HARLEY DAVIDSON 2008 REPORT AND 2009 PLANS
January 26 2009.

Harley-Davidson Release:

Harley-Davidson Reports 2008 Results, Plans Lower 2009 Shipments and Unveils Strategy for Current Environment

Company Generated Full-Year Profit of $654.7 Million

Fourth Quarter Revenue, Net Income and EPS Declined

Three-Part Strategy Includes Workforce Reductions to Address Volume Slow-Down



Harley-Davidson Inc. reported decreased revenue, net income and earnings per share for the fourth quarter of 2008 compared to the year-ago quarter. The Company said it plans lower motorcycle shipments in 2009 and made public its overall strategy to deal with the current economic environment.

"We have a strong core business anchored by a uniquely powerful brand, but we are certainly not immune to the current economic conditions," said Jim Ziemer, Chief Executive Officer, Harley-Davidson Inc. "We have a clear strategy to not only deal with the economic conditions, but also strengthen our long-term operations and financial results. We are executing that strategy with confidence and conviction."


Fourth-Quarter and Full-Year Results
Revenue for the quarter was $1.29 billion compared to $1.39 billion in the year-ago quarter, a 6.8 percent decrease. Net income for the quarter was $77.8 million compared to $186.1 million in the fourth quarter 2007, a decrease of 58.2 percent. Fourth quarter diluted earnings per share were $0.34, a 56.4 percent decrease compared to last year's $0.78.

Revenue for the full year 2008 was $5.59 billion compared to $5.73 billion in 2007, a 2.3 percent decline. Full-year net income was $654.7 million, compared to $933.8 million in 2007. Diluted earnings per share were $2.79, a decrease of 25.4 percent compared to $3.74 in 2007. The full-year results are below the previously provided company guidance.

For the full year, wholesale shipments of Harley-Davidson motorcycles were 303,479 units, an 8.2 percent decrease compared to 330,619 units in 2007.


2009 Shipment Plan, Gross Margins
In the first quarter of 2009, the Company plans to ship between 74,000 and 78,000 new Harley-Davidson motorcycles, a 3.0 percent to 8.5 percent increase versus the first quarter of 2008. However, for the full year 2009, the Company plans to ship between 264,000 and 273,000 new Harley-Davidson motorcycles, a 10 percent to 13 percent reduction from 2008.

"We reduced our production levels prudently in 2008, helping our dealers achieve lower inventory levels," said Ziemer, "and we're going to show similar discipline in 2009. That's not only critical for the health of our business, but for our dealers' businesses, as well."

For the full year 2009, the Company expects gross margins to be between 30.5 percent and 31.5 percent, which compares to 34.5 percent for the full year 2008. The decrease is primarily due to an expected unfavorable shipment mix versus 2008, the allocation of fixed costs over fewer units, and expected unfavorable foreign currency exchange rates versus 2008. Given the volatility of the current economic environment, the Company also indicated it would not provide EPS guidance for 2009.


Strategy for the Current Economic Environment
The Company is executing a three-part strategy that includes a number of measures to deal with the impact of the recession and worldwide slowdown in consumer demand, with the intent of strengthening its operations and financial results going forward.

"Our strategy is focused on three critical areas: to invest in the Harley- Davidson brand, get our cost-structure right, and obtain funding for HDFS to help our dealers sell motorcycles and our retail customers to buy them," said Ziemer


Investing in the Brand
The Company is reinforcing its support of the Harley-Davidson brand, accelerating its ongoing marketing efforts to reach out to emerging rider groups, including younger and diverse riders. In addition, the Company will continue to focus on product innovations targeted at specific growth opportunities with its strong core customer base and new riders.

In the U.S., the Company said its Sportster(R) motorcycle trade-up program is being well-received by dealers and consumers and is generating new floor traffic during the winter months. The program lets riders who already own a qualifying Sportster motorcycle, or who buy a new Sportster motorcycle, receive back the original Manufacturer's Suggested Retail Price value when they trade up to a Harley-Davidson Big Twin or VRSC motorcycle at participating dealerships.

Outside the U.S., the Company will continue to support the product, dealer development and marketing activities which, during the last several years, have helped drive strong retail sales growth.

"Among other things, the Harley-Davidson brand stands for strength and resilience, and we're managing the business in this economic climate in ways that we believe will build long-term value into the brand," said Ziemer.


Adjusting the Cost Structure
As a result of motorcycle volume reduction and the Company's commitment to improve its cost structure, Harley-Davidson plans to:


-- Consolidate its two engine and transmission plants in the Milwaukee area into its facility in Menomonee Falls, Wis.


-- Consolidate paint and frame operations at its assembly facility in York, Pa.


-- Close its distribution facility in Franklin, Wis., consolidating Parts and Accessories and General Merchandise distribution through a third party.


-- Discontinue its domestic transportation fleet operation.


The planned volume reduction and restructuring actions are expected to result in the elimination of about 1,100 jobs over 2009 and 2010, including about 800 hourly production positions and about 300 non-production, primarily salaried positions. About 70 percent of the workforce reduction is expected to occur in 2009.

"We obviously need to make adjustments to address the current volume declines," said Ziemer. "But we are also determined to do that in a way that will make us more competitive for the long term. Our management group will engage with union leaders, through our partnering relationship, regarding these changes."

On a combined basis, Harley-Davidson expects the volume reduction and changes to operations to result in one-time charges of approximately $110 million to $140 million over 2009 and 2010, and ongoing annual savings of approximately $60 million to $70 million upon completion of the restructuring actions.


Obtaining Additional Funding for HDFS
The Company said it is evaluating a range of options to provide the necessary liquidity for the wholesale and retail lending activities of Harley- Davidson Financial Services (HDFS).

"We're evaluating options in order to obtain the necessary funding to support Harley-Davidson dealers and customers throughout the year," said Tom Bergmann, Chief Financial Officer of Harley-Davidson, Inc. and interim President of HDFS.