Harley-Davidson, Inc Second Quarter Update July 19, 2011

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1 Mon. 4/19 AM Harley-Davidson, Inc Second Quarter Update July 19, Harley-Davidson Road Glide Custom

2 2 Agenda 2011 Second Quarter Update Introduction - Amy Giuffre, Director, Investor Relations Opening remarks Keith Wandell, CEO Financial Results John Olin, CFO HDFS Business Results Larry Hund, President, HDFS Q&A This presentation will include forward-looking statements that are subject to risks that could cause actual results to be materially different. Those risks include, among others, matters we have noted in our latest earnings release and filings with the SEC. Harley- Davidson disclaims any obligation to update information in this presentation. Risk factors are included at the end of this presentation.

3 Q Perspectives Keith Wandell, President & CEO

4 Perspective Strong Q2 Improvement U.S. and worldwide retail sales growth Raised shipment guidance 2012 Harley-Davidson XR1200X

5 Perspective Transformation Best in Class... Manufacturing Product Development Retail 2012 Harley-Davidson Nightster

6 Perspective Manufacturing York milestone: assembly operations under one roof All manufacturing transformation expected to be completed in Harley-Davidson Road King Classic

7 Perspective Product Development Lean Engineering Reduced Time to Market 2012 Harley-Davidson Tri Glide Ultra Classic

8 Perspective Retail Outstanding Customer Experience Every Time, Everywhere ecommerce 2012 Harley-Davidson Sportster 1200 Custom

9 Perspective Great Progress! One Company, One Team, One Direction 2012 Harley-Davidson Electra Glide Classic

10 Q Financial Results John Olin, Senior Vice President & CFO

11 Consolidated Motorcycles and Related Products (Motorcycles) and Financial Services Segments 11 Harley-Davidson, Inc. Results Q Vs. Q Results Continuing Operations Revenue $1.51 Billion Income $190.6 Million EPS $ % +36.8% +37.3% Earnings impacted by: Motorcycles Segment operating income up due to: 18% increase in revenue (+13% motorcycle shipments) Favorable restructuring charges offset by higher SG&A Financial Services Segment strong operating income Lower interest expense and higher effective income tax rate vs. last year

12 12 Motorcycle Retail Sales Worldwide Harley-Davidson motorcycle retail sales up 5.6% vs. prior year during Q2 driven by strong sales in the U.S. Worldwide Harley-Davidson Retail Sales Q2 11 YTD June 11 WW US International - Canada - Europe Region 5.6% 7.5% 2.4% -2.1% 2.6% 4.8% 4.4% 5.6% 0.6% 9.3% U.S. 651+CC Industry Retail Sales Industry up 3.8% June YTD H-D Market Share 53.8% June YTD Q2 53.9%, +1.5 pts. June YTD 53.8%, +0.2 pts. Harley-Davidson share of US 651+CC retail market - Asia Pacific Region 6.7% 1.9% 60.0% - Latin America Region -1.0% Worldwide H-D retail sales by quarter -2.9% 40.0% 20.0% 53.3% 54.9% 53.6% 53.8% 10% 5% 0% -5% -10% -15% -20% -25% 5.6% 3.5% -1.0% -5.5% -7.7% -18.2% -21.4% Q4 '09 Q1 '10 Q2 '10 Q3 '10 Q4 '10 Q1 '11 Q2 '11 0.0% FY 2009 FY 2010 June YTD '10 June YTD '11 Full Year H-D Market Share Up 1.6 percentage points June YTD H-D Market Share up 0.2 percentage points

13 Shipments & Mix Harley-Davidson motorcycle shipments were up 7,769 units during the second quarter compared to last year Harley-Davidson Motorcycle Shipments Total Units Shipped Q ,815 Vs. PY 13.2% Touring Custom Sportster 38.3% 37.7% 24.0% 100.0% 3.6 pts. (3.2) pts. (0.4) pts. In Q2 2011, 36.2% of shipments were international compared to 42.5% in Q Motorcycles and Related Products Segment 13

14 U.S. Harley-Davidson Dealer Network Second Quarter U.S. Dealer Inventory* Q Q Q Q Q U.S. dealer inventory continued to decline in Q2 U.S. shipments 42,623 / U.S. dealers retailed 53,599 motorcycles U.S. dealer inventory declined 3,500 versus Q U.S. dealer network prudently managing their businesses Pressured from macro-economic challenges, dealers are taking action: Continue to actively manage their expense structures Dealers sales of used H-D motorcycles up double-digits through May Total demand for Harley-Davidson Motorcycles remained strong through May *U.S. dealer network inventory of new Harley-Davidson motorcycles 14

