As expected, Harley-Davidson announced dire third quarter financial results this morning -- sales are down 21.3 percent year-on-year, but net income is down 84.1 percent -- but the fallout from the company's irresponsible business practices is shocking; Buell is being "discontinued" and MV Agusta, only acquired last year, will be sold.

"As our announcement regarding Buell and MV Agusta indicates, we are moving with the speed and decisiveness required to bring our business strategy to life," said Keith Wandell, the company's new CEO.  "The fact is we must focus both our effort and our investment on the Harley-Davidson brand, as we believe this provides an optimal path to sustained, meaningful, long-term growth."

Full details below. We'll bring you more analysis later today.
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Harley-Davidson announces 3rd quarter results, Unveils long-term business strategy

MILWAUKEE
(October 15, 2009) - Harley-Davidson, Inc. (NYSE:HOG) announced
decreased revenue, net income and earnings per share for the third
quarter of 2009 compared to the year-ago period, while reporting a
moderation in the decline of retail new Harley-Davidson motorcycle
sales compared to the second quarter.

Worldwide
retail sales of new Harley-Davidson® motorcycles declined 21.3 percent
in the third quarter compared to last year's third quarter, an
improvement from the 30.1 percent decline in this year's second
quarter.  An 84.1 percent decline in net income and an 84.5 percent
decline in diluted earnings per share from the year-ago quarter
reflected lower motorcycle shipments and the effects of the economy on
retail and wholesale loan performance at Harley-Davidson Financial
Services.

Harley-Davidson also unveiled major elements of its
go-forward business strategy to drive growth through a single-minded
focus of efforts and resources on the unique strengths of the
Harley-Davidson brand, and to enhance productivity and profitability
through continuous improvement. As approved yesterday by
Harley-Davidson's Board of Directors, the Company will discontinue its
Buell product line and divest its MV Agusta unit as part of this
strategy.

"While the environment remains challenging for us, we
are mildly encouraged by the moderation in the decline of dealer retail
Harley-Davidson motorcycle sales," said Keith Wandell, Chief Executive
Officer of Harley-Davidson, Inc. "And moving forward, our strategy is
designed to strengthen Harley-Davidson for long-term growth and deliver
results through increased focus.  

"As our announcement regarding
Buell and MV Agusta indicates, we are moving with the speed and
decisiveness required to bring our business strategy to life," said
Wandell.  "The fact is we must focus both our effort and our investment
on the Harley-Davidson brand, as we believe this provides an optimal
path to sustained, meaningful, long-term growth."

Third Quarter and Nine-Month Results
Net income for the third quarter was $26.5 million, compared to $166.5 million in the third quarter of 2008, on revenue of $1.12 billion, compared to $1.42 billion in the year-ago period. Diluted earnings per share were $0.11 for the third quarter of 2009 and $0.71 in the year-ago period.

Through
nine months, Harley-Davidson, Inc. reported net income of $163.6
million, down 71.6 percent and diluted earnings per share of $0.70,
down 71.4 percent from the year-ago period. Revenue through nine months
was $3.57 billion, down 17.1 percent from the same period last year.

"Delivering Results Through Focus" Strategy
A key element of the Company's go-forward strategy is to focus on extending the Harley-Davidson brand by leveraging unique Harley-Davidson strengths. The strategy focuses company resources on Harley-Davidson products and experiences, global expansion, demographic outreach and commitment to core customers. In addition, the Company will continue to expand its initiatives to enhance profitability through continuous improvement in manufacturing, product development and business operations.

"We
are refocusing our business with the expectation that we can provide
growth that is both profitable and sustainable over the long term,"
said Wandell.  "We believe we can create a bright long-term future for
our stakeholders through a single-minded focus on the Harley-Davidson
brand."

The Company said it would share additional details about the strategy during its investor conference call today.

Details of Buell and MV Agusta Actions
The Company will discontinue production of Buell motorcycles. Remaining inventories of Buell motorcycles, accessories and apparel, while they last, will continue to be sold through authorized dealerships. Warranty coverage will continue as normal for Buell motorcycles and the Company will provide replacement parts and service through dealerships.

The
decision will result in a reduction over time of about 80 hourly
production positions and about 100 salaried positions at Buell.
Employment will end for a majority of Buell employees Dec. 18, 2009.

