Product Warranty and Safety Recall Campaigns

6 Months Ended

Jul. 01, 2012

Product Warranty and Safety Recall Campaigns

12. Product Warranty and Safety Recall Campaigns

The Company currently provides a standard two-year limited warranty on all new motorcycles sold worldwide, except for Japan, where the Company currently provides a standard three-year limited warranty on all new motorcycles sold. In addition, the Company started offering a one-year warranty for Parts & Accessories (P&A) in 2012. The warranty coverage for the retail customer generally begins when the product is sold to a retail customer. The Company maintains reserves for future warranty claims using an estimated cost, which is based primarily on historical Company claim information. Additionally, the Company has from time to time initiated certain voluntary safety recall campaigns. The Company reserves for all estimated costs associated with safety recalls in the period that the safety recalls are announced.

Changes in the Company’s warranty and safety recall liability were as follows (in thousands):

	Three months ended						Six months ended
	July 1,			June 26,			July 1,			June 26,
	2012			2011			2012			2011
Balance, beginning of period	$	57,102		$	57,111		$	54,994		$	54,134
Warranties issued during the period		17,127			12,335			32,618			23,560
Settlements made during the period		(18,549	)		(12,570	)		(33,086	)		(22,866	)
Recalls and changes to pre-existing warranty liabilities		12,121			(1,469	)		13,275			579
Balance, end of period	$	67,801		$	55,407		$	67,801		$	55,407

The liability for safety recall campaigns was $6.7 million, $10.7 million and $2.9 million as of July 1, 2012, December 31, 2011 and June 26, 2011, respectively.