The motorcycle maker posted a fourth-quarter net loss of $218.7 million, or 94 cents a share, compared with a year-earlier profit of $77.8 million, or 34 cents a share.
Its loss from continuing operations came to 63 cents a share on sales of $764.5 million.
Analysts on average expected a loss of just 32 cents a share before items, on sales of $764.4 million, according to Thomson Reuters I/B/E/S.
Weak consumer spending and tight credit markets created huge headwinds for Harley-Davidson in 2009. The Milwaukee, Wisconsin-based company was already dealing with a number of significant challenges, including the aging of its key baby boomer customer base.
Analysts who once considered the company a growth stock said key demographic trend would trim the company's growth rate significantly in the coming years.
In response to the downturn, Harley has undertaken a huge restructuring, consolidating production, laying off thousands of workers and putting its MV Agusta unit up for sale.
Chief Executive Officer Keith Wandell said the results reflected the difficult economy as well as the higher-than-expected cost of the restructuring needed to bring production in line with demand.
The costly revamp is critical to restoring greater profitability and long-term growth, Wandell said, and warned that the company would have to spend another $175 million to $195 million in 2010 on the process. Harley's total outlays on the restructuring could reach $460 million into 2012, he added.
Revenue from sales of Harley motorcycles to dealers fell 45.6 percent to $552.0 million in the fourth quarter, and shipments fell 53.1 percent.
Retail sales of motorcycles to consumers, meanwhile, fell 21.4 percent worldwide during the quarter, led by a 27.9 percent drop in the United States, the company's largest and most lucrative market.
In trading before the market opened, Harley shares were down 4.2 percent at $24.50.
(Reporting by James B. Kelleher; Editing by Derek Caney and Lisa Von Ahn)