** **

**UNITED STATES**

**SECURITIESAND EXCHANGE COMMISSION**

**Washington,D.C. 20549**

 

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**FORM 10-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 ended December 31,  2007** |
|--------|-------------------------------------------------------|

 

**or**

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

 
|   | **For the transition period from                        to** |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------|

 

**Commissionfile number of issuing entity: 333-124935-05**

 

**Harley-DavidsonMotorcycle Trust 2007-1**

(Exact name of issuingentity as specified in its charter)

 

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

 

**Harley-DavidsonCustomer Funding Corp.**

(Exact name of depositoras specified in its charter)

 

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

 

**Harley-DavidsonCredit Corp.**

(Exact name of sponsor asspecified in its charter)

 

| **Delaware**                                                                                                          | ** ** | **51-6584385**                        |
|-----------------------------------------------------------------------------------------------------------------------|------------|---------------------------------------|
| (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 the registrant is a well-known seasonedissuer, as defined in Rule 405 of the Securities Act.

Yes o   Nox

 

Indicate by check mark if the registrant is not required to filereports pursuant to Section 13 or Section 15(d) of the Act.

Yes o   Nox

 

Indicate by check mark whether the registrant (1) has filed allreports required to be filed by Section 13 or 15(d) of the SecuritiesExchange Act of 1934 during the preceding 12 months (or for such shorterperiod that the registrant was required to file such reports), and (2) hasbeen subject to such filing requirement for the past 90 days.

Yes x   Noo

 

Indicate by check mark if disclosure of delinquent filers pursuant toItem 405 of Regulation S-K is not contained herein, and will not becontained, to the best of registrant’s knowledge, in definitive proxy orinformation statements incorporated by reference in Part III of this Form 10-Kor any amendment to this Form 10-K.                          x

 

Indicate by check mark whether the registrant is a large acceleratedfiler, an accelerated filer, a non-accelerated filer, or a smaller reportingcompany. See the definitions of “large accelerated filer,” “accelerated filer”and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

 
| Large accelerated filer  o | Accelerated filer  o         |
|--------------------------------------|----------------------------------------|
|                                 |                                   |
| Non-accelerated filer  x   | Smaller reporting company  o |

(Do not check if a smaller reporting company)

 

Indicate by check mark whether the registrant is a shell company (asdefined in Exchange Act Rule 12b-2).

Yes o   No x

 

State the aggregate market value of the voting and non-voting commonequity held by non-affiliates computed by reference to the price at which thecommon equity was last sold, or the average bid and asked price of such commonequity, as of the last business day of the registrant’s most recently completedsecond fiscal quarter.                                                             **Not applicable.**

 

Indicate the number of shares as of the latest practicable date.                                                                  **Notapplicable.**

 

**DOCUMENTSINCORPORATED BY REFERENCE**

 

None.

 

 

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**PART I**

 

**The followingItems have been omitted in accordance with General 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.

 

**Substituteinformation provided in accordance with General Instruction J to Form 10-K:**

 

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

Not Applicable.

 

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

Not Applicable.

 

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

Not Applicable.

 

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

There are no legalproceedings pending, or any proceedings known to be contemplated bygovernmental authorities, against the servicer, sponsor, the depositor or theissuing entity that is material to the holders of 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**

 

**Thefollowing Items have been omitted in accordance with General Instruction J to Form 10-K:**

 

 Item 5.Market for Registrant’s Common Equity, Related Stockholder Matters and IssuerPurchases of Equity Securities.

 Item 6.Selected Financial Data.

 Item 7.Management’s Discussion and Analysis of Financial Condition and Results ofOperations.

 Item 7A.Quantitative and Qualitative Disclosures About Market Risk.

 Item 8.Financial Statements and Supplementary Data.

 Item 9.Changes in and Disagreement with Accountants on Accounting and FinancialDisclosure.

 Item 9A.Controls and Procedures.

** **

**Item 9B.Other Information.**

None.

 

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**PART III**

 

**The followingItems have been omitted in accordance with General Instruction J to Form 10-K:**

 

 Item 10. Directors and Executive Officersof 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 andServices.

