FORM 11-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
[X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 33-35311
A. Full title of the plan and the address of the plan, if different from
that of the issuer named below:
Harley-Davidson
Retirement Savings Plan for Salaried Employees
B. Name of issuer of the securities held pursuant to the plan and the
address of its principal executive office:
Harley-Davidson, Inc.
3700 West Juneau Avenue
Milwaukee, Wisconsin 53208
<PAGE>
REQUIRED INFORMATION
1. Not Applicable.
2. Not Applicable.
3. Not Applicable.
4. The Harley-Davidson Retirement Savings Plan for Salaried Employees
(the "Plan") is subject to the requirements of the Employee
Retirement Income Security Act of 1974 ("ERISA"). Attached hereto is
a copy of the most recent financial statements and schedules of the
Plan prepared in accordance with the financial reporting requirements
of ERISA.
Exhibits
23 Consent of Independent Auditors
<PAGE>
CONTENTS
Harley-Davidson Retirement Savings
Plan for Salaried Employees
Page
Report of independent auditors 5
Financial statements
Statements of net assets available for plan benefits 6-7
Statements of changes in net assets available for
plan benefits 8-9
Notes to financial statements 10-17
Supplemental schedules Schedules
Assets held for investment 1
Transactions or series of transactions in excess
of 5 percent of the current value of
plan assets 2
A schedule of party-in-interest transactions has not been
presented because there were no party-in-interest
transactions that are prohibited by ERISA Section 406 and
for which there is no statutory or administrative exemption.
<PAGE>
Report of Ernst & Young LLP, Independent Auditors
Plan Administrative Committee
Harley-Davidson Retirement Savings
Plan for Salaried Employees
We have audited the accompanying statements of net assets available for
plan benefits of the Harley-Davidson Retirement Savings Plan for Salaried
Employees (the Plan) as of December 31, 1996 and 1995, and the related
statements of changes in net assets available for plan benefits for the
years then ended. These financial statements are the responsibility of
the Plan's management. Our responsibility is to express an opinion on
these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the net assets available for plan benefits of
the Plan at December 31, 1996 and 1995, and the changes in its net assets
available for plan benefits for the years then ended, in conformity with
generally accepted accounting principles.
Our audits were performed for the purpose of forming an opinion on the
basic financial statements taken as a whole. The accompanying
supplemental schedules of assets held for investment as of December 31,
1996, and transactions or series of transactions in excess of five percent
of the current value of plan assets for the year then ended, are presented
for purposes of complying with the Department of Labor's Rules and
Regulations for Reporting and Disclosure under the Employee Retirement
Income Security Act of 1974, and are not a required part of the basic
financial statements. The fund information in the statements of net
assets available for plan benefits and in the statements of changes in net
assets available for plan benefits is presented for purposes of additional
analysis rather than to present the net assets available for plan benefits
and changes in net assets available for plan benefits of each fund. The
supplemental schedules and fund information have been subjected to the
auditing procedures applied in our audits of the basic financial
statements and, in our opinion, are fairly stated in all material respects
in relation to the basic financial statements taken as a whole.
Milwaukee, Wisconsin ERNST & YOUNG LLP
June 6, 1997
<PAGE>
<TABLE>
HARLEY-DAVIDSON
RETIREMENT SAVINGS PLAN FOR SALARIED EMPLOYEES
STATEMENT OF NET ASSETS AVAILABLE FOR PLAN BENEFITS
December 31, 1996
<CAPTION>
Fidelity Fidelity Fidelity
Managed Investment International Harley- Asset
Income Grade Bond Growth and Davidson Manager
ASSETS Total Fund Fund Income Fund Stock Fund Income
<S> <C> <C> <C> <C> <C> <C>
Investments:
Interest in Harley-Davidson
Retirement Savings Plan Master
Trust, comprised of:
Investments in securities of
unaffiliated issuers,
at fair value $22,790,068 $ 544,485 $2,918,085 $1,693,922 $ - $305,384
Investments in securities
of affiliated issuer,
