UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

Form 10-Q

(X)	Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the quarterly period ended April 1, 2007

(_)	Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the transition period from ______________________ to ______________________

Commission File Number 1-9183

Harley-Davidson, Inc.

(Exact name of registrant as specified in its Charter)

Wisconsin	39-1382325
(State or other jurisdiction of	(I.R.S. Employer
incorporation or organization)	Identification No.)
3700 West Juneau Avenue, Milwaukee, Wisconsin	53208
(Address of principal executive offices)	(Zip Code)

(Registrant’s telephone number, including area code) (414) 342-4680

None
(Former name, former address and former
fiscal year, if changed since last report)

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 (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act (Check one):

Large accelerated filer (X) Accelerated filer ( ) Non-accelerated filer ( )

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No X

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

Common Stock Outstanding as of April 30, 2007: 257,533,007 shares

HARLEY-DAVIDSON, INC.

Form 10-Q Index
For the Quarter Ended April 1, 2007

		Page
Part I	Financial Information
Item 1.	Consolidated Financial Statements
	Condensed Consolidated Statements of Income	3
	Condensed Consolidated Balance Sheets	4
	Condensed Consolidated Statements of Cash Flows	5
	Notes to Condensed Consolidated Financial Statements	6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operation	14
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	26
Item 4.	Controls and Procedures	26
Part II	Other Information
Item 1.	Legal Proceedings	27
Item 1A.	Risk Factors	27
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	27
Item 6.	Exhibits	28
Signatures		29

PART I — FINANCIAL INFORMATION

Item 1. Consolidated Financial Statements

Harley-Davidson, Inc.
Condensed Consolidated Statements of Income
(Unaudited)
(In thousands, except per share amounts)

	Three Months Ended
	April 1, 2007		March 26, 2006
Net revenue	$	1,178,875	$	1,285,090
Cost of goods sold		755,829		791,876

Gross profit		423,046		493,214
Financial services income		109,163		95,901
Financial services expense		50,226		44,270

Operating income from financial services		58,937		51,631
Selling, administrative and engineering expense		192,571		185,659

Income from operations		289,412		359,186
Investment income and other, net		8,744		7,317

Income before provision for income taxes		298,156		366,503
Provision for income taxes		105,846		131,940

Net income	$	192,310	$	234,563

Earnings per common share:
Basic	$	0.75	$	0.86
Diluted	$	0.74	$	0.86
Cash dividends per common share	$	0.21	$	0.18

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

Harley-Davidson, Inc.
Condensed Consolidated Balance Sheets
(In thousands)

	(Unaudited) April 1, 2007		December 31, 2006		(Unaudited) March 26, 2006
ASSETS
Current assets:
Cash and cash equivalents	$	310,010	$	238,397	$	196,464
Marketable securities		618,502		658,133		915,434
Accounts receivable, net		147,732		143,049		148,561
Finance receivables held for sale		297,885		547,106		131,389
Finance receivables held for investment, net		1,550,001		1,554,260		1,546,417
Inventories		369,418		287,798		256,788
Prepaid expenses and other current assets		122,627		121,890		103,953

Total current assets		3,416,175		3,550,633		3,299,006
Finance receivables held for investment, net		767,529		725,957		625,664
Property, plant and equipment, net		1,013,104		1,024,469		992,328
Prepaid pension costs		51,532		55,351		356,791
Goodwill		59,035		58,800		56,892
Other assets		139,123		116,940		69,166

	$	5,446,498	$	5,532,150	$	5,399,847

LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	373,368	$	283,477	$	334,840
Accrued liabilities		481,096		479,709		506,836
Current portion of finance debt		463,530		832,491		93,610

Total current liabilities		1,317,994		1,595,677		935,286
Finance debt		890,000		870,000		1,000,000
Pension liability		52,122		47,916		33,643
Postretirement healthcare benefits		203,514		201,126		64,573
Other long-term liabilities		147,381		60,694		201,757
Commitments and contingencies (Note 11)
Total shareholders’ equity		2,835,487		2,756,737		3,164,588

	$	5,446,498	$	5,532,150	$	5,399,847

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

Harley-Davidson, Inc.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
(In thousands)

	Three Months Ended
	April 1, 2007			March 26, 2006
Net cash provided by operating activities (Note 3)	$	519,624		$	365,714
Cash flows from investing activities:
Capital expenditures		(40,775	)		(36,017	)
Origination of finance receivables held for investment		(103,889	)		(82,456	)
Collections on finance receivables held for investment		90,949			62,619
Collection of retained securitization interests		14,493			6,960
Purchase of marketable securities		(117,075	)		(231,773	)
Sales and redemptions of marketable securities		157,697			222,147
Other, net		4,545			4,373

Net cash provided (used) by investing activities		5,945			(54,147	)
Cash flows from financing activities:
Net decrease in finance-credit facilities
and commercial paper		(353,540	)		(105,707	)
Dividends		(54,103	)		(48,955	)
Purchase of common stock for treasury		(61,251	)		(107,065	)
Excess tax benefits from share-based payments		1,157			1,098
Issuance of common stock under employee
stock option plans		12,953			5,064

Net cash used by financing activities		(454,784	)		(255,565	)
Effect of exchange rate changes on cash
and cash equivalents		828			(513	)
Net increase in cash and cash equivalents		71,613			55,489
Cash and cash equivalents:
At beginning of period		238,397			140,975

At end of period	$	310,010		$	196,464

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

HARLEY-DAVIDSON, INC.
Notes to Condensed Consolidated Financial Statements
(Unaudited)

Note 1 – Basis of Presentation and Use of Estimates

The condensed interim consolidated financial statements included in this quarterly report on Form 10-Q have been prepared by Harley-Davidson, Inc. (the “Company”) without audit. Certain information and footnote disclosures normally included in complete financial statements have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission and U.S. generally accepted accounting principles for interim financial information. However, the foregoing statements contain all adjustments (consisting only of normal recurring adjustments) which are, in the opinion of Company management, necessary to present fairly the condensed consolidated balance sheets as of April 1, 2007 and March 26, 2006 and the condensed consolidated statements of income and the condensed consolidated statements of cash flows for the three-month periods ended April 1, 2007 and March 26, 2006. For further information, refer to the consolidated financial statements and footnotes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2006.

The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates.

Certain prior year amounts have been reclassified to conform to the current year presentation.

Note 2 – New Accounting Standards

In September 2006, the Financial Accounting Standards Board issued SFAS No. 158, “Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans, an amendment of FASB Statements No. 87, 88, 106 and 132(R).” SFAS No. 158 requires employers that sponsor defined benefit pension and postretirement benefit plans to recognize previously unrecognized actuarial losses and prior service costs in the statement of financial position and to recognize future changes in these amounts in the year in which changes occur through comprehensive income. Additionally, employers are required to measure the funded status of a plan as of the date of its year-end statement of financial position. The Company adopted SFAS No. 158, as it relates to recognizing the funded status of its defined benefit pension and postretirement benefit plans, and the related disclosure requirements, as of December 31, 2006. The requirement to measure the funded status as of the date of the year-end statement of financial position is required by December 31, 2008. The Company will adopt the funded status measurement date requirement in 2008 and is currently evaluating the impact the change in the measurement date will have on its consolidated financial statements and notes thereto.

Note 3 – Additional Balance Sheet and Cash Flow Information

The Company values its inventories at the lower of cost or market. Substantially all inventories located in the United States are valued using the last-in, first-out (LIFO) method. Other inventories are valued at the lower of cost or market using the first-in, first-out (FIFO) method. Inventories consist of the following (in thousands):

	April 1, 2007		December 31, 2006		March 26, 2006
Components at the lower of FIFO cost or market
Raw materials and work in process	$	132,784	$	123,376	$	86,682
Motorcycle finished goods		157,427		94,399		103,587
Part and accessories and general merchandise		110,003		98,749		90,809

Inventory at lower of FIFO cost or market		400,214		316,524		281,078
Excess of FIFO over LIFO cost		30,796		28,726		24,290

	$	369,418	$	287,798	$	256,788

The reconciliation of net income to net cash provided by operating activities is as follows (in thousands):

	Three Months Ended
	April 1, 2007			March 26, 2006
Cash flows from operating activities:
Net income	$	192,310		$	234,562
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation		51,464			54,232
Provision for employee long-term benefits		19,345			24,482
Stock compensation expense		4,828			5,289
Gain on current year securitizations		(13,039	)		(8,647	)
Net change in wholesale finance receivables		(7,370	)		(201,948	)
Origination of retail finance receivables held for sale		(603,125	)		(604,924	)
Collections on retail finance receivables held for sale		19,548			25,749
Proceeds from securitization of retail finance receivables		796,859			723,234
Contributions to pension and postretirement plans		(3,202	)		(2,726	)
Foreign currency adjustments		(1,778	)		(610	)
Other, net		15,663			2,676
Changes in current assets and liabilities:
Accounts receivable, net		(3,141	)		(25,710	)
Finance receivables - accrued interest and other		(2,210	)		169
Inventories		(79,814	)		(33,849	)
Accounts payable and accrued liabilities		132,791			167,583
Other		495			6,152

Total adjustments		327,314			131,152

Net cash provided by operating activities	$	519,624		$	365,714

Note 4 – Impairment of Investment in Retained Securitization Interests

During the first quarter of 2007, the Company recorded an impairment charge of $3.5 million on its retained securitization interests. Retained securitization interests are recorded at fair value, which is based on the present value of future expected cash flows using the Company’s best estimate of key assumptions for credit losses, prepayments and discount rates commensurate with the risks involved. During the first quarter of 2007, the fair value of certain retained securitization interests was lower than the amortized cost, which indicates impairment. This impairment was considered permanent and as a result the investment in retained securitization interests has been appropriately written down to fair value. The decline in fair value was due to higher actual and anticipated credit losses on certain securitization portfolios, partially offset by a slowing in actual and expected prepayment speeds. This charge was recorded as a reduction of financial services income.

Note 5 – Income Taxes

The Company or one of its subsidiaries files income tax returns in the United States federal and Wisconsin state jurisdictions and various other state and foreign jurisdictions. The Company is no longer subject to income tax examinations for any significant tax jurisdictions for years before 1998.

The Company adopted the provisions of FASB Interpretation No. 48 (FIN 48), Accounting for Uncertainty in Income Taxes, on January 1, 2007. As a result of the implementation of FIN 48, the Company recognized a $16.1 million increase in the liability for unrecognized tax benefits, which was accounted for as a reduction to January 1, 2007 retained earnings. The total gross liability for unrecognized tax benefits is $84.9 million as of January 1, 2007. Included in this amount are approximately $11.4 million of accrued interest and $2.5 million of accrued penalties. The amount of unrecognized tax benefits that, if recognized, would affect the effective tax rate is approximately $56.6 million. The Company recognizes interest and penalties related to unrecognized tax benefits in the provision for income taxes. The Company does not expect a significant increase or decrease to the total amounts of unrecognized tax benefits within the next 12 months. There was no material change to the amount of unrecognized tax benefits during the first three months ended April 1, 2007.

Note 6 – Product Warranty and Recall Campaigns

The Company currently provides a standard two-year limited warranty on all new motorcycles sold. The warranty coverage for the retail customer includes parts and labor and begins when the motorcycle is sold to a retail customer. The Company maintains reserves for future warranty claims using an estimated cost per unit sold which is based primarily on historical Company claim information. Additionally, the Company has from time to time initiated certain voluntary recall campaigns. The Company reserves for all estimated costs associated with recalls in the period that the recalls are announced. Changes in the Company’s warranty and product recall liability were as follows (in thousands):

	Three months ended
	April 1, 2007			March 26, 2006
Balance, beginning of period	$	66,385		$	43,073
Warranties issued during the period		9,808			10,201
Settlements made during the period		(14,304	)		(12,074	)
Recalls and changes to pre-existing
warranty liabilities		4,274			8,517

Balance, end of period	$	66,163		$	49,717

The liability for product recall campaigns was $4.5 million and $5.4 million as of April 1, 2007 and March 26, 2006, respectively.

Note 7 – Business Segments

The Company operates in two business segments: Motorcycles & Related Products (Motorcycles) and Financial Services (Financial Services). The Company’s reportable segments are strategic business units that offer different products and services. They are managed separately based on the fundamental differences in their operations. Selected segment information is set forth below (in thousands):

	Three months ended
	April 1, 2007		March 26, 2006
Net revenue	$	1,178,875	$	1,285,090
Gross profit		423,046		493,214
Operating expenses		187,632		180,902

Operating income from Motorcycles		235,414		312,312
Financial Services income		109,163		95,901
Financial Services expense		50,226		44,270

Operating income from Financial Services		58,937		51,631
Corporate expenses		4,939		4,757

Income from operations	$	289,412	$	359,186

Note 8 – Earnings Per Share

The following table sets forth the computation for basic and diluted earnings per share (in thousands, except per share amounts):

	Three months ended
	April 1, 2007		March 26, 2006
Numerator:
Net income used in computing basic and
diluted earnings per share	$	192,310	$	234,563

Denominator:
Denominator for basic earnings per share-
weighted-average common shares		257,326		272,966
Effect of dilutive securities - employee
stock compensation plan		832		657

Denominator for diluted earnings per share-
adjusted weighted-average shares outstanding		258,158		273,623

Basic earnings per share	$	0.75	$	0.86
Diluted earnings per share	$	0.74	$	0.86

Outstanding options to purchase 0.4 million and 3.2 million shares of common stock for the three months ended April 1, 2007 and March 26, 2006, respectively, were not included in the Company’s computation of dilutive securities because the exercise price was greater than the market price and therefore the effect would have been anti-dilutive.

Note 9 – Comprehensive Income

The following table sets forth the reconciliation of net income to comprehensive income (in thousands):

	Three months ended
	April 1, 2007			March 26, 2006
Net income	$	192,310		$	234,563
Foreign currency translation adjustment		3,411			1,104
Changes in net unrealized gains and losses, net of tax:
Retained securitization interest		(9,172	)		(8,641	)
Derivative financial instruments		(570	)		(2,044	)
Marketable securities		613			378
Unrecognized pension and postretirement benefit plan liabilities		3,742			--

	$	190,334		$	225,360

Note 10 – Employee Benefit Plans

The Company has several defined benefit pension plans and postretirement healthcare benefit plans (Retirement Plans), which cover substantially all employees of the Motorcycles segment. The Company also has unfunded supplemental employee retirement plan agreements (SERPA) which were instituted to replace benefits lost under the Tax Revenue Reconciliation Act of 1993. Components of net periodic benefit costs were as follows (in thousands):

	Three months ended
	April 1, 2007			March 26, 2006
Pension and SERPA Benefits
Service cost	$	12,912		$	12,190
Interest cost		14,941			13,110
Expected return on plan assets		(20,209	)		(19,104	)
Amortization of unrecognized:
Prior service cost		1,673			1,749
Net loss		2,919			4,389

Net periodic benefit cost	$	12,236		$	12,334

Postretirement Healthcare Benefits
Service cost	$	3,191		$	3,236
Interest cost		4,895			4,019
Expected return on plan assets		(2,496	)		(2,278	)
Amortization of unrecognized:
Prior service credit		(281	)		(281	)
Net loss		1,734			1,629

Net periodic benefit cost	$	7,043		$	6,325

During the remainder of 2007, the Company expects to continue its practice of funding the SERPA and postretirement healthcare plans in amounts equal to benefits paid during the year. At this time, the Company does not expect to make contributions in 2007 to further fund its qualified pension and postretirement healthcare plans.

Note 11 – Commitments and Contingencies

The Company is subject to lawsuits and other claims related to environmental, product and other matters. In determining required reserves related to these items, the Company carefully analyzes cases and considers the likelihood of adverse judgments or outcomes, as well as the potential range of possible loss. The required reserves are monitored on an ongoing basis and are updated based on new developments or new information in each matter.

Shareholder Lawsuits:

A number of shareholder class action lawsuits were filed between May 18, 2005 and July 1, 2005 in the United States District Court for the Eastern District of Wisconsin. On February 14, 2006, the court consolidated all of the actions into a single case, captioned In re Harley-Davidson, Inc. Securities Litigation , and appointed Lead Plaintiffs and Co-Lead Plaintiffs’ Counsel. Pursuant to the schedule set by the court, on October 2, 2006, the Lead Plaintiffs filed a Consolidated Class Action Complaint, which names the Company and Jeffrey L. Bleustein, James L. Ziemer, and James M. Brostowitz, who are Company officers, as defendants. The Consolidated Complaint alleges securities law violations and seeks unspecified damages relating generally to the Company’s April 13, 2005 announcement that it was reducing short-term production growth and planned increases of motorcycle shipments from 317,000 units in 2004 to a new 2005 target of 329,000 units (compared to its original target of 339,000 units). On December 18, 2006, the defendants filed a motion to dismiss the Consolidated Complaint in its entirety. Briefing of the motion to dismiss was completed in April 2007.

Three shareholder derivative lawsuits were filed in the United States District Court for the Eastern District of Wisconsin on June 3, 2005, October 25, 2005 (this lawsuit was later voluntarily dismissed) and December 2, 2005 and two shareholder derivative lawsuits were filed in Milwaukee County Circuit Court on July 22, 2005 and November 16, 2005 against some or all of the following current or former directors and officers of the Company: Jeffrey L. Bleustein, James L. Ziemer, James M. Brostowitz, Barry K. Allen, Richard I. Beattie, George H. Conrades, Judson C. Green, Donald A. James, Sara L. Levinson, George L. Miles, Jr., James A. Norling, James A. McCaslin, Donna F. Zarcone, Jon R. Flickinger, Gail A. Lione, Ronald M. Hutchinson, W. Kenneth Sutton, Jr. and John A. Hevey. The lawsuits also name the Company as a nominal defendant. In general, the shareholder derivative complaints include factual allegations similar to those in the class action complaints and allegations that officers and directors breached their fiduciary duties to the Company. On February 14, 2006, the state court consolidated the two state court derivative actions and appointed Lead Plaintiffs and Lead Plaintiffs’ counsel, and on April 24, 2006, the state court ordered that the consolidated state court derivative action be stayed until after motions to dismiss the federal securities class action are decided. On February 15, 2006, the federal court consolidated the federal derivative lawsuits with the securities and ERISA (see below) actions for administrative purposes. On February 1, 2007, the federal court appointed Lead Plaintiff and Co-Lead Plaintiffs’ Counsel in the consolidated federal derivative action.

On July 11, 2005, the staff of the Enforcement Division of the United States Securities and Exchange Commission (SEC) advised the Company that it was inquiring into matters relating generally to the Company’s April 13, 2005 announcement and certain allegations contained in the shareholder complaints. The Company has cooperated with the SEC.

On August 25, 2005, a class action lawsuit alleging violations of the Employee Retirement Income Security Act (ERISA) was filed in the United States District Court for the Eastern District of Wisconsin. As noted above, on February 15, 2006, the court ordered the ERISA action consolidated with the federal derivative and securities actions for administrative purposes. Pursuant to the schedule set by the court, on October 2, 2006, the ERISA plaintiff filed an Amended Class Action Complaint, which named the Company, the Harley-Davidson Motor Company Retirement Plans Committee, the Company’s Leadership and Strategy Council, Harold A. Scott, James L. Ziemer, James M. Brostowitz, Gail A. Lione, Joanne M. Bischmann, Karl M. Eberle, Jon R. Flickinger, Ronald M. Hutchinson, James A. McCaslin, W. Kenneth Sutton, Jr., and Donna F. Zarcone, who are current or former Company officers or employees, as defendants (the “Company Defendants”). In general, the ERISA complaint includes factual allegations similar to those in the shareholder class action lawsuits and alleges on behalf of participants in certain Harley-Davidson retirement savings plans that the plan fiduciaries breached their ERISA fiduciary duties. On December 18, 2006, the defendants filed a motion to dismiss the ERISA complaint in its entirety. Briefing of the motion to dismiss was completed in April 2007.

The Company believes the allegations against all of the defendants in the lawsuits against the Company are without merit and it intends to vigorously defend against them. Since all of these matters are in the preliminary stages, the Company is unable to predict the scope or outcome or quantify their eventual impact, if any, on the Company. At this time, the Company is also unable to estimate associated expenses or possible losses. The Company maintains insurance that may limit its financial exposure for defense costs and liability for an unfavorable outcome, should it not prevail, for claims covered by the insurance coverage.

Security Breach Lawsuit:

On January 22, 2007, a purported class action lawsuit was filed in the Supreme Court of the State of New York against Harley-Davidson, Inc. and the Harley Owners Group. The complaint alleges that the Company was negligent in failing to properly safeguard, protect and keep confidential the personal “Customer Identifiable Information” that was stored on a Company laptop computer that was lost on or about August 14, 2006. The complaint also alleges that Harley-Davidson breached fiduciary duties and made false and fraudulent representations and warranties to its customers that it would keep confidential and safeguard and protect the personal customer information in its possession. The complaint seeks unspecified damages. On February 23, 2007, this matter was removed to the United States District Court Southern District of New York. The Company believes the allegations in the lawsuit are without merit and it intends to vigorously defend against them.

Cam Bearing Lawsuit:

In January 2001, the Company, on its own initiative, notified each owner of 1999 and early-2000 model year Harley-Davidson motorcycles equipped with Twin Cam 88 ^® and Twin Cam 88B ^™ engines that the Company was extending the warranty for a rear cam bearing to 5 years or 50,000 miles. Subsequently, on June 28, 2001, a putative nationwide class action was filed against the Company in state court in Milwaukee County, Wisconsin, which was amended by a complaint filed September 28, 2001. The complaint alleged that this cam bearing is defective and asserted various legal theories. The complaint sought unspecified compensatory and punitive damages for affected owners, an order compelling the Company to repair the engines and other relief. On February 27, 2002, the Company’s motion to dismiss the amended complaint was granted by the Court and the amended complaint was dismissed in its entirety. An appeal was filed with the Wisconsin Court of Appeals. On April 12, 2002, the same attorneys filed a second putative nationwide class action against the Company in state court in Milwaukee County, Wisconsin relating to this cam bearing issue and asserting different legal theories than in the first action. The complaint sought unspecified compensatory damages, an order compelling the Company to repair the engines and other relief. On September 23, 2002, the Company’s motion to dismiss was granted by the Court, the complaint was dismissed in its entirety, and no appeal was taken. On January 14, 2003, the Wisconsin Court of Appeals reversed the trial court’s February 27, 2002 dismissal of the complaint in the first action, and the Company petitioned the Wisconsin Supreme Court for review. On March 26, 2004, the Wisconsin Supreme Court reversed the Court of Appeals and dismissed the remaining claims in the action. On April 12, 2004, the same attorneys filed a third action in the state court in Milwaukee County, on behalf of the same plaintiffs from the action dismissed by the Wisconsin Supreme Court. This third action was dismissed by the court on July 26, 2004. In addition, the plaintiffs in the original case moved to reopen that matter and amend the complaint to add new causes of action. On September 9, 2004, Milwaukee County Circuit Court refused to allow the reopening or amendment. Plaintiffs again appealed to the Wisconsin Court of Appeals, and on December 13, 2005, the Court of Appeals again reversed the trial court. On January 12, 2006, the Company filed a petition for review with the Wisconsin Supreme Court. Oral arguments were heard on September 7, 2006 and the Company is awaiting a decision from the court. The Company believes that the 5-year/50,000 mile warranty extension it announced in January 2001 adequately addressed the condition for affected owners, and the Company intends to continue to vigorously defend this matter.

