Restructuring Expenses

In January 2018, the Company initiated a plan to further improve its manufacturing operations and cost structure by commencing a multi-year manufacturing optimization plan which includes the consolidation of its motorcycle assembly plant in Kansas City, Missouri, into its plant in York, Pennsylvania, and the closure of its wheel operations in Adelaide, Australia. As the U.S. operations are consolidated, the Company expects approximately 800 jobs will be eliminated with the closure of Kansas City operations and approximately 450 jobs will be added in York through 2019. Approximately 90 jobs will be eliminated in Adelaide.

The Company expects to incur restructuring and other consolidation costs of $155 million to $185 million in the Motorcycles segment related to this plan through 2019, of which approximately 70% will be cash charges. These cost estimates reflect a $15 million decrease from the Company's previous estimate. The current estimate includes $125 million to $145 million of restructuring expense and $30 million to $40 million of costs related to temporary inefficiencies. The Company expects restructuring expenses to include the cost of employee termination benefits, accelerated depreciation, and other project implementation costs of $40 million to $45 million, $50 million to $55 million, and $35 million to $45 million, respectively. Restructuring expense is recorded as a separate line item in the consolidated statements of income and the accrued restructuring liability is recorded in accrued liabilities in the consolidated balance sheet. The Company expects the plan to be completed by mid-2019. Changes in the accrued restructuring liability (in thousands) were as follows:



	Three months ended September 30, 2018
	Employee Termination Benefits			Accelerated Depreciation			Other			Total
Balance, beginning of period	$	36,758		$	—		$	77		$	36,835
Restructuring (benefit) expense	(649		)	9,420			6,061			14,832
Utilized - cash	(5,402		)	—			(6,053		)	(11,455		)
Utilized - non cash	—			(9,420		)	—			(9,420		)
Foreign currency changes	(140		)	—			(2		)	(142		)
Balance, end of period	$	30,567		$	—		$	83		$	30,650



	Nine months ended September 30, 2018
	Employee Termination Benefits			Accelerated Depreciation			Other			Total
Balance, beginning of period	$	—		$	—		$	—		$	—
Restructuring expense	38,956			24,779			10,309			74,044
Utilized - cash	(7,835		)	—			(10,220		)	(18,055		)
Utilized - non cash	—			(24,779		)	—			(24,779		)
Foreign currency changes	(554		)	—			(6		)	(560		)
Balance, end of period	$	30,567		$	—		$	83		$	30,650

During the three months ended September 30, 2018, the Company adjusted its termination benefit liability to reflect updated assumptions resulting in a reversal of approximately $0.9 million of previously recognized restructuring expense.

During the three and nine month periods ended September 30, 2018, the Company incurred $6.2 million and $9.3 million, respectively, of incremental cost of goods sold due to temporary inefficiencies resulting from implementing the manufacturing optimization plan.