10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

x Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

for the quarterly period ended June 30, 2014

or

¨ Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Commission File Number: 0-18607

ARCTIC CAT INC.

(Exact name of registrant as specified in its charter)

Minnesota	41-1443470
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
505 Hwy 169 North, Suite 1000 Plymouth, Minnesota	55441
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code:

(763) 354-1800

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No  ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  x    No  ¨

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

Large accelerated filer	x	Accelerated filer	¨
Non-accelerated filer	¨	Smaller reporting company	¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ¨    No  x

At August 1, 2014, the registrant had 12,922,548 shares of Common Stock outstanding.

ARCTIC CAT INC.

TABLE OF CONTENTS

PART I FINANCIAL INFORMATION
ITEM 1.	FINANCIAL STATEMENTS	3
	UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS	3
	UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS	4
	UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME	5
	UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS	6
	NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS	7
ITEM 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	15
ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	19
ITEM 4.	CONTROLS AND PROCEDURES	19
PART II OTHER INFORMATION
ITEM 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	20
ITEM 6.	EXHIBITS	21

2

Part I – FINANCIAL INFORMATION

ITEM 1 – FINANCIAL STATEMENTS

Arctic Cat Inc.

CONDENSED CONSOLIDATED BALANCE SHEETS

(unaudited)

	June 30, 2014			March 31, 2014
ASSETS
Current Assets
Cash and cash equivalents	$	24,265,000		$	22,524,000
Short-term investments		8,000			60,008,000
Accounts receivable, less allowances		33,194,000			42,003,000
Inventories		185,264,000			140,652,000
Prepaid expenses		4,218,000			3,815,000
Income taxes receivable		953,000			1,323,000
Deferred income taxes		16,063,000			14,971,000
Total current assets		263,965,000			285,296,000
Property and Equipment
Machinery, equipment and tooling		183,434,000			181,028,000
Land, buildings and improvements		29,758,000			29,758,000
		213,192,000			210,786,000
Less accumulated depreciation		157,939,000			154,855,000
		55,253,000			55,931,000
Other Assets		1,036,000			1,067,000
	$	320,254,000		$	342,294,000
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities
Accounts payable	$	80,298,000		$	93,882,000
Accrued expenses		46,267,000			54,659,000
Total current liabilities		126,565,000			148,541,000
Deferred Income Taxes		8,895,000			8,710,000
Commitments and Contingencies		—			—
Shareholders’ Equity
Preferred stock, par value $1.00; 2,050,000 shares authorized; none issued		—			—
Preferred stock – Series B Junior Participating, par value $1.00; 450,000 shares authorized; none issued		—			—
Common stock, par value $.01; 37,440,000 shares authorized; shares issued and outstanding: 12,914,282 at June 30, 2014 and 12,882,705 at March 31, 2014		129,000			129,000
Additional paid-in-capital		673,000			—
Accumulated other comprehensive loss		(4,984,000	)		(2,110,000	)
Retained earnings		188,976,000			187,024,000
Total shareholders’ equity		184,794,000			185,043,000
	$	320,254,000		$	342,294,000

The accompanying notes are an integral part of these condensed consolidated statements.

3

Arctic Cat Inc.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited)

	Three Months Ended June 30,
	2014			2013
Net sales
Snowmobile & ATV units	$	119,978,000		$	98,914,000
Parts, garments & accessories		23,661,000			21,854,000
Total net sales		143,639,000			120,768,000
Cost of goods sold
Snowmobile & ATV units		97,701,000			77,908,000
Parts, garments & accessories		15,137,000			13,700,000
Total cost of goods sold		112,838,000			91,608,000
Gross profit		30,801,000			29,160,000
Operating expenses
Selling & marketing		6,981,000			6,994,000
Research & development		5,346,000			5,282,000
General & administrative		12,904,000			8,411,000
Total operating expenses		25,231,000			20,687,000
Operating profit		5,570,000			8,473,000
Other income (expense)
Interest income		4,000			9,000
Interest expense		(40,000	)		(3,000	)
Total other income (expense)		(36,000	)		6,000
Earnings before income taxes		5,534,000			8,479,000
Income tax expense		1,965,000			3,011,000
Net earnings	$	3,569,000		$	5,468,000
Net earnings per share
Basic	$	0.28		$	0.41
Diluted	$	0.27		$	0.40
Weighted average shares outstanding
Basic		12,896,000			13,215,000
Diluted		13,082,000			13,711,000

The accompanying notes are an integral part of these condensed consolidated statements.

4

Arctic Cat Inc.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)

	Three Months Ended June 30,
	2014			2013
Net earnings	$	3,569,000		$	5,468,000
Other comprehensive income (loss):
Foreign currency translation adjustments		(304,000	)		638,000
Unrealized gain (loss) on derivative instruments, net of tax		(2,570,000	)		3,131,000
Comprehensive income	$	695,000		$	9,237,000

The accompanying notes are an integral part of these condensed consolidated statements.

5

Arctic Cat Inc.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

	Three Months Ended June 30,
	2014			2013
Cash flows from operating activities:
Net earnings	$	3,569,000		$	5,468,000
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation and amortization		3,116,000			3,440,000
Deferred income tax expense		603,000			1,485,000
Stock-based compensation expense		1,904,000			1,329,000
Changes in operating assets and liabilities:
Trading securities		60,000,000			76,396,000
Accounts receivable, less allowances		8,683,000			(8,316,000	)
Inventories		(44,932,000	)		(52,367,000	)
Prepaid expenses		(404,000	)		(619,000	)
Accounts payable		(17,644,000	)		8,640,000
Accrued expenses		(8,368,000	)		(11,742,000	)
Income taxes		565,000			(6,125,000	)
Net cash provided by operating activities		7,092,000			17,589,000
Cash flows from investing activities:
Purchases of property and equipment		(2,415,000	)		(2,815,000	)
Net cash used in investing activities		(2,415,000	)		(2,815,000	)
Cash flows from financing activities:
Proceeds from issuance of common stock		9,000			19,000
Payments for income taxes on net-settled option exercises		(966,000	)		(1,355,000	)
Tax benefit from stock options exercises		732,000			1,522,000
Dividends paid		(1,617,000	)		(1,326,000	)
Repurchase of common stock		(1,006,000	)		(1,438,000	)
Net cash used in financing activities		(2,848,000	)		(2,578,000	)
Effect of exchange rate changes on cash and cash equivalents		(88,000	)		289,000
Net increase in cash and cash equivalents		1,741,000			12,485,000
Cash and cash equivalents at beginning of period		22,524,000			35,566,000
Cash and cash equivalents at end of period	$	24,265,000		$	48,051,000
Supplemental disclosure of cash payments for:
Income taxes	$	32,000		$	5,539,000
Interest	$	24,000		$	3,000

The accompanying notes are an integral part of these condensed consolidated statements.

6

Arctic Cat Inc.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

NOTE A–BASIS OF PRESENTATION

The accompanying unaudited condensed consolidated financial statements of Arctic Cat Inc. (the “Company”) have been prepared in accordance with Regulation S-X pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted pursuant to such rules and regulations, although management believes that the disclosures are adequate to make the information presented not misleading.

In the opinion of management, the unaudited condensed consolidated financial statements contain all adjustments (consisting of only normal recurring adjustments) necessary to present fairly the Company’s financial position as of June 30, 2014, results of operations for the three-month periods ended June 30, 2014 and 2013 and cash flows for the three-month periods ended June 30, 2014 and 2013. Results of operations for the interim periods are not necessarily indicative of results for the full year. The condensed consolidated balance sheet as of March 31, 2014 is derived from the audited balance sheet as of that date.

Preparation of the Company’s condensed consolidated financial statements requires management to make estimates and assumptions that affect reported amounts of assets and liabilities and related revenues and expenses. Actual results could differ from those estimates.

NOTE B–STOCK-BASED COMPENSATION

Stock Option Plans

The Company has stock-based compensation plans, previously approved by the Company’s shareholders that provide for incentive and non-qualified stock options and restricted stock awards to be granted to directors, officers and other key employees. The stock options granted generally have a five to ten year life, vest over a period of one to three years, and have an exercise price equal to the fair market value of the stock on the date of grant. The stock options are generally subject to accelerated vesting if there is a change in control, as defined in the plans. The restricted stock awards generally vest over a period of two to three years and do not require cash payments from restricted stock award recipients. At June 30, 2014, the Company had 1,009,434 shares of common stock available for grant under the plans.

For the three months ended June 30, 2014 and 2013, the Company recorded stock-based compensation expense for stock options and restricted stock awards of $1,904,000 and $1,329,000, respectively, which have been included in general and administrative expenses. The Company’s total stock-based compensation related expense reduced both basic and diluted earnings per share by $0.09 and $0.06 for each of the three months ended June 30, 2014 and 2013, respectively.

At June 30, 2014, the Company had $3,325,000 of unrecognized compensation costs related to non-vested stock options and restricted stock awards that are expected to be recognized over a weighted average period of approximately two years.

The Company accounts for stock option based compensation by estimating the fair value of options granted using a Black-Scholes option valuation model. For stock options issued during the three months ended June 30, 2014 and 2013, the following assumptions were used to determine fair value:

	Three Months Ended June 30, 2014
Assumptions used:	2014			2013
Expected term (in years)		6 years			5 years
Expected volatility		49.0	%		49.0	%
Risk free interest rate		0.8	%		0.8	%
Expected dividend		1.0	%		1.0	%
Fair Value	$	20.50		$	21.68

7

Option transactions under the plans during the three months ended June 30, 2014, are summarized as follows:

	Shares			Weighted Average Exercise Price		Weighted Average Contractual Life		Aggregate Intrinsic Value
Outstanding at March 31, 2014		480,837		$	24.95
Granted		38,794			47.79
Exercised		(91,345	)		15.62
Cancelled		(60	)		15.77
Outstanding at June 30, 2014		428,226		$	29.01		6.31 years	$	5,415,000
Exercisable at June 30, 2014		338,994		$	24.78		5.59 years	$	5,407,000

The aggregate intrinsic value is based on the difference between the exercise price and the Company’s June 30, 2014 common share market value for in-the-money options.

The following tables summarize information concerning currently outstanding and exercisable stock options at June 30, 2014:

Options Outstanding and Exercisable

Range of Exercise Prices	Number Outstanding		Weighted Average Remaining Contractual Life		Weighted Average Exercise Price		Number Exercisable		Weighted Average Exercise Price
$6.26		7,800		2.54 years	$	6.26		7,800	$	6.26
9.57-13.59		54,287		5.76 years		10.79		54,287		10.79
14.68-21.03		139,421		6.99 years		16.18		139,421		16.18
21.96-27.69		24,000		9.35 years		24.83		24,000		24.83
33.67-47.79		202,718		5.78 years		44.07		113,486		43.30
		428,226		6.31 years	$	29.01		338,994	$	24.78

In August 2013, the Company’s shareholders adopted the 2013 Omnibus Stock and Incentive Plan (the “2013 Plan”). The 2013 Plan permits the granting of stock options, stock appreciation rights, restricted stock and restricted stock units, performance awards, other stock awards and dividend and dividend equivalents. At June 30, 2014, 1,009,434 shares of common stock remain available for issuance under the 2013 Plan.

In August 2007, the Company’s shareholders adopted the 2007 Omnibus Stock and Incentive Plan (the “2007 Plan”, and along with the 2013 Plan, “the Plans”). The terms of the 2007 Plan are substantially identical to those of the 2013 Plan. With the adoption of the 2013 Plan, the Company’s Board of Directors determined no further awards will be granted from the 2007 Plan.

The expected term of options granted is the safe harbor period. The volatility is based on historic volatilities from the traded shares of the Company over the past two and one-half years. The risk-free interest rate for periods matching the contractual life of the option is based on the U.S. Treasury yield curve in effect at the time of grant. Expected dividend is based on the historic dividend of the Company. The Company has analyzed the forfeitures of stock and option grants and has used a ten percent forfeiture rate in the expense calculation.

8

Restricted Stock

The 2013 Plan provides for grants of restricted common stock and restricted stock units to executives and key employees of the Company. The restricted common stock and restricted stock units are valued based on the Company’s market value of common stock on the date of grant and the amount of any award is expensed over the requisite service period which approximates two to three years. If grantees are retirement eligible and awards would either fully vest upon retirement or continue to vest after retirement, the full amount of the related expense is recognized upon grant. At June 30, 2014, the Company had 7,600 shares of restricted common stock issued and outstanding and 18,405 unvested restricted stock units outstanding under the 2007 Plan and 8,000 shares of restricted common stock issued and outstanding and 42,195 unvested restricted stock units outstanding under the 2013 Plan. The shares of restricted common stock awarded have voting rights and participate equally in all dividends and other distributions duly declared by the Company’s Board of Directors.

Compensation expenses associated with restricted stock awards totaled $121,000 and $87,000 for the three months ended June 30, 2014 and 2013, respectively. Compensation expenses associated with restricted stock units totaled $698,000 and $290,000 for the three months ended June 30, 2014 and 2013, respectively. The Company recognizes the expense for grants of restricted stock and restricted stock units on a straight-line basis in the statement of operations as general and administrative expense based on their fair value over their requisite service periods. At June 30, 2014, unamortized compensation expense of restricted stock totaled $503,000 and of restricted stock units totaled $1,672,000. The unamortized expense as of June 30, 2014 is expected to be recognized over a weighted average period of 1.4 years for restricted stock and restricted stock units.

