##### Table of Contents



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-K
 þ
    
    Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 For the fiscal year ended December 31, 2006
 o
    
    Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 For the transition period from to.
 Commission file number: 0-25620
 A.S.V.,
Inc.
 
 Minnesota
    
    41-1459569State or other jurisdiction of
    
    I.R.S. Employer Identification No.incorporation or organization
 840 Lily Lane, P.O. Box 5160, Grand Rapids, MN 55744
    
    (218) 327-3434Address of principal executive offices, including zip code
    
    Registrants telephone number,
including area code
 Common Stock, $.01 par value
 None
  o þ
  o þ
  þ o
 þ
  o þ o
  o þ
   DOCUMENTS INCORPORATED BY REFERENCE:




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TABLE OF CONTENTS  PART IItem 1. BUSINESSItem 1A. RISK FACTORSItem 1B. UNRESOLVED STAFF COMMENTSItem 2. PROPERTIESItem 3. LEGAL PROCEEDINGSItem 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERSPART IIItem 5. MARKET FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIESItem 6. Selected Financial DataItem 7. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSItem 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKItem 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATAItem 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSUREItem 9A. CONTROLS AND PROCEDURESItem 9B. OTHER INFORMATIONPART IIIItem 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCEItem 11. EXECUTIVE COMPENSATIONItem 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERSItem 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCEItem 14. PRINCIPAL ACCOUNTANT FEES AND SERVICESPART IVItem 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULESSIGNATURESStatement Regarding Computation of Per Share EarningsSubsidiariesConsent of Indpendent Registered Public Accounting FirmCertificationCertificationCertificationCertification    Table of Contents  
 PART I
 
 Item 1. BUSINESS
 General
   Principal Developments in 2006
 New Models
   Retirement of Chairman/CEO
   2




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Stock Repurchase Plan
    Markets for Our Products
    ®
 Benefits of a Rubber Track Undercarriage
     3




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Products  Posi-Track Products
     Model
    
    Weight (w/out bucket)
    
    Operating Capacity*
    
    Engine Horsepower
    
    List Price ($)RC-30
    
    2,935 lbs
    
    800 lbs
    
    31.5
    
    22,609RC-50
    
    4,750 lbs
    
    1,500 lbs
    
    50
    
    32,939RC-60
    
    5,500 lbs
    
    1,900 lbs
    
    60
    
    37,100SR-70
    
    7,890 lbs
    
    2,750 lbs
    
    71
    
    42,500SR-80
    
    8,060 lbs
    
    3,100 lbs
    
    81
    
    47,500RC-85
    
    8,800 lbs
    
    3,400 lbs
    
    86
    
    46,627RC-100
    
    9,200 lbs
    
    3,800 lbs
    
    99.5
    
    53,490RCV
    
    9,595 lbs
    
    4,000 lbs
    
    86
    
    51,449Scout SC-50**
    
    4,562 lbs
    
    4,000 lbs (bed capacity)
    
    50
    
    24,995
 
 *
    
    Operating capacity shown is based on 50% of tipping load.**
    
    The Scout SC-50 went into production in the first quarter of 2007.   4




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Products  OEM Undercarriages
   Products  Loegering
  Products  Other
  5




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Sales and Marketing
    Disclosure about Segments of an Enterprise and Related Information.
       6




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Affiliation with Caterpillar
 Supply Agreement
   Registration Rights Agreement and Board Representation
  Competition
     7




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Warranty
   Manufacturing and Suppliers
   Intellectual Property Rights
   ®
  8




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Research and Development
  Insurance
  Employees
  Website Access to SEC Reports
  
 Item 1A. RISK FACTORS
  Our revenue and business would be harmed if Caterpillar ceased manufacturing and marketing products
that relate to our Supply Agreement.
   
    
    The overall market for rubber track machines is relatively new and the benefits of
rubber track machines are not currently widely known. Caterpillar and we believe the
market potential for rubber track machines justifies the necessary investment in the
MTL Machines. However, there is no assurance that the MTL Machines will attract
sufficient demand to warrant their continued production and produce the returns
anticipated by us and Caterpillar. We will be relying significantly on Caterpillar for
their continued interest in manufacturing and marketing the MTL Machines. In 2006,
total sales to Caterpillar accounted for 33% of our net sales. If Caterpillar stopped
manufacturing the
MTL Machines, stopped marketing the MTL Machines to its dealers or the Caterpillar
dealers did not adequately promote the sale of the MTL Machines, our revenue would
be decreased and our business would be harmed.
 9




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##### Table of Contents




    
    While Caterpillar has agreed it will purchase 100% of its undercarriage and original
equipment manufacturer service parts requirements for current and certain future
Caterpillar MTLs from us, the Supply Agreement contains no guarantee as to the quantity
of undercarriages or service parts Caterpillar must purchase from us.
    
    The Supply Agreement calls for specified prices for the undercarriages we sell to
Caterpillar for the life of the contract, subject to mutually agreed adjustments for
abnormal cost changes outside of our control due to certain cost fluctuations. If
general raw material prices increase during the term of the Supply Agreement, or if we
are unable to mutually agree on cost changes, the gross profit we may receive on the
sale of undercarriages may be reduced. The Supply Agreement also calls for specified
prices for the service parts we sell to Caterpillar for the life of the contract.
Should the prices we pay to manufacture or purchase these service parts increase during
the term of the Supply Agreement, the gross profit we may receive on the sale of these
service parts may be reduced.
 Our business could be materially harmed if Caterpillar did not actively support and cooperate with
us to provide us with various commercial services.
  Caterpillar has the ability to influence or control us, which could negatively affect other
shareholders and could discourage offers by third parties to acquire us.
   If Caterpillar begins selling, or is perceived to be selling, its shares of our Common Stock, the
market price of our Common Stock may fall.
  If we are unable to manage growth effectively, our business, results of operations and financial
condition would be materially adversely affected.
  10




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A disruption or termination of our relationships with certain suppliers could have a material
adverse effect on our operations.
  A number of our competitors have more resources and more established reputations than us. If we do
not compete effectively, our business will be harmed.
  If our rubber track vehicles do not continue to receive market acceptance, our operating results
will be harmed.
  Our business could be harmed if the Commercial Alliance Agreement with Vermeer Manufacturing Inc.
does not prove to be beneficial.
    Our business may be adversely affected if we are unable to successfully develop new products or if
new products developed are unable to gain market acceptance.
   11




