Harley-Davidson, Inc. Posts Record Second Quarter/First Half Sales and Earnings

14 July 1997

     MILWAUKEE, Wis., July 14 -- Harley-Davidson, Inc.
today announced record sales and earnings for its second quarter
and first half ended June 29, 1997.
     For the quarter, net sales totaled $444.1 million, a $51.3 million or
13.1 percent increase compared to the year-ago quarter.  Net income and
earnings per share were $49.2 million and 65 cents on 75.8 million shares
outstanding versus $39.9 million and 53 cents on 75.5 million shares
outstanding, increases of 23.1 percent and 22.6 percent, respectively.
     "This is our 29th consecutive quarter of record revenues, and once again
earnings have grown faster than revenue," said Rich Teerlink, chairman of
Harley-Davidson, Inc.  "Jeff Bleustein was instrumental in developing our
long-term strategic plan which calls for continued growth in revenue and
earnings, and in his new role as president and chief executive officer of
Harley-Davidson, Inc, he will have the opportunity to implement that plan."
     "This quarter's record performance was driven primarily by increased
motorcycle unit shipments, improved operating efficiencies, and a favorable
product and market mix compared to the year-ago quarter," said Bleustein.
Second quarter Harley-Davidson motorcycle unit shipments totaled 33,965 units,
up 3,113 units or 10.1 percent from a year ago.  Parts and Accessories sales
totaled $63.0 million, a $3.2 million or 5.3 percent increase.  General
Merchandise sales totaled $19.4 million, a $0.8 million or 4.5 percent
increase.
     "Our daily production averaged 535 units for the second quarter, as
scheduled," said Bleustein.  "Our manufacturing facilities continue to improve
their quality, predictability, and operating efficiencies.  As a result, we
have increased our 1997 motorcycle production target to 131,000 units, 12,000
units more than our 1996 production and an increase of 1,000 units over our
prior target.  To achieve this higher production, we have increased our
production rate starting in the third quarter and are scheduled to average
540 units per day."
     Second quarter gross profit totaled $150.3 million or 33.8 percent of
revenue, compared to $124.9 million or 31.8 percent of revenue in 1996.  "The
gross margin improvement was primarily due to operating efficiencies and a
favorable product and market mix," continued Bleustein.  "The operating
efficiencies are driven by partnering efforts with our employees and
productivity improvements realized from investments in our plants.  Motorcycle
shipments had a greater mix of custom motorcycles as well as a greater mix of
international units sold through wholly owned distributors."
     Second quarter operating income for the Motorcycle segment was
$72.5 million or 16.3 percent of revenue, compared to $63.1 million or
16.1 percent of revenue in 1996.  "Operating margins improved slightly even as
we continued our increased investment in information systems and product
development," said Bleustein.  "We are currently in the midst of the most
extensive new product development program in the Company's history."

     Market Review (Harley-Davidson motorcycles)
     The most current data (through May) show that in the U.S. 651+cc market,
Harley-Davidson holds a 46.6 percent market share, compared to 44.7 percent in
the year-ago period.  The U.S. 651+cc motorcycle market grew at a 9.5 percent
rate year-to-date.  Registrations for Harley-Davidson motorcycles in the U.S.
were up 14.1 percent through May.  "It's still our goal to narrow the gap
between demand and supply so our customers do not have to wait up to a year or
more for a new motorcycle," said Bleustein.
     European data (through May) show Harley-Davidson holding a 5.8 percent
share of the 651+cc market, down from 6.5 percent in the year-ago period.  The
European 651+cc market grew at a 5.3 percent rate year-to-date.
Harley-Davidson motorcycle registrations were down 6.5 percent compared to
last year.  "We now realize that the near-term growth in Europe for
Harley-Davidson motorcycles will be slower than we originally thought," said
Bleustein.  "Over the past two years we have upgraded our infrastructure in
Europe by installing new information systems, improving our distribution, and
developing a European management team.  Through our close relationships with
our distributors, dealers and customers, we have learned that in addition to
continuing to upgrade our infrastructure, we will need to adapt our products
more specifically to European markets.  Some of these initiatives will take
longer than others, but we remain confident that Europe offers long-term
growth opportunities for Harley-Davidson."

     Parts and Accessories
     Second quarter Genuine Motor Parts and Genuine Motor Accessories (P&A)
sales totaled $63.0 million, a $3.2 million or 5.3 percent increase from the
year-ago quarter.  "Second quarter P&A sales were a little lower than we
anticipated, but our long-term goal for P&A growth to approximate the growth
rate in motorcycle revenue remains unchanged," explained Bleustein.  "At our
annual dealer meeting at the end of July, we will have the largest P&A new
product introduction in the Company's history."

     General Merchandise
     General Merchandise, which consists of MotorClothes apparel and
collectibles, sales totaled $19.4 million, up $0.8 million or 4.5 percent from
the year-ago quarter.  "We were pleased with the second quarter General
Merchandise sales, but we remain in a rebuilding mode for the rest of 1997,"
said Bleustein.

