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 September 25, 2005

or

(_) 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 an accelerated filer (as defined by Rule 12b-2 of the Exchange Act). Yes   X   No       

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 October 28, 2005: 274,617,100 shares

HARLEY-DAVIDSON, INC.

Form 10-Q Index
For the Quarter Ended September 25, 2005

		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	6-13
Item 2.	Management's Discussion and Analysis of Financial
	Condition and Results of Operations	14-28
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	28
Item 4.	Controls and Procedures	28
Part II.	Other Information
Item 1.	Legal Proceedings	29
Item 2.	Changes in Securities and Use of Proceeds	30
Item 6.	Exhibits	30
	Signatures	31
Exhibit Index		32

2

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					Nine months ended
	Sep 25, 2005			Sep 26, 2004		Sep 25, 2005		Sep 26, 2004
Net revenue	$	1,431,151		$	1,300,684	$	3,999,879	$	3,794,193
Cost of goods sold		869,879			806,116		2,473,890		2,356,080
Gross profit		561,272			494,568		1,525,989		1,438,113
Financial services income		81,444			77,484		255,558		239,038
Financial services expense		33,869			27,410		103,403		89,644
Operating income from financial services		47,575			50,074		152,155		149,394
Operating expenses		197,985			191,328		558,781		542,215
Income from operations		410,862			355,314		1,119,363		1,045,292
Investment income and other, net		(79	)		1,699		11,739		10,220
Income before provision for income taxes		410,783			353,013		1,131,102		1,055,512
Provision for income taxes		145,829			126,030		401,542		374,708
Net income	$	264,954		$	228,983	$	729,560	$	680,804
Earnings per common share:
Basic	$	.97		$	.78	$	2.58	$	2.30
Diluted	$	.96		$	.77	$	2.57	$	2.29
Weighted-average common shares outstanding:
Basic		274,415			294,031		282,519		295,362
Diluted		275,460			295,824		283,406		297,357
Cash dividends per share	$	.16		$	.10	$	.445	$	.28

See accompanying notes.

3

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

	Sep 25, 2005		Dec 31, 2004		Sep 26, 2004
	(Unaudited)				(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	437,007	$	275,159	$	484,578
Marketable securities		580,826		1,336,909		1,043,758
Accounts receivable, net		139,759		121,333		139,022
Finance receivables, net		1,161,289		1,207,124		998,114
Inventories		232,240		226,893		234,728
Other current assets		114,568		98,854		84,155
Total current assets		2,665,689		3,266,272		2,984,355
Finance receivables, net		784,785		905,176		581,296
Property, plant and equipment, net		981,848		1,024,665		978,292
Goodwill		56,909		59,456		57,267
Other assets		205,237		227,724		329,164
	$	4,694,468	$	5,483,293	$	4,930,374
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	322,700	$	244,202	$	285,725
Accrued expenses and other liabilities		540,510		433,053		407,348
Current portion of finance debt		--		495,441		109,179
Total current liabilities		863,210		1,172,696		802,252
Finance debt		776,626		800,000		670,000
Other long-term liabilities		134,786		142,278		220,461
Post-retirement health care benefits		57,732		149,848		144,917
Contingencies (Note 9)
Total shareholders’ equity		2,862,114		3,218,471		3,092,744
	$	4,694,468	$	5,483,293	$	4,930,374

See accompanying notes.

4

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

	Nine months ended
	Sep 25, 2005			Sep 26, 2004
Cash flows from operating activities:
Net income	$	729,560		$	680,804
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation		159,773			160,765
Provision for long-term employee benefits		62,224			47,143
Gain on current year securitizations		(42,355	)		(58,302	)
Net change in wholesale finance receivables		17,529			23,811
Contributions to pension and postretirement plans		(109,000	)		--
Tax benefit from the exercise of stock options		--			42,919
Other		18,438			25,788
Net changes in current assets and current liabilities		144,369			20,055
Total adjustments		250,978			262,179
Net cash provided by operating activities		980,538			942,983
Cash flows from investing activities:
Capital expenditures		(122,128	)		(109,874	)
Finance receivables acquired or originated		(2,265,198	)		(1,945,197	)
Finance receivables collected		230,557			196,646
Proceeds from securitizations		2,128,608			1,847,895
Collection of retained securitization interests		84,766			97,494
Purchase of marketable securities		(707,345	)		(541,551	)
Sales and redemptions of marketable securities		1,462,613			487,957
Other, net		(10,586	)		(8,868	)
Net cash provided by investing activities		801,287			24,502
Cash flows from financing activities:
Net decrease in finance debt		(510,720	)		(214,290	)
Dividends		(124,330	)		(82,411	)
Purchase of common stock for treasury		(1,014,645	)		(564,132	)
Excess tax benefits from share based payments		5,319			--
Issuance of common stock under employee stock plans		24,399			48,597
Net cash used in financing activities		(1,619,977	)		(812,236	)
Net increase in cash and cash equivalents		161,848			155,249
Cash and cash equivalents:
At beginning of period		275,159			329,329
At end of period	$	437,007		$	484,578

See accompanying notes.

5

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 herein 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 September 25, 2005 and September 26, 2004, the condensed consolidated statements of income for the three- and nine-month periods then ended and the condensed consolidated statements of cash flows for the nine-month periods then ended. 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, 2004.

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.

Note 2 – Additional Balance Sheet and Cash Flow Information

The Company values its inventories at the lower of cost, principally using the last-in, first-out (LIFO) method, or market. Inventories consist of the following (in thousands):

	Sep 25, 2005		Dec 31, 2004		Sep 26, 2004
Components at the lower of cost, first-in,
first-out (FIFO), or market:
Raw material and work-in-process	$	76,989	$	78,750	$	79,476
Motorcycle finished goods		77,736		75,839		83,217
Parts and accessories/general merchandise		100,044		93,933		90,077
		254,769		248,522		252,770
Excess of FIFO over LIFO		22,529		21,629		18,042
	$	232,240	$	226,893	$	234,728

Net changes in current assets and liabilities included in the statement of cash flows to adjust net income to net cash provided by operating activities was comprised of the following (in thousands):

	Nine months ended
	Sep 25, 2005			Sep 26, 2004
Accounts receivable, net	$	(18,426	)	$	(26,616	)
Finance receivables accrued interest and other		(6,734	)		(10,017	)
Inventories		(5,347	)		(27,001	)
Accounts payable/Accrued expenses		187,161			90,007
Other		(12,285	)		(6,318	)
	$	144,369		$	20,055

