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, 2023~~March 31, 2024


☐			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 ~~141,686,771~~134,505,837 shares of common stock as of ~~July 28, 2023.~~April 29, 2024.

HARLEY-DAVIDSON, INC.

Form 10-Q

For The Quarter Ended ~~June 30, 2023~~March 31, 2024


Part I	Financial Information	3
Item 1.	Financial Statements	3
	Consolidated Statements of Operations	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
	1. Basis of Presentation and Use of Estimates	9
	2. New Accounting Standards	9
	3. Revenue	10
	4. Income Taxes	1011
	5. Earnings Per Share	11
	6. Additional Balance Sheet and Cash Flow Information	11
	7. Finance Receivables	1213
	8. Derivative Financial Instruments and Hedging Activities	1819
	9. Debt	22
	10. Asset-Backed Financing	23
	11. Fair Value	26
	12. Product Warranty and Recall Campaigns	2728
	13. Employee Benefit Plans	2829
	14. Commitments and Contingencies	2930
	15. Accumulated Other Comprehensive Loss	3031
	16. Reportable Segments	32
	17. Supplemental Consolidating Data	32

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	4140
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	6156
Item 4.	Controls and Procedures	6257
Part II	Other Information	6257
Item 1.	Legal Proceedings	6257
Item 1A.	Risk Factors	57
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	6258
Item 5.	Other Information	6358
Item 6.	Exhibits	6358
Signatures		6560

Table of Contents

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements

HARLEY-DAVIDSON, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share amounts)

(Unaudited)


		Three months ended				Six months ended
		June 30, 2023		June 26, 2022		June 30, 2023		June 26, 2022

		March 31, 2024
		March 31, 2024
		March 31, 2024
Revenue:
Revenue:
Revenue:	Revenue:
Motorcycles and related products	Motorcycles and related products	$	1,205,162	$	1,266,471	$	2,770,753	$	2,569,642
Motorcycles and related products
Motorcycles and related products
Financial services	Financial services	240,361		202,616		463,456		394,631
		1,445,523		1,469,087		3,234,209		2,964,273
Financial services
Financial services
		1,729,607
		1,729,607
		1,729,607
Costs and expenses:
Costs and expenses:
Costs and expenses:	Costs and expenses:
Motorcycles and related products cost of goods sold	Motorcycles and related products cost of goods sold	790,628		879,721		1,797,929		1,775,257
Motorcycles and related products cost of goods sold
Motorcycles and related products cost of goods sold
Financial services interest expense
Financial services interest expense
Financial services interest expense	Financial services interest expense	86,005		47,649		159,554		89,748
Financial services provision for credit losses	Financial services provision for credit losses	57,278		29,133		109,642		57,955
Financial services provision for credit losses
Financial services provision for credit losses
Selling, administrative and engineering expense	Selling, administrative and engineering expense	290,274		235,233		576,137		474,858
Restructuring benefit		—		(264)		—		(392)
Selling, administrative and engineering expense
Selling, administrative and engineering expense
		1,224,185		1,191,472		2,643,262		2,397,426
		1,466,528

		1,466,528

		1,466,528
Operating income
Operating income
Operating income	Operating income	221,338		277,615		590,947		566,847
Other income, net	Other income, net	7,226		10,055		27,322		21,085
Investment income (loss)		11,151		(3,530)		21,176		(5,509)
Other income, net
Other income, net
Investment income
Investment income
Investment income
Interest expense
Interest expense
Interest expense	Interest expense	7,696		7,720		15,416		15,431
Income before income taxes	Income before income taxes	232,019		276,420		624,029		566,992
Income before income taxes
Income before income taxes
Income tax provision
Income tax provision
Income tax provision	Income tax provision	58,189		60,571		148,370		128,641
Net income	Net income	173,830		215,849		475,659		438,351
Net income
Net income
Less: Loss attributable to noncontrolling interests
Less: Loss attributable to noncontrolling interests
Less: Loss attributable to noncontrolling interests	Less: Loss attributable to noncontrolling interests	4,209		—		6,470		—
Net income attributable to Harley-Davidson, Inc.	Net income attributable to Harley-Davidson, Inc.	$	178,039	$	215,849	$	482,129	$	438,351
Net income attributable to Harley-Davidson, Inc.
Net income attributable to Harley-Davidson, Inc.
Earnings per share:
Earnings per share:
Earnings per share:	Earnings per share:
Basic	Basic	$	1.24	$	1.47	$	3.33	$	2.92
Basic
Basic
Diluted
Diluted
Diluted	Diluted	$	1.22	$	1.46	$	3.27	$	2.91
Cash dividends per share	Cash dividends per share	$	0.1650	$	0.1575	$	0.3300	$	0.3150
Cash dividends per share
Cash dividends per share

The accompanying notes are integral to the consolidated financial statements.

Table of Contents

HARLEY-DAVIDSON, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In thousands)

(Unaudited)


		Three months ended				Six months ended
		June 30, 2023		June 26, 2022		June 30, 2023		June 26, 2022

		March 31, 2024
		March 31, 2024
		March 31, 2024
Net income
Net income
Net income	Net income	$	173,830	$	215,849	$	475,659	$	438,351
Other comprehensive (loss) income, net of tax:	Other comprehensive (loss) income, net of tax:
Other comprehensive (loss) income, net of tax:
Other comprehensive (loss) income, net of tax:
Foreign currency translation adjustments	Foreign currency translation adjustments	(19,637)		(31,021)		(9,516)		(35,142)
Foreign currency translation adjustments
Foreign currency translation adjustments
Derivative financial instruments
Derivative financial instruments
Derivative financial instruments	Derivative financial instruments	19,126		12,852		(2,756)		22,780

Pension and postretirement benefit plans	Pension and postretirement benefit plans	(961)		5,503		(1,923)		11,005
		(1,472)		(12,666)		(14,195)		(1,357)
Pension and postretirement benefit plans

Pension and postretirement benefit plans
		(27,596)
		(27,596)
		(27,596)
Comprehensive income
Comprehensive income
Comprehensive income	Comprehensive income	172,358		203,183		461,464		436,994
Less: Comprehensive loss attributable to noncontrolling interests	Less: Comprehensive loss attributable to noncontrolling interests	4,209		—		6,470		—
Less: Comprehensive loss attributable to noncontrolling interests
Less: Comprehensive loss attributable to noncontrolling interests
Comprehensive income attributable to Harley-Davidson, Inc.	Comprehensive income attributable to Harley-Davidson, Inc.	$	176,567	$	203,183	$	467,934	$	436,994
Comprehensive income attributable to Harley-Davidson, Inc.
Comprehensive income attributable to Harley-Davidson, Inc.

The accompanying notes are integral to the consolidated financial statements.

Table of Contents

HARLEY-DAVIDSON, INC.

CONSOLIDATED BALANCE SHEETS

(In thousands)


		(Unaudited)				(Unaudited)
		June 30, 2023		December 31, 2022		June 26, 2022
	(Unaudited)								(Unaudited)			(Unaudited)
	March 31, 2024								March 31, 2024	December 31, 2023	March 31, 2023
ASSETS	ASSETS

Cash and cash equivalents	Cash and cash equivalents	$	1,521,940	$	1,433,175	$	2,194,259

Cash and cash equivalents

Cash and cash equivalents

Accounts receivable, net	Accounts receivable, net	329,487		252,225		302,049
Finance receivables, net of allowance of $65,541, $62,488, and $59,851		1,979,645		1,782,631		1,674,970
Accounts receivable, net
Accounts receivable, net
Finance receivables, net of allowance of $66,302, $67,035, and $62,706
Inventories, net	Inventories, net	846,033		950,960		726,586
Restricted cash	Restricted cash	135,618		135,424		226,488
Other current assets	Other current assets	201,702		196,238		183,816
Current assets	Current assets	5,014,425		4,750,653		5,308,168
Finance receivables, net of allowance of $316,239, $296,223, and $292,286		5,530,221		5,355,807		5,428,714
Finance receivables, net of allowance of $314,059, $314,931, and $295,725
Property, plant and equipment, net	Property, plant and equipment, net	688,116		689,886		652,153
Pension and postretirement assets	Pension and postretirement assets	353,004		320,133		411,906
Goodwill	Goodwill	62,451		62,090		61,890
Deferred income taxes	Deferred income taxes	145,368		135,041		69,394
Lease assets	Lease assets	73,226		43,931		44,247
Other long-term assets	Other long-term assets	148,750		134,935		145,146
	$
LIABILITIES AND SHAREHOLDERS’ EQUITY
		$	12,015,561	$	11,492,476	$	12,121,618
LIABILITIES AND SHAREHOLDERS’ EQUITY
Accounts payable

Accounts payable

Accounts payable	Accounts payable	$	359,425	$	378,002	$	416,703
Accrued liabilities	Accrued liabilities	590,685		620,945		592,259
Short-term deposits, net	Short-term deposits, net	216,293		79,710		78,005
Short-term debt	Short-term debt	695,356		770,468		701,384
Current portion of long-term debt, net	Current portion of long-term debt, net	604,700		1,684,782		1,887,552
Current liabilities	Current liabilities	2,466,459		3,533,907		3,675,903
Long-term deposits, net	Long-term deposits, net	223,618		237,665		267,785
Long-term debt, net	Long-term debt, net	5,765,246		4,457,052		5,204,317
Lease liabilities	Lease liabilities	56,110		26,777		26,697
Pension and postretirement liabilities	Pension and postretirement liabilities	66,801		67,955		91,362
Deferred income taxes	Deferred income taxes	31,519		29,528		9,189
Other long-term liabilities	Other long-term liabilities	215,952		232,784		211,213
Commitments and contingencies (Note 14)	Commitments and contingencies (Note 14)							Commitments and contingencies (Note 14)
Shareholders’ equity:	Shareholders’ equity:

Common stock	Common stock	1,712		1,704		1,704

Common stock

Common stock
Additional paid-in-capital	Additional paid-in-capital	1,722,853		1,688,159		1,564,364
Retained earnings	Retained earnings	2,924,585		2,490,649		2,233,626
Accumulated other comprehensive loss	Accumulated other comprehensive loss	(356,124)		(341,929)		(242,276)
Treasury stock, at cost	Treasury stock, at cost	(1,104,130)		(935,064)		(922,266)
Total Harley-Davidson, Inc. shareholders' equity	Total Harley-Davidson, Inc. shareholders' equity	3,188,896		2,903,519		2,635,152
Noncontrolling interest	Noncontrolling interest	960		3,289		—
Total equity	Total equity	3,189,856		2,906,808		2,635,152
		$	12,015,561	$	11,492,476	$	12,121,618
	$

Table of Contents

HARLEY-DAVIDSON, INC.

CONSOLIDATED BALANCE SHEETS (continued)

(In thousands)


		(Unaudited)				(Unaudited)
		June 30, 2023		December 31, 2022		June 26, 2022
	(Unaudited)							(Unaudited)			(Unaudited)
	March 31, 2024							March 31, 2024	December 31, 2023	March 31, 2023
Balances held by consolidated variable interest entities (Note 10):	Balances held by consolidated variable interest entities (Note 10):
Finance receivables, net - current
Finance receivables, net - current
Finance receivables, net - current	Finance receivables, net - current	$	516,423	$	559,651	$	704,048
Other assets	Other assets	$	10,632	$	9,805	$	4,214
Finance receivables, net - non-current	Finance receivables, net - non-current	$	2,053,605	$	2,317,956	$	3,198,752
Restricted cash - current and non-current	Restricted cash - current and non-current	$	140,102	$	141,128	$	245,730
Current portion of long-term debt, net	Current portion of long-term debt, net	$	583,367	$	619,683	$	834,104
Long-term debt, net	Long-term debt, net	$	1,659,584	$	1,825,525	$	2,584,445

The accompanying notes are integral to the consolidated financial statements.

Table of Contents

HARLEY-DAVIDSON, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)


		Six months ended				Three months ended
		June 30, 2023		June 26, 2022
	March 31, 2024						March 31, 2024	March 31, 2023
Net cash provided by operating activities (Note 6)	Net cash provided by operating activities (Note 6)	$	410,520	$	244,186
Cash flows from investing activities:	Cash flows from investing activities:
Capital expenditures
Capital expenditures
Capital expenditures	Capital expenditures	(86,526)		(55,015)
Origination of finance receivables	Origination of finance receivables	(2,128,983)		(2,511,193)
Collections on finance receivables	Collections on finance receivables	1,869,463		2,071,952

Other investing activities	Other investing activities	850		797

Other investing activities

Other investing activities
Net cash used by investing activities	Net cash used by investing activities	(345,196)		(493,459)
Cash flows from financing activities:	Cash flows from financing activities:
Proceeds from issuance of medium-term notes
Proceeds from issuance of medium-term notes
Proceeds from issuance of medium-term notes	Proceeds from issuance of medium-term notes	1,446,304		495,785
Repayments of medium-term notes	Repayments of medium-term notes	(1,056,680)		(950,000)

Proceeds from securitization debt	Proceeds from securitization debt	547,706		1,826,891

Proceeds from securitization debt

Proceeds from securitization debt
Repayments of securitization debt	Repayments of securitization debt	(645,377)		(610,205)
Borrowings of asset-backed commercial paper	Borrowings of asset-backed commercial paper	33,547		425,253
Repayments of asset-backed commercial paper	Repayments of asset-backed commercial paper	(129,961)		(133,159)
Net decrease in unsecured commercial paper		(75,229)		(50,672)
Net increase (decrease) in unsecured commercial paper

Net increase in deposits		122,288		55,255
Net (decrease) increase in deposits
Net (decrease) increase in deposits
Net (decrease) increase in deposits

Dividends paid
Dividends paid
Dividends paid	Dividends paid	(48,193)		(47,146)
Repurchase of common stock	Repurchase of common stock	(169,645)		(325,828)
Other financing activities	Other financing activities	76		(1,237)
Net cash provided by financing activities		24,836		684,937
Net cash (used) provided by financing activities
Effect of exchange rate changes on cash, cash equivalents and restricted cash	Effect of exchange rate changes on cash, cash equivalents and restricted cash	(490)		(14,413)
Net increase in cash, cash equivalents and restricted cash		$	89,670	$	421,251
Net (decrease) increase in cash, cash equivalents and restricted cash

Cash, cash equivalents and restricted cash:	Cash, cash equivalents and restricted cash:
Cash, cash equivalents and restricted cash:
Cash, cash equivalents and restricted cash:
Cash, cash equivalents and restricted cash, beginning of period	Cash, cash equivalents and restricted cash, beginning of period	$	1,579,177	$	2,025,219
Net increase in cash, cash equivalents and restricted cash		89,670		421,251
Cash, cash equivalents and restricted cash, beginning of period
Cash, cash equivalents and restricted cash, beginning of period
Net (decrease) increase in cash, cash equivalents and restricted cash
Cash, cash equivalents and restricted cash, end of period	Cash, cash equivalents and restricted cash, end of period	$	1,668,847	$	2,446,470

Reconciliation of cash, cash equivalents and restricted cash on the Consolidated balance sheets to the Consolidated statements of cash flows:	Reconciliation of cash, cash equivalents and restricted cash on the Consolidated balance sheets to the Consolidated statements of cash flows:
Reconciliation of cash, cash equivalents and restricted cash on the Consolidated balance sheets to the Consolidated statements of cash flows:
Reconciliation of cash, cash equivalents and restricted cash on the Consolidated balance sheets to the Consolidated statements of cash flows:
Cash and cash equivalents
Cash and cash equivalents
Cash and cash equivalents	Cash and cash equivalents	$	1,521,940	$	2,194,259
Restricted cash	Restricted cash	135,618		226,488
Restricted cash included in Other long-term assets	Restricted cash included in Other long-term assets	11,289		25,723
Cash, cash equivalents and restricted cash per the Consolidated statements of cash flows	Cash, cash equivalents and restricted cash per the Consolidated statements of cash flows	$	1,668,847	$	2,446,470

The accompanying notes are integral to the consolidated financial statements.

Table of Contents

HARLEY-DAVIDSON, INC.

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

(In thousands, except share and per share amounts)

(Unaudited)


	Equity Attributable to Harley-Davidson, Inc.

		Equity Attributable to Harley-Davidson, Inc.
		Common Stock			Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Treasury Stock		Total		Equity Attributable to Noncontrolling Interests		Total Equity		Common Stock				Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Treasury Stock		Total		Equity Attributable to Noncontrolling Interests		Total Equity
		Issued Shares	Balance
Balance, December 31, 2022		170,400,212	$	1,704			$	1,688,159	$	2,490,649	$	(341,929)	$	(935,064)	$	2,903,519	$	3,289			$	2,906,808
Balance, December 31, 2023
Balance, December 31, 2023
Balance, December 31, 2023
Net income (loss)	Net income (loss)	—	—		—		304,090		—		—		304,090		(2,261)		$	301,829
Other comprehensive income, net of tax (Note 15)	Other comprehensive income, net of tax (Note 15)	—	—		—		—		(12,723)		—		(12,723)		—		$	(12,723)
Dividends ($0.1650 per share)		—	—		—		(24,123)		—		—		(24,123)		—		$	(24,123)
Dividends ($0.1725 per share)
Repurchase of common stock	Repurchase of common stock	—	—		—		—		—		(96,767)		(96,767)		—		$	(96,767)
Share-based compensation	Share-based compensation	733,658	7		19,055		—		—		—		19,062		1,763		$	20,825

Balance, March 31, 2023		171,133,870	1,711		1,707,214		2,770,616		(354,652)		(1,031,831)		3,093,058		2,791		3,095,849
Net income (loss)		—	—		—		178,039		—		—		178,039		(4,209)		$	173,830
Other comprehensive loss, net of tax (Note 15)		—	—		—		—		(1,472)		—		(1,472)		—		$	(1,472)
Dividends ($0.1650 per share)		—	—		—		(24,070)		—		—		(24,070)		—		$	(24,070)
Repurchase of common stock		—	—		—		—		—		(74,184)		(74,184)		—		$	(74,184)
Share-based compensation		38,173	1		15,639		—		—		1,885		17,525		2,378		$	19,903
Balance, June 30, 2023		171,172,043	1,712		1,722,853		2,924,585		(356,124)		(1,104,130)		3,188,896		960		3,189,856
Balance, March 31, 2024
Balance, March 31, 2024
Balance, March 31, 2024

Balance, December 31, 2021		169,364,686	$	1,694	$	1,547,011	$	1,842,421	$	(240,919)	$	(596,963)	$	2,553,244	$	—	$	2,553,244
Net income		—	—		—		222,502		—		—		222,502		—		$	222,502
Other comprehensive income, net of tax (Note 15)		—	—		—		—		11,309		—		11,309		—		$	11,309
Dividends ($0.1575 per share)		—	—		—		(24,056)		—		—		(24,056)		—		$	(24,056)
Repurchase of common stock		—	—		—		—		—		(261,737)		(261,737)		—		$	(261,737)
Share-based compensation		976,062	10		7,829		—		—		—		7,839		—		$	7,839

Balance, March 27, 2022		170,340,748	1,704		1,554,840		2,040,867		(229,610)		(858,700)		2,509,101		—		2,509,101
Net income		—	—		—		215,849		—		—		215,849		—		$	215,849
Other comprehensive income, net of tax (Note 15)		—	—		—		—		(12,666)		—		(12,666)		—		$	(12,666)
Dividends ($0.1575 per share)		—	—		—		(23,090)		—		—		(23,090)		—		$	(23,090)
Repurchase of common stock		—	—		—		—		—		(64,091)		(64,091)		—		$	(64,091)
Share-based compensation		23,479	—		9,524		—		—		525		10,049		—		$	10,049
Balance, June 26, 2022		170,364,227	1,704		1,564,364		2,233,626		(242,276)		(922,266)		2,635,152		—		2,635,152

		Equity Attributable to Harley-Davidson, Inc.

		Equity Attributable to Harley-Davidson, Inc.

		Equity Attributable to Harley-Davidson, Inc.


																				Common Stock				Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Treasury Stock		Total		Equity Attributable to Noncontrolling Interests		Total Equity
	Issued Shares
Balance, December 31, 2022
Balance, December 31, 2022
Balance, December 31, 2022
Net income (loss)
Other comprehensive income, net of tax (Note 15)
Dividends ($0.1650 per share)
Repurchase of common stock
Share-based compensation

Balance, March 31, 2023
Balance, March 31, 2023
Balance, March 31, 2023

The accompanying notes are integral to the consolidated financial statements.

Table of Contents

HARLEY-DAVIDSON, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1. Basis of Presentation and Use of Estimates

Principles of Consolidation and Basis of Presentation – The consolidated financial statements include the accounts of Harley-Davidson, Inc. and its subsidiaries and certain variable interest entities (VIEs) related to secured financing as the Company is the primary beneficiary. All intercompany accounts and material intercompany transactions have been eliminated. The Company has a controlling equity interest in LiveWire Group, Inc. As the controlling shareholder, the Company consolidates LiveWire Group, Inc. results with additional adjustments to recognize non-controlling shareholder interests.

The Company operates in three reportable segments: Harley-Davidson Motor Company (HDMC), LiveWire and Harley-Davidson Financial Services (HDFS). ~~The Company changed its segments in the period ended December 31, 2022. The change has been retrospectively reflected in the periods presented below.~~

Substantially all of the Company’s international subsidiaries use their respective local currency as their functional currency. Assets and liabilities of international subsidiaries have been translated at period-end exchange rates, and revenues and expenses have been translated using average exchange rates for the period. Monetary assets and liabilities denominated in a currency that is different from an entity's functional currency are remeasured from the transactional currency to the entity's functional currency on a monthly basis. The aggregate transaction gain (loss) resulting from foreign currency remeasurements was ~~$1.1~~($2.9) million and ~~$5.7~~$3.3 million for the three month periods ended ~~June 30,~~March 31, 2024 and March 31, 2023, ~~and June 26, 2022, respectively, and $4.5 million and $7.3 million for the six month periods ended June 30, 2023 and June 26, 2022,~~ respectively.

In the opinion of the Company's 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,~~March 31, 2024 and March 31, 2023, ~~and June 26, 2022,~~ the Consolidated statements of operations 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~~three month periods then ended, and the Consolidated statements of shareholders' equity for the three month periods ~~within the six month periods~~ ended ~~June 30, 2023~~March 31, 2024 and ~~June 26, 2022.~~March 31, 2023.

Certain information and disclosures normally included in complete financial statements have been condensed or omitted pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (SEC) and U.S. generally accepted accounting principles (U.S. GAAP) for interim financial reporting. The consolidated financial statements should be read in conjunction with the audited consolidated financial statements and accompanying notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2022.~~2023.

Use of Estimates – The preparation of financial statements in conformity with U.S. GAAP requires the Company's management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and the accompanying notes. Actual results could differ from those estimates.

Fair Value Measurements – 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. Foreign currency contracts, commodity contracts, and cross-currency swaps are valued using quoted forward rates and prices; interest rate caps are valued using quoted interest rates and yield curves; LiveWire warrants, including public (Level 1) and private placement (Level 2) warrants, are valued using the closing market price of the public warrants as the private placement warrants have terms and provisions that are identical to those of the public warrants.

Level 3 inputs are not observable in the market and include the Company's judgments about the assumptions market participants would use in pricing the asset or liability.

2. New Accounting Standards

Accounting Standards ~~Recently~~Not Yet Adopted

In ~~March 2022,~~November 2023, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. ~~2022-02, Financial Instruments-Credit Losses~~2023-07, Segment Reporting (Topic ~~326)~~280): ~~Troubled Debt Restructurings and Vintage~~Improvements to Reportable Segment Disclosures (ASU 2023-07). ASU 2023-07 is intended to improve reportable segment disclosures, primarily through enhanced disclosures about significant segment

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~~2022-02).~~expenses. The main provisions of ASU 2022-02 addresses areas identified by the FASB as part of its post-implementation review of its previously issued credit losses standard (ASU 2016-13) that introduced the current expected credit losses (CECL) model. ASU 2022-02 eliminates the accounting guidance for troubled debt restructurings by creditors that have adopted the CECL model and enhances disclosure requirements for certain loan refinancings and restructurings made with borrowers experiencing financial difficulty. In addition, ASU 2022-02 requires2023-07 require a public ~~business~~ entity to disclose ~~current-period gross write-offs~~on an annual and interim basis: (i) significant segment expenses provided to the chief operating decision maker, (ii) an amount representing the difference between segment revenue less segment expenses disclosed under the significant segment expense principle and each reported measure of segment profit or loss and a description of its composition, (iii) all annual disclosures about a reportable segment's profit or loss and assets currently required under Topic 280 in interim periods, (iv) clarification that if the chief operating decision maker uses more than one measure of a segment's profit or loss in assessing segment performance and deciding how to allocate resources, a public entity may report one or more of those additional measures of segment profit, (v) the title and position of the chief operating decision maker and an explanation of how the chief operating decision maker uses the reported measure of segment profit or loss in assessing segment performance and deciding how to allocate resources, and (vi) all disclosures required by ASU 2023-07 and all existing segment disclosures under Topic 280 for ~~financing receivables~~an entity with a single reportable segment. The new guidance is effective for the fiscal years beginning after December 15, 2023 and ~~net investment in leases by year of origination in the vintage disclosures.~~for interim periods within fiscal years beginning after December 15, 2024. Early adoption is permitted. The Company ~~adopted~~is still evaluating the impact ASU ~~2022-02 on January 1, 2023. The adoption did not~~2023-07 will have ~~a material impact~~ on the Company's consolidated financial ~~statements.~~statement disclosures.

In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which is intended to enhance the transparency and decision usefulness of income tax disclosures. The main provisions of ASU 2023-09 require a public entity to disclose on an annual basis (i) specific prescribed categories in the income tax rate reconciliation, (ii) additional information for reconciling items that meet a quantitative threshold, (iii) the amount of income taxes paid, net of refunds received, disaggregated by federal, state, and foreign taxes, (iv) the amount of income taxes paid, net of refunds received, disaggregated by individual jurisdictions in which the amount of income taxes paid is equal to greater than 5 percent of total income taxes paid, (v) income or loss from continuing operations before income tax expense or benefit disaggregated between domestic and foreign, and (vi) income tax expense or benefit from continuing operations disaggregated by federal, state, and foreign. ASU 2023-09 also removes certain disclosure requirements related to unrecognized tax benefits and cumulative unrecognized temporary differences. The new guidance is effective for the fiscal years beginning after December 15, 2024. Early adoption is permitted. The Company is still evaluating the impact ASU 2023-09 will have on the Company's consolidated financial statement disclosures.

3. Revenue

The Company recognizes revenue when it satisfies a performance obligation by transferring control of a good or service to a customer. Revenue is measured based on the consideration that the Company expects to be entitled to in exchange for the goods or services transferred. Taxes that are collected from a customer concurrent with revenue-producing activities are excluded from revenue.

Disaggregated revenue by major source was as follows (in thousands):


		Three months ended				Six months ended
		June 30, 2023		June 26, 2022		June 30, 2023		June 26, 2022
		Three months ended
		Three months ended
		Three months ended
		March 31, 2024
		March 31, 2024
		March 31, 2024
HDMC:
HDMC:
HDMC:	HDMC:
Motorcycles	Motorcycles	$	890,919	$	935,172	$	2,193,297	$	1,992,177
Motorcycles
Motorcycles
Parts and accessories
Parts and accessories
Parts and accessories	Parts and accessories	215,520		214,267		383,192		379,587
Apparel	Apparel	66,356		77,325		137,747		128,729
Apparel
Apparel
Licensing
Licensing
Licensing	Licensing	5,116		11,781		11,326		18,278
Other	Other	20,225		15,420		30,403		27,964
		1,198,136		1,253,965		2,755,965		2,546,735
Other
Other
		1,476,106
		1,476,106
		1,476,106
LiveWire	LiveWire	7,026		12,506		14,788		22,907
LiveWire
LiveWire
Motorcycles and related products revenue
Motorcycles and related products revenue
Motorcycles and related products revenue	Motorcycles and related products revenue	1,205,162		1,266,471		2,770,753		2,569,642

HDFS:	HDFS:

HDFS:

HDFS:
Interest income
Interest income
Interest income	Interest income	196,809		168,707		379,079		330,441
Other	Other	43,552		33,909		84,377		64,190
Other
Other
Financial services revenue	Financial services revenue	240,361		202,616		463,456		394,631
		$	1,445,523	$	1,469,087	$	3,234,209	$	2,964,273
Financial services revenue
Financial services revenue
		$
		$
		$

The Company maintains certain ~~deferred revenue~~contract liability balances related to payments received at contract inception in advance

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of the Company’s performance under the contract ~~and~~which generally ~~relates~~relate to the sale of ~~Harley Owners Group®~~ memberships, loyalty points earned under membership programs and ~~various financial services products. Deferred revenue is~~certain insurance-related contracts. Contract liabilities are recognized as revenue as the Company performs under the contract. ~~Deferred revenue,~~Contract liabilities, included in Accrued liabilities and Other long-term liabilities on the Consolidated balance sheets, was as follows (in thousands):


		June 30, 2023		June 26, 2022
		March 31, 2024
		March 31, 2024
		March 31, 2024				March 31, 2023
Balance, beginning of period	Balance, beginning of period	$	44,100	$	40,092
Balance, end of period	Balance, end of period	$	43,191	$	47,061

Previously deferred ~~revenue~~contract liabilities recognized as revenue in the three months ended ~~June 30,~~March 31, 2024 and March 31, 2023 ~~and June 26, 2022 was $6.5~~were $7.3 million and ~~$7.7~~$6.8 million, ~~respectively, and $13.4 million and $15.4 million in the six months ended June 30, 2023 and June 26, 2022, respectively .~~respectively. The Company expects to recognize approximately ~~$18.1~~$20.6 million of the remaining unearned revenue over the next 12 months and ~~$25.1~~$26.8 million thereafter.

4. Income Taxes

The Company’s effective income tax rate for the ~~six~~three months ended ~~June 30, 2023~~March 31, 2024 was ~~23.8%~~20.0% compared to ~~22.7%~~23.0% for the ~~six~~three months ended ~~June 26, 2022.~~March 31, 2023.

~~Table of Contents~~

5. Earnings Per Share

The computation of basic and diluted earnings per share was as follows (in thousands, except per share amounts):


		Three months ended				Six months ended
		June 30, 2023		June 26, 2022		June 30, 2023		June 26, 2022

		March 31, 2024
		March 31, 2024
		March 31, 2024
Net income attributable to Harley-Davidson, Inc.
Net income attributable to Harley-Davidson, Inc.
Net income attributable to Harley-Davidson, Inc.	Net income attributable to Harley-Davidson, Inc.	$	178,039	$	215,849	$	482,129	$	438,351

Basic weighted-average shares outstanding	Basic weighted-average shares outstanding	143,414		147,211		144,724		149,936

Basic weighted-average shares outstanding

Basic weighted-average shares outstanding
Effect of dilutive securities – employee stock compensation plan
Effect of dilutive securities – employee stock compensation plan
Effect of dilutive securities – employee stock compensation plan	Effect of dilutive securities – employee stock compensation plan	2,373		624		2,627		876
Diluted weighted-average shares outstanding	Diluted weighted-average shares outstanding	145,787		147,835		147,351		150,812
Diluted weighted-average shares outstanding
Diluted weighted-average shares outstanding
Net earnings per share:
Net earnings per share:
Net earnings per share:	Net earnings per share:
Basic	Basic	$	1.24	$	1.47	$	3.33	$	2.92
Basic
Basic
Diluted	Diluted	$	1.22	$	1.46	$	3.27	$	2.91
Diluted
Diluted

Shares of common stock related to share-based compensation that were not included in the effect of dilutive securities because the effect would have been anti-dilutive include 1.7 million and 1.3 million shares for ~~both~~ the three months ended ~~June 30,~~March 31, 2024 and March 31, 2023, ~~and June 26, 2022, and 1.3 million and 2.4 million shares for the six months ended June 30, 2023 and June 26, 2022,~~ respectively.

6. Additional Balance Sheet and Cash Flow Information

Investments in Marketable Securities – The Company’s investments in marketable securities consisted of the following (in thousands):
June 30,
2023 December 31,
2022 June 26,
2022
Mutual funds $ 35,175 $ 33,071 $ 38,779


	March 31, 2024		December 31, 2023		March 31, 2023

Mutual funds	$	36,484	$	34,079	$	34,017

Mutual funds, included in Other long-term assets on the Consolidated balance sheets, are carried at fair value with gains and losses recorded in income. Mutual funds are held to support certain deferred compensation obligations.

