Polaris 2011 Annual Report Download - page 46

Overview
Our full year 2011 sales and earnings growth rates rapidly accelerated past the record results we delivered in
2010. While the global economy remained difficult, market share gains in ORV and Victory motorcycles,
coupled with strong international and adjacency growth, enabled us to once again outperform the competition.
The overall North American powersports industry was about flat year over year, a positive trend for the industry
compared to the past several years. Our full year North American retail sales were up 14%, helping to drive total
Company sales to a record $2.66 billion in 2011, up 33 percent from 2010. Sales growth remained broad based,
as sales grew in every product line and in every region of the world. Thanks 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 growth. Despite this winter’s lack of snow, last season’s
success and our line-up of new products contributed to a very strong 2011 for our snowmobile business,
increasing 48 percent in 2011. Our European business grew sales 37 percent in 2011, supporting total
International sales growth of 39 percent in 2011.
Full year earnings reflect the success of our margin expansion efforts, as we exceeded expectations by
delivering a 120 basis point increase in net income margin, to a record 8.6 percent of sales. The combination of
rapid sales growth and expanding margins drove net income up 55 percent to $227.6 million, with diluted
earnings per share increasing 50 percent to a record $3.20 per share.
During 2011, Polaris accomplished much more than posting record sales and earnings results. Across the
business and around the globe, each of our employees helped to make significant progress towards achieving our
first strategic objective, to be the Best in Powersports PLUS. The strongest testimony to this commitment comes
from our market share expansion and financial results in ORV, snowmobiles and motorcycles.
Growth through Adjacencies moved meaningfully from concept to reality in 2011, as we completed three
acquisitions, GEM, Goupil and Indian Motorcycles; made small investments in cutting-edge technology
companies and greatly expanded our military and Bobcat businesses. GEM and Goupil both hold strong positions
in the growing $4.0 billion small electric vehicle industry and our integration and development of Indian
Motorcycles is proceeding well.
Global Market Leadership is an attractive growth initiative in the company shorter term and our objective is
to drive International business to generate at least 25 percent of our sales within the next few years. In 2011, we
took an important step and asked two of our most experienced executives to lead our international efforts in the
Europe, Middle East and Africa regions and Asia Pacific/Latin America. While these regions are quite different,
we look to consistently pursue our strategy of creating organic growth through new product introductions and
dealer expansion, while looking for opportunities to invest in businesses to augment our organic growth.
Supporting quality growth and ensuring customer satisfaction are key objectives of our Operational
Excellence and LEAN initiatives, and in 2011 our operations team made substantial progress. They executed the
challenging and complex Monterrey Mexico plant start-up on time and within budget, providing much needed
production capacity to meet rising demand. Additionally, we integrated three acquisitions, increased vehicle
production at all assembly facilities and delivered improved productivity for the second year in a row.
During the 2011 third quarter, the Board of Directors declared a two-for-one split of our outstanding shares
of Common Stock. On September 12, 2011, Polaris shareholders received one additional share of Common Stock
for each share they held of record at the close of business on September 2, 2011.
On February 2, 2012, we announced that our Board of Directors approved a 64 percent increase in the
regular quarterly cash dividend to $0.37 per share for the first quarter 2012, representing the 17th consecutive
year of increased dividends. This percentage increase is our largest since 1995, reflecting the momentum and
potential of our business and the strength of our balance sheet.
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