HARLEYDAVIDSON,INC.

CompanyProfile AccountingAnalysis FinancialAnalysis MarketingAnalysis Recommendations Conclusion

HARLEYDAVIDSON,INC.
CompanyProfile Worldsleadingdesignerandmanufacturerofheavyweight(651+cc) motorcyclesandrelatedproductsandmerchandise KeyOperations:HarleyDavidsonMotorCompanyandHarley DavidsonFinancialServices RecentMilestones o 2008:105th AnniversaryofHarleyDavidson o 2009:KeithE.Wandell namedPresidentandCEO;Restructuring Planlaunched o 2010:Indiaselectedassecondinternational o assemblysite

HARLEYDAVIDSON,INC.
CompanyProfile AccountingAnalysis FinancialAnalysis MarketingAnalysis Recommendations Conclusion

HARLEYDAVIDSON,INC.
AccountingAnalysis PerformanceMetrics
HOG asof9/30/10 EPS P/E Price/Sales InventoryT/O A/RTurnover CurrentRatio Debt/Equity LTDebt/Assets ROE ROA GrossMargin NetMargin asof12/31/10 Price/Book Beta EBITDMargin 3.48 2.32 15.18 1.62 2.08 5.35 6.84 3.04 15.36 2.95 1.11 45.16 11.76 1.77 13.00 0.65 47.88 1.46 9.20 15.70 1.83 280.24 61.12 17.37 3.71 36.65 7.44 0.34 43.38 0.39 5.40 13.40 2.19 0.00 0.00 41.38 26.00 29.16 10.13 1.48 N/A 0.44 5.10 8.00 1.77 384.20 30.53 13.82 1.05 22.48 0.88 0.02 404.31 2.51 3.30 52.70 3.54 0.00 0.00 4.71 3.78 16.96 4.16 4.02 18.06 1.07 6.80 23.80 1.60 67.13 20.57 70.45 21.12 25.98 8.14 ACAT BC MPX PII

HARLEYDAVIDSON,INC.
AccountingAnalysis PerformanceMetrics InventoryTurnover:increasingamountoffunds tiedupininventory

InventoryTurnover
16.0x 12.0x Multiple 8.0x 4.0x 0.0x 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Year

HARLEYDAVIDSON,INC.
AccountingAnalysis PerformanceMetrics AccountsReceivableTurnover:decreaseduetodropinRevenuesin recentyears

AccountsReceivableTurnover
50.0x 40.0x Multiple 30.0x 20.0x 10.0x 0.0x 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Year

HARLEYDAVIDSON,INC.
AccountingAnalysis PerformanceMetrics LTDebttoAssets:highrelianceondebtfinancing, increasingovertime

DebttoAssetsRatio
70% 60% 50% Multiple 40% 30% 20% 10% 0% 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Year

HARLEYDAVIDSON,INC.
AccountingAnalysis MethodologyandDisclosures InventoryValuation:combinationofbothLIFOandFIFO,dependent onwherematerials/goodsaresourced;decreasingLIFOReserve indicatesatrendtosourcemoreinventoryfromabroad
LIFOReserve
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 0 5 10 15 20 25 30 35 40 45

$inMillions

Year

HARLEYDAVIDSON,INC.
AccountingAnalysis MethodologyandDisclosures Goodwill Impairmentof$28.4millionin2009,duetosignificantlossesand writedownsinHDFSsloanportfolio; HDFSwasacquiredasEaglemark FinancialServicesin1995for$43.0 millioninexcessoffairvalue

HARLEYDAVIDSON,INC.
AccountingAnalysis MethodologyandDisclosures SafetyRecallCampaignLiabilities:increasesoverlastthreeyears duetopossibleincreaseduseofforeignpartsandcomponentsof lesserquality
SafetyRecallCampaignLiability
8 7 6 $inMillions 5 4 3 2 1 0 2007 2008 Year 2009 $3.7 $4.6 $6.7

HARLEYDAVIDSON,INC.
CompanyProfile AccountingAnalysis FinancialAnalysis MarketingAnalysis Recommendations Conclusion

HARLEYDAVIDSON,INC.
FinancialAnalysisOverview(2010Q3vs.2009Q3)
KeyMetrics Revenue (HDMC+HDFS) Revenue(HDMC) GrossProfit OperatingExpense EBITDA NetIncome(Excl.Unusual Items) DilutedEPS(Excl.Unusual Items) B/W 1% (2%) 25% 11% 35% 66% 66%

HARLEYDAVIDSON,INC.
FinancialAnalysis Profitability
Profitability
5.00 4.00 3.00 2.00 1.00 0.00 1.00 2005 EPS 2007 2009 2010Q2 7000 6000 5000 4000 3000 2000 1000 0 Millions

