Dear fellow shareholder,

Harley-Davidson experienced a challenging year in 2007. Although our 2007 revenue and earnings decreased from 2006, they were the second highest in company history. While our numbers may not be as strong as 2006, our image and brand has gained international strength, giving us an optimistic future.

We experienced the following results in 2007:

• A net sales of $5.7 billion, compared to the net sales of $5.8 billion in 2006 and $5.3 billion in 2005.

• A net income of $1 billion in 2007 and 2006, compared to the net income of $1 million in 2005.

• A diluted earnings per share of $3.74 compared to $3.93 in 2006 and $3.41 in 2005.

A poor economy in 2007 contributed to reduced revenue and earnings. We responded by investing in our brand. As part of this decision, we shipped 330,619 motorcycles in 2007, 5.3 percent fewer than in 2006. Dealers sold 337,774 new Harley-Davidson motorcycles worldwide in 2007 compared to 343,981 in 2006. This strategy resulted in the increase of international retail sales of 13.7 percent from 2006, marking the first step in strengthening our presence in the international market.

In 2008 we expect to see a continued downturn in the economy. Harley-Davidson is committed to weathering through economic challenges and focusing our company on marketing, product development and our people.

We pride ourselves as a company built on customer relationships, market-defining products and extraordinary customer experiences. The outstanding leadership of our employees, combined with the passion of our customers and dealers around the world, has granted us with success. To showcase our company’s strength, we will continue to grow internationally and remain a top influence in the motorcycle industry.

As 2008 approaches, the year will mark many celebratory events for Harley-Davidson in its 105^th year of business. We are eager to open the Harley-Davidson museum and introduce our new 2009 Harley-Davidson models.

In this next year, 2008 will allow us to further establish the strength of our brand despite an unstable economy. We trust that our decisions are not only good for our company but also everything we are built upon. We remain excited for future opportunities and trust that our company will prevail over economic challenges.

Get ready for another ride!

James Ziemer

President and Chief Executive Officer

Harley-Davidson Inc.