6

Note 3 — Product Warranty

The Company provides a standard two-year limited warranty on all new motorcycles sold. The warranty coverage 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 on historical Company claim information. Changes in the Company’s warranty liability were as follows (in thousands):

	Three months ended						Nine months ended
	Sep 25, 2005			Sep 26, 2004			Sep 25, 2005			Sep 26, 2004
Balance, beginning of period	$	42,070		$	36,917		$	39,998		$	30,475
Warranties issued during the period		12,853			10,707			31,318			31,170
Settlements made during the period		(10,713	)		(9,030	)		(24,566	)		(24,980	)
Changes to the liability for pre-existing warranties
during the period		--			--			(2,540	)		1,929
Balance, end of period	$	44,210		$	38,594		$	44,210		$	38,594

Note 4 — 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				Nine months ended
	Sep 25, 2005		Sep 26, 2004		Sep 25, 2005		Sep 26, 2004
Motorcycles net revenue	$	1,431,151	$	1,300,684	$	3,999,879	$	3,794,193
Gross profit		561,272		494,568		1,525,989		1,438,113
Operating expenses		194,270		187,980		540,780		529,344
Operating income from Motorcycles		367,002		306,588		985,209		908,769
Financial Services income		81,444		77,484		255,558		239,038
Financial Services expense		33,869		27,410		103,403		89,644
Operating income from Financial Services		47,575		50,074		152,155		149,394
Corporate expenses		3,715		3,348		18,001		12,871
Income from operations	$	410,862	$	353,314	$	1,119,363	$	1,045,292

7

Note 5 — 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				Nine months ended
	Sep 25, 2005		Sep 26, 2004		Sep 25, 2005		Sep 26, 2004
Numerator
Net income used in computing
basic and diluted earnings per share	$	264,954	$	228,983	$	729,560	$	680,804
Denominator
Denominator for basic earnings per share -
weighted-average common shares		274,415		294,031		282,519		295,362
Effect of dilutive securities - employee stock
options and nonvested stock		1,045		1,793		887		1,995
Denominator for diluted earnings per share-
adjusted weighted-average shares		275,460		295,824		283,406		297,357
Basic earnings per share	$	.97	$	.78	$	2.58	$	2.30
Diluted earnings per share	$	.96	$	.77	$	2.57	$	2.29

Note 6 — Comprehensive Income

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

	Three months ended						Nine months ended
	Sep 25, 2005			Sep 26, 2004			Sep 25, 2005			Sep 26, 2004
Net income	$	264,954		$	228,983		$	729,560		$	680,804
Foreign currency translation adjustments		(2,753	)		(263	)		(14,760	)		(2,925	)
Changes in net unrealized
gains and losses, net of tax:
Investment in retained securitization interests		(850	)		(178	)		(6,461	)		1,117
Derivative financial instruments		1,938			(1,109	)		24,279			13,020
Marketable securities		(400	)		545			(504	)		(1,939	)
Comprehensive income	$	262,889		$	227,978		$	732,114		$	690,077

8

Note 7 – 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) with certain employees 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						Nine months ended
	Sep 25, 2005			Sep 26, 2004			Sep 25, 2005			Sep 26, 2004
Pension & SERPA Benefits
Service cost	$	10,093		$	9,216		$	30,279		$	27,648
Interest cost		12,486			11,463			37,458			34,389
Expected return on plan assets		(15,641	)		(14,798	)		(46,923	)		(44,394	)
Amortization of unrecognized prior service cost		1,759			1,770			5,277			5,310
Amortization of unrecognized net loss		3,265			2,536			9,795			7,608
Net periodic benefit cost	$	11,962		$	10,187		$	35,886		$	30,561
Postretirement Healthcare Benefits
Service cost	$	2,634		$	2,842		$	7,902		$	8,786
Interest cost		3,685			3,749			11,055			11,607
Expected return on plan assets		(1,108	)		--			(3,324	)		--
Amortization of unrecognized prior service cost		(329	)		(256	)		(987	)		(764	)
Amortization of unrecognized net loss		1,248			1,423			3,744			4,701
Net periodic benefit cost	$	6,130		$	7,758		$	18,390		$	24,330

During the nine months ended September 25, 2005, the Company contributed $102.3 million to its postretirement healthcare plan trusts to partially pre-fund its postretirement healthcare benefits and $6.7 million to its pension plans. The Company contributed an additional $150 million to the pension plans early in the fourth quarter of 2005.

Note 8 — Stock Compensation

The Company has a stock compensation plan which was approved by its shareholders in April 2004 (Plan) under which the Board of Directors may grant to employees, among other things, nonqualified stock options and shares of nonvested stock. The options have an exercise price equal to the fair market value of the underlying stock at the date of grant and vest ratably over a four-year period with the first 25% becoming exercisable one year after the date of grant. The options expire 10 years from the date of grant. Shares of nonvested stock that have been issued under the Plan vest over periods ranging from 4 to 5 years with certain of the shares subject to accelerated vesting should the Company meet certain performance conditions. Dividends are paid on shares of nonvested stock.

On January 1, 2005 the Company adopted Statement of Financial Accounting Standards (SFAS) No. 123 (revised 2004), “Share-Based Payment,” requiring the Company to recognize expense related to the fair value of its employee stock option awards. For additional information related to the Company’s adoption of SFAS No. 123 (revised 2004), refer to the Company’s Quarterly Report on Form 10-Q for the period ended March 27, 2005. Total stock compensation expense recognized by the Company during the three- and nine-month periods ended September 25, 2005 was $5.1 million and $18.1 million, respectively, or $3.2 million and $11.2 million, respectively, net of taxes. Stock compensation cost is recognized on a straight-line basis over the vesting period of the award and relates to (a) stock option awards granted prior to, but not yet vested as of, January 1, 2005, based on the grant date fair value estimated in accordance with the original provisions of SFAS No. 123, and (b) compensation cost for all share-based payments granted subsequent to January 1, 2005, based on the grant-date fair value estimated in accordance with the provisions of SFAS No. 123 (revised 2004) using a lattice-based valuation model for stock option awards.