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Inventories, net – Substantially all inventories located in the U.S. 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. Motorcycle finished goods inventories include motorcycles that are ready for sale and motorcycles that are substantially complete but awaiting installation of certain components affected by supply chain constraints. Inventories, net consisted of the following (in thousands):


		June 30, 2023		December 31, 2022		June 26, 2022
	March 31, 2024							March 31, 2024	December 31, 2023	March 31, 2023
Raw materials and work in process	Raw materials and work in process	$	406,560	$	331,380	$	384,658
Motorcycle finished goods	Motorcycle finished goods	391,528		549,041		277,614
Parts and accessories and apparel	Parts and accessories and apparel	171,367		187,039		152,221
Inventory at lower of FIFO cost or net realizable value	Inventory at lower of FIFO cost or net realizable value	969,455		1,067,460		814,493
Excess of FIFO over LIFO cost	Excess of FIFO over LIFO cost	(123,422)		(116,500)		(87,907)
		$	846,033	$	950,960	$	726,586
	$

Deposits – HDFS offers brokered certificates of deposit to customers indirectly through contractual arrangements with third-party banks and/or securities brokerage firms through its bank subsidiary. The Company had ~~$439.9~~$441.2 million, ~~$317.4~~$447.8 million, and ~~$345.8~~$369.3 million, net of fees, of interest-bearing brokered certificates of deposit outstanding as of ~~June 30, 2023,~~March 31, 2024, December 31, ~~2022,~~2023, and ~~June 26, 2022,~~March 31, 2023, respectively. The liabilities for deposits are included in Short-term deposits, net or Long-term deposits, net on the Consolidated balance sheets based upon the term of each brokered certificate of deposit issued. Each separate brokered certificate of deposit is issued under a master certificate, and as such, all outstanding brokered certificates of deposit are considered below the Federal Deposit Insurance Corporation insurance coverage limits.

~~Table of Contents~~

Future maturities of the Company's certificates of deposit as of ~~June 30, 2023~~March 31, 2024 were as follows (in thousands):


2023		$	69,367
2024	2024	187,959
2025	2025	49,740
2026	2026	79,678
2027	2027	54,158
Thereafter	Thereafter	—
Future maturities	Future maturities	440,902
Unamortized fees	Unamortized fees	(991)
		$	439,911
	$

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Operating Cash Flow – The reconciliation of Net income to Net cash provided by operating activities was as follows (in thousands):


		Six months ended				Three months ended
		June 30, 2023		June 26, 2022
	March 31, 2024						March 31, 2024	March 31, 2023
Cash flows from operating activities:	Cash flows from operating activities:
Net income	Net income	$	475,659	$	438,351
Net income
Net income
Adjustments to reconcile Net income to Net cash provided by operating activities:	Adjustments to reconcile Net income to Net cash provided by operating activities:
Depreciation and amortization
Depreciation and amortization
Depreciation and amortization	Depreciation and amortization	72,225		77,389
Amortization of deferred loan origination costs	Amortization of deferred loan origination costs	44,393		47,101
Amortization of financing origination fees	Amortization of financing origination fees	6,508		7,637
Provision for long-term employee benefits	Provision for long-term employee benefits	(33,656)		(9,844)
Employee benefit plan contributions and payments	Employee benefit plan contributions and payments	(2,882)		(5,466)
Stock compensation expense	Stock compensation expense	44,413		19,765
Net change in wholesale finance receivables related to sales	Net change in wholesale finance receivables related to sales	(267,942)		(201,326)
Provision for credit losses	Provision for credit losses	109,642		57,955

Deferred income taxes	Deferred income taxes	(4,251)		2,475

Deferred income taxes

Deferred income taxes

Other, net
Other, net
Other, net	Other, net	(31,160)		11,102
Changes in current assets and liabilities:	Changes in current assets and liabilities:
Accounts receivable, net
Accounts receivable, net
Accounts receivable, net	Accounts receivable, net	(79,531)		(134,605)
Finance receivables – accrued interest and other	Finance receivables – accrued interest and other	3,189		4,255
Inventories, net	Inventories, net	94,636		(33,986)
Accounts payable and accrued liabilities	Accounts payable and accrued liabilities	(16,047)		(4,239)

Other current assets	Other current assets	(4,676)		(32,378)
		(65,139)		(194,165)
Other current assets
Other current assets
	(128,236)
Net cash provided by operating activities	Net cash provided by operating activities	$	410,520	$	244,186

7. Finance Receivables

Finance receivables include both retail and wholesale finance receivables, including amounts held by consolidated VIEs. Finance receivables are recorded in the financial statements at amortized cost net of an allowance for credit losses.

The Company provides retail financial services to customers of its dealers in the U.S. 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 dealer sales of motorcycles to retail customers. The Company holds either titles or liens on titles to vehicles financed by promissory notes and installment sales contracts.

~~Table of Contents~~

The Company offers wholesale financing to its dealers in the U.S. and Canada. Wholesale finance receivables are related primarily to the Company's sale of motorcycles, related parts and accessories and apparel to dealers. Wholesale loans to dealers are generally secured by financed inventory or property.

Finance receivables, net were as follows (in thousands):


		June 30, 2023		December 31, 2022		June 26, 2022
	March 31, 2024							March 31, 2024	December 31, 2023	March 31, 2023
Retail finance receivables	Retail finance receivables	$	6,955,514	$	6,748,201	$	6,847,651
Wholesale finance receivables	Wholesale finance receivables	936,132		748,948		608,170
		7,891,646		7,497,149		7,455,821
	8,286,383
Allowance for credit losses	Allowance for credit losses	(381,780)		(358,711)		(352,137)
		$	7,509,866	$	7,138,438	$	7,103,684
	$

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The Company’s finance receivables are reported at amortized cost, net of the allowance for credit losses. Amortized cost includes the principal outstanding, accrued interest, and deferred loan fees and costs. The Company's allowance for credit losses reflects expected lifetime credit losses on its finance receivables. Based on differences in the nature of the finance receivables and the underlying methodology for calculating the allowance for credit losses, the Company segments its finance receivables into the retail and wholesale portfolios. The Company further disaggregates each portfolio by credit quality indicators. As the credit risk varies between the retail and wholesale portfolios, the Company utilizes different credit quality indicators for each portfolio.

The retail portfolio primarily consists of a large number of small balance, homogeneous finance receivables. The Company performs a collective evaluation of the adequacy of the retail allowance for credit losses. The Company utilizes a vintage-based loss forecast methodology that includes decompositions for probability of default, exposure at default, attrition rate, and recovery balance rate. Reasonable and supportable economic forecasts for a two-year period are incorporated into the methodology to reflect the estimated impact of changes in future economic conditions, such as unemployment rates, household obligations or other relevant factors, over the two-year reasonable and supportable period. For periods beyond the Company’s reasonable and supportable forecasts, the Company reverts to its average historical loss experience using a mean-reversion process over a three-year period. Adjustments to historical loss information are made for differences in current loan-specific risk characteristics such as differences in underwriting standards, portfolio mix, or term as well as other relevant factors.

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 to determine whether the loans share similar risk characteristics. The Company individually evaluates loans that do not share risk characteristics. Loans identified as those for which foreclosure is probable are classified as Non-Performing, and a specific allowance for credit losses is established when appropriate. The specific allowance is determined based on the amortized cost of the related finance receivable and the estimated fair value of the collateral, less selling costs and the cash that the Company expects to receive. Finance receivables in the wholesale portfolio not individually assessed are aggregated, based on similar risk characteristics, according to the Company’s internal risk rating system and measured collectively. 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 credit loss experience, reasonable and supportable economic forecasts, and the value of the underlying collateral and expected recoveries.

The Company considers various third-party economic forecast scenarios as part of estimating the allowance for expected credit losses and applies a probability-weighting to those economic forecast scenarios. Each quarter, the ~~Company’s~~Company's outlook on economic conditions impacts the Company's retail and wholesale estimates for expected credit losses. ~~During~~At the ~~second~~end of the first quarter of ~~2023, uncertainty surrounding overall macro-economic conditions continued as near-term recession concerns did not abate, elevated levels of inflation continued to challenge~~2024, the ~~U.S. and global economies, and muted consumer confidence persisted, among other factors. As such, at the end the second quarter of 2023, the Company’s outlook on economic conditions and its~~Company's probability weighting of its economic forecast scenarios ~~were~~was weighted towards more pessimistic scenarios given continued challenging macro-economic conditions including a ~~near-term recession.~~persistently high interest rate environment, ongoing elevated inflation levels and muted consumer confidence.

Additionally, the historical experience incorporated into the portfolio-specific models does not fully reflect the Company's comprehensive expectations regarding the future. As such, the Company incorporated qualitative factors to establish an appropriate allowance for credit losses balance. These factors include motorcycle recovery value considerations, delinquency adjustments, specific problem loan trends, and changes in other portfolio-specific loan characteristics. During the first quarter of 2024, the Company experienced increased retail credit losses driven by several factors connected to the macro-economic environment and related customer and industry dynamics, including the impact of higher motorcycle payments and general inflationary pressures on customers. Additionally, the Company experienced downward pressure on recovery values at auction during the first quarter of 2024.

Due to the use of projections and assumptions in estimating the losses, the amount of losses incurred by the Company in either portfolio could differ from the amounts estimated. Further, the Company’s allowance for credit losses incorporates known conditions at the balance sheet date and the Company’s expectations surrounding the economic forecasts. The

~~Table of Contents~~

Company will continue to monitor future economic trends and conditions. Expectations surrounding the Company's economic forecasts may change in future periods as additional information becomes available.

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Changes in the Company's allowance for credit losses on its finance receivables by portfolio were as follows (in thousands):
Three months ended June 30, 2023 Six months ended June 30, 2023
Retail Wholesale Total Retail Wholesale Total
Balance, beginning of period $ 343,600 $ 14,831 $ 358,431 $ 345,275 $ 13,436 $ 358,711
Provision for credit losses 57,248 30 57,278 108,217 1,425 109,642
Charge-offs (50,437) — (50,437) (118,445) — (118,445)
Recoveries 16,508 — 16,508 31,872 — 31,872
Balance, end of period $ 366,919 $ 14,861 $ 381,780 $ 366,919 $ 14,861 $ 381,780
Three months ended June 26, 2022 Six months ended June 26, 2022
Retail Wholesale Total Retail Wholesale Total
Balance, beginning of period $ 327,206 $ 13,267 $ 340,473 $ 326,320 $ 13,059 $ 339,379
Provision for credit losses 32,954 (3,821) 29,133 61,568 (3,613) 57,955
Charge-offs (32,058) — (32,058) (73,862) — (73,862)
Recoveries 14,589 — 14,589 28,665 — 28,665
Balance, end of period $ 342,691 $ 9,446 $ 352,137 $ 342,691 $ 9,446 $ 352,137


	Three months ended March 31, 2024
	Retail		Wholesale		Total
Balance, beginning of period	$	367,037	$	14,929	$	381,966
Provision for credit losses	60,989		21		61,010
Charge-offs	(81,368)		—		(81,368)
Recoveries	18,753		—		18,753
Balance, end of period	$	365,411	$	14,950	$	380,361
	Three months ended March 31, 2023
	Retail		Wholesale		Total
Balance, beginning of period	$	345,275	$	13,436	$	358,711
Provision for credit losses	50,969		1,395		52,364
Charge-offs	(68,008)		—		(68,008)
Recoveries	15,364		—		15,364
Balance, end of period	$	343,600	$	14,831	$	358,431

The Company manages retail credit risk through its credit approval process 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. For the Company’s U.S. and Canadian retail finance receivables, the Company determines the credit quality indicator for each loan at origination and does not update the credit quality indicator subsequent to the loan origination date.

As loan performance by credit quality indicator differs between the U.S. and Canadian retail loans, the Company’s credit quality indicators vary for the two portfolios. For U.S. retail finance receivables, those with a FICO score of 740 or above at origination are generally considered super prime, loans with a FICO score between 640 and 740 are generally categorized as prime, and loans with FICO score below 640 are generally considered sub-prime. For Canadian retail finance receivables, those with a FICO score of 700 or above at origination are generally considered super prime, loans with a FICO score between 620 and 700 are generally categorized as prime, and loans with FICO score below 620 are generally considered sub-prime.

1415

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The amortized cost along with period gross charge-offs of the Company's U.S. and Canadian retail finance receivables by vintage and credit quality indicator was as follows (in thousands):


		June 30, 2023
		2023		2022		2021		2020		2019		2018 & Prior		Total
	March 31, 2024																			March 31, 2024
	2024															2024	2023	2022	2021	2020	2019 & Prior	Total
U.S. Retail:	U.S. Retail:
Super prime
Super prime
Super prime	Super prime	$	653,241	$	900,693	$	483,064	$	204,865	$	108,690	$	52,889	$	2,403,442
Prime	Prime	744,143		1,197,541		719,455		334,005		192,671		132,899		3,320,714
Sub-prime	Sub-prime	203,996		341,127		236,686		128,806		83,042		69,723		1,063,380
		1,601,380		2,439,361		1,439,205		667,676		384,403		255,511		6,787,536
	693,429
Canadian Retail:	Canadian Retail:
Super prime
Super prime
Super prime	Super prime	29,516		39,496		23,265		13,012		7,952		3,296		116,537
Prime	Prime	9,836		13,856		8,895		5,755		3,733		3,063		45,138
Sub-prime	Sub-prime	1,287		1,868		1,021		994		666		467		6,303
		40,639		55,220		33,181		19,761		12,351		6,826		167,978
		$	1,642,019	$	2,494,581	$	1,472,386	$	687,437	$	396,754	$	262,337	$	6,955,514
Current YTD period gross charge-offs:
	14,758
	$
Gross charge-offs for the three months ended March 31, 2024:
US Retail
US Retail
US Retail	US Retail	$	738	$	44,340	$	37,534	$	16,365	$	9,518	$	8,354	$	116,849
Canadian Retail	Canadian Retail	—		492		421		205		128		350		1,596
		$	738	$	44,832	$	37,955	$	16,570	$	9,646	$	8,704	$	118,445
	$


		December 31, 2022
		2022		2021		2020		2019		2018		2017 & Prior		Total
	December 31, 2023																			December 31, 2023
	2023															2023	2022	2021	2020	2019	2018 & Prior	Total
U.S. Retail:	U.S. Retail:
Super prime
Super prime
Super prime	Super prime	$	1,118,198	$	612,890	$	276,492	$	159,550	$	69,652	$	26,701	$	2,263,483
Prime	Prime	1,433,141		887,817		425,401		260,458		135,454		79,611		3,221,882
Sub-prime	Sub-prime	420,660		298,153		164,946		108,372		57,993		46,827		1,096,951
		2,971,999		1,798,860		866,839		528,380		263,099		153,139		6,582,316
	2,572,883
Canadian Retail:	Canadian Retail:
Super prime
Super prime
Super prime	Super prime	49,033		30,090		17,553		12,215		4,975		1,527		115,393
Prime	Prime	16,094		10,705		7,283		5,098		3,068		1,787		44,035
Sub-prime	Sub-prime	2,223		1,402		1,173		869		475		315		6,457
		67,350		42,197		26,009		18,182		8,518		3,629		165,885
		$	3,039,349	$	1,841,057	$	892,848	$	546,562	$	271,617	$	156,768	$	6,748,201
	64,315
	$
Gross charge-offs for the year ended December 31, 2023:
US Retail
US Retail
US Retail
Canadian Retail
	$

1516

Table of Contents


		June 26, 2022
		2022		2021		2020		2019		2018		2017 & Prior		Total
	March 31, 2023																			March 31, 2023
	2023															2023	2022	2021	2020	2019	2018 & Prior	Total
U.S. Retail:	U.S. Retail:
Super prime
Super prime
Super prime	Super prime	$	703,972	$	780,335	$	364,514	$	225,193	$	111,097	$	50,527	$	2,235,638
Prime	Prime	923,272		1,107,587		546,653		348,801		194,109		134,420		3,254,842
Sub-prime	Sub-prime	287,448		379,189		211,288		139,507		78,111		73,359		1,168,902
		1,914,692		2,267,111		1,122,455		713,501		383,317		258,306		6,659,382
	686,156
Canadian Retail:	Canadian Retail:
Super prime
Super prime
Super prime	Super prime	35,811		40,084		24,426		18,702		8,819		3,085		130,927
Prime	Prime	11,623		13,831		9,767		7,022		4,458		3,267		49,968
Sub-prime	Sub-prime	1,415		1,844		1,628		1,186		743		558		7,374
		48,849		55,759		35,821		26,910		14,020		6,910		188,269
		$	1,963,541	$	2,322,870	$	1,158,276	$	740,411	$	397,337	$	265,216	$	6,847,651
	14,657
	$
Gross charge-offs for the three months ended March 31, 2023:
US Retail
US Retail
US Retail
Canadian Retail
	$

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 the Company’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. Additionally, the Company classifies dealers identified as those in which foreclosure is probable as Non-Performing. 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 by the Company on a quarterly basis.

1617

Table of Contents

The amortized cost of the Company's wholesale ~~financial~~finance receivables, by vintage and credit quality indicator, was as follows (in thousands):


		June 30, 2023
		2023		2022		2021		2020		2019		2018 & Prior		Total
	March 31, 2024																			March 31, 2024
	2024															2024	2023	2022	2021	2020	2019 & Prior	Total
Non-Performing	Non-Performing	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Doubtful	Doubtful	—		—		—		—		—		—		—
Substandard	Substandard	—		—		—		—		—		—		—
Special Mention	Special Mention	—		—		—		—		—		—		—
Medium Risk	Medium Risk	—		—		—		—		—		—		—
Low Risk	Low Risk	746,491		165,620		7,060		5,779		8,665		2,517		936,132
		$	746,491	$	165,620	$	7,060	$	5,779	$	8,665	$	2,517	$	936,132
	$


		December 31, 2022
		2022		2021		2020		2019		2018		2017 & Prior		Total
	December 31, 2023																			December 31, 2023
	2023															2023	2022	2021	2020	2019	2018 & Prior	Total
Non-Performing	Non-Performing	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Doubtful	Doubtful	—		—		—		—		—		—		—
Substandard	Substandard	—		—		—		—		—		—		—
Special Mention	Special Mention	—		—		—		—		—		—		—
Medium Risk	Medium Risk	—		—		—		—		—		—		—
Low Risk	Low Risk	714,238		11,478		6,646		8,457		7,938		191		748,948
		$	714,238	$	11,478	$	6,646	$	8,457	$	7,938	$	191	$	748,948
	$


		June 26, 2022
		2022		2021		2020		2019		2018		2017 & Prior		Total
	March 31, 2023																			March 31, 2023
	2023															2023	2022	2021	2020	2019	2018 & Prior	Total
Non-Performing	Non-Performing	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Doubtful	Doubtful	—		—		—		—		—		—		—
Substandard	Substandard	—		—		—		—		—		—		—
Special Mention	Special Mention	—		—		—		—		—		—		—
Medium Risk	Medium Risk	—		—		—		—		—		—		—
Low Risk	Low Risk	540,284		45,976		7,871		4,153		9,247		639		608,170
		$	540,284	$	45,976	$	7,871	$	4,153	$	9,247	$	639	$	608,170
	$

Retail finance receivables are contractually delinquent if the minimum payment is not received by the specified due date. Retail finance receivables at amortized cost, excluding accrued interest, 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. The Company reverses accrued interest related to charged-off accounts against Financial Services interest income when the account is charged-off. The Company reversed ~~$6.2~~$9.5 million and ~~$4.2~~$7.2 million of accrued interest against Financial Services interest income during the three months ended ~~June 30,~~March 31, 2024 and March 31, 2023, ~~and June 26, 2022, respectively, and $13.4 million and $9.1 million during the six months ended June 30, 2023 and June 26,2022,~~ respectively. All retail finance receivables accrue interest until either collected or charged-off. Due to the timely write-off of accrued interest, the Company made the election provided under Accounting Standards Codification (ASC) Topic 326, Financial Instruments - Credit Losses to exclude accrued interest from its allowance for credit losses. Accordingly, as of ~~June 30, 2023,~~March 31, 2024, December 31, ~~2022,~~2023, and ~~June 26, 2022,~~March 31, 2023, all retail finance receivables were accounted for as interest-earning receivables.

Wholesale finance receivables are delinquent if the minimum payment is not received by the contractual due date. Wholesale finance receivables are written down once the Company 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 Company determines that foreclosure is probable, 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. Once an account is charged-off, the Company will reverse the associated accrued interest against interest income. As the Company

~~Table of Contents~~

follows a non-accrual policy for interest, the allowance for credit losses excludes accrued interest for the wholesale portfolio.

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There were no charged-off accounts during the three ~~and six~~ months ended ~~June 30, 2023 and June 26, 2022.~~March 31, 2024 or March 31, 2023. As such, the Company did not reverse any wholesale accrued interest in those periods. There were no dealers on non-accrual status at ~~June 30, 2023,~~March 31, 2024, December 31, ~~2022,~~2023, or ~~June 26, 2022.~~March 31, 2023.

The aging analysis of the Company's finance receivables was as follows (in thousands):


		June 30, 2023													March 31, 2024
		Current		31-60 Days Past Due		61-90 Days Past Due		Greater than 90 Days Past Due		Total Past Due		Total
	Current															Current	31-60 Days Past Due	61-90 Days Past Due	Greater than 90 Days Past Due	Total Past Due	Total
Retail finance receivables	Retail finance receivables	$	6,730,985	$	134,418	$	47,207	$	42,904	$	224,529	$	6,955,514
Wholesale finance receivables	Wholesale finance receivables	934,562		1,543		26		1		1,570		936,132
	$
		$	7,665,547	$	135,961	$	47,233	$	42,905	$	226,099	$	7,891,646

		December 31, 2022
		Current		31-60 Days Past Due		61-90 Days Past Due		Greater than 90 Days Past Due		Total Past Due		Total		December 31, 2023
	Current															Current	31-60 Days Past Due	61-90 Days Past Due	Greater than 90 Days Past Due	Total Past Due	Total
Retail finance receivables	Retail finance receivables	$	6,473,462	$	152,343	$	60,446	$	61,950	$	274,739	$	6,748,201
Wholesale finance receivables	Wholesale finance receivables	748,682		222		44		—		266		748,948
	$
		$	7,222,144	$	152,565	$	60,490	$	61,950	$	275,005	$	7,497,149

		June 26, 2022
		Current		31-60 Days Past Due		61-90 Days Past Due		Greater than 90 Days Past Due		Total Past Due		Total		March 31, 2023
	Current															Current	31-60 Days Past Due	61-90 Days Past Due	Greater than 90 Days Past Due	Total Past Due	Total
Retail finance receivables	Retail finance receivables	$	6,660,108	$	117,436	$	38,855	$	31,252	$	187,543	$	6,847,651
Wholesale finance receivables	Wholesale finance receivables	608,169		—		1		—		1		608,170
		$	7,268,277	$	117,436	$	38,856	$	31,252	$	187,544	$	7,455,821
	$

Generally, it is the Company’s policy not to change the terms and conditions of finance receivables. However, to minimize economic loss, the Company may modify certain finance receivables inas troubled loan modifications. Total finance receivables insubject to troubled loan modifications were not significant as of ~~June 30, 2023,~~March 31, 2024, December 31, ~~2022,~~2023, and ~~June 26, 2022.~~March 31, 2023. In accordance with its policies, in certain situations, the Company may offer short-term adjustments to customer payment due dates without affecting the associated interest rate or loan term.

8. Derivative Financial Instruments and Hedging Activities

The Company is exposed to risks from fluctuations in foreign currency exchange rates, interest rates and commodity prices. 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, and Mexican ~~peso, Chinese yuan, Singapore dollar, Thai baht, and Pound sterling.~~peso. The Company's 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 its motorcycle operations. The Company's commodity contracts generally have maturities of less than one year.

The Company periodically utilizes treasury rate and swap rate lock contracts to fix the interest rate on a portion of the principal related to an anticipated issuance of long-term debt and cross-currency swaps to mitigate the effect of foreign currency exchange rate fluctuations on its foreign currency-denominated debt. The Company also utilizes interest rate caps to facilitate certain asset-backed securitization transactions.

All derivative financial instruments are recognized on the Consolidated balance sheets at fair value. In accordance with ASC Topic 815, Derivatives and Hedging (ASC Topic 815), the accounting for changes in the fair value of a derivative financial

~~Table of Contents~~

instrument depends on whether it has been designated and qualifies as part of a hedging relationship and, further, on the type of hedging relationship.

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Changes in the fair value of derivative financial instruments that are designated as cash flow hedges are initially recorded in Other comprehensive (loss) income (OCI) and subsequently reclassified into income when the hedged item affects income. Refer to Note 15 of the Notes to Consolidated financial statements for more detail on derivatives activity included in accumulated other comprehensive income. The Company assesses, both at the inception of each hedge and on an ongoing basis, whether the derivative financial instruments that are designated as cash flow hedging transactions are highly effective in offsetting changes in cash flows of the hedged items. No component of a designated hedging derivative financial instrument’s gain or loss is excluded from the assessment of hedge effectiveness. Derivative financial instruments 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 derivative financial instruments not designated as hedging instruments are recorded directly in income. Cash flow activity associated with the Company's derivative financial instruments is recorded in Cash flows from operating activities on the Consolidated statement of cash ~~flow.~~flows. Derivative assets and liabilities are reported in Other current assets and Accrued liabilities, respectively, other than long-term balances noted below.

The notional and fair values of the Company's derivative financial instruments under ASC Topic 815 were as follows (in thousands):
Derivative Financial Instruments
Designated as Cash Flow Hedging Instruments
June 30, 2023 December 31, 2022 June 26, 2022
Notional
Value
Assets(a)
Liabilities(b)
Notional
Value
Assets(a)
Liabilities(b)
Notional
Value
Assets(a)
Liabilities(b)
Foreign currency contracts $ 484,914 $ 6,612 $ 8,324 $ 550,160 $ 6,054 $ 13,440 $ 435,208 $ 18,960 $ 1,004
Commodity contracts 875 — 127 1,361 — 410 834 228 —
Cross-currency swaps 1,420,560 5,539 20,104 1,367,460 — 36,101 1,383,390 386 54,954
$ 1,906,349 $ 12,151 $ 28,555 $ 1,918,981 $ 6,054 $ 49,951 $ 1,819,432 $ 19,574 $ 55,958
Derivative Financial Instruments
Not Designated as Hedging Instruments
June 30, 2023 December 31, 2022 June 26, 2022
Notional
Value
Assets(c)
Liabilities Notional
Value
Assets(c)
Liabilities Notional
Value
Assets(c)
Liabilities
Commodity contracts 9,453 7 795 10,803 310 310 9,857 1,107 987
Interest rate caps 823,912 2,666 — 1,058,827 2,373 — 1,286,262 1,860 —
$ 833,365 $ 2,673 $ 795 $ 1,069,630 $ 2,683 $ 310 $ 1,296,119 $ 2,967 $ 987

~~Table of Contents~~


	Derivative Financial Instruments Designated as Cash Flow Hedging Instruments
	March 31, 2024						December 31, 2023						March 31, 2023
	Notional Value		Assets		Liabilities(a)		Notional Value		Assets(b)		Liabilities(a)		Notional Value		Assets		Liabilities(a)
Foreign currency contracts	$	507,835	$	8,965	$	1,406	$	540,088	$	3,529	$	9,194	$	530,175	$	3,134	$	12,659
Commodity contracts	570		—		85		642		—		134		906		—		339
Cross-currency swaps	1,420,560		—		26,524		1,420,560		15,080		3,160		2,127,240		—		34,685

Swap rate lock contracts	—		—		—		—		—		—		324,843		—		1,780
	$	1,928,965	$	8,965	$	28,015	$	1,961,290	$	18,609	$	12,488	$	2,983,164	$	3,134	$	49,463

	Derivative Financial Instruments Not Designated as Hedging Instruments
	March 31, 2024						December 31, 2023						March 31, 2023
	Notional Value		Assets(c)		Liabilities		Notional Value		Assets(c)		Liabilities		Notional Value		Assets(c)		Liabilities

Commodity contracts	$	4,361	$	24	$	89	$	5,637	$	—	$	318	$	11,229	$	99	$	755
Interest rate caps	521,765		327		—		617,859		464		—		938,768		1,414		—
	$	526,126	$	351	$	89	$	623,496	$	464	$	318	$	949,997	$	1,513	$	755

(a)Includes ~~$5.5~~$5.9 million, and $27.9 million of cross-currency swaps recorded in Other long-term liabilities as of March 31, 2024 and March 31, 2023, respectively, with all remaining amounts recorded in Accrued liabilities.

(b)Includes $15.1 million of cross-currency swaps recorded in Other long-term assets as of ~~June 30, 2023.~~

~~(b)Includes $20.1 million and $24.2 million of cross-currency swaps recorded in~~ ~~Other long-term liabilities~~ ~~as of June 30, 2023 and~~ December 31, ~~2022, respectively,~~2023 with all remaining amounts recorded in ~~Accrued liabilities~~Other current assets.

(c)Includes ~~$2.7~~$0.3 million, $0.5 million, and ~~$2.4~~$1.4 million of interest rate caps recorded in Other long-term assets as of ~~June 30,~~March 31, 2024, December 31, 2023, and ~~December~~March 31, ~~2022,~~2023 respectively, with all remaining amounts recorded in Other current assets.

The amounts of gains and losses related to the Company's derivative financial instruments designated as cash flow hedges were as follows (in thousands):

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Gain/(Loss)
Recognized in OCI Gain/(Loss)
Reclassified from AOCL into Income
Three months ended Six months ended Three months ended Six months ended
June 30,
2023 June 26,
2022 June 30,
2023 June 26,
2022 June 30,
2023 June 26,
2022 June 30,
2023 June 26,
2022
Foreign currency contracts $ 5,671 $ 19,328 $ 3,965 $ 27,772 $ (2,067) $ 9,627 $ 4,223 $ 15,282
Commodity contracts (107) 166 (416) 728 (320) 254 (699) 480
Cross-currency swaps 20,130 (73,403) 21,546 (89,639) 3,220 (80,466) 24,845 (106,266)
Treasury rate lock contracts — — 1,139 — (203) (117) (269) (244)
Swap rate lock contracts — — (1,780) — 73 — 68 —
$ 25,694 $ (53,909) $ 24,454 $ (61,139) $ 703 $ (70,702) $ 28,168 $ (90,748)


	Gain/(Loss) Recognized in OCI				Gain/(Loss) Reclassified from AOCL into Income
	Three months ended					Three months ended
	March 31, 2024		March 31, 2023				March 31, 2024		March 31, 2023
Foreign currency contracts	$	15,906	$	(1,706)			$	3,522	$	6,290
Commodity contracts	(103)		(309)				(151)		(379)
Cross-currency swaps	(38,444)		1,416				(31,733)		21,625
Treasury rate lock contracts	—		1,139				4		(66)
Swap rate lock contracts	—		(1,780)				(148)		(5)
	$	(22,641)	$	(1,240)			$	(28,506)	$	27,465

The location and amount of gains and losses recognized in income related to the Company's derivative financial instruments designated as cash flow hedges were as follows (in thousands):
Motorcycles and related products
cost of goods sold Selling, administrative &
engineering expense Interest expense Financial services interest expense
Three months ended June 30, 2023
Line item on the Consolidated statements of operations in which the effects of cash flow hedges are recorded
$ 790,628 $ 290,274 $ 7,696 $ 86,005
Gain/(loss) reclassified from AOCL into income:
Foreign currency contracts (2,067) — — —
Commodity contracts (320) — — —
Cross-currency swaps — 3,220 — —
Treasury rate lock contracts — — (90) (113)
Swap rate lock contracts — — — 73
Three months ended June 26, 2022
Line item on the Consolidated statements of operations in which the effects of cash flow hedges are recorded
$ 879,721 $ 235,233 $ 7,720 $ 47,649
Gain/(loss) reclassified from AOCL into income:
Foreign currency contracts 9,627 — — —
Commodity contracts 254 — — —
Cross-currency swaps — (80,466) — —
Treasury rate lock contracts — — (90) (27)

~~Table of Contents~~


		Motorcycles and related products cost of goods sold		Selling, administrative & engineering expense		Interest expense		Financial services interest expense		Motorcycles and related products cost of goods sold	Selling, administrative & engineering expense	Interest expense		Financial services interest expense
		Six months ended June 30, 2023
	Three months ended March 31, 2024												Three months ended March 31, 2024
Line item on the Consolidated statements of operations in which the effects of cash flow hedges are recorded	Line item on the Consolidated statements of operations in which the effects of cash flow hedges are recorded	$	1,797,929	$	576,137	$	15,416	$	159,554

Gain/(loss) reclassified from AOCL into income:	Gain/(loss) reclassified from AOCL into income:
Gain/(loss) reclassified from AOCL into income:
Gain/(loss) reclassified from AOCL into income:
Foreign currency contracts
Foreign currency contracts
Foreign currency contracts	Foreign currency contracts	4,223		—		—		—
Commodity contracts	Commodity contracts	(699)		—		—		—
Cross-currency swaps	Cross-currency swaps	—		24,845		—		—
Treasury rate lock contracts	Treasury rate lock contracts	—		—		(181)		(88)

Swap rate lock contracts	Swap rate lock contracts	—		—		—		68
		Six months ended June 26, 2022
	Three months ended March 31, 2023												Three months ended March 31, 2023
Line item on the Consolidated statements of operations in which the effects of cash flow hedges are recorded	Line item on the Consolidated statements of operations in which the effects of cash flow hedges are recorded	$	1,775,257	$	474,858	$	15,431	$	89,748

Gain/(loss) reclassified from AOCL into income:	Gain/(loss) reclassified from AOCL into income:
Gain/(loss) reclassified from AOCL into income:
Gain/(loss) reclassified from AOCL into income:
Foreign currency contracts
Foreign currency contracts
Foreign currency contracts	Foreign currency contracts	15,282		—		—		—
Commodity contracts	Commodity contracts	480		—		—		—
Cross-currency swaps	Cross-currency swaps	—		(106,266)		—		—
Treasury rate lock contracts	Treasury rate lock contracts	—		—		(181)		(63)
Swap rate lock contracts

The amount of net loss included in Accumulated other comprehensive loss (AOCL) at ~~June 30, 2023,~~March 31, 2024, estimated to be reclassified into income over the next 12 months was ~~$24.9~~$19.5 million.

