Arctic Cat (ACAT) 10-Q 2016 Q2 Quarterly report

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

x Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

for the quarterly period ended September 30, 2015

or

¨ Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Commission File Number: 0-18607

ARCTIC CAT INC.

(Exact name of registrant as specified in its charter)

Minnesota	41-1443470
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

505 Hwy 169 North, Suite 1000 Plymouth, Minnesota	55441
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code:

(763) 354-1800

Indicate by check mark whether the registrant (1) has filed all reports required 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  x    No  ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 ofRegulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  x    No  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” inRule 12b-2 of the Exchange Act.

Large accelerated filer	¨	Accelerated filer	x
Non-accelerated filer	¨	Smaller reporting company	¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ¨    No  x

At October 30, 2015, the registrant had 12,989,200 shares of Common Stock outstanding.

ARCTIC CAT INC.

TABLE OF CONTENTS

PART I – FINANCIAL INFORMATION
	ITEM 1.     FINANCIAL STATEMENTS		3
		CONSOLIDATED BALANCE SHEETS	3
		CONSOLIDATED STATEMENTS OF OPERATIONS	4
		CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)	5
		CONSOLIDATED STATEMENTS OF CASH FLOWS	6
		NOTES TO CONSOLIDATED FINANCIAL STATEMENTS	7
	ITEM 2.      MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF  OPERATIONS		15
	ITEM 3.      QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK		19
	ITEM 4.     CONTROLS AND PROCEDURES		19
PART II – OTHER INFORMATION
	ITEM 1.     LEGAL PROCEEDINGS		20
	ITEM 2.      UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS		20
	ITEM 6.     EXHIBITS		21

2

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements

Arctic Cat Inc.

Consolidated Balance Sheets

($ in thousands, except per share amounts)

(unaudited)

	September 30, 2015			March 31, 2015
ASSETS
Current assets
Cash and cash equivalents	$	10,713		$	40,253
Short-term investments		—			1,009
Accounts receivable, less allowances		68,225			25,067
Inventories		171,267			152,443
Prepaid expenses		5,112			5,363
Income taxes receivable		—			5,151
Deferred income taxes		14,456			14,485
Other current assets		2,855			3,628
Total current assets		272,628			247,399
Property and equipment
Machinery, equipment and tooling		210,620			194,074
Land, buildings and improvements		31,492			30,004
		242,112			224,078
Less accumulated depreciation		169,181			161,210
		72,931			62,868
Goodwill, intangibles and other assets		6,465			6,579
	$	352,024		$	316,846
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities
Accounts payable	$	83,685		$	70,257
Accrued expenses		46,665			51,832
Income taxes payable		832			—
Total current liabilities		131,182			122,089
Deferred income taxes		11,602			11,151
Long-term debt		15,794			—
Other liabilities		3,066			3,234
Commitments and contingencies
Shareholders’ equity
Preferred stock, par value $1.00; 2,050,000 shares authorized; none issued		—			—
Preferred stock – Series B Junior Participating, par value $1.00; 450,000 shares authorized; none issued		—			—
Common stock, par value $0.01; 37,440,000 shares authorized; shares issued and outstanding: 12,984,383 at September 30, 2015 and 12,949,702 at March 31, 2015		130			130
Additional paid-in-capital		4,278			1,940
Accumulated other comprehensive loss		(6,312	)		(7,142	)
Retained earnings		192,284			185,444
Total shareholders’ equity		190,380			180,372
	$	352,024		$	316,846

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

3

Arctic Cat Inc.

Consolidated Statements of Operations

($ in thousands, except per share amounts)

(unaudited)

	Three Months Ended September 30,						Six Months Ended September 30,
	2015			2014			2015			2014
Net Sales
Snowmobile and ATV/ROV units	$	180,676		$	227,382		$	291,781		$	347,360
Parts, garments and accessories		30,481			35,097			53,757			58,758
Total net sales		211,157			262,479			345,538			406,118
Cost of goods sold
Snowmobile and ATV/ROV units		147,739			185,064			244,696			282,765
Parts, garments and accessories		19,500			22,334			34,362			37,471
Total cost of goods sold		167,239			207,398			279,058			320,236
Gross profit		43,918			55,081			66,480			85,882
Operating Expenses
Selling and marketing		11,842			12,074			20,797			19,055
Research and development		6,222			6,621			12,225			11,967
General and administrative		7,202			12,325			16,353			25,229
Total operating expenses		25,266			31,020			49,375			56,251
Operating profit		18,652			24,061			17,105			29,631
Other income (expense)
Interest income		12			6			12			10
Interest expense		(394	)		(209	)		(508	)		(249	)
Total other expense		(382	)		(203	)		(496	)		(239	)
Earnings before income taxes		18,270			23,858			16,609			29,392
Income tax expense		7,099			8,469			6,494			10,434
Net earnings	$	11,171		$	15,389		$	10,115		$	18,958
Net earnings per share
Basic	$	0.86		$	1.19		$	0.78		$	1.47
Diluted	$	0.85		$	1.18		$	0.77		$	1.45
Weighted average shares outstanding (in thousands)
Basic		12,985			12,922			12,972			12,909
Diluted		13,145			13,074			13,149			13,078

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

4

Arctic Cat Inc.

Consolidated Statements of Comprehensive Income (Loss)

($ in thousands)

(unaudited)

	Three Months Ended September 30,						Six Months Ended September 30,
	2015			2014			2015			2014
Net earnings	$	11,171		$	15,389		$	10,115		$	18,958
Other comprehensive income (loss):
Foreign currency translation adjustments		(64	)		(2,602	)		1,043			(2,906	)
Unrealized gain (loss) on derivative instruments, net of tax		669			3,674			(213	)		1,104
Comprehensive income	$	11,776		$	16,461		$	10,945		$	17,156

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

5

Arctic Cat Inc.

