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Harley-Davidson Reports Record Fourth Quarter and 17th Consecutive Record Year

Harley-Davidson Reports Record Fourth Quarter and 17th Consecutive Record Year

            Net Income of $580 Million on Revenue of $4.1 Billion

    MILWAUKEE, Jan. 21, 2003;Harley-Davidson, Inc. today announced record revenue and earnings
for its fourth quarter and year ended December 31, 2002.  Revenue for the
quarter was $1.03 billion compared with $905.9 million in the year-ago
quarter, a 13.3 percent increase.  Net income for the quarter was
$150.9 million, an increase of 27.5 percent over the year ago quarter.  Fourth
quarter diluted earnings per share (EPS) were 49 cents, a 25.6 percent
increase compared with last year's 39 cents.  Revenue for the full year was
$4.1 billion, compared with $3.4 billion in 2001, a 20.1 percent increase.
Net income for the year was $580.2 million, a 32.5 percent increase versus
last year's $437.7 million, while diluted EPS for the full year were $1.90, a
32.9 percent increase compared with $1.43 in 2001.
    "The year 2002 was our 17th consecutive year of record revenue and net
income," said Jeffrey L. Bleustein, chairman and chief executive officer of
Harley-Davidson, Inc.  "Worldwide retail sales of Harley-Davidson(R)
motorcycles were strong in 2002 with 15.9 percent unit growth over the prior
year.  Strong demand for our products gives us confidence in maintaining our
production goal of 289,000 Harley-Davidson motorcycles for 2003."
    "We believe that the excitement surrounding our 100th Anniversary
celebration combined with the strength of the underlying fundamentals of our
motorcycle business are helping us continue to grow -- even in the face of a
weak global economy.  We are fulfilling the dreams of many new customers as we
welcome them into the Harley-Davidson family," said Bleustein.

    Motorcycles and Related Products Segment -- Fourth Quarter Results
    Revenue from Harley-Davidson motorcycles was $820.3 million, an increase
of $86.1 million or 11.7 percent over the same period last year.  Fourth
quarter shipments of Harley-Davidson motorcycles totaled 65,970 units.  The
Company had four fewer workdays in the fourth quarter of 2002 compared with
2001, yet shipped 2,435 more units, or 3.8 percent more than the same period
last year.
    Revenue from Parts and Accessories (P&A), which consists of Genuine Motor
Parts and Genuine Motor Accessories, totaled $129.9 million, an increase of
$18.5 million, or 16.6 percent over the year-ago quarter.  Revenue from
General Merchandise, which consists of MotorClothes(TM) apparel and
collectibles, totaled $54.8 million, an increase of $7.3 million or 15.4
percent.  Revenue from 100th Anniversary P&A products was $12.7 million and
revenue from General Merchandise associated with the 100th Anniversary was
$12.5 million.  "We are very pleased with sales of our 100th Anniversary
products, but we realize that not all of these were incremental because some
substitution from standard offerings to commemorative anniversary products did
occur," said Bleustein.
    Fourth quarter gross margin was 36.1 percent of revenue, up from 34.5
percent last year.  Gross margin improved primarily due to wholesale
motorcycle price increases, favorable product mix and foreign exchange
    Fourth quarter operating margin for the Motorcycles and Related Products
Segment was 20.7 percent of revenue, which was better than last year's fourth
quarter operating margin of 18.6 percent.  The increase in operating margin
was driven primarily by the increase in gross margin.

    Retail Sales Data
    Harley-Davidson retail motorcycle sales for the year grew in the U.S.
(18.3 percent), Europe (7.6 percent) and Japan (5.9 percent) compared to the
same period last year.  The most recent available data is listed in the
accompanying tables.

    Financial Services Segment -- Fourth Quarter Results
    Harley-Davidson Financial Services, Inc. (HDFS), a subsidiary of Harley-
Davidson, Inc., reported fourth quarter operating income of $25.4 million, up
$8.4 million or 49 percent compared to the year-ago quarter.
    "Harley-Davidson Financial Services had a fantastic quarter and year, both
in financial performance and in helping to make the dream of owning a Harley-
Davidson motorcycle a reality," said Bleustein.  The subsidiary benefited from
the increase in Harley-Davidson's U.S. motorcycle sales, growing acceptance of
its consumer financing program and decreased cost of funds due to lower market
interest rates.