9

Prior to January 1, 2005, the Company accounted for stock options under the recognition and measurement principles of APB Opinion No. 25, “Accounting for Stock Issued to Employees,” and related interpretations. As a result, no stock-option based employee compensation cost was reflected in net income, as all options granted under those plans had an exercise price equal to the market value of the underlying common stock on the date of grant. For purposes of pro forma disclosures required under SFAS No. 123, “Accounting for Stock-Based Compensation,” the estimated fair value of the options, using the Black-Scholes options pricing model, was amortized to expense on a straight line basis over the options’ vesting period. The Company’s pro forma information for the three- and nine-month periods ended September 26, 2004 was as follows (in thousands, except per share amounts):

	Three months ended Sep 26, 2004			Nine months ended Sep 26, 2004
Net income, as reported	$	228,983		$	680,804
Deduct: Stock-based employee compensation expense determined under fair value
method for all option awards, net of tax effects		(3,494	)		(10,438	)
Pro forma net income	$	225,489		$	670,366
Earnings per share:
Basic as reported	$	.78		$	2.30
Basic pro forma	$	.77		$	2.27
Diluted as reported	$	.77		$	2.29
Diluted pro forma	$	.76		$	2.26

10

Note 9 – 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.

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 against the Company and some or all of the following Company officers: Jeffrey L. Bleustein, James M. Brostowitz, Jon R. Flickinger, John A. Hevey, Ronald M. Hutchinson, Gail A. Lione, James A. McCaslin, W. Kenneth Sutton, Jr., Donna F. Zarcone and James L. Ziemer. The complaints allege securities law violations and seek 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).

Two shareholder derivative lawsuits were filed in the United States District Court for the Eastern District of Wisconsin on June 3, 2005 and October 25, 2005 and one shareholder derivative lawsuit was filed in Milwaukee County Circuit Court on July 22, 2005 against some or all of the following directors and officers of the Company:  Jeffrey L. Bleustein, James L. Ziemer, James M. Brostowitz, Barry K. Allen, Richard Beattie, George Conrades, Judson Green, Donald James, Sara Levinson, George L. Miles, Jr., James Norling, James A. McCaslin, Donna 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 July 11, 2005, the staff of the Enforcement Division of the United States Securities and Exchange Commission (“SEC”) advised the Company that it is inquiring into matters relating generally to the Company’s April 13, 2005 announcement and certain allegations contained in the shareholder complaints. The Company is cooperating 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 against the Company, the Administrative Committee of Harley-Davidson, Inc., and the following Company employees, officers, and directors:  Harold A. Scott, James M. Brostowitz, James L. Ziemer, Gail A. Lione, Barry K. Allen, Richard I. Beattie, Jeffrey L. Bleustein, George H. Conrades, Judson C. Green, Donald A. James, Sara L. Levinson, George L. Miles, Jr., and James A. Norling.  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.

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.

11

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, which motion was denied on August 23, 2004. A notice of appeal to the Wisconsin Court of Appeals from the latter dismissal was filed by the plaintiffs and the appeal is currently pending. The Company intends to continue to vigorously defend this matter. The Company believes that the 5-year/50,000-mile warranty extension it announced in January 2001 adequately addresses the condition for affected owners.

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.

12

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 $7.0 million. The Company has established reserves for this amount, which are included in Accrued Expenses and Other Liabilities in the 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 2010. Response Costs related to ground water remediation may continue for some time beyond 2010. 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 million. Based on the environmental studies performed as part of the sale of the Transportation Vehicles segment, the Company does not expect to incur any material expenditures under this indemnification.

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.

Note 10 – Reclassifications

Cash flows from operating activities in the Condensed Consolidated Statements of Cash Flows include the net impact of changes in wholesale finance receivables related to loans made by the Company’s Financial Services segment to its independent motorcycle dealers. Prior to December 2004, the Company’s policy was to classify all the cash flow effects of providing wholesale loans to its independent motorcycle dealers as an investing activity in its Statements of Cash Flows. The classification of these amounts was changed after considering concerns raised by the staff of the Securities and Exchange Commission and all prior period amounts have been reclassified to be consistent with the current presentation. This change in classification is discussed in more detail in Note 1 to the Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2004.

Certain other prior year amounts relating to cash and cash equivalents and marketable securities have also been reclassified to conform to the current year presentation.

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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 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. Harley-Davidson Motor Company manufactures five families of motorcycles: Touring, Dyna™, Softail^®, VRSC™ and Sportster^®. Buell Motorcycle Company produces sport motorcycles, including seven twin-cylinder XB models and the single-cylinder Buell^® Blast^®. Buell also offers a line of motorcycle parts, accessories, apparel and general merchandise. Harley-Davidson Financial Services provides wholesale and retail financing and insurance programs primarily to Harley-Davidson/Buell dealers and customers.

Overview⁽¹⁾

The Company’s net revenue for the third quarter of 2005 was $1.43 billion, up 10.0% over the same quarter last year, due primarily to an 8.7% increase in shipments of Harley-Davidson motorcycles over the third quarter of 2004. Net income and diluted earnings per share also grew during the third quarter of 2005, with increases over prior year of 15.7% and 24.7%, respectively. The increase in diluted earnings per share includes the benefit of fewer weighted average shares outstanding when compared to the same quarter last year. The Company’s outstanding shares have decreased as a result of common stock repurchases totaling 20.6 million shares through the nine months of 2005.

The Company’s independent dealer network also reported increases in motorcycle unit sales during the third quarter of 2005. In the United States, retail sales of Harley-Davidson^® motorcycles grew 12.1% during the quarter, and in Europe and Japan, retail sales were up 11.5% and 13.1%, respectively. Through the first nine months of 2005, worldwide retail sales of Harley-Davidson motorcycles were up 6.9%. Retail sales data is compiled by the Company from sales and warranty registrations provided by the Company’s independent dealers.

The Company’s 2005 third quarter results keep it on track with its previously disclosed annual guidance for 2005. The Company’s shipment target for 2005 remains at 329,000 Harley-Davidson motorcycles, supporting a 2005 earnings per share growth rate in the range of 10% to 13%. Management is pleased with the positive response to the Company’s 2006 motorcycles and believes it has great new products and customer experiences planned for 2006. However, looking ahead, management is watching the economy carefully. Considering the uncertainty related to consumer confidence, increasing fuel prices and rising interest rates, the Company has set a shipment target range of 348,000 to 352,000 Harley-Davidson motorcycles for 2006. Consistent with this outlook, the Company has changed long-term guidance for Harley-Davidson motorcycle wholesale unit growth at 5% to 9% annually. The Company believes this will support a long-term earnings per share growth target in the range of 11% to 17%.

