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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549

FORM 10-K

[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 [FEE REQUIRED] For the fiscal year ended: DECEMBER 31, 1993

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [NO FEE REQUIRED] For the transition period from
_______________ to ________________

Commission file number 1-10793
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HARLEY-DAVIDSON, INC.
(Exact name of registrant as specified in its charter)

WISCONSIN 39-1382325
(State of organization) (I.R.S. Employer Identification No.)

3700 WEST JUNEAU AVENUE, 53208
MILWAUKEE, WISCONSIN (Zip Code)
(Address of principal executive offices)

Registrant's telephone number: (414) 342-4680

Securities registered pursuant to Section 12(b) of the Act:

Name of each Exchange
Title of each class on which registered
- -------------------------------------- -----------------------
COMMON STOCK, $.01 PAR VALUE PER SHARE NEW YORK STOCK EXCHANGE
PREFERRED STOCK PURCHASE RIGHTS NEW YORK STOCK EXCHANGE



Securities registered pursuant to Section 12(g) of the Act: NONE

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months and (2) has been subject to such requirements for the
past 90 days. Yes X No .
--- ---

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of the registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [X]

Aggregate market value of the voting stock held by nonaffiliates of the
registrant at March 17, 1994:
$1,835,127,446.

Number of shares of the registrant's common stock outstanding at March 17, 1994:
38,091,491 shares.
Part III of this report incorporates information by reference from registrant's
Proxy Statement for the annual meeting of its shareholders to be held on May 14,
1994.

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PART I
Item 1. Business
----------------
Summary
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Harley-Davidson, Inc. (the "Company") was incorporated in 1981, at which time
it purchased the Harley-Davidson Motorcycle Business from AMF Incorporated
(currently doing business as Minstar) in a management buyout. In 1986, the
Company became publicly held. The Company operates in two segments:
Motorcycles and Related Products and Transportation Vehicles.

The Company's Motorcycles and Related Products segment designs, manufactures
and sells primarily heavyweight (engine displacement of 751cc or above)
touring and custom motorcycles and a broad range of related products which
include motorcycle parts and accessories and riding apparel. The Company,
which is the only major American motorcycle manufacturer, has held the largest
share of the United States heavyweight motorcycle market since 1986. The
Company generally holds much smaller market shares in international markets.

The Transportation Vehicles segment consists entirely of the Company's wholly
owned subsidiary Holiday Rambler Corporation and its subsidiaries ("Holiday
Rambler"). Holiday Rambler manufactures recreational vehicles, principally
motorhomes and travel trailers, and specialized commercial vehicles. Holiday
Rambler was acquired by the Company in December 1986. Holiday Rambler's
Recreational Vehicle division competes primarily in the mid to premium segment
of the recreational vehicle market. Holiday Rambler's commercial vehicles
(marketed under the Utilimaster(R) brand name), which include walk-in vans
and parcel delivery trucks, are built for a diverse range of specialized
commercial uses. Holiday Rambler's Commercial Vehicle division is one of a
small number of commercial vehicle manufacturers with the resources to satisfy
the volume requirements and specialized needs of fleet customers.

Revenue, operating profit (loss) and identifiable assets attributable to each
of the Company's segments are as follows (in thousands):
- -------------------------------------------------------------------------------



Motorcycles
and Related Transportation
Products Vehicles Corporate
----------- -------------- ---------

1993
----
Revenue $933,262 $284,166 $ -
Operating income (loss) 136,217 (59,533)* (6,878)
Identifiable assets 437,813 134,699 10,773

1992
----
Revenue $822,929 $282,355 $ -
Operating income (loss) 102,300 2,137 (7,240)
Identifiable assets 341,940 178,252 1,972

1991
----
Revenue $701,969 $237,894 $ -
Operating income (loss) 89,551 (13,427) (7,479)
Identifiable assets 281,790 189,326 3,117

*Includes $57.0 million charge related primarily to the write-off of goodwill.
- --------------------------------------------------------------------------------

2


The heavyweight motorcycle market continued to expand in 1993. The
recreational vehicle industry also reported volume increases during 1993,
primarily in the middle to low price segments of the market. The Recreational
Vehicles division generally targets its products toward the middle to upper
price segment of the market.

Quarterly revenue and operating income (loss) (in thousands), by segment, and
motorcycle shipment information, are as follows:




- ----------------------------------------------------------------------------------------------------
First Second Third Fourth Total
Quarter Quarter Quarter Quarter Year
--------- --------- --------- ---------- ------------

1993
Revenue by segment:
Motorcycles and Related Products $205,328 $256,870 $220,778 $250,286 $ 933,262
Transportation Vehicles 64,257 77,508 63,598 78,803 284,166
-------- -------- -------- -------- ----------
$269,585 $334,378 $284,376 $329,089 $1,217,428
Operating income (loss) by segment:
Motorcycles and Related Products $ 27,505 $ 41,604 $ 31,175 $ 35,933 $ 136,217
Transportation Vehicles (589) 301 (2,137) (57,108)* (59,533)
Corporate (1,746) (1,840) (1,183) (2,109) (6,878)
-------- -------- -------- -------- ----------
$ 25,170 $ 40,065 $ 27,855 $(23,284) $ 69,806
Units:
Motorcycles 19,502 22,951 17,963 21,280 81,696

*Includes $57.0 million charge related primarily to the write-off of
goodwill.
- ----------------------------------------------------------------------------------------------------
1992
Revenue by segment:
Motorcycles and Related Products $179,010 $203,929 $201,408 $238,582 $ 822,929
Transportation Vehicles 68,412 70,020 70,342 73,581 282,355
-------- -------- -------- -------- ----------
$247,422 $273,949 $271,750 $312,163 $1,105,284

Operating income (loss) by segment:
Motorcycles and Related Products $ 18,292 $ 32,772 $ 25,311 $ 25,925 $ 102,300
Transportation Vehicles 138 1,144 106 749 2,137
Corporate (1,719) (2,270) (1,416) (1,835) (7,240)
-------- -------- -------- -------- ----------
$ 16,711 $ 31,646 $ 24,001 $ 24,839 $ 97,197
Units:
Motorcycles 17,186 18,771 17,977 22,561 76,495
- ----------------------------------------------------------------------------------------------------
1991
Revenue by segment:
Motorcycles and Related Products $145,429 $191,939 $177,896 $186,705 $ 701,969
Transportation Vehicles 50,772 73,385 62,730 51,007 237,894
-------- -------- -------- -------- ----------
$196,201 $265,324 $240,626 $237,712 $ 939,863

Operating income (loss) by segment:
Motorcycles and Related Products $ 14,756 $ 31,061 $ 21,783 $ 21,951 $ 89,551
Transportation Vehicles (3,267) 790 (4,018) (6,932) (13,427)
Corporate (1,659) (2,313) (1,497) (2,010) (7,479)
-------- -------- -------- -------- ----------
$ 9,830 $ 29,538 $ 16,268 $ 13,009 $ 68,645
Units:
Motorcycles 14,334 18,706 16,747 18,839 68,626


3


MOTORCYCLES AND RELATED PRODUCTS

The primary business of the Motorcycles and Related Products segment is to
produce and sell premium heavyweight motorcycles. The Company's motorcycle
products emphasize traditional styling, design simplicity, durability, ease of
service and evolutionary change. Studies by the Company indicate that the
typical Harley-Davidson(R) motorcycle owner is a male in his late-thirties,
with a household income of approximately $53,700, who purchases a motorcycle
for recreational purposes rather than to provide transportation and who is an
experienced motorcycle rider. Approximately two-thirds of the Company's sales
are to buyers with at least one year of higher education beyond high school.

The heavyweight class of motorcycles is comprised of four types: standard,
which emphasizes simplicity and cost; performance, which emphasizes racing and
speed; touring, which emphasizes comfort and amenities for long-distance
travel; and custom, which emphasizes styling and individual owner
customization. Touring and custom models are the primary class of heavyweight
motorcycle the Company manufactures. The Company presently manufactures and
sells 18 models of touring and custom heavyweight motorcycles, with suggested
retail prices ranging from approximately $5,000 to $16,200. The touring
segment of the heavyweight market was pioneered by the Company and includes
motorcycles equipped for long-distance touring with fairings, windshields,
saddlebags and Tour Paks(R). The custom segment of the market includes
motorcycles featuring the distinctive styling associated with certain classic
Harley-Davidson motorcycles. These motorcycles are highly customized through
the use of trim and accessories. The Company's motorcycles are based on
variations of five basic chassis designs and are powered by one of three air
cooled, twin cylinder engines of "V" configuration which have displacements of
883cc, 1200cc and 1340cc. The Company manufactures its own engines and
frames.

During 1993, the Company acquired a 49 percent interest in Buell Motorcycle
Company (Buell), a manufacturer of performance motorcycles. This investment in
Buell offers the Company the possibility of gradually gaining entry into
select niches within the performance motorcycle market. Buell will begin the
distribution of a limited number of Buell motorcycles during 1994 to select
dealers within the Company's dealer network.

Although there are some accessory differences between the Company's top-of-the
line touring motorcycles and those of its competitors', suggested retail
prices are generally comparable. The top of the Company's custom product line
is typically priced at approximately twice that of its competitors' custom
motorcycles. The custom portion of the product line represents the Company's
highest unit volumes and continues to command a price premium because of its
features, styling and high resale value. The Company's smallest displacement
custom motorcycle (the 883cc Sportster(R)) is directly price competitive with
competitors' comparable motorcycles. The Company's surveys of retail
purchasers indicate that, historically, over three-quarters of the purchasers
of its Sportster model have come from competitive-brand motorcycles or are
people new to the sport of motorcycling. Since 1988, the Company's research
has consistently shown a repurchase intent in excess of 92% on the part of
purchasers of its motorcycles, and the Company expects to see sales of its
883cc Sportster model partially translated into sales of its higher-priced
products in the normal two to three year ownership cycle. Domestically,
motorcycle sales generated 51.4%, 52.8% and 50.6% of revenues in the
Motorcycles and Related Products segment during 1993, 1992 and 1991,
respectively.

The major product categories for the Motorcycle Parts and Accessories business
are replacement parts, mechanical accessories, rider accessories
(MotorClothes(R) and collectibles) and specially formulated oil and other
lubricants. The Company's replacement parts include original equipment

4


parts, generally made in the United States, and a less expensive line of
imported parts introduced in 1983 to compete against foreign-sourced
aftermarket suppliers. Domestic motorcycle parts and accessories sales
comprised 17.4%, 15.3% and 14.9% of net sales in the Motorcycles and Related
Products segment in 1993, 1992 and 1991, respectively. Net sales from
domestic motorcycle parts and accessories have grown 77% over the last three
years (since 1990).

The Company also provides a variety of services to its dealers and retail
customers including service training schools, delivery of its motorcycles,
motorcycling vacations, memberships in an owners club and customized software
packages for dealers. The Company has had recent success under a program
emphasizing modern store design and display techniques in the merchandising of
parts and accessories by its dealers. Currently, 307 domestic and 75
international dealerships have completed store design renovation projects.

Licensing. In recent years, the Company has endeavored to create an awareness
of the brand among the nonriding public by licensing its trademark "Harley-
Davidson(R)" and numerous related trademarks owned by the Company. The
Company currently has licensed the production and sale of a broad range of
consumer items, including t-shirts and other clothing, jewelry, small leather
goods and numerous other products and is expanding its licensing activity in
the toy category. Although the majority of licensing activity occurs in the
U.S., the Company has expanded into international markets.

This licensing activity provides the Company with a valuable source of
advertising. Licensing also has proven to be an effective means for enhancing
the Company's image with consumers and provides an important tool for policing
the unauthorized use of the Company's trademarks thereby protecting the brand
and its use by authorized motorcycle dealers. Royalty revenues from licensing
accounted for approximately 1% of the net sales from the Motorcycles and
Related Products segment during each of the three years in the period ended
December 31, 1993. While royalty revenues from licensing activities are
small, the profitability of this business is relatively high.

Marketing and Distribution. The Company's basic channel of United States
distribution for its motorcycles and related products consists of
approximately 600 independently owned full-service dealerships. With respect
to sales of new motorcycles, approximately 75% of the dealerships sell Harley-
Davidson motorcycles exclusively. All dealerships carry the Company's
replacement parts and aftermarket accessories and perform servicing of Harley-
Davidson motorcycle products.

The Company's marketing efforts are divided among dealer promotions, customer
events, magazine and direct mail advertising, public relations, and
cooperative programs with Harley-Davidson dealers. The Company also sponsors
racing activities and special promotional events and participates in all major
motorcycle consumer shows and rallies. In an effort to encourage Harley-
Davidson owners to become more actively involved in the sport of motorcycling,
the Company formed a riders club in 1983. The Harley Owners Group(R), or
"HOG(R)" currently has approximately 250,000 members worldwide and is the
industry's largest company-sponsored enthusiast organization. In addition,
since 1980 the Company has been a national sponsor of the Muscular Dystrophy
Association. In 1984, the Company became the first motorcycle manufacturer to
use a national program of demonstration rides. The Company's expenditures on
domestic marketing and advertising were approximately $53.8 million, $45.2
million and $36.1 million during 1993, 1992 and 1991, respectively.

Retail Customer and Dealer Financing. Among the factors affecting the volume
of the Company's motorcycle sales are the availability and cost of credit to
both retail purchasers and Harley-Davidson dealers.

5


On January 5, 1993, the Company invested $10 million for a 49% interest in
Eagle Credit Corporation ("Eagle"). Eagle was formed to provide a source for
wholesale and retail motorcycle financing to dealers and customers,
respectively. Also on January 5, 1993, Eagle assumed the motorcycle floor-
plans and parts and accessories arrangements previously held by ITT Commercial
Finance Corp. Eagle has initiated programs that have allowed it to offer
retail financing opportunities to the Company's domestic motorcycle customers.
In addition, Eagle has established a proprietary credit card for use in the
Company's independent dealerships.

A majority of dealer purchases of the Company's motorcycles are financed by
Eagle. Under the terms of the Company's agreement with Eagle, participating
dealers finance with Eagle 100% of the motorcycle invoice price. The Company
has agreed to indemnify Eagle for certain losses that might be incurred by
Eagle upon the sale or disposition of motorcycles repossessed by Eagle.
Historically, the Company has experienced insignificant losses under this
program.

The Company encourages its motorcycle dealers to purchase and maintain
adequate inventories of the Company's parts and accessories during the winter
months in anticipation of the Christmas and spring selling season by offering
its dealers special discounts and delayed billing terms. Under this program,
payments to Eagle by dealers are due on June 1. The Company enters into an
annual trade acceptance agreement with Eagle to provide the Company with the
ability to sell its receivables from dealers. Under the terms of the
agreement, the Company receives cash from Eagle in the amount of 100% of
certain eligible accounts receivable at the time of sale to the dealer. On
June 1 of each year, the date by which payments to Eagle are due from dealers,
the Company is obligated to repurchase all unpaid balances from Eagle.
Historically, the Company has experienced insignificant losses under this
program.

International Sales. International sales were $263 million, $240 million and
$205 million, accounting for approximately 28%, 29% and 29% of net sales of
the Motorcycles and Related Products segment, during 1993, 1992 and 1991,
respectively. The Company believes that the international heavyweight market
is growing and is significantly larger than the U.S. heavyweight market. The
Company estimates, using data reasonably available to the Company, that it
holds an average market share of approximately 14% in the heavyweight export
markets in which it competes.

The Company has wholly owned subsidiaries located in Germany, Japan and the
United Kingdom. The German subsidiary also serves Austria and France. The
combined foreign subsidiaries have a network of 129 dealers of which
approximately 44% sell the Company's motorcycles exclusively. Distribution
through these subsidiaries allows the Company flexibility in responding to
changing economic conditions in a variety of foreign markets. Elsewhere,
sales are managed through 16 distributors in 14 countries. These distributors
service approximately 251 additional dealers, of which approximately 92% sell
Harley-Davidson motorcycles exclusively. The Company has representatives in 5
additional countries who primarily seek fleet sales and parts orders. Japan,
Germany, Canada and France, in that order, represent the Company's largest
export markets and account for approximately 63% of export sales. See Note 11
to the consolidated financial statements for additional information regarding
foreign operations.

Competition. The U.S. and international heavyweight motorcycle markets are
highly competitive. The Company's major competitors generally have financial
and marketing resources which are substantially greater than those of the
Company. The Company's principal competitors have larger overall sales
volumes and are more diversified than the Company. The Company believes that
the heavyweight motorcycle market is the most profitable segment of the U.S.
motorcycle market.

6


During 1993, the heavyweight segment represented 34% of the total U.S.
motorcycle market in terms of new units registered.

The Company first began to experience significant competition in the domestic
heavyweight motorcycle market from Japanese manufacturers in the early 1970's,
and prior to 1984, the Company's U.S. market share declined almost
continuously. Domestically, the Company competes in the touring and custom
segments of the heavyweight motorcycle market, which together accounted for
75%, 73% and 72% of total heavyweight retail unit sales in the U.S. during
1993, 1992 and 1991, respectively. The custom and touring motorcycles are
generally the most expensive and most profitable vehicles in the market.

For the last 8 years, the Company has led the industry in domestic sales of
heavyweight motorcycles. The Company has increased its share of the
heavyweight market from 22% in 1983 to 58% in 1993.



Shares of U.S. Heavyweight Motorcycle Market*
(Above 750cc Engine Displacement)



Year Ended December 31,
--------------------------------------
1993 1992 1991 1990 1989
------ ------ ------ ------ ------


New U.S. Registrations (thousands of units):
Total new registrations 101.4 86.4 74.3 78.5 71.4
Harley-Davidson new registrations 59.3 52.2 45.1 46.9 41.0

Percentage Market Share:
Harley-Davidson 58.4% 60.4% 60.7% 59.7% 57.4%
Honda 17.7 16.4 17.3 18.7 17.3
Suzuki 9.4 9.4 7.6 5.7 6.6
Kawasaki 6.2 5.6 6.4 6.5 7.4
Yamaha 4.4 4.1 4.7 6.9 8.8
Other 3.9 4.1 3.3 2.5 2.5
----- ----- ----- ----- -----

Total 100.0% 100.0% 100.0% 100.0% 100.0%
===== ===== ===== ===== =====


* Information in this report regarding motorcycle registrations and market
shares has been derived from data published by R.L. Polk & Co.

7


On a worldwide basis, the Company measures its market share using the
heavyweight classification. Although definitive market share information does
not exist for many of the smaller foreign markets, the Company estimates its
worldwide competitive position, using data reasonably available to the
Company, to be as follows:

- --------------------------------------------------------------------------------

Worldwide Heavyweight Motorcycle Registration Data
(Above 750cc Engine Displacement)


(Units in Thousands)
1993 1992 1991
------ ------ ------

North America(1):
Total registrations 109.5 92.3 80.7
Harley-Davidson registrations 63.4 56.0 48.3
Harley-Davidson market share percentage 57.9% 60.6% 59.9%

Europe(2):
Total registrations 129.4 128.0 104.9
Harley-Davidson registrations 13.0 12.5 10.7
Harley-Davidson market share percentage 10.1% 9.7% 10.2%

Japan/Australia(3):
Total registrations 31.8 28.2 24.6
Harley-Davidson registrations 6.6 5.2 5.2
Harley-Davidson market share percentage 20.9% 18.4% 21.1%

(1) Includes the United States and Canada
(2) Includes Austria, Belgium, France, Germany, Italy,
Netherlands, Spain, Switzerland and United Kingdom.
(3) Data for Queensland, Northern Territory and South Australia
not available prior to 1993.
- -------------------------------------------------------------------------------

Competition in the heavyweight motorcycle market is based upon a number of
factors, including price, quality, reliability, styling, product features and
warranties. The Company emphasizes quality, reliability and styling in its
products and offers warranties which are generally comparable to those of its
competitors. In general, resale prices of Harley-Davidson motorcycles, as a
percentage of price when new, are significantly higher than resale prices of
motorcycles sold by the Company's competitors.

Although domestic heavyweight registrations increased 17% and 14% during 1993
and 1992, respectively, the Company expects only modest market growth in the
future. The Company's ability to maintain its current domestic sales levels
will depend primarily on its ability to maintain or increase its share of the
market.

Motorcycle Manufacturing. Since 1982, in an effort to achieve cost and
quality parity with its competitors, the Company has incorporated
manufacturing techniques to continuously improve its operations. These
techniques, which include employee involvement, just-in-time inventory
principles and statistical process control, have significantly improved
quality, productivity and asset utilization.

The Company's use of just-in-time inventory principles allows it to minimize
its inventories of raw materials and work in process, as well as scrap and
rework costs. This system also allows quicker reaction to engineering design
changes, quality improvements and market demands. The Company has trained the
majority of its manufacturing employees in problem solving and statistical
methods.

