MINNEAPOLIS, MN – January 27, 2015 –Polaris Industries Inc. (NYSE: PII)
reported record fourth quarter net income of $1.98 per diluted share
for the quarter ended December 31, 2014, an increase of 27 percent
compared to the prior year’s fourth quarter net income of $1.56 per
diluted share. Net income was $135.4 million for the fourth quarter of
2014, up 25 percent from the previous fourth quarter’s net income of
$108.7 million. Sales for the fourth quarter of 2014 totaled a record
$1,275.0 million, an increase of 18 percent over last year’s fourth
quarter sales of $1,083.7 million.
For the full year ended December 31, 2014, Polaris reported record
net income from continuing operations of $6.65 per diluted share, a 23
percent increase compared to net income from continuing operations of
$5.40 per diluted share for the year ended December 31, 2013. Net income
from continuing operations was $454.0 million for the full year 2014,
up 19 percent from the previous year’s net income from continuing
operations of $381.1 million. Sales for the full year 2014 totaled a
record $4,479.6 million, an increase of 19 percent compared to sales of
$3,777.1 million for the full year 2013.
“2014 marks our fifth consecutive year of double digit sales and
earnings growth, an accomplishment which testifies to the innovative
spirit and dedication of the 8,000 member global Polaris team. It is
inspiring to see how they overcame obstacles ranging from negative
foreign exchange impacts and a weakening European economy, to highly
volatile oil and crop prices, to record a 19 percent increase in both
sales and net income for the full year 2014. During the year, we added
over thirty new vehicles to the Polaris armada, expanding and
strengthening our portfolio with our largest ever new product
introduction, while our strategic acquisitions and significant
investments in our global manufacturing infrastructure allow us to both
create and meet the increasing demand for our products,” explained Scott
Wine, Polaris’ Chairman and Chief Executive Officer.
“While we expect to face similar headwinds in 2015, namely ongoing
currency volatility and a struggling European economy, I am confident
that with the best team in powersports and numerous catalysts for growth
and margin expansion, we are well positioned to surmount any
challenges. Our ability to develop, produce, and market visionary
products, and to invest strategically and aggressively, will continue
driving Polaris to industry-leading growth and profitability in 2015 and
beyond.”
2014 Product and Operations Highlights
Product –
Introduced over twenty new MY’14.5 and MY‘15 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™ and strengthened our #1 market share position in ORVs
Introduced nine new MY’15 snowmobiles in the all-new AXYS™
chassis platform for the flatland rider – 38 lbs. lighter, 15% more
power to weight, fastest in the ¼ mile shootout; MY’15 800 Switchback
Pro-S won “2015 Snowmobile of the Year” by SnowGoer Magazine
Added two new models to the iconic Indian Motorcycle® brand: the 2015 Roadmaster®, a luxury touring motorcycle, and the return of the Scout™,
one of motorcycling’s most famous and coveted mid-sized motorcycles;
Polaris’ first mid-sized bike, and added a new bagger to the Victory
motorcycle line, the Victory Magnum™
Introduced the revolutionary all-new three-wheeled motorcycle, Slingshot™, the Company’s first roadster motorcycle
Polaris’ Quality improving: #1 in Net Promoter Score (NPS) for motorcycles, Side-by-sides and ATVs
Added over 400 new Polaris accessories contributing to a 21% increase in PG&A sales in 2014
Acquired Kolpin (April 2014) and Pro Armor
(November 2014), adding two industry-leading accessory companies to
Polaris’ PG&A business
Announced a strategic partnership with Ariens® Company, maker of outdoor power equipment to further develop our work and transportation business
Held first Camp RZR® in the Eastern United States for our recreational trail customers – over 12,000 in attendance
Operations –
Celebrated the Company’s 60th
Anniversary reflecting on the spirit of innovation, hard work and
passion the Polaris founders, Edgar and Allan Hetteen and David Johnson,
instilled in the Company six decades ago, beginning in 1954
Expanded production capacity and capabilities at all manufacturing facilities in the U.S. and Mexico
Completed the construction of the manufacturing
plant in Opole, Poland, the Company’s first manufacturing operation
outside North America with initial production beginning late 2014
Appointed an experienced Polaris leader, Matt
Homan, to the newly established position of President, Global Adjacent
Markets to increase focus on achieving the stated objective of creating a
$2+ billion non-powersports portfolio
Added 1,800 new employees, including the hiring of
Ken Pucel for the newly established position of Executive Vice
President of Operations, Engineering and Lean, to drive towards a lean
enterprise that gives competitive advantage in quality, delivery and
costs alongside the Company’s world-class innovation engine
2015 Business Outlook
Full year 2015 earnings per share is expected to be in the range of
$7.22 to $7.42 per diluted share, an increase of 9 to 12 percent over
the full year 2014 earnings per share. Net income for full year 2015 is
expected to increase in the range of 9 to 12 percent over full year
2014. Sales for full year 2015 are expected to increase 9 to 12 percent
over full year 2014 sales.
