Polaris 2011 Annual Report Download

Download and view the complete annual report

Please find the complete 2011 Polaris annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 107

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107

POLARIS INDUSTRIES INC. ANNUAL REPORT 2011

Table of contents

  • Page 1
    POLARIS INDUSTRIES INC. ANNUAL REPORT 2011

  • Page 2
    ... $ 1.55 $ 1.36 $ 1.57 $ 1.49 $ 1.29 $ 1.14 02 03 04 05 06 07 08 09 10 11 PER SHARE GROSS MARGINS UP 30 BASIS POINTS TO SALES FROM CONTINUED OPERATIONS DOLLARS IN MILLIONS NET INCOME FROM CONTINUED OPERATIONS 27.9 NET INCOME MARGIN + 20 8.6 BASIS POINTS RECORD EARNINGS PER SHARE 3.20 EPS

  • Page 3
    ... Polaris Industries Inc. designs, manufactures and markets innovative, high-quality, high-performance motorized products including: all-terrain recreational and utility Off-Road Vehicles (ORVs), which include ATVs and side-by-sides; Snowmobiles; On-Road Vehicles, including Motorcycles and Small...

  • Page 4
    ... 2010 TO 2011 33 INCREASE FROM 2010 TO 2011 CANADA PERCENT OF SALES 2011 2010 2009 4 % 2011 2010 2009 $369 $ 279 $239 INCREASE FROM 2010 TO 2011 32 INTERNATIONAL PERCENT OF SALES 6% 13 -2 0 2011 2010 2009 $424 $306 $252 39 INCREASE FROM 2010 TO 2011 Polaris Recreational Vehicle Index...

  • Page 5
    ... return it generated, but numbers are only part of the Polaris story. Our focus is not just on annual targets and short-term results. We also concentrate on steadily building and refining our infrastructure to ensure we can sustain and improve upon our products and services - for customers, dealers...

  • Page 6
    ...new market. The electric RANGER® was among the many products that enabled Polaris Defense to achieve record sales and profitability in 2011. With numerous contract wins and an extensive array of products designed specifically for the needs of our military customers, the Defense business begins 2012...

  • Page 7
    ... AGAINST THE LONG-TERM PLAN: ObJECTIvE 3-5-yEAR GOAL 2011 ACTIONS Extended #1 market share in ORV 3-yEAR PROGRESS (2009-2011) 10% annual organic growth 83 new vehicles PG&A >1,000 new products #1 Side-by-sides with 40+% market share #2 Snowmobiles market share #2 Motorcycles market share Organic...

  • Page 8
    ... XP® 4 900. SNOWMObILES Our North American snowmobile market share jumped 5 points for the season ending March 2011-backed by the biggest retail sales increase in six years. We focused on improving quality while continuing to give riders new innovations, like the industry's first adventure sled...

  • Page 9
    ... heavyweight motorcycle segment in 2011 with the acquisition of Indian Motorcycle Company. With Victory and Indian-two quintessential american brands-we can create a stronger, more profitable dealer network and leverage infrastructure economies of scale to accelerate our On-Road Vehicles business.

  • Page 10
    ...InTO THE On-ROaD lIGHT-DuTY HaulER VEHIClES MaRKET with the acquisition of Goupil Industrie Sa, a privately owned French manufacturer. The company's established product line, history of profitable growth and segment-leading European presence will help us realize the long-term growth potential of the...

  • Page 11
    ... WE WON SEVERAL NEW DEFENSE CONTRACTS ULTRA LIGHT SILITARY SARKET SIZE IN 2011, DRIVING MORE THAN 100 PERCENT SALES GROWTH. OUR ABILITY TO DELIVER INNOVATIVE, COST-EFFECTIVE VEHICLES LIKE THE UNMANNED MINE ROLLER MAKES US A VALUABLE PARTNER TO MILITARY AGENCIES IN THE UNITED STATES AND ABROAD...

  • Page 12
    ... ,000 INDEPENDENT DEALERS +4 30 COUNTRIES CORPORATE HEADQUARTERS POLARIS INTERNATIONAL SUbSIDIARIES nO.1 InTERnaTIOnal SnOWMOBIlE SalES aCCElERaTED In 2011 OFF-ROaD VEHIClES OUTSIDE NORTH AMERICA WITH MID-TEEnS PERCEnT MaRKET SHaRE nuMBER 1 In MaRKET SHaRE In Snowmobile sales jumped more than...

