**UNITEDSTATES**

**SECURITIESAND EXCHANGE COMMISSION**

**Washington,D.C. 20549**

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**FORM10-K**

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**(Mark one)**
| x | ** ** | **ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF  THE SECURITIES EXCHANGE ACT OF 1934** |
|---|------------|-------------------------------------------------------------------------------------------|

 

**For the fiscal year endedDecember 31, 2006**

**or**
| o | ** ** | **TRANSITION REPORT PURSUANT TO SECTION 13 OR  15(d) OF THE SECURITIES EXCHANGE****ACT OF 1934** |
|---|------------|--------------------------------------------------------------------------------------------------|

 

**For thetransition period from                    to**

**Commissionfile number of issuing entity: 333-124935-04**

**Harley-DavidsonMotorcycle Trust 2006-3**

 (Exact name of issuing entity as specified inits charter)

**Commissionfile number of depositor: 333-124935**

**Harley-DavidsonCustomer Funding Corp.**

(Exact name ofdepositor as specified in its charter)

**Commissionfile number of sponsor: 333-21793**

**Harley-DavidsonCredit Corp.**

(Exact name ofsponsor as specified in its charter)

| **Delaware**                                                                                           |   | **51-6579060**                                     |
|--------------------------------------------------------------------------------------------------------|--------|----------------------------------------------------|
| (State or other  jurisdiction of incorporation or****organization)                                     |   | (I.R.S. Employer  Identification No.)              |
|                                                                                                   |   |                                               |
| **c/o  Wilmington Trust Company  Rodney Square North  1100 North Market Street  Wilmington, Delaware** |   | ** **

** **

** **

**19890-0001** |
| (Address of  principal executive offices)                                                              |   | (Zip Code)                                         |

 

Issuing entity’stelephone number, including area code:**  (302) 651-1000**

**SECURITIESREGISTERED PURSUANT TO SECTION 12(b) OF THE ACT: NONE**

**SECURITIESREGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: NONE**

Indicate by check mark if theregistrant is a well-known seasoned issuer, as defined in Rule 405 of theSecurities Act.

Yes o  No x

Indicate by check mark if the registrant is notrequired to file reports pursuant to Section 13 or Section 15(d) ofthe Act.

Yes o  No x

Indicate by checkmark whether the registrant (1) has filed all reports required to be filedby Section 13 or 15(d) of the Securities Exchange Act of 1934 during thepreceding 12 months (or for such shorter period that the registrant wasrequired to file such reports), and (2) has been subject to such filingrequirement for the past 90 days. Yes x  No o

Indicate by checkmark if disclosure of delinquent filers pursuant to Item 405 ofRegulation S-K is not contained herein, and will not be contained, to thebest of registrant’s knowledge, in definitive proxy or information statementsincorporated by reference in Part III of this Form 10-K or anyamendment to this Form 10-K. x

Indicate by checkmark whether the registrant is a large accelerated filer, an accelerated fileror a non-accelerated filer. See definition of “accelerated filer and largeaccelerated filer” in Rule 12b-2 of the Exchange Act. (Check one). 

LargeAccelerated Filer o     AcceleratedFiler o     Non-AcceleratedFiler x

Indicate by checkmark whether the registrant is a shell company (as defined in Exchange ActRule 12b-2). Yes o  No x

State theaggregate market value of the voting and non-voting common equity held bynon-affiliates computed by reference to the price at which the common equitywas last sold, or the average bid and asked price of such common equity, as ofthe last business day of the registrant’s most recently completed second fiscalquarter. Not applicable.

Indicate thenumber of shares as of the latest practicable date. Not applicable.

**DOCUMENTSINCORPORATED BY REFERENCE**

None.

 

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**PART I**

**The following Items have been omitted in accordance withGeneral Instruction J to Form 10-K:**

Item 1. Business

Item 1A. Risk Factors

Item 2. Properties

Item 3. Legal Proceedings

Item 4.Submission of Matters to a Vote of Security Holders

**Item 1B.Unresolved Staff Comments**

Not Applicable.

**Substitute information provided in accordance with GeneralInstruction J to Form 10-K:**

**Item 1112(b)of Regulation AB. Significant Obligors of Pool Assets (FinancialInformation).**

Not Applicable.

**Item 1114(b)(2)of Regulation AB. Credit Enhancement and Other Support, Except for CertainDerivatives Instruments (Financial Information).**

Not Applicable.

**Item 1115(b)of Regulation AB. Certain Derivatives Instruments (Financial Information).**

Not Applicable.