Consolidated Statements of Cash Flows

($ in thousands)

(unaudited)

	Six Months Ended September 30,
	2015			2014
Cash flows from operating activities:
Net earnings	$	10,115		$	18,958
Adjustments to reconcile net earnings to net cash provided by (used in) operating activities:
Depreciation and amortization		9,385			8,184
Deferred income tax expense		534			(3,183	)
Stock-based compensation expense		2,037			2,799
Gain on disposal of fixed assets		—			(1	)
Changes in operating assets and liabilities:
Trading securities		1,009			60,000
Accounts receivable		(42,797	)		(63,581	)
Inventories		(18,263	)		(30,377	)
Accounts payable		9,210			867
Accrued expenses		(5,253	)		7,171
Income taxes		5,913			11,456
Prepaid expenses and other		477			435
Net cash provided by (used in) operating activities		(27,633	)		12,728
Cash flows from investing activities:
Purchases of property and equipment		(19,269	)		(9,328	)
Net cash used in investing activities		(19,269	)		(9,328	)
Cash flows from financing activities:
Proceeds from long-term borrowings		148,323			151,123
Payments on long-term borrowings		(132,529	)		(151,123	)
Checks written in excess of bank balances		3,361			4,101
Proceeds from issuance of common stock		497			34
Payments for income taxes on net-settled option exercises		(50	)		(1,300	)
Tax benefit from stock options exercises		45			739
Dividends paid		(3,275	)		(3,241	)
Repurchase of common stock		(120	)		(1,007	)
Net cash provided by (used in) financing activities		16,252			(674	)
Effect of exchange rate changes on cash and cash equivalents		1,110			(1,236	)
Net increase (decrease) in cash and cash equivalents		(29,540	)		1,490
Cash and cash equivalents at beginning of period		40,253			22,524
Cash and cash equivalents at end of period	$	10,713		$	24,014
Supplemental disclosure of cash payments for:
Income taxes	$	123		$	1,067
Interest	$	508		$	149

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

6

Arctic Cat Inc.

Notes to Consolidated Financial Statements

(unaudited)

NOTE A–BASIS OF PRESENTATION

The accompanying unaudited consolidated financial statements of Arctic Cat Inc. (the “Company”) have been prepared in accordance withRegulation S-X pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted pursuant to such rules and regulations, although management believes that the disclosures are adequate to make the information presented not misleading.

In the opinion of management, the unaudited consolidated financial statements contain all adjustments (consisting of only normal recurring adjustments) necessary for the fair presentation of the Company’s financial position as of September 30, 2015 and results of operations and cash flows for the three-month and six-month periods ended September 30, 2015 and 2014. Results of operations for the interim periods are not necessarily indicative of results for the full year due to the seasonality of snowmobiles, all-terrain vehicles (“ATVs”) and recreational off-highway vehicles (“ROVs”) and related parts, garments and accessories (“PG&A”). The consolidated balance sheet as of March 31, 2015 is derived from the audited balance sheet as of that date.

Preparation of the Company’s consolidated financial statements requires management to make estimates and assumptions that affect reported amounts of assets and liabilities and related revenues and expenses. Actual results could differ from those estimates.

Certain fiscal 2015 amounts have been reclassified to conform to the fiscal 2016 financial statement presentation. The reclassifications had no effect on previously reported operating results.

In preparing the accompanying consolidated financial statements, the Company evaluated the period from October 1, 2015, through the date the financial statements were issued, for material subsequent events requiring recognition or disclosure. No such events were identified for this period.

Recent Accounting Pronouncements

In July 2015, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2015-11,

Inventory, which provides guidance for the measurement of inventory. The ASU requires entities to measure most inventory at the lower of cost and net realizable value. The ASU simplifies the current guidance, which requires entities to measure inventory at the lower of cost or market (with market defined as one of three different measures). The ASU is effective prospectively for annual periods beginning after December 15, 2016, and interim periods therein. The Company is currently in the process of evaluating the impact of the adoption of this ASU on the Company’s consolidated results.

In May 2014, the FASB issued ASU 2014-09,Revenue from Contracts with Customers, which provides guidance for revenue recognition that supersedes existing revenue recognition guidance (but does not apply to nor supersede accounting guidance for lease contracts). The ASU’s core principle is that an entity will recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The ASU also requires more detailed disclosures to enable users of financial statements to understand the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. In July 2015, the FASB approved a proposal to defer the effective date of the ASU by one year to reporting periods beginning after December 15, 2018. The ASU should be applied retrospectively to each prior reporting period presented or retrospectively with the cumulative effect of initially applying the ASU recognized at the date of initial application. The Company is currently in the process of evaluating the impact of the adoption of this ASU on the Company’s consolidated results.

NOTE B–STOCK-BASED COMPENSATION

For the three months ended September 30, 2015 and 2014, the Company recorded stock-based compensation expense of $0.9 million and $0.9 million, respectively, and for the six months ended September 30, 2015 and 2014, the Company recorded $2.0 million and $2.8 million, respectively, which has been included in general and administrative expenses. At September 30, 2015, the Company had $8.2 million of unrecognized compensation expense related to non-vested stock options and restricted stock awards that are expected to be recognized over a weighted average period of approximately two years.

7

The following tables summarize the stock option transactions and restricted share and restricted stock unit award activity during the six months ended September 30, 2015:

	Shares			Weighted Average Exercise Price		Weighted Average Contractual Life		Aggregate Intrinsic Value ($ in thousands)
Outstanding at March 31, 2015		604,218		$	29.39
Granted		93,215			33.04
Exercised		(32,147	)		15.48
Outstanding at September 30, 2015		665,286		$	30.57		7.90 years	$	1,302
Exercisable at September 30, 2015		277,888		$	24.63		6.12 years	$	1,302

The aggregate intrinsic value is based on the difference between the exercise price and the Company’s September 30, 2015 common share market value for in-the-money options.

