Good morning. My name is Tanai and I will be your conferenceoperator today. At this time I would like to welcome everyone to the Polaris2007 Q3 Earnings Release Conference Call. All lines have been placed on mute toprevent any background noise. After the speakers' remarks, there will be aquestion-and-answer session. (Operator Instructions). Thank you Mr. Edwards,you may begin your conference.

Thank you, and good morning and thank you to all you joiningus this morning for our Third Quarter 2007 Earnings Conference Call. Here atPolaris today, we have Tom Tiller, our Chief Executive Officer; Bennett Morgan,our President and Chief Operating Officer; and Mike Malone, our Chief FinancialOfficer. During the call today, we will be discussing certain topics,including product demand and shipments, sales and margin trends, income andprofitability levels, and other matters, including more specific guidance onour expectations for future periods, which should be considered forward lookingfor the purposes of the Private Securities Reform Act of 1995. Actual results could differ from those projected in anyforward-looking statement, which by the nature involve risk and uncertainties.There are a number of important factors that could cause results to differmaterially from those anticipated. Additional information concerning a number of these factorscan be found in Polaris's 2006 annual report and in the 2006 Form 10-K, whichare on file with the SEC. Now I'll turn it over to Tom. Tom?

Thanks, Richard and good morning, everyone. Thank you foryour interest in Polaris. For the third quarter, earnings were $1.07 per share, upfrom $1.04 last year on an 11% increase in sales. This is a record salesquarter and the results modestly exceeded our expectations. Despite a sluggisheconomy, especially for consumer durables, our business continues to be good.In most of the themes that you will hear today, are consistent with what wetalked about 90 days ago. We are following the plan that we laid out at the beginningof the year; specifically, wining in the core, delivering operational excellentand targeting five important growth opportunities. Our overall dealer inventory is much lower than a year ago,and our new products like the RANGER RZR and the Victory Vision are deliveringwhat we had hoped. As a result we are again raising and narrowing, our earningsguidance for the full year to $3.05 to $3.10 per share. This represents a $0.10increase in the lower end of the range, and a $0.05 increase at the upper endcompared to 90 days ago. And as we usually do during the third quarter call, we'llgive you some early qualitative thoughts about 2008. With over view, let's turnto the individual business segment, starting with the All-Terrain Vehicledivision. The ATV division had a solid quarter in a sluggish, core ATVindustry and a vibrant side-by-side market. ATV shipments for the quarterincreased by 15%, driven by strong RANGER sales, and more normal levels ofdealer inventory of core ATVs. Dealer inventory of core North American ATVs measured inunits are more than 25% lower than they were at this time last year. In termsof the industry on a year-to-date basis, the core ATV industry is down about10% versus last year, while Polaris is down mid single-digit. So we've gainedmarket share as a result of our effort to be…

Thanks Tom, and good morning. For many years, Polaris hasgenerated nice results through our efficient operations. With operationalexcellence, we intend to take our performance to a completely new level, withthe objective of becoming the Toyotaof the powersports business. Operational excellence will not only fuel the success of ourwinning in the core and growth strategies, but can transform the competitiveposition of Polaris in the powersports industry overtime. We'll accomplish this by focusing on, understanding, andmeeting our end customer's needs, and then working those insights back into ouroperations by driving out the unnecessary waste in time, cost, materialinactivity that adds absolutely no value to our end consumer. To achieve this in powersports, it comes down to threesimple principles for Polaris: quality, cost and speed. Our goals areaggressive and straightforward. In quality, we intend to improve consumersatisfaction by 50% by 2010; in cost, we intend to reduce system-wide cost byover 20% by 2010; and in speed we want to improve our speed to the end customerby 50% by 2010. On the quality and cost principles, operational excellenceis an evolution to a bigger and broader objective of what we've already beenstriving for, for years; industry-leading quality and 5% annual productivityimprovements. Now with the key insight of the consumer as our compass, ourfocus has been broadened to the complete consumer experience and the totalPolaris value chain, which includes our suppliers and dealer partners. We will be able to generate tremendous leverage and valuefor our consumers, by focusing on waste opportunities that previously, we justdidn’t spend enough time on. The consumer doesn't care where the waste or theproblems are in the value chain, they simply don't want to pay for it orexperience them. It's really that simple. As we focus on reducing the non-value added waste across ourvalue chain, we can become much faster in responding…