15 Motorcycles and Related Products Segment July 19, 2011 Conference Call and Slide Presentation 15 Revenue Motorcycle Segment revenue was up $204.6 million, or 18%, in Q2 versus prior year Motorcycle Segment Revenue ($ Millions) Q % Change H-D Motorcycle P&A General Merchandise Buell Motorcycle Other Total Revenue $1, $1, % 10.2% 8.2% NM 15.5% 18.0% Q average H-D motorcycle revenue per unit up $968 compared to Q2 2010

16 Restructuring Cost $221 Actual Motorcycle Segment Restructuring Summary as of 7/19/11 $ Millions Total $164 Actual $80-$90 Estimated $25-$30 Estimated $490-$505 Estimated % Cash 65% 69% Approx. 95% Approx. 100% Approx. 80% Annual Savings Annual $91 Actual $172 Actual $210-$230 Estimated $275-$295 Estimated $305-$325 Estimated % SG&A 91% 64% 45%-55% 35%-45% 30%-40% Motorcycle and Related Products Segment 16

17 Motorcycle and Related Products Segment July 19, 2011 Conference Call and Slide Presentation 17 Gross Margin Q2 gross margin was adversely impacted by higher raw material cost and temporary inefficiencies at York which lowered manufacturing benefits Motorcycle Segment Gross Margin ($ Millions) Q2 YTD 2010 Gross Margin $397.0 $776.5 % of revenue 35.0% 35.7% -Volume - Currency -Mix - Raw Materials - Manufacturing (9.1) (2.1) 16.3 (14.8) (14.2) 2011 Gross Margin $468.3 $820.1 % of revenue 35.0% 34.1%

18 Motorcycle and Related Products Segment July 19, 2011 Conference Call and Slide Presentation 18 Operating Income Second quarter operating margin was up 2.5 ppts. behind higher gross margin compared to last year Motorcycle Segment Operating Income ($ Millions) Q2 YTD 2010 Operating Income $157.9 $284.0 Operating Margin (% of revenue) 13.9% 13.1% - Gross Margin Impact - Restructuring - SG&A 2011 Operating Income (25.9) $ (24.5) $344.9 Operating Margin (% of revenue) 16.4% 14.4%

19 Motorcycle and Related Products Segment July 19, 2011 Conference Call and Slide Presentation 19 HDFS Operating Income Financial Services Segment (HDFS) operating income benefited from favorable retail credit loss performance and net interest income HDFS Operating Income ($ Millions) Q2 YTD 2010 Operating Income $60.8 $ Net interest Provision for retail motorcycle loan losses Provision for wholesale loan losses 0.6 (1.1) - Operating expenses All other Operating Income $82.0 $150.0

20 Financial Services Segment July 19, 2011 Conference Call and Slide Presentation 20 HDFS Results Q HDFS Originated $777.7 million in retail motorcycle loans (+19%) 52.5% share of U.S. Harley-Davidson new retail sales $6.11 billion in finance receivables outstanding (-6.8% yr/yr) $5.37 billion retail $733.8 million wholesale YTD new originations 80-85% prime

21 Financial Services Segment July 19, 2011 Conference Call and Slide Presentation 21 HDFS Results 6% Retail 30+ Day Delinquencies Managed Retail Motorcycle Loans 5% 4.36% 4.65% 4.97% 4.50% 4% 3.61% 3.53% 3% Q Q Q Q Q Q Annualized Loss Experience Managed Retail Motorcycle Loans 4% 2.69% 3% 2.14% 2.04% 1.63% 2% 1.20% 1.06% 1% Q Q Q Q Q Q2 2011

22 Consolidated Motorcycles and Related Products and Financial Services Segments July 19, 2011 Conference Call and Slide Presentation 22 Harley-Davidson, Inc. Cash Cash/Liquidity Position 2011 Liquidity Strategy As of June 26, 2011 ($ Billions) Cash & Marketable Securities H-D, Inc. $0.93 HDFS $0.29 Total $1.22 Availability Bank Credit Facilities $0.41 Asset-Backed Conduit $0.60 Total Availability $1.01 Maintain a minimum of 12 months of projected liquidity in cash and/or committed credit facilities Obtain cost-effective funding through diversified sources Balance long-term and short-term funding vehicles Less reliance on ABS market Extension of debt maturities (MTNs) Recent Transactions Q Day credit facility expired in April, replaced with 4-year, $675M credit facility Increased Q shareholder dividend by 25% ($0.125 vs. $0.10 in Q1 2011)