Restricted Shares	Shares			Weighted Average Grant Date Fair Value
Non-vested shares at March 31, 2015		22,500		$	40.12
Vested		(7,300	)		53.80
Forfeited		(500	)		33.46
Non-vested shares at September 30, 2015		14,700		$	33.56

Restricted Stock Units	Shares			Weighted Average Grant Date Fair Value
Non-vested shares at March 31, 2015		116,439		$	35.67
Granted		23,090			34.14
Vested		(9,535	)		44.63
Forfeited		(267	)		43.79
Non-vested shares at September 30, 2015		129,727		$	34.72

NOTE C–NET EARNINGS PER SHARE

The Company’s basic net earnings per share is computed by dividing net earnings by the weighted average number of outstanding common shares. The Company’s diluted weighted average shares outstanding include common shares and common share equivalents relating to stock options and restricted stock units, when dilutive. Options to purchase 475,925 and 131,780 shares of common stock with weighted average exercise price of $36.53 and $44.64 were outstanding during the three-month periods ended September 30, 2015 and 2014, respectively, and options to purchase 335,807 and 166,218 shares of common stock with weighted average exercise price of $38.16 and $44.36 were outstanding during the six-months periods ended September 30, 2015 and 2014, respectively, but were excluded from the computation of common share equivalents because they were anti-dilutive.

Weighted average shares outstanding consist of the following for the three and six months ended September 30, 2015 and 2014 (in thousands):

	Three Months Ended September 30,				Six Months Ended September 30,
	2015		2014		2015		2014
Weighted average number of common shares outstanding – basic		12,985		12,922		12,972		12,909
Dilutive effect of stock options and restricted stock units		160		152		177		169
Weighted average number of common shares outstanding – diluted		13,145		13,074		13,149		13,078

8

NOTE D–INVENTORIES

Inventories consist of the following ($ in thousands):

	September 30, 2015		March 31, 2015
Raw materials and sub-assemblies	$	57,619	$	41,045
Finished goods		72,807		77,763
Parts, garments and accessories		40,841		33,635
	$	171,267	$	152,443

NOTE E–GOODWILL AND OTHER INTANGIBLE ASSETS

The following provides the gross carrying amount of goodwill and indefinite-lived intangible assets at September 30, 2015 and March 31, 2015 ($ in thousands):

	September 30, 2015		March 31, 2015
	Gross Carrying Amount		Gross Carrying Amount
Goodwill	$	3,342	$	3,342
Indefinite-lived intangible assets	$	253	$	253

There was no cumulative impairment related to goodwill or indefinite-lived intangibles assets at September 30, 2015 or March 31, 2015.

The gross carrying amount and accumulated amortization of definite-lived intangible assets was as follows at September 30, 2015 and March 31, 2015 ($ in thousands):

	September 30, 2015				March 31, 2015
	Gross Carrying Amount		Accumulated Amortization		Gross Carrying Amount		Accumulated Amortization
Definite-lived intangible assets	$	3,251	$	860	$	3,215	$	667

Amortization expense was $0.2 million in the six months ended September 30, 2015. Amortization expense is expected to be approximately $0.2 million in the remainder of fiscal 2016 and approximately $0.4 million in each of fiscal 2017, 2018, 2019 and 2020.

NOTE F–LINE OF CREDIT

The Company has a $100.0 million line of credit pursuant to a senior secured revolving credit agreement, which is scheduled to expire in November 2017. Under the agreement, the Company may borrow up to $100.0 million during May through November and up to $50.0 million during all other months of the fiscal year. Borrowings under the line of credit bear interest at the greater of the following rates: the prime rate plus 0.75%, the federal funds rate plus 0.50% or LIBOR for a 30 day interest period plus 1.00%. As of September 30, 2015, the effective rate was 3.75%. All borrowings are collateralized by substantially all of the Company’s assets, including all real estate, accounts receivable and inventory. The Company had $15.8 million of outstanding borrowings under the line of credit at September 30, 2015. No borrowings from the line of credit were outstanding at March 31, 2015. The outstanding letters of credit balances were $3.5 million and $6.1 million at September 30, 2015 and 2014, respectively. Borrowings under the line of credit are subject to certain covenants and restrictions on indebtedness, financial guarantees, business combinations and other related items. The Company was in compliance with the terms of the credit agreement as of September 30, 2015. Outstanding letters of credit will be repaid over the following six months in accordance with the credit agreement and any such renewal.

9

NOTE G–ACCRUED EXPENSES

Accrued expenses consist of the following ($ in thousands):

	September 30, 2015		March 31, 2015
Marketing	$	7,971	$	14,495
Compensation		5,728		4,429
Warranties		24,672		23,062
Insurance		3,481		4,383
Other		4,813		5,463
	$	46,665	$	51,832

NOTE H–PRODUCT WARRANTIES

The Company generally provides a limited warranty to the owner of snowmobiles for twelve months from the date of consumer registration and for six months from the date of consumer registration on ATVs and ROVs. The Company provides for estimated warranty costs at the time of sale based on historical rates and trends and makes subsequent adjustments to its estimate as actual claims become known or the amounts are determinable, including costs associated with safety recalls, which may occur after the standard warranty period. The following represents changes in the Company’s accrued warranty liability ($ in thousands):

	Six Months Ended September 30,
	2015			2014
Balance at beginning of period	$	23,062		$	19,357
Warranty provision		6,659			13,815
Warranty claim payments		(5,049	)		(5,387	)
Balance at end of period	$	24,672		$	27,785

NOTE I–SHAREHOLDERS’ EQUITY

Share Repurchase Authorization

On August 7, 2014, the Board authorized the repurchase of an additional $25.0 million in shares of common stock, which supplemented the $1.1 million remaining under the program previously approved in May 2013. During the six months ended September 30, 2015 and 2014, the Company invested $0.1 million and $1.0 million, respectively, to repurchase and cancel 4,190 and 26,951 shares of common stock, respectively, pursuant to the Board of Directors’ authorizations. At September 30, 2015, the Company has remaining authorization to repurchase up to approximately $25.9 million in shares of common stock.

Additional Paid-in-Capital

The components of the changes in additional paid-in-capital during the following periods were as follows ($ in thousands):

	Six Months Ended September 30,
	2015			2014
Balance at beginning of period	$	1,940		$	—
Proceeds from issuance of common stock		497			34
Payment for income taxes on net-settled option exercises		(50	)		(1,300	)
Tax benefits from stock options exercised		45			739
Tax deficit from stock options exercised		(71	)		—
Repurchase of common stock		(120	)		(1,007	)
Stock-based compensation expense		2,037			2,799
Balance at end of period	$	4,278		$	1,265

10

Accumulated Other Comprehensive Loss

The components of the changes in accumulated other comprehensive loss during the following periods were as follows ($ in thousands):

	Six Months Ended September 30,
	2015			2014
Balance at beginning of period	$	(7,142	)	$	(2,110	)
Unrealized gain (loss) on derivative instruments, net of tax		(213	)		1,104
Foreign currency translation adjustment		1,043			(2,906	)
Balance at end of period	$	(6,312	)	$	(3,912	)

The unrealized gains (losses) on derivatives instruments in the six months ended September 30, 2015 and 2014 were net of a tax benefit of $0.1 million and tax expense of $0.6 million, respectively.

