Business Segments

6 Months Ended

Jul. 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				Six months ended
	July 1, 2018		June 25, 2017		July 1, 2018		June 25, 2017
Motorcycles net revenue	$	1,525,121	$	1,577,135	$	2,889,068	$	2,905,846
Gross profit	532,085		572,962		1,005,858		1,047,785
Selling, administrative and engineering expense	276,309		255,610		530,402		493,887
Restructuring expense	12,370		—		59,212		—
Operating income from Motorcycles	243,406		317,352		416,244		553,898
Financial Services revenue	188,102		188,034		366,276		361,255
Financial Services expense	107,561		106,099		222,156		226,684
Operating income from Financial Services	80,541		81,935		144,120		134,571
Operating income	$	323,947	$	399,287	$	560,364	$	688,469

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.