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UNITED STATES SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark one)


þ		QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended SEPTEMBER 30, 2005


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

For the transition period from _____________________ to _____________________

Commission File Number 1-11411

Polaris Industries Inc.

(Exact Name of Registrant as Specified in its Charter)


Minnesota		41-1790959
(State or other jurisdiction of incorporation or organization		(IRS Employer Identification No.)

2100 Highway 55, Medina, MN 55340

(Address of principal executive offices)		(Zip Code)

(763) 542-0500

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports 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 þ No o

Indicate by check mark whether the registrant is an accelerated filer (as defined in Section 12b-2 of the Exchange Act).

Yes þ No o

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

Yes o No þ

APPLICABLE ONLY TO CORPORATE ISSUERS:

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

As of November 7, 2005, 41,595,428 shares of Common Stock of the issuer were outstanding.

FORM 10-Q
For the Quarterly Period Ended
September 30, 2005

POLARIS INDUSTRIES INC.

CONSOLIDATED BALANCE SHEETS
(In Thousands)


	September 30, 2005			December 31, 2004
	(Unaudited)

Assets
Current Assets
Cash and cash equivalents	$	13,410		$	138,469
Trade receivables		68,527			71,172
Inventories		249,890			173,624
Prepaid expenses and other		13,718			12,090
Deferred tax assets		60,644			65,489
Current assets of discontinued operations		354			4,811

Total current assets		406,543			465,655

Property and equipment, net		222,715			200,901
Investments in finance affiliate and retail credit deposit		48,274			98,386
Investment in manufacturing affiliates		88,963			2,877
Goodwill, net		25,006			24,798
Intangible and other assets, net		241			308

Total Assets	$	791,742		$	792,925


Liabilities and Shareholders’ Equity
Current Liabilities:
Accounts payable	$	146,316		$	96,302
Accrued expenses		229,263			252,704
Income taxes payable		37,530			31,001
Current liabilities of discontinued operations		7,098			25,186

Total current liabilities		420,207			405,193

Deferred income taxes		1,800			8,000
Borrowings under credit agreement		18,000			18,000

Total liabilities	$	440,007		$	431,193


Shareholders’ Equity:
Preferred stock $0.01 par value, 20,000 shares authorized, no shares issued and outstanding		—			—

Common stock $0.01 par value, 80,000 shares authorized, 41,815 and 42,741 shares issued and outstanding	$	418		$	427
Additional paid-in capital		—			—
Deferred compensation		(4,077	)		(8,516	)
Retained earnings		355,847			366,345
Accumulated other comprehensive income (loss)		(453	)		3,476

Total shareholders’ equity		351,735			361,732


Total Liabilities and Shareholders’ Equity	$	791,742		$	792,925

The balance sheet at December 31, 2004 has been derived from the audited financial statements at that date.

The accompanying footnotes are an integral part of these consolidated statements.

FORM 10-Q
For the Quarterly Period Ended
September 30, 2005

POLARIS INDUSTRIES INC.

CONSOLIDATED STATEMENTS OF INCOME
(In Thousands, Except Per Share Data)
UNAUDITED


	For Three Months Ended						For Nine Months Ended
	September 30,						September 30,
	2005			2004			2005			2004
Sales	$	543,124		$	510,623		$	1,343,732		$	1,234,248
Cost of sales		416,343			387,206			1,036,088			941,076

Gross profit		126,781			123,417			307,644			293,172
Operating expenses
Selling and marketing		27,324			28,051			80,255			79,565
Research and development		17,706			15,294			51,485			44,024
General and administrative		18,191			20,158			52,578			57,037

Total operating expenses		63,221			63,503			184,318			180,626

Income from financial services		10,203			7,429			26,951			22,817


Operating Income		73,763			67,343			150,277			135,363

Non-operating Expense (Income):
Interest expense		1,552			558			3,310			1,705
Equity in (income) of manufacturing affiliates, net of tax		(945	)		(6	)		(945	)		—
Other expense, net		1,159			265			2,403			613

Income before income taxes		71,997			66,526			145,509			133,045

Provision for Income Taxes		20,870			21,954			45,129			43,905


Net Income from continuing operations	$	51,127		$	44,572		$	100,380		$	89,140


Loss from discontinued operations, net of tax	$	(265	)	$	(2,067	)	$	(685	)	$	(7,961	)
Loss on disposal of discontinued operations, net of tax		—			(23,852	)		—			(23,852	)

Net Income	$	50,862		$	18,653		$	99,695		$	57,327


Basic Net Income per share
Continuing operations	$	1.22		$	1.05		$	2.37		$	2.10
Loss from discontinued operations		(0.01	)		(0.05	)		(0.02	)		(0.19	)
Loss on disposal of discontinued operations		—			(0.56	)		—			(0.56	)

Net Income	$	1.21		$	0.44		$	2.35		$	1.35


Diluted Net Income per share
Continuing operations	$	1.17		$	1.00		$	2.27		$	1.98
Loss from discontinued operations		(0.01	)		(0.05	)		(0.02	)		(0.18	)
Loss on disposal of discontinued operations		—			(0.53	)		—			(0.53	)

Net Income	$	1.16		$	0.42		$	2.25		$	1.27


Weighted average shares outstanding:
Basic		41,962			42,294			42,349			42,348
Diluted		43,696			44,771			44,267			44,996

The accompanying footnotes are an integral part of these consolidated statements.