at fair value-common
stock of Harley-Davidson,
Inc. 22,005,828 - - - 22,005,828 -
Investments other than
securities -
Insurance group annuity
contracts - at contract
value (Note D) 14,424,626 14,424,626 - - - -
Cash and cash equivalents 608,541 608,541 - -
- -
Notes receivable from
participants 1,650,026 - - - - -
---------- ---------- --------- --------- ---------- --------
Total investments 61,479,089 15,577,652 2,918,085 1,693,922 22,005,828 305,384
Other assets:
Participant contributions
receivable 373,326 66,830 21,445 22,257 85,318 7,449
Employer contributions
receivable 1,878,956 - - - 1,878,956 -
---------- ---------- --------- --------- ---------- --------
Net assets available
for plan benefits $63,731,371 $15,644,482 $2,939,530 $1,716,179 $23,970,102 $312,833
========== ========== ========= ========= ========== =======
<CAPTION>
Fidelity Fidelity
Asset Fidelity Blue Chip
Manager Asset Growth Loan
ASSETS Growth Manager Fund Fund
<S> <C> <C> <C> <C>
Investments:
Interest in Harley-Davidson
Retirement Savings Plan Master
Trust, comprised of:
Investments in securities of
unaffiliated issuers,
at fair value $1,644,871 $3,862,510 $11,820,811 $ -
Investments in securities
of affiliated issuer,
at fair value-common
stock of Harley-Davidson,
Inc. - - - -
Investments other than
securities -
Insurance group annuity
contracts - at contract
value (Note D) - - - -
Cash and cash equivalents - - - -
Notes receivable from
participants - - - 1,650,026
--------- ---------- ---------- ---------
Total investments 1,644,871 3,862,510 11,820,811 1,650,026
Other assets:
Participant contributions
receivable 29,276 27,920 112,831 -
Employer contributions
receivable - - - -
--------- --------- ---------- ---------
Net assets available
for plan benefits $1,674,147 $3,890,430 $11,933,642 $1,650,026
========= ========= ========== =========
</TABLE>
See notes to financial statements.
<PAGE>
<TABLE>
HARLEY-DAVIDSON
RETIREMENT SAVINGS PLAN FOR SALARIED EMPLOYEES
STATEMENT OF NET ASSETS AVAILABLE FOR PLAN BENEFITS
December 31, 1995
<CAPTION>
Fidelity Fidelity Fidelity
Managed Investment International Harley- Asset
Income Grade Bond Growth and Davidson Manager
ASSETS Total Fund Fund Income Fund Stock Fund Income
<S> <C> <C> <C> <C> <C> <C>
Investments:
Interest in Harley-Davidson
Retirement Savings Plan Master
Trust, comprised of:
Investments in securities of
unaffiliated issuers,
at fair value $15,841,483 $ 181 $2,823,358 $993,782 $ - $155,555
Investments in securities
of affiliated issuer,
at fair value-common stock
of Harley-Davidson, Inc. 11,423,774 - - - 11,423,774 -
Investments other than
securities -
Insurance group annuity
contracts, at contract
value (Note D) 14,932,397 14,932,397 - - - -
Cash and cash equivalents 587,846 473,645 - - 114,201 -
Notes receivable from
participants 1,464,987 - - - - -
---------- ---------- ---------- -------- ---------- -------
Total investments 44,250,487 15,406,223 2,823,358 993,782 11,537,975 155,555
Other assets:
Participant contributions
receivable 110,673 22,090 7,792 5,646 24,943 8,941
Employer contributions
receivable 1,377,147 - - - 1,377,147 -
---------- ---------- ---------- -------- ---------- -------
Net assets available
for plan benefits $45,738,307 $15,428,313 $2,831,150 $999,428 $12,940,065 $164,496
========== ========== ========== ======== ========== =======
<CAPTION>
Fidelity Fidelity
Asset Fidelity Blue Chip
Manager Asset Growth Loan
ASSETS Growth Manager Fund Fund
<S> <C> <C> <C> <C>
Investments:
Interest in Harley-Davidson
Retirement Savings Plan Master
Trust, comprised of:
Investments in securities of
unaffiliated issuers,
at fair value $448,675 $3,210,971 $8,208,961 $ -
Investments in securities
of affiliated issuer,
at fair value-common stock
of Harley-Davidson, Inc. - - - -
Investments other than
securities -
Insurance group annuity
contracts, at contract value
(Note D) - - - -
Cash and cash equivalents - - - -
Notes receivable from
participants - - - 1,464,987
---------- ---------- ---------- ----------
Total investments 448,675 3,210,971 8,208,961 1,464,987
Other assets:
Participant contributions
receivable 6,958 2,318 31,985 -
Employer contributions
receivable - - - -
---------- ---------- ---------- ---------
Net assets available
for plan benefits $455,633 $3,213,289 $8,240,946 $1,464,987
======== ========== ========== ==========
</TABLE>
See notes to financial statements.