⁽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. 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 this release, and the Company disclaims any obligation to publicly update such forward-looking statements to reflect subsequent events or circumstances.

14

Results of Operations for the Three Months Ended September 25, 2005
Compared to the Three Months Ended September 26, 2004

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.

Overall

For the third quarter ended September 25, 2005, net revenue totaled $1.43 billion, a $130.5 million or 10.0% increase over the same period last year. Net income for the third quarter of 2005 was $265.0 million compared to $229.0 million in the third quarter of 2004, an increase of 15.7%. Diluted earnings per share for the third quarter of 2005 were $.96 representing a 24.7% increase over 2004 third quarter earnings per share of $.77. Diluted earnings per share were positively impacted during the third quarter of 2005 by a decrease in the weighted-average shares outstanding, which were 275.5 million in the third quarter of 2005 compared to 295.8 million in the same quarter last year. The decrease in weighted-average shares outstanding was driven by the Company’s repurchase of 20.6 million shares of common stock that occurred during the first nine months of 2005. The Company’s 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 September 25, 2005 and September 26, 2004 (dollars in millions):

	2005		2004		Increase (Decrease)			% Change
Motorcycle Unit Shipments
Touring motorcycle units		29,492		21,818		7,674			35.2	%
Custom motorcycle units*		40,730		39,857		873			2.2
Sportster motorcycle units		17,363		18,903		(1,540	)		(8.1	)
Harley-Davidson motorcycle units		87,585		80,578		7,007			8.7
Buell motorcycle units		2,914		2,472		442			17.9
Total motorcycle units		90,499		83,050		7,449			9.0	%
Net Revenue
Harley-Davidson motorcycles	$	1,110.2	$	996.6	$	113.6			11.4	%
Buell motorcycles		25.3		18.3		7.0			37.9
Total motorcycles		1,135.5		1,014.9		120.6			11.9
Parts & Accessories		231.2		224.4		6.8			3.0
General Merchandise		64.5		61.4		3.1			5.1
Net revenue	$	1,431.2	$	1,300.7	$	130.5			10.0	%

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

During the third quarter of 2005, Harley-Davidson motorcycle revenue was up 11.4% from the same quarter last year due primarily to an increase in Harley-Davidson motorcycle shipments of 7,007 units. Harley-Davidson motorcycle revenue also benefited during the third quarter of 2005 from favorable changes in product mix which related primarily to an increase in the percentage of shipments consisting of higher-priced touring motorcycles. Touring motorcycles made up 33.6% of shipments in the third quarter of 2005 compared to 27.1% in 2004. Touring motorcycles typically make up approximately 30% of Harley-Davidson motorcycle unit shipments, and management anticipates that the percentage of shipments consisting of touring motorcycles in the fourth quarter of 2005 will decrease slightly from third quarter 2005 levels. ⁽¹⁾

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Harley-Davidson motorcycle revenue also received a modest benefit during the third quarter of 2005 from wholesale price increases on its 2006 model year motorcycles, which averaged approximately 1%.

During the third quarter of 2005, net revenue from Parts and Accessories (P&A) was up 3.0% over the third quarter of 2004. On a long-term basis, the Company expects the growth rate for P&A revenue will be slightly higher than the growth rate for Harley-Davidson motorcycle units.⁽¹⁾

General Merchandise revenue during the third quarter of 2005 was 5.1% higher than the same period last year. The Company expects that the long-term growth rate for General Merchandise revenue will be lower than the growth rate for Harley-Davidson motorcycle units.⁽¹⁾

Gross Profit

Gross profit was $561.3 million for the Motorcycles segment in the third quarter of 2005, an increase of $66.7 million or 13.5% over the same quarter last year. Gross margin for the third quarter of 2005 was 39.2% compared to 38.0% in the third quarter of 2004. During the third quarter of 2005, the increase in gross margin was driven by a favorable motorcycle product mix and wholesale price increases on 2006 model year motorcycles. The Company experienced higher material costs of approximately $6.1 million during the third quarter of 2005 when compared to the same period last year.

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 September 25, 2005 and September 26, 2004 (in millions):

	2005		2004		Increase (Decrease)			% Change
Interest income	$	28.7	$	23.4	$	5.3			22.8	%
Income from securitizations		29.3		29.7		(0.4	)		(1.3	)
Other income		23.4		24.4		(1.0	)		(4.0	)
Financial services income		81.4		77.5		3.9			5.1
Interest expense		8.1		5.5		2.6			45.9
Operating expenses		25.7		21.9		3.8			17.9
Financial services expense		33.8		27.4		6.4			23.6
Operating income from financial services	$	47.6	$	50.1	$	(2.5	)		(5.0	)%

During the third quarter of 2005, operating income from Financial Services was lower than in the third quarter of 2004, as increased interest income was offset by a lower gain on the current quarter securitization and higher expenses.  Interest income during the third quarter of 2005 benefited from increased retail and wholesale outstanding receivables and higher wholesale interest rates when compared to the same quarter last year. Interest expense in the third quarter of 2005 was higher than in the same period last year due to increased HDFS’ borrowings, in support of higher average outstanding receivables, and higher borrowing costs. The increase in operating expenses during the third quarter of 2005 was the result of lower foreign exchange gains and a higher provision for finance credit losses, when compared to the same period last year. 

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Income from securitizations was down slightly as lower gains on current year securitization transactions were partially offset by the increase in income on the investment in retained securitization interests. During the third quarter of 2005, HDFS sold $650 million in retail motorcycle loans through a securitization transaction resulting in a gain of $9.2 million. This compares with a gain of $13.8 million on $625 million of loans securitized in the third quarter of 2004. The 2005 gain as a percentage of loans sold of 1.4% falls within management’s prior expectation of 1.3% to 2.0%. The gain as a percentage of the amount of loans securitized was lower as compared to percentage gains in the third quarter of 2004 due to rising market interest rates and the competitive environment for motorcycle lending. In the current competitive market and interest rate environment, the Company expects 2005 fourth quarter securitization gains in the range of 1.0% to 1.4%.⁽¹⁾

During the third quarter of 2005, income on the investment in retained securitization interests was $20.1 million, an increase of $4.2 million over 2004, due primarily to larger securitization transactions and better than anticipated performance on prior years’ securitization transactions.