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A cyclical, economic downturn in the construction or farm equipment industries could materially
harm our business.
  The loss of the services of any key member of our management could have a material adverse effect
on our ability to achieve our objectives.
  We may face product liability claims, which could result in losses in excess of our insurance
coverage or in our inability to obtain adequate insurance coverage in the future.
  Our business would be adversely affected if we are not able to protect our intellectual property
rights or if we get involved in litigation relating to our intellectual property rights.
  We may be unable to manufacture our products if any of our manufacturing facilities is damaged,
destroyed or becomes otherwise inoperable.
  We are subject to extensive governmental regulations, and compliance with such regulations is
costly.
  12




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Item 1B. UNRESOLVED STAFF COMMENTS
  
 Item 2. PROPERTIES
       
 Item 3. LEGAL PROCEEDINGS
  
 Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
  13




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PART II
 
 Item 5. MARKET FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER             PURCHASES OF
EQUITY SECURITIES
 Market Information
 ®
 Year Ended December 31, 2005
    
    High
    
    
    LowFirst Quarter
    
    $
    24.03
    
    
    $
    18.24Second Quarter
    
    
    20.73
    
    
    
    16.39Third Quarter
    
    
    24.69
    
    
    
    19.89Fourth Quarter
    
    
    27.38
    
    
    
    18.50
 Year Ended December 31, 2006
    
    High
    
    
    LowFirst Quarter
    
    $
    35.03
    
    
    $
    24.78Second Quarter
    
    
    33.61
    
    
    
    18.00Third Quarter
    
    
    23.42
    
    
    
    14.43Fourth Quarter
    
    
    18.49
    
    
    
    13.61
  Holders
  Dividends
  Purchases of Equity Securities
  
 Item 6. Selected Financial Data
  14




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(Dollar amounts in thousands,
    
    As of and for the years ended December 31,except per share data)
    
    2006 (1)
    
    
    2005
    
    
    2004(2)
    
    
    2003
    
    
    2002Net Sales
    
    $
    246,137
    
    
    $
    245,082
    
    
    $
    160,873
    
    
    $
    96,387
    
    
    $
    44,237Net Earnings
    
    
    22,047
    
    
    
    27,898
    
    
    
    17,175
    
    
    
    8,718
    
    
    
    1,353Net Earnings Per Share-Basic
    
    
    .82
    
    
    
    1.04
    
    
    
    .67
    
    
    
    .43
    
    
    
    .07Net Earnings Per Share-Diluted
    
    
    .81
    
    
    
    1.01
    
    
    
    .64
    
    
    
    .39
    
    
    
    .07Total Assets
    
    
    198,588
    
    
    
    183,221
    
    
    
    145,275
    
    
    
    82,624
    
    
    
    57,210Long-Term Liabilities
    
    
    40
    
    
    
    138
    
    
    
    1,874
    
    
    
    1,845
    
    
    
    1,980Shareholders Equity
    
    
    176,202
    
    
    
    158,087
    
    
    
    126,071
    
    
    
    72,280
    
    
    
    50,467
 
 (1)
    
    Reflects the adoption of SFAS 123R effective January 1,
2006 of $3.0 million.(2)
    
    Includes the results of operation of Loegering Mfg. Inc. from October 1, 2004 (date of
acquisition) to December 31, 2004. 
 Item 7. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 Overview
   Critical Accounting Policies
   Revenue Recognition and Accounts Receivable.
 15




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i.e.
 Inventories.
 Warranties.
 Income Taxes
 Stock-Based Compensation. Share-Based Payment Accounting for Stock-Based Compensation.
  Results of Operations
  Year Ended December 31,2006
    
    
    2005
    
    
    2004Net sales
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %Gross profit
    
    
    23.1
    
    
    
    24.6
    
    
    
    22.6Selling, general and administrative expense
    
    
    9.0
    
    
    
    6.7
    
    
    
    6.0Research and development
    
    
    0.7
    
    
    
    0.7
    
    
    
    0.7Operating income
    
    
    13.4
    
    
    
    17.2
    
    
    
    16.0Net earnings
    
    
    9.0
    
    
    
    11.4
    
    
    
    10.7
 16




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Year Ended December 31,2006
    
    
    2005
    
    
    2004ASV Machines
    
    
    52.7
    %
    
    
    46.3
    %
    
    
    47.5
    %OEM Undercarriages
    
    
    24.8
    
    
    
    30.5
    
    
    
    33.6Parts and other
    
    
    12.4
    
    
    
    13.3
    
    
    
    14.7Loegering
    
    
    10.1
    
    
    
    9.9
    
    
    
    4.2
 Net Sales
  Gross Profit.
 17




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Selling, General and Administrative Expenses.
  Research and Development.
  Other Income (Expense)
  18




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Net Earnings.
  Liquidity and Capital Resources
     Table of Contractual Commitments
  Payments due by period (000s omitted)Contractual Obligations
    
    Total
    
    
    Less than 1 year
    
    
    1-3 years
    
    
    3-5 years
    
    
    More than 5 yearsLong-Term Debt
    
    $
    77
    
    
    $
    37
    
    
    $
    40
    
    
    $
    
    
    
    $
    Operating Leases
    
    
    218
    
    
    
    63
    
    
    
    149
    
    
    
    6
    
    
    
    Purchase Obligations
    
    
    44,101
    
    
    
    44,101
    
    
    
    
    
    
    
    
    
    
    
    Financing Guarantee
    
    
    35
    
    
    
    35
    
    
    
    
    
    
    
    
    
    
    
    Total
    
    $
    44,431
    
    
    $
    44,236
    
    
    $
    189
    
    
    $
    6
    
    
    $
    
 19




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Caterpillar Supply Agreement
  Scope:
 
    
    Consistent with the original Alliance Agreement, Caterpillar will purchase from us
100% of its undercarriage requirements for current and certain future Caterpillar MTLs.
    
    If Caterpillar chooses to manufacture MTLs outside North America for non-North
American markets, Caterpillar will purchase from us 100% of its undercarriage
requirements for these MTLs, provided we meet certain capacity requirements and local
requirements for the applicable geographic area.
    
