Polaris 2008 Annual Report Download - page 6

2 Polaris Industries Inc. 2008 Annual Report
Core Strengths Drive Long-Term Success
Polaris has continually proved it can not only survive tough economic environments, but
continue to lead the industry through weak sales cycles. Three core strengths are at the
heart of our long-term viability:
Innovative Culture: We gain sales by being first to market with new features or new
models. Our culture of continuous improvement and passion for performance have yielded
such industry-leading innovations as the automatic transmission ATV, electronic fuel
injection 4x4s, independent rear suspension and on-demand all-wheel drive. (For current
innovations, see the featured story beginning on Page 4.)
Applications Engineering: The ride and handling capability of our vehicles is considered
a key competitive advantage for Polaris. By being close to the customer — and being riders
ourselves — we gain insight into what customers want, and then engineer new features or
models to meet those needs. Good examples are the custom products we build for the
military, based on our ATV and RANGER platforms, and our new RANGER HD (pictured at
left), designed to meet the needs of customers who have to carry heavy loads.
Flexible Manufacturing: We can quickly adapt to swings in demand because we
design our vehicles with common platforms and processes, making it easy to change
which product we make. Our dedicated, experienced workforce and modern, efficient
manufacturing facilities allow us to adapt quickly to changes in industry trends.
2008 HIGHLIGHTS
As we look back on 2008, several achievements stand out:
• Continuedside-by-sideleadership: Our RANGER RZR
side-by-side vehicle took the industry by storm when we
introduced it in 2007. In 2008, we introduced its powerful
big brother, the RANGER RZR S. This new model is faster
and more stylish to please the sport performance crowd.
We also added a youth RANGER RZR 170 to meet the
market demand of our younger riders.
• Mademost-popularATVevenbetter: We celebrated the
1 millionth sale of the Sportsman ATV by reengineering it
for even better performance. Our Sportsman line has been
the industry’s recognized recreation leader for 13 years,
but not being one to rest on our laurels, we created a
99 percent all-new Sportsman XP to take the off road
experience to levels never seen before.
• Internationalexpansion: Our international sales grew
18 percent in 2008, up from 11 percent growth in 2007.
(For details, see the featured International story on Page 8.)
• PG&Agrowth: Sales increased 17 percent, with growth
coming from all product lines and geographies. We
continue to feed consumer demand with hundreds of
new, innovative products each year.
• Energizingthesnowmobilemarket: Snowmobile sales
grew 15 percent in 2008 as we continued to manage the
business conservatively. Dealer inventories were at their
lowest levels in years, and we continued to innovate with
the unveiling of our new RUSH™ model for 2009
A Letter from the CEO and COO (cont.)
at the Winter X Games in January, a fitting venue for one
of our most innovative snowmobiles ever. (For details, see
the featured Innovation story beginning on Page 4.)
• Improvingthedealerprocess: In 2008, we continued to
help our dealers reduce their inventory levels to the lowest
level in five years. Additionally, to help our dealers drive
growth, respond quickly to market changes and improve
their profitability, we introduced a pilot Maximum Velocity
Program (MVP) to select dealers. It emphasizes retail
sales, rather than long-term order fulfillment. Currently,
about 17 percent of the volume of our North American
sales is generated through the MVP process. Early results
have been encouraging. (For details, see the featured
Operational Excellence story on Page 6.)
• Militarygrowth: Sales for 2008 increased by 42 percent,
and operating profit increased by even more. We have
expanded our customer base to over 200 military agencies
and greatly increased our overseas penetration. The
outlook for 2009 remains very encouraging; we expect
to increase sales by a minimum of 50 percent.
2008 DISAPPOINTMENTS
As with every year, there were a few disappointments
and challenges:
• ATVindustryweakness: Our North American ATV business
is about half of what it was five years ago. The North
American market continues to weaken, so we are putting
more emphasis on high-demand international markets,
such as Australia/New Zealand, Italy, Norway and Russia.