating data may be different than segment information presented elsewhere due to the allocation of intercompany eliminations to the reportable segments. All supplemental data is presented in thousands.

| Three months ended June 30, 2019
| HDMC Entities |  | HDFS Entities |  | Eliminations |  | Consolidated
Revenue: |  |  |  |  |  |  |
Motorcycles and Related Products | $ | 1,439,685 |  |  | $ | — |  |  | $ | (5,681 | ) |  | $ | 1,434,004 |
Financial Services | — |  |  | 196,197 |  |  | 2,418 |  |  | 198,615 |
Total revenue | 1,439,685 |  |  | 196,197 |  |  | (3,263 | ) |  | 1,632,619 |
Costs and expenses: |  |  |  |  |  |  |
Motorcycles and Related Products cost of goods sold | 978,761 |  |  | — |  |  | 505 |  |  | 979,266 |
Financial Services interest expense | — |  |  | 52,673 |  |  | — |  |  | 52,673 |
Financial Services provision for credit losses | — |  |  | 26,383 |  |  | — |  |  | 26,383 |
Selling, administrative and engineering expense | 267,777 |  |  | 43,586 |  |  | (3,746 | ) |  | 307,617 |
Restructuring expense | 10,423 |  |  | — |  |  | — |  |  | 10,423 |
Total costs and expenses | 1,256,961 |  |  | 122,642 |  |  | (3,241 | ) |  | 1,376,362 |
Operating income | 182,724 |  |  | 73,555 |  |  | (22 | ) |  | 256,257 |
Other income (expense), net | 4,037 |  |  | — |  |  | — |  |  | 4,037 |
Investment income | 48,571 |  |  | — |  |  | (45,000 | ) |  | 3,571 |
Interest expense | 7,784 |  |  | — |  |  | — |  |  | 7,784 |
Income before provision for income taxes | 227,548 |  |  | 73,555 |  |  | (45,022 | ) |  | 256,081 |
Provision for income taxes | 43,348 |  |  | 17,102 |  |  | — |  |  | 60,450 |
Net income | $ | 184,200 |  |  | $ | 56,453 |  |  | $ | (45,022 | ) |  | $ | 195,631 |

36

Table of Contents

| Six months ended June 30, 2019
| HDMC Entities |  | HDFS Entities |  | Eliminations |  | Consolidated
Revenue: |  |  |  |  |  |  |
Motorcycles and Related Products | $ | 2,639,694 |  |  | $ | — |  |  | $ | (10,053 | ) |  | $ | 2,629,641 |
Financial Services | — |  |  | 382,950 |  |  | 4,408 |  |  | 387,358 |
Total revenue | 2,639,694 |  |  | 382,950 |  |  | (5,645 | ) |  | 3,016,999 |
Costs and expenses: |  |  |  |  |  |  |
Motorcycles and Related Products cost of goods sold | 1,827,464 |  |  | — |  |  | — |  |  | 1,827,464 |
Financial Services interest expense | — |  |  | 104,997 |  |  | — |  |  | 104,997 |
Financial Services provision for credit losses | — |  |  | 60,874 |  |  | — |  |  | 60,874 |
Selling, administrative and engineering expense | 495,769 |  |  | 86,174 |  |  | (5,701 | ) |  | 576,242 |
Restructuring expense | 24,053 |  |  | — |  |  | — |  |  | 24,053 |
Total costs and expenses | 2,347,286 |  |  | 252,045 |  |  | (5,701 | ) |  | 2,593,630 |
Operating income | 292,408 |  |  | 130,905 |  |  | 56 |  |  | 423,369 |
Other income (expense), net | 8,697 |  |  | — |  |  | — |  |  | 8,697 |
Investment income | 99,929 |  |  | — |  |  | (90,000 | ) |  | 9,929 |
Interest expense | 15,515 |  |  | — |  |  | — |  |  | 15,515 |
Income before provision for income taxes | 385,519 |  |  | 130,905 |  |  | (89,944 | ) |  | 426,480 |
Provision for income taxes | 71,905 |  |  | 30,999 |  |  | — |  |  | 102,904 |
Net income | $ | 313,614 |  |  | $ | 99,906 |  |  | $ | (89,944 | ) |  | $ | 323,576 |

37

Table of Contents

| Three months ended July 1, 2018
| HDMC Entities |  | HDFS Entities |  | Eliminations |  | Consolidated
Revenue: |  |  |  |  |  |  |
Motorcycles and Related Products | $ | 1,528,045 |  |  | $ | — |  |  | $ | (2,924 | ) |  | $ | 1,525,121 |
Financial Services | — |  |  | 188,788 |  |  | (686 | ) |  | 188,102 |
Total revenue | 1,528,045 |  |  | 188,788 |  |  | (3,610 | ) |  | 1,713,223 |
Costs and expenses: |  |  |  |  |  |  |
Motorcycles and Related Products cost of goods sold | 993,036 |  |  | — |  |  | — |  |  | 993,036 |
Financial Services interest expense | — |  |  | 51,943 |  |  | — |  |  | 51,943 |
Financial Services provision for credit losses | — |  |  | 18,880 |  |  | — |  |  | 18,880 |
Selling, administrative and engineering expense | 276,827 |  |  | 39,663 |  |  | (3,443 | ) |  | 313,047 |
Restructuring expense | 12,370 |  |  | — |  |  | — |  |  | 12,370 |
Total costs and expenses | 1,282,233 |  |  | 110,486 |  |  | (3,443 | ) |  | 1,389,276 |
Operating income | 245,812 |  |  | 78,302 |  |  | (167 | ) |  | 323,947 |
Other income (expense), net | 645 |  |  | — |  |  | — |  |  | 645 |
Investment income | 2,533 |  |  | — |  |  | — |  |  | 2,533 |
Interest expense | 7,728 |  |  | — |  |  | — |  |  | 7,728 |
Income before provision for income taxes | 241,262 |  |  | 78,302 |  |  | (167 | ) |  | 319,397 |
Provision for income taxes | 59,683 |  |  | 17,376 |  |  | — |  |  | 77,059 |
Net income | $ | 181,579 |  |  | $ | 60,926 |  |  | $ | (167 | ) |  | $ | 242,338 |
| Six months ended July 1, 2018
| HDMC Entities |  | HDFS Entities |  | Eliminations |  | Consolidated
Revenue: |  |  |  |  |  |  |
Motorcycles and Related Products | $ | 2,894,291 |  |  | $ | — |  |  | $ | (5,223 | ) |  | $ | 2,889,068 |
Financial Services | — |  |  | 367,248 |  |  | (972 | ) |  | 366,276 |
Total revenue | 2,894,291 |  |  | 367,248 |  |  | (6,195 | ) |  | 3,255,344 |
Costs and expenses: |  |  |  |  |  |  |
Motorcycles and Related Products cost of goods sold | 1,883,210 |  |  | — |  |  | — |  |  | 1,883,210 |
Financial Services interest expense | — |  |  | 100,393 |  |  | — |  |  | 100,393 |
Financial Services provision for credit losses | — |  |  | 48,932 |  |  | — |  |  | 48,932 |
Selling, administrative and engineering expense | 531,228 |  |  | 78,054 |  |  | (6,049 | ) |  | 603,233 |
Restructuring expense | 59,212 |  |  | — |  |  | — |  |  | 59,212 |
Total costs and expenses | 2,473,650 |  |  | 227,379 |  |  | (6,049 | ) |  | 2,694,980 |
Operating income | 420,641 |  |  | 139,869 |  |  | (146 | ) |  | 560,364 |
Other income (expense), net | 865 |  |  | — |  |  | — |  |  | 865 |
Investment income | 113,736 |  |  | — |  |  | (110,000 | ) |  | 3,736 |
Interest expense | 15,418 |  |  | — |  |  | — |  |  | 15,418 |
Income before provision for income taxes | 519,824 |  |  | 139,869 |  |  | (110,146 | ) |  | 549,547 |
Provision for income taxes | 99,916 |  |  | 32,530 |  |  | — |  |  | 132,446 |
Net income | $ | 419,908 |  |  | $ | 107,339 |  |  | $ | (110,146 | ) |  | $ | 417,101 |

38

Table of Contents

| June 30, 2019
| HDMC Entities |  | HDFS Entities |  | Eliminations |  | Consolidated
ASSETS |  |  |  |  |  |  |
Current assets: |  |  |  |  |  |  |
Cash and cash equivalents | $ | 560,446 |  |  | $ | 364,192 |  |  | $ | — |  |  | $ | 924,638 |
Accounts receivable, net | 671,719 |  |  | — |  |  | (346,413 | ) |  | 325,306 |
Finance receivables, net | — |  |  | 2,362,125 |  |  | — |  |  | 2,362,125 |
Inventories | 470,610 |  |  | — |  |  | — |  |  | 470,610 |
Restricted cash | — |  |  | 82,248 |  |  | — |  |  | 82,248 |
Other current assets | 102,956 |  |  | 44,278 |  |  | — |  |  | 147,234 |
Total current assets | 1,805,731 |  |  | 2,852,843 |  |  | (346,413 | ) |  | 4,312,161 |
Finance receivables, net | — |  |  | 5,232,280 |  |  | — |  |  | 5,232,280 |
Property, plant and equipment, net | 801,871 |  |  | 54,127 |  |  | — |  |  | 855,998 |
Goodwill | 64,449 |  |  | — |  |  | — |  |  | 64,449 |
Deferred income taxes | 96,914 |  |  | 38,928 |  |  | (1,203 | ) |  | 134,639 |
Lease assets | 48,415 |  |  | 6,498 |  |  | — |  |  | 54,913 |
Other long-term assets | 157,061 |  |  | 20,159 |  |  | (91,344 | ) |  | 85,876 |
| $ | 2,974,441 |  |  | $ | 8,204,835 |  |  | $ | (438,960 | ) |  | $ | 10,740,316 |
LIABILITIES AND SHAREHOLDERS’ EQUITY |  |  |  |  |  |  |
Current liabilities: |  |  |  |  |  |  |
Accounts payable | $ | 302,137 |  |  | $ | 368,740 |  |  | $ | (346,413 | ) |  | $ | 324,464 |
Accrued liabilities | 497,019 |  |  | 118,256 |  |  | 630 |  |  | 615,905 |
Short-term debt | — |  |  | 405,695 |  |  | — |  |  | 405,695 |
Current portion of long-term debt, net | — |  |  | 2,396,188 |  |  | — |  |  | 2,396,188 |
Total current liabilities | 799,156 |  |  | 3,288,879 |  |  | (345,783 | ) |  | 3,742,252 |
Long-term debt, net | 742,959 |  |  | 3,907,217 |  |  | — |  |  | 4,650,176 |
Lease liabilities | 31,809 |  |  | 6,556 |  |  | — |  |  | 38,365 |
Pension liability | 92,750 |  |  | — |  |  | — |  |  | 92,750 |
Postretirement healthcare liability | 92,539 |  |  | — |  |  | — |  |  | 92,539 |
Other long-term liabilities | 171,509 |  |  | 39,314 |  |  | 2,770 |  |  | 213,593 |
Commitments and contingencies (Note 17) |  |  |  |  |  |  |
Shareholders’ equity | 1,043,719 |  |  | 962,869 |  |  | (95,947 | ) |  | 1,910,641 |
| $ | 2,974,441 |  |  | $ | 8,204,835 |  |  | $ | (438,960 | ) |  | $ | 10,740,316 |

39

Table of Contents

| December 31, 2018
| HDMC Entities |  | HDFS Entities |  | Eliminations |  | Consolidated
ASSETS |  |  |  |  |  |  |
Current assets: |  |  |  |  |  |  |
Cash and cash equivalents | $ | 544,548 |  |  | $ | 659,218 |  |  | $ | — |  |  | $ | 1,203,766 |
Marketable securities | 10,007 |  |  | — |  |  | — |  |  | 10,007 |
Accounts receivable, net | 425,727 |  |  | — |  |  | (119,253 | ) |  | 306,474 |
Finance receivables, net | — |  |  | 2,214,424 |  |  | — |  |  | 2,214,424 |
Inventories | 556,128 |  |  | — |  |  | — |  |  | 556,128 |
Restricted cash | — |  |  | 49,275 |  |  | — |  |  | 49,275 |
Other current assets | 91,172 |  |  | 59,070 |  |  | (5,874 | ) |  | 144,368 |
Total current assets | 1,627,582 |  |  | 2,981,987 |  |  | (125,127 | ) |  | 4,484,442 |
Finance receivables, net | — |  |  | 5,007,507 |  |  | — |  |  | 5,007,507 |
Property, plant and equipment, net | 847,176 |  |  | 56,956 |  |  | — |  |  | 904,132 |
Goodwill | 55,048 |  |  | — |  |  | — |  |  | 55,048 |
Deferred income taxes | 105,388 |  |  | 37,603 |  |  | (1,527 | ) |  | 141,464 |
Other long-term assets | 144,122 |  |  | 18,680 |  |  | (89,731 | ) |  | 73,071 |
| $ | 2,779,316 |  |  | $ | 8,102,733 |  |  | $ | (216,385 | ) |  | $ | 10,665,664 |
LIABILITIES AND SHAREHOLDERS’ EQUITY |  |  |  |  |  |  |
Current liabilities: |  |  |  |  |  |  |
Accounts payable | $ | 258,587 |  |  | $ | 145,527 |  |  | $ | (119,253 | ) |  | $ | 284,861 |
Accrued liabilities | 496,643 |  |  | 110,063 |  |  | (5,576 | ) |  | 601,130 |
Short-term debt | — |  |  | 1,135,810 |  |  | — |  |  | 1,135,810 |
Current portion of long-term debt, net | — |  |  | 1,575,799 |  |  | — |  |  | 1,575,799 |
Total current liabilities | 755,230 |  |  | 2,967,199 |  |  | (124,829 | ) |  | 3,597,600 |
Long-term debt, net | 742,624 |  |  | 4,145,043 |  |  | — |  |  | 4,887,667 |
Pension liability | 107,776 |  |  | — |  |  | — |  |  | 107,776 |
Postretirement healthcare liability | 94,453 |  |  | — |  |  | — |  |  | 94,453 |
Other long-term liabilities | 164,243 |  |  | 37,142 |  |  | 2,834 |  |  | 204,219 |
Commitments and contingencies (Note 17) |  |  |  |  |  |  |
Shareholders’ equity | 914,990 |  |  | 953,349 |  |  | (94,390 | ) |  | 1,773,949 |
| $ | 2,779,316 |  |  | $ | 8,102,733 |  |  | $ | (216,385 | ) |  | $ | 10,665,664 |