Thanks, Bennet. So to wrap it up, we had a good thirdquarter and a tough [gain]. We are looking forward to closing the year strong,and expect 2008 to be another good year for Polaris. Our core business is significantly healthier than it was ayear ago. Our sales are growing again, growth margins are expanding, and marketshare is increasing in every business. So we're pleased with the progress thatwe've made thus far, and we remain committed to the long-term objectives thatwe outlined a year ago. With that report, I will turn it over to our Chief FinancialOfficer, Mike Malone. Mike?

Thanks and good morning to everyone. Before I begin, I wantto highlight this third quarter's 11% increase in sales to $544 million, whichnot only represents our first quarterly increase in sales in eight quarters,but which also represents the highest quarterly dollar sales generated by thecompany for any quarter of any year in our 53-year history. We are very proud ofthat accomplishment, particularly in the current challenging macroeconomicenvironment. And we accomplished this achievement in the quarter, whileshipping fewer units to dealers in the third quarter of this year than thethird quarter last year. So, obviously, our top line sales growth is benefitingfrom a favorable mix movement, with increased RANGER sales at higher pricepoints and double-digit growth from PG&A, as well as favorable currencymovements. Let me give you more specifics on our third quarter resultsand our fourth quarter and full-year 2007 guidance. As Tom mentioned, theintroduction of the new RANGER RZR has been a huge success for us. Given thissuccess and the continued growth in the base RANGER business and our dealer'score ATV inventory at significantly lower levels, we are increasing our totalyear and total company sales guidance and now expect sales to grow in the rangeof 5% to 6% for the full year 2007. Additionally, we are increasing and narrowing the earningsguidance range, and now expect earnings per diluted share from continuingoperations for the full year 2007 to be between $3.05 and $3.10, an increase of12% to 14% over the $2.72 during last year. Current expectations for sales growth by product line forthe full year 2007 have also been adjusted, and are as follows. ATV sales arenow expected to be up in the range of 5% to 6% for the full year 2007, anincrease from prior guidance. The increase in our expectations is drivenprimarily by the strength of our RANGER business.…

(Operator Instructions).

We are ready to begin Tanai.

Your first question comes from the line of Hayley Wolff.

Hello?

Yes. Go ahead.

Hi there, I have a few questions. First, can we have alittle more detail on ATV inventories, wholesale versus retail shipment trendsinto the fourth quarter and '08? Are you at equilibrium, and if not, when doyou expect to achieve equilibrium there? Second, can you characterize the sales patterns on amonth-to-month basis and into November, just to try and get a read on theconsumer behavior throughout the quarter? And lastly, the guidance that you, the long-term guidance of$4.25 in 2009, is that still a valid number, and if so, do you see a steadyincrease to get to that number or is there something that would lead to a stepup in your rate of growth in '09 vis-à-vis '08? And that's it.

Okay, thank you. I think with regard to the wholesale andretail ATV trends, just in the interested time, I think we covered almost allof that in the prepared remarks in terms of what's going on for the industry,what's going on for us, what's going on our market share. I would say that theinventory is about balance. You have individual dealers, individual models, and thosekinds of things. But certainly the vast majority of the inventory reduction isbehind us at this point. I think again, in my prepared remarks, we've talkedabout unit inventory of ATVs at dealership is down by -- in excess of 25%,compared to the same time last year. So, I would refer most of that to theprepared remarks rather than just repeating it in the interest of time.

So, you are [flowing] product in and at the same rate thatit's going out now?

