v3.26.3
Derivative Financial Instruments and Hedging Activities
 9 Months Ended
Sep. 30, 2026
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Derivative Financial Instruments and Hedging Activities Derivative Financial Instruments and Hedging Activities
The Company is exposed to risks from fluctuations in foreign currency exchange rates, interest rates and commodity prices. To reduce its exposure to such risks, the Company selectively uses derivative financial instruments. All derivative transactions are authorized and executed pursuant to regularly reviewed policies and procedures which prohibit the use of financial instruments for speculative trading purposes.
The Company sells products in foreign currencies and utilizes foreign currency exchange contracts to mitigate the effects of foreign currency exchange rate fluctuations related to the Euro, Australian dollar, Japanese yen, and Canadian dollar. The Company's foreign currency exchange contracts generally have maturities of less than one year.
The Company utilizes commodity contracts to mitigate the effects of commodity price fluctuations related to metals and fuel consumed in its motorcycle operations. The Company's commodity contracts generally have maturities of less than one year.
The Company periodically utilizes treasury rate and swap rate lock contracts to fix the interest rate on a portion of the principal related to an anticipated issuance of long-term debt or to mitigate the risk of declining interest rates associated with anticipated debt retirements. The Company also utilizes cross-currency swaps to mitigate the effect of foreign currency exchange rate fluctuations on its foreign currency-denominated debt and interest rate caps to facilitate certain asset-backed securitization transactions.
All derivative financial instruments are recognized on the Consolidated balance sheets at fair value. In accordance with ASC Topic 815, Derivatives and Hedging (ASC Topic 815), the accounting for changes in the fair value of a derivative financial instrument depends on whether it has been designated and qualifies as part of a hedging relationship and, further, on the type of hedging relationship.
Changes in the fair value of derivative financial instruments that are designated as cash flow hedges are initially recorded in Other comprehensive (loss) income (OCI) and subsequently reclassified into income when the hedged item affects income. Refer to Note 15 of the Notes to Consolidated financial statements for more detail on derivatives activity included in accumulated other comprehensive income. The Company assesses, both at the inception of each hedge and on an ongoing basis, whether the derivative financial instruments that are designated as cash flow hedging transactions are highly effective in offsetting changes in cash flows of the hedged items. No component of a designated hedging derivative financial instrument’s gain or loss is excluded from the assessment of hedge effectiveness. Derivative financial instruments not designated as hedges are not speculative and are used to manage the Company’s exposure to foreign currency, commodity risks and interest rate risks. Changes in the fair value of derivative financial instruments not designated as hedging instruments are recorded directly in income. Cash flow activity associated with the Company's derivative financial instruments is recorded in Cash flows from operating activities and Cash flows from investing activities on the Consolidated statement of cash flows. Derivative assets and liabilities are reported in Other current assets and Accrued liabilities on the Consolidated balance sheets, respectively, other than long-term balances noted below.
The notional and fair values of the Company's derivative financial instruments under ASC Topic 815 were as follows (in thousands):
Derivative Financial Instruments
Designated as Cash Flow Hedging Instruments
September 30, 2026December 31, 2025September 30, 2025
Notional
Value
Assets(a)
LiabilitiesNotional
Value
Assets(a)
LiabilitiesNotional
Value
Assets(a)
Liabilities
Foreign currency contracts$398,475 $9,063 $573 $448,287 $2,096 $6,299 $362,988 $1,501 $7,359 
Commodity contracts842 — 105 879 — 89 940 — 81 
Cross-currency swaps657,214 30,323 — 657,214 46,889 — 1,416,994 115,232 — 
$1,056,531 $39,386 $678 $1,106,380 $48,985 $6,388 $1,780,922 $116,733 $7,440 
Derivative Financial Instruments
Not Designated as Hedging Instruments
September 30, 2026December 31, 2025September 30, 2025
Notional
Value
Assets
LiabilitiesNotional
Value
Assets(b)
LiabilitiesNotional
Value
Assets
Liabilities
Commodity contracts$4,423 $1,096 $— $3,632 $— $106 $3,247 $15 $7 
Cross-currency swaps
— — — 759,780 59,450 — — — — 
$4,423 $1,096 $— $763,412 $59,450 $106 $3,247 $15 $7 
(a)Includes $30.3 million, $46.9 million, and $52.3 million of cross-currency swaps recorded in Other long-term assets as of September 30, 2026, December 31, 2025, and September 30, 2025, respectively, with all remaining amounts recorded in Other current assets.
