HARLEY-DAVIDSON, INC.HOG
HARLEY-DAVIDSON, INC. Fair Value Disclosure
Fair Value
The following tables present the fair values of certain of the Company's assets and liabilities within the fair value hierarchy as defined in Note 1. Refer to Note 14 for further discussion regarding the Company's pension plan assets measured at fair value.
Recurring Fair Value Measurements – The Company’s assets and liabilities measured at fair value on a recurring basis as of December 31, were as follows (in thousands):
| 2025 | |||||||||||||||||||||||
| Balance | Level 1 | Level 2 | Level 3 | ||||||||||||||||||||
| Assets: | |||||||||||||||||||||||
| Cash equivalents | $ | 2,693,739 | $ | 2,553,850 | $ | 139,889 | $ | — | |||||||||||||||
| Marketable securities | 31,513 | 31,513 | — | — | |||||||||||||||||||
| Derivative financial instruments | 108,435 | — | 108,435 | — | |||||||||||||||||||
| Investments in Retained Notes | 68,130 | — | 68,130 | — | |||||||||||||||||||
| Investments in Residual Interests | 10,156 | — | — | 10,156 | |||||||||||||||||||
| 2,911,973 | 2,585,363 | 316,454 | 10,156 | ||||||||||||||||||||
| Liabilities: | |||||||||||||||||||||||
| Derivative financial instruments | $ | 6,494 | $ | — | $ | 6,494 | $ | — | |||||||||||||||
| LiveWire warrants | 1,901 | 1,244 | 657 | — | |||||||||||||||||||
| $ | 8,395 | $ | 1,244 | $ | 7,151 | $ | — | ||||||||||||||||
| 2024 | |||||||||||||||||||||||
| Balance | Level 1 | Level 2 | Level 3 | ||||||||||||||||||||
| Assets: | |||||||||||||||||||||||
| Cash equivalents | $ | 1,275,561 | $ | 1,000,933 | $ | 274,628 | $ | — | |||||||||||||||
| Marketable securities | 32,070 | 32,070 | — | — | |||||||||||||||||||
| Derivative financial instruments | 19,839 | — | 19,839 | — | |||||||||||||||||||
| $ | 1,327,470 | $ | 1,033,003 | $ | 294,467 | $ | — | ||||||||||||||||
| Liabilities: | |||||||||||||||||||||||
| Derivative financial instruments | $ | 35,020 | $ | — | $ | 35,020 | $ | — | |||||||||||||||
| LiveWire warrants | 1,549 | 1,013 | 536 | — | |||||||||||||||||||
| $ | 36,569 | $ | 1,013 | $ | 35,556 | $ | — | ||||||||||||||||
The following table presents the reconciliation for all Level 3 assets measured at fair value on a recurring basis (in thousands):
Investments in Residual Interests | ||||||||
Fair value at December 31, 2024(a) | $ | — | ||||||
Initial Fair Value | 12,348 | |||||||
| Investment Proceeds | (2,336) | |||||||
| 81 | ||||||||
| 63 | ||||||||
Fair value at December 31, 2025 | $ | 10,156 | ||||||
(a) No assets or liabilities were measured using Level 3 inputs as of December 31, 2024 or 2023 so the prior period reconciliation has been excluded.
Investments in Retained Notes and Residual Interests – As discussed in Note 11 of the Notes to Consolidated financial statements, the Company recorded investments in Retained Notes and Residual Interests in off-balance sheet VIEs. The initial fair value of the Retained Notes was $88.6 million and was estimated based on pricing currently available for transactions with similar terms and maturities (Level 2 inputs). The initial fair value of the Residual Interests was $12.3 million based on a discounted cash flow calculation using the key assumptions below (Level 3 inputs). Both investments are classified as AFS securities and, accordingly, are held at fair value remeasured through OCI in the Statements of comprehensive income.
The initial and current period fair values of the Residual Interests were calculated using the following ranges of key assumptions:
Initial Fair Value | December 31, 2025 | ||||||||||
Recovery rate on defaulted receivables | 50.00% | 50.00% | |||||||||
Prepayment speed | 1.40% | 1.40% | |||||||||
Expected cumulative lifetime losses | 1.56% - 2.65% | 2.01%- 3.21% | |||||||||
Weighted-average life (in years) | 0.85 - 2.49 | 0.96 - 2.46 | |||||||||
Residual cash flows discount rate | 15.00% | 15.00% | |||||||||
The weighted average of the key assumptions utilized in calculating the initial and current period fair values of the Residual Interests were as follows:
| Initial Fair Value | December 31, 2025 | ||||||||||
Recovery rate on defaulted receivables | 50.00% | 50.00% | |||||||||
Prepayment speed | 1.40% | 1.40% | |||||||||
Expected cumulative lifetime losses | 2.33% | 2.47% | |||||||||
Weighted-average life (in years) | 1.91 | 1.87 | |||||||||
Residual cash flows discount rate | 15.00% | 15.00% | |||||||||
Additionally, the fair value assumes that the Company, as servicer, does not exercise its option to purchase the underlying receivables at the earliest distribution date on which it is permitted to do so.