    Should we choose not to supply undercarriages to Caterpillar for these non-North
American sales, we would grant a royalty-bearing license to Caterpillar to use our
intellectual property to manufacture undercarriages for use on MTLs manufactured
outside North America for the non-North American markets.
    
    Caterpillar will continue to purchase 100% of its requirements for proprietary
original equipment manufacturer aftermarket service parts from us.
    
    We will continue to be allowed to sell our rubber track undercarriages to other
equipment manufacturers for machines that do not compete with Caterpillars MTLs.
    
    We will continue to utilize Caterpillar components in the manufacture of our
products.
 Term:
 
    
    The Supply Agreement commenced on November 1, 2005 and will continue through
November 1, 2010.
    
    The Supply Agreement will automatically renew for successive one-year renewal terms
unless either party provides at least six months prior written notice of termination.
 Pricing:
 
    
    The Supply Agreement calls for specified prices for the undercarriages we sell to
Caterpillar for the life of the contract, subject to mutually agreed adjustments for
abnormal cost changes outside of our control due to certain cost fluctuations.
  Customer Note Receivable
  Off-Balance Sheet Arrangements
  20




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Relationship with Finance Companies
   New Accounting Pronouncements
 Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current
Year Financial Statements Considering the Effects of Prior Year
Misstatements when Quantifying Misstatements in Current Year Financial Statements
 Fair Value Measurements Fair Value Measurement
  The Fair Value Option for Financial Assets and Financial Liabilities: The Fair Value Option for Financial Assets and Financial Liabilities
 21




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Cash Requirements
  Forward-Looking Statements
  
 Item 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
  
 Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
 Financial Statements
  
 Supplementary Financial Information
  
 Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
  22




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Item 9A. CONTROLS AND PROCEDURES
 Evaluation of Disclosure Controls and Procedures
 Managements Annual Report on Internal Control over Financial Reporting 
 Attestation Report of the Registered Public Accounting Firm 
 Changes in Internal Controls
 
 Item 9B. OTHER INFORMATION
  
 PART III
 
 Item 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
  
 Item 11. EXECUTIVE COMPENSATION
  
 Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED 
               STOCKHOLDER
MATTERS
 Equity Compensation Plan Information
  23




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Number of securities
    
    
    
    
    
    Number of securities remainingto be issued upon
    
    
    Weighted-average
    
    
    available for future issuance underexercise of
    
    
    exercise price of
    
    
    equity compensation plansoutstanding options,
    
    
    outstanding options,
    
    
    (excluding securitieswarrants and rights
    
    
    warrants and rights
    
    
    reflected in column (a))Plan category
    
    (a)
    
    
    (b)
    
    
    (c)Equity compensation
plans approved by
security holders
    
    
    1,974,813
    
    
    $
    13.15
    
    
    
    3,357,875Equity compensation
plans not approved
by security holders
    
    
    
    
    
    
    n/a
    
    
    
    Total
    
    
    1,974,813
    
    
    $
    13.15
    
    
    
    3,357,875
  
 Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
  
 Item 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
  
 PART IV
 
 Item 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
 Financial Statements
  Financial Statement Schedules
   Exhibits
 2.1
    
    Merger Agreement, dated as of October 1, 2004 by and among the Company, Loegering
Mfg, Inc., LMI Merger Corp., The Marilyn A. Loegering Revocable Trust and Marilyn A.
Loegering (h)3.1
    
    Third Restated Articles of Incorporation of the Company (o)3.2
    
    Bylaws of the Company (a)
 24




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3.3
    
    Amendment to Bylaws of the Company adopted April 13, 1999 (e)4.1
    
    Specimen form of the Companys Common Stock Certificate (a)10.1*
    
    1996 Incentive and Stock Option Plan (c)10.2*
    
    Employment Agreement dated October 17, 1994 between the Company and Thomas R. Karges (b)10.3*
    
    Amendment to 1996 Incentive and Stock Option Plan (d)10.4*
    
    1998 Non-Employee Director Stock Option Plan (d)10.5*
    
    Amendment to 1998 Non-Employee Director Stock Option Plan (f)10.6*
    
    2004 Stock Incentive Plan (g)10.7*
    
    Form of Incentive Stock Option Agreement used for grants made under the
Companys 1996 and 2004 Stock Option Plans (i)10.8*
    
    Summary of Board of Director Compensation for the Company (j)10.9**
    
    Purchase Agreement between the Company and Caterpillar Inc. effective November 1, 2005 (l)10.10
    
    Registration Rights Agreement between the Company and Caterpillar Inc.,
effective November 1, 2005 (k)10.11**
    
    Commercial Alliance Agreement between the Company and Vermeer Manufacturing Inc.
dated September 23, 2005 (k)10.12*
    
    Description of the Companys 2006 Bonus Plan for certain executive officers (m)10.13*
    
    Agreement between Caterpillar Inc. and Richard A. Benson, effective as of May 3, 2006 (n)10.14*
    
    Employment and Supplement Executive Retirement Pay Agreement between Mark Glasnapp and
the Company, effective as of July 12, 2004 (n)11
    
    Statement re: Computation of Per Share Earnings21
    
    Subsidiaries23
    
    Consent of Grant Thornton LLP, Independent Registered Public Accounting Firm31.1
    
    Certification of the Chief Executive Officer pursuant to Section 302 of the
Sarbanes-Oxley Act of 200231.2
    
    Certification of the Chief Financial Officer pursuant to Section 302 of the
Sarbanes-Oxley Act of 200232.1
    
    Certification of the Chief Executive Officer pursuant to Section 906 of the
Sarbanes-Oxley Act of 200232.2
    
    Certification of the Chief Financial Officer pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002
 
 (a)    Incorporated by reference to the Companys Registration
Statement on Form SB-2 (File No. 33-61284C) filed July 7, 1994.
 25




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##### Table of Contents



(b)
    
    Incorporated by reference to the Companys Quarterly Report on
Form 10-QSB for the quarter ended September 30, 1994 (File No. 33-61284C) filed
November 11, 1994.(c)
    
    Incorporated by reference to the Companys Quarterly Report on
Form 10-QSB for the quarter ended June 30, 1997 (File No. 0-25620) filed
electronically August 13, 1997.(d)
    