Restricted stock and restricted stock unit award activity under the Plans during the three months ended June 30, 2014 and 2013 is summarized as follows:

	2014					2013
Restricted Shares	Shares			Weighted Average Grant Date Fair Value		Shares			Weighted Average Grant Date Fair Value
Non-vested shares at March 31,		16,200		$	43.45		42,820		$	19.33
Awarded		7,500			34.02		—			—
Vested		(8,100	)		33.33		(3,674	)		12.90
Non-vested shares at June 30,		15,600		$	44.17		39,146		$	19.93

	2014					2013
Restricted Stock Units	Shares			Weighted Average Grant Date Fair Value		Shares			Weighted Average Grant Date Fair Value
Non-vested shares at March 31,		40,103		$	35.35		41,607		$	27.35
Granted		43,772			37.05		17,976			42.99
Vested		(23,275	)		29.41		(16,643	)		23.75
Forfeited		—			—		(1,217	)		27.60
Non-vested shares at June 30,		60,600		$	38.86		41,723		$	35.52

NOTE C–NET EARNINGS PER SHARE

The Company’s basic net earnings per share is computed by dividing net earnings by the weighted average number of outstanding common shares. The Company’s diluted net earnings per share is computed by dividing net earnings by the weighted average number of outstanding common shares and common share equivalents relating to stock options, when dilutive. Options to purchase 200,656 shares of common stock with a weighted average exercise price of $44.18 outstanding during the three month period ended June 30, 2014, were excluded from the computation of common share equivalents because they were anti-dilutive as the per share exercise prices exceeded the per share market value. No options outstanding were excluded from the computation of common share equivalents because they were anti-dilutive during the three month periods ended June 30, 2013.

9

Weighted average shares outstanding consist of the following for the three months ended June 30, 2014 and 2013:

	Three Months Ended June 30,
	2014		2013
Weighted average number of common shares outstanding		12,896,000		13,215,000
Dilutive effect of option plan		186,000		496,000
Common and potential shares outstanding—diluted		13,082,000		13,711,000

NOTE D–SHORT-TERM INVESTMENTS

Trading securities consisted of $8,000 and $60,008,000, invested in various money market funds at June 30, 2014 and March 31, 2014, respectively. All of the trading securities are deemed to be Level 1 investments.

NOTE E–INVENTORIES

Inventories consist of the following:

	June 30, 2014		March 31, 2014
Raw materials and sub-assemblies	$	53,937,000	$	52,580,000
Finished goods		96,313,000		55,327,000
Parts, garments and accessories		35,014,000		32,745,000
	$	185,264,000	$	140,652,000

NOTE F–LINE OF CREDIT

The Company entered into a $100,000,000 senior secured revolving credit agreement in November 2013 for documentary and stand-by letters of credit, working capital needs and general corporate purposes, which amended and restated the Company’s prior $60,000,000 senior secured revolving credit agreement. This agreement is scheduled to expire in November 2017. Under the agreement, the Company may borrow up to $100,000,000 during May through November and up to $50,000,000 during all other months of the fiscal year. Borrowings under the line of credit bear interest at the greater of the following rates: the prime rate plus 0.75%, the federal funds rate plus 0.50% or LIBOR for a 30 day interest period plus 1.00%. As of June 30, 2014, the effective rate was 3.5%. All borrowings are collateralized by substantially all of the Company’s assets, including all real estate, accounts receivable and inventory. No borrowings from the line of credit were outstanding at June 30, 2014 and March 31, 2014. The outstanding letters of credit balances were $9,316,000 and $11,145,000 at June 30, 2014 and 2013, and borrowings under the line are subject to certain covenants and restrictions on indebtedness, financial guarantees, business combinations and other related items. The Company was in compliance with the terms of the credit agreement as of June 30, 2014. Outstanding letters of credit will be repaid during the six month period following execution or renewal of the letter of credit.

NOTE G–ACCRUED EXPENSES

Accrued expenses consist of the following:

	June 30, 2014		March 31, 2014
Marketing	$	9,726,000	$	11,671,000
Compensation		5,059,000		9,338,000
Warranties		19,423,000		19,357,000
Insurance		5,839,000		7,026,000
Other		6,220,000		7,267,000
	$	46,267,000	$	54,659,000

10

NOTE H–PRODUCT WARRANTIES

The Company generally provides a limited warranty to the owner of snowmobiles for twelve months from the date of consumer registration and for six months from the date of registration on all-terrain vehicles (“ATVs”) and recreational off-highway vehicles (“ROVs”). The Company provides for estimated warranty costs at the time of sale based on historical rates and trends and makes subsequent adjustments to its estimate as actual claims become known or the amounts are determinable. The following represents changes in the Company’s accrued warranty liability for the three-month periods ended June 30:

	2014			2013
Balance at beginning of period	$	19,357,000		$	18,709,000
Warranty provision		3,096,000			2,347,000
Warranty claim payments		(3,030,000	)		(3,024,000	)
Balance at end of period	$	19,423,000		$	18,032,000

NOTE I–SHAREHOLDERS’ EQUITY

Share Repurchase Authorization

During the three months ended June 30, 2014 and 2013, the Company invested $1,006,000 and $1,438,000, respectively, to repurchase and cancel 26,951 and 31,364 shares of common stock, respectively, pursuant to the Board of Directors’ prior share repurchase program authorizations. At June 30, 2014 and 2013, the Company has remaining authorization to repurchase up to $1,076,000 and $28,833,000 of its common stock, or approximately 27,000 and 641,000 shares based on the per share closing price of $39.42 and $44.98 as of June 30, 2014 and 2013, respectively.

Additional Paid-in-Capital

The components of the changes in additional paid-in-capital during the following periods were as follows:

	Three Months Ended June 30,
	2014			2013
Balance at beginning of period	$	—		$	10,945,000
Proceeds from issuance of common stock		9,000			19,000
Payment for income taxes on net-settled option exercises		(966,000	)		(1,355,000	)
Tax benefits from stock options exercised		732,000			1,522,000
Repurchase of common stock		(1,006,000	)		(1,438,000	)
Stock-based compensation expense		1,904,000			1,329,000
Balance at end of period	$	673,000		$	11,022,000

Accumulated Other Comprehensive Loss

The components of the changes in accumulated other comprehensive loss during the following periods were as follows:

	Three Months Ended June 30,
	2014			2013
Balance at beginning of period	$	(2,110,000	)	$	(4,166,000	)
Unrealized gain (loss) on derivative instruments, net of tax		(2,570,000	)		3,131,000
Foreign currency translation adjustment		(304,000	)		638,000
Balance at end of period	$	(4,984,000	)	$	(397,000	)

11

Retained Earnings

The components of the changes in retained earnings during the following periods were as follows:

	Three Months Ended June 30,
	2014			2013
Balance at beginning of period	$	187,024,000		$	167,561,000
Net earnings		3,569,000			5,468,000
Dividends paid		(1,617,000	)		(1,326,000	)
Balance at end of period	$	188,976,000		$	171,703,000

NOTE J–COMMITMENTS AND CONTINGENCIES

Dealer Financing

Finance companies provide the Company’s North American dealers with floorplan financing. The Company has agreements with these finance companies to repurchase certain repossessed products sold to its dealers. At June 30, 2014, the Company was contingently liable under these agreements for a maximum repurchase amount of approximately $65,704,000. The Company’s financial exposure under these agreements is limited to the difference between the amount paid to the finance companies for repurchases and the amount received upon the resale of the repossessed product. Losses incurred under these agreements during the periods presented have not been material. The financing agreements also have loss sharing provisions should any dealer default, whereby the Company shares certain losses with the finance companies. The maximum potential liability to the Company under these provisions is approximately $2,367,000 at June 30, 2014.

Litigation

The Company is subject to legal proceedings and claims which arise in the ordinary course of business. Accidents involving personal injury and property damage may occur in the use of snowmobiles, ATVs and ROVs. Claims have been made against the Company from time to time relating to these accidents, and from time to time, parties assert claims relating to their intellectual property. It is the Company’s policy to vigorously defend against these actions. The Company is not involved in any legal proceedings which it believes will have the potential for a materially adverse impact on the Company’s business or financial condition, results of operations or cash flows. The Company has recorded a reserve based on its estimated range of potential exposures based on the legal proceedings and claims that it is aware of. Should any settlement occur that exceeds the Company’s estimate or a new claim arise, the Company may need to adjust its overall reserve and, depending on the amount, such adjustment could be material.

NOTE K–FAIR VALUE MEASUREMENTS

As of June 30, 2014, we have notional Canadian dollar denominated cash flow hedges of approximately $126,982,000 (USD) with a weighted average contract exchange rate of 90.06 USD to CAD. The Company’s foreign currency contract fair value was a liability totaling $4,503,000 and considered a Level 2 measurement as of June 30, 2014. As of March 31, 2014, the Company’s foreign currency contract fair value was a liability totaling $424,000 and considered a Level 2 measurement. See Note L for additional information regarding the Company’s Derivative Instruments and Hedging Activities.

NOTE L–DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES

The Company is exposed to certain risks relating to its ongoing business operations. Foreign currency risk is the primary risk that is managed. Forward contracts are entered into in order to manage the foreign exchange risk associated with the forecasted revenue denominated in a foreign currency.

The Company’s foreign currency management objective is to reduce earnings volatility related to movements in foreign exchange rates and limit the risk of loss in value of certain of its foreign currency-denominated cash flows. The Company actively manages certain forecasted foreign currency exposures, principally its exports sales to Canada. To protect against the reduction in value of forecasted foreign currency cash flows resulting from export sales, the Company hedges portions of its forecasted revenue denominated in foreign currencies with forward contracts. When the dollar strengthens against the foreign currency, the decline in present value of future foreign

12

currency revenue is offset by gains in the fair value of the forward contracts designated as hedges. Conversely, when the dollar weakens, the increase in the present value of future foreign currency cash flows is offset by losses in the fair value of the forward contracts. The duration is linked to the timing of the underlying exposure, with the connection between the two being regularly monitored. The Company does not use any financial contracts for trading purposes.

At June 30, 2014, the Company had the following open foreign currency contracts:

Foreign Currency	Notional Amounts (in US Dollars)		Net Unrealized Gain (Loss)
Canadian Dollar	$	126,982,000	$	(4,503,000	)

These contracts, with maturities through March 31, 2015, met the criteria for cash flow hedges and the unrealized gains or losses, after tax, are recorded as a component of accumulated other comprehensive income in shareholders’ equity.

The table below summarizes the carrying values of derivative instruments as of June 30, 2014 and March 31, 2014:

	Carrying Values of Derivative Instruments as of June 30, 2014
Derivatives designated as hedging instruments	Fair Value Assets		Fair Value (Liabilities)		Derivative Net Carrying Value
Foreign exchange contracts (1)	$	—	$	4,503,000	$	4,503,000

	Carrying Values of Derivative Instruments as of March 31, 2014
Derivatives designated as hedging instruments	Fair Value Assets		Fair Value (Liabilities)		Derivative Net Carrying Value
Foreign exchange contracts (1)	$	—	$	424,000	$	424,000

(1) Assets are included in Accounts Receivable and liabilities are included in Accounts Payable on the accompanying consolidated balance sheets.

For derivative instruments that are designated and qualify as cash flow hedges, the effective portion of the gain or loss on the derivative is reported as a component of accumulated other comprehensive income and reclassified into the income statement in the same period during which the hedged transaction affects the income statement. Gains and losses on the derivative representing hedge ineffectiveness are recognized in the current income statement. The table below provides data about the amount of gains and losses, net of tax, related to derivative instruments designated as cash flow hedges included in accumulated other comprehensive income for the three months ended June 30, 2014 and 2013:

Derivatives in Cash Flow Hedging Relationships	Three Months Ended June 30,
	2014			2013
Foreign currency contracts	$	(2,570,000	)	$	3,131,000

The ineffective portion of foreign currency contracts was not material for the three month periods ended June 30, 2014 and 2013.

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NOTE M–SEGMENT REPORTING

The Company manages each segment based on gross margin and there are no material transactions between the segments. Operating, tax and other expenses are not allocated to individual segments. Additionally, given the crossover of customers, manufacturing and asset management, the Company does not maintain separate balance sheets for each segment. Accordingly, the segment information presented below is limited to sales and margin data.

