|
|
|
(Mark one)
|
|
|
x
|
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
|
|
|
¨
|
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
|
|
Minnesota
|
|
41-1790959
|
(State or other jurisdiction of
incorporation or organization)
|
|
(I.R.S. Employer
Identification No.)
|
|
|
|
2100 Highway 55, Medina MN
|
|
55340
|
(Address of principal executive offices)
|
|
(Zip Code)
|
|
(763) 542-0500
(Registrant’s telephone number, including area code)
|
|
|
Large accelerated filer
|
x
|
Accelerated filer
|
¨
|
Non-accelerated filer
|
¨
(Do not check if a smaller reporting company)
|
Smaller reporting company
|
¨
|
|
|
Emerging growth company
|
¨
|
|
POLARIS INDUSTRIES INC.
FORM 10-Q
For Quarterly Period Ended March 31, 2018
|
|||
|
|
|
Page
|
|
|||
|
|||
|
|
||
|
|
||
|
|
||
|
|
||
|
|
||
|
|||
|
|
||
|
|
||
|
|
||
|
|
||
|
|
||
|
|||
|
|||
|
|
|
|
|
|||
|
|||
|
|||
|
|||
|
|||
|
|||
|
|
|
|
POLARIS INDUSTRIES INC.
CONSOLIDATED BALANCE SHEETS
(In thousands, except per share data)
|
|||||||
|
March 31, 2018
|
|
December 31, 2017
|
||||
|
(Unaudited)
|
|
|
||||
Assets
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
166,357
|
|
|
$
|
138,345
|
|
Trade receivables, net
|
186,044
|
|
|
200,144
|
|
||
Inventories, net
|
922,925
|
|
|
783,961
|
|
||
Prepaid expenses and other
|
96,247
|
|
|
101,453
|
|
||
Income taxes receivable
|
13,013
|
|
|
29,601
|
|
||
Total current assets
|
1,384,586
|
|
|
1,253,504
|
|
||
Property and equipment, net
|
759,957
|
|
|
747,189
|
|
||
Investment in finance affiliate
|
95,511
|
|
|
88,764
|
|
||
Deferred tax assets
|
114,881
|
|
|
115,511
|
|
||
Goodwill and other intangible assets, net
|
777,844
|
|
|
780,586
|
|
||
Other long-term assets
|
86,828
|
|
|
104,039
|
|
||
Total assets
|
$
|
3,219,607
|
|
|
$
|
3,089,593
|
|
Liabilities and Shareholders’ Equity
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Current portion of debt, capital lease obligations and notes payable
|
$
|
65,245
|
|
|
$
|
47,746
|
|
Accounts payable
|
366,872
|
|
|
317,377
|
|
||
Accrued expenses:
|
|
|
|
||||
Compensation
|
85,997
|
|
|
168,014
|
|
||
Warranties
|
116,286
|
|
|
123,840
|
|
||
Sales promotions and incentives
|
174,610
|
|
|
162,298
|
|
||
Dealer holdback
|
107,829
|
|
|
114,196
|
|
||
Other
|
191,057
|
|
|
186,103
|
|
||
Income taxes payable
|
6,599
|
|
|
10,737
|
|
||
Total current liabilities
|
1,114,495
|
|
|
1,130,311
|
|
||
Long-term income taxes payable
|
22,432
|
|
|
20,114
|
|
||
Capital lease obligations
|
18,497
|
|
|
18,351
|
|
||
Long-term debt
|
945,737
|
|
|
846,915
|
|
||
Deferred tax liabilities
|
10,006
|
|
|
10,128
|
|
||
Other long-term liabilities
|
123,680
|
|
|
120,398
|
|
||
Total liabilities
|
$
|
2,234,847
|
|
|
$
|
2,146,217
|
|
Deferred compensation
|
$
|
11,298
|
|
|
$
|
11,717
|
|
Shareholders’ equity:
|
|
|
|
||||
Preferred stock $0.01 par value, 20,000 shares authorized, no shares issued and outstanding
|
—
|
|
|
—
|
|
||
Common stock $0.01 par value, 160,000 shares authorized, 63,098 and 63,075 shares issued and outstanding, respectively
|
$
|
631
|
|
|
$
|
631
|
|
Additional paid-in capital
|
755,888
|
|
|
733,894
|
|
||
Retained earnings
|
246,980
|
|
|
242,763
|
|
||
Accumulated other comprehensive loss, net
|
(30,037
|
)
|
|
(45,629
|
)
|
||
Total shareholders’ equity
|
973,462
|
|
|
931,659
|
|
||
Total liabilities and shareholders’ equity
|
$
|
3,219,607
|
|
|
$
|
3,089,593
|
|
POLARIS INDUSTRIES INC.