For the full year 2005, the Company expects operating income from Financial Services to be approximately equal to that achieved in 2004. For the longer term, the Company expects the Financial Services operating income growth rate to be slightly higher than the Company’s motorcycle unit growth rate.⁽¹⁾

Changes in the allowance for finance credit losses during the three months ended September 25, 2005 and September 26, 2004 were as follows (in millions):

	2005			2004
Balance, beginning of period	$	26.8		$	31.3
Provision for finance credit losses		2.2			0.7
Charge-offs, net of recoveries		(2.4	)		(0.7	)
Balance, end of period	$	26.6		$	31.3

The periodic evaluation of the adequacy of the allowance for credit losses is generally based on past loan loss experience, known and inherent risks in the portfolio, and current economic conditions.  HDFS believes the allowance is adequate to cover the losses of principal and accrued interest in the existing portfolio.⁽¹⁾ Included in charge-offs, net of recoveries, are $0.9 million and $0.2 million of recoveries in the third quarters of 2005 and 2004, respectively, received by HDFS from HDMC. These recoveries relate to guarantees provided by HDMC on wholesale loans to independent European Harley-Davidson dealers.

Operating Expenses

The following table includes operating expenses for the Motorcycles segment and Corporate for the three months ended September 25, 2005 and September 26, 2004 (in millions):

	2005		2004		Increase (Decrease)		% Change
Motorcycles and Related Products	$	194.3	$	188.0	$	6.3		3.3	%
Corporate		3.7		3.3		0.4		11.0
Total operating expenses	$	198.0	$	191.3	$	6.7		3.5	%

The increase in operating expenses during the third quarter of 2005 was driven primarily by stock compensation expense. As discussed in Note 8 to the Condensed Consolidated Financial Statements, the Company began expensing the cost of its employee stock option awards on January 1, 2005. As a result, the Company recorded $5.1 million of stock compensation expense during the third quarter of 2005 of which $4.0 million was included in operating expenses. Total operating expenses, which includes selling, administrative and engineering expenses, were 13.8% and 14.7% of net revenue for the third quarters of 2005 and 2004, respectively.

Provision for income taxes

The Company’s effective income tax rate was 35.5% during the third quarters of 2005 and 2004. The Company expects that the income tax rate will be 35.5% for the remainder of 2005.⁽¹⁾

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Results of Operations for the Nine Months Ended September 25, 2005
Compared to the Nine Months Ended September 26, 2004

Overall

Net revenue for the nine months ended September 25, 2005 totaled $4.00 billion, a $205.7 million or 5.4% increase over the same period last year. Net income for the first nine months of 2005 was $729.6 million compared to $680.8 million in the first nine months of 2004, an increase of 7.2%. Diluted earnings per share for the first nine months of 2005 were $2.57 on 283.4 million weighted-average shares outstanding, compared to $2.29 on 297.4 million weighted-average shares outstanding during the same period last year, an increase in earnings per share of 12.2%. The decrease in weighted-average shares outstanding was driven by the Company’s repurchase of 20.6 million shares that occurred during the first nine months of 2005. The Company’s 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 nine months ended September 25, 2005 and September 26, 2004 (dollars in millions):

	2005		2004		Increase			% Change
Motorcycle Unit Shipments
Touring motorcycle units		81,103		68,253		12,850			18.8	%
Custom motorcycle units*		110,376		116,128		(5,752	)		(5.0	)
Sportster motorcycle units		49,950		52,321		(2,371	)		(4.5	)
Harley-Davidson motorcycle units		241,429		236,702		4,727			2.0
Buell motorcycle units		8,450		7,793		657			8.4
Total motorcycle units		249,879		244,495		5,384			2.2	%
Net Revenue
Harley-Davidson motorcycles	$	3,095.2	$	2,935.6	$	159.6			5.4	%
Buell motorcycles		71.2		63.5		7.7			12.2
Total motorcycles		3,166.4		2,999.1		167.3			5.6
Parts & Accessories		645.8		623.7		22.1			3.5
General Merchandise		187.4		168.8		18.6			11.0
Other		0.3		2.6		(2.3	)		n.m.
Net revenue	$	3,999.9	$	3,794.2	$	205.7			5.4	%

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

During the first nine months of 2005, Harley-Davidson motorcycle revenue was up 5.4% from the same period last year on 4,727 or 2.0% more unit shipments. Favorable changes in product mix, foreign currency exchange rates and wholesale price increases helped revenue grow at a faster rate than units through nine months of 2005. During the first nine months of 2005, product mix was favorable due to a greater percentage of shipments consisting of higher-priced touring motorcycles, when compared to the same period last year. Favorable foreign currency exchange rates during the first three quarters of 2005 resulted in approximately $15.8 million of higher Harley-Davidson motorcycle revenue, when compared to the same period last year. An average wholesale price increase of approximately 1% on 2006 model year motorcycles also contributed to the higher revenue during the first nine months of 2005.

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During the first nine months of 2005, net revenue from P&A increased 3.5% over the same period in 2004. General Merchandise revenue during the first nine months of 2005 was up 11.0% over the same period last year.

Harley-Davidson Retail Motorcycle Sales

Worldwide retail sales of Harley-Davidson motorcycles grew 6.9% for the first nine months of 2005 over the same period last year. Through September 30, 2005, retail sales of Harley-Davidson motorcycles were up 5.0% in the United States, 19.3% in Europe, and 11.4% in Japan, when compared to the same period last year. On an industry-wide basis the heavyweight (651+cc) segment was up 4.3% in the United States through September 30, 2005, while industry-wide sales in Europe and Japan were both down through August 31, 2005, when compared to the same period last year. The following table includes retail unit sales of Harley-Davidson motorcycles through September 30, 2005 and 2004 (units in thousands):

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

	2005		2004		% Change
United States		210.8		200.8		5.0	%
Europe (b)		25.2		21.1		19.3
Japan		8.4		7.6		11.4
Canada		10.7		10.0		7.2
All other markets		8.2		6.8		19.7
Total Harley-Davidson retail sales		263.3		246.3		6.9	%

(a) Data source for all 2005 retail sales figures shown above is sales and warranty registrations 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. 2004 retail sales figures shown above conform to sales warranty and registration information as of September 30, 2004, and the U.S. figures vary from previously published Motorcycle Industry Council data.