| Fourth Quarter and Full Year Performance Summary (in thousands, except per share data) |
|
|
Three Months ended December 31,
|
|
Years ended December 31,
|
Sales Components
|
|
|
2014
|
|
|
|
2013
|
|
|
Change
|
|
|
2014
|
|
|
|
2013
|
|
|
Change
|
| Off-Road Vehicles |
|
$ |
781,500 |
|
|
$ |
659,051 |
|
|
19 |
% |
|
$ |
2,909,020 |
|
|
$ |
2,521,559 |
|
|
15 |
% |
| Snowmobiles |
|
|
138,070 |
|
|
|
134,934 |
|
|
2 |
% |
|
|
322,449 |
|
|
|
301,659 |
|
|
7 |
% |
| Motorcycles |
|
|
103,475 |
|
|
|
68,778 |
|
|
50 |
% |
|
|
348,733 |
|
|
|
219,819 |
|
|
59 |
% |
| Small Vehicles |
|
|
41,213 |
|
|
|
46,276 |
|
|
-11 |
% |
|
|
157,379 |
|
|
|
122,765 |
|
|
28 |
% |
| Parts, Garments & Accessories |
|
|
210,742 |
|
|
|
174,671 |
|
|
21 |
% |
|
|
742,067 |
|
|
|
611,266 |
|
|
21 |
% |
| Total Sales |
|
$ |
1,275,000 |
|
|
$ |
1,083,710 |
|
|
18 |
% |
|
$ |
4,479,648 |
|
|
$ |
3,777,068 |
|
|
19 |
% |
| Gross profit |
|
$ |
367,573 |
|
|
$ |
317,108 |
|
|
16 |
% |
|
$ |
1,319,178 |
|
|
$ |
1,120,879 |
|
|
18 |
% |
| Gross profit as a % of sales |
|
|
28.8 |
% |
|
|
29.3 |
% |
|
-43 bps |
|
|
29.4 |
% |
|
|
29.7 |
% |
|
-23 bps |
| Operating expenses |
|
$ |
176,927 |
|
|
$ |
160,664 |
|
|
10 |
% |
|
$ |
666,155 |
|
|
$ |
588,866 |
|
|
13 |
% |
| Operating expenses as a % of sales |
|
|
13.9 |
% |
|
|
14.8 |
% |
|
-95 bps |
|
|
14.9 |
% |
|
|
15.6 |
% |
|
-72 bps |
| Operating income |
|
$ |
210,000 |
|
|
$ |
169,098 |
|
|
24 |
% |
|
$ |
714,690 |
|
|
$ |
577,914 |
|
|
24 |
% |
| Operating income as a % of sales |
|
|
16.5 |
% |
|
|
15.6 |
% |
|
+87 bps |
|
|
16 |
% |
|
|
15.3 |
% |
|
+65 bps |
| Net income from continuing operations |
|
$ |
135,397 |
|
|
$ |
108,680 |
|
|
25 |
% |
|
$ |
454,029 |
|
|
$ |
381,069 |
|
|
19 |
% |
| Net income from continuing operations as a % of sales |
|
|
10.62 |
% |
|
|
10.03 |
% |
|
+59 bps |
|
|
10.14 |
% |
|
|
10.09 |
% |
|
+5 bps |
| Diluted net income per share from continuing operations |
|
$ |
1.98 |
|
|
$ |
1.56 |
|
|
27 |
% |
|
$ |
6.65 |
|
|
$ |
5.40 |
|
|
23 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Off-Road Vehicle (“ORV”) sales increased 19 percent from the
fourth quarter 2013 to $781.5 million. This increase reflects continued
market share gains on strong demand for the Company’s products for both
ATVs and side-by-sides. Polaris North American ORV unit retail sales
were up low-double digits percent from the 2013 fourth quarter with
consumer purchases of side-by-side vehicles up double-digits percent and
ATV retail sales up high-single digits percent for the 2014 fourth
quarter. The Company’s new ACE™ platform accelerated its retail sales
sequentially throughout 2014. The Company estimates that North American
industry ORV retail sales increased high-single digits percent from the
fourth quarter of 2013 with side-by-sides increasing in the high-single
digits percent range and ATVs up mid-single digits percent.