CONSOLIDATED STATEMENTS OF INCOME (LOSS)
(In thousands, except per share data)
(Unaudited)
|
|||||||
|
Three months ended March 31,
|
||||||
|
2018
|
|
2017
|
||||
Sales
|
$
|
1,297,473
|
|
|
$
|
1,153,782
|
|
Cost of sales
|
973,992
|
|
|
911,291
|
|
||
Gross profit
|
323,481
|
|
|
242,491
|
|
||
Operating expenses:
|
|
|
|
||||
Selling and marketing
|
117,707
|
|
|
114,313
|
|
||
Research and development
|
65,230
|
|
|
52,005
|
|
||
General and administrative
|
78,693
|
|
|
75,514
|
|
||
Total operating expenses
|
261,630
|
|
|
241,832
|
|
||
Income from financial services
|
21,425
|
|
|
20,430
|
|
||
Operating income
|
83,276
|
|
|
21,089
|
|
||
Non-operating expense:
|
|
|
|
||||
Interest expense
|
8,048
|
|
|
7,914
|
|
||
Equity in loss of other affiliates
|
21,511
|
|
|
1,900
|
|
||
Other expense (income), net
|
(19,975
|
)
|
|
11,608
|
|
||
Income (loss) before income taxes
|
73,692
|
|
|
(333
|
)
|
||
Provision for income taxes
|
17,978
|
|
|
2,578
|
|
||
Net income (loss)
|
$
|
55,714
|
|
|
$
|
(2,911
|
)
|
Net income (loss) per share:
|
|
|
|
||||
Basic
|
$
|
0.88
|
|
|
$
|
(0.05
|
)
|
Diluted
|
$
|
0.85
|
|
|
$
|
(0.05
|
)
|
Weighted average shares outstanding:
|
|
|
|
||||
Basic
|
63,303
|
|
|
63,128
|
|
||
Diluted
|
65,219
|
|
|
64,133
|
|
|
Three months ended March 31,
|
||||||
|
2018
|
|
2017
|
||||
Net income (loss)
|
$
|
55,714
|
|
|
$
|
(2,911
|
)
|
Other comprehensive income, net of tax:
|
|
|
|
||||
Foreign currency translation adjustments
|
10,978
|
|
|
13,416
|
|
||
Unrealized gain on derivative instruments
|
4,529
|
|
|
356
|
|
||
Retirement benefit plan activity
|
85
|
|
|
—
|
|
||
Comprehensive income
|
$
|
71,306
|
|
|
$
|
10,861
|
|
POLARIS INDUSTRIES INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
|
|||||||
|
Three months ended March 31,
|
||||||
|
2018
|
|
2017
|
||||
Operating Activities:
|
|
|
|
||||
Net income (loss)
|
$
|
55,714
|
|
|
$
|
(2,911
|
)
|
Adjustments to reconcile net income (loss) to net cash provided by (used for) operating activities:
|
|
|
|
||||
Depreciation and amortization
|
52,720
|
|
|
44,538
|
|
||
Noncash compensation
|
12,032
|
|
|
12,336
|
|
||
Noncash income from financial services
|
(7,003
|
)
|
|
(7,088
|
)
|
||
Deferred income taxes
|
113
|
|
|
2,565
|
|
||
Impairment charges
|
18,733
|
|
|
18,760
|
|
||
Other, net
|
(10,700
|
)
|
|
1,900
|
|
||
Changes in operating assets and liabilities:
|
|
|
|
||||
Trade receivables
|
15,587
|
|
|
1,372
|
|
||
Inventories
|
(135,850
|
)
|
|
(48,949
|
)
|
||
Accounts payable
|
48,138
|
|
|
73,091
|
|
||
Accrued expenses
|
(75,722
|
)
|
|
(47,184
|
)
|
||
Income taxes payable/receivable
|
14,747
|
|
|
(3,801
|
)
|
||
Prepaid expenses and others, net
|
8,302
|
|
|
2,400
|
|
||
Net cash provided by (used for) operating activities
|
(3,189
|
)
|
|
47,029
|
|
||
Investing Activities:
|
|
|
|
||||
Purchase of property and equipment
|
(55,558
|
)
|
|
(38,391
|
)
|
||
Investment in finance affiliate, net
|
256
|
|
|
13,699
|
|
||
Investment in other affiliates, net
|
11,183
|
|
|
(1,694
|
)
|
||
Acquisition and disposal of businesses, net of cash acquired
|
—
|
|
|
1,644
|
|
||
