Polaris 2015 Annual Report Download - page 56

resulted primarily from unfavorable foreign currency fluctuations, new plant start-up costs and higher
depreciation and amortization, partially offset by product cost reduction and higher selling prices.
ORV/Snowmobiles. Gross profit dollars decreased one percent from 2014 to 2015, primarily due to the
negative impact of currency movements, decreased volumes and higher promotions, partially offset by product
cost reduction efforts. Gross profit dollars increased 15 percent from 2013 to 2014, primarily due to higher
selling prices, mix and product cost reduction efforts, partially offset by the negative impact of currency
movements.
Motorcycles. Gross profit dollars increased 79 percent from 2014 to 2015, primarily due to increased sales
volumes of Indian and Slingshot, partially offset by additional manufacturing costs and inefficiencies associated
with our efforts to scale-up production and add capacity to the paint system at our Spirit Lake, Iowa
motorcycle facility. Gross profit dollars increased 13 percent from 2013 to 2014, primarily due to increased
sales volumes of Indian.
Global Adjacent Markets. Gross profit dollars decreased five percent from 2014 to 2015, primarily due to the
negative impact of currency movements. Gross profit dollars increased 39 percent from 2013 to 2014, primarily
due to increased sales volumes of Aixam/Mega vehicles and government/military vehicles, partially offset by
negative impacts of currency movements.
Operating Expenses:
The following table reflects our operating expenses in dollars and as a percentage of sales:
For the Years Ended December 31,
Change Change
($ in millions) 2015 2014 2015 vs. 2014 2013 2014 vs. 2013
Selling and marketing ................. $316.7 $314.5 1% $270.3 16%
Research and development ............. 166.4 148.5 12% 139.2 7%
General and administrative ............. 209.1 203.2 3% 179.4 13%
Total operating expenses ............... $692.2 $666.2 4% $588.9 13%
Percentage of sales ................... 14.7% 14.9% ǁ20 basis points 15.6% ǁ72 basis points
Operating expenses for 2015 increased four percent to $692.2 million, compared to $666.2 million in 2014.
Operating expenses as a percentage of sales decreased 20 basis points in 2015 to 14.7 percent compared to
14.9 percent in 2014. Operating expenses in absolute dollars increased in 2015 primarily due to higher
research and development expenses, as well as increased general and administrative expenses, which includes
infrastructure investments being made to support global growth initiatives. Operating expenses as a percent of
sales declined primarily due to operating cost control measures and a reduction in incentive compensation
plan expenses. Foreign currencies had a favorable impact to operating expenses of approximately $15.0 million
for 2015, when compared to the prior year period.
Operating expenses for 2014 increased 13 percent to $666.2 million, compared to $588.9 million in 2013.
Operating expenses as a percentage of sales decreased 72 basis points in 2014 to 14.9 percent compared to
15.6 percent in 2013. Operating expenses in absolute dollars increased in 2014 primarily due to higher selling,
marketing and advertising expenses related to the launch of new model year 2015 products, including
Slingshot, and the continued roll-out of Indian motorcycles, as well as increased general and administrative
expenses, which includes infrastructure investments being made to support global growth initiatives. Operating
expenses as a percent of sales declined primarily due to lower long-term incentive compensation expenses,
partially offset by higher marketing and advertising expenses related to the launch of various new model year
2015 products.
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