<PAGE>
<TABLE>
HARLEY-DAVIDSON
RETIREMENT SAVINGS PLAN FOR SALARIED EMPLOYEES
STATEMENT OF CHANGES IN NET ASSETS
AVAILABLE FOR PLAN BENEFITS
Year Ended December 31, 1996
<CAPTION>
Fidelity Fidelity Fidelity
Managed Investment International Harley- Asset
Income Grade Bond Growth and Davidson Manager
ASSETS Total Fund Fund Income Fund Stock Fund Income
<S> <C> <C> <C> <C> <C> <C>
Investment income:
Net appreciation (depreciation)
in fair value of investments
(Note C) $ 8,600,962 $ - $ (103,268) $ 118,690 $ 7,734,011 $ 986
Interest and dividend income 2,616,470 890,691 183,589 54,960 98,479 24,133
---------- ----------- ---------- --------- ---------- --------
Net investment income 11,217,432 890,691 80,321 173,650 7,832,490 25,119
Employer contributions 1,878,956 - - - 1,878,956 -
Participant contributions 7,238,523 1,266,008 432,875 404,165 1,534,334 163,015
---------- ----------- ---------- --------- ---------- --------
20,334,911 2,156,699 513,196 577,815 11,245,780 188,134
DEDUCTIONS
Benefit payments and
withdrawals (2,341,847) (1,364,553) (171,962) (7,892) (244,131) (5,688)
Net transfers in (out) - (575,977) (232,854) 146,828 28,388 (34,109)
---------- ----------- ---------- --------- ---------- --------
(2,341,847) (1,940,530) (404,816) 138,936 (215,743) (39,797)
---------- ----------- ---------- --------- ---------- --------
Increase in net assets
available for plan benefits 17,993,064 216,169 108,380 716,751 11,030,037 148,337
Net assets available for plan
benefits:
Beginning of year 45,738,307 15,428,313 2,831,150 999,428 12,940,065 164,496
---------- ----------- ---------- --------- ---------- --------
End of Year $63,731,371 $15,644,482 $2,939,530 $1,716,179 $23,970,102 $312,833
========== =========== ========== ========= ========== =======
<CAPTION>
Fidelity Fidelity
Asset Fidelity Blue Chip
Manager Asset Growth Loan
ASSETS Growth Manager Fund Fund
<S> <C> <C> <C> <C>
Investment income:
Net appreciation (depreciation)
in fair value of investments
(Note C) $ 49,379 $ 126,047 $ 675,117 $ -
Interest and dividend income 133,972 302,803 811,832 116,011
--------- ---------- ---------- --------
Net investment income 183,351 428,850 1,486,949 116,011
Employer contributions - - - -
Participant contributions 613,352 631,516 2,193,258 -
--------- ---------- ---------- --------
796,703 1,060,366 3,680,207 116,011
DEDUCTIONS
Benefit payments and
withdrawals (79,568) (97,771) (343,969) (26,313)
Net transfers in (out) 501,379 (285,454) 356,458 95,341
-------- -------- -------- ---------
421,811 (383,225) 12,489 69,028
-------- -------- -------- ---------
Increase in net assets
available for plan benefits 1,218,514 677,141 3,692,696 185,039
Net assets available for plan
benefits:
Beginning of year 455,633 3,213,289 8,240,946 1,464,987
--------- --------- ---------- ---------
End of Year $1,674,147 $3,890,430 $11,933,642 $1,650,026
========= ========= ========== =========
</TABLE>
See notes to financial statements.
