Polaris 2010 Annual Report Download - page 30

replacement. Our standard warranties require us or our dealers to repair or replace defective products during such
warranty periods at no cost to the consumer. Historically, product recalls have been administered through our
dealers and distributors. The repair and replacement costs we could incur in connection with a recall could
adversely affect our business. In addition, product recalls could harm our reputation and cause us to lose customers,
particularly if recalls cause consumers to question the safety or reliability of our products.
Changing weather conditions may reduce demand and negatively impact net sales of certain of our
products.
Lack of snowfall in any year in any particular geographic region may adversely affect snowmobile retail sales
and related PG&A sales in that region. Additionally, to the extent that unfavorable weather conditions are
exacerbated by global climate change or otherwise, our sales may be affected to a greater degree than we have
previously experienced. There is no assurance that weather conditions could not have a material effect on our sales
of ORVs, snowmobiles, motorcycles, or PG&A.
We face intense competition in all product lines, including from some competitors that have greater
financial and marketing resources. Failure to compete effectively against competitors would negatively
impact our business and operating results.
The snowmobile, off-road vehicle, motorcycle and low emission vehicle markets are highly competitive.
Competition in such markets is based upon a number of factors, including price, quality, reliability, styling, product
features and warranties. At the dealer level, competition is based on a number of factors including sales and
marketing support programs (such as financing and cooperative advertising). Certain of our competitors are more
diversified and have financial and marketing resources which are substantially greater than ours, which allow these
competitors to invest more heavily in intellectual property, product development and advertising. If we are not able
to compete with new products or models of our competitors, our future business performance may be materially and
adversely affected. Internationally, our products typically face more competition where foreign competitors
manufacture and market products in their respective countries because that allows those competitors to sell
products at lower prices, which could adversely affect our competitiveness. In addition, our products compete with
many other recreational products for the discretionary spending of consumers, and, to a lesser extent, with other
vehicles designed for utility applications. A failure to effectively compete with these other competitors could have a
material adverse effect on our performance.
Termination or interruption of informal supply arrangements could have a material adverse effect on our
business or results of operations.
Pursuant to our informal agreements with Fuji in Japan, Fuji was the sole manufacturer of our two-cycle
snowmobile engines from 1968 to 1995. Fuji has manufactured engines for our ATV products since their
introduction in the spring of 1985 and remains a major supplier of engines to us. Such engines are developed
by Fuji to our specific requirements. Although we have alternative sources for our engines and do not currently have
knowledge that Fuji intends to terminate supplying engines to us, a termination of the supply relationship with Fuji
would materially adversely affect our production until substitute supply arrangements for the quantity of engines
required by us could be established. There can be no assurance that alternate supply arrangements will be made on
satisfactory terms. If we need to enter into supply arrangements on unsatisfactory terms, or if there are any delays to
our supply arrangements, it could adversely affect our business and operating results.
Fluctuations in foreign currency exchange rates could result in declines in our reported sales and net
earnings.
The changing relationships of primarily the United States dollar to the Canadian dollar, the Euro, the Japanese
yen and certain other foreign currencies, have from time to time had a negative impact on our results of operations
because fluctuations in the value of the United States dollar relative to these foreign currencies can adversely affect
the price of our products in foreign markets and the costs we incur to import certain components for our products.
While we actively manage our exposure to fluctuating foreign currency exchange rates by entering into foreign
exchange hedging contracts from time to time, these contracts hedge foreign currency denominated transactions
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