Environmental Matters:

The Company is involved with government agencies and groups of potentially responsible parties in various environmental matters, including a matter involving the cleanup of soil and groundwater contamination at its York, Pennsylvania facility. The York facility was formerly used by the U.S. Navy and AMF prior to the purchase of the York facility by the Company from AMF in 1981. Although the Company is not certain as to the full extent of the environmental contamination at the York facility, it has been working with the Pennsylvania Department of Environmental Protection (PADEP) since 1986 in undertaking environmental investigation and remediation activities, including an ongoing site-wide remedial investigation/feasibility study (RI/FS).

In January 1995, the Company entered into a settlement agreement (the Agreement) with the Navy. The Agreement calls for the Navy and the Company to contribute amounts into a trust equal to 53% and 47%, respectively, of future costs associated with environmental investigation and remediation activities at the York facility (Response Costs). The trust administers the payment of the Response Costs incurred at the York facility as covered by the Agreement.

In February 2002, the Company was advised by the U.S. Environmental Protection Agency (EPA) that it considers some of the Company’s remediation activities at the York facility to be subject to the EPA’s corrective action program under the Resource Conservation and Recovery Act (RCRA) and offered the Company the option of addressing corrective action under a RCRA facility lead agreement. In July 2005, the York facility was designated as the first site in Pennsylvania to be addressed under the “One Cleanup Program.” The program provides a more streamlined and efficient oversight of voluntary remediation by both PADEP and EPA and will be carried out consistent with the Agreement with the Navy. As a result, the RCRA facility lead agreement has been superseded.

Although the RI/FS is still under way and substantial uncertainty exists concerning the nature and scope of the additional environmental investigation and remediation that will ultimately be required at the York facility, the Company estimates that its share of the future Response Costs at the York facility will be approximately $7.7 million. The Company has established reserves for this amount, which are included in Accrued Liabilities in the Condensed Consolidated Balance Sheets.

The estimate of the Company’s future Response Costs that will be incurred at the York facility is based on reports of independent environmental consultants retained by the Company, the actual costs incurred to date and the estimated costs to complete the necessary investigation and remediation activities. Response Costs related to the remediation of soil are expected to be incurred over a period of several years ending in 2012. Response Costs related to ground water remediation may continue for some time beyond 2012. However, these Response Costs are expected to be much lower than those related to the remediation of soil.

Under the terms of the sale of the Commercial Vehicles Division in 1996, the Company has agreed to indemnify Utilimaster Corporation, until 2008, for certain claims related to environmental contamination present at the date of sale, up to $20.0 million. Based on the environmental studies performed, the Company does not expect to incur any material expenditures under this indemnification.

Product Liability Matters:

Additionally, the Company is involved in product liability suits related to the operation of its business. The Company accrues for claim exposures that are probable of occurrence and can be reasonably estimated. The Company also maintains insurance coverage for product liability exposures. The Company believes that its accruals and insurance coverage are adequate and that product liability will not have a material adverse effect on the Company’s consolidated financial statements.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Harley-Davidson, Inc. is the parent company for the groups of companies doing business as Harley-Davidson Motor Company (HDMC), Buell Motorcycle Company (Buell) and Harley-Davidson Financial Services (HDFS). Harley-Davidson Motor Company produces heavyweight motorcycles and offers a complete line of motorcycle parts, accessories, apparel and general merchandise. HDMC manufactures five families of motorcycles: Touring, Dyna™, Softail ^® , Sportster ^® and VRSC™. Buell produces sport motorcycles, including nine twin-cylinder XB models and the single-cylinder Buell ^® Blast ^® . Buell also offers a line of motorcycle parts, accessories, apparel and general merchandise. HDFS provides wholesale and retail financing and insurance programs primarily to Harley-Davidson/Buell dealers and customers.

The “% Change” figures included in this section have been calculated using unrounded dollar amounts and may differ from calculations using the rounded dollar amounts presented.

Overview

The Company’s collective bargaining agreement with the Pennsylvania-IAM (Union) covering approximately 2,800 workers at its assembly plant in York, Pennsylvania expired on February 2, 2007. Prior to the expiration of that contract, the union voted to reject a proposed new collective bargaining agreement for employees and authorized a strike which began immediately following the expiration of the contract. On February 22, 2007, the Company reached a new agreement with the Union, ending the strike. The new contract with the York Union employees is a three-year agreement expiring in February 2010.

The disruption caused by the strike had a significant impact on the Company’s business. As a result of the strike, the Company lost approximately four weeks of production at its York, Pennsylvania assembly facility and interrupted production at some of the Company’s other manufacturing locations.

During the first quarter of 2007, the Company’s shipments of Harley-Davidson ^® motorcycles were 11,745 units lower than in the first quarter of 2006. Primarily as a result of this decrease in shipments, the Company’s net revenue for the first quarter of 2007 was $1.18 billion, down 8.3% versus the same quarter last year. Net income and diluted earnings per share for the first quarter of 2007 were also down 18.0% and 14.0%, respectively, compared to the first quarter of 2006. The decrease in diluted earnings per share includes the benefit of fewer weighted average shares outstanding when compared to the same quarter last year. Weighted-average shares outstanding were 15.4 million shares lower in the first quarter of 2007 compared to the same quarter last year, as a result of the Company’s repurchases of common stock occurring over the last year.

For the first quarter of 2007, worldwide retail sales of Harley-Davidson motorcycles decreased 1.3% versus the same period last year. In the United States, retail sales of Harley-Davidson motorcycles decreased 5.9% during the first quarter of 2007 when compared to the same quarter last year. Internationally, retail sales were up 16.5% over the first quarter of 2006 with increases of 25.7% in Europe, 14.0% in Canada and 16.7% in other foreign markets more than offsetting a 7.7% decrease in Japan.

⁽¹⁾ Note Regarding Forward-Looking Statements
The Company intends that certain matters discussed in this report are “forward-looking statements” intended to qualify for the safe harbor from liability established by the Private Securities Litigation Reform Act of 1995. These forward-looking statements can generally be identified as such by reference to this footnote or because the context of the statement will include words such as the Company “believes,” “anticipates,”“expects,” “plans,” or “estimates” or words of similar meaning. Similarly, statements that describe future plans, objectives, outlooks, targets, guidance or goals are also forward-looking statements. Such forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from those anticipated as of the date of this report. Certain of such risks and uncertainties are described in close proximity to such statements or elsewhere in this report, including under the caption “Cautionary Statements” included in this report, and in Item 1A “Risk Factors” of the Company’s Annual Report on Form 10-K for the year ended December 31, 2006. Shareholders, potential investors, and other readers are urged to consider these factors in evaluating the forward-looking statements and cautioned not to place undue reliance on such forward-looking statements. The forward-looking statements included in this report are made only as of the date of the filing of this report (May 3, 2007), and the Company disclaims any obligation to publicly update such forward-looking statements to reflect subsequent events or circumstances.

Outlook ⁽¹⁾

The Company’s 2007 expected results have been impacted by the strike. The Company anticipates that 2007 second quarter shipments of Harley-Davidson motorcycles will be between 94,000 and 97,000 units compared to second quarter 2006 unit shipments of 79,796. By combining first quarter 2007 actual shipments with anticipated second quarter shipments, the shipment growth rate for the first half of 2007 is expected to be in the range of 1.5% to 3.4%. The expected first-half 2007 unit shipments reflect an increase over the prior year, despite the impact of the strike, due primarily to the following two factors. First, as a result of the strike, the Company is planning to add one additional week of 2007 model year shipments in the second quarter of 2007. Second, the Company’s 2007 fiscal calendar has one additional week of production in the first half and one less week of production in the second half as compared to 2006. As a result of these factors, the Company anticipates a modest increase in unit shipments in the first half of 2007 and two fewer weeks of 2008 model year shipments in the second half of 2007 as compared to the prior year.

The Company expects revenue growth for 2007 to be moderate as a result of the strike. The Company continues to believe that shipments in its international markets will grow at a faster rate than in the U.S. market. The Company believes its opportunities for growth will be driven by a focus on providing customers around the world with a continuous stream of exciting new motorcycles, surrounded by the unique Harley-Davidson experience. Harley-Davidson customers enjoy a unique lifestyle experience through organized rides and rallies, through membership in the Harley Owners Group ^® (H.O.G. ^® ) organization, and through the use of MotorClothes ^® merchandise and Harley-Davidson ^® Genuine Motor Accessories to personalize their experience.

In the first quarter of 2007, the Company’s operating margins were impacted by inefficiencies and costs associated with the strike and the related make-up plan. As a result, the Company expects full-year 2007 operating margins to be lower than operating margins experienced in 2006. The Company believes its manufacturing expertise and focus on operational excellence, and other factors such as increased production, quality and pricing for features, position it to continue to drive a net income growth rate in 2008 and 2009 that will be in excess of its revenue growth rate.

As the Company executes its plans, the Company believes its business model will continue to generate cash, permitting it to invest in the business, fund future growth opportunities and return value to shareholders. The Company’s expected annual capital expenditures are provided under “Liquidity and Capital Resources.”

Prior to the strike, the Company had expected to deliver earnings-per-share growth of 11% to 17% annually through 2009 driven by solid revenue growth, operating margin improvement and the benefits of free cash flow. However, as a result of the strike and its related impact to the business in 2007, the Company’s expected annual earnings-per-share growth rate for 2007 is in the range of 4% to 6%. The Company expects its annual earnings-per-share growth rate to return to 11% to 17% in 2008 and 2009.

Results of Operations for the Three Months Ended April 1, 2007
Compared to the Three Months Ended March 26, 2006

Overall

For the quarter ended April 1, 2007, net revenue totaled $1.18 billion, a $106.2 million or 8.3% decrease from the same period last year. Net income for the first quarter of 2007 was $192.3 million compared to $234.6 million in the first quarter of 2006, a decrease of 18.0%. Diluted earnings per share for the first quarter of 2007 were $0.74 representing a 14.0% decrease from 2006 first quarter diluted earnings per share of $0.86. Diluted earnings per share during the first quarter of 2007 were positively impacted by a decrease in the weighted-average shares outstanding, which were 258.2 million in the first quarter of 2007 compared to 273.6 million in the same quarter last year. The decrease in weighted-average shares outstanding was driven by the Company’s repurchases of common stock occurring over the last year. The Company’s first quarter 2007 share repurchases are discussed in further detail under “Liquidity and Capital Resources.”

Motorcycle Unit Shipments & Net Revenue

The following table includes wholesale motorcycle unit shipments and net revenue for the Motorcycles segment for the three months ended April 1, 2007 and March 26, 2006 (dollars in millions):

	2007		2006		(Decrease) Increase			% Change
Motorcycle Unit Shipments
Touring motorcycle units		21,802		27,537		(5,735	)		(20.8	%)
Custom motorcycle units*		30,768		35,794		(5,026	)		(14.0	)
Sportster motorcycle units		15,191		16,175		(984	)		(6.1	)

Harley-Davidson motorcycle units		67,761		79,506		(11,745	)		(14.8	)
Buell motorcycle units		2,558		3,037		(479	)		(15.8	)

Total motorcycle units		70,319		82,543		(12,224	)		(14.8	)

Net Revenue
Harley-Davidson motorcycles	$	891.5	$	1,008.5	$	(117.0	)		(11.6	)
Buell motorcycles		21.7		24.1		(2.4	)		(10.0	)

Total motorcycles		913.2		1,032.6		(119.4	)		(11.6	)
Parts & Accessories		188.2		182.9		5.3			2.9
General Merchandise		76.1		68.6		7.5			11.0
Other		1.4		1.0		0.4			N/M

Net revenue	$	1,178.9	$	1,285.1	$	(106.2	)		(8.3	%)

* Custom motorcycle units, as used in this table, include Softail, Dyna, VRSC and CVO models.

The Company shipped 67,761 Harley-Davidson motorcycle units during the first quarter of 2007, a decrease of 11,745 units or 14.8% from the same quarter last year. Domestic shipments were down 19.1% from the prior year quarter, while international shipments were down 1.1% relative to the first quarter of 2006. International shipments represented 28.1% of total Harley-Davidson wholesale shipments for the quarter ended April 1, 2007, compared to 24.2% for the quarter ended March 26, 2006. The increase in international shipments as a percentage of total shipments is consistent with the Company’s expectation that international growth will outpace domestic shipment growth. ⁽¹⁾

Motorcycle segment net revenue was down $106.2 million or 8.3% during the first quarter of 2007 compared to the same quarter last year. Net revenue was approximately $135 million lower as a result of the decrease in Harley-Davidson motorcycle unit shipments. Partially offsetting the negative volume impact was approximately $14 million of revenue attributable to wholesale price increases. Favorability from changes in foreign currency exchange rates also increased revenue by approximately $15 million in the period ended April 1, 2007 compared to the period ended March 26, 2006.

The mix of Harley-Davidson motorcycle shipments during the first quarter of 2007 was directly impacted by the York strike. During the first quarter of 2007, shipments of Touring models decreased as a percentage of total shipments while Custom and Sportster model shipments increased as a percentage of total shipments. The percentage of Touring motorcycles shipped in the first quarter of 2007 declined to 32.2% compared to 34.6% in the first quarter of 2006. However, the net impact of all mix changes as compared to the same quarter last year did not have a material impact on net revenue.

Harley-Davidson Motorcycle Retail Sales

The Company sells its motorcycles at wholesale to an independent network of distributors and dealers who in turn sell the Company’s products at retail. Worldwide dealer retail sales of Harley-Davidson motorcycles declined 1.3% during the first three months of 2007 relative to the same period last year. Retail sales of Harley-Davidson motorcycles decreased 5.9% in the United States while growing 16.5% internationally, when compared to the first three months of 2006. On an industry-wide basis, the heavyweight (651+cc) portion of the market was down 0.7% in the United States (through March) while growing 14.5% in Europe (through February) when compared to the same periods in 2006. The following table includes retail unit sales of Harley-Davidson motorcycles for the first three months of 2007 and 2006 (units in thousands):

Harley-Davidson Motorcycle Retail Sales ^(a)
Heavyweight (651+cc)

	2007		2006		Change
United States		53.4		56.8		(5.9	%)
Europe ^(b)		8.7		6.9		25.7
Japan		2.3		2.5		(7.7	)
Canada		2.0		1.8		14.0
All other markets		4.1		3.5		16.7

Total Retail Sales		70.5		71.5		(1.3	%)

(a)	Data source for retail sales figures shown above is sales warranty and registration information provided by Harley-Davidson dealers and compiled by the Company. The Company must rely on information that its dealers supply concerning retail sales and this information is subject to revision.

(b)	Data for Europe include Austria, Belgium, Denmark, Finland, France, Germany, Greece, Italy, Netherlands, Norway, Portugal, Spain, Sweden, Switzerland and the United Kingdom.

The following table includes industry retail motorcycle registration data through the month indicated (units in thousands):

Motorcycle Industry Retail Registrations
Heavyweight (651+cc)

	2007		2006		Change
United States ^(a)		108.3		109.1		(0.7	%)
Europe ^(b)		39.8		34.7		14.5	%

(a)	U.S. data provided by the Motorcycle Industry Council through March.

(b)

Europe data includes Austria, Belgium, Denmark, Finland, France, Germany, Greece, Italy, Netherlands, Norway, Portugal, Spain, Sweden, Switzerland and the United Kingdom through February. Industry retail motorcycle registration data is derived from information provided by Giral S.A., an independent agency. Data for 2006 has been adjusted to include competitor motorcycles that had previously not been included by the Company. The previously reported amount for 2006 was 33.3.

Cost of Goods Sold

Cost of goods sold was $755.8 million for the Motorcycles segment in the first quarter of 2007, a decrease of $36.0 million or 4.6% versus the same quarter last year. The decrease relative to prior year quarter is primarily attributable to lower shipment volumes reducing cost of goods sold for motorcycles and related products by approximately $47 million. However, the Company did experience a higher cost per unit when compared to the same quarter last year as a result of inefficiencies and costs associated with the strike. In addition, cost of goods sold increased by approximately $10 million related to higher raw material surcharges and approximately $4 million due to changes in foreign currency exchange rates quarter over quarter.

Gross Profit

Gross profit was $423.0 million for the Motorcycles segment in the first quarter of 2007, a decrease of $70.2 million or 14.2% over the same quarter last year. Gross margin for the first quarter of 2007 was 35.9% compared to 38.4% in the first quarter of 2006. During the first quarter of 2007, the gross margin was negatively impacted by higher costs associated with the strike combined with higher raw material surcharges, partially offset by wholesale price increases and net favorable changes in foreign currency exchange rates, as detailed under “Motorcycle Unit Shipments and Net Revenue” and “Cost of Goods Sold” above.

Financial Services

The following table includes the condensed statements of operations for the Financial Services segment (which consists of HDFS) for the three months ended April 1, 2007 and March 26, 2006 (in millions):

	2007		2006		Increase		% Change
Interest income	$	50.7	$	42.4	$	8.3		19.6	%
Income from securitizations		29.2		28.7		0.5		1.8
Other income		29.3		24.8		4.5		17.9

Financial services income		109.2		95.9		13.3		13.8
Interest expense		21.1		15.1		6.0		39.5
Operating expenses		29.2		29.2		0.0		0.0

Financial services expense		50.3		44.3		6.0		13.5

Operating income from financial services	$	58.9	$	51.6	$	7.3		14.2	%

During the first quarter of 2007, interest income benefited from higher average wholesale and retail outstanding receivables and higher wholesale and retail lending rates as compared to the same period in 2006. The increase in other income was primarily due to an increase in securitization servicing income and credit card licensing income. Interest expense was higher in the first quarter of 2007 due to increased borrowings to support higher average outstanding receivables and higher borrowing costs as compared to 2006.

Income from securitizations in the first quarter of 2007 remained flat as compared to the first quarter of 2006 due to a higher gain on the first quarter 2007 securitization transaction, offset by a decrease in income on the investment in retained securitization interests. During the first quarter of 2007, HDFS sold $800.0 million in retail motorcycle loans through a securitization transaction resulting in a gain of $13.0 million. This compares with a gain of $8.6 million on $730.0 million of loans securitized during the first quarter of 2006. The 2007 gain as a percentage of loans sold was 1.6% as compared to 1.2% for 2006. The higher gain is due to a higher net interest spread in 2007 than in the prior year due to increases in the consumer lending rates.

During the first quarter of 2007, income on the investment in retained securitization interests decreased to $16.2 million from $20.1 million in the first quarter of 2006 primarily due to a $3.5 million permanent impairment charge. The permanent impairment resulted from a decline in fair value due to higher actual and anticipated credit losses on certain securitization portfolios, partially offset by a slowing in actual and expected prepayment speeds.

Annualized losses on HDFS’ managed retail motorcycle loans were 2.28% during the first quarter of 2007 compared to 1.48% during the first quarter of 2006. Managed retail loans include loans held by HDFS as well as those sold through securitization. The increase in losses was primarily due to lower recoveries, as a percentage of the outstanding loan balance, on repossessed motorcycles and a higher incidence of loss resulting from increased delinquencies.

Changes in the allowance for finance credit losses on finance receivables held for investment during the three months ended April 1, 2007 and March 26, 2006 were as follows (in millions):

	2007			2006
Balance, beginning of period	$	27.3		$	26.2
Provision for finance credit losses		2.4			2.7
Charge-offs, net of recoveries		(2.3	)		(1.4	)

Balance, end of period	$	27.4		$	27.5

HDFS’ periodic evaluation of the adequacy of the allowance for credit losses is generally based on HDFS’ past loan loss experience, known and inherent risks in the portfolio, and current economic conditions. HDFS believes the allowance is adequate to cover estimated losses of principal and accrued interest in the existing portfolio.

Operating Expenses

The following table includes operating expenses for the Motorcycles segment and Corporate for the three months ended April 1, 2007 and March 26, 2006 (in millions):

	2007		2006		Increase (Decrease)			% Change
Motorcycles and Related Products
Selling	$	76.0	$	66.7	$	9.3			13.9	%
Administrative		64.9		64.7		0.2			0.3
Engineering		46.8		49.4		(2.6	)		(5.3	)
Corporate		4.9		4.8		0.1			2.1

Total operating expenses	$	192.6	$	185.6	$	7.0			3.8	%

Total operating expenses, which include selling, administrative and engineering expenses, were 16.3% and 14.4% of net revenue for the first quarters of 2007 and 2006, respectively. The increase in the ratio of operating expenses to revenue from first quarter 2006 to first quarter 2007 is due to lower revenues as a result of the strike impact.

During the first quarter of 2007, selling expenses were higher than the prior year due primarily to higher marketing expenses combined with increased international operating costs in connection with the Company’s growth in those markets.

Provision for Income Taxes

The Company’s effective income tax rate for the first quarter of 2007 was 35.5% compared to 36.0% in the same quarter last year. The decrease was due to the reinstatement of the federal research and development tax credit in the fourth quarter of 2006.

Other Matters

Contractual Obligations

As of January 1, 2007, the Company’s expected payment for significant contractual obligations now includes approximately $3 million of gross liability for unrecognized tax benefits in 2007 associated with the adoption of Financial Accounting Standards Board Interpretation No. 48 (FIN 48). The Company cannot make a reasonably reliable estimate of the period of cash settlement for the remaining $81.9 million of liability for unrecognized tax benefits.

There have been no other material changes to the Company’s summary of expected payments for significant contractual obligations under the caption “Contractual Obligations” in Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of the Company’s Annual Report of Form 10-K for the year ended December 31, 2006.

