From a press release:

HARLEY-DAVIDSON REPORTS RECORD FOURTH QUARTER AND 16th CONSECUTIVE RECORD YEAR

2001 Net Income Increased 25.9% on 15.7% Higher Revenue

Milwaukee, Wis., January 17, 2002 — Harley-Davidson, Inc. (NYSE: HDI) today announced record sales and earnings for its fourth quarter and year ended December 31, 2001. Revenue for the quarter was $894.4 million compared with $756.2 million in the year-ago quarter, an 18.3 percent increase. Fourth quarter diluted earnings per share (EPS) were 39 cents, a 26.8 percent increase compared with last year’s 31 cents. Revenue for the full year was $3.36 billion, compared with $2.91 billion in 2000, a 15.7 percent increase. Net income for the year was $437.7 million, a 25.9 percent increase versus last year’s $347.7 million, while diluted EPS for the full year were $1.43, a 26.4 percent increase compared with $1.13 in 2000.

“The year 2001 was our 16th consecutive year of record revenue and income, in spite of the weaker global economy,” said Jeffrey L. Bleustein, chairman and chief executive officer of Harley-Davidson, Inc. “Worldwide retail sales of Harley-Davidson® motorcycles in the fourth quarter were strong with 12.9 percent unit growth over last year.

“In addition to strong demand for our traditional products, we also successfully launched our new performance cruiser, the V-Rod. In late November, we began shipping V-Rod motorcycles to our dealer network. Dealers and customers alike were anxiously awaiting this innovative new product which has received acclaim from industry experts worldwide.

“Even though the world is experiencing difficult economic conditions, fourth quarter retail sales of Harley-Davidson motorcycles and progress in expanding our motorcycle capacity have given us the confidence to increase our production target to 258,000 Harley-Davidson motorcycles for 2002,” said Bleustein. “We will continue to manage our business for the long-term while carefully monitoring the motorycle market and other near-term indicators.”

Motorcycles and Related Products Segment – Fourth Quarter Results

Fourth quarter shipments of Harley-Davidson motorcycles totaled 63,535 units, up 9,406 units or 17.4 percent over the same period last year. Included in the 2001 figures are 1,703 V-Rod motorcycles. Revenue from Harley-Davidson motorcycles was $723.3 million, an increase of $117.2 million or 19.3 percent.

Sales of Parts and Accessories (P&A), which consist of Genuine Motor Parts and Genuine Motor Accessories, totaled $110.8 million, an increase of $12.3 million, or 12.5 percent from the year-ago quarter. Sales of General Merchandise, which consists of MotorClothes apparel and collectibles, totaled $47.5 million, an increase of $6.8 million or 16.8 percent.

Fourth quarter gross margin was 35.7 percent of revenue, up from 34.7 percent last year. Gross margin improved primarily due to a higher percentage of U.S. shipments, favorable product mix and wholesale motorcycle price increases.

Fourth quarter operating margin for the Motorcycles and Related Products Segment was 18.8 percent of revenue, which was better than last year’s fourth quarter operating margin of 17.3 percent. The increase in operating margin was driven primarily by the increase in gross margin.


Financial Services Segment – Fourth Quarter Results

Harley-Davidson Financial Services, Inc. (HDFS), a subsidiary of Harley-Davidson, Inc., reported fourth quarter operating income of $17.0 million, up $4.0 million or 31 percent compared to the year-ago quarter.

“Harley-Davidson Financial Services continues to help make the dream of owning a new Harley-Davidson motorcycle a reality,” said Bleustein. The subsidiary benefited from the increase in Harley-Davidson’s U.S. motorcycle sales, strong acceptance of its improved consumer financing program and decreasing cost of funds due to lower market interest rates.

HDFS also entered into an agreement to sell $315 million of asset-backed securitizations during the quarter. The Company expects HDFS’s full year 2002 operating income growth rate to be slightly higher than the Harley-Davidson motorcycle unit growth rate.


Harley-Davidson Motorcycle Retail Data

Harley-Davidson retail sales for 2001 grew in the U.S. and in Japan, up 14.4 and 10.7 percent, respectively, compared to last year. Harley-Davidson retail sales in Europe were down 2.0 percent compared with 2000. The Company believes the strong U.S. dollar and weak European economies are contributing to slower Harley-Davidson sales in Europe. “While complete data is not available, we expect to grow worldwide market share for heavyweight motorcycles in 2001,” said Bleustein.



Share Repurchase

During the year, Harley-Davidson repurchased approximately 2.4 million shares of its common stock, of which 0.2 million shares were repurchased during the fourth quarter.


Twelve Month Results

For the fiscal year ended 2001, total Harley-Davidson motorcycle shipments were 234,461 units compared with 204,592 units in 2000, a 14.6 percent increase. Harley-Davidson motorcycle revenue was $2.63 billion, an increase of $383.7 million or 17.1 percent.

P&A revenue totaled $507.3 million, a 13.3 percent increase, while General Merchandise revenue totaled $163.9 million, an 8.2 percent increase compared with 2000.

On a longer-term basis, the Company expects the growth rate for P&A revenues to be slightly higher than the Harley-Davidson motorcycle unit growth rate. The General Merchandise growth rate is expected to be lower than the motorcycle unit growth rate over the long term.

Full year operating income for HDFS was $61.3 million, an increase of $24.1 million or 64.8 percent compared to 2000.

Diluted earnings per share were $1.43, an increase of 26.4 percent. If the sale of the Harley-Davidson® Chrome VISA® card in 2000 is excluded, diluted earnings per share increased 28.9 percent.


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, 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. Harley-Davidson Financial Services, Inc. provides wholesale and retail financing, insurance and credit card programs to Harley-Davidson dealers and 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 be statements that describe the Company’s future plans, objectives, targets, estimates, beliefs or goals. 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 growth targets 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; (v) continued development of its distributor and dealer network; (vi) successful introduction of new products; (vii) changes in political conditions; and (viii) interest rate fluctuations and successful adjustment to foreign currency exchange rates. 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.