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Harley-Davidson, Inc. Reports Record Fourth Quarter

20 January 1999

Harley-Davidson, Inc. Reports Record Fourth Quarter and 13th Consecutive Year of Record Revenue and Earnings
              1998 Earnings Increased 22% on 17% higher revenue

    MILWAUKEE, Jan. 19 -- Harley-Davidson, Inc. today
reported record revenue and earnings for its fourth quarter and year ended
December 31, 1998, marking the thirteenth consecutive year of record revenue
and earnings.  Fourth quarter diluted earnings per share (EPS) were 39 cents,
an increase of 40.0 percent from the year-ago period, on revenue of
$563.1 million.  For the full year, diluted EPS were $1.38 on revenue of
$2,064.0 million, an increase of 22.1 percent and 17.1 percent respectively.
This is the sixth consecutive year EPS from continuing operations have grown
faster than revenue.
    "Harley-Davidson's record results again in 1998 will not surprise those
who understand what drives our company," said Jeffrey L. Bleustein, chairman
and chief executive officer of Harley-Davidson, Inc.  "Our performance has
been consistent and predictable for thirteen years running.  This sustainable
growth results from vigorous attention to the fundamentals: product
development, innovative marketing, and state of the art manufacturing
    "During the past year, we celebrated our 95th Anniversary with a marketing
initiative that imprinted our brand on hundreds of thousands of prospective
customers.  We also successfully completed the transition to two new
manufacturing facilities which have already significantly increased our
capacity, and we introduced a completely new Twin Cam 88 engine into our Dyna
and Touring motorcycle models.  These were tremendous accomplishments and they
enable us to look forward to another record year in 1999."

    Motorcycles and Related Products Segment
    Fourth quarter sales of Harley-Davidson motorcycles were $449.9 million,
an increase of 24.3 percent over the fourth quarter last year.  Shipments of
Harley-Davidson motorcycles in the fourth quarter totaled 42,155 units, up
8,198 units or 24.1 percent over last year.  The fourth quarter shipments of
Harley-Davidson motorcycles exceeded the company's previously announced target
by approximately 3,000 units.  The additional units were produced with
significant overtime expense.  This action was taken in recognition of growing
U.S. demand, rapid expansion of the worldwide heavyweight market, and the
impact of constrained supply on the Company's U.S. marketshare.
    Total sales of Harley-Davidson motorcycles in 1998 were $1,595.4 million,
an increase of 15.4 percent over 1997.  Total shipments of Harley-Davidson
motorcycles in 1998 were 150,818 units, a 14.0 percent increase over 1997.
For 1999, Harley-Davidson's motorcycle production target has been increased to
167,000 units, and the first quarter production target is 40,500 units.
    Buell motorcycle sales for the fourth quarter totaled $18.6 million on
shipments of 2,418 units, compared to $11.8 million on shipments of 1,294
units last year.  For the full year, Buell sales were $53.5 million on
shipments of 6,334 units, increases over 1997 of 32.8 percent and 43.5 percent
respectfully.  In 1998 the average price per Buell motorcycle decreased as a
result of new product offerings.  For 1999, Buell's motorcycle production
target has been increased to 7,500 units.
    Worldwide retail registration data available through October/November show
the heavyweight (651cc+) motorcycle market grew 13.8 percent over the same
period last year.  Worldwide retail registrations for Harley-Davidson and
Buell motorcycles grew 14.3 percent over the same period last year (see table
for more information).  This is the second consecutive year that the worldwide
market and Harley-Davidson/Buell have grown more than 13 percent.
    Fourth quarter sales of Parts and Accessories (P&A), which consist of
Genuine Motor Parts and Genuine Motor Accessories, totaled $64.3 million, a
27.7 percent increase from the year-ago quarter.  P&A sales for the total year
were $297.1 million, a 22.8 percent increase over 1997.  General Merchandise
fourth quarter sales, which consist of MotorClothes apparel and collectibles,
totaled $29.3 million, an increase of 30.1 percent over the same period last
year.  General Merchandise sales for the year were $114.5 million, a 20.4
percent increase over 1997.
    During 1998, both P&A and General Merchandise benefited from increased
dealer floor traffic due to Harley-Davidson's 95th anniversary celebration.
Going forward, the Company's target for P&A and General Merchandise growth is
approximately the same as motorcycle unit growth.
    Fourth quarter gross margin was 34.1 percent of revenue, the same as last
year.  For the year, gross margin was 33.5 percent of revenue, up from
33.3 percent in 1997.  The Company was able to achieve a record gross margin
while incurring the expenses related to bringing two new manufacturing
facilities on-line and the introduction of the new Twin Cam 88 engine.
    Fourth quarter operating margin for the Motorcycles and Related Products
Segment was 16.0 percent of revenue, or $90.3 million, compared to
15.0 percent of revenue for the same period last year.  For the year,
operating margin for the Motorcycles and Related Products Segment was a record
15.7 percent of revenue, or $324.4 million, up from 15.1 percent in 1997.  The
increase in operating margin in 1998 was driven by the improved gross margin
and administrative expenses growing at a rate slower than revenue.

