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 March 31, 1996
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)
(414) 342-4680
(Registrant's telephone number, including area code)
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 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 May 3, 1996: 75,488,241 Shares
<PAGE>
HARLEY-DAVIDSON, INC.
Form 10-Q Index
For the Quarter Ended March 31, 1996
Page
Part I. Financial Information
Item 1. Financial Statements
Condensed Consolidated Statements of Operations 3
Condensed Consolidated Balance Sheets 4
Condensed Consolidated Statements of Cash Flows 5
Notes to Condensed Consolidated Financial
Statements 6-7
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 8-11
Part II. Other Information
Item 1. Legal Proceedings 12
Item 6. Exhibits and Reports on Form 8-K 12
Signatures 13
Exhibit Index 14
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements
Harley-Davidson, Inc.
Condensed Consolidated Statements of Operations
(Unaudited)
(In thousands, except per share amounts)
Three months ended
March 31, March 26,
1996 1995
Sales $371,051 $294,886
Cost of goods sold 255,274 204,495
-------- --------
Gross profit 115,777 90,391
Operating income from financial services 1,732 651
Selling, administrative and engineering
expenses (63,484) (51,785)
--------- --------
Income from operations 54,025 39,257
Interest income (expense) - net (405) 339
Other income (expense) - net (1,249) (1,963)
--------- ---------
Income from continuing operations before
provision for income taxes 52,371 37,633
Provision for income taxes 19,377 13,818
--------- ---------
Income from continuing operations 32,994 23,815
Loss from discontinued operations, net
of tax - (184)
---------- ---------
Net income $ 32,994 $ 23,631
======== ========
Weighted average common shares
outstanding 75,113 76,060
====== ======
Net income per common share:
Income from continuing operations $0.44 $0.31
Loss from discontinued operations,
net of tax - -
------ -----
Net income $0.44 $0.31
===== =====
Cash dividends per share $0.05 $0.04
===== =====
<PAGE>
Harley-Davidson, Inc.
Condensed Consolidated Balance Sheets
(In thousands)
ASSETS
March 31, Dec. 31, March 26,
1996 1995 1995
(Unaudited) (Unaudited)
Current assets:
Cash and cash equivalents $ 39,577 $ 31,462 $ 19,295
Accounts receivable, net 157,786 134,210 144,296
Inventories (Note 2) 85,758 84,427 101,957
Notes receivable 12,000 - -
Other current assets 29,128 30,591 22,536
Net assets from
discontinued operations 22,833 56,548 56,848
-------- ------- --------
Total current assets 347,082 337,238 344,932
Finance receivables, net 270,762 213,444 -
Property, plant and equipment,
net 293,270 284,775 219,188
Goodwill 42,643 43,256 -
Other assets 82,177 66,949 64,844
Net assets from discontinued
operations 26,981 55,008 54,873
--------- --------- --------
$1,062,915 $1,000,670 $683,837
========= ========= ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Notes payable $ 1,020 $ 2,327 $ 23,761
Current maturities of
long-term debt 278 364 218
Accounts payable 97,790 102,563 48,650
Accrued expenses and other 118,877 127,956 103,693
--------- --------- ---------
Total current liabilities 217,965 233,210 176,322
Finance debt 196,657 164,330 -
Postretirement health care benefits 63,980 63,570 61,273
Other long-term liabilities 50,746 44,991 29,939
Contingencies (Note 5)
Total shareholders' equity 533,567 494,569 416,303
--------- -------- --------
$1,062,915 $1,000,670 $683,837
========== ========= ========
<PAGE>
Harley-Davidson, Inc.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
(In thousands)
Three months ended
March 31, March 26,
1996 1995
Cash flows from operating activities:
Net income $ 32,994 $ 23,631
Depreciation and amortization 12,122 8,949
Long-term employee benefits 1,258 2,119
Other-net 1,490 (55)
Net change in discontinued operations 4,953 (5,328)
Net change in other current assets and
current liabilities (37,296) (40,797)
------- -------
Net cash provided by (used in)
operating activities 15,521 (11,481)
Cash flows from investing activities:
Purchase of property and equipment (19,884) (14,018)
Finance receivables acquired or
originated (274,435) -
Finance receivables collected/sold 216,507 -
Proceeds from disposition of
discontinued segment 23,350 -
Net change in discontinued operations (3,338) (2,234)
Other - net (7,492) 2,758
-------- -------
Net cash used in investing activities (65,292) (13,494)
Cash flows from financing activities:
Reduction of long-term debt (2,146) (127)
Net increase (decrease) in notes payable (1,307) 22,675
Net increase in finance debt 32,327 -
Dividends paid (3,899) (3,048)
Stock repurchases - (39,972)
Issuance of stock under employee
stock and option plans 11,134 131
Net change in discontinued operations 21,777 6,727
-------- --------
Net cash provided by (used in)
financing activities 57,886 (13,614)
-------- --------
Net increase (decrease) in cash and
cash equivalents 8,115 (38,589)
Cash and cash equivalents:
At beginning of period 31,462 57,884
-------- --------
At end of period $ 39,577 $ 19,295
======== ========
<PAGE>
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 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 consolidated financial
position as of March 31, 1996 and March 26, 1995, and the results of
operations for the three-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, 1995.
The operations of Holiday Rambler are classified as discontinued
operations. As such, certain prior-year balances have been reclassified
in order to conform to current-year presentation.
On November 14, 1995, the Company acquired substantially all of the common
stock and common stock equivalents of Eaglemark Financial Services, Inc.
(Eaglemark) that it did not already own. The Company has included the
results of operations of Eaglemark in its statement of operations for the
three months ended March 26, 1995 as though it had been acquired at the
beginning of the year and deducted the preacquisition earnings as part of
non-operating expense. Prior to December 31, 1995, the Company accounted
for its investment in Eaglemark using the equity method. The carrying
value of its investment in Eaglemark was approximately $9.6 million and is
included in other assets at March 26, 1995.
