Harley-Davidson Q1 Sales Figures

HARLEY-DAVIDSON ANNOUNCES FIRST QUARTER RESULTS


Milwaukee, WI (April 12, 2006) - Harley-Davidson, Inc. (NYSE: HDI) today announced record revenue and earnings for its first quarter ended March 26, 2006. Revenue for the quarter was $1.29 billion compared with $1.24 billion in the year-ago quarter, a 4.0 percent increase. Net income for the quarter was $234.6 million compared to $227.2 million, an increase of 3.2 percent over the first quarter of 2005. First quarter diluted earnings per share (EPS) were $0.86, an 11.7 percent increase compared with last year’s $0.77.

“Harley-Davidson is off to an excellent start for 2006, having achieved record revenue and earnings,” said Jim Ziemer, President and Chief Executive Officer, Harley-Davidson, Inc. “In addition, our dealers continued their retail sales growth momentum from the second half of 2005 as motorcycle sales increased by approximately 7 percent worldwide in the first quarter. With the increased seasonality in our business, we are pleased with this retail sales performance,” said Ziemer.

Harley-Davidson’s second quarter shipment plan is 78,000 2006 model year motorcycles. Production in the second quarter will also include approximately 13,000 2007 models to prepare for the new model introduction in mid July; however, these 2007 motorcycles will not be shipped until the third quarter.

The Company’s wholesale shipment target for the calendar year 2006 remains between 348,000 and 352,000 Harley-Davidson® motorcycles. “We believe that the prospects for retail growth remain strong and support a wholesale unit growth rate in the range of 5 to 9 percent annually and an annual EPS growth rate of 11 to 17 percent,” said Ziemer.

Motorcycles and Related Products Segment – First Quarter Results
Revenue from Harley-Davidson motorcycles was $1.01 billion, an increase of $29.6 million, or 3.0 percent over the same period last year. Shipments of Harley-Davidson motorcycles totaled 79,506 units, an increase of 2,790 units, or 3.6 percent over last year’s first quarter.

Revenue from Parts and Accessories (P&A), which consists of Genuine Motor Parts and Genuine Motor Accessories, totaled $182.9 million, an increase of $6.0 million, or 3.4 percent over the year-ago quarter. Revenue from General Merchandise, which consists of MotorClothes™ apparel and collectibles, totaled $68.6 million, an increase of $9.1 million, or 15.3 percent.

For the long term, the Company expects the growth rate for P&A revenue to be slightly higher than Harley-Davidson’s motorcycle shipment growth rate, and the General Merchandise growth rate is expected to be lower than the motorcycle shipment growth rate.

Gross margin for the first quarter of 2006 was 38.4 percent of revenue, up from 37.6 percent for the same period in 2005. Operating margin increased from 24.2 percent in the first quarter of 2005 to 24.3 percent in the first quarter of 2006.

Motorcycle Retail Sales Data
Worldwide retail sales of Harley-Davidson motorcycles increased 6.9 percent for the first quarter of 2006 compared to the same period in 2005. In the U.S., retail sales of Harley-Davidson motorcycles increased 5.8 percent for the quarter. The heavyweight motorcycle market in the U.S. increased 6.8 for the same period.

Retail sales of Harley-Davidson motorcycles grew 11.6 percent in international markets during the first quarter of 2006 compared with the first quarter of 2005. First quarter retail sales were up 16.3 percent in Japan and 6.6 percent in Europe. Data is listed in the accompanying tables.

Financial Services Segment
Harley-Davidson Financial Services (HDFS) reported first quarter operating income of $51.6 million, a decrease of $1.9 million, or 3.6 percent, compared to the year-ago quarter. This decrease was primarily due to a lower year-over-year gain on the current securitization.

The first quarter securitization of $730 million in motorcycle retail loans resulted in a gain of $8.6 million, compared to the first quarter 2005 gain of $19.2 million. The 1.2 percent gain as a percentage of loans sold is consistent with management’s prior guidance for the first quarter of 2006 of 1.0 to 1.4 percent.

For the long term, the Company expects the HDFS operating income growth rate to be slightly higher than the growth rate of Harley-Davidson motorcycle shipments.

Income Tax Rate
The Company’s first quarter effective income tax rate was 36.0 percent compared to 35.5 percent in the same quarter last year. This increase was due to the expiration of the federal research and development tax credit as of December 31, 2005. The Company expects its annual effective tax rate in 2006 to be 35.5 percent assuming the retroactive reinstatement of this tax credit.

Cash Flow
Cash and marketable securities totaled $1.11 billion as of March 26, 2006, an increase of $65.7 million during the first quarter. Cash flow from operations was $365.2 million and capital expenditures were $36.0 million during the first quarter.

Stock Repurchase
The Company repurchased 2.1 million shares of its common stock at a cost of $107.1 million during the first quarter of 2006. These shares were repurchased under an authorization from the Company’s Board of Directors to buy back 20 million shares. A total of 17.9 million shares remain under this authorization.

Company Background
Harley-Davidson, Inc. is the parent company for the group of companies doing business as Harley-Davidson Motor Company, Buell Motorcycle Company and Harley-Davidson Financial Services. 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 motorcycles. Harley-Davidson Financial Services provides wholesale and retail financing and insurance programs to Harley-Davidson dealers and their retail customers.

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 as such because the context of the statement will include words such as the Company “believes,” “anticipates,” “expects,” “plans,” or “estimates” or words of similar meaning. Similarly, statements that describe future plans, objectives, outlooks, targets, guidance 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 disclaims any obligation to publicly update such forward-looking statements to reflect subsequent events or circumstances.

The Company’s ability to meet the targets and expectations noted depends upon, among other factors, the Company's ability to (i) continue to realize production efficiencies at its production facilities and manage operating costs including materials, labor and overhead, (ii) manage production capacity and production changes, (iii) manage supply chain issues, (iv) provide products, services and experiences that are successful in the marketplace, (v) develop and implement sales and marketing plans that retain existing retail customers and attract new retail customers in an increasingly competitive marketplace, (vi) sell all of its motorcycles and related products and services to its independent dealers and distributors, (vii) continue to develop the capacity of its distributor and dealer network, (viii) manage changes and prepare for requirements in legislative and regulatory environments for its products, services and operations, (ix) adjust to fluctuations in foreign currency exchange rates, interest rates and commodity prices, (x) adjust to worldwide economic and political conditions, including changes in fuel prices and interest rates, (xi) manage the credit quality and recovery rates of HDFS’s loan portfolio, (xii) retain and attract talented employees and (xiii) detect any defects in our motorcycles to minimize delays in new model launches, recall campaigns, increased warranty costs or litigation. In addition, the Company could experience delays in the operation of manufacturing facilities as a result of work stoppages, natural causes, terrorism or other factors. Other factors are described in risk factors that the Company has disclosed in documents previously filed with the Securities and Exchange Commission.

The Company’s ability to sell all of its motorcycles and related products and services also depends on the ability of the Company’s independent dealer network to sell them to retail customers. The Company depends on the capability of its independent dealers and distributors to develop and implement effective retail sales plans to create demand for the motorcycles and related products and services they purchase from the Company.

In addition, the Company’s independent dealers and distributors may experience difficulties in selling Harley-Davidson motorcycles and related products and services as a result of weather, economic conditions or other factors.

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George Obradovich
George Obradovich

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