**Item 1117of Regulation AB. Legal Proceedings.**

There are no legal proceedings pending, or any proceedings known to becontemplated by governmental authorities, against the servicer, sponsor, thedepositor or the issuing entity that is material to the holders of the notes.  To the knowledge of the issuing entity, thereare no legal proceedings pending, or any proceedings known to be contemplatedby governmental authorities, against Wilmington Trust Company (the “OwnerTrustee”) or The Bank of New York Trust Company, N.A. (the “Indenture Trustee”)that is material to the holders of notes.

**PART II**

**The following Items have been omitted in accordance withGeneral Instruction J to Form 10-K:**

Item 5. Market for Registrant’s CommonEquity, Related Stockholder Matters and Issuer Purchases of Equity Securities.

Item 6. Selected Financial Data.

Item 7. Management’s Discussion andAnalysis of Financial Condition and Results of Operations.

Item 7A. Quantitative and QualitativeDisclosures About Market Risk.

Item 8. Financial Statements andSupplementary Data.

Item 9. Changes in and Disagreement withAccountants on Accounting and Financial Disclosure.

Item 9A.Controls and Procedures.

**Item 9B.Other Information.**

None.

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**PART III**

**The following Items have been omitted in accordance withGeneral Instruction J to Form 10-K:**

Item 10. Directors and ExecutiveOfficers of the Registrant.

Item 11. Executive Compensation.

Item 12. Security Ownership of CertainBeneficial Owners and Management and Related Stockholder Matters.

Item 13. Certain Relationships andRelated Transactions.

Item 14.Principal Accountant Fees and Services.

**Substitute information provided in accordance with GeneralInstruction J to Form 10-K:**

**Item 1119of Regulation AB. Affiliations and Certain Relationships and RelatedTransactions.**

Harley-Davidson Credit Corp. (“HDCC”), the seller, servicer andsponsor, is a Nevada corporation and wholly-owned subsidiary of Harley-DavidsonFinancial Services, Inc. (“HDFS”).  HDFS,a Delaware corporation, is a wholly-owned subsidiary and the financing divisionof Harley-Davidson, Inc.  HDCC and itsaffiliates provide retail financial services to consumers in the United Statesand Canada and wholesale financial services to Harley-Davidson® motorcycledealers and Buell® motorcycle dealers in the United States, Canada andEurope.  Harley-Davidson Customer FundingCorp. (“CFC”), the depositor, is a Nevada corporation and wholly-ownedspecial-purpose finance subsidiary of HDCC.  All of the officers anddirectors of CFC are also employed by HDCC or HDFS, except that at least twodirectors of CFC will at all times be independent of HDCC, HDFS andHarley-Davidson, Inc.  CFC’s business is limited to, among other things,(i) purchasing the contracts and related property (and other similar retailmotorcycle installment conditional sales contracts and similar promissory noteand security agreements) from HDCC (in its capacity as seller), (ii) acting asthe beneficial owner of the issuing entity ─ Harley-Davidson MotorcycleTrust 2006-3 (the “Trust”) ─  andother similar trusts and (iii) performing its obligations under the transferand servicing agreements to which it is a party (as well as similar agreementsentered into in connection with the formation of similar trusts).

Annualized losseson HDCC's managed retail motorcycle loans totaled 1.41% in 2006 compared to1.29% for the same period in 2005.  Thisincrease in losses reflects continued pressure on values for repossessedmotorcycles.  Managed retail loansinclude loans held by HDCC as well as those sold through securitization.  The 30-day delinquency rate for managedretail motorcycle loans at December 31, 2006 increased to 5.18% from 4.83% atDecember 31, 2005, and as a result it is expected that HDCC will experience highercredit losses as a percentage of managed retail motorcycle loans in 2007 ascompared to 2006. The assets owned by the Trust may experience credit lossesthat are the same as, greater than or less than those of managed retailmotorcycle loans as a whole. The Trust has disclosed its actual credit lossexperience for January and February 2007 in Form 10-Ds that it has filed withthe Securities and Exchange Commission.

**Item 1122of Regulation AB. Compliance with Applicable Servicing Criteria.**

Each of HDCC and the Indenture Trustee (each, a “Servicing Participant”)has been identified by the issuing entity as a party participating in theservicing function during the reporting period with respect to the pool assetsheld by the Trust. Each of the Servicing Participants has completed a report onan assessment of compliance with the servicing criteria applicable to suchServicing Participant (each, a “Report on Assessment”) during the Trust’sfiscal year ending December 31, 2006, which Reports on Assessment areattached as exhibits to this Form 10-K. In addition, each of the ServicingParticipants has provided an attestation report (each, an “Attestation Report”)by a registered independent public accounting firm regarding its related Reporton Assessment. Each Attestation Report is attached as an exhibit to thisForm 10-K. None of the Reports on Assessment or the related AttestationReports has identified any material instances of noncompliance with theservicing criteria described in the related Report on Assessment as beingapplicable to such Servicing Participant.