<PAGE>
<TABLE>
HARLEY-DAVIDSON
RETIREMENT SAVINGS PLAN FOR SALARIED EMPLOYEES
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS
Year Ended December 31, 1995
<CAPTION>
Fidelity
Strong Asset Fidelity Managed Investment
Allocation Insurance Balanced Income Income Grade Bond
ADDITIONS Total Fund Account Fund Fund Fund Fund
<S> <C> <C> <C> <C> <C> <C> <C>
Investment income:
Net appreciation in
fair value of
investments (Note C) $2,118,307 $ 103,062 $ - $ 102,294 $ - $ - $ 132,721
Interest and
dividend income 1,881,213 26,045 - 27,057 328,226 612,719 124,614
--------- --------- -------- --------- -------- -------- ---------
Net investment income 3,999,520 129,107 - 129,351 328,226 612,719 257,335
Employer contributions 1,500,571 - - - - - -
Participant
contributions 5,741,532 183,771 - 248,562 697,289 824,127 287,559
--------- --------- -------- --------- -------- -------- ---------
11,241,623 312,878 - 377,913 1,025,515 1,436,846 544,894
DEDUCTIONS
Benefit payments and
withdrawals (2,405,629) (170,067) - (85,791) (842,156) (198,192) (48,012)
Life insurance expense,
less increase in cash
surrender value (9,033) - (9,033) - - - -
Net transfers in (out) - (2,549,700) (239,335) (2,970,732) (15,543,957) 14,189,659 2,334,268
--------- --------- -------- --------- -------- -------- ---------
(2,414,662) (2,719,767) (248,368) (3,056,523) (16,386,113) 13,991,467 2,286,256
--------- --------- -------- --------- -------- -------- ---------
Increase (decrease) in
net assets available
for plan benefits 8,826,961 (2,406,889) (248,368) (2,678,610) (15,360,598) 15,428,313 2,831,150
Net assets available
for plan benefits:
Beginning of year 36,911,346 2,406,889 248,368 2,678,610 15,360,598 - -
---------- --------- -------- --------- ---------- ---------- ---------
End of year $45,738,307 $ - $ - $ - $ - $15,428,313 $2,831,150
========== ========= ======== ========= ========== ========== =========
<CAPTION>
Fidelity Fidelity Fidelity
International Harley- Asset Asset Fidelity Fidelity
Growth and Davidson Manager Manager Asset Blue Chip Loan
ADDITIONS Income Fund Stock Fund Income Growth Manager Growth Fund Fund
<S> <C> <C> <C> <C> <C> <C> <C>
Investment income:
Net appreciation in
fair value of
investments (Note C) $ 9,365 $ 416,373 $ 2,794 $ 11,638 $ 293,181 $1,046,879 $ -
Interest and
dividend income 11,433 69,331 3,296 6,518 72,834 501,598 97,542
--------- ----------- -------- -------- -------- --------- --------
Net investment income 20,798 485,704 6,090 18,156 366,015 1,548,477 97,542
Employer contributions - 1,500,571 - - - - -
Participant
contributions 183,277 1,203,251 67,573 178,874 293,940 1,573,309 -
--------- ----------- -------- -------- -------- --------- --------
204,075 3,189,526 73,663 197,030 659,955 3,121,786 97,542
DEDUCTIONS
Benefit payments and
withdrawals (95) (413,237) - (96) (50,729) (589,207) (8,047)
Life insurance expense,
less increase in cash
surrender value - - - - - - -
Net transfers in (out) 795,448 394,706 90,833 258,699 2,604,063 591,629 44,419
--------- ----------- -------- -------- -------- --------- --------
795,353 (18,531) 90,833 258,603 2,553,334 2,422 36,372
--------- ----------- -------- -------- -------- --------- --------
Increase (decrease) in
net assets available
for plan benefits 999,428 3,170,995 164,496 455,633 3,213,289 3,124,208 133,914
Net assets available
for plan benefits:
Beginning of year - 9,769,070 - - - 5,116,738 1,331,073
--------- ----------- -------- -------- --------- --------- ---------
End of year $ 999,428 $12,940,065 $164,496 $455,633 $3,213,289 $8,240,946 $1,464,987
========= =========== ======== ======== ========= ========= =========
</TABLE>
See notes to financial statements.
<PAGE>
HARLEY-DAVIDSON
RETIREMENT SAVINGS PLAN FOR SALARIED EMPLOYEES
NOTES TO FINANCIAL STATEMENTS
December 31, 1996
Note A - Description of the Plan
The following brief description of the Harley-Davidson Retirement Savings
Plan for Salaried Employees (the "Plan") is provided for general
information purposes only. Participants should refer to the Plan
agreement for more complete information.
General - The Plan is a defined contribution plan that covers salaried
employees of Harley-Davidson, Inc., Harley-Davidson Motor Company (the
"Sponsor") and H-D Michigan, Inc. (together, the "Company") meeting
minimum eligibility requirements. It is subject to the provisions of the
Employee Retirement Income Security Act of 1974 ("ERISA"). Effective May
1, 1995, the Plan Trustee was changed, the Plan adopted daily valuation
for each of its investment funds, and universal life insurance policies
were deleted as an investment option.