International ORV shipments increased 10 percent in the 2014 fourth
quarter compared to the same period last year. For the full year 2014,
Polaris ORV sales increased 15 percent compared to the prior full year.
Snowmobile sales increased two percent to $138.1 million for
the fourth quarter of 2014 as compared to $134.9 million for the fourth
quarter of 2013. Due to the early snowfall and colder weather in North
America, the snowmobile selling season started strong with industry
retail sales increasing in the high-single digits percent range for the
season-to-date period ended December 31, 2014. Polaris’ retail sales in
North America for the same period reflects the positive start to the
snowmobile season and consumers acceptance of the all-new
AXYS™
platform featured on nine new MY 2015 snowmobiles. Polaris retail sales
increased in the high-teens percent range for the April through December
2014 period. Sales of Polaris snowmobiles outside North America,
principally in the Scandinavian region and Russia, decreased 25 percent
and 28 percent for the fourth quarter and full year 2014, respectively,
when compared to the same periods a year ago, reflecting poor snowfall
in the Scandinavian region and ongoing Russian economic uncertainty. For
the full year 2014, Polaris snowmobile sales increased seven percent
compared to the same period in the prior year.
Motorcycle division sales, increased 50 percent in the 2014
fourth quarter to $103.5 million compared to $68.8 million in the fourth
quarter of 2013. During the quarter, the Company began retailing the
two newest Indian motorcycles, the new 2015 Roadmaster™, and the Company’s first mid-sized motorcycle, the highly regarded Indian
® Scout™, and began initial shipments late in the fourth quarter of the all-new roadster, Slingshot™. Consumer retail demand for Polaris motorcycles was up almost 40 percent with continued strong retail sales for Indian
® motorcycles, improved retail demand for Victory
® motorcycles with retail sales up in the mid-single digits percent range in North America, and initial retail sales of Slingshot™.
Fourth quarter North American industry heavyweight cruiser and touring
motorcycle retail sales, 1400cc and above, were down low-single digits
percent compared to 2013, primarily due to the extremely cold weather in
much of North America during the 2014 fourth quarter and the expected
headwind resulting from strong 2013 fourth quarter industry retail
sales. Sales of Polaris motorcycles outside of North America increased
seven percent in the fourth quarter of 2014 as compared to a year ago.
For the full year 2014, Polaris motorcycle sales increased 59 percent
compared to the prior year.
Sales in the
Small Vehicles division decreased 11 percent to
$41.2 million in the fourth quarter 2014 compared to $46.3 million in
the fourth quarter of 2013. While the Company’s GEM
®
business experienced an increase in sales for the 2014 fourth quarter,
both Goupil and Aixam Mega realized lower sales during the 2014 fourth
quarter, which was a direct result of the weak European economy and
unfavorable currency impacts. For the full year 2014, Polaris small
vehicles sales increased 28 percent compared to the prior year.