	Three Months Ended June 30,
	2014		2013
Net sales
Snowmobile & ATV units	$	119,978,000	$	98,914,000
Parts, garments, & accessories		23,661,000		21,854,000
Total net sales		143,639,000		120,768,000
Cost of goods sold
Snowmobile & ATV units		97,701,000		77,908,000
Parts, garments, & accessories		15,137,000		13,700,000
Total cost of goods sold		112,838,000		91,608,000
Gross profit
Snowmobile & ATV units		22,277,000		21,006,000
Parts, garments, & accessories		8,524,000		8,154,000
Total gross profit	$	30,801,000	$	29,160,000

	Three Months Ended June 30,
	2014		2013
Net sales by product line
Snowmobile units	$	56,152,000	$	22,574,000
ATV units		63,826,000		76,340,000
Parts, garments, & accessories		23,661,000		21,854,000
Total net sales	$	143,639,000	$	120,768,000

	Three Months Ended June 30,
	2014		2013
Net sales by geography, based on location of the customer
United States	$	88,587,000	$	61,884,000
Canada		41,445,000		41,220,000
Europe and other		13,607,000		17,664,000
Total net sales	$	143,639,000	$	120,768,000

The Company has identifiable long-lived assets with total carrying values of approximately $708,000 and $751,000 at June 30, 2014 and March 31, 2014, respectively, outside the United States in Canada and Europe.

NOTE N–RECENT ACCOUNTING PRONOUNCEMENTS

In May 2014, the Financial Accounting Standards Board issued Accounting Standards Update (“ASU”) 2014-09, Revenue from Contracts with Customers, which provides guidance for revenue recognition that supersedes existing revenue recognition guidance (but does not apply to nor supersede accounting guidance for lease contracts). The ASU’s core principle is that an entity will recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The ASU also requires more detailed disclosures to enable users of financial statements to understand the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. The ASU is effective for reporting periods beginning after December 15, 2016, and should be applied retrospectively to each prior reporting period presented or retrospectively with the cumulative effect of initially applying the ASU recognized at the date of initial application. The Company is currently in the process of evaluating the impact of the adoption of this ASU on the Company’s consolidated results.

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Item 2.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Overview

Arctic Cat Inc. (the “Company” or “Arctic Cat,” or “we,” “our” or “us”) is a Minnesota corporation with principal executive offices in Plymouth, Minnesota. We design, engineer, manufacture and market snowmobiles, all-terrain vehicles (“ATVs”) and recreational off-highway vehicles (“side-by-sides” or “ROVs”) under the Arctic Cat^® brand name, as well as related parts, garments and accessories (“PG&A”). We market our products through a network of independent dealers located throughout the United States, Canada, and Europe and through distributors representing dealers in Europe, Russia, South America, the Middle East, Asia and other international markets. The Arctic Cat brand name has existed for more than 50 years and is among the most widely recognized and respected names in the snowmobile, ATV and side-by-side industry. We were incorporated in 1982. Our common stock trades on the NASDAQ Global Select Market under the symbol ACAT.

Executive Overview

The following discussion pertains to our results of operations and financial position for the quarter ended June 30, 2014. Due to the seasonality of the snowmobile, ATV and PG&A businesses, and due to certain changes in production and shipping cycles, the results of such period are not necessarily indicative of the results to be expected for the full year.

For the first quarter ended June 30, 2014, we reported net sales of $143.6 million and net earnings of $3.6 million, or $0.27 per diluted share, compared to first quarter ended June 30, 2013 net sales of $120.8 million and net earnings of $5.5 million, or $0.40 per diluted share. We recorded an executive severance charge during the first quarter that reduced earnings by $0.08 per diluted share. Excluding this charge, our first quarter earnings totaled $0.35 per diluted share. Increased sales were not enough to overcome the unfavorable Canadian currency and the planned increase in lower margin OEM sales in the 2015 first quarter, resulting in lower profitability compared to record earnings in the first quarter last year. Going forward, we remain focused on increasing sales this fiscal year by introducing innovative new products, as well as continuing to leverage our operating efficiency.

Our snowmobile sales in the fiscal 2015 first quarter increased 148.7% to $56.2 million, up from $22.6 million in the prior-year quarter. The increase in snowmobile sales during the quarter was largely due to Arctic Cat’s expanded OEM partnership. Following strong retail sales and market share gains in fiscal 2014, we anticipate higher snowmobile sales to our dealers in the current fiscal year. We are committed to investing in research and development in order to remain an industry innovation leader. We expect fiscal 2015 North American industry retail snowmobile sales to be flat to up 3%.

Our ATV/side-by-side sales for the first quarter decreased 16.4% to $63.8 million versus $76.3 million in the prior-year quarter, as planned to reduce our dealer inventories ahead of our ATV dealer show in September 2014. We expect fiscal 2015 North American core ATV industry retail sales will grow up to 2%, and the side-by-side industry will continue to show growth in the 6% to 9% range.

First quarter PG&A sales increased 8.3% to $23.7 million versus $21.9 million in the prior-year quarter. Contributing to the increased sales were strong sales of newly developed Wildcat Trail accessories, as well as core ATV accessories. Arctic Cat continues to expect its PG&A business to grow in fiscal 2015 through the expansion of its Wildcat accessories and continued growth of the parts business.

For the fiscal year ending March 31, 2015, we now estimate full-year net earnings to be in the range of $2.25 to $2.35 per diluted share, which includes the executive severance charge of $0.08 recorded in the fiscal 2015 first quarter, on anticipated sales in the range of $775 million to $786 million. Previously, the Company estimated full-year earnings in the range of $2.33 to $2.43 per diluted share.

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Results of Operations

Product Line Sales

	Three Months Ended June 30,
($ in thousands)	2014		Percent of Net Sales			2013		Percent of Net Sales			Change 2014 vs. 2013
Snowmobile	$	56,152		39.1	%	$	22,574		18.7	%		148.7	%
ATV		63,826		44.4	%		76,340		63.2	%		(16.4	)%
Parts, garments & accessories		23,661		16.5	%		21,854		18.1	%		8.3	%
Net Sales	$	143,639		100.0	%	$	120,768		100.0	%		18.9	%

During the first quarter of fiscal 2015, net sales increased 18.9% to $143.6 million from $120.8 million in the first quarter of fiscal 2014, due to sales increases for snowmobile and PG&A businesses. Snowmobile unit volume increased 78.8%, ATV unit volume decreased 6.8%, and PG&A sales increased $1.8 million or 8.3%. The increase in net sales was driven by higher snowmobile sales to our OEM partner, in addition to increased sales from our PG&A business, due to the increase in sales of newly developed accessories for the new Wildcat Trail model, as well as core ATV accessories. Sales of ATVs and side-by-sides were lower in the first quarter as planned to reduce dealer inventories ahead of our ATV dealer show in September 2014.

Cost of Goods Sold

	Three Months Ended June 30,
($ in thousands)	2014		Percent of Net Sales			2013		Percent of Net Sales			Change 2014 vs. 2013
Snowmobile & ATV units	$	97,701		68.0	%	$	77,908		64.5	%		25.4	%
Parts, garments & accessories		15,137		10.5	%		13,700		11.3	%		10.5	%
Total Cost of Goods Sold	$	112,838		78.5	%	$	91,608		75.8	%		23.2	%

During the first quarter of fiscal 2015, cost of sales increased 23.2% to $112.8 million from $91.6 million for the first quarter of fiscal 2014. Fiscal 2015 snowmobile and ATV unit cost of sales increased 25.4% to $97.7 million from $77.9 million, which was directionally in line with increases in unit sales during the first quarter of fiscal 2015 compared to the first quarter of fiscal 2014. The first quarter of fiscal 2015 cost of sales for PG&A increased 10.5% to $15.1 million from $13.7 million for the first quarter of fiscal 2014 due to increased sales.

Gross Profit

	Three Months Ended June 30,
($ in thousands)	2014			2013			Change 2014 vs. 2013
Gross Profit Dollars	$	30,801		$	29,160			5.6	%
Percentage of Net Sales		21.4	%		24.1	%		(2.7	)%

Gross profit increased 5.6% to $30.8 million in the first quarter of fiscal 2015 from $29.2 million in the first quarter of fiscal 2014. The gross profit percentage for the first quarter of fiscal 2015 decreased to 21.4% versus 24.1% in fiscal 2014. The decrease in the first quarter of fiscal 2015 gross profit percentages was primarily due to unfavorable Canadian currency exchange and increased sales of lower margin OEM snowmobiles compared to the first quarter of fiscal 2014.

Operating Expenses

	Three Months Ended June 30,
($ in thousands)	2014			2013			Change 2014 vs. 2013
Selling & Marketing	$	6,981		$	6,994			(0.2	)%
Research & Development		5,346			5,282			1.2	%
General & Administrative		12,904			8,411			53.4	%
Total Operating Expenses	$	25,231		$	20,687			22.0	%
Percentage of Net Sales		17.6	%		17.1	%

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Selling and Marketing expenses were essentially flat at $7.0 million in the first quarter of fiscal 2015 from $7.0 million in the first quarter of fiscal 2014. Research and Development expenses increased 1.2% to $5.3 million in the first quarter of fiscal 2015 compared to $5.3 million in the first quarter of fiscal 2014, primarily due to higher product development expenses. General and Administrative expenses increased 53.4% to $12.9 million in the first quarter of fiscal 2015 from $8.4 million in the first quarter of fiscal 2014, primarily due to higher Canadian hedge costs, higher legal expenses and a $1.5 million severance charge relating to the departure of our former CEO in May 2014.

Other Income / Expense

We had $4,000 in interest income in the first quarter of fiscal 2015 compared to $9,000 in the first quarter of fiscal 2014. Interest expense increased to $40,000 in the first quarter of fiscal 2015 from $3,000 in the first quarter of fiscal 2014. Interest expense was higher due to increased borrowing levels resulting primarily from lower cash levels at the beginning of the fiscal year compared to last year.

Liquidity and Capital Resources

The seasonality of our snowmobile production cycle and the lead time between the commencement of snowmobile and ATV production and commencement of shipments late in the first quarter create significant fluctuations in our working capital requirements. Historically, we have financed our working capital requirements out of available cash balances at the beginning and end of the production cycle and with short-term bank borrowings during the middle of the cycle. Our cash balances traditionally peak early in the fourth quarter and then decrease as working capital requirements increase when our snowmobile and ATV production cycles begin in the spring. Accounts receivable decreased to $33.2 million at June 30, 2014 from $43.7 million at June 30, 2013, primarily due to timing of snowmobile and ATV/side-by-side shipments. The accounts receivable balance at March 31, 2014 was $42.0 million. Inventory increased to $185.3 million at June 30, 2014 from $149.7 million at June 30, 2013, primarily due to increased snowmobile production as well as increased ATV/side-by-side inventory. Inventory was $140.7 million at March 31, 2014. The increases in our inventory balances as of June 30, 2014 compared to March 31, 2014 are due to the seasonality of our snowmobile, ATV and PG&A businesses as well as the items discussed above. During the three months ended June 30, 2014, we repurchased 26,951 shares of our common stock at a total cost of $1.0 million under the share repurchase program previously approved by the Board of Directors in May 2013, and we repurchased an additional 60,689 shares of our common stock at a total cost of $2.4 million for the exercise and related income taxes for net-settled stock options and RSUs. Cash and short-term investments were $24.3 million and $48.9 million at June 30, 2014 and 2013, respectively, and $82.5 million at March 31, 2014. Cash and short-term investments decreased from March 31, 2014, due to the seasonality of our business. Our investment objectives are first, safety of principal, and second, rate of return. No short-term bank borrowings were outstanding at June 30, 2014 and 2013 and March 31, 2014.

We believe current available cash and cash generated from operations together with working capital financing through our available line of credit will provide sufficient funds to finance operations on a short and long-term basis.

Line of Credit

We entered into a $100,000,000 senior secured revolving credit agreement in November 2013 for documentary and stand-by letters of credit, working capital needs and general corporate purposes, which amended and restated our prior $60,000,000 senior secured revolving credit agreement. We may borrow up to $100,000,000 during May through November and up to $50,000,000 during all other months of the fiscal year. We were in compliance with the terms of the credit agreement as of June 30, 2014. See Note F of the notes to condensed consolidated financial statements herein for further discussion.

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Dealer Floorplan Financing

We have agreements with GE Commercial Distribution Finance in the United States and TCF Commercial Finance Canada in Canada to provide snowmobile, ATV and ROV floorplan financing for our dealers. These agreements improve our liquidity by financing dealer purchases of products without requiring substantial use of our working capital. We are paid by the floorplan companies shortly after shipment and as part of our marketing programs, we pay the floorplan financing of our dealers for certain set time periods depending on the size of a dealer’s order.

Certain Information Concerning Off-Balance Sheet Arrangements

As of June 30, 2014, we did not have any relationships with unconsolidated entities or financial partnerships, such as entities often referred to as structured finance or special purpose entities, which would have been established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes. We are, therefore, not exposed to any financing, liquidity, market or credit risk that could arise if we had engaged in these relationships.

Critical Accounting Policies

See our most recent Annual Report on Form 10-K for the year ended March 31, 2014 for a discussion of our critical accounting policies.

In May 2014, the Financial Accounting Standards Board issued Accounting Standards Update (“ASU”) 2014-09, Revenue from Contracts with Customers, which provides guidance for revenue recognition that supersedes existing revenue recognition guidance (but does not apply to nor supersede accounting guidance for lease contracts). The ASU’s core principle is that an entity will recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The ASU also requires more detailed disclosures to enable users of financial statements to understand the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. The ASU is effective for reporting periods beginning after December 15, 2016, and should be applied retrospectively to each prior reporting period presented or retrospectively with the cumulative effect of initially applying the ASU recognized at the date of initial application. The Company is currently in the process of evaluating the impact of the adoption of this ASU on the Company’s consolidated results.

