U.S. Retail Sales of Harley-Davidson Motorcycles Climb 12.1% during the Quarter

Milwaukee, Wis., October 12, 2005 -- Harley-Davidson, Inc. (NYSE: HDI) today announced record earnings for its third quarter ended September 25, 2005. Third quarter diluted earnings per share (EPS) were 96 cents, a 24.7 percent increase compared with 77 cents last year. Net income for the quarter was $265.0 million, up $36.0 million or 15.7 percent. Revenue for the quarter was $1.43 billion compared to $1.30 billion in the year-ago quarter.

"Harley-Davidson had a great third quarter," said Jim Ziemer, Chief Executive Officer of Harley-Davidson, Inc. "Our motorcycles sold at a brisk pace in all of our worldwide markets. In the U.S., retail sales of Harley-Davidson(R) motorcycles rose 12 percent during the quarter, and in Europe and Japan, retail sales were up 11.5 percent and 13 percent, respectively. Year-to-date, Harley-Davidson worldwide retail sales were up approximately 7 percent."

"We are pleased with these third quarter retail sales results and the positive response to our exciting line of 2006 motorcycles," said Ziemer. "We introduced six brand new models and made significant enhancements to each of our motorcycle families this year, and the changes have been very well received by our dealers, the motorcycle press and our retail customers. Our third quarter results keep us on track with our previously disclosed guidance for 2005 and move us closer to achieving the Company's 20th consecutive year of record revenue and earnings," said Ziemer.

"Harley-Davidson's current performance is outstanding and we have great new products and customer experiences planned for next year. However, as we look ahead we are watching the economy carefully. Given the uncertainty related to consumer confidence, increasing fuel prices and rising interest rates, we are setting a shipment target range of 348,000 to 352,000 Harley-Davidson motorcycles for 2006. Consistent with this more conservative outlook, we are also broadening our long-term guidance on wholesale unit growth to 5 to 9 percent annually. This will support an annual earnings per share growth target in the range of 11 to 17 percent," said Ziemer.

Motorcycles and Related Products Segment - Third Quarter Results

Third quarter revenue from Harley-Davidson motorcycles was $1.11 billion, an increase of $113.6 million or 11.4 percent over last year. Worldwide wholesale shipments of Harley-Davidson motorcycles in the third quarter totaled 87,585 units, up 8.7 percent from the year-ago period. The Company's 2005 shipment target for Harley-Davidson motorcycles remains at 329,000 units.

Third quarter revenue from Parts & Accessories (P&A), which consists of Genuine Motor Parts and Genuine Motor Accessories, totaled $231.2 million. This is a 3.0 percent increase, or $6.8 million more than the same quarter a year-ago.

Third quarter revenue from General Merchandise, which consists of MotorClothes(R) apparel and collectibles, totaled $64.5 million, up 5.1 percent or $3.2 million over the same period last year.

Growth rates for P&A and General Merchandise fluctuate from quarter to quarter. However, for the long term the Company expects the growth rate for P&A revenue to be slightly higher than Harley-Davidson's motorcycle unit growth rate, and the General Merchandise revenue growth rate is expected to be lower than the motorcycle unit growth rate.

Third quarter gross margin improved to 39.2 percent of revenue in 2005 compared to 38.0 percent of revenue in 2004. The increase in margin was primarily driven by a favorable motorcycle product mix. Consistent with the higher gross margin, operating margin increased to 25.6 percent in 2005 from 23.6 percent in 2004.

Motorcycle Retail Data

During the third quarter, worldwide retail sales of Harley-Davidson motorcycles grew 12.1 percent. Sales of Harley-Davidson motorcycles outpaced the total industry in each of the Company's major markets. Data are listed in the accompanying tables.

On a year-to-date basis, Harley-Davidson motorcycle sales were up 5.0 percent in the U.S., 19.3 percent in Europe, and 11.4 percent in Japan.

Industry-wide sales in the 651+cc segment in the U.S. were up 4.3 percent year to date. Through August, retail sales in Europe were down 1.4 percent and in Japan, they were down 1.5 percent.

Source: Harley-Davidson, Inc.

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