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Harley-Davidson Delivers Strong Full-Year 2014 Financial Performance

Diluted EPS Rises 18.3 Percent on 5.6 Percent Revenue Growth

Retail Motorcycle Sales Grow Worldwide On Strength in International Markets

MILWAUKEE, January 29, 2015 ―Harley-Davidson, Inc. (NYSE:HOG) full-year 2014 diluted earnings per share increased 18.3 percent to $3.88 compared to diluted EPS of $3.28 in 2013. Net income was $844.6 million on consolidated revenue of $6.23 billion compared to full-year 2013 net income of $734.0 million on consolidated revenue of $5.90 billion. For the fourth quarter of 2014, diluted EPS increased 2.9 percent year-over-year to $0.35. Fourth quarter net income was $74.5 million on consolidated revenue of $1.20 billion compared to net income of $75.4 million on consolidated revenue of $1.19 billion in the year-ago period.

Worldwide retail sales of new Harley-Davidson motorcycles grew 2.8 percent in the fourth quarter and 2.7 percent for the full year compared to the year-ago periods, driven by strong international sales – up 9.2 percent in the fourth quarter and 5.4 percent for the full year.

“Harley-Davidson achieved a great year of financial performance in 2014, with double-digit earnings growth, revenue topping $6 billion and continued strong improvement in margins,” said Keith Wandell, Chairman, President and Chief Executive Officer of Harley-Davidson, Inc.

“We also continued to broaden our customer base and expand the reach of our brand through unrivaled products and experiences. In international markets, our dealers in Asia Pacific, EMEA and Latin America posted their highest new motorcycle sales on record for each region, delivering on our expectation for international sales to grow at a faster rate than U.S. sales. And in the U.S., for the third straight year, sales to our outreach customers grew at more than twice the rate of sales to core customers.”

“Our success is the result of a clear focus on managing the company for the long term, building on our well-established strategies and driving continuous improvement in every aspect of our business,” Wandell said.

Retail Harley-Davidson Motorcycle Sales
Dealers worldwide sold 47,149 new Harley-Davidson motorcycles in the fourth quarter of 2014, up 2.8 percent compared to 45,875 motorcycles in the year-ago quarter. In the U.S., dealers sold 26,957 new Harley-Davidson motorcycles in the quarter, down 1.6 percent compared to sales of 27,387 motorcycles in the year-ago period. In international markets, dealers sold 20,192 new Harley-Davidson motorcycles during the quarter, up 9.2 percent compared to sales of 18,488 motorcycles in the year-ago period, with unit sales up 14.2 percent in the Asia Pacific region, 8.7 percent in the EMEA region and 4.7 percent in the Latin America region, and down 5.7 percent in Canada.

For the full year 2014, dealers sold 267,999 new Harley-Davidson motorcycles worldwide, up 2.7 percent compared to 260,839 motorcycles in 2013. Retail unit sales were up 1.3 percent in the U.S., 11.8 percent in the Asia Pacific region, 6.4 percent in the EMEA region, 2.1 percent in the Latin America region and down 10.8 percent in Canada compared to full-year 2013.

Harley-Davidson Motorcycles and Related Products Segment Results
Fourth-Quarter Results: Operating income for the Motorcycles and Related Products segment (the Motorcycles segment) was $35.9 million in the fourth quarter of 2014 compared to operating income of $60.7 million in the year-ago period. Operating income in the quarter was primarily impacted by unfavorable foreign currency exchange rates.

Revenue from sales of motorcycles to dealers and distributors increased to $784.5 million, compared to revenue of $781.8 million in the year-ago period. The Company shipped 47,157 motorcycles worldwide during the quarter compared to shipments of 46,618 motorcycles in the year-ago period.

Revenue from motorcycle parts and accessories was $165.6 million during the quarter compared to $169.3 million the year-ago period. Revenue from general merchandise, which includes MotorClothes® apparel and accessories, was $75.0 million compared to $75.9 million in the year-ago period.

Gross margin for the Motorcycles segment was 30.5 percent in the fourth quarter of 2014 compared to 31.5 percent in the fourth quarter of 2013. Fourth-quarter operating margin for the Motorcycles segment was 3.5 percent compared to operating margin of 5.9 percent in last year's fourth quarter.

Twelve-Month Results: For the full year 2014, the Company shipped 270,726 motorcycles to dealers and distributors, a 3.9 percent increase compared to 2013 and in line with guidance. Full-year revenue from motorcycles was $4.39 billion compared to $4.07 billion in the year-ago period. Revenue from parts and accessories was $875.0 million compared to $873.1 million in 2013. Revenue from general merchandise was $284.8 million compared to $295.9 million in the prior year. Full-year gross margin for the Motorcycles segment was 36.4 percent, and operating margin was 18.0 percent compared to 35.4 percent and 16.6 percent respectively in 2013.

Financial Services Segment Results
Operating income from financial services was $62.4 million in the fourth quarter of 2014 compared to $61.3 million in last year's fourth quarter. Full-year 2014 operating income from financial services was $277.8 million compared to $283.1 million in 2013. Results for the fourth quarter and full year reflect the impact of higher credit losses.