Forward-Looking Statements

The Private Securities Litigation Reform Act of 1995 provides a safe harbor for certain forward-looking statements. This Quarterly Report on Form 10-Q, and future filings with the Securities and Exchange Commission, our press releases and oral statements made with the approval of an authorized executive officer, contain forward-looking statements that reflect our current views with respect to future events and financial performance. These forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from historical results or those anticipated. The words “aim,” “believe,” “expect,” “anticipate,” “intend,” “estimate” and other expressions that indicate future events and trends identify forward-looking statements, including statements related to our fiscal 2015 outlook, business strategy and expected product introductions and demand. In particular, these include, among others, statements relating to our anticipated capital expenditures, research and development expenditures, product introductions, the effect of weather conditions and dealer ordering processes on our net sales, legal proceedings, our expectations regarding financing arrangements, our wholesale and retail sales and market share expectations, inventory levels, industry wholesale and retail sales and demand expectations, depreciation and amortization expense, dividends, sufficiency of funds to finance our operations and capital expenditures, raw material and component supply expectations, adequacy of insurance, and the effect of regulations on us and our industry and our compliance with such regulations. Actual future results and trends may differ materially from historical results or those anticipated depending on a variety of factors including, but not limited to the following: product mix and volume; competitive pressure on sales, pricing and sales incentives; increases in material or production cost which cannot be recouped in product pricing; changes in the sourcing of engines; interruption of dealer floorplan financing; warranty expenses and product recalls; foreign currency exchange rate fluctuations; product liability claims and other legal proceedings in excess of reserves or insured amounts; environmental and product safety regulatory activity; effects of the weather; general economic conditions and political changes; interest rate changes; consumer demand and confidence; and those factors set forth in the Company’s Annual Report on Form 10-K for the year ended March 31, 2014, under heading “Item 1A. Risk Factors.” We do not undertake any obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.

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Item 3. Quantitative and Qualitative Disclosures about Market Risk

We are subject to certain market risks relating to changes in inflation, foreign currency exchange rates and interest rates. These market risks have not changed significantly since March 31, 2014. As of June 30, 2014, we have notional Canadian dollar denominated cash flow hedges of approximately $126,982,000 (USD) with a weighted average contract exchange rate of 90.06 USD to CAD. The fair values of the Canadian dollar contracts at June 30, 2014 represent an unrealized loss of $4,503,000. A ten percent fluctuation in the currency rates as of June 30, 2014 would have resulted in a change in the fair value of the Canadian dollar hedge contracts of approximately $12,698,000. However, since these contracts hedge foreign currency denominated transactions, any change in the fair value of the contracts would be offset by changes in the underlying value of the transactions being hedged.

Information regarding inflation, foreign currency exchange rates and interest rates is discussed within “Quantitative and Qualitative Disclosures About Market Risk-Foreign Exchange Rates and Interest Rates” and Footnote A to the Financial Statements in the Company’s 2014 Annual Report on Form 10-K. Interest rate market risk is managed for cash and short-term investments by investing in a diversified frequently maturing portfolio consisting of municipal bonds and money market funds that experience minimal volatility and are not deemed to be significant.

Item 4. Controls and Procedures

Our management, including our Chief Executive Officer and Chief Financial Officer, has conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) pursuant to Rule 13a-15 under the Exchange Act as of June 30, 2014. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures are effective.

There have been no changes in internal control over financial reporting during the fiscal quarter ended June 30, 2014 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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Part II – OTHER INFORMATION

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Company Purchases of Company Equity Securities

On May 15, 2013, the Company’s Board of Directors approved a $30,000,000 common stock share repurchase program. The share repurchase program does not have an expiration date. The following table presents the total number of shares repurchased during the first quarter of fiscal 2015 by fiscal month, the average price paid per share, the number of shares that were purchased as part of a publicly announced repurchase plan, and the approximate dollar value of shares that may yet be purchased pursuant to our stock repurchase program as of the end of the first quarter of fiscal 2015:

Period	Total Number of Shares Purchased (1)		Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs		Maximum Number of Shares that May Yet be Purchased Under the Plans or Programs (2)
April 1, 2014 – April 30, 2014		5,093	$	47.51		0		50,942
May 1, 2014 – May 31, 2014		992		40.22		0		55,845
June 1, 2014 – June 30, 2014		81,555		38.11		26,951		27,304
Total		87,640	$	38.68		26,951		27,304

(1) 26,951 shares purchased were under the share repurchase program and 60,689 shares were withheld for the exercise and related income taxes for net-settled stock options and RSUs.

(2) The Maximum Number of Shares that May Yet Be Purchased for the periods represents the number of shares purchasable at the closing price of the Company’s common stock on the last day of the month under the share repurchase program.

We have historically purchased our common stock primarily to offset the dilution created by employee stock option exercises and because the Board of Directors believes investment in our common stock is a good use of our excess cash.

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Item 6. Exhibits

Exhibit Number	Description
3 (a)	Amended and Restated Articles of Incorporation of the Company	(1	)
3 (b)	Amended and Restated By-Laws of the Company	(2	)
4 (a)	Form of specimen common stock certificate	(3	)
10.1	Limited Term Employment Agreement, dated June 2, 2014, between the Company and Christopher A. Twomey.	(4	)
10.2	Amendment to Employment Agreement, dated June 2, 2014, between the Company and Timothy C. Delmore.	(4	)
31.1	CEO Certification pursuant to section 302 of the Sarbanes-Oxley Act of 2002	(5	)
31.2	CFO Certification pursuant to section 302 of the Sarbanes-Oxley Act of 2002	(5	)
32.1	CEO Certification pursuant to section 906 of the Sarbanes-Oxley Act of 2002	(5	)
32.2	CFO Certification pursuant to section 906 of the Sarbanes-Oxley Act of 2002	(5	)
101	Financial statements from the quarterly report on Form 10-Q of the Company for the quarter ended June 30, 2014, formatted in XBRL: (i) the Condensed Consolidated Balance Sheets, (ii) the Condensed Consolidated Statements of Operations, (iii) the Condensed Consolidated Statements of Comprehensive Income (Loss), (iv) the Condensed Consolidated Statements of Cash Flows, and (v) the Notes to the Condensed Consolidated Financial Statements.	(5	)

(1) Incorporated herein by reference to the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 1997.

(2) Incorporated herein by reference to the Company’s Current Report on Form 8-K filed January 16, 2013.

(3) Incorporated herein by reference to the Company’s Form S-1 Registration Statement. (File Number 33-34984)

(4) Incorporated herein by reference to the Company’s Current Report on form 8-K filed June 5, 2014.

(5) Filed with this Quarterly Report on Form 10-Q.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

		ARCTIC CAT INC.
Date: August 7, 2014	By	/s/ Christopher A. Twomey
		Christopher A. Twomey
		Chief Executive Officer
Date: August 7, 2014	By	/s/ Timothy C. Delmore
		Timothy C. Delmore
		Chief Financial Officer

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EX-31.1

Exhibit 31.1

CERTIFICATION

I, Christopher A. Twomey, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Arctic Cat Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 7, 2014	/s/ Christopher A. Twomey
	Christopher A. Twomey,
	Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATION

I, Timothy C. Delmore, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Arctic Cat Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures as of the end of the period covered by this report based on such evaluation; and

d. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter(the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 7, 2014	/s/ Timothy C. Delmore
	Timothy C. Delmore,
	Chief Financial Officer

EX-32.1

EXHIBIT 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

Pursuant to 18 U.S.C. §1350 (as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002), I, the undersigned Chief Executive Officer of Arctic Cat Inc. (the “Company”), hereby certify that the Quarterly Report on Form 10-Q of the Company for the quarterly period ended June 30, 2014 (the “Report”) fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the SEC or its staff upon request.

Date: August 7, 2014	/s/ Christopher A. Twomey
	Christopher A. Twomey,
	Chief Executive Officer

EX-32.2

EXHIBIT 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

Pursuant to 18 U.S.C. §1350 (as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002), I, the undersigned Chief Financial Officer of Arctic Cat Inc. (the “Company”), hereby certify that the Quarterly Report on Form 10-Q of the Company for the quarterly period ended June 30, 2014 (the “Report”) fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the SEC or its staff upon request.

Date: August 7, 2014	/s/ Timothy C. Delmore
	Timothy C. Delmore,
	Chief Financial Officer

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Components of Accrued Expenses (Detail) (USD $)	Jun. 30, 2014	Mar. 31, 2014	Jun. 30, 2013	Mar. 31, 2013
Accrued Liabilities Current [Abstract]
Marketing	$ 9,726,000	$ 11,671,000
Compensation	5,059,000	9,338,000
Warranties	19,423,000	19,357,000	18,032,000	18,709,000
Insurance	5,839,000	7,026,000
Other	6,220,000	7,267,000
Accrued Liabilities, Current, Total	$ 46,267,000	$ 54,659,000

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Derivative Instruments and Hedging Activities - Schedule of Foreign Currency Contracts (Detail) (USD $)	3 Months Ended
	Jun. 30, 2014
Derivative Instruments and Hedging Activities Disclosures [Line Items]
Notional Amounts	$ 126,982,000
Foreign Currency Canadian Dollar
Derivative Instruments and Hedging Activities Disclosures [Line Items]
Notional Amounts	126,982,000
Net Unrealized Gain (Loss)	$ (4,503,000)

XML

Commitments and Contingencies - Additional Information (Detail) (USD $)	Jun. 30, 2014
Loss Contingencies [Line Items]
Maximum repurchase amount repossessed products sold to dealers	$ 65,704,000
Loss Sharing Provisions
Loss Contingencies [Line Items]
Maximum repurchase amount repossessed products sold to dealers	$ 2,367,000

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Restricted Stock Activity (Detail) (USD $)	3 Months Ended
	Jun. 30, 2014	Jun. 30, 2013
Restricted Stock Award
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Non-vested shares, Beginning balance	40,103	41,607
Awarded	43,772	17,976
Vested	(23,275)	(16,643)
Forfeited		(1,217)
Non-vested shares, Ending balance	60,600	41,723
Non-vested shares, Weighted-Average Grant Date Fair Value Beginning	$ 35.35	$ 27.35
Awarded	$ 37.05	$ 42.99
Vested	$ 29.41	$ 23.75
Forfeited		$ 27.60
Non-vested shares, Weighted-Average Grant Date Fair Value Ending	$ 38.86	$ 35.52
Restricted Stock Units
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Non-vested shares, Beginning balance	16,200	42,820
Awarded	7,500
Vested	(8,100)	(3,674)
Non-vested shares, Ending balance	15,600	39,146
Non-vested shares, Weighted-Average Grant Date Fair Value Beginning	$ 43.45	$ 19.33
Awarded	$ 34.02
Vested	$ 33.33	$ 12.90
Non-vested shares, Weighted-Average Grant Date Fair Value Ending	$ 44.17	$ 19.93

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PRODUCT WARRANTIES (Tables)

3 Months Ended

Jun. 30, 2014

Guarantees [Abstract]

Changes in Accrued Warranty Liability

The following represents changes in the Company’s accrued warranty liability for the three-month periods ended June 30:

	2014			2013
Balance at beginning of period	$	19,357,000		$	18,709,000
Warranty provision		3,096,000			2,347,000
Warranty claim payments		(3,030,000	)		(3,024,000	)
Balance at end of period	$	19,423,000		$	18,032,000

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Derivative Instruments and Hedging Activities - Summary of Carrying Values of Derivative Instruments (Detail) (Designated as Hedging Instrument, USD $)	Jun. 30, 2014	Mar. 31, 2014
Designated as Hedging Instrument
Derivatives, Fair Value [Line Items]
Fair Value Assets
Fair Value (Liabilities)	4,503,000	424,000
Derivative Net Carrying Value	$ 4,503,000	$ 424,000

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Shareholders' Equity - Additional Information (Detail) (USD $)	3 Months Ended
	Jun. 30, 2014	Jun. 30, 2013
Stockholders Equity Note [Abstract]
Value of shares repurchased and canceled	$ 1,006,000	$ 1,438,000
Number of shares repurchased and canceled	26,951	31,364
Stock repurchase program remaining authorized repurchase value	$ 1,076,000	$ 28,833,000
Remaining authorization common stock repurchase	27,000	641,000
Remaining authorization common stock repurchase per share closing price	$ 39.42	$ 44.98

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Components of Inventories (Detail) (USD $)	Jun. 30, 2014	Mar. 31, 2014
Inventories [Abstract]
Raw materials and sub-assemblies	$ 53,937,000	$ 52,580,000
Finished goods	96,313,000	55,327,000
Parts, garments and accessories	35,014,000	32,745,000
Inventory, Total	$ 185,264,000	$ 140,652,000