23 Consolidated Motorcycles and Related Products and Financial Services Segments July 19, 2011 Conference Call and Slide Presentation 23 Harley-Davidson, Inc Harley-Davidson, Inc. Continuing Operations Cash & Marketable Securities 6/26/11 - $1.22 billion vs. $1.50 billion 6/27/10 Operating cash flow first half $473 million provided vs. $726 million provided in 2010 First half 2011 Motorcycles & Related Products operating cash provided of $311 million vs. $297 million provided in 2010 $200 million cash contribution to pension plans Capital spending first half 2011 $69.3 million vs. $45.8 million in 2010 Depreciation expense first half 2011 $89.5 million vs. $136.6 million in 2010 Continuing operations tax rate first half % vs. 36.4% in 2010

24 Consolidated Motorcycles and Related Products and Financial Services Segments July 19, 2011 Conference Call and Slide Presentation Guidance 2011 Guidance (as of July 19, 2011) Ship 228,000 to 235,000 H-D Motorcycles in 2011 (Q ,000 to 65,000) Gross Margins between 34.0% and 35.0% Capital Expenditures between $210 to $230 million Includes $70 - $85 million capital expenditures expected for restructuring activities 2012 Harley-Davidson Forty-Eight

economic challenges Continue to invest in future growth Focused

25 25 Harley-Davidson, Inc. Progress along journey to growth Prudently managing through the economic challenges Continue to invest in future growth Focused on results Strong Margins / Strong Returns Returning value to shareholders 2012 Harley-Davidson SuperLow

26 26 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 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 forwardlooking 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.

27 27 Forward-Looking Statements (cont.) 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) effectively execute the Company s restructuring plans within expected costs and timing, (iii) implement and manage enterprise-wide information technology solutions, including solutions at its manufacturing facilities, and secure data contained in those systems (iv) anticipate the level of consumer confidence in the economy, (v) continue to realize production efficiencies at its production facilities and manage operating costs including materials, labor and overhead, (vi) successfully implement with our labor unions the agreements that we have executed with them that we believe will provide flexibility and cost-effectiveness to accomplish restructuring goals and long-term competitiveness, (vii) manage supply chain issues, including the ability of several Company suppliers to execute short-term and long-term contingency plans for maintaining supply, or obtaining alternate supply, of certain components and sub-components currently manufactured in Japan, (viii) manage production capacity and production changes, (ix) provide products, services and experiences that are successful in the marketplace, (x) develop and implement sales and marketing plans that retain existing retail customers and attract new retail customers in an increasingly competitive marketplace, (xi) <update?>manage the risks that our independent dealers may have difficulty obtaining capital and managing through unfavorable economic conditions and consumer demand, (xii) continue to have access to reliable sources of capital funding and adjust to fluctuations in the cost of capital, (xiii) manage the credit quality, the loan servicing and collection activities, and the recovery rates of HDFS loan portfolio, (xiv) sell all of its motorcycles and related products and services to its independent dealers, (xv) continue to develop the capabilities of its distributor and dealer network, (xvi) manage changes and prepare for requirements in legislative and regulatory environments for its products, services and operations, (xvii) adjust to fluctuations in foreign currency exchange rates, interest rates and commodity prices, (xviii) adjust to healthcare inflation and reform, pension reform and tax changes, (xix) retain and attract talented employees, and (xx) detect any issues with our motorcycles or manufacturing processes to avoid delays in new model launches, recall campaigns, increased warranty costs or litigation.

28 Forward-Looking Statements (cont.) 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 changing capital, credit and retail markets and our ability to manage through inconsistent economic conditions. 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. 28

Harley-Davidson, Inc Fourth Quarter Update January 29, 2013

Harley-Davidson, Inc Fourth Quarter Update January 29, 2013 Mon. 4/19 AM Harley-Davidson, Inc. 2012 Fourth Quarter Update January 29, 2013 2013 CVO TM Breakout TM Introduction Amy Giuffre, Director, Investor Relations Opening Remarks Keith Wandell, CEO H-D, Inc.