8-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT
Pursuant to Section 13 OR 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): September 2, 2004

POLARIS INDUSTRIES INC.

(Exact name of Registrant as specified in its charter)

Minnesota
(State of Incorporation) 1-11411
(Commission File Number) 41-1790959
(I.R.S. Employer Identification No.)

2100 Highway 55
Medina, Minnesota 55340
(Address of principal executive offices)
(Zip Code)

(763) 542-0500
(Registrant’s telephone number, including area code)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

[  ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

[  ] Soliciting material pursuant to Rule 14a-12(b) under the Exchange Act (17 CFR 240.14a-12(b))

[  ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

[  ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

TABLE OF CONTENTS

Presentation Materials

Press Release

Item 2.02  RESULTS OF OPERATIONS AND FINANCIAL CONDITION

     On September 2, 2004 Polaris Industries Inc. (the “Company”) announced that it will cease to manufacture marine products effective immediately (as described more fully under Item 2.05 and Exhibit 99.2 to this report). In order to provide additional historical financial information regarding its continuing operations and the impact of discontinued operations, the Company is furnishing its quarterly consolidated statements of income for the fiscal year ended December 31, 2003 and the fiscal quarters ended March 31, 2004 and June 30, 2004. The consolidated statements of income appear as Exhibits A and B to the presentation materials (as described more fully under Item 7.01 of this report), which are attached to this report as Exhibit 99.1.

     Additionally, the Company is updating its sales and earnings guidance for the quarter ending September 30, 2004 and the full year ending December 31, 2004. The updated sales and earnings guidance also appears in the presentation materials attached to this report as Exhibit 99.1.

     The presentation materials are furnished pursuant to Regulation FD. These materials are also available on the Company’s web site at www.polarisindustries.com. Such materials shall not be deemed filed for purposes of Section 18 of the Securities Exchange Act of 1934, nor shall they be deemed incorporated by reference in any filing under the Securities Act of 1933, except as shall be expressly set forth by specific reference in such filing.

Item 2.05  COSTS ASSOCIATED WITH EXIT OR DISPOSAL ACTIVITIES

     On September 2, 2004 the Company announced that it will cease to manufacture marine products effective immediately. The Company cited the following factors as influencing its decision:

1.	The personal watercraft market has been in decline for several years, leaving industry sales today at about half the size of the market from its peak in 1996 with uncertainty of recovery.
2.	In 2003, sales from the marine division comprised only three percent of total Company sales.
3.	Less than 25 percent of Polaris dealers in North America carry marine products, and it generally makes up a small percentage of their overall business.
4.	As technology and the distribution channel have evolved, the marine division’s lack of commonality with other Polaris product lines has created challenges for Polaris and its dealer base.
5.	Recently, the marine division has experienced escalating costs and increasing competitive pressures.
6.	The marine business has never been profitable for Polaris, and generated a pretax loss from operations of $13 million in 2003.

     The Company expects to incur a loss on disposal of discontinued operations during the third quarter 2004 of approximately $36 million (or $24 million after tax, which represents $0.53 per diluted share) related to its decision to discontinue its marine division. This loss includes the estimated costs to support the dealers in selling their remaining inventory, additional incentives and discounts to encourage consumers to

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purchase remaining products, the disposal of the Company’s remaining inventory, tooling and other physical assets, and the cancellation of supplier arrangements. The Company estimates that the anticipated charge will result in approximately $29 million in future cash expenditures.

Item 7.01  REGULATION FD DISCLOSURE

     Materials dated September 2, 2004 (attached to this report as Exhibit 99.1 and furnished pursuant to Regulation FD) were prepared with respect to presentations that may be made during the September 2, 2004 conference call that was announced in the press release attached as Exhibit 99.2 to this report. These materials and the press release are also available on the Company’s website at www.polarisindustries.com. Such materials and press release shall not be deemed filed for purposes of Section 18 of the Securities Exchange Act of 1934, nor shall they be deemed incorporated by reference in any filing under the Securities Act of 1933, except as shall be expressly set forth by specific reference in such filing.

Item 9.01  FINANCIAL STATEMENTS AND EXHIBITS

EXHIBIT NO.	DESCRIPTION OF EXHIBIT
99.1	Presentation Materials
99.2	Press Release dated September 2, 2004

SIGNATURE

     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.

