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PART I
Item 1. Business
Polaris Industries Inc., a Minnesota corporation, was formed in 1994 and is the successor to Polaris Industries
Partners LP. The terms ‘‘Polaris,’’ the ‘‘Company,’’ ‘‘we,’’ ‘‘us,’’ and ‘‘our’’ as used herein refer to the business
and operations of Polaris Industries Inc., its subsidiaries and its predecessors, which began doing business in
the early 1950’s. We design, engineer and manufacture Off-Road Vehicles (ORV), including All-Terrain
Vehicles (ATV) and side-by-side vehicles for recreational and utility use, Snowmobiles, Motorcycles and Small
Vehicles (SV), together with the related replacement Parts, Garments and Accessories (PG&A). These
products are sold through dealers and distributors principally located in the United States, Canada and
Europe. Sales of ORVs, Snowmobiles, Motorcycles, SVs and PG&A accounted for the following approximate
percentages of our sales for the years ended December 31:
ORVs Snowmobiles Motorcycles Small Vehicles PG&A
2014 ............................... 65% 7% 8% 3% 17%
2013 ............................... 67% 8% 6% 3% 16%
2012 ............................... 69% 9% 6% 2% 14%
Industry Background
Off-Road Vehicles. Our ORVs include core ATVs and RANGER↧ and RZR↧ side-by-side vehicles. ATVs are
four-wheel vehicles with balloon style tires designed for off-road use and traversing rough terrain, swamps and
marshland. Side-by-side vehicles are multi-passenger off-road, all-terrain vehicles that can carry up to six
passengers in addition to cargo. ORVs are used for recreation, in such sports as fishing and hunting and for
trail and dune riding, for utility purposes on farms, ranches, construction sites and for certain military
applications.
ATVs were introduced to the North American market in 1971 by Honda Motor Co., Ltd. (‘‘Honda’’). Other
Japanese motorcycle manufacturers, including Yamaha Motor Corporation (‘‘Yamaha’’), Kawasaki Motors
Corp. (‘‘Kawasaki’’), and Suzuki Motor Corporation (‘‘Suzuki’’), entered the North American ATV market in
the late 1970’s and early 1980’s. We entered the ATV market in 1985, Arctic Cat Inc. (‘‘Arctic Cat’’) entered
in 1995 and Bombardier Recreational Products Inc. (‘‘BRP’’) entered in 1998 with their Can-Am product line.
In addition, numerous Chinese and Taiwanese manufacturers of youth and small ATVs exist for which limited
industry sales data is available. By 1985, the number of three- and four-wheel ATVs sold in North America
had grown to approximately 650,000 units per year, then dropped dramatically to a low of 148,000 in 1989.
The ATV industry then grew each year in North America from 1990 until 2005, but declined between 2005
and 2011, primarily due to weak overall economic conditions and a move to side-by-side vehicles, until
returning to modest low single digit percentage growth in 2012 through 2014. Internationally, ATVs are also
sold primarily in Western European countries by similar manufacturers as in North America. We estimate that
during 2014 world-wide industry sales increased three percent from 2013 levels with an estimated 419,000
ATVs sold worldwide.
We estimate that the side-by-side vehicle market sales increased approximately seven percent during 2014 over
2013 levels with an estimated 413,000 side-by-side vehicles sold worldwide. The side-by-side market has
increased consistently over the past several years primarily due to continued innovation by existing and new
manufacturers. The main competitors for our RANGER and RZR side-by-side vehicles are Deere & Company
(‘‘Deere’’), Kawasaki, Yamaha, Arctic Cat, Kubota Tractor Corporation (‘‘Kubota’’), Honda and BRP’s
Can-Am product line.
We estimate that total off-road vehicle industry sales for 2014, which includes core ATVs and side-by-side
vehicles, increased five percent from 2013 levels with an estimated 832,000 units sold worldwide.
Snowmobiles. In the early 1950’s, a predecessor to Polaris produced a ‘‘gas powered sled,’’ which became the
forerunner of the Polaris snowmobile. Snowmobiles have been manufactured under the Polaris name since
3