Table of Contents

The amount of gains and losses recognized in income related to derivative financial instruments not designated as hedging instruments were as follows (in thousands). Gains and losses on foreign currency contracts and commodity contracts were recorded in Motorcycles and related products cost of goods sold. Gains and losses on interest rate caps were recorded in Selling, administrative & engineering expense.


		Amount of Gain/(Loss) Recognized in Income
		Three months ended				Six months ended
		June 30, 2023		June 26, 2022		June 30, 2023		June 26, 2022		Amount of Gain/(Loss) Recognized in Income

		March 31, 2024
		March 31, 2024
		March 31, 2024
Foreign currency contracts
Foreign currency contracts
Foreign currency contracts	Foreign currency contracts	$	(310)	$	9,793	$	(937)	$	6,287
Commodity contracts	Commodity contracts	(1,278)		(1,155)		(1,377)		1,232
Commodity contracts
Commodity contracts
Interest rate caps	Interest rate caps	1,252		(1,682)		294		18
		$	(336)	$	6,956	$	(2,020)	$	7,537
Interest rate caps
Interest rate caps
		$
		$
		$

The Company is exposed to credit loss risk in the event of non-performance by counterparties to its derivative financial instruments. Although no assurances can be given, the Company does not expect any of the counterparties to its derivative financial instruments to fail to meet their 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 their position.

~~Table of Contents~~

9. Debt

Debt with a contractual term less than 12 months is generally classified as short-term and consisted of the following (in thousands):
June 30,
2023 December 31,
2022 June 26,
2022
Unsecured commercial paper $ 695,356 $ 770,468 $ 701,384


	March 31, 2024		December 31, 2023		March 31, 2023
Unsecured commercial paper	$	938,719	$	878,935	$	501,243

Debt with a contractual term greater than 12 months is generally classified as long-term and consisted of the following (in thousands):


					June 30, 2023		December 31, 2022		June 26, 2022
			March 31, 2024
Secured debt:
Secured debt:
Secured debt:	Secured debt:
Asset-backed Canadian commercial paper conduit facility	Asset-backed Canadian commercial paper conduit facility				$	84,269	$	71,785	$	77,984
Asset-backed Canadian commercial paper conduit facility
Asset-backed Canadian commercial paper conduit facility
Asset-backed U.S. commercial paper conduit facility
Asset-backed U.S. commercial paper conduit facility
Asset-backed U.S. commercial paper conduit facility	Asset-backed U.S. commercial paper conduit facility				318,406		425,794		570,628
Asset-backed securitization debt	Asset-backed securitization debt				1,932,779		2,028,155		2,860,810
Asset-backed securitization debt
Asset-backed securitization debt
Unamortized discounts and debt issuance costs	Unamortized discounts and debt issuance costs				(8,234)		(8,741)		(12,889)
					2,327,220		2,516,993		3,496,533
Unamortized discounts and debt issuance costs
Unamortized discounts and debt issuance costs
					2,235,480
					2,235,480
					2,235,480
Unsecured notes (at par value):
Unsecured notes (at par value):
Unsecured notes (at par value):	Unsecured notes (at par value):
Medium-term notes:	Medium-term notes:
Medium-term notes:
Medium-term notes:

Due in 2023, issued February 2018		3.35		%	—		350,000		350,000
Due in 2023, issued May 2020 (a)

Due in 2023, issued May 2020 (a)

Due in 2023, issued May 2020(a)	Due in 2023, issued May 2020(a)	4.94		%	—		695,727		681,837
Due in 2024, issued November 2019(b)	Due in 2024, issued November 2019(b)	3.14		%	653,484		642,210		629,388
Due in 2024, issued November 2019(b)
Due in 2024, issued November 2019(b)
Due in 2025, issued June 2020	Due in 2025, issued June 2020	3.35		%	700,000		700,000		700,000
Due in 2025, issued June 2020
Due in 2025, issued June 2020
Due in 2026, issued April 2023(c)
Due in 2026, issued April 2023(c)
Due in 2026, issued April 2023(c)
Due in 2027, issued February 2022
Due in 2027, issued February 2022
Due in 2027, issued February 2022	Due in 2027, issued February 2022	3.05		%	500,000		500,000		500,000
Due in 2028, issued March 2023	Due in 2028, issued March 2023	6.50		%	700,000		—		—
Due in 2026, issued April 2023(c)		6.36		%	762,398		—		—
Due in 2028, issued March 2023
Due in 2028, issued March 2023
Unamortized discounts and debt issuance costs	Unamortized discounts and debt issuance costs				(18,878)		(8,464)		(10,905)
Unamortized discounts and debt issuance costs
Unamortized discounts and debt issuance costs
					3,288,993
					3,288,993
					3,288,993
					3,297,004		2,879,473		2,850,320

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
Unamortized discounts and debt issuance costs					(4,278)		(4,632)		(4,984)
					745,722		745,368		745,016
					4,042,726		3,624,841		3,595,336
Long-term debt					6,369,946		6,141,834		7,091,869
Current portion of long-term debt, net					(604,700)		(1,684,782)		(1,887,552)
Long-term debt, net					$	5,765,246	$	4,457,052	$	5,204,317

Table of Contents


			March 31, 2024		December 31, 2023		March 31, 2023
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
Unamortized discounts and debt issuance costs			(3,742)		(3,921)		(4,455)
			746,258		746,079		745,545
			4,035,251		4,065,217		3,991,136
Long-term debt			6,270,731		6,246,585		6,683,946
Current portion of long-term debt, net			(1,281,840)		(1,255,999)		(1,408,777)
Long-term debt, net			$	4,988,891	$	4,990,586	$	5,275,169

(a)€650.0 million par value remeasured to U.S. dollar at ~~December~~March 31, ~~2022 and June 26, 2022, respectively~~2023

(b)€600.0 million par value remeasured to U.S. dollar at ~~June 30, 2023,~~March 31, 2024, December 31, ~~2022,~~2023, and ~~June 26, 2022,~~March 31, 2023, respectively

(c)€700.0 million par value remeasured to U.S. dollar at ~~June 30,~~March 31, 2024 and December 31, 2023, respectively

~~Table of Contents~~

Future principal payments of the Company's debt obligations as of ~~June 30, 2023~~March 31, 2024 were as follows (in thousands):


2023		$	1,063,672
2024	2024	1,246,164
2025	2025	1,799,753
2026	2026	1,344,017
2027	2027	643,085
2028
Thereafter	Thereafter	1,000,001
Future principal payments	Future principal payments	7,096,692
Unamortized discounts and debt issuance costs	Unamortized discounts and debt issuance costs	(31,390)
		$	7,065,302
	$

10. 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 Consolidated balance sheets 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~~recorded in Financial services revenue on the Consolidated statements of operations.

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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 assets and liabilities related to the on-balance sheet asset-backed financings included in the Consolidated balance sheets were as follows (in thousands):
June 30, 2023
Finance receivables Allowance for credit losses Restricted cash Other assets Total assets Asset-backed debt, net
On-balance sheet assets and liabilities:
Consolidated VIEs:
Asset-backed securitizations $ 2,361,561 $ (124,796) $ 115,616 $ 8,977 $ 2,361,358 $ 1,924,545
Asset-backed U.S. commercial paper conduit facility 351,848 (18,585) 24,486 1,655 359,404 318,406
Unconsolidated VIEs:
Asset-backed Canadian commercial paper conduit facility 96,278 (4,235) 6,805 169 99,017 84,269
$ 2,809,687 $ (147,616) $ 146,907 $ 10,801 $ 2,819,779 $ 2,327,220

~~Table of Contents~~


		December 31, 2022
		Finance receivables		Allowance for credit losses		Restricted cash		Other assets		Total assets		Asset-backed debt, net
	March 31, 2024																	March 31, 2024
	Finance receivables													Finance receivables	Allowance for credit losses	Restricted cash	Other assets		Total assets	Asset-backed debt, net
On-balance sheet assets and liabilities:	On-balance sheet assets and liabilities:
Consolidated VIEs:	Consolidated VIEs:
Consolidated VIEs:
Consolidated VIEs:
Asset-backed securitizations
Asset-backed securitizations
Asset-backed securitizations	Asset-backed securitizations	$	2,558,450	$	(130,774)	$	114,254	$	7,899	$	2,549,829	$	2,019,414
Asset-backed U.S. commercial paper conduit facility	Asset-backed U.S. commercial paper conduit facility	474,167		(24,236)		26,874		1,906		478,711		425,794
Unconsolidated VIEs:	Unconsolidated VIEs:
Asset-backed Canadian commercial paper conduit facility	Asset-backed Canadian commercial paper conduit facility	82,375		(3,452)		4,873		130		83,926		71,785
Asset-backed Canadian commercial paper conduit facility
Asset-backed Canadian commercial paper conduit facility
	$
		$	3,114,992	$	(158,462)	$	146,001	$	9,935	$	3,112,466	$	2,516,993

		June 26, 2022
		Finance receivables		Allowance for credit losses		Restricted cash		Other assets		Total assets		Asset-backed debt, net
		December 31, 2023
		December 31, 2023
		December 31, 2023
	Finance receivables													Finance receivables	Allowance for credit losses	Restricted cash	Other assets		Total assets	Asset-backed debt, net
On-balance sheet assets and liabilities:	On-balance sheet assets and liabilities:
Consolidated VIEs:	Consolidated VIEs:
Consolidated VIEs:
Consolidated VIEs:
Asset-backed securitizations
Asset-backed securitizations
Asset-backed securitizations	Asset-backed securitizations	$	3,477,839	$	(173,853)	$	202,029	$	3,432	$	3,509,447	$	2,847,921
Asset-backed U.S. commercial paper conduit facility	Asset-backed U.S. commercial paper conduit facility	630,305		(31,491)		43,701		782		643,297		570,628
Unconsolidated VIEs:	Unconsolidated VIEs:
Asset-backed Canadian commercial paper conduit facility	Asset-backed Canadian commercial paper conduit facility	88,197		(3,598)		6,481		76		91,156		77,984
Asset-backed Canadian commercial paper conduit facility
Asset-backed Canadian commercial paper conduit facility
	$
		$	4,196,341	$	(208,942)	$	252,211	$	4,290	$	4,243,900	$	3,496,533
		March 31, 2023
		March 31, 2023
		March 31, 2023
	Finance receivables													Finance receivables	Allowance for credit losses	Restricted cash	Other assets		Total assets	Asset-backed debt, net
On-balance sheet assets and liabilities:
Consolidated VIEs:
Consolidated VIEs:
Consolidated VIEs:
Asset-backed securitizations
Asset-backed securitizations
Asset-backed securitizations
Asset-backed U.S. commercial paper conduit facility
Unconsolidated VIEs:
Asset-backed Canadian commercial paper conduit facility
Asset-backed Canadian commercial paper conduit facility
Asset-backed Canadian commercial paper conduit facility
	$

On-Balance Sheet Asset-Backed Securitization VIEs – The Company transfers U.S. retail motorcycle finance receivables to SPEs that 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 transactions 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 currently have various contractual maturities ranging from 2024 to ~~2030.~~2031.

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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.

~~Quarterly transfers~~There were no on-balance sheet asset-backed securitization transactions during the first quarter of 2024. During the first quarter of 2023, the Company transferred $628.5 million of U.S. retail motorcycle finance receivables to ~~SPEs, the respective proceeds, and the respective proceeds,~~an SPE which, in turn, issued $550.0 million, or $547.7 million net of ~~discounts~~discount and issuance costs, ~~were as follows (in millions):~~

2023 2022
Transfers Proceeds Proceeds, net Transfers Proceeds Proceeds, net
First quarter $ 628.5 $ 550.0 $ 547.7 $ — $ — $ —
Second quarter $ — $ — $ — 2,176.4 1,836.3 1,826.9
$ 628.5 $ 550.0 $ 547.7 $ 2,176.4 $ 1,836.3 $ 1,826.9
of secured notes through an on-balance sheet asset-backed securitization transaction.

On-Balance Sheet Asset-Backed U.S. Commercial Paper Conduit Facility VIE – ~~The~~In November 2023, the Company ~~has a~~renewed its $1.50 billion revolving facility agreement (the U.S. Conduit Facility) with third-party banks and their asset-backed U.S. commercial paper conduits. Under the revolving facility agreement, the Company may transfer U.S. retail motorcycle finance receivables to an SPE, which

~~Table of Contents~~

in turn may issue debt to those third-party banks and their asset-backed U.S. commercial paper conduits. InFrom November 2020 through November 2022, the ~~Company renewed the~~ U.S. Conduit ~~Facility. As a result of the renewal, the agreement no longer allows~~Facility allowed for uncommitted additional borrowings ~~at the lender's discretion,~~ of up to $300.0 million ~~in addition to~~at the ~~$1.50 billion aggregate commitment. Prior to~~lenders’ discretion. At March 31, 2023, $72.8 million remained outstanding under the ~~November 2022 renewal, the Company drew against the $300.0 million of~~ uncommitted additional borrowings ~~that were available prior to~~previously allowed.During 2023, the ~~renewal and, at June 30, 2023, $18.4 million~~remaining balance of ~~the amount drawn remained outstanding.~~these uncommitted additional borrowings was paid in full. Availability under the U.S. Conduit Facility 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 Facility, 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 if funded by a conduit lender through the issuance of commercial paper. ~~Subsequent to the November 2022 renewal, the~~The interest rate on all outstanding debt and future borrowings, if not funded by a conduit lender through the issuance of commercial paper, is based on the Secured Overnight Financing Rate (SOFR), with provisions for a transition to other benchmark rates in the future, if necessary. Prior to the renewal, if not funded by a conduit lender through the issuance of commercial paper, the terms of the interest were based on LIBOR or SOFR, as appropriate, with provisions for a transition to other benchmark rates. In addition to interest, a program fee is assessed based on the outstanding debt principal balance. The U.S. Conduit Facility also provides for an unused commitment fee based on the unused portion of the total aggregate commitment. Prior to November 2022, when calculating the unused fee, the aggregate commitment did not include any unused portion of the $300.0 million uncommitted additional borrowings allowed. 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 Facility, 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 45 years. Unless earlier terminated or extended by mutual agreement of the Company and the lenders, as of March 31, 2024, the U.S. Conduit Facility ~~has~~had an expiration date of November ~~17, 2023.~~20, 2024.

The Company is the primary beneficiary of its U.S. Conduit Facility 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.

During the first quarter of 2024, the Company transferred $334.8 million of U.S. retail motorcycle finance receivables to an SPE which, in turn, issued $306.0 million of debt under the U.S. Conduit Facility. There were no finance receivable transfers under the U.S. Conduit Facility during the first ~~half~~quarter of 2023. During the second quarter of 2022, the Company transferred $420.8 million of U.S. retail motorcycle finance receivables to an SPE which, in turn, issued $362.8 million of debt under the U.S. Conduit Facility. During the first quarter of 2022, the Company transferred $47.1 million of U.S. retail motorcycle finance receivables to an SPE which, in turn, issued $41.3 million of debt under the U.S. Conduit Facility.

On-Balance Sheet Asset-Backed Canadian Commercial Paper Conduit Facility – In June 2023, the Company renewed its 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 eligible Canadian retail motorcycle finance receivables for proceeds up to C$125.0 million. The transferred assets are restricted as collateral for the payment of the associated 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$125.0 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 4 5

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years. Unless earlier terminated or extended by mutual agreement ~~between~~of the Company and the lenders, as of March 31, 2024, the Canadian Conduit ~~has~~had an expiration date of June 28, 2024.

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 ~~$14.7~~$15.5 million at ~~June 30, 2023.~~March 31, 2024. The maximum exposure is not an indication of the Company's expected loss exposure.

~~Table of Contents~~

During the ~~second~~first quarter of ~~2023,~~2024, the Company transferred ~~$40.5~~$34.9 million of Canadian retail motorcycle finance receivables to the Canadian Conduit for proceeds of ~~$33.5~~$28.6 million. There were no finance receivable transfers under the Canadian Conduit during the first quarter of 2023 or the second quarter of 2022. During the first quarter of 2022, the Company transferred $25.3 million of Canadian retail motorcycle finance receivables to the Canadian Conduit for proceeds of $21.2 million.

2023.

11. Fair Value

The following tables present the fair values of certain of the Company's assets and liabilities within the fair value hierarchy as defined in Note 1.

Recurring Fair Value Measurements – The Company’s assets and liabilities measured at fair value on a recurring basis were as follows (in thousands):


		June 30, 2023
		Balance		Level 1		Level 2
								March 31, 2024
	Balance
Assets:
Assets:
Assets:	Assets:
Cash equivalents	Cash equivalents	$	972,567	$	738,000	$	234,567
Cash equivalents
Cash equivalents
Marketable securities
Marketable securities
Marketable securities	Marketable securities	35,175		35,175		—
Derivative financial instruments	Derivative financial instruments	14,824		—		14,824
		$	1,022,566	$	773,175	$	249,391
Derivative financial instruments
Derivative financial instruments
		$
		$
		$
Liabilities:
Liabilities:
Liabilities:	Liabilities:
Derivative financial instruments	Derivative financial instruments	$	29,350	$	—	$	29,350
LiveWire warrants		18,757		12,300		6,457
		$	48,107	$	12,300	$	35,807
		December 31, 2022
		Balance		Level 1		Level 2
Assets:
Cash equivalents		$	805,629	$	594,000	$	211,629
Marketable securities		33,071		33,071		—
Derivative financial instruments	Derivative financial instruments	8,737		—		8,737
		$	847,437	$	627,071	$	220,366
Liabilities:
Derivative financial instruments	Derivative financial instruments	$	50,261	$	—	$	50,261
LiveWire warrants	LiveWire warrants	8,388		5,500		2,888
		$	58,649	$	5,500	$	53,149
		June 26, 2022
		Balance		Level 1		Level 2
Assets:
Cash equivalents		$	1,936,000	$	1,936,000	$	—
Marketable securities		38,779		38,779		—
Derivative financial instruments		22,541		—		22,541
		$	1,997,320	$	1,974,779	$	22,541
Liabilities:
Derivative financial instruments		$	56,945	$	—	$	56,945
LiveWire warrants	LiveWire warrants	—		$	—	$	—
		$	56,945	$	—	$	56,945
LiveWire warrants
		$
		$
		$

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	December 31, 2023
	Balance		Level 1		Level 2
Assets:
Cash equivalents	$	1,067,755	$	898,000	$	169,755
Marketable securities	34,079		34,079		—
Derivative financial instruments	19,073		—		19,073
	$	1,120,907	$	932,079	$	188,828
Liabilities:
Derivative financial instruments	$	12,806	$	—	$	12,806
LiveWire warrants	12,319		8,059		4,260
	$	25,125	$	8,059	$	17,066
	March 31, 2023
	Balance		Level 1		Level 2
Assets:
Cash equivalents	$	1,030,696	$	858,000	$	172,696
Marketable securities	34,017		34,017		—
Derivative financial instruments	4,647		—		4,647
	$	1,069,360	$	892,017	$	177,343
Liabilities:
Derivative financial instruments	$	50,218	$	—	$	50,218
LiveWire warrants	7,320		$	4,800	$	2,520
	$	57,538	$	4,800	$	52,738

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 ~~$24.2~~$28.7 million, ~~$20.7~~$28.0 million and ~~16.1~~$24.9 million as of ~~June 30, 2023,~~March 31, 2024, December 31, ~~2022~~2023 and ~~June 26, 2022,~~March 31, 2023, respectively, for which the fair value adjustment was a decrease of ~~$5.2~~$14.8 million, ~~$7.5~~$18.6 million and ~~an increase of $1.4~~$6.8 million, respectively. Fair value is estimated using Level 2 inputs based on the recent market values of repossessed inventory.

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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 fair value and carrying value of the Company’s remaining financial instruments that are measured at cost or amortized cost were as follows (in thousands):


		June 30, 2023				December 31, 2022				June 26, 2022				March 31, 2024		December 31, 2023			March 31, 2023
		Fair Value		Carrying Value		Fair Value		Carrying Value		Fair Value		Carrying Value		Fair Value	Carrying Value		Fair Value	Carrying Value		Fair Value	Carrying Value
Assets:	Assets:
Finance receivables, net	Finance receivables, net	$	7,536,523	$	7,509,866	$	7,248,353	$	7,138,438	$	7,329,371	$	7,103,684
Finance receivables, net
Finance receivables, net
Liabilities:	Liabilities:
Deposits, net
Deposits, net
Deposits, net	Deposits, net	$	459,497	$	439,911	$	339,981	$	317,375	$	364,938	$	345,790
Debt:	Debt:
Unsecured commercial paper	Unsecured commercial paper	$	695,356	$	695,356	$	770,468	$	770,468	$	701,384	$	701,384
Unsecured commercial paper
Unsecured commercial paper

Asset-backed U.S. commercial paper conduit facility

Asset-backed U.S. commercial paper conduit facility

Asset-backed U.S. commercial paper conduit facility	Asset-backed U.S. commercial paper conduit facility	$	318,406	$	318,406	$	425,794	$	425,794	$	570,628	$	570,628
Asset-backed Canadian commercial paper conduit facility	Asset-backed Canadian commercial paper conduit facility	$	84,269	$	84,269	$	71,785	$	71,785	$	77,984	$	77,984
Asset-backed securitization debt	Asset-backed securitization debt	$	1,903,422	$	1,924,545	$	1,996,550	$	2,019,414	$	2,831,401	$	2,847,921
Medium-term notes	Medium-term notes	$	3,191,435	$	3,297,004	$	2,760,093	$	2,879,473	$	2,762,208	$	2,850,320
Senior notes	Senior notes	$	681,581	$	745,722	$	661,630	$	745,368	$	703,629	$	745,016

Finance Receivables, net – The carrying value of retail and wholesale finance receivables 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 are generally either short-term or have interest rates that adjust with changes in market interest rates.

Deposits, net – The carrying value of deposits is amortized cost, net of fees. The fair value of deposits is estimated based upon rates currently available for deposits with similar terms and maturities. Fair value is calculated using Level 3 inputs.

Debt – The carrying value of debt is generally cost, net of unamortized discounts and debt issuance costs. The fair value of unsecured commercial paper is calculated using Level 2 inputs and approximates carrying value due to its short maturity. The fair value of debt provided under the U.S. Conduit Facility and the Canadian Conduit Facility is calculated using Level 2 inputs and approximates carrying value since the interest rates charged under the facilities are tied directly to market rates and fluctuate as market rates change. The fair values of the medium-term notes and senior notes are estimated based upon rates currently available for debt with similar terms and remaining maturities (Level 2 inputs). The fair value of the fixed-rate 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). The fair value of the floating-rate debt related to on-balance sheet asset-backed securitization transactions is calculated using Level 2 inputs and approximates carrying value since the interest rates charged are tied directly to market rates and fluctuate as market rates change.

12. Product Warranty and Recall Campaigns

The Company currently provides a standard two-year limited warranty on all new motorcycles sold worldwide, except in certain markets, where the Company currently provides a standard three-year limited warranty. The Company also provides a five-year limited warranty on the battery for electric motorcycles. In addition, the Company provides a one-year warranty for parts and accessories. The warranty coverage for the retail customer generally begins when the product is sold to a retail

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customer. The Company accrues for future warranty claims at the time of shipment using an estimated cost based primarily on historical Company claim information.

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Additionally, the Company has from time to time initiated certain voluntary recall campaigns. The Company records estimated recall costs when the liability is both probable and estimable. This generally occurs when the Company's management approves and commits to a recall. The warranty and recall liability is included in Accrued liabilities and Other long-term liabilities on the Consolidated balance sheets. Changes in the Company’s warranty and recall liabilities were as follows (in thousands):


		Three months ended				Six months ended
		June 30, 2023		June 26, 2022		June 30, 2023		June 26, 2022

		March 31, 2024
		March 31, 2024
		March 31, 2024
Balance, beginning of period
Balance, beginning of period
Balance, beginning of period	Balance, beginning of period	$	74,668	$	65,095	$	75,960	$	61,621
Warranties issued during the period	Warranties issued during the period	10,058		9,744		21,985		20,455
Warranties issued during the period
Warranties issued during the period
Settlements made during the period
Settlements made during the period
Settlements made during the period	Settlements made during the period	(14,528)		(10,060)		(26,579)		(17,156)
Recalls and changes to pre-existing warranty liabilities	Recalls and changes to pre-existing warranty liabilities	(4,907)		(3,052)		(6,075)		(3,193)
Recalls and changes to pre-existing warranty liabilities
Recalls and changes to pre-existing warranty liabilities
Balance, end of period	Balance, end of period	$	65,291	$	61,727	$	65,291	$	61,727
Balance, end of period
Balance, end of period

The liability for recall campaigns, included in the balance above, was ~~$18.4~~$17.7 million, ~~$29.7~~$18.9 million and ~~$14.6~~$26.6 million at ~~June 30, 2023,~~March 31, 2024, December 31, ~~2022~~2023 and ~~June 26, 2022,~~March 31, 2023, respectively.

13. Employee Benefit Plans

The Company has a qualified pension plan and postretirement healthcare benefit plans. The plans cover certain eligible employees and retirees of the HDMC segment. The Company also has unfunded supplemental employee retirement plan agreements (SERPA) with certain employees. Service cost is allocated among Selling, administrative and engineering expense, Motorcycles and related products cost of goods sold and Inventories, net. Amounts capitalized in inventory are not significant. Non-service cost components of net periodic benefit (income) cost are presented in Other income, net. Components of net periodic benefit (income) cost for the Company's defined benefit plans were as follows (in thousands):


		Three months ended				Six months ended
		June 30, 2023		June 26, 2022		June 30, 2023		June 26, 2022

		March 31, 2024
		March 31, 2024
		March 31, 2024
Pension and SERPA Benefits:
Pension and SERPA Benefits:
Pension and SERPA Benefits:	Pension and SERPA Benefits:
Service cost	Service cost	$	1,294	$	4,763	$	2,588	$	9,525
Service cost
Service cost
Interest cost
Interest cost
Interest cost	Interest cost	20,476		15,472		40,952		30,945
Expected return on plan assets	Expected return on plan assets	(36,519)		(31,476)		(73,038)		(62,952)
Expected return on plan assets
Expected return on plan assets
Amortization of unrecognized:	Amortization of unrecognized:
Prior service cost (credit)		188		(328)		376		(656)
Net (gain) loss		(181)		7,978		(362)		15,956
Amortization of unrecognized:
Amortization of unrecognized:
Prior service cost
Prior service cost
Prior service cost
Net gain
Net gain
Net gain
Settlement gain	Settlement gain	—		—		(222)		(256)
Settlement gain
Settlement gain

Net periodic benefit income

Net periodic benefit income

Net periodic benefit income	Net periodic benefit income	$	(14,742)	$	(3,591)	$	(29,706)	$	(7,438)

Postretirement Healthcare Benefits:	Postretirement Healthcare Benefits:

Postretirement Healthcare Benefits:

Postretirement Healthcare Benefits:
Service cost
Service cost
Service cost	Service cost	$	797	$	1,161	$	1,594	$	2,322
Interest cost	Interest cost	2,772		1,904		5,544		3,808
Interest cost
Interest cost
Expected return on plan assets
Expected return on plan assets
Expected return on plan assets	Expected return on plan assets	(4,281)		(3,809)		(8,562)		(7,618)
Amortization of unrecognized:	Amortization of unrecognized:
Prior service credit		(166)		(581)		(332)		(1,162)
Net (gain) loss		(1,097)		122		(2,194)		244
Amortization of unrecognized:
Amortization of unrecognized:
Prior service cost (credit)
Prior service cost (credit)
Prior service cost (credit)
Net gain
Net gain
Net gain

Net periodic benefit income	Net periodic benefit income	$	(1,975)	$	(1,203)	$	(3,950)	$	(2,406)

Net periodic benefit income

Net periodic benefit income

There are no required or planned voluntary qualified pension plan contributions for ~~2023.~~2024. The Company expects it will continue to make ongoing benefit payments under the SERPA and postretirement healthcare plans.

2829

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14. Commitments and Contingencies

Litigation and Other Claims – The Company is subject to lawsuits and other claims related to product, commercial, employee, environmental 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. The Company accrues for matters when losses are both probable and estimable. 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. The Company also maintains insurance coverage for product liability exposures. The Company believes that its accruals and insurance coverage are adequate and there are no material exposures to loss in excess of amounts accrued and insured for losses related to these matters.

Supply Matters – During the second quarter of 2022, the Company received information from a Tier 2 supplier, Proterial Cable America, Inc. ("PCA" f/k/a Hitachi Cable America, Inc.), concerning a potential regulatory compliance matter relating to PCA's brake hose assemblies. As a result, out of an abundance of caution, the Company suspended all vehicle assembly and shipments for approximately two weeks during the second quarter of 2022. Since then, the Company has been working through the regulatory compliance matter with PCA, the Company’s relevant Tier-1 suppliers, and the National Highway Traffic Safety Administration (NHTSA), the agency responsible for brake hose assembly compliance in the United States.

In connection with this matter, in July 2022, PCA notified NHTSA of a population of brake hose assemblies manufactured between May and July of 2022 that were non-compliant with select NHTSA laboratory test standards. Based on that filing, in August 2022, the Company notified NHTSA of the corresponding population of Harley-Davidson motorcycles containing those brake hose assemblies. In October 2022, PCA amended its original notification, expanding its population of non-compliant brake hose assemblies to include units produced by PCA for use in Harley-Davidson motorcycles beginning as early as model year 2008. In December 2022, the Company amended its August notification, expanding the population to also include Harley-Davidson motorcycles that contained PCA's newly identified brake hose assemblies. In March 2023, PCA again amended its NHTSA notification, identifying additional compliance issues with the previously identified brake hose assemblies. The Company followed PCA's March amendment with a derivative amended notification to NHTSA in May 2023.

In June 2023, the Company received a letter from PCA advising that PCA was investigating a new, separate potential quality issue with brake hose assemblies produced by PCA after the Company’s 2022 production suspension. Due to this issue, the Company was forced to suspend production of most of the motorcycles manufactured at its York facility and run limited motorcycle manufacturing operations there for approximately two weeks. The Company continued to manufacture, among other motorcycles, the ~~recently launched~~ 2023 CVO Road Glide and Street Glide, which do not use PCA's brake hose assemblies. It also continued its normal motorcycle manufacturing operations at its international facilities. In connection with this matter, in late June 2023, PCA filed a new and separate NHTSA notification, identifying certain brake hose assemblies produced between June of 2022 and June of 2023 as noncompliant with select NHTSA laboratory test standards. The Company followed PCA’s June 2023 notification by filing a derivative notification with NHTSA in early July 2023.

As permitted by federal law, both PCA and the Company have utilized NHTSA’s standard process to petition the agency to determine that these compliance issues are inconsequential to motor vehicle safety (“("Inconsequentiality ~~Determinations”~~Determinations"). If NHTSA makes the Inconsequentiality Determinations requested, the Company will be exempt from conducting a field action or recall of its motorcycles related to these matters.

In its inconsequentiality petitions, the Company has presented NHTSA with: (1) extensive independent, third-party and internal testing demonstrating that the brake hose assemblies at issue are robust to extreme conditions - which far exceed maximum expected motorcycle lifetime demands - with no impact to brake performance; and (2) real-world field safety data showing no documented crashes or injuries attributable to the identified compliance issues for the relevant affected populations. The Company believes its petitions are closely comparable to inconsequentiality petitions that have resulted in successful inconsequentiality determinations in the past. The Company is also confident that its position that the compliance issues are inconsequential to motor vehicle safety is strong and, therefore, no field action or recall will be necessary.

Based on its expectation that NHTSA will make Inconsequentiality Determinations, the Company does not expect that these regulatory noncompliance matters will result in material costs in the future, and no costs have been accrued to date. However, it is possible that a field action or recall could be required that could cause the Company to incur material costs. There are several variables and uncertainties associated with any potential field action or recall that are not yet fully known including, but not limited to, the population of brake hose assemblies and motorcycles, the specific field action or recall required, the complexity and cost of the required repair, the need for and availability of replacement parts, the suppliers of replacement parts and the number of motorcycle owners that would participate. The Company estimates, based on its available information and assumptions, that the cost of a potential field action or recall in the aggregate, if any were to occur, could range from approximately ~~$100~~$100 million to $400 million. The Company continues to evaluate and update its estimates as

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it learns more about these regulatory matters, including the variables and uncertainties discussed above. The Company also continues to maintain its expectation that NHTSA will make the requested Inconsequentiality Determinations and that these regulatory matters will not

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result in any material field action or recall costs. If a material field action or recall ~~costs~~ were to result, the Company would seek full recovery of those amounts.

