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As filed with the Securities and Exchange Commission on June 15, 2006

 
 

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, 2005

or

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

For the transition period from                 to               


Commission File
No. 333 - 94451


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

POLARIS 401(k) RETIREMENT SAVINGS PLAN


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

POLARIS INDUSTRIES INC.

2100 Highway 55
Medina, Minnesota 55340

 
 

 


 

Polaris 401(k) Retirement Savings Plan
Financial Statements and Supplemental Schedule
Years Ended December 31, 2005 and 2004
Contents
         
    1  
 
       
 Audited Financial Statements
       
 
       
    2  
    3  
    4  
 
       
       
 
       
    8  
 
       
 Consent of Ernst & Young LLP

 


Table of Contents

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, 2005 and 2004, 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, 2005 and 2004, 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, 2005, 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 12, 2006
   

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Polaris 401(k) Retirement Savings Plan
Statements of Net Assets Available for Benefits
                 
    December 31
    2005   2004
     
Assets
               
Cash
  $     $ 9,770  
Investments, at fair value
    192,670,130       171,714,274  
Accrued income receivable
    385       296  
     
Net assets available for benefits
  $ 192,670,515     $ 171,724,340  
     
See accompanying notes.

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Polaris 401(k) Retirement Savings Plan
Statements of Changes in Net Assets Available for Benefits
                 
    Year Ended December 31
    2005   2004
     
 
Net assets available for benefits, beginning of year
  $ 171,724,340     $ 143,738,770  
 
               
Contributions:
               
Employer
    7,252,823       6,795,898  
Employee
    10,795,622       9,999,675  
Rollover
    763,290       1,320,003  
     
Total contributions
    18,811,735       18,115,576  
 
               
Investment gain:
               
Interest and dividend income
    5,501,228       4,554,412  
Net realized and unrealized (loss) gain in fair value of investments:
               
Polaris Industries common stock
    (1,330,759 )     1,834,911  
Registered investment companies
    7,519,302       10,099,829  
     
Total investment gain
    11,689,771       16,489,152  
 
               
Distributions to participants
    (9,514,373 )     (6,579,098 )
Administrative expenses
    (40,958 )     (40,060 )
     
 
               
Net increase
    20,946,175       27,985,570  
     
Net assets available for benefits, end of year
  $ 192,670,515     $ 171,724,340  
     
See accompanying notes.

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Polaris 401(k) Retirement Savings Plan
Notes to Financial Statements
December 31, 2005
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 $26,250 and $26,000 for the plan years ended December 31, 2005 and 2004, 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 $14,000, 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.

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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, 2005.
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.

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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 accounting principles generally accepted in the United States 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, 2005 and 2004, consist of deposits with 15 funds for 2005 and 15 funds for 2004 managed by the Trustee, 7 externally managed funds for 2005 and 4 externally managed funds for 2004, 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:
                 
    2005   2004
     
 
Neuberger Berman Genesis Trust
  $ 35,999,002     $ 29,911,737  
Fidelity Managed Income Portfolio
    35,232,764       30,943,139  
Spartan U.S. Equity Fund
    30,920,425       30,327,061  
Fidelity Dividend Growth Fund
    25,304,408       25,083,312  
Fidelity Puritan Fund
    17,019,670       15,925,438  
Fidelity Diversified International Fund
    13,370,636       9,775,177  

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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 Polaris Industries, Inc. common stock was $3,981,563 and $5,253,457 at December 31, 2005 and 2004, 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 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.

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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, 2005
         
Description
  Current Value  
 
 
Neuberger Berman Genesis Trust
  $ 35,999,002  
Fidelity Managed Income Portfolio*
    35,232,764  
Spartan U.S. Equity Fund
    30,920,425  
Fidelity Dividend Growth Fund*
    25,304,408  
Fidelity Puritan Fund*
    17,019,670  
Fidelity Diversified International Fund*
    13,370,636  
Polaris Industries Inc. common stock*
    3,981,563  
PIMCO Total Return Fund
    3,613,256  
Fidelity Growth Company Fund*
    3,315,594  
Oakmark Select I
    3,094,524  
Fidelity Blue Chip Growth Fund*
    2,140,621  
Fidelity Freedom 2020 Fund*
    1,910,319  
Fidelity Freedom 2030 Fund*
    1,891,513  
Franklin Small Cap Growth Fund
    1,832,521  
Fidelity Equity Income*
    1,369,465  
Fidelity Freedom 2010 Fund*
    1,301,913  
Fidelity Freedom 2040 Fund*
    1,295,107  
Dreyfus Mid Cap Index
    740,275  
Fidelity Aggressive Growth Fund*
    462,867  
Dreyfus Small Cap Stock
    179,436  
Fidelity Freedom Income Fund*
    171,695  
Interest-bearing cash
    117,573  
Fidelity Freedom 2000 Fund*
    79,199  
 
     
 
    185,344,346  
 
       
Participant loans, with interest rates ranging from 6.0% to 11.5%, maturing through September 2, 2015*
    7,325,784  
 
     
Total investments
  $ 192,670,130  
 
     
 
* Denotes party in interest.

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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.
         
Date: June 15, 2006   POLARIS 401(k) RETIREMENT SAVINGS PLAN  
 
       
    By the Members of the 401(k) Retirement Committee as Plan Administrator
 
       
 
  /s/ John B. Corness    
 
       
 
  John B. Corness    
 
       
 
  /s/ Shannon K. Knotts    
 
       
 
  Shannon K. Knotts    
 
       
 
  /s/ Michael W. Malone    
 
       
 
  Michael W. Malone    
 
       
 
  /s/ Mary P. McConnell    
 
       
 
  Mary P. McConnell    
 
       
 
  /s/ Thomas J. Rooney    
 
       
 
  Thomas J. Rooney    

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POLARIS 401(k) RETIREMENT SAVINGS PLAN
EXHIBIT INDEX
         
Number   Document   Method of Filing
 
23
  Consent of Ernst & Young LLP   Filed herewith electronically

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