FORM 10-Q
For the Quarterly Period Ended
September 30, 2005

POLARIS INDUSTRIES INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands)
Unaudited


	For Nine Months Ended
	September 30,
	2005			2004
Operating Activities:
Net income	$	99,695		$	57,327
Net loss from discontinued operations		685			31,813
Adjustments to reconcile net income to net cash provided by (used for) operating activities:
Depreciation and amortization		47,466			43,525
Noncash compensation		9,553			11,892
Noncash income from manufacturing affiliates		(945	)		—
Noncash income from financial services		(9,669	)		(8,123	)
Deferred income taxes		(1,355	)		(550	)
Changes in current operating items:
Trade receivables		2,645			(26,711	)
Inventories		(76,264	)		(31,487	)
Accounts payable		50,014			79,886
Accrued expenses		(23,441	)		(22,383	)
Income taxes payable		21,020			524
Prepaid expenses and others, net		(5,255	)		1,850

Net cash provided by continuing operations		114,149			137,563
Net cash flow provided (used) from discontinued operations		(14,316	)		10,499

Net cash provided by operating activities		99,833			148,062

Investing Activities:
Purchase of property and equipment		(69,423	)		(61,992	)
Investment in manufacturing affiliates		(85,443	)		0
Investments in finance affiliate and retail credit deposit, net		59,781			6,762

Net cash used for continuing operations investment activities		(95,085	)		(55,230	)
Net cash used for discontinued operations investment activities		—			(1,091	)

Net cash used for investing activities		(95,085	)		(56,321	)

Financing Activities:
Borrowings under credit agreement		554,000			380,000
Repayments under credit agreement		(554,000	)		(380,008	)
Repurchase and retirement of common shares		(111,297	)		(49,225	)
Cash dividends to shareholders		(35,329	)		(29,095	)
Proceeds from stock issuances under employee plans		16,819			10,400


Net cash used for financing activities		(129,807	)		(67,928	)


Net increase (decrease) in cash and cash equivalents		(125,059	)		23,813

Cash and cash equivalents at beginning of period		138,469			82,761


Cash and cash equivalents at end of period	$	13,410		$	106,574

The accompanying footnotes are an integral part of these consolidated statements.

FORM 10-Q
For the Quarterly Period Ended
September 30, 2005

POLARIS INDUSTRIES INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1. Significant Accounting Policies

Basis of Presentation

The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States for interim financial statements and, therefore, do not include all information and disclosures of results of operations, financial position and changes in cash flow in conformity with accounting principles generally accepted in the United States for complete financial statements. Accordingly, such statements should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended December 31, 2004, previously filed with the Securities and Exchange Commission. In the opinion of management, such statements reflect all adjustments (which include only normal recurring adjustments) necessary for a fair presentation of the financial position, results of operations, and cash flows for the periods presented. Due to the seasonality of the snowmobile, all terrain vehicle (ATV), motorcycle and the parts, garments and accessories (PG&A) business, and to certain changes in production and shipping cycles, results of such periods are not necessarily indicative of the results to be expected for the complete year. Certain amounts in the 2005 and 2004 periods presented have been reclassified for consistency of presentation. Polaris’ allocable share of the income (loss) of Robin Manufacturing (Robin) has been reclassified to Equity in (income) of manufacturing affiliates, net of tax and Polaris’ investment for Robin has been reclassified to Investments in manufacturing affiliates in the consolidated balance sheets for each period presented. These changes had no impact on previously reported net income.

On September 2, 2004, the Company announced its decision to discontinue the manufacture of marine products. In accordance with Statement of Financial Accounting Standards (“SFAS”) No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets, the marine products division’s financial results are reported separately as discontinued operations for all periods presented.

New accounting pronouncements

In December 2004, the Financial Accounting Standards Board (“FASB”) issued SFAS No. 123 (revised 2004), “Share-Based Payments” (SFAS No. 123R). The statement originally required the expensing of stock options in the financial statements for periods no later than the annual or interim periods beginning after June 15, 2005. In April 2005, the Securities and Exchange Commission extended the implementation date of SFAS No. 123R to the beginning of the Company’s next fiscal year. Based on the change in the implementation date, Polaris expects to implement the statement beginning with its interim financial statements for the first quarter 2006. As of yet the Company has not made a determination of the valuation methodology and, therefore, has not determined the impact to future periods.

Product Warranties

Polaris provides a limited warranty for ATVs for a period of six months and for a period of one year for all remaining products. Polaris may provide longer

FORM 10-Q
For the Quarterly Period Ended
September 30, 2005

warranties related to certain promotional programs, as well as longer warranties in certain geographical markets as determined by local regulations and market conditions. Polaris’ standard warranties require the Company or its dealers to repair or replace defective product during such warranty period at no cost to the consumer. The warranty reserve is established at the time of sale to the dealer or distributor based on management’s best estimate using historical rates and trends. Adjustments to the warranty reserve are made from time to time as actual claims become known in order to properly estimate the amounts necessary to settle future and existing claims on products sold as of the balance sheet date. Factors that could have an impact on the warranty accrual in any given period include the following: improved manufacturing quality, shifts in product mix, changes in warranty coverage periods, snowfall and its impact on snowmobile usage, product recalls and any significant changes in sales volume. The activity in Polaris’ accrued warranty reserve for the periods presented is as follows (in thousands):


	For the Three Months						For the Nine Months
	Ended September 30,						Ended September 30,
	2005			2004			2005			2004
Accrued warranty reserve, beginning	$	23,386		$	22,318		$	28,243		$	29,068
Additions charged to expense		10,553			8,753			26,599			16,965
Warranty claims paid		(7,000	)		(5,269	)		(26,953	)		(20,231	)
Consumer Products Safety Commission (CPSC) settlement paid (charged to expense prior to 2004)		—			—			(950	)		—

Accrued warranty reserve, ending	$	26,939		$	25,802		$	26,939		$	25,802

During the first quarter 2005, the Company paid the CPSC $950,000 to settle claims alleging that the Company violated the Consumer Product Safety Act dating back to the late 1990’s. Polaris entered into the settlement to avoid continuing legal costs associated with protracted litigation.

Stock Based Employee Compensation

Polaris accounts for all stock based compensation plans in accordance with the provision of APB Opinion No. 25. Had compensation costs for these plans been recorded at fair value consistent with the methodology prescribed by SFAS No. 123 “Accounting for Stock-Based Compensation,” Polaris’ net income and net income per share would have been reduced to the following pro-forma amounts (in thousands except per share data):


	For the Three Months						For the Nine Months
	Ended September 30,						Ended September 30,
	2005			2004			2005			2004
Net income from continuing operations:
As reported	$	51,127		$	44,572		$	100,380		$	89,140
Less: Additional compensation expense, net of tax		(2,518	)		(992	)		(4,774	)		(3,699	)


Pro forma	$	48,609		$	43,580		$	95,606		$	85,441

Net income from continuing operations per share (diluted):
As reported	$	1.17		$	1.00		$	2.27		$	1.98
Pro forma	$	1.11		$	0.97		$	2.16		$	1.90

FORM 10-Q
For the Quarterly Period Ended
September 30, 2005

The fair value of each award under the Option Plan is estimated on the date of grant using the Black-Scholes option-pricing model.

