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Harley-Davidson Announces Q1 Results

13 April 1998

Harley-Davidson, Inc. Announces Record First Quarter Earnings and 32nd Consecutive Quarter of Record Sales

    MILWAUKEE, April 13 -- Harley-Davidson, Inc.
today announced record sales and earnings for its first quarter ended
March 29, 1998.  This is Harley-Davidson's 32nd consecutive quarter of record
sales, and 31st out of the last 32 quarters of record earnings.  The Company's
first quarter diluted earnings per share were 29 cents, an increase of
10.2 percent over last year.  Total sales for the first quarter were
$466.5 million, a 9.2 percent increase compared to last year.
    "We achieved another quarter of record performance even as we incurred the
start-up costs of two new plants," said Jeffrey  L. Bleustein, president and
chief executive officer of Harley-Davidson, Inc.  "I am also pleased to report
the ramp-up of our new Sportster motorcycle manufacturing plant in Kansas
City, Mo. is ahead of schedule.  In fact, all of our Sportster motorcycles are
now being produced in Kansas City, and our plant in York, Pa. is preparing to
increase production of our larger cruiser motorcycles.  This is a significant
milestone in our capacity expansion efforts, and it demonstrates the
capabilities of our employees and our commitment to sustaining our growth."

    Motorcycles and Related Products Segment
    First quarter sales of Harley-Davidson and Buell motorcycles were
$361.3 million and $12.3 million respectively.  Harley-Davidson and Buell
motorcycle shipments were 34,482 units and 1,350 units respectively, increases
of 4.9 percent and 24.2 percent over the first quarter last year.  The
Harley-Davidson motorcycle production target for 1998 has been increased to
148,000 units, and the second quarter production target is 38,000 units.
    The gross margin for the first quarter was 32.1 percent of revenue,
compared to 32.4 percent of revenue in 1997.  This anticipated decline in
gross margin was due primarily to the start-up of the new manufacturing plant
in Kansas City and the transition to the new powertrain manufacturing plant in
Milwaukee.  The Company expects similar start-up expenses to continue through
the second quarter of this year.
    First quarter operating margin for the Motorcycles and Related Products
Segment was 15.2 percent of revenue, or $71.1 million, compared to 14.8
percent of revenue, or $63.0 million in 1997.
    Year-end 1997 data show the United States 651cc+ motorcycle market grew
14.8 percent over 1996, while retail registrations of Harley-Davidson and
Buell motorcycles combined were up 16.8 percent.  (See attached table for
detail data)
    The European 651cc+ market grew 11.4 percent in 1997, while registrations
of Harley-Davidson and Buell motorcycles combined increased 4.6 percent over
1996.  The Company believes the introduction of two new Europe specific
Harley-Davidson motorcycle models, a new European marketing campaign, a full
year of Buell sales, and additional dealers will result in increased sales for
1998.  Additionally, John Russell was recently hired as the Vice President,
Managing Director Europe, and comes to Harley-Davidson with extensive sales
and marketing experience in the European automotive industry.
    First quarter sales for Parts and Accessories (P&A), which consists of
Genuine Motor Parts and Genuine Motor Accessories, totaled $63.3 million, a
16.2 percent increase from the year-ago quarter.
    General Merchandise first quarter sales, which consists of MotorClothes
apparel and collectibles, totaled $29.2 million, an increase of 19.5 percent
over 1997.  This growth was driven by the introduction of both a new denim
product line in January and the Spring MotorClothes product line.  The Company
does not expect to maintain this level of growth throughout 1998.