40

Table of Contents

| July 1, 2018
| HDMC Entities |  | HDFS Entities |  | Eliminations |  | Consolidated
ASSETS |  |  |  |  |  |  |
Current assets: |  |  |  |  |  |  |
Cash and cash equivalents | $ | 627,783 |  |  | $ | 350,966 |  |  | $ | — |  |  | $ | 978,749 |
Accounts receivable, net | 669,266 |  |  | — |  |  | (333,672 | ) |  | 335,594 |
Finance receivables, net | — |  |  | 2,252,956 |  |  | — |  |  | 2,252,956 |
Inventories | 465,373 |  |  | — |  |  | — |  |  | 465,373 |
Restricted cash | — |  |  | 44,386 |  |  | — |  |  | 44,386 |
Other current assets | 124,521 |  |  | 41,841 |  |  | — |  |  | 166,362 |
Total current assets | 1,886,943 |  |  | 2,690,149 |  |  | (333,672 | ) |  | 4,243,420 |
Finance receivables, net | — |  |  | 5,060,246 |  |  | — |  |  | 5,060,246 |
Property, plant and equipment, net | 854,681 |  |  | 49,432 |  |  | — |  |  | 904,113 |
Prepaid pension costs | 131,497 |  |  | — |  |  | — |  |  | 131,497 |
Goodwill | 55,451 |  |  | — |  |  | — |  |  | 55,451 |
Deferred income taxes | 27,043 |  |  | 41,696 |  |  | (1,234 | ) |  | 67,505 |
Other long-term assets | 151,691 |  |  | 19,999 |  |  | (87,900 | ) |  | 83,790 |
| $ | 3,107,306 |  |  | $ | 7,861,522 |  |  | $ | (422,806 | ) |  | $ | 10,546,022 |
LIABILITIES AND SHAREHOLDERS’ EQUITY |  |  |  |  |  |  |
Current liabilities: |  |  |  |  |  |  |
Accounts payable | $ | 262,562 |  |  | $ | 358,324 |  |  | $ | (333,672 | ) |  | $ | 287,214 |
Accrued liabilities | 481,402 |  |  | 90,416 |  |  | 622 |  |  | 572,440 |
Short-term debt | — |  |  | 1,327,307 |  |  | — |  |  | 1,327,307 |
Current portion of long-term debt, net | — |  |  | 945,463 |  |  | — |  |  | 945,463 |
Total current liabilities | 743,964 |  |  | 2,721,510 |  |  | (333,050 | ) |  | 3,132,424 |
Long-term debt, net | 742,292 |  |  | 4,126,054 |  |  | — |  |  | 4,868,346 |
Pension liability | 55,819 |  |  | — |  |  | — |  |  | 55,819 |
Postretirement healthcare liability | 113,464 |  |  | — |  |  | — |  |  | 113,464 |
Other long-term liabilities | 174,412 |  |  | 36,997 |  |  | 3,034 |  |  | 214,443 |
Commitments and contingencies (Note 17) |  |  |  |  |  |  |
Shareholders’ equity | 1,277,355 |  |  | 976,961 |  |  | (92,790 | ) |  | 2,161,526 |
| $ | 3,107,306 |  |  | $ | 7,861,522 |  |  | $ | (422,806 | ) |  | $ | 10,546,022 |

41

Table of Contents

| Six months ended June 30, 2019
| HDMC Entities |  | HDFS Entities |  | Eliminations |  | Consolidated
Cash flows from operating activities: |  |  |  |  |  |  |
Net income | $ | 313,614 |  |  | $ | 99,906 |  |  | $ | (89,944 | ) |  | $ | 323,576 |
Adjustments to reconcile net income to net cash provided by operating activities: |  |  |  |  |  |  |
Depreciation and amortization of intangibles | 121,026 |  |  | 4,360 |  |  | — |  |  | 125,386 |
Amortization of deferred loan origination costs | — |  |  | 38,036 |  |  | — |  |  | 38,036 |
Amortization of financing origination fees | 335 |  |  | 4,187 |  |  | — |  |  | 4,522 |
Provision for long-term employee benefits | 6,936 |  |  | — |  |  | — |  |  | 6,936 |
Employee benefit plan contributions and payments | (3,637 | ) |  | — |  |  | — |  |  | (3,637 | )
Stock compensation expense | 15,672 |  |  | 1,613 |  |  | — |  |  | 17,285 |
Net change in wholesale finance receivables related to sales | — |  |  | — |  |  | (167,594 | ) |  | (167,594 | )
Provision for credit losses | — |  |  | 60,874 |  |  | — |  |  | 60,874 |
Deferred income taxes | 5,928 |  |  | (236 | ) |  | (324 | ) |  | 5,368 |
Other, net | (8,545 | ) |  | (1,876 | ) |  | (56 | ) |  | (10,477 | )
Changes in current assets and liabilities: |  |  |  |  |  |  |
Accounts receivable, net | (244,752 | ) |  | — |  |  | 227,160 |  |  | (17,592 | )
Finance receivables - accrued interest and other | — |  |  | (4,963 | ) |  | — |  |  | (4,963 | )
Inventories | 88,146 |  |  | — |  |  | — |  |  | 88,146 |
Accounts payable and accrued liabilities | 21,336 |  |  | 221,959 |  |  | (208,925 | ) |  | 34,370 |
Derivative instruments | 4,291 |  |  | 61 |  |  | — |  |  | 4,352 |
Other | (15,573 | ) |  | 13,091 |  |  | (5,874 | ) |  | (8,356 | )
Total adjustments | (8,837 | ) |  | 337,106 |  |  | (155,613 | ) |  | 172,656 |
Net cash provided by operating activities | 304,777 |  |  | 437,012 |  |  | (245,557 | ) |  | 496,232 |

42

Table of Contents

| Six months ended June 30, 2019
| HDMC Entities |  | HDFS Entities |  | Eliminations |  | Consolidated
Cash flows from investing activities: |  |  |  |  |  |  |
Capital expenditures | (81,698 | ) |  | (1,531 | ) |  | — |  |  | (83,229 | )
Origination of finance receivables | — |  |  | (3,936,208 | ) |  | 1,871,309 |  |  | (2,064,899 | )
Collections on finance receivables | — |  |  | 3,484,581 |  |  | (1,715,752 | ) |  | 1,768,829 |
Sales and redemptions of marketable securities | 10,007 |  |  | — |  |  | — |  |  | 10,007 |
Acquisition of business | (7,000 | ) |  | — |  |  | — |  |  | (7,000 | )
Other | 11,717 |  |  | — |  |  | — |  |  | 11,717 |
Net cash used by investing activities | (66,974 | ) |  | (453,158 | ) |  | 155,557 |  |  | (364,575 | )
Cash flows from financing activities: |  |  |  |  |  |  |
Proceeds from issuance of medium-term notes | — |  |  | 546,655 |  |  | — |  |  | 546,655 |
Repayments of medium-term notes | — |  |  | (750,000 | ) |  | — |  |  | (750,000 | )
Proceeds from securitization debt | — |  |  | 1,021,353 |  |  | — |  |  | 1,021,353 |
Repayments of securitization debt | — |  |  | (113,806 | ) |  | — |  |  | (113,806 | )
Borrowings of asset-backed commercial paper | — |  |  | 23,373 |  |  | — |  |  | 23,373 |
Repayments of asset-backed commercial paper | — |  |  | (155,286 | ) |  | — |  |  | (155,286 | )
Net decrease in credit facilities and unsecured commercial paper | — |  |  | (728,606 | ) |  | — |  |  | (728,606 | )
Dividends paid | (120,841 | ) |  | (90,000 | ) |  | 90,000 |  |  | (120,841 | )
Purchase of common stock for treasury | (104,621 | ) |  | — |  |  | — |  |  | (104,621 | )
Issuance of common stock under employee stock option plans | 833 |  |  | — |  |  | — |  |  | 833 |
Net cash used by financing activities | (224,629 | ) |  | (246,317 | ) |  | 90,000 |  |  | (380,946 | )
Effect of exchange rate changes on cash, cash equivalents and restricted cash | 2,724 |  |  | 715 |  |  | — |  |  | 3,439 |
Net increase (decrease) in cash, cash equivalents and restricted cash | $ | 15,898 |  |  | $ | (261,748 | ) |  | $ | — |  |  | $ | (245,850 | )
Cash, cash equivalents and restricted cash: |  |  |  |  |  |  |
Cash, cash equivalents and restricted cash—beginning of period | $ | 544,548 |  |  | $ | 715,200 |  |  | $ | — |  |  | $ | 1,259,748 |
Net increase (decrease) in cash, cash equivalents and restricted cash | 15,898 |  |  | (261,748 | ) |  | — |  |  | (245,850 | )
Cash, cash equivalents and restricted cash—end of period | $ | 560,446 |  |  | $ | 453,452 |  |  | $ | — |  |  | $ | 1,013,898 |

43

Table of Contents

| Six months ended July 1, 2018
| HDMC Entities |  | HDFS Entities |  | Eliminations |  | Consolidated
Cash flows from operating activities: |  |  |  |  |  |  |
Net income | $ | 419,908 |  |  | $ | 107,339 |  |  | $ | (110,146 | ) |  | $ | 417,101 |
Adjustments to reconcile net income to net cash provided by operating activities: |  |  |  |  |  |  |
Depreciation and amortization of intangibles | 127,935 |  |  | 2,126 |  |  | — |  |  | 130,061 |
Amortization of deferred loan origination costs | — |  |  | 39,396 |  |  | — |  |  | 39,396 |
Amortization of financing origination fees | 331 |  |  | 3,802 |  |  | — |  |  | 4,133 |
Provision for long-term employee benefits | 18,954 |  |  | — |  |  | — |  |  | 18,954 |
Employee benefit plan contributions and payments | (6,422 | ) |  | — |  |  | — |  |  | (6,422 | )
Stock compensation expense | 17,229 |  |  | 1,852 |  |  | — |  |  | 19,081 |
Net change in wholesale finance receivables related to sales | — |  |  | — |  |  | (171,195 | ) |  | (171,195 | )
Provision for credit losses | — |  |  | 48,932 |  |  | — |  |  | 48,932 |
Deferred income taxes | (443 | ) |  | 2,043 |  |  | (85 | ) |  | 1,515 |
Other, net | 20,993 |  |  | (245 | ) |  | 146 |  |  | 20,894 |
Changes in current assets and liabilities: |  |  |  |  |  |  |
Accounts receivable, net | (194,831 | ) |  | — |  |  | 179,949 |  |  | (14,882 | )
Finance receivables - accrued interest and other | — |  |  | 4,228 |  |  | — |  |  | 4,228 |
Inventories | 63,957 |  |  | — |  |  | — |  |  | 63,957 |
Accounts payable and accrued liabilities | 137,644 |  |  | 192,410 |  |  | (168,953 | ) |  | 161,101 |
Derivative instruments | (205 | ) |  | 69 |  |  | — |  |  | (136 | )
Other | 2,924 |  |  | 1,884 |  |  | (5,667 | ) |  | (859 | )
Total adjustments | 188,066 |  |  | 296,497 |  |  | (165,805 | ) |  | 318,758 |
Net cash provided by operating activities | 607,974 |  |  | 403,836 |  |  | (275,951 | ) |  | 735,859 |

44

Table of Contents

| Six months ended July 1, 2018
| HDMC Entities |  | HDFS Entities |  | Eliminations |  | Consolidated
Cash flows from investing activities: |  |  |  |  |  |  |
Capital expenditures | (63,236 | ) |  | (6,057 | ) |  | — |  |  | (69,293 | )
Origination of finance receivables | — |  |  | (4,046,125 | ) |  | 2,046,339 |  |  | (1,999,786 | )
Collections on finance receivables | — |  |  | 3,593,272 |  |  | (1,880,388 | ) |  | 1,712,884 |
Other | (11,758 | ) |  | — |  |  | — |  |  | (11,758 | )
Net cash used by investing activities | (74,994 | ) |  | (458,910 | ) |  | 165,951 |  |  | (367,953 | )
Cash flows from financing activities: |  |  |  |  |  |  |
Proceeds from issuance of medium-term notes | — |  |  | 1,144,018 |  |  | — |  |  | 1,144,018 |
Repayments of medium-term notes | — |  |  | (877,488 | ) |  | — |  |  | (877,488 | )
Repayments of securitization debt | — |  |  | (183,453 | ) |  | — |  |  | (183,453 | )
Borrowings of asset-backed commercial paper | — |  |  | 120,903 |  |  | — |  |  | 120,903 |
Repayments of asset-backed commercial paper | — |  |  | (100,660 | ) |  | — |  |  | (100,660 | )
Net increase in credit facilities and unsecured commercial paper | — |  |  | 56,280 |  |  | — |  |  | 56,280 |
Dividends paid | (124,680 | ) |  | (110,000 | ) |  | 110,000 |  |  | (124,680 | )
Purchase of common stock for treasury | (111,227 | ) |  | — |  |  | — |  |  | (111,227 | )
Issuance of common stock under employee stock option plans | 1,965 |  |  | — |  |  | — |  |  | 1,965 |
Net cash (used by) provided by financing activities | (233,942 | ) |  | 49,600 |  |  | 110,000 |  |  | (74,342 | )
Effect of exchange rate changes on cash, cash equivalents and restricted cash | (9,441 | ) |  | (650 | ) |  | — |  |  | (10,091 | )
Net increase (decrease) in cash, cash equivalents and restricted cash | $ | 289,597 |  |  | $ | (6,124 | ) |  | $ | — |  |  | $ | 283,473 |
Cash, cash equivalents and restricted cash: |  |  |  |  |  |  |
Cash, cash equivalents and restricted cash—beginning of period | $ | 338,186 |  |  | $ | 408,024 |  |  | $ | — |  |  | $ | 746,210 |
Net increase (decrease) in cash, cash equivalents and restricted cash | 289,597 |  |  | (6,124 | ) |  | — |  |  | 283,473 |
Cash, cash equivalents and restricted cash—end of period | $ | 627,783 |  |  | $ | 401,900 |  |  | $ | — |  |  | $ | 1,029,683 |

