EXECUTIVE SUMMARY Harley-Davidson is the largest market share holder of motorcycles over 750cc in the United States

. After the expansion of our production and distribution capacity, we will be in the position to meet the increasing demand for our motorcycles and other products. Growth potential appears very good especially in the overseas market. Gaining a larger market share in these area may require a further increase in production and distribution capacities. We must plan for expansion now and continue to grow as a company. COMPANY DESCRIPTION In Milwaukee, William Harley, 21, and Arthur Davidson, 20, began experiments on taking the work out of bicycling. They were soon joined by Arthur s brothers, Walter and William. Many changes were made to the engine design before its builders were satisfied. After the new looped from was finalized, they were ready to begin production. In 1903 they produced three motorcycles. Harley-Davidson erected its first building the current Juneau avenue site in 1906 and incorporated in 1907. In 1907 Harley-Davidson produced 150 motorcycles. SITUATION ANALYSIS The motorcycle market over 750cc has been increasing over the last five years. The Harley-Davidson 1996 model year production line, sold though a world wide network of more than 1,000 dealers, includes 20 cruiser, factory custom and touring motorcycles, as well as police motorcycles. Harley-Davidson benefits form having one of the world s most recognized and respected brand names and our motorcycle model names are among the best known in

the industry: The Competition and Market share This chart shows the competition and market share for 1995 in the United States: Current Market Situation Overall Net sales for 1995 of $1.4 billion were $191.6 million, or 16.5%, higher than net sales for 1994. Net income and earnings per share from continuing operations were $111.1 million and $1.48, for 1995 as compared with $96.2 million and $1.26, for 1994. Net income and earnings per share from discontinued operations were $1.4 million and $.02, for 1995 as compared with $8.0 million and $.11, for 1994, which included a $4.6 million, or $.06 per-share, one-time tax benefit related to the legal reorganization of Holiday Rambler. On January 22, 1996, the Company announced its strategic decision to discontinue the operations of the Transportation Vehicles segment in order to concentrate its financial and human resources on its core motorcycle business. The Company does not anticipate a loss on the discontinuance of the Transportation Vehicles segment. The results of the Transportation Vehicles segment have been reported separately as discontinued operations for each year presented. On November 14, 1995, the Company acquired substantially all of the common stock and common stock equivalents of Eaglemark Financial Services, Inc. that it did not already own. The purchase price was approximately $45 million, which was paid from internally generated funds and short-term borrowings. The Company has included the results of operations of the Financial Services segment ($3.6 million) in its statement of operations

The Company increased its quarterly dividend in September from $. The manufacturing strategy is designed to increase capacity. The increase in motorcycle shipments is the result of ongoing implementation of the Company's manufacturing strategy and efforts to satisfy demand. Units Shipped and Net Sales The Motorcycles and Related Products (Motorcycles) segment's net sales increased 16. the rate increased to 470 units per day by the end of the year. 1995 as though it had been acquired at the beginning of the year and deducted the preacquisition earnings as part of non-operating expense.000 units in 1995 and anticipates 1996 production will reach at least 115. adjust to changes in the market place and further improve product quality while reducing costs.for the year ended December 31.18 per share.05 per share which resulted in a total year pay out of $. The Company exceeded its production goal of 100.000 units.5% over 1994 due primarily to a 9. The Company began 1995 at a scheduled motorcycle production rate of 395 units per day. The Company is currently reviewing alternative sites for the construction of a new manufacturing facility to enable it to achieve its long-term goal of doubling motorcycle production . Sales of Buell motorcycles (which are distributed through select Harley-Davidson dealers) increased to $14 million in 1995 as compared to $6 million in 1994.04 per share to $.0% increase in its Parts and Accessories business.293 unit (9.7%) increase in motorcycle shipments. As the implementation of the manufacturing strategy continued. as well as a 14.