Salesdecreasedto$5B, lowestsince2006 Earningspersharehas beendeclining,hitthe lowestpointin2009 EBITDAandEBITmargin havebeendecliningover theyears

EPSBeforeAbnormalItems

Sales(Revenuein$MM)

EBITDA&EBITMargins
40% 30% 20% 10% 0% 2005 2007 2009 2010Q2

EBITDAMargin(ExclAbnornalItems) EBITMargin(ExclAbornmalItems)

HARLEYDAVIDSON,INC.
FinancialAnalysis Leverage
100% 80% 60% 40% 20% 0% 2005 2007 DebttoAssetratio 2009 2010Q2 DebttoEquityratio

LeverageRatio

350% 300% 250% 200% 150% 100% 50% 0%

HDishighlylevered o TheDebttoEquityisat 246%in2010Q3

o

TheDebttoAssetRatio isat78%in2010Q3

1000 500 0 2005 500 1000

FreeCashFlow

2007

2009

2010Q2

HDhasbeenmaintaining freecashflow;withadipin 2009

FreeCashFlow($MM)

HARLEYDAVIDSON,INC.
FinancialAnalysis LiquidityStanding
4.00 3.50 3.00 2.50 2.00 1.50 1.00 0.50 0.00 2005 2007 2009 Currentratio 2010Q2

CurrentRatio

TheCurrentratiohas beenfallingsince2005. Asof2010Q3itwas1.8

80% 70% 60% 50% 40% 30% 20% 10% 0% 2005

LineofCreditUtilization

1400 1200 1000 800 600 400 200 0

HDhasbeenutilizing itslineofcreditlately: utilizationratejumped to72%in2009

2006

2007

2008

2009 Lineofcreditutilization

TotalAvailableLineOfCredit($MM)

HARLEYDAVIDSON,INC.
FinancialAnalysis Valuation DiscountedCashFlow o Discountedby~11%WACC o ProjectedSalesgrowthof8.8%CAGRfrom20102015 o Terminalgrowthrateof4% o SensitivityAnalysisofthestockPrice $3135 AsofDec11th ,2010HDstockclosedat$33.69 TheStockispricedwithinacceptablerangebythemarket

HARLEYDAVIDSON,INC.
CompanyProfile AccountingAnalysis FinancialAnalysis MarketingAnalysis Recommendations Conclusion

HARLEYDAVIDSON,INC.
MarketingAnalysis ProductsandServices
Bikes HarleyDavidson Motorcycles (80%Revenue) Trikes Parts Merchandise

Insurance HarleyDavidson FinancialServices (20%Revenue)

WholesaleFinancing

RetailFinancing

HARLEYDAVIDSON,INC.
MarketingAnalysis CustomerSegmentation
CustomerDemographicsby Age
55 MedianAge 50 45 40 35 2004 2005 2006 Year 2007 2008

MedianAge: 47(in2008) Hasincreasedby6months peryearforlast20years

CustomerDemographicsby Gender
100% Customers(%) 80% 60% 40% 20% 0% 2007 2006 2005 Year 2004 2003 Male Female

Consistent8889%male ownershiprate

HARLEYDAVIDSON,INC.
MarketingAnalysis MarketShare

Internationalshipments havebeenincreasingas percentageoftotalHD motorcycleshipments 2008:32% 2009:35.2%

UnitShipments
250000 200000 Units 150000 100000 50000 0 2008 Year 2009 UnitedStates International

HARLEYDAVIDSON,INC.
MarketingAnalysis DistributionChannels Distribution
IndependentDistributors HDOnly Buellonly HDandBuell Total SecondaryRetailLocations AlternateRetailOutlets SeasonalRetailOutlets Total
NorthAmerica US 0 Canada 1 Europe Region 3 AsiaPacific Region 0 LatinAmerica Region 0

FullServiceDealerships
389 0 282 671 25 0 46 71 52 2 315 369 110 2 86 198 16 0 18 34

NonTraditionalRetailers
87 83 10 180 3 5 1 9 2 8 0 10 4 6 0 10 6 15 1 22

HARLEYDAVIDSON,INC.
MarketingAnalysis CompetitivePositioningStrategy

Value

Quality

HARLEYDAVIDSON,INC.
MarketingAnalysis HistoricBrandMeaning
HarleyDavidsonLifestyle Freedom,Rebellion 1MMinHOGBrandCommunity Senseofbelonging Highqualitydesign andproduct