45

Table of Contents
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Harley-Davidson, Inc. is the parent company of Harley-Davidson Motor Company (HDMC) and Harley-Davidson Financial Services (HDFS). Unless the context otherwise requires, all references to the "Company" include Harley-Davidson, Inc. and all its subsidiaries. The Company operates in two segments: Motorcycles and Related Products (Motorcycles) and Financial Services. The Company’s reportable segments are strategic business units that offer different products and services and are managed separately based on the fundamental differences in their operations.
The Motorcycles segment consists of HDMC which designs, manufactures and sells at wholesale on-road Harley-Davidson motorcycles as well as a line of motorcycle parts, accessories, general merchandise and related services. The Company's products are sold to retail customers primarily through a network of independent dealers. The Company conducts business on a global basis, with sales in the United States, Canada, Latin America, Europe/Middle East/Africa (EMEA) and the Asia Pacific region.
The Financial Services segment consists of HDFS which is engaged in the business of financing and servicing wholesale inventory receivables and retail consumer loans, primarily for the purchase of Harley-Davidson motorcycles. HDFS also works with certain unaffiliated insurance companies to provide motorcycle insurance and protection products to motorcycle owners. HDFS conducts business principally in the United States and Canada.
The “% Change” figures included in the “Results of Operations” section were calculated using unrounded dollar amounts and may differ from calculations using the rounded dollar amounts presented.
(1) Note Regarding Forward-Looking Statements
The Company intends that certain matters discussed in this report are “forward-looking statements” intended to qualify for the safe harbor from liability established by the Private Securities Litigation Reform Act of 1995. These forward-looking statements can generally be identified as such by reference to this footnote or because the context of the statement will include words such as the Company “believes,” “anticipates,” “expects,” “plans,” or “estimates” or words of similar meaning. Similarly, statements that describe future plans, objectives, outlooks, targets, guidance or goals are also forward-looking statements. Such forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from those anticipated as of the date of this report. Certain of such risks and uncertainties are described in close proximity to such statements or elsewhere in this report, including under the caption “Cautionary Statements” and in Item 1A. Risk Factors of the Company’s Annual Report on Form 10-K for the year ended December 31, 2018. Shareholders, potential investors, and other readers are urged to consider these factors in evaluating the forward-looking statements and are cautioned not to place undue reliance on such forward-looking statements. The forward-looking statements included in the Overview and Outlook sections are only made as of July 23, 2019 and the remaining forward-looking statements in this report are made as of the date of the filing of this report (August 8, 2019), and the Company disclaims any obligation to publicly update such forward-looking statements to reflect subsequent events or circumstances.
Overview(1)
The Company’s net income was $195.6 million, or $1.23 per diluted share, for the second quarter of 2019 compared to $242.3 million, or $1.45 per diluted share, in the second quarter of 2018. Operating income from the Motorcycles segment decreased $62.7 million compared to the prior year second quarter and was impacted by lower shipments, unfavorable mix and incremental tariffs, partially offset by lower operating expenses. Operating income from the Financial Services segment in the second quarter of 2019 was $75.5 million, down 6.2% compared to the year-ago quarter on a higher provision for credit losses and higher operating expenses.
Worldwide dealer retail sales of new Harley-Davidson motorcycles in the second quarter of 2019 were down 8.4% compared to the second quarter of 2018. Retail sales were down 8.0% in the U.S. and down 8.9% in international markets compared to the prior year second quarter. U.S. retail sales in the first half of 2019 continued to be impacted by weak industry results, but remained in line with the Company's expectations. International retail sales during the second quarter of 2019 were adversely impacted by weak performance in the Company's developed markets, and through the first six months of 2019, were below the Company's expectations.
In the near term, the Company is addressing the softness it is experiencing in the U.S. and its developed international markets by continuing to aggressively manage supply in line with demand and increasing marketing investments to encourage trial and increase conversion to sale. In addition, the Company expects to launch its new model-year 2020 motorcycles in the third quarter of 2019, including LiveWire TM, the Company's first electric motorcycle.
46

Table of Contents
The Company also continues to invest in its strategy to build the next generation of Harley-Davidson riders. Through 2022, the More Roads to Harley-Davidson (More Roads) plan is aimed at stabilizing the Company's core business in the U.S. as it grows ridership globally. The Company believes the More Roads plan is building the proper foundation and driving the fundamentals to help steer the U.S. industry back to growth and drive Company growth across its international markets. The More Roads plan through 2022 includes three growth catalysts:

• | New Products - keep current riders engaged and inspire new riders by extending heavyweight leadership and expanding into new markets and segments

• | Broader Access - meet customers where they are and how they want to engage with a multi-channel retail experience

• | Stronger Dealers - drive a performance framework to improve dealer financial strength and the Harley-Davidson customer experience

Outlook(1)
On July 23, 2019, the Company provided the following information concerning its expectations for the remainder of 2019:
Motorcycles and Related Products Segment - Full Year
In the second quarter of 2019, the Company obtained regulatory approvals that allow it to supply its European Union (EU) markets with Softail® and Sportster® motorcycles produced at its Thailand operations at reduced tariff rates. This will result in a reduction in tariffs on these motorcycles, from the rate of 31% currently levied on motorcycles sourced from the Company's U.S. facilities to 6%. The Company expects to obtain similar approvals for its non-Trike Touring motorcycles later this year.
The regulatory approval process took considerably longer than the Company expected, and the delay is among the factors that will adversely impact the Company's 2019 shipment plans and operating income expectations. The Company expects to begin production of lower-tariff motorcycles for the EU markets at its Thailand facility in late October 2019. The transition to Thailand-sourced product for the EU will result in a temporary supply constraint as higher-tariff motorcycle inventory is reduced and subsequently replenished with lower-tariff motorcycle inventory. This inventory transition was originally expected to occur in the third quarter of 2019 allowing the Company to begin wholesaling lower-tariff motorcycles in the EU in the fourth quarter of 2019. However, given the delay in obtaining regulatory approvals, this transition and related supply constraint are now planned for the end of 2019. As a result, the Company expects to ship fewer motorcycles to its European dealers in the fourth quarter of 2019 than originally planned. The Company expects Company inventory and dealer inventory in Europe to be down approximately 1,200 and 2,000 motorcycles, respectively, at the end of 2019 compared to its original plan. The Company expects wholesale shipments of lower-tariff motorcycles in the EU to begin early in the second quarter of 2020.
Given the delay in obtaining regulatory approvals and softer than expected European retail sales, the Company has lowered its 2019 full year shipment guidance range to 212,000 to 217,000 units, down from its previous expectation of 217,000 to 222,000 units. The Company continues to expect the U.S. industry to decline in 2019, but at a more tempered pace than in 2018. However, the Company now expects international retail sales to decline during 2019. The Company continues to expect year-end U.S. dealer inventory of new motorcycles to be down compared to 2018.
Full year 2019 incremental tariff costs are now expected to be approximately $100 million, down compared to the Company's previous estimate of $100 to $120 million. Incremental tariff costs include incremental EU and China tariffs imposed on the Company's products shipped from the U.S., as well as incremental U.S. tariffs on certain items imported from certain international markets. Incremental tariff costs exclude higher metals cost resulting from the U.S. steel and aluminum tariffs. The lower expected incremental tariff cost is due to lower planned wholesale shipments in the EU resulting from constrained supply and lower demand in Europe.
The Company continues to expect 2019 Motorcycles segment gross margin as a percent of revenue to be lower than 2018 driven by the significant increase in incremental tariff costs, lower shipment volumes and unfavorable product mix, partially offset by aggressive cost management, including the benefit of $25 million to $30 million of savings from the Company's Manufacturing Optimization Plan. Refer to "Restructuring Plan Costs and Savings" below for further information regarding the Manufacturing Optimization Plan.
The Company expects selling, administrative and engineering expenses for the Motorcycles segment to be lower in 2019 behind aggressive cost management and lower recall costs.
The Company's previous estimate of Motorcycles segment operating income anticipated that a portion of the incremental tariff costs noted above would be mitigated in late 2019. However, given the delay in obtaining regulatory approvals, the Company does not expect to benefit from reduced tariff rates until early in the second quarter of 2020. In addition, the
47

Table of Contents
Company incurred costs associated with idle manufacturing capacity in Thailand as it awaited regulatory approvals, as well as costs to prepare alternative tariff mitigation plans in the event regulatory approvals allowing it to supply its EU markets with motorcycles produced at its Thailand operations were not obtained. Given the impact of these additional costs combined with the lower expectation for wholesale shipments, the Company has reduced its 2019 full year Motorcycles segment operating margin guidance to 6% to 7% from its previous guidance of 8% to 9%.
Motorcycles and Related Products Segment - Third Quarter
In the third quarter of 2019, the Company expects to ship between 43,000 and 48,000 motorcycles. Motorcycles segment operating margin as a percent of revenue is expected to be down approximately 3 percentage points compared to the third quarter of 2018 driven by lower planned shipments, higher incremental tariff costs and higher selling, administrative and engineering expenses behind increased marketing costs. The Company expects to incur restructuring expenses and temporary inefficiencies associated with the Manufacturing Optimization Plan of $10 million in the third quarter of 2019. Refer to "Restructuring Plan Costs and Savings" below for further information regarding the Manufacturing Optimization Plan.
Financial Services Segment
The Company expects Financial Services segment operating income in 2019 to be down compared to 2018 driven by higher credit losses and higher depreciation associated with its new loan management system which went into service in January 2019.
Harley-Davidson, Inc.
Capital expenditures in 2019 are expected to be $225 million to $245 million, which includes approximately $20 million to support the Manufacturing Optimization Plan. The Company anticipates it will have the ability to fund all capital expenditures in 2019 with cash flows generated by operations.
The Company expects its 2019 full year effective tax rate will be approximately 24% to 25%. This guidance excludes the effect of potential future adjustments, including items associated with any potential new tax legislation or audit settlements.
Restructuring Plan Costs and Savings(1)
In January 2018, the Company commenced a significant, multi-year Manufacturing Optimization Plan anchored by the consolidation of its final assembly plant in Kansas City, Missouri into its plant in York, Pennsylvania. The consolidation of operations included the elimination of approximately 800 jobs at the Kansas City facility and the addition of approximately 450 jobs at the York facility through 2019 (Manufacturing Optimization Plan). The Manufacturing Optimization Plan also included the closure of the Company's wheel operations in Adelaide, Australia, resulting in the elimination of approximately 90 jobs.
In November 2018, the Company implemented a workforce reorganization plan (Reorganization Plan). As a result, approximately 70 employees left the Company on an involuntary basis.
48

Table of Contents
The following table summarizes the 2018 actual costs and the expected costs and savings associated with these plans as of July 23, 2019 (dollars in millions):

| 2018 Actual |  | 2019 Estimated |  | 2020 Estimated |  | Total
Manufacturing Optimization Plan |  |  |  |  |  |  |
Cost related to temporary inefficiencies | $12.9 |  | $10 - $15 |  | n/a |  | $23 - $28
Restructuring expenses | $89.5 |  | $30 - $35 |  | n/a |  | $119 - $124
| $102.4 |  | $40 - $50 |  |  |  | $142 - $152
% cash | 70% |  | 70% |  |  |  | 70%
Reorganization Plan |  |  |  |  |  |  |
Restructuring expenses | $3.9 |  | $- |  |  |  | $4
% cash | 100% |  | 100% |  |  |  | 100%
Annual cash savings |  |  | 2019 Estimated |  | 2020 Estimated |  | Annual Ongoing
Manufacturing Optimization Plan |  |  | $25 - $30 |  | $45 - $50 |  | $65 - $75
Reorganization Plan |  |  | $7 |  | $7 |  | $7

Through the six months ended June 30, 2019, the Motorcycles segment incurred restructuring expenses and other costs related to temporary inefficiencies of $24.4 million and $7.6 million, respectively relating to the Manufacturing Optimization Plan.
The current estimated cost of the Manufacturing Optimization Plan of $142 million to $152 million reflects a $10 million decrease from the Company's previous estimate. The total expected restructuring expenses for the Manufacturing Optimization Plan include the estimated cost of employee termination benefits, accelerated depreciation, and other project implementation costs of $38 million to $40 million, $48 million to $49 million and $33 million to $35 million, respectively. The timing of cash payments for restructuring costs may not occur in the same fiscal period that the Company records the expense.
Refer to Note 4 of the Notes to Consolidated Financial Statements for additional information concerning restructuring expenses. The Company expects total capital expenditures of $65 million associated with the Manufacturing Optimization Plan through 2019, including $20 million in 2019.
Results of Operations for the Three Months Ended June 30, 2019
Compared to the Three Months Ended July 1, 2018
Consolidated Results

| Three months ended |  |  |  |
(in thousands, except earnings per share) | June 30, 2019 |  | July 1, 2018 |  | (Decrease) Increase |  | % Change
Operating income from Motorcycles and Related Products | $ | 180,728 |  |  | $ | 243,406 |  |  | $ | (62,678 | ) |  | (25.8 | )%
Operating income from Financial Services | 75,529 |  |  | 80,541 |  |  | (5,012 | ) |  | (6.2 | )
Operating income | 256,257 |  |  | 323,947 |  |  | (67,690 | ) |  | (20.9 | )
Other income (expense), net | 4,037 |  |  | 645 |  |  | 3,392 |  |  | 525.9 |
Investment income | 3,571 |  |  | 2,533 |  |  | 1,038 |  |  | 41.0 |
Interest expense | 7,784 |  |  | 7,728 |  |  | 56 |  |  | 0.7 |
Income before provision for income taxes | 256,081 |  |  | 319,397 |  |  | (63,316 | ) |  | (19.8 | )
Provision for income taxes | 60,450 |  |  | 77,059 |  |  | (16,609 | ) |  | (21.6 | )
Net income | $ | 195,631 |  |  | $ | 242,338 |  |  | $ | (46,707 | ) |  | (19.3 | )%
Diluted earnings per share | $ | 1.23 |  |  | $ | 1.45 |  |  | $ | (0.22 | ) |  | (15.2 | )%

