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.