    Incorporated by reference to the Companys Definitive Proxy
Statement for the year ended December 31, 1997 (File No. 0-25620) filed
electronically April 28, 1998.(e)
    
    Incorporated by reference to the Companys Quarterly Report on
Form 10-Q for the quarter ended September 30, 1999 (File No. 0-25620) filed
electronically November 12, 1999.(f)
    
    Incorporated by reference to the Companys Quarterly Report on
Form 10-Q for the quarter ended June 30, 2000 (File No. 0-25620) filed
electronically August 10, 2000.(g)
    
    Incorporated by reference to the Companys Definitive Proxy
Statement for the year ended December 31, 2003 (File No. 0-25620) filed
electronically April 29, 2004.(h)
    
    Incorporated by reference to the Companys Current Report on
Form 8-K (File NO. 0-25620) filed electronically October 7, 2004.(i)
    
    Incorporated by reference to the Companys Quarterly Report on
Form 10-Q for the quarter ended September 30, 2004 (File No. 0-25620) filed
electronically November 10, 2004.(j)
    
    Incorporated by reference to the Companys Current Report on
Form 8-K filed electronically July 18, 2005.(k)
    
    Incorporated by reference to the Companys Quarterly Report on
Form 10-Q for the quarter ended September 30, 2005 (File No. 0-25620) filed
electronically November 9, 2005.(l)
    
    Incorporated by reference to the Companys Quarterly Report on
Form 10-Q/A for the quarter ended September 30, 2005 (File No. 0-25620) filed
electronically November 14, 2005.(m)
    
    Incorporated by reference to Item 1.01 of the Companys Current
Report on Form 8-K filed electronically April 17, 2006.(n)
    
    Incorporated by reference to the Companys Current Report on
Form 8-K filed electronically May 8, 2006.(o)
    
    Incorporated by reference to the Companys Quarterly Report on
Form 10-Q for the quarter ended June 30, 2006 (File No. 0-25620) filed
electronically August 9, 2006.
 *
    
    Indicates management contract or compensation plan or arrangement.**
    
    Certain information contained in this document has been omitted
and filed separately accompanied by a confidential request pursuant to Rule
24b-2 of the Securities Exchange Act of 1934. 26




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SIGNATURES
  A.S.V., Inc.By: /s/ Richard A. Benson

Richard A. Benson, Chief Executive Officer
    
    Date: March 15, 2007
  /s/ Richard A. Benson

Richard A. Benson, Chairman of the Board,
Chief Executive Officer and Director
(principal executive officer)
    
    Date: March 15, 2007/s/ Thomas R. Karges
    
    Date: March 15, 2007Thomas R. Karges, Chief Financial Officer and Secretary
(principal financial officer and
principal accounting officer)/s/ Jerome T. Miner
    
    Date: March 14, 2007Jerome T. Miner, Vice-Chairman of the Board and Director/s/ James H. Dahl
    
    Date: March 13, 2007James Dahl, Director/s/ Leland T. Lynch
    
    Date: March 14, 2007Leland T. Lynch, Director/s/ Karlin S. Symons
    
    Date: March 15, 2007Karlin S. Symons, Director/s/ Bruce D. Iserman
    
    Date: March 14, 2007Bruce D. Iserman, Director/s/ Kenneth J. Zika
    
    Date: March 13, 2007Kenneth J. Zika, Director
 27




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##### Table of Contents



A.S.V., Inc.
CONSOLIDATED BALANCE SHEETS
December 31, 2006 and 2005
 (In thousands, except share data)
 2006
    
    
    2005ASSETSCURRENT ASSETSCash and cash equivalents
    
    $
    17,090
    
    
    $
    35,517Short-term investments
    
    
    220
    
    
    
    1,224Accounts receivable (net of allowance for doubtful
accounts of $597 in 2006; $547 in 2005)Trade
    
    
    39,777
    
    
    
    33,706Caterpillar Inc.
    
    
    4,407
    
    
    
    10,087Inventories
    
    
    71,384
    
    
    
    52,362Deferred income taxes
    
    
    4,840
    
    
    
    3,545Other current assets
    
    
    903
    
    
    
    1,083Total current assets
    
    
    138,621
    
    
    
    137,524PROPERTY AND EQUIPMENT, net
    
    
    29,342
    
    
    
    20,907LONG-TERM INVESTMENTS
    
    
    14,155
    
    
    
    7,995OTHER NON-CURRENT ASSETS
    
    
    313
    
    
    
    535INTANGIBLES, net
    
    
    7,771
    
    
    
    7,874GOODWILL
    
    
    8,386
    
    
    
    8,386$
    198,588
    
    
    $
    183,221LIABILITIES AND SHAREHOLDERS EQUITYCURRENT LIABILITIESCurrent portion of long-term liabilities
    
    $
    37
    
    
    $
    71Accounts payableTrade
    
    
    10,660
    
    
    
    14,031Caterpillar Inc.
    
    
    857
    
    
    
    1,467Accrued liabilitiesWarranties
    
    
    5,894
    
    
    
    5,077Other
    
    
    2,582
    
    
    
    2,195Income taxes payable
    
    
    686
    
    
    
    855Total current liabilities
    
    
    20,716
    
    
    
    23,696LONG-TERM LIABILITIES, less current portion
    
    
    40
    
    
    
    138DEFERRED INCOME TAXES
    
    
    1,630
    
    
    
    1,300COMMITMENTS AND CONTINGENCIES
    
    
    
    
    
    
    SHAREHOLDERS EQUITYCapital stock, $.01 par value:Preferred stock, 5,000,000 shares authorized;
no shares issued or outstanding
    
    
    
    
    
    
    Common stock, 70,000,000 shares authorized; shares issued
and outstanding  26,716,420 in 2006; 26,988,187 in 2005
    
    
    267
    
    
    
    270Additional paid-in capital
    
    
    88,398
    
    
    
    92,327Retained earnings
    
    
    87,537
    
    
    
    65,490176,202
    
    
    
    158,087$
    198,588
    
    
    $
    183,221
  F-1




---



##### Table of Contents



A.S.V., Inc.
CONSOLIDATED STATEMENTS OF EARNINGS
Years ended December 31, 2006, 2005 and 2004
 (In thousands, except share data)
 2006
    
    
    2005
    
    
    2004Net salesTrade
    
    $
    164,750
    
    
    $
    149,882
    
    
    $
    95,798Caterpillar Inc.
    
