The Auto Channel
The Largest Independent Automotive Research Resource
The Largest Independent Automotive Research Resource
Official Website of the New Car Buyer

Harley-Davidson, Inc. Reports Record Q1 Sales and Earnings

13 April 1999

Harley-Davidson, Inc. Reports Record First Quarter Sales and Earnings
    MILWAUKEE, April 12 -- Harley-Davidson, Inc.
today announced record sales and earnings for its first quarter ended March
28, 1999.  The Company's first quarter sales were $558.6 million, an increase
of 19.7 percent over the first quarter last year. Earnings per share for the
first quarter were 38 cents, a 30.8 percent increase compared to last year.
    "We achieved a strong start to 1999 with another record quarter of
double-digit growth," said Jeffrey L. Bleustein, chairman and chief executive
officer of Harley-Davidson, Inc.  "We continue to increase our production
capacity to meet the growing worldwide demand for Harley-Davidson motorcycles.
Our dealers are expanding their capabilities and service capacity and we
believe our new products currently in development will continue to fulfill the
dreams of our existing customers and attract new customers into the
Harley-Davidson family.  All of this should position us for long-term
sustainable growth."

    Motorcycles and Related Products Segment
    First quarter sales of Harley-Davidson(R) motorcycles were $436.5 million,
an increase of 20.8 percent over the first quarter last year.  Shipments of
Harley-Davidson motorcycles in the first quarter totaled 41,181 units, up
6,699 units or 19.4 percent over last year.  Based on the results of the first
quarter, Harley-Davidson's motorcycle production target for 1999 has been
increased to 168,000 units, and the second quarter production target is 43,500
    Buell(R) motorcycle sales for the first quarter totaled $16.0 million on
shipments of 2,013 units, compared to $12.3 million on shipments of 1,350
units last year.  Buell's motorcycle production target for 1999 has been
increased to 8,000 units.
    Available year-end 1998 worldwide retail registration data show the
heavyweight (651cc+) motorcycle market grew 13.8 percent over 1997.  Worldwide
retail registrations for Harley-Davidson and Buell motorcycles grew
15.8 percent in 1998 increasing the Company's worldwide market share to
25.2 percent.  Complete worldwide retail registration data for the first
quarter is not yet available.
    First quarter sales of Parts and Accessories (P&A), which consist of
Genuine Motor Parts(TM) and Genuine Motor Accessories(TM), totaled
$75.0 million, an 18.6 percent increase from the year-ago quarter.  General
Merchandise first quarter sales, which consist of MotorClothes(R) apparel and
collectibles, totaled $29.5 million, up slightly over the same period last
year.  General Merchandise sales grew slower than the Company's long-term
target due primarily to the timing of new product introductions in 1999
compared to 1998.  The Company's long-term P&A and General Merchandise sales
growth target is similar to its motorcycle unit growth target.
    First quarter gross margin was 33.9 percent of revenue, up from 32.1
percent of revenue last year.  The increase in gross margin was due in part to
a favorable product and market mix.  In addition, last year's gross margin was
negatively impacted by the costs associated with the ramp-up of two new
manufacturing plants.
    First quarter operating margin for the Motorcycles and Related Products
Segment was 16.4 percent of revenue, compared to 15.2 percent of revenue for
the same period last year.  The increase in gross margin more than offset the
increase in operating expenses.

    Financial Services Segment
    Eaglemark Financial Services, Inc. (Eaglemark), a subsidiary of
Harley-Davidson, Inc., reported first quarter operating income of $2.6
million, slightly higher than the year-ago quarter.  As expected, Eaglemark's
first quarter operating income grew slower than it has historically due to
increased investment in systems and staffing to accommodate continued growth.
The Company still expects Eaglemark operating income to grow faster than the
motorcycle business for 1999.
    Harley-Davidson, Inc. is the parent company for Harley-Davidson Motor
Company, Buell Motorcycle Company and Eaglemark 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.  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
                                               Mar. 28,    Mar. 29,
                                                1999        1998

    Net sales                                 $558,567    $466,527
    Gross profit                               189,134     149,875
    Operating income:
        Motorcycles and Related Products        91,477      71,051
        Financial Services                       2,642       2,585
        Corporate expenses                      (2,802)     (2,829)
    Total operating income                      91,317      70,807
    Interest income, net                         1,489         774
    Other income (expense), net                    178      (1,189)
    Income before provision for income taxes    92,984      70,392
    Provision for income taxes                  33,940      25,694
    Net income                                 $59,044     $44,698

    Earnings per common share:
      Basic                                       $.39        $.29
      Diluted                                     $.38        $.29
    Weighted average common shares:
      Basic                                    153,046     151,834
      Diluted                                  155,686     154,201

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

                                           Mar. 28,     Dec. 31,     Mar. 29,
                                             1999         1998         1998

       Current assets:
         Cash and cash equivalents         $145,238     $165,170     $ 95,236
         Accounts receivable, net           139,633      113,417      124,974
         Finance receivables, net           401,746      360,341      320,107
         Inventories                        154,127      155,616      128,869
         Other current assets                46,909       50,419       41,219
       Total current assets                 887,653      844,963      710,405
       Finance receivables, net             427,076      319,427      334,916
       Other long-term assets               753,391      755,819      649,033
    Total assets                         $2,068,120   $1,920,209   $1,694,354

       Current liabilities:
         Other current liabilities         $324,551     $321,773     $272,239
         Current portion of finance debt    238,288      146,742      152,586
       Total current liabilities            562,839      468,515      424,825
       Finance debt                         280,000      280,000      280,000
       Other long-term liabilities           59,351       69,700       62,595
       Postretirement health care benefits   73,152       72,083       69,264
       Total shareholders' equity         1,092,778    1,029,911      857,670
    Total liabilities and
     shareholders' equity                $2,068,120   $1,920,209   $1,694,354

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

                                                  Three Months Ended
                                                  Mar. 28,   Mar. 29,
                                                    1999       1998

    NET SALES (in thousands)
    Harley-Davidson(R) motorcycles               $436,524    $361,328
    Buell(R) motorcycles                           16,047      12,279
    Parts & Accessories                            75,035      63,283
    General Merchandise                            29,451      29,206
    Other                                           1,510         431
    Total net sales                              $558,567    $466,527

    Motorcycle shipments:
       United States                               30,135      23,882
       Export                                      11,046      10,600
    Total                                          41,181      34,482

    Motorcycle product mix:
       Touring                                       26.8%       24.3%
       Custom                                        50.4        51.9
       Sportster(R)                                  22.8        23.8
    Total                                           100.0%      100.0%

    Motorcycle shipments                            2,013       1,350

                651cc+ Motorcycle Retail Registrations (Units)

                                            1998       1997   % change

    UNITED STATES                         227,132    190,949    18.9%
      HDI                                 112,349     95,403    17.8

    CANADA                                 19,082     14,458    32.0
      HDI                                   7,094      5,807    22.2

    EUROPE                                270,212    250,293     8.0
      HDI                                  17,250     16,057     7.4

    JAPAN/AUSTRALIA                        69,222     58,880    17.6
      HDI                                  10,805     10,112     6.9

    TOTAL                                 585,648    514,580    13.8
      HDI                                 147,498    127,379    15.8%

    HDI includes both Harley-Davidson and Buell motorcycles

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