8


During 1993, the Company completed a comprehensive motorcycle manufacturing
strategy designed to, among other things, achieve the goal of a 100,000 units
per year production rate in 1996. The Company began implementing the strategy
in 1993 and estimates that it will be completed during 1996. The strategy
calls for the enhancement of the Motorcycle division's ability to increase
capacity, adjust to changes in the market place and further improve quality
while reducing costs. The strategy calls for the achievement of the increased
capacity within the existing facilities (with minor additions) without a
significant change in personnel.

Raw Material and Purchased Components. The Company has endeavored to
establish with its suppliers long-term informal "partnership" relationships,
directly assisting them in the implementation of the manufacturing techniques
employed by the Company through training sessions and plant evaluations. In
furtherance of the Company's "partnership" philosophy, the Company reduced the
number of its manufacturing suppliers in recent years and is conducting more
business with suppliers that have implemented these same manufacturing
techniques in their manufacturing operations.

The Company purchases all of its raw material, principally steel and aluminum
castings, forgings, sheet and bars, and certain motorcycle components,
including carburetors, batteries, tires, seats, electrical components and
instruments. Certain of these components are secured from one of a limited
number of suppliers. Interruptions from certain of these suppliers could
adversely affect the Company's production pending the establishment of
substitute supply arrangements. The Company anticipates no significant
difficulties in obtaining raw materials or components for which it relies upon
a limited source of supply.

Research and Development. The Company believes that research and development
is a significant factor in the Company's ability to continuously improve its
competitive position. The Motorcycles and Related Products segment incurred
research and development expenses of approximately $19.3 million, $14.6
million and $8.0 million during 1993, 1992 and 1991, respectively.

Patents and Trademarks. The Company owns certain patents which relate to its
motorcycles and related products and processes for their production. The
Company believes that the loss of any of its patents would not have a material
effect upon its business.

Trademarks are important to the Company's motorcycle business and licensing
activities. The Company has a vigorous program of trademark registration and
enforcement to prevent the unauthorized use of its trademarks, strengthen the
value of its trademarks and improve its image and customer goodwill. The
Company believes that its "Harley-Davidson(R)" registered United States
trademark is its most significant trademark. The Company's Bar and Shield
design is also highly recognizable by the general public. Additionally, the
Company has numerous other registered trademarks, trade names and logos, both
in the United States and abroad. The Company has used the "Harley-Davidson"
trademark continuously since 1903.

Seasonality. The Company, in general, does not experience seasonal
fluctuations in production. This is primarily the result of a strong demand
for the Company's motorcycles and related products, as well as the
availability of floor plan financing arrangements for its independent dealers.
Floor plan financing allows many dealers to build their inventory levels in
anticipation of the spring and summer selling seasons.

Regulation. Both federal and state authorities have various environmental
control requirements relating to air, water and noise pollution which affect
the business and operations of the Company.

9


The Company endeavors to ensure that its facilities and products comply with
all applicable environmental regulations and standards.

To ensure compliance with lower European Union noise standards (80dba),
which are scheduled to take effect in calendar year 1994, the Company began a
product development program during late 1990. Most of the design changes
related to this program will be incorporated into the 1995 model year
motorcycles (production beginning in July 1994). While these models are
subject to European Union Certification procedures, testing performed by
the Company to date indicates that the design changes will bring 1995 model
year motorcycles within the required limits. Near the end of the decade, there
may be a further reduction of European Union noise standards (to 77dba).
Accordingly, the Company anticipates that it will continue to incur some
level of research and development costs related to this matter over the next
several years.

The Company's motorcycles are subject to certification by the U.S.
Environmental Protection Agency (EPA) for compliance with applicable emissions
and noise standards and by the State of California Air Resources Board (ARB)
with respect to the ARB's more stringent emissions standards. The Company's
motorcycle products have been certified to comply fully with all such
applicable standards. The Company's motorcycles are subject to additional ARB
tailpipe and evaporation emissions standards requiring that unique vehicles be
built for sale exclusively in California.

The Company, as a manufacturer of motorcycle products, is subject to the
National Traffic and Motor Vehicle Safety Act (Safety Act), which is
administered by the National Highway Traffic Safety Administration (NHTSA).
The Company has acknowledged to NHTSA that its motorcycle products comply
fully with all applicable federal motor vehicle safety standards and related
regulations.

In accordance with NHTSA policies the Company has from time to time initiated
certain voluntary recalls. During the last three years, the Company has
initiated 11 voluntary recalls at a total cost of approximately $7.8 million.
The Company fully reserves for all estimated costs associated with recalls in
the period that they are announced.

Federal, state, and local authorities have adopted various control standards
relating to air, water and noise pollution which affect the business and
operations of the Motorcycles and Related Product segment. Management does
not anticipate that any of these standards will have a materially adverse
impact on its capital expenditures, earnings, or competitive position.


Employees. As of December 31, 1993, the Motorcycles and Related Products
segment had approximately 4,100 employees. Production workers at the
motorcycle manufacturing facilities in Wauwatosa and Tomahawk, Wisconsin, are
represented principally by the United Paperworkers International Union (UPIU)
of the AFL-CIO, as well as the International Association of Machinist and
Aerospace Workers (IAM). Production workers at the motorcycle manufacturing
facility in York, Pennsylvania, are represented principally by the IAM. The
current collective bargaining agreement with the UPIU as been extended to
expire on April 11, 1994. The collective bargaining agreement with the
Wisconsin-IAM will expire on March 2, 1997, and the collective bargaining
agreement with the Pennsylvania-IAM will expire on February 2, 1997.

10


TRANSPORTATION VEHICLES

Recreational Vehicles
---------------------

The Recreational Vehicle division's motorhomes and travel trailers are
designed to appeal to people interested in travel and outdoor recreational
activities. These recreational vehicles are distinct from mobile homes, which
are manufactured housing designed for permanent and semipermanent dwelling.

Principal types of recreational vehicles produced by the Recreational Vehicle
division include Class A or "conventional" motorhomes, Class C or "mini"
motorhomes (discontinued with the 1994 model year), and travel trailers.
Recreational vehicle classifications are based upon standards established by
the Recreation Vehicle Industry Association (RVIA).

A motorhome is a self-powered vehicle built on a motor vehicle chassis. The
interior typically includes a driver's area, kitchen, bathroom, dining, and
sleeping areas. Motorhomes are self-contained, with their own lighting,
heating, cooking, refrigeration, sewage holding and water storage facilities
so that they can be lived in without being attached to utilities. As such,
they generally qualify as second homes for income tax purposes. Although they
generally are not designed to provide complete facilities for permanent or
semipermanent living, motorhomes do provide comfortable living facilities for
short periods of time.

Class A motorhomes are constructed on medium-duty truck chassis, which are
purchased with engine and drive train components. The living area and
driver's compartment are designed, manufactured, and installed by the
Recreational Vehicle division.

Travel trailers are non-motorized vehicles which are designed to be towed by
passenger automobiles, pick-up trucks, sport utility vehicles or vans. They
are otherwise similar to motorhomes in features and use. The Company produces
both "conventional" and "fifth wheel" travel trailers. Conventional travel
trailers are towed by means of a bumper or frame hitch attached to the towing
vehicle. Fifth wheel trailers, designed to be towed by pick-up trucks, are
constructed with a raised forward section that is attached to the bed area of
the pick-up truck. This design allows a bi-level floor plan and additional
living space.

The Company's premium lines of recreational vehicles are marketed under the
Navigator(R) and Imperial(TM) brand names. Models in these lines are
manufactured with premium quality materials and components, including
entertainment centers, solid oak cabinetry and brass fixtures, and may be
equipped with luxury features such as microwave-convection ovens,
washer/dryers and built-in vacuum cleaner systems. These models are generally
purchased by persons who previously have owned recreational vehicles. The
Navigator is a bus-style motorhome that carries a suggested retail price of
$193,000 to $220,000. In the Company's Imperial line, suggested retail prices
of motorhomes generally range between $108,000 and $183,000, while travel
trailers retail between $38,200 and $67,000.

The Company also produces motorhomes under the Aluma-Lite(R) brand name, and
travel trailers under the Aluma-Lite and Free Spirit(R) brand names, for
the mid-range market. These models are produced with fewer standard features
than the Navigator or Imperial. Suggested retail prices for the Aluma-Lite
motorhome range between $68,000 and $123,000 while Aluma-Lite and Free Spirit
travel trailers range between $18,000 and $58,000. Also in the mid-range
market, the Company produces Endeavor(R) and Vacationer(R) motorhome models.
Suggested retail prices in these lines range between $50,000 and $112,000.


11


Holiday Rambler continues to emphasize product development. Its major
thrust is threefold: to develop competitive floorplans; to update existing
models; and to bring innovation into the product line along with increased
quality. In achieving these goals, Holiday Rambler does not plan to vary from
its traditional aluminum frame construction or stray from its existing product
boundaries.

The following table presents information regarding wholesale sales of the
Company's recreational vehicles during the periods indicated:

- --------------------------------------------------------------------------------

Wholesale Recreational Vehicle Sales



Year Ended December 31,
-----------------------------
(in thousands)
1993 1992 1991
Sales Sales Sales
-------- -------- --------

Premium lines $ 53,041 $ 58,460 $ 41,246
Mid-range lines 83,677 89,601 79,788
-------- -------- --------
Total $136,718 $148,061 $121,034
======== ======== ========

- --------------------------------------------------------------------------------


In addition to wholesale sales of the recreational vehicle products shown
above, sales by the Recreational Vehicle division also include retail sales
by its wholly owned Holiday World(R) stores, discussed below.

The Recreational Vehicle division's sales (including retail, wholesale and
other sales) were $192.7 million, $202.1 million and $170.6 million in 1993,
1992 and 1991, respectively. Sales of the Recreational Vehicle division
accounted for 67.8%, 71.6% and 71.7% of the Transportation Vehicles segment's
revenues for the years ended December 31, 1993, 1992 and 1991, respectively.

Competition and Other Business Considerations - The recreational vehicle
market is highly competitive with a number of other manufacturers selling
products in competition with the Company. Competition is based upon price,
design, quality and service. The Company believes that it provides service
comparable to that provided by its competitors and that the design and quality
of its products compare favorably with similarly priced products of its
competitors.

The Company believes that the primary external factors affecting the
recreational vehicle industry are the consumer's perception of the health of
the economy, interest rates, availability of retail financing and the
availability of gasoline.

Fifteen manufacturers accounted for approximately 82% of total units sold
during 1993 in the recreational vehicle market classifications in which the
Recreational Vehicle division competes. The remaining units included products
manufactured by approximately fifty additional manufacturers. During 1993,
Fleetwood Enterprises, Inc. (Fleetwood) accounted for approximately 34% and
26% of the Class A and Travel Trailer markets, respectively. During the same
period, the Company's shares of the Class A and Travel Trailer markets were
4.8% and 2.4%, respectively. The Company ranks fourth in Class A market share
and ninth in Travel Trailer market share.

12


As a result of the Company's emphasis on sales of premium vehicles, the
Company's market share in the premium market is significantly higher than its
share of the overall market. While definitive market share statistics with
respect to this market do not exist, the Company believes that its
Recreational Vehicle division is one of the largest producers of premium
recreational vehicles. The largest manufacturer in the recreational vehicle
industry, Fleetwood, does not have significant market share in the premium
segment. Although the Company manufactures Class A motorhomes and travel
trailers with lower prices, the Recreational Vehicle division's strategy in
manufacturing recreational vehicles outside of the premium market is to offer
a broad range of recreational vehicles to purchasers who may subsequently
purchase premium recreational vehicles.

Marketing and Distribution - The Recreational Vehicle division markets its
recreational vehicle products through a network of approximately 150 dealers
located throughout the continental United States, including fourteen company-
owned Holiday World dealers. Holiday World dealers also stock previously
owned vehicles and new recreational vehicles manufactured by certain of
Holiday Rambler's competitors. The Holiday World dealers provide Holiday
Rambler with valuable knowledge regarding consumer preferences and information
regarding products of its competitors, as well as other marketing information.
Holiday Rambler's sales and service agreements require dealers to maintain a
service department and a supply of recreational vehicle parts, supplies and
accessories. These agreements are subject to renewal on an annual basis.

Holiday Rambler's new owner questionnaires indicate that approximately 68% of
purchasers of Holiday Rambler's new recreational vehicles are 56 years or
older, a growing segment of the U.S. population.

Customer loyalty is reinforced by Holiday Rambler's sponsorship of the Holiday
Rambler Recreational Vehicle Club, Inc., a not-for-profit Indiana corporation.
The club is open only to owners of Holiday Rambler's recreational vehicles and
has approximately 11,600 members. The club holds 31 club-sponsored rallies
and caravans each year and is provided with administrative and promotional
assistance by Holiday Rambler. Holiday Rambler receives valuable feedback
from its customers at these events.

Holiday Rambler is focusing its marketing effort to be more responsive to its
customers' needs. During 1993, Holiday Rambler replaced or filled several key
positions including that of the chief operating officer and the vice
presidents of sales, marketing and engineering. The Company believes that
these positions are vital to the success of the Transportation Vehicles
segment's strategies surrounding the renewed customer focus.

Dealer Financing - Substantially all of the Recreational Vehicle division's
recreational vehicle sales to dealers are made on terms requiring payment
within ten days of the dealer's receipt of the unit. Most dealers are
financed under "floor plan" arrangements with banks or finance companies under
which the lender advances all, or substantially all, of the purchase price of
the vehicle being purchased. The loan is collateralized by a lien on the
vehicle. In certain instances, consistent with industry practice, Holiday
Rambler has entered into repurchase agreements with these lenders which
provide that, in the event of default by the dealer in repaying the loan,
Holiday Rambler will either repay the loan or repurchase the financed
vehicles. In general, the repurchase agreements provide that, for up to
twelve months after a unit is financed, Holiday Rambler will repurchase the
unit upon a determination by the lender to repossess the unit. Holiday
Rambler's loss exposure on repurchase is limited to the difference between the
net realized resale value of the vehicle and the amount required to be paid
the lending institution at the time of repurchase. On January 5, 1993, Eagle
purchased the Notes Payable obligations (floor plan financing) of the
Company's wholly owned Holiday World Stores. For further

13


information on dealer financing programs, see Notes 5 and 7 to the 1993
consolidated financial statements.

Commercial Vehicles
-------------------

The Company, through its Utilimaster Corporation subsidiary (Utilimaster),
builds truck bodies for specialized commercial uses. Sales of the Company's
commercial vehicles and truck bodies accounted for 27.8%, 24.0% and 23.4% of
the Transportation Vehicles segment's revenues in 1993, 1992 and 1991,
respectively.

Utilimaster currently installs the truck bodies on chassis of various sizes
supplied by third parties. The truck bodies are offered in aluminum or
fiberglass reinforced plywood (FRP) construction and are available in lengths
of 9 to 28 feet. The Company's products (excluding chassis) range in price
from $2,600 to $34,000 although special service vehicles can sell as high as
$60,000.

The principal types of commercial bodies are as follows:

Parcel Delivery Vans - Aluminum or FRP parcel delivery van bodies are
installed on chopped van chassis supplied by the major Detroit truck
manufacturers. These parcel delivery van bodies that are manufactured by
the Company range in length from 10 to 16 feet and are primarily used for
local delivery of parcels, freight and perishables.

Standard Walk-In Vans - Utilimaster manufactures its standard walk-in vans
(step-vans) on a truck chassis supplied with engine and drive train
components, but without a cab. The Company fabricates the driver's
compartment and body using aluminum panels. Uses for these vans include
the distribution of food products and small packages.

Truck Bodies - Utilimaster's truck bodies are typically fabricated up to 28
feet in length with prepainted aluminum or FRP panels, aerodynamic front
and side corners, hardwood floors, and various door configurations to
accommodate end-user loading and unloading requirements. These products
are used for diversified dry freight transportation. The Company installs
its truck bodies on chassis supplied with a finished cab.

Mobile Rescue and Special Use Emergency Vehicles - Utilimaster builds a
variety of high cube and walk-in specialty use vehicles for the fire and
rescue industry. These vehicles range in lengths from 10 to 22 feet and
usually require extensive customization to meet the needs of the local
emergency agencies.

Aeromate(R) - The Aeromate was developed for customers needing a mid-size
delivery vehicle that offered maneuverability, front-wheel drive, fuel
efficiency, a large cargo area and driver comfort, features not available
from production vans and larger delivery vans. Its six-cylinder engine,
automatic transmission and drive train are purchased from a third party in
the automotive industry and retrofitted to the Company-built chassis. The
all-aluminum truck body can hold 317 cubic feet of cargo, weighing up to
one ton.

Marketing and Distribution - Utilimaster markets its commercial vehicles and
bodies directly to 450 fleet accounts and to single commercial vehicle
purchasers through a network of 900 automobile and truck dealers. This
network is distinct from the Company's recreational vehicle dealer network.
The Company does not provide financing to these dealers or fleet accounts.
For Aeromate dealers, the


14


Company makes financing available through lenders with which the Company has
repurchase agreements.

Competition - While the Commercial Vehicle division experiences some
competition from the large automotive manufacturers, which traditionally have
offered a narrow selection of standardized commercial vehicle body options for
their truck chassis, its principal competition is from a small number of
manufacturers with the resources to satisfy the volume requirements and
specialized needs of commercial vehicle fleet customers. These manufacturers
include Grumman Corp., Union City Body Company, Inc., and Supreme Corp.
Competition among manufacturers is based upon price, quality, and
responsiveness to customer requirements both in design and timing of delivery.
Sales of commercial vehicles to fleet customers generally are either the
result of direct competition with other manufacturers or a competitive bidding
process. Because of the specialized needs of each customer, the relative
importance of each individual factor varies from customer to customer. The
Company believes that it has been able to compete successfully on the basis of
all of these factors.

Other Products
--------------

The Transportation Vehicles segment's Creative Dimensions division produces a
broad line of contemporary office furniture. Creative Dimensions products are
marketed through a network of approximately 750 office suppliers and designers
nationwide. The Transportation Vehicles segment's Nappanee Wood Products
division is a custom cabinetmaker which produces high quality, solid wood
cabinets and wood components primarily for the Company's recreational
vehicles. The Transportation Vehicles segment's B & B Molders division
designs and manufactures a diverse range of custom or standard tooling and
injection molded plastic pieces.

Other products accounted for 4.4%, 4.4% and 4.9% of the Transportation
Vehicles segment revenues for the years ended December 31, 1993, 1992 and
1991, respectively.

All Divisions
-------------

Production. Holiday Rambler's products are built utilizing an assembly line
process. Holiday Rambler has designed and built its own fabricating and
assembly equipment for the majority of its manufacturing processes. Holiday
Rambler believes that the manufacturing systems and technology enables it to
produce high quality products on an efficient basis. In addition to
assembling its products and installing various options and accessories,
Holiday Rambler manufactures a majority of its plastic components and other
installed products, such as draperies, bathtubs, holding tanks, wheel covers,
and wiring harnesses.

Holiday Rambler currently operates one production shift. Capacity increases
can be achieved at relatively low cost on the existing shifts, largely by
increasing the number of production employees, or by adding a shift. Holiday
Rambler's plant facilities can be easily expanded, contracted, or converted to
reflect changing product demand.

The manufacturing processes, facilities, and equipment used to make Holiday
Rambler's recreational vehicles and commercial vehicles are similar and, in
most respects, interchangeable. The required employee skills are applicable
to the production of either type of vehicle. As a result, the Company has the
flexibility to shift employees and resources in order to meet changing demands
in its markets. A portion of production employees' compensation consists of
production group incentives, which can permit an employee to increase his
total compensation by increasing productivity and meeting quality standards.


15


Production Materials. The principal raw materials and other components used
in the production of recreational and commercial vehicles are purchased from
third parties. With the exception of the chassis, these materials, including
aluminum, plywood, lumber, plastic and fiberglass, are generally available
from numerous sources.

Holiday Rambler obtains its chassis from several automobile or truck
manufacturers under either consignment agreements or secured financing
agreements with interest subsidies by the manufacturers. Subject to certain
time limitations, Holiday Rambler pays for a recreational vehicle chassis upon
making an alteration or addition to the chassis. Upon sale of a recreational
vehicle to a dealer, Holiday Rambler invoices the purchasing dealer for the
completed vehicle, including the chassis.

The agreements relating to commercial vehicle chassis contemplate that Holiday
Rambler will make alterations or additions to a chassis upon the order of
dealers affiliated with the chassis manufacturer. In this situation, Holiday
Rambler delivers completed vehicles to the purchasing dealer and invoices the
dealer for Holiday Rambler's additions and alterations only. The dealer is
invoiced for the chassis directly by the chassis manufacturer (which has
reacquired title to the chassis from Holiday Rambler under an interest
subsidized secured financing arrangement). The commercial vehicle chassis
agreements also permit Holiday Rambler to purchase the chassis from the
manufacturer through an affiliated dealer, in which case Holiday Rambler takes
title, and is obligated to pay for the chassis.