(b) Europe retail sales includes sales in Austria, Belgium, Denmark, Finland, France, Germany, Greece, Italy, the 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):

Industry Motorcycle Retail Registration
Heavyweight (651+cc)

	2005		2004		% Change
United States (through September 30) (a)		437.1		419.3		4.3	%
Europe (through August 31) (b)		282.0		285.8		(1.3	)
Japan (through August 31) (c)		30.7		31.2		(1.5	)

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

(b) Europe data provided by Giral S.A., includes retail sales in Austria, Belgium, Denmark, Finland, France, Germany, Greece, Italy, the Netherlands, Norway, Portugal, Spain, Sweden, Switzerland and the United Kingdom.

(c) Japan data provided by Japan Automobile Importers Association.

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Gross Profit

Gross profit was $1.53 billion for the Motorcycles segment during the first nine months of 2005, an increase of $87.9 million or 6.1% over gross profit in the same period last year. Gross profit margin for the first nine months of 2005 was 38.2% compared to 37.9% during the same period last year. During the first nine months of 2005, the increase in gross margin was due primarily to the favorable motorcycle product mix shipped during the period. Gross margin also benefited during the first nine months of 2005 from 2006 model year wholesale price increases, favorable changes in foreign currency exchange rates and lower costs resulting from manufacturing efficiencies. However, the positive impact from pricing, currency and manufacturing efficiencies was offset by higher raw material costs which totaled $23.4 million for the first nine months of 2005.

Financial Services

The following table includes the condensed statements of operations for the Financial Services segment (which consists of HDFS) for the nine months ended September 25, 2005 and September 26, 2004 (in millions):

	2005		2004		Increase (Decrease)			% Change
Interest income	$	95.2	$	73.3	$	21.9			29.8	%
Income from securitizations		100.3		97.9		2.4			2.5
Other income		60.1		67.8		(7.7	)		(11.4	)
Financial services income		255.6		239.0		16.6			6.9
Interest expense		26.1		15.9		10.2			63.6
Operating expenses		77.3		73.7		3.6			4.9
Financial services expense		103.4		89.6		13.8			15.3
Operating income from financial services	$	152.2	$	149.4	$	2.8			1.8	%

During the first nine months of 2005, operating income from Financial Services increased slightly over the same period last year driven by higher interest income and higher income from securitizations, partially offset by lower other income and higher expenses. During the first nine months of 2005, interest income benefited from increased retail and wholesale outstanding receivables and higher wholesale interest rates when compared to the same period last year.  The reduction in other income during the first three quarters of 2005 was primarily due to lower revenue from insurance commissions than in the first nine months of 2004. Interest expense was higher during the first nine months of 2005 due to increased HDFS’ borrowings, in support of higher average outstanding receivables and higher borrowing costs when compared to the same period last year. 

Income from securitizations was higher due to an increase in income on the investment in retained securitization interests that was partially offset by lower gains on current year securitization transactions. During the first nine months of 2005, income on the investment in retained securitization interests was $57.9 million, an increase of $18.3 million over 2004, due primarily to larger securitization transactions and better than anticipated performance on prior years’ securitization transactions.

During the first nine months of 2005, HDFS sold $2.2 billion in retail motorcycle loans through securitization transactions resulting in gains of $42.4 million. This compares with gains of $58.3 million on $1.9 billion of loans securitized in the first nine months of 2004. The 2005 gain as a percentage of loans sold is 2.0% as compared to 3.1% for the same period in 2004. The 2005 gain as a percentage of the amount of loans securitized was lower when compared with the same period in the prior year due to rising market interest rates, the competitive environment for motorcycle lending and the cost of an enhanced dealer participation program introduced in May 2004.

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Changes in the allowance for finance credit losses during the nine months ended September 25, 2005 and September 26, 2004 were as follows (in millions):

	2005			2004
Balance, beginning of period	$	30.3		$	31.3
Provision for finance credit losses		1.7			2.4
Charge-offs, net of recoveries		(5.4	)		(2.4	)
Balance, end of period	$	26.6		$	31.3

The periodic evaluation of the adequacy of the allowance for credit losses is generally based on past loan loss experience, known and inherent risks in the portfolio, and current economic conditions.  HDFS believes the allowance is adequate to cover the losses of principal and accrued interest in the existing portfolio.⁽¹⁾ Included in charge-offs, net of recoveries, are $1.5 million and $3.3 million of recoveries in the first nine months of 2005 and 2004, respectively, received by HDFS from HDMC. These recoveries relate to guarantees provided by HDMC on wholesale loans to independent European Harley-Davidson dealers.

Operating Expenses

The following table includes operating expenses for the Motorcycles segment and Corporate for the nine months ended September 25, 2005 and September 26, 2004 (in millions):

	2005		2004		Increase		% Change
Motorcycles and Related Products	$	540.8	$	529.3	$	11.5		2.2	%
Corporate		18.0		12.9		5.1		39.9
Total operating expenses	$	558.8	$	542.2	$	16.6		3.1	%

The increase in operating expenses during the first nine months of 2005 was driven primarily by higher costs related to marketing activities and stock compensation expense, partially offset by a decrease in expense related to the Company’s short-term incentive compensation plan. The Company began expensing the cost of its employee stock option awards on January 1, 2005, and as a result, recorded $18.1 million of stock compensation expense during the first nine months of 2005 of which $15.1 million was included in operating expenses. Operating expenses, which includes selling, administrative and engineering expenses, were 14.0% and 14.3% of net revenue for the first nine months of 2005 and 2004, respectively.

Provision for income taxes

The Company’s effective income tax rate was 35.5% during both the first nine months of 2005 and 2004.

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Other Matters

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 on-going basis and are updated based on new developments or new information in each matter.

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 against the Company and some or all of the following Company officers: Jeffrey L. Bleustein, James M. Brostowitz, Jon R. Flickinger, John A. Hevey, Ronald M. Hutchinson, Gail A. Lione, James A. McCaslin, W. Kenneth Sutton, Jr., Donna F. Zarcone and James L. Ziemer. The complaints allege securities law violations and seek 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).

Two shareholder derivative lawsuits were filed in the United States District Court for the Eastern District of Wisconsin on June 3, 2005 and October 25, 2005 and one shareholder derivative lawsuit was filed in Milwaukee County Circuit Court on July 22, 2005 against some or all of the following directors and officers of the Company:  Jeffrey L. Bleustein, James L. Ziemer, James M. Brostowitz, Barry K. Allen, Richard Beattie, George Conrades, Judson Green, Donald James, Sara Levinson, George L. Miles, Jr., James Norling, James A. McCaslin, Donna 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 July 11, 2005, the staff of the Enforcement Division of the United States Securities and Exchange Commission (“SEC”) advised the Company that it is inquiring into matters relating generally to the Company’s April 13, 2005 announcement and certain allegations contained in the shareholder complaints. The Company is cooperating 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 against the Company, the Administrative Committee of Harley-Davidson, Inc., and the following Company employees, officers, and directors:  Harold A. Scott, James M. Brostowitz, James L. Ziemer, Gail A. Lione, Barry K. Allen, Richard I. Beattie, Jeffrey L. Bleustein, George H. Conrades, Judson C. Green, Donald A. James, Sara L. Levinson, George L. Miles, Jr., and James A. Norling.  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.

