Revenue for the quarter was $1.18 billion compared to $1.29 billion in the year-ago quarter, an 8.3 percent decrease. Net income for the quarter was $192.3 million compared to $234.6 million, a decrease of 18.0 percent compared to the first quarter of 2006. First quarter diluted earnings per share (EPS) were $0.74, a 14.0 percent decrease compared to last year’s $0.86.
“We anticipated that first quarter results would be lower than last year due to the strike,” said Jim Ziemer, Chief Executive Officer of Harley-Davidson, Inc. “Nobody wants a strike and no one wins in a strike. Not our employees, dealers, customers, suppliers, or our shareholders. Now that the strike is behind us, our employees are focused on moving ahead, and with the new contract, we are better positioned for the future,” he said.

“In 2007 Harley-Davidson expects EPS growth in the range of 4 – 6 percent compared to 2006 based on moderate revenue growth, lower operating margin, and the benefits of our strong free cash flow. Looking ahead to 2008 and 2009, we expect solid revenue growth, operating margin improvement and the continued benefits of our strong free cash flow to drive EPS growth in the range of 11 – 17 percent,” said Ziemer.

The Company expects to ship between 94,000 and 97,000 Harley-Davidson® motorcycles in the second quarter of 2007.

Motorcycles and Related Products Segment – First Quarter Results
Revenue from Harley-Davidson motorcycles was $891.5 million, a decrease of $117.0 million or 11.6 percent versus the same period last year. Shipments of Harley-Davidson motorcycles totaled 67,761 units, a decrease of 11,745 units or 14.8 percent compared to last year’s first quarter.

Revenue from Parts and Accessories (P&A), which consists of Genuine Motor Parts and Genuine Motor Accessories, totaled $188.2 million, an increase of $5.3 million or 2.9 percent over the year-ago quarter. Revenue from General Merchandise, which consists of MotorClothes® apparel and collectibles, totaled $76.1 million, an increase of $7.6 million or 11.0 percent over the year-ago quarter.

Gross margin for the first quarter of 2007 was 35.9 percent of revenue compared to 38.4 percent for the first quarter last year. First quarter operating margin decreased to 20.0 percent from 24.3 percent in the first quarter of 2006. The changes in both gross margin and operating margin are primarily due to the strike.

Motorcycle Retail Sales Data
During the first quarter, worldwide retail sales of Harley-Davidson motorcycles decreased 1.3 percent compared to the prior year quarter. In the U.S., retail sales of Harley-Davidson motorcycles decreased 5.9 percent for the quarter while the heavyweight motorcycle industry in the U.S. decreased 0.7 percent. “We never like to see a retail sales decline,” said Ziemer, “but first quarter sales are not necessarily indicative of sales for the full year. We continue to expect positive worldwide retail sales growth for 2007.”

Retail sales of Harley-Davidson motorcycles grew 16.5 percent in international markets during the first quarter of 2007 compared to the first quarter of 2006. First quarter retail sales increased 25.7 percent in Europe; Canada was up 14.0 percent, and Japan was down 7.7 percent. All other international markets combined were up 16.7 percent.

Data is listed in the accompanying tables.

Financial Services Segment
Harley-Davidson Financial Services (HDFS) reported first quarter operating income of $58.9 million, an increase of $7.3 million or 14.2 percent compared to the year-ago quarter. The increase is primarily due to higher wholesale and retail net interest income and higher fee income.

Income Tax Rate
The Company's first quarter effective income tax rate was 35.5 percent compared to 36.0 percent in the same quarter last year. This decrease primarily reflects the reinstatement of the federal research and development tax credit.

Cash Flow
Cash and marketable securities totaled $929 million as of April 1, 2007. Cash flow from operations was $520 million and capital expenditures were $41 million during the first quarter of 2007. For the full year of 2007, capital expenditures are expected to be between $300 million and $325 million.

Stock Repurchase
The Company repurchased 870,000 shares of its common stock at a cost of $61.2 million during the first quarter of 2007. On April 1, 2007, the Company had 257,470,381 shares of common stock outstanding.

As of April 1, 2007, there are 21.9 million shares remaining on two board-approved share repurchase authorizations. An additional board-approved share repurchase authorization is in place to offset option exercises.

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) manage regional and worldwide demographic trends and economic and political conditions, including healthcare inflation, pension reform and tax changes, (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 or disruptions in its operations as a result of work stoppages, strikes, 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.

TABLES FOLLOW

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