Contributions - Participants have the right to make salary deferral
contributions of not less than 1% or more than 15% of their base
compensation (as defined in the Plan); subject to certain Internal Revenue
Code limitations. Participants have the option of investing their
contributions in one or a combination of several different investment
funds. Such voluntary contributions are nonforfeitable, accounted for in
a separate Voluntary Contribution Account for each participant in the
various funds, and can be withdrawn as provided in the Plan. Effective
January 1, 1993, the Sponsor established a match provision for
discretionary contributions. The Sponsor match provision begins at 25% of
participant contributions up to 6% of pay if certain financial criteria
are met and increases up to 50% determined by an established variable
schedule. A contribution of $1,878,956 was made in 1997 for fiscal 1996
and was recorded as a contribution receivable by the Plan at December 31,
1996. The money that the Sponsor contributes is invested in Harley-
Davidson, Inc. common stock. The value of the Sponsor match cannot be
transferred or directed to any other investment option in the Plan unless
the participant is age 55 or older.
Participant contributions below the statutory limit are made with
tax-deferred dollars under Section 401(k) of the Internal Revenue Code
(the "Code"). These contributions are excluded from the participant's
current wages for federal income tax purposes. No federal income tax is
paid for the tax-deferred contributions and earnings thereon or Company
contributions until the participant withdraws them from the Plan.
Participants' accounts - A separate account is maintained for each
applicable fund for each participant. Effective May 1, 1995, the account
balances are adjusted daily for participants' contributions, Sponsor
contributions, net investment income and distributions of participants'
benefits or withdrawals. Prior to May 1, 1995, account balances were
adjusted on a monthly basis.
Vesting - Participants are currently 100% vested in their contributions.
Sponsor contributions vest at the earlier of the end of the participant's
fifth year of employment, retirement, or death. Forfeitures of non-vested
contributions are used by the Sponsor to offset future Sponsor matching
contributions (none in 1995 or 1996).
Payment of benefits - Benefit and withdrawal payments consist of the
following:
(1) Upon retirement, death, disability, or termination of employment, the
balance in a participant's separate account(s) is paid to the
participant or beneficiary in a lump-sum.
(2) A participant may withdraw at any time all or any portion of the
vested balance of their separate account(s) that does not
pertain to contributions made under provisions of Section 401(k)
of the Code.
(3) A participant may not withdraw prior to retirement, death,
disability, or termination of employment any portion of their
separate account(s) pertaining to contributions made under provisions
of Section 401(k) of the Code, except for financial hardships, as
defined in the Code, or after the participant attains age 59-1/2.
Investment provisions - The Plan's investments consist of its interest in
the commingled investments of the Harley-Davidson Retirement Savings Plan
Master Trust (Master Trust) and notes receivable from participants. The
Master Trust is a common trust arrangement under which investments of the
Plan and another Harley-Davidson defined contribution plan are commingled
(see Note C). The Plan's investment in the Master Trust is based on its
equity share of the Master Trust's investments (determined separately for
each of the Master Trust's investment accounts), which are described
below.
In accordance with Plan provisions, participants may direct their
contributions to be invested in one or a combination of the following
funds: Managed Income Fund, Fidelity Investment Grade Bond Fund, Fidelity
Blue Chip Growth Fund, Fidelity International Growth and Income Fund,
Harley-Davidson Stock Fund, Fidelity Asset Manager: Income Fund, Fidelity
Asset Manager Fund, and Fidelity Asset Manager: Growth Fund.
The Managed Income Fund seeks to preserve capital and achieve a
competitive level of income over time. The Managed Income Fund is a
combination of the Managed Income Portfolio and existing investment
contracts previously purchased by Harley-Davidson Motor Company. The
Managed Income Portfolio purchases investment contracts from high quality
financial institutions such as insurance companies or banks, "synthetic"
investment contracts that are composed of high quality bonds and a wrapper
which simulates the terms of conventional investment contracts, and money
market instruments for liquidity. The Fund's goal is to maintain a stable
$1 share price, but there is no guarantee that it will be able to do so.
Its yield will fluctuate. The Managed Income Fund is not a mutual fund
and is managed by Fidelity Management Trust Company (FMTC). Although
individual investment contracts are backed by the issuers of the debt,
shares of the Fund are not guaranteed by the Sponsor, FMTC or insured by
the FDIC.
The Fidelity Investment Grade Bond Fund seeks a high level of current
income. The Fund will invest in a broad array of securities that are
considered "investment-grade," which means that they are generally of
medium to high quality. These types of bonds generally provide lower
yields than those rated below investment-grade, but they also involve less
investment risk.