The preparation of financial statements in conformity with 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 - Inventories
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):
March 31, Dec. 31, March 26,
Components at the lower of cost, 1996 1995 1995
first-in, first-out (FIFO),
or market:
Raw material & work-in-
process $ 30,328 $ 32,284 $ 32,438
Finished goods 19,236 19,290 31,626
Parts & accessories 56,023 52,182 56,027
-------- ------- ---------
105,587 103,756 120,091
Excess of FIFO over LIFO 19,829 19,329 18,134
-------- ------- ---------
Inventories as reflected in the
accompanying condensed
consolidated balance sheets $ 85,758 $ 84,427 $101,957
======= ======= =======
Note 3 - Capital Stock
The Company has continuing authorization from its Board of Directors to
repurchase up to 4 million shares of the Company's outstanding common
stock. During the first quarter of 1995, the Company repurchased
1,650,000 shares of its common stock with cash on hand and short-term
borrowings.
Note 4 - Supplemental noncash investing activities
On March 6, 1996, the Company sold substantially all of the assets of its
Holiday Rambler Recreational Vehicles Division to Monaco Coach Corporation
("Monaco"). Total consideration consisted of approximately $23 million in
cash, $3 million in preferred stock of Monaco, a $12 million note from a
Monaco subsidiary guaranteed by Monaco and assumption by Monaco of certain
liabilities of the acquired operations in the approximate amount of $47
million.
Note 5 - Contingencies
The Company is involved with government agencies in various environmental
matters, including a matter involving soil and groundwater contamination
at its York, Pennsylvania facility (the Facility). The Facility was
formerly used by the U.S. Navy and AMF (the predecessor corporation of
Minstar). The Company purchased the Facility from AMF in 1981. Although
the Company is not certain as to the extent of the environmental
contamination at the Facility, it is working with the Pennsylvania
Department of Environmental Resources in undertaking certain investigation
and remediation activities. In March 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 investigation
and remediation activities at the Facility (response costs). The trust
will administer the payment of the future response costs at the Facility
as covered by the Agreement. In addition, in March 1991 the Company
entered into a settlement agreement with Minstar related to certain
indemnification obligations assumed by Minstar in connection with the
Company's purchase of the Facility. Pursuant to this settlement, Minstar
is obligated to reimburse the Company for a portion of its response costs
at the Facility. Although substantial uncertainty exists concerning the
nature and scope of the environmental remediation that will ultimately be
required at the Facility, based on preliminary information currently
available to the Company and taking into account the Company's settlement
agreement with the Navy and the settlement agreement with Minstar, the
Company estimates that it will incur approximately $5 million of net
additional response costs at the Facility. The Company has established
reserves for this amount. The Company's estimate of additional response
costs is based on reports of 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 are expected to be incurred over a period of approximately 10 years.
The reserves established by the Company have not been reduced by potential
insurance recoveries and are not discounted. The Company has put certain
of its insurance carriers on notice that it intends to make claims
relating to the environmental contamination at the Facility. However, the
Company is currently unable to determine the probable amount of recovery
available, if any, under insurance policies.
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Results of Operations for the Three Months Ended March 31, 1996
Compared to the Three Months Ended March 26, 1995
For the quarter ended March 31, 1996, consolidated net sales totaled
$371.1 million, a $76.2 million or 25.8% increase over the same period
last year. Net income and earnings per share for 1996 were $33.0 million
and $.44 on 75.1 million shares outstanding versus $23.6 million and $.31
on 76.1 million shares outstanding in 1995, increases of 39.6% and 41.9%,
respectively. All 1995 financial data have been restated to reflect the
classification of the Company's Transportation Vehicles segment to that of
a discontinued operation, as announced on January 22, 1996. All Harley-
Davidson, Inc. sales are generated by the Motorcycles and Related Products
("Motorcycles") segment.
Motorcycle Unit Shipments and Net Sales
For the Three Month Periods Ended March 31, 1996 and March 26, 1995
Incr
1996 1995 (Decr) %
Motorcycle units
(excluding Buell) 30,071 23,651 6,420 27.1%
Net sales (in
millions):
Motorcycles
(excluding Buell) $297.0 $224.8 $72.2 32.1%
Motorcycle Parts and
Accessories 68.1 65.5 2.6 4.0
Other 6.0 4.6 1.4 30.4
Total Motorcycles
and Related
Products $371.1 $294.9 $76.2 25.8%
The Motorcycles segment reported record first quarter net sales. Net
sales increases were primarily driven by a 27.1% increase in motorcycle
unit shipments. The increase in motorcycle unit shipments over the first
quarter of 1995 was due to more production days versus the same period
last year and higher average daily production rates.
Sales of Buell motorcycles (which are distributed through select Harley-
Davidson dealers) increased to $4.6 million in 1996 as compared to $3.6
million in 1995. (Included in "Other" in the above table.)
During the first quarter of 1996, motorcycle production averaged 470 units
per day. The Company announced that it increased daily motorcycle
production to an average of 485 units per day starting the first day of
the second quarter.
Parts and Accessories revenue of $68.1 million was up only $2.6 million or
$4.0% compared to the first quarter of 1995. The combined sales of
Genuine Motor Parts and Genuine Motor Accessories were up 23.0% compared
to last year however, MotorClothes sales were down 23.0%. The Company
anticipates that overall Parts and Accessories revenue growth for 1996
will approximate the growth rate in motorcycle unit shipments as the
demand for Genuine Motor Parts and Genuine Motor Accessories remains
strong. Due to the softening in demand for the MotorClothes product line,
the Company expects 1996 MotorClothes sales to be down from 1995.
Gross Profit
Gross profit increased $25.4 million, or 28.1%, compared to the first
quarter of 1995 primarily due to an increase in motorcycle volume. The
gross profit margin was 31.2% in 1996 as compared with 30.7% in 1995. The
increase in the gross profit percentage was due to a shift in mix from the
lower margin Sportster model, a decrease in overtime and a shift in mix
from MotorClothes to Genuine Motor Parts.
Operating Expenses
For the Three Month Periods Ended March 31, 1996 and March 26, 1995
(Dollars in Millions)
Incr
1996 1995 (Decr) %
Motorcycles and Related
Products $61.0 $49.9 $11.1 22.2%
Corporate 2.5 1.9 .6 31.6
Total operating
expenses $63.5 $51.8 $11.7 22.6%
Operating expenses increased $11.7 million, or 22.6%, compared to the
first quarter of 1995. The increase was largely related to increased
motorcycle volumes and an increase in engineering expenses when compared
to the same period last year.