The Company distributes approximately one-half of its exported units through its wholly owned subsidiaries in Germany. Year-end data indicates that the domestic (United States) motorcycle market continued to grow throughout 1995. which allows the Company flexibility in responding to changing economic conditions in a variety of foreign markets. Japan and the United Kingdom. Demand for the Company's motorcycles continues to exceed supply with nearly all of the Company's independent domestic dealers reporting retail orders on all of their remaining 1996 model year motorcycle allocations (production through June. The Company ended 1995 with a domestic market share of 55. While definitive market share information (engine displacements in excess of 751cc) is not available in many foreign countries.6 million (19. The Company has exported approximately 30% of its motorcycle unit shipments since 1990 and expects to maintain approximately the same percentage during 1996. . 1996).8% compared to 56.8 million during 1995.3% . industry registrations of domestic heavyweight (engine displacements in excess of 751cc) motorcycles were up 11. This decrease is a reflection of the Company's constrained production capacity in a growing heavyweight motorcycle market.by 2003.1% in 1994. the Company believes it holds an approximate 11% market share in the European markets in which it competes and a 22% market share in the Pacific Rim. Export revenues totaled $394. Compared to 1994.2%) over 1994. an increase of approximately $63.

while the Motor Parts and Motor Accessories businesses are expected to increase. The Motorclothes business. the Company plans to construct a new distribution center (at an approximate cost of $17 million). which accounted for approximately $100 million of Parts and Accessories sales in 1995.8%. in 1995 as compared with 1994 primarily due to an increase in volume. The Company is developing an improved system to better monitor domestic dealer inventories and retail traffic. The gross profit margin was negatively . Gross Profit Gross profit increased $53. The rate of increase is lower than experienced in recent years. however.1 million. is expected to remain stable in 1996. an increase of 14. the Parts and Accessories business generated $292. and the facility should be fully operational by the first quarter of 1997. The gross profit margin was 30. management believes the 1995 increase is more indicative of the long-term growth potential of the Parts and Accessories business.9% in 1994. To further strengthen its ability to process and fill orders for the Parts and Accessories business. The Parts and Accessories business is expected to grow at an annual rate similar to the annual growth rate in motorcycle shipments. the Company initiated several promotional programs in the fourth quarter of 1995 to increase dealer floor traffic and plans to continue this promotional strategy in 1996. In addition.0% over 1994. Construction is scheduled to begin in the second quarter of 1996.5% in 1995 as compared with 30. or 14.3 million in revenues.During 1995.

affected by the overtime incurred to produce additional motorcycle units and make up for production time lost because production employees were involved in numerous strategic planning sessions during 1995. It important to us to offer the highest quality product possible. . dealers. investors. international company-a leader in its commitment to continuously improve the quality of mutually beneficial relationships with stakeholders (customers. suppliers. employees. Harley-Davidson believes the key to success is to balance stakeholders' interests through the empowerment of all employees to focus on value-added activities. Inc. This value added mentality helps us to improve our product quality. governments and society). Internal & External Analysis Strengths ¨ Customer Loyalty and Following ¨ Very High Product Demand ¨ Profitable Product Line and Market Mix ¨ Highest Market Share for Motorcycles over 750cc in the United States ¨ Union Contract That is beneficial to both the Firm and the Employees ¨ Significant opportunities in the growing worldwide motorcycle market ¨ A proven management team that s committed to build a beneficial relationship with all of the stakeholders for the long term ¨ Increased capacity with the construction of new plant and distribution center Weaknesses ¨ Inefficiency due to Large Production Level ¨ More Demand than Supply ¨ Lower Than expected Sales in Motor Clothes ¨ Lingering biker image MARKETING PLAN OBJECTIVES Harley-Davidson. is an action-oriented. In addition to quality we have also been focusing on service.

Many of our dealers are continuing to make major investments in the future growth of their businesses-such as converting their dealerships into world-class retail sales establishments through our Designer Store program. Organization Goals ¨ By the year 2003. adding new production and retail distribution points ¨ Grow Parts and Accessories sales volume. expected to be completed by year-end '96 in Milwaukee. as a percent of total revenue. we will produce 200. we're dedicated to maintaining leadership in our traditional motorcycle segments and gaining further penetration into the performance market through our joint venture with Buell. Both we and our dealers are investing in training and education. we're re-defining the market with exciting new products. should give our staff the room and tools they need to maintain our market leadership. With worldwide motorcycle market growth expected to continue. We want to ensure that while our competitors are busy copying our past work. building larger dealerships. We will also be focusing more strongly than ever before on new product development. and where necessary. Our new Product Development Center.000 motorcycles annually ¨ Complete the production of our Product Development Center in Milwaukee by the end of 1996 ¨ Meet the demand by expanding our existing distribution and manufacturing capacity. to better serve the motorcycling community. expanding their existing service areas or opening alternate 'satellite stores in high traffic areas. for both new and used vehicle .