**Item 1123of Regulation AB. Servicer Compliance Statement.**

HDCC has been identified by the Trust as a servicer during thereporting period with respect to the pool assets held by the Trust.  HDCC has provided a Servicer ComplianceStatement, signed by an authorized officer, and such Servicer ComplianceStatement is attached as an exhibit to this Form 10-K.

3

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**PART IV**

**Item 15. Exhibits, Financial Statement Schedules.**

(a)   List of Documents Filed as Part of thisReport:

 

(1)    Not Applicable.

 

(2)    Not Applicable.

 

(3)    See Item 15(b).

 

(b)   Exhibits Required by Item 601 of RegulationS-K:

 
| **Exhibit  No.** | ** ** | ** **                                                                                                                                                                                                                                                                                                                      |
|------------------|------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 4.1              |       | Trust Agreement dated as of August 1, 2006 between  Harley-Davidson Customer Funding Corp. (“CFC”) and Wilmington Trust Company,  incorporated by reference to Exhibit 4.1 to Registrant’s Form 8-K (File  Number 333-124935-04), filed  on August 29, 2006.                                                     |
|             |       |                                                                                                                                                                                                                                                                                                                            |
| 4.2              |       | Indenture dated as of August 1, 2006 between  Harley-Davidson Motorcycle Trust 2006-3 (the “Trust”) and The Bank of New  York Trust Company, N.A. (the “Indenture Trustee”), incorporated by reference  to Exhibit 4.2 to Registrant’s Form 8-K (File Number 333-124935-04), filed on August 29, 2006. |
|             |       |                                                                                                                                                                                                                                                                                                                            |
| 10.1             |       | Transfer and Sale Agreement dated as of August 1,  2006 between Harley-Davidson Credit Corp. (“HDCC”) and CFC, incorporated by  reference to Exhibit 10.1 to Registrant’s Form 8-K (File Number 333-124935-04), filed on August 29,  2006.                                                                       |
|             |       |                                                                                                                                                                                                                                                                                                                            |
| 10.2             |       | Sale and Servicing Agreement dated as of August 1,  2006 among the Trust, CFC, HDCC, and the Indenture Trustee, incorporated by  reference to Exhibit 10.2 to Registrant’s Form 8-K (File Number 333-124935-04), filed on August 29,  2006.                                                                                |
|             |       |                                                                                                                                                                                                                                                                                                                            |
| 10.3             |       | Administration Agreement dated as of August 1, 2006  among the Trust, HDCC, CFC and the Indenture Trustee, incorporated by  reference to Exhibit 10.3 to Registrant’s Form 8-K (File Number 333-124935-04), filed on August 29,  2006.                                                                                     |
|             |       |                                                                                                                                                                                                                                                                                                                            |
| 10.4             |       | Underwriting Agreement dated as of August 17, 2006  among CFC, HDCC and Citigroup Global Markets Inc., as representative for the  several underwriters, incorporated by reference to Exhibit 10.4 to  Registrant’s Form 8-K (File Number 333-124935-04),  filed on August 29, 2006.                                        |
|             |       |                                                                                                                                                                                                                                                                                                                            |
| 31.1             |       | Rule 13a-14(a)/15d-14(a) Certification  (Section 302 Certification).                                                                                                                                                                                                                                                  |
|             |       |                                                                                                                                                                                                                                                                                                                            |
| 33.1             |       | Report on Assessment of Compliance with Servicing  Criteria concerning servicing activities of HDCC for the year ended  December 31, 2006.                                                                                                                                                                                 |
|             |       |                                                                                                                                                                                                                                                                                                                            |
| 33.2             |       | Report on Assessment of Compliance with Servicing  Criteria concerning servicing activities of The Bank of New York Trust  Company, N.A. for the year ended December 31, 2006.                                                                                                                                             |
|             |       |                                                                                                                                                                                                                                                                                                                            |
| 34.1             |       | Attestation Report of Ernst & Young LLP on  Assessment of Compliance with Servicing Criteria relating to HDCC.                                                                                                                                                                                                              |
|             |       |                                                                                                                                                                                                                                                                                                                            |
| 34.2             |       | Attestation Report of Ernst & Young LLP on  Assessment of Compliance with Servicing Criteria relating to The Bank of New  York Trust Company, N.A.                                                                                                                                                                          |
|             |       |                                                                                                                                                                                                                                                                                                                            |
| 35.1             |       | Servicer Compliance Statement of HDCC for the period  from August 25, 2006 through December 31, 2006.                                                                                                                                                                                                                      |

** **

(c)     NotApplicable.