Parts, Garments, and Accessories (“PG&A”) sales increased
21 percent during the fourth quarter of 2014 to $210.7 million compared
to $174.7 million in the same period last year. ORV and motorcycles were
the primary drivers of the growth in PG&A for the 2014 fourth
quarter, as both experienced strong double-digit percent increases in
sales year over year. The 2014 fourth quarter sales increase includes
the incremental accessory sales from the Pro Armor
®
acquisition completed in November 2014. Sales of PG&A to customers
outside of North America increased four percent during the 2014 fourth
quarter compared to the same period last year. For the full year 2014,
Polaris PG&A sales increased 21 percent compared to the prior year.
International sales to customers outside of North America
totaled $198.0 million for the 2014 fourth quarter, down three percent
from the same period in 2013. The Company experienced sales growth in
its Latin American and Asia Pacific business with combined sales
increasing nine percent. While the Company’s Europe, Middle East and
Africa (EMEA) business reported sales five percent lower, year over
year, for the 2014 fourth quarter due to the weak economic environment
in Europe, Polaris gained market share in both ORVs and motorcycles
during the quarter. For the full year 2014, Polaris’ International sales
increased 16 percent compared to the prior year.
Gross profit for the fourth quarter of 2014 was 28.8 percent
of sales, a 43 basis point decrease from the fourth quarter 2013. Lower
product costs and higher pricing realized during the 2014 fourth quarter
were more than offset by negative currency movements. Gross profit
dollars increased 16 percent to $367.6 million for the fourth quarter of
2014, compared to $317.1 million for the fourth quarter of 2013. For
the full year 2014, gross profit as a percentage of sales decreased 23
basis points to 29.4 percent, in line with Company expectations.
Operating expenses for the fourth quarter of 2014 increased 10
percent to $176.9 million compared to $160.7 million for the fourth
quarter of 2013. Operating expenses, as a percentage of sales, declined
95 basis points, to 13.9 percent compared to 14.8 percent of sales in
the 2013 fourth quarter. The decline in operating expenses, as a percent
of sales, for the 2014 fourth quarter was due to lower long-term
incentive compensation expenses and favorable currency impacts,
partially offset by higher marketing and advertising expenses related to
the launch of various new model year 2015 products including the
continued roll-out of Indian
® motorcycles. For the 2014 full year, operating expenses, as a percent of sales, decreased 72 basis points to 14.9 percent.
Income from financial services increased 53 percent to $19.4
million during the fourth quarter of 2014 as compared to $12.7 million
in the fourth quarter of 2013. These results were primarily due to
higher income from Polaris Acceptance’s dealer inventory financing as
well as to the increased profitability of the retail credit portfolio.
For the 2014 full year, income from financial services was $61.7
million, a 34 percent increase compared to $45.9 million for the full
year 2013.
Equity in loss of other affiliates was $1.2 million for the
fourth quarter 2014, which represents the Company’s portion of the
start-up costs related to the Polaris/Eicher joint venture in India
established in 2012. For the 2014 full year, equity in loss of other
affiliates was $4.1 million compared to $2.4 million for the full year
2013.
Non-operating other expense (income), which primarily relates
to foreign currency exchange rate movements and the corresponding
effects on foreign currency transactions related to the Company’s
foreign subsidiaries, was $3.7 million of expense in the fourth quarter
of 2014, compared to $1.1 million of expense in the fourth quarter of
2013. For the 2014 full year, non-operating other expense was $0.0
million compared to $5.1 million of income for the full year 2013.
The
provision for income taxes for the fourth quarter of 2014
was $67.1 million or 33.1 percent of pretax income compared to $56.7
million or 34.3 percent of pretax income for the fourth quarter 2013.
The income tax provision for the fourth quarter of 2014 was positively
impacted by the United States Congress extending the research and
development income tax credit for calendar year 2014 during the quarter,
offset somewhat by lower income generated from the Company’s
international operations, which generally have lower income tax rates.