Harley-Davidson,
Inc. expects to incur approximately $125 million in one-time costs
related to the discontinuation of the Buell product line. The Company
expects to incur approximately $115 million of that amount this year.

Relative to MV Agusta, the Company will immediately commence efforts to sell the business, which is based in Varese, Italy.

In
the third quarter, Harley-Davidson, Inc. recorded a one-time
fixed-asset impairment charge of $14.2 million related to Buell and a
goodwill impairment charge of $18.9 million related to MV Agusta.

"Buell
and MV Agusta are great companies, with proud brands, high-quality
exciting products and passionate enthusiasm for the motorcycle
business. Buell has introduced many innovative advancements in
motorcycle design and technology over the years and MV Agusta is known
in Europe for its premium, high-performance sport motorcycles. However,
our strategy to focus on the Harley-Davidson brand reflects the fact
that we believe our investments in that brand are a better utilization
of overall company resources," said Wandell.

Motorcycles and Related Products Segment
Third Quarter.
Revenue from Harley-Davidson motorcycles during the third quarter of
2009 was $803.3 million, down 22.1 percent compared to the year-ago
period. The Company shipped 54,236 Harley-Davidson motorcycles to
dealers and distributors worldwide, down 27.4 percent from the third
quarter of 2008 but in line with previous guidance of 52,000 to 57,000
units.Revenue from Parts and Accessories totaled $221.8 million during
the quarter, down 14.4 percent and revenue from General Merchandise was
$70.7 million during the quarter, down 15.9 percent compared to the
year-ago period. Gross margin was 33.1 percent of revenue for the
quarter compared to 34.0 percent in the year-ago quarter. Operating
margin was 9.5 percent compared to 16.4 percent in the third quarter of
2008. Operating margin was affected largely by lower gross margin,
restructuring charges and impairment charges.

Nine Months.
Through nine months, revenue from Harley-Davidson motorcycles was $2.62
billion compared to $3.23 billion in 2008 on shipments of 187,085
Harley-Davidson motorcycles, compared to 226,898 motorcycles in 2008.
Revenue from Parts and Accessories totaled $623.1 million during the
first nine months, down 11.8 percent and revenue from General
Merchandise was $215.5 million during the nine-month period, down 12.0
percent compared to the year-ago period. Gross margin was 34.6 percent
and operating margin was 14.1 percent, compared to 35.4 percent and
18.9 percent respectively in the year-ago period.

Retail Motorcycle Sales.During
the third quarter, retail sales of Harley-Davidson motorcycles
decreased 21.3 percent worldwide, 24.3 percent in the U.S. and 13.1
percent in international markets, compared to the prior-year quarter.
Industry-wide U.S. retail heavyweight (651cc+) motorcycle sales
declined 35.9 percent during the quarter, compared to the year-ago
period.

For 2009 compared to 2008 through nine months, retail
sales of Harley-Davidson motorcycles decreased 22.9 percent worldwide,
25.5 percent in the U.S. and 16.5 percent in international markets.
Industry-wide U.S. retail heavyweight motorcycle sales declined 38.7
percent year to date in 2009, compared to 2008.

Harley-Davidson Financial Services
Harley-Davidson Financial Services recorded an operating loss of $31.5 million for the third quarter of 2009 compared to an operating profit of $35.6 million in the third quarter of 2008.  This decrease of $67.2 million was due to a higher provision for credit losses in both the retail and wholesale portfolios as well as increased interest expense.  Year to date through the third quarter, HDFS reported an operating loss of $110.8 million, compared to operating income of $107.7 million for the prior year period. The nine-month operating loss includes two non-cash charges recorded in the second quarter of 2009: a $72.7 million credit loss provision for a one-time reclassification of motorcycle loan receivables; and a one-time $28.4 million charge to write off goodwill associated with HDFS.

HDFS
continues to successfully access the credit markets to fund its lending
activities. On October 9, HDFS completed a $700 million term
securitization transaction with a weighted average interest rate of 1.2
percent.

Update on Restructuring Activities
On a combined basis, the Company expects previously announced restructuring activities, together with the discontinuation of Buell operations, to result in one-time charges of $215 million to $245 million over 2009 and 2010, or an increase of $55 million from the estimate provided July 16, 2009. The Company estimates annual ongoing savings from restructuring of approximately $140 million to $150 million. 

