Polaris 2013 Annual Report Download - page 33

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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. The current installment credit
agreement under which GE Bank provides installment credit lending for motorcycles expires in March 2016.
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. The current installment credit
agreement under which Sheffield provides exclusive installment credit lending for ORVs, snowmobiles and
certain other Polaris products expires in February 2016.
We promote our brands 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.
We sell clothing and accessories through our e-commerce sites polaris.com and klim.com.
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
and on the internet, 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 $270.3 million, $210.4 million, and $178.7 million for sales and marketing activities in 2013, 2012
and 2011, respectively.
Engineering, Research and Development, and New Product Introduction
We have approximately 600 employees who are engaged in the development and testing of existing products
and research and development of new products and improved production techniques, located primarily in our
Roseau and Wyoming, Minnesota facilities and in Burgdorf, Switzerland. Our recent SV acquisitions of GEM,
Goupil and Aixam included research and development resources for their respective product lines. 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 in 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 and for the planning of manufacturing procedures. In addition, we maintain numerous facilities where
each of the products is extensively tested under actual use conditions. In 2013, we completed a project which
more than doubled our research and development facility in Wyoming, Minnesota to 272,000 square feet. We
utilize our Wyoming, Minnesota facility for engineering, design and development personnel for our line of
engines and powertrains, ORVs, Victory and Indian motorcycles, and SVs. In 2010, we acquired Swissauto
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