15. Accumulated Other Comprehensive Loss

Changes in Accumulated other comprehensive loss were as follows (in thousands):


		Three months ended March 31, 2024
		Three months ended March 31, 2024
		Three months ended March 31, 2024
	Foreign currency translation adjustments									Foreign currency translation adjustments	Derivative financial instruments	Pension and postretirement benefit plans	Total
Balance, beginning of period
Other comprehensive loss, before reclassifications
Income tax benefit
	(31,294)
Reclassifications:
		Three months ended June 30, 2023
Net loss on derivative financial instruments
		Foreign currency translation adjustments		Derivative financial instruments		Pension and postretirement benefit plans		Total
Net loss on derivative financial instruments

Net loss on derivative financial instruments
Prior service credits(a)
Actuarial gains(a)
Reclassifications before tax
Income tax (expense) benefit
	—
Other comprehensive (loss) income
Balance, end of period

		Three months ended March 31, 2023
		Three months ended March 31, 2023
		Three months ended March 31, 2023
	Foreign currency translation adjustments									Foreign currency translation adjustments	Derivative financial instruments	Pension and postretirement benefit plans	Total
Balance, beginning of period	Balance, beginning of period	$	(70,150)	$	(32,322)	$	(252,180)	$	(354,652)
Other comprehensive (loss) income, before reclassifications		(23,296)		25,694		—		2,398
Income tax benefit (expense)		3,659		(6,027)		—		(2,368)
Other comprehensive income (loss), before reclassifications
Income tax (expense) benefit
	10,121
Reclassifications:
		(19,637)		19,667		—		30
Reclassifications:
Net gain on derivative financial instruments

Net gain on derivative financial instruments

Net gain on derivative financial instruments	Net gain on derivative financial instruments	—		(703)		—		(703)
Prior service credits(a)	Prior service credits(a)	—		—		22		22
Actuarial gains(a)	Actuarial gains(a)	—		—		(1,278)		(1,278)
Reclassifications before tax	Reclassifications before tax	—		(703)		(1,256)		(1,959)
Income tax benefit	Income tax benefit	—		162		295		457
		—		(541)		(961)		(1,502)
Other comprehensive (loss) income		(19,637)		19,126		(961)		(1,472)
	—
Other comprehensive income (loss)
Balance, end of period	Balance, end of period	$	(89,787)	$	(13,196)	$	(253,141)	$	(356,124)

		Three months ended June 26, 2022
		Foreign currency translation adjustments		Derivative financial instruments		Pension and postretirement benefit plans		Total
Balance, beginning of period		$	(48,522)	$	7,923	$	(189,011)	$	(229,610)
Other comprehensive loss, before reclassifications		(31,600)		(53,909)		—		(85,509)
Income tax benefit		579		11,731		—		12,310
		(31,021)		(42,178)		—		(73,199)
Reclassifications:

Net loss on derivative financial instruments		—		70,702		—		70,702
Prior service credits(a)		—		—		(909)		(909)
Actuarial losses(a)		—		—		8,100		8,100
Reclassifications before tax		—		70,702		7,191		77,893
Income tax expense		—		(15,672)		(1,688)		(17,360)
		—		55,030		5,503		60,533
Other comprehensive (loss) income		(31,021)		12,852		5,503		(12,666)
Balance, end of period		$	(79,543)	$	20,775	$	(183,508)	$	(242,276)

(a) Amounts reclassified are included in the computation of net periodic benefit (income) cost, discussed further in Note 13.

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Six months ended June 30, 2023
Foreign currency translation adjustments Derivative financial instruments Pension and postretirement benefit plans Total
Balance, beginning of period $ (80,271) $ (10,440) $ (251,218) $ (341,929)
Other comprehensive (loss) income, before reclassifications (12,320) 24,454 — 12,134
Income tax benefit (expense) 2,804 (5,654) — (2,850)
(9,516) 18,800 — 9,284
Reclassifications:
Net gain on derivative financial instruments — (28,168) — (28,168)
Prior service credits(a)
— — 44 44
Actuarial gains(a)
— — (2,556) (2,556)
Reclassifications before tax — (28,168) (2,512) (30,680)
Income tax benefit — 6,612 589 7,201
— (21,556) (1,923) (23,479)
Other comprehensive loss (9,516) (2,756) (1,923) (14,195)
Balance, end of period $ (89,787) $ (13,196) $ (253,141) $ (356,124)

Six months ended June 26, 2022
Foreign currency translation adjustments Derivative financial instruments Pension and postretirement benefit plans Total
Balance, beginning of period $ (44,401) $ (2,005) $ (194,513) $ (240,919)
Other comprehensive loss, before reclassifications (35,404) (61,139) — (96,543)
Income tax benefit 262 13,224 — 13,486
(35,142) (47,915) — (83,057)
Reclassifications:
Net loss on derivative financial instruments — 90,748 — 90,748
Prior service credits(a)
— — (1,818) (1,818)
Actuarial losses(a)
— — 16,200 16,200
Reclassifications before tax — 90,748 14,382 105,130
Income tax expense — (20,053) (3,377) (23,430)
— 70,695 11,005 81,700
Other comprehensive (loss) income (35,142) 22,780 11,005 (1,357)
Balance, end of period $ (79,543) $ 20,775 $ (183,508) $ (242,276)

~~(a)Amounts reclassified are included in the computation of net periodic benefit (income) cost, discussed further in Note 15~~

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16. Reportable Segments

The Company operates in three business segments: HDMC, LiveWire and HDFS. 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 Company changed its segments in the period ended December 31, 2022. The change has been retrospectively reflected in the periods presented below.~~

Selected segment information is set forth below (in thousands):


		Three months ended				Six months ended
		June 30, 2023		June 26, 2022		June 30, 2023		June 26, 2022

		March 31, 2024
		March 31, 2024
		March 31, 2024
HDMC:
HDMC:
HDMC:	HDMC:
Revenue	Revenue	$	1,198,136	$	1,253,965	$	2,755,965	$	2,546,735
Revenue
Revenue
Gross profit
Gross profit
Gross profit	Gross profit	417,474		387,140		974,500		794,722
Selling, administrative and engineering expense	Selling, administrative and engineering expense	223,137		176,361		444,427		365,137
Restructuring benefit		—		(264)		—		(392)
Selling, administrative and engineering expense
Selling, administrative and engineering expense

Operating income

Operating income

Operating income	Operating income	194,337		211,043		530,073		429,977
LiveWire:	LiveWire:
LiveWire:
LiveWire:
Revenue	Revenue	7,026		12,506		14,788		22,907
Gross profit		(2,940)		(390)		(1,676)		(337)
Revenue
Revenue
Gross (loss) profit
Gross (loss) profit
Gross (loss) profit
Selling, administrative and engineering expense
Selling, administrative and engineering expense
Selling, administrative and engineering expense	Selling, administrative and engineering expense	29,044		18,966		54,855		35,078
Operating loss	Operating loss	(31,984)		(19,356)		(56,531)		(35,415)
Operating loss
Operating loss
HDFS:
HDFS:
HDFS:	HDFS:
Financial services revenue	Financial services revenue	240,361		202,616		463,456		394,631
Financial services revenue
Financial services revenue
Financial services expense
Financial services expense
Financial services expense	Financial services expense	181,376		116,688		346,051		222,346

Operating income	Operating income	58,985		85,928		117,405		172,285

Operating income	Operating income	$	221,338	$	277,615	$	590,947	$	566,847

Operating income
Operating income
Operating income
Operating income

Total assets for the HDMC, LiveWire and HDFS segments were ~~$3.4~~$3.5 billion, ~~$310.5 million~~$0.2 billion and ~~$8.3~~$8.6 billion, respectively, as of ~~June 30, 2023, $3.3~~March 31, 2024, $3.6 billion, ~~$351.4 million~~$0.3 billion and ~~$7.9~~$8.2 billion, respectively, as of December 31, ~~2022,~~2023, and ~~$2.9~~$3.1 billion, ~~$77.2 million~~$0.3 billion and ~~$9.1~~$8.6 billion, respectively, as of ~~June 26, 2022.~~March 31, 2023.

17. Supplemental Consolidating Data

The supplemental consolidating data includes separate legal entity data for the Company's financial services entities, including Harley-Davidson Financial Services, Inc. and its subsidiaries (Financial Services Entities), and all other Harley-Davidson, Inc. entities (Non-Financial Services Entities). This information is presented to highlight the separate financial statement impacts of the Company's Financial Services Entities and its Non-Financial Services Entities. The ~~legal entity~~ income statement information presented below differs from reportable segment income statement information due to the allocation of legal entity consolidating adjustments to income for reportable segments. Supplemental consolidating data is as follows (in thousands):

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		Three months ended June 30, 2023								Three months ended March 31, 2024
		Non-Financial Services Entities		Financial Services Entities		Consolidating Adjustments		Consolidated
	Non-Financial Services Entities										Non-Financial Services Entities	Financial Services Entities	Consolidating Adjustments	Consolidated
Revenue:	Revenue:
Motorcycles and related products	Motorcycles and related products	$	1,207,314	$	—	$	(2,152)	$	1,205,162
Motorcycles and related products
Motorcycles and related products
Financial services	Financial services	—		241,090		(729)		240,361
		1,207,314		241,090		(2,881)		1,445,523
	1,482,759
Costs and expenses:	Costs and expenses:
Motorcycles and related products cost of goods sold
Motorcycles and related products cost of goods sold
Motorcycles and related products cost of goods sold	Motorcycles and related products cost of goods sold	790,628		—		—		790,628
Financial services interest expense	Financial services interest expense	—		86,005		—		86,005
Financial services provision for credit losses	Financial services provision for credit losses	—		57,278		—		57,278
Selling, administrative and engineering expense	Selling, administrative and engineering expense	252,825		40,245		(2,796)		290,274

		1,043,453		183,528		(2,796)		1,224,185
		1,272,155
		1,272,155
		1,272,155
Operating income	Operating income	163,861		57,562		(85)		221,338
Other income, net	Other income, net	7,226		—		—		7,226
Investment income	Investment income	11,151		—		—		11,151
Interest expense	Interest expense	7,696		—		—		7,696
Income before income taxes	Income before income taxes	174,542		57,562		(85)		232,019
Income tax provision	Income tax provision	43,670		14,519		—		58,189
Net income	Net income	130,872		43,043		(85)		173,830
Less: (income) loss attributable to noncontrolling interests	Less: (income) loss attributable to noncontrolling interests	4,209		$	—	$	—	$	4,209
Net income attributable to Harley-Davidson, Inc.	Net income attributable to Harley-Davidson, Inc.	$	135,081	$	43,043	$	(85)	$	178,039

		Six months ended June 30, 2023
		Non-Financial Services Entities		Financial Services Entities		Consolidating Adjustments		Consolidated

		Three months ended March 31, 2023

		Three months ended March 31, 2023

		Three months ended March 31, 2023
	Non-Financial Services Entities										Non-Financial Services Entities	Financial Services Entities	Consolidating Adjustments	Consolidated
Revenue:	Revenue:
Motorcycles and related products		$	2,775,023	$	—	$	(4,270)	$	2,770,753
Financial services		—		464,613		(1,157)		463,456
		2,775,023		464,613		(5,427)		3,234,209
Motorcycles and Related Products
Motorcycles and Related Products
Motorcycles and Related Products
Financial Services
	1,567,709
Costs and expenses:	Costs and expenses:
Motorcycles and related products cost of goods sold		1,797,929		—		—		1,797,929
Financial services interest expense		—		159,554		—		159,554
Financial services provision for credit losses		—		109,642		—		109,642
Motorcycles and Related Products cost of goods sold
Motorcycles and Related Products cost of goods sold
Motorcycles and Related Products cost of goods sold
Financial Services interest expense
Financial Services provision for credit losses
Selling, administrative and engineering expense	Selling, administrative and engineering expense	500,520		81,125		(5,508)		576,137

		2,298,449		350,321		(5,508)		2,643,262
		1,254,996
		1,254,996
		1,254,996
Operating income	Operating income	476,574		114,292		81		590,947
Other income, net	Other income, net	27,322		—		—		27,322
Investment income	Investment income	21,176		—		—		21,176
Interest expense	Interest expense	15,416		—		—		15,416
Income before income taxes	Income before income taxes	509,656		114,292		81		624,029
Provision for income taxes	Provision for income taxes	122,398		25,972		—		148,370
Net income	Net income	387,258		88,320		81		475,659
Less: (income) loss attributable to noncontrolling interests	Less: (income) loss attributable to noncontrolling interests	6,470		—		—		6,470
Net income attributable to Harley-Davidson, Inc.	Net income attributable to Harley-Davidson, Inc.	$	393,728	$	88,320	$	81	$	482,129

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Three months ended June 26, 2022
Non-Financial Services Entities Financial Services Entities Consolidating Adjustments Consolidated
Revenue:
Motorcycles and Related Products $ 1,269,592 $ — $ (3,121) $ 1,266,471
Financial Services — 203,386 (770) 202,616
1,269,592 203,386 (3,891) 1,469,087
Costs and expenses:
Motorcycles and Related Products cost of goods sold 879,721 — — 879,721
Financial Services interest expense — 47,649 — 47,649
Financial Services provision for credit losses — 29,133 — 29,133
Selling, administrative and engineering expense 195,939 43,028 (3,734) 235,233
Restructuring expense (264) — — (264)
1,075,396 119,810 (3,734) 1,191,472
Operating income 194,196 83,576 (157) 277,615
Other income, net 10,055 — — 10,055
Investment income (3,530) — — (3,530)
Interest expense 7,720 — — 7,720
Income before income taxes 193,001 83,576 (157) 276,420
Provision for income taxes 40,994 19,577 — 60,571
Net income 152,007 63,999 (157) 215,849
Less: (income) loss attributable to noncontrolling interests — — — —
Net income attributable to Harley-Davidson, Inc. $ 152,007 $ 63,999 $ (157) $ 215,849
Six months ended June 26, 2022
Non-Financial Services Entities Financial Services Entities Consolidating Adjustments Consolidated
Revenue:
Motorcycles and related products $ 2,575,885 $ — $ (6,243) $ 2,569,642
Financial services — 395,776 (1,145) 394,631
2,575,885 395,776 (7,388) 2,964,273
Costs and expenses:
Motorcycles and related products cost of goods sold 1,775,257 — — 1,775,257
Financial services interest expense — 89,748 — 89,748
Financial services provision for credit losses — 57,955 — 57,955
Selling, administrative and engineering expense 401,356 80,886 (7,384) 474,858
Restructuring benefit (392) — — (392)
2,176,221 228,589 (7,384) 2,397,426
Operating income 399,664 167,187 (4) 566,847
Other income, net 21,085 — — 21,085
Investment loss (5,509) — — (5,509)
Interest expense 15,431 — — 15,431
Income before income taxes 399,809 167,187 (4) 566,992
Provision for income taxes 88,841 39,800 — 128,641
Net income 310,968 127,387 (4) 438,351
Less: (income) loss attributable to noncontrolling interests — — — —
Net income attributable to Harley-Davidson, Inc. $ 310,968 $ 127,387 $ (4) $ 438,351


	March 31, 2024
	Non-Financial Services Entities		Financial Services Entities		Consolidating Adjustments		Consolidated
ASSETS
Current assets:
Cash and cash equivalents	$	1,052,237	$	412,377	$	—	$	1,464,614

Accounts receivable, net	718,621		38		(412,668)		305,991
Finance receivables, net	—		2,523,250		—		2,523,250
Inventories, net	779,575		—		—		779,575
Restricted cash	—		129,745		—		129,745
Other current assets	138,623		55,101		(10,994)		182,730
	2,689,056		3,120,511		(423,662)		5,385,905
Finance receivables, net	—		5,382,772		—		5,382,772
Property, plant and equipment, net	699,723		18,960		—		718,683
Pension and postretirement assets	426,817		—		—		426,817
Goodwill	62,286		—		—		62,286
Deferred income taxes	71,083		83,744		(745)		154,082
Lease assets	63,085		2,920		—		66,005
Other long-term assets	227,542		25,998		(115,170)		138,370
	$	4,239,592	$	8,634,905	$	(539,577)	$	12,334,920
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	369,067	$	441,107	$	(412,668)	$	397,506
Accrued liabilities	480,771		162,329		(10,286)		632,814
Short-term deposits, net	—		240,445		—		240,445
Short-term debt	—		938,719		—		938,719
Current portion of long-term debt, net	—		1,281,840		—		1,281,840
	849,838		3,064,440		(422,954)		3,491,324
Long-term deposits, net	—		200,723		—		200,723
Long-term debt, net	746,258		4,242,633		—		4,988,891
Lease liabilities	45,830		2,559		—		48,389
Pension and postretirement liabilities	59,226		—		—		59,226
Deferred income taxes	30,267		3,242		—		33,509
Other long-term liabilities	143,800		31,187		1,785		176,772
Commitments and contingencies (Note 14)
Shareholders’ equity	2,364,373		1,090,121		(118,408)		3,336,086
	$	4,239,592	$	8,634,905	$	(539,577)	$	12,334,920

Table of Contents

June 30, 2023
Non-Financial Services Entities Financial Services Entities Consolidating Adjustments Consolidated
ASSETS
Current assets:
Cash and cash equivalents $ 1,056,404 $ 465,536 $ — $ 1,521,940
Accounts receivable, net 514,653 — (185,166) 329,487
Finance receivables, net — 1,979,645 — 1,979,645
Inventories, net 846,033 — — 846,033
Restricted cash — 135,618 — 135,618
Other current assets 151,505 55,556 (5,359) 201,702
2,568,595 2,636,355 (190,525) 5,014,425
Finance receivables, net — 5,530,221 — 5,530,221
Property, plant and equipment, net 666,908 21,208 — 688,116
Pension and postretirement assets 353,004 — — 353,004
Goodwill 62,451 — — 62,451
Deferred income taxes 60,412 85,907 (951) 145,368
Lease assets 67,878 5,348 — 73,226
Other long-term assets 226,149 34,790 (112,189) 148,750
$ 4,005,397 $ 8,313,829 $ (303,665) $ 12,015,561
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable $ 329,394 $ 215,197 $ (185,166) $ 359,425
Accrued liabilities 480,352 115,130 (4,797) 590,685
Short-term deposits, net — 216,293 — 216,293
Short-term debt — 695,356 — 695,356
Current portion of long-term debt, net — 604,700 — 604,700
809,746 1,846,676 (189,963) 2,466,459
Long-term deposits, net — 223,618 — 223,618
Long-term debt, net 745,722 5,019,524 — 5,765,246
Lease liabilities 51,013 5,097 — 56,110
Pension and postretirement liabilities 66,801 — — 66,801
Deferred income taxes 28,390 3,129 — 31,519
Other long-term liabilities 154,029 59,971 1,952 215,952
Commitments and contingencies (Note 14)
Shareholders’ equity 2,149,696 1,155,814 (115,654) 3,189,856
$ 4,005,397 $ 8,313,829 $ (303,665) $ 12,015,561


	March 31, 2023
	Non-Financial Services Entities		Financial Services Entities		Consolidating Adjustments		Consolidated
ASSETS
Current assets:
Cash and cash equivalents	$	876,248	$	684,952	$	—	$	1,561,200

Accounts receivable, net	798,728		—		(465,195)		333,533
Finance receivables, net	—		2,245,628		—		2,245,628
Inventories, net	830,521		—		—		830,521
Restricted cash	—		164,965		—		164,965
Other current assets	110,559		50,727		(6,626)		154,660
	2,616,056		3,146,272		(471,821)		5,290,507
Finance receivables, net	—		5,328,095		—		5,328,095
Property, plant and equipment, net	667,474		22,577		—		690,051
Pension and postretirement assets	336,569		—		—		336,569
Goodwill	62,426		—		—		62,426
Deferred income taxes	58,175		83,725		(692)		141,208
Lease assets	37,868		5,672		—		43,540
Other long-term assets	217,124		28,650		(108,585)		137,189
	$	3,995,692	$	8,614,991	$	(581,098)	$	12,029,585
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	375,395	$	494,214	$	(465,195)	$	404,414
Accrued liabilities	488,814		142,192		(5,710)		625,296
Short-term deposits, net	—		144,854		—		144,854
Short-term debt	—		501,243		—		501,243
Current portion of long-term debt, net	—		1,408,777		—		1,408,777
	864,209		2,691,280		(470,905)		3,084,584
Long-term deposits, net	—		224,457		—		224,457
Long-term debt, net	745,545		4,529,624		—		5,275,169
Lease liabilities	21,160		5,514		—		26,674
Pension and postretirement liabilities	66,968		—		—		66,968
Deferred income taxes	28,180		2,852		—		31,032
Other long-term liabilities	155,487		67,626		1,739		224,852
Commitments and contingencies (Note 14)
Shareholders’ equity	2,114,143		1,093,638		(111,932)		3,095,849
	$	3,995,692	$	8,614,991	$	(581,098)	$	12,029,585

Table of Contents

June 26, 2022
Non-Financial Services Entities Financial Services Entities Consolidating Adjustments Consolidated
ASSETS
Current assets:
Cash and cash equivalents $ 600,091 $ 1,594,168 $ — $ 2,194,259
Accounts receivable, net 617,220 — (315,171) 302,049
Finance receivables, net — 1,674,970 — 1,674,970
Inventories, net 726,586 — — 726,586
Restricted cash — 226,488 — 226,488
Other current assets 148,632 48,079 (12,895) 183,816
2,092,529 3,543,705 (328,066) 5,308,168
Finance receivables, net — 5,428,714 — 5,428,714
Property, plant and equipment, net 626,230 25,923 — 652,153
Pension and postretirement assets 411,906 — — 411,906
Goodwill 61,890 — — 61,890
Deferred income taxes 16,640 75,754 (23,000) 69,394
Lease assets 37,616 6,631 — 44,247
Other long-term assets 209,006 41,616 (105,476) 145,146
$ 3,455,817 $ 9,122,343 $ (456,542) $ 12,121,618
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable $ 383,994 $ 347,880 $ (315,171) $ 416,703
Accrued liabilities 447,055 156,995 (11,791) 592,259
Short-term deposits, net — 78,005 — 78,005
Short-term debt — 701,384 — 701,384
Current portion of long-term debt, net — 1,887,552 — 1,887,552
831,049 3,171,816 (326,962) 3,675,903
Long-term deposits, net — 267,785 — 267,785
Long-term debt, net 745,016 4,459,301 — 5,204,317
Lease liabilities 19,995 6,702 — 26,697
Pension and postretirement liabilities 91,362 — — 91,362
Deferred income taxes 30,092 1,458 (22,361) 9,189
Other long-term liabilities 153,846 55,164 2,203 211,213
Commitments and contingencies (Note 14)
Shareholders’ equity 1,584,457 1,160,117 (109,422) 2,635,152
$ 3,455,817 $ 9,122,343 $ (456,542) $ 12,121,618


	Three months ended March 31, 2024
	Non-Financial Services Entities		Financial Services Entities		Consolidating Adjustments		Consolidated
Cash flows from operating activities:
Net income	$	192,363	$	39,763	$	107	$	232,233
Adjustments to reconcile Net income to Net cash provided by operating activities:
Depreciation and amortization	39,288		2,216		—		41,504
Amortization of deferred loan origination costs	—		18,282		—		18,282
Amortization of financing origination fees	180		3,178		—		3,358
Provision for long-term employee benefits	(13,933)		—		—		(13,933)
Employee benefit plan contributions and payments	(1,399)		—		—		(1,399)
Stock compensation expense	15,583		629		—		16,212
Net change in wholesale finance receivables related to sales	—		—		(435,047)		(435,047)
Provision for credit losses	—		61,010		—		61,010



Deferred income taxes	4,799		1,201		(601)		5,399
Other, net	(1,946)		3,822		(107)		1,769
Changes in current assets and liabilities:
Accounts receivable, net	(311,951)		—		264,832		(47,119)
Finance receivables – accrued interest and other	—		1,213		—		1,213
Inventories, net	131,529		—		—		131,529
Accounts payable and accrued liabilities	42,313		270,073		(259,153)		53,233
Other current assets	14,248		18,092		3,413		35,753
	(81,289)		379,716		(426,663)		(128,236)
Net cash provided by operating activities	111,074		419,479		(426,556)		103,997

Cash flows from investing activities:
Capital expenditures	(45,922)		(434)		—		(46,356)
Origination of finance receivables	—		(2,080,020)		1,172,251		(907,769)
Collections on finance receivables	—		1,587,609		(745,695)		841,914

Other investing activities	(1,289)		—		1,000		(289)
Net cash used by investing activities	(47,211)		(492,845)		427,556		(112,500)

Table of Contents

Six months ended June 30, 2023
Non-Financial Services Entities Financial Services Entities Consolidating Adjustments Consolidated
Cash flows from operating activities:
Net income $ 387,258 $ 88,320 $ 81 $ 475,659
Adjustments to reconcile Net income to Net cash provided by operating activities:
Depreciation and amortization 67,720 4,505 — 72,225
Amortization of deferred loan origination costs — 44,393 — 44,393
Amortization of financing origination fees 354 6,154 — 6,508
Provision for long-term employee benefits (33,656) — — (33,656)
Employee benefit plan contributions and payments (2,882) — — (2,882)
Stock compensation expense 42,174 2,239 — 44,413
Net change in wholesale finance receivables related to sales — — (267,942) (267,942)
Provision for credit losses — 109,642 — 109,642
Deferred income taxes 233 (4,413) (71) (4,251)
Other, net (25,290) (5,788) (82) (31,160)
Changes in current assets and liabilities:
Accounts receivable, net (147,730) — 68,199 (79,531)
Finance receivables – accrued interest and other
— 3,189 — 3,189
Inventories, net 94,636 — — 94,636
Accounts payable and accrued liabilities (30,340) 80,563 (66,270) (16,047)
Other current assets (12,329) 6,836 817 (4,676)
(47,110) 247,320 (265,349) (65,139)
Net cash provided by operating activities 340,148 335,640 (265,268) 410,520
Cash flows from investing activities:
Capital expenditures (85,401) (1,125) — (86,526)
Origination of finance receivables — (4,076,675) 1,947,692 (2,128,983)
Collections on finance receivables — 3,551,887 (1,682,424) 1,869,463
Other investing activities (1,650) — 2,500 850
Net cash used by investing activities (87,051) (525,913) 267,768 (345,196)


	Three months ended March 31, 2024
	Non-Financial Services Entities		Financial Services Entities		Consolidating Adjustments		Consolidated
Cash flows from financing activities:





Repayments of securitization debt	—		(234,178)		—		(234,178)
Borrowings of asset-backed commercial paper	—		334,561		—		334,561
Repayments of asset-backed commercial paper	—		(46,154)		—		(46,154)
Net increase in unsecured commercial paper	—		58,794		—		58,794

Net decrease in deposits	—		(6,758)		—		(6,758)

Dividends paid	(24,385)		—		—		(24,385)
Repurchase of common stock	(107,812)		—		—		(107,812)

Other financing activities	7		1,000		(1,000)		7
Net cash (used) provided by financing activities	(132,190)		107,265		(1,000)		(25,925)
Effect of exchange rate changes on cash, cash equivalents and restricted cash	(6,836)		(184)		—		(7,020)
Net (decrease) increase in cash, cash equivalents and restricted cash	$	(75,163)	$	33,715	$	—	$	(41,448)

Cash, cash equivalents and restricted cash:
Cash, cash equivalents and restricted cash, beginning of period	$	1,127,400	$	521,411	$	—	$	1,648,811
Net (decrease) increase in cash, cash equivalents and restricted cash	(75,163)		33,715		—		(41,448)
Cash, cash equivalents and restricted cash, end of period	$	1,052,237	$	555,126	$	—	$	1,607,363

Table of Contents

Six months ended June 30, 2023
Non-Financial Services Entities Financial Services Entities Consolidating Adjustments Consolidated
Cash flows from financing activities:
Proceeds from issuance of medium-term notes — 1,446,304 — 1,446,304
Repayments of medium-term notes — (1,056,680) — (1,056,680)
Proceeds from securitization debt — 547,706 — 547,706
Repayments of securitization debt — (645,377) — (645,377)
Borrowings of asset-backed commercial paper — 33,547 — 33,547
Repayments of asset-backed commercial paper — (129,961) — (129,961)
Net decrease in unsecured commercial paper — (75,229) — (75,229)
Net increase in deposits — 122,288 — 122,288
Dividends paid (48,193) — — (48,193)
Repurchase of common stock (169,645) — — (169,645)
Excess tax benefits from share-based payments
Other financing activities 76 2,500 (2,500) 76
Net cash (used) provided by financing activities (217,762) 245,098 (2,500) 24,836
Effect of exchange rate changes on cash, cash equivalents and restricted cash (729) 239 — (490)
Net increase in cash, cash equivalents and restricted cash $ 34,606 $ 55,064 $ — $ 89,670
Cash, cash equivalents and restricted cash:
Cash, cash equivalents and restricted cash, beginning of period $ 1,021,798 $ 557,379 $ — $ 1,579,177
Net increase in cash, cash equivalents and restricted cash 34,606 55,064 — 89,670
Cash, cash equivalents and restricted cash, end of period $ 1,056,404 $ 612,443 $ — $ 1,668,847


	Three months ended March 31, 2023
	Non-Financial Services Entities		Financial Services Entities		Consolidating Adjustments		Consolidated
Cash flows from operating activities:
Net income	$	256,385	$	45,278	$	166	$	301,829
Adjustments to reconcile Net income to Net cash provided by operating activities:
Depreciation and amortization	32,120		2,232		—		34,352
Amortization of deferred loan origination costs	—		21,858		—		21,858
Amortization of financing origination fees	177		2,834		—		3,011
Provision for long-term employee benefits	(16,939)		—		—		(16,939)
Employee benefit plan contributions and payments	(1,739)		—		—		(1,739)
Stock compensation expense	22,494		1,134		—		23,628
Net change in wholesale finance receivables related to sales	—		—		(487,314)		(487,314)
Provision for credit losses	—		52,364		—		52,364



Deferred income taxes	4,261		1,717		(330)		5,648
Other, net	(18,087)		(3,418)		(166)		(21,671)
Changes in current assets and liabilities:
Accounts receivable, net	(426,221)		—		348,228		(77,993)
Finance receivables – accrued interest and other	—		2,252		—		2,252
Inventories, net	123,047		—		—		123,047
Accounts payable and accrued liabilities	14,610		379,094		(349,917)		43,787
Other current assets	25,342		13,131		2,084		40,557
	(240,935)		473,198		(487,415)		(255,152)
Net cash provided by operating activities	15,450		518,476		(487,249)		46,677
Cash flows from investing activities:
Capital expenditures	(44,894)		(220)		—		(45,114)
Origination of finance receivables	—		(2,100,019)		1,182,874		(917,145)
Collections on finance receivables	—		1,586,477		(695,625)		890,852

Other investing activities	821		—		—		821
Net cash used by investing activities	(44,073)		(513,762)		487,249		(70,586)

Table of Contents

Six months ended June 26, 2022
Non-Financial Services Entities Financial Services Entities Consolidating Adjustments Consolidated
Cash flows from operating activities:
Net income $ 310,968 $ 127,387 $ (4) $ 438,351
Adjustments to reconcile Net income to Net cash provided by operating activities:
Depreciation and amortization 73,098 4,291 — 77,389
Amortization of deferred loan origination costs — 47,101 — 47,101
Amortization of financing origination fees 348 7,289 — 7,637
Provision for long-term employee benefits (9,844) — — (9,844)
Employee benefit plan contributions and payments (5,466) — — (5,466)
Stock compensation expense 18,341 1,424 — 19,765
Net change in wholesale finance receivables related to sales — — (201,326) (201,326)
Provision for credit losses — 57,955 — 57,955
Deferred income taxes 4,312 (1,431) (406) 2,475
Other, net 5,678 5,420 4 11,102
Changes in current assets and liabilities:
Accounts receivable, net (347,250) — 212,645 (134,605)
Finance receivables – accrued interest and other
— 4,255 — 4,255
Inventories, net (33,986) — — (33,986)
Accounts payable and accrued liabilities (5,423) 223,086 (221,902) (4,239)
Other current assets (48,633) 6,592 9,663 (32,378)
(348,825) 355,982 (201,322) (194,165)
Net cash (used) provided by operating activities (37,857) 483,369 (201,326) 244,186
Cash flows from investing activities:
Capital expenditures (53,694) (1,321) — (55,015)
Origination of finance receivables — (4,379,674) 1,868,481 (2,511,193)
Collections on finance receivables — 3,739,107 (1,667,155) 2,071,952
Other investing activities 797 — — 797
Net cash used by investing activities (52,897) (641,888) 201,326 (493,459)


	Three months ended March 31, 2023
	Non-Financial Services Entities		Financial Services Entities		Consolidating Adjustments		Consolidated
Cash flows from financing activities:

Proceeds from issuance of medium-term notes	—		693,276		—		693,276
Repayments of medium-term notes	—		(350,000)		—		(350,000)
Proceeds from securitization debt	—		547,706		—		547,706
Repayments of securitization debt	—		(310,640)		—		(310,640)

Repayments of asset-backed commercial paper	—		(62,634)		—		(62,634)
Net decrease in unsecured commercial paper	—		(270,119)		—		(270,119)

Net increase in deposits	—		51,822		—		51,822

Dividends paid	(24,123)		—		—		(24,123)
Repurchase of common stock	(96,767)		—		—		(96,767)
Other financing activities	69		—		—		69
Net cash (used) provided by financing activities	(120,821)		299,411		—		178,590
Effect of exchange rate changes on cash, cash equivalents and restricted cash	3,894		(74)		—		3,820
Net (decrease) increase in cash, cash equivalents and restricted cash	$	(145,550)	$	304,051	$	—	$	158,501

Cash, cash equivalents and restricted cash:
Cash, cash equivalents and restricted cash, beginning of period	$	1,021,798	$	557,379	$	—	$	1,579,177
Net (decrease) increase in cash, cash equivalents and restricted cash	(145,550)		304,051		—		158,501
Cash, cash equivalents and restricted cash, end of period	$	876,248	$	861,430	$	—	$	1,737,678

~~Table of Contents~~

Six months ended June 26, 2022
Non-Financial Services Entities Financial Services Entities Consolidating Adjustments Consolidated
Cash flows from financing activities:
Proceeds from issuance of medium-term notes — 495,785 — 495,785
Repayments of medium-term notes — (950,000) — (950,000)
Proceeds from securitization debt — 1,826,891 — 1,826,891
Repayments of securitization debt — (610,205) — (610,205)
Borrowings of asset-backed commercial paper — 425,253 — 425,253
Repayments of asset-backed commercial paper — (133,159) — (133,159)
Net decrease in unsecured commercial paper — (50,672) — (50,672)
Net increase in deposits — 55,255 — 55,255
Dividends paid (47,146) — — (47,146)
Repurchase of common stock (325,828) — — (325,828)
Other financing activities (1,237) — — (1,237)
Net cash (used) provided by financing activities (374,211) 1,059,148 — 684,937
Effect of exchange rate changes on cash, cash equivalents and restricted cash (13,149) (1,264) — (14,413)
Net (decrease) increase in cash, cash equivalents and restricted cash $ (478,114) $ 899,365 $ — $ 421,251
Cash, cash equivalents and restricted cash:
Cash, cash equivalents and restricted cash, beginning of period $ 1,078,205 $ 947,014 $ — $ 2,025,219
Net (decrease) increase in cash, cash equivalents and restricted cash (478,114) 899,365 — 421,251
Cash, cash equivalents and restricted cash, end of period $ 600,091 $ 1,846,379 $ — $ 2,446,470

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Unless the context otherwise requires, all references to the “Company” include Harley-Davidson, Inc. and all its subsidiaries. Harley-Davidson, Inc. operates in three segments: Harley-Davidson Motor Company (HDMC), LiveWire and Harley-Davidson Financial Services (HDFS).