customers ¨ Drive financial results to the levels achieved by acknowledged high performing companies TARGET MARKETS THE HARLEY OWNERS GROUP The Harley Owners Group. atlas.G. our Fly & Ride program can get you aboard a rental Harley. Besides the H. Plans for 1996 include analysis of dealer five-year plans and local market variables to establish priorities for implementation of dealership improvements and additions. especially Harley-Davidsons. There's Hog Tales magazine to keep you up on club events. membership card and H. Over the last decade women have become a significant purchaser of motorcycles. Harleys are not just for men. MARKETING STRATEGY The Americas Our top priority in the United States is to grow primarily through our existing dealers. but we will never forget where we came from.O.000 members and 900 local chapters located around the globe.O. is the world's largest factory-sponsored motorcycle organization. pin and patch. The owners of Harley-Davidson motorcycles are among the most diverse group of consumers in any industry. members get treated to benefits that are as helpful as the suspension under a Softail seat. We'll also begin to bring more consistency to our dealer network by helping dealers improve their businesses based on a best practice model that incorporates local market data and customer input with .G. Recently our target market has shifted more toward the upper end of the buyer market. If you're off to certain far flung spots. with more than 300..G. or H. They range from blue collar factory workers to Doctors and Layers.O.

These outlets. Our second priority is to grow through new dealers on an asneeded basis. we've opened two flagship stores in major markets-North London and . we're allocating more resources to future growth of South and Central America. Although still in the developmental stages.characteristics of our most successful dealerships. dealers and customers there. The start-up of a European Distribution Center in Rotterdam has consolidated our motorcycle and P&A distribution under one roof. We are currently considering new markets in which to open additional dealerships in 1996 and beyond. dealer-owned motorcycle service facilities or stores carrying mostly MotorClothes. Peru. Colombia and Lima. we consider this to be a market that is ripe with new opportunities. In 1995. Genuine Motor Accessories and Genuine Motor Parts. To further bolster Harley-Davidson's brand image. are smaller. allowing us to improve service levels and develop a stronger competitive advantage in the marketplace. Europe Although our European presence goes back over 80 years. while adding new satellite outlets where necessary to increase customer convenience and satisfaction. Our emphasis in 1995 was simply to focus on the basics by establishing Harley-Davidson Europe headquarters in the United Kingdom and creating an in-country management team dedicated to improving the bond between HarleyDavidson and our distributors. Mexico and the Caribbean. typically located in high traffic areas. new dealerships opened in the major market cities of Bogota.

the Sportster . the early stages of which were completed in 1995. The infrastructure and strategies that we've put in place will provide a solid foundation for continued success as the heavyweight motorcycle market grows and develops here. As it turns forty. Like Europe. improved management information systems. expansion of Harley Owners Group activities and development of new markets. but with special emphasis on increasing technical service competencies. we'll also be focused intensely on the basics to ensure consistency among our dealer network. the Sportster is HarleyDavidson in its purest form. our short-term focus will remain on improving customer satisfaction through gradual expansion of our dealer network. better product availability and consistent pricing. Going forward.Central Paris-and are currently studying the feasibility of opening similar stores in other markets. First introduced in 1957. MARKETING MIX The sportster. Findings of an intensive market study. It is an uncompromising exercise in getting power to pavement. conversion of more existing dealerships into Designer Stores. Asia/Pacific This evolving market is one we're watching very closely. enhanced technical service training. show that short-term growth opportunities will come from existing markets in this region-led by Japan and Australia-with long-term growth coming from developing new markets. We'll also work to enhance customer relationship-building activities through Harley Owners Group and cohesive direct marketing and brand image-building initiatives.