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.

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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. This complaint and a second lawsuit filed on April 12, 2002 in state court in Milwaukee County, Wisconsin were dismissed. On April 12, 2004, the same attorneys filed a third action in 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, which was denied on August 23, 2004. A notice of appeal to the Wisconsin Court of Appeals has now been filed. The Company intends to continue to vigorously defend this matter. The Company believes that the 5 year/50,000 mile warranty extension it announced in January 2001 adequately addresses the condition for affected owners. Note 9 to the Condensed Consolidated Financial Statements includes a more detailed discussion of this matter.

The Company is involved with government agencies and groups of potentially responsible parties in various environmental matters, including a matter involving the clean up 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 since 1986 in undertaking environmental investigation and remediation activities, including an on-going site-wide remedial investigation/feasibility study (RI/FS). Note 9 to the Condensed Consolidated Financial Statements includes a discussion of the history of this matter in more detail.

Although the RI/FS is still underway 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 costs associated with environmental investigation and remediation activities at the York facility (Response Costs) will be approximately $7.0 million. The Company has established reserves for this amount, which are included in Accrued Expenses and Other Liabilities in the 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 2010. Response Costs related to ground water remediation may continue for some time beyond 2010. 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 million. Based on the environmental studies performed as part of the sale of the Transportation Vehicles segment, the Company does not expect to incur any material expenditures under this indemnification.

Additionally, the Company is involved in product liability suits related to the operation of its business. The Company accrues for claim exposures which 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.

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Liquidity and Capital Resources as of September 25, 2005

The Company’s financial condition and cash-generating capability are fundamental strengths and provide substantial flexibility in meeting the operating, investing and financing needs of the Company. This flexibility allows the Company to pursue its growth strategies, while providing the potential to enhance shareholder value through repurchasing common stock and paying dividends. The Company also has a commercial paper program, credit facilities and debt instruments in place to support the on-going cash requirements of its Financial Services business.

Cash and Marketable Securities

Cash and marketable securities totaled $1.0 billion as of September 25, 2005 compared to $1.6 billion as of December 31, 2004. The decline is primarily attributable to common stock repurchases, higher dividend payments and benefit plan funding, all of which are discussed in more detail below. 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 3 years. 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 on-going liquidity is cash flow from operations. The Company generated $980.5 million of cash from operating activities during the first nine months of 2005 compared to $943.0 million in same period last year. Cash flows from operations during the first nine months of 2005 includes the impact of a $102.3 million voluntary cash contribution to pre-fund retiree healthcare benefits and a $6.7 million contribution to the Company’s pension plans. In addition, the Company contributed an additional $150 million to the pension plans early in the fourth quarter of 2005.

The Company’s presentation of operating cash flows includes the net impact of changes in wholesale finance receivables related to loans made by the Company’s Financial Services segment to its independent motorcycle dealers. Prior to December 2004, the Company’s policy was to classify all the cash flow effects of providing wholesale loans to its independent motorcycle dealers as an investing activity in its Statements of Cash Flows. The classification of these amounts was changed after considering concerns raised by the staff of the Securities and Exchange Commission, and all prior period amounts have been reclassified to be consistent with this presentation. This change in classification is discussed in more detail in Note 1 to the Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2004.

Investing Activities

Net cash provided by investing activities was $801.3 million during the first nine months of 2005, compared to $24.5 million during the same period last year. The Company’s investing activities consist primarily of net changes in marketable securities, capital expenditures and net changes in finance receivables.

Changes in marketable securities balances provided $755.3 million during the first nine months of 2005. Proceeds from the sale of marketable securities in 2005 were used primarily for the Company’s repurchase of common stock during the first half of 2005.

Capital expenditures were $122.1 million and $110.0 million during the first nine months of 2005 and 2004, respectively. The Company estimates that total capital expenditures in 2005 will be in the range of $200 million to $250 million.⁽¹⁾ The Company anticipates it will have the ability to fund all capital expenditures in 2005 with internally generated funds.⁽¹⁾

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During the first three quarters of 2005 and 2004, HDFS acquired or originated $2.3 billion and $1.9 billion of finance receivables, respectively. Proceeds from securitization transactions and collections of finance receivables and retained securitization interests resulted in cash inflows of $2.4 billion and $2.1 billion during the first nine months of 2005 and 2004, respectively.

Financing Activities

The Company’s financing activities consist primarily of stock transactions, dividend payments and finance debt activity. Net cash used in financing activities during the first nine months of 2005 and 2004 was $1.62 billion and $812.2 million, respectively.

During the first nine months of 2005, the Company repurchased 20.6 million shares of its common stock at a total cost of $1.01 billion. The Company repurchased 20.0 million shares under a general authorization from the Company’s Board of Directors. The remaining 600,000 shares were repurchased under 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. On April 30, 2005, the Company’s Board of Directors separately authorized the Company to buy back another 20 million shares of its common stock with no dollar limit or expiration date. No repurchases have been made under this authorization as of the end of the third quarter of 2005. Please see Part II, Item 2. Changes in Securities and Use of Proceeds for additional detail regarding the Company’s share repurchase activity and authorizations. During the first nine months of 2004, the Company repurchased 10.6 million shares of its common stock at a total cost of $564.1 million.

The Company paid dividends of $.125 per share, $.16 per share and $.16 per share during the first, second and third quarters of 2005, respectively, at a total cost of $124.3 million, compared to dividends of $.08 per share, $.10 per share and $.10 per share, respectively, totaling $82.4 million during the same periods last year.