Consolidated operating income was down $67.7 million in the second quarter of 2019, or 20.9%, compared to the same period last year. Operating income from the Motorcycles segment declined $62.7 million, or 25.8%, compared to the second quarter of 2018, and operating income from the Financial Services segment decreased $5.0 million, or 6.2%, compared to the second quarter of 2018. Please refer to the “Motorcycles and Related Products Segment” and “Financial Services Segment” discussions following for a more detailed discussion of the factors affecting operating income.
49

Table of Contents
Other income in the second quarter was favorably impacted by lower amortization of actuarial losses related to the Company's defined benefit plans.
The effective income tax rate for the second quarter of 2019 was 23.6% compared to 24.1% for the second quarter of 2018. The lower effective income tax rate was primarily due to favorable discrete income tax adjustments recorded in the second quarter of 2019.
Diluted earnings per share were $1.23 in the second quarter of 2019, down 15.2% from the same period in the prior year. The decrease in diluted earnings per share was driven by a 19.3% decrease in net income offsetting the benefit of lower diluted weighted average shares outstanding. Diluted weighted average shares outstanding decreased from 167.2 million in the second quarter of 2018 to 159.4 million in the second quarter of 2019, driven by the Company's repurchases of common stock. Please refer to "Liquidity and Capital Resources" for additional information concerning the Company's share repurchase activity.
Harley-Davidson Motorcycle Retail Sales(a)
The following table includes retail unit sales of Harley-Davidson motorcycles:

| Three months ended |  |  |  |
| June 30, 2019 |  | June 30, 2018 |  | (Decrease) Increase |  | % Change
United States | 42,762 |  |  | 46,490 |  |  | (3,728 | ) |  | (8.0 | )%
Europe(b) | 13,703 |  |  | 16,012 |  |  | (2,309 | ) |  | (14.4 | )
EMEA - Other | 1,916 |  |  | 1,832 |  |  | 84 |  |  | 4.6 |
Total EMEA | 15,619 |  |  | 17,844 |  |  | (2,225 | ) |  | (12.5 | )
Asia Pacific(c) | 4,544 |  |  | 5,096 |  |  | (552 | ) |  | (10.8 | )
Asia Pacific - Other | 3,126 |  |  | 2,622 |  |  | 504 |  |  | 19.2 |
Total Asia Pacific | 7,670 |  |  | 7,718 |  |  | (48 | ) |  | (0.6 | )
Latin America | 2,516 |  |  | 2,569 |  |  | (53 | ) |  | (2.1 | )
Canada | 3,279 |  |  | 3,807 |  |  | (528 | ) |  | (13.9 | )
Total International Retail Sales | 29,084 |  |  | 31,938 |  |  | (2,854 | ) |  | (8.9 | )
Total Worldwide Retail Sales | 71,846 |  |  | 78,428 |  |  | (6,582 | ) |  | (8.4 | )%

(a) | Data source for retail sales figures shown above is new sales warranty and registration information provided by Harley-Davidson dealers and compiled by the Company. The Company must rely on information that its dealers supply concerning new retail sales, and the Company does not regularly verify the information that its dealers supply. This information is subject to revision.

(b) | Includes Austria, Belgium, Denmark, Finland, France, Germany, Greece, Italy, Luxembourg, Netherlands, Norway, Portugal, Spain, Sweden, Switzerland and the United Kingdom.

(c) | Includes Japan, Australia, New Zealand and Korea.

Retail sales of new Harley-Davidson motorcycles in the U.S. were down 8.0% in the second quarter of 2019. Overall, U.S. retail sales of new Harley-Davidson motorcycles were adversely impacted by the continued weak U.S. industry. The 2019 second quarter U.S. industry decline of 4.9% was an improvement over the 6.3% decline experienced in the second quarter of 2018 and was sequentially in line with the 2019 first quarter rate of decline which also improved over the prior year quarter. While the Company is encouraged by the tempering rate of decline for the industry over the last two quarters, it believes the U.S. industry for new motorcycles continues to be challenged by soft used motorcycle prices and a shift towards other styles of motorcycles including smaller displacement motorcycles(1).
Prices for used Harley-Davidson motorcycles in the U.S. remained at near historical low levels compared to new; however, the Company is encouraged by the firming of used motorcycle prices over recent quarters. During the second quarter of 2019, prices of Harley-Davidson used motorcycles in the Harley-Davidson U.S. dealer network rose for the eighth consecutive quarter.
50

Table of Contents
U.S. retail sales of new Harley-Davidson motorcycles declined 8.0% during the second quarter which was higher than the improved 4.2% decline experienced in the first quarter of 2019. During the first quarter of 2019, retail sales were positively impacted by increased sales incentives and the execution of Stronger Dealer growth initiatives, under the More Roads plan, as the Company moved to accelerate a slow start to the selling season. In the second quarter of 2019, the Company increased the execution of its longer-term focused Stronger Dealer efforts and increased brand equity marketing, while reducing shorter-term sales incentives compared to the first quarter. The Company believes the incentives offered in the first quarter were effective and will play a role moving forward, but expects its focus to be on more strategic and sustainable investments.
The Company's U.S. market share of new 601+cc motorcycles for the second quarter of 2019 was 46.6%, down 1.8 percentage points from the same period last year. The Company's U.S. market share reflects the adverse impact of relatively strong growth in segments in which the Company does not currently compete. The Company plans to enter these segments starting next year under the More Roads plan. In the Touring and Cruiser segments, which represent approximately 70% of the 601+cc market, where the Company does currently compete, its market share was up 2.0 percentage points during the second quarter of 2019 compared to the same period last year (Source: Motorcycle Industry Council).
International retail sales of new Harley-Davidson motorcycles were down 8.9% in the second quarter of 2019. Retail sales in developed markets were down 13.6% during the second quarter partially offset by higher retail sales in emerging markets, which increased 7.6% during the second quarter. Retail sales increases in emerging markets during the second quarter of 2019 were driven by growth in various markets, including China and the Company's Association of South East Asian Nations (ASEAN) markets. The Company's new Thailand operations, which enable lower tariffs, were a key factor supporting growth in the Company's ASEAN markets during the second quarter of 2019.
In developed international markets, retail sales across most markets in western Europe were lower following last year's strong initial retail sales of the Company's new Softail motorcycle. Additionally, retail sales in Japan and Australia continued to be weak in the second quarter behind contracting industry sales and competitive new product introductions in segments outside of the Touring and Cruiser segments.
The Company remains confident in, and committed to, the potential that international markets offer Harley-Davidson. The Company is expanding its Stronger Dealer efforts internationally and continues efforts to drive demand in these markets through marketing programs with a significant focus on national test ride campaigns. The Company also continued to expand its international dealer network, adding 9 new dealers during the second quarter of 2019. In addition, during the second quarter of 2019, the Company announced a collaboration with Zhejiang Qianjiang Motorcycle Co., Ltd. that will support the launch of a smaller, more accessible Harley-Davidson motorcycle planned for China in 2020 with additional Asian markets to follow.(1)
Motorcycles and Related Products Segment
Motorcycle Unit Shipments
The following table includes wholesale motorcycle unit shipments for the Motorcycles segment:

| Three months ended |  |  |  |
| June 30, 2019 |  | July 1, 2018 |  | Unit |  | Unit
| Units |  | Mix % |  | Units |  | Mix % |  | Decrease |  | % Change
United States | 41,404 |  |  | 60.2 | % |  | 43,047 |  |  | 59.3 | % |  | (1,643 | ) |  | (3.8 | )%
International | 27,353 |  |  | 39.8 | % |  | 29,546 |  |  | 40.7 | % |  | (2,193 | ) |  | (7.4 | )
Harley-Davidson motorcycle units | 68,757 |  |  | 100.0 | % |  | 72,593 |  |  | 100.0 | % |  | (3,836 | ) |  | (5.3 | )%
Touring motorcycle units | 30,923 |  |  | 45.0 | % |  | 31,064 |  |  | 42.8 | % |  | (141 | ) |  | (0.5 | )%
Cruiser motorcycle units | 22,691 |  |  | 33.0 | % |  | 24,348 |  |  | 33.5 | % |  | (1,657 | ) |  | (6.8 | )
Sportster® / Street motorcycle units | 15,143 |  |  | 22.0 | % |  | 17,181 |  |  | 23.7 | % |  | (2,038 | ) |  | (11.9 | )
Harley-Davidson motorcycle units | 68,757 |  |  | 100.0 | % |  | 72,593 |  |  | 100.0 | % |  | (3,836 | ) |  | (5.3 | )%

The Company shipped 68,757 Harley-Davidson motorcycles worldwide during the second quarter of 2019, which was 5.3% lower than the second quarter of 2018 and in line with the Company's expectations. The mix of Cruiser and Sportster®/Street motorcycles decreased slightly while the mix of Touring motorcycles increased.
At the end of the second quarter of 2019, U.S. retail inventory of new Harley-Davidson motorcycles was down approximately 1,350 motorcycles compared to the end of the prior year second quarter. The Company was pleased with the U.S. dealer inventory levels in preparation for the new model-year.
51

Table of Contents
Segment Results
The following table includes the condensed statements of operations for the Motorcycles segment (in thousands):

| Three months ended |  |  |  |
| June 30, 2019 |  | July 1, 2018 |  | (Decrease) Increase |  | % Change
Revenue: |  |  |  |  |  |  |
Motorcycles | $ | 1,128,063 |  |  | $ | 1,201,453 |  |  | $ | (73,390 | ) |  | (6.1 | )%
Parts & Accessories | 221,258 |  |  | 231,014 |  |  | (9,756 | ) |  | (4.2 | )
General Merchandise | 64,644 |  |  | 68,653 |  |  | (4,009 | ) |  | (5.8 | )
Licensing | 9,911 |  |  | 10,407 |  |  | (496 | ) |  | (4.8 | )
Other | 10,128 |  |  | 13,594 |  |  | (3,466 | ) |  | (25.5 | )
Total revenue | 1,434,004 |  |  | 1,525,121 |  |  | (91,117 | ) |  | (6.0 | )
Cost of goods sold | 979,266 |  |  | 993,036 |  |  | (13,770 | ) |  | (1.4 | )
Gross profit | 454,738 |  |  | 532,085 |  |  | (77,347 | ) |  | (14.5 | )
Operating expenses: |  |  |  |  |  |  |
Selling & administrative expense | 208,925 |  |  | 224,310 |  |  | (15,385 | ) |  | (6.9 | )
Engineering expense | 54,662 |  |  | 51,999 |  |  | 2,663 |  |  | 5.1 |
Restructuring expense | 10,423 |  |  | 12,370 |  |  | (1,947 | ) |  | (15.7 | )
Operating expense | 274,010 |  |  | 288,679 |  |  | (14,669 | ) |  | (5.1 | )
Operating income from Motorcycles | $ | 180,728 |  |  | $ | 243,406 |  |  | $ | (62,678 | ) |  | (25.8 | )%

The following table includes the estimated impact of significant factors affecting the comparability of net revenue, cost of goods sold and gross profit from the second quarter of 2018 to the second quarter of 2019 (in millions):

| Net Revenue |  | Cost of Goods Sold |  | Gross Profit
Three months ended July 1, 2018 | $ | 1,525.1 |  |  | $ | 993.0 |  |  | $ | 532.1 |
Volume | (73.4 | ) |  | (48.7 | ) |  | (24.7 | )
Price, net of related cost | 22.1 |  |  | 8.0 |  |  | 14.1 |
Foreign currency exchange rates and hedging | (23.9 | ) |  | (24.7 | ) |  | 0.8 |
Shipment mix | (15.9 | ) |  | (1.6 | ) |  | (14.3 | )
Raw material prices | — |  |  | (1.2 | ) |  | 1.2 |
Manufacturing and other costs | — |  |  | 54.5 |  |  | (54.5 | )
Total | (91.1 | ) |  | (13.7 | ) |  | (77.4 | )
Three months ended June 30, 2019 | $ | 1,434.0 |  |  | $ | 979.3 |  |  | $ | 454.7 |

The following factors affected the comparability of net revenue, cost of goods sold and gross profit from the second quarter of 2018 to the second quarter of 2019:

• | The decrease in volume was due to lower wholesale motorcycle shipments and lower P&A and General Merchandise sales.

• | On average, wholesale prices for motorcycles shipped in the current period were higher than in the same period last year resulting in a favorable impact on revenue. The positive impact on revenue was partially offset by increased costs related to the additional content added to motorcycles shipped in the current period as compared to the same period last year.

• | Revenue was adversely impacted by weaker weighted-average foreign currency exchange rates, relative to the U.S. dollar, as compared to the same period last year. The unfavorable revenue impact was more than offset by favorable net foreign currency gains related to foreign currency hedging and balance sheet remeasurements, as compared to the prior year second quarter.

• | Revenue and gross profit were negatively impacted by a shift in the mix of models within motorcycle families. Additionally, unfavorable mix within P&A and General Merchandise contributed to negative impact.

• | Raw material prices were favorable primarily due to decreased metal costs.