The “% Change” figures included in the Results of Operations sections were calculated using unrounded dollar amounts and may differ from calculations using the rounded dollar amounts presented. Certain “% Change” deemed not meaningful (NM) have been excluded.

(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,” “may,” “will,” “estimates,” “targets,” “intends,” "forecasts," ~~“is on-track,”~~ "sees," "feels," or words of similar meaning. Similarly, statements that describe or refer to future expectations, future plans, strategies, objectives, outlooks, targets, guidance, commitments 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, unfavorably or favorably, 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" in this Item 2, as well as in Item 1A. Risk Factors of the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2022.~~2023. 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 "Key Factors Impacting the Company" and the “Guidance” sections in this Item 2 are only made as of ~~July 27, 2023~~April 25, 2024 and the remaining forward-looking statements in this report are made as of the date of the filing of this report ~~(August 9, 2023)~~(May 6, 2024), and the Company disclaims any obligation to publicly update such forward-looking statements to reflect subsequent events or circumstances.

Overview(1)

The Company's results for the first quarter of 2024 were generally in line with the Company's expectations which included a decline in the Company's wholesale shipments and an improvement in retail sales in North America as the Company launched its new 2024 model year motorcycles. Net income attributable to Harley-Davidson, Inc. was ~~$178.0~~$234.9 million, or ~~$1.22~~$1.72 per diluted share, in the ~~second~~first quarter of ~~2023~~2024 compared to ~~$215.8~~$304.1 million, or ~~$1.46~~$2.04 per diluted share, in the ~~second~~first quarter of 2022. During the second quarter of 2023, results were impacted by lower motorcycle shipments stemming from an unplanned production suspension late in the quarter. Despite lower shipment volumes, HDMC continued to benefit from pricing and product mix. HDFS results for the second quarter were down but remained in line with expectations as it continued to navigate the current credit environment.2023.

In the ~~second~~first quarter of ~~2023,~~2024, HDMC segment operating income was ~~$194.3~~$238.4 million, down ~~$16.7~~$97.3 million from the ~~second~~first quarter of ~~2022.~~2023. The decrease in operating income from the HDMC segment for the ~~second~~first quarter of ~~2023~~2024 was driven primarily by lower ~~than planned~~ motorcycle shipments ~~increased operating expenses~~ and ~~unfavorable foreign currency exchange rates partially offset by price increases, reduced manufacturing costs~~lower pricing stemming from the elimination of a pricing surcharge late in 2023 and ~~favorable product mix~~the Company's fine-tuned pricing strategy for 2024 compared to the same quarter last year. Operating loss from the LiveWire segment in the ~~second~~first quarter of ~~2023~~2024 was ~~$32.0~~$29.2 million compared to an operating loss of ~~$19.4~~$24.5 million in the prior year quarter due primarily to lower revenue from electric balance ~~bike shipments~~bikes and ~~increased operating expenses.~~changes in the mix of electric motorcycle models sold. Operating income from the HDFS segment in the ~~second~~first quarter of ~~2023~~2024 was ~~$59.0~~$53.9 million, down ~~$26.9~~$4.5 million compared to the prior year quarter due primarily to higher interest expense, ~~and~~ an increase in the provision for credit losses, and higher operating expenses partially offset by higher interest income.

~~Retail sales grew during the second quarter behind improved product availability relative to last year although consumers continued to face challenging economic conditions. Retail~~Worldwide retail sales of new Harley-Davidson motorcycles in the ~~second~~first quarter of 2024 were flat compared to the first quarter of 2023, ~~increased 2.6% compared to~~including a 5.6% increase in North America, the ~~second quarter~~Company's largest market, and offsetting decreases in EMEA and Asia-Pacific. The positive retail sales results in North America were driven by sales of ~~2022, including an increase of 1.6% and 4.2% in U.S. and~~the Company's new model year 2024 Touring motorcycles, while international markets ~~respectively.~~declined primarily due to macroeconomic conditions. Refer to the Harley-Davidson Motorcycles Retail Sales and Registration Data section for further discussion of retail sales results.

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Key Factors Impacting the Company(1)

~~Supply Chain Challenges~~ – Starting in 2020, the Company began to experience disruption and increasing costs related to global supply chain challenges, including global semiconductor chip shortages. During the second half of 2022, these cost increases began to moderate primarily through the normalization of logistics inflation and to a lesser extent raw materials inflation which slowed as metal markets improved. In addition, during the second half of 2022, the Company began to reduce its reliance on expedited shipping. During the first half of 2023, the Company continued to experience a moderate level of cost inflation, primarily related to labor and warehousing costs, partially offset by deflation related to freight and raw materials. The Company also continued to reduce its use of expedited modes of freight during the first half of 2023. The Company continues to expect overall supply-chain cost inflation to moderate for the 2023 full year as compared to 2022.

Based on its expectation that NHTSA will make Inconsequentiality Determinations, the Company does not expect that these regulatory noncompliance matters will result in material costs in the future, and no costs have been accrued to date. However, it is possible that a field action or recall could be required that could cause the Company to incur material costs. There are several variables and uncertainties associated with any potential field action or recall that are not yet fully known including, but not limited to, the population of brake hose assemblies and motorcycles, the specific field action or recall required, the complexity and cost of the required repair, the need for and availability of replacement parts, the suppliers of replacement parts and the number of motorcycle owners that would participate. The Company estimates, based on its available information and assumptions, that the cost of a potential field action or recall in the aggregate, if any were to occur, could range from approximately $100 million to $400 million. The Company continues to evaluate and update its estimates as it learns more about these regulatory matters, including the variables and uncertainties discussed above. The Company also continues to maintain its expectation that NHTSA will make the requested Inconsequentiality Determinations and that these regulatory matters will not result in

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any material field action or recall costs. If a material field action or recall ~~costs~~ were to result, the Company would seek full recovery of those amounts.

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Interest Rates - Interest rates increased significantly during 2022 and ~~continued to increase in~~into 2023 as central banks attempted to reduce inflation. ~~Rising~~The current higher interest ~~rates may~~rate environment has adversely ~~impact HDFS's~~impacted HDFS' interest income margin due to ~~the extent HDFS is unable to offset~~ a higher cost of funds ~~with~~that is only partially offset by increased interest rates on financing products ~~it offers to its customers.~~sold by HDFS. Additionally, higher interest rates ~~may make~~have adversely impacted consumer discretionary purchases, like purchases of the ~~Company’s~~Company's motorcycles, as higher borrowing costs have made these purchases less affordable ~~adversely impact product mix~~ or ~~impact customers’~~impacted the consumer's ability to obtain ~~financing~~financing. While the Company expects interest rates to ~~purchase~~moderate, interest rates remained heightened during the ~~Company’s motorcycles.~~first three months of 2024.

Suspension of Additional European Union Tariffs – In April 2021, the Company received notification from the Economic Ministry of Belgium that, following a request from the European Union (EU), the Company would be subject to revocation of the Binding Origin Information (BOI) decisions that allowed it to supply its EU markets with certain motorcycles produced at its Thailand manufacturing facility at tariff rates of 6%. As a result of the revocation, all non-electric motorcycles that Harley-Davidson imported into the EU, regardless of origin, were subject to a total tariff rate of 31% from April 19, 2021 through the end of 2021. On October 30, 2021, the U.S. and EU announced an agreement related to the Section 232 tariffs on steel and aluminum that were implemented in 2018 by the U.S. and the subsequent rebalancing tariff measures taken by the EU. This agreement suspended the additional tariffs initially imposed by the EU on the Company's motorcycles, reducing the total EU tariff rate on the Company’s motorcycles from 31% to 6%, effective January 1, 2022. The lower 6% tariff rate applies to all motorcycles imported by the Company into the EU, regardless of origin. Under the initial agreement between the U.S. and the EU, the lower tariff rate ~~will remain~~remained in effect until December 31, 2023. ~~It is~~In December 2023, the ~~Company's understanding that~~EU extended its suspension of the additional tariffs through March 31, 2025 and the U.S. extended its suspension of the additional tariffs through December 31, 2025. The U.S. and EU will monitor and review the operation of the extended agreement, seeking to conclude the negotiations on steel and aluminum tariffs by ~~December~~March 31, ~~2023.~~2025. These negotiations are ongoing, and there are no assurances the U.S. and EU will reach a resolution that concludes the trade conflict on steel and aluminum tariffs beyond ~~December~~March 31, ~~2023.~~2025.

To date, the Company continues to pursue its appeals of the revocation of the BOI decisions and the denial of its application for temporary extended reliance on the 6% tariff rate (for motorcycles produced in Thailand and ordered prior to April 19, 2021), although there is no assurance that these appeals will continue or be successful.

Guidance(1)

On ~~July 27, 2023,~~April 25, 2024, the Company ~~shared the following guidance~~reaffirmed its expectations for ~~2023, which reflects~~HDMC and HDFS and revised its ~~results in the first half of 2023 and business outlook~~expectations for ~~the remainder of the year:~~LiveWire for 2024:

The Company ~~now expects~~continues to expect HDMC revenue ~~growth~~to be flat to down 9% in 2024 compared to 2023. The Company expects worldwide dealer retail unit sales of 0%Harley-Davidson motorcycles in 2024 to 3%be flat to up 9% compared to 2023. The Company's expectation is for wholesale shipments to move on a balanced basis with dealer retail unit sales in 2024 so that dealer inventory remains appropriately positioned throughout the course of the year. Therefore, the Company expects wholesale unit shipments of Harley-Davidson motorcycles in 2024 to be down between 1% and 10% compared to 2023. In addition, the Company's revenue expectation for 2024 assumes (i) pricing to be down slightly compared to 2023 given the elimination of the pricing surcharge late in 2023 ~~compared~~and a fine-tuned pricing strategy in 2024, especially with respect to ~~2022, down from its previous guidance range of 4% to 7%. The revised guidance remains in line with~~ the Company's ~~overall strategy and reflects~~new Touring models, (ii) the impact of motorcycle shipment mix to be favorable compared to 2023 given the ~~unplanned production suspension that occurred primarily in the second quarter~~Company's continued focus on core products as part of ~~2023.~~ The ~~Company's revenue expectation assumes the~~Hardwire strategy and (iii) an adverse impact of ~~a 1% to 3% decline~~foreign currency exchange rates in wholesale unit shipments, partially offset by beneficial product mix as the Company focuses on its most profitable products and pricing actions intended to offset the impact of a moderated inflationary outlook. Furthermore, the Company expects revenue growth from parts and accessories and apparel and licensing as it executes The Hardwire strategy.2024.

The Company ~~now expects~~continues to expect HDMC operating margin as a percent of revenue to be 12.6% to 13.6% in ~~the range of 13.9% to 14.3% in 2023 down from its previous guidance of 14.1% to 14.6%.~~2024. The Company ~~continues~~believes the expected decline in operating margin compared to ~~believe~~2023 will be due to (i) lower expected wholesale unit volumes compared to 2023 and the ~~anticipated positive~~resulting negative impact of higher costs per unit, (ii) lower overall pricing compared to 2023 and continued modest supply chain ~~productivity will offset cost~~ inflation, and ~~unfavorability related to~~(iii) the impact of unfavorable foreign currency exchange rates. ~~This guidance reflects productivity savings~~Finally, the Company also expects some incremental manufacturing costs to re-align factory processes in the initial year of ~~approximately $100 million for 2023 which has been revised down from $140 million based on the Company's updated volume expectations and~~ production ~~environment.~~of its new model year 2024 Touring motorcycles.

~~LiveWire now expects to sell 600 to 1,000 LiveWire motorcycle units in 2023, down from its previous guidance range of 750 -2,000 units.~~ The Company continues to expect aLiveWire motorcycle sales of 1,000 to 1,500 units in 2024, but has lowered its operating loss expectation for LiveWire. The Company now expects the LiveWire operating loss for 2024 to be $105 million to $115 million, an improvement from the previous expectation of $115 million to $125 ~~million in 2023. LiveWire started production of the new Del Mar electric motorcycle during July 2023.~~million.

The Company continues to expect HDFS operating income to ~~decline 20%~~be flat to ~~25%~~up 5% in ~~2023~~2024 compared to 2022. During the second quarter of 2023, HDFS experienced lower realized credit losses than in the first quarter of 2023 as seasonality played out as the Company expected. HDFS continues to stay focused on several actions underway to effectively manage in the current credit environment, including increased investment behind collections and stronger repossession efforts.2023. The Company expects HDFS results to stabilize in 2024 as it compares to the ~~year-over-year HDFS operating income decline~~higher interest rate environment that began in 2022 and with a moderation in borrowing costs in 2024 based on anticipated actions of the U.S. Federal Reserve. The Company also expects the average yield on the retail and wholesale finance receivable portfolios to be more in-line with the recent higher interest rate environment as the retail portfolio shifts to include a higher mix of recent loans with higher interest rates resulting in greater interest revenue. Additionally, the Company expects the credit loss rate will begin to moderate in the second half of ~~the year~~2024 compared to ~~the first half given the impact of borrowing cost increases experienced by HDFS in~~ the second half of ~~2022.~~2023 as consumers adjust to the existing economic environment.

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The Company has a productivity target to eliminate $400 million of incremental cost incurred since 2020 by 2025. The Company achieved approximately $50 million in productivity savings in 2022 and approximately $70 million in 2023. The Company remains focused on production efficiency, logistics network optimization and supplier cost optimization through consolidation and regionalization in 2024. The Company continues to expect approximately $100 million of additional cost productivity savings in 2024.

The Company continues to expect capital investments in ~~2023~~2024 of between $225 and $250 million. The Company plans to continue to invest ~~behind~~in product development and capability ~~enhancement in~~enhancements that support of The Hardwire strategy.

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The Company's focus remains on core product innovation, investments in manufacturing to automate and reduce costs to improve productivity as well as planned investments for LiveWire. 

The Company's capital allocation priorities remain to fund profitable growth through The Hardwire initiatives, to pay dividends, and to execute share repurchases on a discretionary ~~share repurchases.~~basis. The Company is currently planning to repurchase a similar dollar amount of shares in 2024 as were repurchased in 2023.

Results of Operations for the Three Months Ended ~~June 30, 2023~~March 31, 2024

Compared to the Three Months Ended ~~June 26, 2022~~March 31, 2023

Consolidated Results




		Three months ended
(in thousands, except earnings per share)	(in thousands, except earnings per share)	June 30, 2023		June 26, 2022		Increase (Decrease)		% Change
(in thousands, except earnings per share)
(in thousands, except earnings per share)
Operating income - HDMC
Operating income - HDMC
Operating income - HDMC	Operating income - HDMC	$	194,337	$	211,043	$	(16,706)	(7.9)	%
Operating loss - LiveWire	Operating loss - LiveWire	(31,984)		(19,356)		(12,628)		65.2
Operating loss - LiveWire
Operating loss - LiveWire
Operating income - HDFS
Operating income - HDFS
Operating income - HDFS	Operating income - HDFS	58,985		85,928		(26,943)		(31.4)
Operating income	Operating income	221,338		277,615		(56,277)		(20.3)
Operating income
Operating income
Other income, net	Other income, net	7,226		10,055		(2,829)		(28.1)
Investment income (loss)		11,151		(3,530)		14,681		(415.9)
Other income, net
Other income, net
Investment income
Investment income
Investment income
Interest expense
Interest expense
Interest expense	Interest expense	7,696		7,720		(24)		(0.3)
Income before income taxes	Income before income taxes	232,019		276,420		(44,401)		(16.1)
Income before income taxes
Income before income taxes
Income tax provision
Income tax provision
Income tax provision	Income tax provision	58,189		60,571		(2,382)		(3.9)
Net income	Net income	173,830		215,849		(42,019)		(19.5)	%
Net income
Net income
Less: Loss attributable to noncontrolling interests
Less: Loss attributable to noncontrolling interests
Less: Loss attributable to noncontrolling interests	Less: Loss attributable to noncontrolling interests	4,209		—		4,209		NM
Net income attributable to Harley-Davidson, Inc.	Net income attributable to Harley-Davidson, Inc.	$	178,039	$	215,849	$	(37,810)	(17.5)	%
Net income attributable to Harley-Davidson, Inc.
Net income attributable to Harley-Davidson, Inc.
Diluted earnings per share	Diluted earnings per share	$	1.22	$	1.46	$	(0.24)	(16.4)	%
Diluted earnings per share
Diluted earnings per share

The Company reported operating income of ~~$221.3~~$263.1 million in the ~~second~~first quarter of ~~2023~~2024 compared to ~~$277.6~~$369.6 million in the same period last year. The HDMC segment reported operating income of ~~$194.3~~$238.4 million in the ~~second~~first quarter of ~~2023,~~2024, a decrease of ~~$16.7~~$97.3 million compared to the ~~second~~first quarter of ~~2022.~~2023. Operating loss from the LiveWire segment increased ~~$12.6~~$4.7 million compared to the ~~second~~first quarter of ~~2022.~~2023. Operating income from the HDFS segment decreased ~~$26.9~~$4.5 million compared to the ~~second~~first quarter of ~~2022.~~2023. Refer to the HDMC Segment, LiveWire Segment and HDFS Segment sections for a more detailed discussion of the factors affecting operating results.

Other income in the ~~second~~first quarter of 2024 was higher than in the first quarter of 2023, ~~was lower than in the second quarter of 2022,~~ impacted by ~~an increase in expense~~a larger benefit related to LiveWire's ~~warrants,~~warrant liability, which ~~increased~~decreased in fair value, partially offset by ~~higher~~lower non-operating income related to the Company's defined benefit plans.

The Company's effective income tax rate for the ~~second~~first quarter of ~~2023~~2024 was ~~25.1%~~20.0% compared to ~~21.9%~~23.0% for the ~~second~~first quarter of ~~2022.~~2023.

Diluted earnings per share was ~~$1.22~~$1.72 in the ~~second~~first quarter of ~~2023,~~2024, down ~~16.4%~~15.7% from the same period last year. Diluted weighted average shares outstanding decreased from ~~147.8~~148.9 million in the ~~second~~first quarter of ~~2022~~2023 to ~~145.8~~136.9 million in the ~~second~~first quarter of ~~2023,~~2024, driven by the Company's discretionary repurchases of common stock. Refer to Liquidity and Capital Resources for additional information concerning the Company's share repurchase activity.

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Harley-Davidson Motorcycles Retail Sales and Registration Data

Harley-Davidson Motorcycle Retail Sales(a)

Retail unit sales of new Harley-Davidson motorcycles were as follows:


		Three months ended						Three months ended
		June 30, 2023	June 30, 2022	(Decrease) Increase	% Change
	March 31, 2024									March 31, 2024			March 31, 2023			(Decrease) Increase				% Change
United States	United States	32,161	31,641	520	1.6	%	United States	25,726	24,277		24,277		1,449	1,449			6.0	6.0		%
Canada	Canada	2,899	3,086	(187)	(6.1)
North America	North America	35,060	34,727	333	1.0
Europe/Middle East/Africa (EMEA)	Europe/Middle East/Africa (EMEA)	8,120	8,656	(536)	(6.2)
Asia Pacific	Asia Pacific	7,525	6,045	1,480	24.5
Latin America	Latin America	821	791	30	3.8
		51,526	50,219	1,307	2.6	%
	39,405								39,405			39,425			(20)				(0.1)		%

(a)Data source for retail sales figures shown above is new sales warranty and registration information provided by 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.

~~Worldwide~~

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During the first quarter of 2024, retail sales ~~of new Harley-Davidson motorcycles~~ were up ~~2.6% during the second quarter of 2023 compared to the same period last year, driven primarily~~5.6% in North America offset by ~~increases~~a 12.3% decrease in Asia Pacific and ~~North America. Retail sales~~an 11.0% decrease in ~~North America increased 1.0%, driven by a 1.6% increase in the United States partially offset by a 6.1% decline in Canada.~~EMEA.

North America retail ~~performance was~~sales were positively impacted by the launch of the Company's new 2024 model year motorcycles driven by ~~increased~~sales of the new Touring models. Retail sales in Europe and Asia Pacific were soft primarily due to challenging macroeconomic conditions. In Europe, the ~~Company's core motorcycle categories such as Grand American Touring and Cruiser, offset by weakness~~decline in ~~the Sport motorcycle category following the discontinuation of legacy Sportster models at the end of 2022. The Company believes~~ retail sales was primarily due to lower sales in North America were also adversely impacted during the quarter by the availability of select models in the market as well as macro-economic conditions impacting the consumer, including higher interest rates. GrowthGermany and France, while lower retail unit sales in Asia Pacific ~~was~~were driven primarily by ~~continued strength across a variety of~~declines in China. In most international markets, the ~~Company's markets. The decline in EMEA was primarily driven by a planned unit mix shift towards more profitable core motorcycle models.~~

~~Higher production in the second half of 2022 and~~2024 model year motorcycles only started to arrive at dealers later in the first ~~half~~quarter, limiting the impact of ~~2023, despite~~new model year motorcycles on retail sales during the ~~unplanned production suspension in the second quarter of 2023, has improved product availability in the dealer network over the last 12-months.~~ first quarter.

Worldwide ~~average~~ retail inventory of new motorcycles was approximately 69,000 units at the end of the first quarter of 2024, or up ~~91% during~~approximately 26% compared to the ~~second~~end of the first quarter of 2023, but remained lower than historical levels experienced prior to 2020. The average historical retail inventory level at the end of the first quarter during 2015 through 2019 was approximately 83,000 units. The Company believes current overall dealer inventory is appropriate given the upcoming spring riding season and the recent launch of new model year 2024 motorcycles. Retail inventory of new motorcycles is based on units at the end of the quarter rather than average monthly inventory levels within the quarter.

Motorcycle Registration Data and Market Share – 601+cc(a)

The Company's U.S. market share of new 601+cc motorcycles increased during the first three months of 2024 compared to the ~~second quarter~~first three months of ~~2022, but remains below inventory levels experienced during the second quarter of 2019. Dealer inventory levels and~~2023 on higher retail sales ~~during~~relative to the ~~second quarter~~industry. The Company's European market share of ~~2022 were adversely impacted by~~ ~~a suspension~~new 601+cc motorcycles for first three months of ~~production and shipments for approximately two weeks during second quarter of 2022.~~ ~~Average retail inventory is calculated based on a four-point average including inventory on~~2024 was down compared to the first ~~day~~three months of ~~the quarter~~2023. Industry retail registration data for new motorcycles and ~~each subsequent month-end within the quarter.~~

~~In the U.S., new motorcycle transaction prices on average were within~~ the Company's ~~targeted range of plus or minus 2% of~~market share was as follows:


	Three months ended
	March 31, 2024		March 31, 2023		(Decrease) Increase	% Change
Industry new motorcycle registrations:
United States(b)	61,185		59,262		1,923	3.2	%
Europe(c)	125,072		122,249		2,823	2.3	%

Harley-Davidson market share data:
United States(b)	41.6	%	39.5	%	2.1	pts.
Europe(c)	4.6	%	5.0	%	(0.4)	pts.

(a)Data includes on-road models with internal combustion engines with displacements greater than 600cc's and electric motorcycles with kilowatt (kW) peak power equivalents greater than 600cc's (601+cc). On-road 601+cc models include dual purpose models, three-wheeled motorcycles and autocycles.

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

(c)Europe data includes Austria, Belgium, Denmark, Finland, France, Germany, Italy, Luxembourg, Netherlands, Norway, Spain, Sweden, Switzerland, and the ~~Manufacturer's Suggested Retail Prices during the second quarter of 2023.~~United Kingdom. Industry data is derived from information provided by Management Services Helwig Schmitt GmbH. This third-party data is subject to revision and update.

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~~HDMC Segment~~

~~Harley-Davidson Motorcycle Unit Shipments~~

~~Motorcycle unit shipments were as follows:~~
Three months ended
June 30, 2023 June 26, 2022 Unit Unit
Units Mix % Units Mix % Increase
(Decrease) % Change
U.S. motorcycle shipments 24,229 56.4 % 28,181 58.8 % (3,952) (14.0) %
Worldwide motorcycle shipments:
Grand American Touring(a)
20,270 47.2 % 21,758 45.4 % (1,488) (6.8) %
Cruiser 15,476 36.0 % 14,565 30.4 % 911 6.3
Sport and Lightweight 6,161 14.4 % 8,452 17.6 % (2,291) (27.1)
Adventure Touring 1,027 2.4 % 3,168 6.6 % (2,141) (67.6)
42,934 100.0 % 47,943 100.0 % (5,009) (10.4) %

~~(a)Includes Trike~~

The Company shipped 42,934 motorcycles worldwide during the second quarter of 2023, which was 10.4% lower than the second quarter of 2022. The Company's shipments to dealers were down compared to the same quarter last year due to the unplanned suspension of production in June 2023. Refer to ~~Supply Matters~~ ~~under Key Factors Impacting the Company for additional discussion of the production suspension.~~

During the second quarter of 2023, the Company shipped a higher mix of Grand American Touring and Cruiser motorcycles as a percent of total shipments and a lower mix of Sport and Lightweight and Adventure Touring motorcycles. Sport motorcycle shipments were lower following the discontinuation of legacy Sportster models in North America at the end of 2022 as the Company shifted to more profitable models.

~~Segment Results~~

~~Condensed statements of operations for the HDMC segment were as follows (dollars in thousands):~~
Three months ended
June 30, 2023 June 26, 2022 Increase
(Decrease) %
Change
Revenue:
Motorcycles $ 890,919 $ 935,172 $ (44,253) (4.7) %
Parts and accessories 215,520 214,267 1,253 0.6
Apparel 66,356 77,325 (10,969) (14.2)
Licensing 5,116 11,781 (6,665) (56.6)
Other 20,225 15,420 4,805 31.2
1,198,136 1,253,965 (55,829) (4.5)
Cost of goods sold 780,662 866,825 (86,163) (9.9)
Gross profit 417,474 387,140 30,334 7.8
Operating expenses:
Selling & administrative expense 195,350 147,014 48,336 32.9
Engineering expense 27,787 29,347 (1,560) (5.3)
Restructuring benefit — (264) 264 (100.0)
223,137 176,097 47,040 26.7
Operating income $ 194,337 $ 211,043 $ (16,706) (7.9) %
Operating margin 16.2 % 16.8 % (0.6) pts.

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The estimated impact of significant factors affecting the comparability of net revenue, cost of goods sold and gross profit from the second quarter of 2022 to the second quarter of 2023 were as follows (in millions):
Net
Revenue Cost of
Goods Sold Gross
Profit
Three months ended June 26, 2022 $ 1,254.0 $ 866.9 $ 387.1
Volume (124.7) (81.9) (42.8)
Price and sales incentives 50.6 — 50.6
Foreign currency exchange rates and hedging (8.8) 4.0 (12.8)
Shipment mix 27.0 13.5 13.5
Raw material prices — (7.5) 7.5
Manufacturing and other costs — (14.4) 14.4
(55.9) (86.3) 30.4
Three months ended June 30, 2023 $ 1,198.1 $ 780.6 $ 417.5

~~Factors affecting the comparability of net revenue, cost of goods sold and gross profit from the second quarter of 2022 to the second quarter of 2023 were as follows:~~

•~~The decrease in volume was primarily due to lower motorcycle shipments.~~

•~~Revenue benefited from higher prices on new model year 2023 motorcycles.~~

•Revenue and gross profit were negatively impacted by weaker foreign currency exchange rates relative to the U.S. dollar, partially offset by favorable net foreign currency gains associated with hedging recorded in cost of goods sold.

•~~Changes in the shipment mix had a favorable impact on gross profit.~~

•~~Raw material costs benefited from continued moderation in the rate of inflation related primarily to metals.~~

•Manufacturing and other costs were positively impacted by reduced reliance on expedited freight and other productivity gains as well as reduced ocean freight rates. These benefits were partially offset by continued moderate inflation in other manufacturing costs and higher costs associated with producing fewer units than in the same period last year.

~~Operating expenses were higher in the second quarter of 2023 compared to the same period last year related to Hardwire initiatives and employee-related costs.~~

~~LiveWire Segment~~

~~Segment Results~~

~~Condensed statements of operations for the LiveWire segment were as follows (in thousands, except unit shipments):~~
Three months ended
June 30, 2023 June 26, 2022 Increase
(Decrease) %
Change
Revenue $ 7,026 $ 12,506 $ (5,480) (43.8) %
Cost of goods sold 9,966 12,896 (2,930) (22.7)
Gross profit (2,940) (390) (2,550) 653.8
Selling, administrative and engineering expense 29,044 18,966 10,078 53.1
Operating loss $ (31,984) $ (19,356) $ (12,628) 65.2 %
LiveWire motorcycle unit shipments 33 225 (192) (85.3) %

During the second quarter of 2023, revenue decreased by $5.5 million, or 43.8%, compared to the second quarter of 2022. The decrease was primarily due to lower revenue driven by lower volumes on electric motorcycles and electric balance bikes. Cost of sales decreased by $2.9 million, or 22.7%, during the second quarter of 2023 compared to the second quarter of 2022 on lower volumes.

During the second quarter of 2023, selling, administrative and engineering expense increased $10.1 million, or 53.1%, compared to the second quarter of 2022 driven by higher product development costs as well as higher costs associated with standing up the new organization.

~~Table of Contents~~

~~HDFS Segment~~

~~Segment Results~~

~~Condensed statements of operations for the HDFS segment were as follows (in thousands):~~
Three months ended
June 30, 2023 June 26, 2022 Increase
(Decrease) %
Change
Revenue:
Interest income $ 196,809 $ 168,707 $ 28,102 16.7 %
Other income 43,552 33,909 9,643 28.4
240,361 202,616 37,745 18.6
Expenses:
Interest expense 86,005 47,649 38,356 80.5
Provision for credit losses 57,278 29,133 28,145 96.6
Operating expense 38,093 39,906 (1,813) (4.5)
181,376 116,688 64,688 55.4
Operating income $ 58,985 $ 85,928 $ (26,943) (31.4) %

Interest income was higher for the second quarter of 2023 compared to the same period last year, primarily due to higher average outstanding finance receivables at a higher average yield. Other income increased largely driven by higher investment income and licensing revenue. Interest expense increased due to higher average outstanding debt at a higher average interest rate.