    
    81,387
    
    
    
    95,200
    
    
    
    65,075Total net sales
    
    
    246,137
    
    
    
    245,082
    
    
    
    160,873Cost of goods sold
    
    
    189,345
    
    
    
    184,799
    
    
    
    124,473Gross profit
    
    
    56,792
    
    
    
    60,283
    
    
    
    36,400Operating expensesSelling, general and administrative
    
    
    22,048
    
    
    
    16,468
    
    
    
    9,605Research and development
    
    
    1,692
    
    
    
    1,721
    
    
    
    1,107Operating income
    
    
    33,052
    
    
    
    42,094
    
    
    
    25,688Other income (expense)Interest expense
    
    
    
    
    
    
    (108
    )
    
    
    (124
    )Interest income
    
    
    1,685
    
    
    
    1,372
    
    
    
    833Other, net
    
    
    40
    
    
    
    390
    
    
    
    28Income before income taxes
    
    
    34,777
    
    
    
    43,748
    
    
    
    26,425Provision for income taxes
    
    
    12,730
    
    
    
    15,850
    
    
    
    9,250NET EARNINGS
    
    $
    22,047
    
    
    $
    27,898
    
    
    $
    17,175Net earnings per common shareBasic
    
    $
    .82
    
    
    $
    1.04
    
    
    $
    .67Diluted
    
    $
    .81
    
    
    $
    1.01
    
    
    $
    .64Weighted average number of common shares outstandingBasic
    
    
    26,860,199
    
    
    
    26,820,216
    
    
    
    25,471,998Diluted
    
    
    27,288,972
    
    
    
    27,725,241
    
    
    
    26,825,000
  F-2




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##### Table of Contents



A.S.V., Inc.
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS EQUITY
Years ended December 31, 2006, 2005 and 2004
 (In thousands, except share data)
 AdditionalCommon stock
    
    
    paid-in
    
    
    RetainedShares
    
    
    Amount
    
    
    capital
    
    
    earnings
    
    
    TotalBalance at December 31, 2003
    
    
    22,107,176
    
    
    $
    221
    
    
    $
    51,641
    
    
    $
    20,417
    
    
    $
    72,279Issuance of common stock, net of
issuance costs
    
    
    3,936,946
    
    
    
    39
    
    
    
    36,529
    
    
    
    
    
    
    
    36,568Exercise of stock options, net of
issuance costs
    
    
    780,500
    
    
    
    8
    
    
    
    6,158
    
    
    
    
    
    
    
    6,166Tax benefit from exercise of
stock options
    
    
    
    
    
    
    
    
    
    
    3,400
    
    
    
    
    
    
    
    3,400Cost of shares and warrant retired
    
    
    (151,308
    )
    
    
    (1
    )
    
    
    (9,516
    )
    
    
    
    
    
    
    (9,517
    )Net earnings
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    17,175
    
    
    
    17,175Balance at December 31, 2004
    
    
    26,673,314
    
    
    
    267
    
    
    
    88,212
    
    
    
    37,592
    
    
    
    126,071Exercise of stock options, net
    
    
    320,470
    
    
    
    3
    
    
    
    2,662
    
    
    
    
    
    
    
    2,665Tax benefit from exercise of
stock options
    
    
    
    
    
    
    
    
    
    
    1,570
    
    
    
    
    
    
    
    1,570Cost of shares retired
    
    
    (5,597
    )
    
    
    
    
    
    
    (117
    )
    
    
    
    
    
    
    (117
    )Net earnings
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    27,898
    
    
    
    27,898Balance at December 31, 2005
    
    
    26,988,187
    
    
    
    270
    
    
    
    92,327
    
    
    
    65,490
    
    
    
    158,087Exercise of stock options, net
    
    
    229,082
    
    
    
    2
    
    
    
    1,816
    
    
    
    
    
    
    
    1,818Stock option expense
    
    
    
    
    
    
    
    
    
    
    2,991
    
    
    
    
    
    
    
    2,991Tax benefit from exercise of
stock options
    
    
    
    
    
    
    
    
    
    
    1,310
    
    
    
    
    
    
    
    1,310Cost of shares retired
    
    
    (500,849
    )
    
    
    (5
    )
    
    
    (10,046
    )
    
    
    
    
    
    
    (10,051
    )Net earnings
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    22,047
    
    
    
    22,047Balance at December 31, 2006
    
    
    26,716,420
    
    
    $
    267
    
    
    $
    88,398
    
    
    $
    87,537
    
    
    $
    176,202
  F-3




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##### Table of Contents



A.S.V., Inc.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Years ended December 31, 2006, 2005 and 2004
 (In thousands)
 2006
    
    
    2005
    
    
    2004Cash flows from operating activities:Net earnings
    
    $
    22,047
    
    
    $
    27,898
    
    
    $
    17,175Adjustments to reconcile net earnings to net cash
provided by operating activities:Depreciation
    
    
    2,865
    
    
    
    2,109
    
    
    
    1,120Amortization
of intangibles
    
    
    103
    
    
    
    103
    
    
    
    26Deferred income taxes
    
    
    (965
    )
    
    
    (1,070
    )
    
    
    225Stock-based compensation expense
    
    
    2,991
    
    
    
    
    
    
    
    Tax benefit from stock option exercises
    
    
    1,310
    
    
    
    1,570
    
    
    
    3,400Gain on sale of product line
    
    
    
    
    
    
    (325
    )
    
    
    Changes in operating assets and liabilities, net of
effects of purchase of Loegering Mfg, Inc.:Accounts receivable
    
    
    (391
    )
    
    
    (7,361
    )
    
    
    (19,240
    )Inventories
    
    
    (19,022
    )
    
    
    (17,529
    )
    
    
    (3,344
    )Other assets
    
    
    402
    
    
    
    148
    
    
    
    2,179Accounts payable
    
    
    (3,981
    )
    
    
    4,046
    
    
    
    3,087Accrued liabilities
    
    
    1,204
    
    
    
    2,777
    
    
    
    1,397Income taxes
    
    
    (169
    )
    
    
    321
    
    
    
    534Net cash provided by operating activities
    
    
    6,394
    
    
    
    12,687
    
    
    
    6,559Cash flows from investing activities:Purchase of property and equipment
    
    
    (11,300
    )
    
    
    (11,908
    )
    
    
    (4,653
    )Proceeds from sale of product line
    
    
    
    
    
    
    350
    
    
    
    Cash paid for purchase of Loegering Mfg. Inc.
    