  • Page 13
    ...EMERGInG MaRKETS, InCluDInG InDIa anD CHIna, TO PROVIDE ORV GROWTH DOWn THE ROaD. 2011 INTERNATIONAL SALES BY PRODUCT 64 / O O OFF-ROAD 64 O/O 15 O/O 14 O/O 7 O/O OFF-ROAD VEHICLES PG&A SNOWMOBILES ON-ROAD VEHICLES WE nOW HaVE 12 DEalERSHIPS In CHIna, InCluDInG THIS OnE In BEIJInG. AUSTRALIA...

  • Page 14
    ...aM POlaRIS." MEETING DEMAND -TODaY anD TOMORROW We completed our 425,000-square-foot Monterrey manufacturing facility on time and on budget. The Mexico location provides lower-cost ORV production and an efficient distribution platform for penetrating latin and South american markets to drive future...

  • Page 15
    ...EMPlOYEES OWn POlaRIS STOCK, GIVInG THEM aDDED InCEnTIVE TO MEET OuR GOalS anD BE an InDuSTRY lEaDER. SPIRIT laKE CEnTER VICTORY QualITY IMPROVED Through a culture of continuous improvement and persistent review of the entire value stream, the Victory production team has connected similar processes...

  • Page 16
    ...- Off-Road Vehicles and ORV Engineering Michael W. Malone Vice President - Finance and Chief Financial Officer William C. Fisher Vice President and Chief Information Officer Steven D. Menneto Vice President - Motorcycles Todd-Michael Balan Vice President - Corporate Development Scott A. Swenson...

  • Page 17
    ... Proxy Statement for the registrant's Annual Meeting of Shareholders to be held on April 26, 2012 to be filed with the Securities and Exchange Commission within 120 days after the end of the fiscal year covered by this report (the "2012 Proxy Statement"), are incorporated by reference into Part III...

  • Page 18
    ...of Operations ...Quantitative and Qualitative Disclosures about Market Risk ...Financial Statements and Supplementary Data ...Changes in and Disagreements with Accountants on Accounting and Financial Disclosure ...Controls and Procedures ...Other Information ...PART III Directors, Executive Officers...

  • Page 19
    ...-Road vehicles, including motorcycles and Small Electric Vehicles ("SEV"), together with the related replacement Parts, Garments and Accessories ("PG&A"). These products are sold through dealers and distributors principally located in the United States, Canada and Europe. Sales of ORVs, Snowmobiles...

  • Page 20
    ...The Polaris product survived the industry decline in which snowmobile sales fell to a low point of approximately 87,000 units in 1983 and the number of snowmobile manufacturers serving the North American market declined to four: Yamaha, BRP, Arctic Cat and Polaris. These four manufacturers also sell...

  • Page 21
    ... our touring product line to include the Victory Cross Roads® and Cross Country® models. In 2011, we acquired Indian Motorcycle Company, America's first motorcycle company. Our 2012 model year line of motorcycles for both Victory and Indian consists of 20 models with suggested U.S. retail prices...

  • Page 22
    ...of excellence for Polaris products by enhancing the existing Roseau and Spirit Lake production facilities and have established a new manufacturing facility in Monterrey, Mexico, which became operational mid-2011 that assembles ORVs and certain engines. This realignment led to the sale of part of our...

  • Page 23
    ...for pre-ordered snowmobiles assist in production planning. Annual orders for Victory motorcycles are placed by most dealers in the summer after meetings with dealers. In 2011, Victory began testing a modified version of MVP with a select number of dealers. For non-MVP dealers and products, units are...

  • Page 24
    ...financial services arrangement. We have arrangements with Polaris Acceptance (United States) and GE affiliates (Australia, Canada, France, Germany, the United Kingdom, Ireland and New Zealand) to provide floor plan financing for our dealers. A majority of our United States sales of snowmobiles, ORVs...

  • Page 25
    ...of the products is extensively tested under actual use conditions. In 2005, we completed construction of our 127,000 square-foot research and development facility in Wyoming, Minnesota for engineering, design and development personnel for our line of engines and powertrains, ORVs, Victory and Indian...

  • Page 26
    ... snowmobile, motorcycle and small electric vehicle markets in the United States, Canada and other global 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...