Commitments and Contingencies

Shareholder Lawsuits:

Security Breach Lawsuit:

Cam Bearing Lawsuit:

In January 2001, the Company, on its own initiative, notified each owner of 1999 and early-2000 model year Harley-Davidson motorcycles equipped with Twin Cam 88 ^® and Twin Cam 88B ^™ engines that the Company was extending the warranty for a rear cam bearing to 5 years or 50,000 miles. Subsequently, on June 28, 2001, a putative nationwide class action was filed against the Company in state court in Milwaukee County, Wisconsin, which was amended by a complaint filed September 28, 2001. The complaint alleged that this cam bearing is defective and asserted various legal theories. The complaint sought unspecified compensatory and punitive damages for affected owners, an order compelling the Company to repair the engines and other relief. On February 27, 2002, the Company’s motion to dismiss the amended complaint was granted by the Court and the amended complaint was dismissed in its entirety. An appeal was filed with the Wisconsin Court of Appeals. On April 12, 2002, the same attorneys filed a second putative nationwide class action against the Company in state court in Milwaukee County, Wisconsin relating to this cam bearing issue and asserting different legal theories than in the first action. The complaint sought unspecified compensatory damages, an order compelling the Company to repair the engines and other relief. On September 23, 2002, the Company’s motion to dismiss was granted by the Court, the complaint was dismissed in its entirety, and no appeal was taken. On January 14, 2003, the Wisconsin Court of Appeals reversed the trial court’s February 27, 2002 dismissal of the complaint in the first action, and the Company petitioned the Wisconsin Supreme Court for review. On March 26, 2004, the Wisconsin Supreme Court reversed the Court of Appeals and dismissed the remaining claims in the action. On April 12, 2004, the same attorneys filed a first action in the state court in Milwaukee County, on behalf of the same plaintiffs from the action dismissed by the Wisconsin Supreme Court. This first action was dismissed by the court on July 26, 2004. In addition, the plaintiffs in the original case moved to reopen that matter and amend the complaint to add new causes of action. On September 9, 2004, Milwaukee County Circuit Court refused to allow the reopening or amendment. Plaintiffs again appealed to the Wisconsin Court of Appeals, and on December 13, 2005, the Court of Appeals again reversed the trial court. On January 12, 2006, the Company filed a petition for review with the Wisconsin Supreme Court. Oral arguments were heard on September 7, 2006 and the Company is awaiting a decision from the court. The Company believes that the 5-year/50,000 mile warranty extension it announced in January 2001 adequately addressed the condition for affected owners, and the Company intends to continue to vigorously defend this matter.

Environmental Matters:

Product Liability Matters:

Liquidity and Capital Resources as of April 1, 2007

The Company expects that its business model will continue to generate cash that will allow it to invest in the business, fund future growth opportunities and return value to shareholders. ⁽¹⁾ The Company also has a commercial paper program, credit facilities and debt instruments in place to support the ongoing cash requirements of its Financial Services business.

Cash and Marketable Securities

Cash and marketable securities totaled $928.5 million as of April 1, 2007 compared to $896.5 million as of December 31, 2006. The Company’s cash and cash equivalents are invested in short-term securities to provide for immediate operating cash needs. The Company also invests in marketable securities consisting primarily of investment-grade debt instruments such as corporate bonds and government-backed securities with contractual maturities of approximately one year. Marketable securities also include auction rate securities which have contractual maturities of up to 30 years, but have interest re-set dates that occur every 90 days or less and can be actively marketed at ongoing auctions that occur every 90 days or less.

Operating Activities

The Company’s primary source of ongoing liquidity is cash flow from operations. The Company generated $519.6 million of cash from operating activities during the three months ended April 1, 2007 compared to $365.7 million in the first three months of 2006. The increase in operating cash flow is due primarily to changes in finance receivable activity when compared to the same quarter of last year.

Due to lower quarter over quarter wholesale unit shipments, wholesale finance receivable originations were lower in the first quarter of 2007 than in 2006. Net changes in wholesale finance receivables resulted in cash used of $7.4 million in the first quarter of 2007 compared to cash used of $201.9 million in the first quarter of 2006.

During the first quarters of 2007 and 2006, HDFS originated $603.1 million and $604.9 million, respectively, of retail finance receivables held for sale. Collections on retail finance receivables held for sale and proceeds from the sale of retail finance receivables resulted in cash inflows of $816.4 million and $749.0 million during the first quarters of 2007 and 2006, respectively.

Investing Activities

The Company’s investing activities consist primarily of capital expenditures, net changes in finance receivables and net changes in marketable securities. Net cash provided by investing activities was $5.9 million for the first quarter ended 2007 compared to net cash used by investing activities of $54.1 million during the first quarter ended in 2006.

Capital expenditures were $40.8 million and $36.0 million during the first three months of 2007 and 2006, respectively. The Company estimates that total capital expenditures in 2007 will be in the range of $300 million to $325 million. ⁽¹⁾ The anticipated increase compared to 2006 is primarily a result of expenditures related to the Company’s powertrain facility expansion plans and the construction of the Harley-Davidson museum. The Company anticipates it will have the ability to fund all capital expenditures in 2007 with internally generated funds. ⁽¹⁾

Sales and redemptions of marketable securities (net of purchases) in the first three months of 2007 resulted in cash inflow of $40.6 million compared to cash outflow of $9.6 million in the first three months of 2006.

Financing Activities

The Company’s financing activities consist primarily of share repurchases, stock issuances, dividend payments and finance debt activity. Net cash used in financing activities during the three months ended April 1, 2007 and March 26, 2006 was $454.8 million and $255.6 million, respectively.

During the first three months of 2007, the Company repurchased 0.9 million shares of its common stock at a total cost of $61.3 million. The Company repurchased these shares under a general authorization provided by the Company’s Board of Directors in April 2005 to buy back 20.0 million shares. A total of 1.9 million shares remained under this authorization as of April 1, 2007. In October 2006, the Company’s Board of Directors authorized a second share repurchase program for up to 20.0 million additional shares. The Company also has an authorization from the Company’s Board of Directors that is designed to provide the Company with continuing authority to repurchase shares to offset dilution caused by the exercise of stock options and the issuance of nonvested stock. Please see Part II, Item 2 “Unregistered Sales of Equity Securities and Use of Proceeds” for additional details regarding the Company’s share repurchase activity and authorizations.

The Company paid dividends of $0.21 per share at a total cost of $54.1 million during the first three months of 2007, compared to dividends of $0.18 per share totaling $49.0 million during the same period last year.

In addition to operating cash flows and proceeds from asset-backed securitizations, HDFS is financed by the issuance of commercial paper, borrowings under a revolving credit facility, medium-term notes, senior subordinated debt and borrowings from the Company. HDFS’ outstanding debt consisted of the following as of April 1, 2007 and March 26, 2006 (in millions):

	2007		2006
Commercial paper	$	543.0	$	314.4
Credit facilities		191.1		169.7

	$	734.1	$	484.1
Medium-term notes		589.4		579.5
Senior subordinated notes		30.0		30.0

Total finance debt	$	1,353.5	$	1,093.6

Credit Facilities – In December 2006, HDFS increased its revolving credit facility (Global Credit Facility) to $1.40 billion from $1.10 billion. Subject to certain limitations, HDFS has the option to borrow in various currencies. Interest is based on London interbank offered rates (LIBOR), European interbank offered rates or other short-term indices, depending on the type of advance. The Global Credit Facility is a committed facility due in 2009 and HDFS pays a fee for its availability.

Commercial Paper – Subject to limitations, HDFS may issue up to $1.40 billion of short-term commercial paper with maturities up to 365 days. Outstanding commercial paper may not exceed the unused portion of the Global Credit Facility. As a result, the combined total of commercial paper and borrowings under the Global Credit Facility was limited to $1.40 billion as of April 1, 2007.

Medium-Term Notes – HDFS has $400.0 million of 3.63% medium-term notes outstanding which are due in December 2008 and $200.0 million of 5% medium-term notes due in December 2010 (collectively referred to as “Notes”). The Notes provide for semi-annual interest payments and principal due at maturity. As of April 1, 2007 and March 26, 2006, the Notes included a fair value adjustment reducing the balance by $10.6 million and $20.4 million, respectively, due to interest rate swap agreements designated as fair value hedges. The effect of the interest rate swap agreements is to convert the interest rate on the Notes from a fixed to a floating rate, which is based on 3-month LIBOR.

Senior Subordinated Debt – HDFS has $30.0 million of 10 year senior subordinated notes outstanding which are due in December 2007.

Intercompany Borrowing – HDFS has a revolving credit line with the Company whereby HDFS may borrow up to $210.0 million from the Company at a market interest rate. As of April 1, 2007 and March 26, 2006, HDFS had no outstanding borrowings owed to the Company under this agreement.

The Company has a support agreement with HDFS whereby, if required, the Company agrees to provide HDFS with financial support in order to maintain certain financial covenants. Support may be provided at the Company’s option as capital contributions or loans. Accordingly, certain debt covenants may restrict the Company’s ability to withdraw funds from HDFS outside the normal course of business. No amount has ever been provided to HDFS under the support agreement.

Operating and Financial Covenants – HDFS is subject to various operating and financial covenants related to the Global Credit Facilities, Medium-Term Notes and Senior Subordinated Debt issued by HDFS. The more significant covenants are described below.

The covenants limit HDFS’ ability to:

•

incur certain additional indebtedness;

•

assume or incur certain liens;

•

participate in a merger, consolidation, liquidation or dissolution; and

•

purchase or hold margin stock

Under the Global Credit Facility financial covenants, the debt to equity ratio of HDFS and its consolidated subsidiaries cannot exceed 9.0 to 1.0 and HDFS must maintain a minimum consolidated tangible net worth of $300.0 million. The financial covenants under the Senior Subordinated Debt require that HDFS maintain a tangible net worth of $40.0 million and a minimum fixed charge coverage ratio of 125%. No financial covenants are required under the Medium-Term Notes.

At April 1, 2007, HDFS remained in compliance with all of these covenants.

The Company expects that future activities of HDFS will be financed from funds internally generated by HDFS, the sale of loans through securitization programs, issuance of commercial paper and medium-term notes, borrowings under revolving credit facilities and advances or loans from the Company. ⁽¹⁾

Cautionary Statements

The Company’s ability to meet the targets and expectations noted in this Form 10-Q depends upon, among other factors, the Company’s ability to (i) continue to realize production efficiencies at its production facilities and effectively manage operating costs including materials, labor and overhead; (ii) manage production capacity and production changes; (iii) manage supply chain issues; (iv) provide products, services and experiences that are successful in the marketplace; (v) develop and implement sales and marketing plans that retain existing customers and attract new customers in an increasingly competitive marketplace; (vi) sell all of its motorcycles and related products and services to its independent dealers and distributors; (vii) continue to develop the capacity of its distributor and dealer network; (viii) manage changes and prepare for requirements in legislative and regulatory environments for its products, services and operations; (ix) adjust to fluctuations in foreign currency exchange rates, interest rates and commodity prices; (x) manage regional and worldwide demographic trends and economic and political conditions, including healthcare inflation, pension reform and tax changes; (xi) manage the credit quality and recovery rates of HDFS’ loan portfolio; (xii) retain and attract talented employees; (xiii) detect any defects in our motorcycles to minimize delays in new model launches, recall campaigns, increased warranty costs or litigation; and (xiv) implement and manage enterprise-wide information technology solutions and secure data contained in those systems. In addition, the Company could experience delays or disruptions in its operations as a result of work stoppages, strikes, natural causes, terrorism or other factors. These risks, potential delays and uncertainties regarding the costs could also adversely impact the Company’s capital expenditure estimates (see “Liquidity and Capital Resources” section).

In addition, see “Risk Factors” under Item 1A of the Company’s Annual Report on Form 10-K for the year ended December 31, 2006 which includes a discussion of additional factors and a more complete discussion of some of the cautionary statements noted above.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

Refer to the Company’s Annual Report on Form 10-K for the year ended December 31, 2006 for a complete discussion of the Company’s market risk. There have been no material changes to the market risk information included in the Company’s Annual Report on Form 10-K for the year December 31, 2006.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

In accordance with Rule 13a-15(b) of the Securities Exchange Act of 1934 (the Exchange Act), as of the end of the period covered by this Quarterly Report on Form 10-Q, the Company’s management evaluated, with the participation of the Company’s President and Chief Executive Officer and Vice President and Chief Financial Officer, the effectiveness of the design and operation of the Company’s disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act). Based upon their evaluation of these disclosure controls and procedures, the President and Chief Executive Officer and the Vice President and Chief Financial Officer have concluded that the disclosure controls and procedures were effective as of the end of the period covered by this Quarterly Report on Form 10-Q to ensure that information required to be disclosed by the Company in the reports it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time period specified in the Securities and Exchange Commission rules and forms, and to ensure that information required to be disclosed by the Company in the reports it files or submits under the Exchange Act is accumulated and communicated to the Company’s management, including its President and Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding disclosure.

Changes in Internal Controls

In the first quarter of 2007, the Company implemented a new integrated financial system which included modifications to certain processes and related controls. The Company has conducted post-implementation monitoring to ensure the on-going effectiveness of internal control over financial reporting. There have been no other changes in the Company’s internal control over financial reporting during the quarter ended April 1, 2007 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting..

Part II – OTHER INFORMATION

Item 1. Legal Proceedings

The information required under this Item 1 of Part II is contained in Item 1 of Part I of this Quarterly Report on Form 10-Q in Note 11 of the Notes to Condensed Consolidated Financial Statements, and such information is incorporated by reference in this Item 1 of Part II.

Item 1A. Risk Factors

Refer to Item 1A of the Company’s Annual Report on Form 10-K for the year ended December 31, 2006 for a discussion regarding risk factors relating to the Company. There have been no material changes to the risk factors included in Item 1A of the Company’s Annual Report on Form 10-K for the year ended December 31, 2006.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

The following table contains detail related to the repurchase of common stock based on the date of trade during the quarter ended April 1, 2007:

2007 Fiscal Month	Total Number of Shares Purchased		Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs		Maximum Number of Shares that May Be Purchased Under the Plans or Programs
January 1 to
February 4		869,700	$	70		869,700		26,233,216
February 5 to
March 4		323		69		0		26,360,275
March 5 to
April 1		0		0		0		26,364,692

Total		870,023	$	70		869,700

The Company has an authorization (originally adopted in December 1997) by its Board of Directors to repurchase shares of its outstanding common stock under which the cumulative number of shares repurchased, at the time of any repurchase, shall not exceed the sum of (1) the number of shares issued in connection with the exercise of stock options or grants of nonvested stock occurring on or after January 1, 2004 plus (2) one percent of the issued and outstanding common stock of the Company on January 1 of the current year, adjusted for any stock split. The Company did not repurchase shares under this authorization during the quarter ended April 1, 2007.

The shares repurchased during the first quarter of 2007 were completed under an authorization granted by the Company’s Board of Directors on April 30, 2005 which originally authorized the Company to buy back up to 20.0 million shares of its common stock with no dollar limit or expiration date. As of April 1, 2007, a total of 1.9 million shares remained under this authorization.

During October 2006, the Company’s Board of Directors separately authorized the Company to buy back up to 20.0 million shares of its common stock with no dollar limit or expiration date. No shares had been repurchased under this authorization as of April 1, 2007.

The Harley-Davidson, Inc. 2004 Incentive Stock Plan permits participants to satisfy all or a portion of the federal, state and local withholding tax obligations arising in connection with plan awards by electing to (a) have the Company withhold shares otherwise issuable under the award; (b) tender back shares received in connection with such award; or (c) deliver other previously owned shares, in each case having a value equal to the amount to be withheld. During the first quarter of 2007, the Company acquired 323 shares of common stock that were presented to the Company by employees to satisfy withholding taxes in connection with the vesting of nonvested (restricted) stock awards.

Item 6. Exhibits

Refer to the Exhibit Index on page 30 of this report.

Signatures

Pursuant to the requirements of the Securities and Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

		HARLEY-DAVIDSON, INC.
	Date: May 3, 2007	/s/ Thomas E. Bergmann
		Thomas E. Bergmann
		Vice President and Chief Financial Officer
		(Principal Financial Officer)
	Date: May 3, 2007	/s/ James M. Brostowitz
		James M. Brostowitz
		Vice President and Treasurer
		(Principal Accounting Officer)

HARLEY-DAVIDSON, INC.
Exhibit Index to Form 10-Q

Exhibit No.

Description

10.1*

Form of Transition Agreement dated February 1, 2007 between the Registrant and Mr. Naqvi

10.2*

Form of Severance Benefits Agreement dated February 1, 2007 between the Registrant and Mr. Naqvi

10.3*

Harley-Davidson, Inc. 1995 Stock Option Plan as amended through April 28, 2007

10.4*

Harley-Davidson, Inc. 2004 Incentive Stock Plan as amended through April 28, 2007

10.5*

Form of Notice of Award of Restricted Stock and Restricted Stock Agreement of Harley-Davidson, Inc. under the Harley-Davidson, Inc. 2004 Incentive Stock Plan

10.6*

Form of Notice of Special Award of Restricted Stock and Restricted Stock Agreement of Harley-Davidson, Inc. under the Harley-Davidson, Inc. 2004 Incentive Stock Plan

10.7*

Form of Notice of Award of Restricted Stock Unit and Restricted Stock Unit Agreement of Harley-Davidson, Inc. under the Harley-Davdison, Inc. 2004 Incentive Stock Plan

31.1

Chief Executive Officer Certification pursuant to Rule 13a-14(a)

31.2

Chief Financial Officer Certification pursuant to Rule 13a-14(a)

32.1

Written Statement of the Chief Executive Officer and the Chief Financial Officer pursuant to 18 U.S.C.ss.1350

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

Exhibit 10.1

TRANSITION AGREEMENT

AGREEMENT dated the 1 ^st day of February, 2007 between Harley-Davidson, Inc., a Wisconsin corporation (the “Corporation”), and Saiyid T. Naqvi (the “Executive”). Unless otherwise indicated, terms used herein and defined in Schedule A shall have the meanings assigned to them in Schedule A.

WHEREAS, the HDI Group desires to continue to attract and retain skilled and dedicated management employees, consistent with achieving the best possible price for its stockholders in any transition period or change in ownership and control of the Corporation;

WHEREAS, the Executive has specific duties and unique talents which are of benefit to the HDI Group both presently and in any transition period;

WHEREAS, the HDI Group and the Executive desire that the Executive be free of any conflict of interest with regard to the performance of the Executive’s duties in evaluating any proposed change in ownership or control;

NOW, THEREFORE, it is agreed as follows

1. The HDI Group currently employs the Executive as Vice President and Chief Financial Officer, Harley-Davidson, Inc. upon the terms and conditions currently reflected in the Executive’s personnel file or in various minutes of the Board.

2. This Agreement shall become effective on the date hereof and shall terminate on the second anniversary of the occurrence of a Change of Control Event; PROVIDED, HOWEVER, that no benefits shall be payable or accrue pursuant to this Agreement prior to the occurrence of a Change of Control Event.

3. During the two year period following a Change of Control Event, so long as the Executive remains employed by the HDI Group he shall devote his full time, attention, and energies to the business of the HDI Group and shall not engage in any other business activity whether or not such business activity is pursued for gain, profit, or other pecuniary advantage; but this shall not be construed as preventing the Executive from (a) investing the Executive’s assets in such form or manner as will not materially affect the Executive’s ability to perform his duties and obligations to the HDI Group; or (b) continuing to serve as a director of any corporation of which he was a director immediately prior to the Change of Control Event. The Executive agrees that once a Change of Control Event occurs he will not voluntarily terminate his employment with the HDI Group until ten days after such Change of Control Event has occurred.

4. The HDI Group agrees that following a Change of Control Event no termination of the Executive’s employment with the HDI Group will be effective, unless it provides the Executive ten days prior written notice of such termination; PROVIDED, HOWEVER, that any Termination by the Executive shall provide the HDI Group Employer with ten days prior written notice. The Executive may waive the notice requirement for the HDI Group.

5. The Executive recognizes and acknowledges that the list of the HDI Group’s customers, its product plans, forecasts and financial information, as well as other confidential information, as it may exist from time to time, is valuable, special, and unique asset of the HDI Group’s business. The Executive will not, during or after the term of the Executive’s employment, disclose any such information or any part thereof to any person, firm, corporation, association, or other entity for any reason or purpose whatsoever. In the event of a breach or threatened breach by the Executive of the provisions of this section, the HDI Group shall be entitled to an injunction restraining the Executive from disclosing, in whole or in part, this information. The HDI Group will be free to pursue any other remedies as may in its discretion be deemed appropriate under the circumstances.

6. Upon the happening of a Change of Control Event, the HDI Group agrees, while the Executive is employed hereunder, to continue the Compensation of the Executive at a level, comparable in the aggregate, to that immediately preceding the Change of Control Event.

7. (a) (i) The Executive shall be entitled to receive upon Termination a lump-sum payment equal to the product of three multiplied by the sum of:

(A) the Executive’s highest annual rate of salary during the five year period preceding the Executive’s termination of employment with the HDI Group;

(B) the highest annual bonus paid to or accrued for the benefit of the Executive during the five year period preceding the Executive’s termination of employment with the HDI Group under any bonus plan, program, or arrangement of the HDI Group which the HDI Group Employer maintains or has adopted; and

(C) the product of four times the last quarterly payment, prior to the Change of Control Event, paid to the Executive by the HDI Group, to the extent such payment was paid by the HDI Group in lieu of providing the Executive with various fringe benefits (the “Perquisite Payment”).

In addition, if Executive has attained age 55 prior to the date of Termination, the Executive shall receive an additional amount, in lieu of any post-retirement life insurance, equal to his annual base salary, at its then current rate.

(ii) In addition, the HDI Group shall, at the time the 10 day written notice prior to Termination is given, cause:

(A) the Executive to be fully and immediately vested in his accrued benefit and any minimum years of service requirement will be deemed to have been satisfied under: the Harley-Davidson Retirement Savings Plan for Salaried Employees, the Retirement Annuity Plan for Salaried Employees of Harley-Davidson, the Harley-Davidson Pension Benefit Restoration Plan, the Harley-Davidson Supplemental Executive Retirement Plan, and any other pension or retirement plan in which Executive was entitled to participate at the time of the Change of Control Event or at any time prior to Termination;

(B) all restricted stock awards made to the Executive to be fully and immediately vested;

(C) all stock options granted pursuant to the Harley-Davidson, Inc. 2004 Incentive Stock Plan, as amended, and any successor or predecessor plan, to be fully vested and become immediately exercisable;

(D) all performance or other awards granted to the Executive pursuant to any HDI long-term incentive plan to be fully and immediately vested, as if all performance requirements have been satisfied; and

(E) the HDI Group Employer to pay to Executive an amount in respect of any bonus under a short-term incentive or other annual bonus plan of the HDI Group equal to the higher of (a) Executive’s target bonus for the year of Termination, or (b) the bonus Executive received in the year prior to the Change of Control Event, which amount shall be pro-rated by a fraction, the numerator of which is the number of days elapsed in the HDI Group’s fiscal year on the date of Termination and the denominator of which is 365.

