Polaris 2014 Annual Report Download - page 63

Operating Activities:
Net cash provided by operating activities totaled $529.3 million and $492.2 million in 2014 and 2013,
respectively. The $37.1 million increase in net cash provided by operating activities in 2014 is primarily the
result of higher net income compared to 2013, which includes a $35.4 million increase in depreciation and
amortization, partially offset by a $44.5 million increase in deferred income taxes and a $15.8 million increase
in net working capital. Changes in working capital (as reflected in our statements of cash flows) for the year
ended 2014 was an increase of $15.6 million, compared to an increase of $0.2 million in 2013. This was
primarily due to an increase in net cash used of $106.4 million related to higher inventory required to support
the growth in the business, offset by an increase in net cash provided related to timing of payments made for
accounts payable of $54.3 million and the timing of collections of trade receivables of $29.9 million.
Investing Activities:
Net cash used for investing activities was $246.8 million in 2014 compared to $406.7 million in 2013. The
primary uses of cash in 2014 were the acquisitions of Kolpin and Pro Armor and capital expenditures for the
purchase of property and equipment. In 2014, we made large capital expenditures related to the expansion of
many of our North America locations, including our manufacturing facilities in Spirit Lake, Iowa; Milford,
Iowa; Roseau, Minnesota; and Monterrey, Mexico, as well as the construction of our new manufacturing
facility in Opole, Poland. We expect that capital expenditures for 2015 will be in excess of $250 million.
Financing Activities:
Net cash used for financing activities was $222.6 million in 2014 compared to $409.0 million in 2013. We paid
cash dividends of $126.9 million and $113.7 million in 2014 and 2013, respectively. Total common stock
repurchased in 2014 and 2013 totaled $81.8 million and $530.0 million, respectively. In November 2013,
Polaris repurchased the 3.96 million Polaris shares held by Fuji for $497.5 million. The repurchase of the
Polaris shares held by Fuji was partially funded through additional debt borrowings. In 2014, we had net
repayments under our capital lease arrangements and debt arrangements of $82.1 million, compared to net
borrowings of $179.2 million in 2013. Proceeds from the issuance of stock under employee plans were
$31.3 million and $26.9 million in 2014 and 2013, respectively.
The seasonality of production and shipments cause working capital requirements to fluctuate during the year.
We are party to an unsecured $350 million variable interest rate bank lending agreement that expires in
January 2018. Interest is charged at rates based on LIBOR or ‘‘prime.’’ At December 31, 2014, there were no
borrowings under this arrangement.
In December 2010, we entered into a Master Note Purchase Agreement to issue $25.0 million of 3.81 percent
unsecured Senior Notes due May 2018 and $75.0 million of 4.60 percent unsecured Senior Notes due May
2021 (collectively, the ‘‘Senior Notes’’). The Senior Notes were issued in May 2011. In December 2013, the
Company entered into a First Supplement to Master Note Purchase Agreement, under which the Company
issued $100.0 million of 3.13 percent unsecured senior notes due December 2020. At December 31, 2014 and
2013, outstanding borrowings under the amended Master Note Purchase Agreement totaled $200.0 million for
both periods.
At December 31, 2014 and 2013, we were in compliance with all debt covenants. Our debt to total capital
ratio was 21 percent and 35 percent at December 31, 2014 and 2013, respectively.
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