    Financial Services Segment
    Eaglemark Financial Services, Inc. (Eaglemark), a subsidiary of
Harley-Davidson, Inc., reported first quarter operating income of $2.6 million
versus $2.2 million in the year-ago quarter.  Eaglemark experienced growth in
all areas of its business, which was partially offset by promotional expenses
for the Harley-Davidson Chrome VISA Card.
    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.  Buell
Motorcycle Company produces sport and sport-touring motorcycles.  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
                   (In thousands, except per share amounts)

                                           Three Months Ended
                                 Mar. 29,                Mar. 30,
                                     1998                    1997

    Net sales                    $466,527                $427,095
    Gross profit                  149,875                 138,216
    Operating income
     Motorcycles and Related
      Products                     71,051                  63,016
     Financial Services             2,585                   2,219
     Corporate expenses            (2,829)                 (2,587)
    Total                          70,807                  62,648
    Interest income                   774                   1,574
    Other expense                  (1,189)                   (185)
    Income before provision for
     taxes                         70,392                  64,037
    Provision for income taxes     25,694                  23,695
    Net income                    $44,698                 $40,342

    Earnings per common share:
     Basic                           $.29                    $.27
     Diluted                         $.29                    $.26

    Weighted average common shares:
     Basic                        151,834                 151,257
     Diluted                      154,201                 153,330

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

                                       Mar. 29,      Dec. 31,    Mar. 30,
                                          1998           1997        1997
    Current assets:
    Cash and cash equivalents          $95,236       $147,462    $113,548
    Accounts and finance receivables,
     net                               445,081        396,126     410,315
    Inventories                        128,869        117,475      93,440
    Other current assets                41,219         42,958      40,631
    Total current assets               710,405        704,021     657,934
    Finance receivables, net           334,916        249,346     222,836
    Other long-term assets             649,033        645,534     539,200
    Total assets                    $1,694,354     $1,598,901  $1,419,970
    Liabilities and stockholders'
    Current liabilities:
    Current portion of finance debt   $152,586        $90,638     $85,740
    Other current liabilities          272,239        271,050     254,581
    Total current liabilities          424,825        361,688     340,321
    Finance debt                       280,000        280,000     250,000
    Other long-term liabilities         62,595         62,131      67,327
    Postretirement health care benefits 69,264         68,414      66,635
    Total stockholders' equity         857,670        826,668     695,687
    Total liabilities and
     stockholders' equity           $1,694,354     $1,598,901  $1,419,970

                            Harley-Davidson, Inc.
                           Motorcycle Shipment Data

                                        Three Months Ended
                                 Mar. 29,                Mar. 30,
                                     1998                    1997
    Motorcycle shipments:
    United States                  23,882                  22,582
    Export                         10,600                  10,278
    Total                          34,482                  32,860

    Motorcycle product mix:
    Touring                         24.3%                   20.4%
    Custom                           51.9                    55.0
    Sportster                        23.8                    24.6
    Total                          100.0%                  100.0%

    Motorcycle shipments:
    United States                     477                     602
    Export                            873                     485
    Total                           1,350                   1,087

                651cc+ Motorcycle Retail Registrations (Units)
                          12 Months Through December

                                       1997            1996      % change

    UNITED STATES                   190,236         165,696         14.8%
    Harley-Davidson                  93,491          79,936          17.0
    Buell                             1,912           1,740           9.9
    Total Harley-Davidson, Inc.      95,403          81,676          16.8

    EUROPE                          250,293         224,688          11.4
    Harley-Davidson                  15,286          15,347          -0.4
    Buell                               771               0            na
    Total Harley-Davidson, Inc.      16,057          15,347           4.6

    JAPAN/AUSTRALIA                  58,880          37,417          57.4
    Harley-Davidson                   9,686           8,190          18.3
    Buell                               426             182         134.1
    Total Harley-Davidson, Inc.      10,112           8,372          20.8

    TOTAL                           499,409         427,801          16.7
    Harley-Davidson                 118,463         103,473          14.5
    Buell                             3,109           1,922          61.8
    Total Harley-Davidson, Inc.     121,572         105,395         15.4%

    Sources:  Motorcycle Industry Council (1997), R.L. Polk (1996), Giral
     S.A., JAMA, ABS

SOURCE  Harley-Davidson, Inc.