Polaris 2014 Annual Report Download - page 53

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion pertains to the results of operations and financial position of the Company for each
of the three years in the period ended December 31, 2014, and should be read in conjunction with the
Consolidated Financial Statements and the Notes thereto included elsewhere in this report.
Overview
In 2014, we had record sales and net income, with our fifth straight year of double digit growth in both sales
and net income. This growth is fueled by award-winning innovative new products leading to continued market
share leadership in side-by-side vehicles and ATVs. In 2014, we also experienced growth in our snowmobiles,
motorcycles, international and small vehicles businesses. The overall North American powersports industry
continued its positive trend with mid-single digit percentage growth in 2014. Our North America retail sales to
consumers increased 12 percent in 2014, helping to drive total full year Company sales up 19 percent to a
record $4.48 billion. Despite the global economy remaining difficult, our international sales increased
16 percent due to continued market share growth in all product categories and strong results by our recent
European acquisitions.
Full year earnings reflect the success of our ongoing product innovation, as 19 percent sales growth, partially
offset by a decrease in the gross profit percentage of 23 basis points, drove net income from continuing
operations up 19 percent to $454.0 million, with diluted earnings per share from continuing operations
increasing 23 percent to a record $6.65 per share. These increases came while we continued to invest in
numerous longer-term diversification and growth opportunities.
In 2014, we began to receive benefits from prior investments while continuing to invest in both product
development and strategic initiatives. We introduced over twenty new ORV models in 2014, including the
all-new RZR↧ XP 900 trail and RZR XP4 900 trail, several new value models, and two models in a newly
defined category of single-seat, ride-in ATVs, the Polaris ACE↩. We also introduced nine new snowmobiles in
the all-new AXYS↩ chassis platform. In our motorcycles line, we added two new models to the iconic Indian
Motorcycle↧ brand—the 2015 Roadmaster↧, a luxury touring motorcycle, and the Scout↩, Polaris’ first
mid-sized motorcycle. Additionally, we introduced the revolutionary all-new three-wheel motorcycle,
Slingshot↧, our first roadster motorcycle. We also acquired Kolpin and Pro Armor, adding two industry
leading accessory companies to Polaris’ PG&A activities. Operationally, we expanded production capacity and
capabilities at all manufacturing facilities in the U.S. and Mexico, and completed the construction of the
manufacturing plant in Opole, Poland, our first manufacturing operation outside of North America, where
production began in late 2014.
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.
On January 29, 2015, we announced that our Board of Directors approved a 10 percent increase in the
regular quarterly cash dividend to $0.53 per share for the first quarter of 2015, representing the
20th consecutive year of increased dividends to shareholders. This increase reflects the continued momentum
and potential of our business and the strength of our balance sheet.
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