ASPIRATIONAL EMOTIONAL FUNCTIONAL BASIC PRODUCT

LadderedHierarchyofcustomerneeds

TheHOGMission: MakingtheHarleyDavidsonDreamaWayofLife

HARLEYDAVIDSON,INC.
MarketingAnalysis LossofBrandEquity Downfrom#74to#98inglobal brandranking(Interbrand)dueto: o Agingmarketproblem o Lossofrebelliousbrandimage o Negativecompanypress o Massmarketingstrategies havedilutedthebrand

HARLEYDAVIDSON,INC.
Recommendation RefocusMarketingStrategyaroundBrand

RELEVANCE

Freedom

Authenticity

CREDIBILITY

REBEL
DIFFERENTIATION

STRETCH

Badboy

American

Relevance:Attractivetoawider market Stretch:Rebellionmeansawide rangeofthingstodifferent consumers Credibility:HDhashistorically stoodforrebellion;category Differentiation:HDisthe rebelmotorcyclebrand

SymantecBrandOpportunityFramework

HARLEYDAVIDSON,INC.
Recommendation RefocusMarketingStrategyaroundBrand Forallprint,TV,andonline messagingchannelseliminate anyimagesthatcontradicta rebelliousimage HDshouldlimittheamountof lowendapparelsoldintheU.S. market HDshouldabandontheWERIDE Magazine,oranyotherobvious femaleorientedmarketing

HARLEYDAVIDSON,INC.
Recommendation MarkettoYoungerDemographic Relyonundergroundmediachannels,suchastheVice Magazineblog AvoidusingTVorlargescaleeventswhichcouldappeartoo mainstream UtilizeretroAmericanarebelliousimages,whichcouldgive thebrandamoreclassicvintagefeel(i.e.JamesDeanmore thanaHellsAngel).

HARLEYDAVIDSON,INC.
Recommendation MarkettoYoungerDemographic
PBRsalesarenowgrowingat about30%peryear Onlylargescaledomestic brewerytogrowduringthe recession PBRcurrentlypricedatover $250milliondollars

SoftTouch Marketing Underground Media CoreValues

Credibility/ Authenticity Cynicism Anti Mainstream BrandAdoption Rebellion Retro Americana

HARLEYDAVIDSON,INC.
Recommendations FutureMarketingStrategy
CounterLoss ofBrand Equity Refocus Brand Marketto Younger Demographic Manageimageofconsumers Reducemassmarketing

Returntocoreattributes:rebellion,freedom

Utilizeantimarketingstrategies Focusonretromodelsandadvertising

HARLEYDAVIDSON,INC.
Recommendation IncreaseFootprintinIndia
AsianMotorcycleMarketShare

INDIA
Highgrowthpotential Existingcapitalcommitment Brandawareness

(2009)
SouthKorea 1% Japan 11% China 56% Other 8%

India 24%

HarleyDavidson,Inc.
Recommendation IncreaseFootprintinIndia
MotorcycleSalesVolume
(India)
14,000 12,000 10,000 UnitsSold 8,000 6,000 4,000 2,000 0 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Year

2005 2009CAPR 5.5% 2010 2014CAPR 5.1% ProjectedUnitSales (thousands) 2010=9,849 2011=10,351 2012=10,879 2013=11,434 2014=12,017

HARLEYDAVIDSON,INC.
Recommendation IncreaseFootprintinIndia
UnitSales
400,000 350,000 300,000 250,000 200,000 150,000 100,000 50,000 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 IndiaExpansion International Domestic

Year UnitSales

2010 200

2011 500

2012 2,000

2013 5,000

2014 8,000

HARLEYDAVIDSON,INC.
Recommendation IncreaseFootprintinIndia

India

Current
Chandigarh NewDelhi Mumbai Hyderabad Bengaluru

Proposed
Kolkata Chennai Ahmedabad Pune Surat Kanpur Jaipur Lucknow Nagpur Patna

HARLEYDAVIDSON,INC.
Recommendations FutureinIndia
GrowMarket Share Growdealernetwork Smallerbikes,lowercost Marketresearchtoprotectbrand Purchaseparts/materialslocally ExpandCKDfacilityasdemandgrows Feasibilityofmanufacturinglocally,brandandcosts

Source Locally BuildOn Production Capability

HARLEYDAVIDSON,INC.
CompanyProfile AccountingAnalysis FinancialAnalysis MarketingAnalysis Recommendations Conclusion

HARLEYDAVIDSON,INC.
Conclusion Theroadahead
RefocusBrand=>HarleyDavidsonscoreasset

StrategicExpansiontoIndia

ShortandLongTermGrowth

HARLEYDAVIDSON,INC.

Questions?

HARLEYDAVIDSON,INC.

Appendices

HARLEYDAVIDSON,INC.
DCFSensitivityAnalysis

HARLEYDAVIDSON,INC.
WeightedAverageCostofCapital

HARLEYDAVIDSON,INC.