NOTE 2. Inventories

Inventories are stated as the lower of cost (first-in, first-out method) or market. The major components of inventories are as follows (in thousands):


	September 30, 2005			December 31, 2004
Raw Materials and Purchased Components	$	46,116		$	14,993
Service Parts, Garments and Accessories		71,999			67,966
Finished Goods		144,991			100,735
Less: reserves		(13,216	)		(10,070	)

Inventories	$	249,890		$	173,624

NOTE 3. Financing Agreement

Polaris has an unsecured bank line of credit arrangement with maximum available borrowings of $250,000,000 expiring on June 25, 2009. Interest is charged at rates based on LIBOR or “prime” (effective rate was 4.40 percent at September 30, 2005).

Polaris has entered into an interest rate swap agreement to manage exposures to fluctuations in interest rates. The effect of this agreement is to fix the interest rate at 7.21 percent for $18,000,000 of borrowings under the credit line until June 2007.

As of September 30, 2005, total borrowings under the bank line of credit arrangement were $18,000,000 and has been classified as long-term in the accompanying consolidated balance sheets.

NOTE 4. Investments in Finance Affiliate and Retail Credit Deposit

In 1996, a wholly owned subsidiary of Polaris entered into a partnership agreement with a subsidiary of Transamerica Distribution Finance (TDF) to form Polaris Acceptance. In January 2004, TDF was purchased by GE Commercial Distribution Finance (GECDF), a subsidiary of General Electric Company. Polaris Acceptance provides floor plan financing to Polaris’ dealers in the United States. Polaris’ subsidiary has a 50 percent equity interest in Polaris Acceptance. The receivable portfolio is recorded on Polaris Acceptance’s books, and is funded 85 percent through a loan from an affiliate of GECDF and 15 percent by a cash investment shared equally between the two partners. Polaris has not guaranteed the outstanding indebtedness of Polaris Acceptance. Substantially all of Polaris’ U.S. sales are financed through Polaris Acceptance whereby Polaris receives payment within a few days of shipment of the product. The net amount financed for dealers under this arrangement at September 30, 2005 was approximately $757,000,000.

FORM 10-Q
For the Quarterly Period Ended
September 30, 2005

partnership agreement provides that all income and losses of the portfolio are shared 50 percent by Polaris’ wholly owned subsidiary and 50 percent by GECDF’s subsidiary. Polaris’ allocable share of the income of Polaris Acceptance has been included as a component of Income from financial services in the accompanying consolidated statements of income.

A wholly owned subsidiary of Polaris has entered into a new multi-year contract with HSBC Bank Nevada, National Association (“HSBC”), formerly known as Household Bank (SB), N.A. under which HSBC will continue managing the Polaris private label credit card program under the StarCard label. The terms of the new multi-year agreement, executed on August 10, 2005, became effective as of August 1, 2005. The new agreement provides for income to be paid to Polaris based on a percentage of the volume of retail credit business generated. The previous agreement provided for equal sharing of all income and losses with respect to the retail credit portfolio, subject to certain limitations. The new contract removes all credit, interest rate and funding risk to Polaris and also eliminates the need for Polaris to maintain a retail credit cash deposit with HSBC which was $50.0 million at August 1, 2005.

Polaris facilitates the availability of extended service contracts and certain insurance contracts to consumers through arrangements with various third party suppliers. Polaris does not have any incremental warranty, insurance or financial risk from any of these third party arrangements. Polaris collects commission fees from these arrangements which are included as a component of Income from financial services in the accompanying consolidated statements of income.

NOTE 5. Investment in Manufacturing Affiliate

Polaris is a partner with Fuji Heavy Industries Ltd. in Robin Manufacturing, U.S.A. (Robin). Polaris has a 40 percent ownership interest in Robin, which builds engines in the United States for recreational and industrial products. Polaris’ investment in Robin is accounted for under the equity method, and is recorded as a component of Investment in manufacturing affiliates in the accompanying consolidated balance sheets. Polaris’ allocable share of the income (loss) of Robin has been included on an after-tax basis as a component of Equity in (income) of manufacturing affiliates in the accompanying consolidated statements of income.

During third quarter 2005 Polaris, through an Austrian subsidiary, invested in the Austrian motorcycle manufacturer KTM Power Sports AG (KTM) by purchasing a 24.9 percent interest in that company from a third party for $82.8 million. KTM manufactures and markets ready-to-race, off-road motorcycles, and recently entered the on-road motorcycle segment. Polaris’ investment in KTM is accounted for under the equity method, and is recorded, together with associated transaction costs, as a component of Investment in manufacturing affiliates in the accompanying consolidated balance sheets. Polaris’ allocable share of the income of KTM is recorded on an after-tax basis as a component of Equity in (income) of manufacturing affiliates in the accompanying consolidated statements of income. Additionally, Polaris and KTM’s largest shareholder, Cross Industries AG (“Cross”), have entered into an option agreement which provides that, under certain conditions in 2007, either Cross may purchase Polaris’ interest in

FORM 10-Q
For the Quarterly Period Ended
September 30, 2005

KTM Power Sports AG or, alternatively, Polaris may purchase Cross’ interest and become the majority shareholder of KTM Power Sports AG. In the latter case, under most circumstances, the majority of the purchase price to Cross will be settled in Polaris shares and Cross will become a significant shareholder in the combined Polaris/KTM organization. Cross’ principal shareholders are entities controlled by KTM CEO Stefan Pierer and KTM CFO Rudolf Knünz. The exercise price under both option arrangements are based on market-based, predetermined pricing formulas to be derived from operating results of both companies in 2007.

NOTE 6. Shareholders’ Equity

During the first nine months of 2005, Polaris paid $111,297,000 to repurchase and retire approximately 1,907,000 shares of its common stock. On October 20, 2005 the Board of Directors increased the Company’s common stock share repurchase authorization by 4,000,000 shares. The additional share repurchase authorization, together with the 1,112,000 shares remaining available for repurchase under the prior authorization as of September 30, 2005, brings the total shares authorized to be repurchased to approximately 5,112,000 shares. The repurchase of any or all such shares authorized for repurchase will be governed by applicable SEC rules and dependent on management’s assessment of market conditions.