Campgrounds. Following Eaglemark's . fresh from tremendous success in the 600 and 750 Supersport classes. Racing In his first year of superbike racing. coming off his record sixth AMA Grand National Championship. This year. It just keeps getting better. These bikes move you ahead by moving you back in time. Chris Carr won rookie-of-the-year honors and finished twelfth in overall points. he is joined on the VR 1000 racing team by Thomas Wilson. Scott Parker. brought up-to-date with the reliability of modern technology. Distant rallies and forgotten highways. The Softtail The Softails offer a retro look. sunsets.certainly isn't experiencing a mid-life crisis. And now it's all available with electronic sequential port fuel injection on most models. continues to dominate aboard his XR 750. Touring Harley-Davidson touring motorcycles offer a lot more than meets the eye. he is committed full. burger joints and national parks. Dyna There is a place where the past and future mingle. On the dirt track. while still winning dirt-track races. Other Segments Eaglemark Eaglemark began in 1993 as an independent company with HarleyDavidson holding a minority stake.time to road racing and his poll position at Laguna Seca proved it. This year.with a smooth ride dictated by computer-aided engineering and a look inspired by classic Harley-Davidson styling. taking on each other's qualities until they become a new incarnation of the here and now. inspired by the classic hardtail frame. Even thunderstorms. Like small town coffee shops and historic landmarks. This is the land of the Dyna Glides .

From these challenges come . fast personal service. while producing attractive returns. we're establishing closer ties with our suppliers. Parts and Accessories As successful as our P&A business has been over the last several years. And we've found that our international markets have very specific needs for fit. Consistent with the brand's image. rather than Eaglemark. to build on the loyalty customers have for the Harley-Davidson brand. which has become a very tough environment for apparel sales. to ensure they have adequate capacity to handle demand. styling and pricing that our current broad-based line doesn't adequately support. when it comes on stream. Eaglemark was established to better meet the financial needs of Harley dealers and owners. To address dealer and customer dissatisfaction with backorders on popular items. Harley-Davidson acquired essentially full ownership in November of 1995 to fully benefit from future growth and value creation. Ninety percent of our MotorClothes revenue comes from the domestic market. competitive terms and a thorough knowledge of the products we finance and insure. And the new P&A distribution center. our services aim to provide real value to customers through one-stop shopping.success in achieving our initial goals. we took some major steps in 1995-including repositioning our replacement parts and mechanical accessories lines-to reenergize our approach and maintain our market leadership. will help speed the flow of parts to dealers. We use the name Harley Credit and Insurance.

Harley-Davidson dealerships).000 and 200.approximately 1.opportunities. which is four times larger than its U. In 1996. bringing the year-end total to approximately 150. Our Rallies draw between 5. to support its flagship S2 Thunderbolt. to attract them into our dealerships. the Buell team will complete its study of the European sport/performance market. developed by a centralized styling department.400 Buell units were shipped in 1995-the Buell team is continuing to explore and evaluate new opportunities in the sport/performance market. then work with regional MotorClothes managers to produce market-specific products.000 people. While traditional sportbikes utilize complex technology with the sole purpose of increasing speed. In 1996. Buell Although still a start-up operation. We're also increasing our promotional efforts toward the non-riding public.S. This group will develop overall concepts. Buell also added more than 100 new dealers in 1995 (Buells are distributed only through select U. counterpart. to prepare for a possible future launch there. unified MotorClothes product line.S. Buell's mission is to develop and employ innovative technology to enhance the ride and give Buell owners a motorcycling experience that no other brand can provide. The majority of the . we're creating a global. the S1 Lightning and S2 Touring. Buell expanded its 1996 model year product line by adding two new models. Promotion The majority of our advertising comes from bike rallies and special events that are held that are held across the United States.

and desires should be specified. Costs should be identified and target cost levels specified to facilitate their control. and other individuals should be responsible for controlling the marketing mix implemented. Harley Davidson as an organization does very little mainstream advertising. and production. Growth potential appears very good especially in the overseas market. The president.attendants are Harley owners. we will be in the position to meet the increasing demand for our motorcycles and other products. Attitude standards. BUDGETS CONTROL AND ACCOUNTABILITY Standards should be specified in terms of sales. 20. After the expansion of our production and distribution capacity. vice-president. Controls should be implemented and monitored by appropriate administrators. Gaining a larger market share in these area may require a further increase in production and distribution capacities. administrators. William Harley. and Arthur Davidson. COMPANY DESCRIPTION In Milwaukee. They were . 21. Standards should be established in terms of consumer s attitudes. Bibliography EXECUTIVE SUMMARY Harley-Davidson is the largest market share holder of motorcycles over 750cc in the United States. We must plan for expansion now and continue to grow as a company. in terms of perceptions. began experiments on taking the work out of bicycling.

