Employee Benefit Plans and Other Postretirement Benefits

12 Months Ended

Dec. 31, 2024

Retirement Benefits [Abstract]

Employee Benefit Plans and Other Postretirement Benefits

Employee Benefit Plans and Other Postretirement Benefits

The Company has a qualified defined benefit pension plan and postretirement healthcare benefit plans. The plans cover certain eligible employees and retirees of the HDMC segment. The Company also has unfunded supplemental employee retirement plan agreements (SERPA) with certain employees.

Pension benefits are based primarily on years of service and, for certain participants, levels of compensation. Plan participants are generally eligible to receive postretirement healthcare benefits upon attaining age 55 after rendering at least 10 years of service to the Company. Some of the plans require participant contributions to partially offset benefit costs.

Obligations and Funded Status:

The changes in the benefit obligation, fair value of plan assets and the funded status of the Company’s pension and SERPA plans and the postretirement healthcare plans as of the Company’s measurement dates of December 31, were as follows (in thousands):

	Pension and SERPA Benefits				Postretirement Healthcare Benefits
	2024		2023		2024		2023
Change in benefit obligation:
Benefit obligation, beginning of period	$	1,568,277	$	1,553,912	$	206,506	$	210,811
Service cost	4,698		5,174		2,892		3,184

	Pension and SERPA Benefits				Postretirement Healthcare Benefits
	2024		2023		2024		2023
Interest cost	80,478		81,911		10,775		11,089
Actuarial loss / (gains)	(41,748)		35,608		(15,269)		(18,350)
Plan participant contributions	—		—		564		1,790
Special early retirement benefits	1,722		—		—		—
Plan amendments	5,601		—		—		12,959
Benefits paid	(112,281)		(106,493)		(13,721)		(14,977)
Settlements	—		(1,835)		—		—
Benefit obligation, end of period	1,506,747		1,568,277		191,747		206,506
Change in plan assets:
Fair value of plan assets, beginning of period	1,901,824		1,809,543		225,167		205,803
Return on plan assets	49,572		198,212		28,067		29,211
Plan participant contributions	—		—		564		1,790
Benefits paid	(111,617)		(105,931)		(9,308)		(11,637)
Fair value of plan assets, end of period	1,839,779		1,901,824		244,490		225,167
Funded status of the plan	$	333,032	$	333,547	$	52,743	$	18,661
Funded status as recognized on the Consolidated balance sheets:
Pension and postretirement assets	$	342,569	$	343,619	$	98,256	$	69,489
Accrued liabilities	(1,176)		(1,129)		—		—
Pension and postretirement liabilities	(8,361)		(8,943)		(45,513)		(50,828)
	$	333,032	$	333,547	$	52,743	$	18,661
Amounts included in Accumulated other comprehensive loss, net of tax:
Prior service credits	$	6,597	$	2,886	$	8,087	$	8,542
Actuarial losses (gains)	310,065		277,825		(75,603)		(59,631)
	$	316,662	$	280,711	$	(67,516)	$	(51,089)

During 2024, actuarial gains related to the obligation for pension and SERPA benefits were due primarily to an increase in the discount rate and changes in other demographic assumptions. During 2023, actuarial losses related to the obligation for pension and SERPA benefits were due primarily to a decrease in the discount rate and changes in other demographic assumptions.

During 2024, actuarial gains related to the obligation for postretirement healthcare benefits were due primarily to an increase in the discount rate and better than expected trends in claim costs and Retirement Health Care Account (RHCA) drawdowns, partially offset by changes in other demographic assumptions. During 2023, actuarial gains related to the obligation for postretirement healthcare benefits were due primarily to changes in benefit utilization assumptions and claims cost adjustments.

The funded status of the qualified pension plan and the SERPA plans are combined above. The SERPA plans had projected benefit obligations (PBO) and accumulated benefit obligations (ABO) in excess of the fair value of plan assets at December 31, as presented below (in thousands):

	2024		2023
Plans with PBO in excess of fair value of plan assets:
PBO	$	9,537	$	10,072
Fair value of plan assets	$	—	$	—
Plans with ABO in excess of fair value of plan assets:
ABO	$	9,516	$	10,035
Fair value of plan assets	$	—	$	—

The total ABO for all the Company's pension and SERPA plans combined was $1.51 billion and $1.57 billion as of December 31, 2024 and 2023, respectively.

Benefit Costs:

Service cost is allocated among Selling, administrative and engineering expense, Motorcycles and related products cost of goods sold and Inventories, net. Amounts capitalized in inventory are not significant. Non-service cost components of net periodic benefit cost are presented in Other income (expense), net. Components of net periodic benefit costs for the Company's defined benefit plans for the years ended December 31, were as follows (in thousands):

	Pension and SERPA Benefits						Postretirement Healthcare Benefits
	2024		2023		2022		2024		2023		2022
Service cost	$	4,698	$	5,174	$	19,052	$	2,892	$	3,184	$	4,642
Interest cost	80,478		81,911		61,890		10,775		11,089		7,617
Expected return on plan assets	(132,574)		(146,076)		(125,904)		(17,696)		(17,124)		(15,237)
Amortization of unrecognized:
Prior service credit	751		751		(1,312)		595		(665)		(2,323)
Net loss	(650)		(722)		31,912		(4,999)		(4,388)		488
Settlement (gain) loss	1,722		(759)		(1,471)		—		—		(1,244)
Net periodic benefit cost	$	(45,575)	$	(59,721)	$	(15,833)	$	(8,433)	$	(7,904)	$	(6,057)

The expected return on plan assets is calculated based on the market related value of plan assets. The market related value of plan assets is different from the fair value in that asset gains and losses are smoothed over a five-year period. 