Polaris paid a regular cash dividend of $0.28 per share on August 15, 2005 to holders of record on August 1, 2005.

On October 20, 2005, the Polaris Board of Directors declared a regular cash dividend of $0.28 per share payable on or about November 15, 2005 to holders of record of such shares at the close of business on November 1, 2005.

Net Income per Share

Basic net income per share is computed by dividing net income available to common shareholders by the weighted average number of common shares outstanding during each period, including shares earned under the non-qualified deferred compensation plan for the non-employee members of the Board of Directors (Director Plan) and the Employee Stock Ownership Plan (ESOP). Diluted net income per share is computed under the treasury stock method and is calculated to reflect the dilutive effect of outstanding stock options and certain shares issued under the restricted stock plan.

FORM 10-Q
For the Quarterly Period Ended
September 30, 2005

A reconciliation of these amounts is as follows (in thousands):


	For the Three Months				For the Nine Months
	Ended September 30,				Ended September 30,
	2005		2004		2005		2004
Weighted average number of common shares outstanding		41,704		42,081		42,118		42,115

Director Plan		67		59		65		59

ESOP		191		154		166		174


Weighted average shares outstanding — basic		41,962		42,294		42,349		42,348

Net effect of dilutive stock options and restricted stock		1,734		2,477		1,918		2,648


Weighted average shares outstanding — diluted		43,696		44,771		44,267		44,996

Comprehensive Income

Comprehensive income represents net income adjusted for foreign currency translation adjustments and the deferred gains or losses on derivative instruments utilized to hedge Polaris’ interest and foreign exchange exposures. Comprehensive income is as follows (in thousands):


	For the Three Months						For the Nine Months
	Ended September 30,						Ended September 30,
	2005			2004			2005			2004
Net income	$	50,862		$	18,653		$	99,695		$	57,327
Other comprehensive income:
Foreign currency translation adjustment		221			1,300			(4,673	)		(1,065	)
Unrealized gain (loss) on derivative instruments		(1,214	)		(2,069	)		744			2,196

Comprehensive income	$	49,869		$	17,884		$	95,766		$	58,458

NOTE 7. Commitments and Contingencies

Polaris is subject to product liability claims in the normal course of business. Polaris is currently self-insured for all product liability claims. The estimated costs resulting from any losses are charged to operating expenses when it is probable a loss has been incurred and the amount of the loss is reasonably determinable. The Company utilizes historical trends and actuarial analysis tools to assist in determining the appropriate loss reserve levels.

Polaris is a defendant in lawsuits and subject to claims arising in the normal course of business. In the opinion of management, it is not probable that any legal proceedings pending against or involving Polaris will have a material adverse effect on Polaris’ financial position or results of operations.

FORM 10-Q
For the Quarterly Period Ended
September 30, 2005

NOTE 8. Accounting for Derivative Instruments and Hedging Activities

Accounting and reporting standards require that every derivative instrument, including certain derivative instruments embedded in other contracts be recorded in the balance sheet as either an asset or liability measured at its fair value. Changes in the derivative’s fair value should be recognized currently in earnings unless specific hedge criteria are met and companies must formally document, designate and assess the effectiveness of transactions that receive hedge accounting.

Interest Rate Swap Agreements

Polaris has an interest rate swap agreement expiring in 2007 related to $18,000,000 of debt that has been designated and meets the criteria as a cash flow hedge. At September 30, 2005, the fair value of the interest rate swap agreement was an unrealized loss of $859,000, which is recorded net of tax as a component of Accumulated other comprehensive income (loss) in shareholders’ equity.

Foreign Exchange Contracts

Polaris enters into foreign exchange contracts to manage currency exposures of certain of its purchase commitments denominated in foreign currencies and transfers of funds from its foreign subsidiaries. Polaris does not use any financial contracts for trading purposes. These contracts have been designated as and meet the criteria for cash flow hedges or fair value hedges.

At September 30, 2005, Polaris had open Japanese yen foreign exchange contracts with notional amounts totaling U.S. $36,662,000, and an unrealized loss of $1,250,000 and open Canadian dollar contracts with notional amounts totaling U.S. $82,825,000 and an unrealized loss of $3,007,000. These contracts met the criteria for cash flow hedges and the net unrealized losses, after tax, are recorded as a component of Accumulated other comprehensive income (loss) in shareholders’ equity.

NOTE 9. Discontinued Operations

On September 2, 2004, the Company announced its decision to discontinue the manufacture of marine products. In the third quarter 2004, the Company recorded a loss on disposal of discontinued operations of $35,600,000 before tax or $23,852,000 after tax. This loss included a total of $28,705,000 in expected future cash payments for costs to assist the dealers in selling their remaining inventory, incentives and discounts to encourage consumers to purchase remaining products, costs to cancel supplier arrangements, legal and regulatory issues, and personnel termination costs. In addition, there were $8,287,000 of liabilities related to the marine products division at the time of the exit announcement. Total cash outlays of $7,909,000 were made in the third quarter 2005 related to the liabilities. Total cash outlays of $30,236,000 have been made since the marine products division exit announcement.

In addition, the loss on disposal of discontinued operations included $6,895,000 in non-cash costs related primarily to the disposition of tooling, other physical assets, and the Company’s remaining inventory. Non-cash charges totaling $588,000 were made to the accrual in the third quarter 2005.

FORM 10-Q
For the Quarterly Period Ended
September 30, 2005

Total non-cash charges of $6,554,000 have been made to the accrual since the marine products division exit announcement. No adjustments were made to the closedown accrual during the third quarter 2005.