Retained Earnings

The components of the changes in retained earnings during the following periods were as follows ($ in thousands):

	Six Months Ended September 30,
	2015			2014
Balance at beginning of period	$	185,444		$	187,024
Net earnings		10,115			18,958
Dividends paid		(3,275	)		(3,241	)
Balance at end of period	$	192,284		$	202,741

NOTE J–COMMITMENTS AND CONTINGENCIES

Dealer Financing

Finance companies provide the Company’s North American dealers with floorplan financing. The Company has agreements with these finance companies to repurchase certain repossessed products sold to its dealers. At September 30, 2015, the Company was contingently liable under these agreements for a maximum repurchase amount of approximately $67.7 million. The Company’s financial exposure under these agreements is limited to the difference between the amount paid to the finance companies for repurchases and the amount received upon the resale of the repossessed product. Losses incurred under these agreements during the periods presented have not been material. The financing agreements also have loss sharing provisions should any dealer default, whereby the Company shares certain losses with the finance companies. The maximum potential liability to the Company under these provisions was approximately $2.2 million at September 30, 2015.

Litigation

The Company is subject to legal proceedings and claims which arise in the ordinary course of business. Accidents involving personal injury and property damage may occur in the use of snowmobiles, ATVs and ROVs. Claims have been made against the Company from time to time relating to these accidents, and from time to time, parties assert claims relating to their intellectual property. It is the Company’s practice to vigorously defend against these actions. The Company is not involved in any legal proceedings which it believes will have a materially adverse impact on the Company’s business or financial condition, results of operations or cash flows. The Company has recorded a reserve based on its estimated range of probable exposures based on the legal proceedings and claims of which it is aware. Should any settlement occur that exceeds the Company’s estimate or a new claim arise, the Company may need to adjust its overall reserve and, depending on the amount, such adjustment could be material.

11

NOTE K–FAIR VALUE MEASUREMENTS

Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. A fair value hierarchy has been established which requires classification based on observable and unobservable inputs when measuring fair value. There are three levels of inputs that may be used to measure fair value:

Level 1 – Quoted prices in active markets for identical assets or liabilities.

Level 2 – Observable inputs other than Level 1 prices such as quoted prices for similar assets and liabilities; quoted prices in markets that are not active; or inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

Level 3 – Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

Recurring Fair Value Measurements

As of September 30, 2015, the Company’s Canadian dollar foreign currency contracts fair value was an asset totaling $2.9 million, and the Company did not have any open Japanese yen foreign currency contracts. As of March 31, 2015, the Company’s Canadian foreign currency contract fair value was an asset totaling $3.6 million, and the Company’s Japanese yen foreign currency contract fair value was a liability totaling $0.4 million. The Company utilizes the income approach to measure fair value of foreign currency contracts, which is based on significant other observable inputs. As such, the foreign currency contracts are considered a Level 2 measurement.

Nonrecurring Fair Value Measurements

The Company’s assets and liabilities that are measured at fair value on a nonrecurring basis primarily relate to tangible fixed assets, goodwill and other intangible assets, which are generally recorded at fair value as a result of an impairment charge. The Company did not record any significant charges to assets measured at fair value on a nonrecurring basis during the six months ended September 30, 2015 and 2014.

Other Fair Value Disclosures

The Company’s financial instruments not measured at fair value on a recurring basis include cash and cash equivalents, accounts receivable and accounts payable and approximate fair value due to their short-term nature. At September 30, 2015, the carrying value of the Company’s revolving credit agreement approximates fair value and would be considered a Level 2 measurement.

NOTE L–DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES

The Company uses foreign currency derivative instruments to manage its exposure to currency fluctuations on transactions denominated in foreign currencies – primarily the Canadian dollar and Japanese yen. The Company’s foreign currency management objective is to reduce earnings volatility related to movements in foreign exchange rates and limit the risk of loss in value of certain of its foreign currency-denominated cash flows. The Company does not enter into forward contracts for trading or speculative purposes. The Company has no derivatives that have credit risk-related contingent features and mitigates its risk by engaging with major financial institutions as counterparties.

The Company records all foreign currency forward contracts at fair value in our Consolidated Balance Sheets. The forward contracts are designated as, and meet the criteria for, cash flow hedges. The Company evaluates hedge effectiveness prospectively and retrospectively, and we formally document all hedging relationships at inception, as well as the risk management objectives for undertaking the hedge transaction. Our Canadian dollar and Japanese yen forward contracts generally have terms up to 12 months. Gains and losses on forward contracts are recorded in accumulated other comprehensive income (loss), net of tax, and subsequently reclassified into cost of goods sold or operating expenses during the same period in which the hedged transaction affects the Consolidated Statements of Operations. Gains and losses on the derivative representing hedge ineffectiveness, if any, are recognized in the Consolidated Statements of Operations.

12

The following table presents the notional amounts and gross carrying values of derivative instruments as of September 30, 2015 and March 31, 2015 ($ in thousands):

	September 30, 2015				March 31, 2015
Foreign Currency Contracts	Notional Amount (in US Dollars)		Fair Value Asset (Liability)		Notional Amount (in US Dollars)		Fair Value Asset (Liability)
Canadian Dollar(1)	$	67,888	$	2,855	$	76,328	$	3,628
Japanese Yen(1)		—		—		19,046		(434	)

(1) Assets are included in other current assets and liabilities are included in accrued expenses in the accompanying Consolidated Balance Sheets.