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Schedule of Segment Information (Detail) (USD $)	3 Months Ended
	Jun. 30, 2014	Jun. 30, 2013
Segment Reporting Information [Line Items]
Net sales	$ 143,639,000	$ 120,768,000
Cost of goods sold	112,838,000	91,608,000
Gross profit	30,801,000	29,160,000
United States
Segment Reporting Information [Line Items]
Net sales	88,587,000	61,884,000
Canada
Segment Reporting Information [Line Items]
Net sales	41,445,000	41,220,000
Europe and other
Segment Reporting Information [Line Items]
Net sales	13,607,000	17,664,000
Snowmobile units - Product line
Segment Reporting Information [Line Items]
Net sales	56,152,000	22,574,000
ATV units - Product line
Segment Reporting Information [Line Items]
Net sales	63,826,000	76,340,000
Parts, garments & accessories - Product line
Segment Reporting Information [Line Items]
Net sales	23,661,000	21,854,000
Snowmobile & ATV units
Segment Reporting Information [Line Items]
Net sales	119,978,000	98,914,000
Cost of goods sold	97,701,000	77,908,000
Gross profit	22,277,000	21,006,000
Parts, garments & accessories
Segment Reporting Information [Line Items]
Net sales	23,661,000	21,854,000
Cost of goods sold	15,137,000	13,700,000
Gross profit	$ 8,524,000	$ 8,154,000

XML

Fair Value Measurements - Additional Information (Detail) (USD $)	Jun. 30, 2014	Mar. 31, 2014
Fair Value Measurements Disclosure [Line Items]
Denominated cash flow hedges notional amount	$ 126,982,000
Weighted average contract exchange rate	90.06
Fair Value, Inputs, Level 2
Fair Value Measurements Disclosure [Line Items]
Foreign currency contract fair value liability	$ 4,503,000	$ 424,000

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NET EARNINGS PER SHARE

3 Months Ended

Jun. 30, 2014

Earnings Per Share [Abstract]

NET EARNINGS PER SHARE

NOTE C–NET EARNINGS PER SHARE

The Company’s basic net earnings per share is computed by dividing net earnings by the weighted average number of outstanding common shares. The Company’s diluted net earnings per share is computed by dividing net earnings by the weighted average number of outstanding common shares and common share equivalents relating to stock options, when dilutive. Options to purchase 200,656 shares of common stock with a weighted average exercise price of $44.18 outstanding during the three month period ended June 30, 2014, were excluded from the computation of common share equivalents because they were anti-dilutive as the per share exercise prices exceeded the per share market value. No options outstanding were excluded from the computation of common share equivalents because they were anti-dilutive during the three month periods ended June 30, 2013.

Weighted average shares outstanding consist of the following for the three months ended June 30, 2014 and 2013:

	Three Months Ended June 30,
	2014		2013
Weighted average number of common shares outstanding		12,896,000		13,215,000
Dilutive effect of option plan		186,000		496,000
Common and potential shares outstanding—diluted		13,082,000		13,711,000

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Components of Changes in Additional Paid-in-Capital (Detail) (USD $)	3 Months Ended
	Jun. 30, 2014	Jun. 30, 2013
Equity [Abstract]
Additional paid-in-capital, Beginning Balance		$ 10,945,000
Proceeds from issuance of common stock	9,000	19,000
Payment for income taxes on net-settled option exercises	(966,000)	(1,355,000)
Tax benefits from stock options exercised	732,000	1,522,000
Repurchase of common stock	(1,006,000)	(1,438,000)
Stock-based compensation expense	1,904,000	1,329,000
Additional paid-in-capital, Ending Balance	$ 673,000	$ 11,022,000

XML

Stock-Based Compensation - Additional Information (Detail) (USD $)	3 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Mar. 31, 2014	Mar. 31, 2013
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of shares available for grant	1,009,434
Stock-based compensation expense	$ 1,904,000	$ 1,329,000
Stock-based compensation related expense reduced in basic and diluted earnings per share	$ 0.09	$ 0.06
Unrecognized compensation costs related to non-vested stock options and restricted stock awards	3,325,000
Compensation expense related to non-vested stock options, weighted average period of recognition	2 years
Stock and option grants, forfeiture rate	10.00%
2013 Omnibus Stock and Incentive Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares of common stock available for issuance	1,009,434
Restricted Stock Award
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock-based compensation expense	121,000	87,000
Compensation expense related to non-vested stock options, weighted average period of recognition	1 year 4 months 24 days
Restricted common stock issued and outstanding	60,600	41,723	40,103	41,607
Unamortized compensation expense	503,000
Restricted Stock Award | 2013 Omnibus Stock and Incentive Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Restricted common stock issued and outstanding	8,000
Restricted Stock Award | 2007 Omnibus Stock and Incentive Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Restricted common stock issued and outstanding	7,600
Stock Options and Restricted Stock Awards
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock-based compensation expense	1,904,000	1,329,000
Restricted Stock Units
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock-based compensation expense	698,000	290,000
Compensation expense related to non-vested stock options, weighted average period of recognition	1 year 4 months 24 days
Restricted common stock issued and outstanding	15,600	39,146	16,200	42,820
Unamortized compensation expense	$ 1,672,000
Restricted Stock Units | 2007 Omnibus Stock and Incentive Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Restricted common stock issued and outstanding	18,405
Minimum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock option granted term	5 years
Stock options and restricted stock awards granted, vesting period	1 year
Minimum | 2013 Omnibus Stock and Incentive Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock award requisite service period	2 years
Minimum | Restricted Stock Award
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock options and restricted stock awards granted, vesting period	2 years
Maximum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock option granted term	10 years
Stock options and restricted stock awards granted, vesting period	3 years
Maximum | 2013 Omnibus Stock and Incentive Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock award requisite service period	3 years
Maximum | Restricted Stock Award
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock options and restricted stock awards granted, vesting period	3 years

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SEGMENT REPORTING (Tables)

3 Months Ended

Jun. 30, 2014

Segment Reporting [Abstract]

Schedule of Segment Information

Accordingly, the segment information presented below is limited to sales and margin data.

	Three Months Ended June 30,
	2014		2013
Net sales
Snowmobile & ATV units	$	119,978,000	$	98,914,000
Parts, garments, & accessories		23,661,000		21,854,000
Total net sales		143,639,000		120,768,000
Cost of goods sold
Snowmobile & ATV units		97,701,000		77,908,000
Parts, garments, & accessories		15,137,000		13,700,000
Total cost of goods sold		112,838,000		91,608,000
Gross profit
Snowmobile & ATV units		22,277,000		21,006,000
Parts, garments, & accessories		8,524,000		8,154,000
Total gross profit	$	30,801,000	$	29,160,000

	Three Months Ended June 30,
	2014		2013
Net sales by product line
Snowmobile units	$	56,152,000	$	22,574,000
ATV units		63,826,000		76,340,000
Parts, garments, & accessories		23,661,000		21,854,000
Total net sales	$	143,639,000	$	120,768,000

	Three Months Ended June 30,
	2014		2013
Net sales by geography, based on location of the customer
United States	$	88,587,000	$	61,884,000
Canada		41,445,000		41,220,000
Europe and other		13,607,000		17,664,000
Total net sales	$	143,639,000	$	120,768,000

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Components of Changes in Accumulated Other Comprehensive Income (Loss) (Detail) (USD $)	3 Months Ended
	Jun. 30, 2014	Jun. 30, 2013
Equity [Abstract]
Balance at beginning of period	$ (2,110,000)	$ (4,166,000)
Unrealized gain (loss) on derivative instruments, net of tax	(2,570,000)	3,131,000
Foreign currency translation adjustment	(304,000)	638,000
Balance at end of period	$ (4,984,000)	$ (397,000)

XML

Assumptions Used to Determine Fair Value of Stock Option Issued (Detail) (USD $)	3 Months Ended
	Jun. 30, 2014	Jun. 30, 2013
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]
Expected term (in years)	6 years	5 years
Expected volatility	49.00%	49.00%
Risk free interest rate	0.80%	0.80%
Expected dividend	1.00%	1.00%
Fair Value	$ 20.50	$ 21.68

XML

Option Transactions Under Plans (Detail) (USD $)	3 Months Ended
	Jun. 30, 2014
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]
Number of Shares under option, Outstanding beginning balance	480,837
Number of Shares under option, Granted	38,794
Number of Shares under option, Exercised	(91,345)
Number of Shares under option, Cancelled	(60)
Number of Shares under option, Outstanding ending balance	428,226
Number of Shares under option, Options exercisable	338,994
Weighted-Average Exercise Price, Outstanding beginning balance	$ 24.95
Weighted-Average Exercise Price, Granted	$ 47.79
Weighted-Average Exercise Price, Exercised	$ 15.62
Weighted-Average Exercise Price, Cancelled	$ 15.77
Weighted-Average Exercise Price, Outstanding ending balance	$ 29.01
Weighted-Average Exercise Price, Options exercisable	$ 24.78
Weighted-Average Contractual Life Years, Outstanding ending balance	6 years 3 months 22 days
Weighted-Average Contractual Life Years, Exercisable ending balance	5 years 7 months 2 days
Aggregate Intrinsic Value, Outstanding ending balance	$ 5,415,000
Aggregate Intrinsic Value, Exercisable ending balance	$ 5,407,000

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STOCK-BASED COMPENSATION

3 Months Ended

Jun. 30, 2014

Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]

STOCK-BASED COMPENSATION

NOTE B–STOCK-BASED COMPENSATION

Stock Option Plans

The Company has stock-based compensation plans, previously approved by the Company’s shareholders that provide for incentive and non-qualified stock options and restricted stock awards to be granted to directors, officers and other key employees. The stock options granted generally have a five to ten year life, vest over a period of one to three years, and have an exercise price equal to the fair market value of the stock on the date of grant. The stock options are generally subject to accelerated vesting if there is a change in control, as defined in the plans. The restricted stock awards generally vest over a period of two to three years and do not require cash payments from restricted stock award recipients. At June 30, 2014, the Company had 1,009,434 shares of common stock available for grant under the plans.

For the three months ended June 30, 2014 and 2013, the Company recorded stock-based compensation expense for stock options and restricted stock awards of $1,904,000 and $1,329,000, respectively, which have been included in general and administrative expenses. The Company’s total stock-based compensation related expense reduced both basic and diluted earnings per share by $0.09 and $0.06 for each of the three months ended June 30, 2014 and 2013, respectively.

At June 30, 2014, the Company had $3,325,000 of unrecognized compensation costs related to non-vested stock options and restricted stock awards that are expected to be recognized over a weighted average period of approximately two years.

The Company accounts for stock option based compensation by estimating the fair value of options granted using a Black-Scholes option valuation model. For stock options issued during the three months ended June 30, 2014 and 2013, the following assumptions were used to determine fair value:

	Three Months Ended June 30, 2014
Assumptions used:	2014			2013
Expected term (in years)		6 years			5 years
Expected volatility		49.0	%		49.0	%
Risk free interest rate		0.8	%		0.8	%
Expected dividend		1.0	%		1.0	%
Fair Value	$	20.50		$	21.68

Option transactions under the plans during the three months ended June 30, 2014, are summarized as follows:

	Shares			Weighted Average Exercise Price		Weighted Average Contractual Life		Aggregate Intrinsic Value
Outstanding at March 31, 2014		480,837		$	24.95
Granted		38,794			47.79
Exercised		(91,345	)		15.62
Cancelled		(60	)		15.77
Outstanding at June 30, 2014		428,226		$	29.01		6.31 years	$	5,415,000
Exercisable at June 30, 2014		338,994		$	24.78		5.59 years	$	5,407,000

The aggregate intrinsic value is based on the difference between the exercise price and the Company’s June 30, 2014 common share market value for in-the-money options.

The following tables summarize information concerning currently outstanding and exercisable stock options at June 30, 2014:

Options Outstanding and Exercisable

Range of Exercise Prices	Number Outstanding		Weighted Average Remaining Contractual Life		Weighted Average Exercise Price		Number Exercisable		Weighted Average Exercise Price
$6.26		7,800		2.54 years	$	6.26		7,800	$	6.26
9.57-13.59		54,287		5.76 years		10.79		54,287		10.79
14.68-21.03		139,421		6.99 years		16.18		139,421		16.18
21.96-27.69		24,000		9.35 years		24.83		24,000		24.83
33.67-47.79		202,718		5.78 years		44.07		113,486		43.30
		428,226		6.31 years	$	29.01		338,994	$	24.78

In August 2013, the Company’s shareholders adopted the 2013 Omnibus Stock and Incentive Plan (the “2013 Plan”). The 2013 Plan permits the granting of stock options, stock appreciation rights, restricted stock and restricted stock units, performance awards, other stock awards and dividend and dividend equivalents. At June 30, 2014, 1,009,434 shares of common stock remain available for issuance under the 2013 Plan.

In August 2007, the Company’s shareholders adopted the 2007 Omnibus Stock and Incentive Plan (the “2007 Plan”, and along with the 2013 Plan, “the Plans”). The terms of the 2007 Plan are substantially identical to those of the 2013 Plan. With the adoption of the 2013 Plan, the Company’s Board of Directors determined no further awards will be granted from the 2007 Plan.

The expected term of options granted is the safe harbor period. The volatility is based on historic volatilities from the traded shares of the Company over the past two and one-half years. The risk-free interest rate for periods matching the contractual life of the option is based on the U.S. Treasury yield curve in effect at the time of grant. Expected dividend is based on the historic dividend of the Company. The Company has analyzed the forfeitures of stock and option grants and has used a ten percent forfeiture rate in the expense calculation.