• | Manufacturing and other costs were negatively impacted by incremental tariff costs, lower fixed cost absorption and temporary inefficiencies associated with the Manufacturing Optimization Plan. The Company incurred incremental tariff

52

Table of Contents
costs of $34.4 million in the second quarter of 2019 related to tariffs enacted in the European Union and China. Temporary inefficiencies associated with the Manufacturing Optimization Plan in the second quarter of 2019 were $1.6 million higher than in the prior year second quarter.
The decrease in operating expenses during the second quarter of 2019 compared to the same period in 2018 was driven by lower spending as the Company aggressively manages cost, lower warranty and recall costs and lower restructuring expense related to the Manufacturing Optimization Plan.
Financial Services Segment
Segment Results
The following table includes the condensed statements of operations for the Financial Services segment (in thousands):

| Three months ended |  |  |  |
| June 30, 2019 |  | July 1, 2018 |  | Increase (Decrease) |  | % Change
Revenue: |  |  |  |  |  |  |
Interest income | $ | 167,077 |  |  | $ | 158,639 |  |  | $ | 8,438 |  |  | 5.3 | %
Other income | 31,375 |  |  | 29,159 |  |  | 2,216 |  |  | 7.6 |
Securitization and servicing fee income | 163 |  |  | 304 |  |  | (141 | ) |  | (46.4 | )
Total revenue | 198,615 |  |  | 188,102 |  |  | 10,513 |  |  | 5.6 |
Interest expense | 52,673 |  |  | 51,943 |  |  | 730 |  |  | 1.4 |
Provision for credit losses | 26,383 |  |  | 18,880 |  |  | 7,503 |  |  | 39.7 |
Operating expense | 44,030 |  |  | 36,738 |  |  | 7,292 |  |  | 19.8 |
Financial Services expense | 123,086 |  |  | 107,561 |  |  | 15,525 |  |  | 14.4 |
Operating income from Financial Services | $ | 75,529 |  |  | $ | 80,541 |  |  | $ | (5,012 | ) |  | (6.2 | )%

Interest income was favorable in the second quarter of 2019 due to higher average retail and wholesale receivables at higher average yields.
Interest expense slightly increased due to higher average outstanding debt.
The provision for credit losses increased $7.5 million compared to the second quarter of 2018. The retail motorcycle provision increased $6.9 million largely driven by higher retail credit losses which the Company believes was due in part to inefficiencies resulting from the implementation of a new loan management system.
Operating expenses increased $7.3 million compared to the second quarter of 2018 including higher depreciation associated with the implementation of a new loan management system.
Changes in the allowance for credit losses on finance receivables were as follows (in thousands):

| Three months ended
| June 30, 2019 |  | July 1, 2018
Balance, beginning of period | $ | 190,872 |  |  | $ | 190,350 |
Provision for credit losses | 26,383 |  |  | 18,880 |
Charge-offs, net of recoveries | (22,259 | ) |  | (15,300 | )
Balance, end of period | $ | 194,996 |  |  | $ | 193,930 |

53

Table of Contents
Results of Operations for the Six Months Ended June 30, 2019
Compared to the Six Months Ended July 1, 2018
Consolidated Results

| Six months ended |  |  |  |
(in thousands, except earnings per share) | June 30, 2019 |  | July 1, 2018 |  | (Decrease) Increase |  | % Change
Operating income from Motorcycles and Related Products | $ | 289,109 |  |  | $ | 416,244 |  |  | $ | (127,135 | ) |  | (30.5 | )%
Operating income from Financial Services | 134,260 |  |  | 144,120 |  |  | (9,860 | ) |  | (6.8 | )
Operating income | 423,369 |  |  | 560,364 |  |  | (136,995 | ) |  | (24.4 | )
Other income (expense), net | 8,697 |  |  | 865 |  |  | 7,832 |  |  | 905.4 |
Investment income | 9,929 |  |  | 3,736 |  |  | 6,193 |  |  | 165.8 |
Interest expense | 15,515 |  |  | 15,418 |  |  | 97 |  |  | 0.6 |
Income before provision for income taxes | 426,480 |  |  | 549,547 |  |  | (123,067 | ) |  | (22.4 | )
Provision for income taxes | 102,904 |  |  | 132,446 |  |  | (29,542 | ) |  | (22.3 | )
Net income | $ | 323,576 |  |  | $ | 417,101 |  |  | $ | (93,525 | ) |  | (22.4 | )%
Diluted earnings per share | $ | 2.03 |  |  | $ | 2.48 |  |  | $ | (0.45 | ) |  | (18.1 | )%

Consolidated operating income was down 24.4% in the first six months of 2019 due to a decrease in operating income from the Motorcycles segment of $127.1 million and a $9.9 million decrease in operating income from Financial Services, compared to the same period last year. Please refer to the “Motorcycles and Related Products Segment” and “Financial Services Segment” discussions following for a more detailed analysis of the factors affecting operating income.
Other income in the first half of 2019 was favorably impacted by lower amortization of actuarial losses related to the Company's defined benefit plans. Investment income was up in the first half of 2019 compared to the same period last year driven by higher income from investments in marketable securities and cash equivalents.
The Company's effective income tax rate for the first six months of 2019 was 24.1%, which was flat from the same period in 2018.
Diluted earnings per share were $2.03 in the first half of 2019, down 18.1% from the same period last year on lower net income offsetting the benefit of lower diluted weighted average shares outstanding. Diluted weighted average shares outstanding decreased from 168.2 million in the first half of 2018 to 159.7 million in the first half of 2019, driven by the Company's repurchases of common stock. Please refer to "Liquidity and Capital Resources" for additional information concerning the Company's share repurchase activity.
54

Table of Contents
Motorcycles Retail Sales and Registration Data
Harley-Davidson Motorcycle Retail Sales(a)
The following table includes retail unit sales of Harley-Davidson motorcycles:

| Six months ended |  |  |  |
| June 30, 2019 |  | June 30, 2018 |  | (Decrease) Increase |  | % Change
United States | 70,853 |  |  | 75,799 |  |  | (4,946 | ) |  | (6.5 | )%
Europe(b) | 23,211 |  |  | 25,728 |  |  | (2,517 | ) |  | (9.8 | )
EMEA - Other | 3,205 |  |  | 2,978 |  |  | 227 |  |  | 7.6 |
Total EMEA | 26,416 |  |  | 28,706 |  |  | (2,290 | ) |  | (8.0 | )
Asia Pacific(c) | 8,330 |  |  | 9,548 |  |  | (1,218 | ) |  | (12.8 | )
Asia Pacific - Other | 5,414 |  |  | 4,499 |  |  | 915 |  |  | 20.3 |
Total Asia Pacific | 13,744 |  |  | 14,047 |  |  | (303 | ) |  | (2.2 | )
Latin America | 4,757 |  |  | 5,075 |  |  | (318 | ) |  | (6.3 | )
Canada | 5,227 |  |  | 5,887 |  |  | (660 | ) |  | (11.2 | )
Total International Retail Sales | 50,144 |  |  | 53,715 |  |  | (3,571 | ) |  | (6.6 | )
Total Worldwide Retail Sales | 120,997 |  |  | 129,514 |  |  | (8,517 | ) |  | (6.6 | )%

(a) | Data source for retail sales figures shown above is new sales warranty and registration information provided by Harley-Davidson dealers and compiled by the Company. The Company must rely on information that its dealers supply concerning new retail sales, and the Company does not regularly verify the information that its dealers supply. This information is subject to revision.

(b) | Includes Austria, Belgium, Denmark, Finland, France, Germany, Greece, Italy, Luxembourg, Netherlands, Norway, Portugal, Spain, Sweden, Switzerland and the United Kingdom.

(c) | Includes Japan, Australia, New Zealand and Korea.

Retail sales of new Harley-Davidson motorcycles in the U.S. were down 6.5% in the first half of 2019 on a continued weak U.S. industry and a decrease in market share. Overall, the U.S. industry was down 4.8% percent in the first half of 2019, but declined at a slower rate than in the first half 2018, when it fell 8.2%. Similarly, the retail sales decline for new Harley-Davidson motorcycles in the first half of 2019 moderated from last year's first-half year over year decline of 8.7%. While the Company is encouraged by the tempering rates of decline in the first half of 2019, it believes the U.S. industry for new motorcycles continues to be challenged by soft used motorcycle prices and a shift towards other styles of motorcycles including smaller displacement motorcycles(1).
The Company's U.S. market share of new 601+cc motorcycles for the first half of 2019 was 48.3%, down 0.9 percentage points compared to the same period last year. The Company's U.S. market share reflects the adverse impact of relatively strong growth in segments in which it does not currently compete. The Company plans to enter these segments starting next year under the More Roads plan. In the Touring and Cruiser segments, which represent approximately 70% of the 601+cc market, where the Company does compete, its market share was up 2.2 percentage points during the first half of 2019 from the same period last year (Source: Motorcycle Industry Council).
International retail sales of new Harley-Davidson motorcycles were down 6.6% in the first half of 2019. Retail sales in developed markets were down 10.7% during the first half of 2019 partially offset by higher retail sales in emerging markets, which increased 6.6% during the same period. Retail sales increases in emerging markets during the first half of 2019 were driven by double-digit growth in various markets, including China and the Company's ASEAN markets.
In developed international markets, retail sales across most markets in western Europe were lower following last year's strong initial retail sales of the Company's new Softail motorcycle and lower Street sales which were adversely impacted in 2019 by a recall initiated in early 2019. Additionally, retail sales in Japan and Australia continued to be weak in the second quarter behind contracting industry sales and competitive new product introductions in segments outside of the Touring and Cruiser segments.
55

Table of Contents
The Company's 2019 market share of new 601+cc motorcycles in Europe was 8.8% through June, compared to 10.4% for the same period last year (Source: Association des Constructeurs Europeens de Motocycles). The European market share was adversely impacted by lower retail sales of Softail and Street motorcycles.
Motorcycle Registration Data(a)
The following table includes industry retail motorcycle registration data:

| Six months ended |  |  |  |
| June 30, 2019 |  | June 30, 2018 |  | (Decrease) Increase |  | % Change
United States(b) | 144,623 |  |  | 151,989 |  |  | (7,366 | ) |  | (4.8 | )%
Europe(c) | 267,212 |  |  | 252,656 |  |  | 14,556 |  |  | 5.8 | %

(a) | Data includes on-road 601+cc models. On-road 601+cc models include dual purpose models, three-wheeled motorcycles and autocycles. Registration data for Harley-Davidson Street® 500 motorcycles is not included in this table.

(b) | United States industry data is derived from information provided by Motorcycle Industry Council (MIC). This third-party data is subject to revision and update.

(c) | Europe data includes Austria, Belgium, Denmark, Finland, France, Germany, Greece, Italy, Luxembourg, Netherlands, Norway, Portugal, Spain, Sweden, Switzerland, and the United Kingdom. Industry retail motorcycle registration data includes 601+cc models derived from information provided by Association des Constructeurs Europeens de Motocycles (ACEM), an independent agency. This third-party data is subject to revision and update.

Motorcycles and Related Products Segment
Motorcycle Unit Shipments
The following table includes wholesale motorcycle unit shipments for the Motorcycles segment:

| Six months ended |  |  |  |
| June 30, 2019 |  | July 1, 2018 |  |  |  |
| Units |  | Mix % |  | Units |  | Mix % |  | Unit Decrease |  | Unit % Change
United States | 75,909 |  |  | 59.5 | % |  | 81,844 |  |  | 59.9 | % |  | (5,935 | ) |  | (7.3 | )%
International | 51,739 |  |  | 40.5 | % |  | 54,693 |  |  | 40.1 | % |  | (2,954 | ) |  | (5.4 | )
Harley-Davidson motorcycle units | 127,648 |  |  | 100.0 | % |  | 136,537 |  |  | 100.0 | % |  | (8,889 | ) |  | (6.5 | )%
Touring motorcycle units | 55,966 |  |  | 43.8 | % |  | 61,921 |  |  | 45.4 | % |  | (5,955 | ) |  | (9.6 | )%
Cruiser motorcycle units | 43,142 |  |  | 33.8 | % |  | 45,902 |  |  | 33.6 | % |  | (2,760 | ) |  | (6.0 | )
Sportster® / Street motorcycle units | 28,540 |  |  | 22.4 | % |  | 28,714 |  |  | 21.0 | % |  | (174 | ) |  | (0.6 | )
Harley-Davidson motorcycle units | 127,648 |  |  | 100.0 | % |  | 136,537 |  |  | 100.0 | % |  | (8,889 | ) |  | (6.5 | )%

The Company shipped 127,648 Harley-Davidson motorcycles worldwide during the first half of 2019, which was 6.5% lower than the same period in 2018. The mix of Touring motorcycles decreased as a percent of total shipments while the mix of Cruiser and Sportster®/Street motorcycles increased compared to the same period last year.
56

Table of Contents
Segment Results
The following table includes the condensed statements of operations for the Motorcycles segment (in thousands):

| Six months ended |  |  |  |
| June 30, 2019 |  | July 1, 2018 |  | (Decrease) Increase |  | % Change
Revenue: |  |  |  |  |  |  |
Motorcycles | $ | 2,092,638 |  |  | $ | 2,323,126 |  |  | $ | (230,488 | ) |  | (9.9 | )%
Parts & Accessories | 380,961 |  |  | 400,089 |  |  | (19,128 | ) |  | (4.8 | )
General Merchandise | 120,045 |  |  | 125,254 |  |  | (5,209 | ) |  | (4.2 | )
Licensing | 18,488 |  |  | 18,765 |  |  | (277 | ) |  | (1.5 | )
Other | 17,509 |  |  | 21,834 |  |  | (4,325 | ) |  | (19.8 | )
Total revenue | 2,629,641 |  |  | 2,889,068 |  |  | (259,427 | ) |  | (9.0 | )
Cost of goods sold | 1,827,464 |  |  | 1,883,210 |  |  | (55,746 | ) |  | (3.0 | )
Gross profit | 802,177 |  |  | 1,005,858 |  |  | (203,681 | ) |  | (20.2 | )
Operating expenses: |  |  |  |  |  |  |
Selling & administrative expense | 385,469 |  |  | 431,854 |  |  | (46,385 | ) |  | (10.7 | )
Engineering expense | 103,546 |  |  | 98,548 |  |  | 4,998 |  |  | 5.1 |
Restructuring expense | 24,053 |  |  | 59,212 |  |  | (35,159 | ) |  | (59.4 | )
Operating expense | 513,068 |  |  | 589,614 |  |  | (76,546 | ) |  | (13.0 | )
Operating income from Motorcycles | $ | 289,109 |  |  | $ | 416,244 |  |  | $ | (127,135 | ) |  | (30.5 | )%

The following table includes the estimated impact of significant factors affecting the comparability of net revenue, cost of goods sold and gross profit from the first half of 2018 to the first half of 2019 (in millions):

| Net Revenue |  | Cost of Goods Sold |  | Gross Profit
Six months ended July 1, 2018 | $ | 2,889.1 |  |  | $ | 1,883.2 |  |  | $ | 1,005.9 |
Volume | (181.6 | ) |  | (115.5 | ) |  | (66.1 | )
Price, net of related costs | 45.3 |  |  | 14.8 |  |  | 30.5 |
Foreign currency exchange rates and hedging | (53.7 | ) |  | (39.4 | ) |  | (14.3 | )
Shipment mix | (69.5 | ) |  | (16.0 | ) |  | (53.5 | )
Raw material prices | — |  |  | 1.9 |  |  | (1.9 | )
Manufacturing and other costs | — |  |  | 98.5 |  |  | (98.5 | )
Total | (259.5 | ) |  | (55.7 | ) |  | (203.8 | )
Six months ended June 30, 2019 | $ | 2,629.6 |  |  | $ | 1,827.5 |  |  | $ | 802.1 |

The following factors affected the comparability of net revenue, cost of goods sold and gross profit from the first half of 2018 to the first half of 2019:

• | The decrease in volume was due to lower wholesale motorcycle shipments and lower P&A and General Merchandise sales.