~~The provision for credit losses increased $28.1 million compared to the second quarter of 2022, primarily driven by an increase in the allowance for credit losses and higher actual credit losses.~~

The allowance for credit losses considers current economic conditions and the Company’s outlook on future conditions. During the second quarter of 2023, uncertainty surrounding overall macro-economic conditions remained as near-term recession concerns continued, ongoing elevated levels of inflation challenged both the U.S. and global economies, and muted consumer confidence persisted, among other factors. As such, at the end of the second quarter of 2023, the Company’s outlook on economic conditions and its probability weighting of its economic forecast scenarios were weighted towards a near-term recession. Refer to the Results of Operations for the Six Months Ended June 30, 2023 Compared to the Six Months Ended June 26, 2022 for a discussion of 2023 annualized credit losses.

Operating expenses decreased $1.8 million compared to the second quarter of 2022 due in part to a valuation gain on a securitization interest rate cap partially offset by higher repossession and employee-related costs.

~~Changes in the allowance for credit losses on finance receivables were as follows (in thousands):~~
Three months ended
June 30,
2023 June 26,
2022
Balance, beginning of period $ 358,431 $ 340,473
Provision for credit losses 57,278 29,133
Charge-offs, net of recoveries (33,929) (17,469)
Balance, end of period $ 381,780 $ 352,137

~~Table of Contents~~

~~Results of Operations for the Six Months Ended June 30, 2023~~

~~Compared to the Six Months Ended June 26, 2022~~

~~Consolidated Results~~
Six months ended
(in thousands, except earnings per share) June 30,
2023 June 26,
2022 (Decrease)
Increase %
Change
Operating income - HDMC $ 530,073 $ 429,977 $ 100,096 23.3 %
Operating loss - LiveWire (56,531) (35,415) (21,116) 59.6
Operating income - HDFS 117,405 172,285 (54,880) (31.9)
Operating income 590,947 566,847 24,100 4.3
Other income, net 27,322 21,085 6,237 29.6
Investment (loss) income 21,176 (5,509) 26,685 NM
Interest expense 15,416 15,431 (15) (0.1)
Income before income taxes 624,029 566,992 57,037 10.1
Provision for income taxes 148,370 128,641 19,729 15.3
Net income $ 475,659 $ 438,351 $ 37,308 8.5 %
Less: Loss attributable to noncontrolling interests 6,470 — 6,470 NM
Net income attributable to Harley-Davidson, Inc. 482,129 438,351 43,778 10.0 %
Diluted earnings per share $ 3.27 $ 2.91 $ 0.36 12.4 %

The Company reported operating income of $590.9 million in the first six months of 2023 compared to $566.8 million in the same period last year. HDMC segment operating income was $530.1 million in the first six months of 2023, up $100.1 million compared to the same period last year. Operating loss from the LiveWire segment increased $21.1 million compared to the first six months of 2022. Operating income from the HDFS segment decreased $54.9 million compared to the first six months of 2022. Refer to the HDMC Segment, LiveWire Segment and HDFS Segment discussions for a more detailed analysis of the factors affecting operating income.

Other income in the first six months of 2023 was higher than the same period last year, impacted by higher non-operating income related to the Company's defined benefit plans, partially offset by an increase in expense related to LiveWire's warrants, which increased in value.

~~The Company's effective income tax rate for the first six months of 2023 was 23.8% compared to 22.7% for the same period in 2022.~~

Diluted earnings per share was $3.27 in the first six months of 2023, up from diluted earnings per share of $2.91 for the same period last year on higher net income and from the impact of lower diluted weighted average shares outstanding. Diluted weighted average shares outstanding decreased from 150.8 million in the first six months of 2022 to 147.4 million in the first six months of 2023, driven by the Company's discretionary repurchases of common stock. Please refer to Liquidity and Capital Resources for additional information concerning the Company's share repurchase activity.

~~Table of Contents~~

~~Harley-Davidson Motorcycles Retail Sales and Registration Data~~

~~Harley-Davidson Motorcycle Retail Sales(a)~~

~~Retail unit sales of new Harley-Davidson motorcycles were as follows:~~
Six months ended
June 30,
2023 June 30,
2022 (Decrease)
Increase % Change
United States 56,438 60,985 (4,547) (7.5) %
Canada 4,643 4,955 (312) (6.3)
North America 61,081 65,940 (4,859) (7.4)
Europe/Middle East/Africa (EMEA) 14,037 14,946 (909) (6.1)
Asia Pacific 14,406 12,744 1,662 13.0
Latin America 1,427 1,600 (173) (10.8)
90,951 95,230 (4,279) (4.5) %

~~(a)~~Data source for retail sales figures shown above is new sales warranty and registration information provided by 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.

Worldwide retail sales of new Harley-Davidson motorcycles were down 4.5% during the first six months of 2023 compared to the same period last year. Retail sales results during the first six months of 2023 were driven primarily by a decline in North America, partially offset by an increase in Asia Pacific. North America retail sales were adversely impacted during the first six months of 2023 by the timing of certain new model year shipments, the discontinuation of legacy Sportster models at the end of 2022, the availability of select models in the market as well as macro-economic conditions impacting the consumer including higher interest rates.

~~Motorcycle Registration Data and Market Share – 601+cc(a)~~

The Company's U.S. market share of new 601+cc motorcycles decreased during the first six months of 2023 compared to the first six months of 2022 on lower retail sales relative to the industry. The Company's European market share of new 601+cc motorcycles for first six months of 2023 was down compared to the first six months of 2022. Industry retail registration data for new motorcycles and the Company's market share was as follows:
Six months ended
June 30,
2023 June 30,
2022 (Decrease)
Increase % Change
Industry new motorcycle registrations:
United States(b)
150,851 147,932 2,919 2.0 %
Europe(c)
287,443 249,384 38,059 15.3 %
Harley-Davidson market share data:
United States(b)
36.7 % 41.2 % (4.5) pts.
Europe(c)
4.7 % 5.7 % (1.0) pts.

~~(a)~~Data includes on-road models with internal combustion engines with displacements greater than 600cc's and electric motorcycles with kilowatt (kW) peak power equivalents greater than 600cc's (601+cc). 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. This third-party data is subject to revision and update.~~

~~(c)~~Europe data includes Austria, Belgium, Denmark, Finland, France, Germany, Italy, Luxembourg, Netherlands, Norway, Spain, Sweden, Switzerland, and the United Kingdom. Industry data is derived from information provided by Management Services Helwig Schmitt GmbH. This third-party data is subject to revision and update.

~~Table of Contents~~

HDMC Segment

Harley-Davidson Motorcycle Unit Shipments

Motorcycle unit shipments were as follows:


		Six months ended										Three months ended
	March 31, 2024																	March 31, 2024								March 31, 2023										Unit
	Units														Units					Mix %					Units					Mix %				Increase (Decrease)					% Change
		June 30, 2023			June 26, 2022			Unit	Unit
		Units	Mix %		Units	Mix %		(Decrease) Increase	% Change

U.S. motorcycle shipments
U.S. motorcycle shipments
U.S. motorcycle shipments	U.S. motorcycle shipments	66,817	63.5	%	64,000	62.3	%	2,817	4.4	%	41,577		72.1			72.1	%					42,588	68.4				68.4	%				(1,011)	(2.4)		(2.4)		%

Worldwide motorcycle shipments:	Worldwide motorcycle shipments:

Worldwide motorcycle shipments:

Worldwide motorcycle shipments:
Grand American Touring(a)
Grand American Touring(a)
Grand American Touring(a)	Grand American Touring(a)	52,489	49.9	%	47,770	46.5	%	4,719	9.9	%	35,356		61.3			61.3	%					32,219	51.8				51.8	%				3,137	9.7		9.7		%
Cruiser	Cruiser	36,734	34.9	%	30,128	29.4	%	6,606	21.9
Sport and Lightweight	Sport and Lightweight	12,746	12.2	%	18,106	17.6	%	(5,360)	(29.6)

Adventure Touring	Adventure Touring	3,202	3.0	%	6,685	6.5	%	(3,483)	(52.1)
		105,171	100.0	%	102,689	100.0	%	2,482	2.4	%
Adventure Touring

Adventure Touring
	57,672													57,672					100.0		%			62,237					100.0		%		(4,565)					(7.3)		%

(a)Includes Trike

The Company shipped ~~105,171~~57,672 motorcycles worldwide during the first ~~six months~~quarter of ~~2023,~~2024, which was ~~2.4% higher~~7.3% lower than the ~~same period in 2022. The Company's shipments in the U.S. during the~~ first ~~six months~~quarter of ~~2023 were up compared~~2023. Shipments to ~~the same period last year on higher production.~~

The motorcycles shipped during the first six months of 2023 compared to the same period last year included a higher mix of Grand American Touring and Cruiser motorcycles shipped as a percent of total shipments and a lower mix of Sport and Lightweight and Adventure Touring motorcycles. Sport motorcycle shipments were lower following the discontinuation of legacy Sportster models in North America at the end of 2022 as the Company shifted to more profitable models. In addition, the Company began shipping Lightweight motorcyclesdealers in the first quarter of ~~2023.~~2024 were lower than the first quarter of 2023 when wholesale shipments benefited from dealers rebuilding inventory levels following the low levels experienced during the COVID-19 pandemic. In addition, the Company shipped a greater proportion of Grand American Touring models to improve availability of models most desired by customers going into riding season.

Segment Results

Condensed statements of operations for the HDMC segment were as follows (dollars in thousands):


		Six months ended												Three months ended
		June 30, 2023			June 26, 2022			Increase (Decrease)		% Change
	March 31, 2024																	March 31, 2024							March 31, 2023							Increase (Decrease)					% Change
Revenue:	Revenue:
Motorcycles
Motorcycles
Motorcycles	Motorcycles	$	2,193,297		$	1,992,177		$	201,120	10.1	%	$	1,221,540			$			$	1,302,378			$			$	(80,838)			(6.2)			(6.2)	%
Parts and accessories	Parts and accessories	383,192			379,587			3,605		0.9
Apparel	Apparel	137,747			128,729			9,018		7.0
Licensing	Licensing	11,326			18,278			(6,952)		(38.0)
Other	Other	30,403			27,964			2,439		8.7
		2,755,965			2,546,735			209,230		8.2
	1,476,106
Cost of goods sold	Cost of goods sold	1,781,465			1,752,013			29,452		1.7
Gross profit	Gross profit	974,500			794,722			179,778		22.6
Operating expenses:	Operating expenses:
Selling & administrative expense	Selling & administrative expense	392,790			310,028			82,762		26.7
Selling & administrative expense
Selling & administrative expense
Engineering expense	Engineering expense	51,637			55,109			(3,472)		(6.3)
Restructuring (benefit) expense		—			(392)			392		(100.0)
		444,427			364,745			79,682		21.8	%
		222,625
		222,625
		222,625
Operating income	Operating income	$	530,073		$	429,977		$	100,096	23.3	%	Operating income		$	238,445		$				$	335,736		$				$	(97,291)		(29.0)			(29.0)		%
Operating margin	Operating margin	19.2		%	16.9		%	2.3		pts.		Operating margin		16.2		%					21.6		%					(5.4)			pts.				pts.

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The estimated ~~impacts~~impact of significant factors affecting the comparability of net revenue, cost of goods sold and gross profit from the first ~~six months~~quarter of ~~2022~~2023 to the first ~~six months~~quarter of ~~2023~~2024 were as follows (in millions):


		Net Revenue		Cost of Goods Sold		Gross Profit
Six months ended June 26, 2022		$	2,546.7	$	1,752.0	$	794.7
	Net Revenue							Net Revenue	Cost of Goods Sold	Gross Profit
Three months ended March 31, 2023
Volume	Volume	28.7		27.2		1.5
Price and sales incentives	Price and sales incentives	154.5		—		154.5
Foreign currency exchange rates and hedging	Foreign currency exchange rates and hedging	(37.4)		(2.1)		(35.3)
Shipment mix	Shipment mix	63.5		21.2		42.3
Raw material prices	Raw material prices	—		(14.4)		14.4
Manufacturing and other costs	Manufacturing and other costs	—		(2.4)		2.4
		209.3		29.5		179.8
Six months ended June 30, 2023		$	2,756.0	$	1,781.5	$	974.5
	(81.7)
Three months ended March 31, 2024

Factors affecting the comparability of net revenue, cost of goods sold and gross profit from the first ~~six months~~quarter of ~~2022~~2023 to the first ~~six months~~quarter of ~~2023~~2024 were as follows:

•~~Revenue and gross profit were positively impacted by higher~~The decrease in volume was primarily due to lower motorcycle ~~shipments; however, the gross profit benefit from motorcycles was partially offset by unfavorable volumes in higher-margin products, including parts and accessories and licensing.~~shipments.

•Revenue ~~benefited from~~was adversely impacted by the elimination of the pricing surcharge late in 2023, a fine-tuned pricing strategy for 2024 and higher ~~prices on new~~promotional costs to promote the sale of model year 2023 ~~motorcycles.~~carryover inventory at dealers. The Company expects this will help drive dealer retail performance in 2024(1).

•~~Revenue and gross~~The impact of foreign currency changes on revenue compared to prior year was flat. Gross profit ~~were~~was negatively impacted by ~~weaker~~unfavorable net foreign currency ~~exchange rates relative~~losses related primarily to ~~the U.S. dollar.~~hedging, recorded in cost of goods sold.

•Changes in the shipment mix ~~of motorcycles~~ had a favorable impact on gross profit.

•Raw material costs benefited from continued moderation in the rate of ~~inflation related primarily to metals.~~inflation.

•Manufacturing and other costs were ~~positively~~negatively impacted by lower operating leverage and continued modest cost inflation of approximately 2%. The majority of units shipped in the first quarters of 2024 and 2023 were produced in the preceding fourth quarters in advance of the new model year launch. Production volumes were lower in the fourth quarter of 2023 compared to the fourth quarter of 2022, which resulted in a higher fixed cost per unit for units shipped in the first quarter of 2024 as compared to units shipped in the first quarter of 2023. The impact of lower operating leverage was partially offset by other productivity gains including reduced reliance on expedited freight ~~and other productivity gains~~ as well as reduced ocean freight rates. ~~These benefits were partially offset by continued moderate inflation in other manufacturing costs.~~

Operating expenses were ~~higher~~up slightly in the first ~~six months~~quarter of ~~2023~~2024 compared to the same period last year related to ~~Hardwire initiatives~~higher marketing and warranty expenses, partially offset by lower employee-related costs.

LiveWire Segment

Segment Results

Condensed statements of operations for the LiveWire segment were as follows (in thousands, except unit shipments):


		Six months ended									Three months ended
		June 30, 2023		June 26, 2022		Increase (Decrease)		% Change
	March 31, 2024													March 31, 2024				March 31, 2023					Increase (Decrease)							% Change
Revenue	Revenue	$	14,788	$	22,907	$	(8,119)	(35.4)	%	Revenue	$	4,704	$		$	7,762	$		$	(3,058)		(39.4)				(39.4)		%
Cost of goods sold	Cost of goods sold	16,464		23,244		(6,780)		(29.2)
Gross profit	Gross profit	(1,676)		(337)		(1,339)		397.3		Gross profit	(3,941)		1,264			1,264		(5,205)			(5,205)			NM					NM
Selling, administrative and engineering expense	Selling, administrative and engineering expense	54,855		35,078		19,777		56.4
Operating loss	Operating loss	$	(56,531)	$	(35,415)	$	(21,116)	59.6	%	Operating loss	$	(29,241)	$		$	(24,547)	$		$	(4,694)		19.1				19.1		%

LiveWire motorcycle unit shipments	LiveWire motorcycle unit shipments	96		322		(226)		(70.2)
LiveWire motorcycle unit shipments
LiveWire motorcycle unit shipments											117				63				54						85.7		%

During the first ~~six months~~quarter of ~~2023,~~2024, revenue decreased by ~~$8.1~~$3.1 million, or ~~35.4%~~39.4%, compared to the first ~~six months~~quarter of ~~2022.~~2023. The decrease was primarily due to lower ~~revenue driven by lower~~electric balance bike volumes onand an unfavorable change in the mix of electric motorcycles ~~and electric balance bikes.~~sold during quarter as compared to the same period last year. Cost of sales ~~decreased~~increased by ~~$6.8~~$2.1 million, or ~~29.2%~~33.0%, during the first ~~six months~~quarter of ~~2023~~2024 compared to the first ~~six months of 2022 on lower volumes.~~

~~During the first six months~~quarter of 2023 ~~selling, administrative and engineering expense increased $19.8 million, or 56.4%, compared~~due to ~~the first six months of 2022 driven by~~ higher ~~product development costs as well as higher costs associated with standing up the new organization.~~electric motorcycle volumes.

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During the first quarter of 2024, selling, administrative and engineering expense remained relatively flat with the first quarter of 2023 as the Company continued to focus on product development.

HDFS Segment

Segment Results

Condensed statements of operations for the HDFS segment were as follows (in thousands):


		Six months ended									Three months ended
		June 30, 2023		June 26, 2022		Increase (Decrease)		% Change			March 31, 2024			March 31, 2023			Increase (Decrease)			% Change
Revenue:	Revenue:
Interest income	Interest income	$	379,079	$	330,441	$	48,638	14.7	%
Interest income
Interest income											$	211,335		$	182,270		$	29,065		15.9		%
Other income	Other income	84,377		64,190		20,187		31.4
		463,456		394,631		68,825		17.4
	248,797
Expenses:	Expenses:
Interest expense
Interest expense
Interest expense	Interest expense	159,554		89,748		69,806		77.8
Provision for credit losses	Provision for credit losses	109,642		57,955		51,687		89.2
Operating expense	Operating expense	76,855		74,643		2,212		3.0

		346,051		222,346		123,705		55.6
		194,922
		194,922
		194,922
Operating income	Operating income	$	117,405	$	172,285	$	(54,880)	(31.9)	%	Operating income	$	53,875	$	$	58,420	$	$	(4,545)	(7.8)		(7.8)		%

Interest income was higher for the first ~~six months~~quarter of ~~2023,~~2024 compared to the same period last year, primarily due to higher average outstanding finance receivables at a higher average yield. Other income ~~increased largely driven by higher investment income,~~decreased due to lower insurance ~~revenue~~ and licensing ~~revenue.~~revenue as well as lower investment income. Interest expense increased due to higher average ~~debt at a~~interest rates on higher average ~~interest rate.~~outstanding debt and deposits.

The provision for credit losses ~~was $51.7~~increased $8.6 million ~~higher in the first six months of 2023 as~~ compared to the ~~prior year primarily due to~~first quarter of 2023, driven by higher actual credit losses ~~and an increase~~partially offset by a favorable change in the allowance for credit losses. The favorable change in the allowance for credit losses was due to a reserve rate increase during the first ~~six months~~quarter of ~~2023. The increase~~2023 compared to a flat reserve rate in the first quarter of 2024, partially offset by receivable growth.

The allowance for credit losses inconsiders current economic conditions and the Company’s outlook on future conditions. At the end of the first ~~six months~~quarter of ~~2023 was largely driven by~~2024, the Company's outlook on economic conditions and its probability weighting of its economic forecast scenarios ~~which were~~was weighted ~~towards~~toward more pessimistic scenarios given continued challenging macro-economic conditions, including a ~~near-term recession. The Company’s expectations surrounding its economic forecasts may change in future periods as additional information becomes available.~~persistently high interest rate environment, elevated inflation levels, and muted consumer confidence.

Annualized ~~credit~~ losses on the Company's retail motorcycle loans were ~~2.61% at~~3.74% during the ~~end of the second~~first quarter of ~~2023~~2024 compared to ~~1.40% at~~3.21% in the ~~end of the second~~first quarter of ~~2022.~~2023. The 30-day delinquency rate for retail motorcycle loans at ~~June 30, 2023~~March 31, 2024 increased to ~~3.63%~~4.00% from ~~2.95%~~3.74% at ~~June 26, 2022.~~March 31, 2023. The unfavorable retail credit loss and delinquency performance was driven by several factors connected to the macro-economic environment and related customer and industry dynamics, including the impact of higher ~~retail delinquencies~~motorcycle payments and ~~credit losses as consumers faced increased pressure from higher debt levels and the impacts of inflation, both more generally as well as through higher payments~~general inflationary pressures on ~~larger retail motorcycle loans. Further,~~customers. Additionally, the Company continues to experience challenges with motorcycle repossessions as the repossession industry contracted during the COVID-19 pandemic and has yet to expand to meet current demand. This has resulted in more motorcycle loans with larger loan balances that are in the later stages of delinquency being charged-off without a successful repossession. In the future, the Company anticipates recovering some portion of those charge-offs as the motorcycles are located, repossessed and soldexperienced downward pressure on recovery values at auction.

Operating expenses increased ~~$2.2~~$6.4 million ~~in the first six months of 2023~~ compared to the first ~~six months~~quarter of ~~2022~~2023 due in part ~~due~~ to increased repossession costs, higher ~~repossession~~tax-related expenses, and ~~employee-related costs~~unfavorable foreign currency rates partially offset by lower employee-related costs and a ~~valuation gain~~smaller loss on a securitization interest rate ~~cap.~~cap derivative valuation.

Changes in thethe allowance for credit losses on finance receivables were as follows (in thousands):


		Six months ended				Three months ended
		June 30, 2023		June 26, 2022
	March 31, 2024						March 31, 2024	March 31, 2023
Balance, beginning of period	Balance, beginning of period	$	358,711	$	339,379
Provision for credit losses	Provision for credit losses	109,642		57,955
Charge-offs, net of recoveries	Charge-offs, net of recoveries	(86,573)		(45,197)

Balance, end of period	Balance, end of period	$	381,780	$	352,137
Balance, end of period
Balance, end of period

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Other Matters

Commitments and Contingencies

The Company is subject to lawsuits and other claims related to product, product recall, commercial, employee, environmental 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. Refer to Note 14 of the Notes to Consolidated financial statements for a discussion of the Company's commitments and contingencies.

Liquidity and Capital Resources

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 its credit facilities.

The Company believes its current cash, cash equivalents and availability under its credit facilities are sufficient to meet its liquidity requirements, consistent with its strategy. The Company expects to fund its operations, excluding the origination of finance receivables, primarily with cash flows from operating activities and cash and cash equivalents on hand.(1) The Company expects to fund the origination of finance receivables primarily with unsecured debt, unsecured commercial paper, asset-backed commercial paper conduit facilities, committed unsecured bank facilities, asset-backed securitizations and brokered certificates of deposit.(1)

The Company’s cash and cash equivalents and availability under its credit and conduit facilities at ~~June 30, 2023~~March 31, 2024 were as follows (in thousands):



Cash and cash equivalents(a)		$	~~1,521,940~~1,464,614



U.S. commercial paper conduit facility:
~~Committed asset-backed~~Asset-backed U.S. commercial paper conduit facility(b)		1,500,000
Borrowings against committed facility		~~(300,000)~~(502,521)
Net asset-backed U.S. commercial paper conduit committed facility availability		~~1,200,000~~997,479

~~Uncommitted asset-backed U.S. commercial paper conduit facility~~	~~18,406~~
~~Borrowings against uncommitted facility~~	~~(18,406)~~
~~Net asset-backed U.S. commercial paper conduit uncommitted facility availability~~	—
~~Total net U.S. commercial paper conduit facility availability~~		~~1,200,000~~

Asset-backed Canadian commercial paper conduit facility(b)(c)		~~94,273~~92,294
Borrowings against committed facility		~~(84,269)~~(88,333)
Net asset-backed Canadian commercial paper conduit facility		~~10,004~~3,961

Availability under credit and conduit facilities:
Credit facilities		1,420,000
Commercial paper outstanding		~~(695,356)~~(938,719)
Net credit facility availability		~~724,644~~481,281
		$	~~3,456,588~~2,947,335

(a)Includes ~~$215.9~~$141.0 million of cash and cash equivalents held by LiveWire Group, Inc.

(b)Includes facilities expiring in the next 12 months, which the Company expects to renew prior to expiration.(1)

(c)C$125.0 million Canadian Conduit facility agreement remeasured to U.S. dollars at ~~June 30, 2023.~~March 31, 2024.

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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, 2023~~March 31, 2024 were as follows:

Short-Term

Long-Term

Outlook

Moody’s

Baa3

Stable

Standard & Poor’s

BBB-

Stable

Fitch

BBB+

Stable

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.(1) HDFS segment results 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 HDFS to provide loans to dealers and their retail customers, and dilution to existing shareholders through the use of alternative sources of capital.

Cash Flow Activity

The Company's cash flow activities were as follows (in thousands):


		Six months ended				Three months ended
		June 30, 2023		June 26, 2022
	March 31, 2024						March 31, 2024	March 31, 2023
Net cash provided by operating activities	Net cash provided by operating activities	$	410,520	$	244,186
Net cash used by investing activities	Net cash used by investing activities	(345,196)		(493,459)
Net cash provided by financing activities	Net cash provided by financing activities	24,836		684,937
Effect of exchange rate changes on cash, cash equivalents and restricted cash	Effect of exchange rate changes on cash, cash equivalents and restricted cash	(490)		(14,413)
Net increase in cash, cash equivalents and restricted cash	Net increase in cash, cash equivalents and restricted cash	$	89,670	$	421,251

Operating Activities

Cash flow provided by operating activities in the first ~~half~~three months of ~~2023~~2024 compared to the first ~~half~~three months of ~~2022 was impacted by a benefit~~2023 benefited from changes in working capital and lower net cash outflows related to wholesale finance receivables, partially offset by ~~an increase in wholesale finance receivables.~~lower net income. Working capital was positively impacted primarily by favorable changes in ~~inventory and~~ accounts receivable compared to the first ~~half~~three months of ~~2022.~~2023.

The Company's ongoing operating cash requirements include those related to existing contractual commitments which it expects to fund with cash inflows from operating activities. The Company's purchase orders for inventory used in manufacturing generally do not become firm commitments until 90 days prior to expected delivery. The Company's material contractual operating cash commitments at ~~June 30, 2023~~March 31, 2024 relate to leases, retirement plan obligations and income taxes. The Company's long-term lease obligations and future payments are discussed further in Note 109 of the Notes to Consolidated financial statements in the Company's Annual Report on Form 10-K for the year ended December 31, ~~2022~~2023. There are no required qualified pension plan contributions in ~~2023.~~2024. The Company’s expected future contributions and benefit payments related to its defined benefit retirement plans are discussed further in Note 1514 of the Notes to Consolidated financial statements in the Company's Annual Report on Form 10-K for the year ended December 31, ~~2022.~~2023. The Company has a liability for unrecognized tax benefits of ~~$28.4~~$18.1 million and related accrued interest and penalties of ~~$16.3~~$8.6 million as of ~~June 30, 2023.~~March 31, 2024. The Company cannot reasonably estimate the period of cash settlement for either the liability for unrecognized tax benefits or accrued interest and penalties. The Company continues to expect that it will fund its ongoing operating cash requirements related to the origination of finance receivables with the issuance of debt.

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Investing Activities

The Company’s most significant investing activities consist of capital expenditures and retail finance receivable originations and collections. Capital expenditures were ~~$86.5~~$46.4 million in the first ~~half~~three months of ~~2023~~2024 compared to ~~$55.0~~$45.1 million in the same period last year. The Company's ~~2023~~2024 plan includes estimated capital investments between $225 million and $250 million, all of which the Company expects to fund with net cash flow generated by operations.(1)

Net cash outflows for finance receivables during the first ~~half~~three months of ~~2023~~2024 were ~~$179.7~~$39.6 million ~~lower~~higher compared to the same period last year due to lower retail finance receivable ~~originations,~~collections, partially offset by lower ~~collections~~originations of finance receivables. The Company funds its finance receivables net lending activity through the issuance of debt, discussed in "Financing Activities" below.

Financing Activities

The Company’s financing activities consist primarily of dividend payments, share repurchases, and debt activity.

The Company paid dividends of ~~$0.330~~$0.173 and ~~$0.315~~$0.165 per share totaling ~~$48.2~~$24.4 million and ~~$47.1~~$24.1 million during the first ~~half~~three months of ~~2023~~2024 and ~~2022,~~2023, respectively.

Cash outflows for share repurchases were ~~$169.6~~$107.8 million in the first ~~half~~three months of ~~2023~~2024 compared to ~~$325.8~~$96.8 million in the same period last year. Share repurchases during the first ~~half~~three months of ~~2023~~2024 include ~~$156.3~~$98.2 million or ~~4.1~~2.5 million shares of common stock related to discretionary repurchases and ~~$13.3~~$9.6 million or 0.3 million shares of common stock employees surrendered to satisfy withholding taxes in connection with the vesting of restricted stock units and performance shares. As of ~~June 30, 2023,~~March 31, 2024, there were ~~5.8~~7.2 million shares remaining on a board-approved share repurchase authorization.

Financing cash flows related to debt and brokered certificates of deposit activity resulted in net cash inflows of ~~$0.2~~$0.1 billion in the first ~~six~~three months of ~~2023~~2024 compared to net cash inflows of ~~$1.1~~$0.3 billion in the same period last year. The Company’s total outstanding debt and liability for brokered certificates of deposit consisted of the following (in thousands):


	March 31, 2024					March 31, 2024	March 31, 2023
Outstanding debt:
		June 30, 2023		June 26, 2022
Outstanding debt:
Unsecured commercial paper

Unsecured commercial paper

Unsecured commercial paper	Unsecured commercial paper	$	695,356	$	701,384
Asset-backed Canadian commercial paper conduit facility	Asset-backed Canadian commercial paper conduit facility	84,269		77,984
Asset-backed U.S. commercial paper conduit facility	Asset-backed U.S. commercial paper conduit facility	318,406		570,628
Asset-backed securitization debt, net	Asset-backed securitization debt, net	1,924,545		2,847,921
Medium-term notes, net	Medium-term notes, net	3,297,004		2,850,320
Senior notes, net	Senior notes, net	745,722		745,016
		$	7,065,302	$	7,793,253
	$

Deposits, net	Deposits, net	$	439,911	$	345,790
Deposits, net
Deposits, net

Refer to Note 9 of the Notes to Consolidated financial statements for a summary of future principal payments on the Company's debt obligations. Refer to Note 6 of the Notes to Consolidated financial statements for a summary of future maturities on the Company's certificates of deposit.

Deposits – HDFS offers brokered certificates of deposit to customers indirectly through contractual arrangements with third-party banks and/or securities brokerage firms through its bank subsidiary. The Company had ~~$439.9~~$441.2 million and ~~$345.8~~$369.3 million, net of fees, of interest-bearing brokered certificates of deposit outstanding as of ~~June 30,~~March 31, 2024 and March 31, 2023, ~~and June 26, 2022,~~ respectively. The deposits are classified as short- and long-term liabilities based upon the term of each brokered certificate of deposit issued. Each separate brokered certificate of deposit is issued under a master certificate, and as such, all outstanding brokered certificates of deposit are considered below the Federal Deposit Insurance Corporation insurance coverage limits.

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Credit Facilities – ~~In April 2022,~~As of March 31, 2024, the Company ~~entered into~~had a $710.0 million five-year credit facility ~~to replace the $707.5~~with a maturity in April 2025 and a $710.0 million five-year credit facility ~~that was due to mature~~with a maturity in April ~~2023. The new five-year credit facility matures in April~~ 2027. ~~The Company also amended its other $707.5 million five-year credit facility to $710.0 million with no change to the maturity date of April 2025.~~ 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. The Global Credit Facilities are committed facilities primarily used to support the Company's unsecured commercial paper program. On April 12, 2024, the Company extended its $710.0 million five-year credit facility that was due to mature in April 2025 so that it now matures in April 2029. It also conformed the language of the April 2027 facility in all respects other than maturity date.