Holiday Rambler's Class A motorhomes are generally built on Chevrolet, Ford
and Spartan chassis, and its commercial vehicles are generally built on GM and
Ford chassis. If any of these manufacturers were to cease manufacturing or
otherwise reduce the availability of these chassis, the business of Holiday
Rambler could be adversely affected, although Class A chassis supplied by
Oshkosh Truck Corporation could lessen the impact. In general, Holiday
Rambler has not experienced any substantial shortages of raw materials or
components. However, the industry has occasionally experienced short-term
chassis shortages.

Patents and Trademarks. The Transportation Vehicles segment owns various
patents and know-how which relate to its recreational vehicles and other
products and the processes for their production. The Company believes that
the loss of any of these patents would not have a material effect upon its
business.

Trademarks are important to the Transportation Vehicles segment's recreational
and commercial vehicle business. The Transportation Vehicles segment's Holiday
Rambler(R) trademark is its most significant trademark. Additionally, the
Transportation Vehicle segment has numerous other valuable registered
trademarks, trade names, and logos used in its business.

Seasonality. The recreational vehicle market is generally subject to seasonal
fluctuations. Retail sales are generally stronger during the spring and late
summer months. The availability of retail floor plan financing to the
Recreational Vehicle division's independent dealers, as well as the use of
specialized sales programs during the winter months, help to mitigate some of
the effects of seasonality on the Recreational Vehicle division's production
schedule.

Regulation. The manufacture, distribution, and sale of the Transportation
Vehicle segment's vehicles are subject to governmental regulations in the
United States at the federal, state, and local levels. The most extensive
regulations are promulgated under the Safety Act which, among other things,
enables the NHTSA to require a manufacturer to remedy vehicles containing
"defects related to motor vehicle safety" or vehicles which fail to conform to
all applicable federal motor vehicle safety standards. Pursuant to the Safety
Act and related regulations, the Transportation Vehicles segment from time to

16


time has initiated voluntary recalls of its recreational and commercial
vehicles. Since the beginning of 1990, recalls by the Transportation Vehicles
segment initiated under the Safety Act, all of which have been voluntary, have
involved an aggregate cost to the Company of approximately $3.8 million.

Federal, state, and local authorities have adopted various control standards
relating to air, water and noise pollution which affect the business and
operations of the Transportation Vehicle segment. Management does not
anticipate that any of these standards will have a materially adverse impact
on its capital expenditures, earnings, or competitive position.

Employees. As of December 31, 1993, the Transportation Vehicles segment
employed approximately 1,900 people. None of the segment's personnel are
represented by labor unions.


17


Item 2. Properties
------------------

The following is a summary of the principal properties of the Company as of
March 17, 1994.

Motorcycles and Related Products Segment
----------------------------------------



Type of Facility Location Square Feet Status
- ---------------- -------- ----------- ------


Executive Offices,
Engineering & Warehouse Milwaukee, WI 502,720 Owned
Manufacturing Wauwatosa, WI 357,734 Owned
Manufacturing Tomahawk, WI 70,327 Owned
Manufacturing York, PA 949,380 Owned
Motorcycle Testing Talladega, AL 11,500 Lease expiring
1996
Office and Warehouse Morfelden-Walldorf, 50,859 Lease expiring
Germany 2001
Office Tokyo, Japan 7,015 Lease expiring
1995
Warehouse Yokohama, Japan 7,460 Lease expiring
1995
Office Brackley, England 2,845 Lease expiring
2005
Warehouse Brackley, England 1,122 Lease expiring
2005


The Motorcycles and Related Products segment has three facilities that perform
manufacturing operations: Wauwatosa, Wisconsin, a suburb of Milwaukee
(motorcycle power train production); Tomahawk, Wisconsin (fiberglass parts
production and painting); and York, Pennsylvania (motorcycle parts
fabrication, painting and assembly).

The results of a comprehensive manufacturing strategy completed by the Company
during 1993 indicated that generally the size of the existing facilities with
minor additions would be adequate to meet its current goal of being able to
produce 100,000 motorcycles, annually, in 1996.

18


Transportation Vehicles Segment
- -------------------------------


Type of Facility Location Square Feet Status
- ---------------- -------- ----------- ------

Executive Offices Wakarusa, IN 51,178 Owned
Manufacturing and Warehouse Wakarusa, IN 842,367 Owned
Factory Service Center Wakarusa, IN 41,138 Owned
Data Processing Wakarusa, IN 23,850 Owned
Research and Development/
Purchasing Wakarusa, IN 38,120 Owned
Sales Facilities Various 2,069 Owned
Manufacturing and Offices Nappanee, IN 169,711 Owned
Manufacturing Mishawaka, IN 16,180 Owned
Retail Dealership Facilities Various 201,900 Owned
Retail Dealership Facilities Various 18,328 Leased


The Transportation Vehicles segment's units are manufactured in approximately
30 separate buildings. Additionally, the Segment owns 20 buildings used for
administrative, storage, and other purposes. Substantially all of the
facilities are located on three sites at or near the Transportation Vehicles
segment's corporate headquarters in Wakarusa, Indiana. The Company owns all
of the production facilities and the underlying parcels of land. Because
recreational and commercial vehicles are produced largely through a labor-
intensive assembly process, the facilities do not house extensive capital
equipment. The Transportation Vehicles segment's present facilities are
generally adequate for their current intended use. Capacity increases may be
achieved at a relatively low cost, largely by adding production employees.

Item 3. Legal proceedings
--------------------------

The Company is involved with government agencies in various environmental
matters, including a matter involving soil and groundwater contamination at
its York, Pennsylvania facility (the Facility). The Facility was formerly used
by the U.S. Navy and AMF (the predecessor corporation of Minstar). The Company
purchased the facility from AMF in 1981. Although the Company is not certain
as to the extent of the environmental contamination at the Facility, it is
working with the Pennsylvania Department of Environmental Resources. The
Company is currently pursuing cost recovery litigation against the Navy and
believes that the Navy, by virtue of its ownership and operation of the
Facility, will ultimately be responsible for a substantial portion of the
environmental remediation costs at the Facility. In addition, in March 1991
the Company entered into a settlement agreement with Minstar related to
certain indemnification obligations assumed by Minstar in connection with the
Company's purchase of the Facility. Pursuant to this settlement, Minstar is
obligated to reimburse the Company for a portion of its investigation and
remediation costs at the Facility. Although substantial uncertainty exists
concerning the nature and scope of the environmental remediation that will
ultimately be required at the Facility, based on preliminary information
currently available to the Company and taking into account the Company's
estimate of the probable liability of the Navy, and the settlement agreement
with Minstar, the Company estimates that it will incur approximately $4
million of additional remediation and related costs at the Facility. The
Company has established reserves for this amount. The Company has also put
certain of its insurance carriers on notice that it intends to make claims
relating to the environmental contamination at the Facility. However, the
Company is currently unable to determine the probable amount of recovery
available, if any, under insurance policies.

The Company self-insures its product liability loss exposure. The Company
accrues for claim exposures which are probable of occurrence and reasonably
estimable.

19


Item 4. Submission of matters to a vote of security holders

No matters were submitted to a vote of stockholders of the Company in the
fourth quarter of 1993.

Executive officers of the registrant
------------------------------------


The following sets forth, as of March 17, 1994, the name, age and business
experience for the last five years of each of the executive officers of
Harley-Davidson.

Executive Officers
------------------



Name Age
- ---- ---

Richard F. Teerlink 57
President and Chief Executive Officer

Jeffrey L. Bleustein 54
President and Chief Operating Officer -
Motorcycle Division

James M. Brostowitz 42
Vice President, Controller and Treasurer

Thomas A. Gelb 58
Vice President, Continuous Improvement

C. William Gray 52
Vice President, Human Resources
Motorcycle Division

Timothy K. Hoelter 47
Vice President, General Counsel and
Secretary

Martin R. Snoey 50
President & Chief Operating Officer,
Holiday Rambler Corporation

James L. Ziemer 44
Vice President, Chief Financial Officer and
Assistant Treasurer


All of these individuals have been employed by the Company in an executive
capacity for more than five years, except C. William Gray and Martin R. Snoey.

Mr. Gray has been Vice President of Human Resources for the Motorcycle
Division since joining the Company in 1990. Prior to that time, he was Senior
Vice President, Human Resources for Champion International Corp., a
manufacturer of paper products, and from 1986 to 1988 Vice President, Human

20


Resources and Vice President, Strategic Planning for B. F. Goodrich Company, a
leading manufacturer serving the chemical and aerospace industries.

Mr. Snoey has been President and Chief Operating Officer of Holiday Rambler
Corporation since joining the Company in January 1993. Prior to that time he
held, from January 1992 to December 1992, a general management consulting
agreement with Precision Castparts Corporation, a specialty manufacturer
supplying the transportation industry. From July 1989 to March 1991 he was
the President and CEO of Geostar Corporation, an entrepreneurial, global
satellite communications company, serving the transportation industry. In
February 1991, Geostar Corporation filed a voluntary Chapter 11 bankruptcy
petition. From March 1984 to July 1989, he was an executive with the Kenworth
Truck Division of PACCAR, Inc., a leading manufacturer of transportation
equipment, where his last position was General Manager for U.S. Operations.


21


PART II
-------

Item 5. Market for Harley-Davidson, Inc. common stock and related stockholder
matters

Harley-Davidson, Inc., common stock is traded on the New York Stock Exchange.
The high and low market prices for the common stock, reported as New York
Stock Exchange Composite Transactions, were as follows:



1993 Low High
---- ------- -------


First quarter $31-1/5 $38-3/4
Second quarter 33-1/4 39-1/2
Third quarter 38-1/4 46-3/4
Fourth quarter 39-3/4 47-1/2

1992
----

First quarter $21-3/4 $32-1/2
Second quarter 23-1/4 31-3/8
Third quarter 23-3/4 29
Fourth quarter 26-1/2 38-3/4

The Company paid the following dividends during 1993.

First quarter $ -
Second quarter -
Third quarter .06
Fourth quarter .06


Prior to the declaration of its first quarterly dividends during 1993, the
Company had not paid cash dividends on its common stock.

As of March 17, 1994, there were approximately 19,300 shareholders of record
of Harley-Davidson, Inc. common stock.

22





Item 6. Selected financial data
1993 1992 1991 1990 1989
---------- ----------- --------- --------- ---------
(In thousands, except per share amounts)

Income statement data:
Net sales $1,217,428 $1,105,284 $939,863 $864,600 $790,967
Cost of goods sold 880,269 808,871 706,140 635,551 596,940
---------- ---------- -------- -------- --------
Gross profit 337,159 296,413 233,723 229,049 194,027

Selling, administrative, and engineering 267,353* 199,216 165,078 145,674 127,606
---------- ---------- -------- -------- --------
Income from operations 69,806 97,197 68,645 83,375 66,421

Other income (expense):
Interest expense, net (831) (4,912) (7,312) (9,701) (14,322)
Lawsuit judgement - 2,200 - (7,200) -
Other (2,460) (5,676) (3,239) (3,857) 910
---------- ---------- -------- -------- --------
(3,291) (8,388) (10,551) (20,758) (13,412)
---------- ---------- -------- -------- --------
Income from continuing operations before
income taxes, extraordinary items
and accounting changes 66,515 88,809 58,094 62,617 53,009
Provision for income taxes 48,072 34,636 21,122 24,309 20,399
---------- ---------- -------- -------- --------
Income from continuing operations before
extraordinary items and
accounting changes 18,443 54,173 36,972 38,308 32,610
Discontinued operation, net of tax - - - - 3,590
---------- ---------- -------- -------- --------
Income before extraordinary items
and accounting changes 18,443 54,173 36,972 38,308 36,200

Extraordinary items, net of tax - (388) - (478) (3,258)
---------- ---------- -------- -------- --------

Income before accounting changes 18,443 53,785 36,972 37,830 32,942
Cumulative effect of accounting changes,
net of tax (30,328) - - - -
---------- ---------- -------- -------- --------


Net income (loss) $ (11,885) $ 53,785 $ 36,972 $ 37,830 $ 32,942
========== ========== ======== ======== ========

Weighted average common
shares assuming no dilution 37,950 35,889 35,580 35,576 34,548
========== ========== ======== ======== ========

Per common share:
Income from continuing operations $.49 $1.51 $1.04 $1.08 $ .94
Discontinued operation - - - - .10
Extraordinary items - (.01) - (.02) (.09)
Accounting changes (.80) - - - -
----- ----- ----- ----- -----

Net income (loss) $( .31) $1.50 $1.04 $1.06 $ .95
====== ===== ===== ===== =====

Balance sheet data:
Working capital $ 142,996 $ 96,232 $ 64,212 $ 50,152 $ 51,313
Total assets 583,285 522,164 474,233 407,467 378,929
Short-term debt, including current
maturities of long-term debt 21,369 16,965 41,089 23,859 26,932
Long-term debt, less current maturities 3,429 2,360 46,906 48,339 74,795
---------- ---------- -------- -------- --------
Total debt 24,798 19,325 87,995 72,198 101,727
Stockholders' equity 324,912 335,380 238,000 198,775 156,247

*Includes a $57.0 million charge related primarily to the write-off of goodwill
at the Transportation Vehicles segment (Holiday Rambler).

23


Item 7. Management's discussion and analysis of financial condition and
results of operations

OVERALL
The Company's Motorcycles and Related Products segment was responsible for
virtually all of the growth in 1993 revenue and earnings. Demand for the
segment's motorcycles continued to exceed supply during 1993 and its parts and
accessories business generated a 27.8% revenue increase over 1992. The
motorcycle business also significantly benefitted from a more predictable and
efficient manufacturing process.

The Transportation Vehicles segment, in total, recorded disappointing results
in 1993. The segment's Recreational Vehicles business did not participate, to
the extent of other recreational vehicles manufacturers, in the industry
recovery. During the fourth quarter of 1993, the Company determined that an
impairment of goodwill related to the Transportation Vehicles segment had
occurred, and accordingly, recorded a $57.0 million ($1.46 per share) write-
off of goodwill and certain other assets.

In addition to the goodwill write-off, the Company changed its methods of
accounting both for postretirement health care benefits and for income taxes
during 1993, resulting in a $30.3 million ($0.80 per share) charge to
earnings, net of tax. Excluding the effect of the goodwill write-off and
accounting changes, the Company would have reported earnings during 1993 of
$74.1 million ($1.95 per share) compared to $53.8 million ($1.50 per share)
during 1992.

RESULTS OF OPERATIONS
1993 COMPARED TO 1992

MOTORCYCLE UNIT SHIPMENTS AND CONSOLIDATED NET SALES



1993 1992 Change %Change
Motorcycle unit shipments 81,696 76,495 5,201 6.8%
==================================================================================

Net sales (in millions):
Motorcycles $ 734.3 $ 667.2 $ 67.1 10.0%
Motorcycle Parts and Accessories 199.0 155.7 43.3 27.8
Total Motorcycles and Related Products 933.3 822.9 110.4 13.4
Recreational Vehicles 192.7 202.1 (9.4) (4.6)
Commercial Vehicles 78.9 67.9 11.0 16.2
Other 12.5 12.4 0.1 1.1
Total Transportation Vehicles 284.1 282.4 1.7 0.6
Consolidated Harley-Davidson, Inc. $1,217.4 $1,105.3 $112.1 10.1%
==================================================================================


The Company reported record consolidated revenue during 1993 of $1.2 billion
compared to $1.1 billion during 1992. The Motorcycles and Related Products
segment was responsible for virtually all of the change in consolidated
revenue as the result of increases in both motorcycle unit shipments and parts
and accessories sales.

During 1992, the motorcycle production schedule began the year at 280 units
per day and increased throughout the year to a scheduled rate of 345 units per
day in December. The scheduled motorcycle production rate remained steady at
345-350 units per day throughout 1993. Accordingly, the Company reported only
a 6.8% increase in unit shipments compared to 1992.

24


In October 1993, the Company announced that it would increase its scheduled
production rate to 365 units per day beginning January 3, 1994. Since the
beginning of 1994, that rate has been exceeded several times. The Company may
increase the rate during 1994 if the current production conditions continue.

Year-end data indicate that the domestic (United States) motorcycle market
continued to grow throughout 1993. Compared to 1992, industry registrations of
heavyweight (engine displacements in excess of 750cc) motorcycles were up
17.4% (data provided by R.L. Polk). The Company ended 1993 with a market share
of 58.4% compared to 60.4% in 1992. This decrease is primarily a reflection of
the Company's constrained capacity in a growing motorcycle market. Demand for
the Company's motorcycles continues to exceed supply with nearly all of the
Company's independent domestic dealers reporting retail orders on their
remaining 1994 model year motorcycle allocations (production through June,
1994).

In total, international demand remains strong. Export revenues totaled $262.8
million during 1993, an increase of approximately $23.4 million (9.8%) over
1992. The Company exported approximately 30% of motorcycle units in both 1993
and 1992 and expects to maintain approximately the same percentage during
1994. The Company distributes approximately one-half of exported units through
its wholly owned subsidiaries in Germany, Japan and England, which allows the
Company flexibility in responding to changing economic conditions in a variety
of foreign markets. While definitive market share information does not exist
in many foreign countries, the Company believes that it generally holds an
approximate 14% overall market share in the foreign markets in which it
competes.

Parts and accessories revenues exceeded management's expectations during 1993,
increasing 27.8% over 1992. Fourth quarter results were especially strong,
with revenues increasing 39.7% compared to the same period in 1992. Several
factors including media exposure surrounding the Company's 90th anniversary
celebration in June 1993, the popularity of the MotorClothes line and a strong
holiday selling season contributed to the growth. While pleased with the
results, the Company does not believe that the parts and accessories business
growth will continue at these rates.

The Transportation Vehicles segment's Recreational Vehicle division did not
realize the same level of improvement as the overall recreational vehicle
industry. During 1993, industry registrations increased 13.1% overall, while
the division's wholesale unit shipments decreased in both "Class A"
(motorized) and towable (fifth wheel and travel trailers) product lines
compared to 1992. The division's 1993 market shares for Class A motorhomes and
towables were 4.8% and 2.3%, respectively, compared to 5.3% and 2.9% during
1992. Much of the industry improvement (especially with respect to travel
trailers) has occurred in the lower end of the market, where the division
generally does not compete.

During 1993, the division added several employees from outside of the
organization to fill key leadership positions in product development,
marketing and sales areas. In addition, the Company replaced, in January 1993,
the President and Chief Operating Officer position of the Transportation
Vehicles segment. The entire leadership group at the Recreational Vehicles
division has renewed their focus on providing more customer responsive
products to the marketplace.

A 16.2% revenue increase in the Commercial Vehicles division was primarily the
result of large fleet contracts completed during 1993. Although it is too
early to determine whether the Commercial Vehicles division will be able to
match its success in 1994, its ability to attract large fleet contracts in a
competitive market positions it well for future growth.

25


CONSOLIDATED GROSS PROFIT
(Dollars in Millions)


Percent Percent
of Sales of Sales
1993 1992 Change 1993 1992
- ----------------------------------------------------------------------------------

Motorcycles and Related Products $292.0 $250.0 $42.0 31.3% 30.4%
Transportation Vehicles 45.2 46.4 (1.2) 15.9 16.4
==================================================================================
Consolidated Harley-Davidson, Inc. $337.2 $296.4 $40.8 27.7% 26.8%
==================================================================================


The $40.8 million increase in consolidated gross profit was generated entirely
by the Motorcycles and Related Products segment. Volume increases in both
motorcycle units and parts and accessories provided the majority of the
increase. The improvement in gross profit as a percent of sales reflects,
primarily, efficiencies realized in the manufacturing process. Motorcycle
volume increases realized during 1992 resulted in substantial overtime and
caused significant manufacturing inefficiencies. Accordingly, the
manufacturing focus in 1993 was on process improvement rather than on dramatic
production increases. The result was a more predictable manufacturing process,
a substantial decrease in overtime and an efficient transition to production
of 1994 models. The improvement in gross profit percentage occurred despite a
shift in mix toward lower-margin Sportster models. Approximately 27% of 1993
motorcycle unit shipments were Sportster models compared to approximately 23%
during 1992. The Company's long-term goal is a product mix consisting of
approximately 25% Sportsters. The Company currently anticipates that
approximately 28% of calendar 1994 production will consist of the Sportster
models.

Gross profit at the Transportation Vehicles segment decreased slightly during
1993. Volume decreases in the Recreational Vehicles division were largely
offset by volume increases in the Commercial Vehicles division. However, most
of the volume increase at the Commercial Vehicles division was the result of
fleet contracts which generally carry lower margins.