  • Page 27
    ... on-road motorcycles and small electric vehicles. In 1988, Polaris, five competitors and the CPSC entered into a ten-year consent decree settling litigation involving CPSC's attempt to force an industry-wide recall of all three-wheel ATVs and four-wheel ATVs sold that could be used by youth under 16...

  • Page 28
    ... safety in places where we sell our products outside the United States. We believe that our motorcycles, SEVs, ATVs, Off-Road side-by-side vehicles and Snowmobiles have complied with applicable safety standards in the United States and other international locations. Use regulation. State and federal...

  • Page 29
    ... new corporate average emission standards effective for model years 2006 and later, for off-road recreational vehicles, including ATVs, off-road side-by-side vehicles and snowmobiles. We have developed engine and emission technologies along with our existing technology base to meet current...

  • Page 30
    ... and Chief Information Officer Vice President-Europe, Middle East and Africa Vice President-Snowmobiles, Sales and Corporate Marketing Vice President-Global Operations and Integration Vice President-Off-Road Vehicles and Off-Road Vehicles Engineering Vice President-Small Vehicles Vice President...

  • Page 31
    ... directors of the Company. Mr. Wine joined Polaris Industries Inc. as Chief Executive Officer on September 1, 2008. Prior to joining Polaris, Mr. Wine was President of Fire Safety Americas, a division of United Technologies, a provider of high technology products and services to the building systems...

  • Page 32
    ... all technical, dealer, and consumer service operations since 2005. Prior to joining Polaris, Mr. Fisher was employed by MTS Systems for 15 years in various positions in information services, software engineering, control product development, and general management. Before that time, Mr. Fisher...

  • Page 33
    ... financial condition. Significant product repair and/or replacement due to product warranty claims or product recalls could have a material adverse impact on the results of operations. We provide a limited warranty for ORVs for a period of six months and for a period of one year for our snowmobiles...

  • Page 34
    ... 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...

  • Page 35
    ... in North America and Europe, that impact consumer spending, including discretionary spending. Weakening of, and fluctuations in, economic conditions affecting disposable consumer income such as employment levels, business conditions, changes in housing market conditions, capital markets, tax rates...

  • Page 36
    ... affect our sales and profitability during the transition period. Over the past several years we have been transitioning our North American ORV dealers to the Maximum Velocity Program (MVP), an enhanced dealer ordering process. Currently 100 percent of our ORV dealers in North America are using the...

  • Page 37
    ... affect our operating results or financial condition. In May 2010, we announced our plans to realign our manufacturing operations footprint by enhancing our Roseau, Minnesota and Spirit Lake, Iowa production facilities and establishing a new facility in Mexico. The realignment led to the sale of...

  • Page 38
    ... foreign jurisdictions. These risks include increased costs of customizing products for foreign countries; difficulties in managing and staffing international operations and increases in infrastructure costs including legal, tax, accounting, and information technology; the imposition of additional...

  • Page 39
    ... to maintain our competitive advantage in product innovation which could cause our business to suffer. Product improvements and new product introductions also require significant planning, design, development, and testing at the technological, product, and manufacturing process levels and we may...

  • Page 40
    ... Australia ...Bourran, France ... Headquarters Wholegoods manufacturing Wholegoods manufacturing and R&D Wholegoods manufacturing Component parts manufacturing Engine manufacturing Injection molding manufacturing Research and development facility Research and development facility Distribution center...

  • Page 41
    ... it lacked sufficient steerage while being operated off-throttle and lacked sufficient warnings regarding this alleged condition. Plaintiff is seeking general, special, and punitive damages. The case is currently scheduled for trial on May 8, 2012. Management believes the claim to be without merit...

  • Page 42
    ...Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities The information under the caption "Other Investor Information" appearing on the inside back cover of the Company's 2011 Annual Report is incorporated herein by reference. On February 16, 2012...

  • Page 43
    ...table below sets forth the information with respect to purchases made by or on behalf of Polaris during the fourth quarter of the fiscal year ended December 31, 2011. Issuer Purchases of Equity Securities Total Number of Shares Purchased as Part of Publicly Announced Program Maximum Number of Shares...

  • Page 44
    ... data) 2011 2010 2006 Statement of Operations Data Sales Data: Total sales ...Percent change from prior year ...Sales mix by product: Off-Road Vehicles ...Snowmobiles ...On-Road Vehicles ...Parts, Garments and Accessories ...Gross Profit Data: Total gross profit ...Percent of sales ...Operating...