More or less, yeah. With regard to month-to-month guidanceon retail trends, that's nothing that we provide, we simply don't do that. Wewould expect, for the full year that the industry will continue to be down,probably about 10%. And I would expect that we will continue to gain marketshare. As I said in my prepared remarks that we are downyear-to-date about 6%, I would say that, I would expect to end the full yearmaterially in those same kinds of numbers. They may change a little bit, but nobig change. And again, as I said in prepared remarks, we are confirmingour long-term goals. The $2.2 billion in sales by 2009, $150 million in netincome, and $4.25 a share, and it will be a steady increase. There's no, we arenot expecting any kind of one-time event or that kind of thing. As we had talked about almost a year ago now, 2007 was aboutgetting the company back on track, getting the inventories right, introducingsome hot new products. That’s gone well. 2008-2009 is about profitable growth,and again in the prepared remarks, in each business we talked about some of thedrivers there, so.

Well there have been some data points out there, withconsumers slowing down dramatically in September. And I’m just trying toconfirm whether or not, you saw any change in that?

We had an excellent quarter overall for retail, including anexcellent September. We’re very, very pleased with September.

Thank you.

Next question?

Your next question comes from the line of Greg Badishkanianof Citigroup.

Great, and really nice quarter guys.

Hey Greg.

Yeah, thanks. And just a few quick question here. I meanobviously the RZR did phenomenally well, 20% cannibalization, I mean that seemspretty low would you expected to say at that level and would that sort of comein below what you were, I am assuming that came in well below what you areexpecting in terms of cannibalization?

It did Greg. You might recall back in January, there werepeople even back then asking what's the [incrementality] there, and I think thenumbers we were estimating at that point were somewhere between 30% and 50%with our estimates being probably close to the higher ended to that range of50% piece of that, and the dealers being somewhere around 30%. We have, as I mention in the prepared remarks, actual dataof 20% so far now. I would caution you it's early, and the people that havepurchased the product so far tend be early adopters and that kind of thing. SoI would not be surprised to see that increase some what, although I would bequite surprise if it went to 50% or a number up there. So, I think we’llcontinue to monitor it and I would guess we’re in that 20% to 30% range, whichis pretty encouraging

And to the extent that you can comment, how big do you thinkthe opportunity is for the RZR over the next year or two? How big do you thinkit could become as a percentage of maybe your RANGER sales or market share,however you want to categorize it if you are even able to at this point?

Yeah we've been very pleased obviously with how RZR is gone.And I think everybody that's done dealer checks has reported on that, it'spretty hard to miss I think. But the other piece of the puzzle that's gone verywell also is the base RANGER business. Both those parts of the business aredoing very well, and are a substantial part of our, the third prong of ourstrategy that's growth, and we are talking about $500 million worth of growthby 2009, and both RANGER and RZRs will be a key part of that. And while I can't give you a specific number about RZRs,what I would tell you is, we are on track for that right now. We are actuallyslightly ahead. If you took that $500 million and you divided it, say equallyover the three years '07,'08,and '09, we are ahead of that pace, and a good bitof that being driven by RANGERs obviously. But the other growth initiatives theyare important too; the Victory, the International and military, and thisadjacent market segment that we've talked about. So, I feel good about thewhole growth side of things, in a pretty tough economy, right?

Yeah. And from our conversations with dealers, they are veryexcited. Obviously they can't get enough of the RZR, so that's creating somescarcity value there. How do you look at that going forward versus achievingsales, versus keeping that sort of excitement and scarcity value which ishelping the brand?