    Financial Services Segment
    Eaglemark Financial Services, Inc. (Eaglemark), a subsidiary of
Harley-Davidson, Inc,. reported fourth quarter operating income of
$7.7 million versus $3.8 million in the year-ago quarter.  For the total year,
operating income was $20.2 million compared to $12.4 million in 1997.
    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.  Eaglemark
Financial Services, Inc.  provides wholesale and retail financing, insurance
and credit card programs to Harley-Davidson dealers and customers.


                            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,
                                1998        1997         1998          1997
    Net sales                $563,067    $447,166    $2,063,956    $1,762,569
    Gross profit              192,128     152,501       690,670       586,217
    Operating income
      Motorcycles and
       related products        90,281      67,249       324,448       265,486
      Financial services        7,672       3,788        20,211        12,355
      Corporate expenses       (2,522)     (1,730)      (11,043)       (7,838)
         Total                 95,431      69,307       333,616       270,003
    Interest income             1,386       1,819         3,828         7,871
    Other income/(expense)       (707)     (2,169)       (1,215)       (1,572)
    Income before provision
     for taxes                 96,110      68,957       336,229       276,302
    Provision for
     income taxes              35,082      25,513       122,729       102,232
    Net income                $61,028     $43,444      $213,500      $174,070

    Earnings per common share:
      Basic                      $.40        $.29         $1.40         $1.15
      Diluted                    $.39        $.28         $1.38         $1.13

     common shares:
      Basic                   152,675     152,150       152,227       151,650
      Diluted                 155,051     154,481       154,703       153,948

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

                                                       Dec 31,       Dec 31,
                                                        1998          1997

       Current assets:
         Cash and cash equivalent                    $165,170      $147,462
         Accounts receivable, net                     113,417       102,797
         Finance receivables, net                     360,341       293,329
         Inventories                                  155,616       117,475
         Other current assets                          50,419        42,958
             Total current assets                     844,963       704,021
         Finance receivables, net                     319,427       249,346
         Other long-term assets                       755,819       645,534
                  Total assets                     $1,920,209    $1,598,901
    Liabilities and stockholders' equity
       Current portion of finance debt               $146,742       $90,638
       Other current liabilities                      321,773       271,050
           Total current liabilities                  468,515       361,688
       Finance debt                                   280,000       280,000
       Other long-term liabilities                     69,700        62,131
       Postretirement health care benefits             72,083        68,414
       Total shareholders' equity                   1,029,911       826,668
             Total liabilities and
              shareholders' equity                 $1,920,209    $1,598,901

                            Harley-Davidson, Inc.
                           Motorcycle Shipment Data

                                     Three Months Ended    Twelve Months Ended
                                      Dec 31,   Dec 31,    Dec 31,   Dec 31,
                                       1998      1997       1998      1997
    Motorcycle shipments:
       United States                  31,126    24,982    110,902    96,216
       Export                         11,029     8,975     39,916    36,069
          Total                       42,155    33,957    150,818   132,285
    Motorcycle product mix:
        Touring                         29.1%     24.2%      26.1%     22.7%
        Custom                          48.8      52.6       51.3      53.5
        Sportster                       22.1      23.2       22.6      23.8
           Total                       100.0%    100.0%     100.0%    100.0%

    Motorcycle shipments               2,418     1,294      6,334     4,415

                       651cc+ Motorcycle Retail Registrations (Units)

                                                1998       1997    % change

    UNITED STATES (through Nov.)              214,194    181,417     18.1%
      Harley-Davidson & Buell                 103,908     89,351     16.3

    EUROPE  (through Oct.)                    255,310    234,022      9.1
      Harley-Davidson & Buell                  15,906     14,978      6.2

    JAPAN/AUSTRALIA (through Nov.)             64,433     53,831     19.7
      Harley-Davidson & Buell                   9,879      9,146      8.0

    TOTAL                                     533,937    469,270     13.8
      Harley-Davidson & Buell                 129,693    113,475     14.3%

     Sources:  Motorcycle Industry Council, Giral S.A., JAMA, ABS