Reportable Segments and Geographic Information

12 Months Ended

Dec. 31, 2019

Reportable Segments and Geographic Information

Reportable Segments – Harley-Davidson, Inc. is the parent company of Harley-Davidson Motor Company (HDMC) and Harley-Davidson Financial Services (HDFS). The Company operates in two segments: the Motorcycles and Related Products (Motorcycles) and Financial Services. 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 Harley-Davidson motorcycles as well as motorcycle parts, accessories, general merchandise and services. The Company’s products are sold to retail customers primarily through a network of independent dealers. The Company conducts business on a global basis, with sales in the U.S., Canada, Europe/Middle East/Africa (EMEA), Asia Pacific, and Latin America.

The Financial Services segment consists of HDFS which is engaged in the business of financing and servicing wholesale inventory receivables and retail consumer loans, primarily for the purchase of Harley-Davidson motorcycles. HDFS also works with certain unaffiliated insurance companies to provide motorcycle insurance and protection products to motorcycle owners. HDFS conducts business principally in the U.S. and Canada.

Selected segment information is set forth below for the years ended December 31, (in thousands):



	2019		2018		2017
Motorcycles and Related Products:
Motorcycles revenue	$	4,572,678	$	4,968,646	$	4,915,027
Gross profit	1,342,880		1,616,850		1,642,697
Selling, administrative and engineering expense	1,020,907		1,101,086		1,035,921
Restructuring expense	32,353		93,401		—
Operating income	289,620		422,363		606,776
Financial Services:
Financial Services revenue	789,111		748,229		732,197
Financial Services expense	523,123		457,069		456,892
Operating income	265,988		291,160		275,305
Operating income	$	555,608	$	713,523	$	882,081

Financial Services revenue includes $10.0 million, $9.0 million and $6.9 million of interest paid by HDMC to HDFS on wholesale finance receivables in 2019, 2018 and 2017, respectively. The offsetting cost of these interest incentives was recorded as a reduction to Motorcycles revenue.

Additional segment information is set forth below as of December 31, (in thousands):



	Motorcycles		Financial Services		Consolidated
2019:
Assets	$	2,548,115	$	7,980,044	$	10,528,159
Depreciation and amortization	$	223,656	$	8,881	$	232,537
Capital expenditures	$	176,264	$	5,176	$	181,440
2018:
Assets	$	2,562,931	$	8,102,733	$	10,665,664
Depreciation and amortization	$	260,707	$	4,156	$	264,863
Capital expenditures	$	197,905	$	15,611	$	213,516
2017:
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

Geographic Information – Included in the Consolidated financial statements are the following amounts relating to geographic locations for the years ended December 31, (in thousands):



	2019		2018		2017
Motorcycles revenue^(a):
United States	$	2,971,223	$	3,159,049	$	3,215,513
EMEA	743,385		893,589		790,725
Canada	210,381		230,211		232,883
Japan	156,644		161,370		180,938
Australia and New Zealand	117,525		147,561		168,670
Other countries	373,520		376,866		326,298
	$	4,572,678	$	4,968,646	$	4,915,027
Financial Services revenue^(a):
United States	$	754,535	$	712,898	$	698,383
Canada	22,799		23,120		22,580
Europe	8,435		8,411		6,845
Other countries	3,342		3,800		4,389
	$	789,111	$	748,229	$	732,197
Long-lived assets^(b):
United States	$	757,594	$	838,446	$	912,032
International:
Thailand	78,651		50,331		31,087
Other countries	11,137		15,355		24,662
	89,788		65,686		55,749
	$	847,382	$	904,132	$	967,781


(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.