  • Page 45
    ...2001 Statement of Operations Data Sales Data: Total sales ...Percent change from prior year ...Sales mix by product: Off-Road Vehicles ...Snowmobiles ...On-Road Vehicles ...Parts, Garments and Accessories ...Gross Profit Data: Total gross profit ...Percent of sales ...Operating Expense Data: Total...

  • Page 46
    ... to innovative new products, our ORV business extended their market share leadership position while contributing significantly to our sales growth. With Victory hitting its stride in most every respect and the Indian brand now part of Polaris, our motorcycle business was a key contributor to revenue...

  • Page 47
    ... market share gains for both ATVs and side-by-side vehicles driven by industry leading product offerings and good growth in military and shipments to Bobcat. Polaris' North American ORV unit retail sales to consumers increased mid-teens percent for 2011 compared to 2010, with ATV unit retail sales...

  • Page 48
    ...significantly reduced snowmobile dealer inventory levels entering the 2011 - 2012 selling season compared to the prior year and the success of model year 2012 new product introductions resulting in increased orders from dealers. Sales of snowmobiles to customers outside of North America, principally...

  • Page 49
    ... currency rates accounted for six percent of the increase for the 2011 year compared to 2010. The remainder of the increase was primarily driven by higher volume largely related to market share gains for ORV and Victory motorcycles. Sales in other foreign countries, primarily in Europe, increased 21...

  • Page 50
    ...gross profit margin percentage in 2010 resulted primarily from higher volume, continued product cost reduction efforts, higher selling prices and beneficial currency movements. These increases were partially offset by manufacturing realignment costs as well as higher sales promotion costs. Operating...

  • Page 51
    ... 31, Change Change 2010 2011 vs. 2010 2009 2010 vs. 2009 ($ in millions) 2011 Equity in earnings of Polaris Acceptance ...Income from Securitization Facility ...Income from HSBC, Sheffield and GE Bank retail credit agreements ...Income from other financial services activities ...Total income from...

  • Page 52
    ..., sales promotions and incentives, dealer holdback programs, share-based employee compensation, product warranties and product liability. Revenue recognition: Revenues are recognized at the time of shipment to the dealer, distributor or other customers. Historically, product returns, whether...

  • Page 53
    ... promotional programs. Our standard warranties require us or our dealers to repair or replace defective products during such warranty periods at no cost to the consumers. The warranty reserve is established at the time of sale to the dealer or distributor based on management's best estimate using...

  • Page 54
    ... condition. New Accounting Pronouncements See Item 8 of Part II, "Financial Statements and Supplementary Data-Note 1-Organization and Significant Accounting Policies-New Accounting Pronouncements." Liquidity and Capital Resources Our primary sources of funds have been cash provided by operating...

  • Page 55
    ...companies (including Polaris Acceptance) to provide secured floor plan financing for our dealers. These arrangements provide liquidity by financing dealer purchases of our products without the use of our working capital. A majority of the worldwide sales of snowmobiles, ORVs, motorcycles and related...

  • Page 56
    ... credit card program under the StarCard label for the financing of Polaris products by consumers. During 2010 Polaris and HSBC extended the term of the agreement to October 2013. During 2011 it was announced that HSBC's U.S. Credit Card and Retail Services business would be acquired by Capital One...

  • Page 57
    ...percent increase from 2010. Improvements in manufacturing capacity and product development during 2011 included $29.7 million of tooling expenditures for new product development across all product lines. We anticipate that capital expenditures for 2012, including tooling and research and development...

  • Page 58
    ... in the Shareholders' Equity section of the consolidated balance sheets. Revenues and expenses in all of our foreign entities are translated at the average foreign exchange rate in effect for each month of the quarter. We are subject to market risk from fluctuating market prices of certain purchased...

  • Page 59
    ...of June 30, 2010 was other than temporary and therefore recorded in the statement of income a non-cash impairment charge on securities held for sale of $0.8 million. During the first quarter 2009, we determined that the decline in the fair value of the KTM shares owned by us as of March 31, 2009 was...

  • Page 60
    ... Control over Financial Reporting ...Report Of Independent Registered Public Accounting Firm on Internal Control over Financial Reporting ...Report Of Independent Registered Public Accounting Firm on Consolidated Financial Statements ...Consolidated Balance Sheets as of December 31, 2011 and 2010...

