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Harley-Davidson, Inc. Reports Record Second Quarter Sales and Earnings; Additional Motorcycle Production Facility to be Located in York, Pa.

Harley-Davidson, Inc. Reports Record Second Quarter Sales and Earnings; Additional Motorcycle Production Facility to be Located in York, Pa.

    MILWAUKEE, July 11 Harley-Davidson, Inc. 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
    "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,

    Motorcycles and Related Products Segment -- Second Quarter Results
    Second quarter sales of Harley-Davidson(R) 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
MotorClothes(TM) 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(R) Chrome VISA(R) 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
    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.

                            Harley-Davidson, Inc.
                 Condensed Consolidated Statements of Income
                   (In thousands, except per share amounts)

                               Three Months Ended         Six Months Ended
                              June 24,    June 25,     June 24,      June 25,
                                2001       2000          2001          2000

    Net sales                $850,944    $754,973    $1,618,221    $1,436,086
    Gross profit              294,953     257,146      588,070       488,451
    Operating income
      Motorcycles and
       related products       153,998     127,228       289,554       239,868
      Financial services       23,086     11,282        28,065        14,614
      Corporate expenses       (3,974)     (2,259)      (6,776)       (5,264)
    Total operating income    173,110     136,251       310,843       249,218
    Interest income, net        4,794      3,424         9,593         6,296
    Gain on sale of credit
     card business                 --          --            --        18,915
    Other income (expense), net   (17)        189          (937)         (136)
    Income before provision
     for taxes                177,887     139,864       319,499       274,293
    Provision for income taxes 62,260      49,277       111,824       103,479
    Net income               $115,627     $90,587      $207,675      $170,814

    Earnings per common share:
      Basic                      $.38        $.30          $.69          $.56
      Diluted                    $.38        $.29          $.68          $.55

    Weighted-average common shares:
      Basic                   302,621     303,337       302,285       303,123
      Diluted                 306,569     308,104       306,330       307,914

                            Harley-Davidson, Inc.
                    Condensed Consolidated Balance Sheets
                                (In thousands)

                                      June 24,        Dec 31,      June 25,
                                        2001           2000          2000
                                    (Unaudited)                  (Unaudited)
    Current assets:
      Cash and cash equivalents      $546,656        $419,736      $297,917
      Accounts receivable, net        136,781          98,311       115,743
      Finance receivables, net        545,883         530,859       451,983
      Inventories                     177,678         191,931       157,415
      Other current assets             63,025          56,427        50,760
    Total current assets            1,470,023       1,297,264     1,073,818
      Finance receivables, net        452,247         234,091       329,082
      Other long-term assets          920,031         905,049       782,326

    Total assets                   $2,842,301      $2,436,404    $2,185,226

      Current liabilities:
        Current portion of
         finance debt
                                     $192,044         $89,509       $48,163
        Other current liabilities     477,504         408,234       422,066
      Total current liabilities       669,548         497,743       470,229
      Finance debt                    355,000         355,000       280,000
      Other long-term liabilities     101,911          97,340        81,749
      Postretirement health
       care benefits                   85,148          80,666        78,222
      Shareholders' equity          1,630,694       1,405,655     1,275,026

    Total liabilities and
     shareholders' equity          $2,842,301      $2,436,404    $2,185,226

                            Harley-Davidson, Inc.
                           Net Sales and Motorcycle
                                Shipment Data

                            Three Months Ended         Six Months Ended
                          June 24,       June 25,    June 24,     June 25,
                            2001           2000        2001         2000
    NET SALES (in thousands)
     motorcycles          $663,994      $576,949   $1,268,604    $1,112,199
    Buell(R) motorcycles    15,739        20,188       30,903        36,950
    Parts & Accessories    137,984       121,101      246,229       215,967
    General Merchandise     33,162        36,067       72,333        69,562
    Other                       65           668          152         1,408
    Total net sales       $850,944      $754,973   $1,618,221    $1,436,086

    Motorcycle shipments:
      United States         48,072        42,252       88,339        78,576
      Export                12,089        11,077       25,976        23,810
    Total                   60,161        53,329      114,315       102,386

    Motorcycle product mix:
      Touring                 28.4%         29.0%        27.7%         27.9%
      Custom                  50.2          49.4         51.0          50.6
      Sportster(R)            21.4          21.6         21.3          21.5
    Total                    100.0         100.0        100.0         100.0

    Motorcycle shipments:
      Buell (excluding
       Blast(TM))            1,757         1,955        3,350         3,802
      Buell Blast              711         1,325        1,565         1,816
                             2,468         3,280        4,915         5,618

                      Year-to-date Heavyweight (651+ cc)
                   Motorcycle Retail Registrations (Units),
                     2001, data through month indicated.

                                       2001            2000        % change
    United States
    -- H-D (June)                     93,851          83,691         +11.8
    -- Industry (May)                182,002         159,198         +14.3

    -- H-D (June)                     13,038          14,466          -9.9
    -- Industry (April)              117,760         128,176          -8.1

    -- H-D (June)                      5,822           5,603          +3.9
    -- Industry (March)               12,840          12,891          -0.4

    Only Harley-Davidson(R) motorcycles are included in the Harley-Davidson
(H-D) data.
    Sources:  Motorcycle Industry Council, Giral S.A., JAMA, ABS, Company