Unrecognized gains and losses related to plan obligations and assets are initially recorded in other comprehensive income and result from actual experience that differs from assumed or expected results, and the impacts of changes in assumptions. Unrecognized plan asset gains and losses not yet reflected in the market related value of plan assets are not subject to amortization. Remaining unrecognized gains and losses that exceed 10% of the greater of the projected benefit obligation or the market related value of plan assets are amortized to earnings over the estimated future service period of active plan participants. The impacts of plan amendments, if any, are amortized over the estimated future service period of plan participants at the time of the amendment.

Assumptions:

Weighted-average assumptions used to determine benefit obligations and net periodic benefit cost at December 31, were as follows:

	Pension and SERPA Benefits						Postretirement Healthcare Benefits
	2024		2023		2022		2024		2023		2022
Assumptions for benefit obligations:
Discount rate	5.65	%	5.31	%	5.45	%	5.63	%	5.36	%	5.42	%
Rate of compensation increase	4.00	%	4.00	%	4.00	%	n/a		n/a		n/a
Assumptions for net periodic benefit cost:
Discount rate	5.31	%	5.45	%	2.89	%	5.36	%	5.42	%	2.72	%
Expected return on plan assets	6.20	%	6.80	%	5.60	%	7.46	%	7.48	%	6.77	%
Rate of compensation increase	4.00	%	4.00	%	3.49	%	n/a		n/a		n/a

Plan Assets:

Pension Plan Assets – The Company’s investment objective is to ensure assets are sufficient to pay benefits while mitigating the volatility of retirement plan assets or liabilities recorded in the balance sheet. The Company mitigates volatility through asset diversification and partial asset/liability matching. The investment portfolio for the Company's pension plan assets contains a diversified blend of equity and fixed-income investments. The Company’s current overall targeted asset allocation as a percentage of total market value was 30% equities and 70% fixed-income and cash. Assets are rebalanced regularly to keep the actual allocation in line with targets. Equity holdings primarily include investments in small-, medium- and large-cap companies in the U.S., investments in developed and emerging foreign markets and other investments such as private equity and real estate. Fixed-income holdings consist of U.S. government and agency securities, state and municipal bonds, corporate bonds from diversified industries and foreign obligations. In addition, cash equivalent balances are maintained at levels adequate to meet near-term plan expenses and benefit payments. Investment risk is measured and monitored on an ongoing basis through quarterly investment portfolio reviews.

Postretirement Healthcare Plan Assets – The Company's investment objective is to maximize the return on assets to help pay benefits by prudently investing in equities, fixed income and alternative assets. The Company's current overall targeted asset allocation as a percentage of total market value was 68% equities and 32% fixed-income and cash. Equity holdings primarily include investments in small-, medium- and large-cap companies in the U.S., investments in developed and emerging foreign markets and other investments such as private equity and real estate. Fixed-income holdings consist of U.S. government and agency securities, state and municipal bonds, corporate bonds from diversified industries and foreign obligations. In addition, cash equivalent balances are maintained at levels adequate to meet near-term plan expenses and benefit payments. Investment risk is measured and monitored on an ongoing basis through quarterly investment portfolio reviews.

The following tables present the fair values of the plan assets related to the Company’s pension and postretirement healthcare plans within the fair value hierarchy as defined in Note 1. Equity holdings are primarily exchange-traded and are valued based on quoted prices for identical securities. Fixed income holdings are generally measured at fair value using quoted prices for identical or similar securities. Certain assets measured are valued at fair value using the net asset value practical expedient and are not classified in the fair value hierarchy. The fair values of the Company’s pension plan assets at December 31, 2024 were as follows (in thousands):

	Balance		Level 1		Level 2
Cash and cash equivalents	$	26,111	$	26,111	$	—
Equity holdings:
U.S. companies	190,113		190,058		55
Foreign companies	32		32		—
Pooled equity funds	237,473		135,631		101,842
	427,618		325,721		101,897
Fixed-income holdings:
U.S. Treasuries	120,028		120,028		—
Federal agencies	11,271		—		11,271
Corporate bonds	694,002		—		694,002
Pooled fixed income funds	463,769		—		463,769
Foreign bonds	86,071		—		86,071
Municipal bonds	10,020		—		10,020
	1,385,161		120,028		1,265,133
Plan assets subject to fair value leveling	1,838,890		$	471,860	$	1,367,030
Plan assets measured at net asset value:
Private equity investments	334
Real estate investments	555
	889
	$	1,839,779

Included in the pension plan assets are 1,273,592 shares of the Company’s common stock with a market value of $38.4 million at December 31, 2024.