(iii) The Executive will also receive, for a period of three years from the date of Termination:

(A) use of professional outplacement services by qualified consultants retained at the expense of the HDI Group Employer; and

(B) continued coverage under HDI Group hospital, medical, life, disability insurance and other welfare benefit plans.

(iv) Furthermore, unless the Perquisite Payment was substituted for the following, the Executive shall also receive a cash lump sum payment, calculated so as to equal the fair market value of three years of benefits, for:

(A) automobiles and vehicles (or allowance in respect thereof) to which he was entitled either prior to the Change of Control Event or prior to Termination; and

(B) all amounts in respect of club, association or similar fees and dues covering such Executive to which he was entitled either prior to the Change of Control Event or prior to Termination.

(v) The Executive shall also be entitled to all amounts earned or accrued through the date of Termination but not paid as of such date, including base salary, reimbursement for reasonable and necessa ry expenses incurred by the Executive on behalf of the HDI Group during the period ending on the date of Termination, vacation pay, and sick leave (collectively, “Accrued Compensation”).

(vi) All amounts payable pursuant to this Section 7(a) of this Agreement shall be paid to the Executive within 10 days following the date of Termination and all other benefits provided pursuant this Section 7(a) shall be provided or begun, as the case may be, on the date of Termination.

(b) In the event the Executive’s employment shall be terminated due to death within the two year period following a Change of Control Event, for a period of one year following such termination (i) the HDI Group shall be obligated to make payments under then existing employee benefit programs, including, but not limited to, hospital, medical, life and disability insurance; and (ii) except as provided in (i) above, all payments under this Agreement shall cease, other than those payments which accrued, but were not yet paid, on the date of an event described in this Section 7(b). In addition, Executive shall also be entitled to all Accrued Compensation within 10 days of his date of termination.

(c) Nothing in this Agreement shall be construed to prevent the HDI Group Employer or the Board from terminating the Executive’s employment under this Agreement for Cause. Such termination shall relieve the HDI Group of its obligation to make any other payments under this Agreement, except those that may be payable under then existing employee benefit programs. In order for the Executive to be terminated for Cause, the existence of Cause must be determined by a written resolution adopted by the affirmative vote of not less than two-thirds of all the Continuing Directors, excluding for this purpose the Executive, or in the event there are no Continuing Directors, by a unanimous vote of all the Directors, at a meeting duly called and held for that purpose after reasonable notice to the Executive and opportunity for the Executive and his counsel to be heard. Any such determination shall require that the Continuing Directors (or the entire Board) find that in their reasonable good faith judgment the conduct which was the basis for the hearing in fact occurred and is sufficient to warrant a termination for Cause.

8. (a) If the Executive receives any payments under this Agreement from the HDI Group which are “excess parachute payments” taxed under Section 4999 of the Code, the HDI Group Employer will pay, pursuant to subsection (b) below, an amount sufficient to offset such tax effects.

(b) (i) In the event that the Executive becomes entitled to payments in connection with a Change of Control Event under this Agreement or otherwise (“the Payments”), if any of the Payments will be subject to the tax imposed by Section 4999 of the Code (the “Excise Tax”) (or any similar tax that may hereafter be imposed), the HDI Group Employer shall pay to the Executive an additional amount (the “Gross-Up Payment”) such that the net amount retained by the Executive, after deduction of any Excise Tax on the Payments and any federal and state income or other taxes and Excise Tax upon Gross-Up Payments provided for by this section, shall be equal to the Payment.

(ii) For purposes of determining whether any of the Payments will be subject to the Excise Tax and the amount of such Excise Tax, (A) any other payments or benefits received or to be received by the Executive in connection with a Change of Control Event shall be treated as “parachute payments” within the meaning of Section 280G(b)(2) of the Code, and all “excess parachute payments” within the meaning of Section 280G(b)(1) shall be treated as subject to the Excise Tax, unless in the opinion of tax counsel selected by the HDI Group’s independent auditors, and acceptable to the Executive, such other payments or benefits (in whole or in part) do not constitute parachute payments, or such “excess parachute payments” (in whole or in part) represent reasonable compensation for services actually rendered within the meaning of Section 280G(b)(4) of the Code in excess of the base amount within the meaning of Section 280G(b)(3) of the Code, or are otherwise not subject to the Excise Tax, (B) the amount of the Payments which shall be treated as subject to the Excise Tax shall be equal to the lesser of (1) the total amount of the Payments or (2) the amount of excess parachute payments within the meaning of Section 280G(b)(1) of the Code (after applying clause (A), above), and (C) the value of any non-cash benefits or any deferred payment or benefit shall be determined by the HDI Group’s independent auditors in accordance with the principles of Section 280G(b)(3) and (4) of the Code.

(iii) For purposes of determining the amount of the Gross-Up Payment, the Executive shall be deemed to pay federal and state income taxes at the highest marginal rate of federal and state income taxation in the calendar year in which the Gross-Up Payment is to be made.

(iv) A Gross-Up Payment and Tax Adjustment Amount, if any, under subsection (v) shall be paid not later than the fifth day following the Executive’s date of Termination; PROVIDED, HOWEVER, that if the amounts of such payment cannot be finally determined on or before such day, the HDI Group Employer shall pay to the Executive on such day an estimate, as determined in good faith by the HDI Group Employer of the minimum amount of such payments and shall pay the remainder of such payment (together with interest at the rate provided under Section 1274(b)(2)(B) of the Code) as soon as the amount can be determined but no later than the thirtieth day after the Executive’s date of Termination. Notwithstanding the foregoing, a Gross-Up Payment and a Tax Adjustment Amount, if any, shall be paid prior to Termination, if necessary, and the event prompting such payment shall be substituted for “Termination” in this subsection (iv) for purposes of determining the date by which payments must be made.

(v) In addition to the Gross-Up Payments under this Section 8, the HDI Group Employer shall pay to the Executive an additional amount (the “Tax Adjustment Amount”) in the event any portion of the Payments are taxed (for state or federal income tax purposes) at income tax rates higher than the highest marginal federal and state income tax rates otherwise applicable to the Executive without considering the Payments (“Base Income Tax Rates”), such that the net amount retained by the Executive, after deduction of state and federal income taxes at their respective actual rates and any state and federal income taxes upon the Tax Adjustment Amount provided by this subsection (v), shall be equal to the Payments less state and federal income taxes thereon calculated at the Base Income Tax Rates. In the event any payments are required under this subsection (v), they shall be included as “Payments” under subsections (a) and (b) of this Section 8.

(vi) The Executive shall notify the HDI Group in writing of any claim by the Internal Revenue Service that, if successful, would require the payment by the HDI Group of a Gross-Up Payment. Such notification shall be given as soon as practicable, but no later than 10 business days after the Executive is informed in writing of such claim and shall apprise the HDI Group of the nature of such claim and the date on which such claim is requested to be paid. The Executive shall not pay such claim prior to the expiration of the 30 day period following the date on which the Executive gives such notice to the HDI Group (or such shorter period ending on the date that any payment of taxes with respect to such claim is due). If the HDI Group notifies the Executive in writing prior to the expiration of such period that it desires to contest such claim, the Executive shall:

(A) give the HDI Group any information reasonably requested by the HDI Group relating to such claim;

(B) take such action in connection with contesting such claim as the HDI Group shall reasonably request in writing from time to time, including, without limitation, accepting legal representation with respect to such claim by an attorney reasonably selected by the HDI Group and reasonably satisfactory to the Executive;

(D) permit the HDI Group to participate in any proceedings related to such claim;

PROVIDED, HOWEVER, that the HDI Group shall bear and pay directly all costs and expenses (including, but not limited to, additional interest and penalties and related legal, consulting or other similar fees) incurred in connection with such contest and shall indemnify and hold the Executive harmless, on an after-tax basis, for any Excise Tax or other tax (including interest and penalties with respect thereto) imposed as a result of such representation and payment of costs and expenses.

(vii) The HDI Group shall control all proceedings taken in connection with such contest and, at its sole option, may pursue or forego any and all administrative appeals, proceedings, hearings and conferences with the taxing authority in respect of such claim and may, at its sole option, either direct the Executive to pay the tax claimed and sue for a refund or contest the claim in any permissible manner, and the Executive agrees to prosecute such contest to a determination before any administrative tribunal, in a court of initial jurisdiction and in one or more appellate courts, as the HDI Group shall determine; PROVIDED, HOWEVER, that if the HDI Group directs the Executive to pay such claim and sue for a refund, the HDI Group shall advance the amount of such payment to the Executive on an interest-free basis, and shall indemnify and hold the Executive harmless, on an after-tax basis, from any Excise Tax or other tax (including interest and penalties with respect thereto) imposed with respect to such advance or with respect to any imputed income with respect to such advance; and PROVIDED, FURTHER, that if the Executive is required to extend the statute of limitation to enable the HDI Group to contest such claim, the Executive may limit this extension solely to such contested amount. The HDI Group’s control of the contest shall be limited to issues with respect to which a Gross-Up Payment would be payable hereunder and the Executive shall be entitled to settle or contest, as the case may be, any other issue raised by the Internal Revenue Service or any other taxing authority. In addition, no position may be taken nor any final resolution be agreed to by the HDI Group without the Executive’s consent if such position or resolution could reasonably be expected to adversely affect the Executive (including any other tax position of the Executive unrelated to the matters covered hereby).

(viii) As a result of the uncertainty in the application of Section 4999 of the Code, it is possible that Gross-Up Payments and Tax Adjustment Amounts which will not have been made by the HDI Group should have been made (“Underpayment”), consistent with the calculation required to be made hereunder. In the event that the HDI Group exhausts its remedies and the Executive thereafter is required to pay to the Internal Revenue Service an additional amount in respect of any Excise Tax, the HDI Group shall determine the amount of the Underpayment (including any Tax Adjustment Amount) that has occurred and any such Underpayment shall promptly be paid by the HDI Group to or for the benefit of the Executive.

(ix) If, after the receipt by the Executive of an amount advanced by the HDI Group in connection with the contest of the Excise Tax claim, the Executive becomes entitled to receive any refund with respect to such claim, the Executive shall promptly pay to the HDI Group the amount of such refund (together with any interest paid or credited thereon after taxes applicable thereto). If, after the receipt by the Executive of an amount advanced by the HDI Group in connection with an Excise Tax claim, a determination is made that the Executive shall not be entitled to any refund with respect to such claim and the HDI Group does not notify the Executive in writing of its intent to contest the denial of such refund prior to the expiration of 30 days after such determination, such advance shall be forgiven and shall not be required to be repaid and the amount of such advance shall be offset, to the extent thereof, by the amount of the Gross-Up Payment and the Tax Adjustment Amount.

9. The Executive agrees that during the term of his employment under this Agreement, he shall not, directly or indirectly, engage or participate in any business activity that is directly competitive with and likely to have a material adverse effect on the business of the HDI Group without prior written approval of the Board. In the event that, while employed by the HDI Group, the Executive engages in practices that are directly competitive and that are likely to have a material adverse effect on the HDI Group and the Executive fails to cease such competitive practices within 30 days after written notice is received from the Board, Executive shall be treated for purposes of this Agreement as terminated for Cause as of such 30th day.

10. Any dispute or controversy arising under or in connection with this Agreement shall be settled exclusively by arbitration in Milwaukee, Wisconsin or, at the option of the Executive, in the county where the Executive resides, in accordance with the Rules of the American Arbitration Association then in effect; PROVIDED, HOWEVER, that if the Executive institutes an action relating to this Agreement the Executive may, at his option, bring such action in a court of competent jurisdiction. Judgment may be entered on the arbitrator’s award in any court having jurisdiction.

11. The HDI Group shall pay all costs and expenses, including attorneys’ fees and disbursements, of the HDI Group and, at least monthly, the Executive, in connection with any legal services or proceedings (including, but not limited to, arbitration), whether or not instituted by the HDI Group or the Executive, relating to the interpretation or enforcement of any provision of this Agreement. The HDI Group also agrees to pay prejudgment interest on any money judgment obtained by the Executive as a result of such proceedings, calculated at the reference rate or prime rate, as the case may be, of First Wisconsin National Bank of Milwaukee as in effect from time to time from the date that payment should have been made to the Executive under this Agreement.

12. This Agreement shall be binding upon, inure to the benefit of and be enforceable by the HDI Group and the Executive and their respective heirs, legal representatives, successors and assigns. If the HDI Group or any member of the HDI Group shall be merged into or consolidated with another entity, the provisions of this Agreement shall be binding upon and inure to the benefit of the entity surviving such merger or resulting from such consolidation. The HDI Group will require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business or assets of the HDI Group or any member of the HDI Group, by agreement in form and substance satisfactory to the Executive, to expressly assume and agree to perform this Agreement in the same manner and to the same extent that the HDI Group would be required to perform it if no such succession had taken place. The provisions of this Section 12 shall continue to apply to each subsequent employer of the Executive hereunder in the event of any subsequent merger, consolidation or transfer of assets of such subsequent employer.

13. The HDI Group Employer will indemnify the Executive against expenses (including attorney’s fees), amounts paid in settlement (whether with or without court approval), judgments and fines actually and reasonably incurred by him in connection with a threatened or actual action, suit or proceeding if he acted in good faith and in a manner he reasonably believed to be in, or not opposed to, the best interests of the HDI Group, and with respect to any criminal action or proceeding, if he had no reasonable cause to believe that his conduct was unlawful, (and the HDI Group Employer will advance expenses for the Executive) if he becomes a party or is threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigation (if not by or in the right of the HDI Group Employer) by reason of the fact that he is or was a director, officer, employee or agent of the HDI Group or is or was serving at the request of the HDI Group as a director, officer, employee or agent or in any other capacity or in another corporation, or a partnership, joint venture, trust or other enterprise, or by reason of any action alleged to have been taken or not taken by him while acting in any such capacity, to the fullest extent permitted by the HDI Group Employer’s Articles of Incorporation and By-Laws.

14. Any provision of this Agreement which is held to be unenforceable or invalid in any respect in any jurisdiction shall be ineffective in such jurisdiction to the extent that it in unenforceable or invalid without affecting the remaining provisions hereof, which shall continue in full force and effect. The unenforceability or invalidity of a provision of this Agreement in one jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.

15. This Agreement shall be governed by and construed in accordance with the laws of the State of Wisconsin applicable to contracts made and to be performed therein, without regard to conflict of law principles.

16. This instrument contains the entire agreement of the parties, and supersedes any earlier agreement between them, relative to a transition period or termination in the event of a Change of Control Event. It may not be changed orally but only by an agreement in writing signed by the party against whom enforcement of any waiver, change, modification, extension, or discharge is sought. Notwithstanding anything in this Agreement to the contrary, the Corporation may unilaterally amend this Agreement to make changes that the Corporation reasonably determines are necessary or appropriate for purposes of causing this Agreement to comply with the requirements of Section 409A of the Internal Revenue Code and regulations proposed or promulgated thereunder, so long as the Corporation makes the same changes to corresponding agreements to which other Corporation executives are parties.

"Para (List) Flush Lv 0- TNR" FSL="Project" -- 17. The Executive shall not be required to mitigate damages or the amount of any payment to the Executive provided for under this Agreement by seeking other employment or otherwise, nor shall the amount of any payment provided for under this Agreement be reduced by any compensation earned by Executive as a result of employment by another employer after Termination.

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

	HARLEY-DAVIDSON, INC.
	By: /s/ James L. Ziemer
	James L. Ziemer
	President and Chief Executive Officer
	ATTEST:
	/s/ Gail A. Lione
	Gail A. Lione
	Vice President, General Counsel and Secretary
	EXECUTIVE:
	/s/ Saiyid T. Naqvi
	Saiyid T. Naqvi

Schedule A

CERTAIN DEFINITIONS

As used in this Agreement, and unless the context requires a different meaning, the following terms have the meanings indicated:

“BASE INCOME TAX RATES” shall have the meaning ascribed to it in Section 8(b)(v) of the Agreement.

“BOARD” means the Corporation’s board of directors.

“CAUSE” means the commission by the Executive of one or more acts for which the Executive is convicted of a felony under United States federal, state or local criminal law, or willful and gross misconduct on the part of the Executive that is materially and demonstrably detrimental to the HDI Group taken as a whole.

“CHANGE OF CONTROL EVENT” means any one of the following: (a) Continuing Directors no longer constitute at least 2/3 of the Directors; (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% or more of the Corporation’s then outstanding Common Stock or 20% of 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-2 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 Board determines that such proposed action, if taken, would constitute a change of control of the Corporation and such action is taken.

“CODE” means the Internal Revenue Code of 1986, as amended.

“COMPENSATION” means the sum of all remuneration to which the Executive is entitled, including, but not limited to salary, participation in HDI Group bonus and benefit plans, programs or arrangements and awards under any HDI Group bonus plans, long-term incentive compensation plans, stock option plans, restricted stock plans or any other deferred compensation plans in which the HDI Group Employer maintained or adopted prior to the Change of Control Event or the value to the Executive of the use of professional outplacement services by qualified consultants and use of automobiles or vehicles, (or allowances in respect thereof), and all amounts in respect of club, association or similar fees and dues covering such Executive. In the event that the HDI Group cannot provide the Executive with one or more benefits which it is obligated to provide to the Executive, pursuant to this Agreement, under its employee benefit plans, programs or arrangements then the HDI Group shall provide the Executive with equivalent benefits at the expense of the HDI Group Employer.

“CONTINUING DIRECTOR” means any individual who is either (i) a member of the Board on the date hereof or (ii) a member of the Board whose election or nomination to the Board was approved by a vote of at least two-thirds of the Continuing Directors (other than a person whose election was as a result of an actual or threatened proxy or other control contest).

“CORPORATION” means Harley-Davidson, Inc., a Wisconsin corporation.

“EXCISE TAX” has the meaning ascribed to it in Section 8(b)(i) of the Agreement.

“GROSS-UP PAYMENT” has the meaning ascribed to it in Section 8(b)(i) of the Agreement.

“HDI GROUP” means Harley-Davidson, Inc. and its affiliates.

“HDI GROUP EMPLOYER” means the member of the HDI Group that employed the Executive immediately prior to the Change of Control Event.

“TAX ADJUSTMENT AMOUNT” has the meaning ascribed to it in Section 8(b)(v) of the Agreement.

“TERMINATION” means any termination of Executive’s employment following the occurrence of any Change of Control Event, and shall include any voluntary termination by the Executive, any termination in connection with retirement under any retirement plan of the HDI Group, or any termination resulting from a disability; PROVIDED, HOWEVER, that such term shall not include any termination of the Executive’s employment by the Corporation for Cause or as a result of the death of the Executive.

“UNDERPAYMENT” has the meaning ascribed to it in Section 8(b)(viii) of the Agreement.

Exhibit 10.2

HARLEY-DAVIDSON FINANCIAL SERVICES, INC.
SEVERANCE BENEFITS AGREEMENT

THIS AGREEMENT, entered into as of the 1 ^st day of February, 2007, by and between HARLEY-DAVIDSON FINANCIAL SERVICES, INC., a Delaware corporation (“Employer”), and SAIYID T. NAQVI (“Executive”).

WHEREAS, Employer desires to continue to attract and retain skilled and dedicated management employees;

WHEREAS, Executive is currently employed by Employer in an executive capacity and has unique skills and abilities that are of benefit to Employer; and

WHEREAS, Employer desires to provide Executive certain assurances regarding severance pay and other benefits in the event of a Covered Termination (as defined below).

NOW, THEREFORE, in consideration of the premises and other good and valuable consideration, the parties hereby agree as follows:

1. Not an Employment Agreement . This Agreement is not an employment agreement and shall not change the employment relationship between Employer and Executive. Except as expressly provided herein, this Agreement shall not amend or alter the terms of, or limit the benefits to Executive under, any existing or future employment, transition, change of control or other agreement between Executive and Employer. This Agreement shall not be amended by any such future agreement unless such future agreement specifically provides that the terms of this Agreement shall be amended. Anything in this Agreement to the contrary notwithstanding and subject to any existing or future employment or other agreement between Employer and Executive, (a) Executive may terminate Executive’s employment with Employer at any time and for any reason and (b) Employer may terminate Executive’s employment with Employer at any time and for any reason.

2. Definitions .

a. Affiliate . “Affiliate” shall mean any parent, subsidiary or other affiliate of Employer.

b. Base Salary Amount . “Base Salary Amount” shall mean (1) the amount of Executive’s average monthly base salary during either (i) if Executive has been employed by Employer for twelve (12) or more consecutive months immediately prior to the Termination Date, the twelve (12) consecutive months immediately prior to the Termination Date or (ii) if Executive has been employed by Employer for less than twelve (12) consecutive months immediately prior to the Termination Date, the consecutive months of Executive’s employment with Employer immediately prior to the Termination Date, multiplied by (2) either (i) if Executive has been employed by Employer for twenty four (24) or more consecutive months immediately prior to the Termination Date, twelve (12) or (ii) if Executive has been employed by Employer for less than twenty four (24) consecutive months immediately prior to the Termination Date, six (6).

c. Benefit Period . “Benefit Period” shall mean (1) if Executive has been employed by Employer for twenty four (24) or more consecutive months immediately prior to the Termination Date, the twelve (12) consecutive months immediately following the Termination Date or (2) if Executive has been employed by Employer for less than twenty four (24) consecutive months immediately prior to the Termination Date, the six (6) consecutive months immediately following the Termination Date.

d. Cause . “Cause” shall mean:

(1) the conviction of Executive of a felony or a crime involving moral turpitude, theft or fraud; or

(2) Executive’s refusal to perform duties as directed in good faith by Executive’s supervisor, which failure is not cured within 10 days after written notice thereof from Employer to Executive; or

(3) Executive’s engaging in sexual harassment or any act involving theft or fraud with respect to Employer or any of its parents, subsidiaries or other affiliates, as determined by the Chief Executive Officer of Employer; or

(4) Executive’s reckless conduct or willful misconduct which results in substantial harm (in relation to Executive’s annual compensation), as determined by the Chief Executive Officer of Employer, whether financial, reputational or otherwise, to Employer or any of its parents, subsidiaries or other affiliates.

e. Covered Termination . “Covered Termination” shall mean Employer’s termination of Executive’s employment with Employer other than (1) for Cause or (2) in connection with the death or disability of Executive. Notwithstanding the foregoing, the transfer of Executive’s employment to any Affiliate shall not be a Covered Termination.

f. Disability . “Disability” shall have the meaning assigned to it in the long-term disability insurance policy then provided or made available to Executive by or through Employer. If there is then no such policy or such term is not defined therein, then “Disability” shall mean Executive’s incapacity due to physical or mental illness causing Executive to be absent from the full-time performance of Executive’s duties with Employer for sixty (60) consecutive days.

g. Stock Plans . “Stock Plans” shall mean the Employer’s Amended 2004 Incentive Stock Plan, the Employer’s 1995 Stock Option Plan, as amended, and any other existing or future plans for the issuance of stock options, stock appreciation rights or restricted stock.

