Product Warranty and Safety Recall Campaigns

3 Months Ended

Mar. 31, 2013

Product Warranty and Safety Recall Campaigns

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 provides a one-year warranty for Parts & Accessories (P&A). 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
	March 31, 2013			April 1, 2012
Balance, beginning of period	$	60,263		$	54,994
Warranties issued during the period	15,120			14,912
Settlements made during the period	(11,638		)	(13,958		)
Recalls and changes to pre-existing warranty liabilities	3,964			1,154
Balance, end of period	$	67,709		$	57,102

The liability for safety recall campaigns was $4.1 million, $4.6 million and $8.0 million as of March 31, 2013, December 31, 2012 and April 1, 2012, respectively.