  • Page 61
    Item 8. Financial Statements and Supplementary Data Management's Report on Internal Control over Financial Reporting Management is responsible for establishing and maintaining an adequate system of internal control over financial reporting of the Company. This system is designed to provide ...

  • Page 62
    ... respects, effective internal control over financial reporting as of December 31, 2011, based on the COSO criteria. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets of Polaris Industries Inc. as...

  • Page 63
    Report of Independent Registered Public Accounting Firm on Consolidated Financial Statements The Board of Directors and Shareholders of Polaris Industries Inc. We have audited the accompanying consolidated balance sheets of Polaris Industries Inc. (the Company) as of December 31, 2011 and 2010, and ...

  • Page 64
    ...' EQUITY Current Liabilities: Current portion of long-term borrowings under credit agreement ...- $ 100,000 Current portion of capital lease obligations ...$ 2,653 - Accounts payable ...146,743 113,248 Accrued expenses: Compensation ...187,671 126,781 Warranties ...44,355 32,651 Sales promotions and...

  • Page 65
    ... data) For the Years Ended December 31, 2011 2010 2009 Sales ...Cost of sales ...Gross profit ...Operating expenses: Selling and marketing ...Research and development ...General and administrative ...Total operating expenses ...Income from financial services ...Operating income ...Non-operating...

  • Page 66
    ... INDUSTRIES INC. CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY AND COMPREHENSIVE INCOME (In thousands, except per share data) Additional Accumulated Other Number Common PaidRetained Comprehensive of Shares Stock In Capital Earnings Income (Loss) Total Balance, December 31, 2008 ...Employee...

  • Page 67
    ... shares ...Cash dividends to shareholders ...Tax effect of proceeds from share-based compensation exercises ...Proceeds from stock issuances under employee plans ...Net cash used for financing activities ...Impact of currency exchange rates on cash balances ...Net increase (decrease) in cash and...

  • Page 68
    ...Road Vehicles ("ORV"), Snowmobiles, and On-Road Vehicles, including motorcycles and Small Electric Vehicles. Polaris products, together with related parts, garments and accessories are sold worldwide through a network of dealers, distributors and its subsidiaries located in the United States, Canada...

  • Page 69
    ... Company utilizes the market approach to measure fair value for its non-qualified deferred compensation assets, and the income approach for the interest rate swap agreements, foreign currency contracts and commodity contracts. The market approach uses prices and other relevant information generated...

  • Page 70
    ... at cost, which approximates fair value. Such investments consist principally of money market mutual funds. Allowance for doubtful accounts: Polaris' financial exposure to collection of accounts receivable is limited due to its agreements with certain finance companies. For receivables not serviced...

  • Page 71
    ... promotional programs. Polaris' standard warranties require the Company or its dealers to repair or replace defective products during such warranty periods at no cost to the consumer. The warranty reserve is established at the time of sale to the dealer or distributor based on management's best...

  • Page 72
    ... to sales when products are sold to the dealer or distributor customer. Share-based employee compensation: For purposes of determining estimated fair value of share-based payment awards on the date of grant under ASC Topic 718, Polaris uses the Black-Scholes Model. The BlackScholes Model requires...

  • Page 73
    ... and components based upon market prices that are established with the vendor as part of the purchase process. From time to time, Polaris utilizes derivative contracts to hedge a portion of the exposure to commodity risks. During 2011 and 2010, the Company entered into derivative contracts...

  • Page 74
    ... next annual shareholders meeting following the date of grant and must be exercised no later than 10 years from the date of grant. Under the Polaris Industries Inc. Deferred Compensation Plan for Directors ("Director Plan"), members of the Board of Directors who are not Polaris officers or employees...

  • Page 75
    ... in Cost of sales and Operating expenses in the accompanying consolidated statements of income. For purposes of determining the estimated fair value of option awards on the date of grant under ASC Topic 718, Polaris has used the Black-Scholes option-pricing model. Assumptions utilized in the model...

  • Page 76
    ... and 2009: Option Plan Omnibus Plan Broad Based Plan Director Stock Option Plan Weighted Weighted Weighted Weighted Average Average Average Average Outstanding Exercise Outstanding Exercise Outstanding Exercise Outstanding Exercise Shares Price Shares Price Shares Price Shares Price Balance as of...

