Polaris 2010 Annual Report Download - page 38

The Company made no purchases of equity securities during the fourth quarter of the fiscal year ended
December 31, 2010. The Board of Directors previously authorized a share repurchase program to repurchase up to
an aggregate of 37.5 million shares of the Company’s common stock (the “Program”). Of that total, approximately
34.4 million shares have been repurchased cumulatively from 1996 through December 31, 2010.
Item 6. Selected Financial Data
The information under the caption “11-Year Selected Financial Data” appearing on pages 6 and 7 of our 2010
Annual Report is incorporated herein by reference.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion pertains to the results of operations and financial position of the Company for each of
the three years in the period ended December 31, 2010, and should be read in conjunction with the Consolidated
Financial Statements and the Notes thereto included elsewhere in this report.
Overview
At the beginning of 2010, we challenged our employees to “Make Growth Happen,” and felt confident that it
could rebound from the recession and deliver moderate year over year improvement in sales and earnings.
Throughout the year, each Polaris business and function performed extremely well and, as a result, sales and
earnings growth surpassed our highest stretch goals.
While our 2010 predictions for the overall economy and the powersports industry were relatively accurate, we
underestimated the market share gains and corresponding retail sales increase that were the primary sources of the
year’s performance. Our total 2010 North American retail sales to consumers increased 15 percent from 2009,
helping to drive total Company recorded sales to a record $1, 991.1 million, up 27 percent from 2009 and
$42.8 million above the previous record set in 2008.
The dramatic success of our side-by-side ORV business drove a significant portion of our sales growth.
However, it is also important to note how well the Victory motorcycle business performed in the face of a weak
heavyweight motorcycle industry, and how effectively our European team worked to overcome the difficult
economic situation in many of their markets. For the year ended December 31, 2010, we reported net income of
$147.1 million, or $4.28 per diluted share, an increase of 46 percent and 40 percent, respectively, compared to
$101.0 million, or $3.05 per diluted share, for the year ended December 31, 2009. Our strong earnings performance
contributed to a record year-end cash balance, and we are pleased to be in the position to fund a wide variety of
growth initiatives and capital investments in the years ahead.
The performance generated in 2010 was largely the result of the successful execution of our long-term strategy.
Our number one objective is to be the Best in Powersports PLUS, as it fuels our passion and funds its growth and
diversification. The Company saw sales growth in every product line and geography during 2010. Off-Road
Vehicles is the largest product line representing 69 percent of our sales in 2010, Snowmobiles accounted for
10 percent of 2010 total sales, the On-Road Vehicles Division represented four percent and PG&A represented
17 percent of 2010 total Company sales. The Company sells its products through a network of approximately 1, 600
dealers in North America (United States and Canada) and 11 subsidiaries and 43 distributors in approximately 130
countries outside of North America. Growth through adjacencies is critical to our diversification efforts and will
enable us to accelerate growth in new markets. The Bobcat product sourcing relationship met our 2010 sales
expectations and continues to grow. The neighborhood electric vehicle business and the military business fell short
of our 2010 sales expectations, but both expanded their product offering and distribution opportunities. During
2010, our international team carefully balanced strong execution of our current business with key strategic
investments to position us for growth in China, India and Brazil. International sales to customers outside of North
America grew 21 percent to a record $305.9 million in 2010. The new Monterrey, Mexico manufacturing plant is on
target to begin production mid- 2011 and the global operations team continues to drive waste out of other areas of
the business with LEAN and other Operational Excellence tools.
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