Restricted Stock

The 2013 Plan provides for grants of restricted common stock and restricted stock units to executives and key employees of the Company. The restricted common stock and restricted stock units are valued based on the Company’s market value of common stock on the date of grant and the amount of any award is expensed over the requisite service period which approximates two to three years. If grantees are retirement eligible and awards would either fully vest upon retirement or continue to vest after retirement, the full amount of the related expense is recognized upon grant. At June 30, 2014, the Company had 7,600 shares of restricted common stock issued and outstanding and 18,405 unvested restricted stock units outstanding under the 2007 Plan and 8,000 shares of restricted common stock issued and outstanding and 42,195 unvested restricted stock units outstanding under the 2013 Plan. The shares of restricted common stock awarded have voting rights and participate equally in all dividends and other distributions duly declared by the Company’s Board of Directors.

Compensation expenses associated with restricted stock awards totaled $121,000 and $87,000 for the three months ended June 30, 2014 and 2013, respectively. Compensation expenses associated with restricted stock units totaled $698,000 and $290,000 for the three months ended June 30, 2014 and 2013, respectively. The Company recognizes the expense for grants of restricted stock and restricted stock units on a straight-line basis in the statement of operations as general and administrative expense based on their fair value over their requisite service periods. At June 30, 2014, unamortized compensation expense of restricted stock totaled $503,000 and of restricted stock units totaled $1,672,000. The unamortized expense as of June 30, 2014 is expected to be recognized over a weighted average period of 1.4 years for restricted stock and restricted stock units.

Restricted stock and restricted stock unit award activity under the Plans during the three months ended June 30, 2014 and 2013 is summarized as follows:

	2014					2013
Restricted Shares	Shares			Weighted Average Grant Date Fair Value		Shares			Weighted Average Grant Date Fair Value
Non-vested shares at March 31,		16,200		$	43.45		42,820		$	19.33
Awarded		7,500			34.02		—			—
Vested		(8,100	)		33.33		(3,674	)		12.90
Non-vested shares at June 30,		15,600		$	44.17		39,146		$	19.93

	2014					2013
Restricted Stock Units	Shares			Weighted Average Grant Date Fair Value		Shares			Weighted Average Grant Date Fair Value
Non-vested shares at March 31,		40,103		$	35.35		41,607		$	27.35
Granted		43,772			37.05		17,976			42.99
Vested		(23,275	)		29.41		(16,643	)		23.75
Forfeited		—			—		(1,217	)		27.60
Non-vested shares at June 30,		60,600		$	38.86		41,723		$	35.52

XML

Summary of Information Concerning Currently Outstanding and Exercisable Stock Option (Detail) (USD $)	3 Months Ended
	Jun. 30, 2014
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number Outstanding	428,226
Weighted Average Remaining Contractual Life	6 years 3 months 22 days
Weighted Average Exercise Price	$ 29.01
Number Exercisable	338,994
Weighted Average Exercise Price	$ 24.78
6.26
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Range of Exercise Prices, Maximum	$ 6.26
Number Outstanding	7,800
Weighted Average Remaining Contractual Life	2 years 6 months 15 days
Weighted Average Exercise Price	$ 6.26
Number Exercisable	7,800
Weighted Average Exercise Price	$ 6.26
9.57-13.59
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Range of Exercise Prices, Minimum	$ 9.57
Range of Exercise Prices, Maximum	$ 13.59
Number Outstanding	54,287
Weighted Average Remaining Contractual Life	5 years 9 months 4 days
Weighted Average Exercise Price	$ 10.79
Number Exercisable	54,287
Weighted Average Exercise Price	$ 10.79
14.68-21.03
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Range of Exercise Prices, Minimum	$ 14.68
Range of Exercise Prices, Maximum	$ 21.03
Number Outstanding	139,421
Weighted Average Remaining Contractual Life	6 years 11 months 27 days
Weighted Average Exercise Price	$ 16.18
Number Exercisable	139,421
Weighted Average Exercise Price	$ 16.18
21.96-27.69
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Range of Exercise Prices, Minimum	$ 21.96
Range of Exercise Prices, Maximum	$ 27.69
Number Outstanding	24,000
Weighted Average Remaining Contractual Life	9 years 4 months 6 days
Weighted Average Exercise Price	$ 24.83
Number Exercisable	24,000
Weighted Average Exercise Price	$ 24.83
33.67-47.79
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Range of Exercise Prices, Minimum	$ 33.67
Range of Exercise Prices, Maximum	$ 47.79
Number Outstanding	202,718
Weighted Average Remaining Contractual Life	5 years 9 months 11 days
Weighted Average Exercise Price	$ 44.07
Number Exercisable	113,486
Weighted Average Exercise Price	$ 43.30

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Product Warranties - Additional Information (Detail)	3 Months Ended
	Jun. 30, 2014
Snowmobiles
Product Warranty [Line Items]
Product warranty term from date of consumer registration	12 months
ATV And ROV Units
Product Warranty [Line Items]
Product warranty term from date of consumer registration	6 months

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Segment Reporting - Additional Information (Detail) (Europe, Canada, USD $)	Jun. 30, 2014	Mar. 31, 2014
Europe | Canada
Revenues from External Customers and Long-Lived Assets [Line Items]
Long-lived assets with carrying value	$ 708,000	$ 751,000

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CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited) (USD $)	Jun. 30, 2014	Mar. 31, 2014
Current Assets
Cash and cash equivalents	$ 24,265,000	$ 22,524,000
Short-term investments	8,000	60,008,000
Accounts receivable, less allowances	33,194,000	42,003,000
Inventories	185,264,000	140,652,000
Prepaid expenses	4,218,000	3,815,000
Income taxes receivable	953,000	1,323,000
Deferred income taxes	16,063,000	14,971,000
Total current assets	263,965,000	285,296,000
Property and Equipment
Machinery, equipment and tooling	183,434,000	181,028,000
Land, buildings and improvements	29,758,000	29,758,000
Property, Plant and Equipment, Gross, Total	213,192,000	210,786,000
Less accumulated depreciation	157,939,000	154,855,000
Property, Plant and Equipment, Net, Total	55,253,000	55,931,000
Other Assets	1,036,000	1,067,000
Assets, Total	320,254,000	342,294,000
Current Liabilities
Accounts payable	80,298,000	93,882,000
Accrued expenses	46,267,000	54,659,000
Total current liabilities	126,565,000	148,541,000
Deferred Income Taxes	8,895,000	8,710,000
Commitments and Contingencies
Shareholders' Equity
Preferred stock	0	0
Common stock, par value $.01; 37,440,000 shares authorized; shares issued and outstanding: 12,914,282 at June 30, 2014 and 12,882,705 at March 31, 2014	129,000	129,000
Additional paid-in-capital	673,000
Accumulated other comprehensive loss	(4,984,000)	(2,110,000)
Retained earnings	188,976,000	187,024,000
Total shareholders' equity	184,794,000	185,043,000
Liabilities and Equity, Total	320,254,000	342,294,000
Preferred Stock - Series B Junior Participating
Shareholders' Equity
Preferred stock	$ 0	$ 0

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Components of Changes in Retained Earnings (Detail) (USD $)	3 Months Ended
	Jun. 30, 2014	Jun. 30, 2013
Equity [Abstract]
Balance at beginning of period	$ 187,024,000	$ 167,561,000
Net earnings	3,569,000	5,468,000
Dividends paid	(1,617,000)	(1,326,000)
Balance at end of period	$ 188,976,000	$ 171,703,000

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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (USD $)	3 Months Ended
	Jun. 30, 2014	Jun. 30, 2013
Cash flows from operating activities:
Net earnings	$ 3,569,000	$ 5,468,000
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation and amortization	3,116,000	3,440,000
Deferred income tax expense	603,000	1,485,000
Stock-based compensation expense	1,904,000	1,329,000
Changes in operating assets and liabilities:
Trading securities	60,000,000	76,396,000
Accounts receivable, less allowances	8,683,000	(8,316,000)
Inventories	(44,932,000)	(52,367,000)
Prepaid expenses	(404,000)	(619,000)
Accounts payable	(17,644,000)	8,640,000
Accrued expenses	(8,368,000)	(11,742,000)
Income taxes	565,000	(6,125,000)
Net cash provided by operating activities	7,092,000	17,589,000
Cash flows from investing activities:
Purchases of property and equipment	(2,415,000)	(2,815,000)
Net cash used in investing activities	(2,415,000)	(2,815,000)
Cash flows from financing activities:
Proceeds from issuance of common stock	9,000	19,000
Payments for income taxes on net-settled option exercises	(966,000)	(1,355,000)
Tax benefit from stock options exercises	732,000	1,522,000
Dividends paid	(1,617,000)	(1,326,000)
Repurchase of common stock	(1,006,000)	(1,438,000)
Net cash used in financing activities	(2,848,000)	(2,578,000)
Effect of exchange rate changes on cash and cash equivalents	(88,000)	289,000
Net increase in cash and cash equivalents	1,741,000	12,485,000
Cash and cash equivalents at beginning of period	22,524,000	35,566,000
Cash and cash equivalents at end of period	24,265,000	48,051,000
Supplemental disclosure of cash payments for:
Income taxes	32,000	5,539,000
Interest	$ 24,000	$ 3,000

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Schedule of Weighted Average Shares Outstanding (Detail)	3 Months Ended
	Jun. 30, 2014	Jun. 30, 2013
Earnings Per Share [Abstract]
Weighted average number of common shares outstanding	12,896,000	13,215,000
Dilutive effect of option plan	186,000	496,000
Common and potential shares outstanding-diluted	13,082,000	13,711,000

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NET EARNINGS PER SHARE (Tables)

3 Months Ended

Jun. 30, 2014

Earnings Per Share [Abstract]

Schedule of Weighted Average Shares Outstanding

Weighted average shares outstanding consist of the following for the three months ended June 30, 2014 and 2013:

	Three Months Ended June 30,
	2014		2013
Weighted average number of common shares outstanding		12,896,000		13,215,000
Dilutive effect of option plan		186,000		496,000
Common and potential shares outstanding—diluted		13,082,000		13,711,000

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Short-Term Investments - Additional Information (Detail) (USD $)	Jun. 30, 2014	Mar. 31, 2014
Short Term Investments [Abstract]
Investment in money market funds	$ 8,000	$ 60,008,000

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ACCRUED EXPENSES (Tables)

3 Months Ended

Jun. 30, 2014

Payables And Accruals [Abstract]

Components of Accrued Expenses

Accrued expenses consist of the following:

	June 30, 2014		March 31, 2014
Marketing	$	9,726,000	$	11,671,000
Compensation		5,059,000		9,338,000
Warranties		19,423,000		19,357,000
Insurance		5,839,000		7,026,000
Other		6,220,000		7,267,000
	$	46,267,000	$	54,659,000

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BASIS OF PRESENTATION

3 Months Ended

Jun. 30, 2014

Accounting Policies [Abstract]

BASIS OF PRESENTATION

NOTE A–BASIS OF PRESENTATION

The accompanying unaudited condensed consolidated financial statements of Arctic Cat Inc. (the “Company”) have been prepared in accordance with Regulation S-X pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted pursuant to such rules and regulations, although management believes that the disclosures are adequate to make the information presented not misleading.

In the opinion of management, the unaudited condensed consolidated financial statements contain all adjustments (consisting of only normal recurring adjustments) necessary to present fairly the Company’s financial position as of June 30, 2014, results of operations for the three-month periods ended June 30, 2014 and 2013 and cash flows for the three-month periods ended June 30, 2014 and 2013. Results of operations for the interim periods are not necessarily indicative of results for the full year. The condensed consolidated balance sheet as of March 31, 2014 is derived from the audited balance sheet as of that date.

Preparation of the Company’s condensed consolidated financial statements requires management to make estimates and assumptions that affect reported amounts of assets and liabilities and related revenues and expenses. Actual results could differ from those estimates.

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CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited) (Parenthetical) (USD $)	Jun. 30, 2014	Mar. 31, 2014
Preferred stock, par value	$ 1.00	$ 1.00
Preferred stock, shares authorized	2,050,000	2,050,000
Preferred stock, shares issued
Common stock, par value	$ 0.01	$ 0.01
Common stock, shares authorized	37,440,000	37,440,000
Common stock, shares issued	12,914,282	12,882,705
Common stock, shares outstanding	12,914,282	12,882,705
Preferred Stock - Series B Junior Participating
Preferred stock, par value	$ 1.00	$ 1.00
Preferred stock, shares authorized	450,000	450,000
Preferred stock, shares issued

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FAIR VALUE MEASUREMENTS

3 Months Ended

Jun. 30, 2014

Fair Value Disclosures [Abstract]

FAIR VALUE MEASUREMENTS

NOTE K–FAIR VALUE MEASUREMENTS

As of June 30, 2014, we have notional Canadian dollar denominated cash flow hedges of approximately $126,982,000 (USD) with a weighted average contract exchange rate of 90.06 USD to CAD. The Company’s foreign currency contract fair value was a liability totaling $4,503,000 and considered a Level 2 measurement as of June 30, 2014. As of March 31, 2014, the Company’s foreign currency contract fair value was a liability totaling $424,000 and considered a Level 2 measurement. See Note L for additional information regarding the Company’s Derivative Instruments and Hedging Activities.