  • Page 77
    ...Company's closing stock price on the last trading day of the year. The weighted average fair values at the grant dates of grants awarded under the Restricted Stock Plan for the years ended December 31, 2011, 2010, and 2009 were $42.54, $28.95, and $17.84, respectively. Employee Savings Plans Polaris...

  • Page 78
    ... product. No material losses have been incurred under these agreements during the periods presented. As a part of its marketing program, Polaris contributes to the cost of dealer financing up to certain limits and subject to certain conditions. Such expenditures are included as an offset to Sales...

  • Page 79
    ... aggregate Goupil purchase price was allocated on a preliminary basis to the assets acquired and liabilities assumed based on their estimated fair values at the date of acquisition. As of December 31, 2011, this allocation for Goupil remains preliminary related to income taxes and capitalized leases...

  • Page 80
    ... amounts could differ due to additional intangible asset acquisitions, changes in foreign currency rates or impairment of intangible assets. Note 5. Income Taxes Polaris' Income before income taxes was generated from its United States and foreign operations as follows: (In thousands): For the Years...

  • Page 81
    ... $331,000 recorded as a component of Long term income taxes payable at December 31, 2011 and 2010, respectively. The entire balance of unrecognized tax benefits at December 31, 2011, if recognized, would affect the Company's effective tax rate. The Company does not anticipate that total unrecognized...

  • Page 82
    ... final expiration date of the rights from May 2010 to April 2020, expanded the definition of "Beneficial Owner" to include certain derivative securities relating to the common stock of the Company and increased the purchase price for the rights from $75 to $125 per share. The Board of Directors may...

  • Page 83
    ...of Polaris' United States sales are financed through Polaris Acceptance and the Securitization Facility whereby Polaris receives payment within a few days of shipment of the product. The net amount financed for dealers under this arrangement at December 31, 2011, including both the portfolio balance...

  • Page 84
    ... and commercial credit to customers of Polaris dealers for both Polaris and non-Polaris products. In November 2010, the Company extended its installment credit agreement to March 2016 under which GE Bank will provide exclusive installment credit lending for Victory motorcycles. Polaris' income...

  • Page 85
    ... ("Robin"), which assembled engines in the United States for recreational and industrial products. The Robin operations were closed during third quarter 2011 as the production volumes of engines made by Robin had declined significantly in recent years. Polaris received the return of its remaining...

  • Page 86
    ...The Company is exposed to certain risks relating to its ongoing business operations. The primary risks managed by using derivative instruments are foreign currency risk, interest rate risk and commodity price fluctuations. Forward exchange contracts on various currencies are entered into in order to...

  • Page 87
    ... as of December 31, 2010 Derivative Net Fair Value-Assets Fair Value-(Liabilities) Carrying Value Derivatives Designated as Hedging Instruments Interest rate contracts(1) ...Foreign exchange contracts(2) ...Total derivatives designated as hedging instruments ...Commodity contracts(2) ...Total...

  • Page 88
    ... operations into existing operations in Roseau, Minnesota and Spirit Lake, Iowa as well as establish a new facility in Monterrey, Mexico. As part of the realignment, the Company sold a portion of the Osceola, Wisconsin facility and outsourced certain components previously manufactured by Polaris...

  • Page 89
    ... economic characteristics, (2) product and services, (3) production processes, (4) customers, (5) distribution channels, and (6) regulatory environments. Therefore, the Company reports as a single reportable business segment. The following data relates to Polaris' foreign operations: For the Years...

  • Page 90
    Note 14. Quarterly Financial Data (unaudited) Sales Gross Profit Net Income (In thousands, except per share data) Diluted Net Income per Share 2011 First Quarter ...Second Quarter ...Third Quarter ...Fourth Quarter ...Totals ...2010 First Quarter ...Second Quarter ...Third Quarter ...Fourth Quarter...

  • Page 91
    ... to the Company's management including its Chief Executive Officer and Vice President-Finance and Chief Financial Officer, in a manner that allows timely decisions regarding required disclosure. No changes have occurred during the period covered by this report or since the evaluation date that would...

  • Page 92
    ... Committee Financial Expert will be set forth under the caption "Corporate Governance-Committees of the Board and Meetings-Audit Committee" in the Company's 2012 Proxy Statement incorporated herein by reference. (d) Section 16(a) Beneficial Ownership Reporting Compliance The information required...