Operating income from financial services
The results of operations of the Financial Services segment were $1.7
million and $.7 million in 1996 and 1995, respectively.
Consolidated income taxes
The Company's effective income tax rate for the first quarter of 1996
approximated 37.0% compared to 36.7% during the first quarter of 1995.
Discontinued operations
The operations for the Transportation Vehicles segment have been
classified as discontinued operations. The sale of the Recreational
Vehicles division and ten of the fourteen Holiday World stores was
completed in the first quarter of 1996 (the remaining four stores will be
disposed of by the Company in due course). The disposition of the
remaining businesses (Commercial Vehicles division and B&B Molders) is
expected to be finalized during 1996.
Environmental
The Company's policy is to comply with all applicable environmental laws
and regulations, and the Company has a compliance program in place to
monitor, and report on, environmental issues. The Company has reached
settlement agreements with its former parent (Minstar, successor to AMF
Incorporated) and the U.S. Navy regarding groundwater remediation at the
Company's manufacturing facility in York, Pennsylvania and currently
estimates that it will incur approximately $5 million of net additional
costs related to the remediation effort. The Company has established
reserves for this amount. See Note 5 of the notes to condensed
consolidated financial statements.
Recurring costs associated with managing hazardous substances and
pollution in on-going operations are not material.
The Company regularly invests in equipment to support and improve its
various manufacturing processes. While the Company considers environmental
matters in capital expenditure decisions, and while some capital
expenditures also act to improve environmental compliance, only a small
portion of the Company's annual capital expenditures relate to equipment
which has the sole purpose of meeting environmental compliance
obligations. The Company anticipates that capital expenditures for
equipment used to limit hazardous substances/ pollutants during 1996 will
approximate $1 million. The Company does not expect that these
expenditures related to environmental matters will have a material effect
on future operating results or cash flows.
Liquidity and Capital Resources
During the first quarter, the Company had an increase in cash of
approximately $8 million compared to December 31, 1995. The Motorcycles
segment generally experiences increases in receivable balances during the
first quarter over prior year-end balances due to the annual December
shut-downs. The Motorcycles segment's receivable balances also increased
as a result of motorcycle volume increases. The results of discontinued
operations, including the sale of the Recreational Vehicles Division, had
a positive impact on cash flows of approximately $47 million. This was
offset by the finance receivable activity which impacted cash flows for
the first time since the acquisition of the remaining interest in
Eaglemark in November, 1995. The related finance debt increased
approximately $32 million as the motorcycle and marine retail activity
began their seasonal increase.
Capital expenditures amounted to $19.9 million and $14.0 million during
the first quarter of 1996 and 1995, respectively. The Company is pursuing
a long-term manufacturing strategy to increase its motorcycle production
capacity with a goal of having the capacity to manufacture in excess of
200,000 units per year by 2003. The strategy includes expansion in and
near the Company's existing facilities and construction of a new
manufacturing facility in Kansas City, Missouri.
The following are forward looking statements: Due in part to this
strategy, the Company anticipates 1996 capital expenditures will
approximate $180-$200 million, and the Company currently estimates that
1997 capital expenditures will be in the range of $160-$180 million and
1998 capital expenditures will be in the range of $120-$140 million. The
Company currently estimates it will have the capacity to produce at least
117,000 motorcycles in 1996, 125,000-130,000 units in 1997 and 145,000-
150,000 units in 1998. The Company anticipates it will have the ability
to fund all capital expenditures with internally generated funds and
short-term financing.
The Company's ability to reach these production capacity levels will
depend upon, among other factors, the Company's ability to (i) continue to
realize efficiencies in the utilization of existing facilities through
implementation of innovative manufacturing techniques and other means,
(ii) implement additions and changes to existing facilities and (iii)
construct the new manufacturing facility such that it will be operational
in 1998. However, there is no assurance that the Company will continue to
find means to realize additional efficiencies. In addition, the Company
could experience delays in making additions and changes to existing
facilities and/or constructing the new manufacturing facility as a result
of risks normally associated with the construction and operation of new
manufacturing facilities, including unanticipated problems in
construction, delays in the delivery of machinery and equipment or
difficulties in making such machinery and equipment operational, work
stoppages, difficulties with suppliers, natural causes or other factors.
These risks, potential delays and uncertainties regarding the actual costs
of the measures the Company intends to take to implement its strategy
could also impact adversely the capital expenditure estimates referred to
above. Moreover, there is no assurance that the Company will have the
ability to sell all of the motorcycles it has the capacity to produce.
The Company (excluding Eaglemark) currently has nominal levels of long-
term debt and has available lines of credit of approximately $49 million,
of which approximately $47 million remained available at March 31, 1996.
Eaglemark finances its business, without guarantees from the Company,
through commercial paper, through revolving credit facilities and by
securitizing its retail installment loans. Eaglemark issues short-term
commercial paper secured by wholesale finance receivables with maximum
issuance available of $155 million of which $142.3 million was outstanding
at March 31, 1996. Maturities of commercial paper issued range from 1 to
60 days. Eaglemark has in place two revolving credit facilities totalling
$110 million to fund primarily the United States and Canadian retail loan
originations of which approximately $56 million was outstanding at March
31, 1996. Borrowings under the facilities are secured by, and limited to
a percentage of, eligible receivables ranging from 75% to 95% of the
outstanding loan balances. During the first quarter, Eaglemark
securitized and sold approximately $59 million of its retail installment
loans to investors with limited recourse, with servicing rights being
retained by Eaglemark. The Company expects the future growth of Eaglemark
will be financed from additional capital contributions from the Company
and a continuation of its programs of commercial paper and
securitizations.
The Company has continuing authorization from its Board of Directors to
repurchase up to 4 million shares of the Company's outstanding common
stock. During the first quarter of 1995, the Company repurchased
1,650,000 shares of its common stock with cash on hand and short-term
borrowings of $40 million.
On February 19, 1996, the Company's Board of Directors declared a cash
dividend of $.05 per share payable March 25, 1996 to shareholders of
record March 15.
<PAGE>
Part II - OTHER INFORMATION
HARLEY-DAVIDSON, INC.