Yeah, that's a tricky balance. On one hand obviously we wantto try to satisfy demand, capture demand, on the other hand, we are talkingabout a durable here. So, the last thing you want to do is, put in too muchcapacity. And then, once you get the channel flow and so forth, then you wind upover shooting significantly and then you wind up discounting the product andthat sort of stuff. So, we've been very careful in terms of trying to balancethose two things. As I've mentioned, we've increased the production rate fourtimes, we've increased the pricing a little bit, a few hundred dollars atretail, and I would expect that we will continue to be oversold, into the firstquarter, beyond that we'll see. But I expect the product will remain very high. There is nothing like it that's out there, and you got thechannel [fill] issue this year. But the facts are, it's a really dominantproduct and the 80% of the customers that aren't -- the non-cannibalized salesif you will, those are coming from competitive brands, people that wouldconsider alternative products. So that's all big share gains, and we love that. So, we'll keep trying to balance those two things, and bevery, very careful that we don't overshoot in terms of putting so much capacityin place that we wind up hurting ourselves next year.

Good strategy. Congrats again. Thanks.

Thank you.

Your next question comes from the line of James Hardiman ofFTN Midwest Securities.

Good morning. A couple of questions for you guys, first onthe tax rate. It looks like this year's tax rate was higher than last year, butit seems like both years and really the last three years, you've gotten apretty big benefit. You talked about truing things up in the third quarter. So,I guess my question is should that be something we should expect every thirdquarter to get a decent size benefit from that true-up process. As I go forwardto next year, is it the rate that I should sort of push forward in to myestimates for next year?

Well, as I said we generally true-up. In the last few yearsit’s been positive in the third quarter. It obviously can go either waydepending on how accurate we are on some of our year-end estimations of the taxprovisions. So I would tell you we trued it up and it can go either way, kindof like currencies can go either way or anything else. So, I guess I suggestyou look at our full year guidance on the tax rates and spread it by quarteranyway you want.

Okay, but your full year guidance for the tax is notchanging. So, this is sort of the rate you expected at least a quarter ago, Iam assuming?

Correct.

Okay. In terms of the Victory dealerships, where do we standtoday in terms of the total number? You talked about opening about a 100 thisyear. I am assuming that those plans have slowed down somewhat. Where we arestand today in terms of the total dealership?

No, we didn’t say we are going to open 100 Victorydealerships this year. We said we would expand a Victory dealership account,and we have. I don’t know that I have that number. Let me see if I can get thatfor you James, here on the call.

Okay.

And let me come back to you on that, okay. In terms of theadditional rate of [growth] I think that's fair, that the expansion in thenumber of dealerships probably will slow down a little bit, as the cruisermarket generally has slowed through the motorcycle market. So there does seemto be little less interest of dealers generally of picking up any motorcycleline, including Victory. Mike has been kind enough to put the actual number infront of me here, we got that. At the end of the quarter we had 369 Victory dealers, andthe year-end goal was 400. So, we are a bit short of that. I don’t know wherewe will wind up in the fourth quarter, in terms of some addition. So, I don’tknow if we’ll wind up at 380 or some number like that, but…

Okay. I thought that the goal had been 450 at the beginningof the year.

2009.

The goal for 2009 is 450?

Right.

Okay. So I guess as it relates to that motorcycle business.I guess when I think about the long-term 2009 goals, which I assume that eachof the sort of line-by-line goals are still the same or based on what you’veseen in Victory. Are you scaling that back and then making that up somewhereelse?

No, I think as I said, you know we feel pretty good aboutthe overall growth objectives for the company, right? When we put out the $500million worth of growth last year, there were a bunch of people with eyes aboutthe size of a saucer, right? I mean, there is no way this company is going togrow sales by $500 million, including some of the people on this telephone callwill call by the way. And the individual pieces may move around a little bit. Wemay use a little more flour and a little less sugar to bake the cake, than whatwe thought a year ago. But as I said, we are more than a third of the waythrough that progress, through a pretty tough economy and all that. So, I feelpretty good. In terms of the long term future of Victory, I continue to bevery, very bullish. Think of what we have accomplished in motorcycles, right?Next year will be our 10th anniversary. We are the first company tosuccessfully enter the market, we've got a fantastic product, we've done wellin the cruiser side, and now we're going into the touring segment. The market, well it is down 6% of the all-time high, and ithad a record run for 15 or 16 years. So, it's a big market. It’s attractive. We'vegot good initial position. In over the next 10 years, we're going to continueto build out motorcycles, and motorcycles are going to be a big part of thesuccess of Polaris and obviously of Victory. So, we may have perturbations, one quarter to the next oryear to the next on a particular model and a particular segment. But when youlook at the demographic trends, people love to ride motorcycles, and getthrough the housing bubble or some of the other short-term things. Andmotorcycle business is going to be just fine. We are going to continue to focuson innovation, on improving the dealer network, on building that brand, and weshould see long-term growth out of Victory.