. Harley-Davidson erected its first building the current Juneau avenue site in 1906 and incorporated in 1907.02. they were ready to begin production. In 1903 they produced three motorcycles. higher than net sales for 1994. Walter and William.0 million and $. which included a $4. as well as police motorcycles. for 1995 as compared with $8.1 million and $1. Many changes were made to the engine design before its builders were satisfied. for 1994. In 1907 Harley-Davidson produced 150 motorcycles.4 billion were $191. or 16. includes 20 cruiser. Net income and earnings per share from discontinued operations were $1.soon joined by Arthur s brothers.06 per-share.2 million and $1. for 1994. SITUATION ANALYSIS The motorcycle market over 750cc has been increasing over the last five years.11. or $. factory custom and touring motorcycles. Harley-Davidson benefits form having one of the world s most recognized and respected brand names and our motorcycle model names are among the best known in the industry: The Competition and Market share This chart shows the competition and market share for 1995 in the United States: Current Market Situation Overall Net sales for 1995 of $1.5%.4 million and $. The Harley-Davidson 1996 model year production line.6 million. On January 22. one-time tax benefit related to the legal reorganization of Holiday Rambler. 1996.000 dealers.6 million. sold though a world wide network of more than 1.48. After the new looped from was finalized. for 1995 as compared with $96. Net income and earnings per share from continuing operations were $111.26.

which was paid from internally generated funds and short-term borrowings.04 per share to $.05 per share which resulted in a total year pay out of $.0% increase in its Parts and Accessories business. 1995 as though it had been acquired at the beginning of the year and deducted the preacquisition earnings as part of non-operating expense.the Company announced its strategic decision to discontinue the operations of the Transportation Vehicles segment in order to concentrate its financial and human resources on its core motorcycle business. The Company does not anticipate a loss on the discontinuance of the Transportation Vehicles segment. Inc.5% over 1994 due primarily to a 9. The results of the Transportation Vehicles segment have been reported separately as discontinued operations for each year presented. that it did not already own.6 million) in its statement of operations for the year ended December 31. Units Shipped and Net Sales The Motorcycles and Related Products (Motorcycles) segment's net sales increased 16.7%) increase in motorcycle shipments.18 per share.293 unit (9. as well as a 14. the Company acquired substantially all of the common stock and common stock equivalents of Eaglemark Financial Services. 1995. The increase in motorcycle shipments is the result of ongoing implementation of the Company's manufacturing strategy . The Company has included the results of operations of the Financial Services segment ($3. On November 14. The Company increased its quarterly dividend in September from $. The purchase price was approximately $45 million.

The manufacturing strategy is designed to increase capacity.and efforts to satisfy demand. The Company ended 1995 with a domestic market share of 55.3% . This decrease is a reflection of the Company's constrained production capacity in a growing heavyweight motorcycle market. adjust to changes in the market place and further improve product quality while reducing costs.000 units in 1995 and anticipates 1996 production will reach at least 115.1% in 1994. As the implementation of the manufacturing strategy continued.000 units. Demand for the Company's motorcycles continues to exceed supply with nearly all of the Company's independent domestic dealers reporting retail orders on all of their remaining 1996 model year motorcycle allocations . the rate increased to 470 units per day by the end of the year. Compared to 1994. The Company exceeded its production goal of 100.8% compared to 56. industry registrations of domestic heavyweight (engine displacements in excess of 751cc) motorcycles were up 11. The Company is currently reviewing alternative sites for the construction of a new manufacturing facility to enable it to achieve its long-term goal of doubling motorcycle production by 2003. Sales of Buell motorcycles (which are distributed through select Harley-Davidson dealers) increased to $14 million in 1995 as compared to $6 million in 1994. Year-end data indicates that the domestic (United States) motorcycle market continued to grow throughout 1995. The Company began 1995 at a scheduled motorcycle production rate of 395 units per day.