CONSOLIDATED OPERATING EXPENSES
(Dollars in Millions)



1993 1992 Change %Change
- ----------------------------------------------------------------------

Motorcycles and Related Products $155.8 $147.7 $ 8.1 5.5%
Transportation Vehicles 47.7 44.3 3.4 7.6
Goodwill and restructuring charges 57.0 - 57.0 -
Corporate 6.9 7.2 (0.3) (5.0)
======================================================================
Consolidated Harley-Davidson, Inc. $267.4 $199.2 $68.2 34.2%
======================================================================


The Motorcycles and Related Products segment's operating expenses increased
approximately 5.5% during 1993, although 1992's operating expenses included a
$5.5 million charge in the Motorcycle division related to two voluntary
recalls. In general, the increase in operating expense was the result of
spending required to support the growing business, including international
operations. Other areas of increase in 1993 include incentive compensation
and engineering costs, while areas of decrease included product liability and
warranty costs.

During the fourth quarter of 1993, the Company recorded a $57.0 million charge
to operations related to its Transportation Vehicles segment. $53.5 million
($1.41 per share) of the charge related to nondeductible goodwill associated
with the Company's purchase of Holiday Rambler Corporation during 1986. Since
the acquisition, the markets in which the Transportation Vehicles segment
operates have become increasingly competitive, and the segment itself did not
react appropriately to changes in market conditions, resulting in lower profit
than initially anticipated. The Company considered these and other factors in
concluding that an impairment of the goodwill asset had

26


occurred. The Company measured the impairment by discounting estimated future
cash flows of the Transportation Vehicles segment over the remaining goodwill
amortization period, using a targeted cost of capital discount rate. In
addition, the Company recorded a $3.5 million pretax ($0.05 per share)
restructuring charge related to strategic decisions made with respect to
certain operating units of the Transportation Vehicles segment.

Excluding the effect of the goodwill and restructuring charge, the
Transportation Vehicles segment recorded a $3.4 million (7.6%) increase in
operating expenses related primarily to increased marketing costs, rising
fringe benefit costs and incremental costs generated by two new Holiday World
retail showroom and service centers. 1993 operating expenses included goodwill
amortization of $2.2 million. Although the segment will not incur goodwill
amortization during 1994, it expects operating costs in the areas of
marketing, engineering and research and development to more than offset any
reduction related to the elimination of goodwill amortization.

CONSOLIDATED OTHER EXPENSES

Consolidated other expense decreased $3.2 million during 1993 compared to
1992, primarily as the result of approximately $3.7 million related to foreign
exchange gain recognized during 1993. In addition, the third quarter of 1992
included an unusual $1.9 million product recall in the Recreational Vehicles
division related to units that had been produced eight to ten years earlier,
prior to the purchase of Holiday Rambler Corporation by the Company. During
the fourth quarter of 1993, the Company accrued $2.0 million toward the
initial funding of the Harley-Davidson Foundation. The Foundation was
established to administer the Company's charitable contributions.

CONSOLIDATED NET INTEREST EXPENSE

Consolidated net interest expense of $0.8 million decreased $4.1 million
(83.1%) compared to 1992. The conversion of the Company's 7 1/4% convertible
subordinated debentures during the fourth quarter of 1992 and generally lower
short-term debt levels were the primary factors in the decrease of
consolidated interest expense.

CONSOLIDATED INCOME TAXES

The Company's effective tax rate during 1993 was 72.3% due primarily to the
effect of a $53.5 million nondeductible goodwill write-off during 1993.
Excluding the effect of the write-off, the Company's effective tax rate would
have been 40.0% compared to 39.0% during 1992.

27


1992 COMPARED TO 1991

MOTORCYCLE UNIT SHIPMENTS AND CONSOLIDATED NET SALES



1992 1991 Change %Change
- ----------------------------------------------------------------------------------------------

Motorcycle unit shipments 76,495 68,626 7,869 11.5%
==============================================================================================
Net sales (in millions):
Motorcycles $ 667.2 $ 571.7 $ 95.5 16.7%
Motorcycle Parts and Accessories 155.7 130.3 25.4 19.5
Total Motorcycles and Related Products 822.9 702.0 120.9 17.2
Recreational Vehicles 202.1 170.6 31.5 18.4
Commercial Vehicles 67.9 55.7 12.2 21.9
Other 12.4 11.6 0.8 7.1
Total Transportation Vehicles 282.4 237.9 44.5 18.7
Harley-Davidson, Inc. Consolidated Net Sales $1,105.3 $ 939.9 $165.4 17.6%
==============================================================================================


The Company reported worldwide net sales during 1992 of $1.1 billion.
Worldwide motorcycle demand continued to outpace production during 1992 and
net sales at the Transportation Vehicles segment increased $44.5 million
(18.7%) related primarily to an increase in volume in the Recreational Vehicle
division.

Total 1992 shipments included additional motorcycles shipped from planned
year-end inventories, similar to the year ago quarter. This resulted in a
shift of 1,400 units, intended for the first quarter of 1993, into the fourth
quarter of 1992.

The Company held approximately 60% of the heavyweight segment of the domestic
motorcycle market during 1992 and 1991. United States market registrations of
heavyweight motorcycles increased approximately 12,100 units (16%) during
1992. Although definitive market share information does not exist for many of
the smaller foreign markets, the Company estimates that it holds an average
market share of approximately 13% in the heavyweight segment of the foreign
markets in which it competes.

Total export revenues in the Motorcycles and Related Products segment
increased 16.6% to $239.5 million during 1992. Revenue from export motorcycle
sales and parts and accessories sales increased 17.1% and 13.5%, respectively,
during 1992, despite reported consumer concerns regarding worldwide economic
conditions. Over the past three years approximately 30-31% of all motorcycle
unit production has been allocated and shipped to non domestic markets.

Worldwide, the motorcycle parts and accessories business reported a 19.5%
revenue increase over 1991. The MotorClothes line of rider accessories
increased $15.3 million (approximately 45%) during the same period. The
MotorClothes line has begun to attract "non-traditional" customers and is
increasing floor traffic at dealerships. Margins on the MotorClothes line are
slightly lower than the margins generated by the other major parts and
accessories lines.

Motorcycle production during a normal eight-hour day increased to 345 units by
the end of 1992, compared to 280 units in January, 1992. The production ramp-
up required additional overtime during 1992 to achieve the schedule.

The Transportation Vehicles segment reported a $44.5 million (18.7%) revenue
increase compared to 1991. The Recreational Vehicle division provided the
majority of the increase. Improvements in market conditions, as well as
introductions of several new products during the year contributed to the
Recreational Vehicle division's revenue increase. The division began shipping
the new "bus style"

28


Navigator motorhome at the end of the second quarter which generated the
division's largest single source of revenue increase during 1992. Revenue also
benefited from a $16.6 million increase in total sales at the division's 12
retail Holiday World stores. Approximately $9.4 million of this increase was
the result of two new retail Holiday World stores, in California, which opened
at the beginning of 1992.

The Commercial Vehicle division reported a $12.2 million (21.9%) improvement
in revenue over the prior year. This increase was primarily the result of
additional volume from progress on two large fleet contracts awarded in 1991.
During the second half of 1992, the Commercial Vehicle division was awarded
two additional fleet contracts totaling approximately $17 million. Production
on these contracts began during the first quarter of 1993.

CONSOLIDATED GROSS PROFIT
(Dollars in Millions)


Percent Percent
of Sales of Sales
1992 1991 Change 1992 1991
- ---------------------------------------------------------------------------------

Motorcycles and Related Products $250.0 $201.2 $48.8 30.4% 28.8%
Transportation Vehicles 46.4 32.5 13.9 16.4 13.6
=================================================================================
Consolidated Harley-Davidson, Inc. $296.4 $233.7 $62.7 26.8% 24.9%
=================================================================================


The Motorcycles and Related Products segment reported a $48.8 million (24.2%)
increase in gross profit compared to 1991. Motorcycle volume increases
accounted for approximately one-half of the change. Improvement in the gross
profit percentage was primarily the result of a shift in motorcycle mix toward
higher margin custom units. The shift in product mix accounted for
approximately one-third of the segment's increase in gross profit. Gross
margins during both 1992 and 1991 were negatively impacted by costs associated
with a number of manufacturing issues. These issues included the production
ramp-up process and paint facility transition during 1991 and 1992, and
inefficiencies caused by a two week work stoppage and voluntary brake recall
in 1991.

The Transportation Vehicles segment reported a $13.9 million (42.8%) increase
in gross profit compared to 1991. The gross profit percentage for the segment
improved to 16.4% during 1992 from 13.6% in 1991. Gross profit in the
Recreational Vehicle division showed improvement due, in part, to the
introduction of the Navigator motorhome. The division also benefited from a
shift in product mix within the towable lines toward higher margin fifth wheel
products. The gross profit percentage at the Commercial Vehicle division
increased during 1992, due to higher sales volume and lower warranty costs.

CONSOLIDATED OPERATING EXPENSES
(Dollars in Millions)


1992 1991 Change %Change
- ----------------------------------------------------------------------


Motorcycles and Related Products $147.7 $112.3 $35.4 31.5%
Transportation Vehicles 44.3 45.9 (1.6) (3.5)
Corporate 7.2 6.9 0.3 5.2
======================================================================
Consolidated Harley-Davidson, Inc. $199.2 $165.1 $34.1 20.7%
======================================================================


The entire increase in operating expenses during 1992 occurred in the
Motorcycles and Related Products segment. Significant financial resources were
allocated in 1992 to both supporting increased sales levels over 1991 and
preparing for additional revenue advances in the future. Operating cost
increases occurred in almost every area, but more significantly in marketing
and employee services and training areas. Additionally, the engineering group
continued its on-going effort to meet more stringent motorcycle noise
regulations which take effect as early as 1994 in the European Community,

29


and also concentrated on new product development programs. In total,
engineering costs increased approximately $6 million in 1992 compared to 1991.
Another area of increase related to two voluntary motorcycle recalls totaling
$5.5 million, initiated in the fourth quarter of 1992.

The Transportation Vehicles segment reduced its operating expenses during 1992
by 3.5%, despite an 18.7% increase in revenues. This reduction occurred
primarily in the Commercial Vehicle division where operating costs were
decreased by approximately $1.1 million in several areas, including promotion,
research and development, and employment.

CONSOLIDATED OTHER EXPENSES
Consolidated other expenses in 1992 include a $1.9 million charge related to a
voluntary product recall announced in September at the Recreational Vehicle
division. This unusual recall covered units produced eight to ten years
earlier, prior to the purchase of Holiday Rambler Corporation by Harley-
Davidson, Inc.

CONSOLIDATED NET INTEREST EXPENSE
Consolidated net interest expense of $5.9 million during 1992 decreased $2.4
million (29.0%) compared to 1991. Lower short-term borrowings during 1992,
combined with the retirement of the remaining $7.8 million of Holiday Rambler
12 1/2% subordinated notes during May 1992, were the primary factors in the
decrease. Interest expense in 1991 was reported net of capitalized interest
incurred during the construction of the paint facility in York, Pennsylvania.
No interest was capitalized during 1992. During December 1992, the remaining
$36.3 million of Harley-Davidson, Inc. 7 1/4% convertible subordinated
debentures outstanding were converted into shares of the Company's common
stock.

CONSOLIDATED INCOME TAXES
The Company's consolidated effective tax rate of 39.0% compares to an
effective rate of 36.4% during 1991. The 1991 effective rate was impacted by
the settlement of various tax matters with the Internal Revenue Service
related to the final audit of prior tax years.

OTHER MATTERS

ACCOUNTING CHANGES
On January 1, 1993, the Company adopted the provisions of Statements of
Financial Accounting Standards (SFAS) No. 106, "Employers' Accounting for
Postretirement Benefits Other than Pensions" and No. 109 "Accounting for
Income Taxes." The adoption of SFAS No. 106 resulted in the recognition of a
$32.1 million charge (net of tax) representing the cumulative effect of
adopting the standard. The adoption of the standard resulted in additional
expense to continuing operations of approximately $4.6 million during 1993.

The adoption of SFAS No. 109 resulted in the recognition of a cumulative
effect adjustment of $1.8 million. Other than the cumulative effect
adjustment recorded on January 1, 1993, the adoption of SFAS No. 109 had no
significant effect on 1993 earnings. Virtually all of the adjustment relates
to the accounting treatment applied to inventory balances at the date of the
Company's initial purchase in 1981 as required under the then current
provisions of Accounting Principles Board Opinions No. 11 and No. 16. In
addition to the effect on earnings of adopting SFAS No. 109, the standard
resulted in a $7.7 million valuation increase in inventory and a related $5.9
million short-term deferred tax liability.

In considering the necessity of establishing a valuation allowance on
deferred tax assets, management considered: the levels of taxes paid in prior
years that would be available for carryback; its ability to offset reversing
deferred tax assets against reversing deferred tax liabilities; and, the
Company's prospects for future earnings. Accordingly, it is the opinion of
management that it is more likely than

30


not that the gross deferred tax assets included in the consolidated balance
sheet at December 31, 1993 will be realized in their entirety. It is the
intent of management to evaluate the realizability of deferred tax assets on a
quarterly basis.

The adoption of these standards had no impact on cash flows.

MANUFACTURING STRATEGY

During the third quarter of 1993, the Company announced that its Board of
Directors approved a comprehensive manufacturing strategy designed to, among
other things, achieve the goal of a 100,000 units-per-year production rate in
1996. The strategy calls for the enhancement of the Motorcycle division's
ability to increase capacity, adjust to changes in the marketplace and further
improve quality while reducing costs. The strategy calls for the achievement
of the increased capacity within the existing facilities (with minor
additions) without a significant change in personnel.

ENVIRONMENTAL MATTERS
The Company's policy is to comply with applicable environmental laws and
regulations. The Company has a compliance program in place to monitor, and
report on, environmental issues. The Company is currently involved with its
former parent (Minstar) and the U.S. Navy in cost recovery litigation
surrounding the remediation of the Company's manufacturing facility in York,
PA. The Company currently estimates that it will be responsible for
approximately $4 million related to the remediation of the York facility. The
Company has established reserves for this amount.

Recurring costs associated with managing hazardous substances and pollution in
on-going operations are not material.

The Company regularly invests in equipment to support and improve its various
manufacturing processes. While the Company considers environmental matters in
capital expenditure decisions, and while some capital expenditures also act to
improve environmental compliance, only a small portion of the Company's annual
capital expenditures relate to equipment which has the sole purpose of
environmental compliance. During 1993, the Company spent approximately $1
million on equipment used to limit hazardous substances/ pollutants. The
Company anticipates that capital expenditures for these matters during 1994
will approximate $2 million. The Company does not expect that expenditures
related to environmental matters will have a material effect on future
operating results or cash flows.

31


LIQUIDITY AND CAPITAL RESOURCES

The Company recorded cash flows from operating activities of $96.2 million in
1993 compared to $87.9 million during 1992. Earnings before the noncash
effects of the goodwill write-off and accounting changes added approximately
$21 million to 1993 cash flow from operating activities compared to 1992.
Decreases in Motorcycles and Related Products segment receivable balances
occurred primarily as the result of a reduced shipping schedule near the close
of the fourth quarter of 1993 compared to 1992. FIFO inventories in the
Motorcycles and Related Products segment increased $24 million related
primarily to the timing of motorcycle shipments to its foreign subsidiaries
and to volume related increases in its Parts and Accessories business. The
Transportation Vehicles segment reported a $16 million inventory increase
related primarily to the advance receipt of chassis for first quarter 1994
orders at the Commercial Vehicles division and to additional recreational
vehicles at two new Holiday World retail locations. As mentioned earlier, the
adoption of SFAS No. 109 also had the effect of increasing inventory balances
by approximately $7.7 million.

Investing activities utilized approximately $67.0 million during 1993. Capital
expenditures amounted to $55.2 million and $47.2 million during 1993 and 1992,
respectively. The Company anticipates 1994 capital expenditures will
approximate $80-$90 million. As discussed earlier, the Company's Board of
Directors approved a manufacturing strategy plan during the third quarter of
1993. The Company estimates the cost of capital expenditures for new
initiatives under this plan will be approximately $80 million through 1996,
with $5.0 million incurred in 1993. This estimate is in addition to capital
expenditures to maintain existing equipment and for new product development.
The Company anticipates funding all capital expenditures with internally
generated funds.

On January 5, 1993, the Company invested $10.0 million for a noncontrolling
interest in Eagle Credit Corporation (Eagle). The Company accounts for its
investment in Eagle using the equity method. Eagle was formed primarily to
provide wholesale and retail financing to the Company's dealer networks and
customers. Upon completion of its capitalization on January 5, 1993, Eagle
purchased all of Holiday Rambler's floor plan obligations (Notes payable) from
a third party finance company. Eagle also began providing wholesale financing
to the Motorcycle division's independent dealers, on that date, by purchasing
a wholesale motorcycle floor plan financing portfolio from the third party
finance company.

The Company currently has nominal levels of long-term debt and has available
lines of credit of approximately $44 million, of which approximately $40
million remained available at year-end.

The Company's Board of Directors declared two quarterly cash dividends of $.06
each during 1993. On February 6, 1994, the Company's Board of Directors
declared a cash dividend of $.06 per share payable February 28, 1994 to
shareholders of record February 14.

32


Item 8. Consolidated financial statements and supplementary data
------- --------------------------------------------------------


Page
----

Report of Ernst & Young, independent auditors 34

Consolidated statements of operations 35

Consolidated balance sheets 36

Consolidated statements of cash flows 37

Consolidated statements of changes in
stockholders' equity 38

Notes to consolidated financial statements 39

Supplementary data
Quarterly financial data (unaudited) 53



33


REPORT OF ERNST & YOUNG, INDEPENDENT AUDITORS


The Board of Directors and
Stockholders
Harley-Davidson, Inc.

We have audited the accompanying consolidated balance sheets of Harley-
Davidson, Inc. as of December 31, 1993 and 1992, and the related consolidated
statements of operations, changes in stockholders' equity and cash flows for
each of the three years in the period ended December 31, 1993. Our audits also
included the financial statement schedules listed in the index at item 14(a).
These financial statements and schedules are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements and schedules based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.

In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position
of Harley-Davidson, Inc. at December 31, 1993 and 1992, and the consolidated
results of its operations and its cash flows for each of the three years in
the period ended December 31, 1993, in conformity with generally accepted
accounting principles. Also, in our opinion, the related financial statement
schedules, when considered in relation to the basic financial statements taken
as a whole, present fairly in all material respects the information set forth
therein.

As discussed in notes 6 and 9 to the consolidated financial statements,
effective January 1, 1993, the Company changed its methods of accounting for
income taxes and postretirement benefits other than pensions.

ERNST & YOUNG


Milwaukee, Wisconsin
January 28, 1994

34


HARLEY-DAVIDSON, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
Years ended December 31, 1993, 1992 and 1991
(In thousands, except per share amounts)



1993 1992 1991
----------- ----------- ---------


Net sales $1,217,428 $1,105,284 $939,863
Cost of goods sold 880,269 808,871 706,140
---------- ---------- --------
Gross profit 337,159 296,413 233,723

Selling, administrative and engineering 210,329 199,216 165,078
Goodwill and restructuring charges 57,024 - -
---------- ---------- --------
Income from operations 69,806 97,197 68,645

Interest income 1,214 956 950
Interest expense (2,045) (5,868) (8,262)
Lawsuit judgement reversal - 2,200 -
Other - net (2,460) (5,676) (3,239)
---------- ---------- --------

Income before provision for income taxes,
extraordinary item and accounting changes 66,515 88,809 58,094
Provision for income taxes 48,072 34,636 21,122
---------- ---------- --------

Income before extraordinary item and
accounting changes 18,443 54,173 36,972
Extraordinary item, loss on debt
repurchases, net of tax - (388) -
---------- ---------- --------
Income before accounting changes 18,443 53,785 36,972

Cumulative effect of accounting changes:
Postretirement health care benefits, net of tax (32,124) - -
Income taxes 1,796 - -
---------- ---------- --------

Net income (loss) $ (11,885) $ 53,785 $ 36,972
========== ========== ========

Earnings (loss) per common share assuming no dilution:
Income before extraordinary item and
accounting changes $ .49 $1.51 $1.04
Extraordinary item - (.01) -
Accounting changes (.80) - -
----- ----- -----
Net income (loss) $(.31) $1.50 $1.04
===== ===== =====

Earnings (loss) per common share assuming full dilution:
Income before extraordinary item and
accounting changes $ .49 $1.46 $1.04
Extraordinary item - (.01) -
Accounting changes (.80) - -
----- ----- -----
Net income (loss) $(.31) $1.45 $1.04
===== ===== =====
Cash dividends per common share $ .12 $ - $ -
====== ====== ======


The accompanying notes are an integral part
of the consolidated financial statements.