The following table presents the effects of derivative instruments on other comprehensive income (OCI) and on our Consolidated Statements of Operations for the six months ended September 30, 2015 and 2014 ($ in thousands):

	September 30, 2015						September 30, 2014
	Pre-Tax Gain (Loss) Recognized in OCI			Pre-Tax Gain (Loss) Reclassified from Accumulated OCI to Earnings (Effective Portion)			Pre-Tax Gain (Loss) Recognized in OCI		Pre-Tax Gain (Loss) Reclassified from Accumulated OCI to Earnings (Effective Portion)
Canadian Dollar(1)	$	4,901		$	5,673		$	590	$	(1,162	)
Japanese Yen(1)		(374	)		(808	)		—		—

(1) Canadian Dollar contracts are included in general and administrative expenses and Japanese Yen contracts are included in cost of goods sold in the accompanying Consolidated Statements of Operations.

The ineffective portion of foreign currency contracts was not material for the six month periods ended September 30, 2015 and 2014.

NOTE M–SEGMENT REPORTING

The Company manages each segment based on gross profit and there are no material transactions between the segments. Operating, tax and other expenses are not allocated to individual segments. Additionally, given the crossover of customers, manufacturing and asset management, the Company does not maintain separate balance sheets for each segment. Accordingly, the segment information presented below is limited to sales and gross profit data ($ in thousands).

	Three Months Ended September 30,				Six Months Ended September 30,
	2015		2014		2015		2014
Net sales
Snowmobiles and ATV/ROV units	$	180,676	$	227,382	$	291,781	$	347,360
Parts, garments and accessories		30,481		35,097		53,757		58,758
Total net sales		211,157		262,479		345,538		406,118
Cost of goods sold
Snowmobiles and ATV/ROV units		147,739		185,064		244,696		282,765
Parts, garments and accessories		19,500		22,334		34,362		37,471
Total cost of goods sold		167,239		207,398		279,058		320,236
Gross profit
Snowmobiles and ATV/ROV units		32,937		42,318		47,085		64,595
Parts, garments and accessories		10,981		12,763		19,395		21,287
Total gross profit	$	43,918	$	55,081	$	66,480	$	85,882

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	Three Months Ended September 30,				Six Months Ended September 30,
	2015		2014		2015		2014
Net sales by product line
Snowmobiles units	$	109,918	$	157,791	$	168,149	$	213,943
ATV/ROV units		70,758		69,591		123,632		133,417
Parts, garments and accessories		30,481		35,097		53,757		58,758
Total net sales	$	211,157	$	262,479	$	345,538	$	406,118

	Three Months Ended September 30,				Six Months Ended September 30,
	2015		2014		2015		2014
Net sales by geography, based on location of the customer
United States	$	125,150	$	150,538	$	212,193	$	239,195
Canada		62,683		69,316		97,687		110,761
Europe and other		23,324		42,625		35,658		56,162
Total net sales	$	211,157	$	262,479	$	345,538	$	406,118

	September 30, 2015		September 30, 2014
Long-lived assets by geography
United States	$	79,173	$	57,501
Canada and Europe		223		554
Total long-lived assets	$	79,396	$	58,055

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

Overview

Arctic Cat Inc. (the “Company” or “Arctic Cat,” or “we,” “our” or “us”) is a Minnesota corporation with principal executive offices in Plymouth, Minnesota. We design, engineer, manufacture and market snowmobiles, all-terrain vehicles (“ATVs”) and recreational off-highway vehicles (“side-by-sides” or “ROVs”), as well as related parts, garments and accessories (“PG&A”) under the Arctic Cat^® and MotorFist^® brand names. We market our products through a network of independent dealers located throughout the United States, Canada, and Europe and through distributors representing dealers in Europe, Russia, South America, the Middle East, China, Asia and other international markets. The Arctic Cat brand name has existed for more than 50 years and is among the most widely recognized and respected names in the snowmobile, ATV and side-by-side industry. We were incorporated in 1982. Our common stock trades on the NASDAQ Global Select Market under the symbol ACAT.

Executive Overview

For the second quarter ended September 30, 2015, we reported net earnings of $11.2 million, or $0.85 per diluted share, on net sales of $211.2 million. In the prior-year period, we reported net earnings of $15.4 million, or $1.18 per diluted share, on net sales of $262.5 million. For the six months ended September 30, 2015, our net earnings were $10.1 million, or $0.77 per diluted share, compared to $19.0 million, or $1.45 per diluted share, in the prior-year period. Year to date, our net sales totaled $345.5 million versus $406.1 million in the first six months of fiscal 2015.

We executed well in the second quarter on our strategies to reposition the business for a return to growth in fiscal 2017 and beyond. However, sales and earnings in the quarter were dampened by a greater-than-anticipated Canadian currency exchange impact and a softer ATV/ROV retail market industry-wide. During the second quarter, we introduced new ATV/ROV products to dealers in August and unveiled exciting product and marketing initiatives, including our exclusive partnership with racer Robby Gordon and his SPEED^TM brand. Under this agreement, we will bring innovative side-by-side and accessory products to market.

Additionally, our effort to right-size our core North America ATV dealer inventory is on track through the first six months of fiscal 2016. The significant reductions we achieved in the first quarter allowed us to introduce new products in the second quarter without increasing overall inventory levels. We remain committed to further reducing non-current inventory to enable a return to wholesale and retail growth of new products next fiscal year. Our key strategies to reinvigorate growth under new management include: dramatically improving Arctic Cat’s dealer network; ramping up end-user focused new products; pursuing OEM partnerships and bolt-on acquisitions; and creating a brand marketing powerhouse.

In this rebuilding year, we are addressing many near-term challenges, and we are making significant progress against our strategic plans. However, due to the intensifying impact of unfavorable foreign currency exchange rates, we are lowering our fiscal 2016 full-year revenue and earnings outlook. For the fiscal year ending March 31, 2016, we now estimate full-year net sales in the range of $665 million to $675 million, with a greater unfavorable foreign currency exchange impact in the range of $27 million to $30 million pre-tax. We now expect fiscal 2016 full-year net earnings to be in the range of $0.05 to $0.15 per diluted share, again reflecting unfavorable foreign currency exchange rates, particularly the Canadian dollar, as approximately 30 percent of Arctic Cat’s annual sales are to Canada. Foreign currency exchange headwinds are estimated to negatively impact gross profit and reduce net earnings in the range of $1.25 to $1.39 per diluted share when compared to fiscal 2015, which will be only partially offset by our hedging strategy.

