As filed with the Securities and Exchange Commission on June 8, 2007

 

 

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 11-K

þ		ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2006

o		TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1933

For the transition period from                      to                     

A.		Full title of the plan and the address of the plan, if different from that of the issuer named below:

B.		Name of issuer of the securities held pursuant to the plan and the address of its principal executive office:

POLARIS INDUSTRIES INC.

 

 

Polaris 401(k) Retirement Savings Plan

Financial Statements and Supplemental Schedule

Years Ended December 31, 2006 and 2005

Contents

Report of Independent Registered Public Accounting Firm			1
Audited Financial Statements
Statements of Net Assets Available for Benefits			2
Statements of Changes in Net Assets Available for Benefits			3
Notes to Financial Statements			4
Supplemental Schedule
Schedule H, Line 4i – Schedule of Assets (Held at End of Year)			8
Consent of Ernst & Young LLP

Report of Independent Registered Public Accounting Firm

The Plan Administrator
Polaris 401(k) Retirement Savings Plan

We have audited the accompanying statements of net assets available for benefits of Polaris 401(k) Retirement Savings Plan as of December 31, 2006 and 2005, and the related statements of changes in net assets available for benefits for the years then ended. These financial statements are the responsibility of the Plan’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. We were not engaged to perform an audit of the Plan’s internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Plan’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the net assets available for benefits of the Plan at December 31, 2006 and 2005, and the changes in net assets available for benefits for the years then ended, in conformity with U.S. generally accepted accounting principles.

Our audits were performed for the purpose of forming an opinion on the financial statements taken as a whole. The accompanying supplemental schedule of assets (held at end of year) as of December 31, 2006, is presented for purposes of additional analysis and is not a required part of the financial statements but is supplementary information required by the Department of Labor’s Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. This supplemental schedule is the responsibility of the Plan’s management. The supplemental schedule has been subjected to the auditing procedures applied in our audits of the financial statements and, in our opinion, is fairly stated in all material respects in relation to the financial statements taken as a whole.

/s/ Ernst & Young LLP

Minneapolis, Minnesota
June 4, 2007

Polaris 401(k) Retirement Savings Plan

Statements of Net Assets Available for Benefits

		December 31
		2006				2005
Assets
Cash		$	456			$	—
Investments, at fair value			213,546,957				192,670,130
Accrued income receivable			411				385
Net assets available for benefits		$	213,547,824			$	192,670,515

See accompanying notes.

Polaris 401(k) Retirement Savings Plan

Statements of Changes in Net Assets Available for Benefits

		Year Ended December 31
		2006				2005
Net assets available for benefits, beginning of year		$	192,670,515			$	171,724,340
Contributions:
Employer			6,867,202				7,252,823
Employee			10,382,203				10,795,622
Rollover			581,585				763,290
Total contributions			17,830,990				18,811,735
Investment gain:
Interest and dividend income			10,619,715				5,501,228
Net realized and unrealized (loss) gain in fair value of investments:
Polaris Industries common stock			(147,037	)			(1,330,759	)
Registered investment companies			10,220,252				7,519,302
Total investment gain			20,692,930				11,689,771
Distributions to participants			(17,601,267	)			(9,514,373	)
Administrative expenses			(45,344	)			(40,958	)
Net increase			20,877,309				20,946,175
Net assets available for benefits, end of year		$	213,547,824			$	192,670,515

See accompanying notes.

Polaris 401(k) Retirement Savings Plan

Notes to Financial Statements

December 31, 2006

1. Description of the Plan

The following description of the Polaris 401(k) Retirement Savings Plan (the Plan) provides only general information. Participants should refer to the plan agreement for a more complete description of the Plan’s provisions.

General

The Plan is a defined contribution plan covering substantially all employees of the Plan’s sponsor, Polaris Industries Inc. (the Company), and its U.S. subsidiaries. It is subject to the provisions of the Employee Retirement Income Security Act of 1974 (ERISA).

Plan Operations

Certain administrative costs totaling $26,500 and $26,250 for the plan years ended December 31, 2006 and 2005, respectively, were paid by the Company. Administrative costs paid by the Company include trustee/asset custodian fees, record-keeping fees, and investment management fees.

Plan Administration

The Plan’s trustee, Fidelity Management Trust Company (the Trustee), holds and invests the assets of the Plan and also distributes the retirement benefits upon instruction from the plan administrator. The Plan is administered by an executive committee appointed by the Board of Directors of the Company.

Contributions/Participant Accounts

Participants may elect to make contributions (limited to a maximum of 50% of the participant’s compensation or $15,000, as defined in the Plan) to their account balances.

The Company will make a fully vested matching contribution to each participant’s account in the Plan of 100% of each dollar of 401(k) contributions up to 5% of covered compensation. This contribution is intended to satisfy a safe harbor contribution formula permitted by Internal Revenue Service (IRS) regulations. By making the safe harbor matching contribution, the Plan will automatically satisfy the nondiscrimination requirements that otherwise would apply to 401(k) contributions made to the Plan.

Plan earnings, as defined, are allocated pro rata based on participants’ account balances.

Polaris 401(k) Retirement Savings Plan

Notes to Financial Statements (continued)

1. Description of the Plan (continued)

Vesting

Participants are immediately vested in their pretax and employer contributions, plus actual earnings thereon.

Participant Loans

Participants may apply for loans from the Plan in amounts of the lesser of 50% of their vested account balances or $50,000. Loans must be paid back within five years; however, this period may be extended to ten years if the loan is utilized for the acquisition of a primary residence. The interest rate charged on loans outstanding ranged from 6.0% to 11.5% as of December 31, 2006.