     Buell
     Buell Distribution Corporation, a wholly-owned subsidiary of
Harley-Davidson, Inc., and the exclusive distributor of Buell Motorcycle
Company (a 49 percent owned subsidiary), reported second quarter sales of
1,020 units or $9.6 million, versus 899 units or $7.6 million in the year-ago
quarter.  "Buell is meeting our expectations and the brand is building a good
following," Bleustein said. "Buell plans to broaden its exposure this year by
providing over 20,000 demo rides to potential customers."

     Eaglemark Financial Services
     Eaglemark Financial Services, Inc. (Eaglemark), a subsidiary of
Harley-Davidson, Inc., reported second quarter operating income of
$3.3 million versus $2.0 million in the year-ago quarter, a 68.1 percent
increase.  "The significant increase in operating income was driven by retail
products and services," said Bleustein.  "Eaglemark increased their U.S.
market share of retail installment lending on new Harley-Davidson motorcycles
to 19 percent year-to-date, from 16 percent in the year-ago period."

     First Half Results
     For the six month period, net sales totaled $871.2 million, a
$107.3 million or 14.1 percent increase over the year-ago period.  Net income
and earnings per share were $89.5 million and $1.18 on 75.8 million shares
outstanding versus $72.9 million and 97 cents on 75.3 million shares
outstanding, increases of 22.7 percent and 21.6 percent, respectively.
     For the first six months, P&A revenue totaled $117.5 million, a
$10.4 million or 9.7 percent increase, and General Merchandise revenue totaled
$43.8 million, a $4.4 million or 11.1 percent in crease over the year-ago
period.

     Harley-Davidson Motor Company, the only major U.S.-based motorcycle
manufacturer, produces heavyweight motorcycles and a complete line of
motorcycle parts, accessories, apparel, and general merchandise.  Eaglemark
Financial Services, Inc. provides wholesale and retail financing, insurance
and credit card programs to Harley-Davidson dealers and customers and similar
programs for other leisure products manufacturers.


    TABLES FOLLOW

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

                              Three Months Ended          Six Months Ended
                             June 29,    June 30,       June 29,     June 30,
                              1997         1996          1997         1996

    Net sales             $444,085      $392,804     $871,180      $763,855
    Gross profit           150,319       124,861      288,533       240,638
    Operating income        73,790        63,109      136,438       117,134
    Interest income          2,092           835        3,666           430
    Other income/(expense)   2,188         (532)        2,003       (1,781)
    Income before provision
     for taxes              78,070        63,412      142,107       115,783
    Provision for income
     taxes                  28,886        23,464       52,581        42,841
    Net income            $ 49,184      $ 39,948     $ 89,526      $ 72,942
    Earnings per share        $.65          $.53        $1.18          $.97
    Shares outstanding      75,779        75,475       75,820        75,294


                                              Segment Data
                              Three Months Ended           Six Months Ended
                             June 29,      June 30,     June 29,      June 30,
                              1997          1996          1997          1996
    HARLEY-DAVIDSON UNITS
    Motorcycle shipments:
    United States           25,629        21,431       48,211        42,474
    Export                   8,336         9,421       18,614        18,449
    Total                   33,965        30,852       66,825        60,923

    BUELL UNITS
    Motorcycle shipments     1,020           899        2,107         1,421

    OPERATING INCOME (Thousands)
    Motorcycles and Related
     Products              $72,465       $63,144     $135,481      $117,914
    Financial Services       3,346         1,990        5,565         3,722
    Corporate expenses     (2,021)       (2,025)      (4,608)       (4,502)
    Total                  $73,790       $63,109     $136,438      $117,134

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

                                   June 29,                June 30,
                                    1997                    1996
                                  (unaudited)            (unaudited)
    Assets
      Current assets:
        Cash and cash equivalents$144,474                 $96,273
        Accounts receivable       198,707                 159,256
        Inventories               101,437                  80,316
        Other current assets       40,898                  40,404
        Net assets from discontinued
         operations                     0                  15,752
          Total current assets    485,516                 392,001
        Finance subsidiary
         receivables, net         396,290                 251,542
        Other long-term assets    591,567                 434,727
        Net assets from discontinued
         operations                     0                  26,105
          Total assets         $1,473,373              $1,104,375
    Liabilities and stockholders'
     equity
      Current liabilities:
        Notes payable and
         current maturities           $61                  $1,197
        Other current liabilities 288,060                 234,553
          Total current liabilities 288,121               235,750
        Finance subsidiary debt   306,325                 180,089
        Other long-term liabilities70,021                  51,006
        Postretirement health care
         benefits                  67,167                  64,514
        Total stockholders' equity741,739                 573,016
          Total liabilities and
           stockholders' equity $1,473,373             $1,104,375

SOURCE  Harley-Davidson, Inc.