    
    
    
    
    
    
    
    
    
    (3,480
    )Purchase of long-term investments
    
    
    (6,160
    )
    
    
    (2,082
    )
    
    
    (5,913
    )Purchase of short-term investments
    
    
    (220
    )
    
    
    (1,224
    )
    
    
    (9,563
    )Redemption of short-term investments
    
    
    1,224
    
    
    
    9,562
    
    
    
    2,306Net cash used in investing activities
    
    
    (16,456
    )
    
    
    (5,302
    )
    
    
    (21,303
    )Cash flows from financing activities:Proceeds from long-term liabilities
    
    
    
    
    
    
    
    
    
    
    100Principal payments on long-term liabilities
    
    
    (132
    )
    
    
    (1,854
    )
    
    
    (737
    )Principal payments on short-term note payable
    
    
    
    
    
    
    
    
    
    
    (3,050
    )Proceeds from issuance of common stock
    
    
    
    
    
    
    
    
    
    
    21,818Proceeds from exercise of stock options and warrant
    
    
    1,818
    
    
    
    2,665
    
    
    
    6,166Retirement of common stock and warrant
    
    
    (10,051
    )
    
    
    (117
    )
    
    
    (9,518
    )Net cash provided by (used in) financing activities
    
    
    (8,365
    )
    
    
    694
    
    
    
    14,779Net increase (decrease) in cash and cash equivalents
    
    
    (18,427
    )
    
    
    8,079
    
    
    
    35Cash and cash equivalents at beginning of year
    
    
    35,517
    
    
    
    27,438
    
    
    
    27,403Cash and cash equivalents at end of year
    
    $
    17,090
    
    
    $
    35,517
    
    
    $
    27,438Supplemental disclosure of cash flow information:Cash paid for interest
    
    $
    
    
    
    $
    118
    
    
    $
    131Cash paid for income taxes
    
    $
    12,544
    
    
    $
    15,029
    
    
    $
    5,044Supplemental disclosure of non-cash
investing and financing activities:Issuance of common stock for purchase of Loegering Mfg. Inc.
    
    $
    
    
    
    $
    
    
    
    $
    14,750
 
 F-4




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##### Table of Contents



A.S.V., Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2006, 2005 and 2004
(Dollar amounts in thousands, except share data)
 NOTE A  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
   Principles of Consolidation
  Revenue Recognition
  Fair Value of Financial Instruments
  Cash and Cash Equivalents
  Investments
   Accounts Receivable
  F-5




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##### Table of Contents



A.S.V., Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2006, 2005 and 2004
(Dollar amounts in thousands, except share data)
 NOTE A
 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES  Continued
  December 31,2006
    
    
    2005Balance, beginning of year
    
    $
    547
    
    
    $
    296Bad debt expense
    
    
    863
    
    
    
    346Accounts written off
    
    
    (813
    )
    
    
    (95
    )Balance, end of year
    
    $
    597
    
    
    $
    547
  Inventories
  Property and Equipment
  Impairment of Long-Lived Assets
 Accounting for the
Impairment or Disposal of Long-Lived Assets,
 Intangibles
   Year ending December 31,2007
    
    $
    1032008
    
    $
    1032009
    
    $
    1032010
    
    $
    1032011
    
    $
    103
 F-6




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##### Table of Contents



A.S.V., Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2006, 2005 and 2004
(Dollar amounts in thousands, except share data)
 NOTE A
 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES  Continued
 Goodwill
  Income Taxes
  Warranties
   December 31,2006
    
    
    2005Balance, beginning of year
    
    $
    5,077
    
    
    $
    3,078Expense for new warranties issued
    
    
    3,949
    
    
    
    5,403Warranty claims
    
    
    (3,132
    )
    
    
    (3,404
    )Balance, end of year
    
    $
    5,894
    
    
    $
    5,077
 Advertising Expense
  Shipping Costs
  Research and Development
  Employee Savings and Profit Sharing Plan
  F-7




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##### Table of Contents



A.S.V., Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  Continued
December 31, 2006, 2005 and 2004
(Dollar amounts in thousands, except share data)
 NOTE A
 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES  Continued
 Stock-Based Compensation
 Share-Based Payment Accounting
for Stock-Based Compensation.
  Classification in the
Statement of Cash Flows of the Income Tax Benefit Received by a Company upon Exercise of a
Nonqualified Employee Stock Option.
 Net Earnings Per Common Share
   Year ended December 31,2006
    
    2005
    
    2004Common stock equivalents
    
    
    428,773
    
    
    
    905,025
    
    
    
    1,353,002Anti-dilutive options
    
    
    861,263
    
    
    
    
    
    
    
    
 Use of Estimates
  Segment Information
 Disclosure about Segments of an Enterprise and Related Information.
 F-8




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##### Table of Contents



A.S.V., Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  Continued
December 31, 2006, 2005 and 2004
(Dollar amounts in thousands, except share data)
 NOTE A
 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES  Continued
 New Accounting Pronouncements
 Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year
Financial Statements Considering the Effects of Prior Year Misstatements
when Quantifying Misstatements in Current Year Financial Statements
 Fair Value Measurements Fair Value Measurement
 Accounting for Uncertainty in Income Taxes Accounting for Uncertainty in Income Taxes  an interpretation of FASB Statement
No. 109
 The Fair Value Option for Financial Assets and Financial Liabilities: The Fair Value Option for Financial Assets and Financial Liabilities
 NOTE B
 ACQUISITION
    F-9




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##### Table of Contents



A.S.V., Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  Continued
December 31, 2006, 2005 and 2004
(Dollar amounts in thousands, except share data)
 NOTE B
 ACQUISITION  Continued
 Current assets
    