The
weighted average diluted shares outstanding for the fourth
quarter of 2014 decreased one percent to 68.5 million shares compared
to 69.5 million shares in the fourth quarter of last year. The decrease
in the weighted average diluted shares outstanding is primarily due to
the Company’s purchase of 3.96 million shares of Polaris stock
previously held by FHI Heavy Industries Ltd. (“Fuji”) in November 2013.
For the 2014 full year, the weighted average diluted shares outstanding
was 68.2 million shares compared to 70.5 million shares for the full
year 2013.
Loss from Discontinued Operations in 2013
In the third quarter of 2013 Polaris recorded a loss from
discontinued operations of $3.8 million net of tax, or $0.05 per diluted
share, resulting from a jury verdict in connection with a personal
watercraft accident. Reported net income for the full year of 2013,
including both continuing and discontinued operations, was $377.3
million, or $5.35 per diluted share. The Company ceased manufacturing
marine products in September 2004 and substantially completed the exit
of the business in 2007.
Financial Position and Cash Flow
Net cash provided by operating activities from continuing operations
increased six percent to $529.3 million for the year ended December 31,
2014 compared to $499.2 million for the same period in 2013. Higher net
income for the full year 2014 was offset primarily by higher factory
inventory to support the new manufacturing plant in Poland and increased
demand for Polaris products, and higher deferred income tax assets.
Total debt, including capital lease obligations, at December 31, 2014
was $226.1 million and the Company’s debt-to-total capital ratio was 21
percent compared to 35 percent at December 31, 2013. Cash and cash
equivalents were $137.6 million at December 31, 2014, a 49 percent
increase from a year ago.
Share Buyback Activity
During the fourth quarter 2014, the Company repurchased and retired
524,000 shares of its common stock for $77.8 million, bringing total
share repurchases to 553,000 shares or $81.8 million for the full year
2014. As of December 31, 2014, the Company has authorization from its
Board of Directors to repurchase up to an additional 1.1 million shares
of Polaris stock.
Conference Call and Webcast Presentation
Today at 9:00 AM (CT) Polaris Industries Inc. will host a conference
call and webcast to discuss Polaris’ 2014 fourth quarter and full year
earnings results released this morning. The call will be hosted by Scott
Wine, Chairman and CEO, Bennett Morgan, President and COO, and Mike
Malone, Vice President―Finance and CFO.
A slide presentation and link to the webcast will be posted on the Investor Relations page of the Polaris web site at ir.polaris.com.
To listen to the conference call by phone, dial 877-706-7543 in the
U.S. and Canada, or 973-200-3967 internationally. The Conference ID is
#61960475.
A replay of the conference call will be available approximately two
hours after the call for a one-week period by accessing the same link on
our website, or by dialing 855-859-2056 in the U.S. and Canada, or
404-537-3406 internationally.
About Polaris
Polaris is a recognized leader in the powersports industry with
annual 2014 sales of $4.5 billion. Polaris designs, engineers,
manufactures and markets innovative, high quality off-road vehicles,
including all-terrain vehicles (ATVs) and the Polaris
RANGER® and
RZR® side-by-side vehicles, snowmobiles, motorcycles and on-road electric/hybrid powered vehicles.
Polaris is among the global sales leaders for both snowmobiles and
off-road vehicles and has established a presence in the heavyweight
cruiser and touring motorcycle market with the Victory
® and Indian Motorcycle
® and Slingshot™
brands. Additionally, Polaris continues to invest in the global on-road
small electric/hybrid powered vehicle industry with Global Electric
Motorcars (GEM), Goupil Industrie SA, Aixam Mega S.A.S., and internally
developed vehicles. Polaris enhances the riding experience with a
complete line of Polaris Engineered Parts, Accessories and Apparel, Klim
branded apparel and ORV accessories under the Kolpin
®, Cycle Country
® and Pro Armor
® brands.
Polaris Industries Inc. trades on the New York Stock Exchange under
the symbol “PII”, and the Company is included in the S&P Mid-Cap 400
stock price index.