35


HARLEY-DAVIDSON, INC.
CONSOLIDATED BALANCE SHEETS
December 31, 1993 and 1992
(In thousands, except share amounts)



ASSETS 1993 1992
------ -------- --------

Current assets:
Cash and cash equivalents $ 77,709 $ 44,122
Accounts receivable, net of allowance for doubtful accounts 86,031 93,178
Inventories 140,151 94,428
Deferred income taxes 20,296 24,120
Prepaid expenses 9,571 9,617
-------- --------
Total current assets 333,758 265,465

Property, plant, and equipment, net 205,768 183,787
Goodwill, net - 56,710
Deferred income taxes 11,676 -
Other assets 32,083 16,202
-------- --------
$583,285 $522,164
======== ========

LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
Current liabilities:
Notes payable $ 20,580 $ 15,933
Accounts payable 56,350 58,004
Accrued expenses and other liabilities 113,043 94,264
Current maturities of long-term debt 789 1,032
-------- --------
Total current liabilities 190,762 169,233


Long-term liabilities 12,612 7,224
Deferred income taxes - 10,327
Postretirement health care benefits 54,999 -

Commitments and contingencies (Note 7)

Stockholders' equity:
Series A Junior Participating preferred stock, none issued - -
Common stock, 38,452,490 shares issued in 1993 and 1992 385 385
Additional paid-in capital 137,150 131,053
Retained earnings 189,410 205,850
Cumulative foreign currency translation adjustment 186 757
-------- --------
327,131 338,045
Less:
Treasury stock (456,464 and 567,284 shares in 1993
and 1992, respectively), at cost (1,583) (1,028)
Unearned compensation (636) (1,637)
-------- --------

Total stockholders' equity 324,912 335,380
-------- --------
$583,285 $522,164
======== ========



The accompanying notes are an integral part
of the consolidated financial statements.

36


HARLEY-DAVIDSON, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Years ended December 31, 1993, 1992 and 1991
(In thousands)



1993 1992 1991
-------- -------- --------


Cash flows from operating activities:
Net income (loss) $(11,885) $ 53,785 $ 36,972
Adjustments to reconcile net income (loss) to net cash
provided by operating activities:
Goodwill and restructuring charges 57,024 - -
Depreciation and amortization 33,272 29,410 22,603
Deferred income taxes (25,922) (993) (2,981)
Lawsuit:
Reversal - (2,200) -
Settlement paid - (5,000) -
Long-term employee benefits 57,386 1,369 1,258
Loss on disposal of long-term assets 626 1,164 1,346
Equity in net loss of joint ventures 1,427 - -
Net changes in other current assets and current liabilities (15,756) 10,380 (9,772)
-------- -------- --------
Total adjustments 108,057 34,130 12,454
-------- -------- --------
Net cash provided by operating activities 96,172 87,915 49,426

Cash flows from investing activities:
Net capital expenditures (55,202) (47,229) (47,766)
Investment in joint ventures (10,350) - -
Other - net (1,484) (2,727) (766)
-------- -------- --------
Net cash used in investing activities (67,036) (49,956) (48,532)

Cash flows from financing activities:
Net increase (decrease) in notes payable 4,647 (23,593) 17,175
Payments on long-term debt (1,183) (9,420) (1,771)
Dividends paid (4,555) - -
Issuance of stock under employee stock plans 5,542 8,257 620
-------- -------- --------
Net cash provided by (used in) financing activities 4,451 (24,756) 16,024
-------- -------- --------

Net increase in cash and cash equivalents 33,587 13,203 16,918

Cash and cash equivalents:
At beginning of year 44,122 30,919 14,001
-------- -------- --------
At end of year $ 77,709 $ 44,122 $ 30,919
======== ======== ========


The accompanying notes are an integral part
of the consolidated financial statements.

37


HARLEY-DAVIDSON, INC.
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
Years ended December 31, 1993, 1992 and 1991
(In thousands, except share amounts)



Cumulative
Common Stock foreign
------------------- Additional currency
Issued paid-in Retained translation Treasury Unearned
shares Balance capital earnings adjustment stock compensation
---------- ------- ---------- -------- ----------- -------- ------------


Balance December 31, 1990 18,310,000 $183 $ 87,115 $115,093 $ 995 $ (771) $(3,840)

Net income - - - 36,972 - - -

Amortization of unearned compensation,
net of cancellations - - - - - (218) 1,280

Exercise of stock options - - 615 - - 5 -

Foreign currency translation
adjustment - - - - 571 - -
---------- ---- -------- -------- ------ ------- -------

Balance December 31, 1991 18,310,000 183 87,730 152,065 1,566 (984) (2,560)

Two-for-one common stock split 18,310,000 183 (183) - - - -

Net income - - - 53,785 - - -

Amortization of unearned compensation,
net of cancellations - - - - - (73) 923

Exercise of stock options - - 2,757 - - 29 -

Tax benefit of restricted shares and
stock options - - 5,471 - - - -

Conversions of subordinated
debentures 1,832,490 19 35,278 - - - -

Foreign currency translation
adjustment - - - - (809) - -
---------- ---- -------- -------- ------ ------- -------

Balance December 31, 1992 38,452,490 385 131,053 205,850 757 (1,028) (1,637)

Net loss - - - (11,885) - - -

Dividends declared - - - (4,555) - - -

Amortization of unearned compensation,
net of cancellations - - - - - (566) 1,001

Exercise of stock options - - 2,044 - - 11 -

Tax benefit of restricted shares and
stock options - - 4,053 - - - -

Foreign currency translation
adjustment - - - - (571) - -
---------- ---- -------- -------- ------ ------- -------

Balance December 31, 1993 38,452,490 $385 $137,150 $189,410 $ 186 $(1,583) $ (636)
========== ==== ======== ======== ====== ======= =======

The accompanying notes are an integral part
of the consolidated financial statements.

38


HARLEY-DAVIDSON, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Year ended December 31, 1993


1. Summary of significant accounting policies

Principles of consolidation - The consolidated financial statements include
the accounts of Harley-Davidson, Inc. and all of its wholly owned
subsidiaries (the Company), including the accounts of Holiday Rambler
Corporation (Holiday Rambler). All significant intercompany accounts and
transactions are eliminated.

The Company has investments in certain entities which are accounted for
using the equity method. Accordingly, the Company's share of the net
earnings (losses) of these entities is included in consolidated net income
(loss).

Cash and cash equivalents - The Company considers all highly liquid
investments purchased with an original maturity of three months or less to be
cash equivalents.

Inventories - Inventories are valued at the lower of cost or market.
Motorcycle and new transportation vehicle inventories located in the United
States are valued using the last-in, first-out (LIFO) method. Other
inventories, $26.5 million in 1993 and $16.4 million in 1992, are valued at
the lower of cost or market using the first-in, first-out (FIFO) method.

Depreciation - Depreciation of plant and equipment is determined on the
straight-line basis over the estimated useful lives of the assets.
Accelerated methods are used for income tax purposes.

Product warranty - Product warranty costs are charged to operations based
upon the estimated warranty cost per unit sold.

Goodwill - Goodwill represented the excess of the purchase price over the
fair value of tangible net assets acquired. Goodwill was amortized
principally over 25 years using the straight-line method. Accumulated
amortization was $18.3 million at December 31, 1992. See footnote 2.

Research and development expenses - Research and development expenses were
approximately $22.7 million, $17.6 million and $11.1 million for 1993, 1992
and 1991, respectively.

Environmental - The Company accrues for environmental loss contingencies
when it is probable that a liability has been incurred and the amount can be
reasonably estimated. The Company does not use discounting in determining
its environmental liabilities.

Earnings (loss) per share - Earnings (loss) per common share assuming no
dilution is calculated by dividing elements of net income (loss) by the
weighted average number of common shares outstanding during the period, as
adjusted for the stock split described in Note 10. The weighted average
number of common shares outstanding during 1993, 1992 and 1991 were 38.0
million, 35.9 million and 35.6 million, respectively.

Earnings (loss) per common share assuming full dilution include shares
generated by the assumed conversion of convertible debt at the beginning of
the period as well as the dilutive effect of stock options. 1992 net income
has been adjusted (for purposes of this calculation) to reflect the interest
savings of approximately $1.6 million (net of tax) associated with the
assumed conversion. Shares used in computing earnings per common share
assuming full dilution during 1992 were 38.3 million. Neither stock options
nor convertible debt were materially dilutive, alone or in combination,
during 1993 or 1991.

39


2. Goodwill and restructuring charges

During the fourth quarter of 1993, the Company recorded a $53.5 million
nondeductible charge to operations resulting from the write-off of the
remaining goodwill associated with the Company's purchase of Holiday Rambler
in 1986. Since 1986, the markets in which Holiday Rambler operates have
become increasingly competitive, resulting in lower profitability than
initially anticipated. The Company considered these factors, as well as
estimated future operating results, during the fourth quarter in concluding
that an impairment had occurred. The Company measured the impairment and,
based on the results of that measurement, recorded a $53.5 million charge
against earnings. In measuring the impairment, the Company calculated the
discounted value of estimated Holiday Rambler cash flows, over the
approximate remaining goodwill amortization period, using a targeted cost of
capital discount rate.

In addition, the Company recorded a pretax restructuring charge of
approximately $3.5 million related to strategic decisions made with respect
to certain operating units of Holiday Rambler.

Goodwill and restructuring charges, in total, had the effect of reducing 1993
earnings per share by $1.46.


3. Additional balance sheet and cash flows information

Accounts receivable consist of the following:



December 31
----------------
1993 1992
------- -------
(In thousands)

Motorcycles and Related Products segment:
Domestic $27,854 $30,901
Foreign 46,686 48,421

Transportation Vehicles segment 11,491 13,856
------- -------

$86,031 $93,178
======= =======


Domestic motorcycle and transportation vehicle sales are generally floor
planned by the purchasing dealers. Foreign motorcycle sales are sold on open
account except for sales to European distributors, which are typically backed
by letters of credit.

40


3. Additional balance sheet and cash flows information (continued)
---------------------------------------------------------------

The allowance for doubtful accounts deducted from accounts receivable was
$1.8 million and $1.6 million at December 31, 1993 and 1992, respectively.



December 31
------------------
1993 1992
-------- --------
(In thousands)

Inventories:
Components at the lower of FIFO cost or market:
Raw materials and work in process $ 54,155 $ 43,885
Finished goods 66,865 41,973
Parts and accessories 35,366 30,635
-------- --------
156,386 116,493
Excess of FIFO over LIFO inventories 16,235 22,065
-------- --------
$140,151 $ 94,428
======== ========


Adoption of Financial Accounting Standard No. 109, "Accounting for Income
Taxes," resulted in a $7.7 million increase in the Company's LIFO inventory
valuation. The increase was the result of breaking out the effect of an
imbedded deferred tax liability, as required by the standard.



December 31
------------------
1993 1992
-------- --------
(In thousands)

Property, plant, and equipment, at cost:
Land and land improvements $ 11,260 $ 11,168
Buildings and improvements 79,666 74,367
Machinery and equipment 252,857 212,191
-------- --------
343,783 297,726
Less accumulated depreciation and
amortization 138,015 113,939
-------- --------
$205,768 $183,787
======== ========
Accrued expenses and other current liabilities:
Payroll, bonuses, and related expenses $ 41,226 $ 25,612
Warranty/recalls 16,446 21,000
Dealer incentive programs 13,089 11,684
Product liability 11,408 15,073
Other taxes payable 3,960 3,352
Income taxes payable 3,729 5,192
Other current liabilities 23,185 12,351
-------- --------
$113,043 $ 94,264
======== ========


41


3. Additional balance sheet and cash flows information (continued)
---------------------------------------------------------------

Supplemental cash flow information is as follows:


1993 1992 1991
--------- --------- ---------
(In thousands)

Net changes in other current assets and current liabilities:
Receivables $ 7,147 $(21,661) $(19,620)
Inventories (37,980) 12,255 3,195
Prepaid expenses 46 (940) (2,217)
Accounts payable and accrued expenses 15,031 20,726 8,870
-------- -------- --------
$(15,756) $ 10,380 $ (9,772)
======== ======== ========

Cash paid during the period for interest and income taxes is as follows:


1993 1992 1991
------- ------- -------
(In thousands)


Interest $ 1,959 $ 5,940 $ 9,170
======= ======= =======
Income taxes $53,277 $28,092 $22,624
======= ======= =======


In December 1992, the Company issued approximately 1.8 million shares of its
common stock in exchange for the remaining $36.3 million of Harley-Davidson,
Inc. 7-1/4% convertible subordinated debentures.

During 1991, the Company incurred $9.4 million of interest expense of which
approximately $1.1 million was capitalized. No interest was capitalized in
1993 or 1992.

4. Investments
-----------

On January 5, 1993, the Company invested $10.0 million for a 49% interest in
Eagle Credit Corporation (Eagle). Eagle was formed to provide wholesale and
retail financing to the Company's dealer networks and customers. Upon the
completion of its capitalization on January 5, 1993, Eagle purchased all of
Holiday Rambler's floor plan obligations (Notes payable) from a third party
finance company. Eagle also began providing wholesale financing to the
Company's independent dealers, on that date, by purchasing a wholesale
motorcycle floor plan financing portfolio from the third party finance
company.

The Company accounts for this and another investment using the equity
method. As of December 31, 1993, the Company's carrying value of its
investments in these unconsolidated affiliates totaled $8.9 million which is
included in other assets. In addition, accounts receivable includes a $9.4
million amount due from Eagle.

5. Notes payable
-------------

Notes payable represent, primarily, floor plan obligations of Holiday
Rambler which are secured by specific units held for sale (approximately $17
million of the finished goods inventory at December 31, 1993).

As of December 31, 1993, the Company had unsecured lines of credit available
totaling approximately $44.0 million, of which approximately $40.0 million
remained available.

42


6. Income taxes
------------

In February 1992, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 109, "Accounting for Income Taxes,"
which became effective for fiscal years beginning after December 15, 1992.
The Company adopted this standard on a prospective basis effective January
1, 1993. The adoption resulted in additional income of $1.8 million related
primarily to the accounting treatment applied to inventory LIFO reserves
calculated at the date of the Company's initial purchase in 1981 as required
under the then current provisions of Accounting Principles Board Opinion
Nos. 11 and 16.

Details of income before provision for income taxes are as follows:



1993 1992 1991
--------- -------- -------
(In thousands)

Income before taxes, extraordinary
item and accounting changes:
Domestic $ 55,709 $77,802 $45,835
Foreign 10,806 11,007 12,259
Extraordinary item - (644) -
Accounting changes (52,661) - -
-------- ------- -------
$ 13,854 $88,165 $58,094
======== ======= =======

Provision for income taxes consists of the following:

Income tax (benefit) applicable to:
Income before taxes, extraordinary item and
accounting changes $ 48,072 $34,636 $21,122
Extraordinary item - (256) -
Accounting changes (22,333) - -
-------- ------- -------
$ 25,739 $34,380 $21,122
======== ======= =======
Provision for income taxes:
Current:
Federal $ 38,031 $22,968 $12,494
State 9,368 6,981 5,657
Foreign 4,262 5,424 5,952
-------- ------- -------
51,661 35,373 24,103
Deferred:
Federal (24,780) (1,140) (3,646)
State (2,573) (121) (84)
Foreign 1,431 268 749
-------- ------- -------
(25,922) (993) (2,981)
-------- ------- -------
Total $ 25,739 $34,380 $21,122
======== ======= =======

43


6. Income taxes (continued)
------------------------

The provision for income taxes differs from the amount which would be
provided by applying the statutory U.S. corporate income tax rate of 35%,
34% and 34% during 1993, 1992 and 1991, respectively, due to the following
items:


1993 1992 1991
-------- -------- --------
(In thousands)

Provision at statutory rate $ 4,849 $29,976 $19,752
Write-off of goodwill 18,746 - -
Foreign income taxes 1,484 2,033 2,533
Foreign tax credits (1,100) (1,600) (1,500)
State taxes, net of federal benefit 3,687 4,171 3,614
Settlement of tax issues - - (2,106)
Foreign sales corporation (1,405) (613) (613)
Other (522) 413 (558)
------- ------- -------
Provision for income taxes $25,739 $34,380 $21,122
======= ======= =======


Deferred income taxes result from temporary differences between the
recognition of revenues and expenses for financial statements and income
tax returns. The principal components of the Company's deferred tax assets
and liabilities as of December 31, 1993 include the following:



1993
--------------
(In thousands)

Deferred tax asset:
Accruals not yet tax deductible $ 29,874
Postretirement benefit obligation 21,834
Other, net 956
--------
52,664

Deferred tax liability:
Depreciation, tax in excess of book (12,124)
Inventory adjustments (6,453)
Pension obligation (2,115)
--------
(20,692)
--------

Net deferred tax asset $ 31,972
========


The deferred tax provision for 1992 and 1991 resulted principally from
accelerated depreciation ($1.3 million and $1.7 million, respectively),
warranty accrual increases ($3.6 million and $1.4 million, respectively),
product liability accrual increase ($2.2 million during 1991) a lawsuit
judgement ($2.7 million during 1992) and foreign tax credits ($1.5 million
during 1991).

44


7. Commitments and contingencies
-----------------------------

The Company is involved with government agencies in various environmental
matters, including a matter involving soil and groundwater contamination at
its York, Pennsylvania facility (the Facility). The Facility was formerly
used by the U.S. Navy and AMF (the predecessor corporation of Minstar). The
Company purchased the facility from AMF in 1981. Although the Company is not
certain as to the extent of the environmental contamination at the Facility,
it is working with the Pennsylvania Department of Environmental Resources.
The Company is currently pursuing cost recovery litigation against the Navy
and believes that the Navy, by virtue of its ownership and operation of the
Facility, will ultimately be responsible for a substantial portion of the
environmental remediation costs at the Facility. In addition, in March 1991
the Company entered into a settlement agreement with Minstar related to
certain indemnification obligations assumed by Minstar in connection with
the Company's purchase of the Facility. Pursuant to this settlement, Minstar
is obligated to reimburse the Company for a portion of its investigation and
remediation costs at the Facility. Although substantial uncertainty exists
concerning the nature and scope of the environmental remediation that will
ultimately be required at the Facility, based on preliminary information
currently available to the Company and taking into account the Company's
estimate of the probable liability of the Navy, and the settlement agreement
with Minstar, the Company estimates that it will incur approximately $4
million of additional remediation and related costs at the Facility. The
Company has established reserves for this amount. The Company has also put
certain of its insurance carriers on notice that it intends to make claims
relating to the environmental contamination at the Facility. However, the
Company is currently unable to determine the probable amount of recovery
available, if any, under insurance policies.

The Company self-insures its product liability loss exposure. The Company
accrues for claim exposures which are probable of occurrence and can be
reasonably estimated.

The Company enters into forward exchange contracts to hedge against sales
transactions denominated principally in European currencies. At December 31,
1993, the Company had forward exchange contracts that required it to convert
these foreign currencies, at a variety of rates, into U.S. Dollars or German
Deutsche Marks. These contracts represent a combined U.S. dollar equivalent
commitment of approximately $45.5 million. The contracts mature at various
dates through August, 1994. Unrealized gains and losses associated with
these contracts are deferred and accounted for as part of the hedged
transaction. At December 31, 1993 and 1992, these contracts had a fair value
(deferred contract gains) of approximately $1.0 million and $1.6 million,
respectively, based on published exchange rates.

At December 31, 1993, the Motorcycles and Related Products segment (the
Motorcycle segment) and the Transportation Vehicles segment (the
Transportation segment) estimated that they were contingently liable under
repurchase agreements for a maximum of $31.8 million and $31.7 million,
respectively, to lending institutions that provide wholesale floor plan
financing to their dealers. These agreements are customary in both the
motorcycle and recreational vehicle industry. The Company's loss exposure
on repurchase is limited to the difference between the resale value of the
vehicle and the amount required to be paid the lending institution at the
time of repurchase.

The Motorcycle segment has a trade acceptance agreement with Eagle (see
note 4) which expires on June 1, 1994, and is subject to annual renewal.
Under the terms of the agreement, the Motorcycle segment receives cash from
Eagle in the amount of 100% of certain eligible accounts receivable at the
time of sale. On June 1, 1994, the Motorcycle segment is obligated to
repurchase all unpaid balances from Eagle. At December 31, 1993, trade
acceptances of $15.4 million were subject to this agreement. The Company has
not incurred any material losses from the foregoing repurchase agreements
and currently anticipates no material losses.

45


7. Contingencies and commitments (continued)
-----------------------------------------

At December 31, 1993, the Company was contingently liable for $13.0 million
related to letters of credit. The letters of credit typically act as a
guarantee of payment to certain third parties in accordance with specified
terms and conditions.

8. Employee benefit plans
----------------------

The Company has several noncontributory defined benefit pension plans or
profit sharing plans covering substantially all employees of the Motorcycle
segment. The Company's policy with respect to the pension plans is to fund
pension benefits to the extent contributions are deductible for tax
purposes.

