Polaris 2013 Annual Report Download - page 55

Other Foreign Countries:
Sales in other foreign countries, primarily in Europe, increased 29 percent for 2013 compared to 2012. The
increase was primarily driven by the acquisition of Aixam in April 2013, along with increased sales of side-by-
side vehicles and PG&A. This increase was partially offset by currency rate movements, which had an
unfavorable one percent impact on sales for 2013 compared to 2012. Sales in other foreign countries,
primarily in Europe, increased nine percent for 2012 compared to 2011. The increase was primarily driven by
the additional sales from the Goupil acquisition, higher sales of Victory motorcycles and snowmobiles, and a
21 percent increase in the Asia/Pacific and Latin America region sales. Currency rates had an unfavorable two
percent impact on sales for 2012 compared to 2011.
Cost of Sales:
The following table reflects our cost of sales in dollars and as a percentage of sales:
For the Years Ended December 31,
Percent of Percent of Change Percent of Change
Total Cost of Total Cost of 2013 vs. Total Cost of 2012 vs.
($ in millions) 2013 Sales 2012 Sales 2012 2011 Sales 2011
Purchased materials and
services ............$2,336.1 88% $2,008.9 88% 16% $1,650.8 86% 22%
Labor and benefits ...... 198.7 8% 177.7 8% 12% 165.5 9% 7%
Depreciation and
amortization ......... 64.5 2% 51.8 2% 25% 53.9 3% (4)%
Warranty costs ......... 56.9 2% 46.1 2% 23% 46.2 2% —%
Total cost of sales .......$2,656.2 100% $2,284.5 100% 16% $1,916.4 100% 19%
ǁ90 basis ǁ90 basis
Percentage of sales . 70.3% 71.2% points 72.1% points
For 2013, cost of sales increased 16 percent to $2,656.2 million compared to $2,284.5 million in 2012. The
increase in cost of sales in 2013 resulted primarily from the effect of a 12 percent increase in sales volume on
purchased materials and services and labor and benefits, and also includes an unfavorable resolution regarding
a contract dispute resulting in an approximate $10.0 million charge for additional royalties in 2013.
For 2012, cost of sales increased 19 percent to $2,284.5 million compared to $1,916.4 million in 2011. The
increase in cost of sales in 2012 resulted primarily from the effect of an 18 percent increase in sales volumes
on purchased materials and services and labor and benefits offset somewhat by continued product cost
reduction efforts in 2012.
Gross Profit:
The following table reflects our gross profit in dollars and as a percentage of sales:
For the Years Ended December 31,
Change Change
($ in millions) 2013 2012 2013 vs. 2012 2011 2012 vs. 2011
Gross profit dollars ................. $1,120.9 $925.3 21% $740.6 25%
Percentage of sales .............. 29.7% 28.8% +90 basis points 27.9% +90 basis points
Gross profit, as a percentage of sales, was 29.7 percent for 2013, an increase of 90 basis points from 2012.
Gross profit dollars increased 21 percent to $1,120.9 million in 2013 compared to 2012. The increases in gross
profit dollars and the increase in gross profit margin percentage resulted primarily from continued product
cost reduction, production efficiencies on increased volumes and higher selling prices, partially offset by
unfavorable foreign currency fluctuations, higher promotional costs and royalty expenses as a result of a
contract dispute resolution.
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