FORM 10-Q
March 31, 1996
Item 1. Legal Proceedings
The Company is involved with government agencies in various environmental
matters, including a matter involving soil and groundwater contamination
at its York, Pennsylvania facility. See footnote 5 to the accompanying
condensed consolidated financial statements.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
10.1 Harley-Davidson Pension Benefit Restoration Plan
10.2 Form of Supplemental Executive Retirement Plan Agreement
between the Registrant and each of Messrs. Bleustein, Gelb,
Gray, Hoelter, Teerlink, Werner and Ziemer
27.1 Financial Data Schedule for March 31, 1996
27.2 Restated Financial Data Schedule for March 26, 1995
(b) Reports on Form 8-K
The Company filed a current report on Form 8-K dated March 6, 1996
to report under Item 2 the disposition of its Holiday Rambler
Recreational Vehicle Division including 10 of its 14 Holiday World
Recreational Vehicle Dealerships.
<PAGE>
Part II - Other Information
HARLEY-DAVIDSON, INC.
Form 10-Q
March 31, 1996
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 14, 1996 /s/ James L. Ziemer
James L. Ziemer
Vice President and Chief Financial
Officer (Principal Financial Officer)
May 14, 1996 /s/ James M. Brostowitz
James M. Brostowitz
Vice President, Controller
(Principal Accounting Officer) and
Treasurer
<PAGE>
Exhibit Index
Exhibit No. Description
10.1 Harley-Davidson Benefit Restoration Plan
10.2 Form of Supplemental Executive Retirement Plan Agreement
between the Registrant and each of Messrs. Bleustein, Gelb,
Gray, Hoelter, Teerlink, Werner and Ziemer
27.1 Financial Data Schedule for March 31, 1996
27.2 Restated Financial Data Schedule for March 26, 1995
Exhibit 10.1
HARLEY-DAVIDSON
PENSION BENEFIT RESTORATION PLAN
HARLEY-DAVIDSON MOTOR COMPANY, a Wisconsin corporation, together with
its subsidiaries and affiliates participating in the Funded Plan
(collectively referred to herein as the "Employer"), hereby establishes
the Harley-Davidson Pension Benefit Restoration Plan (the "Plan")
effective on the Effective Date as follows:
1. Purpose. The purpose of the Plan is to provide the benefits
which an employee of an Employer would have been entitled to receive
except for (i) the statutory maximum annual benefit limitations of Code
Section 415, (ii) the statutory maximum limitations on pensionable pay
provided for in Code Section 401(a)(17), and (iii) the exclusion from the
definition of pensionable compensation in the Funded Plan for amounts
contributed as a pretax contribution to a nonqualified plan of deferred
compensation maintained by an Employer.
2. Definitions. The following terms have the following meanings
unless the context clearly indicates otherwise:
(a) "Applicable Interest Rate" means the product of one (1.0)
minus the applicable maximum tax rate expressed as a decimal multiplied by
the preretirement earnings assumption in effect for the Funded Plan at the
employee's Retirement Date, expressed as a decimal. The product shall
then be rounded up to the nearest hundredth. The "applicable maximum tax
rate" means the total of the maximum federal individual income tax, the
maximum State of Wisconsin individual income tax, and the Hospital
Insurance (Medicare) payroll tax, taking into account the deductibility of
state income taxes for federal income tax purposes, to the extent
permitted by law and tax rates as they are legally in effect at the
relevant time. Any subsequent adjustments which may be made to tax rates
or to the Funded Plan's earnings assumption having retroactive effect to
such date shall be disregarded.
(b) "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 of Directors of Harley-Davidson, Inc.;
(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 then outstanding
securities entitled generally to vote for the election 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;
(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 of Directors
of Harley-Davidson, Inc. determine that such proposed action, if taken,
would constitute a change of control of Harley-Davidson, Inc., and such
action is taken. Continuing director means any person who either was a
director of Harley-Davidson, Inc. on the effective date, or was designated
before such person's initial election as a director as a "continuing
director" by a majority of the continuing directors.
(c) "Code" means the Internal Revenue Code of 1986, as it may
be amended from time to time.
(d) "Committee" means the Retirement Plans Committee appointed
by the Board of Directors of Harley-Davidson, Inc. or, if such Committee
is unable to fulfill its duties under the Agreement, the Board of
Directors of Harley-Davidson, Inc.
(e) "Determination Date" means the first day of the month
coincident with or immediately following the date on which an employee,
who has a valid optional lump sum payment election in effect, terminates
employment with the Employer for any reason, other than death, after
satisfying the vesting requirements of Section 3.
(f) "Earnings" and "Final Average Earnings" have the meanings
assigned to such terms by the Funded Plan except that each shall be
determined for purposes of this Agreement without regard to the
limitations on pensionable earnings imposed by Code Section 401(a)(17) and
shall be increased by any amount which would be taxable compensation if
such amount were not contributed as a pretax contribution to a
nonqualified plan of deferred compensation maintained by an Employer.
(g) "Effective Date" means January 1, 1996.
(h) "Funded Plan" means the Retirement Annuity Plan for
Salaried Employees of Harley-Davidson.
(i) "Maximum Benefit" means the maximum monthly benefit payable
in the form of a single life annuity which is permitted by the Code to be
paid to an employee by the Funded Plan, determined as of the employee's
Retirement Date.
(j) "Pension Restoration Benefit" means the monthly benefit
payable in the form of a single life annuity for the life of the employee
equal to an employee's Unrestricted Benefit less the employee's Maximum
Benefit. A Pension Restoration Benefit is payable only to an employee who
is living on the date payments are to commence to be paid to the employee.
For this purpose, normal Pension Restoration Benefit payments are deemed
to commence on the employee's Retirement Date and any optional lump sum
payment is deemed to commence on the employee's Determination Date.
"Annuity," for all purposes hereunder, means periodic payments of income
and does not, under any circumstance, suggest or require that a contract
from an insurance company will be obtained to provide such periodic
payments.
(k) "Retirement Date" means the later of the first day of the
month coincident with or immediately following the date on which the
employee has (i) terminated employment with the Company for any reason
other than death after completing five (5) Years of Vesting Service under
the Funded Plan and has attained age fifty-five (55), or (ii) the date on
which payments commence to be made by the Funded Plan to the employee.
(l) "Spouse" means the surviving spouse of the employee, as
such term is defined in the Funded Plan.