  • Page 93
    ... Owners and Management" in the Company's 2012 Proxy Statement is incorporated herein by reference. Equity compensation plan information Equity Compensation Plans Approved by Shareholders Our shareholders have approved the Polaris Industries Inc. 1995 Stock Option Plan, the Polaris Industries...

  • Page 94
    ... Public Accounting Firm" in the Company's 2012 Proxy Statement, to be filed within 120 days after the close of the Company's fiscal year ended December 31, 2011, and is incorporated herein by reference. PART IV Item 15. Exhibits, Financial Statement Schedules (a) The following documents are filed...

  • Page 95
    ... of Minneapolis, State of Minnesota on February 27, 2012. POLARIS INDUSTRIES INC. By: /S/ SCOTT W. WINE Scott W. Wine Chief Executive Officer Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant...

  • Page 96
    ...2012 (Scott W. Wine Attorney-in-Fact) * Scott W. Wine, pursuant to Powers of Attorney executed by each of the officers and directors listed above whose name is marked by an "*" and filed as an exhibit hereto, by signing his name hereto does hereby sign and execute this report of Polaris Industries...

  • Page 97
    POLARIS INDUSTRIES INC. SCHEDULE II-VALUATION AND QUALIFYING ACCOUNTS Additions Balance at Charged to Additions Beginning of Costs and Through Other Changes Balance at Period Expenses Acquisition Add (Deduct)(1) End of Period Allowance for Doubtful Accounts (In thousands) 2009: Deducted from asset...

  • Page 98
    ...Rights Agreement, dated as of April 29, 2010 by and between the Company and Wells Fargo Bank Minnesota, N.A., as Rights Agent, incorporated by reference to Exhibit 4.1 to the Company's Current Report on Form 8-K filed April 30, 2010. Master Note Purchase Agreement by and among Polaris Industries Inc...

  • Page 99
    ...Current Report on Form 8-K filed on May 12, 2009.* Polaris Industries Inc. Long Term Incentive Plan, as amended and restated effective January 22, 2009 and as further amended effective January 20, 2011, incorporated by reference to Annex B to the Company's Proxy Statement for the 2011 Annual Meeting...

  • Page 100
    ... Company's Current Report on Form 8-K filed on May 2, 2011.* Form of Deferred Stock Award Agreement for shares of deferred stock granted to non-employee directors in 2007 under the Polaris Industries Inc. 2007 Omnibus Incentive Plan, incorporated by reference to Exhibit 10.t to the Company's Annual...

  • Page 101
    ... Agreement dated as of February 28, 2011, by and among the Company, Polaris Industries Inc., a Delaware Corporation, Polaris Sales Inc., and Polaris Acceptance, incorporated by reference to Exhibit 10.2 to the Company's Current Report on Form 8-K filed March 1, 2011. Portions of the Annual Report...

  • Page 102
    ... and report financial information; and b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. /s/ SCOTT W. WINE Scott W. Wine Chief Executive Officer Date: February 27, 2012

  • Page 103
    ...; and b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. /s/ MICHAEL W. MALONE Michael W. Malone Vice President - Finance and Chief Financial Officer Date: February 27, 2012

  • Page 104
    ... Report fairly presents, in all material respects, the financial condition and results of operations of the Company as of the dates and for the periods indicated therein. Date: February 27, 2012 /s/ Scott W. Wine Scott W. Wine Chief Executive Officer A signed original of this written statement...

  • Page 105
    ... - Finance and Chief Financial Officer of Polaris Industries Inc., a Minnesota corporation (the "Company"), hereby certify as follows: 1. This statement is provided pursuant to 18 U.S.C. § 1350 in connection with the Company's Annual Report on Form 10-K for the period ended December 31, 2011 (the...

  • Page 106
    ... Company's annual report and financial information, products and specifications, press releases, dealer locations and product brochures, access Polaris on the Internet at: www.polarisindustries.com Investor Relations Security analysts and investment professionals should direct their business-related...

  • Page 107
    Polaris Industries Inc. 2100 Highway 55 Medina, MN 55340 763-542-0500 763-542-0599 fax www.polarisindustries.com Printed in the USA E Printed on recycled paper containing 10 percent post-consumer fiber. Tracking #: PU012012AR ©2012 Polaris Industries Inc. All rights reserved.