    Pension Plan Activities
    During the quarter, the Company contributed $100 million to its various
pension plans, which brought the total year contribution to $154 million,
compared with a contribution of $19 million in 2001.  The Company also
responded to current market conditions by lowering its pension plan discount
rate from 8.0 to 7.25 percent.

    Cash Flow
    Operations generated cash of more than $779 million in 2002, providing the
Company the ability to invest $324 million in capital expenditures, repurchase
1.1 million shares of company stock for $57 million, pay $41 million in
dividends and contribute $154 million to the Company's pension plans, even as
the Company increased cash and marketable securities by $160 million.

    Twelve Month Results
    For the fiscal year ended 2002, total Harley-Davidson motorcycle shipments
were 263,653 units compared with 234,461 units in 2001, a 12.5 percent
increase.  Harley-Davidson motorcycle revenue was $3.16 billion, an increase
of $489.7 million or 18.3 percent.
    P&A revenue totaled $629.2 million, a 23.5 percent increase, while General
Merchandise revenue totaled $231.5 million, a 41.2 percent increase compared
with 2001.
    On a longer-term basis, the Company expects the growth rate for P&A
revenues to be slightly higher than the Harley-Davidson motorcycle unit growth
rate.  The General Merchandise growth rate is expected to be lower than the
motorcycle unit growth rate over the long term.
    Full year operating income for HDFS was $104.2 million, an increase of
$43.0 million or 70.1 percent compared to 2001.  The Company expects 2003 HDFS
operating income to grow approximately 20 percent over 2002 performance.

    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 meet the targets and expectations noted 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, (viii) successfully adjust to foreign
currency exchange rate fluctuations, (ix) successfully adjust to interest rate
fluctuations, and (x) successfully manage changes in the credit quality of
HDFS's loan portfolio.
    In addition, the Company could experience delays in the operation of
manufacturing facilities as a result of 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

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

                               Three Months Ended       Twelve Months Ended
                               Dec. 31,    Dec. 31,    Dec. 31,     Dec. 31,
                                 2002        2001        2002         2001

    Net revenue              $1,026,532   $905,887    $4,090,970  $3,406,786
    Gross profit                370,626    312,883     1,417,841   1,152,971
    Operating expenses          157,768    144,457       626,720     539,660
      Operating income
       from motorcycles
       & related products       212,858    168,426       791,121     613,311

    Financial services
     income                      53,991     49,064       211,500     181,545
    Financial services
     operating expense           28,634     32,094       107,273     120,272
      Operating income from
       financial services        25,357     16,970       104,227      61,273

    Corporate expenses            3,027      2,944        12,646      12,083
    Total operating income      235,188    182,452       882,702     662,501
    Interest income, net          4,986      3,386        16,541      17,478
    Other income (expense),
     net                         (9,852)    (3,762)      (13,416)     (6,524)
    Income before
      provision for taxes       230,322    182,076       885,827     673,455
    Provision for
     income taxes                79,461     63,726       305,610     235,709
    Net income                 $150,861   $118,350      $580,217    $437,746

    Earnings per common share:
      Basic                       $0.50      $0.39         $1.92       $1.45
      Diluted                     $0.49      $0.39         $1.90       $1.43

    Weighted-average common
      Basic                     302,395    302,343       302,297     302,506
      Diluted                   305,037    305,512       305,158     306,248

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

                                                   Dec. 31,          Dec 31,
                                                     2002             2001

      Current assets:
        Cash and cash equivalents                  $280,928         $439,438
        Marketable securities                       514,800          196,011
        Accounts receivable, net                    108,694          118,843
        Finance receivables, net                    855,771          656,421
        Inventories                                 218,156          181,115
        Other current assets                         88,237           73,436
      Total current assets                        2,066,586        1,665,264
        Finance receivables, net                    589,809          379,335
        Other long-term assets                    1,204,822        1,073,896