(m) "Unrestricted Benefit" means the Maximum Benefit which
would be paid to the employee by the Funded Plan determined as of the
employee's Retirement Date based on all of the employee's Earnings and
Final Average Earnings, as those terms are specially defined for purposes
of this Plan.
3. Vesting. An employee's entitlement to Pension Restoration
Benefits hereunder vests and becomes nonforfeitable concurrently, to the
extent accrued hereunder, with the vesting in the employee's benefit
entitlement under the Funded Plan.
4. Coordination of Pension Benefit Restoration Benefits with SERP .
The Pension Restoration Benefit hereunder and any benefit entitlements of
the employee under the Harley-Davidson Pension Benefit Restoration Plan
shall be coordinated by the Employer so as to have the effect of being
benefits provided by a single plan or program. As a result, the same form
of benefit payment is required for benefits under each program and the
benefits payable under each program may be combined into one payment or
check.
5. Pension Restoration Benefit.
(a) Amount. The amount of an employee's Pension Restoration
Benefit shall be determined in accordance with Section 2(j), above.
(b) Form of Payment. Unless the employee has elected the
optional lump sum form of payment in accordance with this Section and
Section 4, the employee's Pension Restoration Benefit shall be paid in the
same form of payment applicable to the payment of benefits to the employee
under the Funded Plan. If a periodic payment method other than a single
life annuity form of payment is in effect under the Funded Plan, the
employee's single life annuity payment hereunder shall be converted to the
actuarial equivalent of such benefit on the basis of the Funded Plan's
method of determining actuarial equivalency.
(c) Commencement of Payment. Unless the employee has elected
the optional lump sum form of payment in accordance with this Section and
Section 4, payment of the employee's Pension Restoration Benefit shall
commence at the same time as payments commence to the Executive under the
Funded Plan.
(d) Optional Lump Sum Payment. Subject to the requirements of
Section 4, the employee may, in accordance with Committee rules and
procedures, elect to receive payment of the employee's Pension Restoration
Benefit in the form of a single lump sum cash payment amount. Special
rules apply to the optional lump sum form of payment with regard to
determination of the amount of the payment and when the payment is to be
made.
i) The amount of the employee's optional lump sum cash
payment shall be equal to the present value of the employee's Pension
Restoration Benefit determined as of the employee's Determination Date.
The present value determination shall be made on the assumption that two
hundred forty (240) consecutive monthly Pension Restoration Benefit
payments in the form of a single life annuity would otherwise have been
made to the employee, commencing on the later of the first day of the
month following the employee's attainment of age fifty-five (55) or the
employee's Determination Date. The Applicable Interest Rate shall be used
to determine present value, including, when the assumed benefit
commencement date is later than the Determination Date, discounting the
present value determined as of the assumed commencement date to the
Determination Date.
ii) The payment of any optional lump sum hereunder shall
be made as soon as practicable on or after the employee's Determination
Date.
(e) Optional Lump Sum Payment Election Procedures. Committee
rules and procedures governing the election of the optional lump sum form
of payment, and revocations of such election, include, but are not limited
to, the following: The employee may change the form of payment initially
effective hereunder only with the written consent of the Committee.
Changes in such election may be made no later than the close of the
calendar year preceding the calendar year in which benefit payments are to
commence. The Committee has full and complete discretion regarding
whether or not to consent to any change in payment method requested by an
employee.
(f) Small Payment Cash Out Rule. Notwithstanding the foregoing
provisions of this Section 5, the Committee is authorized to cash out the
present value of benefits, using the methodology described in subparagraph
(d), above, where the monthly payments which would otherwise be required
to be made are de minimis, as determined by the Committee.
6. Surviving Spouse Death Benefit.
(a) Amount and Normal Form. If a vested employee dies before
the employee's Retirement Date, or, if the employee has a valid optional
lump sum payment election in force, the employee dies before the
employee's Determination Date, and the employee has a Spouse who is
eligible to receive a preretirement surviving spouse benefit under the
Funded Plan, such Spouse shall be entitled to receive a preretirement
surviving spouse benefit hereunder. The normal form of payment of the
preretirement surviving spouse benefit is monthly payments for the life of
the surviving Spouse, equal in amount to the Spouse's monthly
preretirement surviving spouse benefit determined using the Funded Plan's
methodology for determining preretirement surviving spouse benefits based
on the deceased employee's accrued benefits under the Funded Plan
immediately prior to death, but determined without regard to the
limitations under Code Sections 401(a)(17) and 415, less the applicable
maximum preretirement surviving spouse benefit which is payable by the
Funded Plan on behalf of the deceased employee.
(b) Commencement of Normal Form of Preretirement Surviving
Spouse Benefit. Payment of the normal form of payment of a preretirement
surviving spouse benefit hereunder shall commence at the same time as the
similar benefit commences under the Funded Plan.
(c) Optional Lump Sum Payment. If the employee has in effect
at the time of the employee's death a valid election to receive the
employee's Pension Restoration Benefit in the optional lump sum payment
form, any preretirement surviving spouse benefit which is otherwise
payable under this Plan shall be paid to the employee's surviving Spouse
in the form of a single lump sum cash amount. The single lump sum cash
amount shall be equal to the present value of the monthly benefits
described in subparagraph (a), above, and shall be determined on the
assumption that two hundred forty (240) consecutive monthly benefit
payments would otherwise be made, commencing on the later of the first day
of the month following the date the deceased employee would have attained
age fifty-five (55) or the deceased employee's Determination Date. The
Applicable Interest Rate shall be used to determine present value,
including, when the assumed benefit commencement date is later than the
Determination Date, discounting the present value determined as of the
assumed commencement date to the Determination Date. Payment of the
optional lump sum amount shall be completed as soon as practicable on or
after the date as of which the amount is determined.
7. Other Terminations of Employment. If employment terminates
before the employee is vested in Pension Restoration Benefits, or if
employment terminates due to the death of the employee and the employee
does not have a surviving Spouse, no benefits are payable hereunder.
8. Effect of Change of Control Event. (a) If a Change of Control
Event is determined by the Committee to have occurred while an employee is
actively employed by the Employer, the Committee may, in its sole
discretion, establish an irrevocable grantor trust, to be entered into by
the Employer and the trustee thereof, for the purpose of holding assets
sufficient to fund some or all of the liability or contingent liability of
the Employer to pay benefits hereunder to the employee. Funding of such
irrevocable grantor ("rabbi") trust shall be in the discretion of the
Board of Directors of Harley-Davidson, Inc.
