Business Segments

3 Months Ended

Apr. 01, 2018

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



	Three months ended
	April 1, 2018		March 26, 2017
Motorcycles net revenue	$	1,363,947	$	1,328,711
Gross profit	473,773		474,823
Selling, administrative and engineering expense	254,093		238,277
Restructuring expense	46,842		—
Operating income from Motorcycles	172,838		236,546
Financial Services revenue	178,174		173,221
Financial Services expense	114,595		120,585
Operating income from Financial Services	63,579		52,636
Operating income	$	236,417	$	289,182

As discussed in Note 2, the Company adopted ASU 2017-07 on January 1, 2018 which required the Company to record the non-service cost components of net periodic benefit plan costs in non-operating income on a prospective and retrospective basis. As a result, operating income from Motorcycles excludes these costs for all periods presented.