• | On average, wholesale prices for motorcycles shipped in the current period were higher than in the same period last year resulting in a favorable impact on revenue. The positive impact on revenue was partially offset by increased costs related to the additional content added to motorcycles shipped in the current period as compared to the same period last year.

• | Revenue was adversely impacted by weaker foreign currency exchange rates, relative to the U.S. dollar, as compared to the same period last year. The unfavorable revenue impact was partially offset by favorable net foreign currency gains related to foreign currency hedging and balance sheet remeasurements, as compared to the first half of the prior year.

• | Changes in the shipment mix of motorcycle families, as well as the mix of models within motorcycle families, had an adverse impact on revenue and gross profit during the first half of 2019.

• | Raw material prices were higher primarily due to increased metal costs.

• | Manufacturing and other costs were negatively impacted by incremental tariff costs, lower fixed cost absorption and higher temporary inefficiencies. Costs associated with incremental tariffs implemented in mid-2018 were $55.4 million

57

Table of Contents
during the first half of 2019. Temporary inefficiencies associated with the Manufacturing Optimization Plan were $4.5 million higher than in the same period last year.
Operating expenses were lower in the first half of 2019 compared to the first half of the prior year driven by favorable net warranty and recall costs and lower restructuring expenses. In the first half of 2019, net warranty and recall costs were approximately $40 million lower than the first half of the prior year driven by higher than normal recoveries and lower warranty costs. Operating expenses also benefited in the first half of 2019 from lower spending as the Company aggressively managed cost. However, these decreases were mostly offset as the Company increased its investments in marketing and the More Roads plan.
Financial Services Segment
Segment Results
The following table includes the condensed statements of operations for the Financial Services segment (in thousands):

| Six months ended |  |  |  |
| June 30, 2019 |  | July 1, 2018 |  | Increase (Decrease) |  | % Change
Revenue: |  |  |  |  |  |  |
Interest income | $ | 326,881 |  |  | $ | 312,680 |  |  | $ | 14,201 |  |  | 4.5 | %
Other income | 60,125 |  |  | 52,940 |  |  | 7,185 |  |  | 13.6 |
Securitization and servicing fee income | 352 |  |  | 656 |  |  | (304 | ) |  | (46.3 | )
Total revenue | 387,358 |  |  | 366,276 |  |  | 21,082 |  |  | 5.8 |
Interest expense | 104,997 |  |  | 100,393 |  |  | 4,604 |  |  | 4.6 |
Provision for credit losses | 60,874 |  |  | 48,932 |  |  | 11,942 |  |  | 24.4 |
Operating expense | 87,227 |  |  | 72,831 |  |  | 14,396 |  |  | 19.8 |
Financial Services expense | 253,098 |  |  | 222,156 |  |  | 30,942 |  |  | 13.9 |
Operating income from Financial Services | $ | 134,260 |  |  | $ | 144,120 |  |  | $ | (9,860 | ) |  | (6.8 | )%

Interest income was higher for the first six months of 2019 due to higher average retail and wholesale receivables at higher average yields. Other income was favorable due to higher insurance related revenue, partially offset by lower licensing revenue.
Interest expense increased due to higher average outstanding debt at a slightly higher cost of funds.
The provision for credit losses increased $11.9 million compared to the first half of 2018. The retail motorcycle provision increased $11.8 million largely driven by higher retail credit losses which the Company believes was due in part to inefficiencies resulting from the implementation of a new loan management system. The provision for credit losses was also adversely impacted by an unfavorable change in the reserve rate compared to the first half of 2018.
Annualized credit losses for the Company's retail motorcycle loans were 1.82% through June 30, 2019 compared to 1.56% through July 1, 2018. The 30-day delinquency rate for retail motorcycle loans at June 30, 2019 was 3.33% compared to 3.09% at July 1, 2018.
Operating expenses increased $14.4 million compared to the first half of 2018 including higher depreciation associated with the implementation of a new loan management system.
Changes in the allowance for credit losses on finance receivables were as follows (in thousands):

| Six months ended
| June 30, 2019 |  | July 1, 2018
Balance, beginning of period | $ | 189,885 |  |  | $ | 192,471 |
Provision for credit losses | 60,874 |  |  | 48,932 |
Charge-offs, net of recoveries | (55,763 | ) |  | (47,473 | )
Balance, end of period | $ | 194,996 |  |  | $ | 193,930 |

58

Table of Contents
Other Matters
Contractual Obligations
As of June 30, 2019, the Company has updated the contractual obligations table under the caption “Contractual Obligations” in Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations of the Company’s Annual Report on Form 10-K for the year ended December 31, 2018 to reflect the new projected principal and interest payments for the remainder of 2019 and beyond as follows (in thousands):

| 2019 |  | 2020-2021 |  | 2022-2023 |  | Thereafter |  | Total
Principal payments on debt | $ | 1,160,128 |  |  | $ | 3,578,261 |  |  | $ | 1,967,892 |  |  | $ | 768,700 |  |  | $ | 7,474,981 |
Interest payments on debt | 107,733 |  |  | 295,706 |  |  | 113,011 |  |  | 336,802 |  |  | 853,252 |
| $ | 1,267,861 |  |  | $ | 3,873,967 |  |  | $ | 2,080,903 |  |  | $ | 1,105,502 |  |  | $ | 8,328,233 |

Interest obligations for floating rate instruments, as calculated above, assume rates in effect at June 30, 2019 remain constant. For purposes of the above, the principal payment balances for medium-term notes, on-balance sheet asset-backed securitizations, and senior unsecured notes are shown without reduction for debt issuance costs. Refer to Note 12 for a breakout of the finance costs consistent with ASU No. 2015-03.
As of June 30, 2019, there have been no other material changes to the Company’s summary of expected payments for significant contractual obligations in the contractual obligations table in the Company's Annual Report on Form 10-K for the year ended December 31, 2018.
Commitments and Contingencies
The Company is subject to lawsuits and other claims related to environmental, product and other matters. In determining costs to accrue related to these items, the Company carefully analyzes cases and considers the likelihood of adverse judgments or outcomes, as well as the potential range of possible loss. Any amounts accrued for these matters are monitored on an ongoing basis and are updated based on new developments or new information as it becomes available for each matter.
Environmental Protection Agency Notice:
In December 2009, the Company received formal, written requests for information from the United States Environmental Protection Agency (EPA) regarding: (i) certificates of conformity for motorcycle emissions and related designations and labels, (ii) aftermarket parts, and (iii) warranty claims on emissions related components. The Company promptly submitted written responses to the EPA’s inquiry and has engaged in information exchanges and discussions with the EPA. In August 2016, the Company entered into a consent decree with the EPA regarding these issues, and the consent decree was subsequently revised in July 2017 (the Settlement). In the Settlement, the Company agreed to, among other things, pay a fine, and not sell tuning products unless they are approved by the EPA or California Air Resources Board. In December 2017, the Department of Justice (DOJ), on behalf of the EPA, filed the Settlement with the U.S. District Court for the District of Columbia for the purpose of obtaining court approval of the Settlement. Three amicus briefs opposing portions of the Settlement were filed with the court by the deadline of January 31, 2018. On March 1, 2018, the Company and the DOJ each filed separate response briefs. The Company is awaiting the court's decision on whether or not to finalize the Settlement, and on February 8, 2019, the DOJ filed a status update reminding the court of the current status of the outstanding matter. The Company has an accrual associated with this matter which is included in Accrued liabilities on the consolidated balance sheets, and as a result, if it is finalized, the Settlement would not have a material adverse effect on the Company's financial condition or results of operations. The Settlement is not final until it is approved by the court, and if it is not approved by the court, the Company cannot reasonably estimate the impact of any remedies the EPA might seek beyond the Company's current reserve for this matter.
York Environmental Matters:
The Company is involved with government agencies and groups of potentially responsible parties related to a matter involving the cleanup of soil and groundwater contamination at its York, Pennsylvania facility. The York facility was formerly used by the U.S. Navy and AMF prior to the purchase of the York facility by the Company from AMF in 1981. The Company has been working with the Pennsylvania Department of Environmental Protection (PADEP) since 1986 and with the U.S. Environmental Protection Agency (EPA) in undertaking environmental investigation and remediation activities, including a site-wide remedial investigation/feasibility study (RI/FS).
59

Table of Contents
In January 1995, the Company entered into a settlement agreement (the Agreement) with the Navy, and the parties amended the Agreement in 2013 to address ordnance and explosive waste. The Agreement calls for the Navy and the Company to contribute amounts into a trust equal to 53% and 47%, respectively, of costs associated with environmental investigation and remediation activities at the York facility (Response Costs). The trust administers the payment of the Response Costs incurred at the York facility as covered by the Agreement.
The Company has an accrual for its estimate of its share of the future Response Costs at the York facility which is included in Other long-term liabilities on the consolidated balance sheets. While the work on the RI/FS is now complete and the final remedy was proposed in late 2018, it has not yet been approved, and given the uncertainty that exists concerning the nature and scope of additional environmental remediation that may ultimately be required under the approved final remedy, the Company is unable to make a reasonable estimate of those additional costs, if any, that may result.
The estimate of the Company's future Response Costs that will be incurred at the York facility is based on reports of independent environmental consultants retained by the Company, the actual costs incurred to date, and the estimated costs to complete the necessary investigation and remediation activities.
Product Liability Matters:
The Company is involved in product liability suits related to the operation of its business. The Company accrues for claim exposures that are probable of occurrence and can be reasonably estimated. The Company also maintains insurance coverage for product liability exposures. The Company believes that its accruals and insurance coverage are adequate and that product liability suits will not have a material adverse effect on the Company’s consolidated financial statements.
Off-Balance Sheet Arrangements
The Company participates in asset-backed financing both through asset-backed securitization transactions and through asset-backed commercial paper conduit facilities. In the Company's asset-backed financing programs, the Company transfers retail motorcycle finance receivables to special purpose entities (SPEs), which are considered variable interest entities (VIEs) under U.S. GAAP. Each SPE then converts those assets into cash, through the issuance of debt. The Company retains servicing rights for all of the retail motorcycle finance receivables transferred to SPEs as part of an asset-backed financing.
The SPEs are separate legal entities that assume the risks and rewards of ownership of the retail motorcycle finance receivables they hold. The assets of the VIEs are not available to pay other obligations or claims of the Company’s creditors. The Company’s economic exposure related to the VIEs is generally limited to restricted cash reserve accounts, retained interests and ordinary representations and warranties and related covenants. The VIEs have a limited life and generally terminate upon final distribution of amounts owed to investors.
The accounting treatment for asset-backed financings depends on the terms of the related transaction and the Company’s continuing involvement with the VIE. Most of the Company’s asset-backed financings do not meet the criteria to be treated as a sale for accounting purposes because, in addition to retaining servicing rights, the Company retains a financial interest in the VIE in the form of a debt security. These transactions are treated as secured borrowings. As secured borrowings, the retail motorcycle finance receivables remain on the balance sheet with a corresponding obligation reflected as debt.
During the second quarter of 2016, the Company sold finance receivables with a principal balance of $301.8 million into a securitization VIE. The transaction met the criteria to be treated as a sale for accounting purposes and resulted in an off-balance sheet arrangement because the Company did not retain any financial interest in the VIE beyond servicing rights and ordinary representations and warranties and related covenants. For more information, refer to Note 13 of the Notes to the Consolidated Financial Statements.
Liquidity and Capital Resources as of June 30, 2019(1)
Over the long-term, the Company expects that its business model will continue to generate cash that will allow it to invest in the business, fund future growth opportunities, and return value to shareholders.(1) The Company will evaluate opportunities to return cash to its shareholders through increasing dividends and repurchasing shares. The Company believes the Motorcycles operations will continue to be primarily funded through cash flows generated by operations.(1) The Company expects the Financial Services operations to continue to be funded with unsecured debt, unsecured commercial paper, asset-backed commercial paper conduit facilities, committed unsecured bank facilities, and asset-backed securitizations.
60

Table of Contents
The Company’s strategy is to maintain a minimum of twelve months of its projected liquidity needs through a combination of cash and cash equivalents and availability under credit facilities. The following table summarizes the Company’s cash and availability under credit and conduit facilities (in thousands):

| June 30, 2019
Cash and cash equivalents | $ | 924,638 |
Credit facilities | 1,334,305 |
Asset-backed U.S. commercial paper conduit facilities(a) | 600,000 |
Asset-backed Canadian commercial paper conduit facility(a) | 19,309 |
Total availability under credit and conduit facilities | 1,953,614 |
Total | $ | 2,878,252 |