Previously, we estimated full-year net sales for fiscal 2016 in the range of $690 million to $705 million, with an unfavorable foreign currency exchange impact on sales in the range of $12 million to $15 million. At that time, we expected fiscal 2016 full-year net earnings to be in the range of $0.80 to $0.95 per diluted share, after factoring in negative foreign currency exchange impact on gross profit and reduced net earnings in the range of $0.60 to $0.70 per diluted share.

We are confident in our strategic plans to turn the business around. While we face ongoing challenges over the next few quarters, including continued foreign currency headwinds, we see tremendous opportunities to improve the company’s operations, expand gross margins and enhance financial performance over time

15

Results of Operations

Product Line Sales

	Three Months Ended September 30,										Six Months Ended September 30,
($ in thousands)	2015		Percent of Net Sales			2014		Percent of Net Sales			2015		Percent of Net Sales			2014		Percent of Net Sales
Snowmobile	$	109,918		52.1	%	$	157,791		60.1	%	$	168,149		48.6	%	$	213,943		52.7	%
ATV/ROV		70,758		33.5	%		69,591		26.5	%		123,632		35.8	%		133,417		32.8	%
PG&A		30,481		14.4	%		35,097		13.4	%		53,757		15.6	%		58,758		14.5	%
Net sales	$	211,157		100.0	%	$	262,479		100.0	%	$	345,538		100.0	%	$	406,118		100.0	%

During the second quarter of fiscal 2016, net sales decreased 19.6% to $211.2 million from $262.5 million in the second quarter of fiscal 2015, driven by lower snowmobile sales and unfavorable foreign currency exchange rates. Snowmobile net sales decreased 30.3% due to lower international sales to Russia, unfavorable foreign currency exchange and lack of snow in key regions last year. ATV/ROV net sales increased 1.7% as increased sales of Wildcat ROVs were mainly offset by unfavorable foreign currency exchange rates. In addition, we continued to curtail wholesale shipments of core ATV models to support our efforts to reduce core ATV inventory at our North America dealers. PG&A net sales decreased 13.2%, which was primarily attributable to unfavorable foreign currency exchange rates and the timing of shipments, partially offset by MotorFist sales. We changed our ATV/ROV PG&A preseason dealer order program at our August 2015 dealer show from one order, which created a single large shipment in the second quarter, to three order and shipment windows. The result of this change lowered PG&A shipments in the fiscal 2016 second quarter versus the prior year, but is expected to more evenly spread out the timing of shipments.

Net sales for the six months ended September 30, 2015 decreased 14.9% to $345.5 million from $406.1 million, largely due to lower sales volume and unfavorable foreign currency exchange rates. Snowmobile net sales decreased 21.4% primarily due to the second quarter fiscal 2016 decrease in international sales and unfavorable foreign currency exchange rates. ATV/ROV net sales decreased 7.3% driven by unfavorable foreign currency exchange rates and a decrease in ATV sales, which were only partially offset by growth in sales of Wildcat ROVs. PG&A net sales decreased 8.5%, primarily due to the decline in second quarter sales volume.

Cost of Goods Sold

	Three Months Ended September 30,										Six Months Ended September 30,
($ in thousands)	2015		Percent of Net Sales			2014		Percent of Net Sales			2015		Percent of Net Sales			2014		Percent of Net Sales
Snowmobile and ATV/ROV units	$	147,739		70.0	%	$	185,064		70.5	%	$	244,696		70.8	%	$	282,765		69.6	%
PG&A		19,500		9.2	%		22,334		8.5	%		34,362		9.9	%		37,471		9.2	%
Total cost of goods sold	$	167,239		79.2	%	$	207,398		79.0	%	$	279,058		80.7	%	$	320,236		78.8	%

During the second quarter of fiscal 2016, cost of goods sold decreased 19.4% to $167.2 million from $207.4 million for the second quarter of fiscal 2015. During the six months ended September 30, 2015, cost of goods sold decreased 12.9% to $279.1 million from $320.2 million for the six months ended September 30, 2014. The overall decrease in net sales drove the decreases in costs of goods sold in snowmobile and ATV/ROV units in both periods, which was partially offset by the favorable impact of lapping the $5.3 million second quarter fiscal 2015 ATV warranty recall.

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Gross Profit

	Three Months Ended September 30,									Six Months Ended September 30,
($ in thousands)	2015			2014			Change 2015 vs. 2014			2015			2014			Change 2015 vs. 2014
Gross profit dollars	$	43,918		$	55,081			(20.3	)%	$	66,480		$	85,882			(22.6	)%
Percentage of net sales		20.8	%		21.0	%		(0.2	)%		19.2	%		21.1	%		(1.9	)%

Gross profit decreased 20.3% to $43.9 million in the second quarter of fiscal 2016 from $55.1 million in the second quarter of fiscal 2015. The gross profit as percentage of net sales for the second quarter of fiscal 2016 decreased to 20.8% versus 21.0% in fiscal 2015. Gross profit was negatively impacted by lower sales volume, due to lower snowmobiles sales and a decrease in ATV sales as we worked to right-size our core ATV inventory. Also affecting gross profit was unfavorable foreign currency exchange rates, which we estimate reduced gross profit in the second quarter of fiscal 2016 by $14.1 million. While we had expected foreign currency exchange rates to moderate through the remainder of fiscal 2016, we are now anticipating stronger foreign currency headwinds. These negative impacts were partially offset by the absence of the second quarter fiscal 2015 product warranty recall, which did not recur in fiscal 2016.

Gross profit decreased 22.6% to $66.5 million from $85.9 million for the six months ended September 30, 2015 and 2014, respectively. The gross profit percentage of net sales for the six months ended September 30, 2015 decreased to 19.2% versus 21.1% in fiscal 2015. Gross profit was negatively impacted by lower sales volume and unfavorable foreign currency exchange rates. We estimate the unfavorable foreign currency exchange rates reduced gross profit in first six months ended September 30, 2016 by $20.6 million. These negative impacts were partially offset by the absence of the second quarter fiscal 2015 product warranty recall, which did not recur in fiscal 2016.