The following data is provided for the pension plans for the years
indicated:



Components of net periodic pension cost
- ---------------------------------------
December 31,
----------------------------
1993 1992 1991
------- ------- --------
(In thousands)

Service cost - benefits earned during the year $ 3,384 $ 2,580 $ 2,298
Interest cost on projected benefit obligations 8,188 7,364 6,315
Actual return on plan assets (7,327) (3,367) (15,758)
Net amortization and deferral (606) (4,173) 8,908
------- ------- --------
Net periodic pension cost $ 3,639 $ 2,404 $ 1,763
======= ======= ========


46


8. Employee benefit plans (continued)

Reconciliation of funded status



September 30, 1993
-------------------------
Assets Accumulated
Exceed Benefits
Accumulated Exceed December 31,
Benefits Assets 1992
-------- -------- --------
(In thousands)

Actuarial present value of benefit obligations:
Vested benefit obligation $ 29,687 $ 50,877 $ 66,431
Nonvested benefit obligation 4,058 5,363 8,126
-------- -------- --------
Accumulated benefit obligation $ 33,745 $ 56,240 $ 74,557
======== ======== ========

Projected benefit obligations for service rendered to date $ 48,015 $ 72,096 $ 97,701
Plan assets at fair value, consisting primarily of debt
securities, bank common trust funds, common stock,
and an immediate participation guarantee contract 38,805 51,662 83,127
-------- -------- --------

Projected benefit obligation in excess of plan assets 9,210 20,434 14,574
Unrecognized net loss from past experience different
from that assumed and changes in assumptions (15,271) (17,200) (18,636)
Unrecognized prior service cost (50) (2,602) (2,936)
Unrecognized transition asset 866 1,344 2,559
Additional minimum liability - 2,602 -
-------- -------- --------

Accrued (prepaid) pension cost (September 30, 1993;
December 31, 1992) (5,245) 4,578 (4,439)
Fourth quarter contribution (482) (159) -
-------- -------- --------
Accrued (prepaid) pension cost, December 31 $ (5,727) $ 4,419 $ (4,439)
======== ======== ========


In 1993, the Company elected to change the measurement date for pension
plan assets and liabilities from December 31 to September 30. The change in
measurement date had no effect on 1993, or prior years', pension expense.

The provisions of Financial Accounting Standards Board Statement No. 87,
"Employers' Accounting for Pensions," require the recognition of an additional
minimum liability and related intangible asset to the extent that accumulated
benefits exceed plan assets. At December 31, 1993, the Company recorded an
adjustment of $2.6 million which was required to reflect the Company's minimum
pension liability. The Company recorded an intangible asset in the same amount.



1993 1992 1991
----- ----- -----

Weighted average assumptions used in determining
actuarial present value of plan benefit obligations:
Discount rate 7.8% 8.5% 9.0%
Rate of increase in future compensation levels 5.0% 5.0% 5.0%
Assumed long-term rate of return on plan assets 10.3% 10.3% 10.3%


47


8. Employee benefit plans (continued)

Certain of the Company's plans relating to hourly employees were amended
during 1993, 1992 and 1991 to increase the scheduled benefits.

The Company also has thrift incentive plans for both salaried and hourly
Motorcycle segment employees. The Company accrued for a matching contribution
to the plan during 1993 of $1.2 million. The Company did not contribute to
these plans in 1992 or 1991. Employees can make voluntary contributions in
accordance with the provisions of their respective plan, which includes a
401(k) tax deferral option.

The Transportation segment has a defined contribution employee benefit plan
which covers substantially all full-time employees. The plan is funded partly
by employee wage deferrals in accordance with section 401(k) of the Internal
Revenue Code. The Transportation segment accrued for a discretionary matching
contribution of $0.4 million during 1992. The Company did not contribute to
this plan in 1993 or 1991.

9. Postretirement health care benefits

The Company has several postretirement health care benefit plans covering
substantially all employees of the Motorcycle segment. Employees are eligible
to receive benefits upon attaining age 55 after rendering at least 10 years
of service to the Company.

On January 1, 1993, the Company adopted Statement of Financial Accounting
Standards No. 106 (SFAS 106), "Employers' Accounting for Postretirement
Benefits Other Than Pensions," which requires companies to accrue the cost of
postretirement benefits during the employees' active service period. The
Company elected to immediately recognize the accumulated postretirement
benefit obligation upon adoption of SFAS 106. The Company recorded an
accumulated obligation of $32.1 million, net of tax. In prior years, the
Company accounted for postretirement benefits on a cash basis.

The Company uses September 30 as the measurement date for valuing its
postretirement health care obligation.

The Company's postretirement health care plans are currently funded as claims
are submitted ($1.6 million in 1993). Some of the plans require employee
contributions to offset benefit costs. The status of the plans at December
31, 1993 was as follows (in thousands):

Accumulated postretirement benefit obligation:


Retirees $19,538
Fully eligible active plan participants 12,776
Other active plan participants 26,640
-------
58,954
Unrecognized net loss (3,528)
Fourth quarter contribution (427)
-------
Accrued postretirement benefit liability $54,999
=======


48


9. Postretirement health care benefits (continued)
-----------------------------------------------

The net periodic postretirement benefit cost for the year ended December
31, 1993 includes the following (in thousands):

Service cost - benefits earned during the year $1,967
Interest cost on projected benefit obligation 4,277
------
Net periodic postretirement benefit cost $6,244

The weighted average health care cost trend rate used in determining the
accumulated postretirement benefit obligation of the health care plans was
15%. The per capita health care cost rate was assumed to decrease gradually
to 6% for 1999 and remain at that level thereafter. This assumption can
have a significant effect on the amounts reported. If the weighted average
health care cost trend rate were to increase by 1%, the accumulated
postretirement benefit obligation as of January 1, 1994 and aggregate of
service and interest cost components of net periodic postretirement benefit
cost for the year ended December 31, 1994 would increase by $7.1 million
and $1.1 million, respectively. The weighted average discount rate used to
determine the accumulated postretirement benefit obligation of the health
care plan as of September 30, 1993 was 7.75%. The Company used a weighted
average discount rate of 8.5% in establishing the transition obligation at
January 1, 1993.

Pretax postretirement benefits expense was $1.6 million and $1.9 million
for the years ended December 31, 1992 and 1991, respectively.

10. Capital stock
-------------

On May 9, 1992, shareholders approved an increase in the number of
authorized shares of common stock from 25 million to 100 million. Upon
approval, the Company's Board of Directors declared a two-for-one stock
split effected in the form of a dividend to shareholders of record on June
5, 1992, payable on June 26, 1992.

Stock options, and all other agreements payable in the Company's common
stock, have been amended to reflect the split. An amount equal to the par
value of the shares issued has been transferred from additional paid-in
capital to the common stock account. All references to number of shares,
except shares authorized, in the notes to the consolidated financial
statements have been adjusted to reflect the stock split on a retroactive
basis.

On May 9, 1992, the shareholders also approved an increase in the number of
authorized Series A Junior Participating preferred stock (Preferred Stock)
from 1 million to 2 million. The Preferred Stock has a par value of $1 per
share. Each share of Preferred Stock is entitled to receive, when as and if
declared, a quarterly dividend in an amount equal to the greater of $1 per
share or 100 times the dividends declared on the Company's common stock.
Each preferred share is entitled to 100 votes. In the event of liquidation,
the holders of the Preferred Stock will be entitled to receive a
liquidation payment in the amount equal to the greater of $1 per share or
100 times the payment made per share of common stock.

The Company has reserved 1 million shares of Preferred Stock for issuance
in connection with Preferred Stock Purchase Rights (Rights). Each of the
Rights entitles a stockholder to buy one one-hundredth of a newly issued
share of the Company's Preferred Stock at an exercise price of $50. The
Rights are only exercisable upon certain changes in Company ownership as
defined by the Rights Agreement.

49


10. Capital stock (continued)
-------------------------

The Company has a restricted stock plan in which plan participants are
entitled to cash dividends and voting rights on their respective shares.
Restrictions generally limit the sale or transfer of shares during a
restricted period, not exceeding eight years. Participants may vest in
certain amounts of the restricted stock upon death, disability or retirement
as described in the plan.

Unearned compensation was charged for the market value of the restricted
shares on the date of grant and is being amortized over the restricted
period. The unamortized unearned compensation value is shown as a reduction
of stockholders' equity in the accompanying consolidated balance sheets.

Information with respect to restricted stock outstanding is as follows:


1993 1992 1991
--------- --------- --------

Outstanding at beginning of year at
$8.92 to $10.09 per share 712,284 958,288 980,612
Restricted shares vested at
$8.92 to $10.09 per share (170,911) (238,432) -
Restricted shares cancelled at
$9.30 to $10.06 per share (58,336) (7,572) (22,324)
-------- -------- -------
Total shares outstanding at end of year at
$8.92 to $10.09 per share 483,037 712,284 958,288
======== ======== =======


Expense in 1993, 1992, and 1991 associated with the restricted stock plan
was $.4 million, $.9 million and $1.1 million, respectively.

The Company has Stock Option Plans under which the Board of Directors may
grant to employees of the Company nonqualified stock options with or without
appreciation rights. The options may be exercised one year after the date of
grant, not to exceed 25 percent of the shares in the first year with an
additional 25 percent to be exercisable in each of the three following
years. The options expire ten years from the date of grant. The maximum
number of shares of common stock available for grants under such plans are
3.0 million at December 31, 1993 of which 1.0 million shares remain
available for future grants. The exercise price of outstanding options at
December 31, 1993 ranged from $2.95 to $37.13. A summary of option activity
is as follows:



1993 1992 1991
---------- ---------- ----------

Options outstanding at beginning of year 1,510,890 1,723,710 1,383,388
Options granted 8,000 314,522 463,754
Options exercised or cancelled (227,149) (527,342) (123,432)
--------- --------- ---------
Options outstanding at end of year 1,291,741 1,510,890 1,723,710
========= ========= =========

Number of options exercisable at end of year 734,356 511,378 616,124
========= ========= =========


Historically, the Company granted stock options in December of each year.
In order to review all elements of compensation at the same time, the Human
Resources Committee of the Board of Directors decided in February 1993 to
consider annual stock option grants in February of each year, beginning
with February 1994. Stock options issued during 1993 represent grants to
certain new executives.

50


11. Business segments and foreign operations

(a) Business segments

The Company operates in two business segments: Motorcycles and Related
Products and Transportation Vehicles.

Information by industry segment is set forth below (in thousands):


1993 1992 1991
---- ---- ----

Net sales:
Motorcycles and Related Products $ 933,262 $ 822,929 $701,969
Transportation Vehicles 284,166 282,355 237,894
---------- ---------- --------
$1,217,428 $1,105,284 $939,863
========== ========== ========

Income (loss) from operations:
Motorcycles and Related Products $ 136,217 $ 102,300 $ 89,551
Transportation Vehicles (1) (59,533) 2,137 (13,427)
General corporate expenses (6,878) (7,240) (7,479)
---------- ---------- --------
69,806 97,197 68,645

Interest expense, net (831) (4,912) (7,312)

Other:
Motorcycles and Related Products:
Lawsuit judgement reversal - 2,200 -
Other (3,249) (3,811) (1,355)
Transportation Vehicles 789 (1,865) (1,884)
---------- ---------- --------
(2,460) (3,476) (3,239)
---------- ---------- --------
Income before provision for income taxes,
extraordinary item and accounting changes $ 66,515 $ 88,809 $ 58,094
========== ========== ========

(1) Includes a $57.0 million charge related primarily to the write-off
of goodwill in 1993.



Motorcycles
and Related Transportation
Products Vehicles Corporate Consolidated
----------- -------------- --------- ------------

1993
Identifiable assets $437,813 $134,699 $10,773 $583,285
Depreciation and amortization 27,225 5,813 234 33,272
Net capital expenditures 52,324 2,766 112 55,202

1992
Identifiable assets $341,940 $178,252 $ 1,972 $522,164
Depreciation and amortization 22,630 6,639 141 29,410
Net capital expenditures 42,276 4,754 199 47,229

1991
Identifiable assets $281,790 $189,326 $ 3,117 $474,233
Depreciation and amortization 15,404 7,058 141 22,603
Net capital expenditures 43,621 2,987 1,158 47,766



There were no sales between business segments for the years ended December 31,
1993, 1992 or 1991.

51


11. Business segments and foreign operations (continued)
--------------------------------------------------------

(b) Foreign operations
------------------

Included in the consolidated financial statements are the following
amounts relating to foreign affiliates:



1993 1992 1991
-------- -------- -------
(In thousands)


Assets $ 49,109 $ 37,962 $31,081
Liabilities 40,769 27,716 15,882
Net sales 144,639 132,557 99,441
Net income 5,113 5,315 5,558

Export sales of domestic subsidiaries to nonaffiliated customers were
$117.6 million, $106.9 million and $105.7 million in 1993, 1992 and 1991,
respectively.

52


SUPPLEMENTARY DATA

Quarterly financial data (unaudited)
(In millions, except per share data)


1st Quarter 2nd Quarter 3rd Quarter 4th Quarter
--------------- --------------- -------------- ---------------
1993 1992 1993 1992 1993 1992 1993 1992
------- ------ ------ ------- ------ ------ ------- ------


Net sales $269.5 $247.4 $334.4 $273.9 $284.4 $271.8 $329.1 $312.2

Gross profit 75.4 62.3 90.9 72.1 76.2 72.6 94.7 89.4

Income before extraordinary item
and accounting changes (a) 15.1 8.7 23.8 17.8 16.4 13.2 (36.9) 14.5
Extraordinary item - - - (.4) - - - -
Accounting changes (30.3) - - - - - - -
Net income (loss) (15.2) 8.7 23.8 17.4 16.4 13.2 (36.9) 14.5

Earnings (loss) per common share
assuming no dilution:
Income before extraordinary item
and accounting changes (a) .40 .24 .63 .50 .43 .37 (.97) .40
Extraordinary item - - - (.01) - - - -
Accounting changes (.80) - - - - - - -
Net income (loss) (.40) .24 .63 .49 .43 .37 (.97) .40

Earnings (loss) per common share
assuming full dilution (b):
Income before extraordinary item
and accounting changes (a) .40 .24 .62 .48 .43 .36 (.97) .38
Extraordinary item - - - (.01) - - - -
Accounting changes (.80) - - - - - - -
Net income (loss) (.40) .24 .62 .47 .43 .36 (.97) .38




(a) 1993 fourth quarter results include a $57.0 million charge related primarily
to the write-off of goodwill, which reduced earnings per share by $1.46.

(b) Earnings (loss) per common share assuming full dilution generally includes
the dilutive effect of outstanding stock options. During the first and
fourth quarters of 1993, the effect of stock options was antidilutive, and
therefore, was excluded from the calculations.

53


Item 9. Changes in and disagreements with accountants on accounting and
------- ---------------------------------------------------------------
financial disclosure
--------------------

None.

54


PART III
--------

Item 10. Directors and executive officers of the registrant
------- --------------------------------------------------

Information with respect to the Directors of the registrant will be included
in the Company's definitive proxy statement for the 1994 annual meeting of
shareholders (the "Proxy Statement"), which will be filed within 120 days
after the close of the Company's fiscal year ended December 31, 1993, and is
hereby incorporated by reference to such Proxy Statement.

Item 11. Executive compensation
------- ----------------------

This information will be included in the Proxy Statement, which will be filed
within 120 days after the close of the Company's fiscal year ended December
31, 1993, and is hereby incorporated by reference to such Proxy Statement.

Item 12. Security ownership of certain beneficial owners and management
------- --------------------------------------------------------------

This information will be included in the Proxy Statement, which will be filed
within 120 days after the close of Harley-Davidson's fiscal year ended
December 31, 1993, and is hereby incorporated by reference to such Proxy
Statement.

Item 13. Certain relationships and related transactions
------- ----------------------------------------------

This information will be included in the Proxy Statement, which will be filed
within 120 days after the close of the Company's fiscal year ended December
31, 1993, and is hereby incorporated by reference to such Proxy Statement.

Item 14. Exhibits, financial statement schedules, and reports on Form 8-K
------- ----------------------------------------------------------------

(A) 1. Financial statements - The financial statements listed in the
--------------------
accompanying Index to Consolidated Financial Statements and
Financial Statement Schedules are filed as part of this annual
report and such Index to Consolidated Financial Statements and
Financial Statement Schedules is incorporated herein by
reference.

2. Financial statement schedules - The financial statement
-----------------------------
schedules listed in the accompanying Index to Consolidated
Financial Statements and Financial Statement Schedules are filed
as part of this annual report and such Index to Consolidated
Financial Statements and Financial Statement Schedules is
incorporated herein by reference.

3. Exhibits - The exhibits listed on the accompanying List of
--------
Exhibits are filed as part of this annual report and such List
of Exhibits is incorporated herein by reference.

(B) Reports on Form 8-K
-------------------
The Company filed a current report on Form 8-K on December 20,
1993 to report under Item 5 the write down of goodwill and certain
other assets in its Holiday Rambler Corporation subsidiary.

55


INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------
AND FINANCIAL STATEMENT SCHEDULES
---------------------------------

[Item 14(A) 1 and 2]



Page
----


Consolidated statements of operations for each of the
three years in the period ended December 31, 1993 35

Consolidated balance sheets at December 31, 1993 and 1992 36

Consolidated statements of cash flows for each of the
three years in the period ended December 31, 1993 37

Consolidated statements of changes in stockholders' equity
for each of the three years in the period ended
December 31, 1993. 38

Notes to consolidated financial statements 39

Consolidated financial statement schedules for each of the
three years in the period ended December 31, 1993

V - Property, plant and equipment 59

VI - Accumulated depreciation and amortization of
property, plant and equipment 60

VIII - Valuation and qualifying accounts 61

IX - Short-term borrowings 62

X - Supplementary income statement information 63



All other schedules are omitted since the required information is not present
or is not present in amounts sufficient to require submission of the
schedules, or because the information required is included in the consolidated
financial statements and notes thereto.

56


LIST OF EXHIBITS
----------------
[Item 14(A)(3)]


Exhibit No. Description
----------- -----------

3.1 Restated Articles of Incorporation of the Registrant

3.2 By-Laws of the Registrant

3.3 Form of Certificate of Designation relating to Series A Junior
Participating Preferred Stock

4.6 Form of Rights Agreement between Harley-Davidson, Inc. and
Firstar Trust Company

4.6(a) First Amendment to Rights Agreement, dated as of June 21, 1991

10.1* Form of Employment Agreement for Executive Officers

10.2(a)* 1986 Stock Option Plan of the Registrant

10.2(b)* 1988 Stock Option Plan of the Registrant

10.2(c)* 1990 Stock Option Plan of the Registrant

10.2(d)* Form of Stock Option Agreement for use under the Harley-
Davidson, Inc. 1986 Stock Option Plan

10.2(e)* Form of Stock Option Agreement for use under the Harley-
Davidson, Inc. 1988 Stock Option Plan

10.2(f)* Form of Stock Option Agreement for use under the Harley-
Davidson, Inc. 1990 Stock Option Plan

10.3(a) Ford Authorized Converter Pool Agreement between Ford Motor
Company and Holiday Rambler Corporation dated June 11, 1990

10.3(b) First Amendment to the Ford Authorized Converter Pool
Agreement between Ford Motor Company and Holiday Rambler Corporation
dated July 1, 1990

10.4* Consulting Agreement, dated May 19, 1989 between the Registrant
and Vaughn L. Beals, Jr.

10.5(a)* Restated Long-Term Incentive Plan II, as amended, of the
Registrant



* Represents a management contract or compensatory plan, contract or
arrangement in which a director or named executive officer of the Company
participated.

57


LIST OF EXHIBITS
----------------
[Item 14(A)(3)]


Exhibit No. Description
----------- -----------

10.5(b)* Growth Unit Cancellation Agreement of the Registrant

10.6* Form of Transition Agreement for Executive Officers

10.7* Transition Agreement, dated October 22, 1989 between the
Registrant and Richard F. Teerlink

10.8* Harley-Davidson, Inc. Deferred Compensation Plan

10.9* Description of supplemental executive retirement benefits.

10.10* Form of Split Dollar Life Insurance Agreement.

11 Computation of Primary and Fully Diluted Earnings Per Share.

22 List of subsidiaries

23 Consent of Ernst & Young, Independent Auditors



* Represents a management contract or compensatory plan, contract or
arrangement in which a director or named executive officer of the Company
participated.

58


Schedule V
----------

HARLEY-DAVIDSON, INC.

CONSOLIDATED PROPERTY, PLANT, AND EQUIPMENT
Years ended December 31, 1993, 1992 and 1991
(In thousands)



Balance at Balance
beginning Additions Retirement at end
Classification of year at cost or sales of year
- -------------- ---------- ------------- ----------- --------

Year ended December 31, 1993:
Land and land improvements $ 11,168 $ 92 $ - $ 11,260
Buildings and improvements 74,367 6,943 (1,644) 79,666
Machinery and equipment 212,191 48,167 (7,501) 252,857
-------- ------- ------- --------
Total $297,726 $55,202 $(9,145) $343,783
======== ======= ======= ========

Year ended December 31, 1992:
Land and land improvements $ 11,131 $ 52 $ (15) $ 11,168
Buildings and improvements 67,729 6,699 (61) 74,367
Machinery and equipment 179,292 40,315 (7,416) 212,191
-------- ------- ------- --------
Total $258,152 $47,066 $(7,492) $297,726
======== ======= ======= ========

Year ended December 31, 1991:
Land and land improvements $ 11,075 $ 200 $ (144) $ 11,131
Buildings and improvements 51,428 17,323 (1,022) 67,729
Machinery and equipment 150,201 30,633 (1,542) 179,292
-------- ------- ------- --------

Total $212,704 $48,156(1) $(2,708) $258,152
======== ======= ======= ========

(1) Includes approximately $12.3 million during 1991 related to a new paint
facility in York, PA.