Utilization of components of the accrued disposal costs during the third quarter and year-to-date period ended September 30, 2005 is as follows (in thousands):


								Utilization
			Utilization					Three
			Six Months					Months
	Balance		Ended			Balance,		Ended			Balance
	December 31,		June 30,			June 30,		Sept. 30,			Sept. 30,
	2004		2005			2005		2005			2005
Dealer & customer incentive costs to sell remaining dealer inventory including product warranty	$	12,111		($7,506	)	$	4,605		($3,232	)	$	1,373

Costs related to canceling supplier arrangements		5,039		(498	)		4,541		(4,538	)		3

Legal, regulatory, personnel and other costs		6,932		(1,413	)		5,519		(139	)		5,380

Disposition of tooling, inventory and other fixed assets (non-cash)		1,104		(175	)		929		(588	)		341

Total	$	25,186		($9,592	)	$	15,594		($8,497	)	$	7,097

The financial results of the marine products division included in discontinued operations were as follows (in thousands):


	For Three Months						For Nine Months
	Ended September 30,						Ended September 30,
	2005			2004			2005			2004
Sales	$	199		$	3,142		$	3,797		$	47,838

Loss on discontinued operations before income tax benefit		(395	)		(3,086	)		(1,022	)		(11,883	)

Income tax (benefit)		(130	)		(1,019	)		(337	)		(3,922	)

Loss on discontinued operations, net of tax	($	265	)	($	2,067	)	($	685	)	($	7,961	)


Loss on disposal of discontinued operations, net of tax		—			($23,852	)		—			($23,852	)

FORM 10-Q
For the Quarterly Period Ended
September 30, 2005

Item 2

MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Executive-Level Overview

The following discussion pertains to the results of operations and financial position of Polaris Industries Inc., a Minnesota corporation (“Polaris” or the “Company”) for the quarters and the year-to-date periods ended September 30, 2005 and 2004. Due to the seasonality of the snowmobile, all terrain vehicle (ATV), motorcycle and parts, garments and accessories (PG&A) business, and to certain changes in production and shipping cycles, results of such periods are not necessarily indicative of the results to be expected for the complete year.

For the third quarter ended September 30, 2005, Polaris reported record net income from continuing operations of $1.17 per diluted share, a 17 percent increase over net income from continuing operations of $1.00 per diluted share for the period ended September 30, 2004. Net income from continuing operations was $51.1 million, an increase of 15 percent over net income from continuing operations of $44.6 million for the period ended September 30, 2004. The third quarter 2005 net income from continuing operations includes an income tax benefit of $2.6 million or $0.06 per diluted share resulting primarily from the settlement of state income tax audit disputes for the years 1997 through 2000. Sales from continuing operations for the third quarter 2005 totaled a record $543.1 million, up six percent compared to sales from continuing operations of $510.6 million for the third quarter 2004. In the third quarter 2005, ATV sales grew four percent, snowmobile sales increased ten percent, Victory motorcycles grew 45 percent and parts, garments and accessories increased 8 percent when compared to the same period in 2004.

The Company ceased manufacturing marine products on September 2, 2004. The marine products division’s financial results are reported separately as discontinued operations for all periods presented.

Results of Operations

Sales were $543.1 million in the third quarter 2005, representing a six percent increase from $ 510.6 million in sales for the same period in 2004.

Sales of ATVs were $351.2 million in the third quarter 2005, up four percent from the third quarter 2004 sales of $338.7 million. The sales growth was primarily driven by continued growth in the RANGER™ product line. Year-to-date 2005 sales of ATVs increased nine percent over last year, a result of growth in the RANGER™ product line and strong international sales growth during the year-to-date period. The average per unit sales price for ATVs in third quarter 2005 was approximately the same as during third quarter 2004. For the year-to-date period ended September 30, 2005, the average ATV per unit sales price increased four percent over last year’s year-to-date period primarily as a result of the increased sales of the higher priced RANGER™ product and a positive product mix change.

FORM 10-Q
For the Quarterly Period Ended
September 30, 2005

Sales of snowmobiles were $104.2 million for the third quarter 2005, an increase of ten percent from sales of $94.7 million for the comparable quarter in 2004. For the year-to-date 2005 period, snowmobile sales increased four percent compared to the prior year-to-date period. The average snowmobile per unit sales price for the third quarter 2005 increased 14 percent compared to last year’s third quarter unit sales price due to product mix change as more of the higher priced snowmobiles were shipped during the third quarter 2005.

Sales of Victory motorcycles were $16.1 million for the third quarter 2005, a 45 percent increase from $11.1 million for the comparable period in 2004. The increase is attributable to improved brand recognition, the success of the new Hammer and 8-Ball models and continued acceptance of the Vegas and Kingpin models. Additionally, improvement in the dealer network is contributing to the higher sales. Victory motorcycle sales increased 24 percent for the first nine months of 2005 over the same period in 2004. The average per unit sales price for Victory motorcycles increased nine percent during the third quarter 2005 when compared to the same period in 2004 due to a product mix change.

PG&A sales were $71.6 million for the third quarter 2005, an increase of eight percent from $66.1 million for the third quarter 2004. For the nine-month period ended September 30, 2005, PG&A sales increased eight percent from the comparable period in 2004. Higher sales for ATV, RANGER^TM and Victory PG&A offset somewhat by lower sales of snowmobile PG&A, contributed to the increase for the third quarter and year-to-date periods.

Gross profit for the third quarter 2005 increased three percent to $126.8 million compared to $123.4 million for the third quarter 2004. For the year-to-date period ended September 30, 2005, gross profit increased five percent to $307.6 million compared to $293.2 million in the comparable period in 2004. Gross profit, as a percentage of sales, was 23.3 percent for the third quarter 2005, a decrease from 24.2 percent in the comparable quarter of 2004. For the first nine months 2005, gross margins were 22.9 percent compared to 23.8 percent for the same nine-month period in 2004. The gross profit margin for the third quarter and nine-month period decreased primarily due to increased raw material costs, higher warranty expenses, higher floor plan financing costs and incremental transportation and fuel costs on a year over year comparative basis. These higher costs were partially offset by continued efficiency gains and savings from various cost reduction initiatives.

For the third quarter 2005, operating expenses decreased both in absolute dollars spent and as a percentage of sales compared to the third quarter of 2004. Operating expenses for the third quarter 2005 decreased to $63.2 million or 11.6 percent of sales compared to $63.5 million or 12.4 percent of sales for the third quarter 2004. For the year-to-date period ended September 30, 2005, operating expenses increased two percent to $184.3 million or 13.7 percent of sales compared to $180.6 million or 14.6 percent of sales for the same nine month period in 2004. Operating expenses, as a percent of sales, decreased in the third quarter and year-to-date periods ended September 30, 2005 primarily due to the lower Polaris stock price that reduced stock-based compensation plan expenses. These reductions were partially offset by higher research and development expenses incurred during the 2005 periods related to new product development activities and the new research and development facility in Wyoming, Minnesota which opened in spring 2005.