The Fidelity Blue Chip Growth Fund is a "capital growth" mutual fund and
seeks to grow the value of the investment over the long term. The Fund
invests in common stocks of well-known, established growth companies that
are generally considered industry leaders.
The Fidelity International Growth and Income Fund seeks both capital
growth and income. While the Fund focuses primarily on stocks which have
growth possibilities, it will keep at least 25% of its assets invested in
debt securities for the income they provide. The Fund invests primarily
in companies who mostly operate outside of the U.S. Although it will
generally spread its investments across six different countries, including
the U.S., the Fund may, at times invest all assets in a single country.
International investing may pose greater risks, as well as greater
potential rewards, than investments in domestic securities.
The Harley-Davidson Stock Fund consists primarily of Harley-Davidson
Common Stock, with a small portion of short-term instruments to allow for
daily transactions into and out of this option. The value of this Fund
will fluctuate and is tied directly to the performance of Harley-Davidson
Motor Company as well as general stock market trends.
The Fidelity Asset Manager: Income Fund seeks to provide a high level of
current income, but also considers the potential for capital appreciation.
The Fund can invest in all three investment classes: foreign (including
emerging markets) and domestic stocks, bonds and short-term instruments.
Based on the current outlook for market conditions, the Fund's manager can
gradually increase or decrease the amount that the fund invests in each of
these asset classes. The Fund's investments in each of these classes can
range anywhere from 0% to 30% in stocks, 40% to 60% in bonds and 10% to
50% in short-term instruments, but over time, the general mix of these
investments classes (known as the Fund's "neutral mix") will include 20%
stocks, 50% bonds and 30% short-term instruments.
The Fidelity Asset Manager Fund seeks to provide high total return with
reduced risk over the long term. Total return is the combination of
income (from dividends and capital gains) and the change in the value of
the share price of the Fund. As an asset allocation fund, Asset Manager
invests in all three investment classes: foreign (including emerging
markets) and domestic stocks, bonds, and short-term instruments. The
Fund's manager may gradually adjust the combination of these investments
depending upon the current outlook for the various markets. As a result,
Asset Manager's investments can range anywhere from 30% to 70% in stocks,
20% to 60% in bonds, and 0% to 50% in short-term instruments. Over the
long term, the Fund will generally include the following combination of
these investments (known as its "neutral mix"): 50% stocks, 40% bonds, and
10% short-term instruments.
The Fidelity Asset Manager: Growth Fund focuses on maximizing total return
over the long term. Total return is the combination of income (from
dividends and capital gains) and the change in the value of the share
price of the Fund. As the most aggressive asset allocation fund that
Fidelity offers, Asset Manager: Growth can invest anywhere from 50% to
100% of its assets in stocks, 0% to 50% in bonds, and 0% to 50% in short-
term instruments. The Fund's "neutral mix," which represents the way the
Fund's investments will be allocated over the long term, includes 70%
stocks, 25% bonds and 5% short-term instruments.
Participants may borrow from their separate account balances subject to
Code provisions, which include a surtax on loans in excess of 50% of the
participant's vested separate account balance and require a market rate of
interest be charged on the loans. The Plan administrator has discretion
to make such loans under the Plan and to determine the rate of interest
for such loans (within Code guidelines). Amounts loaned to a participant
will not share in the allocation of the Plan earnings, but will be
credited with the interest earned on the loan balance payable by the
participant.
The Plan's security investments were held until April 30, 1995 by the
Marshall & Ilsley Trust Company under a nondiscretionary trust agreement
dated October 1, 1989. As of May 1, 1995, the Plan's security investments
were held by FMTC. The Administrative Committee directs the trustee to
invest and reinvest amounts with the current investment managers.
Plan termination - While the Sponsor has not expressed any intent to
terminate the Plan, it is free to do so at any time. In the event of
termination, Sponsor contributions automatically become vested to the
extent of the balance in each participant's separate account(s).
Administrative expenses - Administrative expenses generally are paid by
the Sponsor.
Note B - Summary of significant accounting policies
Valuation of investments - The investments in the mutual funds are stated
at fair value and are based on the quoted market or redemption values on
the last business day of the plan year. Securities traded on a national
securities exchange (including the Harley-Davidson, Inc. common stock)
are valued at the closing market price on the last business day of the
plan year.