    Total assets                                 $3,861,217       $3,118,495

      Current liabilities:
        Accounts payable & accrued expenses        $607,473         $499,059
        Current portion of finance debt             382,579          217,051
      Total current liabilities                     990,052          716,110
      Finance debt                                  380,000          380,000
      Other long-term liabilities                   152,831          176,190
      Postretirement health care benefits           105,419           89,912
      Shareholders' equity                        2,232,915        1,756,283

    Total liabilities and shareholders' equity   $3,861,217       $3,118,495

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

                                                  Dec. 31,           Dec 31,
                                                    2002              2001
    Cash flows from operating activities:
      Net income                                  $580,217          $437,746
      Adjustments to reconcile net income
       to net cash provided by operating
        Depreciation                               175,778           153,061
        Non cash expenses                          123,360           107,534
        Contributions to the pension plans        (153,636)          (19,294)
        Net changes in current assets and
         current liabilities                        53,827            77,761
    Net cash provided by operating activities      779,546           756,808

    Cash flows from investing activities:
      Capital expenditures                        (323,866)         (290,381)
      Finance receivables, net                    (398,768)         (275,754)
      Net increase in marketable securities       (318,171)         (196,011)
      Other, net                                    22,813            (9,361)
    Net cash used in investing activities       (1,017,992)         (771,507)

    Cash flows from financing activities:
      Net increase in finance debt                 165,528           152,542
      Dividends paid                               (41,457)          (35,428)
      Purchase of common stock for treasury        (56,814)         (111,552)
      Issuance of common stock under employee
       stock plans                                  12,679            28,839
    Net cash used in financing activities           79,936            34,401

    Net (decrease) increase in cash and
     cash equivalents                             (158,510)           19,702

    Cash and cash equivalents:
      At beginning of period                       439,438           419,736
      At end of period                            $280,928          $439,438

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

                               Three Months Ended       Twelve Months Ended
                              Dec. 31,    Dec. 31,     Dec. 31,     Dec. 31,
                                2002        2001         2002         2001
    NET REVENUE (in thousands)
     motorcycles              $820,287   $734,183    $3,161,046   $2,671,314
    Buell(R) motorcycles        21,523     12,674        66,949       61,673
    Parts & Accessories        129,929    111,454       629,202      509,623
    General Merchandise         54,788     47,474       231,503      163,909
    Other                            5        102         2,270          267
    Total net sales         $1,026,532   $905,887    $4,090,970   $3,406,786

    Motorcycle shipments:
      United States             54,235     53,616       212,833      186,915
      Export                    11,735      9,919        50,820       47,546
    Total                       65,970     63,535       263,653      234,461

    Motorcycle product mix:
      Touring                   17,911     17,557        70,713       65,403
      Custom                    30,753     30,584       123,761      116,541
      VRSC                       4,760      1,703        18,008        1,703
      Sportster(R)              12,546     13,691        51,171       50,814
    Total                       65,970     63,535       263,653      234,461

    Motorcycle shipments:
      Buell (excluding Blast)    2,519      1,208         6,887        6,436
      Buell Blast                  612        963         4,056        3,489
    Total                        3,131      2,171        10,943        9,925

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

                                      2002            2001         % change
    United States
    - H-D (December)                209,944         177,414         +18.3
    - Industry (December)           442,326         394,325         +12.2

    - H-D * (December)               24,419          22,704          +7.6
    - Industry (November)           296,611         285,785          +3.8

    - H-D (December)                  9,521           8,989          +5.9
    - Industry (November)            43,798          45,470          -3.7

    Only Harley-Davidson(R) motorcycles are included in the Harley-Davidson
(H-D) data.
    H-D * Includes Harley-Davidson sales in all European countries.
    Industry data for Europe includes sales only in Austria, Belgium, France,
Germany, Italy, Netherlands, Spain, Switzerland and United Kingdom.

    Data Sources: (subject to update)
      United States: Motorcycle Industry Council
      Europe: Company reports, Giral S.A.
      Japan: Company reports, Industry sources