Fair enough. And then, just one real quick question here,you talked in the release about the PG&A segment, how that was helped bythe timing of the delivery of pre-seasoned snowmobile items. I am assumingthat's not especially large and that we shouldn't be assuming that, that'sgoing to -- a significant number is going to come out of the fourth quarter,can you quantify how much of a boost that was in the third quarter?

Actually, James, that was a little bit of the timing changebetween Q2 and Q3.

Okay.

If you go back to Q2, it was quite a bit lower than it hasbeen historically, and I think we talked about timing a quarter ago, and itjust moved between Q2 and Q3.

Okay, great. Thanks guys.

Thank you.

Your next question comes from the line of Ed Aaron of RBCCapital Markets.

Aaron, are you there?

Your next question comes from the line of Kathryn Thompsonof Avondale Partners.

Hi, thanks. Just a couple of questions, first, how is theprofitability profile of your military contracts versus your traditional ATVproducts or RANGER products?

It's very attractive.

Would you say it's similar?

No, I said it's very attractive.

Okay. But would you say that it's better than just yourtraditional -- for instance, RANGER products you would sell for the consumer?

Yes, I would.

Also you had some nice improvements in the cash flow fromoperations, and something that you talked about a little bit last quarter. Doyou have any free cash flow goals for '07 and '08 and if so, could you quantifythose?

Well, we haven't quantified externally our goals for operatingcash flow. Obviously, it will be a lot higher this year given that last yearwas unusually low. So, we've got a very low bar. We have been exceeding, as wego through out this year, we'll be an excess of $200 million and we have beensuggesting that we'll continue to use that strong cash flow in a similar waythat we have historically utilized cash flow which is to invest back into thebusiness, paying attractive dividend, and continuing to repurchase sharesaggressively.

I know this question was asked earlier. Basically, how big,do you think the RZR segment could be? Right now, do you expect that could itbe anywhere, say, 5% or 10% of your total ATV segment sales? And I'm reallyjust trying to get a sense of how big, how it could be on a percentage over thenext 2 to 3 years?

I'm sorry, Kathryn, were you asking RZR specifically orRANGER total?

RZR specifically?

Okay. Let me see if I can give you something here. I thinkwe've said that RANGERs, I think, originally it was 15% of the total ATVbusiness. Now this is RANGER total, RANGER plus RZR. I think, we said it was15%, and then I don't know what it was a year ago or something, we said it was20%, and now looks like it might be an excess of 25%, the combined side-by-sidemarket. When we take side-by-side that includes the base RANGER utilitybusiness and also the RZR recreational vehicle. And I would guess that I've togo back and look at numbers exactly, but probably there are more utilityvehicles than there are RZRs. So the combined business is more than 25%. RZRswould be something less than half of that. That should give you at least someball park.

And any other, you've given a lot of nice color on yourVictory segment. But any other updates in terms of how your Victory Visionshipments are progressing, and how long it might take to fill the channel?

