This summary is based on the second quarter fiscal 2007 earnings call conducted by Harley-Davidson Inc. (HOG: chart) on July 19, 2007.

Chief Executive Officer and President: Jim Ziemer
Chief Finance Officer: Tom Bergmann
Chief Finance Officer, Harley-Davidson Financial Services: Larry Hund

Key Investor Issues

- Earnings per share were $1.14, up 25.3% from last year.
- Net income was also up at $290.5 million, an increase of 19.3% from prior year.
- Revenue for the quarter was $1.62 billion, up 17.7% compared to the year-ago quarter.
- The company repurchased 6.7 million shares at a cost of $430 million.
- A dividend of 25 cents per share was declared for the quarter.

Second Quarter 2007 Highlights

- Revenue for the quarter was $1.62 billion, up 17.7% compared to the year-ago quarter.
- Net income was also up at $290.5 million, an increase of 19.3% from prior year.
- Earnings per share were $1.14, up 25.3% from same period a year earlier.

The company reported a gross margin of 37.4% in the quarter, flat from 37.5% a year earlier.

This was due to higher material charges and promotional costs which offset the positive effect of higher pricing. Operating margin improved from 23.6% in the second quarter of 2006 to 23.8% in the second quarter of 2007, as operating expenses grew at a slower rate than revenue.

The effective tax rate for the quarter was 35.5% from 36% same period a year ago, which reflects the reinstatement of the Federal Research and Development Tax Credit.

Operating cash flow for the first six months of the year was $1.06 billion compared to $825.6 million in the first six months of 2006.

The increase was primarily driven by securitizing $220 million more in motorcycle loans during the first six months of 2007 compared to the first six months of 2006.

- In the first six months of the year, depreciation was $106 million, and capital expenditures were $86 million compared to $108 million in depreciation and $89 million in capital expenditures for the same period in 2006.

The company repurchased 6.7 million shares of its common stock at a cost of $430 million.

By end of second quarter, there were 15.2 million shares outstanding on a board-approved share repurchase authorization. An additional board approved authorization is also in place to offset option exercises. As of July 1, 2007, the company had 251.2 million shares of common stock outstanding.

The company, to enhance profitability and create demand for Harley-Davidson motorcycles, will supply dealers in various regions with what they are likely to exhaustively sell.

This is a market driven system and the company is working with dealers for individualized annual sales plans which will be reviewed frequently during the year.

The company is launching new models in its product line in readiness for the 105th anniversary in 2008.
- The new Dyna Fat Bob takes advantage of the nimble, lightweight Dyna chassis, which has always provided great riding.
- Two all-new models, the Rocker and the Rocker C, with a rear fender that moves with the wheel, creating a slammed lower look. The great look for the Rockers incorporates a new rear suspension called the Rocker Tail. The two models target different buyers.

The company has also added some high-profile features of its models like larger capacity, six-gallon fuel tank, cable-less throttle, and an optional anti-lock braking system which serious touring riders will appreciate.

- The V-Rod family is fitted with a 1250cc Revolution engine with 125 horsepower. All of the 2008 V-Rod models have a new clutch design that reduces clutch effort by more than 20%.
- The XL 1200 Nightster, which we launched in the U.S. in spring, will now be available on international markets. The recent XR 1200 prototype will go into production from 2008 targetting the European market.
- The new products and technology will be launched to the worldwide market only at a 1.5% average price increase. The enhancement includes the twin-cam 96 engine and the six-speed transmission introduced in 2006 on all of the company’s Big Twin models.
- Buell Motor Company, a subsidiary of Harley Davidson, in its 25th anniversary introduced its first liquid-cooled motorcycle, the 1125R with a 146 horsepower engine.

Performance Analysis of Segments