 

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**SIGNATURE**

Pursuant to therequirements of the Securities Exchange Act of 1934, the registrant has dulycaused this report to be signed on its behalf by the undersigned hereunto dulyauthorized.

 
|                |   |   | HARLEY-DAVIDSON MOTORCYCLE TRUST 2006-3 |
|----------------|--------|--------|-----------------------------------------|
|           |   |   |                                    |   |
|           |   |   |                                    |   |
|           |   |   |                                    | By: | Harley-Davidson Credit Corp., |
|           |   |   |                                    |   | as Servicer |
|           |   |   |                                    |   |
|           |   |   |                                    |   |
|           |   |   |                                    |   |
|           |   |   |                                    | By: |  /s/ Perry A.  Glassgow |
|           |   |   |                                    |   | Perry A. Glassgow |
|           |   |   |                                    |   | Vice President and Treasurer |
|           |   |   |                                    |   |
|           |   |   |                                    |   |
|           |   |   |                                    |   |
| March 28, 2007 |   |   |                                    |   |
|           |   |   |                                    |   |

 

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**EXHIBIT INDEX**
|             |       |                                                                                                                                                                                                                                                                                                                            |
|-------------|------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| **Exhibit** | ** ** | ** **                                                                                                                                                                                                                                                                                                                      |
| 4.1         |       | Trust Agreement dated as of August 1, 2006 between  Harley-Davidson Customer Funding Corp. (“CFC”) and Wilmington Trust Company,  incorporated by reference to Exhibit 4.1 to Registrant’s Form 8-K (File  Number 333-124935-04), filed  on August 29, 2006.                                                     |
|        |       |                                                                                                                                                                                                                                                                                                                            |
| 4.2         |       | Indenture dated as of August 1, 2006 between  Harley-Davidson Motorcycle Trust 2006-3 (the “Trust”) and The Bank of New  York Trust Company, N.A. (the “Indenture Trustee”), incorporated by reference  to Exhibit 4.2 to Registrant’s Form 8-K (File Number 333-124935-04), filed on August 29, 2006. |
|        |       |                                                                                                                                                                                                                                                                                                                            |
| 10.1        |       | Transfer and Sale Agreement dated as of August 1,  2006 between Harley-Davidson Credit Corp. (“HDCC”) and CFC, incorporated by  reference to Exhibit 10.1 to Registrant’s Form 8-K (File Number 333-124935-04), filed on August 29,  2006.                                                                       |
|        |       |                                                                                                                                                                                                                                                                                                                            |
| 10.2        |       | Sale and Servicing Agreement dated as of August 1,  2006 among the Trust, CFC, HDCC, and the Indenture Trustee, incorporated by  reference to Exhibit 10.2 to Registrant’s Form 8-K (File Number 333-124935-04), filed on August 29,  2006.                                                                                |
|        |       |                                                                                                                                                                                                                                                                                                                            |
| 10.3        |       | Administration Agreement dated as of August 1, 2006  among the Trust, HDCC, CFC and the Indenture Trustee, incorporated by  reference to Exhibit 10.3 to Registrant’s Form 8-K (File Number 333-124935-04), filed on August 29,  2006.                                                                                     |
|        |       |                                                                                                                                                                                                                                                                                                                            |
| 10.4        |       | Underwriting Agreement dated as of August 17, 2006  among CFC, HDCC and Citigroup Global Markets Inc., as representative for the  several underwriters, incorporated by reference to Exhibit 10.4 to  Registrant’s Form 8-K (File Number 333-124935-04),  filed on August 29, 2006.                                        |
|        |       |                                                                                                                                                                                                                                                                                                                            |
| 31.1        |       | Rule 13a-14(a)/15d-14(a) Certification  (Section 302 Certification).                                                                                                                                                                                                                                                  |
|        |       |                                                                                                                                                                                                                                                                                                                            |
| 33.1        |       | Report on Assessment of Compliance with Servicing  Criteria concerning servicing activities of HDCC for the year ended  December 31, 2006.                                                                                                                                                                                 |
|        |       |                                                                                                                                                                                                                                                                                                                            |
| 33.2        |       | Report on Assessment of Compliance with Servicing  Criteria concerning servicing activities of The Bank of New York Trust  Company, N.A. for the year ended December 31, 2006.                                                                                                                                             |
|        |       |                                                                                                                                                                                                                                                                                                                            |
| 34.1        |       | Attestation Report of Ernst & Young LLP on  Assessment of Compliance with Servicing Criteria relating to HDCC.                                                                                                                                                                                                              |
|        |       |                                                                                                                                                                                                                                                                                                                            |
| 34.2        |       | Attestation Report of Ernst & Young LLP on  Assessment of Compliance with Servicing Criteria relating to The Bank of New  York Trust Company, N.A.                                                                                                                                                                          |
|        |       |                                                                                                                                                                                                                                                                                                                            |
| 35.1        |       | Servicer Compliance Statement of HDCC for the period  from August 25, 2006 through December 31, 2006.                                                                                                                                                                                                                      |

 

 

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