Unsecured Commercial Paper – Subject to limitations, the Company could issue unsecured commercial paper of up to $1.42 billion as of ~~June 30, 2023~~March 31, 2024 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 facility or through the use of operating cash flow and cash on hand.(1)

Medium-Term Notes – The Company had the following unsecured medium-term notes issued and outstanding at ~~June 30, 2023~~March 31, 2024 (in thousands):

Principal Amount

Rate

Issue Date

Maturity Date

Principal Amount

Rate

Issue Date

Maturity Date

$653,484(a)

3.14%

November 2019

November 2024

$647,592(a)

3.14%

November 2019

November 2024

$700,000

3.35%

June 2020

June 2025

$700,000

3.35%

June 2020

June 2025

$762,398(b)

6.36%

April 2023

April 2026

$755,524(b)

6.36%

April 2023

April 2026

$500,000

3.05%

February 2022

February 2027

$500,000

3.05%

February 2022

February 2027

$700,000

6.50%

March 2023

March 2028

$700,000

6.50%

March 2023

March 2028

(a)€600.0 million par value remeasured to U.S. dollar at ~~June 30, 2023~~March 31, 2024

(b)€700.0 million par value remeasured to U.S. dollar at ~~June 30, 2023~~March 31, 2024

The U.S. dollar-denominated medium-term notes provide for semi-annual interest payments and the foreign currency-denominated medium-term notes provide for annual interest payments. Principal on the medium-term notes is due at maturity. Unamortized discounts and debt issuance costs on the medium-term notes reduced the outstanding balance by ~~$18.9~~$14.1 million and ~~$10.9~~$14.0 million at ~~June 30,~~March 31, 2024 and March 31, 2023, ~~and June 26, 2022,~~ respectively. ~~During~~There were no medium-term note maturities during the ~~second~~first quarter of ~~2023, $706.7 million of 4.94% medium-term notes matured, and the principal and accrued interest were paid in full.~~2024. During the first quarter of 2023, $350.0 million of 3.35% medium-term notes matured, and the principal and accrued interest were paid in full. During the second quarter of 2022, $400.0 million of 2.55% medium-term notes matured, and the principal and accrued interest were paid in full. During the first quarter of 2022, $550.0 million of 4.05% medium-term notes matured, and the principal and accrued interest were paid in full.

Senior Notes – In July 2015, the Company issued $750.0 million of unsecured senior notes in an underwritten offering. The senior notes provide for semi-annual interest payments and principal due at maturity. $450.0 million of the senior notes mature in July 2025 and have an interest rate of 3.50%, and $300.0 million of the senior 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 – In June 2023, the Company renewed its ~~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 eligible Canadian retail motorcycle finance receivables for proceeds up to C$125.0 million. The transferred assets are restricted as collateral for the payment of the associated 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$125.0 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 45 years. Unless earlier terminated or extended by mutual agreement between the Company and the lenders, as of ~~June 30, 2023,~~March 31, 2024, the Canadian Conduit ~~has~~had an expiration date of June 28, 2024.

~~Table of Contents~~

On-Balance Sheet Asset-Backed U.S. Commercial Paper Conduit Facilities VIE – ~~The~~In November 2023, the Company ~~has a~~renewed its $1.50 billion revolving facility agreement (the U.S. Conduit Facility) with third-party banks and their asset-backed U.S. commercial paper conduits. Under the revolving facility agreement, the Company may transfer U.S. retail motorcycle

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finance receivables to an SPE, which in turn may issue debt to those third-party banks and their asset-backed U.S. commercial paper conduits. InFrom November 2020 through November 2022, the ~~Company renewed the~~ U.S. Conduit ~~Facility. As a result of the renewal, the agreement no longer allows~~Facility allowed for uncommitted additional borrowings ~~at the lender's discretion,~~ of up to $300.0 million ~~in addition to~~at the ~~$1.50 billion aggregate commitment. Prior to~~lenders’ discretion. At March 31, 2023, $72.8 million remained outstanding under the ~~November 2022 renewal, the Company drew against the $300.0 million of~~ uncommitted additional borrowings ~~that were available prior to~~previously allowed.During 2023, the ~~renewal and, at June 30, 2023, $18.4 million~~remaining balance of ~~the amount drawn remained outstanding.~~these uncommitted additional borrowings was paid in full. Availability under the U.S. Conduit Facility is based on, among other things, the amount of eligible U.S. retail motorcycle finance receivables held by the SPE as collateral.

During the first quarter of 2024, the Company transferred $334.8 million of U.S. retail motorcycle finance receivables to an SPE which, in turn, issued $306.0 million of debt under the U.S. Conduit Facility. There were no finance receivable transfers under the U.S. Conduit Facility during the first quarter ~~or second quarter~~ of 2023. During the second quarter of 2022, the Company transferred $420.8 million of U.S. retail motorcycle finance receivables to an SPE which, in turn, issued $362.8 million of debt under the U.S. Conduit Facility. During the first quarter of 2022, the Company transferred $47.1 million of U.S. retail motorcycle finance receivables to an SPE which, in turn, issued $41.3 million of debt under the U.S. Conduit Facility.

The terms for this debt provide for interest on the outstanding principal based on prevailing commercial paper rates if funded by a conduit lender through the issuance of commercial paper. ~~Subsequent to the November 2022 renewal, the~~The interest rate on all ~~outstanding debt and future~~ borrowings, if not funded by a conduit lender through the issuance of commercial paper, is based on the Secured Overnight Financing Rate (SOFR), with provisions for a transition to other benchmark rates in the future, if necessary. Prior to the renewal, if not funded by a conduit lender through the issuance of commercial paper, the terms of the interest were based on LIBOR or SOFR, as appropriate, with provisions for a transition to other benchmark rates. In addition to interest, a program fee is assessed based on the outstanding debt principal balance. The U.S. Conduit Facility also provides 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 Facility, 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 45 years. Unless earlier terminated or extended by mutual agreement of the Company and the lenders, as of ~~June 30, 2023,~~March 31, 2024, the U.S. Conduit Facility ~~has~~had an expiration date of November ~~17, 2023.~~20, 2024.

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. The Company's current outstanding 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, and as such, 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 currently have various contractual maturities ranging from 2024 to ~~2030.~~2031.

~~Table~~There were no on-balance sheet asset-backed securitization transactions during the first quarter of ~~Contents~~

~~Quarterly transfers~~2024. During the first quarter of 2023, the Company transferred $628.5 million of U.S. retail motorcycle finance receivables to ~~SPEs, the respective proceeds, and the respective proceeds,~~an SPE which, in turn, issued $550.0 million, or $547.7 million net of ~~discounts~~discount and issuance costs, ~~were as follows (in millions):~~

2023 2022
Transfers Proceeds Proceeds, net Transfers Proceeds Proceeds, net
First quarter $ 628.5 $ 550.0 $ 547.7 $ — $ — $ —
Second quarter — — — 2,176.4 1,836.3 1,826.9
$ 628.5 $ 550.0 $ 547.7 $ 2,176.4 $ 1,836.3 $ 1,826.9
of secured notes through an on-balance sheet asset-backed securitization transaction.

Intercompany Agreements – On January 27, 2023, Harley-Davidson, Inc. entered into a revolving line of credit with Harley-Davidson Financial Services, Inc. whereby Harley-Davidson Financial Services, Inc. may borrow up to $200.0 million at market interest rates with an expiration date of July 27, 2024. ~~As of June 30, 2023,~~ Harley-Davidson Financial Services, Inc. did not borrow on the line of credit during the first quarter of 2024 or 2023 and had no outstanding borrowings owed to Harley-Davidson, Inc. under this ~~agreement.~~agreement as of March 31, 2024.

Harley Davidson, Inc. also has a support agreement with Harley-Davidson Financial Services Inc. whereby, if required, Harley-Davidson, Inc. agrees to provide Harley-Davidson Financial Services Inc. with financial support to maintain Harley-Davidson Financial Services Inc.’s fixed-charge coverage at 1.25 and minimum net worth of $40.0 million. Support may be provided at Harley-Davidson, Inc.'s option as capital contributions or loans. No amount has ever been provided to Harley-Davidson Financial Services Inc. under the support agreement.

On February 14, 2024, Harley-Davidson, Inc. entered into a Convertible Delayed Draw Term Loan Agreement (the “Convertible Term Loan”) with LiveWire Group, Inc. and a wholly-owned subsidiary of LiveWire Group, Inc. whereby LiveWire may obtain term loans in one or more advances up to an aggregate principal amount of $100.0 million. The outstanding principal under the Convertible Term Loan bears interest at a floating rate per annum, as calculated on the date of each advance and as of each June 1 and December 1 thereafter. The interest rate is calculated based on the sum of (i) the forward-

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looking term rate based on SOFR for a six-month interest period, plus (ii) 4.00%. The Convertible Term Loan does not include affirmative covenants impacting the operations of LiveWire. The Convertible Term Loan includes negative covenants restricting the ability of LiveWire to incur indebtedness, create liens, sell assets, make investments, make fundamental changes, make dividends or other restricted payments and enter into affiliate transactions. The Convertible Term Loan has a maturity date of the earlier of (i) 24 months from the date of the first draw on the loan or (ii) October 31, 2026. In the event that the Convertible Term Loan cannot be settled in cash by LiveWire at maturity, unless otherwise agreed between Harley-Davidson, Inc. and LiveWire, the Convertible Term Loan will be converted to equity of LiveWire Group, Inc. at a conversion price per share of LiveWire Group, Inc. common stock equal to 90% of the volume weighted average price per share of common stock for the 30 trading days immediately preceding the conversion date. As of March 31, 2024, there was no outstanding balance under the Convertible Term Loan.

Operating and Financial Covenants – Harley-Davidson Financial Services Inc. and the Company are subject to various operating and financial covenants related to the credit facilities and various operating covenants under the medium-term and senior notes and the U.S. and Canadian asset-backed commercial paper conduit facilities. The more significant covenants are described below.

The operating covenants limit the Company’s and Harley-Davidson Financial Services Inc’s 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 Harley-Davidson Financial Services Inc.’s consolidated debt, excluding secured debt, to Harley-Davidson Financial Services' consolidated allowance for credit losses on finance receivables plus Harley-Davidson Financial Services Inc’s consolidated shareholders' equity, excluding accumulated other comprehensive loss (AOCL), 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 Harley-Davidson Financial Services Inc. and its subsidiaries, and the Company's consolidated shareholders’ equity excludes AOCL), cannot exceed 0.7 to 1.0 as of the end of any fiscal quarter. No financial covenants are required under the medium-term or senior notes or the U.S. or Canadian asset-backed commercial paper conduit facilities.

As of ~~June 30, 2023,~~March 31, 2024, Harley-Davidson Financial Services Inc. and the Company remained in compliance with all of the then existing covenants.

~~Cautionary Statements~~HDMC Segment

Harley-Davidson Motorcycle Unit Shipments

~~Important factors that could affect future results and cause those results~~Motorcycle unit shipments were as follows:


	Three months ended
	March 31, 2024			March 31, 2023			Unit	Unit
	Units	Mix %		Units	Mix %		Increase (Decrease)	% Change

U.S. motorcycle shipments	41,577	72.1	%	42,588	68.4	%	(1,011)	(2.4)	%



Worldwide motorcycle shipments:
Grand American Touring(a)	35,356	61.3	%	32,219	51.8	%	3,137	9.7	%
Cruiser	15,691	27.2	%	21,258	34.1	%	(5,567)	(26.2)
Sport and Lightweight	4,963	8.6	%	6,585	10.6	%	(1,622)	(24.6)


Adventure Touring	1,662	2.9	%	2,175	3.5	%	(513)	(23.6)
	57,672	100.0	%	62,237	100.0	%	(4,565)	(7.3)	%

(a)Includes Trike

The Company shipped 57,672 motorcycles worldwide during the first quarter of 2024, which was 7.3% lower than the first quarter of 2023. Shipments to ~~differ materially from those expressed~~dealers in the ~~forward-looking statements include, among others,~~first quarter of 2024 were lower than the ~~Company’s ability to: (a) execute its business plans and strategies, including The Hardwire, each~~first quarter of 2023 when wholesale shipments benefited from dealers rebuilding inventory levels following the ~~pillars, and~~low levels experienced during the ~~evolution~~COVID-19 pandemic. In addition, the Company shipped a greater proportion of ~~LiveWire as a standalone brand, which includes the risks noted below; (b) manage supply chain and logistics issues, including quality issues,~~Grand American Touring models to improve availability of ~~semiconductor chip components and the ability to find alternative sources~~models most desired by customers going into riding season.

Segment Results

Condensed statements of those components in a timely manner, unexpected interruptions or price increases caused by supplier volatility, raw material shortages, inflation, war or other hostilities, including the conflict in Ukraine, or natural disasters and longer shipping times and increased logistics costs, including by successfully implementing pricing surcharges; (c) realize the expected business benefits from LiveWire operating as a separate public company, which may be affected by, among other things: (I) the ability of LiveWire to: (1) execute its plans to develop, produce, market and sell its electric vehicles; (2) achieve profitability, which is dependent on the successful development and commercial introduction and acceptance of its electric vehicles, and its services, which may not occur; (3) adequately control the costs of its operations as a new entrant into a new space; (4) develop, maintain and strengthen its brand; (5) execute its plans to develop, produce, market and sell its electric vehicles on expected timelines; and (6) effectively establish and maintain cooperation from its retail partners, largely drawn from the Company's traditional motorcycle dealer network, to be able to effectively establish or maintain relationships with customers for electric vehicles; (II) competition; and (III) other risks and uncertainties indicated in documents filed with the SEC by the Company or LiveWire Group, Inc., including those risks and uncertainties noted in ~~Risk Factors~~ ~~under~~ ~~Item 1.A~~ ~~of LiveWire Group Inc.'s Annual Report on Form 10-K~~ for the ~~year ended~~HDMC segment were as follows (dollars in thousands):


	Three months ended
	March 31, 2024			March 31, 2023			Increase (Decrease)		% Change
Revenue:
Motorcycles	$	1,221,540		$	1,302,378		$	(80,838)	(6.2)	%
Parts and accessories	166,193			167,671			(1,478)		(0.9)
Apparel	64,112			71,391			(7,279)		(10.2)
Licensing	8,930			6,210			2,720		43.8
Other	15,331			10,179			5,152		50.6
	1,476,106			1,557,829			(81,723)		(5.2)
Cost of goods sold	1,015,036			1,000,803			14,233		1.4
Gross profit	461,070			557,026			(95,956)		(17.2)
Operating expenses:
Selling & administrative expense	199,892			197,439			2,453		1.2
Engineering expense	22,733			23,851			(1,118)		(4.7)

	222,625			221,290			1,335		0.6
Operating income	$	238,445		$	335,736		$	(97,291)	(29.0)	%
Operating margin	16.2		%	21.6		%	(5.4)		pts.

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~~December 31, 2022; (d) accurately analyze, predict~~The estimated impact of significant factors affecting the comparability of net revenue, cost of goods sold and ~~react to changing market conditions and successfully adjust to shifting global consumer needs and interests; (e) successfully access~~gross profit from the ~~capital and/or credit markets on terms that are acceptable~~first quarter of 2023 to the first quarter of 2024 were as follows (in millions):


	Net Revenue		Cost of Goods Sold		Gross Profit
Three months ended March 31, 2023	$	1,557.8	$	1,000.8	$	557.0
Volume	(103.2)		(72.7)		(30.5)
Price and sales incentives	(47.4)		—		(47.4)
Foreign currency exchange rates and hedging	0.1		4.3		(4.2)
Shipment mix	68.8		61.7		7.1
Raw material prices	—		(1.3)		1.3
Manufacturing and other costs	—		22.2		(22.2)
	(81.7)		14.2		(95.9)
Three months ended March 31, 2024	$	1,476.1	$	1,015.0	$	461.1

Factors affecting the comparability of net revenue, cost of goods sold and gross profit from the first quarter of 2023 to the first quarter of 2024 were as follows:

•The decrease in volume was primarily due to lower motorcycle shipments.

•Revenue was adversely impacted by the elimination of the pricing surcharge late in 2023, a fine-tuned pricing strategy for 2024 and higher promotional costs to promote the sale of model year 2023 carryover inventory at dealers. The Company expects this will help drive dealer retail performance in 2024(1).

•The impact of foreign currency changes on revenue compared to prior year was flat. Gross profit was negatively impacted by unfavorable net foreign currency losses related primarily to hedging, recorded in cost of goods sold.

•Changes in the shipment mix had a favorable impact on gross profit.

•Raw material costs benefited from continued moderation in the rate of inflation.

•Manufacturing and ~~within its expectations; (f) successfully carry out its global manufacturing~~other costs were negatively impacted by lower operating leverage and ~~assembly operations; (g) develop~~continued modest cost inflation of approximately 2%. The majority of units shipped in the first quarters of 2024 and ~~introduce products, services and experiences on a timely basis that~~2023 were produced in the ~~market accepts, that enable~~preceding fourth quarters in advance of the ~~Company~~new model year launch. Production volumes were lower in the fourth quarter of 2023 compared to ~~generate desired sales levels and that provide~~ the desired financial returns, including successfully implementing and executing plans to strengthen and grow its leadership position in Grand American Touring, large Cruiser and Trike, and grow its complementary businesses; (h) performfourth quarter of 2022, which resulted in a ~~manner that enables~~higher fixed cost per unit for units shipped in the ~~Company~~first quarter of 2024 as compared to ~~benefit from market opportunities while competing against existing and new competitors; (i) manage ongoing risks~~units shipped in the first quarter of 2023. The impact of lower operating leverage was partially offset by other productivity gains including reduced reliance on expedited freight as well as reduced ocean freight rates.

Operating expenses were up slightly in the first quarter of 2024 compared to the same period last year related to higher marketing and warranty expenses, partially offset by lower employee-related costs.

LiveWire Segment

Segment Results

Condensed statements of operations for the ~~impact~~LiveWire segment were as follows (in thousands, except unit shipments):


	Three months ended
	March 31, 2024		March 31, 2023		Increase (Decrease)		% Change
Revenue	$	4,704	$	7,762	$	(3,058)	(39.4)	%
Cost of goods sold	8,645		6,498		2,147		33.0
Gross profit	(3,941)		1,264		(5,205)		NM
Selling, administrative and engineering expense	25,300		25,811		(511)		(2.0)
Operating loss	$	(29,241)	$	(24,547)	$	(4,694)	19.1	%

LiveWire motorcycle unit shipments	117		63		54		85.7	%

During the first quarter of the COVID-19 pandemic, such as supply chain disruptions, its ability to carry out business as usual, and government actions and restrictive measures implemented in response; (j) manage the quality and regulatory non-compliance issues relating2024, revenue decreased by $3.1 million, or 39.4%, compared to the ~~brake hose assemblies provided~~first quarter of 2023. The decrease was primarily due to lower electric balance bike volumes and an unfavorable change in the mix of electric motorcycles sold during quarter as compared to the ~~Company~~same period last year. Cost of sales increased by ~~Proterial Cable America (PCA) in a manner that avoids future quality~~$2.1 million, or ~~non-compliance issues and additional costs or recall expenses that are material; (k) effectively mitigate~~33.0%, during the ~~impact on the Company’s business~~first quarter of ~~the production suspensions that were caused by the quality issues and regulatory non-compliances of PCA’s brake hose assemblies, including but not limited~~2024 compared to the ~~impact on wholesale and retail sales~~first quarter of ~~new motorcycles; (l) successfully appeal: (I) the revocation of the Binding Origin Information (BOI) decisions that allowed the Company~~2023 due to supply its European Union (EU) market with certain of its motorcycles produced at its Thailand operations at a reduced tariff rate and (II) the denial of the Company's application for temporary relief from the effect of the revocation of the BOI decisions; (m) manage and predict the impact that new, reinstated or adjusted tariffs may have on the Company's ability to sell products internationally, and the cost of raw materials and components, including the temporary lifting of the Section 232 steel and aluminum tariffs and incremental tariffs on motorcycles imported into the EU from the U.S., between the U.S. and EU, which expires on December 31, 2023; (n) 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; (o) manage the impact that prices for and supply of used motorcycles may have on its business, including on retail sales of new motorcycles; (p) successfully manage and reduce costs throughout the business; (q) manage through changes in general economic and business conditions, including changing capital, credit and retail markets, particularly with the recent turmoil in the banking industry, and the changing domestic and international political environments, including as a result of the conflict in Ukraine; (r) 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 dealers may have difficulty obtaining capital and managing through changing economic conditions and consumer demand; (s) continue to develop and maintain a productive relationship with Zhejiang Qianjiang Motorcycle Co., Ltd. and launch related products in a timely manner; (t) maintain a productive relationship with Hero MotoCorp as a distributor and licensee of the Harley-Davidson brand name in India; (u) successfully maintain a manner in which to sell motorcycles in China and the Company’s Association of Southeast Asian Nations (ASEAN) countries that does not subject its motorcycles to incremental tariffs; (v) manage its Thailand corporate and manufacturing operation 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; (w) accurately estimate and adjust to fluctuations in foreign currency exchange rates, interest rates and commodity prices; (x) retain and attract talented employees, and eliminate personnel duplication, inefficiencies and complexity throughout the organization; (y) prevent a cybersecurity breach involving consumer, employee, dealer, supplier, or Company data and respond to evolving regulatory requirements regarding data security; (z) manage the credit quality, the loan servicing and collection activities, and the recovery rates of Harley-Davidson Financial Services' loan portfolio; (aa) 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; (bb) manage through the effects inconsistent and unpredictable weather patterns may have on retail sales of motorcycles; (cc) implement and manage enterprise-wide information technology systems, including systems at its manufacturing facilities; (dd) manage changes, prepare for, and respond to evolving requirements in legislative and regulatory environments related to its products, services and operations; (ee) manage its exposure to product liability claims and commercial or contractual disputes; (ff) continue to manage the relationships and agreements that the Company has with its labor unions to help drive long-term competitiveness; (gg) achieve anticipated results with respect to the Company's pre-ownedhigher electric motorcycle program, Harley-Davidson Certified, the Company's H-D1 Marketplace, and Apparel and Licensing; (hh) accurately predict the margins of its segments in light of, among other things, tariffs, inflation, foreign currency exchange rates, the cost associated with product development initiatives and the Company's complex global supply chain; and (ii) optimize capital allocation in light of the Company's capital allocation priorities; and (jj) manage through the effects increased environmental, safety, emissions or other regulations or other influences may have on the business and its operating results.

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 dealers to sell its motorcycles and related products and services to retail customers. The Company depends on the capability and financial capacity of its 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 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, the impact of the COVID-19 pandemic, or other factors.volumes.

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~~In recent years, Harley-Davidson Financial Services (HDFS) experienced historically low~~During the first quarter of 2024, selling, administrative and engineering expense remained relatively flat with the first quarter of 2023 as the Company continued to focus on product development.

HDFS Segment

Segment Results

Condensed statements of operations for the HDFS segment were as follows (in thousands):


	Three months ended
	March 31, 2024		March 31, 2023		Increase (Decrease)		% Change
Revenue:
Interest income	$	211,335	$	182,270	$	29,065	15.9	%
Other income	37,462		40,825		(3,363)		(8.2)
	248,797		223,095		25,702		11.5
Expenses:
Interest expense	88,739		73,549		15,190		20.7
Provision for credit losses	61,010		52,364		8,646		16.5
Operating expense	45,173		38,762		6,411		16.5

	194,922		164,675		30,247		18.4
Operating income	$	53,875	$	58,420	$	(4,545)	(7.8)	%

Interest income was higher for the first quarter of 2024 compared to the same period last year, primarily due to higher average outstanding finance receivables at a higher average yield. Other income decreased due to lower insurance and licensing revenue as well as lower investment income. Interest expense increased due to higher average interest rates on higher average outstanding debt and deposits.

The provision for credit losses increased $8.6 million compared to the first quarter of 2023, driven by higher actual credit losses partially offset by a favorable change in the allowance for credit losses. The favorable change in the allowance for credit losses was due to a reserve rate increase during the first quarter of 2023 compared to a flat reserve rate in the first quarter of 2024, partially offset by receivable growth.

The allowance for credit losses considers current economic conditions and the Company’s outlook on future conditions. At the end of the first quarter of 2024, the Company's outlook on economic conditions and its probability weighting of its economic forecast scenarios was weighted toward more pessimistic scenarios given continued challenging macro-economic conditions, including a persistently high interest rate environment, elevated inflation levels, and muted consumer confidence.

Annualized losses on the Company's retail motorcycle loans were 3.74% during the first quarter of 2024 compared to 3.21% in the first quarter of 2023. The 30-day delinquency rate for retail motorcycle loans at March 31, 2024 increased to 4.00% from 3.74% at March 31, 2023. The unfavorable retail credit ~~losses, but credit losses have been normalizing~~loss and delinquency performance was driven by several factors connected to ~~higher levels in recent quarters. Further,~~ the ~~Company believes that HDFS's retail credit losses will continue to change over time due to changing consumer credit behavior, macroeconomic conditions~~macro-economic environment and related customer and industry dynamics, including the impact of ~~inflation,~~higher motorcycle payments and ~~HDFS's efforts~~general inflationary pressures on customers. Additionally, the Company experienced downward pressure on recovery values at auction.

Operating expenses increased $6.4 million compared to ~~adjust underwriting criteria based~~the first quarter of 2023 due in part to increased repossession costs, higher tax-related expenses, and unfavorable foreign currency rates partially offset by lower employee-related costs and a smaller loss on ~~market~~a securitization interest rate cap derivative valuation.

Changes in the allowance for credit losses on finance receivables were as follows (in thousands):


	Three months ended
	March 31, 2024		March 31, 2023
Balance, beginning of period	$	381,966	$	358,711
Provision for credit losses	61,010		52,364
Charge-offs, net of recoveries	(62,615)		(52,644)

Balance, end of period	$	380,361	$	358,431

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Other Matters

Commitments and ~~economic conditions,~~Contingencies

The Company is subject to lawsuits and other claims related to product, product recall, commercial, employee, environmental 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 ~~actions that~~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. Refer to Note 14 of the Notes to Consolidated financial statements for a discussion of the Company's commitments and contingencies.

Liquidity and Capital Resources

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 its credit facilities.

The Company’s cash and cash equivalents and availability under its credit and conduit facilities at March 31, 2024 were as follows (in thousands):



Cash and cash equivalents(a)	$	1,464,614



U.S. commercial paper conduit facility:
Asset-backed U.S. commercial paper conduit facility(b)	1,500,000
Borrowings against committed facility	(502,521)
Net asset-backed U.S. commercial paper conduit committed facility availability	997,479

Asset-backed Canadian commercial paper conduit facility(b)(c)	92,294
Borrowings against committed facility	(88,333)
Net asset-backed Canadian commercial paper conduit facility	3,961

Availability under credit and conduit facilities:
Credit facilities	1,420,000
Commercial paper outstanding	(938,719)
Net credit facility availability	481,281
	$	2,947,335

(a)Includes $141.0 million of cash and cash equivalents held by LiveWire Group, Inc.

(b)Includes facilities expiring in the next 12 months, which the Company ~~has taken~~expects to renew prior to expiration.(1)

(c)C$125.0 million Canadian Conduit facility agreement remeasured to U.S. dollars at March 31, 2024.

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Short-Term

Long-Term

Outlook

Moody’s

Baa3

Stable

Standard & Poor’s

BBB-

Stable

Fitch

BBB+

Stable

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.(1) HDFS segment results could ~~take that impact motorcycle values.~~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 HDFS to provide loans to dealers and their retail customers, and dilution to existing shareholders through the use of alternative sources of capital.

Cash Flow Activity

The Company's ~~operations, demand~~cash flow activities were as follows (in thousands):


	Three months ended
	March 31, 2024		March 31, 2023
Net cash provided by operating activities	$	103,997	$	46,677
Net cash used by investing activities	(112,500)		(70,586)
Net cash provided by financing activities	(25,925)		178,590
Effect of exchange rate changes on cash, cash equivalents and restricted cash	(7,020)		3,820
Net increase in cash, cash equivalents and restricted cash	$	(41,448)	$	158,501

Operating Activities

Cash flow provided by operating activities in the first three months of 2024 compared to the first three months of 2023 benefited from changes in working capital and lower net cash outflows related to wholesale finance receivables, partially offset by lower net income. Working capital was positively impacted primarily by favorable changes in accounts receivable compared to the first three months of 2023.

The Company's ongoing operating cash requirements include those related to existing contractual commitments which it expects to fund with cash inflows from operating activities. The Company's purchase orders for ~~its products,~~inventory used in manufacturing generally do not become firm commitments until 90 days prior to expected delivery. The Company's material contractual operating cash commitments at March 31, 2024 relate to leases, retirement plan obligations and ~~its liquidity could be adversely impacted by work stoppages, facility closures, strikes, natural causes, widespread infectious disease, terrorism, war or other hostilities, including the conflict~~income taxes. The Company's long-term lease obligations and future payments are discussed further in ~~Ukraine, or other factors. Refer to~~ ~~Risk Factors~~ ~~under~~ ~~Item 1.A~~Note 9 of the ~~Company’s~~Notes to Consolidated financial statements in the Company's Annual Report on Form 10-K for the year ended December 31, ~~2022 for a discussion of additional risk factors~~2023. There are no required qualified pension plan contributions in 2024. The Company’s expected future contributions 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~~benefit payments related to market risk from changes in foreign currency exchange rates, commodity prices and interest rates. To reduce such risks, the Company selectively uses derivative financial instruments. All hedging transactionsits defined benefit retirement plans 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 currency exchange rate and interest rate risks. Further disclosure relating to the fair value of the Company's derivative financial instruments is includeddiscussed further in Note 814 of the Notes to Consolidated financial statements in the Company's Annual Report on Form 10-K for the year ended December 31, 2023. The Company has a liability for unrecognized tax benefits of $18.1 million and related accrued interest and penalties of $8.6 million as of March 31, 2024. The Company cannot reasonably estimate the period of cash settlement for either the liability for unrecognized tax benefits or accrued interest and penalties. The Company continues to expect that it will fund its ongoing operating cash requirements related to the origination of finance receivables with the issuance of debt.

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Investing Activities

The Company’s most significant investing activities consist of capital expenditures and retail finance receivable originations and collections. Capital expenditures were $46.4 million in the first three months of 2024 compared to $45.1 million in the same period last year. The Company's 2024 plan includes estimated capital investments between $225 million and $250 million, all of which the Company expects to fund with net cash flow generated by operations.(1)

Net cash outflows for finance receivables during the first three months of 2024 were $39.6 million higher compared to the same period last year due to lower retail finance receivable collections, partially offset by lower originations of finance receivables. The Company funds its finance receivables net lending activity through the issuance of debt, discussed in "Financing Activities" below.

Financing Activities

The Company’s financing activities consist primarily of dividend payments, share repurchases, and debt activity.

The Company paid dividends of $0.173 and $0.165 per share totaling $24.4 million and $24.1 million during the first three months of 2024 and 2023, respectively.

Cash outflows for share repurchases were $107.8 million in the first three months of 2024 compared to $96.8 million in the same period last year. Share repurchases during the first three months of 2024 include $98.2 million or 2.5 million shares of common stock related to discretionary repurchases and $9.6 million or 0.3 million shares of common stock employees surrendered to satisfy withholding taxes in connection with the vesting of restricted stock units and performance shares. As of March 31, 2024, there were 7.2 million shares remaining on a board-approved share repurchase authorization.

Financing cash flows related to debt and brokered certificates of deposit activity resulted in net cash inflows of $0.1 billion in the first three months of 2024 compared to net cash inflows of $0.3 billion in the same period last year. The Company’s total outstanding debt and liability for brokered certificates of deposit consisted of the following (in thousands):


	March 31, 2024		March 31, 2023
Outstanding debt:

Unsecured commercial paper	$	938,719	$	501,243
Asset-backed Canadian commercial paper conduit facility	88,333		62,195
Asset-backed U.S. commercial paper conduit facility	502,521		372,816
Asset-backed securitization debt, net	1,644,626		2,257,799
Medium-term notes, net	3,288,993		3,245,591
Senior notes, net	746,258		745,192
	$	7,209,450	$	7,184,836

Deposits, net	$	441,168	$	369,311

Deposits – HDFS offers brokered certificates of deposit to customers indirectly through contractual arrangements with third-party banks and/or securities brokerage firms through its bank subsidiary. The Company had $441.2 million and $369.3 million, net of fees, of interest-bearing brokered certificates of deposit outstanding as of March 31, 2024 and March 31, 2023, respectively. The deposits are classified as short- and long-term liabilities based upon the term of each brokered certificate of deposit issued. Each separate brokered certificate of deposit is issued under a master certificate, and as such, all outstanding brokered certificates of deposit are considered below the Federal Deposit Insurance Corporation insurance coverage limits.

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Credit Facilities – As of March 31, 2024, the Company had a $710.0 million five-year credit facility with a maturity in April 2025 and a $710.0 million five-year credit facility with a maturity in April 2027. 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. The Global Credit Facilities are committed facilities primarily used to support the Company's unsecured commercial paper program. On April 12, 2024, the Company extended its $710.0 million five-year credit facility that was due to mature in April 2025 so that it now matures in April 2029. It also conformed the language of the April 2027 facility in all respects other than maturity date.

Unsecured Commercial Paper – Subject to limitations, the Company could issue unsecured commercial paper of up to $1.42 billion as of March 31, 2024 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 facility or through the use of operating cash flow and cash on hand.(1)

Medium-Term Notes – The Company had the following unsecured medium-term notes issued and outstanding at March 31, 2024 (in thousands):

Principal Amount

Rate

Issue Date

Maturity Date

$647,592(a)

3.14%

November 2019

November 2024

$700,000

3.35%

June 2020

June 2025

$755,524(b)

6.36%

April 2023

April 2026

$500,000

3.05%

February 2022

February 2027

$700,000

6.50%

March 2023

March 2028

(a)€600.0 million par value remeasured to U.S. dollar at March 31, 2024

(b)€700.0 million par value remeasured to U.S. dollar at March 31, 2024

On-Balance Sheet Asset-Backed Canadian Commercial Paper Conduit Facility – In June 2023, 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$125.0 million. The transferred assets are restricted as collateral for the payment of the associated 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$125.0 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 March 31, 2024, the Canadian Conduit had an expiration date of June 28, 2024.