 

**Substituteinformation provided in accordance with General Instruction J to Form 10-K:**

 

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

Harley-Davidson Credit Corp.(“HDCC”), the seller, servicer and sponsor, is a Nevada corporation andwholly-owned subsidiary of Harley-Davidson Financial Services, Inc. (“HDFS”).  HDFS, a Delaware corporation, is awholly-owned subsidiary and the financing division of Harley-Davidson, Inc.  HDCC and its affiliates provide retailfinancial services to consumers in the United States and Canada and wholesalefinancial services to Harley-Davidson® motorcycle dealers and Buell® motorcycledealers in the United States, Canada and Europe.  Harley-Davidson Customer Funding Corp. (“CFC”),the depositor, is a Nevada corporation and wholly-owned special-purpose financesubsidiary of HDCC.  All of the officers and directors of CFC are alsoemployed by HDCC or HDFS, except that at least two directors of CFC will at alltimes be independent of HDCC, HDFS and Harley-Davidson, Inc.  CFC’sbusiness is limited to, among other things, (i) purchasing the contractsand related property (and other similar retail motorcycle installmentconditional sales contracts and similar promissory note and securityagreements) from HDCC (in its capacity as seller), (ii) acting as thebeneficial owner of the issuing entity – Harley-Davidson Motorcycle Trust2007-1 (the “Trust”) –  and other similartrusts and (iii) performing its obligations under the transfer andservicing agreements to which it is a party (as well as similar agreementsentered into in connection with the formation of similar trusts).

 

Annualized losses on HDCC’smanaged retail motorcycle loans totaled 1.91% in 2007 compared to 1.41% for thesame period in 2006.  Managed retailloans include loans held by HDCC as well as those sold through securitizationtransactions.  The 30-day delinquencyrate for managed retail motorcycle loans at December 31, 2007 increased to6.15% from 5.18% at December 31, 2006. This increase in losses is primarily due to an increase in delinquentaccounts resulting in a higher incidence of loss as well as continued pressureon values for repossessed motorcycles. As a result, it is expected that HDCC will experience higher creditlosses as a percentage of managed retail motorcycle loans in 2008 as comparedto 2007.  The assets owned by the Trustmay experience credit losses that are the same as, greater than or less thanthose of managed retail motorcycle loans as a whole.  The Trust has disclosed its actual creditloss experience for January and February 2008 in Form 10-Ds thatit has filed with the Securities and Exchange Commission.

 

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

Each of HDCC and theIndenture Trustee (each, a “Servicing Participant”) has been identified by theissuing entity as a party participating in the servicing function during thereporting period with respect to the pool assets held by the Trust. Each of theServicing Participants has completed a report on an assessment of compliancewith the servicing criteria applicable to such Servicing Participant (each, a “Reporton Assessment”) during the Trust’s fiscal year ending December 31, 2007,which Reports on Assessment are attached as exhibits to this Form 10-K. Inaddition, each of the Servicing Participants has provided an attestation report(each, an “Attestation Report”) by a registered independent public accountingfirm regarding its related Report on Assessment. Each Attestation Report isattached as an exhibit to this Form 10-K. Except as disclosed below, no Report on Assessment or relatedAttestation Report has identified any material instance of noncompliance withthe servicing criteria identified in such Report on Assessment as applicable tothe related Servicing Participant.

 

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The Bank of New York’sReport on Assessment and related Attestation Report have identified materialnoncompliance with one servicing criterion applicable to The Bank of NewYork.  Specifically, with regard toservicing criterion 1122(d)(2)(i) (which contemplates that payments onpool assets are deposited into the appropriate custodial bank accounts andrelated bank clearing accounts within the time frames specified in thetransaction agreements), collections received on assets relating to certainseries of securities were not deposited into a segregated account for eachspecified series but rather were deposited into a general account held by TheBank of New York, as indenture trustee (the “Indenture Trustee”) and remitteddirectly to the investors of such series. The Bank of New York indicates that the segregated account relating toeach specified series was in existence prior to the time deposits were to bemade into such account but such account was not utilized in all instances bythe Indenture Trustee as stated above.

 

The Bank of New York furtherindicates in its Report on Assessment that (i) all collections wereproperly allocated by the Indenture Trustee to the related series of securitiesand timely remitted to the investors in such series, and (ii) procedureshave been in place and are currently being reinforced so that collections aredeposited into the segregated account for each specified series within theapplicable time frames and then remitted to the investors in such series inaccordance with the related transaction documents.  We have not independently verified theaccuracy of The Bank of New York’s assertions or the adequacy of itsremediation efforts; however, based on the above and information from The Bankof New York, the registrant does not believe these errors had a material impactor effect on the Trust’s investors.