The insurance group annuity contracts are fully benefit responsive and
therefore, are valued at contract value as reported by the Plan Trustee.
Contract value represents contributions made under the contract, plus
interest at the contract rate, less funds used to pay retirement and other
benefits.
Notes receivable from participants are stated at their unpaid principal
balances which approximates fair value.
Reclassifications - Certain prior year balances have been reclassified in
order to conform to current year presentation.
Use of estimates - 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 C - Investments
As indicated in Note A, the assets of the Master Trust include commingled
investments held for both the Plan and the Harley-Davidson Retirement
Savings Plan for Milwaukee and Tomahawk Hourly Bargaining Unit Employees
(Hourly Plan). The carrying amounts of the commingled investments and
cash have been allocated between the Plan and the Hourly Plan based on the
respective participants' interest, reduced by other allocable assets and
liabilities.
A summary of the Master Trust's commingled investments and the Plan's
interest in those Master Trust investments at December 31, 1996 is as
follows:
Contract Value/
Cost Fair Value
Cash and cash equivalents $ 1,106,401 $ 1,106,401
Master Trust Investments
at contract value:
Insurance company contracts 25,176,240 25,176,240
Master Trust investments
at fair value:
Securities of unaffiliated
issuer 31,074,460 34,470,238
Securities of affiliated
issuer-Common stock -
Harley Davidson, Inc. 18,275,976 32,354,776
---------- ----------
Commingled assets of the
Master Trust 75,633,077 93,107,655
Less amount allocated to
Hourly Plan 28,021,343 33,278,592
---------- ----------
Plan interest in Master Trust $47,611,734 $59,829,063
========== ==========
The Plan's interest in the fair values of the various Master Trust
investment categories is as follows at December 31, 1996:
Cash and cash equivalents $ 608,541
Insurance company contracts 14,424,626
Investments in securities of unaffiliated issuers 22,790,068
Investments in securities of affiliated issuer -
common stock of Harley-Davidson, Inc. 22,005,828
----------
$59,829,063
==========
Income earned by the commingled investments of the Master Trust and the
Plan's allocated share therein for the year ended December 31, 1996 and
for the period from inception of the Master Trust agreement May 1, 1995
through December 31, 1995, is as follows:
Year Ended May 1, 1995-
Dec. 31, 1996 Dec. 31, 1995
Interest and dividend income $ 4,200,938 $2,493,098
Net realized and unrealized
appreciation in fair value of
investments 12,619,716 7,113,787
---------- ----------
Commingled investment income earned
by the Master Trust 16,820,654 9,606,885
Less amount allocated to Hourly Plan 5,603,222 3,185,343
---------- ----------
Master Trust commingled investment
income allocated to the Plan $11,217,432 $6,421,542
========== =========
These amounts are included in the respective categories in the Statement
of Changes in Net Assets Available for Plan Benefits.
Investments that represent 5% or more of the Master Trust's net assets at
December 31, 1996 are as follows:
1996
Aetna group annuity contracts $25,176,240
Harley-Davidson Stock Fund 32,354,776
Fidelity Asset Manager 5,539,951
Fidelity Blue Chip Growth Fund 18,351,809
For the four months ended April 30, 1995, investments held by the Plan
(including investments bought, sold, as well as held during the year)
appreciated in fair value as follows (as determined by reference to quoted
market prices as discussed in Note B).
Four months ended
December 31, 1995
Net depreciation in fair value of
investments by investment type:
Mutual Funds $ (186,848)
Common stock -
Harley-Davidson, Inc. (2,633,967)
-----------
$(2,820,815)
===========
Note D - Insurance company contracts
The insurance group annuity contract owned by the Plan at December 31,
1996, and was group annuity contract #14490 with Aetna Life Insurance
Company and is stated at contract value which approximates fair value.
The crediting interest rate which approximates the average yield,is
adjusted semi-annually and is subject to contractually guaranteed minimum
rates. In 1996, the crediting interest rates were 5.90% and 6.21%. In
1995, the crediting interest rates were 6.61% and 5.95%.
Note E - Transactions with Parties-in-Interest
The following Harley-Davidson, Inc. common stock transactions occurred
(includes the Plan's share of Master Trust transactions):
1996 1995
Cost of stock held at beginning
of year $ 8,721,689 $ 5,611,117
Cost of purchases during the year 5,285,116 3,918,293
Proceeds from sales during the year (2,594,334) (1,142,073)
Net gain 637,535 334,352
---------- -----------
Cost of stock held at end of year $12,050,006 $ 8,721,689
========== ===========
Market value of stock held at end
of year $22,005,828 $11,423,774
========== ==========
Shares held at end of year 468,209 397,349
======== ========
All transactions in Harley-Davidson, Inc. common stock were executed at
market prices on the dates of the transactions.