Income from financial services increased 37 percent to $10.2 million in the third quarter 2005, up from $7.4 million in the third quarter 2004, due to increased profitability generated from both the wholesale credit portfolio and increased income from the retail

FORM 10-Q
For the Quarterly Period Ended
September 30, 2005

credit arrangement with HSBC Bank (formerly known as Household Bank, N.A.). During the third quarter the Company entered into a new multi-year contract with HSBC Bank, which provides for income to be paid to Polaris based on a percentage of the volume of retail credit business generated. The previous agreement provided for equal sharing of all income and losses with respect to the retail credit portfolio, subject to certain limitations. The new agreement removes all credit, interest rate and funding risk to Polaris and also eliminates the need for Polaris to maintain a retail credit cash deposit with HSBC Bank, which was $50.0 million on August 1, 2005, the effective date of the new agreement. Income from financial services for the year-to-date period ended September 30, 2005 increased 18 percent to $27.0 million compared to $22.8 million for the same period in 2004.

During the third quarter 2005 Polaris invested in Austrian motorcycle manufacturer KTM by purchasing a 24.9 percent interest in that company from a third party for $82.8 million. Income from the investment in KTM is recorded on an after-tax basis on the income statement as a component of Equity in income of manufacturing affiliates and totaled $0.9 million for the third quarter 2005. Polaris’ investment in KTM is accounted for under the equity method, and is recorded, together with associated transaction costs, as a component of Investment in manufacturing affiliates in the accompanying consolidated balance sheets.

The income tax provision for the third quarter 2005 was recorded at a rate of approximately 29.0 percent of Polaris’ pretax income, a reduction from 33.0 percent recorded in the third quarter 2004 and the first half of 2005. The lower income tax rate for the third quarter 2005 is primarily the result of an income tax benefit generated from the settlement of state income tax audit disputes for the years 1997 through 2000. As a result of the settlement, a portion of the Company’s recorded income tax reserves are no longer necessary, resulting in a reduction in the third quarter 2005 income tax provision and a corresponding increase in third quarter 2005 net income of approximately $2.6 million, or $0.06 per diluted share.

Discontinued Operations

The Company ceased manufacturing marine products on September 2, 2004. As a result, the marine products division’s financial results are being reported separately as discontinued operations for all periods presented. The Company’s third quarter 2005 loss from discontinued operations was $0.3 million, net of tax, or less than $0.01 per diluted share, compared to a loss of $2.1 million, net of tax, or $0.05 per diluted share in the third quarter 2004. In the third quarter of 2004, the Company recorded a loss on disposal of discontinued operations of $23.9 million, net of tax or $0.53 per diluted share. Reported net income for the third quarter 2005 compared to the same period in 2004, including continuing and discontinued operations and the loss on disposal of discontinued operations, was $50.9 million or $1.16 per diluted share compared to $18.7 million or $0.42 per diluted share in the third quarter of 2004. For the nine months ended September 30, 2005, the loss from discontinued operations was $0.7 million, after tax, or $0.02 per diluted share, compared to a loss of $8.0 million or $0.18 per diluted share in 2004. Reported net income for the nine months ended September 30, 2005, including continuing and discontinued operations and the loss on disposal of discontinued operations, was $99.7 million or $2.25 per diluted share, compared to $57.3 million, or $1.27 per diluted share for the nine months ended September 30, 2004.

FORM 10-Q
For the Quarterly Period Ended
September 30, 2005

Cash Dividends

Polaris paid a $0.28 per share dividend on August 15, 2005 to shareholders of record on August 1, 2005. On October 20, 2005, the Polaris Board of Directors declared a regular cash dividend of $0.28 per share payable on or about November 15, 2005 to holders of record of such shares at the close of business on November 1, 2005.

Liquidity and Capital Resources

Net cash provided by operating activities of continuing operations totaled $108.7 million for the third quarter 2005, a nine percent increase from $99.7 million in the third quarter 2004. For the year-to-date period ended September 30, 2005, net cash provided by operating activities of continuing operations totaled $114.1 million compared to $137.6 million for the same year-to-date period in 2004. An increase in inventory levels in 2005 compared to the same periods last year was the primary reason for the decrease in net cash provided by operating activities during the third quarter and first nine months of 2005. Net cash used for investing activities from continuing operations was $95.1 million during the first nine months of 2005 and primarily represents the purchase of property and equipment and the investment made in KTM, offset somewhat by the return of Polaris’ $50.0 million cash deposit from HSBC, a result of the new multi-year agreement with HSBC. Net cash used for financing activities was $129.8 million during the nine months ended September 30, 2005, which primarily represents dividends paid to shareholders and the repurchase of common shares offset somewhat by an increase in proceeds from employee stock option exercises. Cash and cash equivalents totaled $13.4 million at September 30, 2005.

The seasonality of production and shipments causes working capital requirements to fluctuate during the year. Polaris has an unsecured bank line of credit arrangement with maximum available borrowings of $250.0 million. Interest is charged at rates based on LIBOR or “prime” (effective rate was 4.40 percent at September 30, 2005). As of September 30, 2005, total borrowing under this credit arrangement was $18.0 million and has been classified as long-term in the accompanying consolidated balance sheets. The Company’s debt to total capital ratio was five percent for each of the periods ending September 30, 2005 and 2004.

The following table summarizes the Company’s significant future contractual obligations at September 30, 2005 (in millions):


	Total		< 1 year		1-3 Years		> 3 Years
Borrowings under credit agreement	$	18.0	$	—	$	—	$	18.0
Interest expense under swap agreement		2.3		1.3		1.0		—
Operating leases		4.3		1.9		2.1		0.3
Capital leases		0.4		0.1		0.3		—

Total	$	25.0	$	3.3	$	3.4	$	18.3

Additionally, at September 30, 2005, Polaris had letters of credit outstanding of $3.5 million related to purchase obligations for raw materials.

