Polaris 2014 Annual Report Download - page 32

cabs, cargo box accessories, tracks and oil. Snowmobile accessories include covers, traction products, reverse
kits, electric starters, tracks, bags, windshields, oil and lubricants. Motorcycle accessories include saddle bags,
handlebars, backrests, exhaust, windshields, seats, oil and various chrome accessories. We also market a full
line of recreational apparel for our product lines, including helmets, jackets, bibs and pants, leathers and hats.
In 2012, we acquired Teton Outfitters, LLC (d/b/a Klim), which specializes in premium technical riding gear
for the snowmobile and motorcycle industries. Apparel is designed to our specifications, purchased from
independent vendors and sold by us through our dealers and distributors, and online under our brand names.
In 2014, we acquired Kolpin Outdoors, Inc. (‘‘Kolpin’’), an aftermarket brand delivering purpose-built and
universal-fit ORV accessories and lifestyle products. We also acquired certain assets of LSI Products Inc. and
Armor Holdings LLC (collectively ‘‘Pro Armor’’), an aftermarket accessories company that specializes in
accessories for performance side-by-side vehicles and all-terrain vehicles. These two 2014 acquisitions added
industry leading aftermarket accessory brands to our PG&A activities.
Marine Products Division. We entered the personal watercraft market in 1992. In September 2004, we
announced our decision to cease manufacturing marine products effective immediately. As technology and the
distribution channel evolved, the marine products division’s lack of commonality with our other product lines
created challenges for us and our dealer base. The marine products division continued to experience
escalating costs and increasing competitive pressures and was never profitable.
Manufacturing and Distribution Operations
Our products are primarily assembled at our original manufacturing facility in Roseau, Minnesota and at our
facilities in Spirit Lake, Iowa, and its surrounding areas, Osceola, Wisconsin, Monterrey, Mexico, Opole,
Poland and various locations across France. Since our product lines incorporate similar technology,
substantially the same equipment and personnel are employed across production in North America. We are
vertically integrated in several key components of our manufacturing process, including plastic injection
molding, welding, clutch assembly and balancing and painting. Fuel tanks, tracks, tires, seats and instruments,
and certain other component parts are purchased from third-party vendors. Raw materials or standard parts
are readily available from multiple sources for the components manufactured by us. Our work force is familiar
with the use, operation and maintenance of the products since many employees own the products we
manufacture. In 2010, we announced plans to realign our manufacturing operations. We have created
manufacturing centers of excellence for our products by enhancing the existing Roseau and Spirit Lake
production facilities and established a manufacturing facility in Monterrey, Mexico, which became operational
in 2011, that assembles ORVs and certain engines. This realignment led to the sale of part of our Osceola,
Wisconsin manufacturing operations, moving frame tube bending into Roseau and Monterrey, and outsourcing
some operations including seat manufacturing and stamping. Several of the engines used in our vehicles
continue to be manufactured in Osceola. Our plant in Opole, Poland facility manufactures ORVs to serve the
European market. Goupil has its manufacturing operations in Bourran, France, while Aixam has its
manufacturing operations in Aix-les-Bains and Chanas, France. Our Roseau facility primarily manufactures
ORVs and snowmobiles and our Monterrey facility primarily manufactures ORVs. Our facilities in Spirit Lake,
Iowa and its surrounding areas primarily manufacture ORVs, motorcycles and GEM vehicles. In January 2015,
we announced plans to build a new production facility in Huntsville, Alabama to provide additional capacity
and flexibility. The 600,000 square-foot facility will focus on off-road vehicle production. We will break ground
on the facility in the first quarter of 2015 with completion expected in the first half of 2016.
Pursuant to informal agreements between us and Fuji Heavy Industries Ltd. (‘‘Fuji’’), Fuji was the sole
manufacturer of our two-cycle snowmobile engines from 1968 to 1995. Fuji has manufactured engines for our
ATV products since their introduction in 1985. We had entered into an agreement with Fuji to form Robin
Manufacturing, U.S.A. (‘‘Robin’’) in 1995. Under the agreement, we made an investment for a 40 percent
ownership position in Robin, which built engines in the United States for recreational and industrial products.
The Robin facility was closed in 2011 as the production volume of engines made at the facility had declined
significantly. Since 2011, our reliance on and use of Fuji manufactured engines in our products has steadily
declined as our internal engine manufacturing capabilities have expanded. After decreasing from 2011 to 2014,
we expect our use of Fuji engines in our vehicles to stabilize in 2015.
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