Full Description

Harley-Davidson, Inc., incorporated in 1981, operates in two segments: the Motorcycles & Related Products (Motorcycles) segment and the Financial Services segment. The Motorcycles segment includes the group of companies doing business as Harley-Davidson Motor Company (HDMC), Buell Motorcycle Company (Buell) and MV Agusta (MV). The Motorcycles segment designs, manufactures and sells at wholesale primarily heavyweight (engine displacement of 651+cubic centimeters (cc)) touring, custom and performance motorcycles, as well as a line of motorcycle parts, accessories, general merchandise and related services. The Financial Services (Financial Services) segment includes the group of companies doing business as Harley-Davidson Financial Services (HDFS). HDFS provides wholesale and retail financing and, as an agent, provides insurance and insurance-related programs primarily to Harley-Davidson and Buell dealers and their retail customers. HDFS conducts business in the United States and Canada. In August 2008, the Company announced the completion of its purchase of MV Agusta Group.

Motorcycles

The primary business of the Motorcycles segment is to design and manufacture motorcycles for the heavyweight market and sell them at wholesale. The Company in addition to its Harley-Davidson motorcycle products, also offers a line of motorcycles and related products under the Buell, MV Agusta and Cagiva brand name. The Company’s worldwide motorcycle sales generated approximately 80% of the total net revenue in the Motorcycles segment during the year ended December 31, 2008.

HDMC manufactures five families of motorcycles: Touring, Dyna, Softail, Sportster and VRSC. The Touring, Dyna, Softail and Sportster motorcycle families are powered by an air-cooled, twin-cylinder engine with a 45-degree V configuration. The VRSC family is powered by a liquid-cooled, twin-cylinder engine with a 60-degree V configuration. HDMC’s Harley-Davidson engines range in size from 883 cubic centimeters to 1803 cubic centimeters.

Buell manufactures four families of motorcycles: Sportbike, Street, Adventure and Blast. The Sportbike family includes one model with a liquid-cooled, twin-cylinder engine with a 72-degree V configuration. All other models in the Sportbike, Street and Adventure families feature an air-cooled, twin-cylinder engine with a 45-degree V configuration ranging in size from 984 cubic centimeters to 1203 cubic centimeter. The Blast features a 492 cubic centimeter air-cooled single-cylinder engine. MV manufactures two families of motorcycles: MV Agusta and Cagiva. The MV Agusta family is a line of sport motorcycles featuring a liquid-cooled, four-cylinder engine ranging in size from 750 cubic centimeters to 1078 cubic centimeter. The Cagiva family offers lightweight sport motorcycles powered by a 125 cubic centimeter air-cooled, single-cylinder engine.

The total motorcycle market, including the heavyweight portion of the market, comprises four segments: standard, performance, custom and touring. The touring segment includes the Harley-Davidson Touring family of motorcycles, which are equipped with fairings, windshields, saddlebags and Tour Pak luggage carriers. The custom segment of the market includes motorcycles featuring the distinctive styling associated with classic Harley-Davidson motorcycles and includes the Company’s Dyna, Softail and VRSC motorcycle families, as well as a portion of the motorcycles in the Sportster family. The Company’s Sportster family also serves the standard segment of the market along with the Buell Blast. The Buell Sportbike, Street and Adventure families, as well as both of the MV families,

The major Parts and Accessories (P&A) products are replacement parts (Genuine Motor Parts) and mechanical, and cosmetic accessories (Genuine Motor Accessories). Worldwide P&A net revenue comprised 15.4% of net revenue in the Motorcycles segment, in 2008. Worldwide General Merchandise net revenue, which includes MotorClothes apparel and collectibles, comprised 5.6%of net revenue in the Motorcycles segment, in 2008. The Company’s licensed products include t-shirts, vehicle and vehicle accessories, jewelry, small leather goods, toys and other products. The Company also provides a variety of services to its independent dealers, including service and business management training programs, customized dealer software packages and delivery of its motorcycles. Motorcycle rental and tour program, and Riders Edge, the Company’s rider training program, are available through the Company’s independent dealers.

Financial Services

HDFS is engaged in the business of financing and servicing wholesale inventory receivables and retail consumer loans, primarily for the purchase of Harley-Davidson and Buell. In addition, HDFS is an agent for certain unaffiliated insurance carriers providing property/casualty insurance and also sells extended service contracts, gap coverage and debt protection products to motorcycle owners. HDFS conducts business in the United States and Canada.

Operating under the trade name Harley-Davidson Credit, HDFS provides wholesale financial services to Harley-Davidson and Buell dealers and retail financing to consumers. Operating under the trade name Harley-Davidson Insurance, HDFS is an agent for the sale of motorcycle insurance policies and also sells extended service contracts, gap coverage and debt protection products. Wholesale financial services include floorplan and open account financing of motorcycles and motorcycle parts and accessories. HDFS offers wholesale financial services to Harley-Davidson and Buell dealers in the United States and Canada, and during 2008, approximately 95% of such dealers utilized those services.

The wholesale finance operations of HDFS are located in Plano, Texas. Retail motorcycle financial services include installment lending for the purchase of new and used Harley-Davidson and Buell. HDFS’ retail financial services are available through Harley-Davidson and Buell dealers in the United States and Canada. HDFS’ retail finance operations are located in Carson City, Nevada and Plano, Texas. Motorcycle insurance, extended service contracts, gap coverage and debt protection products, which are offered by HDFS are available through Harley-Davidson and Buell dealers in the United States and Canada. Motorcycle insurance that HDFS offers is also marketed on a direct basis to motorcycle riders. HDFS insurance operations are located in Carson City, Nevada and Plano, Texas. During 2008, HDFS financed 53.5% of the new Harley-Davidson motorcycles retailed by independent dealers in the United States.