Operating Expenses

	Three Months Ended September 30,									Six Months Ended September 30,
($ in thousands)	2015			2014			Change 2015 vs. 2014			2015			2014			Change 2015 vs. 2014
Selling and marketing	$	11,842		$	12,074			(1.9	)%	$	20,797		$	19,055			9.1	%
Research and development		6,222			6,621			(6.0	)%		12,225			11,967			2.2	%
General and administrative		7,202			12,325			(41.6	)%		16,353			25,229			(35.2	)%
Total operating expenses	$	25,266		$	31,020			(18.5	)%	$	49,375		$	56,251			(12.2	)%
Percentage of net sales		12.0	%		11.8	%					14.3	%		13.9	%

Operating expenses decreased 18.5% in the second quarter of fiscal 2016 compared to the prior-year quarter primarily due to the 41.6% decrease in general and administrative expenses. The decrease in general and administrative expenses was driven by gains from our foreign currency hedging, as well as a decrease in legal expenses.

Operating expenses decreased 12.2% for the six months ended September 30, 2015 compared to the prior-year primarily due to the 35.2% decrease in general and administrative expenses. The decrease in general and administrative expenses was due to gains from our foreign currency hedging, a decrease in legal expenses and the absence of $1.5 million of executive transition costs incurred in the first six months of fiscal 2015. The decrease in general and administrative expenses was partially offset by an increase in selling and marketing expenses.

Effective Tax Rate

The second quarter fiscal 2016 effective tax rate (ETR) was 38.9% compared to 35.5% in the prior-year period. For the six months ended September 30, 2015, the ETR was 39.1% compared to 35.5% in the prior year. The increase in the ETR was primarily due to lower forecast pre-tax earnings in fiscal 2016, as the rate impact of non-deductible expenses and other discrete items have a greater impact on the ETR when pre-tax earnings are lower.

Other Income (Expense)

We recognized an immaterial amount of interest income in the second quarter and first six months of fiscal 2016, which was consistent with the comparable periods in fiscal 2015. Interest expense increased to $0.4 million and $0.5 million in the second quarter and first six months of fiscal 2016, respectively, compared to $0.2 million in the comparable prior-year periods. The increase in interest expense in both periods was due to our borrowings under our line of credit being outstanding for a longer period of time during fiscal 2016.

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Liquidity and Capital Resources

The seasonality of our snowmobile production cycle and the lead time between the commencement of snowmobile and ATV production and commencement of shipments late in the first quarter create significant fluctuations in our working capital requirements. Historically, we have financed our working capital requirements out of available cash balances at the beginning and end of the production cycle and with bank borrowings during the middle of the cycle. Our cash balances traditionally peak early in the fourth quarter and then decrease as working capital requirements increase when our snowmobile and ATV production cycles begin in the spring.

Accounts receivable decreased to $68.2 million at September 30, 2015 from $104.7 million at September 30, 2014, primarily due to timing of product shipments and lower net sales. The accounts receivable balance at March 31, 2015 was $25.1 million. Inventory remained relatively flat at $171.3 million at September 30, 2015 from $170.1 million at September 30, 2014. The slight increase in the year-over-year inventory balance was largely due to increased PG&A inventory due to our acquisition of MotorFist in March 2015 and the decrease in net sales, partially offset by lower finished goods inventory as we continue to be on track to achieve our inventory reduction targets by the end of fiscal 2016. Inventory was $152.4 million at March 31, 2015. The increase in our inventory balances as of September 30, 2015 compared to March 31, 2015 was due primarily to the seasonality of our snowmobile, ATV and PG&A businesses. Capital expenditures totaled $19.3 million at September 30, 2015 compared to $9.3 million at September 30, 2014, as we invested in modernizing our manufacturing process and increased our investment in tooling for key new product introductions. During the six months ended September 30, 2015, we repurchased $0.1 million of our common stock under the share repurchase programs previously approved by the Board of Directors in August 2014 and May 2013. Cash, cash equivalents and short-term investments were $10.7 million and $24.0 million at September 30, 2015 and 2014, respectively, and $41.3 million at March 31, 2015. Cash, cash equivalents and short-term investments decreased from March 31, 2015, due to the seasonality of our business and investments in property and equipment. Our investment objectives are first, safety of principal, and second, rate of return. We had $15.8 million of long-term bank borrowings outstanding at September 30, 2015 and no borrowings were outstanding at September 30, 2014 and March 31, 2015.

We believe current available cash and cash generated from operations together with working capital financing through our available line of credit will provide sufficient funds to finance operations on a short- and long-term basis and for at least the next 12 months.

Line of Credit

We have a $100.0 million line of credit pursuant to a senior secured revolving credit agreement, which is scheduled to expire in November 2017, for documentary and stand-by letters of credit, working capital needs and general corporate purposes. Under the agreement, we may borrow up to $100.0 million during May through November and up to $50.0 million during all other months of the year. We had $15.8 million of outstanding borrowings under the line of credit as of September 30, 2015. We were in compliance with the terms of the credit agreement as of September 30, 2015. See Note F of the notes to consolidated financial statements herein for further discussion.

Dealer Floorplan Financing

We have agreements with GE Commercial Distribution Finance in the United States and TCF Commercial Finance Canada in Canada to provide snowmobile, ATV and ROV floorplan financing for our dealers. These agreements improve our liquidity by financing dealer purchases of products without requiring substantial use of our working capital. We are paid by the floorplan companies shortly after shipment and as part of our marketing programs, we pay the floorplan financing of our dealers for certain set time periods depending on the size of a dealer’s order. See Note J of the notes to consolidated financial statements herein for further discussion.

Certain Information Concerning Off-Balance Sheet Arrangements

As of September 30, 2015, we did not have any relationships with unconsolidated entities or financial partnerships, such as entities often referred to as structured finance or special purpose entities, which would have been established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes. We are, therefore, not exposed to any financing, liquidity, market or credit risk that could arise if we had engaged in these relationships.