The sensitivity of the fair value to immediate adverse changes in the key assumptions for the investment in Residual Interests at December 31, 2025 is as follows (dollars in thousands):
| December 31, 2025 | |||||
Fair value of Residual Interests | $ | 10,156 | |||
Prepayment speed | |||||
Impact on fair value of a 1.5% absolute prepayment speed adverse change | $ | (94) | |||
Impact on fair value of a 1.6% absolute prepayment speed adverse change | $ | (186) | |||
Expected cumulative lifetime losses | |||||
Impact on fair value of a 25 bps adverse change | $ | (183) | |||
Impact on fair value of a 50 bps adverse change | $ | (365) | |||
Residual cash flows discount rate | |||||
Impact on fair value of a 25 bps adverse change | $ | (44) | |||
Impact on fair value of a 50 bps adverse change | $ | (88) | |||
The sensitivity of the fair value to immediate adverse changes in the key assumptions for the investment in Retained Notes at December 31, 2025 is as follows (dollars in thousands):
| December 31, 2025 | |||||
Fair value of Retained Notes | $ | 68,130 | |||
Weighted-average life (in years) | 1.86 | ||||
Discount rate | |||||
Impact on fair value of a 50 bps adverse change | $ | (300) | |||
Impact on fair value of a 100 bps adverse change | $ | (613) | |||
These sensitivities are hypothetical and should not be considered to be predictive of future performance. Changes in fair value generally cannot be extrapolated because the relationship of change in assumption to change in fair value may not be linear. Also, in these tables, the effect of a variation in a particular assumption on the fair value of the retained interest is calculated independently from any change in another assumption. In reality, changes in one factor may contribute to changes in another, which may magnify or counteract the sensitivities. Furthermore, the estimated fair values as disclosed should not be considered indicative of future earnings on these assets.
The table below summarizes the unrealized positions for Residual Interests and Retained Notes (in thousands):
| December 31, 2025 | ||||||||||||||||||||
Amortized Cost | Unrealized Gains | Fair Value | ||||||||||||||||||
Residual Interests | $ | 10,109 | $ | 47 | $ | 10,156 | ||||||||||||||
Retained Notes | 68,001 | 129 | $ | 68,130 | ||||||||||||||||
Total Beneficial Interests | $ | 78,110 | $ | 176 | $ | 78,286 | ||||||||||||||
The table below provides information regarding certain cash flows that were received from all motorcycle loan off-balance sheet securitized trusts during the twelve months ended December 31, 2025 (in thousands):
Proceeds from sale of residual interests (a) | $ | 234,617 | |||
Servicing, late, and ancillary fees received | 8,521 | ||||
Collections of retained securitization beneficial interests | $ | 23,722 | |||
(a) Excludes reduction of $109.2 million restricted cash deconsolidated. Refer to Note 6 to the Notes to Consolidated financial statements for further information.
The Company uses the market approach to derive the fair value for its derivative financial instruments (Level 2). Foreign currency contracts, commodity contracts, and cross-currency swaps are valued using quoted forward rates and prices; interest rate caps are valued using quoted interest rates and yield curves.
LiveWire has outstanding warrants to purchase the common stock of LiveWire Group, Inc. comprised of public (Level 1) and private placement (Level 2) warrants. The private placement warrants have terms and provisions that are economically similar to those of the public warrants. The fair value of the public and private placement warrants is determined using the closing market price of the public warrants. The warrants entitle the registered warrant holder to purchase one share of LiveWire common stock at a price of $11.50 per share and expire five years from the completion of the LiveWire business combination that occurred in 2022.
Nonrecurring Fair Value Measurements – Repossessed inventory was $4.2 million and $27.1 million at December 31, 2025 and 2024, respectively, for which the fair value adjustment was an increase of $2.5 million and a decrease of $18.4 million, respectively. Fair value is estimated using Level 2 inputs based on the recent market values of repossessed inventory.