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h. Termination Date . “Termination Date” shall mean the date on which a Covered Termination is effective, which date shall not be less than twenty-five (25) days after the date the Termination Notice is delivered to Executive.

i. Termination Notice Date . “Termination Notice Date” shall mean the date on which written notice is delivered by Employer to Executive stating that the Executive’s employment is being terminated pursuant to a Covered Termination and setting forth the Termination Date.

3. Severance Benefits . In the event of a Covered Termination and in lieu of any benefits or other amounts that would otherwise be payable by Employer to Executive as a result of, arising out of or following such Covered Termination, Executive shall be entitled to all of the following:

a. a lump sum payment, payable within thirty (30) days following the Termination Date, equal to the Base Salary Amount.

b. during the Benefit Period or the period beginning on the Termination Date and ending on the date Executive becomes employed on a substantially full-time basis, whichever is shorter, Employer shall make available to Executive coverage under Employer’s medical, dental and life insurance plans (but not short or long term disability) on the same terms as such plans are made available to Employer’s salaried employees generally.

c. during the Benefit Period or the period beginning on the Termination Date and ending on the date Executive becomes employed on a substantially full-time basis, whichever is shorter, Employer shall maintain any life insurance on Executive’s life owned by Employer and shall pay the premiums (for such period) due on any life insurance on Executive’s life owned by Executive.

d. any other benefits payable pursuant to the terms of the Stock Plans (and applicable agreements thereunder) and any incentive compensation (including STIP), pension, 401(k), retirement, savings or deferred compensation plans earned up to Termination Date.

e. reimbursement of any expenses incurred by Executive in the ordinary course of employment prior to the Termination Date consistent with Employer’s then existing expense reimbursement policy.

4. No Mitigation . Executive shall not be required to mitigate the amount of any payment or benefit provided for in Section 3 hereof by seeking other employment or otherwise, nor will the amount provided for in Section 3(a) hereof be reduced by any compensation earned by Executive as a result of employment by another employer after the Termination Date.

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5. Exclusivity .

a. The benefits provided for herein are intended to constitute a minimum, but noncumulative, benefit package for Executive in the event of a Covered Termination. If Executive has or claims to have any Claims (as defined below), Executive may elect to assert such Claims. If, however, Executive does formally assert one or more Claims in a writing submitted to Employer, or an appropriate body to determine such Claims, for the legal enforcement of such Claims, such writing shall constitute an irrevocable waiver and disclaimer of Executive’s benefits and rights under this Agreement.

b. As a condition of receiving the benefits provided for herein, Executive shall be required to execute, prior to receiving any benefits hereunder, a release in a form reasonably satisfactory to Employer, of all other claims against Employer arising out of such Covered Termination (the “Claims”), including but not limited to any and all claims arising out of contract (written, oral, or implied in law or in fact), tort (including negligent and intentional acts), or state, federal or local law (including discrimination on any basis whatsoever); a reaffirmation of the Executive’s confidentiality agreement; a non-solicitation of other employees; and a non-compete agreement effective during the Benefit Period.

c. If Executive has received benefits under this Agreement for a Covered Termination and thereafter asserts any Claims, Executive shall, notwithstanding any other agreement to the contrary, return to Employer all benefits received hereunder as a condition of being allowed to assert any such Claims. If for any reason Executive cannot legally be compelled to return such benefits, Employer shall be given, to the extent allowed by law, credit for all amounts received by Executive under this Agreement against any other amounts otherwise due to Executive arising out of any such Claims. Notwithstanding the foregoing, this Section 5(c) shall not be construed to limit or otherwise modify the terms of any release executed by Executive pursuant to Section 5(b) hereof or otherwise.

6. Other Termination . In the event Executive’s employment with Employer terminates other than pursuant to a Covered Termination, including without limitation, a termination for Cause, termination by reason of Executive’s death, Disability or retirement or a voluntary termination by Executive, Executive shall be entitled to no benefits or rights under this Agreement.

7. Amendment, Termination and Assignment . This Agreement may be amended, terminated or superseded only by a written instrument signed by Executive and Employer. This Agreement may not be assigned by Executive. Notwithstanding anything in this Agreement to the contrary, Employer may unilaterally amend this Agreement to make changes that Employer reasonably determines are necessary or appropriate for purposes of causing this Agreement to comply with the requirements of Section 409A of the Internal Revenue Code and regulations proposed or promulgated thereunder, so long as Employer makes the same changes to corresponding agreements to which other Employer executives are parties.

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8. Transfer of Employment . If Executive’s employment is transferred to any Affiliate, such Affiliate shall assume Employer’s obligations hereunder and following such transfer such Affiliate shall be deemed the “Employer” for purposes of this Agreement.

9. Headings . Headings used herein are for convenience only and shall not constitute a part of or affect the meaning or interpretation of this Agreement.

10. Governing Law; Venue . This Agreement shall be deemed to have been made and executed in the State of Wisconsin and the validity, interpretation and enforcement hereof shall be governed by the internal laws of the State of Wisconsin. In the event of any dispute arising from or in connection with this Agreement, Executive consents and agrees to in personam jurisdiction and to venue exclusively in either the Circuit Court for Milwaukee County, Wisconsin, or the United States District Court for the Eastern District of Wisconsin, located in Milwaukee, Wisconsin.

IN WITNESS WHEREOF, the parties have executed this Agreement at Milwaukee, Wisconsin as of the date first above written.

EXECUTIVE:	EMPLOYER:
	HARLEY-DAVIDSON FINANCIAL
	SERVICES, INC.
/s/ Saiyid T. Naqvi	By: /s/ James L. Ziemer
Saiyid T. Naqvi

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Exhibit 10.3

HARLEY-DAVIDSON, INC.

1995 STOCK OPTION PLAN

(as amended through April 28, 2007)

ARTICLE I

PURPOSE

The purpose of the Harley-Davidson, Inc. 1995 Stock Option Plan is to provide favorable opportunities for certain selected employees of Harley-Davidson, Inc. and its subsidiaries to purchase or receive shares of Common Stock of Harley-Davidson, Inc., or to benefit from the appreciation thereof. Such opportunities should provide an increased incentive for these employees to contribute to the future success and prosperity of Harley-Davidson, Inc., thus enhancing the value of the stock for the benefit of the shareholders, and increase the ability of Harley-Davidson, Inc. to attract and retain individuals of exceptional skill upon whom, in large measure, its sustained progress, growth and profitability depend.

ARTICLE II

DEFINITIONS

The following capitalized terms used in the Plan shall have the respective meanings set forth in this Article:

2.1. BOARD: The Board of Directors of Harley-Davidson, Inc.

2.2 CAUSE: (i) the Optionee’s conviction of a felony or a plea by the Optionee of no contest to a felony, (ii) willful misconduct on the part of the Optionee that is materially and demonstrably detrimental to the Company, (iii) the Optionee’s willful refusal to perform requested duties consistent with his or her office, position or status with the Company (other than as a result of his or her physical or mental disability) or (iv) other conduct or inaction that the Company determines in its discretion constitutes Cause. With respect to clauses (ii), (iii) and (iv) of this definition, Cause shall be determined by the senior human resources officer of the Company. All determinations of such officer under this definition shall be final.

2.3 CODE: The Internal Revenue Code of 1986, as amended.

2.4. COMMITTEE: The Human Resources Committee of the Board; provided that if any member of the Human Resources Committee is not both a Disinterested Person and Outside Director, the Committee shall be comprised of only those members of the Human Resources Committee who are both Disinterested Persons and Outside Directors.

2.5. COMMON STOCK: The common stock of Harley-Davidson, Inc.

2.6. COMPANY: Harley-Davidson, Inc. and any of its Subsidiaries.

2.7. DISABILITY: Disability within the meaning of Section 22(e)(3) of the Code, as determined by the Committee.

2.8. DISINTERESTED PERSONS: Non-employee directors within the meaning of Rule 16b-3 as promulgated under the Securities Exchange Act of1934, as amended.

2.9. EMPLOYER: The entity that employs the employee or Optionee.

2.10. FAIR MARKET VALUE: (From and after February 14, 2007) Per share of Common Stock on the date as of which Fair Market Value is being determined, if the Common Stock is listed for trading on the New York Stock Exchange, the closing sales price on the date in question as reported in The Wall Street Journal, or if no sales of Common Stock occur on the date in question, on the last preceding date on which there was a sale on such exchange.

2.11. ISO: An incentive stock option within the meaning of Section 422 of the Code and which is designated as an incentive option by the Committee.

2.12. NON-ISO: A stock option which is not an ISO.

2.13. OPTION: A stock option granted under the Plan. Options include both ISOs and Non-ISOs.

2.14. OPTION PRICE: The purchase price of a share of Common Stock under an Option.

2.15. OPTIONEE: A person who has been granted one or more Options.

2.16. OUTSIDE DIRECTORS: Outside Directors within the meaning of Section 162(m) of the Code and the regulations promulgated thereunder.

2.17. PARENT CORPORATION: The parent corporation, as defined in Section 424(e) of the Code.

2.18. PLAN: The Harley-Davidson, Inc. 1990 Stock Option Plan.

2.19. RETIREMENT: Termination of employment from the Company (i) on or after age sixty-two (62); (ii) for reasons other than Cause, on or after age fifty-five (55) if the Optionee has completed five (5) years of service with the Company at the time of such termination; or (iii) with the consent of the Committee, under other circumstances. For purposes of this definition, an Optionee’s years of service with the Company shall be determined in the same manner as is specified in the Retirement Annuity Plan for Salaried Employees of Harley-Davidson (as it may be amended), whether or not the Optionee is covered under such plan.

2.20. SUBSIDIARY: A corporation, limited partnership, general partnership, limited liability company, business trust or other entity of which more than fifty percent (50%) of the voting power or ownership interest is directly and/or indirectly held by the Harley-Davidson, Inc.

2.21. TERMINATION DATE: A date fixed by the Committee but not later than the day preceding the tenth anniversary of the date on which the Option is granted.

ARTICLE III

ADMINISTRATION

3.1. The Committee shall administer the Plan and shall have full power to grant Options, construe and interpret the Plan, establish and amend rules and regulations for its administration, and perform all other acts relating to the Plan, including the delegation of administrative responsibilities, which it believes reasonable and proper.

3.2. Subject to the provisions of the Plan, the Committee shall, in its discretion, determine who shall be granted Options, the number of shares subject to option under any such Options, the dates after which Options, the dates after which Options may be exercise, in whole or in part, whether Options shall be ISOs, and the terms and conditions of the Options.

3.3. Any decision made, or action taken, by the Committee arising out of or in connection with the interpretation and administration of the Plan shall be final and conclusive.

3.4 To the extent permitted by applicable law, the Committee may, in its discretion, delegate to the Chief Executive Officer of the Company any or all of the authority and responsibility of the Committee under the Plan to grant Options to employees of the Company or its affiliates and/or persons who have been engaged to become employees of the Company or its affiliates, in each case other than employees who are, or persons engaged to become employees who upon employment will be, subject to the provisions of Section 16 of the Securities and Exchange Act of 1934, as amended, at the time any such delegated authority or responsibility is exercised. To the extent that the committee has delegated to the Chief Executive Officer the authority and responsibility of the Committee, all references to the Committee in the Plan other than in this Section 3.4 shall include the Chief Executive Officer with respect to the matters delegated. No such delegation shall preclude the Committee from exercising the authority and responsibility delegated.

ARTICLE IV SHARES SUBJECT TO THE PLAN

4.1. The total number of shares of Common Stock available for grants of Options under the Plan shall be 15,200,000; provided that Options for not more than 800,000 shares of Common Stock shall be granted to an Optionee in any calendar year under the Plan, which amount shall be reduced by the amount of Common Stock subject to options granted to such Optionee in such calendar year under any other stock option plan of the Company. The foregoing amounts shall be subject to adjustment in accordance with Article VIII of the Plan. If an Option or portion thereof shall expire, be canceled or terminate for any reason without having been exercised in full, the unpurchased shares covered by such Option shall be available for future grants of Options. An Option, or portion thereof, exercised through the exercise of a stock appreciation right pursuant to Section 6.7 of the Plan shall be treated, for the purposes of this Article, as though the Option, or portion thereof, had been exercised through the purchase, that was so exercised shall not be available for future grants of Options.

ARTICLE V

ELIGIBILITY

5.1. Options may be granted to key employees of the Company or to persons who have been engaged to become key employees of the Company. Key employees will comprise, in general, those who contribute to the management, direction and overall success of the Company, including those who are members of the Board. Members of the Board who are not employees of the Company shall not be eligible for Option grants.

ARTICLE VI

TERM OF OPTIONS

6.1. OPTION AGREEMENTS: All Options shall be evidenced by written agreements executed by the Company. Such Options shall be subject to the applicable provisions of the Plan, and shall contain such provisions as are required by the Plan and any other provisions the Committee may prescribe. All agreements evidencing Options shall specify the total number of shares subject to each grant, the Option Price and the Termination Date. Those Options that comply with the requirements for an ISO set forth in Section 422 of the Code and are designated ISOs by the Committee shall be ISOs and all other Options shall be Non-ISOs.

6.2. OPTION PRICE: The Option Price shall be set by the Committee; provided, however, that the price per share shall not be less than the Fair Market Value of a share of Common Stock on the date the Option is granted.

6.3. PERIOD OF EXERCISE: The Committee shall determine the dates after which Options may be exercised in whole or in part. If Options are exercisable in installments, installments or portions thereof that are exercisable and not exercised shall accumulate and remain exercisable. The Committee may also amend an Option to accelerate the dates after which Options may be exercised in whole or in part. However, no Option or portion thereof shall be exercisable after the Termination Date.

6.4. SPECIAL RULES REGARDING ISOS GRANTED TO CERTAIN EMPLOYEES: Notwithstanding any contrary provisions of Sections 6.2 and 6.3 of the Plan, no ISO shall be granted to any employee who, at the time the Option is granted, owns (directly or indirectly, within the meaning of Section 424(d) of the Code) more than ten percent of the total combined voting power of all classes of stock of the Employer or of any Subsidiary or Parent Corporation thereof, unless (a) the Option Price under such Option is at least 110 percent of the Fair Market Value of a share of Common Stock on the date the Option is granted and (b) the Termination Date of such Option is a date not later than the day preceding the fifth anniversary of the date on which the Option is granted.

6.5. MANNER OF EXERCISE AND PAYMENT: An Option, or portion thereof, shall be exercised by delivery of a written notice of exercise to the Company and provision (in a manner acceptable to the Committee) for payment of the full price of the shares being purchased pursuant to the Option and any withholding taxes due thereon.

6.6. TAXES:

WITHHOLDING TAXES. The Company is entitled to withhold the amount of any tax attributable to any amount payable or Common Stock delivered or deliverable under this Plan, and the Company may defer making payment or delivery if any such tax may be pending unless and until indemnified to its satisfaction. An Optionee shall satisfy the federal, state and local withholding tax obligations arising in connection with an Option in a manner acceptable to the Committee.

NO GUARANTEE OF TAX TREATMENT. The Company does not guarantee to any Optionee or any other person with an interest in an Option that any Option intended to be exempt from Code Section 409A shall be so exempt, or that any Option intended to comply with Code Section 409A shall so comply, and nothing in this Plan obligates the Company or any affiliate to indemnify, defend or hold harmless any individual with respect to the tax consequences of any such failure

6.7. STOCK APPRECIATION RIGHTS: At or after the grant of an Option, the Committee, in its discretion, may provide an Optionee with an alternate means of exercising an Option, or a designated portion thereof, by granting the Optionee a stock appreciation right. A “stock appreciation right”: is a right to receive, upon exercise of an Option or any portion thereof, in the Committee’s sole discretion, an amount of cash equal to, and/or shares of Common Stock having a Fair Market Value on the date of exercise equal to, the excess of the Fair Market Value of a share of Common Stock on the date of exercise over the Option Price, multiplied by the number of shares of Common Stock that the Optionee would have received had the Option or portion thereof been exercised through the purchase of shares of Common Stock at the Option Price, provided that (a) such Option or portion thereof has been designated as exercisable in this alternative manner, (s) such Option or portion thereof is otherwise exercisable, and (c) the Fair Market Value of a share of Common Stock on the date of exercise exceeds the Option Price.

6.8. NONTRANSFERABILITY OF OPTIONS: Except as may otherwise be provided by the Committee, each Option shall, during the Optionee’s lifetime, be exercisable only by the Optionee, and neither it nor any right hereunder shall be transferable otherwise than by will or the laws of descent and distribution or be subject to attachment, execution or other similar process. In the event of any attempt by the Optionee to alienate, assign, pledge, hypothecate or other wise dispose of an Option or of any right hereunder, except as provided for herein, or in the event of any levy or any attachment, execution or similar process upon the rights or interest hereby conferred, the Company may terminate the Option by notice to the Optionee and the Option shall thereupon become null and void. Transfers of Options under the Plan pursuant to any judgment, decree, or order (including approval of a property settlement agreement) which relates to the provision of child support, alimony payments, or marital property rights to a spouse, former spouse, child, or other dependent of a participant, and is made pursuant to a State domestic relations law (including a community property law) and satisfies, to the extent applicable, the provisions of Internal Revenue Code Section 414(p) are allowed.

6.9. CESSATION OF EMPLOYMENT OF OPTIONEE:

CESSATION OF EMPLOYMENT OTHER THAN BY REASON OF RETIREMENT, DISABILITY OR DEATH. Except as may be otherwise provided by the Committee, if an Optionee shall cease to be employed by the Company otherwise than by reason of Retirement, Disability, or death, (i) each Option held by the Optionee, together with all rights thereunder, that is not vested shall terminate on the date of cessation of employment, to the extent not previously exercised and (ii) the Optionee shall have a period of 90 days from the date of cessation of employment to exercise each Option held by the Optionee that is vested on the date of cessation of employment. At the end of such 90-day period, each such Option that has not been exercised, together with all rights thereunder, shall terminate, to the extent not previously exercised.

CESSATION OF EMPLOYMENT BY REASON OF RETIREMENT OR DISABILITY. If an Optionee shall cease to be employed by the Company by reason of Retirement or Disability, each Option held by the Optionee shall remain exercisable, to the extent it was exercisable at the time of cessation of employment, until the earliest of:

the Termination Date,

ii.

the death of the Optionee, or such later date not more than one year after the death of the Optionee as the Committee, in its discretion, may provide pursuant to Section 6.9(c) of the Plan,

iii.

the third anniversary of the date of the cessation of the Optionee’s employment, if employment ceased by reason of Retirement, or

iv.

the first anniversary of the date of the cessation of the Optionee’s employment by reason of Disability;

and thereafter all such Options shall terminate together with all rights hereunder, to the extent not previously exercised.

CESSATION OF EMPLOYMENT BY REASON OF DEATH. In the event of the death of the Optionee, while employed by the Company, an Option may be exercised at any time or from time to time prior to the earlier of the Termination Date or the first anniversary of the date of the Optionee’s death, by the person or persons to whom the Optionee’s rights under each Option shall pass by will or by the applicable laws of descent and death. In the event of the death of the Optionee while entitled to exercise an Option pursuant to Section 6.9(b), the Committee, in its discretion, may permit such Option to be exercised at any time or from time to time prior to the Termination Date during a period of up to one year from the death of the Optionee, as shall pass by will of by the applicable laws of descent and distribution, to the extent that the Option was exercisable at the time of cessation of the Optionee’s employment. Any person or person to whom an Optionee’s rights under an Option have passed by will or by the applicable laws of descent and distribution shall be subject to all terms and condition of the plan and the Option applicable to the Optionee.

6.10. NOTIFICATION OF SALES OF COMMON STOCK: Any Optionee who disposes of shares of Common Stock acquired upon the exercise of an ISO either (a) within two years after the date of the grant of the ISO under which the stock was acquired or (b) within one year after the transfer of such shares to the Optionee, shall notify the Company of such disposition and of the amount realized upon such disposition.

ARTICLE VII

LIMITATIONS AND ACCELERATIONS ON EXERCISABILITY

7.1. Notwithstanding any other provision of this Plan, in the case of an ISO, the aggregate Fair Market Value (determined at the time the ISO is granted) of the shares of Common Stock with respect to which all “incentive stock options” (within the meaning of Section 422 of the Code) are first exercisable by the Optionee during any calendar year (under this Plan and under all other incentive stock option plans of the Employer, any Subsidiary and any Parent Corporation) shall not exceed $100,000.

7.2. Each Option granted under the Plan shall become vested and immediately exercisable upon a Change of Control Event, whether or not the Option was theretofore exercisable. For purposes of this Section 7.2:

(a)

“Change of Control Event” means any one of the following:

(i) Continuing Directors no longer constitute at least two-thirds of the Directors constituting the Board;

(ii) any person or groups (as defined in Rule 13d-5 under the Securities Exchange Act of 1934, as amended (“Exchange Act”)), together with its affiliates, becomes the beneficial owner, directly or indirectly, of 20% or more of Harley-Davidson, Inc.‘s then outstanding Common Stock or 20% or more of the voting power of Harley-Davidson, Inc.‘s Directors;

(iii) the approval by Harley-Davidson, Inc.‘s stockholders of the merger or consolidation of Harley-Davidson, Inc. with any other corporation, the sale of substantially all of Harley-Davidson, Inc.‘s assets or the liquidation or dissolution of Harley-Davidson, inc., unless, in the case of a merger or consolidation, the Continuing Directors in office immediately prior to such merger or consolidation constitute at least two-thirds of the directors constituting the board of directors of the surviving corporation of such merger or consolidation and any parent (as defined in Rule 12b-2 under the Exchange Act) of such corporation; or

(iv) at least two-thirds of the Continuing Directors who are Disinterested Persons in office immediately prior to any other action proposed to be taken by Harley-Davidson, Inc.‘s stockholders or by the Board determine that such proposed action, if taken, would constitute a change of control of Harley-Davidson, Inc. and such action is taken.