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Document and Entity Information	3 Months Ended
	Jun. 30, 2014	Aug. 01, 2014
Document And Entity Information [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Jun. 30, 2014
Document Fiscal Year Focus	2015
Document Fiscal Period Focus	Q1
Trading Symbol	ACAT
Entity Registrant Name	ARCTIC CAT INC
Entity Central Index Key	0000719866
Current Fiscal Year End Date	--03-31
Entity Filer Category	Large Accelerated Filer
Entity Common Stock, Shares Outstanding		12,922,548

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DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES

3 Months Ended

Jun. 30, 2014

Derivative Instruments And Hedging Activities Disclosure [Abstract]

DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES

NOTE L–DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES

The Company is exposed to certain risks relating to its ongoing business operations. Foreign currency risk is the primary risk that is managed. Forward contracts are entered into in order to manage the foreign exchange risk associated with the forecasted revenue denominated in a foreign currency.

The Company’s foreign currency management objective is to reduce earnings volatility related to movements in foreign exchange rates and limit the risk of loss in value of certain of its foreign currency-denominated cash flows. The Company actively manages certain forecasted foreign currency exposures, principally its exports sales to Canada. To protect against the reduction in value of forecasted foreign currency cash flows resulting from export sales, the Company hedges portions of its forecasted revenue denominated in foreign currencies with forward contracts. When the dollar strengthens against the foreign currency, the decline in present value of future foreign currency revenue is offset by gains in the fair value of the forward contracts designated as hedges. Conversely, when the dollar weakens, the increase in the present value of future foreign currency cash flows is offset by losses in the fair value of the forward contracts. The duration is linked to the timing of the underlying exposure, with the connection between the two being regularly monitored. The Company does not use any financial contracts for trading purposes.

At June 30, 2014, the Company had the following open foreign currency contracts:

Foreign Currency	Notional Amounts (in US Dollars)		Net Unrealized Gain (Loss)
Canadian Dollar	$	126,982,000	$	(4,503,000	)

These contracts, with maturities through March 31, 2015, met the criteria for cash flow hedges and the unrealized gains or losses, after tax, are recorded as a component of accumulated other comprehensive income in shareholders’ equity.

The table below summarizes the carrying values of derivative instruments as of June 30, 2014 and March 31, 2014:

	Carrying Values of Derivative Instruments as of June 30, 2014
Derivatives designated as hedging instruments	Fair Value Assets		Fair Value (Liabilities)		Derivative Net Carrying Value
Foreign exchange contracts (1)	$	—	$	4,503,000	$	4,503,000

	Carrying Values of Derivative Instruments as of March 31, 2014
Derivatives designated as hedging instruments	Fair Value Assets		Fair Value (Liabilities)		Derivative Net Carrying Value
Foreign exchange contracts (1)	$	—	$	424,000	$	424,000

(1) Assets are included in Accounts Receivable and liabilities are included in Accounts Payable on the accompanying consolidated balance sheets.

For derivative instruments that are designated and qualify as cash flow hedges, the effective portion of the gain or loss on the derivative is reported as a component of accumulated other comprehensive income and reclassified into the income statement in the same period during which the hedged transaction affects the income statement. Gains and losses on the derivative representing hedge ineffectiveness are recognized in the current income statement. The table below provides data about the amount of gains and losses, net of tax, related to derivative instruments designated as cash flow hedges included in accumulated other comprehensive income for the three months ended June 30, 2014 and 2013:

Derivatives in Cash Flow Hedging Relationships	Three Months Ended June 30,
	2014			2013
Foreign currency contracts	$	(2,570,000	)	$	3,131,000

The ineffective portion of foreign currency contracts was not material for the three month periods ended June 30, 2014 and 2013.

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CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited) (USD $)	3 Months Ended
	Jun. 30, 2014	Jun. 30, 2013
Net sales
Net sales	$ 143,639,000	$ 120,768,000
Cost of goods sold
Cost of goods sold	112,838,000	91,608,000
Gross profit	30,801,000	29,160,000
Operating expenses
Selling & marketing	6,981,000	6,994,000
Research & development	5,346,000	5,282,000
General & administrative	12,904,000	8,411,000
Total operating expenses	25,231,000	20,687,000
Operating profit	5,570,000	8,473,000
Other income (expense)
Interest income	4,000	9,000
Interest expense	(40,000)	(3,000)
Total other income (expense)	(36,000)	6,000
Earnings before income taxes	5,534,000	8,479,000
Income tax expense	1,965,000	3,011,000
Net earnings	3,569,000	5,468,000
Net earnings per share
Basic	$ 0.28	$ 0.41
Diluted	$ 0.27	$ 0.40
Weighted average shares outstanding
Basic	12,896,000	13,215,000
Diluted	13,082,000	13,711,000
Snowmobile & ATV units
Net sales
Net sales	119,978,000	98,914,000
Cost of goods sold
Cost of goods sold	97,701,000	77,908,000
Gross profit	22,277,000	21,006,000
Parts, garments & accessories
Net sales
Net sales	23,661,000	21,854,000
Cost of goods sold
Cost of goods sold	15,137,000	13,700,000
Gross profit	$ 8,524,000	$ 8,154,000

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LINE OF CREDIT

3 Months Ended

Jun. 30, 2014

Debt Disclosure [Abstract]

LINE OF CREDIT

NOTE F–LINE OF CREDIT

The Company entered into a $100,000,000 senior secured revolving credit agreement in November 2013 for documentary and stand-by letters of credit, working capital needs and general corporate purposes, which amended and restated the Company’s prior $60,000,000 senior secured revolving credit agreement. This agreement is scheduled to expire in November 2017. Under the agreement, the Company may borrow up to $100,000,000 during May through November and up to $50,000,000 during all other months of the fiscal year. Borrowings under the line of credit bear interest at the greater of the following rates: the prime rate plus 0.75%, the federal funds rate plus 0.50% or LIBOR for a 30 day interest period plus 1.00%. As of June 30, 2014, the effective rate was 3.5%. All borrowings are collateralized by substantially all of the Company’s assets, including all real estate, accounts receivable and inventory. No borrowings from the line of credit were outstanding at June 30, 2014 and March 31, 2014. The outstanding letters of credit balances were $9,316,000 and $11,145,000 at June 30, 2014 and 2013, and borrowings under the line are subject to certain covenants and restrictions on indebtedness, financial guarantees, business combinations and other related items. The Company was in compliance with the terms of the credit agreement as of June 30, 2014. Outstanding letters of credit will be repaid during the six month period following execution or renewal of the letter of credit.

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INVENTORIES

3 Months Ended

Jun. 30, 2014

Inventory Disclosure [Abstract]

INVENTORIES

NOTE E–INVENTORIES

Inventories consist of the following:

	June 30, 2014		March 31, 2014
Raw materials and sub-assemblies	$	53,937,000	$	52,580,000
Finished goods		96,313,000		55,327,000
Parts, garments and accessories		35,014,000		32,745,000
	$	185,264,000	$	140,652,000

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INVENTORIES (Tables)

3 Months Ended

Jun. 30, 2014

Inventory Disclosure [Abstract]

Components of Inventories

Inventories consist of the following:

	June 30, 2014		March 31, 2014
Raw materials and sub-assemblies	$	53,937,000	$	52,580,000
Finished goods		96,313,000		55,327,000
Parts, garments and accessories		35,014,000		32,745,000
	$	185,264,000	$	140,652,000

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SEGMENT REPORTING

3 Months Ended

Jun. 30, 2014

Segment Reporting [Abstract]

SEGMENT REPORTING

NOTE M–SEGMENT REPORTING

The Company manages each segment based on gross margin and there are no material transactions between the segments. Operating, tax and other expenses are not allocated to individual segments. Additionally, given the crossover of customers, manufacturing and asset management, the Company does not maintain separate balance sheets for each segment. Accordingly, the segment information presented below is limited to sales and margin data.

	Three Months Ended June 30,
	2014		2013
Net sales
Snowmobile & ATV units	$	119,978,000	$	98,914,000
Parts, garments, & accessories		23,661,000		21,854,000
Total net sales		143,639,000		120,768,000
Cost of goods sold
Snowmobile & ATV units		97,701,000		77,908,000
Parts, garments, & accessories		15,137,000		13,700,000
Total cost of goods sold		112,838,000		91,608,000
Gross profit
Snowmobile & ATV units		22,277,000		21,006,000
Parts, garments, & accessories		8,524,000		8,154,000
Total gross profit	$	30,801,000	$	29,160,000

	Three Months Ended June 30,
	2014		2013
Net sales by product line
Snowmobile units	$	56,152,000	$	22,574,000
ATV units		63,826,000		76,340,000
Parts, garments, & accessories		23,661,000		21,854,000
Total net sales	$	143,639,000	$	120,768,000

	Three Months Ended June 30,
	2014		2013
Net sales by geography, based on location of the customer
United States	$	88,587,000	$	61,884,000
Canada		41,445,000		41,220,000
Europe and other		13,607,000		17,664,000
Total net sales	$	143,639,000	$	120,768,000

The Company has identifiable long-lived assets with total carrying values of approximately $708,000 and $751,000 at June 30, 2014 and March 31, 2014, respectively, outside the United States in Canada and Europe.

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SHAREHOLDERS' EQUITY

3 Months Ended

Jun. 30, 2014

Equity [Abstract]

SHAREHOLDERS' EQUITY

NOTE I–SHAREHOLDERS’ EQUITY

Share Repurchase Authorization

During the three months ended June 30, 2014 and 2013, the Company invested $1,006,000 and $1,438,000, respectively, to repurchase and cancel 26,951 and 31,364 shares of common stock, respectively, pursuant to the Board of Directors’ prior share repurchase program authorizations. At June 30, 2014 and 2013, the Company has remaining authorization to repurchase up to $1,076,000 and $28,833,000 of its common stock, or approximately 27,000 and 641,000 shares based on the per share closing price of $39.42 and $44.98 as of June 30, 2014 and 2013, respectively.

Additional Paid-in-Capital

The components of the changes in additional paid-in-capital during the following periods were as follows:

	Three Months Ended June 30,
	2014			2013
Balance at beginning of period	$	—		$	10,945,000
Proceeds from issuance of common stock		9,000			19,000
Payment for income taxes on net-settled option exercises		(966,000	)		(1,355,000	)
Tax benefits from stock options exercised		732,000			1,522,000
Repurchase of common stock		(1,006,000	)		(1,438,000	)
Stock-based compensation expense		1,904,000			1,329,000
Balance at end of period	$	673,000		$	11,022,000

Accumulated Other Comprehensive Loss

The components of the changes in accumulated other comprehensive loss during the following periods were as follows:

	Three Months Ended June 30,
	2014			2013
Balance at beginning of period	$	(2,110,000	)	$	(4,166,000	)
Unrealized gain (loss) on derivative instruments, net of tax		(2,570,000	)		3,131,000
Foreign currency translation adjustment		(304,000	)		638,000
Balance at end of period	$	(4,984,000	)	$	(397,000	)

Retained Earnings

The components of the changes in retained earnings during the following periods were as follows:

	Three Months Ended June 30,
	2014			2013
Balance at beginning of period	$	187,024,000		$	167,561,000
Net earnings		3,569,000			5,468,000
Dividends paid		(1,617,000	)		(1,326,000	)
Balance at end of period	$	188,976,000		$	171,703,000

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ACCRUED EXPENSES

3 Months Ended

Jun. 30, 2014

Payables And Accruals [Abstract]

ACCRUED EXPENSES

NOTE G–ACCRUED EXPENSES

Accrued expenses consist of the following:

	June 30, 2014		March 31, 2014
Marketing	$	9,726,000	$	11,671,000
Compensation		5,059,000		9,338,000
Warranties		19,423,000		19,357,000
Insurance		5,839,000		7,026,000
Other		6,220,000		7,267,000
	$	46,267,000	$	54,659,000

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PRODUCT WARRANTIES

3 Months Ended

Jun. 30, 2014

Guarantees [Abstract]

PRODUCT WARRANTIES

NOTE H–PRODUCT WARRANTIES

The Company generally provides a limited warranty to the owner of snowmobiles for twelve months from the date of consumer registration and for six months from the date of registration on all-terrain vehicles (“ATVs”) and recreational off-highway vehicles (“ROVs”). The Company provides for estimated warranty costs at the time of sale based on historical rates and trends and makes subsequent adjustments to its estimate as actual claims become known or the amounts are determinable. The following represents changes in the Company’s accrued warranty liability for the three-month periods ended June 30:

	2014			2013
Balance at beginning of period	$	19,357,000		$	18,709,000
Warranty provision		3,096,000			2,347,000
Warranty claim payments		(3,030,000	)		(3,024,000	)
Balance at end of period	$	19,423,000		$	18,032,000

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COMMITMENTS AND CONTINGENCIES

3 Months Ended

Jun. 30, 2014

Commitments And Contingencies Disclosure [Abstract]

COMMITMENTS AND CONTINGENCIES

NOTE J–COMMITMENTS AND CONTINGENCIES

Dealer Financing

Finance companies provide the Company’s North American dealers with floorplan financing. The Company has agreements with these finance companies to repurchase certain repossessed products sold to its dealers. At June 30, 2014, the Company was contingently liable under these agreements for a maximum repurchase amount of approximately $65,704,000. The Company’s financial exposure under these agreements is limited to the difference between the amount paid to the finance companies for repurchases and the amount received upon the resale of the repossessed product. Losses incurred under these agreements during the periods presented have not been material. The financing agreements also have loss sharing provisions should any dealer default, whereby the Company shares certain losses with the finance companies. The maximum potential liability to the Company under these provisions is approximately $2,367,000 at June 30, 2014.