While definitive market share information (engine displacements in excess of 751cc) is not available in many foreign countries. The Company distributes approximately one-half of its exported units through its wholly owned subsidiaries in Germany. management believes the 1995 increase is more indicative of the long-term growth potential of the Parts and Accessories business. The Parts and Accessories business is expected to grow at an annual rate similar to the annual growth rate in motorcycle shipments.3 million in revenues. which allows the Company flexibility in responding to changing economic conditions in a variety of foreign markets.2%) over 1994. 1996). The Motorclothes business. while the Motor Parts and Motor Accessories businesses are expected to increase.8 million during 1995. however. Japan and the United Kingdom. an increase of 14.(production through June. the Company believes it holds an approximate 11% market share in the European markets in which it competes and a 22% market share in the Pacific Rim.6 million (19. The rate of increase is lower than experienced in recent years. an increase of approximately $63. Export revenues totaled $394.0% over 1994. the Parts and Accessories business generated $292. is expected to remain stable in 1996. The Company has exported approximately 30% of its motorcycle unit shipments since 1990 and expects to maintain approximately the same percentage during 1996. . During 1995. which accounted for approximately $100 million of Parts and Accessories sales in 1995.

To further strengthen its ability to process and fill orders for the Parts and Accessories business. The gross profit margin was negatively affected by the overtime incurred to produce additional motorcycle units and make up for production time lost because production employees were involved in numerous strategic planning sessions during 1995. and the facility should be fully operational by the first quarter of 1997.5% in 1995 as compared with 30. Construction is scheduled to begin in the second quarter of 1996.1 million.8%.The Company is developing an improved system to better monitor domestic dealer inventories and retail traffic. Gross Profit Gross profit increased $53. or 14. In addition. the Company plans to construct a new distribution center (at an approximate cost of $17 million). in 1995 as compared with 1994 primarily due to an increase in volume. Internal & External Analysis Strengths ¨ Customer Loyalty and Following ¨ Very High Product Demand ¨ Profitable Product Line and Market Mix ¨ Highest Market Share for Motorcycles over 750cc in the United States ¨ Union Contract That is beneficial to both the Firm and the Employees ¨ Significant opportunities in the growing worldwide motorcycle market ¨ A proven management team that s committed to build a beneficial relationship with all of the stakeholders for the long term ¨ .9% in 1994. The gross profit margin was 30. the Company initiated several promotional programs in the fourth quarter of 1995 to increase dealer floor traffic and plans to continue this promotional strategy in 1996.

governments and society).Increased capacity with the construction of new plant and distribution center Weaknesses ¨ Inefficiency due to Large Production Level ¨ More Demand than Supply ¨ Lower Than expected Sales in Motor Clothes ¨ Lingering biker image MARKETING PLAN OBJECTIVES Harley-Davidson. to better serve the motorcycling community. In addition to quality we have also been focusing on service. With worldwide motorcycle market growth expected to continue. employees. Both we and our dealers are investing in training and education. we're dedicated to maintaining leadership in our traditional motorcycle segments and . Many of our dealers are continuing to make major investments in the future growth of their businesses-such as converting their dealerships into world-class retail sales establishments through our Designer Store program. dealers. investors. It important to us to offer the highest quality product possible. This value added mentality helps us to improve our product quality. Harley-Davidson believes the key to success is to balance stakeholders' interests through the empowerment of all employees to focus on value-added activities. is an action-oriented. building larger dealerships. Inc. suppliers. We will also be focusing more strongly than ever before on new product development. expanding their existing service areas or opening alternate 'satellite stores in high traffic areas. international company-a leader in its commitment to continuously improve the quality of mutually beneficial relationships with stakeholders (customers.

atlas. we will produce 200. and where necessary. membership card and H.G. pin and patch. Besides the H.O. we're re-defining the market with exciting new products. There's Hog Tales magazine to keep you up on club events. or H. members get treated to benefits that are as helpful as the suspension under a Softail seat. The owners of Harley-Davidson motorcycles are among the most . adding new production and retail distribution points ¨ Grow Parts and Accessories sales volume. We want to ensure that while our competitors are busy copying our past work. for both new and used vehicle customers ¨ Drive financial results to the levels achieved by acknowledged high performing companies TARGET MARKETS THE HARLEY OWNERS GROUP The Harley Owners Group.O. should give our staff the room and tools they need to maintain our market leadership. our Fly & Ride program can get you aboard a rental Harley.G.G.gaining further penetration into the performance market through our joint venture with Buell.000 members and 900 local chapters located around the globe. Organization Goals ¨ By the year 2003. If you're off to certain far flung spots.000 motorcycles annually ¨ Complete the production of our Product Development Center in Milwaukee by the end of 1996 ¨ Meet the demand by expanding our existing distribution and manufacturing capacity. expected to be completed by year-end '96 in Milwaukee. is the world's largest factory-sponsored motorcycle organization.. as a percent of total revenue. Our new Product Development Center. with more than 300.O.