Notwithstanding the foregoing, with respect to a grant of an Option that is deferred compensation subject to Code Section 409A, the term “Change of Control Event” as defined above shall be deemed amended to conform to the definition provided in guidance, rules or regulations promulgated by the Internal Revenue Service in construing Code Section 409A; and

(b)

“Continuing Director” means any individual who is either:

(i) a member of the Board on the date hereof or

(ii) a member of the Board whose election or nomination to the Board was approved by a Vote of at least two-thirds (2/3) of the Continuing Directors (other than a person whose election was as a result of an actual or threatened proxy or other control contest).

ARTICLE VIII

ADJUSTMENTS

8.1. If (a) the Company shall at any time be involved in a merger or other transaction in which the Common Stock is changed or exchanged; or (b) the Company shall subdivide or combine its Common Stock or the Company shall declare a dividend payable in its Common Stock, other securities (other than any associated preferred stock purchase rights issued pursuant to that certain Rights Agreement, dated February 17, 2000, between the Company and ComputerShare Investor Services, LLC, as successor rights agent, or similar stock purchase rights that the Company might authorize and issue in the future) or other property; or (c) the Company shall effect a cash dividend the amount of which exceeds 15% of the trading price of the Common Stock at the time the dividend is declared or any other dividend or other distribution on the Common Stock in the form of cash, or a repurchase of Common Stock, that the Board determines by resolution is special or extraordinary in nature or that is in connection with a transaction that the Company characterizes publicly as a recapitalization or reorganization involving the Common Stock; or (d) any other event shall occur which, in the case of this clause (d), in the judgment of the Committee necessitates an adjustment to prevent dilution or enlargement of the benefits or potential benefits intended to be made available under the Plan or an Award, then the Committee shall, in such manner as it may deem equitable, adjust any or all of (i) the number and type of securities subject to the Plan and which thereafter may be the subject of Options; (ii) the number and type of securities subject to outstanding Options; (iii) the Option Price with respect to any Option; and (iv) the number of shares of Common Stock that may be issued pursuant to Options granted to an Optionee in any calendar year; provided, however, that each such adjustment, in the case of ISOs, shall be made in such manner as not to constitute a “modification” within the meaning of Section 424(h)(3) of the Code. Unless the Committee determines otherwise, any such adjustment to an Option that is exempt from Code Section 409A shall be made in manner that permits the Option to continue to be so exempt, and any adjustment to an Option that is subject to Code Section 409A shall be made in a manner that complies with the provisions thereof. The judgment of the Committee with respect to any matter referred to in this Article shall be conclusive and binding upon each Optionee.

ARTICLE IX

AMENDMENT AND TERMINATION OF PLAN

9.1. The Board may at any time, or from time to time, suspend or terminate the Plan in whole or in part or amend it in such respects as the Board may deem appropriate, provided, however, that no such amendment shall be made, which would, without approval of the shareholders:

materially modify the eligibility requirements for receiving Options;

increase the aggregate number of Shares of Common Stock which may be issued pursuant to Options granted under the Plan, except as is provided for in accordance with Article VIII of the Plan;

increase the number of shares of Common Stock which may be issued pursuant to Options granted to an Optionee in any calendar year, except as is provided for in accordance with Article VIII of the plan;

reduce the minimum Option Price, except as is provided for in accordance with Article VIII of the Plan;

extend the period of granting Options; or

materially increase in any other way the benefits accruing to Optionees.

9.2. No amendment, suspension or termination of this Plan shall, without the Optionee’s consent, alter or impair any of the rights or obligations under any Option theretofore granted to an Optionee under the Plan, but the Committee need not obtain Optionee (or other interested party) consent for the cancellation of an Award pursuant to the provisions of Section 8.1, the modification of an Option to the extent deemed necessary to comply with any applicable law or the listing requirements of any principal securities exchange or market on which the Common Stock is then traded, to preserve favorable accounting treatment of any Option for the Company, or the adoption, amendment or rescission of rules and regulations relating to this Plan that do not materially and adversely affect the Optionee in respect of any Option then outstanding

9.3. The Board may amend this Plan, subject to the limitations cited above, in such manner as it deems necessary to permit the granting of Options meeting the requirements of future amendments or issued regulations, if any, to the Code.

9.4. The provisions of Code Section 409A are incorporated herein by reference to the extent necessary for any Option that is subject to Code Section 409A to comply therewith.

ARTICLE X

GOVERNMENT AND OTHER REGULATIONS

10.1. The obligation of the Company to issue or transfer and deliver shares for Options exercised under the plan shall be subject to all applicable laws, regulations, rules, orders and approvals which shall then be in effect and required by governmental entities and the stock exchanges on which Common Stock is traded.

ARTICLE XI

MISCELLANEOUS PROVISIONS

11.1. PLAN DOES NOT CONFER EMPLOYMENT OR SHAREHOLDER RIGHTS: The right of the Employer to terminate (whether by dismissal, discharge, retirement or otherwise) the Optionee’s employment with it at any time at will, or as otherwise provided by any agreement between the Company and the Optionee, is specifically reserved. Neither the Optionee nor any person entitled to exercise the Optionee’s rights in the event of the Optionee’s death shall have any rights of a shareholder with respect to the shares subject to each Option, except to the extent that, and until, such shares shall have been issued upon the exercise of each Option.

11.2. PLAN EXPENSES: Any expenses of administering this Plan shall be borne by the Company.

11.3. USE OF EXERCISE PROCEEDS: Payments received from Optionees upon the exercise of Options shall be used for the general corporate purposes of the Company, except that any stock received in payment may be retired, or retained in the Company’s treasury and reissued.

11.4. INDEMNIFICATION: In addition to such other rights of indemnification as they may have as members of the Board, or the Committee, the members of the Committee and the Board shall be indemnified by the Company against all costs and expenses reasonably incurred by them in connection with nay action, suit or proceeding to which they or any of them may be party by reason of any action taken or failure to act under or in connection with the Plan or any Option granted thereunder, and against all amounts paid by them in settlement thereof (provided such settlement is approved by independent legal counsel selected by the Company) or paid by them in satisfaction of a judgment in any such action, suit or proceeding, except a judgment based upon a finding of bad faith; provided that upon the institution of any such action, suit or proceeding a Committee or Board member shall, in writing, give the Company notice thereof and an Opportunity, at its own expense, to handle and defend the same before such Committee or Board member undertakes to handle and defend it on such member’s own behalf.

ARTICLE XII

SHAREHOLDER APPROVAL AND EFFECTIVE DATES

12.1. The Plan shall become effective when it is approved by the shareholders of Harley-Davidson, Inc. at a shareholders meeting by the requisite vote under New York Stock Exchange Rules, Internal Revenue Code Section 162(m) and Rule 16b-3 under the Securities Exchange Act of 1934. Options may not be granted under the Plan after April 26, 2005.

Exhibit 10.4

HARLEY-DAVIDSON, INC.
2004 INCENTIVE STOCK PLAN

(as amended through April 28, 2007)

1. Purposes, History and Effective Date.

(a) Purpose . The Harley-Davidson, Inc. 2004 Incentive Stock Plan has two complementary purposes: (i) to attract and retain outstanding individuals to serve as officers and other employees and (ii) to increase shareholder value. The Plan will provide participants incentives to increase shareholder value by offering the opportunity to acquire shares of the Company’s common stock or receive monetary payments based on the value of such common stock on the potentially favorable terms that this Plan provides.

(b) History . Prior to the effective date of this Plan, the Company had in effect the 1995 Plan, which was originally effective May 6, 1995. Upon shareholder approval of this Plan, the 1995 Plan will terminate and no new awards will be granted under the 1995 Plan, although awards granted under such plan and still outstanding will continue to be subject to all terms and conditions of such plan.

(c) Effective Date . This Plan will become effective, and Awards may be granted under this Plan, on and after the Effective Date. This Plan will terminate as provided in Section 14.

2. Definitions. Capitalized terms used in this Plan have the following meanings:

(a) “1995 Plan” means the Harley-Davidson, Inc. 1995 Stock Option Plan, as amended.

(b) “Affiliate” has the meaning ascribed to such term in Rule 12b-2 promulgated under the Exchange Act or any successor rule or regulation thereto.

(c) “Award” means a grant of Options, Stock Appreciation Rights, Performance Shares, Performance Units, Restricted Stock, Restricted Stock Units, STIP Shares or Dividend Equivalent Units.

(d) “Award Agreement” means any written agreement, contract, or other instrument or document evidencing the grant of an Award in such form as the Committee determines.

(e) “Board” means the Board of Directors of the Company.

(f) “Cause” means (i) the Participant’s conviction of a felony or a plea by the Participant of no contest to a felony, (ii) willful misconduct on the part of the Participant that is materially and demonstrably detrimental to the Company, (iii) the Participant’s willful refusal to perform requested duties consistent with his or her office, position or status with the Company (other than as a result of his or her physical or mental disability) or (iv) other conduct or inaction that the Company determines in its discretion constitutes Cause. With respect to clauses (ii), (iii) and (iv) of this definition, Cause shall be determined by the senior human resources officer of the Company. All determinations of such officer under this definition shall be final.

(g) “Change of Control” means the occurrence of any one of the following events:

(i)

the Continuing Directors no longer constitute at least two-thirds of the Directors constituting the Board;

(ii) any person or group (as defined in Rule 13d-5 under the Exchange Act), together with its affiliates, becomes the beneficial owner, directly or indirectly, of 20% or more of the Company’s then outstanding Stock or 20% or more of the voting power of the Company’s then outstanding Stock;

(iii) the approval by the Company’s shareholders of the merger or consolidation of the Company with any other corporation, the sale of substantially all of the Company’s assets or the liquidation or dissolution of the Company, unless, in the case of a merger or consolidation, the Continuing Directors in office immediately prior to such merger or consolidation constitute at least two-thirds of the directors constituting the board of directors of the surviving corporation of such merger or consolidation and any parent (as defined in Rule 12b-2 under the Exchange Act) of such corporation; or

(iv) at least two-thirds of the then Continuing Directors in office immediately prior to any other action proposed to be taken by the Company’s shareholders or by the Board determine that such proposed action, if taken, would constitute a change of control of the Company and such action is taken.

Notwithstanding the foregoing, with respect to an Award that is deferred compensation subject to Code Section 409A, the term “Change of Control” as defined above shall be deemed amended to conform to the definition provided in guidance, rules or regulations promulgated by the Internal Revenue Service in construing Code Section 409A.

(h) “Change of Control Price” means the highest Fair Market Value price per Share during the sixty (60)-day period preceding the date of a Change of Control.

(i) “Code” means the Internal Revenue Code of 1986, as amended. Any reference to a specific provision of the Code includes any successor provision and the regulations promulgated under such provision.

(j) “Committee” means the Human Resources Committee of the Board (or a successor committee with the same or similar authority).

(k) “Company” means Harley-Davidson, Inc., a Wisconsin corporation, or any successor thereto.

(l) “Continuing Director” means any individual who is either (i) a member of the Board on the Effective Date or (ii) a member of the Board whose election or nomination to the Board was approved by a vote of at least two-thirds (2/3) of the Continuing Directors (other than a person whose election was as a result of an actual or threatened proxy or other control contest).

(m) “Director” means a member of the Board, and “Non-Employee Director” means a Director who is not also an employee of the Company or its Subsidiaries.

(n) “Disability” has the meaning ascribed to the term in Code Section 22(e)(3), as determined by the Committee.

(o) “Disinterested Persons” means the non-employee directors of the Company within the meaning of Rule 16b-3 as promulgated under the Exchange Act.

(p) “Dividend Equivalent Unit” means the right to receive a payment equal to the cash dividends paid with respect to a Share.

(q) “Effective Date” means the date the Company’s shareholders approve this Plan.

(r) “Exchange Act” means the Securities Exchange Act of 1934, as amended. Any reference to a specific provision of the Exchange Act includes any successor provision and the regulations and rules promulgated under such provision.

(s) “Fair Market Value” (from and after February 14, 2007) means, per Share on the date as of which Fair Market Value is being determined, if the Stock is listed for trading on the New York Stock Exchange, the closing sales price on the date in question as reported in The Wall Street Journal, or if no sales of Stock occur on the date in question, on the last preceding date on which there was a sale on such exchange. If the Stock is not listed or admitted to trading on the New York Stock Exchange on the date in question, then “Fair Market Value” means, per Share on the date as of which Fair Market Value is being determined, (i) the closing sales price on the date in question on the principal national securities exchange on which the Stock is listed or admitted to trading, or if no sales of Stock occur on the date in question, on the last preceding date on which there was a sale on such exchange; or (ii) if the Stock is not listed or admitted to trading on any national securities exchange, the closing quoted sale price on the date in question, or if no sales of Stock occur on the date in question, on the last preceding date on which there was a sale; or (iii) if not so quoted, the mean of the closing bid and asked prices on the date in question in the over-the-counter market, as reported by the National Association of Securities Dealers, Inc. Automated Quotations System (“NASDAQ”) or such other system then in use, or if no sales of Stock occur on the date in question, on the last preceding date on which there was a sale; or (iv) if on any such date the Stock is not quoted by any such organization, the mean of the closing bid and asked prices on the date in question as furnished by a professional market maker making a market in the Stock selected by the Board for the date in question, or if no sales of Stock occur on the date in question, on the last preceding date on which there was a sale; or (v) if on any such date no market maker is making a market in the Stock, the price as determined in good faith by the Committee; provided that if Fair Market Value is being determined under clause (v) for purposes of determining the Change of Control Price, the value will be determined by the Continuing Directors.

(t) “Option” means the right to purchase Shares at a specified price for a specified period of time.

(u) “Participant” means an individual selected by the Committee to receive an Award, and includes any individual who holds an Award after the death of the original recipient.

(v) “Performance Goals” means any goals the Committee establishes that relate to one or more of the following for such period as the Committee specifies (in all cases excluding the effects of (A) extraordinary, unusual, transition, one-time and/or non-recurring items of gain or loss, (B) gains or losses on the disposition of a business or arising from the sale of assets outside the ordinary course of business, or (C) changes in tax or accounting regulations or laws):

(i) Any one or more of the following as determined for the Company on a consolidated basis, for any one or more Affiliates or divisions of the Company and/or for any other business unit or units of the Company, as determined by the Committee at the time an Award is made:

(1) Net sales;

(2) Cost of goods sold;

(3) Gross profit;

(4) Selling, administrative and engineering expenses;

(5) Income from operations;

(6) Income before interest and the provision for income taxes;

(7) Income before provision for income taxes;

(8) Net income;

(9) Average accounts receivable, calculated by taking the average of accounts receivable at the end of each fiscal month during the period in question;

(10) Average inventories, calculated by taking the average of inventories at the end of each fiscal month during the period in question;

(11) Return on average equity, with average equity calculated by taking the average of equity at the end of each fiscal month during the period in question;

(12) Return on year-end equity;

(13) Return on average assets, with average assets calculated by taking the average of assets at the end of each fiscal month during the period in question;

(14) Return on capital;

(15) Total shareholder return.

(16)	Economic value added, or other measure of profitability that considers the cost of capital employed.

(17) Net cash provided by operating activities;

(18) Net cash provided by operating activities less net cash used in investing activities;

(19) Net increase (decrease) in cash and cash equivalents;

(20) Customer satisfaction;

(21) Market share; or

(22) Product quality.

(ii) Basic earnings per Share for the Company on a consolidated basis.

(iii) Diluted earnings per Share for the Company on a consolidated basis.

In the case of Awards that the Committee determines will not be considered “performance-based compensation” under Code Section 162(m), the Committee may establish other Performance Goals not listed in this Plan.

(w) “Performance Shares” means the right to receive Shares to the extent Performance Goals are achieved.

(x) “Performance Units” means the right to receive a payment valued in relation to a unit the value of which is equal to the Fair Market Value of one or more Shares, to the extent Performance Goals are achieved.

(y) “Person” has the meaning given in Section 3(a)(9) of the Exchange Act, as modified and used in Sections 14(d) and 15(d) thereof.

(z) “Plan” means this Harley-Davidson, Inc. 2004 Incentive Stock Plan, as may be amended from time to time.

(aa) “Restricted Stock” means Shares that are subject to a risk of forfeiture and/or restrictions on transfer, which may lapse upon the achievement or partial achievement of Performance Goals and/or upon the completion of a period of service.

(bb) “Restricted Stock Unit” means the right to receive a payment valued in relation to a unit that has a value equal to the Fair Market Value of a Share, which right may vest upon the achievement or partial achievement of Performance Goals and/or upon the completion of a period of service.

(cc) “Retirement” means termination of employment from the Company and its Affiliates (i) on or after age sixty-two (62); (ii) for reasons other than Cause, on or after age fifty-five (55) if the Participant has completed five (5) years of service with the Company and its Affiliates at the time of such termination; or (iii) with the consent of the Committee, under other circumstances. For purposes of this definition, a Participant’s years of service with the Company shall be determined in the same manner as is specified in the Retirement Annuity Plan for Salaried Employees of Harley-Davidson (as it may be amended), whether or not the Participant is covered under such plan.

(dd) “Rule 16b-3” means Rule 16b-3 as promulgated by the United States Securities and Exchange Commission under the Exchange Act.

(ee) “Section 16 Participants” means Participants who are subject to the provisions of Section 16 of the Exchange Act.

(ff) “Share” means a share of Stock.

(gg) “STIP Shares” means Shares that the Company delivers in payment or partial payment of an award under the Harley-Davidson, Inc. Corporate Short Term Incentive Plan (or any successor thereto) or other incentive plans of the Company or its affiliates that the Committee designates from time to time.

(hh) “Stock” means the common stock of the Company.

(ii) “Stock Appreciation Right” or “SAR” means the right of a Participant to receive a payment equal to the appreciation of the Fair Market Value of a Share during a specified period of time.

(jj) “Subsidiary” means any corporation (other than the Company) in an unbroken chain of corporations beginning with the Company if each such corporation owns stock possessing fifty percent (50%) or more of the total combined voting power in one of the other corporations in the chain.

3. Administration.

(a) Committee Administration . In addition to the authority specifically granted to the Committee in this Plan, the Committee has full discretionary authority to administer this Plan, including but not limited to the authority to (i) interpret the provisions of this Plan, (ii) prescribe, amend and rescind rules and regulations relating to this Plan, (iii) correct any defect, supply any omission, or reconcile any inconsistency in any Award or Award Agreement in the manner and to the extent it deems desirable to carry this Plan into effect and (iv) make all other determinations necessary or advisable for the administration of this Plan.

(b) Delegation to Other Committees or CEO . To the extent applicable law permits, the Board or the Committee may delegate to another committee of the Board, or the Committee may delegate to the Chief Executive Officer of the Company, any or all of the authority and responsibility of the Committee. However, no such delegation is permitted with respect to Awards made to Section 16 Participants at the time any such delegated authority or responsibility is exercised. To the extent applicable law permits, the Board or the Committee also may delegate to another committee of the Board consisting entirely of Non-Employee Directors any or all of the authority and responsibility of the Committee with respect to individuals who are Section 16 Participants. If the Board or Committee has made such a delegation, then all references to the Committee in this Plan include such other committee or the Chief Executive Officer to the extent of such delegation.

(c) Indemnification . In addition to such other rights of indemnification as they may have as members of the Board or the Committee, the members of the Committee and the Board shall be indemnified by the Company against all costs and expenses reasonably incurred by them in connection with any action, suit or proceeding to which they or any of them may be party by reason of any action taken or failure to act under or in connection with this Plan or any Award, and against all amounts paid by them in settlement thereof (provided such settlement is approved by independent legal counsel selected by the Company) or paid by them in satisfaction of a judgment in any such action, suit or proceeding, except a judgment based upon a finding of bad faith; provided that upon the institution of any such action, suit or proceeding a Committee or Board member shall, in writing, give the Company notice thereof and an opportunity, at its own expense, to handle and defend the same before such Committee or Board member undertakes to handle and defend it on such member’s own behalf.

4. Eligibility. The Committee may designate any of the following as a Participant from time to time: any officer or other employee of the Company or any of its Affiliates, or an individual that the Company or an Affiliate has engaged to become an officer or other employee. The Committee’s designation of a Participant in any year will not require the Committee to designate such person to receive an Award in any other year.

5. Types of Awards. Subject to the terms of this Plan, the Committee may grant any type of Award to any Participant it selects, but only employees of the Company or a Subsidiary may receive grants of incentive stock options. Awards may be granted alone or in addition to, in tandem with, or in substitution for any other Award (or any other award granted under another plan of the Company or any Affiliate of the Company). Awards granted under this Plan shall be evidenced by an Award Agreement except to the extent the Committee provides otherwise.

6. Shares Reserved under this Plan.

(a) Plan Reserve . Subject to adjustment as provided in Section 16, an aggregate of 12,000,000 Shares, plus the number of Shares described in Section 6(c), are reserved for issuance under this Plan. The number of Shares reserved for issuance under this Plan shall be reduced only by the number of Shares delivered in payment or settlement of Awards. Notwithstanding the foregoing, subject to adjustment as provided in Section 16, the Company may issue only 12,000,000 Shares upon the exercise of incentive stock options. In addition, any Shares issued in connection with Restricted Stock, Restricted Stock Units, Performance Shares and Performance Units shall count against the limit described in this Section 6(a) as two Shares for every one Share issued. Shares issued in connection with any other type of Award shall be counted against this limit as one Share for every one Share issued.

(b) Replenishment of Shares Under this Plan . If an Award lapses, expires, terminates or is cancelled without the issuance of Shares under the Award, or if Shares are forfeited under an Award, then the Shares subject to such Award may again be used for new Awards under this Plan under Section 6(a), including issuance as incentive stock options. If Shares are issued under any Award and the Company subsequently reacquires them pursuant to rights reserved upon the issuance of the Shares, or if previously owned Shares are delivered to the Company in payment of the exercise price of an Award, then such Shares may again be used for new Awards under this Plan under Section 6(a), but such Shares may not be issued pursuant to incentive stock options.

(c) Addition of Shares from Predecessor Plan . In addition to the Shares reserved for issuance under Section 6(a), the number of Shares which were reserved for issuance under the 1995 Plan but which are not subject to any outstanding awards under such plan as of the Effective Date shall be available for issuance under Awards granted under this Plan. Further, after the Effective Date, if any Shares subject to awards granted under the 1995 Plan would again become available for new grants under the terms of such plan if such plan were still in effect, then those Shares will be available for the purpose of granting Awards under this Plan, thereby increasing the number of Shares available for issuance under this Plan as determined under the first sentence of Section 6(a). Any such Shares will not be available for future awards under the terms of the 1995 Plan, which plan is terminated on the Effective Date.

