v3.25.4
Employee Benefit Plans and Other Postretirement Benefits
 12 Months Ended
Dec. 31, 2025
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 BenefitsPostretirement Healthcare Benefits
 2025202420252024
Change in benefit obligation:
Benefit obligation, beginning of period$1,506,747 $1,568,277 $191,747 $206,506 
Service cost3,854 4,698 2,571 2,892 
Interest cost82,006 80,478 10,470 10,775 
Actuarial loss / (gains)
15,059 (41,748)(17,916)(15,269)
Plan participant contributions— — 488 564 
Special early retirement benefits— 1,722 — — 
Plan amendments
— 5,601 — — 
Benefits paid(113,359)(112,281)(15,106)(13,721)
Settlements
(531)— — — 
Benefit obligation, end of period1,493,776 1,506,747 172,254 191,747 
 Pension and SERPA BenefitsPostretirement Healthcare Benefits
 2025202420252024
Change in plan assets:
Fair value of plan assets, beginning of period1,839,779 1,901,824 244,490 225,167 
Return on plan assets154,449 49,572 40,909 28,067 
Plan participant contributions— — 488 564 
Benefits paid(112,780)(111,617)(9,382)(9,308)
Fair value of plan assets, end of period1,881,448 1,839,779 276,505 244,490 
Funded status of the plan$387,672 $333,032 $104,251 $52,743 
Funded status as recognized on the Consolidated balance sheets:
Pension and postretirement assets$397,107 $342,569 $149,196 $98,256 
Accrued liabilities(1,245)(1,176)— — 
Pension and postretirement liabilities(8,190)(8,361)(44,945)(45,513)
$387,672 $333,032 $104,251 $52,743 
Amounts included in Accumulated other comprehensive loss, net of tax:
Prior service credits$5,452 $6,597 $7,638 $8,087 
Actuarial losses (gains)304,523 310,065 (101,711)(75,603)
$309,975 $316,662 $(94,073)$(67,516)
During 2025, actuarial losses related to the obligation for pension and SERPA benefits were due primarily to a decrease in the discount rate. 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 2025, actuarial gains related to the obligation for postretirement healthcare benefits were due primarily to better than expected trends in Retirement Health Care Account (RHCA) drawdowns and claims costs, partially offset by a decrease in the discount rate. 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 RHCA drawdowns, partially offset by changes in other demographic assumptions.
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):
20252024
Plans with PBO in excess of fair value of plan assets:
PBO$9,435 $9,537 
Fair value of plan assets$— $— 
Plans with ABO in excess of fair value of plan assets:
ABO$9,417 $9,516 
Fair value of plan assets$— $— 
The total ABO for all the Company's pension and SERPA plans combined was $1.49 billion and $1.51 billion as of December 31, 2025 and 2024, 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 BenefitsPostretirement Healthcare Benefits
 202520242023202520242023
Service cost$3,854 $4,698 $5,174 $2,571 $2,892 $3,184 
Interest cost82,006 80,478 81,911 10,470 10,775 11,089 
Expected return on plan assets(131,195)(132,574)(146,076)(18,699)(17,696)(17,124)
Amortization of unrecognized:
Prior service credit1,520 751 751 595 595 (665)
Net loss(696)(650)(722)(5,476)(4,999)(4,388)
Settlement (gain) loss(145)1,722 (759)— — — 
Net periodic benefit cost$(44,656)$(45,575)$(59,721)$(10,539)$(8,433)$(7,904)
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 BenefitsPostretirement Healthcare Benefits
 202520242023202520242023
Assumptions for benefit obligations:
Discount rate5.55 %5.65 %5.31 %5.39 %5.63 %5.36 %
Rate of compensation increase4.00 %4.00 %4.00 %n/an/an/a
Assumptions for net periodic benefit cost:
Discount rate5.65 %5.31 %5.45 %5.63 %5.36 %5.42 %
Expected return on plan assets6.40 %6.20 %6.80 %7.66 %7.46 %7.48 %
Rate of compensation increase4.00 %4.00 %4.00 %n/an/an/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 25% equities and 75% 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, 2025 were as follows (in thousands):
BalanceLevel 1Level 2
Cash and cash equivalents$34,593 $34,593 $— 
Equity holdings:
U.S. companies190,782 190,751 31 
Foreign companies47 47 — 
Pooled equity funds240,729 195,964 44,765 
431,558 386,762 44,796 
Fixed-income holdings:
U.S. Treasuries63,413 63,413 — 
Federal agencies1,086 — 1,086 
Corporate bonds508,778 — 508,778 
Pooled fixed income funds769,289 — 769,289 
Foreign bonds66,135 — 66,135 
Municipal bonds6,224 — 6,224 
1,414,925 63,413 1,351,512 
Plan assets subject to fair value leveling1,881,076 $484,768 $1,396,308 
Plan assets measured at net asset value:
Private equity investments— 
Real estate investments372 
372 
$1,881,448 
Included in the pension plan assets are 1,273,592 shares of the Company’s common stock with a market value of $26.1 million at December 31, 2025.
