Geoff Gannon March 24, 2006

News Item: Harley-Davidson (HDI)

In early April, Harley-Davidson (HDI) will open its first dealership in China amid a flurry of festivities. Harley-Davidson named Beijing Feng Huo Lun as its first authorized dealer in China. The dealership, located just outside downtown Beijing, will have a staff of 14. It will operate under the Beijing Harley-Davidson name.

The dealership will sell Harley-Davidson motorcycles, parts, and accessories. Harley-Davidson apparel and collectibles will be sold as well.

Harley-Davidson’s management believes the move into China represents a long-term opportunity. Progress will be gradual. Ownership and riding restrictions remain impediments to the company’s growth. Disposable income is still too low in China to support a large “premium, heavy-weight” motorcycle market. The company hopes that ownership and riding restrictions will be reduced as disposable income continues to grow.

On Friday, Harley-Davidson’s share price rose $1.88 to $51.07. At their closing price, shares of Harley-Davidson offered a 6.68% earnings yield.

Over the last ten years, Harley-Davidson’s book value per share compounded at a 17.78% annual rate. During that same period, annual EPS growth was 21.92%.