(d) Participant Limitations . Subject to adjustment as provided in Section 16, no Participant may be granted Awards that could result in such Participant:

(i) receiving in any calendar year Options for, and/or Stock Appreciation Rights with respect to, more than 800,000 Shares (reduced, in the initial calendar year in which this Plan is effective, by the number of options granted to a Participant under the 1995 Plan in such year, if any);

(ii) receiving in any calendar year Awards of Restricted Stock and/or Restricted Stock Units relating to more than 400,000 Shares; or

(iii) receiving in any calendar year Awards of Performance Shares, and/or Awards of Performance Units, for more than 400,000 Shares.

In all cases, determinations under this Section 6(d) should be made in a manner that is consistent with the exemption for performance-based compensation that Code Section 162(m) provides.

7. Options. Subject to the terms of this Plan, the Committee will determine all terms and conditions of each Option, including but not limited to:

(a) Whether the Option is an “incentive stock option” which meets the requirements of Code Section 422, or a “nonqualified stock option” which does not meet the requirements of Code Section 422; provided that in the case of an incentive stock option, if the aggregate Fair Market Value (determined on the date of grant) of the Shares with respect to which all “incentive stock options” (within the meaning of Code Section 422) are first exercisable by the Participant during any calendar year (under this Plan and under all other incentive stock option plans of the Company or any Affiliate that is required to be included under Code Section 422) exceeds $100,000, such Option automatically shall be treated as a nonqualified stock option to the extent this limit is exceeded.

(b) The number of Shares subject to the Option.

(c) The exercise price, which may not be less than the Fair Market Value of the Shares subject to the Option as determined on the date of grant; provided that (i) no incentive stock option shall be granted to any employee who, at the time the Option is granted, owns (directly or indirectly, within the meaning of Code Section 424(d)) more than ten percent of the total combined voting power of all classes of stock of the Company or of any Subsidiary unless the exercise price is at least 110 percent of the Fair Market Value of a Share on the date of grant; and (ii) the exercise price may vary during the term of the Option if the Committee determines that there should be adjustments to the exercise price relating to achievement of Performance Goals and/or to changes in an index or indices that the Committee determines is appropriate (but in no event may the exercise price be less than the Fair Market Value of the Shares subject to the Option as determined on the date of grant).

(d) The terms and conditions of exercise, which may include a requirement that exercise of the Option is conditioned upon achievement of one or more Performance Goals; provided that, unless the Committee provides otherwise in an Award Agreement or in rules and regulations relating to this Plan, an Option, or portion thereof, shall be exercised by delivery of a written notice of exercise to the Company (or its designee) and provision (in a manner acceptable to the Committee) for payment of the full exercise price of the Shares being purchased pursuant to the Option and any withholding taxes due thereon.

(e) The termination date, except that each Option must terminate no later than ten (10) years after the date of grant, and each incentive stock option granted to any employee who, at the time the Option is granted, owns (directly or indirectly, within the meaning of Code Section 424(d)) more than ten percent of the total combined voting power of all classes of stock of the Company or of any Subsidiary must terminate no later than five (5) years after the date of grant.

(f) The exercise period following a Participant’s termination of employment, provided that:

(i) Unless the Committee provides otherwise, if a Participant shall cease to be employed by the Company or any of its Affiliates other than by reason of Retirement, Disability, or death, (A) the portion of the Option that is not vested shall terminate on the date of such cessation of employment and (B) the Participant shall have a period ending on the earlier of the Option’s termination date or 90 days from the date of cessation of employment to exercise the vested portion of the Option to the extent not previously exercised. At the end of such period, the Option shall terminate.

(ii) Unless the Committee provides otherwise, if a Participant shall cease to be employed by the Company or any of its Affiliates by reason of Retirement or Disability, the Option shall remain exercisable, to the extent it was exercisable at the time of cessation of employment, until the earliest of: the Option’s termination date; the death of the Participant, or such later date not more than one year after the death of the Participant as the Committee, in its discretion, may provide; the third anniversary of the date of the cessation of the Participant’s employment, if employment ceased by reason of Retirement; or the first anniversary of the date of the cessation of the Participant’s employment by reason of Disability. At the end of such period, the Option shall terminate.

(iii) In the event of the death of the Participant while employed by the Company or any of its Affiliates, the Option may be exercised at any time prior to the earlier of the Option’s termination date or the first anniversary of the date of the Participant’s death to the extent that the Participant was entitled to exercise such Option on the Participant’s date of death. In the event of the death of the Participant while entitled to exercise an Option pursuant to Section 7(f)(ii), the Committee, in its discretion, may permit such Option to be exercised prior to the Option’s termination date during a period of up to one year from the death of the Participant, as determined by the Committee to the extent that the Option was exercisable at the time of cessation of the Participant’s employment.

Any Participant who disposes of Shares acquired upon the exercise of an incentive stock option either (1) within two years after the date of the grant of such Option or (2) within one year after the transfer of such Shares to the Participant, shall notify the Company of such disposition and of the amount realized upon such disposition.

In all other respects, the terms of any incentive stock option should comply with the provisions of Code Section 422 except to the extent the Committee determines otherwise.

8. Stock Appreciation Rights. Subject to the terms of this Plan, the Committee will determine all terms and conditions of each SAR, including but not limited to:

(a) Whether the SAR is granted independently of an Option or relates to an Option; provided that if an SAR is granted in relation to an Option, then unless otherwise determined by the Committee, the SAR shall be exercisable or shall mature at the same time or times, on the same conditions and to the extent and in the proportion, that the related Option is exercisable and may be exercised or mature for all or part of the Shares subject to the related Option. Upon exercise of any number of SARs, the number of Shares subject to the related Option shall be reduced accordingly and such Option may not be exercised with respect to that number of Shares. The exercise of any number of Options that relate to an SAR shall likewise result in an equivalent reduction in the number of Shares covered by the related SAR.

(b) The number of Shares to which the SAR relates.

(c) The grant price, provided that (i) the grant price shall not be less than the Fair Market Value of the Shares subject to the SAR as determined on the date of grant and (ii) the grant price may vary during the term of the SAR if the Committee determines that there should be adjustments to the grant price relating to achievement of Performance Goals and/or to changes in an index or indices that the Committee determines is appropriate (but in no event may the grant price be less than the Fair Market Value of the Shares subject to the SAR as determined on the date of grant).

(d) The terms and conditions of exercise or maturity.

(e) The termination date, provided that an SAR must terminate no later than 10 years after the date of grant.

(f) The exercise period following a Participant’s termination of employment.

(g) Whether the SAR will be settled in cash, Shares or a combination thereof.

9. Performance Awards. Subject to the terms of this Plan, the Committee will determine all terms and conditions of each Award of Performance Shares or Performance Units, including but not limited to:

(a) The number of Shares and/or units to which such Award relates.

(b) One or more Performance Goals that must be achieved during such period as the Committee specifies in order for the Participant to realize the benefit of such Award.

(c) Whether all or a portion of the Performance Goals subject to an Award are deemed achieved upon a Participant’s death, Disability or Retirement.

(d) With respect to Performance Units, whether to settle such Award in cash, Shares, or a combination of cash and Shares.

10. Restricted Stock and Restricted Stock Unit Awards. Subject to the terms of this Plan, the Committee will determine all terms and conditions of each Award of Restricted Stock or Restricted Stock Units, including but not limited to:

(a) The number of Shares and/or units to which such Award relates.

(b) The period of time, if any, over which the risk of forfeiture or restrictions imposed on the Award will lapse, or the Award will vest, and whether, as a condition for the Participant to realize all or a portion of the benefit provided under the Award, one or more Performance Goals must be achieved during such period, if any, as the Committee specifies; provided that, subject to the provisions of Section 10(c), if an Award requires the achievement of Performance Goals, then the period to which such Performance Goals relate must be at least one year in length, and if an Award is not subject to Performance Goals, then the Award must have a restriction period of at least one year.

(c) Whether all or any portion of the period of forfeiture or restrictions imposed on the Award will lapse, or the vesting of the Award will be accelerated, upon a Participant’s death, Disability or Retirement.

(d) With respect to Restricted Stock Units, whether to settle such Awards in cash, Shares, or a combination of cash and Shares.

(e) With respect to Restricted Stock, the manner of registration of certificates for such Shares, and whether to hold such Shares in escrow pending lapse of the period of forfeiture or restrictions or to issue such Shares with an appropriate legend referring to such restrictions.

(f) Whether dividends paid with respect to an Award of Restricted Stock will be immediately paid or held in escrow or otherwise deferred and whether such dividends shall be subject to the same terms and conditions as the Award to which they relate.

11. STIP Shares. Subject to the terms and conditions of this Plan, the Committee may elect to have the Company deliver STIP Shares in payment or partial payment of awards under the Harley-Davidson, Inc. Corporate Short Term Incentive Plan (or any successor thereto) or other incentive plans of the Company or its affiliates that the Committee designates from time to time.

12. Dividend Equivalent Units. Subject to the terms and conditions of this Plan, the Committee will determine all terms and conditions of each Award of Dividend Equivalent Units, including but not limited to whether such Award will be granted in tandem with another Award, and the form, timing and conditions of payment; provided that any Dividend Equivalent Units granted in connection with an Option, Stock Appreciation Right or other “stock right” within the meaning of Code Section 409A shall be set forth in a written arrangement that is separate from such Award, and to the extent such Dividend Equivalent Units are considered deferred compensation, such written arrangement shall comply with the provisions of Code Section 409A.

13. Transferability . Awards are not transferable other than by will or the laws of descent and distribution, unless and to the extent the Committee allows a Participant to: (a) designate in writing a beneficiary to exercise the Award after the Participant’s death; or (b) transfer an Award, provided that STIP Shares and other Shares that a Participant receives upon final payment of an Award shall be transferable unless the Committee designates otherwise at the time of the Award.

14. Termination and Amendment of Plan; Amendment, Modification or Cancellation of Awards.

(a) Term of Plan . Unless the Board or the Committee earlier terminates this Plan pursuant to Section 14(b), this Plan will terminate on the tenth anniversary of the Effective Date.

(b) Termination and Amendment . The Board or the Committee may amend, alter, suspend, discontinue or terminate this Plan at any time, subject to the following limitations:

(i) the Board must approve any amendment of this Plan to the extent the Company determines such approval is required by: (A) action of the Board, (B) applicable corporate law or (C) any other applicable law;

(ii) shareholders must approve any amendment of this Plan to the extent the Company determines such approval is required by: (A) Section 16 of the Exchange Act, (B) the Code, (C) the listing requirements of any principal securities exchange or market on which the Shares are then traded or (D) any other applicable law; and

(iii) shareholders must approve any of the following Plan amendments: (A) an amendment to materially increase any number of Shares specified in Section 6(a) or 6(d) (except as permitted by Section 16); or (B) an amendment to the provisions of Section 14(e).

(c) Amendment, Modification or Cancellation of Awards . Except as provided in Section 14(e) and subject to the requirements of this Plan, the Committee may modify or amend any Award or waive any restrictions or conditions applicable to any Award or the exercise of the Award, and the terms and conditions applicable to any Awards may at any time be amended, modified or canceled by mutual agreement between the Committee and the Participant or any other person(s) as may then have an interest in the Award, so long as any amendment or modification does not increase the number of Shares issuable under this Plan (except as permitted by Section 16), but the Committee need not obtain Participant (or other interested party) consent for the cancellation of an Award pursuant to the provisions of Section 16(a), the modification of an Award to the extent deemed necessary to comply with any applicable law or the listing requirements of any principal securities exchange or market on which the Shares are then traded, or to preserve favorable accounting treatment of any Award for the Company, or the adoption, amendment or rescission of rules and regulations relating to this Plan that do not materially and adversely affect the Participant in respect of any Award then outstanding.

(d) Survival of Authority and Awards . Notwithstanding the foregoing, the authority of the Board and the Committee under this Section 14 will extend beyond the date of this Plan’s termination. In addition, termination of this Plan will not affect the rights of Participants with respect to Awards previously granted to them, and all unexpired Awards will continue in full force and effect after termination of this Plan except as they may lapse or be terminated by their own terms and conditions.

(e) Repricing Prohibited . Notwithstanding anything in this Plan to the contrary, and except for the adjustments provided in Section 16, neither the Committee nor any other person may decrease the exercise price for any outstanding Option after the date of grant nor cancel or allow a Participant to surrender an outstanding Option to the Company as consideration for the grant of a new Option with a lower exercise price or the grant of another type of Award the effect of which is to reduce the exercise price of any outstanding Option.

(f) Foreign Participation . To assure the viability of Awards granted to Participants employed in foreign countries, the Committee may provide for such special terms as it may consider necessary or appropriate to accommodate differences in local law, tax policy or custom. Moreover, the Committee may approve such supplements to, or amendments, restatements or alternative versions of, this Plan as it determines is necessary or appropriate for such purposes. Any such amendment, restatement or alternative versions that the Committee approves for purposes of using this Plan in a foreign country will not affect the terms of this Plan for any other country. In addition, all such supplements, amendments, restatements or alternative versions must comply with the provisions of Section 14(b)(ii).

(g) Code Section 409A . The provisions of Code Section 409A are incorporated herein by reference to the extent necessary for any Award that is subject to Code Section 409A to comply therewith.

15. Taxes .

(a) Withholding . The Company is entitled to withhold the amount of any tax attributable to any amount payable or Shares delivered or deliverable under this Plan, and the Company may defer making payment or delivery if any such tax may be pending unless and until indemnified to its satisfaction. A Participant shall satisfy the federal, state and local withholding tax obligations arising in connection with an Award in a manner acceptable to the Committee.

(b) No Guarantee of Tax Treatment . The Company does not guarantee to any Participant or any other Person with an interest in an Award that any Award intended to be exempt from Code Section 409A shall be so exempt, or that any Award intended to comply with Code Section 409A shall so comply, and nothing in this Plan obligates the Company or any Affiliate to indemnify, defend or hold harmless any individual with respect to the tax consequences of any such failure.

16. Adjustment Provisions; Change of Control.

(a) Adjustment of Shares . If (i) the Company shall at any time be involved in a merger or other transaction in which the Shares are changed or exchanged; or (ii) the Company shall subdivide or combine the Shares or the Company shall declare a dividend payable in Shares, other securities (other than any associated preferred stock purchase rights issued pursuant to that certain Rights Agreement, dated February 17, 2000, between the Company and ComputerShare Investor Services, LLC, as successor rights agent, or similar stock purchase rights that the Company might authorize and issue in the future) or other property; or (iii) the Company shall effect a cash dividend the amount of which exceeds 15% of the trading price of the Shares at the time the dividend is declared or any other dividend or other distribution on the Shares in the form of cash, or a repurchase of Shares, that the Board determines by resolution is special or extraordinary in nature or that is in connection with a transaction that the Company characterizes publicly as a recapitalization or reorganization involving the Shares; or (iv) any other event shall occur which, in the case of this clause (iv), in the judgment of the Committee necessitates an adjustment to prevent dilution or enlargement of the benefits or potential benefits intended to be made available under the Plan, then, subject to Participants’ rights under Section 16(c), the Committee shall, in such manner as it may deem equitable, adjust any or all of: (A) the number and type of Shares subject to this Plan (including the number and type of Shares described in Sections 6(a) and 6(d)) and which may after the event be made the subject of Awards under this Plan, (B) the number and type of Shares subject to outstanding Awards, and (C) the grant, purchase, or exercise price with respect to any Award. In any such case, the Committee may also (or in lieu of the foregoing) make provision for a cash payment to the holder of an outstanding Award in exchange for the cancellation of all or a portion of the Award (without the consent of the holder of an Award) in an amount determined by the Committee effective at such time as the Committee specifies (which may be the time such transaction or event is effective), but if such transaction or event constitutes a Change of Control, then (1) such payment shall be at least as favorable to the holder as the greatest amount the holder could have received in respect of such Award under Section 16(c) and (2) from and after the Change of Control, the Committee may make such a provision only if the Committee determines that doing so is necessary to substitute, for each Share then subject to an Award, the number and kind of shares of stock, other securities, cash or other property to which holders of Stock are or will be entitled in respect of each Share pursuant to the transaction or event in accordance with the last sentence of this subsection (a). However, in each case, with respect to Awards of incentive stock options, no such adjustment may be authorized to the extent that such authority would cause this Plan to violate Code Section 422(b). Further, the number of Shares subject to any Award payable or denominated in Shares must always be a whole number. Unless the Committee determines otherwise, any such adjustment to an Award that is exempt from Code Section 409A shall be made in manner that permits the Award to continue to be so exempt, and any adjustment to an Award that is subject to Code Section 409A shall be made in a manner that complies with the provisions thereof. Without limitation, subject to Participants’ rights under Section 16(c), in the event of any such merger or similar transaction, subdivision or combination of Shares, dividend or other event described above, whether or not constituting a Change of Control (other than any such transaction in which the Company is the continuing corporation and in which the outstanding Stock is not being converted into or exchanged for different securities, cash or other property, or any combination thereof), the Committee shall substitute, on an equitable basis as the Committee determines, for each Share then subject to an Award, the number and kind of shares of stock, other securities, cash or other property to which holders of Stock are or will be entitled in respect of each Share pursuant to the transaction.

(b) Issuance or Assumption . Notwithstanding any other provision of this Plan, and without affecting the number of Shares otherwise reserved or available under this Plan, in connection with any merger, consolidation, acquisition of property or stock, or reorganization, the Committee may authorize the issuance or assumption of Awards upon such terms and conditions as it may deem appropriate.

(c) Change of Control. Except to the extent the Committee provides a result more favorable to holders of Awards (either in an Award Agreement or at the time of a Change of Control), in the event of a Change of Control and with respect to each Award the holder of which is employed by the Company or an Affiliate on the date of the Change of Control:

(i) each holder of an Option or SAR shall have the right at any time thereafter to exercise the Option or SAR in full whether or not the Option or SAR was theretofore exercisable;

(ii) Restricted Stock and Restricted Stock Units that are not then vested shall vest, and any period of forfeiture or restrictions to which Restricted Stock and Restricted Stock Units are subject shall lapse, upon the date of the Change of Control;

(iii) each holder of a Performance Share and/or Performance Unit for which the performance period has not expired shall become vested in an amount equal to the product of the value of the Performance Share and/or Performance Unit and a fraction the numerator of which is the number of whole months that have elapsed from the beginning of the performance period to which the Award is subject to the date of the Change of Control and the denominator of which is the number of whole months in the performance period;

(iv) all Dividend Equivalent Units that were awarded in connection with another Award shall vest.

For purposes of this Section 16(c), the “value” of a Performance Share shall be equal to, and the “value” of a Performance Unit shall be based on, the Change of Control Price.

The rules of this Section 16(c) shall not prevent the Committee, in connection with a Change of Control transaction, from exercising the authority provided to the Committee under the last sentence of Section 16(a) to substitute, for each vested (taking into account the vesting rules of this Section 16(c)) and previously unexercised or undistributed Share then subject to or underlying an Award, the number and kind of shares of stock, other securities, cash or other property to which holders of Stock are or will be entitled in respect to each Share pursuant to the transaction.

Unless any agreement between the Participant and the Company provides for a payment by the Company to the Participant to cover the excise taxes due by the Participant upon receipt of an excess parachute payment within the meaning of Code Section 280G, if the receipt of any payment by a Participant under the circumstances described above would result in the payment by the Participant of any excise tax provided for in Section 280G and Section 4999 of the Code, then the amount of such payment shall be reduced to the extent required to prevent the imposition of such excise tax.

17. Miscellaneous.

(a) Other Terms and Conditions . Any Award may also be subject to other provisions (whether or not applicable to the Award granted to any other Participant) as the Committee determines appropriate, including, without limitation, provisions for:

(i) one or more means to enable Participants to defer the delivery of Shares or recognition of taxable income relating to Awards or cash payments derived from the Awards on such terms and conditions as the Committee determines, including, by way of example, the form and manner of the deferral election, the treatment of dividends paid on the Shares during the deferral period or a means for providing a return to a Participant on amounts deferred, and the permitted distribution dates or events (provided that if Shares would have otherwise been issued under an Award but for the deferral described in this paragraph and ultimately Shares will be or are issued in respect of the Award, then such Shares shall be treated as if they were issued for purposes of Section 6(a));

(ii) conditioning the grant or benefit of an Award on the Participant’s agreement to comply with covenants not to compete, not to solicit employees and customers and not to disclose confidential information that may be effective during or after the Participant’s employment, and/or provisions requiring the Participant to disgorge any profit, gain or other benefit received in connection with an Award as a result of the breach of such covenant;

(iii) restrictions on resale or other disposition of Shares, including imposition of a retention period; and

(iv) compliance with federal or state securities laws and stock exchange requirements.

(b) Employment . The issuance of an Award shall not confer upon a Participant any right with respect to continued employment with the Company or any Affiliate. Unless determined otherwise by the Committee, for purposes of this Plan and all Awards, the following rules shall apply:

(i) a Participant who transfers employment between the Corporation and any Affiliate of the Company, or between the Company’s Affiliates, will not be considered to have terminated employment;

(ii) a Participant who ceases to be employed by the Company or an Affiliate of the Company and immediately thereafter becomes a Non-Employee Director, a non-employee director of any of its Affiliates, or a consultant to the Company or any of its Affiliates shall not be considered to have terminated employment until such Participant’s service as a director of, or consultant to, the Company and its Affiliates has ceased; and

(iii) a Participant employed by an Affiliate of the Company will be considered to have terminated employment when such entity ceases to be an Affiliate of the Company.

Notwithstanding the foregoing, for purposes of an Award that is subject to Code Section 409A, if a Participant’s termination of employment or service triggers the payment of compensation under such Award, then the Participant will be deemed to have terminated employment or service upon a “separation from service” within the meaning of Code Section 409A.

(c) No Fractional Shares . No fractional Shares or other securities may be issued or delivered pursuant to this Plan, and the Committee may determine whether cash, other securities or other property will be paid or transferred in lieu of any fractional Shares or other securities, or whether such fractional Shares or other securities or any rights to fractional Shares or other securities will be canceled, terminated or otherwise eliminated.

