View Summary Harley-Davidson Reports Another Record First Quarter


Milwaukee, Wis., April 10, 2001 -- Harley-Davidson, Inc. (NYSE: HDI) today announced record sales and earnings for its first quarter ended March 25, 2001. Revenue for the quarter was $767.3 million compared with $681.1 million in the year-ago quarter, a 12.7 percent increase. First quarter diluted earnings per share (EPS) were 30 cents, a 26.2 percent increase compared with last year's 24 cents, which excludes last year's first quarter gain from the sale of the Harley-Davidson credit card program. The Company's diluted EPS grew 15.4 percent from 26 cents when the credit card sale is included in last year's first quarter.

"We are delighted to announce another outstanding quarter and to report that demand for Harley-Davidson products remains strong during this period of economic uncertainty. We are in very close contact with our market, and our U.S. dealers have demonstrated confidence that 2001 will be another record year for Harley-Davidson® motorcycle sales," said Jeffrey L. Bleustein, chairman and chief executive officer of Harley-Davidson, Inc. "Based on continued demand and our manufacturing success, we are raising the 2001 production target for Harley-Davidson motorcycles to 229,000 units, up from the previous target of 227,000."

"I am also pleased with a new seven-year labor contract that was recently agreed upon with our Wisconsin-based unions. This agreement, together with the multi-year contract we signed with our York, Pennsylvania union last fall, underscores the unique working relationship we have with our employees and supports our long term plan for sustainable growth," added Bleustein.

Motorcycles and Related Products Segment

First quarter sales of Harley-Davidson motorcycles were $604.6 million, an increase of 13.0 percent over the first quarter last year. Shipments of Harley-Davidson motorcycles totaled 54,154, up 5,097 units or 10.4 percent over last year. To support the new full year production target of 229,000 units, Harley-Davidson is increasing its second quarter production target to 59,000 units. First quarter sales of Parts and Accessories (P&A), which consist of Genuine Motor Partsä and Genuine Motor Accessoriesä, totaled $108.2 million, a 14.1 percent increase over the year-ago quarter. General Merchandise first quarter sales, which consist of MotorClothes® apparel and collectibles, totaled $39.2 million, up 16.9 percent over the same period last year.

For the long term, the Company expects P&A revenues to increase somewhat faster than Harley-Davidson's motorcycle unit growth rate and expects General Merchandise to grow slightly slower than the motorcycle unit growth rate.

First quarter gross margin for the Motorcycles and Related Products Segment was 34.3 percent of revenue, up from 34.0 percent of revenue last year, while operating margin was 17.7 percent of revenue, compared to 16.5 percent of revenue for the same period last year. The improvement in operating margin was driven by the improvement in gross margin as well as operating expenses that grew at a slower rate than the Company's revenue.

Harley-Davidson Retail Data

Retail sales figures for Harley-Davidson motorcycles in the United States were up 6.4 percent for the period January through March 2001, when compared to the same period last year, which showed a 25.9 percent increase. Over the previous five years, Harley-Davidson's first quarter retail registration growth rates have fluctuated between 7.0 percent and 32.8 percent. Growth rates in the first quarter have not correlated to annual growth rates, and in fact, annual growth rates over this same period have ranged from 14.2 percent to 23.3 percent.

Financial Services Segment

Harley-Davidson Financial Services, Inc. (HDFS), a subsidiary of Harley-Davidson, Inc., reported first quarter operating income of $5.0 million, up from $3.3 million in the year-ago quarter. HDFS performance was driven by strong acceptance of its new consumer financing rates as well as strength across all product lines. The Company expects HDFS to grow operating income between 25 and 30 percent for 2001.

Income Tax Rate

The Company has reduced its effective income tax rate to 35.0 percent for the first quarter and expects to maintain this improved rate for the remainder of the year.

Company Background

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, (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.