    $
    7,117Equipment
    
    
    1,444Non-current assets
    
    
    123Intangible assets
    
    
    8,028Goodwill
    
    
    8,386Total assets acquired
    
    
    25,098Current liabilities
    
    
    6,603Long-term debt
    
    
    265Total liabilities assumed
    
    
    6,868Net assets acquired
    
    $
    18,230
   Net sales
    
    $
    171,167Income before income taxes
    
    
    25,710Net earnings
    
    $
    16,721Net earnings per shareBasic
    
    $
    0.64Diluted
    
    $
    0.61
 NOTE C
 INVENTORIES
  December 31,2006
    
    
    2005Raw materials, service parts and work-in-process
    
    $
    53,390
    
    
    $
    42,122Finished goods
    
    
    16,682
    
    
    
    8,922Used equipment held for resale
    
    
    1,312
    
    
    
    1,318$
    71,384
    
    
    $
    52,362
 NOTE D
 PROPERTY AND EQUIPMENT
  December 31,2006
    
    
    2005Land
    
    $
    717
    
    
    $
    694Buildings and improvements
    
    
    14,085
    
    
    
    7,533Tooling
    
    
    6,621
    
    
    
    5,103Machinery and equipment
    
    
    16,169
    
    
    
    13,006Vehicles
    
    
    452
    
    
    
    42138,044
    
    
    
    26,757Less accumulated depreciation
    
    
    8,702
    
    
    
    5,850$
    29,342
    
    
    $
    20,907
  F-10




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##### Table of Contents



A.S.V., Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  Continued
December 31, 2006, 2005 and 2004
(Dollar amounts in thousands, except share data)
 NOTE E
 INCOME TAXES
  Year ended December 31,2006
    
    
    2005
    
    
    2004CurrentFederal
    
    $
    12,175
    
    
    $
    15,240
    
    
    $
    8,300State
    
    
    1,520
    
    
    
    1,680
    
    
    
    72513,695
    
    
    
    16,920
    
    
    
    9,025Deferred
    
    
    (965
    )
    
    
    (1,070
    )
    
    
    225$
    12,730
    
    
    $
    15,850
    
    
    $
    9,250
  December 31,2006
    
    
    2005Current Assets:Allowance for doubtful accounts
    
    $
    210
    
    
    $
    190Inventory
    
    
    1,745
    
    
    
    1,190Accrued warranty
    
    
    2,170
    
    
    
    1,865Non-statutory stock options
    
    
    495
    
    
    
    Other reserves and accruals
    
    
    220
    
    
    
    300$
    4,840
    
    
    $
    3,545Long-Term Liabilities:Depreciation
    
    $
    1,630
    
    
    $
    1,300
  2006
    
    2005
    
    2004Statutory federal rate
    
    
    35.0
    %
    
    
    35.0
    %
    
    
    35.0
    %State income taxes, net of federal benefit
    
    
    2.8
    
    
    
    2.3
    
    
    
    2.0Research and development tax credit
    
    
    (0.7
    )
    
    
    (0.3
    )
    
    
    (1.2
    )Foreign tax benefits
    
    
    (0.7
    )
    
    
    (0.4
    )
    
    
    (0.4
    )Domestic production activity deduction
    
    
    (0.6
    )
    
    
    (0.7
    )
    
    
    Other
    
    
    0.8
    
    
    
    0.3
    
    
    
    (0.4
    )36.6
    %
    
    
    36.2
    %
    
    
    35.7
    %
  NOTE F
TRANSACTIONS WITH CATERPILLAR
  F-11




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##### Table of Contents



A.S.V., Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  Continued
December 31, 2006, 2005 and 2004
(Dollar amounts in thousands, except share data)
 NOTE F
TRANSACTIONS WITH CATERPILLAR  Continued
    NOTE G
 STOCK-BASED COMPENSATION
  Share-Based
Payment Accounting
for Stock Issued to Employees,
  Income before income taxes
    
    $
    2,974Net income
    
    $
    1,885Earnings per share  Basic and Diluted
    
    $
    .07
   F-12




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##### Table of Contents



A.S.V., Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  Continued
December 31, 2006, 2005 and 2004
(Dollar amounts in thousands, except share data)
 NOTE G
 STOCK-BASED COMPENSATION  Continued
 December 31,2005
    
    
    2004Net earnings, as reported
    
    $
    27,898
    
    
    $
    17,175Less total stock-based compensation
determined under fair value methods
for all awards, net of income taxes
    
    
    (1,669
    )
    
    
    (1,650
    )Pro forma net earnings
    
    $
    26,229
    
    
    $
    15,525Earnings per share:Basic  as reported
    
    $
    1.04
    
    
    $
    .67Basic  pro forma
    
    $
    0.98
    
    
    $
    .61Diluted  as reported
    
    $
    1.01
    
    
    $
    .64Diluted  pro forma
    
    $
    0.95
    
    
    $
    .58
  Year ended December 31,2006
    
    2005
    
    2004Risk-free interest rate
    
    
    4.72
    %
    
    
    4.09
    %
    
    
    3.78
    %Expected volatility
    
    
    35.02
    %
    
    
    39.45
    %
    
    
    52.10
    %Expected term (in years)
    
    
    3.75
    
    
    
    6.05
    
    
    
    6.92Dividend yield
    
    
    
    
    
    
    
    
    
    
    
   WeightedWeighted
    
    
    AverageAverage
    
    
    Remaining
    
    
    AggregateExercise
    
    
    Contractual
    
    
    IntrinsicShares
    
    
    Price
    
    
    Life (Years)
    
    
    ValueOutstanding at December 31, 2003
    
    
    2,116,240
    
    
    $
    6.10Granted
    
    
    689,500
    
    
    
    15.66Exercised
    
    
    (780,500
    )
    
    
    7.93Canceled
    
    
    (33,250
    )
    
    
    10.52Outstanding at December 31, 2004
    
    
    1,991,990
    
    
    
    8.62Granted
    
    
    288,000
    
    
    
    19.82Exercised
    
    
    (320,470
    )
    
    
    8.44Canceled
    
    
    (9,000
    )
    
    
    18.69Outstanding at December 31, 2005
    
    
    1,950,520
    
    
    
    8.62Granted
    
    
    282,500
    
    
    