Litigation

The Company is subject to legal proceedings and claims which arise in the ordinary course of business. Accidents involving personal injury and property damage may occur in the use of snowmobiles, ATVs and ROVs. Claims have been made against the Company from time to time relating to these accidents, and from time to time, parties assert claims relating to their intellectual property. It is the Company’s policy to vigorously defend against these actions. The Company is not involved in any legal proceedings which it believes will have the potential for a materially adverse impact on the Company’s business or financial condition, results of operations or cash flows. The Company has recorded a reserve based on its estimated range of potential exposures based on the legal proceedings and claims that it is aware of. Should any settlement occur that exceeds the Company’s estimate or a new claim arise, the Company may need to adjust its overall reserve and, depending on the amount, such adjustment could be material.

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Net Earnings Per Share - Additional Information (Detail) (USD $)	3 Months Ended
	Jun. 30, 2014	Jun. 30, 2013
Earnings Per Share [Abstract]
Anti-dilutive options to purchase shares of common stock excluded from computation of common share equivalents	200,656	0
Anti-dilutive options to purchase shares of common stock excluded from computation of common share equivalents, weighted average exercise price	$ 44.18	$ 0.00

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Derivative Instruments and Hedging Activities - Schedule of Gains and Losses, Net of Tax, Related to Derivative Instruments Designated as Cash Flow Hedges (Detail) (Derivative in Cash Flow Hedging Relationships, USD $)	3 Months Ended
	Jun. 30, 2014	Jun. 30, 2013
Derivative in Cash Flow Hedging Relationships
Accumulated Other Comprehensive Income (Loss) [Line Items]
Foreign currency contracts	$ (2,570,000)	$ 3,131,000

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STOCK-BASED COMPENSATION (Tables)

3 Months Ended

Jun. 30, 2014

Assumptions Used to Determine Fair Value of Stock Options Issued

For stock options issued during the three months ended June 30, 2014 and 2013, the following assumptions were used to determine fair value:

	Three Months Ended June 30, 2014
Assumptions used:	2014			2013
Expected term (in years)		6 years			5 years
Expected volatility		49.0	%		49.0	%
Risk free interest rate		0.8	%		0.8	%
Expected dividend		1.0	%		1.0	%
Fair Value	$	20.50		$	21.68

Stock Option Activity

Option transactions under the plans during the three months ended June 30, 2014, are summarized as follows:

	Shares			Weighted Average Exercise Price		Weighted Average Contractual Life		Aggregate Intrinsic Value
Outstanding at March 31, 2014		480,837		$	24.95
Granted		38,794			47.79
Exercised		(91,345	)		15.62
Cancelled		(60	)		15.77
Outstanding at June 30, 2014		428,226		$	29.01		6.31 years	$	5,415,000
Exercisable at June 30, 2014		338,994		$	24.78		5.59 years	$	5,407,000

Options Outstanding and Exercisable

Stock Option Activity

The following tables summarize information concerning currently outstanding and exercisable stock options at June 30, 2014:

Options Outstanding and Exercisable

Range of Exercise Prices	Number Outstanding		Weighted Average Remaining Contractual Life		Weighted Average Exercise Price		Number Exercisable		Weighted Average Exercise Price
$6.26		7,800		2.54 years	$	6.26		7,800	$	6.26
9.57-13.59		54,287		5.76 years		10.79		54,287		10.79
14.68-21.03		139,421		6.99 years		16.18		139,421		16.18
21.96-27.69		24,000		9.35 years		24.83		24,000		24.83
33.67-47.79		202,718		5.78 years		44.07		113,486		43.30
		428,226		6.31 years	$	29.01		338,994	$	24.78

Restricted Stock Award

Restricted Stock Activity

Restricted stock and restricted stock unit award activity under the Plans during the three months ended June 30, 2014 and 2013 is summarized as follows:

	2014					2013
Restricted Shares	Shares			Weighted Average Grant Date Fair Value		Shares			Weighted Average Grant Date Fair Value
Non-vested shares at March 31,		16,200		$	43.45		42,820		$	19.33
Awarded		7,500			34.02		—			—
Vested		(8,100	)		33.33		(3,674	)		12.90
Non-vested shares at June 30,		15,600		$	44.17		39,146		$	19.93

Restricted Stock Units

Restricted Stock Activity

	2014					2013
Restricted Stock Units	Shares			Weighted Average Grant Date Fair Value		Shares			Weighted Average Grant Date Fair Value
Non-vested shares at March 31,		40,103		$	35.35		41,607		$	27.35
Granted		43,772			37.05		17,976			42.99
Vested		(23,275	)		29.41		(16,643	)		23.75
Forfeited		—			—		(1,217	)		27.60
Non-vested shares at June 30,		60,600		$	38.86		41,723		$	35.52

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SHAREHOLDERS' EQUITY (Tables)

3 Months Ended

Jun. 30, 2014

Equity [Abstract]

Components of Changes in Additional Paid-in-Capital

The components of the changes in additional paid-in-capital during the following periods were as follows:

	Three Months Ended June 30,
	2014			2013
Balance at beginning of period	$	—		$	10,945,000
Proceeds from issuance of common stock		9,000			19,000
Payment for income taxes on net-settled option exercises		(966,000	)		(1,355,000	)
Tax benefits from stock options exercised		732,000			1,522,000
Repurchase of common stock		(1,006,000	)		(1,438,000	)
Stock-based compensation expense		1,904,000			1,329,000
Balance at end of period	$	673,000		$	11,022,000

Components of Changes in Accumulated Other Comprehensive Loss

The components of the changes in accumulated other comprehensive loss during the following periods were as follows:

	Three Months Ended June 30,
	2014			2013
Balance at beginning of period	$	(2,110,000	)	$	(4,166,000	)
Unrealized gain (loss) on derivative instruments, net of tax		(2,570,000	)		3,131,000
Foreign currency translation adjustment		(304,000	)		638,000
Balance at end of period	$	(4,984,000	)	$	(397,000	)

Components of Changes in Retained Earnings

The components of the changes in retained earnings during the following periods were as follows:

	Three Months Ended June 30,
	2014			2013
Balance at beginning of period	$	187,024,000		$	167,561,000
Net earnings		3,569,000			5,468,000
Dividends paid		(1,617,000	)		(1,326,000	)
Balance at end of period	$	188,976,000		$	171,703,000

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Derivative Instruments and Hedging Activities - Additional Information (Detail) (Maximum)	3 Months Ended
	Jun. 30, 2014
Maximum
Derivative Instruments and Hedging Activities Disclosures [Line Items]
Maturity of Foreign Currency Derivatives	Mar. 31, 2015

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Changes in Accrued Warranty Liability (Detail) (USD $)	3 Months Ended
	Jun. 30, 2014	Jun. 30, 2013
Product Warranties Disclosures [Abstract]
Product Warranty Accrual, Beginning of period	$ 19,357,000	$ 18,709,000
Warranty provision	3,096,000	2,347,000
Warranty claim payments	(3,030,000)	(3,024,000)
Product Warranty Accrual, End of period	$ 19,423,000	$ 18,032,000

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CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited) (USD $)	3 Months Ended
	Jun. 30, 2014	Jun. 30, 2013
Statement Of Income And Comprehensive Income [Abstract]
Net earnings	$ 3,569,000	$ 5,468,000
Other comprehensive income (loss):
Foreign currency translation adjustments	(304,000)	638,000
Unrealized gain (loss) on derivative instruments, net of tax	(2,570,000)	3,131,000
Comprehensive income	$ 695,000	$ 9,237,000

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SHORT-TERM INVESTMENTS

3 Months Ended

Jun. 30, 2014

Investments Debt And Equity Securities [Abstract]

SHORT-TERM INVESTMENTS

NOTE D–SHORT-TERM INVESTMENTS

Trading securities consisted of $8,000 and $60,008,000, invested in various money market funds at June 30, 2014 and March 31, 2014, respectively. All of the trading securities are deemed to be Level 1 investments.

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DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES (Tables)

3 Months Ended

Jun. 30, 2014

Derivative Instruments And Hedging Activities Disclosure [Abstract]

Schedule of Foreign Currency Contracts

At June 30, 2014, the Company had the following open foreign currency contracts:

Foreign Currency	Notional Amounts (in US Dollars)		Net Unrealized Gain (Loss)
Canadian Dollar	$	126,982,000	$	(4,503,000	)

Summary of Carrying Values of Derivative Instruments

The table below summarizes the carrying values of derivative instruments as of June 30, 2014 and March 31, 2014:

	Carrying Values of Derivative Instruments as of June 30, 2014
Derivatives designated as hedging instruments	Fair Value Assets		Fair Value (Liabilities)		Derivative Net Carrying Value
Foreign exchange contracts (1)	$	—	$	4,503,000	$	4,503,000

	Carrying Values of Derivative Instruments as of March 31, 2014
Derivatives designated as hedging instruments	Fair Value Assets		Fair Value (Liabilities)		Derivative Net Carrying Value
Foreign exchange contracts (1)	$	—	$	424,000	$	424,000

(1) Assets are included in Accounts Receivable and liabilities are included in Accounts Payable on the accompanying consolidated balance sheets.

Schedule of Gains and Losses, Net of Tax, Related to Derivative Instruments Designated as Cash Flow Hedges

The table below provides data about the amount of gains and losses, net of tax, related to derivative instruments designated as cash flow hedges included in accumulated other comprehensive income for the three months ended June 30, 2014 and 2013:

Derivatives in Cash Flow Hedging Relationships	Three Months Ended June 30,
	2014			2013
Foreign currency contracts	$	(2,570,000	)	$	3,131,000

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Line of Credit - Additional Information (Detail) (USD $)	3 Months Ended				3 Months Ended
	Jun. 30, 2014	Jun. 30, 2014 Senior Secured Revolving Credit Facility	Nov. 30, 2013 Senior Secured Revolving Credit Facility	Nov. 30, 2009 Senior Secured Revolving Credit Facility	Jun. 30, 2014 Senior Secured Revolving Credit Facility Prime Rate	Jun. 30, 2014 Senior Secured Revolving Credit Facility Libor Rate	Jun. 30, 2014 Senior Secured Revolving Credit Facility Federal Funds Rate	Jun. 30, 2014 Line of Credit	Mar. 31, 2014 Line of Credit	Jun. 30, 2014 Letter of Credit	Jun. 30, 2013 Letter of Credit	Jun. 30, 2014 June through November Senior Secured Revolving Credit Facility	Jun. 30, 2014 All other months Senior Secured Revolving Credit Facility
Line of Credit Facility [Line Items]
Line of credit facility maximum borrowing capacity value			$ 100,000,000	$ 60,000,000								$ 100,000,000	$ 50,000,000
Senior secured revolving credit agreement description		This agreement is scheduled to expire in November 2017. Under the agreement, the Company may borrow up to $100,000,000 during May through November and up to $50,000,000 during all other months of the fiscal year.
Line of credit, basis spread variable rate					0.50%	1.00%	0.75%
Borrowings under line of credit bear interest at effective rate	3.50%
Line of credit Interest rate description	Borrowings under the line of credit bear interest at the greater of the following rates the prime rate plus 0.75%, the federal funds rate plus 0.50% or LIBOR for a 30 day interest period plus 1.00%. As of June 30, 2014, the effective rate was 3.5%.
Outstanding letters of credit balances								$ 0	$ 0	$ 9,316,000	$ 11,145,000

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RECENT ACCOUNTING PRONOUNCEMENTS

3 Months Ended

Jun. 30, 2014

Accounting Changes And Error Corrections [Abstract]

RECENT ACCOUNTING PRONOUNCEMENTS

NOTE N–RECENT ACCOUNTING PRONOUNCEMENTS

In May 2014, the Financial Accounting Standards Board issued Accounting Standards Update (“ASU”) 2014-09, Revenue from Contracts with Customers, which provides guidance for revenue recognition that supersedes existing revenue recognition guidance (but does not apply to nor supersede accounting guidance for lease contracts). The ASU’s core principle is that an entity will recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The ASU also requires more detailed disclosures to enable users of financial statements to understand the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. The ASU is effective for reporting periods beginning after December 15, 2016, and should be applied retrospectively to each prior reporting period presented or retrospectively with the cumulative effect of initially applying the ASU recognized at the date of initial application. The Company is currently in the process of evaluating the impact of the adoption of this ASU on the Company’s consolidated results.