Dated: September 2, 2004	POLARIS INDUSTRIES INC.
	/s/ Michael W. Malone Michael W. Malone Vice President—Finance, Chief Financial Officer and Secretary of Polaris Industries Inc.

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EX-99.1

EXHIBIT 99.1

Polaris Exits Marine Business Today (September 2, 2004) Polaris announced that the Company plans to cease manufacturing marine products effective immediately. Form 8-K Exhibits From conference call September 2,2004

Polaris Exits Marine Business History of the industry and Polaris' marine division, con't Sales of Polaris' marine division peaked in 1996 at $171 million dollars and steadily declined over the subsequent years In 2003, sales of Polaris marine division were $53.5 million, which represents only 3 percent of total Company's sales The Company has lost money in the marine business every year since inception in 1992, including $13.2 million pre-tax in 2003 The total cumulative pre-tax losses of the marine business are in excess of $120 million

Polaris Exits Marine Business Minimal impact on employment levels The decision to exit the marine business will have minimal impact on our employment level at our manufacturing facilities Current seasonally-shared PWC/ATV assembly line in Spirit Lake will be converted to assemble ATVs full time All hourly workers will be retained During 2003 the marine division accounted for less than 15 percent of labor hours and units produced in the Spirit Lake facility Of the 105 employees in the marine division, fewer than 20 are expected to leave the Company

Polaris Exits Marine Business Positive impact on remaining business The exiting of the marine business will allow the Company to focus resources on core products including ATVs, utility vehicles, snowmobiles, PG&A, Victory motorcycles and on expanding international operations Spent $7 million in new product tooling and research and development in 2003 in the Marine division that will be redeployed to our remaining growing product lines

Polaris Exits Marine Business Loss on Disposal of Discontinued Operations The Company expects to record a loss on disposal of discontinued operations of approximately $36 million, or $24 million after tax, during the third quarter 2004 Represents a $0.53 per diluted share charge The loss includes approximately $29 million in expected future cash payments for the estimated costs to support 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 The loss also includes approximately $7 million in non-cash costs related primarily to the disposition of factory inventory, tooling, and other physical assets

Polaris Exits Marine Business Dealer Assistance / Consumer Incentives A number of programs will be available to assist dealers in selling their remaining inventory including: Extended warranties for consumers Various rebates and dealer salesman incentives Special retail financing offers for consumers Transfer plan to move inventory geographically Advertising plan for key markets

Polaris Exits Marine Business Sales Guidance Percentage growth guidance for sales from continuing operations remains unchanged for the third quarter 2004 and full year 2004 Third quarter sales from continuing operations are expected to increase 5 to 8 percent over the comparable $444.4 million in the third quarter 2003 Full year 2004 sales from continuing operations are expected to increase in the range of 8 to 10 percent over the comparable $1,552.4 million for the full year 2003 Sales guidance for ATVs, snowmobiles, Victory motorcycles and parts, garments and accessories remains unchanged for the full year 2004

Polaris Exits Marine Business Earnings Per Share Guidance For the third quarter 2004, our guidance for earnings per share from continuing operations is $0.94 to $0.98 per diluted share This represents the separation from continuing operations of an anticipated loss of approximately $0.04 per share from the discontinued operations of the marine business for the third quarter 2004 Previously issued guidance was $0.90 to $0.94 per share Our full year 2004 earnings per share from continuing operations guidance is $2.90 to $2.98 per diluted share This represents the separation from continuing operations of an anticipated loss of approximately $0.18 per share from the discontinued operations of the marine business for the full year 2004 Previously announced guidance was $2.72 to $2.80 per share The above guidance for both the third quarter and full year 2004 excludes the approximately $0.53 per share loss on disposal of discontinued operations to be recorded in the third quarter 2004

Polaris Exits Marine Business Exhibits Exhibit A Reclassified statements of income for the results of continuing operations for the year 2003 and first six months of 2004 by quarter Exhibit B Statements of income (loss) for the operations of the discontinued marine business for the year 2003 and first six months of 2004 by quarter

Exhibit A

Polaris Industries Inc.