(b) If a Change of Control Event is determined by the Committee
to have occurred while the employee is no longer actively employed by the
Employer and before any periodic payments being made hereunder on behalf
of an employee are completed, the Employer shall cash out, in single lump
sum payment amount, the present value of any remaining payments yet to be
made to or on behalf of the employee. Present value in this situation
shall be determined as of the first day of the month following the month
in which the Change of Control Event occurred. Present value shall be
based on the assumption that the recipient of the monthly payments being
cashed out has the life expectancy assigned to a person of similar age
under the Funded Plan's general mortality assumptions used for funding
purposes. If payments on behalf of the employee have not yet commenced as
of the date of this determination of present value, it shall be further
assumed that payments would have commenced on the later of such date of
determination of present value or the first day of the month following the
fifty-fifth birthday of the employee. The Applicable Interest Rate shall
be used to determine present value, including, when the assumed benefit
commencement date is later than the date as of which present value is
determined, discounting present value determined as of the payment
commencement date to the date as of which it is being determined.
9. Administration of the Agreement. The Committee shall administer
and interpret the Agreement, and supervise its operation. Interpretation
of the Agreement by the Committee shall be final and binding upon the
employee.
10. Unfunded Agreement. This Agreement is unfunded and is
maintained by the Employer primarily for the purpose of providing deferred
compensation for a select group of management or highly compensated
employees. Nothing contained in this Agreement and no action taken
pursuant to its terms shall create or be construed to create a trust of
any kind, or a fiduciary relationship between Employer and employee, or
any other person. The right of the employee to receive benefits hereunder
shall be an unsecured claim against the general assets of Employer and
neither the employee nor any other person shall have any rights in or
against any amounts which may be earmarked by Employer in order to
implement this Agreement or any other specific assets of Employer.
11. Additional ERISA Provisions. The Committee is the named
fiduciary. The Agreement is unfunded. Direct payment is the basis of
payment of benefits under the Agreement. The Committee shall determine
all claims in accordance with the claims procedure set forth in the Funded
Plan.
12. Assignment. The right of an employee or any other person to the
payment of benefits under this Agreement shall not be assigned,
transferred, pledged or encumbered except to the extent provided in a
qualified domestic relations order within the meaning of Article XII of
the Funded Plan.
13. Effect on Retirement Plans. Any benefits accrued pursuant to
this Agreement shall not be deemed compensation to employee for the
purpose of computing benefits under any qualified retirement plan or other
benefit plan, whether qualified or nonqualified, which may be maintained
by an Employer.
14. Severability. If any of the provisions of the Agreement shall
be held to be invalid, or shall be determined to be inconsistent with the
purpose of the Agreement, the remainder of the Agreement shall not be
affected thereby.
15. Binding upon Successors. This Agreement shall be binding upon
and inure to the benefit of the Employer and its successors and assigns
and the employee and the employee's heirs, executors, administrators, and
legal representatives.
16. Governing Law. This Agreement shall be construed in accordance
with and governed by the laws of the State of Wisconsin to the extent not
preempted by federal law.
<PAGE>
HARLEY-DAVIDSON
PENSION BENEFIT RESTORATION PLAN
OPTIONAL LUMP SUM PAYMENT ELECTION FORM
If I make the election below, the present value of my benefits
under this Plan (and of any benefits to which I may be entitled under the
terms of a Supplemental Executive Retirement Plan Agreement) will be paid
to me in a single lump sum cash payment as soon as practicable after my
employment terminates. If I die with this election in effect, any
preretirement surviving spouse benefit to which my surviving spouse is
entitled will be paid to my spouse in a single lump sum cash payment as
soon as practicable after my death. The rules for determining present
value are described in detail in the Plan.
This election, when made, can only be changed with the consent
of the Retirement Plans Committee, which has full discretion to approve or
deny my request to make a change.
Under no circumstances am I permitted to request a change in
this election later than the last day of the calendar year preceding the
calendar year in which benefit payments are scheduled to begin to be paid
to me.
[_] I ELECT the Optional Lump Sum Payment Method (described
above).
[_] I DO NOT ELECT the Optional Lump Sum Payment Method
(described above).
Employee
Date
Receipt Acknowledged by Retirement Plans
Committee
Exhibit 10.2
HARLEY-DAVIDSON
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
FOR
("EXECUTIVE")
HARLEY-DAVIDSON, INC. a Wisconsin corporation, together with its
subsidiaries and affiliates (collectively referred to herein as the
"Employer"), hereby establishes this Supplemental Executive Retirement
Plan (the "SERP") for the Executive effective as of the ____ day of
_____________, 199__, as follows:
1. Purpose. The purpose of the SERP is to provide the Executive
with retirement income benefits which are supplemental to entitlements
under the Funded Plan, the Harley-Davidson Retirement Savings Plan, the
Harley-Davidson Pension Benefit Restoration Plan, and the Employer's post-
retirement medical benefits plan.
2. Definitions. The following terms have the following meanings
unless the context clearly indicates otherwise:
(a) "Applicable Interest Rate" means the product of one (1.0)
minus the applicable maximum tax rate expressed as a decimal multiplied by
the preretirement earnings assumption in effect for the Funded Plan at the
Executive's Retirement Date, expressed as a decimal. The product shall
then be rounded up to the nearest hundredth. The "applicable maximum tax
rate" means the total of the maximum federal individual income tax, the
maximum State of Wisconsin individual income tax, and the Hospital
Insurance (Medicare) payroll tax, taking into account the deductibility of
state income taxes for federal income tax purposes, to the extent
permitted by law and tax rates as they are legally in effect at the
relevant time. Any subsequent adjustments which may be made to tax rates
or to the Funded Plan's earnings assumption having retroactive effect to
such date shall be disregarded.
(b) "Applicable Percentage" means thirty-five percent (35%)
plus, for each full calendar month of employment completed by the
Executive after age fifty-five (55), one thousand seven hundred eighty-six
ten-thousandths percent (0.1786%), not to exceed a maximum of fifty
percent (50%) at age sixty-two (62).