(a) | Includes facilities expiring in the next twelve months which the Company expects to renew prior to expiration.(1)

The Company recognizes that it must continue to monitor and adjust its business to changes in the lending environment. The Company intends to continue with a diversified funding profile through a combination of short-term and long-term funding vehicles and to pursue a variety of sources to obtain cost-effective funding. The Financial Services operations could be negatively affected by higher costs of funding and increased difficulty of raising, or potential unsuccessful efforts to raise, funding in the short-term and long-term capital markets.(1) These negative consequences could in turn adversely affect the Company’s business and results of operations in various ways, including through higher costs of capital, reduced funds available through its Financial Services operations to provide loans to independent dealers and their retail customers, and dilution to existing shareholders through the use of alternative sources of capital.
Cash Flow Activity
The following table summarizes the cash flow activity for the periods indicated (in thousands):

| Six months ended
| June 30, 2019 |  | July 1, 2018
Net cash provided by operating activities | $ | 496,232 |  |  | $ | 735,859 |
Net cash used by investing activities | (364,575 | ) |  | (367,953 | )
Net cash used by financing activities | (380,946 | ) |  | (74,342 | )
Effect of exchange rate changes on cash, cash equivalents and restricted cash | 3,439 |  |  | (10,091 | )
Net (decrease) increase in cash, cash equivalents and restricted cash | $ | (245,850 | ) |  | $ | 283,473 |

Operating Activities
The decrease in cash provided by operating activities for the first half of 2019 compared to the same period in 2018 was primarily due to lower sales and unfavorable changes in working capital which includes the impact of restructuring liabilities. There were no voluntary qualified pension plan contributions in the first half of 2018 or 2019 and no contributions are planned for the remainder of 2019.(1)
Investing Activities
The Company’s most significant investing activities consist of capital expenditures and retail finance originations and collections. Capital expenditures were $83.2 million in the first six months of 2019 compared to $69.3 million in the same period last year. Net cash outflows for finance receivables for the first half of 2019 were $9.2 million higher than the same period last year. Other investing cash inflows, including the redemptions of marketable securities, were $26.5 million higher in the first six months of 2019 compared to the same period last year.
61

Table of Contents
Financing Activities
The Company’s financing activities consist primarily of share repurchases, dividend payments, and debt activity. Cash outflows for share repurchases were $104.6 million in the first half of 2019 compared to $111.2 million in the same period last year. Share repurchases during the first six months of 2019 included $95.5 million or 2.7 million shares of common stock related to discretionary share repurchases and $9.1 million or 0.2 million shares of common stock that employees surrendered to satisfy withholding taxes in connection with the vesting of restricted stock units. As of June 30, 2019, there were 13.7 million shares remaining on a board-approved share repurchase authorization. The Company paid dividends of $0.75 and $0.74 per share totaling $120.8 million and $124.7 million during the first half of 2019 and 2018, respectively.
Financing cash flows related to debt activity resulted in net cash outflows of $156.3 million in the first six months of 2019 compared to net cash inflows of $159.6 million in the first six months of 2018. The Company’s total outstanding debt consisted of the following (in thousands):

| June 30, 2019 |  | July 1, 2018
Unsecured commercial paper | $ | 405,695 |  |  | $ | 1,327,307 |
Asset-backed Canadian commercial paper conduit facility | 148,740 |  |  | 166,638 |
Asset-backed U.S. commercial paper conduit facilities | 464,136 |  |  | 300,000 |
Medium-term notes, net | 4,687,660 |  |  | 4,435,449 |
Senior unsecured notes, net | 742,959 |  |  | 742,292 |
Asset-backed securitization debt, net | 1,002,869 |  |  | 169,430 |
Total debt | $ | 7,452,059 |  |  | $ | 7,141,116 |

To access the debt capital markets, the Company relies on credit rating agencies to assign short-term and long-term credit ratings. Generally, lower credit ratings result in higher borrowing costs and reduced access to debt capital markets. A credit rating agency may change or withdraw the Company’s ratings based on its assessment of the Company’s current and future ability to meet interest and principal repayment obligations. The Company’s short-term debt ratings affect its ability to issue unsecured commercial paper. The Company’s short- and long-term debt ratings as of June 30, 2019 were as follows:

| Short-Term |  | Long-Term |  | Outlook
Moody’s | P2 |  | A3 |  | Stable
Standard & Poor’s | A2 |  | BBB+ |  | Negative
Fitch | F1 |  | A |  | Negative

Credit Facilities – In May 2019, the Company entered into a $195.0 million 364-day credit facility which matures on May 11, 2020. The Company also has a $780.0 million five-year credit facility which matures in April 2023 and a $765.0 million five-year credit facility which matures in April 2021. The new 364-day credit facility and the five-year credit facilities (together, the Global Credit Facilities) bear interest at variable rates, which may be adjusted upward or downward depending on certain criteria, such as credit ratings. The Global Credit Facilities also require the Company to pay a fee based on the average daily unused portion of the aggregate commitments under the Global Credit Facilities. The Global Credit Facilities are committed facilities primarily used to support the Company's unsecured commercial paper program.
Unsecured Commercial Paper – Subject to limitations, the Company could issue unsecured commercial paper of up to $1.74 billion as of June 30, 2019 supported by the Global Credit Facilities, as discussed above. Outstanding unsecured commercial paper may not exceed the unused portion of the Global Credit Facilities. Maturities may range up to 365 days from the issuance date. The Company intends to repay unsecured commercial paper as it matures with additional unsecured commercial paper or through other means, such as borrowing under the Global Credit Facilities, borrowing under its asset-backed U.S. commercial paper conduit facilities or through the use of operating cash flow and cash on hand.(1)
62

Table of Contents
Medium-Term Notes – The Company had the following medium-term notes (collectively, the Notes) issued and outstanding at June 30, 2019 (in thousands):

Principal Amount |  | Rate |  | Issue Date |  | Maturity Date
$600,000 |  | 2.40% |  | September 2014 |  | September 2019
$600,000 |  | 2.15% |  | February 2015 |  | February 2020
$450,000 |  | LIBOR + 0.50% |  | May 2018 |  | May 2020
$350,000 |  | 2.40% |  | March 2017 |  | June 2020
$600,000 |  | 2.85% |  | January 2016 |  | January 2021
$450,000 |  | LIBOR + 0.94% |  | November 2018 |  | March 2021
$350,000 |  | 3.55% |  | May 2018 |  | May 2021
$550,000 |  | 4.05% |  | February 2019 |  | February 2022
$400,000 |  | 2.55% |  | June 2017 |  | June 2022
$350,000 |  | 3.35% |  | February 2018 |  | February 2023

The fixed-rate Notes provide for semi-annual interest payments and the floating-rate Notes provide for quarterly interest payments. Principal on the Notes is due at maturity. Unamortized discount and debt issuance costs on the Notes reduced the outstanding balance by $12.3 million and $14.6 million at June 30, 2019 and July 1, 2018, respectively. There were no medium-term note maturities during the second quarter of 2019. During the first quarter of 2019, $600.0 million of 2.25% and $150.0 million of floating-rate medium-term notes matured, and the principal and accrued interest were paid in full. During the second quarter of 2018, $877.5 million of 6.80% medium-term notes matured, and the principal and accrued interest were paid in full. There were no medium-term note maturities during the first quarter of 2018.
Senior Unsecured Notes – In July 2015, the Company issued $750.0 million of senior unsecured notes in an underwritten offering. The senior unsecured notes provide for semi-annual interest payments and principal due at maturity. $450.0 million of the senior unsecured notes mature in July 2025 and have an interest rate of 3.50%, and $300.0 million of the senior unsecured notes mature in July 2045 and have an interest rate of 4.625%. The Company used the proceeds from the debt to repurchase shares of its common stock in 2015.
On-Balance Sheet Asset-Backed Canadian Commercial Paper Conduit Facility – The Company has a revolving facility agreement (Canadian Conduit) with a Canadian bank-sponsored asset-backed commercial paper conduit. Under the agreement, the Canadian Conduit is contractually committed, at the Company's option, to purchase from the Company eligible Canadian retail motorcycle finance receivables for proceeds up to C$220.0 million. The transferred assets are restricted as collateral for the payment of the debt. The terms for this facility provide for interest on the outstanding principal based on prevailing market interest rates plus a specified margin. The Canadian Conduit also provides for a program fee and an unused commitment fee based on the unused portion of the total aggregate commitment of C$220.0 million. There is no amortization schedule; however, the debt is reduced monthly as available collections on the related finance receivables are applied to outstanding principal. Upon expiration of the Canadian Conduit, any outstanding principal will continue to be reduced monthly through available collections. The Canadian Conduit was renewed on June 28, 2019 with similar terms and a borrowing amount of up to C$220.0 million. The expected remaining term of the related receivables is approximately 5 years. Unless earlier terminated or extended by mutual agreement between the Company and the lenders, as of June 30, 2019, the Canadian Conduit has an expiration date of June 26, 2020.
The following table includes quarterly transfers of Canadian retail motorcycle finance receivables to the Canadian Conduit and the respective proceeds (in thousands):

| 2019 |  | 2018
| Transfers |  | Proceeds |  | Transfers |  | Proceeds
First quarter | $ | — |  |  | $ | — |  |  | $ | 7,600 |  |  | $ | 6,200 |
Second quarter | 28,200 |  |  | 23,400 |  |  | 38,900 |  |  | 32,200 |
| $ | 28,200 |  |  | $ | 23,400 |  |  | $ | 46,500 |  |  | $ | 38,400 |

On-Balance Sheet Asset-Backed U.S. Commercial Paper Conduit Facilities VIE – The Company has two separate agreements with third-party bank-sponsored asset-backed U.S. commercial paper conduits under which it may transfer U.S. retail motorcycle finance receivables to an SPE, which in turn may issue debt to those third-party bank-sponsored asset-backed U.S. commercial paper conduits. In November 2018, the Company renewed its existing $600.0 million revolving facility agreement with third-party bank-sponsored asset-backed U.S. commercial paper conduits. Also at that time, the Company
63

Table of Contents
amended its existing $300.0 million revolving facility agreement with third-party bank-sponsored asset-backed U.S. commercial paper conduits, increasing the aggregate commitment to $600.0 million. The aggregate commitment under this agreement is reduced monthly as collections on the related finance receivables are applied to the outstanding principal until the outstanding principal balance is less than or equal to $300.0 million, at which point the aggregate commitment will equal $300.0 million. In May 2019, the Company further amended this revolving facility agreement to allow for incremental borrowings, at the lenders’ discretion, of up to an additional $300.0 million in excess of the $300.0 million commitment. Availability under the revolving facilities (together, the U.S. Conduit Facilities) is based on, among other things, the amount of eligible U.S. retail motorcycle finance receivables held by the SPE as collateral.
The following table includes quarterly transfers of U.S. retail motorcycle finance receivables to the U.S. Conduit Facilities and the respective proceeds (in thousands):

| 2019 |  | 2018
| Transfers |  | Proceeds |  | Transfers |  | Proceeds
First quarter | $ | — |  |  | $ | — |  |  | $ | 32,900 |  |  | $ | 29,300 |
Second quarter | — |  |  | — |  |  | 59,100 |  |  | 53,300 |
| $ | — |  |  | $ | — |  |  | $ | 92,000 |  |  | $ | 82,600 |

The terms for this debt provide for interest on the outstanding principal based on prevailing commercial paper rates or LIBOR to the extent the advance is not funded by a conduit lender through the issuance of commercial paper plus, in each case, a program fee based on outstanding principal. The U.S. Conduit Facilities also provide for an unused commitment fee based on the unused portion of the total aggregate commitment. There is no amortization schedule; however, the debt is reduced monthly as available collections on the related finance receivables are applied to outstanding principal. Upon expiration of the U.S. Conduit Facilities, any outstanding principal will continue to be reduced monthly through available collections. The expected remaining term of the related receivables held by the SPE is approximately 5 years. Unless earlier terminated or extended by mutual agreement of the Company and the lenders, as of June 30, 2019, the U.S. Conduit Facilities have an expiration date of November 29, 2019.
Asset-Backed Securitization VIEs – For all of its asset-backed securitization transactions, the Company transfers U.S. retail motorcycle finance receivables to separate VIEs, which in turn issue secured notes with various maturities and interest rates to investors. All of the notes held by the VIEs are secured by future collections of the purchased U.S. retail motorcycle finance receivables. The U.S. retail motorcycle finance receivables included in the asset-backed securitization transactions are not available to pay other obligations or claims of the Company's creditors until the associated debt and other obligations are satisfied. Restricted cash balances held by the VIEs are used only to support the securitizations.
The accounting treatment for asset-backed securitizations depends on the terms of the related transaction and the Company’s continuing involvement with the VIE. Most of the Company’s asset-backed securitizations do not meet the criteria to be accounted for as a sale because, in addition to retaining servicing rights, the Company retains a financial interest in the VIE in the form of a debt security. These transactions are treated as secured borrowings. As secured borrowings, the retail motorcycle finance receivables remain on the balance sheet with a corresponding obligation reflected as debt. There is no amortization schedule for the secured notes; however, the debt is reduced monthly as available collections on the related retail motorcycle finance receivables are applied to outstanding principal. The secured notes have various contractual maturities ranging from 2020 to 2026.
During the second quarter of 2019, the Company issued $500.0 million and $525.0 million, or $498.7 million and $522.6 million net of discount and issuance costs, respectively, of secured notes through on-balance sheet asset-backed securitization transactions. There were no on-balance sheet asset-backed securitization transactions during the first quarter of 2019 or the first half of 2018. There were no off-balance sheet asset-backed securitization transactions during the first half of 2019 or 2018.
Support Agreement - The Company has a support agreement with HDFS whereby, if required, the Company agrees to provide HDFS with financial support to maintain HDFS’ fixed-charge coverage at 1.25 and minimum net worth of $40.0 million. Support may be provided at the Company’s option as capital contributions or loans. Accordingly, certain debt covenants may restrict the Company’s ability to withdraw funds from HDFS outside the normal course of business. No amount has ever been provided to HDFS under the support agreement.
Operating and Financial Covenants – HDFS and the Company are subject to various operating and financial covenants related to the credit facilities and various operating covenants under the Notes and the U.S. and Canadian asset-backed commercial paper conduit facilities. The more significant covenants are described below.
64

Table of Contents
The operating covenants limit the Company’s and HDFS’ ability to:

• | Assume or incur certain liens;

• | Participate in certain mergers or consolidations; and

• | Purchase or hold margin stock.

