Reportable Segments and Geographic Information

Reportable Segments:

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

The Motorcycles segment consists of HDMC which designs, manufactures and sells at wholesale on-road Harley-Davidson motorcycles as well as motorcycle parts, accessories, general merchandise and related services. The Company’s products are sold to retail customers through a network of independent dealers. The Company conducts business on a global basis, with sales in the United States, Canada, Latin America, Europe/Middle East/Africa (EMEA) and Asia Pacific.

The Financial Services segment consists of HDFS which provides wholesale and retail financing and provides insurance and insurance-related programs primarily to Harley-Davidson dealers and their retail customers. HDFS conducts business principally in the United States and Canada.

Information by segment is set forth below for the years ended December 31 (in thousands):



	2017		2016		2015
Motorcycles net revenue	$	4,915,027	$	5,271,376	$	5,308,744
Gross profit	1,653,344		1,851,666		1,952,460
Selling, administrative and engineering expense	1,037,386		1,078,260		1,076,970
Operating income from Motorcycles	615,958		773,406		875,490
Financial Services revenue	732,197		725,082		686,658
Financial Services expense	456,892		449,552		406,453
Operating income from Financial Services	275,305		275,530		280,205
Operating income	$	891,263	$	1,048,936	$	1,155,695

Financial Services revenue includes $6.9 million, $4.4 million and $6.9 million of interest that HDMC paid to HDFS on wholesale finance receivables in 2017, 2016 and 2015, respectively. The offsetting cost of these interest incentives was recorded as a reduction to Motorcycles revenue.

Information by segment is set forth below as of December 31 (in thousands):



	Motorcycles		Financial Services		Consolidated
2017
Total assets	$	2,449,603	$	7,523,069	$	9,972,672
Depreciation and amortization	$	215,639	$	6,549	$	222,188
Capital expenditures	$	193,204	$	13,090	$	206,294
2016
Total assets	$	2,490,450	$	7,399,790	$	9,890,240
Depreciation and amortization	$	202,122	$	7,433	$	209,555
Capital expenditures	$	245,316	$	10,947	$	256,263
2015
Total assets	$	2,522,249	$	7,450,728	$	9,972,977
Depreciation and amortization	$	188,926	$	9,148	$	198,074
Capital expenditures	$	249,772	$	10,202	$	259,974

Geographic Information:

Included in the consolidated financial statements are the following amounts relating to geographic locations for the years ended December 31 (in thousands):



	2017		2016		2015
Revenue from Motorcycles^(a):
United States	$	3,215,513	$	3,579,129	$	3,768,069
EMEA	790,725		798,489		728,198
Japan	180,938		200,309		162,675
Canada	232,883		212,099		178,042
Australia and New Zealand	168,670		181,809		165,854
Other foreign countries	326,298		299,541		305,906
Total revenue from Motorcycles	$	4,915,027	$	5,271,376	$	5,308,744
Revenue from Financial Services^(a):
United States	$	698,383	$	692,784	$	656,888
Europe	6,845		6,528		5,373
Canada	22,580		21,626		21,180
Other foreign countries	4,389		4,144		3,217
Total revenue from Financial Services	$	732,197	$	725,082	$	686,658
Long-lived assets^(b):
United States	$	912,032	$	943,479	$	915,509
International	55,749		38,114		26,909
Total long-lived assets	$	967,781	$	981,593	$	942,418


(a)	Revenue is attributed to geographic regions based on location of customer.


(b)	Long-lived assets include all long-term assets except those specifically excluded under ASC Topic 280, “Segment Reporting,” such as deferred income taxes and finance receivables.