Information about the complete line of Polaris products, apparel and
vehicle accessories are available from authorized Polaris dealers or
anytime at
www.polaris.com.
Except for historical information contained herein, the matters
set forth in this news release, including management’s expectations
regarding 2015 sales, shipments, net income, and net income per share
from continuing operations are forward-looking statements that involve
certain risks and uncertainties that could cause actual results to
differ materially from those forward-looking statements. Potential
risks and uncertainties include such factors as the Company’s ability
to successfully implement its manufacturing operations realignment
initiatives, product offerings, promotional activities and pricing
strategies by competitors; acquisition integration costs; warranty
expenses; impact of changes in Polaris stock price on incentive
compensation plan costs; foreign currency exchange rate fluctuations;
environmental and product safety regulatory activity; effects of
weather; commodity costs; uninsured product liability claims;
uncertainty in the retail and wholesale credit markets; performance of
affiliate partners; changes in tax policy and overall economic
conditions, including inflation, consumer confidence and spending and
relationships with dealers and suppliers. Investors are also directed to
consider other risks and uncertainties discussed in documents filed by
the Company with the Securities and Exchange Commission. The Company
does not undertake any duty to any person to provide updates to its
forward-looking statements.
(summarized financial data follows)
|
| POLARIS INDUSTRIES INC. |
| CONSOLIDATED STATEMENTS OF INCOME |
| (In Thousands, Except Per Share Data) |
| (Unaudited) |
|
| Subject to Reclassification |
|
Three months ended December 31, |
|
Years ended December 31, |
|
|
2014 |
|
|
2013 |
|
|
2014 |
|
|
2013 |
|
| Sales |
|
$ |
1,275,000 |
|
|
$ |
1,083,710 |
|
|
$ |
4,479,648 |
|
|
$ |
3,777,068 |
|
| Cost of sales |
|
907,427 |
|
|
766,602 |
|
|
3,160,470 |
|
|
2,656,189 |
|
| Gross profit |
|
367,573 |
|
|
317,108 |
|
|
1,319,178 |
|
|
1,120,879 |
|
| Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
| Selling and marketing |
|
87,134 |
|
|
74,725 |
|
|
314,449 |
|
|
270,266 |
|
| Research and development |
|
37,375 |
|
|
36,129 |
|
|
148,458 |
|
|
139,193 |
|
| General and administrative |
|
52,418 |
|
|
49,810 |
|
|
203,248 |
|
|
179,407 |
|
| Total operating expenses |
|
176,927 |
|
|
160,664 |
|
|
666,155 |
|
|
588,866 |
|
| Income from financial services |
|
19,354 |
|
|
12,654 |
|
|
61,667 |
|
|
45,901 |
|
| Operating income |
|
210,000 |
|
|
169,098 |
|
|
714,690 |
|
|
577,914 |
|
| Non-operating expense (income): |
|
|
|
|
|
|
|
|
|
|
|
|
| Interest expense |
|
2,553 |
|
|
1,846 |
|
|
11,239 |
|
|
6,210 |
|
| Equity in loss of other affiliates |
|
1,225 |
|
|
785 |
|
|
4,124 |
|
|
2,414 |
|
| Other expense (income), net |
|
3,746 |
|
|
1,135 |
|
|
10 |
|
|
(5,139 |
) |
| Income before income taxes |
|
202,476 |
|
|
165,332 |
|