Consolidated Statements of Income

(In thousands, except per share data)

Reclassified for discontinued operations

			For Three months			For Three months			For the year			For Three months			For Three months
			Ended June 30			Ended March 31			Ended December 31			Ended December 31			Ended September 30
			2004			2004			2003			2003			2003
			continuing			continuing			continuing			continuing			continuing
			results			results			results			results			results
Sales			$	394,628		$	328,997		$	1,552,351		$	455,351		$	444,405
Cost of Sales				302,404			251,466			1,189,475			346,281			334,296
	Gross Profit			92,224			77,531			362,876			109,070			110,109
Operating Expenses
	Selling and marketing			23,399			28,115			92,321			25,727			23,006
	Research and development			15,528			13,202			47,069			13,791			12,470
	General and administrative			19,008			17,871			67,175			15,679			18,148
		Total operating expenses		57,935			59,188			206,565			55,197			53,624
Income from financial services				7,252			8,136			23,587			7,372			7,277
		Operating Income		41,541			26,479			179,898			61,245			63,762
Non-Operating Expense (Income)
	Interest Expense			623			524			2,465			430			593
	Other expense (income), net			(17	)		371			(83	)		2,277			593
		Income before income taxes		40,935			25,584			177,516			58,538			62,576
Provision for income taxes				13,509			8,442			57,693			19,025			20,338
		Net Income from continuing operations		27,426			17,142			119,823			39,513			42,238
Loss from discontinued operations, net of tax				(3,057	)		(2,837	)		(8,894	)		(1,482	)		(2,761	)
Net Income			$	24,369		$	14,305		$	110,929		$	38,031		$	39,477
Basic Net Income per share
		Continuing Operations	$	0.65		$	0.40		$	2.80		$	0.92		$	0.99
		Loss from discontinued operations	($	0.07	)	($	0.06	)	($	0.21	)	($	0.03	)	($	0.07	)
		Net Income	$	0.58		$	0.34		$	2.59		$	0.89		$	0.92
Diluted Net Income per share
		Continuing Operations	$	0.61		$	0.38		$	2.66		$	0.87		$	0.93
		Loss from discontinued operations	($	0.07	)	($	0.06	)	($	0.20	)	($	0.03	)	($	0.06	)
		Net Income	$	0.54		$	0.32		$	2.46		$	0.84		$	0.87
Weighted average shares outstanding:
		Basic		42,181			42,570			42,905			42,719			42,760
		Diluted		44,968			45,248			45,056			45,396			45,306

[Table continued on next page]

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Exhibit A

Polaris Industries Inc.

Consolidated Statements of Income

(In thousands, except per share data)

Reclassified for discontinued operations (continued)

			For Three months			For Three months
			Ended June 30			Ended March 31
			2003			2003
			continuing			continuing
			results			results
Sales			$	350,301		$	302,294
Cost of Sales				271,459			237,439
	Gross Profit			78,842			64,855
Operating Expenses
	Selling and marketing			19,903			23,685
	Research and development			10,730			10,078
	General and administrative			17,633			15,715
		Total operating expenses		48,266			49,478
Income from financial services				4,565			4,373
		Operating Income		35,141			19,750
Non-Operating Expense (Income)
	Interest Expense			845			597
	Other expense (income), net			(492	)		(2,461	)
		Income before income taxes		34,788			21,614
Provision for income taxes				11,305			7,025
		Net Income from continuing operations		23,483			14,589
Loss from discontinued operations, net of tax				(2,491	)		(2,160	)
Net Income			$	20,992		$	12,429
Basic Net Income per share
		Continuing Operations	$	0.55		$	0.34
		Loss from discontinued operations	($	0.06	)	($	0.05	)
		Net Income	$	0.49		$	0.29
Diluted Net Income per share
		Continuing Operations	$	0.53		$	0.33
		Loss from discontinued operations	($	0.06	)	($	0.05	)
		Net Income	$	0.47		$	0.28
Weighted average shares outstanding:
		Basic		42,830			43,311
		Diluted		44,544			44,979

Exhibit B

Polaris Industries Inc.