Sure. I mean it's just barely started, I don't know how manyunits we shipped in the third quarter, a handful, two dozen. And we have thoseshowing up in consumer's hands. I've actually talked that quite a few of theconsumers that bought the Visions, and it's really fun. I call the guy up,bought the actually the first one down Alabama,and this was a couple of weeks ago. And I talked to him for about half an hour and I didn’tthink the guy was ever going to stop talking about how much he loved themotorcycle and all that. I think he has got 1500 miles on the motorcycle in thefirst couple of days which is just, it's unbelievable. People love the motorcycle. They love everything, thestyling, the performance, all the things that we hoped. Obviously, the firstseveral months are pre-sold. So, when those bikes show up at the dealer ships,they are getting uncrated, unwrapped, and going right out to consumers. Andmany of these people have waited for quite some time since we introduced thebikes. So, that's great to see. Obviously, we are monitoring, talking to those dealers andconsumers. So far everything is going quite well, but it's very, very early.We'll keep filling that channel, first it goes for dealer demos, and also forthese consumer deposit bikes. I would guess through the end of this year as thebikes are being delivered, I am sure that there are consumers that want to seethe bike and ride the bike before they would make a decision on whether topurchase it. So, so far really, really good, but very early.

Thank you very much.

Next question.

Your next question comes from the line of Bob Evans ofCraig-Hallum Capital.

Can you give us a little bit more -- or elaborate a littlebit more on the RZR buyers? I know you touched on that Tom, earlier, but canyou give us a little greater sense of what the 80%, what type of buyer is it?

If somebody generally, Bob, that is in the market for aside-by-side vehicle that, had a RZR not been available, would have considereda competitive brand of side-by-side vehicles. As you know, that segment of thebusiness, I think, we talked about in January at our analyst meeting. Thatsegment of the business has been growing very, very fast. The recreational side-by-side segment of the business, andas a last couple of years, products have come into that space and some of thepeople are coming off from ATVs, I think, part of the reason that the ATVmarket is down a little bit is because the growth of side-by-side. Thosecustomers instead of buying an ATV are buying a side-by-side. So, the 80% are looking at the side-by-side market, and hada RZR not been available, they would have purchased a Yamaha or Arctic Cat orsome other brand of side-by-side. But nothing out there is close to matchingthe performance level of a RZR right now. And so, if they can get one, that'swhat customers certainly seem like they are hoping for.

Okay. And would you be willing to quantify more on the, yousaid RANGER growth? Would you be willing to quantify kind of what that growthrate is?

It's a high Bob.

That's the level of quantification?

Strong, strong double-digit, I guess, will be myquantification. Just for all the people on the call, because our preparedremarks ran a little long. Typically, we end it at 10:00 Central Time, 11:00Eastern Time. We are going to go for about another 10 minutes. We do have anumber of people lined up in the queue for questions. So, we'll end at about10:10 Central Time, 11:10 Eastern time.

Two more quick questions and I'll move on. The GE deal, thefinancing deal, I think, Mike you said it was lower profitability than theprevious deal. Will we see some kind of make up between, kind of maybe, whereyou're this quarter and where you have been in the past, as a result of thisdeal or can you give us a credit color there?

Well, I think, it’s going to start off pretty slow, it'sreally building up from next to nothing. On an installment basis it's a littlebit different and the most for the dealers to sell on installment loan, than arevolving loan. So, our expectations frankly are relatively modest, as we getthis thing going and ramping up. I think my guidance for the fourth quarter speaks foritself, and we'll learn more through the fourth quarter. And I will try to givea little bit more specific guidance on that for 2008 on the next call.

Okay. And final question, Tom, can you address you had givensome color on 2008, can you give us some sense of level of operating leveragethat might be attained, whether that's through on the SG&A side or grossmargin side? I'm just looking for a little color there.

Yeah, not yet, Bob, as you know, we are a little laterprobably than many companies in the budgeting cycle simply because of theuncertainty around whether in the snowmobile business and so forth. So, we're expected to be a good year, certainly, a year ofprofitable growth, the main drivers again will be the bounce back in core ATVs,because we won't be taken dealer inventory down, full years of Vision and RZR.And also some very, very strong new products in '08, similar perhaps or maybeeven a little better than what we did in '07. So, we're pretty cognizant of the housing market and thepressure on consumers, and we expect the industries continue to be tough, butwe feel pretty good about where we are.

