POLARIS UP
January 28 2006.
Polaris Reports 2005 Fourth Quarter and Full Year Results; Full Year 2005 Earnings Per Share Increased 8 Percent on 5 Percent Sales Growth

Highlights:
--  2005 represents the 24th consecutive year of record earnings per
    share from continuing operations
--  Increased full year 2005 sales ----  ATVs up 7%; Victory
    motorcycles up 34%; PG&A up 9% and  International up 20%
--  Higher product sales and lower operating expenses coupled with
    increased income from financial services contributed to 8%
    earnings per share growth for the full year 2005
--  Polaris repurchased 2.4 million shares of its common stock during
    2005, and has 4.7 million shares remaining under its current
    repurchase authorization
--  On January 19, 2006 Polaris declared an 11% increase in the
    regular quarterly cash dividend, marking the 11th consecutive year
    of increased dividends
--  In 2006, Polaris expects modest growth in sales driven by strong
    demand for Victory motorcycles, Utility Vehicles and an expanding
    presence in international markets. Earnings are expected to be
    positively affected by increased sales, higher gross margins,
    internal productivity efforts and higher income from the Company's
    KTM investment

Polaris Industries Inc. has reported net income from continuing operations of $1.03 per diluted share for the fourth quarter of 2005, a two percent decrease from $1.05 per diluted share for the prior year's fourth quarter. Reported net income from continuing operations for the fourth quarter 2005 was $43.9 million, a decrease of eight percent from the prior year's fourth quarter net income from continuing operations of $47.7 million. Sales from continuing operations for the fourth quarter 2005 decreased two percent to $526.1 million, compared to last year's fourth quarter sales from continuing operations of $539.0 million.
Full Year results from continuing operations
For the full year ended December 31, 2005, Polaris reported record net income from continuing operations of $144.3 million or $3.29 per diluted share compared to $136.8 million or $3.04 per diluted share for the year ended December 31, 2004, representing an increase of eight percent on a per diluted share basis. Sales from continuing operations for the full year ended December 31, 2005 totaled a record $1,869.8 million, up five percent compared to sales from continuing operations of $1,773.2 million for the full year 2004.
Tom Tiller, Chief Executive Officer, stated, "As expected, operating conditions in the fourth quarter of 2005 remained challenging. In response to these challenges, our team made a number of timely adjustments that enabled us to produce another record year of earnings per share for our shareholders. In addition to effectively managing our business through a difficult period, we made several important moves during 2005 that will help to positively position our Company for the future including:
-- The successful introduction of several new ATVs, RANGERs and Victory motorcycles
-- The announcement of an exciting strategic partnership with KTM Power Sports AG (KTM), an Austrian-based motorcycle manufacturer with a strong international presence
-- The modification of our retail credit relationship with HSBC Bank, which contributed to improved earnings and cash flow in addition to removing all credit and funding risk to Polaris
-- Completion of the new research and development facility in Wyoming, Minnesota
Tiller continued: "We expect that many of the challenges we experienced throughout 2005 will probably continue into the first half of 2006. North American ATV retail sales for the industry are expected to continue to be soft, commodity costs are expected to remain higher than historical levels, and dealer and factory inventories remain higher than desired given our view of current economic and industry conditions. However, once these near-term headwinds begin to abate, we are confident that we will be well-positioned to capitalize on strengthening demand. Our underlying businesses are strong, we have a diverse portfolio of industry leading products, and we have made some very strategic investments that will drive growth and increased profitability for many years to come."
2006 Business Outlook
Taking into account the current economic and industry environment, and including the impact of implementation of the Statement of Financial Accounting Standard 123(R) (SFAS 123), for the full year 2006 the Company expects sales to be in the range of flat to up two percent, resulting in full year 2006 earnings from continuing operations of $3.23 to $3.38 per diluted share, which represents a three percent to seven percent growth in diluted earnings per share when compared to the SFAS 123 pro forma net income from continuing operations of $3.15 per diluted share for the full year 2005. The adoption of SFAS 123 is expected to result in a charge to full year 2006 earnings of approximately $0.12 to $0.14 per diluted share. If the Company had adopted SFAS 123 for the 2005 fiscal year, incremental pro forma stock-based compensation related costs would have totaled $0.14 per diluted share for the full year 2005 and $0.02 per share for the first quarter of 2005. During the first quarter of 2006 the Company expects that North American ATV shipments will decline from the first quarter of 2005, with the objective of reducing dealer inventories and expects first quarter 2006 total sales to be six percent to nine percent lower than the first quarter of 2005. First quarter 2006 earnings from continuing operations are expected to be in the range of $0.25 to $0.27 per diluted share, including a charge of approximately $0.03 per diluted share for the impact of SFAS 123 compared to the SFAS 123 pro forma net income from continuing operations of $0.40 per diluted share for the first quarter 2005.
Discontinued Operations Results
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 fourth quarter 2005 loss from discontinued operations was $0.3 million, net of tax, or $0.01 per diluted share, compared to a loss of $0.5 million, net of tax, or $0.01 per diluted share in the fourth quarter 2004. Reported net income for the fourth quarter 2005 including both continuing and discontinued operations was $43.6 million or $1.02 per diluted share compared to $47.2 million, or $1.04 per diluted share in the fourth quarter of 2004. For the full year ended December 31, 2005, the loss from discontinued operations was $1.0 million, after tax, or $0.02 per diluted share, compared to a loss of $8.5 million or $0.19 per diluted share in 2004. Reported net income for the full year 2005, including both continuing and discontinued operations and the $23.9 million, net of tax, loss on disposal of discontinued operations in 2004, was $143.3 million or $3.27 per diluted share, compared to $104.5 million, or $2.32 per diluted share for the full year 2004.