Consolidated Statements of Income (Loss)

(In thousands, except per share data)
 

Discontinued Operations

			For Three months			For Three months			For the year			For Three months			For Three months
			Ended June 30			Ended March 31			Ended December 31			Ended December 31			Ended September 30
			2004			2004			2003			2003			2003
			discontinued			discontinued			discontinued			discontinued			discontinued
Sales				$27,717			$16,979			$53,518			$11,762			$3,291
Cost of Sales				29,605			17,834			56,377			12,289			4,306
	Gross Profit			(1,888	)		(855	)		(2,859	)		(527	)		(1,015	)
Operating Expenses
	Selling and marketing			1,436			1,469			4,586			534			1,399
	Research and development			971			1,288			4,691			951			1,166
	General and administrative			268			622			1,041			184			511
		Total operating expenses		2,675			3,379			10,318			1,669			3,076
Operating Income (loss)				(4,563	)		(4,234	)		(13,177	)		(2,196	)		(4,091	)
Provision (benefit) for income taxes				(1,506	)		(1,397	)		(4,283	)		(714	)		(1,330	)
Net Income (loss), after tax				($3,057	)		($2,837	)		($8,894	)		($1,482	)		($2,761	)
Basic Net Income per share
	Net Income (loss)			($0.07	)		($0.06	)		($0.21	)		($0.03	)		($0.07	)
Diluted Net Income per share
	Net Income (loss)			($0.07	)		($0.06	)		($0.20	)		($0.03	)		($0.06	)
Weighted average shares outstanding:
	Basic			42,181			42,570			42,905			42,719			42,760
	Diluted			44,968			45,248			45,056			45,396			45,306

[Table continued on next page]

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Exhibit B

Polaris Industries Inc.

Consolidated Statements of Income (Loss)

(In thousands, except per share data)
 

Discontinued Operations (continued)

			For Three months			For Three months
			Ended June 30			Ended March 31
			2003			2003
			discontinued			discontinued
Sales				$26,834			$11,631
Cost of Sales				27,903			11,879
	Gross Profit			(1,069	)		(248	)
Operating Expenses
	Selling and marketing			1,077			1,576
	Research and development			1,337			1,237
General and administrative				207			139
		Total operating expenses		2,621			2,952
Operating Income (loss)				(3,690	)		(3,200	)
Provision (benefit) for income taxes				(1,199	)		(1,040	)
Net Income (loss), after tax				($2,491	)		($2,160	)
Basic Net Income per share
	Net Income (loss)			($0.06	)		($0.05	)
Diluted Net Income per share
	Net Income (loss)			($0.06	)		($0.05	)
Weighted average shares outstanding:
	Basic			42,830			43,311
	Diluted			44,544			44,979

EX-99.2 3 c87959exv99w2.htm PRESS RELEASE

EXHIBIT 99.2

	News Release
	2100 Highway 55 Medina, MN 55340-9770 763-542-0500          763-542-0599 fax

Contact:  Richard Edwards
Polaris Industries Inc.
763-513-3477

Marlys Knutson
Polaris Industries Inc.
763-542-0533

POLARIS TO EXIT MARINE BUSINESS
Declining personal watercraft market, continued operating losses led to decision

Minneapolis, MN (September 2, 2004) — Polaris Industries Inc. (NYSE/PSE: PII) announced today that it will cease to manufacture marine products effective immediately. Polaris will assist dealers in liquidating existing inventories and will continue to provide replacement parts, service and warranty to marine dealers and customers. The Company reported that the decision does not affect any of Polaris’ other product lines.

     “This was an extremely difficult decision for the Board of Directors of Polaris because our people are very proud and we have a proven record of succeeding in all we do,” said Polaris President and CEO Tom Tiller. “However, the personal watercraft industry and our position within the market simply is not where we need it to be for this division to be viable. This decision is designed to foster long-term growth and shareholder value.”

     Mr. Tiller cited several factors that influenced Polaris’ decision. He noted that the personal watercraft (PWC) market has been in decline for several years, leaving industry sales today at about half the size of the market from its peak in 1996 with uncertainty of recovery. In 2003, sales from the marine division comprised only three percent of total Company sales. Less than 25 percent of Polaris dealers in North America carry marine products, and it generally makes up a small percentage of their overall business. As technology and the distribution channel have evolved, the marine division’s lack of commonality with other Polaris product lines has created challenges for Polaris and its dealer base. Recently, the marine division has experienced escalating costs and increasing competitive pressures. The marine business has never been profitable for Polaris, and generated a pretax loss from operations of $13 million in 2003.