The
Company continues to pursue its previously announced  "two path" study
to determine whether additional major restructuring at York, Pa.
facility can make those operations competitive and sustainable long
term, or alternatively, whether the Company will relocate those
operations to another U.S. location.  As part of the restructuring
analysis, the Company has begun contract talks with the union
representing employees at York and expects to make a final decision on
the status of the York operations by the end of this year.

Income Tax Rate
The Company's third-quarter effective income tax rate was 61.8 percent compared to 38.2 percent in the same quarter last year.  This increase was due primarily to the tax implications of MV Agusta, including the non-deductible write down of goodwill, and the impact of reduced Company earnings.  The Company expects its full-year 2009 effective tax rate on continuing operations, excluding MV Agusta, to be approximately 59 percent due to the previously reported one-time charges for the Wisconsin tax law change and the non-deductible goodwill write-off for Harley-Davidson Financial Services, as well as the impact of reduced earnings for the remainder of the year.

Cash Flow
Cash and cash equivalents totaled $1.52 billion as of Sept. 27, 2009, compared to $504.4 million at the end of the year-ago period. Cash provided by operations was $511.1 million and capital expenditures were $89.4 million during the first nine months of 2009. For the full year, capital expenditures are now expected to be $125 million to $145 million, including $15 million to $25 million related to restructuring activities.

Guidance
The Company is narrowing its guidance for full-year 2009 shipments, and now expects to ship 222,000 to 227,000 Harley-Davidson motorcycles to dealers, including 35,000 to 40,000 during the fourth quarter. The Company continues to expect full-year gross margins to be between 30.5 percent and 31.5 percent.

Company Background
Harley-Davidson, Inc. is the parent company for the group of companies doing business as Harley-Davidson Motor Company (HDMC), Buell Motorcycle Company (Buell), MV Agusta and Harley-Davidson Financial Services (HDFS). Harley-Davidson Motor Company produces heavyweight custom, touring and cruiser motorcycles. Buell produces American sport performance motorcycles. MV Agusta produces premium, high-performance sport motorcycles sold under the MV Agusta® brand and lightweight sport motorcycles sold under the Cagiva® brand. HDFS provides wholesale and retail financing and insurance programs primarily to Harley-Davidson and Buell 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 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
strategy and successfully exit certain product lines and divest certain
company assets (ii) effectively execute the Company's restructuring
plans within expected costs and timing, (iii) successfully achieve with
our labor union partners flexible and cost-effective agreements to
accomplish restructuring goals and long-term competitiveness, (iv)
manage the risks that our independent dealers may have difficulty
obtaining capital, and adjusting to the recession and slowdown in
consumer demand,  (v) manage supply chain issues, (vi) anticipate the
level of consumer confidence in the economy, (vii) continue to have
access to reliable sources of capital funding and adjust to
fluctuations in the cost of capital, (viii) manage the credit quality,
the loan servicing and collection activities, and the recovery rates of
HDFS' loan portfolio, (ix) continue to realize production efficiencies
at its production facilities and manage operating costs including
materials, labor and overhead, (x) manage production capacity and
production changes, (xi) provide products, services and experiences
that are successful in the marketplace, (xii) develop and implement
sales and marketing plans that retain existing retail customers and
attract new retail customers in an increasingly competitive
marketplace, (xiii) sell all of its motorcycles and related products
and services to its independent dealers, (xiv) continue to develop the
capabilities of its distributor and dealer network, (xv) manage changes
and prepare for requirements in legislative and regulatory environments
for its products, services and operations, (xvi) adjust to fluctuations
in foreign currency exchange rates, interest rates and commodity
prices, (xvii) adjust to healthcare inflation, pension reform and tax
changes, (xviii) retain and attract talented employees, (xix) detect
any issues with our motorcycles or manufacturing processes to avoid
delays in new model launches, recall campaigns, increased warranty
costs or litigation, and (xx) implement and manage enterprise-wide
information technology solutions and secure data contained in those
systems.

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. Many of these risk
factors are impacted by the current turbulent capital, credit and
retail markets and our ability to adjust to the recession.

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.

Harley

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