During the first quarter of 2024, the Company transferred $34.9 million of Canadian retail motorcycle finance receivables to the Canadian Conduit for proceeds of $28.6 million. There were no finance receivable transfers under the Canadian Conduit during the first quarter of 2023.

On-Balance Sheet Asset-Backed U.S. Commercial Paper Conduit Facilities VIE – In November 2023, the Company renewed its $1.50 billion revolving facility agreement (the U.S. Conduit Facility) with third-party banks and their asset-backed U.S. commercial paper conduits. Under the revolving facility agreement, the Company may transfer U.S. retail motorcycle

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finance receivables to an SPE, which in turn may issue debt to those third-party banks and their asset-backed U.S. commercial paper conduits. From November 2020 through November 2022, the U.S. Conduit Facility allowed for uncommitted additional borrowings of up to $300.0 million at the lenders’ discretion. At March 31, 2023, $72.8 million remained outstanding under the uncommitted additional borrowings previously allowed.During 2023, the remaining balance of these uncommitted additional borrowings was paid in full. Availability under the U.S. Conduit Facility is based on, among other things, the amount of eligible U.S. retail motorcycle finance receivables held by the SPE as collateral.

The terms for this debt provide for interest on the outstanding principal based on prevailing commercial paper rates if funded by a conduit lender through the issuance of commercial paper. The interest rate on all borrowings, if not funded by a conduit lender through the issuance of commercial paper, is based on the Secured Overnight Financing Rate (SOFR), with provisions for a transition to other benchmark rates in the future, if necessary. In addition to interest, a program fee is assessed based on the outstanding debt principal balance. The U.S. Conduit Facility also provides 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 Facility, 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 March 31, 2024, the U.S. Conduit Facility had an expiration date of November 20, 2024.

There were no on-balance sheet asset-backed securitization transactions during the first quarter of 2024. During the first quarter of 2023, the Company transferred $628.5 million of U.S. retail motorcycle finance receivables to an SPE which, in turn, issued $550.0 million, or $547.7 million net of discount and issuance costs, of secured notes through an on-balance sheet asset-backed securitization transaction.

Intercompany Agreements – On January 27, 2023, Harley-Davidson, Inc. entered into a revolving line of credit with Harley-Davidson Financial Services, Inc. whereby Harley-Davidson Financial Services, Inc. may borrow up to $200.0 million at market interest rates with an expiration date of July 27, 2024. Harley-Davidson Financial Services, Inc. did not borrow on the line of credit during the first quarter of 2024 or 2023 and had no outstanding borrowings owed to Harley-Davidson, Inc. under this agreement as of March 31, 2024.

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The operating covenants limit the Company’s and Harley-Davidson Financial Services Inc’s ability to:

•Assume or incur certain liens;

•Participate in certain mergers or consolidations; and

•Purchase or hold margin stock.

As of March 31, 2024, Harley-Davidson Financial Services Inc. and the Company remained in compliance with all of the then existing covenants.

HDMC Segment

Harley-Davidson Motorcycle Unit Shipments

Motorcycle unit shipments were as follows:


	Three months ended
	March 31, 2024			March 31, 2023			Unit	Unit
	Units	Mix %		Units	Mix %		Increase (Decrease)	% Change

U.S. motorcycle shipments	41,577	72.1	%	42,588	68.4	%	(1,011)	(2.4)	%



Worldwide motorcycle shipments:
Grand American Touring(a)	35,356	61.3	%	32,219	51.8	%	3,137	9.7	%
Cruiser	15,691	27.2	%	21,258	34.1	%	(5,567)	(26.2)
Sport and Lightweight	4,963	8.6	%	6,585	10.6	%	(1,622)	(24.6)


Adventure Touring	1,662	2.9	%	2,175	3.5	%	(513)	(23.6)
	57,672	100.0	%	62,237	100.0	%	(4,565)	(7.3)	%

(a)Includes Trike

The Company shipped 57,672 motorcycles worldwide during the first quarter of 2024, which was 7.3% lower than the first quarter of 2023. Shipments to dealers in the first quarter of 2024 were lower than the first quarter of 2023 when wholesale shipments benefited from dealers rebuilding inventory levels following the low levels experienced during the COVID-19 pandemic. In addition, the Company shipped a greater proportion of Grand American Touring models to improve availability of models most desired by customers going into riding season.

Segment Results

Condensed statements of operations for the HDMC segment were as follows (dollars in thousands):


	Three months ended
	March 31, 2024			March 31, 2023			Increase (Decrease)		% Change
Revenue:
Motorcycles	$	1,221,540		$	1,302,378		$	(80,838)	(6.2)	%
Parts and accessories	166,193			167,671			(1,478)		(0.9)
Apparel	64,112			71,391			(7,279)		(10.2)
Licensing	8,930			6,210			2,720		43.8
Other	15,331			10,179			5,152		50.6
	1,476,106			1,557,829			(81,723)		(5.2)
Cost of goods sold	1,015,036			1,000,803			14,233		1.4
Gross profit	461,070			557,026			(95,956)		(17.2)
Operating expenses:
Selling & administrative expense	199,892			197,439			2,453		1.2
Engineering expense	22,733			23,851			(1,118)		(4.7)

	222,625			221,290			1,335		0.6
Operating income	$	238,445		$	335,736		$	(97,291)	(29.0)	%
Operating margin	16.2		%	21.6		%	(5.4)		pts.

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The estimated impact of significant factors affecting the comparability of net revenue, cost of goods sold and gross profit from the first quarter of 2023 to the first quarter of 2024 were as follows (in millions):


	Net Revenue		Cost of Goods Sold		Gross Profit
Three months ended March 31, 2023	$	1,557.8	$	1,000.8	$	557.0
Volume	(103.2)		(72.7)		(30.5)
Price and sales incentives	(47.4)		—		(47.4)
Foreign currency exchange rates and hedging	0.1		4.3		(4.2)
Shipment mix	68.8		61.7		7.1
Raw material prices	—		(1.3)		1.3
Manufacturing and other costs	—		22.2		(22.2)
	(81.7)		14.2		(95.9)
Three months ended March 31, 2024	$	1,476.1	$	1,015.0	$	461.1

Factors affecting the comparability of net revenue, cost of goods sold and gross profit from the first quarter of 2023 to the first quarter of 2024 were as follows:

•The decrease in volume was primarily due to lower motorcycle shipments.

•Changes in the shipment mix had a favorable impact on gross profit.

•Raw material costs benefited from continued moderation in the rate of inflation.

•Manufacturing and other costs were negatively impacted by lower operating leverage and continued modest cost inflation of approximately 2%. The majority of units shipped in the first quarters of 2024 and 2023 were produced in the preceding fourth quarters in advance of the new model year launch. Production volumes were lower in the fourth quarter of 2023 compared to the fourth quarter of 2022, which resulted in a higher fixed cost per unit for units shipped in the first quarter of 2024 as compared to units shipped in the first quarter of 2023. The impact of lower operating leverage was partially offset by other productivity gains including reduced reliance on expedited freight as well as reduced ocean freight rates.

LiveWire Segment

Segment Results

Condensed statements of operations for the LiveWire segment were as follows (in thousands, except unit shipments):


	Three months ended
	March 31, 2024		March 31, 2023		Increase (Decrease)		% Change
Revenue	$	4,704	$	7,762	$	(3,058)	(39.4)	%
Cost of goods sold	8,645		6,498		2,147		33.0
Gross profit	(3,941)		1,264		(5,205)		NM
Selling, administrative and engineering expense	25,300		25,811		(511)		(2.0)
Operating loss	$	(29,241)	$	(24,547)	$	(4,694)	19.1	%

LiveWire motorcycle unit shipments	117		63		54		85.7	%

During the first quarter of 2024, revenue decreased by $3.1 million, or 39.4%, compared to the first quarter of 2023. The decrease was primarily due to lower electric balance bike volumes and an unfavorable change in the mix of electric motorcycles sold during quarter as compared to the same period last year. Cost of sales increased by $2.1 million, or 33.0%, during the first quarter of 2024 compared to the first quarter of 2023 due to higher electric motorcycle volumes.

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During the first quarter of 2024, selling, administrative and engineering expense remained relatively flat with the first quarter of 2023 as the Company continued to focus on product development.

HDFS Segment

Segment Results

Condensed statements of operations for the HDFS segment were as follows (in thousands):


	Three months ended
	March 31, 2024		March 31, 2023		Increase (Decrease)		% Change
Revenue:
Interest income	$	211,335	$	182,270	$	29,065	15.9	%
Other income	37,462		40,825		(3,363)		(8.2)
	248,797		223,095		25,702		11.5
Expenses:
Interest expense	88,739		73,549		15,190		20.7
Provision for credit losses	61,010		52,364		8,646		16.5
Operating expense	45,173		38,762		6,411		16.5

	194,922		164,675		30,247		18.4
Operating income	$	53,875	$	58,420	$	(4,545)	(7.8)	%

Operating expenses increased $6.4 million compared to the first quarter of 2023 due in part to increased repossession costs, higher tax-related expenses, and unfavorable foreign currency rates partially offset by lower employee-related costs and a smaller loss on a securitization interest rate cap derivative valuation.

Changes in the allowance for credit losses on finance receivables were as follows (in thousands):


	Three months ended
	March 31, 2024		March 31, 2023
Balance, beginning of period	$	381,966	$	358,711
Provision for credit losses	61,010		52,364
Charge-offs, net of recoveries	(62,615)		(52,644)

Balance, end of period	$	380,361	$	358,431

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Other Matters

Commitments and Contingencies

Liquidity and Capital Resources

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 its credit facilities.

The Company’s cash and cash equivalents and availability under its credit and conduit facilities at March 31, 2024 were as follows (in thousands):



Cash and cash equivalents(a)	$	1,464,614



U.S. commercial paper conduit facility:
Asset-backed U.S. commercial paper conduit facility(b)	1,500,000
Borrowings against committed facility	(502,521)
Net asset-backed U.S. commercial paper conduit committed facility availability	997,479

Asset-backed Canadian commercial paper conduit facility(b)(c)	92,294
Borrowings against committed facility	(88,333)
Net asset-backed Canadian commercial paper conduit facility	3,961

Availability under credit and conduit facilities:
Credit facilities	1,420,000
Commercial paper outstanding	(938,719)
Net credit facility availability	481,281
	$	2,947,335

(a)Includes $141.0 million of cash and cash equivalents held by LiveWire Group, Inc.

(b)Includes facilities expiring in the next 12 months, which the Company expects to renew prior to expiration.(1)

(c)C$125.0 million Canadian Conduit facility agreement remeasured to U.S. dollars at March 31, 2024.

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Short-Term

Long-Term

Outlook

Moody’s

Baa3

Stable

Standard & Poor’s

BBB-

Stable

Fitch

BBB+

Stable

Cash Flow Activity

The Company's cash flow activities were as follows (in thousands):


	Three months ended
	March 31, 2024		March 31, 2023
Net cash provided by operating activities	$	103,997	$	46,677
Net cash used by investing activities	(112,500)		(70,586)
Net cash provided by financing activities	(25,925)		178,590
Effect of exchange rate changes on cash, cash equivalents and restricted cash	(7,020)		3,820
Net increase in cash, cash equivalents and restricted cash	$	(41,448)	$	158,501

Operating Activities

The Company's ongoing operating cash requirements include those related to existing contractual commitments which it expects to fund with cash inflows from operating activities. The Company's purchase orders for inventory used in manufacturing generally do not become firm commitments until 90 days prior to expected delivery. The Company's material contractual operating cash commitments at March 31, 2024 relate to leases, retirement plan obligations and income taxes. The Company's long-term lease obligations and future payments are discussed further in Note 9 of the Notes to Consolidated financial statements in the Company's Annual Report on Form 10-K for the year ended December 31, 2023. There are no required qualified pension plan contributions in 2024. The Company’s expected future contributions and benefit payments related to its defined benefit retirement plans are discussed further in Note 14 of the Notes to Consolidated financial statements in the Company's Annual Report on Form 10-K for the year ended December 31, 2023. The Company has a liability for unrecognized tax benefits of $18.1 million and related accrued interest and penalties of $8.6 million as of March 31, 2024. The Company cannot reasonably estimate the period of cash settlement for either the liability for unrecognized tax benefits or accrued interest and penalties. The Company continues to expect that it will fund its ongoing operating cash requirements related to the origination of finance receivables with the issuance of debt.

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Investing Activities

The Company’s most significant investing activities consist of capital expenditures and retail finance receivable originations and collections. Capital expenditures were $46.4 million in the first three months of 2024 compared to $45.1 million in the same period last year. The Company's 2024 plan includes estimated capital investments between $225 million and $250 million, all of which the Company expects to fund with net cash flow generated by operations.(1)

Financing Activities

The Company’s financing activities consist primarily of dividend payments, share repurchases, and debt activity.

The Company paid dividends of $0.173 and $0.165 per share totaling $24.4 million and $24.1 million during the first three months of 2024 and 2023, respectively.


	March 31, 2024		March 31, 2023
Outstanding debt:

Unsecured commercial paper	$	938,719	$	501,243
Asset-backed Canadian commercial paper conduit facility	88,333		62,195
Asset-backed U.S. commercial paper conduit facility	502,521		372,816
Asset-backed securitization debt, net	1,644,626		2,257,799
Medium-term notes, net	3,288,993		3,245,591
Senior notes, net	746,258		745,192
	$	7,209,450	$	7,184,836

Deposits, net	$	441,168	$	369,311

Deposits – HDFS offers brokered certificates of deposit to customers indirectly through contractual arrangements with third-party banks and/or securities brokerage firms through its bank subsidiary. The Company had $441.2 million and $369.3 million, net of fees, of interest-bearing brokered certificates of deposit outstanding as of March 31, 2024 and March 31, 2023, respectively. The deposits are classified as short- and long-term liabilities based upon the term of each brokered certificate of deposit issued. Each separate brokered certificate of deposit is issued under a master certificate, and as such, all outstanding brokered certificates of deposit are considered below the Federal Deposit Insurance Corporation insurance coverage limits.

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Medium-Term Notes – The Company had the following unsecured medium-term notes issued and outstanding at March 31, 2024 (in thousands):

Principal Amount

Rate

Issue Date

Maturity Date

$647,592(a)

3.14%

November 2019

November 2024

$700,000

3.35%

June 2020

June 2025

$755,524(b)

6.36%

April 2023

April 2026

$500,000

3.05%

February 2022

February 2027

$700,000

6.50%

March 2023

March 2028

(a)€600.0 million par value remeasured to U.S. dollar at March 31, 2024

(b)€700.0 million par value remeasured to U.S. dollar at March 31, 2024

On-Balance Sheet Asset-Backed Canadian Commercial Paper Conduit Facility – In June 2023, 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$125.0 million. The transferred assets are restricted as collateral for the payment of the associated 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$125.0 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 March 31, 2024, the Canadian Conduit had an expiration date of June 28, 2024.

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The terms for this debt provide for interest on the outstanding principal based on prevailing commercial paper rates if funded by a conduit lender through the issuance of commercial paper. The interest rate on all borrowings, if not funded by a conduit lender through the issuance of commercial paper, is based on the Secured Overnight Financing Rate (SOFR), with provisions for a transition to other benchmark rates in the future, if necessary. In addition to interest, a program fee is assessed based on the outstanding debt principal balance. The U.S. Conduit Facility also provides 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 Facility, 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 March 31, 2024, the U.S. Conduit Facility had an expiration date of November 20, 2024.

Intercompany Agreements – On January 27, 2023, Harley-Davidson, Inc. entered into a revolving line of credit with Harley-Davidson Financial Services, Inc. whereby Harley-Davidson Financial Services, Inc. may borrow up to $200.0 million at market interest rates with an expiration date of July 27, 2024. Harley-Davidson Financial Services, Inc. did not borrow on the line of credit during the first quarter of 2024 or 2023 and had no outstanding borrowings owed to Harley-Davidson, Inc. under this agreement as of March 31, 2024.

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The operating covenants limit the Company’s and Harley-Davidson Financial Services Inc’s ability to:

•Assume or incur certain liens;

•Participate in certain mergers or consolidations; and

•Purchase or hold margin stock.

As of March 31, 2024, Harley-Davidson Financial Services Inc. and the Company remained in compliance with all of the then existing covenants.

Cautionary Statements

Important factors that could affect future results and cause those results to differ materially from those expressed in the forward-looking statements include, among others, the Company’s ability to: (a) execute its business plans and strategies, including The Hardwire, each of the pillars, and the evolution of LiveWire as a standalone brand, which includes the risks noted below; (b) manage supply chain and logistics issues, including quality issues, unexpected interruptions or price increases caused by supplier volatility, raw material shortages, inflation, war or other hostilities, including the conflict in Ukraine and the Red Sea conflict, or natural disasters and longer shipping times and increased logistics costs; (c) accurately analyze, predict and react to changing market conditions and successfully adjust to shifting global consumer needs and interests; (d) maintain and enhance the value of the Harley-Davidson brand; (e) realize the expected business benefits from LiveWire operating as a separate public company, which may be affected by, among other things: (i) the ability of LiveWire to execute its plans to develop, produce, market and sell its electric vehicles; (ii) the demand for and consumer willingness to adopt two- and three-wheeled electric vehicles; and (iii) other risks and uncertainties indicated in documents filed with the SEC by the Company or LiveWire Group, Inc., including those risks and uncertainties noted in Risk Factors under Item 1.A of LiveWire Group Inc.'s Annual Report on Form 10-K for the year ended December 31, 2023; (f) successfully access the capital and/or credit markets on terms that are acceptable to the Company and within its expectations; (g) successfully carry out its global manufacturing and assembly operations; (h) 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, including successfully implementing and executing plans to strengthen and grow its leadership position in Grand American Touring, large Cruiser and Trike, and grow its complementary businesses; (i) perform in a manner that enables the Company to benefit from market opportunities while competing against existing and new competitors; (j) manage the quality and regulatory non-compliance issues relating to the brake hose assemblies provided to the Company by Proterial Cable America, Inc. in a manner that avoids future quality or non-compliance issues and additional costs or recall expenses that are material; (k) manage through changes in general economic and business conditions, including changing capital, credit and retail markets, and the changing domestic and international political environments, including as a result of the conflict in Ukraine and the Red Sea conflict; (l) manage the impact that prices for and supply of used motorcycles may have on its business, including on retail sales of new motorcycles; (m) prevent, detect and remediate any issues with its motorcycles or

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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; (n) successfully manage and reduce costs throughout the business; (o) manage risks related to a resurgence of the COVID-19 pandemic, emergence of a new pandemic, epidemic, disease outbreak or other public health crises, such as supply chain disruptions, its ability to carry out business as usual, and government actions and restrictive measures implemented in response; (p) continue to develop the capabilities of its distributors and dealers, effectively implement changes relating to its dealers and distribution methods, including the Company's dealer footprint, and manage the risks that its dealers may have difficulty obtaining capital and managing through changing economic conditions and consumer demand; (q) successfully appeal: (i) the revocation of the Binding Origin Information (BOI) decisions that allowed the Company to supply its European Union (EU) market with certain of its motorcycles produced at its Thailand operations at a reduced tariff rate and (ii) the denial of the Company’s application for temporary relief from the effect of the revocation of the BOI decisions; (r) continue to develop and maintain a productive relationship with Zhejiang Qianjiang Motorcycle Co., Ltd. and launch related products in a timely manner and that meet or exceed customers' expectations; (s) maintain a productive relationship with Hero MotoCorp as a distributor and licensee of the Harley-Davidson brand name in India; (t) manage and predict the impact that new, reinstated or adjusted tariffs may have on the Company’s ability to sell products internationally, and the cost of raw materials and components, including the temporary lifting of the incremental tariffs on motorcycles imported into the EU from the U.S., which was extended to March 31, 2025; (u) accurately predict the margins of its segments in light of, among other things, tariffs, inflation, foreign currency exchange rates, the cost associated with product development initiatives and the Company's complex global supply chain; (v) successfully maintain a manner in which to sell motorcycles in China and the Company's Association of Southeast Asian Nations (ASEAN) countries that does not subject its motorcycles to incremental tariffs; (w) manage its Thailand corporate and manufacturing operation 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; (x) retain and attract talented employees, and eliminate personnel duplication, inefficiencies and complexity throughout the organization; (y) accurately estimate and adjust to fluctuations in foreign currency exchange rates, interest rates and commodity prices; (z) manage the credit quality, the loan servicing and collection activities, and the recovery rates of Harley-Davidson Financial Services' loan portfolio; (aa) prevent a ransomware attack or cybersecurity breach involving consumer, employee, dealer, supplier, or Company data and respond to evolving regulatory requirements regarding cybersecurity and data privacy; (bb) 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; (cc) manage through the effects inconsistent and unpredictable weather patterns may have on retail sales of motorcycles; (dd) implement and manage enterprise-wide information technology systems, including systems at its manufacturing facilities; (ee) manage changes, prepare for, and respond to evolving requirements in legislative and regulatory environments related to its products, services and operations, including increased environmental, safety, emissions or other regulations; (ff) manage its exposure to product liability claims and commercial or contractual disputes; (gg) continue to manage the relationships and agreements that the Company has with its labor unions to help drive long-term competitiveness; (hh) achieve anticipated results with respect to the Company's preowned motorcycle program, Harley-Davidson Certified, the Company's H-D1 Marketplace, and Apparel and Licensing; and (ii) optimize capital allocation in light of the Company's capital allocation priorities.

HDFS' retail credit losses have normalized in recent quarters to higher levels after a period of historically low levels of credit losses. Further, the Company believes that HDFS's retail credit losses will continue to change over time due to changing consumer credit behavior, macroeconomic conditions including the impact of inflation and HDFS's efforts to increase prudently structured loan approvals to sub-prime borrowers. In addition, HDFS’s efforts to adjust underwriting criteria based on market and economic conditions and the actions that the Company has taken and could take that impact motorcycle values may impact HDFS's retail credit losses.

The Company's operations, demand for its products, and its liquidity could be adversely impacted by work stoppages, facility closures, strikes, natural causes, widespread infectious disease, terrorism, war or other hostilities, including the conflict in Ukraine and the Red Sea conflict, or other factors. Refer to Risk Factors under Item 1.A of the Company’s Annual Report on Form 10-K for the year ended December 31, 2023 for a discussion of additional risk factors and a more complete discussion of some of the cautionary statements noted above.

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Item 3. Quantitative and Qualitative Disclosures About Market Risk

The Company is exposed to market risk from changes in foreign currency 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 currency exchange rate and interest rate risks. Further disclosure relating to the fair value of the Company's derivative financial instruments is included in Note 8 of the Notes to Consolidated financial statements.

HDMC Segment

The Company sells its motorcycles and related products internationally and in most markets those sales are made in the foreign country’s local currency. As a result, the HDMC segment operating results are affected by fluctuations in the value of the U.S. dollar relative to foreign currencies. The Company’s most significant foreign currency exchange rate risk resulting from the sale of motorcycles and related products relates to the Euro, Australian dollar, Japanese yen, Brazilian real, Canadian dollar, Mexican peso, Chinese yuan, Singapore dollar, Thai baht and Pound sterling. The Company utilizes foreign currency contracts to mitigate the effect of certain currencies' fluctuations on HDMC segment operating results. The foreign currency contracts are entered into with banks and allow the Company to exchange currencies at a future date, based on a fixed exchange rate. There have been no material changes to the foreign currency exchange rate market risk information included in the Company's Annual Report on Form 10-K for the year ended December 31, ~~2022.~~2023.

The Company purchases commodities for the use in the production of motorcycles. As a result, HDMC segment operating income is affected by changes in commodity prices. The Company uses derivative financial instruments on a limited basis to hedge the prices of certain commodities. There have been no material changes to the commodity market risk information included in the Company's Annual Report on Form 10-K for the year ended December 31, ~~2022.~~2023.

LiveWire Segment

LiveWire sells its electric motorcycles, electric balance bikes and related products internationally, and in most markets, those sales are made in the foreign country’s local currency. As a result, LiveWire’s operating results are affected by fluctuations in the values of the U.S. dollar relative to foreign currencies; however, the impact of such fluctuations on LiveWire’s operations to date have not been material given the majority of LiveWire’s sales are currently in the U.S. LiveWire plans to expand its business and operations internationally and expects its exposure to currency rate risk to increase as it grows its international presence.

HDFS Segment

The Company has interest ~~rate sensitive~~rate-sensitive financial instruments including financial receivables, debt and interest rate derivative financial instruments. As a result, HDFS operating income is affected by changes in interest rates. The Company utilizes interest rate caps to reduce the impact of fluctuations in interest rates on its asset-backed securitization transactions. There have been no material changes to the interest rate market risk information included in the Company's Annual Report on Form 10-K for the year ended December 31, ~~2022.~~2023.

HDFS also has short-term commercial paper and debt issued through the commercial paper conduit facilities that is subject to changes in interest rates, which it does not hedge. There have been no material changes to the interest rate market risk information included in the Company's Annual Report on Form 10-K for the year ended December 31, ~~2022.~~2023.

The Company has foreign denominated medium-term notes, and as a result, HDFS operating income is affected by fluctuations in the value of the U.S. dollar relative to foreign currencies and interest rates. At ~~June 30, 2023,~~March 31, 2024, this exposure related to the Euro. The Company utilizes cross-currency swaps to mitigate the effect of the foreign currency exchange rate

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and interest rate fluctuations related to foreign denominated debt. There have been no material changes to the foreign currency exchange rate and interest rate market risk information included in the Company's Annual Report on Form 10-K for the year ended December 31, ~~2022.~~2023.

Refer to the Company's Annual Report on Form 10-K for the year ended December 31, ~~2022~~2023 for further information concerning the Company's market risk.

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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 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 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 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, 2023~~March 31, 2024 that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting.

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 14 of the Notes to Consolidated financial statements, and such information is incorporated herein by reference in this Item 1 of Part II.

Item 1A. Risk Factors

An investment in Harley-Davidson, Inc. involves risks, including the risk factors discussed in Item 1A. Risk Factors of the Company's Annual Report on Form 10-K for the year ended December 31, 2023,which have not materially changed except as set forth below. This risk factor has been updated to reflect the new expiration date of the current collective bargaining agreement with hourly employees in Wisconsin.

•The Company's motorcycle operations are dependent upon unionized labor. A substantial portion of the hourly production employees working in the Company's motorcycle operations are represented by unions and covered by collective bargaining agreements. The Company is currently a party to three collective bargaining agreements with local affiliates of the International Association of Machinists and Aerospace Workers and the United Steelworkers of America. The current collective bargaining agreement with hourly employees in Pennsylvania will expire on October 15, 2027 and the agreements with employees in Wisconsin will expire on March 31, 2029. There is no certainty that the Company will be successful in negotiating new agreements with these unions that extend beyond the current expiration dates or that these new agreements will be on terms that will allow the Company to be competitive. The Company's decisions regarding opening, closing, expanding, contracting or restructuring its facilities may require changes to existing or new bargaining agreements. Failure to renew agreements when they expire or to establish new collective bargaining agreements on terms acceptable to the Company and the unions could result in the relocation of production facilities, work stoppages or other labor disruptions, which may have a material adverse effect on the Company’s business and results of operations.

The Company disclaims any obligation to update these risk factors or any other forward-looking statements. The Company assumes no obligation, and specifically disclaims any such obligation, to update these risk factors or any other forward-looking statements to reflect actual results, changes in assumptions or other factors affecting such forward-looking statements.

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Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

The Company's share repurchases, which consisted of shares repurchased on a discretionary ~~shares~~basis and shares of common stock that employees surrendered to satisfy withholding taxes in connection with the vesting of restricted stock units and performance shares, were as follows during the quarter ended ~~June 30, 2023:~~March 31, 2024:
2023 Fiscal Month Total Number of
Shares Purchased 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 April 30 882,650 $ 38 882,650 6,962,006
May 1 to May 31 688,456 $ 33 688,456 6,276,694
June 1 to June 30 517,736 $ 33 517,736 5,762,186
2,088,842 $ 35 2,088,842


2024 Fiscal Month	Total Number of Shares Purchased	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
January 1 to January 31	2,290	$	35	2,290	9,683,221
February 1 to February 29	1,288,095	$	37	1,288,095	8,653,111
March 1 to March 31	1,500,342	$	40	1,500,342	7,155,043
	2,790,727	$	39	2,790,727

In ~~February 2020,~~August 2023, the Company's Board of Directors authorized the Company to repurchase up to 10.0 million shares of its common stock on a discretionary basis with no dollar limit or expiration date. The Company repurchased ~~2.1~~2.5 million shares on a discretionary basis during the quarter ended ~~June 30, 2023~~March 31, 2024 under ~~these authorizations.~~this authorization. As of ~~June 30, 2023, 5.8~~March 31, 2024, 7.2 million shares remained under ~~the 2020~~this authorization.

Under the share repurchase ~~authorizations,~~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 repurchase authority has no expiration date but may be suspended, modified or discontinued at any time.

The Company maintains a capital allocation policy to (i) fund The Hardwire strategic initiatives, including the associated capital expenditures, (ii) pay dividends and (iii) exercise discretionary share repurchases. This policy is designed to support the investment required to enhance the long-term value of the Company and to return any excess cash to shareholders.

The amount of capital to be allocated to share repurchases is approved periodically by the Company’s Board of Directors, taking into account the Company’s expected cash flow over time. The specific number of shares repurchased, if any, and the timing of repurchases are determined by Company management from time to time and 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.~~

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The Harley-Davidson, Inc. 2020 Incentive Stock Plan and the 2022 Aspirational Incentive Stock Plan (Incentive Plans) 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~~first quarter of ~~2023,~~2024, the Company acquired ~~15,130~~262,549 shares of common stock that employees presented to the Company to satisfy withholding taxes in connection with the vesting of restricted stock units and performance shares. At the Company's 2022 Annual Meeting of Shareholders held May 12, 2022, the shareholders of the Company approved an amendment to the 2020 Incentive Stock Plan to increase the authorized number of shares under the Incentive Plan by 3.1 million shares. As amended, the 2020 Incentive Stock Plan provides that up to a total of 8.5 million shares of the Company's common stock may be issued thereunder.

Item 5. Other Information

During the three months ended ~~June 30, 2023,~~March 31, 2024, no director or Section 16 officer of the Company adopted or terminated a "Rule 10b5-1 trading arrangement" or "non-Rule 10b5-1 trading arrangement," as each term is defined in Item 408(a) of Regulation S-K.

Item 6. Exhibits

Refer to the exhibit index immediately following this page.

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Harley-Davidson, Inc.

Exhibit Index to Form 10-Q


Exhibit No.						Description
4.1						Third Amended and Restated 5-Year Credit Agreement, dated as of April 12, 2024, among the Company, certain subsidiaries of the Company, the financial institutions parties thereto, and JP Morgan Chase Bank, N.A., as, among other things, global administrative agent, relating to the Second Amended and Restated 5-Year Credit Agreement, dated April 7, 2022, among the Company, certain subsidiaries of the Company, the financial institutions parties thereto and JP Morgan Chase Bank, N.A., as among other things, global administrating agent
4.2						Third Amended and Restated 7-Year Credit Agreement, dated as of April 12, 2024, among the Company, certain subsidiaries of the Company, the financial institutions parties thereto, and JP Morgan Chase Bank, N.A., as, among other things, global administrative agent, relating to the Second Amended and Restated 7-Year Credit Agreement, dated April 7, 2022, among the Company, certain subsidiaries of the Company, the financial institutions parties thereto and JP Morgan Chase Bank, N.A., as among other things, global administrating agent
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
104						Cover Page Interactive Data File - formatted in Inline XBRL and contained in Exhibit 101

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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 9, 2023~~May 6, 2024			/s/ Jonathan R. Root
			Jonathan R. Root
			Chief Financial Officer
			(Principal financial officer)


Date: ~~August 9, 2023~~May 6, 2024			/s/ Mark R. Kornetzke
			Mark R. Kornetzke
			Chief Accounting Officer
			(Principal accounting officer)

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	2023						2022
	Transfers		Proceeds		Proceeds, net		Transfers		Proceeds		Proceeds, net
First quarter	$	628.5	$	550.0	$	547.7	$	—	$	—	$	—
Second quarter	$	—	$	—	$	—	2,176.4		1,836.3		1,826.9



	$	628.5	$	550.0	$	547.7	$	2,176.4	$	1,836.3	$	1,826.9


2023 Fiscal Month	Total Number of Shares Purchased	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 April 30	882,650	$	38	882,650	6,962,006
May 1 to May 31	688,456	$	33	688,456	6,276,694
June 1 to June 30	517,736	$	33	517,736	5,762,186
	2,088,842	$	35	2,088,842