     “This decision will ultimately strengthen Polaris’ position in the powersports industry as we focus our research and development dollars and other resources on those product lines with greater growth potential, including our all-terrain vehicles (ATVs), utility vehicles, snowmobiles, Victory motorcycles and parts, garments and accessories,” said Tiller. “This should result in accelerated product innovation that Polaris is known for and customers have grown to expect and further solidify the Company’s strong financial performance.”

     “The impact of any significant action that we take on Polaris employees and the communities in which we live is certainly an important consideration for our organization,” stated Mr. Tiller. “The decision to exit the marine business will have minimal impact on the employment level at our manufacturing facilities.” The marine division employs 35 full time employees and 70 seasonal production employees in Medina, Minnesota, and Spirit Lake, Iowa. The assembly line in the Spirit Lake manufacturing facility that currently produces PWC and ATVs on a seasonal basis will be converted to focus exclusively on ATVs, and all hourly employees will be retained. Polaris remains committed to maintaining its strong presence in the Spirit Lake community. Fewer than 20 employees are expected to leave the Company as a result of this decision.

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     The Company expects to record a loss on disposal of discontinued operations during the third quarter 2004 of approximately $36 million (or $24 million after tax, which represents $0.53 per diluted share) related to its decision to discontinue its marine division. This loss includes the estimated costs to support the dealers in selling their remaining inventory, additional incentives and discounts to encourage consumers to purchase remaining products, the disposal of factory inventory, tooling, and other physical assets, and the cancellation of supplier arrangements. The marine division inventory at dealerships is at its lowest level in a number of years, which will minimize the financial impact of this decision on Polaris and its dealers.

Conference Call to be Held

     Today at 11:00 a.m. CDT Polaris Industries Inc. will host a conference call with analysts and investors related to this announcement. The conference call is accessible by dialing 800-374-6475 in the U.S. and Canada, or 706-634-4982 for International calls or via the Investor Relations page of the Company’s web site, www.polarisindustries.com. If listening to the web cast, please allow sufficient time to register and download the latest version of Real Player audio software. The conference call will be available for one week after the call by dialing 800-642-1687 in the U.S. and Canada, or 706-645-9291 for International calls and entering Passcode 9723344, and for one week after the call on Polaris’ web site.

     Additional information regarding this announcement, including presentation slides to be used during the conference call, can be found in the Company’s Form 8-K filed today with the Securities and Exchange Commission, which is publicly available at www.sec.gov and on the Company’s web site at www.polarisindustries.com.

About Polaris

     Information about the complete line of Polaris products is available from authorized Polaris dealers or from the Polaris homepage at www.polarisindustries.com.

     With annual 2003 sales of $1.6 billion, Polaris designs, engineers, manufactures and markets snowmobiles, all-terrain vehicles (ATVs), Victory motorcycles and the Polaris RANGER for recreational and utility use.

     Polaris is the recognized leader in the snowmobile industry; and one of the largest manufacturers of ATVs in the world. Victory motorcycles, established in 1998 and representing the first all-new American-made motorcycle from a major company in nearly 60 years, are rapidly making impressive in-roads into the motorcycle cruiser marketplace. Polaris also enhances the riding experience with a complete line of Pure Polaris apparel, accessories and parts, available at Polaris dealerships. Consumers can also purchase apparel and vehicle accessories anytime at www.polarisindustries.com.

     Polaris Industries Inc. trades on the New York Stock Exchange and Pacific Stock Exchange under the symbol “PII,” and the Company is included in the S&P Small-Cap 600 stock price index.

Except for historical information contained herein, the matters set forth in this news release, including management’s expectations regarding expected disposition charges and future investments, are forward-looking statements that involve certain risks and uncertainties that could cause actual results to differ materially from those forward-looking statements. Potential risks and uncertainties include such factors as product offerings, promotional activities and pricing strategies by competitors; costs of canceling supplier arrangements; warranty expenses; foreign currency exchange rate fluctuations; environmental and product safety regulatory activity; effects of weather; uninsured product liability claims; and overall economic conditions, including inflation and consumer confidence and spending. Investors are also directed to consider other risks and uncertainties discussed in documents filed by the company with the Securities and Exchange Commission.

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EX-99.2

exv99w2