Polaris 2011 Annual Report Download - page 25

In April 2006, a wholly-owned subsidiary of Polaris entered into a multi-year contract with GE Money Bank
(“GE Bank”) under which GE Bank makes available closed-end installment consumer and commercial credit to
customers of our dealers for both Polaris and non-Polaris products. In January 2009, a wholly-owned subsidiary
of Polaris entered into a multi-year contract with Sheffield Financial (“Sheffield”) pursuant to which Sheffield
agreed to make available closed-end installment consumer and commercial credit to customers of our dealers for
Polaris products. In October 2010, we extended our installment credit agreement with Sheffield to February 2016
under which Sheffield will provide exclusive installment credit lending for ORV and Snowmobiles. In November
2010, we extended our installment credit contract with GE Bank to March 2016 under which GE Bank will
provide exclusive installment credit lending for Victory motorcycles. See Note 7 of Notes to Consolidated
Financial Statements for a discussion of these financial services arrangements.
We promote the Polaris brand among the riding and non-riding public and provide a wide range of products
for enthusiasts by licensing the name Polaris. We currently license the production and sale of a range of items,
including die cast toys, ride on toys and numerous other products.
During 2000, a wholly-owned subsidiary of Polaris established an e-commerce site, purepolaris.com, to sell
clothing and accessories over the Internet directly to consumers.
Our marketing activities are designed primarily to promote and communicate directly with consumers and
secondarily to assist the selling and marketing efforts of our dealers and distributors. We make available and
advertise discount or rebate programs, retail financing or other incentives for our dealers and distributors to
remain price competitive in order to accelerate retail sales to consumers and gain market share. We advertise our
products directly to consumers using print advertising in the industry press and in user group publications,
billboards, television and radio. We also provide media advertising and partially underwrite dealer and distributor
media advertising to a degree and on terms which vary by product and from year to year. From time to time, we
produce promotional films for our products, which are available to dealers for use in the showroom or at special
promotions. We also provide product brochures, leaflets, posters, dealer signs, and miscellaneous other
promotional items for use by dealers.
We expended approximately $178.7 million, $142.4 million and $111.1 million for sales and marketing
activities in 2011, 2010 and 2009, respectively.
Engineering, Research and Development, and New Product Introduction
We have approximately 450 employees who are engaged in the development and testing of existing
products and research and development of new products and improved production techniques primarily in our
Roseau and Wyoming, Minnesota facilities and in Burgdorf, Switzerland. We believe Polaris was the first to
develop, for wide commercial use, independent front suspensions for snowmobiles, long travel rear suspensions
for snowmobiles, liquid cooled snowmobile brakes, hydraulic brakes for snowmobiles, the three cylinder engine
in snowmobiles, the adaptation of the MacPherson strut front suspension, “on demand” all-wheel drive systems
and the Concentric Drive System for use in ORVs, the application of a forced air cooled variable power
transmission system to ORVs and the use of electronic fuel injection for ORVs.
We utilize internal combustion engine testing facilities to design and optimize engine configurations for our
products. We utilize specialized facilities for matching engine, exhaust system and clutch performance
parameters in our products to achieve desired fuel consumption, power output, noise level and other objectives.
Our engineering department is equipped to make small quantities of new product prototypes for testing by our
testing teams and for the planning of manufacturing procedures. In addition, we maintain numerous test facilities
where each 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 motorcycles, and
9