(d) Unfunded Plan . This Plan is unfunded and does not create, and should not be construed to create, a trust or separate fund with respect to this Plan’s benefits. This Plan does not establish any fiduciary relationship between the Company and any Participant or other person. To the extent any person holds any rights by virtue of an Award granted under this Plan, such rights are no greater than the rights of the Company’s general unsecured creditors.

(e) Requirements of Law and Securities Exchange . The granting of Awards and the issuance of Shares in connection with an Award are subject to all applicable laws, rules and regulations and to such approvals by any governmental agencies or national securities exchanges as may be required. Notwithstanding any other provision of this Plan or any Award Agreement, the Company has no liability to deliver any Shares under this Plan or make any payment unless such delivery or payment would comply with all applicable laws and the applicable requirements of any securities exchange or similar entity, and unless and until the Participant has taken all actions required by the Company in connection therewith. The Company may impose such restrictions on any Shares issued under this Plan as the Company determines necessary or desirable to comply with all applicable laws, rules and regulations or the requirements of any national securities exchanges.

(f) Governing Law . This Plan, and all agreements under this Plan, will be construed in accordance with and governed by the laws of the State of Wisconsin, without reference to any conflict of law principles. The parties agree that the exclusive venue for any legal action or proceeding with respect to this Plan, any Award or any Award Agreement shall be a court sitting in the County of Milwaukee, or the Federal District Court for the Eastern District of Wisconsin sitting in the County of Milwaukee, in the State of Wisconsin, and further agree that any such action may be heard only in a “bench” trial, and any party to such action or proceeding shall agree to waive its right to a jury trial.

(g) Limitations on Actions . Any legal action or proceeding with respect to this Plan, any Award or any Award Agreement must be brought within one year (365 days) after the day the complaining party first knew or should have known of the events giving rise to the complaint.

(h) Construction . Whenever any words are used herein in the masculine, they shall be construed as though they were used in the feminine in all cases where they would so apply; and wherever any words are used in the singular or plural, they shall be construed as though they were used in the plural or singular, as the case may be, in all cases where they would so apply. Titles of sections are for general information only, and this Plan is not to be construed with reference to such titles.

(i) Severability . If any provision of this Plan or any Award Agreement or any Award (i) is or becomes or is deemed to be invalid, illegal or unenforceable in any jurisdiction, or as to any person or Award, or (ii) would disqualify this Plan, any Award Agreement or any Award under any law the Committee deems applicable, then such provision should be construed or deemed amended to conform to applicable laws, or if it cannot be so construed or deemed amended without, in the determination of the Committee, materially altering the intent of this Plan, such Award Agreement or such Award, then such provision should be stricken as to such jurisdiction, person or Award, and the remainder of this Plan, such Award Agreement and such Award will remain in full force and effect.

Exhibit 10.5

Notice of Award of Restricted Stock	Harley-Davidson, Inc.	[LOGO]
and Restricted Stock Agreement	ID: 39-1805420
	3700 West Juneau Avenue
	Milwaukee, WI 53208

«Fname»«M»«Lname»	Award Number:	«Grant_»
«Address1»	Plan:	2004 Incentive Stock Plan
«Address2»	ID:	«ID»
«Address3»
«City»,«St»«Zip»
«CO»

Effective __/__/200_ (the “Grant Date”), you have been granted «Shares» shares of Common Stock of Harley-Davidson, Inc. (the “Company”) constituting Restricted Stock under the Company’s 2004 Incentive Stock Plan (the “Plan”).

All of the Restricted Stock will become fully unrestricted (or “vest”) on the fourth anniversary of the Grant Date, subject to accelerated vesting and forfeiture as discussed below. You may not sell, transfer or otherwise convey an interest in or pledge any of your Shares of Restricted Stock until they are vested. In addition, (i) you cannot sell or otherwise dispose of any Restricted Stock that has vested except pursuant to an effective registration statement under the Securities Act of 1933 and any applicable state securities laws or in a transaction that, in the opinion of counsel for the Company, is exempt from such registration and (ii) the Company may place a legend on any certificates for such Shares to such effect.

The Shares of Restricted Stock are granted under and governed by the terms and conditions of the Plan and this Restricted Stock Agreement including Exhibit A. Additional provisions regarding your Restricted Stock and definitions of capitalized terms used and not defined in this Restricted Stock Agreement can be found in the Plan. Without limitation, “Committee” means the Human Resources Committee of the Board or its delegate in accordance with the Plan.

HARLEY-DAVIDSON, INC.

/s/ James M. Brostowitz

Vice President and Treasurer

Date
Time:

Exhibit A to Restricted Stock Agreement

Termination of Employment: If your employment with the Company and its Affiliates is terminated for any reason other than death, Disability or Retirement, then you will forfeit any Shares of Restricted Stock that are not vested as of the date your employment is terminated. If you cease to be employed by the Company and its Affiliates by reason of death, Disability or Retirement, then, effective immediately prior to the time of cessation of employment, a portion of the unvested Restricted Stock will vest such that the total number of Shares that are vested after giving effect to such vesting will be equal to the original number of Shares of Restricted Stock subject to this Restricted Stock Agreement multiplied by a fraction the numerator of which is the number of Months (counting a partial Month as a full Month) from the Grant Date until the date your employment is terminated by reason of death, Disability or Retirement, and the denominator of which is 48 months, and you will forfeit the remaining Shares of Restricted Stock that are not vested. For purposes of this Agreement, a “Month” shall mean the period that begins on the first calendar day after the Grant Date, or the anniversary of the Grant Date that occurs in each calendar month, and ends on the anniversary of the Grant Date that occurs in the following calendar month.

Accelerated Vesting: If the average of the percentage payouts under the Reference STIPs for the two full calendar years prior to the second anniversary of the Grant Date (including the calendar year in which the Grant Date occurs) is equal to or greater than 100%, then 50% of the Restricted Stock (excluding any forfeited Shares) will vest on the second anniversary of the Grant Date. “Reference STIPs” means the terms of the Short-Term Incentive Plan of the Company or any of its Affiliates applicable to the class or classes of employees of which you were a part during the two full calendar years prior to the second anniversary of the Grant Date, and the average of the percentage payouts will be calculated by weighting each percentage payout that relates to the period during which you were a part of a class of employees based on the time in each year that you were a part of that class of employees.

Issuance of Share Certificates: The Company may issue in your name certificate(s) evidencing your Shares of Restricted Stock. In addition to any other legends placed on the certificate(s), such certificate(s) will bear the following legend:

The shares of Stock represented by this certificate are subject to forfeiture, and the sale or other transfer of the shares of Stock represented by this certificate (whether voluntary or by operation of law) is subject to certain restrictions, as set forth in a Restricted Stock Agreement, dated as of ______________________, by and between Harley-Davidson, Inc. and the registered owner hereof. A copy of such Agreement may be obtained from the Secretary of Harley-Davidson, Inc.

Upon the vesting of Shares of Restricted Stock, you will be entitled to a new certificate for the Shares that have vested, without the foregoing legend, upon making a request for such certificate to the Secretary of the Company or to such other person as the Company may designate.

In lieu of issuing in your name certificate(s) evidencing your Shares of Restricted Stock, the Company may cause its transfer agent or other agent to reflect on its records your ownership of such Shares, subject to the terms of this Restricted Stock Agreement.

[over]

Voting Rights and Dividends: While your Shares of Restricted Stock are subject to forfeiture, you may exercise full voting rights and will receive all cash dividends and other distributions paid with respect to the Restricted Stock (reduced for any tax withholding due), in each case so long as the applicable record date occurs before you forfeit such Shares. If, however, any dividends or distributions are paid in Shares, such Shares will be subject to the same risk of forfeiture, restrictions on transferability and other terms of this Restricted Stock Agreement as are the Shares of Restricted Stock with respect to which they were paid.

Tax Withholding : To the extent that your receipt of Restricted Stock or the vesting of Restricted Stock results in income to you for federal, state or local taxes, you must deliver to the Company or to such other person as the Company may designate at the time the Company is obligated to withhold taxes that arise from such receipt or vesting, as the case may be, such amount as the Company requires to meet its withholding obligation under applicable tax laws or regulations. If you fail to deliver such amount as the Company requires, the Company has the right and authority to deduct or withhold from other compensation it would pay to you an amount, and/or to treat you as having surrendered vested Shares of Restricted Stock having a value, sufficient to satisfy its withholding obligations.

When income results from the vesting of Restricted Stock, to the extent the Company permits you to do so, you may satisfy the withholding requirement, in whole or in part, by electing to have the Company accept that number of vested Shares of Restricted Stock having an aggregate Fair Market Value on the date the tax is to be determined equal to the minimum statutory total tax that the Company must withhold in connection with the vesting of such Shares. If you would be left with a fractional share after satisfying the withholding obligation on the Restricted Stock, the fair market value of that fractional share will be applied to your general federal tax withholding. If the Company does not allow you to elect to have the Company accept vested Shares of Restricted Stock, or if you want to keep all of the shares that are vesting, you will have to deliver to the Company or to such other person as the Company may designate funds in an amount sufficient to cover the withholding tax obligation on a date advised by the Company. Where you may elect to deliver funds to satisfy the withholding tax obligation, your election to deliver funds must be irrevocable, in writing, and submitted to the Secretary or to such other person as the Company may designate on or before the date that the Company specifies, which will be before the applicable vesting date, and if you fail to deliver such election then you will be deemed to have elected to have the Company accept vested Shares of Restricted Stock as described above.

If you do so within thirty (30) days of the Grant Date, you may make an election under Section 83(b) of the Internal Revenue Code of 1986, as amended, for this Award so that the receipt of the Restricted Stock, rather than vesting, results in income. In that case, you will have to deliver to the Company or to such other person as the Company may designate funds in an amount sufficient to cover the withholding tax obligation.

Rejection/Acceptance : You may return this Restricted Stock Agreement to the Company (in care of the Vice President and Treasurer) within thirty (30) days after the Grant Date, together with any certificate you have received evidencing Shares, and by doing so you will forfeit any rights under this Restricted Stock Agreement and any rights to Shares that the Company has transferred to you under this Restricted Stock Agreement. If you choose to retain this Restricted Stock Agreement beyond that date, then you accept the terms of this Award, acknowledge these tax implications and agree and consent to all amendments to the Plan and the Harley-Davidson, Inc. 1995 Stock Option Plan through the Grant Date as they apply to this Award and any prior awards of any kind to you under such plans.

Exhibit 10.6

Notice of Special Award of Restricted Stock	Harley-Davidson, Inc.	[LOGO]
and Restricted Stock Agreement	ID: 39-1805420
	3700 West Juneau Avenue
	Milwaukee, WI 53208

«Fname»«M»«Lname»	Award Number:	«Grant_»
«Address1»	Plan:	2004 Incentive Stock Plan
«Address2»	ID:	«ID»
«Address3»
«City»,«St»«Zip»
«CO»

All of the Restricted Stock will become fully unrestricted (or “vest”) on the ____ anniversary of the Grant Date, subject to accelerated vesting and forfeiture as discussed below. You may not sell, transfer or otherwise convey an interest in or pledge any of your Shares of Restricted Stock until they are vested. In addition, (i) you cannot sell or otherwise dispose of any Restricted Stock that has vested except pursuant to an effective registration statement under the Securities Act of 1933 and any applicable state securities laws or in a transaction that, in the opinion of counsel for the Company, is exempt from such registration and (ii) the Company may place a legend on any certificates for such Shares to such effect.

HARLEY-DAVIDSON, INC.

/s/ James M. Brostowitz

Vice President and Treasurer

Date
Time:

Exhibit A to Restricted Stock Agreement

Termination of Employment: If your employment with the Company and its Affiliates is terminated for any reason other than death or Disability, then you will forfeit any Shares of Restricted Stock that are not vested as of the date your employment is terminated. If you cease to be employed by the Company and its Affiliates by reason of death or Disability, then, effective immediately prior to the time of cessation of employment, a portion of the unvested Restricted Stock will vest, which portion will be equal to the number of unvested Shares multiplied by a fraction the numerator of which is the number of Months (counting a partial Month as a full Month) from the Grant Date until the date your employment is terminated by reason of death or Disability and the denominator of which is __ months < number of months in vesting period >, and you will forfeit the remaining Shares of Restricted Stock that are not vested. For purposes of this Agreement, a “Month” shall mean the period that begins on the first calendar day after the Grant Date, or the anniversary of the Grant Date that occurs in each calendar month, and ends on the anniversary of the Grant Date that occurs in the following calendar month.

Exhibit 10.7

General	Harley-Davidson, Inc.	[LOGO]
Notice of Restricted Stock Units	or Subsidiaries
and Restricted Stock Unit Agreement

«Fname»«M»«Lname»	Award Number:	«Grant_»
«Address1»	Plan:	2004 Incentive Stock Plan
«Address2»	ID:	«ID»
«Address3»
«City»,«St»«Zip»
«CO»

Effective __/__/200_ (the “Grant Date”), you have been granted Restricted Stock Units with respect to «Shares» shares of Common Stock of Harley-Davidson, Inc. (“HDI” and, together with its Subsidiaries, the “Company”). This grant is made under HDI’s 2004 Incentive Stock Plan (the “Plan”).

All of the Restricted Stock Units will become fully unrestricted (or “vest”) on the fourth anniversary of the Grant Date, subject to accelerated vesting and forfeiture as discussed below and in Exhibit A. You may not sell, transfer or otherwise convey an interest in or pledge any of your Restricted Stock Units.

As soon as practicable following the date on which the Restricted Stock Units vest, the Company will make a cash payment to you in your local currency using the spot rate on the vesting date, less applicable withholding, equal to the product obtained by multiplying the Fair Market Value of a share of Common Stock of HDI on the vesting date by the number of Restricted Stock Units that have become vested on such date.

The Restricted Stock Units are granted under and governed by the terms and conditions of the Plan and this Restricted Stock Unit Agreement including Exhibit A. Additional provisions regarding your Restricted Stock Units and definitions of capitalized terms used and not defined in this Restricted Stock Unit Agreement can be found in the Plan. Without limitation, “Committee” means the Human Resources Committee of the Board or its delegate in accordance with the Plan.

HARLEY-DAVIDSON, INC. and Subsidiaries

/s/ James M. Brostowitz

Vice President and Treasurer

Date
Time:

Exhibit A to Restricted Stock Unit Agreement

Termination of Employment: If your employment with the Company and its Affiliates is terminated for any reason other than death, Disability or Retirement, then you will forfeit any Restricted Stock Units that are not vested as of the date your employment is terminated. If you cease to be employed by the Company and its Affiliates by reason of death, Disability or Retirement, then, effective immediately prior to the time of cessation of employment, a portion of the unvested Restricted Stock Units will vest such that the total number of Restricted Stock Units that are vested after giving effect to such vesting will be equal to the original number of Restricted Stock Units subject to this Restricted Stock Unit Agreement multiplied by a fraction the numerator of which is the number of Months (counting a partial Month as a full Month) from the Grant Date until the date your employment is terminated by reason of death, Disability or Retirement, and the denominator of which is 48 months, and you will forfeit the remaining Restricted Stock Units that are not vested. For purposes of this Agreement, a “Month” shall mean the period that begins on the first calendar day after the Grant Date, or the anniversary of the Grant Date that occurs in each calendar month, and ends on the anniversary of the Grant Date that occurs in the following calendar month.

Accelerated Vesting: If the average of the percentage payouts under the Reference STIPs for the two full calendar years prior to the second anniversary of the Grant Date (including the calendar year in which the Grant Date occurs) is equal to or greater than 100%, then 50% of the Restricted Stock Units (excluding any forfeited Shares) will vest on the second anniversary of the Grant Date. “Reference STIPs” means the terms of the Short-Term Incentive Plan of the Company or any of its Affiliates applicable to the class or classes of employees of which you were a part during the two full calendar years prior to the second anniversary of the Grant Date, and the average of the percentage payouts will be calculated by weighting each percentage payout that relates to the period during which you were a part of a class of employees based on the time in each year that you were a part of that class of employees.

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Voting Rights and Dividends: You are not entitled to exercise any voting rights with respect to the Common Stock of HDI underlying your Restricted Stock Units. You will receive a cash payment equivalent to any dividends and other distributions paid with respect to the Common Stock of HDI underlying your Restricted Stock Units (reduced for any tax withholding due), so long as the applicable record date occurs before you forfeit such Restricted Stock Units, which will be paid in your local currency using the spot rate on the date the dividend or other distribution is paid to shareholders. If, however, any dividends or distributions with respect to the Common Stock of HDI underlying your Restricted Stock Units are paid in Shares rather than cash, you will be credited with additional Restricted Stock Units equal to the number of shares that you would have received had your Restricted Stock Units been actual Shares, and such Restricted Stock Units will be subject to the same risk of forfeiture and other terms of this Restricted Stock Unit Agreement as are the Restricted Stock Units that are granted contemporaneously with this Restricted Stock Unit Agreement. Any amounts due to you under this provision shall be paid to you, in cash, no later than the end of the calendar year in which the dividend or other distribution is paid to shareholders or, if later, the 15 ^th day of the third month following the date the dividends are paid to shareholders; provided that in the case of any distribution with respect to which you are credited with additional Restricted Stock Units that are subject to a risk of forfeiture, distribution shall be made at the same time as payment is made in respect of the Restricted Stock Units that are granted contemporaneously with this Restricted Stock Unit Agreement.

Tax Withholding : To the extent that your receipt of Restricted Stock Units, the vesting of Restricted Stock Units or your receipt of payments in respect of Restricted Stock Units results in income to you for federal or local taxes, the Company has the right and authority to deduct or withhold from any compensation it would pay to you (including payments in respect of Restricted Stock Units) an amount, and/or to treat you as having surrendered vested Restricted Stock Units having a value, sufficient to satisfy its withholding obligations. In its discretion, the Company may require you to deliver to the Company or to such other person as the Company may designate at the time the Company is obligated to withhold taxes that arise from such receipt or vesting, as the case may be, such amount as the Company requires to meet its withholding obligation under applicable tax laws or regulations.

Rejection/Acceptance : You may return this Restricted Stock Unit Agreement to the Company (in care of the Vice President and Treasurer of HDI) within thirty (30) days after the Grant Date, and by doing so you will forfeit any rights under this Restricted Stock Unit Agreement If you choose to retain this Restricted Stock Unit Agreement beyond that date, then you accept the terms of this Award, acknowledge these tax implications and agree and consent to all amendments to the Plan and the Harley-Davidson, Inc. 1995 Stock Option Plan through the Grant Date as they apply to this Award and any prior awards to you of any kind under such plans.

Exhibit 31.1

Chief Executive Officer Certification
Pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934

I, James L. Ziemer, certify that:

1.	I have reviewed this quarterly report on Form 10-Q of Harley-Davidson, Inc.;

2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth quarter in case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.	The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors:

All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

	Date: May 3, 2007	/s/ James L. Ziemer
		James L. Ziemer
		President and Chief Executive Officer

Exhibit 31.2

Chief Financial Officer Certification
Pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934

I, Thomas E. Bergmann, certify that:

1.	I have reviewed this quarterly report on Form 10-Q of Harley-Davidson, Inc.;

2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

5.	The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors:

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

	Date: May 3, 2007	/s/ Thomas E. Bergmann
		Thomas E. Bergmann
		Vice President and Chief Financial Officer

Exhibit 32.1

Written Statement of the Chief Executive Officer and Chief Financial Officer
Pursuant to 18 U.S.C. sec. 1350

Solely for the purpose of complying with 18 U.S.C. §1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, we, the undersigned President and Chief Executive Officer and the Vice President and Chief Financial Officer of Harley-Davidson, Inc. (the “Company”), hereby certify, based on our knowledge, that the Quarterly Report on Form 10-Q of the Company for the quarter ended April 1, 2007 (the “Report”) fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934 and that information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

	Date: May 3, 2007	/s/ James L. Ziemer
		James L. Ziemer
		President and Chief Executive Officer
		/s/ Thomas E. Bergmann
		Thomas E. Bergmann
		Vice President and Chief Financial Officer

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549

Form 10-Q

HARLEY-DAVIDSON, INC.

Form 10-Q Index For the Quarter Ended April 1, 2007

PART I — FINANCIAL INFORMATION

Item 1. Consolidated Financial Statements

HARLEY-DAVIDSON, INC. Notes to Condensed Consolidated Financial Statements (Unaudited)

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Overview

Outlook (1)

Results of Operations for the Three Months Ended April 1, 2007 Compared to the Three Months Ended March 26, 2006

Overall

Motorcycle Unit Shipments & Net Revenue

Harley-Davidson Motorcycle Retail Sales

Harley-Davidson Motorcycle Retail Sales (a) Heavyweight (651+cc)

Motorcycle Industry Retail Registrations Heavyweight (651+cc)

Cost of Goods Sold

Gross Profit

Financial Services

Operating Expenses

Provision for Income Taxes

Other Matters

Liquidity and Capital Resources as of April 1, 2007

Cash and Marketable Securities

Operating Activities

Investing Activities

Financing Activities

Cautionary Statements

Item 3. Quantitative and Qualitative Disclosures about Market Risk

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Changes in Internal Controls

Part II – OTHER INFORMATION

Item 1. Legal Proceedings

Item 1A. Risk Factors

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Item 6. Exhibits

TRANSITION AGREEMENT

Schedule A

CERTAIN DEFINITIONS

HARLEY-DAVIDSON FINANCIAL SERVICES, INC. SEVERANCE BENEFITS AGREEMENT

HARLEY-DAVIDSON, INC. 2004 INCENTIVE STOCK PLAN

(as amended through April 28, 2007)

1. Purposes, History and Effective Date.

2. Definitions. Capitalized terms used in this Plan have the following meanings:

3. Administration.

6. Shares Reserved under this Plan.

16. Adjustment Provisions; Change of Control.

17. Miscellaneous.

Exhibit A to Restricted Stock Agreement

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Exhibit A to Restricted Stock Agreement

Exhibit A to Restricted Stock Unit Agreement

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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

Form 10-Q Index
For the Quarter Ended April 1, 2007

HARLEY-DAVIDSON, INC.
Notes to Condensed Consolidated Financial Statements
(Unaudited)

Outlook ⁽¹⁾

Results of Operations for the Three Months Ended April 1, 2007
Compared to the Three Months Ended March 26, 2006

Harley-Davidson Motorcycle Retail Sales ^(a)
Heavyweight (651+cc)

Motorcycle Industry Retail Registrations
Heavyweight (651+cc)

HARLEY-DAVIDSON FINANCIAL SERVICES, INC.
SEVERANCE BENEFITS AGREEMENT

HARLEY-DAVIDSON, INC.
2004 INCENTIVE STOCK PLAN