Polaris 2011 Annual Report Download - page 23

Barcelona, Spain; Ballarat, Australia; Shanghai, China; Rolle, Switzerland; Sao Paulo, Brazil; and New Delhi,
India. Our primary PG&A distribution facility is in Vermillion, South Dakota, which distributes PG&A products
to our North American dealers and we have various other locations around the world that distribute PG&A to our
international dealers and distributors.
Production Scheduling
We produce and deliver our products throughout the year based on dealer, distributor and customer orders.
Beginning in 2008, we began testing a new dealer ordering process called Maximum Velocity Program (“MVP”)
with select dealers in North America, where ORV orders are placed in approximately two-week intervals for the
high volume dealers driven by retail sales trends at the individual dealership. Smaller dealers utilize a similar
MVP process but on a less frequent ordering cycle. Effective in the second half of 2010, the MVP process is now
being utilized by all North American ORV dealers. Prior to the MVP process, most ORV orders were taken from
North American dealers twice a year, in the summer and late winter. International distributor ORV orders are
taken throughout the year. Orders for each year’s production of snowmobiles are placed by the dealers and
distributors in the spring. Non-refundable deposits made by consumers to dealers in the spring 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 built to order each year, subject to fluctuations
in market conditions and supplier lead times. The anticipated volume of units to be produced is substantially
committed to by dealers and distributors prior to production. For MVP dealers, ORV retail sales activity at the
dealer level drives orders which are incorporated into each product’s production scheduling.
Manufacture of snowmobiles commences in late winter of the previous season and continues through late
autumn or early winter of the current season. We generally manufacture ORVs, motorcycles and SEV’s year
round. We have the ability to mix production of the various products on the existing manufacturing lines as
demand dictates.
Sales and Marketing
Our products are sold through a network of approximately 1,500 independent dealers in North America,
through 11 subsidiaries and 65 distributors in approximately 130 countries outside of North America.
We sell our snowmobiles directly to dealers in the snowbelt regions of the United States and Canada. Many
dealers and distributors of our snowmobiles also distribute our ORVs. At the end of 2011, approximately 700
Polaris dealers were located in areas of the United States where snowmobiles are not regularly sold. Unlike our
primary competitors, which market their ORV products principally through their affiliated motorcycle dealers,
we also sell our ORVs through lawn and garden and farm implement dealers.
With the exception of France, the United Kingdom, Sweden, Norway, Australia, New Zealand, Germany,
Spain, China, India and Brazil, sales of our products in Europe and other offshore markets are handled through
independent distributors. In 1999, we acquired certain assets of our distributor in Australia and New Zealand and
distribute our products to the dealer network in those countries through a wholly-owned subsidiary. During 2000,
we acquired our distributor in France and distribute our products to our dealer network in France through a
wholly-owned subsidiary. In 2002, we acquired certain assets of our distributors in the United Kingdom, Sweden
and Norway and distribute our products to our dealer networks in the United Kingdom, Sweden and Norway
through wholly-owned subsidiaries. During 2007, we established a wholly-owned subsidiary in Germany and
distribute our products directly to our dealer network in Germany. In 2008, we established a wholly-owned
subsidiary in Spain and distribute our products directly to our dealer network in Spain. In 2010, we established
wholly-owned subsidiaries in China and Brazil and distribute our products directly to the dealer network in those
countries. In 2011, we established a wholly-owned subsidiary in India to sell direct to dealers. Additionally in
2011, we acquired GEM and Goupil in the Small Electric Vehicles segment, which have their own dealer/
distributor relationships established. See Notes 1 and 12 of Notes to Consolidated Financial Statements for
further discussion of international operations.
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