Fair Value of Financial Instruments Measured at Cost – The carrying value of the Company’s Cash and cash equivalents and Restricted cash approximates their fair values. The fair value and carrying value of the Company’s remaining financial instruments that are measured at cost or amortized cost at December 31, were as follows (in thousands):
| 2025 | 2024 | ||||||||||||||||||||||
| Fair Value | Carrying Value | Fair Value | Carrying Value | ||||||||||||||||||||
| Assets: | |||||||||||||||||||||||
Finance receivables held for sale, net | $ | 268,111 | $ | 264,238 | $ | — | $ | — | |||||||||||||||
Finance receivables held for investment, net (a) | $ | 1,665,453 | $ | 1,653,372 | $ | 7,342,319 | $ | 7,288,294 | |||||||||||||||
| Liabilities: | |||||||||||||||||||||||
| Deposits, net | $ | 537,136 | $ | 536,644 | $ | 555,902 | $ | 550,586 | |||||||||||||||
| Debt: | |||||||||||||||||||||||
| Unsecured commercial paper | $ | 497,776 | $ | 497,776 | $ | 640,204 | $ | 640,204 | |||||||||||||||
| Asset-backed U.S. commercial paper conduit facilities | $ | — | $ | — | $ | 431,846 | $ | 431,846 | |||||||||||||||
| Asset-backed Canadian commercial paper conduit facility | $ | — | $ | — | $ | 77,381 | $ | 77,381 | |||||||||||||||
| Asset-backed securitization debt | $ | — | $ | — | $ | 1,955,006 | $ | 1,950,138 | |||||||||||||||
| Medium-term notes | $ | 2,195,390 | $ | 2,171,963 | $ | 3,127,710 | $ | 3,114,013 | |||||||||||||||
| Senior notes | $ | 241,057 | $ | 297,278 | $ | 683,624 | $ | 746,800 | |||||||||||||||
(a) Excludes $47.6 million estimated recovery amount included in the allowance for credit losses. Refer to Note 6 of the Notes to the Consolidated financial statements for additional information.
Finance Receivables held for sale, net - The carrying value of retail finance receivables held for sale is the lower of amortized cost or fair value. The fair value of finance receivables held for sale was based on the estimated selling price of the receivables (Level 2 inputs).
Finance Receivables held for investment, net – The carrying value of retail and wholesale finance receivables held for investment is amortized cost less an allowance for credit losses. The fair value of retail finance receivables is generally calculated by discounting future cash flows using an estimated discount rate that reflects current credit, interest rate and prepayment risks associated with similar types of instruments. Fair value is determined based on Level 3 inputs. The amortized cost basis of wholesale finance receivables approximates fair value because they are generally either short-term or have interest rates that adjust with changes in market interest rates.
Deposits, net – The carrying value of deposits is amortized cost, net of fees. The fair value of deposits is estimated based upon rates currently available for deposits with similar terms and maturities. Fair value is calculated using Level 3 inputs.
Debt – The carrying value of debt is generally cost, net of unamortized discounts and debt issuance costs. The fair value of unsecured commercial paper is calculated using Level 2 inputs and approximates carrying value due to its short maturity. The fair value of debt provided under the term loan, the U.S. Conduit Facility and the Canadian Conduit Facility is calculated using Level 2 inputs and approximates carrying value since the interest rates charged under the facilities are tied directly to market rates and fluctuate as market rates change. The fair values of the medium-term notes and senior notes are estimated based upon rates currently available for debt with similar terms and remaining maturities (Level 2 inputs). The fair value of the fixed-rate debt related to on-balance sheet asset-backed securitization transactions is estimated based on pricing currently available for transactions with similar terms and maturities (Level 2 inputs). The fair value of the floating-rate debt related to on-balance sheet asset-backed securitization transactions is calculated using Level 2 inputs and approximates carrying value since the interest rates charged are tied directly to market rates and fluctuate as market rates change.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 26, 2026 | Showing above |
| 2024 | Feb 26, 2025 | |
| 2023 | Feb 23, 2024 | |
| 2022 | Feb 24, 2023 | |
| 2021 | Feb 25, 2022 | |
| 2020 | Feb 23, 2021 | |
| 2019 | Feb 19, 2020 | |
| 2018 | Feb 28, 2019 | |
| 2017 | Feb 21, 2018 | |
| 2016 | Feb 21, 2017 | |
| 2015 | Feb 18, 2016 | |
About Fair Value Disclosures
Fair value disclosures classify all assets and liabilities measured at fair value into a three-level hierarchy: Level 1 (quoted market prices), Level 2 (observable inputs like yield curves), and Level 3 (unobservable inputs requiring management estimates). The proportion of Level 3 assets directly reflects how much of the balance sheet depends on internal models rather than market evidence.
Key signals: a growing Level 3 balance relative to total fair-value assets increases valuation uncertainty and earnings volatility risk. Watch for transfers between levels — assets moving from Level 2 to Level 3 often signal deteriorating market liquidity. Unrealized gains and losses on Level 3 positions flow through earnings or other comprehensive income, so large swings deserve scrutiny. For financial institutions, examine the sensitivity disclosures that show how Level 3 valuations change under alternative assumptions. Compare the fair value of debt against its carrying amount to gauge hidden leverage.