 

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

HDCC has been identified bythe Trust as a servicer during the reporting period with respect to the poolassets held by the Trust.  HDCC hasprovided a Compliance Statement, signed by an authorized officer, and suchCompliance Statement is attached as an exhibit to this Form 10-K.

 

**PART IV**

 

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

** **
|   | (a)    | List of Documents Filed as Part of this Report |
|--------|--------|-----------------------------------------------------|
|   |   |                                                |
|   |   | (1)                                                 | Not Applicable. |
|   |   |                                                |   |
|   |   | (2)                                                 | Not Applicable. |
|   |   |                                                |   |
|   |   | (3)                                                 | See Item 15(b) |

 
|   | (b) | Exhibits Required by Item 601 of  Regulation S-K |
|--------|-----|------------------------------------------------------------|

 
|             |       |                                                                                                                                                                                                           |
|------------------|------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| **Exhibit  No.** | ** ** | ** **                                                                                                                                                                                                     |
| 3.1              |       | Articles of Incorporation of the Registrant,  incorporated by reference to Exhibit 3.1 to Registrant’s Registration  Statement on Form S-3 (File Number 333-37550) filed on May 22,  2000. |

 

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| 3.2    |   | Bylaws of the Registrant, incorporated by reference  to Exhibit 3.2 to Registrant’s Registration Statement on Form S-3  (File Number 333-37550) filed on May 22, 2000.                                                                                                                                                              |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |                                                                                                                                                                                                                                                                                                                                                    |
| 4.1    |   | Trust Agreement dated as of January 1, 2007  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 333-124935-05),  filed on February 1, 2007.                                                       |
|   |   |                                                                                                                                                                                                                                                                                                                                                    |
| 4.2    |   | Indenture dated as of January 15, 2007 between  Harley-Davidson Motorcycle Trust 2007-1 (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 333-124935-05), filed on  February 1, 2007. |
|   |   |                                                                                                                                                                                                                                                                                                                                                    |
| 10.1   |   | Transfer and Sale Agreement dated as of  January 15, 2007 between Harley-Davidson Credit Corp. (“HDCC”) and CFC,  incorporated by reference to Exhibit 10.1 to Registrant’s Form 8-K  (File Number 333-124935-05),  filed on February 1, 2007.                                                                       |
|   |   |                                                                                                                                                                                                                                                                                                                                                    |
| 10.2   |   | Sale and Servicing Agreement dated as of  January 15, 2007 among the Trust, CFC, HDCC, and the Indenture Trustee,  incorporated by reference to Exhibit 10.2 to Registrant’s Form 8-K  (File Number 333-124935-05),  filed on February 1, 2007.                                                                                |
|   |   |                                                                                                                                                                                                                                                                                                                                                    |
| 10.3   |   | Administration Agreement dated as of  January 15, 2007 among the Trust, HDCC, CFC and the Indenture Trustee,  incorporated by reference to Exhibit 10.3 to Registrant’s Form 8-K  (File Number 333-124935-05),  filed on February 1, 2007.                                                                                     |
|   |   |                                                                                                                                                                                                                                                                                                                                                    |
| 10.4   |   | Underwriting Agreement dated as of January 23,  2007 among CFC, HDCC and Wachovia Capital Markets LLC, as representative for  the several underwriters, incorporated by reference to Exhibit 10.4 to  Registrant’s Form 8-K (File Number 333-124935-05), filed on February 1, 2007.                                            |
|   |   |                                                                                                                                                                                                                                                                                                                                                    |
| 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, 2007.                                                                                                                                                                                                         |
|   |   |                                                                                                                                                                                                                                                                                                                                                    |
| 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, 2007.                                                                                                                                                                     |
|   |   |                                                                                                                                                                                                                                                                                                                                                    |
| 34.1   |   | Attestation Report of Ernst & Young LLP on  Assessment of Compliance with Servicing Criteria relating to HDCC.                                                                                                                                                                                                                                 |
|   |   |                                                                                                                                                                                                                                                                                                                                                    |
| 34.2   |   | Attestation Report of KPMG 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 January 31, 2007 through December 31, 2007.                                                                                                                                                                                                                                        |

 
|   | (c) | Not Applicable. |
|--------|-----|-----------------|

 