(c) "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 of Directors of Harley-Davidson, Inc.;
(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 then outstanding
securities entitled generally to vote for the election 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;
(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 of Directors
of Harley-Davidson, Inc. determine that such proposed action, if taken,
would constitute a change of control of Harley-Davidson, Inc., and such
action is taken. Continuing director means any person who either was a
director of Harley-Davidson, Inc. on the Effective Date, or was designated
before such person's initial election as a director as a "continuing
director" by a majority of the continuing directors.
(d) "Code" means the Internal Revenue Code of 1986, as it may
be amended from time to time.
(e) "Committee" means the Retirement Plans Committee appointed
by the Board of Directors of Harley-Davidson, Inc., or, if such Committee
is unable to fulfill its duties under the SERP, the Board of Directors of
Harley-Davidson, Inc.
(f) "Determination Date" means the first day of the month
coincident with or immediately following the date on which an Executive,
who has a valid optional lump sum payment election in effect, terminates
employment with the Employer for any reason, other than death, after
satisfying the vesting requirements of Section 3.
(g) "Earnings" and "Final Average Earnings" have the meanings
assigned to such terms by the Funded Plan except that each shall be
determined for purposes of this SERP without regard to the limitations on
pensionable earnings imposed by Code Section 401(a)(17) and increased by
any amount which would be taxable compensation if such amount were not
contributed as a pretax contribution to a nonqualified plan of deferred
compensation maintained by an Employer.
(h) "Effective Date" means the date first above written.
(i) "Funded Plan" means the Retirement Annuity Plan for
Salaried Employees of Harley-Davidson.
(j) "Retirement Date" means the later of the first day of the
month coincident with or immediately following the date on which the
Executive has terminated employment with the Employer for any reason,
other than death, after satisfying the vesting requirements of Section 3,
or the date on which payments commence to be made by the Funded Plan to
the Executive.
(k) "SERP Benefit" means the monthly benefit payable in the
form of a single life annuity for the life of the Executive equal to the
Applicable Percentage multiplied by the Executive's Final Average Earnings
as specially defined for purposes of this SERP, offset and reduced by the
Executive's monthly benefit entitlement payable in the normal single life
annuity form under (i) the Funded Plan and (ii) the Harley-Davidson
Pension Benefit Restoration Plan. A SERP Benefit hereunder is payable
only to an Executive who is living on the date payments are to commence to
be paid to the Executive. For this purpose, normal form SERP Benefit
payments are deemed to commence on the Executive's Retirement Date and any
optional lump sum payment of benefits is deemed to commence on the
Executive's Determination Date. "Annuity," for all purposes hereunder,
means periodic payments of income and does not, under any circumstance,
suggest or require that a contract from an insurance company will be
obtained to provide such periodic payments.
(l) "Spouse" means the surviving spouse of the Executive, as
such term is defined in the Funded Plan.
3. Vesting. The Executive's entitlement to the SERP Benefit
hereunder vests and becomes nonforfeitable, to the extent accrued, upon
completion of fifteen (15) Years of Vesting Service and attainment of age
fifty-five (55) before termination of employment for any reason, including
death. For purposes of this SERP the term "Years of Vesting Service" has
the meaning assigned to it by the Funded Plan.
4. Coordination of SERP Benefits with Pension Benefit Restoration
Plan. The SERP Benefit hereunder and any benefit entitlements of the
Executive under the Harley-Davidson Pension Benefit Restoration Plan shall
be coordinated by the Employer so as to have the effect of being benefits
provided by a single plan or program. As a result, the same form of
benefit payment is required for benefits under each program and the
benefits payable under each program may be combined into one payment or
check. Any election of the form of benefit payment made by the Executive
under the Pension Benefit Restoration Plan shall be fully effective for
all purposes of this SERP.
5. SERP Benefit.
(a) Amount. The amount of the Executive's SERP Benefit shall
be determined in accordance with Section 2(k), above.
(b) Form of Payment. Unless the Executive has elected the
optional lump sum form of payment in accordance with this Section and
Section 4, the Executive's SERP Benefit shall be paid in the same form of
payment applicable to the payment of benefits to the Executive under the
Funded Plan. If a periodic payment method other than a single life
annuity form of payment is in effect under the Funded Plan, the
Executive's single life annuity payment hereunder shall be converted to
the actuarial equivalent of such benefit on the basis of the Funded Plan's
method of determining actuarial equivalency.
(c) Commencement of Payment. Unless the Executive has elected
the optional lump sum form of payment in accordance with this Section and
Section 4, payment of the Executive's SERP Benefit shall commence at the
same time as payments commence to the Executive under the Funded Plan.
(d) Optional Lump Sum Payment. Subject to the requirements of
Section 4, the Executive may, in accordance with Committee rules and
procedures, elect to receive payment of the Executive's SERP Benefit in
the form of a single lump sum cash payment amount. Special rules apply to
the optional lump sum form of payment with regard to determination of the
amount of the payment and when the payment is to be made.
i) The amount of the Executive's optional lump sum cash
payment shall be equal to the present value of the Executive's SERP
Benefit determined as of the Executive's Determination Date. The present
value determination shall be made on the assumption that two hundred forty
(240) consecutive monthly SERP Benefit payments in the form of a single
life annuity would otherwise have been made to the Executive, commencing
on the Executive's Determination Date. The Applicable Interest Rate shall
be used to determine present value.
ii) Any lump sum cash payment to be made hereunder shall
be made as soon as practicable on or after the Executive's Determination
Date.
(e) Optional Lump Sum Payment Election Procedures. Committee
rules and procedures governing the election of the optional lump sum form
of payment, and revocations of such election, include, but are not limited
to, the following: The Executive may change the form of payment initially
effective upon execution of this SERP only with the written consent of the
Committee. Changes in such election may be made no later than the close
of the calendar year preceding the calendar year in which benefit payments
are to commence. The Committee has full and complete discretion regarding
whether or not to consent to any change in payment method requested by an
Executive.
(f) Small Payment Cash Out Rule. Notwithstanding the foregoing
provisions of this Section 5, the Committee is authorized to cash out the
present value of benefits, using the methodology described in subparagraph
(d), above, where the monthly payments which would otherwise be required
to be made are de minimis, as determined by the Committee.