Okay. And you think there's a product that can be as good asthe RZR in '08?

That's what I said.

Okay, just checking, thank you.

Next question.

Hakan Ipekci of Merrill Lynch.

Questions you've given some goals in the operationalexcellence in this call, and I was wondering does that mean that with your 4.25guidance is that going to be a margin expansion, will be a better or a moreimportant contributor than you previously thought or does that mean there couldbe some upside to 4.25 numbers as you look in to '09.?

Let's not get upside to the 4.25 number yet. What we said is$2.2 billion and 4.25, we are ways from 2009, I think my own sense from talkingto investors and analysts and just watching what’s going on in the sector, isthat there's a lot of people that are pretty down on recreational segment rightnow, both are probably about to speed up as I have seen them, [Bronzwick], ArcticCat, Harley-Davidson, Polaris the stock market is at an all time high. And we are just, we are not at an all time low, but prettydepressed valuations and we are optimistic about the future, where the firstpart of this three year plan has gone really almost exactly like we would havehoped with the exception of the RZR probably being a little stronger than whenwould have forecast, and so we continue to think that 4.25 and 2.2 billion aregood numbers. What the operational excellence really allows us to do is towin that competitive battle right. When we say we are going to fight hard, weare going to fight hard and that costs money. Right it costs money to advertisemore, it costs money to develop all these great new products and that money isgot to come from some place and what we have been able to do at this point isto deliver what we need to deliver at the bottom line because we've been pretty[darn] creative on the operational excellence stuff. So let's keep those goalswhere they are now. As we get closer, we'll fill even more and if things getbetter or things get worse, we'll let you know that. But right now, we feelpretty good about those.

I see. And with respect to the availability of finance, itseems that the approval ratings have been steady or even climbing. Given whathappened in the markets, I mean, was your sources indicating in terms of theavailability of the finance in the overall market and kind of how does it gowith what happened in August?

We're satisfied with the credit availability for ourcustomers from our credit providers, as I indicated in the prepared remarks. Inthe prepared remarks our approval rates are just fine, actually a littlebetter. In August…

I think, may be the question was through alternate providersif they don't finance through Polaris, local banks that kind of thing.

Yeah, I think I guess I'm not too aware of what the criteriaare for alternative lenders and if there has been any movement but sorry Idon't know that I can answer that part of the question specifically.

We haven't received, we don't have data on that, but interms of feedbacks from dealers that kind of thing, that's not feedback thatwe've received. That qualified customers can get financing on a widespreadbasis or anything like that, that's not feedback we've received at this pointanyway.

Okay, great, thank you.

Tanai, we've time for two more questions and then we got toend up.

Your next question comes from the line of Ed Aaron of RBCCapital Markets.

Thanks. Can you hear me?

Yes Ed.

Okay, couple of accounting questions. Could you Mike, on thewarranty. Was that because of higher claims or were you just trying to increaseyour reserves a little bit? And then, also on the accounts receivable decline,I was a little bit surprised to see that given that your PG&A sales werepretty good and that you mentioned some improvement in your internationalbusinesses and I have one more question after that but?

Okay. The warranty is do actually to increase in both theprovisioning rate and the claims paid, that goes details for time purposes, wewill see those details in the 10-Q filing but an increase in both. On theaccounts receivable the decline, much of that relates to a change in structurethat we made in Canada inthe last year, where we have sold off our PG&A receivables to GE andtherefore we got much lower receivables in this third quarter than we did lastyear in Canada.And that's the primary reason for the further declines in receivables.

And you had one other piece of the question?

Yeah, this is -- I'm pushing the topic. In the third quarteryou had the, your year-end promotion which included that double down promotion,and I was just wondering, if you could comment may be on the consistency,within your dealer base during that promotion, because some dealersparticipated while some dealers didn't and, I'm just curious to know if you gotmuch feedback from dealers one way or the other and coming out of thatpromotion?