|
699,317 |
|
|
574,429 |
|
| Provision for income taxes |
|
67,079 |
|
|
56,652 |
|
|
245,288 |
|
|
193,360 |
|
| Net income from continuing operations |
|
135,397 |
|
|
108,680 |
|
|
454,029 |
|
|
381,069 |
|
| Loss from discontinued operations, net of tax |
|
— |
|
|
— |
|
|
— |
|
|
(3,777 |
) |
| Net income |
|
$ |
135,397 |
|
|
$ |
108,680 |
|
|
$ |
454,029 |
|
|
$ |
377,292 |
|
| Basic net income per share: |
|
|
|
|
|
|
|
|
|
|
|
|
| Continuing operations |
|
$ |
2.03 |
|
|
$ |
1.61 |
|
|
$ |
6.86 |
|
|
$ |
5.56 |
|
| Loss from discontinued operations |
|
— |
|
|
— |
|
|
— |
|
|
(0.05 |
) |
| Basic net income per share |
|
$ |
2.03 |
|
|
$ |
1.61 |
|
|
$ |
6.86 |
|
|
$ |
5.51 |
|
| Diluted net income per share: |
|
|
|
|
|
|
|
|
|
|
|
|
| Continuing operations |
|
$ |
1.98 |
|
|
$ |
1.56 |
|
|
$ |
6.65 |
|
|
$ |
5.40 |
|
| Loss from discontinued operations |
|
— |
|
|
— |
|
|
— |
|
|
(0.05 |
) |
| Diluted net income per share |
|
$ |
1.98 |
|
|
$ |
1.56 |
|
|
$ |
6.65 |
|
|
$ |
5.35 |
|
| Weighted average shares outstanding: |
|
|
|
|
|
|
|
|
|
|
|
|
| Basic |
|
66,545 |
|
|
67,299 |
|
|
66,175 |
|
|
68,535 |
|
| Diluted |
|
68,540 |
|
|
69,482 |
|
|
68,229 |
|
|
70,546 |
|
| POLARIS INDUSTRIES INC. |
| CONSOLIDATED BALANCE SHEETS |
| (In Thousands) |
| (Unaudited) |
|
| Subject to Reclassification |
|
December 31, 2014 |
|
December 31, 2013 |
|
|
|
|
|
|
| Assets |
|
|
|
|
|
| Current Assets: |
|
|
|
|
|
| Cash and cash equivalents |
|
$ |
137,600 |
|
|
$ |
92,248 |
| Trade receivables, net |
|
204,876 |
|
|
186,213 |
| Inventories, net |
|
565,685 |
|
|
417,948 |
| Prepaid expenses and other |
|
71,526 |
|
|
63,716 |
| Income taxes receivable |
|
2,691 |
|
|
12,217 |
| Deferred tax assets |
|
114,177 |
|
|
93,356 |
| Total current assets |
|
1,096,555 |
|
|
865,698 |
| Property and equipment, net |
|
555,428 |
|
|
455,167 |
| Investment in finance affiliate |
|
89,107 |
|
|
69,217 |
| Deferred tax assets |
|
41,201 |
|
|
18,616 |
| Goodwill and other intangible assets, net |
|
223,966 |
|
|
229,708 |
| Other long-term assets |
|
68,678 |
|
|
47,082 |
| Total assets |
|
$ |
2,074,935 |
|
|
$ |
1,685,488 |
| Liabilities and Shareholders’ Equity |
|
|
|
|
|
| Current Liabilities: |
|
|
|
|
|
| Current portion of capital lease obligations |
|
$ |
2,528 |
|
|
$ |
3,281 |
| Accounts payable |
|
343,470 |
|
|
238,044 |
| Accrued expenses: |
|
|
|
|
|
| Compensation |
|
102,379 |
|
|
143,504 |
| Warranties |
|
53,104 |
|
|
52,818 |
| Sales promotions and incentives |
|
138,630 |
|
|
123,089 |
| Dealer holdback |
|
120,093 |
|
|
100,600 |
| Other |
|
79,262 |
|
|
77,480 |
| Income taxes payable |
|
11,344 |
|
|
9,254 |
| Total current liabilities |
|
850,810 |
|
|
748,070 |
| Long term income taxes payable |
|
10,568 |
|
|
14,292 |
| Capital lease obligations |
|
23,620 |
|
|
3,842 |
| Long-term debt |
|
200,000 |
|
|
280,500 |
| Deferred tax liabilities |
|
18,191 |
|
|
25,028 |
| Other long-term liabilities |
|
96,951 |
|
|
69,730 |
| Total liabilities |
|
$ |
1,200,140 |
|
|
$ |
1,141,462 |
| Deferred compensation |
|
