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Harley-Davidson, Inc. Reports Record Second Quarter Sales and Earnings

13 July 1999

Harley-Davidson, Inc. Reports Record Second Quarter Sales and Earnings
    MILWAUKEE, Wis., July 12 -- Harley-Davidson, Inc.
today announced record sales and earnings for its second quarter ended
June 27, 1999.  The Company's second quarter sales were $608.7 million, an
increase of 17.7 percent over the second quarter last year. Earnings per share
for the second quarter were 44 cents, a 22.9 percent increase compared to last
year.  "This is shaping up to be another record year," said Jeffrey L.
Bleustein, chairman and chief executive officer of Harley-Davidson, Inc.
    "The worldwide heavyweight motorcycle market is in the midst of its eighth
consecutive year of growth," said Jeffrey L. Bleustein, chairman and chief
executive officer of Harley-Davidson, Inc.  "Retail registration data through
May shows the worldwide (651cc+) motorcycle market grew 13.9 percent relative
to 1998, while registrations of Harley-Davidson(R) and Buell(R) motorcycles
grew 30.6 percent during the same period.  In fact, our U.S., Europe and
Asia-Pacific markets are each experiencing double-digit retail registration
    "Based on the market's growth and our manufacturing capabilities, we have
increased our production target for Harley-Davidson motorcycles for 1999 from
168,000 to 172,000 units.  However, even with this planned production
increase, it is unlikely that the Company will be able to sustain a
thirty-plus percent rate of retail registration growth during the second half
of the year."

    Motorcycles and Related Products Segment
    Second quarter sales of Harley-Davidson motorcycles were $468.6 million,
an increase of 16.9 percent over the second quarter last year.  Shipments of
Harley-Davidson motorcycles in the second quarter totaled 44,771 units, up
7,018 units or 18.6 percent over last year.  With the increase in the
Company's 1999 production target, the third quarter production target is
42,000 units.
    Buell motorcycle sales for the second quarter totaled $12.5 million on
shipments of 1,512 units, compared to $13.4 million on shipments of
1,497 units last year.  During the second quarter, Buell motorcycle production
was interrupted for five weeks until the parts associated with its recall
campaign could be supplied to the market.  As a result, Buell's motorcycle
production target for 1999 has been reduced by 300 units to 7,700.
    Second quarter sales of Parts and Accessories (P&A), which consist of
Genuine Motor Parts(TM) and Genuine Motor Accessories(TM), totaled
$99.7 million, a 25.7 percent increase from the year-ago quarter.  General
Merchandise second quarter sales, which consist of MotorClothes(R) apparel and
collectibles, totaled $27.3 million, up 21.2 percent over the same period last
year.  The Company's long term P&A and General Merchandise sales growth target
continues to approximate the Harley-Davidson motorcycle unit growth target.
    Second quarter gross margin was 35.0 percent of revenue, up from
34.3 percent of revenue last year.  The increase in gross margin was due to a
higher mix of domestic motorcycle shipments and higher P&A growth, but
partially offset by a higher Sportster motorcycle mix.
    Second quarter operating margin for the Motorcycles and Related Products
Segment was 16.5 percent of revenue, compared to 16.1 percent of revenue for
the same period last year. Operating expenses are planned to increase in the
second half of 1999 as the Company invests in new products and marketing
programs intended to enhance the Harley-Davidson and Buell motorcycle
ownership experiences.  The Company's goal is to maintain operating margins
during the second half of 1999 comparable to the record levels achieved in the
second half of 1998.

    Financial Services Segment
    Eaglemark Financial Services, Inc. (Eaglemark), a subsidiary of
Harley-Davidson, Inc., reported second quarter operating income of
$9.1 million, up 43.5 percent compared to the year-ago quarter.  Eaglemark is
benefiting from the increase in U.S. motorcycle retail sales as well as
increased market share of motorcycle retail installment lending, which grew
from 18.7 percent to 21.9 percent, year to date.  The Company's goal is to
sustain Eaglemark's first half operating income growth rate of approximately
30 percent through the end of 1999.

    Share Repurchase
    During the second quarter, Harley-Davidson repurchased approximately
1.0 million shares of its common stock, under the Company's authorization to
repurchase shares to offset dilution caused by the exercise of stock options.

    Six Month Results
    For the six month period, sales totaled $1,167 million, an 18.7 percent
increase over the year-ago period.  Diluted earnings per share were 82 cents,
an increase of 26.5 percent compared to the first six months last year.
    Through the first six months of this year, Harley-Davidson motorcycle
revenue was $905.1 million, an 18.7 percent increase while Buell motorcycle
revenue was $28.6 million, an 11.3 percent increase, compared with the same
period in 1998.
    For the first six months of 1999, P&A revenue totaled $174.7 million, a
22.5 percent increase while General Merchandise revenue totaled $56.7 million,
a 9.7 percent increase compared with the same period in 1998.

