Polaris 2015 Annual Report Download - page 55

Cost of Sales:
The following table reflects our cost of sales in dollars and as a percentage of sales:
For the Years Ended December 31,
Percent of Percent of Change Percent of Change
Total Cost of Total Cost of 2015 vs. Total Cost of 2014 vs.
($ in millions) 2015 Sales 2014 Sales 2014 2013 Sales 2013
Purchased materials and
services ............$2,929.9 87% $2,757.6 87% 6% $2,336.1 88% 18%
Labor and benefits ..... 258.7 8% 244.1 8% 6% 198.7 8% 23%
Depreciation and
amortization ........ 117.9 3% 96.9 3% 22% 64.5 2% 50%
Warranty costs ........ 73.7 2% 61.9 2% 19% 56.9 2% 9%
Total cost of sales ......$3,380.2 100% $3,160.5 100% 7% $2,656.2 100% 19%
ǁ108 basis +23 basis
Percentage of sales ..... 71.6% 70.6% points 70.3% points
For 2015, cost of sales increased seven percent to $3,380.2 million compared to $3,160.5 million in 2014. The
increase in cost of sales in 2015 resulted primarily from the effect of a three percent increase in sales volume
on purchased materials and services and labor and benefits. Additionally, depreciation and amortization
increased due to higher capital expenditures to increase production capacity and capabilities.
For 2014, cost of sales increased 19 percent to $3,160.5 million compared to $2,656.2 million in 2013. The
increase in cost of sales in 2014 resulted primarily from the effect of a 14 percent increase in sales volume on
purchased materials and services and labor and benefits. Additionally, depreciation and amortization increased
due to higher capital expenditures to increase production capacity and capabilities.
Gross Profit:
The following table reflects our gross profit in dollars and as a percentage of sales:
For the Years Ended December 31,
Percent Percent Change Percent Change
($ in millions) 2015 of Sales 2014 of Sales 2015 vs. 2014 2013 of Sales 2014 vs. 2013
ORV/Snowmobiles .....$1,190.6 32.1% $1,206.6 32.3% (1)% $1,049.8 32.3% 15%
Motorcycles ......... 97.3 13.9% 54.4 13.0% 79% 48.2 18.3% 13%
Global Adjacent Markets 84.2 27.0% 88.8 27.8% (5)% 63.9 24.7% 39%
Corporate .......... (33.1) (30.6) 8% (41.0) (25)%
Total gross profit dollars . $1,339.0 $1,319.2 2% $1,120.9 18%
Percentage of sales .... 28.4% 29.4% ǁ108 basis points 29.7% ǁ23 basis points
Consolidated. Consolidated gross profit, as a percentage of sales, was 28.4 percent for 2015, a decrease of 108
basis points from 2014. Gross profit dollars increased two percent to $1,339.0 million in 2015 compared to
2014. The increase in gross profit dollars resulted from higher selling prices, lower commodity costs and
product cost reduction efforts, partially offset by the negative impact of currency movements and higher
promotions. Foreign currencies had a negative impact to gross profit of approximately $70.0 million for 2015,
when compared to the prior year period. The decrease in gross profit percentage resulted primarily from
unfavorable foreign currency fluctuations, new plant start-up costs, higher promotional expenses and higher
depreciation and amortization, partially offset by lower commodity costs, product cost reduction and higher
selling prices.
Consolidated gross profit, as a percentage of sales, was 29.4 percent for 2014, a decrease of 23 basis points
from 2013. Gross profit dollars increased 18 percent to $1,319.2 million in 2014 compared to 2013. The
increase in gross profit dollars resulted from higher selling prices, mix and product cost reduction efforts,
partially offset by the negative impact of currency movements. The decrease in gross profit percentage
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