The Plan received dividends of approximately $98,500 and $70,000 on the
common stock in 1996 and 1995, respectively.
Note F - Income tax status
The Plan received a favorable determination from the U.S. Treasury
Department on April 28, 1995 substantiating that the Plan is qualified
under Section 401(a) of the Code. As such, the Plan is exempt from
federal income taxes. Once qualified, a plan is required to operate in
conformity with the Code to maintain its qualification. The Sponsor's
pension administration committee is not aware of any cause of action or
series of events that would adversely affect the Plan's qualified status.
The Plan is intended to satisfy the requirements under Section 404(c) of
the ERISA, and therefore, provides that participants may choose to direct
their contributions and/or all or part of their account balances among any
of the Plan's eight investment alternatives every day.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
trustees (or other persons who administer the Plan) have duly caused this
annual report to be signed by the undersigned thereunto duly authorized.
Harley-Davidson
Retirement Savings Plan for
Salaried Employees
Date: June 27, 1997 By: /S/ James M. Brostowitz
James M. Brostowitz
Administrative Committee
Member
<PAGE>
SUPPLEMENTAL SCHEDULES
Schedule 1
HARLEY-DAVIDSON
RETIREMENT SAVINGS PLAN FOR SALARIED EMPLOYEES
ASSETS HELD FOR INVESTMENT
December 31, 1996
Shares
or face Current
Description amount Cost value
Plan's share of Master
Trust assets:
Cash and cash equivalents 608,541 $ 608,541 $ 608,541
Mutual funds -
Fidelity:
Managed Income Fund 544,485 544,485 544,485
Commingled assets of the
Investment Grade Bond Fund 409,843 2,892,766 2,918,085
Blue Chip Growth Fund 361,603 10,099,088 11,820,811
International Growth
and Income Fund 86,646 1,568,164 1,693,922
Asset Manager: Income 26,304 303,248 305,384
Asset Manager 234,518 3,526,491 3,862,510
Asset Manager: Growth 100,604 1,594,319 1,644,871
---------- ----------
20,528,561 22,790,068
Common stock -
Harley-Davidson, Inc. 468,209 12,050,006 22,005,828
Insurance group annuity -
administration contracts:
Aetna Life Insurance
Company group annuity
contract #14490 14,424,626 14,424,626 14,424,626
Participant loans, at various
interest rates (ranging
from 7% to 11%) and
maturities 1,650,026 1,650,026 1,650,026
---------- ----------
Total assets held for
investment $49,261,760 $61,479,089
========== ==========
<PAGE>
Schedule 2
HARLEY-DAVIDSON
RETIREMENT SAVINGS PLAN FOR SALARIED EMPLOYEES
TRANSACTIONS OR SERIES OF TRANSACTIONS IN EXCESS
OF 5 PERCENT OF THE CURRENT VALUE OF PLAN ASSETS
Year ended December 31, 1996
Cost of
purchases Proceeds from
Number of (1) during sales Net
Description transactions the year during the year gain
Category (iii) - Series of transactions in excess of 5 percent of plan
assets
Bank common trust funds -
FMTC Insti money
market fund 164P;205S $4,777,077 $4,658,033 $ -
Mutual funds:
Fidelity Blue Chip
Growth Fund 192P;125S 4,625,328 1,688,594 148,431
Common Stock -
Harley-Davidson Inc. 197P;128S 5,285,116 2,594,334 637,535
Note: The above transactions represent the Plan's share of Master Trust
transactions.
There were no category (i), (ii), or (iv) reportable transactions during
1996.
(1) P=Purchases; S=Sales
<PAGE>
EXHIBIT INDEX
Exhibit No. Description
23 Consent of Independent Auditors
Exhibit 23
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration Statement
(Form S-8 No. 33-35311) pertaining to the Harley-Davidson Retirement
Savings Plan for Salaried Employees (the Plan) of our report dated June 6,
1997, with respect to the financial statements and schedules of the Plan
included in this Annual Report (Form 11-K) for the year ended December 31,
1996.
ERNST & YOUNG LLP
Milwaukee, Wisconsin
June 27, 1997