The fair values of the Company’s postretirement healthcare plan assets at December 31, 2025 were as follows (in thousands): 
BalanceLevel 1Level 2
Cash and cash equivalents$2,434 $2,434 $— 
Equity holdings:
U.S. companies96,608 96,608 — 
Foreign companies39,889 39,889 — 
Pooled equity funds59,039 44,571 14,468 
195,536 181,068 14,468 
Fixed-income holdings:
U.S. Treasuries234 234 — 
Federal agencies4 — 4 
Corporate bonds1,871 — 1,871 
Pooled fixed income funds60,318 15,807 44,511 
Foreign bonds243 — 243 
Municipal bonds23 — 23 
62,693 16,041 46,652 
Plan assets subject to fair value leveling260,663 $199,543 $61,120 
Plan assets measured at net asset value:
Limited partnership interests
$15,604 
Real estate investments238 
$276,505 
The fair values of the Company’s pension plan assets at December 31, 2024 were as follows (in thousands):
BalanceLevel 1Level 2
Cash and cash equivalents$26,111 $26,111 $— 
Equity holdings:
U.S. companies190,113 190,058 55 
Foreign companies32 32 — 
Pooled equity funds237,473 135,631 101,842 
427,618 325,721 101,897 
Fixed-income holdings:
U.S. Treasuries120,028 120,028 — 
Federal agencies11,271 — 11,271 
Corporate bonds694,002 — 694,002 
Pooled fixed income funds463,769 — 463,769 
Foreign bonds86,071 — 86,071 
Municipal bonds10,020 — 10,020 
1,385,161 120,028 1,265,133 
Plan assets subject to fair value leveling1,838,890 $471,860 $1,367,030 
Plan assets measured at net asset value:
Private equity investments334 
Real estate investments555 
889 
$1,839,779 
Included in the pension plan assets were 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):
BalanceLevel 1Level 2
Cash and cash equivalents$1,824 $1,824 $— 
Equity holdings:
U.S. companies88,083 88,083 — 
Foreign companies27,430 27,430 — 
Pooled equity funds53,987 40,785 13,202 
169,500 156,298 13,202 
Fixed-income holdings:
U.S. Treasuries415 415 — 
Federal agencies39 — 39 
Corporate bonds2,388 — 2,388 
Pooled fixed income funds55,119 14,720 40,399 
Foreign bonds296 — 296 
Municipal bonds34 — 34 
58,291 15,135 43,156 
Plan assets subject to fair value leveling229,615 $173,257 $56,358 
Plan assets measured at net asset value:
Limited partnership interests$14,537 
Real estate investments338 
$244,490 
For 2026, the Company’s overall expected long-term rate of return is 6.30% for pension assets and 7.40% 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:
20252024
Healthcare cost trend rate for next year6.27 %6.89 %
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 rate20332033
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 2026. The Company expects that 2026 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, 2025 were as follows (in thousands):
Pension BenefitsSERPA BenefitsPostretirement Healthcare Benefits
2026$119,495 $1,278 $16,203 
2027$119,851 $1,102 $16,330 
2028$117,972 $941 $16,601 
2029$119,046 $818 $16,673 
2030$119,558 $802 $16,418 
2031-2035$573,837 $3,394 $76,352 
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 $27.8 million, $32.4 million and $30.5 million during 2025, 2024 and 2023, respectively related to the contributions.