59


Schedule VI
-----------


HARLEY-DAVIDSON, INC.

CONSOLIDATED ACCUMULATED DEPRECIATION AND
AMORTIZATION OF PROPERTY, PLANT, AND EQUIPMENT
Years ended December 31, 1993, 1992 and 1991
(In thousands)





Balance at Depreciation Balance
beginning Additions Retirement at end
Classification of year at cost or sales of year
- ------------------------------- ---------- --------- ----------- --------


Year ended December 31, 1993:
Land improvements $ 90 $ - $ - $ 90
Buildings and improvements 23,186 6,247 (272) 29,161
Machinery and equipment 90,663 24,550 (6,449) 108,764
-------- ------- ------- --------

Total $113,939 $30,797 $(6,721) $138,015
======== ======= ======= ========

Year ended December 31, 1992:
Land improvements $ 90 $ - $ - $ 90
Buildings and improvements 18,310 4,896 (20) 23,186
Machinery and equipment 76,066 20,422 (5,825) 90,663
-------- ------- ------- --------

Total $ 94,466 $25,318 $(5,845) $113,939
======== ======= ======= ========


Year ended December 31, 1991:
Land improvements $ 47 $ 43 $ - $ 90
Buildings and improvements 14,653 3,811 (154) 18,310
Machinery and equipment 61,952 15,338 (1,224) 76,066
-------- ------- ------- --------

Total $ 76,652 $19,192 $(1,378) $ 94,466
======== ======= ======= ========




Depreciation of property, plant and equipment is determined on a straight-line
basis over the estimated useful lives of the assets. Estimated useful lives
used in computing depreciation are as follows:



Years
-----

Land improvements 10
Buildings and improvements 10-40
Machinery and equipment 3-20


60


Schedule VIII
-------------


HARLEY-DAVIDSON, INC.

CONSOLIDATED VALUATION AND QUALIFYING ACCOUNTS
Years ended December 31, 1993, 1992 and 1991
(In thousands)





Balance at Additions Balance
beginning charged to at end
Classification of year expense Deductions/(1)/ of year
- ---------------- ---------- ---------- --------------- -------


Receivables -
Allowance for doubtful accounts:




1993 $1,611 $322 $(147) $1,786
====== ==== ===== ======

1992 $1,643 $260 $(292) $1,611
====== ==== ===== ======

1991 $ 974 $872 $(203) $1,643
====== ==== ===== ======









Inventories -
Allowance for obsolescence
and loss (2):

1993 $2,736 $2,095 $(2,048) $2,783
====== ====== ======= ======

1992 $2,683 $1,790 $(1,737) $2,736
====== ====== ======= ======

1991 $2,802 $ 241 $ (360) $2,683
====== ====== ======= ======





(1)Represents amounts written off to the reserve, net of recoveries.

(2)Stated in last-in, first-out (LIFO) cost.

61


Schedule IX
-----------


HARLEY-DAVIDSON, INC.

CONSOLIDATED SHORT-TERM BORROWINGS

Years ended December 31, 1993, 1992 and 1991
(In thousands, except weighted average interest rates)



Maximum Average Weighted
Weighted amount amount average
Balance average outstanding outstanding interest rate
at end interest during during the during the
Classification of year rate the period period (3) period (4)
- ------------------------------- ------- --------- ----------- ------------ --------------


Year ended December 31, 1993:
Floorplan obligations (1) $16,984 7.02% $16,987 $15,201 8.46%
Notes payable to bank (2) 3,596 2.00 5,170 942 1.49

Year ended December 31, 1992:
Floorplan obligations (1) $15,933 7.53% $15,933 $13,366 9.34%
Notes payable to bank (2) - 5.88 27,978 11,030 6.55

Year ended December 31, 1991:
Floorplan obligations (1) $11,559 9.50% $12,780 $10,837 10.30%
Notes payable to bank (2) 27,967 7.89 42,460 26,178 8.02





(1) Floorplan obligations are secured by specific inventory units.

(2) Notes payable to bank represent borrowings under lines of credit.

(3) Computed by averaging the month-end balances during the year.

(4) Computed by dividing the interest expense by the average amount
outstanding during the period.

62


Schedule X
----------


HARLEY-DAVIDSON, INC.

CONSOLIDATED SUPPLEMENTARY INCOME STATEMENT INFORMATION
Years ended December 31, 1993, 1992 and 1991




Charged to costs and expenses
-----------------------------


1993 1992 1991
---- ---- ----
(In thousands)

Classification
- --------------

Maintenance and repairs $31,594 $26,370 $22,700
======= ======= =======


Advertising costs $17,962 $16,507 $14,743
======= ======= =======


Amounts for depreciation and amortization of intangible assets, taxes, other
than payroll and income taxes, and royalties are not presented as such amounts
are less than 1% of net revenues or such information is included in the
consolidated financial statements or the notes thereto.

63


SIGNATURES
----------

Pursuant to the requirements of Section 13, or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized, on March 28,
1994.

HARLEY-DAVIDSON, INC.

By: /S/ Richard F. Teerlink
-------------------------------------------
Richard F. Teerlink
President, Chief Executive Officer
(Principal executive officer) and Director

Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities indicated on March 28, 1994.

Name Title
---- -----

/S/ Richard F. Teerlink President, Chief Executive Officer
---------------------------------
Richard F. Teerlink (Principal executive officer) and Director

/S/ James L. Ziemer Vice-President and Chief Financial Officer
---------------------------------
James L. Ziemer (Principal financial officer)

/S/ James M. Brostowitz Vice-President/Controller (Principal
---------------------------------
James M. Brostowitz accounting officer and Treasurer)

/S/ Vaughn L. Beals Chairman and Director
----------------------------------
Vaughn L. Beals, Jr.

/S/ Barry K. Allen Director
----------------------------------
Barry K. Allen

/S/ William F. Andrews Director
----------------------------------
William F. Andrews

/S/ Fred L. Brengel Director
----------------------------------
Fred L. Brengel

/S/ Richard J. Hermon-Taylor Director
----------------------------------
Richard J. Hermon-Taylor

/S/ Donald A. James Director
----------------------------------
Donald A. James

/S/ Richard G. LeFauve Director
----------------------------------
Richard G. LeFauve

/S/ James A. Norling Director
----------------------------------
James A. Norling

/S/ William B. Potter Director
----------------------------------
William B. Potter

64


INDEX TO EXHIBITS
-----------------
[Item 14(A)(3)]


Exhibit No. Description Page
- ----------- ----------- ----

3.1 Restated Articles of Incorporation of the Registrant
(incorporated herein by reference to Exhibit 3.1 to the
Registrant's Registration Statement on Form 8-B dated
June 24, 1991 (File No. 1-10793 (the "Form 8-B")).

3.2 By-Laws of the Registrant (incorporated herein by reference
to Exhibit 3.2 to the Form 8-B).

3.3 Form of Certificate of Designation relating to Series A
Junior Participating Preferred Stock (incorporated herein
by reference to Exhibit 3.3 to the Form 8-B).

4.6 Form of Rights Agreement between Harley-Davidson, Inc. and
Firstar Trust Company (incorporated herein by reference to
Exhibit 4.6 to the Registrants' Quarterly Report on Form
10-Q for the period ended September 30, 1990
(File No. 1-9183)).

4.6(a) First Amendment to Rights Agreement, dated as of June 21,
1991, (incorporated herein by reference to Exhibit 4.8 to
the Form 8-B).

10.1* Form of Employment Agreement for Executive Officers
(incorporated by reference from Exhibit 10.1 to the
Registrant's Registration Statement on Form S-1
(File No. 33-5871)).

10.2(a)* 1986 Stock Option Plan of the Registrant
(incorporated by reference from Exhibit 10.9 to the
Registrant's Registration Statement on Form S-1
(File No. 33-5871)).

10.2(b)* 1988 Stock Option Plan of the Registrant (incorporated by
reference to Annex A to the Registrants' 1988 Proxy
Statement (File No. 1-9183)).

10.2(c)* 1990 Stock Option Plan of the Registrant (incorporated
by reference to Annex A to the Registrants' 1989 Proxy
Statement (File No. 1-9183)).

10.2(d)* Form of Stock Option Agreement for use under the
Harley-Davidson, Inc. 1986 Stock Option Plan (incorporated
herein by reference from Exhibit 4.1(c) to the
Registrant's registration statement on Form S-8 (File
No. 33-33449)).

10.2(e)* Form of Stock Option Agreement for use under the
Harley-Davidson, Inc. 1988 Stock Option Plan (incorporated
herein by reference from Exhibit 4.1(e) to the
Registrant's registration statement on Form S-8
(File No. 33-33449)).

10.2(f)* Form of Stock Option Agreement for use under the
Harley-Davidson, Inc. 1990 Stock Option Plan (incorporated
herein by reference from Exhibit 10 to the Registrants'
Quarterly Report on Form 10-Q for the period ended
September 26, 1993 (File No. 1-9183)).


* Represents a management contract or compensatory plan, contract or
arrangement in which a director or named executive officer of the Company
participated.

65


INDEX TO EXHIBITS
-----------------
[Item 14(A)(3)]


Exhibit No. Description Page
- ----------- ----------- ----

10.3(a) Ford Authorized Converter Pool Agreement between Ford Motor
Company and Holiday Rambler Corporation dated June 11, 1990
(incorporated herein by reference to Exhibit 10.27(a) to
Holiday Rambler's Quarterly Report on Form 10-Q for the
period ending September 30, 1990 (File No. 33-12743)).
(Replaces Exhibit 10.11 to the Registrant's Annual Report
on Form 10-K for the fiscal year ended December 31, 1987).

10.3(b) First Amendment to the Ford Authorized Converter Pool
Agreement between Ford Motor Company and Holiday Rambler
Corporation dated July 1, 1990 (incorporated herein by
reference from Exhibit 10.27(b) to Holiday Rambler's
Quarterly Report on Form 10-Q for the period ended
September 30, 1990 (File No. 33-12743)).

10.4* Consulting Agreement, dated May 19, 1989 between the
Registrant and Vaughn L. Beals, Jr. (incorporated herein
by reference from Exhibit 10.2 to the Registrant's Annual
Report on Form 10-K for the year ended December 31, 1989
(File No. 1-9183)).

10.5(a)* Restated Long-Term Incentive Plan II, as amended, of the
Registrant (incorporated herein by reference from Exhibit
10.2 to the Registrants' Annual Report on Form 10-K for
the year ended December 31, 1989 (File No. 1-9183)).

10.5(b)* Growth Unit Cancellation Agreement of the Registrant
(incorporated herein by reference from Exhibit 10.2 to the
Registrants' Annual Report on Form 10-K for the year ended
December 31, 1989 (File No. 1-9183)).

10.6* Form of Transition Agreement for Executive Officers (other
than Mr. Teerlink) (incorporated herein by reference from
Exhibit 10.2 to the Registrants' Annual Report on Form
10-K for the year ended December 31, 1989 (File No. 1-9183)).

10.7* Transition Agreement, dated October 22, 1989 between the
Registrant and Richard F. Teerlink (incorporated herein by
reference from Exhibit 10.2 to the Registrants' Annual Report
on Form 10-K for the year ended December 31, 1989 (File
No. 1-9183)).

10.8* Harley-Davidson, Inc. Deferred Compensation Plan 68

10.9* Description of supplemental executive retirement benefits. 79

10.10* Form of Split Dollar Life Insurance Agreement. 80


* Represents a management contract or compensatory plan, contract or
arrangement in which a director or named executive officer of the Company
participated.

66


INDEX TO EXHIBITS
-----------------
[Item 14(A)(3)]



Exhibit No. Description Page
- ----------- ----------- ----

11 Computation of Primary and Fully Diluted Earnings Per Share. 83
22 List of subsidiaries 85
23 Consent of Ernst & Young, Independent Auditors 86

* Represents a management contract or compensatory plan, contract or
arrangement in which a director or named executive officer of the Company
participated.


67


Exhibit 10.8

HARLEY-DAVIDSON, INC.

DEFERRED COMPENSATION PLAN SPECIFICATIONS
-----------------------------------------

Concept Harley-Davidson, Inc. created this Plan, effective as of
October 1, 1988, to assist eligible employees in deferring
income until their retirement, death, or other termination of
employment.


Administrator The Vice President--Human Resources of Harley-Davidson, Inc.
is the Administrator for employees of Harley-Davidson, Inc.
participating in the Plan. If the Administrator is also a
participant, then the Chief Executive Officer of Harley-
Davidson, Inc. is the Administrator as to that person.


Eligibility Participation in the Plan is limited to a select group of
management or highly compensated employees. These employees
are defined as persons whose combined base salary, target
bonus potential, and restricted stock awards are equal to or
greater than $100,000. The Administrator determines
eligibility and may increase the entry level compensation
requirement if necessary to assure that the Plan continues to
be exempt from the eligibility, vesting, and funding
requirements of the Employee Retirement Income Security Act of
1974, as amended.


Participation Eligible persons must complete Deferred Compensation
Requirements Agreements in order to participate. Agreements completed by
newly-eligible participants within 30 days of becoming
eligible will be effective either immediately, or as of a
later designated date, but only as to compensation payable
after the date of the Agreement.


--An eligible person may complete more than one Deferred
Compensation Agreement. Each Participation Agreement will be
treated as a separate program under the Plan and the person
completing an additional Agreement will be treated as a newly-
eligible participant as to each Agreement.


--A person who ceases to be eligible has no further right to
complete additional Deferred Compensation Agreements.
Agreements in effect at the time eligibility is lost will
remain in effect subject to the terms of the Plan.

--The Administrator makes all final decisions regarding
eligibility and compliance with the participation
requirements.


Compensation Each Participation Agreement must designate either a flat
Deferral dollar amount of deferral or a percentage amount of deferral,
and whether the amount is to be deducted from salary or bonus,
or from both. Each Agreement shall also specify the time
period during which the deferral is to take place. The Company
will make the

68


HARLEY-DAVIDSON, INC.

DEFERRED COMPENSATION PLAN SPECIFICATIONS
-----------------------------------------

corresponding reductions in compensation and credit the
Deferred Benefit Account of the participant.


Minimum and Each Deferred Compensation Agreement must provide for an
Maximum aggregate deferral that is not less than $21,000 over 7
Deferrals years from the effective date of the Agreement. Only whole
percentages may be elected as percentage deferrals. The
Administrator may adjust this minimum and establish and/or
revise maximums in the Administrator's discretion.


Deferral A participant's deferral election is irrevocable except for
Elections are Hardship. The Administrator, in his or her discretion, upon
Irrevocable demonstration of Hardship, which is substantial financial
Except for need by a participant due to family health, education, or
Hardship housing needs, may permit reduction of the participant's
compensation deferral election for subsequent years. A
request for change must be submitted in writing, with
evidence of Hardship, to the Administrator before January 1
of the year in which the requested reduction is to take
effect. If the request for change is approved it shall be
effective for all future periods of deferral. The
participant's benefits under the Plan will be adjusted to
reflect the reduced deferral. The method of adjustment is
as described and illustrated in Schedule A to the Plan.



Makeup of A participant whose deferral has been reduced for Hardship may
Deferrals elect, prior to termination of employment to reinstate his
Reduced or her original deferral by paying to the Company the
for Hardship difference between the reduced deferrals actually paid and
the originally scheduled amount as described in the
participant's original Deferred Compensation Agreement.


Effect of All deferral elections under the Plan shall automatically
Change of terminate as of the last day of the month preceding the
Control Event occurrence of a Change of Control Event. The benefits of each
on Deferral participant affected by the automatic termination of deferrals
will be adjusted to reflect the reduced deferral. The method
of adjustment is as described and illustrated in Schedule A to
the Plan. The definition of Change of Control Event is as set
forth in Schedule B to the Plan, which shall be revised from
time to time, by the Administrator, to reflect the same
definition of this term used by Harley-Davidson, Inc. for its
general corporate purposes.


Deferred The Company will establish on its books a Deferred Benefit
Benefit Account for each Plan participant.
Account


69


HARLEY-DAVIDSON, INC.

DEFERRED COMPENSATION PLAN SPECIFICATIONS
-----------------------------------------

--Deferred compensation shall be credited to this Account as
of the last day of the month in which the participant would
otherwise have received the compensation.


--As of the last day of each month interest at the Plan's
Interest Yield will be credited to the account. Interest will
be calculated by applying the Interest Yield to the balances
of the Account on such date including contributions or
distributions to be credited or deducted on that date.


--Distributions shall be charged to this Account as they are
made.


The Company may deduct from non-deferred compensation any
taxes it is required to withhold on deferred amounts.


Special 401(k) The Company will also credit to the Deferred Benefit Account
Matching Con- of each participant a Company matching contribution in the
tribution same relative amount and in the same manner as is made to the
Supplement participant's IRC 401(k) plan account on amounts the
participant has elected to defer under that Plan. This credit
will be made as of the last day of the month in which the
Company matching contribution is deposited to the IRC 401(k)
plan for a year. The credit, and the earnings attributed to
it, are subject to the rules of the IRC 401(k) plan only as to
vesting. Such amount shall not be deemed to be a Company
matching contribution to the IRC 401(k) plan for any
nondiscrimination testing purposes. A participant will not,
under any circumstances, be credited with an aggregate Company
matching amount under this Plan and the IRC 401(k) plan that
is larger than the rate of matching applicable for the year
under the IRC 401(k) plan multiplied by 6% of the
participant's current and deferred compensation for such year.


No Trust A participant's Deferred Benefit Account is a means of
Fund Created measuring the value of the participant's deferred
compensation. The Account does not create a trust fund of any
kind. Any assets earmarked by the Company to pay benefits
under this Plan do at all times remain in the Company. A
participant has no property interest in specific assets of the
Company because of the Plan. The rights of the participant, a
beneficiary, or an estate to benefits under the Plan shall be
solely those of an unsecured creditor of the Company.


Statement Following the close of each year the Administrator will
of Account provide statements of account to each participant.


70


HARLEY-DAVIDSON, INC.

DEFERRED COMPENSATION PLAN SPECIFICATIONS
-----------------------------------------

Interest Interest Yield means, for each 12 consecutive calendar months
Yield ending after September 1, the Moody's Long Term Bond Rate in
effect on such September 1 (or the last business day
immediately preceding such date if it is a Saturday, Sunday,
or holiday) divided by 12.


Payment of Upon a participant's termination of employment, for any reason
Benefits other than death, the Company will pay to the participant, as
Other Than compensation for prior services, an amount equal to the
Upon Death participant's Deferred Benefit Account measured as of the
last day of the month in which employment terminated.

Benefits Upon the death of a participant prior to termination of
Upon Death employment, and before any periodic payments have started,
Before the Company will pay to the participant's Designated
Termination Beneficiary as compensation for services rendered prior to
of Employment the date of death, a pre-retirement benefit that is equal to
the participant's Deferred Benefit Account measured as of the
last day of the month coincident with or immediately
following the date of death or, if greater, a pre-retirement
benefit determined as follows:



71


HARLEY-DAVIDSON, INC.

DEFERRED COMPENSATION PLAN SPECIFICATIONS
- -----------------------------------------




Age at Multiple of
Deferral Deferral Commitment

Thru 45 5.0
46 4.8
47 4.6
48 4.4
49 4.2
50 4.0

51 3.8
52 3.6
53 3.4
54 3.2
55 3.0

56 2.8
57 2.6
58 2.4
59 2.2
60 2.0

61 1.8
62 1.6
63 1.4
64 1.2
65 and over 1.0


Example:

Participant age 49 elects to defer $10,000 for 7 years

Stated Deferral ($10,000) x Deferral Period (7)
= Total Deferral ($70,000)

Total Deferral ($70,000) x Deferral Commitment Multiple (4.2)
= Total Benefit Commitment ($294,000)

Total deferral commitment ($294,000) divided by number of years
pre-retirement benefit promised (10)
= $29,400/year for 10 years

Where the compensation deferred includes bonus or other non-periodic
compensation, the "Deferral Commitment" applicable to such non-periodic

72


HARLEY-DAVIDSON, INC.

DEFERRED COMPENSATION PLAN SPECIFICATIONS
-----------------------------------------

compensation shall be based on the average amount of such bonus or
other non-periodic compensation during the 3 consecutive calendar
years immediately preceding the date of death during which the
participant was an eligible person. If a participant has been an
eligible person for fewer than 3 consecutive calendar years
immediately preceding the date of death, the "Deferral Commitment"
applicable to such non-periodic compensation shall be based on the
person's average amount of such bonus or other non-periodic
compensation during his completed calendar years as an eligible
person.