The fair values of the Company’s postretirement healthcare plan assets at December 31, 2024 were as follows (in thousands): 

	Balance		Level 1		Level 2
Cash and cash equivalents	$	1,824	$	1,824	$	—
Equity holdings:
U.S. companies	88,083		88,083		—
Foreign companies	27,430		27,430		—
Pooled equity funds	53,987		40,785		13,202
	169,500		156,298		13,202
Fixed-income holdings:
U.S. Treasuries	415		415		—
Federal agencies	39		—		39
Corporate bonds	2,388		—		2,388
Pooled fixed income funds	55,119		14,720		40,399
Foreign bonds	296		—		296
Municipal bonds	34		—		34
	58,291		15,135		43,156
Plan assets subject to fair value leveling	229,615		$	173,257	$	56,358
Plan assets measured at net asset value:
Limited partnership interests	$	14,537
Real estate investments	338
	$	244,490

The fair values of the Company’s pension plan assets at December 31, 2023 were as follows (in thousands):

	Balance		Level 1		Level 2
Cash and cash equivalents	$	27,730	$	—	$	27,730
Equity holdings:
U.S. companies	346,895		346,844		51
Foreign companies	22,425		22,425		—
Pooled equity funds	124,853		124,853		—
Other	21		21		—
	494,194		494,143		51
Fixed-income holdings:
U.S. Treasuries	110,767		110,767		—
Federal agencies	11,028		—		11,028
Corporate bonds	708,790		—		708,790
Pooled fixed income funds	442,409		55,487		386,922
Foreign bonds	93,034		462		92,572
Municipal bonds	11,486		—		11,486
	1,377,514		166,716		1,210,798
Plan assets subject to fair value leveling	1,899,438		$	660,859	$	1,238,579
Plan assets measured at net asset value:
Private equity investments	794
Real estate investments	1,592
	2,386
	$	1,901,824

Included in the pension plan assets were 1,273,592 shares of the Company’s common stock with a market value of $46.9 million at December 31, 2023.

The fair values of the Company’s postretirement healthcare plan assets at December 31, 2023 were as follows (in thousands):

	Balance		Level 1		Level 2
Cash and cash equivalents	$	2,391	$	—	$	2,391
Equity holdings:
U.S. companies	113,135		113,135		—
Foreign companies	21,034		21,034		—
Pooled equity funds	26,355		26,355		—
Other	5		5		—
	160,529		160,529		—
Fixed-income holdings:
U.S. Treasuries	359		359		—
Federal agencies	36		—		36
Corporate bonds	2,286		—		2,286
Pooled fixed income funds	44,512		43,248		1,264
Foreign bonds	300		2		298
Municipal bonds	37		—		37
	47,530		43,609		3,921
Plan assets subject to fair value leveling	210,450		$	204,138	$	6,312
Plan assets measured at net asset value:
Limited partnership interests	$	13,773
Real estate investments	944
	$	225,167

For 2025, the Company’s overall expected long-term rate of return is 6.40% for pension assets and 7.70% for postretirement healthcare plan assets. The expected long-term rate of return is based on the portfolio as a whole and not on the sum of the returns on individual asset categories. The return is based on historical returns adjusted to reflect the current view of the long-term investment market.

Postretirement Healthcare Cost:

The weighted-average healthcare cost trend rates used in determining the accumulated postretirement benefit obligation of the healthcare plans were as follows:

	2024		2023
Healthcare cost trend rate for next year	6.89	%	7.50	%
Rate to which the cost trend rate is assumed to decline (the ultimate rate)	5.00	%	5.00	%
Year that the rate reaches the ultimate trend rate	2033		2032

Future Contributions and Benefit Payments:

Based on the funded status of the qualified pension plan, there is no requirement for the Company to make contributions to the qualified pension plan in 2025. The Company expects that 2025 postretirement healthcare plan benefits and benefits due under the SERPA plans will be paid by the Company or, in the case of postretirement healthcare plan benefits, partially funded with plan assets.

The Company's future expected benefit payments as of December 31, 2024 were as follows (in thousands):

	Pension Benefits		SERPA Benefits		Postretirement Healthcare Benefits
2025	$	118,693	$	1,209	$	17,228
2026	$	119,276	$	1,129	$	17,745
2027	$	119,461	$	999	$	18,205
2028	$	117,977	$	892	$	18,512
2029	$	117,909	$	809	$	18,712
2030-2034	$	579,375	$	3,533	$	90,946

Defined Contribution Plans:

The Company has various defined contribution benefit plans that in total cover substantially all full-time employees. Employees can make voluntary contributions in accordance with the provisions of their respective plan, which includes a 401(k) tax deferral option. The Company makes additional contributions to the plans on behalf of the employees and expensed $32.4 million, $30.5 million and $30.9 million during 2024, 2023 and 2022, respectively related to the contributions.