Polaris 2010 Annual Report Download - page 5

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1
For Polaris, 2010 was about
Making Growth Happen. Our plans centered on
leveraging our industry-leading innovation, speed
to market and burgeoning international presence to
drive growth and gain market share, despite weak
economies and a still-sluggish powersports industry.
Through the Polaris team’s extraordinary execution,
our recovery attained exceptional velocity, leading
to solid growth across our portfolio of products. We
finished the year with record sales and earnings and,
most importantly, strong business fundamentals
that provide a foundation for profitable growth
in 2011 and beyond.
Our success in delivering the results stakeholders
expect is similar to our success in satisfying
customers; we do it by developing and executing
sound operational and business practices.
We are certainly proud of our 27 percent revenue
growth, which yielded sales of $1,991 million for
2010, as well as the 46 percent improvement in net
income and corresponding 40 percent improvement
in earnings per diluted share of a record $4.28;
but underneath these results are some equally
impressive ‘fundamental’ numbers:
» Gross profit margin percentage improved
150 basis points to 26.6 percent.
» Net income margins improved 90 basis points
to 7.4 percent.
» Increased market share in every product line
and region.
» North American dealer inventory decreased
20 percent.
» Warranty claims paid decreased 17 percent.
» We hired 51 salaried employees outside of
the United States.
» Engineering and R&D spend increased
35 percent to $84.9 million.
» Inventory turns improved 21 percent.
As a result, investors enjoyed their ride with
Polaris in 2010, with overall shareholder returns
up 82 percent.
A key reason for our success in 2010 was the
stellar performance of the Off-Road vehicle (ORV)
division. Delivering on our commitment to be the
Best in Powersports PLUS requires us to win
with our RANGER® and RANGER RZR® side-by-side
vehicles and Sportsman® ATVs, and our team and
dealers did just that. Riding leading-edge innovation
and the broadest product offering in the industry, our
largest business began 2010 on a high note with the
January launch of the world’s first-ever four-seat
recreational side-by-side vehicle, and never looked
back. Consumer demand for the RZR 4 was very
high, just as we have seen in other ORV products in
our portfolio. Overall, ORV sales were up 35 percent
in 2010, and with the 2011 New Year’s Day launch of
the world’s first XTREME PERFORMANCE side-by-
side, the RANGER RZR XP,
TM there is great potential
for another year of strong growth.
Innovation also fuels growth across our other product
lines, from the market-leading 800 PRO-RMK®
snowmobiles in the mountains to the new Victory
Cross Roads® touring bikes for the road. New
products like these were the primary drivers of
success in our international markets (outside United
States and Canada), where revenues increased
21 percent to $305.9 million. You can read more about
how our product innovation and breadth continue to
drive core powersports market growth on Page 3.
We made significant investments to support our
Global Market Leadership objectives, including a
new Swiss headquarters for our European, Middle
Eastern and African business, where we maintain
our #1 ORV market share position. The Chinese
powersports market, in particular, is emerging, and
Polaris is well positioned to be the brand of choice
in that growing market. In 2010, we strengthened
our China team and expanded our business there
to include three new dealerships.
Additionally, we have strong new business leaders
in Brazil and India, and will continue to invest to
grow our business in those emerging markets.
Our objective is to create a $700-plus million
international business in the next four years, and
we are well on our way in both our established and
developing global markets. For more about our work
in emerging markets, see Page 5.
An important element of our international expansion
is our focus on Growth Through Adjacencies,
wherein we plan to leverage acquisitions and
DEAR FELLOW SHAREHOLDERS