In the past, Polaris has entered into interest rate swap agreements to manage exposures to fluctuations in interest rates. Currently the Company has one such agreement in place. The effect of the agreement is to fix the interest rate at 7.21 percent for $18.0 million of borrowings under the credit line until June 2007.

FORM 10-Q
For the Quarterly Period Ended
September 30, 2005

During the first nine months of 2005, Polaris paid $111.3 million to repurchase and retire 1.9 million shares of its common stock. The shares repurchased in the year-to-date period ended September 30, 2005 had a positive impact on earnings per share of approximately $0.05 per diluted share. On October 20, 2005 the Board of Directors increased the Company’s common stock share repurchase authorization by 4.0 million shares. The additional share repurchase authorization, together with the 1.1 million shares remaining available for repurchase under the prior authorization at September 30, 2005, brings the total shares authorized to be repurchased to approximately 5.1 million shares. The repurchase of any or all such shares authorized for repurchase will be governed by applicable SEC rules and dependent on management’s assessment of market conditions. Since 1996, the Company has repurchased approximately 22.0 million shares of its common stock under its share repurchase program.

Management believes that existing cash balances and bank borrowings, cash flow to be generated from operating activities and available borrowing capacity under the line of credit arrangement will be sufficient to fund operations, regular dividends, share repurchases, and capital requirements for the foreseeable future. At this time, management is not aware of any adverse factors that would have a material impact on cash flow.

In 1996, a wholly owned subsidiary of Polaris entered into a partnership agreement with a subsidiary of Transamerica Distribution Finance (TDF) to form Polaris Acceptance. In January 2004, TDF was purchased by GE Commercial Distribution Finance (GECDF), a subsidiary of General Electric Company. Polaris Acceptance provides floor plan financing to Polaris’ dealers in the United States. Polaris’ subsidiary has a 50 percent equity interest in Polaris Acceptance. The receivable portfolio is recorded on Polaris Acceptance’s books, and is funded 85 percent with a loan from an affiliate of GECDF and 15 percent by a cash investment shared equally between the two partners. Polaris has not guaranteed the outstanding indebtedness of Polaris Acceptance. Substantially all of Polaris’ U.S. sales are financed through Polaris Acceptance whereby Polaris receives payment within a few days of shipment of the product.

Polaris’ investment in Polaris Acceptance is accounted for under the equity method, and is recorded as a component of Investments in finance affiliate and retail credit deposit in the accompanying consolidated balance sheets. The partnership agreement provides that all income and losses of the portfolio are shared 50 percent by Polaris’ wholly owned subsidiary and 50 percent by GECDF’s subsidiary. Polaris’ allocable share of the income of Polaris Acceptance has been included as a component of Income from financial services in the accompanying consolidated statements of income. As of September 30, 2005, the Polaris Acceptance wholesale portfolio balance for dealers in the United States was approximately $757.0 million, a 23 percent increase from $615.0 million at September 30, 2004. Credit losses in this portfolio have been modest, averaging less than one percent of the portfolio.

FORM 10-Q
For the Quarterly Period Ended
September 30, 2005

The new contract removes all credit, interest rate and funding risk to Polaris and also eliminates the need for Polaris to maintain a retail credit cash deposit with HSBC, which was $50.0 million at August 1, 2005.

During the third quarter 2005, a wholly owned Austrian subsidiary of Polaris (“Polaris Austria”) made an investment in Austrian motorcycle manufacturer KTM Power Sports AG by purchasing a 24.9 percent interest in that company from a third party for $82.8 million. Additionally, Polaris and KTM’s largest shareholder, Cross Industries AG (“Cross”), have entered into an option agreement which provides that, under certain conditions in 2007, either Cross may purchase Polaris’ interest in KTM Power Sports AG or, alternatively, Polaris may purchase Cross’ interest and become the majority shareholder of KTM Power Sports AG. In the latter case, under most circumstances, the majority of the purchase price to Cross will be settled in Polaris shares and Cross will become a significant shareholder in the combined Polaris/KTM organization. Cross’ principal shareholders are entities controlled by KTM CEO Stefan Pierer and KTM CFO Rudolf Knünz. The exercise price under both option arrangements are based on market-based, predetermined pricing formulas to be derived from operating results of both companies in 2007.

Inflation and Foreign Exchange Rates

Polaris does not believe that inflation has had a material impact on the results of its recent operations. However, the changing relationships of the U.S. dollar to the Japanese yen, Canadian dollar and Euro have had a material impact from time to time.

During calendar year 2004, purchases totaling 13 percent of Polaris’ cost of sales were from yen-denominated suppliers. Polaris’ cost of sales in the third quarter and year-to-date periods ended September 30, 2005 were negatively impacted by the Japanese yen-U.S. dollar exchange rate fluctuation when compared to the same periods in 2004. At September 30, 2005 Polaris had open Japanese yen foreign exchange hedging contracts in place through the second quarter 2006 with notional amounts totaling $36.7 million with an average rate of approximately 109 Japanese yen to the U.S. dollar. In view of the foreign exchange hedging contracts currently in place, Polaris anticipates that the Japanese yen-U.S. dollar exchange rate will continue to have a negative impact on cost of sales for the remainder of 2005 when compared to the same period in 2004 and a positive impact on cost of sales in the first half of 2006 when compared to the same periods in 2005.

Polaris operates in Canada through a wholly owned subsidiary. The weakening of the U.S. dollar in relation to the Canadian dollar has resulted in higher gross margin levels in the third quarter and year-to-date periods ended September 30, 2005 when compared to the same periods in 2004. At September 30, 2005 Polaris had open Canadian dollar foreign exchange hedging contracts in place through the second quarter 2006 with notional amounts totaling $82.8 million with an average rate of approximately 0.83. In view of the foreign exchange hedging contracts currently in place, Polaris anticipates that the Canadian dollar-U.S. dollar exchange rate will continue to have a positive impact on net income for the remainder of 2005 and the first half of 2006 when compared to the same periods in 2004 and 2005, respectively.