(b)Includes $59.5 million of cross-currency swaps recorded in Other current assets as of December 31, 2025, for which hedge accounting was discontinued prospectively effective September 30, 2025, as it was reasonably possible, but not probable, that the related medium-term notes would be settled prior to maturity.
The amounts of gains and losses related to the Company's derivative financial instruments designated as cash flow hedges were as follows (in thousands):
Gain/(Loss)
Recognized in OCI		Gain/(Loss)
Reclassified from AOCL into Income
Three months endedNine months endedThree months endedNine months ended
September 30,
2026		September 30,
2025		September 30,
2026		September 30,
2025		September 30,
2026		September 30,
2025		September 30,
2026		September 30,
2025
Foreign currency contracts$1,038 $4,410 $13,199 $(26,136)$1,455 $(6,293)$(1,668)$2,855 
Commodity contracts(95)(112)(16)(121)(51)(39)(1)19 
Cross-currency swaps(8,842)(16,877)(16,566)149,941 (6,097)2,227 (28,087)153,216 
Treasury rate lock contracts— — — — (110)(181)(329)(603)
Swap rate lock contracts— — — — — (149)(141)(443)
$(7,899)$(12,579)$(3,383)$123,684 $(4,803)$(4,435)$(30,226)$155,044 
The location and amount of gains and losses recognized in income related to the Company's derivative financial instruments designated as cash flow hedges were as follows (in thousands):
Motorcycles and related products
cost of goods sold		Selling, administrative &
engineering expense		Interest expenseFinancial services interest expense
Three months ended September 30, 2026
Line item on the Consolidated statements of operations in which the effects of cash flow hedges are recorded
$701,453 $291,313 $3,629 $32,245 
Gain/(loss) reclassified from AOCL into income:
Foreign currency contracts1,455 — — — 
Commodity contracts(51)— — — 
Cross-currency swaps— (6,097)— — 
Treasury rate lock contracts— — (47)(63)
Swap rate lock contracts— — — — 
Three months ended September 30, 2025
Line item on the Consolidated statements of operations in which the effects of cash flow hedges are recorded
$798,683 $292,885 $10,182 $75,883 
Gain/(loss) reclassified from AOCL into income:
Foreign currency contracts(6,293)— — — 
Commodity contracts(39)— — — 
Cross-currency swaps— 2,227 — — 
Treasury rate lock contracts— — (61)(120)
Swap rate lock contracts— — — (149)
Nine months ended September 30, 2026
Line item on the Consolidated statements of operations in which the effects of cash flow hedges are recorded
$2,304,903 $890,672 $10,820 $102,105 
Gain/(loss) reclassified from AOCL into income:
Foreign currency contracts(1,668)— — — 
Commodity contracts(1)— — — 
Cross-currency swaps— (28,087)— — 
Treasury rate lock contracts— — (140)(189)
Swap rate lock contracts— — — (141)
Nine months ended September 30, 2025
Line item on the Consolidated statements of operations in which the effects of cash flow hedges are recorded
$2,320,261 $849,098 $25,564 $258,391 
Gain/(loss) reclassified from AOCL into income:
Foreign currency contracts2,855 — — — 
Commodity contracts19 — — — 
Cross-currency swaps— 153,216 — — 
Treasury rate lock contracts— — (243)(360)
Swap rate lock contracts— — — (443)
The amount of net gain included in Accumulated other comprehensive loss (AOCL) at September 30, 2026, estimated to be reclassified into income over the next 12 months was $19.2 million.
The amount of gains and losses recognized in income related to derivative financial instruments not designated as hedging instruments were as follows (in thousands). Gains and losses on foreign currency contracts and commodity contracts were recorded in Motorcycles and related products cost of goods sold. Gains and losses on cross-currency swaps and interest rate caps were recorded in Selling, administrative & engineering expense on the Consolidated statements of operations.
Amount of Gain/(Loss)
Recognized in Income
Three months endedNine months ended
September 30,
2026		September 30,
2025		September 30,
2026		September 30,
2025
Foreign currency contracts$(535)$387 $(6,309)$5,753 
Commodity contracts1,081 75 2,307 (46)
Cross-currency swaps
— — 4,101 — 
Interest rate caps— — — (2)
$546 $462 $99 $5,705 
The Company is exposed to credit loss risk in the event of non-performance by counterparties to its derivative financial instruments. Although no assurances can be given, the Company does not expect any of the counterparties to its derivative financial instruments to fail to meet their obligations. To manage credit loss risk, the Company evaluates counterparties based on credit ratings and, on a quarterly basis, evaluates each hedge’s net position relative to the counterparty’s ability to cover their position.