Guidance
Harley-Davidson expects to ship 282,000 to 287,000 motorcycles to dealers and distributors worldwide in 2015, an approximate 4 to 6 percent increase from 2014 shipments. In the first quarter of 2015, the Company expects to ship 79,000 to 84,000 motorcycles compared to 80,682 motorcycles shipped in the year-ago period. The Company expects full-year 2015 operating margin of approximately 18 to 19 percent for the Motorcycles segment. The Company expects 2015 capital expenditures for Harley-Davidson, Inc. of $240 million to $260 million.

Income Tax Rate
For the full year 2014, Harley-Davidson's effective tax rate was 34.2 percent compared to 34.1 percent in 2013. The Company expects its full-year 2015 effective tax rate will be approximately 35.5 percent.

Cash Flow
Cash and marketable securities totaled $964.0 million at year-end 2014 compared to $1.17 billion at year-end 2013. In 2014, Harley-Davidson generated $1.15 billion of cash from operating activities compared to $977.1 million in 2013. On a discretionary basis, the Company repurchased 3.3 million shares of Harley-Davidson, Inc. common stock during the fourth quarter of 2014 at a cost of $222.1 million. For the full year 2014, Harley-Davidson repurchased 9.1 million shares of its common stock at a cost of $604.0 million. In the fourth quarter of 2014, there were approximately 214.4 million Harley-Davidson weighted-average diluted common shares outstanding. At the end of 2014, 20.9 million shares remained on board-approved share repurchase authorizations.

Company Background
Harley-Davidson, Inc. is the parent company of Harley-Davidson Motor Company and Harley-Davidson Financial Services. Harley-Davidson Motor Company produces cruiser and touring motorcycles and offers a complete line of Harley-Davidson motorcycle parts, accessories, riding gear and apparel, and general merchandise. Harley-Davidson Financial Services provides wholesale and retail financing, insurance, extended service and other protection plans and credit card programs to Harley-Davidson dealers and riders in the U.S., Canada and other select international markets. For more information, visit Harley-Davidson's Web site at www.harley-davidson.com.

Conference Call and Webcast Presentation
Harley-Davidson will discuss fourth-quarter and full-year results on a Webcast at 8:00 a.m. CT today. The supporting slides will be posted prior to the call and can be accessed at http://investor.harley-davidson.com/. Click "Events and Presentations" under "Resources." The audio portion of today's call will also be posted at harley-davidson.com beginning approximately two hours after the conclusion of the call for one year. The audio may also be accessed through Feb. 12, 2015, by calling 404-537-3406 or toll-free in the U.S. at 855-859-2056, pin number 57237851#.

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) execute its business strategy, (ii) manage through changes in general economic conditions, including changing capital, credit and retail markets, and political events, (iii) adjust to fluctuations in foreign currency exchange rates, interest rates and commodity prices, (iv) continue to develop the capabilities of its distributors and dealers and manage the risks that our independent dealers may have difficulty obtaining capital and managing through changing economic conditions and consumer demand, (v) manage risks that arise through expanding international manufacturing, operations and sales, (vi) manage through the effects inconsistent and unpredictable weather patterns may have on retail sales of motorcycles, (vii) manage changes and prepare for requirements in legislative and regulatory environments for its products, services and operations, (viii) manage supply chain issues, including quality issues and any unexpected interruptions or price increases caused by raw material shortages or natural disasters, (ix) detect any issues with our motorcycles or any associated manufacturing processes to avoid delays in new model launches, recall campaigns, increased warranty costs or litigation, (x) develop and implement sales and marketing plans that retain existing retail customers and attract new retail customers in an increasingly competitive marketplace, (xi) implement and manage enterprise-wide information technology solutions, including solutions at its manufacturing facilities, and secure data contained in those systems, (xii) develop and introduce products, services and experiences that are successful in the marketplace, (xiii) continue to realize production efficiencies at its production facilities and manage operating costs including materials, labor and overhead, (xiv) execute its flexible production strategy, (xv) balance production volumes for its new motorcycles with consumer demand, (xvi) continue to manage the relationships and agreements that it has with its labor unions to help drive long-term competitiveness, (xvii) adjust to healthcare inflation and reform, pension reform and tax changes, (xviii) retain and attract talented employees, (xix) continue to have access to reliable sources of capital funding and adjust to fluctuations in the cost of capital, and (xx) manage the credit quality, the loan servicing and collection activities, and the recovery rates of HDFS' loan portfolio.

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 its motorcycles and related products and services and to meet its financial expectations also depends on the ability of the Company's independent dealers to sell its motorcycles and related products and services to retail customers. The Company depends on the capability and financial capacity 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 operating their businesses and selling Harley-Davidson motorcycles and related products and services as a result of weather, economic conditions or other factors.

Contact: Media, Kristen Cunningham, +1-414-343-4251, or Financial, Amy Giuffre, +1-414-343-8002


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