    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 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 the Company's future plans, objectives,
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 circumstances.
    The Company's ability to reach targeted production objectives and to
increase or sustain growth rates in various areas depends upon, among other
factors, (i) continued realization of production efficiencies at its
manufacturing facilities; (ii) successful implementation of production
capacity increases in its facilities; (iii) the sale of all motorcycles the
Company has the capacity to produce; (iv) product availability; and (v)
successful introduction of new products. In addition, the Company could
experience delays in the operation of manufacturing facilities, work
stoppages, difficulty with suppliers, natural causes or other factors. Risk
factors are also disclosed in securities documents previously filed by the
Company with the Securities and Exchange Commission.
    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         Six Months Ended

                               June 27,    June 28,      June 27,     June 28,
                                 1999        1998          1999         1998

    Net sales                  $608,716    $517,164    $1,167,283    $983,691
    Gross profit                212,994     177,528       402,128     327,403
    Operating income
      Motorcycles and
       related products         100,140      83,246       191,617     154,297
      Financial services          9,118       6,355        11,760       8,940
      Corporate expenses         (2,624)     (2,362)       (5,426)     (5,191)
    Total operating income      106,634      87,239       197,951     158,046
    Interest income, net          1,992         612         3,481       1,386
    Other income(expense), net     (641)       (607)         (463)     (1,796)
    Income before provision
     for taxes                  107,985      87,244       200,969     157,636
    Provision for income taxes   39,415      31,843        73,355      57,537
    Net income                 $ 68,570    $ 55,401     $ 127,614    $100,099

    Earnings per common share:
      Basic                        $.45       $ .36          $.83       $ .66
      Diluted                      $.44       $ .36          $.82       $ .65
    Weighted-average common
      Basic                     153,081     151,930       153,064     151,883
      Diluted                   155,606     154,545       155,646     154,385

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

                                           June 27,     Dec 31,      June 28,
                                            1999         1998          1998
                                         (unaudited)               (unaudited)
       Current assets:
         Cash and cash equivalents        $209,984     $165,170      $154,475
         Accounts receivable, net          100,813     113,417        91,336
         Finance receivables, net          369,218     360,341       302,247
         Inventories                       149,060     155,616       131,525
         Other current assets               49,745      50,419        44,565
       Total current assets                878,820     844,963       724,148
         Finance receivables, net          426,000     319,427       346,097
         Other long-term assets            757,370     755,819       675,756
       Total assets                     $2,062,190  $1,920,209    $1,746,001

       Current liabilities:
         Current portion of finance debt  $217,655    $146,742      $125,951
         Other current liabilities         324,273     321,773       294,454
       Total current liabilities           541,928     468,515       420,405
       Finance debt                        280,000     280,000       280,000
       Other long-term liabilities          62,895      69,700        63,308
       Postretirement health care benefits  73,934      72,083        70,164
       Shareholders' equity              1,103,433   1,029,911       912,124
    Total liabilities and
     shareholders' equity               $2,062,190  $1,920,209    $1,746,001

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

                                   Three Months Ended      Six Months Ended

                                  June 27,    June 28,   June 27,     June 28,
                                    1999        1998       1999         1998

    NET SALES (in thousands)
     motorcycles                 $468,559    $400,890    $905,083    $762,218
    Buell(R) motorcycles           12,518      13,380      28,565      25,659
    Parts & Accessories            99,714      79,321     174,749     142,604
    General Merchandise            27,255      22,485      56,706      51,691
    Other                             670       1,088       2,180       1,519
    Total net sales              $608,716    $517,164  $1,167,283    $983,691

    Motorcycle shipments:
      United States                35,641      28,768      65,776      52,650
      Export                        9,130       8,985      20,176      19,585
    Total                          44,771      37,753      85,952      72,235

    Motorcycle product mix:
      Touring                        27.1%       24.5%       27.0%       24.4%
      Custom                         49.8        55.1        50.1        53.5
      Sportster(R)                   23.1        20.4        22.9        22.1
    Total                           100.0       100.0       100.0       100.0

    Motorcycle shipments            1,512       1,497       3,525       2,847

            651cc+ Motorcycle Retail Registrations (Units), thru May.

                                      1999      1998   % change

    UNITED STATES                   126,607    98,579    +28.4
      HDI                            59,408    43,955    +35.2

    EUROPE                          166,162   152,279     +9.1
      HDI                            10,037     8,756    +14.6

    JAPAN/AUSTRALIA                  27,515    30,314     -9.2
      HDI                             5,001     4,312    +16.0

    TOTAL                           320,284   281,172    +13.9
      HDI                            74,446    57,023    +30.6

    HDI includes both Harley-Davidson and Buell motorcycles

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