Under the current financial covenants of the Global Credit Facilities, the ratio of HDFS’ consolidated debt, excluding secured debt, to HDFS’ consolidated shareholders' equity, excluding accumulated other comprehensive income (loss), cannot exceed 10.0 to 1.0 as of the end of any fiscal quarter. In addition, the ratio of the Company's consolidated debt to the Company's consolidated debt and consolidated shareholders’ equity (where the Company's consolidated debt in each case excludes that of HDFS and its subsidiaries, and the Company's consolidated shareholders’ equity excludes accumulated other comprehensive income (loss)), cannot exceed 0.7 to 1.0 as of the end of any fiscal quarter. No financial covenants are required under the Notes or the U.S. or Canadian asset-backed commercial paper conduit facilities.
At June 30, 2019, HDFS and the Company remained in compliance with all of the then existing covenants.
Cautionary Statements
The Company's ability to meet the targets and expectations noted above depends upon, among other factors, the Company's ability to (i) execute its business plans and strategies, including the elements of the More Roads to Harley-Davidson plan for growth that the Company disclosed on July 30, 2018, and strengthen its existing business while enabling growth, (ii) manage and predict the impact that new or adjusted tariffs may have on our ability to sell product internationally, and the cost of raw materials and components, (iii) execute its strategy of growing ridership, globally, (iv) effectively execute the Company’s Manufacturing Optimization Plan within expected costs and timing and successfully carry out its global manufacturing and assembly operations, (v) accurately analyze, predict and react to changing market conditions and successfully adjust to shifting global consumer needs and interests, (vi) successfully launch a smaller displacement motorcycle in India, (vii) develop and introduce products, services and experiences on a timely basis that the market accepts, that enable the Company to generate desired sales levels and that provide the desired financial returns, (viii) perform in a manner that enables the Company to benefit from market opportunities while competing against existing and new competitors, (ix) realize expectations concerning market demand for electric models, which may depend in part on the building of necessary infrastructure, (x) prevent, detect, and remediate any issues with its motorcycles or any issues associated with the manufacturing processes to avoid delays in new model launches, recall campaigns, regulatory agency investigations, increased warranty costs or litigation and adverse effects on its reputation and brand strength, and carry out any product programs or recalls within expected costs and timing, (xi) manage supply chain issues, including quality issues and any unexpected interruptions or price increases caused by raw material shortages or natural disasters, (xii) manage the impact that prices for and supply of used motorcycles may have on its business, including on retail sales of new motorcycles, (xiii) reduce other costs to offset costs of the More Roads to Harley-Davidson plan and redirect capital without adversely affecting its existing business, (xiv) balance production volumes for its new motorcycles with consumer demand, (xv) manage risks that arise through expanding international manufacturing, operations and sales, (xvi) manage through changes in general economic and business conditions, including changing capital, credit and retail markets, and the changing political environment, (xvii) successfully determine, implement on a timely basis, and maintain a manner in which to sell motorcycles in the European Union, China, and ASEAN countries that does not subject its motorcycles to incremental tariffs, (xviii) accurately estimate and adjust to fluctuations in foreign currency exchange rates, interest rates and commodity prices, (xix) continue to develop the capabilities of its distributors and dealers, effectively implement changes relating to its dealers and distribution methods and manage the risks that its independent dealers may have difficulty obtaining capital and managing through changing economic conditions and consumer demand, (xx) retain and attract talented employees, (xxi) prevent a cybersecurity breach involving consumer, employee, dealer, supplier, or Company data and respond to evolving regulatory requirements regarding data security, (xxii) manage the credit quality, the loan servicing and collection activities, and the recovery rates of HDFS' loan portfolio, (xxiii) adjust to tax reform, healthcare inflation and reform and pension reform, and successfully estimate the impact of any such reform on the Company’s business, (xxiv) manage through the effects inconsistent and unpredictable weather patterns may have on retail sales of motorcycles, (xxv) implement and manage enterprise-wide information technology systems, including systems at its manufacturing facilities, (xxvi) manage changes and prepare for requirements in legislative and regulatory environments for its products, services and operations, (xxvii) manage its exposure to product liability claims and commercial or contractual disputes, (xxviii) successfully access the capital and/or credit markets on terms (including interest rates) that are acceptable to the Company and within its expectations, (xxix) conduct its corporate and manufacturing operations in Thailand in a manner that allows the Company to avail itself of preferential free trade agreements and duty rates, and sufficiently lower prices of its motorcycles in certain markets, (xxx) continue to manage the relationships and agreements that the Company has with its labor unions to help drive long-term competitiveness, (xxxi) accurately predict the margins of its Motorcycles and Related Products segment in light of, among other things, tariffs, the cost associated with the More Roads to Harley-Davidson plan, the Company's Manufacturing Optimization Plan, and its complex supply chain, and (xxxii) develop and maintain a productive relationship with Zhejiang Qianjiang Motorcycle Co., Ltd. and launch related products in a timely manner.
65

Table of Contents
The Company could experience delays or disruptions in its operations as a result of work stoppages, strikes, natural causes, terrorism or other factors. Further, actual foreign currency exchange rates may vary from underlying assumptions. Other factors are described in risk factors that the Company has disclosed in documents previously filed with the Securities and Exchange Commission. Many of these risk factors are impacted by the current changing capital, credit and retail markets and the Company's ability to manage through inconsistent economic conditions.
The Company’s ability to sell its motorcycles and related products and services and to meet its financial expectations also depends on the ability of the Company’s independent dealers to sell its motorcycles and related products and services to retail customers. The Company depends on the capability and financial capacity of its independent dealers to develop and implement effective retail sales plans to create demand for the motorcycles and related products and services they purchase from the Company. In addition, the Company’s independent dealers and distributors may experience difficulties in operating their businesses and selling Harley-Davidson motorcycles and related products and services as a result of weather, economic conditions or other factors.
In recent years, HDFS has experienced historically low levels of retail credit losses, but there is no assurance that this will continue. The Company believes that HDFS' retail credit losses may increase over time due to changing consumer credit behavior and HDFS' efforts to increase prudently structured loan approvals to sub-prime borrowers, as well as actions that the Company has taken and could take that impact motorcycle values.
Refer to Item 1A. Risk Factors of the Company’s Annual Report on Form 10-K for the year ended December 31, 2018 for a discussion of additional risk factors and a more complete discussion of some of the cautionary statements noted above.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
The Company is exposed to market risk from changes in foreign exchange rates, commodity prices and interest rates. To reduce such risks, the Company selectively uses derivative financial instruments. All hedging transactions are authorized and executed pursuant to regularly reviewed policies and procedures, which prohibit the use of financial instruments for speculative trading purposes. Sensitivity analysis is used to manage and monitor foreign exchange and interest rate risk.
The Company sells its products internationally and in most markets those sales are made in the foreign country’s local currency. As a result, the Company’s earnings are affected by fluctuations in the value of the U.S. dollar relative to foreign currency. The Company’s most significant foreign currency risk relates to the Euro, Australian dollar, Japanese yen, Brazilian real, Canadian dollar, Mexican peso, Indian rupee, and Pound sterling. The Company utilizes foreign currency contracts to mitigate the effect of certain currencies' fluctuations on earnings. The foreign currency contracts are entered into with banks and allow the Company to exchange a specified amount of foreign currency for U.S. dollars at a future date, based on a fixed exchange rate.
The Company's earnings are affected by changes in the prices of commodities used in the production of motorcycles. The Company uses derivative instruments on a limited basis to hedge the prices of certain commodities.
HDFS’ earnings are affected by changes in interest rates. HDFS’ interest-rate sensitive financial instruments include finance receivables, debt and interest rate derivatives. HDFS utilizes interest rate swaps and caps to reduce the impact of fluctuations in interest rates on its debt.
Refer to the Company's Annual Report on Form 10-K for the year ended December 31, 2018 for further information concerning the Company's market risk. There have been no material changes to the market risk information included in the Company's Annual Report on Form 10-K for the year ended December 31, 2018.
66

Table of Contents
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
In accordance with Rule 13a-15(b) of the Securities Exchange Act of 1934 (the Exchange Act), as of the end of the period covered by this Quarterly Report on Form 10-Q, the Company’s management evaluated, with the participation of the Company’s President and Chief Executive Officer and the Senior Vice President and Chief Financial Officer, the effectiveness of the design and operation of the Company’s disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act). Based upon their evaluation of these disclosure controls and procedures, the President and Chief Executive Officer and the Senior Vice President and Chief Financial Officer have concluded that the disclosure controls and procedures were effective as of the end of the period covered by this Quarterly Report on Form 10-Q to ensure that information required to be disclosed by the Company in the reports it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time period specified in the Securities and Exchange Commission rules and forms, and to ensure that information required to be disclosed by the Company in the reports it files or submits under the Exchange Act is accumulated and communicated to the Company’s management, including its President and Chief Executive Officer and Senior Vice President and Chief Financial Officer, as appropriate, to allow timely decisions regarding disclosure.
Changes in Internal Controls
There were no changes in the Company's internal control over financial reporting during the quarter ended June 30, 2019 that materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.
67

Table of Contents
PART II – OTHER INFORMATION
Item 1. Legal Proceedings
The information required under this Item 1 of Part II is contained in Item 1 of Part I of this Quarterly Report on Form 10-Q in Note 17 of the Notes to Consolidated Financial Statements, and such information is incorporated herein by reference in this Item 1 of Part II.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
The following table contains detail related to the Company's repurchase of its common stock based on the date of trade during the quarter ended June 30, 2019:

2019 Fiscal Month |  | Total Number of Shares Purchased(a) |  | Average Price Paid per Share |  | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs |  | Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs
April 1 to May 5 |  | — |  |  | $ | — |  |  | — |  |  | 14,943,706 |
May 6 to June 2 |  | 416,173 |  |  | $ | 34 |  |  | 416,173 |  |  | 14,528,706 |
June 3 to June 30 |  | 824,692 |  |  | $ | 35 |  |  | 824,692 |  |  | 13,704,306 |
Total |  | 1,240,865 |  |  | $ | 35 |  |  | 1,240,865 |  |  |

(a) | Includes discretionary share repurchases and shares of common stock that employees surrendered to satisfy withholding taxes in connection with the vesting of restricted stock units

In February 2018, the Company's Board of Directors authorized the Company to repurchase up to 15.0 million shares of its common stock with no dollar limit or expiration date. The Company repurchased 1.2 million shares on a discretionary basis during the quarter ended June 30, 2019 under this authorization. As of June 30, 2019, 13.7 million shares remained under this authorization.
Under the share repurchase authorization, the Company’s common stock may be purchased through any one or more of a Rule 10b5-1 trading plan and discretionary purchases on the open market, block trades, accelerated share repurchases, or privately negotiated transactions. The number of shares repurchased, if any, and the timing of repurchases will depend on a number of factors, including share price, trading volume, and general market conditions, as well as on working capital requirements, general business conditions, and other factors. The repurchase authority has no expiration date but may be suspended, modified, or discontinued at any time.
The Harley-Davidson, Inc. 2014 Incentive Stock Plan and predecessor stock plans permit participants to satisfy all or a portion of the statutory federal, state, and local withholding tax obligations arising in connection with plan awards by electing to (a) have the Company withhold shares otherwise issuable under the award, (b) tender back shares received in connection with such award, or (c) deliver other previously owned shares, in each case having a value equal to the amount to be withheld. During the second quarter of 2019, the Company acquired 1,465 shares of common stock that employees presented to the Company to satisfy withholding taxes in connection with the vesting of restricted stock units.
Item 6. Exhibits
Refer to the Exhibit Index immediately following this page.
68

Table of Contents
Harley-Davidson, Inc.
Exhibit Index to Form 10-Q

Exhibit No. |  | Description
10.1* |  | Form of Aircraft Time Sharing Agreement between the Registrant and each of Messrs. Levatich, Olin, Jones, Mansfield, Grimmer and Hund and Mses. Kumbier and Anding (supersedes form of Aircraft Time Sharing Agreement originally filed as Exhibit 10.1 to the Registrant's Quarterly Report on Form 10-Q for the quarter ended September 30, 2012).
10.2* |  | Form of Transition Agreement between the Registrant and each of Messrs. Mansfield and Grimmer and Ms. Anding (incorporated herein by reference to Exhibit 10.1 to the Registrant's Quarterly Report on Form 10-Q for the period ended April 1, 2018 (File No. 1-9183))
10.3* |  | Amended and Restated Harley-Davidson, Inc. 2014 Incentive Stock Plan as amended effective January 25, 2019
31.1 |  | Chief Executive Officer Certification pursuant to Rule 13a-14(a)
31.2 |  | Chief Financial Officer Certification pursuant to Rule 13a-14(a)
32.1 |  | Written Statement of the Chief Executive Officer and the Chief Financial Officer pursuant to 18 U.S.C. §1350
101.INS |  | XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.SCH |  | XBRL Taxonomy Extension Schema Document
101.CAL |  | XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF |  | XBRL Taxonomy Extension Definition Linkbase Document
101.LAB |  | XBRL Taxonomy Extension Label Linkbase Document
101.PRE |  | XBRL Taxonomy Extension Presentation Linkbase Document

* | Represents a management contract or compensatory plan, contract or arrangement in which a director or named executive officer of the Company participated.

69

Table of Contents
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

| HARLEY-DAVIDSON, INC.
Date: August 8, 2019 | /s/ John A. Olin
| John A. Olin
| Senior Vice President and
| Chief Financial Officer
| (Principal financial officer)

Date: August 8, 2019 | /s/ Mark R. Kornetzke
| Mark R. Kornetzke
| Chief Accounting Officer
| (Principal accounting officer)

70