6. Preretirement Surviving Spouse Benefit.
(a) Amount and Normal Form. If a vested Executive dies before
the Executive's Retirement Date, or, if the Executive has a valid optional
lump sum payment election in force, the Executive dies before the
Executive's Determination Date, and the Executive has a Spouse who is
eligible to receive a preretirement surviving spouse benefit under the
Funded Plan, such Spouse shall be entitled to receive a preretirement
surviving spouse benefit hereunder. The normal form of payment of the
preretirement surviving spouse benefit is monthly payments for the life of
the surviving Spouse, equal in amount to the Spouse's monthly
preretirement surviving spouse benefit, determined using the Funded Plan
methodology for determining preretirement surviving spouse benefits based
on the deceased Executive's accrued benefits under the SERP immediately
prior to death.
(b) Commencement of Normal Form of Preretirement Surviving
Spouse Benefit. Payment of the normal form of preretirement surviving
spouse benefit hereunder shall commence at the same time as the similar
benefit to the surviving Spouse commences under the Funded Plan.
(c) Optional Lump Sum Payment. If the Executive has in effect
at the time of the Executive's death a valid election to receive the
Executive's SERP Benefit in the optional lump sum payment form, any
preretirement surviving spouse benefit which is otherwise payable under
this SERP shall be paid to the Executive's surviving Spouse in the form of
a single lump sum cash amount. The single lump sum cash amount shall be
equal to the present value of the monthly benefits described in
subparagraph (a), above, determined on the assumption that two hundred
forty (240) consecutive monthly benefit payments would otherwise be made,
commencing on the first day of the month following the Executive's date of
death. The Applicable Interest Rate shall be used to determine present
value. Payment of the optional lump sum amount shall be completed as soon
as practicable on or after the date as of which the amount is determined.
7. Other Terminations of Employment. If employment terminates
before the Executive is vested in SERP Benefits, or if employment
terminates due to the death of the Executive and the Executive does not
have a surviving Spouse, no benefits are payable hereunder.
8. Effect of Change of Control Event.
(a) If a Change of Control Event is determined by the Committee
to have occurred while the Executive is actively employed by the Employer,
the Committee may, in its sole discretion, establish an irrevocable
grantor trust, to be entered into by the Employer and the trustee thereof,
for the purpose of holding assets sufficient to fund some or all of the
liability or contingent liability of the Employer to pay benefits
hereunder to the Executive. Funding of such irrevocable grantor ("rabbi")
trust shall be in the discretion of the Board of Directors of Harley-
Davidson, Inc.
(b) If a Change of Control Event is determined by the Committee
to have occurred while the Executive is no longer actively employed by the
Employer, but before any periodic payments to which the Executive is
entitled hereunder have been completed, the Employer shall cash out, in
single lump sum payment amount, the present value of any remaining
payments yet to be made to or on behalf of the Executive. Present value
in this situation shall be determined as of the first day of the month
following the month in which the Change of Control Event is determined to
have occurred and shall be based on the assumption that the recipient of
the monthly payments has the life expectancy assigned to a person of the
same age under the Funded Plan's general mortality assumptions used for
funding purposes. The Applicable Interest Rate shall be used to determine
present value.
9. Administration of the SERP. The Committee shall administer and
interpret the SERP, and supervise its operation. Interpretation of the
SERP by the Committee shall be final and binding upon the Executive.
10. Unfunded SERP. This SERP is unfunded and is maintained by the
Employer primarily for the purpose of providing deferred compensation for
a select member of management who is also highly compensated. Nothing
contained in this SERP and no action taken pursuant to its terms shall
create or be construed to create a fiduciary relationship between Employer
and Executive, or any other person. The right of the Executive to receive
benefits hereunder shall be an unsecured claim against the general assets
of Employer and neither the Executive nor any other person shall have any
rights in or against any amounts which may be earmarked by Employer in
order to implement this SERP, or any other specific assets of Employer.
11. Additional ERISA Provisions. The Committee is the named
fiduciary. The SERP is unfunded. Direct payment is the basis of payment
of benefits under the SERP. The Committee shall determine all claims in
accordance with the claims procedure set forth in the Funded Plan.
12. Assignment. The right of the Executive or any other person to
the payment of benefits under this SERP shall not be assigned,
transferred, pledged or encumbered.
13. Effect on Retirement Plans. Any benefits accrued hereunder
shall not be deemed compensation to Executive for the purpose of computing
benefits under any qualified retirement plan or other benefit plan,
whether qualified or nonqualified, which may be maintained by an Employer.
14. Severability. If any of the provisions of this SERP shall be
held to be invalid, or shall be determined to be inconsistent with the
purpose of this SERP, the remainder of the agreement shall not be affected
thereby.
15. Binding upon Successors. This SERP shall be binding upon and
inure to the benefit of the Employer and its successors and assigns and
the Executive and the Executive's heirs, executors, administrators, and
legal representatives.
16. Governing Law. This SERP shall be construed in accordance with
and governed by the laws of the State of Wisconsin to the extent not
preempted by federal law.
HARLEY-DAVIDSON, INC.
BY
Executive
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS OF HARLEY-DAVIDSON, INC. AS OF
AND FOR THE THREE MONTHS ENDED MARCH 31, 1996 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
<CASH> 39,577
<SECURITIES> 0
<RECEIVABLES> 159,350
<ALLOWANCES> 1,564
<INVENTORY> 85,758
<CURRENT-ASSETS> 347,082
<PP&E> 554,551
<DEPRECIATION> 261,281
<TOTAL-ASSETS> 1,062,915
<CURRENT-LIABILITIES> 217,965
<BONDS> 0
<COMMON> 778
0
0
<OTHER-SE> 532,789
<TOTAL-LIABILITY-AND-EQUITY> 1,062,915
<SALES> 371,051
<TOTAL-REVENUES> 371,051
<CGS> 255,274
<TOTAL-COSTS> 255,274
<OTHER-EXPENSES> 1,249
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 405
<INCOME-PRETAX> 52,371
<INCOME-TAX> 19,377
<INCOME-CONTINUING> 32,994
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 32,994
<EPS-PRIMARY> .44
<EPS-DILUTED> .44
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
RESTATED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS OF HARLEY-DAVIDSON,
INC. AS OF AND FOR THE THREE MONTHS ENDED MARCH 26, 1995 AND IS QUALIFIED
IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<RESTATED>
<MULTIPLIER> 1,000
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