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**SIGNATURE**

 

Pursuant to the requirements of the SecuritiesExchange Act of 1934, the registrant has duly caused this report to be signedon its behalf by the undersigned hereunto duly authorized.

 
|                | HARLEY-DAVIDSON MOTORCYCLE TRUST 2007-1 |
|---------------------|-----------------------------------------|
|                |                                    |   |
|                | By:                                     | Harley-Davidson Credit Corp.,   as Servicer |
|                |                                    |   |
|                | By:                                     |   /s/ Perry A. Glassgow |
|                |                                    |   Perry A. Glassgow |
|                |                                    |   Vice President, Treasurer, Acting Chief  Financial Officer    and Assistant Secretary |
|                |                                    |   |
|                |                                    |   |
| March 28, 2008 |                                    |   |
|                     |                                         |  |  |

 

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**EXHIBITINDEX**

 
| **Exhibit** | ** ** | ** **                                                                                                                                                                                                                                                                                                                                              |
|-------------|------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 3.1         |       | Articles of Incorporation of the Registrant,  incorporated by reference to Exhibit 3.1 to Registrant’s Registration  Statement on Form S-3 (File Number 333-37550) filed on May 22,  2000.                                                                                                                                          |
|        |       |                                                                                                                                                                                                                                                                                                                                                    |
| 3.2         |       | Bylaws of the Registrant, incorporated by reference  to Exhibit 3.2 to Registrant’s Registration Statement on Form S-3  (File Number 333-37550) filed on May 22, 2000.                                                                                                                                                              |
|        |       |                                                                                                                                                                                                                                                                                                                                                    |
| 4.1         |       | Trust Agreement dated as of January 1, 2007  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 333-124935-05),  filed on February 1, 2007.                                                       |
|        |       |                                                                                                                                                                                                                                                                                                                                                    |
| 4.2         |       | Indenture dated as of January 15, 2007 between  Harley-Davidson Motorcycle Trust 2007-1 (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 333-124935-05), filed on  February 1, 2007. |
|        |       |                                                                                                                                                                                                                                                                                                                                                    |
| 10.1        |       | Transfer and Sale Agreement dated as of  January 15, 2007 between Harley-Davidson Credit Corp. (“HDCC”) and CFC,  incorporated by reference to Exhibit 10.1 to Registrant’s Form 8-K  (File Number 333-124935-05),  filed on February 1, 2007.                                                                       |
|        |       |                                                                                                                                                                                                                                                                                                                                                    |
| 10.2        |       | Sale and Servicing Agreement dated as of  January 15, 2007 among the Trust, CFC, HDCC, and the Indenture Trustee,  incorporated by reference to Exhibit 10.2 to Registrant’s Form 8-K  (File Number 333-124935-05),  filed on February 1, 2007.                                                                                |
|        |       |                                                                                                                                                                                                                                                                                                                                                    |
| 10.3        |       | Administration Agreement dated as of  January 15, 2007 among the Trust, HDCC, CFC and the Indenture Trustee,  incorporated by reference to Exhibit 10.3 to Registrant’s Form 8-K  (File Number 333-124935-05),  filed on February 1, 2007.                                                                                     |
|        |       |                                                                                                                                                                                                                                                                                                                                                    |
| 10.4        |       | Underwriting Agreement dated as of January 23,  2007 among CFC, HDCC and Wachovia Capital Markets LLC, as representative for  the several underwriters, incorporated by reference to Exhibit 10.4 to  Registrant’s Form 8-K (File Number 333-124935-05), filed on February 1, 2007.                                            |
|        |       |                                                                                                                                                                                                                                                                                                                                                    |
| 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, 2007.                                                                                                                                                                                                         |
|        |       |                                                                                                                                                                                                                                                                                                                                                    |
| 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, 2007.                                                                                                                                                                     |
|        |       |                                                                                                                                                                                                                                                                                                                                                    |
| 34.1        |       | Attestation Report of Ernst & Young LLP on  Assessment of Compliance with Servicing Criteria relating to HDCC.                                                                                                                                                                                                                                 |
|        |       |                                                                                                                                                                                                                                                                                                                                                    |
| 34.2        |       | Attestation Report of KPMG 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 January 31, 2007 through December 31, 2007.                                                                                                                                                                                                                                        |

 

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