Distributions to Participants

Employee account balances are distributable upon retirement, disability, death, termination from the Company, or hardship. Upon the occurrence of one of these events, a participant (or the participant’s beneficiary in the case of death) may receive his or her account balance as a lump-sum payment or in monthly payments through an annuity as available per plan provisions.

Plan Amendment and Termination

The Company has the right to amend or terminate the Plan, subject to the provisions of ERISA. In the event of the Plan’s termination, all assets of the Plan will be distributed to participants in accordance with plan provisions.

2. Significant Accounting Policies and Procedures

Basis of Accounting

The accompanying financial statements have been prepared on the accrual basis of accounting.

Polaris 401(k) Retirement Savings Plan

Notes to Financial Statements (continued)

2. Significant Accounting Policies and Procedures (continued)

Investment Valuation and Income Recognition

Investments of the Plan are stated at fair value. Shares of registered investment companies and the Company’s common stock are valued at quoted market prices, which represent the net asset value of shares held by the Plan at year-end.

Purchases and sales of securities are reflected on a trade-date basis. Interest income is recognized when earned. Dividend income is recorded on the ex-dividend date.

Use of Estimates

The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates.

3. Investments

The investment options of the Plan at December 31, 2006 and 2005, consist of deposits with 18 funds for 2006 and 15 funds for 2005 managed by the Trustee, 6 externally managed funds for 2006 and 6 externally managed funds for 2005, and the Polaris stock fund. Participants elect to have their account balances invested in one or more of the funds and may change the fund investment mix daily via a voice response system or the Internet.

The following presents investments that represent 5% or more of the Plan’s net assets as of December 31:

		2006				2005
Fidelity Managed Income Portfolio		$	36,934,199			$	35,232,764
Neuberger Berman Genesis Trust			36,138,797				35,999,002
Spartan U.S. Equity Fund			33,391,863				30,920,425
Fidelity Dividend Growth Fund			27,085,440				25,304,408
Fidelity Diversified International Fund			19,144,506				13,370,636
Fidelity Puritan Fund			18,076,734				17,019,670

Polaris 401(k) Retirement Savings Plan

Notes to Financial Statements (continued)

4. Tax Status

The Plan has received a determination letter from the IRS dated August 3, 2004, stating that the Plan is qualified under Section 401(a) of the Internal Revenue Code (the Code), and therefore, the related trust is exempt from taxation. Subsequent to this issuance of the determination letter, the Plan was amended. Once qualified, the Plan is required to operate in conformity with the Code to maintain its qualification. The plan administrator believes the Plan is being operated in compliance with the applicable requirements of the Code and, therefore, believes that the Plan, as amended, is qualified and the related trust is tax-exempt.

5. Party-in-Interest Transactions

The Plan invests in Fidelity funds and the Company’s stock. These transactions qualify as exempt party-in-interest transactions. The fair value of the Company’s common stock was $3,350,218 and $3,981,563 at December 31, 2006 and 2005, respectively.

6. Risks and Uncertainties

The Plan invests in various investment securities. Investment securities are exposed to various risks, such as interest rate, market, and credit risks. Due to the level of risk associated with certain investment securities, it is at least reasonably possible that changes in the values of investment securities will occur in the near term and that such changes could materially affect the participants’ account balances and amounts reported in the statements of net assets available for benefits.

7. Plan Amendment

Effective March 28, 2005, the Plan was amended such that terminated participants with account balances of $1,000 or less will receive a lump sum cash payment as soon as administratively practicable upon the participant’s employment termination.

Supplemental Schedule

Polaris 401(k) Retirement Savings Plan

Schedule H, Line 4i – Schedule of Assets (Held at End of Year)

Employer Identification Number 41-1857431
Plan Number: 001

December 31, 2006

Description		Current Value
Fidelity Managed Income Portfolio*		$	36,934,199
Neuberger Berman Genesis Trust			36,138,797
Spartan U.S. Equity Fund			33,391,863
Fidelity Dividend Growth Fund*			27,085,440
Fidelity Diversified International Fund*			19,144,506
Fidelity Puritan Fund*			18,076,734
Fidelity Growth Company Fund*			6,727,908
PIMCO Total Return Fund			4,031,034
Polaris Industries Inc. common stock*			3,350,218
Oakmark Select I			3,256,017
Fidelity Freedom 2020 Fund*			2,720,412
Fidelity Freedom 2030 Fund*			2,608,897
Franklin Small Cap Growth Fund			2,515,343
Fidelity Equity Income*			2,120,788
Fidelity Freedom 2040 Fund*			2,041,009
Fidelity Freedom 2010 Fund*			1,650,684
Dreyfus Mid Cap Index			1,073,758
Fidelity Value Fund			590,874
Fidelity Freedom 2015 Fund*			415,644
Fidelity Freedom 2025 Fund*			254,576
Fidelity Freedom 2035 Fund*			186,346
Fidelity Freedom 2000 Fund*			111,816
Interest-bearing cash			108,098
Fidelity Freedom Income Fund*			107,700
Dreyfus Small Cap Stock			699,093
Fidelity Freedom 2005 Fund*			40,231
			205,381,985
Participant loans, with interest rates ranging from 6.0% to 11.5%, maturing through October 19, 2016*			8,164,972
Total investments		$	213,546,957

SIGNATURES

     The Plan. Pursuant to the requirements of the Securities Exchange Act of 1934, the trustees (or other persons who administer the employee benefit plan) have duly caused this Annual Report to be signed on its behalf by the undersigned hereunto duly authorized.

POLARIS 401(k) RETIREMENT SAVINGS PLAN

EXHIBIT INDEX

Number		Document		Method of Filing
23		Consent of Ernst & Young LLP		Filed herewith electronically