NEWS & EVENTS

Harley-Davidson, Inc. Reports Record Second Quarter Sales and Earnings

07/11/2001

Additional Motorcycle Production Facility to be Located in York, PA

Milwaukee, Wis., July 11, 2001 -- Harley-Davidson, Inc. (NYSE: HDI) today announced record sales and earnings for its second quarter ended June 24, 2001. The Company's second quarter sales were $850.9 million, an increase of 12.7 percent over the same period last year. Diluted earnings per share for the second quarter were 38 cents, a 28.3 percent increase compared to last year.

"We've delivered another record quarter, led by strong motorcycle sales," said Jeffrey L. Bleustein, chairman and chief executive officer of Harley-Davidson, Inc. "Our consistent performance, as well as our ability to bring new products and services to market, reinforces our confidence in the Company's long-term growth. In fact, today we are finalizing plans to invest $145 million in a new 350,000-square-foot manufacturing facility in York, Pennsylvania."

Motorcycles and Related Products Segment - Second Quarter Results Second quarter sales of Harley-Davidson® motorcycles were $664.0 million, an increase of 15.1 percent over last year. Shipments of Harley-Davidson motorcycles in the second quarter totaled 60,161 units, up 6,832 units or 12.8 percent over last year. As a result of continued manufacturing success and product demand, the Company is increasing its 2001 target for Harley-Davidson motorcycles to 231,000 units, or a 12.9 percent increase over the prior year. The Company has set a goal of 256,000 Harley-Davidson units for 2002, a 10.8 percent increase over the 2001 goal.

Second quarter sales of Parts and Accessories (P&A), which consist of Genuine Motor Parts and Genuine Motor Accessories, totaled $138.0 million, a 13.9 percent increase from the year-ago quarter.

General Merchandise second quarter sales, which consist of MotorClothesä apparel and collectibles, totaled $33.2 million, down 8.1 percent over the same period last year. Harley-Davidson's annual sales meeting is being held nearly three weeks earlier than in 2000, and the Company believes the timing of this event has had an impact on dealer orders during the second quarter.

On a longer-term basis, the Company expects the growth rate for P&A revenues to increase slightly faster than Harley-Davidson's motorcycle unit growth rate. General Merchandise is expected to grow slightly slower than the motorcycle unit growth rate. Second quarter gross margin was 34.7 percent of revenue, up from 34.1 percent of revenue last year. A stronger mix of higher margin P&A categories as well as slightly improved General Merchandise margins accounted for much of the improvement. Second quarter operating margin for the Motorcycles and Related Products Segment was 18.1 percent of revenue, compared to 16.9 percent of revenue for the same period last year. The Company's gross margin improvement has driven operating margin improvement. Additionally, last year's second quarter operating expenses were negatively impacted by a $3 million recall reserve at the Buell Motorcycle Company subsidiary.

Harley-Davidson Retail Data

"For the first half of the year, U.S. registrations of Harley-Davidson motorcycles were up nearly 12 percent in a growing market, as we continue to fulfill the dreams of our customers," said Bleustein. Through June, retail registrations of Harley-Davidson motorcycles in Europe were down 9.9 percent, in a European heavyweight motorcycle market that has declined. The Company believes the softer European economy has caused a weakened heavyweight market. Through June, Harley-Davidson sales in the Asia-Pacific region were up 3.9 percent in a generally flat market. Although industry data through June is not yet available, the most recent market data is listed in the accompanying table.

Financial Services Segment - Second Quarter Results Harley-Davidson Financial Services, Inc. (HDFS) reported second quarter operating income of $23.1 million, up from $11.3 million in the year-ago quarter. The subsidiary's performance was driven by strong acceptance of its new consumer financing program, declining interest rates and strength across all product lines. The Company expects HDFS's total year 2001 operating income to be 55 to 60 percent higher than 2000 performance.

Harley-Davidson, Inc. - Six Month Results For the six month period, sales totaled $1.62 billion, a 12.7 percent increase over the year-ago period. Diluted earnings per share were 68 cents, an increase of 22.2 percent compared to the first six months last year. When the sale of the Harley-Davidson® Chrome VISA® card in first quarter 2000 is excluded, diluted earnings per share increased 27.3 percent.

Through the first six months of this year, Harley-Davidson motorcycle revenue was $1.27 billion, a 14.1 percent increase. For the first six months of 2001, P&A revenue totaled $246.2 million, a 14.0 percent increase, while General Merchandise revenue totaled $72.3 million, a 4.0 percent increase compared with the same period in 2000. For the first six months, HDFS operating income was $28.1 million, a $13.5 million increase.

Harley-Davidson, Inc. is the parent company for the group of companies doing business as Harley-Davidson Motor Company, Buell Motorcycle Company and Harley-Davidson Financial Services, Inc. Harley-Davidson Motor Company, the only major U.S.-based motorcycle manufacturer, produces heavyweight motorcycles and offers a complete line of motorcycle parts, accessories, apparel, and general merchandise. Buell Motorcycle Company produces sport and sport-touring motorcycles. Harley-Davidson Financial Services, Inc. provides wholesale and retail financing and insurance programs to Harley-Davidson dealers and customers.

Forward-Looking Statements

The Company intends that certain matters discussed in this release are "forward-looking statements" intended to qualify for the safe harbor from liability established by the Private Securities Litigation Reform Act of 1995. These forward-looking statements can generally be identified as such because the context of the statement will include words such as the Company "believes," "anticipates," "expects" or "estimates" or words of similar meaning. Similarly, statements that describe future plans, objectives, outlooks, targets or goals are also forward-looking statements. Such forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from those anticipated as of the date of this release. Certain of such risks and uncertainties are described below. Shareholders, potential investors, and other readers are urged to consider these factors in evaluating the forward-looking statements and cautioned not to place undue reliance on such forward-looking statements. The forward-looking statements included in this release are only made as of the date of this release, and the Company undertakes no obligation to publicly update such forward-looking statements to reflect subsequent events or circumstances.

The Company's ability to reach targeted production objectives and maintain revenue and income growth depends upon, among other factors, the Company's ability to (i) continue to realize production efficiencies at its production facilities through the implementation of innovative manufacturing techniques and other means, (ii) successfully implement production capacity increases in its facilities, (iii) successfully introduce new products and services, (iv) avoid unexpected P&A /general merchandise supplier backorders, (v) sell all of the motorcycles it has the capacity to produce, (vi) continue to develop the capacity of its distributor and dealer network, (vii) avoid unexpected changes in the regulatory environment for its products, and (viii) successfully adjust to foreign currency exchange rate fluctuations. In addition, the Company could experience delays in the operation of manufacturing facilities, work stoppages, difficulty with suppliers, natural causes or other factors. Risk factors are also disclosed in documents previously filed by the Company with the Securities and Exchange Commission.