Harleys are not just for men. Colombia and Lima. These outlets. dealer-owned motorcycle service facilities or stores carrying mostly MotorClothes.diverse group of consumers in any industry. MARKETING STRATEGY The Americas Our top priority in the United States is to grow primarily through our existing dealers. Genuine Motor Accessories and Genuine Motor Parts. We are currently . Our second priority is to grow through new dealers on an asneeded basis. Plans for 1996 include analysis of dealer five-year plans and local market variables to establish priorities for implementation of dealership improvements and additions. They range from blue collar factory workers to Doctors and Layers. Over the last decade women have become a significant purchaser of motorcycles. Mexico and the Caribbean. but we will never forget where we came from. typically located in high traffic areas. Although still in the developmental stages. In 1995. we're allocating more resources to future growth of South and Central America. new dealerships opened in the major market cities of Bogota. are smaller. We'll also begin to bring more consistency to our dealer network by helping dealers improve their businesses based on a best practice model that incorporates local market data and customer input with characteristics of our most successful dealerships. Peru. Recently our target market has shifted more toward the upper end of the buyer market. especially Harley-Davidsons. while adding new satellite outlets where necessary to increase customer convenience and satisfaction.

dealers and customers there. Asia/Pacific This evolving market is one we're watching very closely. improved management information systems. we've opened two flagship stores in major markets-North London and Central Paris-and are currently studying the feasibility of opening similar stores in other markets. we consider this to be a market that is ripe with new opportunities. The infrastructure and strategies that we've put in place will provide a solid foundation for continued success as . our short-term focus will remain on improving customer satisfaction through gradual expansion of our dealer network. The start-up of a European Distribution Center in Rotterdam has consolidated our motorcycle and P&A distribution under one roof. better product availability and consistent pricing. Europe Although our European presence goes back over 80 years.considering new markets in which to open additional dealerships in 1996 and beyond. allowing us to improve service levels and develop a stronger competitive advantage in the marketplace. expansion of Harley Owners Group activities and development of new markets. To further bolster Harley-Davidson's brand image. enhanced technical service training. Going forward. conversion of more existing dealerships into Designer Stores. Our emphasis in 1995 was simply to focus on the basics by establishing Harley-Davidson Europe headquarters in the United Kingdom and creating an in-country management team dedicated to improving the bond between HarleyDavidson and our distributors.

Touring Harley-Davidson touring motorcycles offer a lot more than meets the eye. brought up-to-date with the reliability of modern technology. Like small town coffee shops and historic landmarks. inspired by the classic hardtail frame. First introduced in 1957. show that short-term growth opportunities will come from existing markets in this region-led by Japan and Australia-with long-term growth coming from developing new markets. we'll also be focused intensely on the basics to ensure consistency among our dealer network. We'll also work to enhance customer relationship-building activities through Harley Owners Group and cohesive direct marketing and brand image-building initiatives. Distant . Dyna There is a place where the past and future mingle. MARKETING MIX The sportster. but with special emphasis on increasing technical service competencies. This is the land of the Dyna Glides . The Softtail The Softails offer a retro look.with a smooth ride dictated by computer-aided engineering and a look inspired by classic Harley-Davidson styling. As it turns forty. taking on each other's qualities until they become a new incarnation of the here and now. the Sportster is HarleyDavidson in its purest form. Like Europe. Findings of an intensive market study. It just keeps getting better.the heavyweight motorcycle market grows and develops here. It is an uncompromising exercise in getting power to pavement. These bikes move you ahead by moving you back in time. the Sportster certainly isn't experiencing a mid-life crisis. the early stages of which were completed in 1995.

burger joints and national parks. Even thunderstorms. And now .rallies and forgotten highways. Campgrounds. sunsets.