If there is a reduction in the deferral amount or a premature
distribution due to Hardship, the Administrator will advise the
participant as to the corresponding effect on the participant's
pre-retirement benefit. If a participant has made more than one
deferral commitment, the participant's pre-retirement benefit will
be separately determined for each commitment.

A special rule applies, however, for any participant who is not
insurable for a death benefit larger than the "guaranteed issue"
amount available to the Company at standard rates when the
participant completes a Deferred Compensation Agreement. In that
case, the affected participant's pre-retirement benefit will be
limited to the greater of (i) the balance in the participant's
Deferred Benefit Account, or (ii) the amount of death benefit able
to be insured by the Company at standard rates at the time the
participant completed his or her Deferred Compensation Agreement.


Example:


Assume that the maximum guaranteed issue life insurance
available to the Company is $600,000 per person.


Assume that an "uninsurable at standard rates" 45-year old
participant elects to defer $100,000 over 7 years.


The participant's formula pre-retirement benefit of $700,000
is not available because of the lack of insurability.


Instead, the participant's pre-retirement benefit is $600,000
divided by 10 years, or $60,000 per year for 10 years. (Of
course, in the event that the participant's Deferred Benefit
Account paid over 10 years would produce a larger benefit,
that larger amount would then be paid.)

73


HARLEY-DAVIDSON, INC.

DEFERRED COMPENSATION PLAN SPECIFICATIONS
-----------------------------------------

Forms of
--------
Benefit
-------
Payment:
--------

--Termination
-----------
of Employment Unless a participant elects an alternative benefit payment
------------- period as part of the participant's Deferred Compensation
At or After Agreement, a participant will receive payment of his or her
----------- benefits upon termination of employment at or after age 55 in
Age 55 annual installments of the Deferred Benefit Account,
-------- commencing within 30 days of the date of termination of
employment, over not more than 10 years, as determined by
the Administrator. At the time a participant completes a
Deferred Compensation Agreement the participant is entitled
to select the number of years over which benefits are to be
paid to the participant, up to a maximum of 15 years. The
payment period selected shall not thereafter be subject to
change by the participant. The amount to be distributed
annually is determined by multiplying the aggregate balance
of the participant's Account by a fraction, the numerator of
which is one (1) and the denominator of which is the number
of years remaining for the payments to be made (e.g., 1/10,
1/9, 1/8, etc.). Additional earnings are to be credited to
the Account during the installment payment period in the
same way that earnings are credited while the participant is
employed.



--Other Termina- A participant whose benefit is payable for a reason other
-------------- than retirement or death will receive payment in a single
tions of lump sum amount within 30 days following termination of
-------- employment.
Employment
----------
Except Due
----------
to Death
--------

--Pre-retirement If a participant's Deferred Benefit Account is to be paid as
-------------- the participant's pre-retirement benefit, payment will be
Benefit made in 10 approximately level annual installments
------- (calculated by the Administrator using reasonable earnings
assumptions) commencing within 30 days of the date of death.
Additional earnings are to be credited to the Account during
the installment payment period in the same way earnings are
credited while a participant is employed. If a participant's
pre-retirement benefit is the formula amount, described
earlier in the Plan, payment of the formula amount will be
made in 10 equal annual installments commencing within 30
days of the date of death. No additional earnings are
credited during the installment payment period when the death
benefit amount is determined by the Plan formula.


Designated All payments by the Company will be made to the participant,
---------- if living. If the participant has died, then any payment
Beneficiary under the Plan will be made to the Designated Beneficiary
----------- of the participant. If a beneficiary dies before receiving
all payments due, the remaining payments will be made to the
beneficiary's estate. All beneficiary designations must be
made in writing and acknowledged by the

74


HARLEY-DAVIDSON, INC.

DEFERRED COMPENSATION PLAN SPECIFICATIONS
-----------------------------------------

Administrator. If there is no beneficiary designation in
force when Plan benefits become payable to a beneficiary, the
deemed beneficiary shall be the participant's spouse, or if no
spouse is then living, the participant's estate.


Hardship The Administrator may, in his or her sole discretion, upon the
-------- finding that the participant has suffered a Hardship,
Payments distribute to the participant any portion of the participant's
-------- Deferred Benefit Account as of such date.


Assignment No participant or beneficiary may assign the right to receive
---------- benefits under the Plan.


Not An Employ- This Plan may not be construed as giving any person right to
-------------- be retained as an employee of the Company.
ment Contract
-------------


Effect on The Company will supplement the defined benefit pension
--------- benefit that may be provided to each participant under the
Pension Company's pension plan with an amount equal to the pension
------- benefit that would have been earned by the participant on the
Benefits amount of compensation deferred by the participant under this
-------- Plan, had such amount been received as compensation by the
participant rather than deferred. Such amount is subject to
all pension plan rules and regulations regarding determination
of amount, vesting, method of payment, and so forth. Under no
circumstance will this provision be construed to permit
payment to a participant of an aggregate pension benefit,
including this supplemental pension benefit, that is larger
than the pension benefit the participant otherwise would have
received if there had been no deferral election under this
Plan.


Taxes The Company will withhold from all benefit payments all
----- required taxes.


Amendment and Harley-Davidson, Inc. may, at any time, amend the Plan by
------------- action of the Board of Directors of the Company, or by the
Termination Human Resources Committee of the Board. The Company may,
at any time, terminate the Plan as to its employees.
The Company may not, however, reduce any benefit payment to a
participant based on deferrals already made, without the
participant's consent. Plan amendments adopted pursuant to
this section shall govern all Deferred Compensation Agreements
and Deferred Benefit Accounts uniformly except to the extent
otherwise specifically provided by such amendment.


Construction The Plan is to be construed under the laws of the State of
------------ Wisconsin.

75


HARLEY-DAVIDSON, INC.

DEFERRED COMPENSATION PLAN SPECIFICATIONS
-----------------------------------------


Binding This Plan is binding upon the Company and participants and
------- their respective successors, assigns, heirs, executors, and
Agreement beneficiaries.
---------




(Rev. 11/18/93 - g)

76


HARLEY-DAVIDSON, INC.

DEFERRED COMPENSATION PLAN SPECIFICATIONS
-----------------------------------------


SCHEDULE A
----------
Assumptions:

X is healthy and under age 45.
X elects to defer $10,000/year for 7 years.
X's pre-retirement benefit is $10,000 x 7 years = $ 70,000
Times Deferral Commitment Multiple x 5
--------
Pre-retirement Benefit $350,000

Further Assume:

After 4 years of deferral X stops contributing either because of
hardship or change of control event.

X's adjusted pre-retirement benefit is based on his actual deferrals:
$10,000 x 4 years = $ 40,000
Times Deferral Multiple Commitment x 5
--------

Pre-retirement Benefit $200,000

Further Assume:

After 4 years of deferral X did not stop all deferrals but had them
reduced by one-half due to hardship.

X's adjusted pre-retirement benefit is based on his actual deferrals:
$5,000 x 7 years = $ 35,000
x 5
--------
$175,000

PLUS

$5,000 x 4 years = $ 20,000
x 5
--------
$100,000

Total Adjusted Pre-retirement Benefit $275,000
========

77


SCHEDULE B
----------

Change of Control Event means any one of the following:

(a) Continuing directors no longer constitute at least 2/3 of the directors
of Harley-Davidson, Inc. (the "Corporation");

(b) Any person or group of persons (as defined in Rule 13d-5 under the
Securities Exchange Act of 1934), together with its affiliates, become
the beneficial owner, directly or indirectly, of 20% of the Corporation's
then outstanding Common Stock or 20% or more of the voting power of the
Corporation's then outstanding securities entitled generally to vote for
the election of the Corporation's directors;

(c) The approval by the Corporation's stockholders of the merger or
consolidation of the Corporation with any other corporation, the sale of
substantially all of the assets of the Corporation or the liquidation or
dissolution, of the Corporation, unless, in the case of a merger or
consolidation, the then continuing directors in office immediately prior
to such merger or consolidation will constitute at least 2/3 of the
directors of the surviving corporation of such merger or consolidation
and any parent (as such term is defined in Rule 12b-1 under the
Securities Exchange Act of 1934) of such corporation; or

(d) At least 2/3 of the then continuing directors in office immediately prior
to any other action proposed to be taken by the Corporation's
stockholders or by the Corporation's Board of Directors determines that
such proposed action, if taken, would constitute a change of control of
the Corporation and such action is taken.

78


DESCRIPTION OF SUPPLEMENTAL EXECUTIVE RETIREMENT BENEFITS Exhibit 10.9

The Board of Directors of the Company has established certain supplemental
retirement arrangements for certain executive officers of the Company.
Pursuant to these arrangements, (1) the Company will pay executive officers
amounts that would have been payable under the Retirement Annuity Plan for
Salaried Employees of Harley-Davidson, Inc. (the "Salaried Plan") but for
limitations imposed by the Internal Revenue Code, (2) if Messrs. Teerlink,
Bleustein, Gelb, Gray and Ziemer retire at or after age 55 with 15 years of
service, they will be entitled to receive a yearly retirement benefit payment
equal to 35% of their final average earnings at age 55 increasing in equal
increments to 50% of final average earnings at age 62, reduced by the amount
of any Company pension or other defined benefit plan payments and by the
amount of certain social security benefits, and (3) Messrs. Teerlink and Gelb
have been credited with 5 and 6 additional years of service for purposes of
the Salaried Plan and the above supplemental retirement arrangements.

79


Exhibit 10.10

FORM OF SPLIT DOLLAR LIFE INSURANCE AGREEMENT (The Plan)
--------------------------------------------------------


THIS AGREEMENT is entered into this ______, by and between HARLEY-DAVIDSON,
INC., a Wisconsin Corporation ("Company") and ____, residing at ________ (the
"Executive").

WHEREAS, the Company has agreed to provide certain life insurance benefits
to the Executive equal to three times the Executive's Base Compensation, as
defined herein; and

WHEREAS, the Company heretofore has provided such life insurance benefits
through group term life insurance; and

WHEREAS, all parties believe that it is in their best interests to replace
such term insurance Policy with both a term and a whole life policy on the
Executive's life; and

WHEREAS, the parties believe that it is in the best interest of the
Executive to be able to name the beneficiary under the Policy with respect to
the insurance proceeds as described herein, but to vest all other incidents of
ownership of the Policy in the Company.

NOW, THEREFORE, IT IS AGREED AS FOLLOWS:

SECTION 1. POLICY
------------------

Effective _____, the Company shall procure policies (the "Policy") on the
life of the Executive.

SECTION 2. EXECUTIVE'S RIGHTS
------------------------------

The Executive's rights under the Policy shall be limited to the right to
have his beneficiary(ies) (or estate, if there is no effective designation of
beneficiary(ies) as of the date of his death) to receive a specified portion
of the proceeds thereof upon the Executive's death and the right to designate
and change the direct and contingent beneficiary(ies) with respect to each
such specified portion of the proceeds, subject to the terms of the Policy.
The rights of the Executive hereunder may not be assigned or alienated, except
with the prior written consent of the Company.

The amount of such specified portion of the proceeds shall be equal to
three times the Executive's Annual Base Salary (excluding bonus).

SECTION 3. RIGHTS AND OBLIGATIONS OF COMPANY
---------------------------------------------

Except as provided in Section 2 hereof, the Company shall be the owner of
the Policy and shall possess all of the rights in and under such Policy. Such
rights shall include, but shall not be limited to, the right with respect to
the split dollar policy, to apply Policy dividends in the manner determined by
the Company, the right to borrow against the cash value of the Policy, the
right to assign, pledge, transfer or exchange the Policy, and the right to
receive any proceeds under the Policy in excess of those described in Section
2 hereof; provided, however, that in no event may the exercise of any such
rights by the Company impair the benefits due to the Executive under Section
2, except with prior written consent of the Executive or except as otherwise
provided in this Agreement.

The Company shall pay each premium under the Policy as it becomes due.

80


SECTION 4. TAXES
-----------------

The Company shall "gross up" the pay of the Executive in respect of each
calendar year or partial calendar year during which this Agreement is in
effect, by the amount of any federal or state income taxes required to be paid
by the Executive by the reason of the current economic benefit derived by him
under the Policy pursuant to Section 2, hereof.

Except as provided in the foregoing paragraph, the Company shall have no
responsibility or liability for any estate or other taxes that may become due
as a consequence of the Executive's rights under this Agreement or the Policy.

SECTION 5. TERM OF AGREEMENT
-----------------------------

This Agreement may be terminated without any liability to the Company by
the Executive Committee of the Motorcycle Division of Harley-Davidson (the
"Committee") at any time in its sole discretion. Unless so terminated by the
Committee, or unless extended by mutual written agreement of the parties
hereto, this Agreement shall remain in force so long as the Executive remains
employed with the Company including all subsidiaries of Harley-Davidson, Inc.
Upon Termination of employment, all rights of the Executive under Section 2
and under the Policy shall cease. Notwithstanding the foregoing, the Company,
in its sole discretion (but subject to any applicable terms of the Policy),
may offer the Executive the right to purchase the Policy upon the termination
of this Agreement, at a price determined by the Company.

SECTION 6. AMENDMENT AND TERMINATION
-------------------------------------

This Agreement may only be amended in writing, signed by the Executive and
an officer of the Company other than the Executive. This Agreement may be
terminated at any time without liability by either party and without the
consent of the other, by giving 30 days advance written notice thereof.

SECTION 7. NOTICES
-------------------

Any notice hereunder shall be in writing and hand delivered or mailed,
postage pre-paid, certified or registered mail, return receipt requested. Any
notice that is mailed from the Company to the Executive shall be mailed to the
address set forth above or to the most recent home address of the executive
that is on file with the Company. The Executive shall promptly notify the
Company of any change of address. Any notice that is mailed from the
Executive to the Company shall be mailed to the Vice President, Human
Resources, Harley-Davidson, Inc., 3700 West Juneau Avenue, Milwaukee,
Wisconsin 53208.

SECTION 8. ENTIRE UNDERSTANDING
--------------------------------

This Agreement contains the entire understanding of the parties with regard
to the subject matter, and the parties acknowledge that there are no
representations, warranties or covenants of either party, express or implied,
except as expressly set forth herein.

SECTION 9. BINDING EFFECT
--------------------------

This Agreement shall bind in benefit the parties hereto in their successors
and assigns.

81


SECTION 10. WAIVERS
--------------------

The failure of either party to complain of any act or omission on the part
of the other party or any waiver, express or implied, of any breach of any of
the provisions of this Agreement, shall not be deemed a waiver of the party's
right to complain of any subsequent act, omission or breach.

SECTION 11. SEVERABILITY
-------------------------

The invalidity of any provision of this Agreement, as determined by a court
of competent jurisdiction, shall in no way affect any other provision of this
Agreement as long as the performance by either party of its obligations under
this Agreement is not eliminated by such determination.

SECTION 12. RATIFICATION
-------------------------

Nothing contained in this Agreement shall be construed as an employment
agreement between Harley-Davidson, Inc. and the Executive. Therefore, nothing
contained in the Plan or otherwise shall interfere with or limit in any
respect whatsoever, the right of the Company or any subsidiary, branch,
affiliate or division thereof to terminate the employment of any participant
in this Plan, for any reason and at any time, nor confer upon any Plan
participant any right to continue in the employ of the Company or any
subsidiary, branch, affiliate or division thereof.

SECTION 13. DUPLICATE ORIGINALS
--------------------------------

This Agreement shall be executed in duplicate, and both copies of the
Agreement shall be deemed originals.

SECTION 14. GOVERNING LAW
--------------------------

This Agreement shall be governed by and construed in accordance with the
laws of the State of Wisconsin.

IN WITNESS WHEREOF, the parties have executed this Agreement as of the day
and year first above written.

Harley-Davidson, Inc.
By:

--------------------------------------------
OFFICER/ TITLE



--------------------------------------------
EXECUTIVE

82


Exhibit 11

HARLEY-DAVIDSON, INC.

COMPUTATION OF EARNINGS PER COMMON SHARE
ASSUMING NO DILUTION
(Unaudited)

(In thousands, except per share amounts)


Year Ended December 31,
1993 1992 1991
-------- ------- -------

Computation of net income (loss)
--------------------------------
Income before extraordinary item and accounting changes $ 18,443 $54,173 $36,972
Extraordinary item, net of tax - (388) -
Accounting changes, net of tax (30,328) - -
-------- ------- -------
Net income (loss) used in computing earnings
per common share assuming no dilution $(11,885) $53,785 $36,792
======== ======= =======


Weighted average common shares outstanding and shares
used in computing earnings (loss) per common share
assuming no dilution 37,950 35,889 35,580
======== ======= =======

Earnings (loss) per common share assuming no dilution:
Income before extraordinary item and accounting changes $ .49 $ 1.51 $ 1.04
Extraordinary item, net of tax - (.01) -
Accounting changes, net of tax (.80) - -
-------- ------- -------
Net income (loss) $ (.31) $ 1.50 $ 1.04
======== ======= =======


83


HARLEY-DAVIDSON, INC.

COMPUTATION OF EARNINGS PER COMMON SHARE
ASSUMING FULL DILUTION
(Unaudited)
(In thousands, except per share amounts)



Year Ended December 31,
1993 1992 1991
---- ---- ----

Computation of net income (loss)
- ---------------------------------
Income before extraordinary item and accounting changes $ 18,443 $54,173 $36,972
Interest expense on Harley-Davidson, Inc. 7 1/4%
convertible subordinated debentures outstanding,
net of tax - 1,538 1,691
-------- ------- -------
Income used in computing earnings per common share
assuming full dilution before extraordinary item
and accounting changes 18,443 55,711 38,663
Extraordinary item, net of tax - (388) -
Accounting changes, net of tax (30,328) - -
-------- ------- -------
Net income (loss) used in computing earnings per
common share assuming full dilution $(11,885) $55,323 $38,663
======== ======= =======


Computation of shares
- ---------------------
Weighted average common shares outstanding 37,950 35,889 35,580
Incremental shares created assuming exercise at the
beginning of the period of stock options outstanding
at the end of the period using period-end market
price when higher than average -* 611 550
Shares issuable upon conversion of outstanding Harley-
Davidson, Inc. 7 1/4% convertible subordinated
debentures - 1,756 1,832
------ ------ ------
Shares used in computing earnings (loss) per common
share assuming full dilution 37,950 38,256 37,962
====== ====== ======

Earnings (loss) per common share assuming full dilution:
Income before extraordinary item $ .49 $1.46 $1.02
Extraordinary item, net of tax - (.01) -
Accounting changes, net of tax (.80) - -
----- ----- -----
Net income (loss) $(.31) $1.45 $1.02
===== ===== =====

* Earnings (loss) per common share assuming full dilution generally includes the
dilutive effect of outstanding stock options. During 1993, the effect of stock
options had an antidilutive effect and, accordingly, was excluded from the
calculations.

84


Exhibit 22
----------


HARLEY-DAVIDSON, INC.

SUBSIDIARIES



State/Country
of
Name Incorporation
---- -------------

Harley-Davidson Transportation Co., Inc. Delaware
Harley-Davidson Foreign Sales Corporation Barbados
Cycom Business Systems, Inc. Ohio
Harley-Davidson Holding Co., Inc. Delaware
Harley-Davidson GmbH Germany
Harley-Davidson Japan, KK Japan
Harley-Davidson UK, Limited England
Holiday Rambler Corporation Indiana
Utilimaster Corporation Indiana
Holiday Holding Corp. Texas
Holiday World, Inc. Indiana
Holiday World, Inc. Washington
Holiday World, Inc. Texas
Holiday World, Inc. Florida
Holiday World, Inc. New Mexico
Holiday World, Inc. Oregon
Holiday World, Inc. California
RV Holiday World, Inc. Massachusetts


85


Exhibit 23



Consent of Ernst & Young, Independent Auditors



We consent to the incorporation by reference in the Registration Statements
(Form S-8 No. 33-33449, No. 33-35311, and No. 33-48581) pertaining to (a) the
Harley-Davidson, Inc. 1986 Stock Option Plan and the Harley-Davidson, Inc.
1988 Stock Option Plan; (b) the Harley-Davidson, Inc. Thrift Incentive Plan
for Salaried Employees, the Harley-Davidson, Inc. Thrift Incentive Plan for
Milwaukee and Tomahawk Hourly Bargaining Unit Employees, and the Holiday
Rambler Corporation Employees Retirement Plan; and (c) the Harley-Davidson,
Inc. 1990 Stock Option Plan of our report dated January 28, 1994, with respect
to the consolidated financial statements and schedules of Harley-Davidson,
Inc. included in this Annual Report (Form 10-K) for the year ended
December 31, 1993.



ERNST & YOUNG

Milwaukee, Wisconsin
March 29, 1994



86