In addition to operating cash flow 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 September 25, 2005 and September 26, 2004 (in millions):

	2005		2004
Commercial paper	$	203.8	$	199.9
Borrowings under credit facilities		155.9		151.2
		359.7		351.1
Medium-term notes		386.9		398.1
Senior subordinated debt		30.0		30.0
Total finance debt	$	776.6	$	779.2

Credit Facilities — During September 2004, HDFS entered into a $1.1 billion revolving credit facility (Global Credit Facility) due September 2009.  This facility replaced $750 million in domestic credit facilities and a $200 million European credit facility.  The primary use of the Global Credit Facility is to provide liquidity to the unsecured commercial paper program and to fund domestic and foreign operations.  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 and HDFS pays a fee for its availability.

Commercial Paper — HDFS may issue up to $1.1 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 $1.1 billion as of September 25, 2005.

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Medium-Term Notes — During November 2003, HDFS issued $400 million of 3.63% medium-term notes (Notes) due in December 2008. The Notes provide for semi-annual interest payments and principal due at maturity. At September 25, 2005, the Notes included a fair value adjustment that reduced the balance by $13.1 million, 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. During September 2005, the Company’s Board of Directors authorized HDFS to issue up to an additional $400 million of medium-term notes.

Senior Subordinated Debt — HDFS has $30 million of 10 year senior subordinated notes outstanding, due in 2007.

Intercompany Borrowing — HDFS has a revolving credit line with the Company whereby HDFS may borrow up to $210 million from the Company at a market interest rate. As of September 25, 2005 and September 26, 2004, 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.

In connection with its debt agreements, HDFS has various operating and financial covenants and was in compliance with all such covenants at September 25, 2005.

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, advances or loans from the Company and subordinated debt.⁽¹⁾

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Risk Factors

The Company’s ability to meet the targets and expectations noted 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) successfully manage production capacity and production changes, (iii) avoid unexpected 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) avoid unexpected changes and prepare for known requirements in the regulatory environment for its products, (ix) successfully adjust to fluctuations in foreign currency exchange rates, interest rates and commodity prices, (x) adjust to worldwide economic and political conditions, including changes in fuel prices and interest rates, (xi) successfully manage the credit quality and recovery rates of HDFS’s loan portfolio, (xii) retain and attract talented employees and (xiii) detect any defects in our motorcycles to minimize delays in new model launches, recall campaigns, increased warranty costs or litigation. In addition, the Company could experience delays in the operation of manufacturing facilities as a result of work stoppages, natural causes, terrorism or other factors. These risks, potential delays and uncertainties could also adversely impact the Company’s capital expenditure estimates (see “Liquidity and Capital Resources” section).

The Company’s ability to sell all of its motorcycles and related products and services also depends on the ability of the Company’s independent dealer network to sell them to retail customers. The Company depends on the capability of its independent dealers and distributors to develop and implement effective retail sales plans to create demand for the motorcycles and related products and services they purchase from the Company. In addition, the Company’s independent dealers and distributors may experience difficulties in selling Harley-Davidson motorcycles and related products and services as a result of weather, economic conditions or other factors

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, 2004 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 2004 annual report on Form 10-K.

Item 4. Controls and Procedures

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 Treasurer and Acting 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 Treasurer and Acting Chief Financial Officer have concluded that the disclosure controls and procedures were effective as of the date of such evaluation to ensure that material information relating to the Company, including its consolidated subsidiaries, was made known to them by others within those entities, particularly during the period in which this Quarterly Report on Form 10-Q was being prepared.

Changes in internal control over financial reporting. There was no change in the Company’s internal control over financial reporting that occurred during the Company’s third quarter that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

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Part II – OTHER INFORMATION

Item 1.  Legal Proceedings

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 against the Company and some or all of the following Company officers: Jeffrey L. Bleustein, James M. Brostowitz, Jon R. Flickinger, John A. Hevey, Ronald M. Hutchinson, Gail A. Lione, James A. McCaslin, W. Kenneth Sutton, Jr., Donna F. Zarcone and James L. Ziemer. The complaints allege securities law violations and seek 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.

Two shareholder derivative lawsuits were filed in the United States District Court for the Eastern District of Wisconsin on June 3, 2005 and October 25, 2005 and one shareholder derivative lawsuit was filed in Milwaukee County Circuit Court on July 22, 2005 against some or all of the following directors and officers of the Company:  Jeffrey L. Bleustein, James L. Ziemer, James M. Brostowitz, Barry K. Allen, Richard Beattie, George Conrades, Judson Green, Donald James, Sara Levinson, George L. Miles, Jr., James Norling, James A. McCaslin, Donna 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 July 11, 2005, the staff of the Enforcement Division of the United States Securities and Exchange Commission (“SEC”) advised the Company that it is inquiring into matters relating generally to the Company’s April 13, 2005 announcement and certain allegations contained in the shareholder complaints. The Company is cooperating 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 against the Company, the Administrative Committee of Harley-Davidson, Inc., and the following Company employees, officers, and directors:  Harold A. Scott, James M. Brostowitz, James L. Ziemer, Gail A. Lione, Barry K. Allen, Richard I. Beattie, Jeffrey L. Bleustein, George H. Conrades, Judson C. Green, Donald A. James, Sara L. Levinson, George L. Miles, Jr., and James A. Norling.  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.

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.

Note 9 to the Condensed Consolidated Financial Statements includes a detailed discussion of the lawsuits related to the rear cam bearing on certain Harley-Davidson motorcycles. Since the Company’s Form 10-Q for the period ended June 26, 2005, there has been no change in the status of these legal proceedings.

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Note 9 to the Condensed Consolidated Financial Statements includes a detailed discussion of an environmental matter related the clean up of soil and groundwater contamination at the Company’s York, Pennsylvania facility involving the Company, government agencies and other responsible parties. Since the Company’s Form 10-Q for the period ended June 26, 2005, there has been no change in the status of this matter.

Item 2. Changes in 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 September 25, 2005.

2005 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
June 27 to
July 31	-	-	-	23,590,562
August 1 to
August 28	-	-	-	23,634,135
August 29 to
September 25	-	-	-	23,686,851
Total	-	-	-

On April 30, 2005, the Company’s Board of Directors separately authorized the Company to buy back 20 million shares of its common stock with no dollar limit or expiration date. No repurchases have been made under this authorization as of the end of the third quarter of 2005.

The Company also has a continuing authorization (originally adopted in January 1998) from 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 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.

Item 6. Exhibits

Refer to the Exhibit Index on page 31 of this report.

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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:  November 3, 2005	/s/ James M. Brostowitz
	James M. Brostowitz
	Vice President and Treasurer and Acting Chief
	Financial Officer (Principal Financial Officer
	and Principal Accounting Officer)

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

Exhibit
Number

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

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