I think, by and large the double down promotion wassuccessful. Just in terms of you know, did we pull sales forward? Why do wepromotions? All that sort of subject, for those that have followed the companyfor quite some time, it’s not unusual that we do promotions at the end of themodel year, similar to what car companies do and others. The purpose is to try to clear the channel as much as youcan of prior model year product, as in this case the model year '08 come in.So, I don't know that you're necessarily pulling sales forward. You are reallygoing after more that value-consciousness buyer, who really doesn't care quiteso much about the latest performance in the machine. He is looking to a moredeal-oriented. In terms of the, if you go back to '04 with the factoryauthorized clearance, in '05 and '06, and we've done that playbook more or lessthe same, I think, each year so, not a big difference there. In terms of theconsistency across the dealer network again, I wouldn't say in comparison toother promotions that we've run from time-to-time, big difference there. I think that feedback that we've gotten from dealersgenerally, and certainly in comparison to competitive brands, they were very,very pleased with how the double down promotion went. Now, we have 1700 ATVdealers, so, you are going to see variation somewhat in there. But I think ifyou look broadly, our feedback was very positive, and quite consistent.

Thanks, nice quarter.

Thank you. We have time for one more question, Tanai.

Your next question comes from the line of Joe Hovorka ofRaymond James.

Thanks guys. Mike, a quick clarification you said somethingearlier. You said $200 million, was that free cash or operating cash flow for2007?

Operating cash flow from --

From continuing operations.

Okay, free cash. Thanks. And then Tom, your comments inregards to the new products for next year being actually equal to or largerincluding with the RZR in '07. I'm assuming that's your existing product lines,not just new adjacent product that you are talking about?

Yeah, I guess I wouldn't say too awful much about thespecifics of any product that we are going to introduce next year, Joe. I thinkit's just more directionally, if you looked at '07, coming off at pretty rough'06, there were a lot of people with concerns where Polaris was going to go,and we talked about this whole idea of winning in a core, deliveringoperational excellence in growth. And, I think all three of them have gone pretty well. We'vegrown market share in every single product line so far. The operationalexcellence, Bennett updated you, but I'm pleased with how that's gone. And thegrowth we’re ahead a pace. So, we are going to keep that same basic formulaworking in 2008 in what's going to be a similar environment, a toughenvironment. And we are not out of good ideas yet, okay? We have some pretty creative people in this company, and youare going to see us kind of turbo charge that effort, if you will, in 2008. Interms of the specific, markets and where they are going to come and all thatsort of stuff, it's just way too early to talk about that. But we will followthat same basic game plan that we showed the world a year ago.

Sure.

Okay. Can you quantify, maybe your ASP growth in ATVs in thethird quarter? I think you said units were down.

Yes. What I said was units were down for the whole company.And at this point in time I don’t have the number to share with you Joe.

Okay.

But obviously the majority had been mix-related, alright.

Right, I was just trying to get a sense of units were down,1% or 8% in ATVs, I guess. Is the ASP growth marginally more than the 15%revenue growth that you've put up or is it significantly big, as far as you'retrying to get into the mix shift?

No comments.

Can you refresh my memory on why D&A is down in ’07versus ’06?

Not off the top of my head.

I am not the only one that forgot why. And then finally, canyou quantify, maybe the foreign currency impact in the quarter? Either on topline operating income, and probably you might want to talk about it?

Joe, we don’t quantify that. I said in my prepared remarksthat it had a positive impact on our sales book. The European currencies andthe Canadian currency moved in our favor, which helps our sales and our grossmargins. However, the yen also impacts our gross margins a little bit, slightlynegative, as well as the European currencies, we purchased a lot of ourcomponent costs in Euro currency. So that dilutes somewhat our gross margins.So net, it's favorable on sales, net favorable on gross margin and netfavorable to bottom line.

Okay, great. Thanks guys.

Okay. With that we are out of time. We want thank everybodyfor participating in the call this morning and we will speak with you nextquarter. Thanks again. Good Bye.

This concludes today's conference call. You may nowdisconnect.