Polaris 2013 Annual Report Download - page 42

an acquisition, non-consolidating investment, new joint venture or partnership may take more time than
expected to develop or integrate into our operations, and we cannot guarantee that acquisitions, non-
consolidating investments, alliances, joint ventures or partnerships will in fact produce any benefits. In
addition, acquisitions, non-consolidating investments, alliances, joint ventures and partnerships involve a
number of risks, including:
• diversion of management’s attention;
• difficulties in integrating and assimilating the operations and products of an acquired business or in
realizing projected efficiencies, cost savings, and synergies;
• potential loss of key employees or customers of the acquired businesses or adverse effects on existing
business relationships with suppliers and customers;
• adverse impact on overall profitability if acquired businesses or affiliates do not achieve the financial
results projected in our valuation models;
• reallocation of amounts of capital from other operating initiatives and/or an increase in our leverage
and debt service requirements to pay the acquisition purchase prices, which could in turn restrict our
ability to access additional capital when needed or to pursue other important elements of our business
strategy;
• inaccurate assessment of undisclosed, contingent or other liabilities or problems, unanticipated costs
associated with an acquisition, and an inability to recover or manage such liabilities and costs;
• incorrect estimates made in the accounting for acquisitions, incurrence of non-recurring charges and
impairment of significant amounts of goodwill, investments or other related assets that could adversely
affect our operating results;
• dilution to existing shareholders if our securities are issued as part of transaction consideration or to
fund transaction consideration; and
• inability to direct the management and policies of a joint venture, alliance, or partnership, where other
participants may be able to take action contrary to our instructions or requests and against our policies
and objectives.
Our ability to grow through acquisitions will depend, in part, on the availability of suitable acquisition targets
at acceptable prices, terms, and conditions, our ability to compete effectively for these acquisition candidates,
and the availability of capital and personnel to complete such acquisitions and run the acquired business
effectively. These risks could be heightened if we complete a large acquisition or multiple acquisitions within a
relatively short period of time. Any potential acquisition could impair our operating results, and any large
acquisition could impair our financial condition, among other things.
Increases in the cost of raw material, commodity and transportation costs and shortages of certain raw materials
could negatively impact our business.
The primary commodities used in manufacturing our products are aluminum, steel, petroleum-based resins
and certain rare earth metals used in our charging systems, as well as diesel fuel to transport the products.
Our profitability is affected by significant fluctuations in the prices of the raw materials and commodities we
use in our products. We may not be able to pass along any price increases in our raw materials to our
customers. As a result, an increase in the cost of raw materials, commodities, labor or other costs associated
with the manufacturing of our products could increase our costs of sales and reduce our profitability.
Our reliance upon patents, trademark laws, and contractual provisions to protect our proprietary rights may not be
sufficient to protect our intellectual property from others who may sell similar products and may lead to costly
litigation.
We hold patents and trademarks relating to various aspects of our products, such as our patented ‘‘on
demand’’ all-wheel drive, and believe that proprietary technical know-how is important to our business.
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