    10.13Exercised
    
    
    (229,082
    )
    
    
    7.95Canceled
    
    
    (29,125
    )
    
    
    20.93Outstanding at December 31, 2006
    
    
    1,974,813
    
    
    $
    13.15
    
    
    
    3.63
    
    
    $
    10,876Exercisable at December 31, 2006
    
    
    976,824
    
    
    $
    8.51
    
    
    
    3.18
    
    
    $
    7,838
 F-13




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##### Table of Contents



A.S.V., Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  Continued
December 31, 2006, 2005 and 2004
(Dollar amounts in thousands, except share data)
 NOTE G
 STOCK-BASED COMPENSATION  Continued
   Options Outstanding
    
    
    Options ExercisableWeighted-averageNumber
    
    
    remaining
    
    
    Weighted-
    
    
    Number
    
    
    Weighted-Range of
    
    outstanding
    
    
    contractual
    
    
    average
    
    
    exercisable at
    
    
    averageexercise prices
    
    at period end
    
    
    life (years)
    
    
    exercise price
    
    
    period end
    
    
    exercise price$    4.04-5.88
    
    
    828,150
    
    
    
    2.92
    
    
    $
    4.54
    
    
    
    593,411
    
    
    $
    4.60$    6.13-7.72
    
    
    70,300
    
    
    
    0.92
    
    
    
    6.37
    
    
    
    70,300
    
    
    
    6.37$14.45-20.54
    
    
    781,363
    
    
    
    4.45
    
    
    
    16.69
    
    
    
    304,113
    
    
    
    16.22$22.60-32.22
    
    
    295,000
    
    
    
    4.09
    
    
    
    29.57
    
    
    
    9,000
    
    
    
    22.601,974,813
    
    
    
    
    
    
    $
    13.15
    
    
    
    976,824
    
    
    $
    8.51
  WeightedAverageGrant DateFair ValueShares
    
    Per ShareOutstanding at December 31, 2005
    
    
    1,250,615
    
    
    $
    6.07Granted
    
    
    282,500
    
    
    
    10.13Vested
    
    
    (506,001
    )
    
    
    7.93Canceled
    
    
    (29,125
    )
    
    
    10.71Outstanding at December 31, 2006
    
    
    997,989
    
    
    
    7.66
 NOTE H
 STOCK BUYBACK PLANS
    NOTE I
 RELATED PARTY TRANSACTION
  F-14




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##### Table of Contents



A.S.V., Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  Continued
December 31, 2006, 2005 and 2004
(Dollar amounts in thousands, except share data)
 NOTE J
 FINANCING GUARANTEE
  NOTE K
 MAJOR SUPPLIERS
  NOTE L
 SUPPLEMENTARY FINANCIAL INFORMATION (unaudited)
  2006Quarters
    
    1st
    
    2nd
    
    3rd
    
    4thNet sales
    
    $
    64,877
    
    
    $
    72,149
    
    
    $
    62,998
    
    
    $
    46,113Gross profit
    
    
    16,284
    
    
    
    17,016
    
    
    
    13,855
    
    
    
    9,637Net earnings
    
    
    6,936
    
    
    
    7,601
    
    
    
    5,078
    
    
    
    2,432Net earnings per common shareBasic
    
    
    .26
    
    
    
    .28
    
    
    
    .19
    
    
    
    .09Diluted
    
    
    .25
    
    
    
    .28
    
    
    
    .19
    
    
    
    .09
 2005Quarters
    
    1st
    
    2nd
    
    3rd
    
    4thNet sales
    
    $
    53,180
    
    
    $
    56,692
    
    
    $
    69,219
    
    
    $
    65,991Gross profit
    
    
    12,759
    
    
    
    13,866
    
    
    
    17,287
    
    
    
    16,371Net earnings
    
    
    5,543
    
    
    
    6,184
    
    
    
    8,001
    
    
    
    8,170Net earnings per common shareBasic
    
    
    .21
    
    
    
    .23
    
    
    
    .30
    
    
    
    .30Diluted
    
    
    .20
    
    
    
    .22
    
    
    
    .29
    
    
    
    .29
 F-15




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##### Table of Contents



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
   Share-Based Payment
   Internal
ControlIntegrated Framework
  
 F-16




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##### Table of Contents



Managements Report on Internal Control over Financial Reporting
    Internal Control-Integrated Framework.
  F-17




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##### Table of Contents



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
 Internal ControlIntegrated Framework
    Internal ControlIntegrated Framework Internal
ControlIntegrated Framework
  
 F-18




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##### Table of Contents



A.S.V., Inc.
SCHEDULE II  VALUATION AND QUALIFYING ACCOUNTS
Years ended December 31, 2006, 2005 and 2004
 Balance
    
    
    Additions
    
    
    
    
    
    
    BalanceBeginning
    
    
    Charged to
    
    
    
    
    
    
    End ofAccrued Warranties
    
    of Period
    
    
    Expense
    
    
    Deductions (A)
    
    
    Period2006
    
    $
    5,076,570
    
    
    $
    3,949,514
    
    
    $
    3,132,303
    
    
    $
    5,893,7812005
    
    $
    3,078,382
    
    
    $
    5,402,402
    
    
    $
    3,404,214
    
    
    $
    5,076,5702004
    
    $
    1,341,100
    
    
    $
    3,323,791
    
    
    $
    1,586,509
    
    
    $
    3,078,382
 
 (A)
    
    Warranty credits issued




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##### Table of Contents



EXHIBIT INDEX
 Exhibit
    
    
    
    Method of Filing11
    
    
    Statement re: Computation of Per Share Earnings
    
    Filed herewith electronically21
    
    
    Subsidiaries
    
    Filed herewith electronically23
    
    
    Consent of Grant Thornton LLP, Independent Registered
Public Accounting Firm
    
    Filed herewith electronically31.1
    
    
    Section 302 Certification of the Chief Executive Officer
    
    Filed herewith electronically31.2
    
    
    Section 302 Certification of the Chief Financial Officer
    
    Filed herewith electronically32.1
    
    
    Section 906 Certification of the Chief Executive Officer
    
    Filed herewith electronically32.2
    
    
    Section 906 Certification of the Chief Financial Officer
    
    Filed herewith electronically