Polaris operates in various countries in Europe through wholly owned subsidiaries and also sells to certain distributors in other countries and purchases components from certain suppliers directly from its U.S. operations in Euro denominated transactions. The strengthening of the U.S. dollar in relation to the Euro has resulted in minimal impact on gross margins for the third quarter 2005 and a slightly higher gross margin level in the

FORM 10-Q
For the Quarterly Period Ended
September 30, 2005

year-to-date period ended September 30, 2005 when compared to the same periods in 2004. Polaris currently does not have any Euro currency hedging contracts in place for the remainder of 2005.

The assets and liabilities in all Polaris foreign entities are translated at the foreign exchange rate in effect at the balance sheet date. Translation gains and losses are reflected as a component of Accumulated other comprehensive income (loss) in the shareholders’ equity section of the accompanying consolidated balance sheets. Revenues and expenses in all Polaris foreign entities are translated at the average foreign exchange rate in effect for each month of the quarter.

Significant Accounting Policies

There have been no material changes in the Company’s significant accounting policies as disclosed in its Annual Report on Form 10-K for the year ended December 31, 2004.

FORM 10-Q
For the Quarterly Period Ended
September 30, 2005

Item 3

QUANTITATIVE AND QUALITATIVE DISCLOSURES
ABOUT MARKET RISK

Refer to the Company’s Annual Report on Form 10-K for the year ended December 31, 2004 for a complete discussion on the Company’s market risk. There have been no material changes to the market risk information included in the Company’s 2004 Annual Report on Form10-K.

Note Regarding Forward Looking Statements

Certain matters discussed in this report are “forward-looking statements” intended to qualify for the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These “forward-looking statements” can generally be identified as such because the context of the statement will include words such as the Company or management “believes,” “anticipates,” “expects,” “estimates” or words of similar import. Similarly, statements that describe the Company’s future plans, objectives or goals are also forward-looking. Shareholders, potential investors and others are cautioned that all forward-looking statements involve risks and uncertainties that could cause results in future periods to differ materially from those anticipated by some of the statements made in this report. In addition to the factors discussed above, among the other factors that could cause actual results to differ materially are the following: product offerings, promotional activities and pricing strategies by competitors; future conduct of litigation processes; warranty expenses; foreign currency exchange rate fluctuations; effects of the KTM relationship; commodity and transportation costs; environmental and product safety regulatory activity; effects of weather; uninsured product liability claims; and overall economic conditions, including inflation and consumer confidence and spending.

FORM 10-Q
For the Quarterly Period Ended
September 30, 2005

Item 4

CONTROLS AND PROCEDURES

The Company carried out an evaluation, under the supervision and with the participation of the Company’s management, including the Company’s Chief Executive Officer and its Vice President-Finance and Chief Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures (as defined in Exchange Act Rule 13a-15) as of the end of the period covered by this report. Based upon that evaluation, the Company’s Chief Executive Officer along with the Company’s Vice President-Finance and Chief Financial Officer concluded that the Company’s disclosure controls and procedures are effective in timely alerting them to material information relating to the Company (including its consolidated subsidiaries) required to be included in the Company’s periodic SEC filings. There were no material changes in the Company’s internal controls over financial reporting during the third quarter 2005.

FORM 10-Q
For the Quarterly Period Ended
September 30, 2005

PART II. OTHER INFORMATION

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


					Total		Maximum
					Number of		Number of
					Shares		Shares
					Purchased		That May
	Total				as Part of		Yet Be
	Number of		Average		Publicly		Purchased
	Shares		Price Paid		Announced		Under the
Period	Purchased		per Share		Program		Program ⁽¹⁾
July 1 — 31, 2005		0		0		0		1,494,000
August 1 — 31, 2005		101,000	$	52.92		101,000		1,393,000
Sept 1 — 30, 2005		281,000	$	49.38		281,000		1,112,000

Total		382,000	$	50.32		382,000		1,112,000


(1)		Our Board of Directors have approved the repurchase of up to an aggregate of 27.0 million shares of the Company’s common stock pursuant to the share repurchase program (the “Program”) of which 21.9 million shares have been repurchased through September 30, 2005. This Program does not have an expiration date.

Item 6-Exhibits

(a) Exhibits

Exhibit 31.a — Certification of Chief Executive Officer — Section 302

Exhibit 31.b — Certification of Chief Financial Officer — Section 302

Exhibit 32.a — Certification of Chief Executive Officer — Section 906

Exhibit 32.b — Certification of Chief Financial Officer — Section 906


		POLARIS INDUSTRIES INC. (Registrant)

Date: November 9, 2005		/s/ Thomas C. Tiller
		Thomas C. Tiller
		Chief Executive Officer
		(Principal Executive Officer)

Date: November 9, 2005		/s/ Michael W. Malone
		Michael W. Malone
		Vice President, Finance, Chief
		Financial Officer, and Secretary
		(Principal Financial and Chief
		Accounting Officer)

	(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

	(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: November 9, 2005

		/s/ Thomas C. Tiller
		Thomas C. Tiller
		Chief Executive Officer

	(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

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	Page
Part I FINANCIAL INFORMATION

Item 1 — Consolidated Financial Statements

Consolidated Balance Sheets		3
Consolidated Statements of Income		4
Consolidated Statements of Cash Flows		5
Notes to Unaudited Consolidated Financial Statements		6

Item 2 — Management’s Discussion and Analysis of Financial Condition and Results of Operations

Executive-Level Overview		14
Results of Operations		14
Discontinued Operations		16
Cash Dividends		17
Liquidity and Capital Resources		17
Inflation and Foreign Exchange Rates		19
Significant Accounting Policies		20

Item 3 — Quantitative and Qualitative Disclosures about Market Risk

Note Regarding Forward Looking Statements		21

Item 4 — Controls and Procedures		22

Part II OTHER INFORMATION

Item 2 Unregistered Sales of Equity Securities and Use of Proceeds		23
Item 6 Exhibits		23

SIGNATURE PAGE		24
Certification of CEO - Section 302
Certification of CFO - Section 302
Certification of CEO - Section 906
Certification of CFO - Section 906

1.		I have reviewed this quarterly report on Form 10-Q of Polaris Industries 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(s) 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:


		/s/ Michael W. Malone
		Michael W. Malone
		Vice President—Finance,
		Chief Financial Officer and Secretary