Critical Accounting Policies

See our most recent Annual Report on Form 10-K for the year ended March 31, 2015 for a discussion of our critical accounting policies.

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Forward-Looking Statements

The Private Securities Litigation Reform Act of 1995 provides a safe harbor for certain forward-looking statements. This Quarterly Report on Form 10-Q, and future filings with the Securities and Exchange Commission, our press releases and oral statements made with the approval of an authorized executive officer, contain forward-looking statements that reflect our current views with respect to future events and financial performance. Theseforward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from historical results or those anticipated. The words “aim,” “believe,” “expect,” “anticipate,” “intend,” “plan,” “estimate” and other expressions that indicate future events and trends identifyforward-looking statements, including statements related to our fiscal 2016 outlook, business strategy and product development. In particular, these include, among others, statements relating to our anticipated capital expenditures, research and development expenditures, product introductions, legal proceedings, our expectations regarding financing arrangements, inventory levels and strategy, industry wholesale and retail sales and demand expectations, dividends and share repurchases, the effect of foreign currency exchange rates, and the sufficiency of funds to finance our operations and capital expenditures Actual future results and trends may differ materially from historical results or those anticipated depending on a variety of factors including, but not limited to the following: product mix and volume; competitive pressure on sales, pricing and sales incentives; increases in material or production cost which cannot be recouped in product pricing; changes in the sourcing of engines; interruption of dealer floorplan financing; warranty expenses and product recalls; foreign currency exchange rate fluctuations; product liability claims and other legal proceedings in excess of reserves or insured amounts; environmental and product safety regulatory activity; effects of the weather; general economic conditions and political changes; interest rate changes; consumer demand and confidence; and those factors set forth in the Company’s Annual Report on Form 10-K for the year ended March 31, 2015, under heading “Item 1A. Risk Factors.” We do not undertake any obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

We are subject to certain market risks relating to changes in inflation, foreign currency exchange rates and interest rates. These market risks have not changed significantly since March 31, 2015. As of September 30, 2015, we have notional Canadian dollar (“CAD”) denominated cash flow hedges of approximately $67.9 million U.S. dollar (“USD”) with a weighted average contract exchange rate of 1.2815 CAD to USD. The fair values of the CAD contracts at September 30, 2015 represent an unrealized gain of $2.9 million. A ten percent fluctuation in the currency rates as of September 30, 2015 would have resulted in a change in the fair value of the Canadian dollar hedge contracts of approximately $6.8 million. However, since these contracts hedge foreign currency denominated transactions, any change in the fair value of the contracts would be offset by changes in the underlying value of the transactions being hedged.

Information regarding inflation, foreign currency exchange rates and interest rates is discussed within “Quantitative and Qualitative Disclosures About Market Risk-Foreign Exchange Rates and Interest Rates” and Note A to the Financial Statements in the Company’s Annual Report on Form 10-K for the year ended March 31, 2015. Interest rate market risk is managed for cash and short-term investments by investing in a diversified frequently maturing portfolio consisting of municipal bonds and money market funds that experience minimal volatility and are not deemed to be significant.

Item 4. Controls and Procedures

Our management, including our Chief Executive Officer and Chief Financial Officer, has conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) pursuant to Rule 13a-15 under the Exchange Act as of September 30, 2015. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures are effective.

There have been no changes in internal control over financial reporting during the fiscal quarter ended September 30, 2015 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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Part II – OTHER INFORMATION

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

Company Purchases of Company Equity Securities

On August 7, 2014, the Board authorized the repurchase of an additional $25.0 million in shares of common stock, which supplemented the $1.1 million remaining under the program previously approved in May 2013. The share repurchase program does not have an expiration date. The following table presents the total number of shares repurchased during the second quarter of fiscal 2016 by fiscal month, the average price paid per share, the number of shares that were purchased as part of a publicly announced repurchase plan, and the approximate dollar value of shares that may yet be purchased pursuant to our stock repurchase program as of the end of the second quarter of fiscal 2016:

Period	Total Number of Shares Purchased(1)		Average Price Paid per Share		Approximate Dollar Value of Shares that May Yet be Purchased Under the Plans or Programs
July 1, 2015 – July 31, 2015		4,190	$	28.61	$	25,921,057
August 1, 2015 – August 31, 2015		—		—		25,921,057
September 1, 2015 – September 30, 2015		—		—		25,921,057
Total		4,190	$	28.61	$	25,921,057

(1) All shares purchased were under the share repurchase program.

We have historically purchased our common stock primarily to offset the dilution created by employee stock option exercises and because the Board of Directors believes investment in our common stock is a good use of our excess cash.

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Item 6. Exhibits

Exhibit Number	Description
3.1	Amended and Restated Articles of Incorporation of the Company	(1	)
3.2	Amended and Restated By-Laws of the Company	(2	)
4.1	Form of specimen common stock certificate	(3	)
31.1	Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002	(4	)
31.2	Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002	(4	)
32.1	Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002	(4	)
32.2	Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002	(4	)
101	Financial statements from the quarterly report on Form 10-Q of the Company for the quarter ended September 30, 2015, formatted in XBRL: (i) the Condensed Consolidated Balance Sheets, (ii) the Condensed Consolidated Statements of Operations, (iii) the Condensed Consolidated Statements of Comprehensive Income (Loss), (iv) the Condensed Consolidated Statements of Cash Flows, and (v) the Notes to the Condensed Consolidated Financial Statements.	(4	)

(1) Incorporated herein by reference to the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 1997 and the Company’s Current Report on Form 8-K filed August 11, 2014.

(2) Incorporated herein by reference to the Company’s Current Report on Form 8-K filed January 16, 2013 and the Company’s Current Report on Form 8-K filed August 12, 2015.

(3) Incorporated herein by reference to the Company’s Form S-1 Registration Statement. (File Number 33-34984)

(4) Filed with this Quarterly Report on Form 10-Q.

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SIGNATURES

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.

			ARCTIC CAT INC.
Date:	November 6, 2015	By	/s/ Christopher T. Metz
			Christopher T. Metz
			President and Chief Executive Officer

Date:	November 6, 2015	By	/s/ Christopher J. Eperjesy
			Christopher J. Eperjesy
			Chief Financial Officer

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