13,528 |
|
|
8,421 |
| Total shareholders’ equity |
|
861,267 |
|
|
535,605 |
| Total liabilities and shareholders’ equity |
|
$ |
2,074,935 |
|
|
$ |
1,685,488 |
|
Certain reclassifications of previously reported balance sheet amounts have been conformed to the current year presentation
|
| POLARIS INDUSTRIES INC. |
| CONSOLIDATED STATEMENTS OF CASH FLOWS |
| (In Thousands) |
| (Unaudited) |
|
| Subject to Reclassification |
|
Year ended December 31, |
|
|
2014 |
|
2013 |
| Operating Activities: |
|
|
|
|
|
|
| Net income |
|
$ |
454,029 |
|
|
$ |
377,292 |
|
| Loss from discontinued operations |
|
— |
|
|
3,777 |
|
| Adjustments to reconcile net income to net cash provided by operating activities: |
|
|
|
|
|
|
| Depreciation and amortization |
|
127,507 |
|
|
92,100 |
|
| Noncash compensation |
|
63,183 |
|
|
57,893 |
|
| Noncash income from financial services |
|
(18,645 |
) |
|
(4,983 |
) |
| Deferred income taxes |
|
(50,388 |
) |
|
(5,892 |
) |
| Tax effect of share-based compensation exercises |
|
(36,966 |
) |
|
(28,621 |
) |
| Other, net |
|
6,124 |
|
|
7,414 |
|
| Changes in operating assets and liabilities: |
|
|
|
|
|
|
| Trade receivables |
|
(24,174 |
) |
|
(54,055 |
) |
| Inventories |
|
(158,476 |
) |
|
(52,049 |
) |
| Accounts payable |
|
105,783 |
|
|
51,519 |
|
| Accrued expenses |
|
30,664 |
|
|
53,278 |
|
| Income taxes payable/receivable |
|
45,324 |
|
|
33,398 |
|
| Prepaid expenses and others, net |
|
(14,695 |
) |
|
(31,919 |
) |
| Cash provided from continuing operations |
|
529,270 |
|
|
499,152 |
|
| Cash used for discontinued operations |
|
— |
|
|
(6,912 |
) |
| Net cash provided by operating activities |
|
529,270 |
|
|
492,240 |
|
| Investing Activities: |
|
|
|
|
|
|
| Purchase of property and equipment |
|
(205,079 |
) |
|
(251,401 |
) |
| Investment in finance affiliate, net |
|
(1,245 |
) |
|
(7,246 |
) |
| Investment in other affiliates |
|
(12,445 |
) |
|
(10,934 |
) |
| Acquisition of businesses, net of cash acquired |
|
(28,013 |
) |
|
(137,104 |
) |
| Net cash used for investing activities |
|
(246,782 |
) |
|
(406,685 |
) |
| Financing Activities: |
|
|
|
|
|
|
| Borrowings under debt arrangements / capital lease obligations |
|
2,146,457 |
|
|
776,669 |
|
| Repayments under debt arrangements / capital lease obligations |
|
(2,228,587 |
) |
|
(597,492 |
) |
| Repurchase and retirement of common shares |
|
(81,812 |
) |
|
(530,033 |
) |
| Cash dividends to shareholders |
|
(126,908 |
) |
|
(113,722 |
) |
| Tax effect of proceeds from share-based compensation exercises |
|
36,966 |
|
|
28,621 |
|
| Proceeds from stock issuances under employee plans |
|
31,313 |
|
|
26,922 |
|
| Net cash used for financing activities |
|
(222,571 |
) |
|
(409,035 |
) |
| Impact of currency exchange rates on cash balances |
|
(14,565 |
) |
|
(1,287 |
) |
| Net increase (decrease) in cash and cash equivalents |
|
45,352 |
|
|
(324,767 |
) |
| Cash and cash equivalents at beginning of period |
|
92,248 |
|
|
417,015 |
|
| Cash and cash equivalents at end of period |
|
$ |
137,600 |
|
|
$ |
92,248 |
|
