Polaris 2006 Annual Report Download - page 5

2006 POLARIS INDUSTRIES INC. ANNUAL REPORT PAGE 1
A LETTER FROM
THE CEO AND COO
DEAR FELLOW SHAREHOLDERS:
2006 was a disappointing year for Polaris. The negatives outweighed the positives
and, for the first time in the last 25 years, we did not produce record earnings per
share from continuing operations. The following summarizes 2006:
• Sales declined by 11 percent to $1.66 billion.
• Net income from continuing operations declined by 18 percent to $113 million.
• Earnings per share from continuing operations decreased 14 percent to $2.72.
• Gross margins declined by 30 basis points.
• The debt-to-total capital ratio increased to 60 percent. Essentially, all of the
increase was the result of a significant share buy-back. In 2006, we repurchased
a total of 17 percent of the outstanding shares of the company.
• The total annual return to shareholders was a negative 4 percent. For the past
five years, our total return to shareholders has been 80 percent.
While the results were disappointing to the entire Polaris team, it should be noted
that for earnings per share from continuing operations, this was the third-best year
in our history.
In terms of individual results for the various business segments, there were both
successes and disappointments. Let’s start with the things that went well.
We had an excellent year in growing the RANGER utility vehicle business. The RANGER
business has seen fast, profitable growth for the last several years, and 2006 continued
the trend. The overall worldwide side-by-side market grew an estimated 19 percent
in 2006, and our
RANGER business continued to outpace the industry growth in 2006.
Thomas C. Tiller
Chief Executive Officer
Bennett J. Morgan
President and Chief Operating Officer