Net cash used for investing activities
|
(44,119
|
)
|
|
(24,742
|
)
|
||
Financing Activities:
|
|
|
|
||||
Borrowings under debt arrangements / capital lease obligations
|
694,401
|
|
|
478,248
|
|
||
Repayments under debt arrangements / capital lease obligations
|
(578,342
|
)
|
|
(444,386
|
)
|
||
Repurchase and retirement of common shares
|
(14,987
|
)
|
|
(21,807
|
)
|
||
Cash dividends to shareholders
|
(37,796
|
)
|
|
(36,384
|
)
|
||
Proceeds from stock issuances under employee plans
|
11,905
|
|
|
4,321
|
|
||
Net cash provided by (used for) financing activities
|
75,181
|
|
|
(20,008
|
)
|
||
Impact of currency exchange rates on cash balances
|
1,856
|
|
|
4,003
|
|
||
Net increase in cash, cash equivalents and restricted cash
|
29,729
|
|
|
6,282
|
|
||
Cash, cash equivalents and restricted cash at beginning of period
|
161,618
|
|
|
145,170
|
|
||
Cash, cash equivalents and restricted cash at end of period
|
$
|
191,347
|
|
|
$
|
151,452
|
|
|
|
|
|
||||
Supplemental Cash Flow Information:
|
|
|
|
||||
Interest paid on debt borrowings
|
$
|
7,626
|
|
|
$
|
6,045
|
|
Income taxes paid
|
$
|
1,807
|
|
|
$
|
3,703
|
|
|
|
|
|
||||
The following presents cash, cash equivalents and restricted cash by category within the consolidated balance sheets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
166,357
|
|
|
$
|
137,494
|
|
Other long-term assets
|
24,990
|
|
|
13,958
|
|
||
Total
|
$
|
191,347
|
|
|
$
|
151,452
|
|
|
Fair Value Measurements as of March 31, 2018
|
||||||||||||||
Asset (Liability)
|
Total
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
||||||||
Non-qualified deferred compensation assets
|
$
|
55,400
|
|
|
$
|
55,400
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Foreign exchange contracts, net
|
5,264
|
|
|
—
|
|
|
5,264
|
|
|
—
|
|
||||
Total assets at fair value
|
$
|
60,664
|
|
|
$
|
55,400
|
|
|
$
|
5,264
|
|
|
$
|
—
|
|
Non-qualified deferred compensation liabilities
|
$
|
(55,400
|
)
|
|
$
|
(55,400
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
Total liabilities at fair value
|
$
|
(55,400
|
)
|
|
$
|
(55,400
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
||||||||
|
Fair Value Measurements as of December 31, 2017
|
||||||||||||||
Asset (Liability)
|
Total
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
||||||||
Non-qualified deferred compensation assets
|
$
|
54,244
|
|
|
$
|
54,244
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Total assets at fair value
|
$
|
54,244
|
|
|
$
|
54,244
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Non-qualified deferred compensation liabilities
|
$
|
(54,244
|
)
|
|
$
|
(54,244
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
Foreign exchange contracts, net
|
(426
|
)
|
|
—
|
|
|
(426
|
)
|
|
—
|
|
||||
Total liabilities at fair value
|
$
|
(54,670
|
)
|
|
$
|
(54,244
|
)
|
|
$
|
(426
|
)
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
March 31, 2018
|
|
December 31, 2017
|
||||
Raw materials and purchased components
|
$
|
220,301
|
|
|
$
|
194,108
|
|
Service parts, garments and accessories
|
320,237
|
|
|
307,684
|
|
||
Finished goods
|
428,894
|
|
|
329,288
|
|
||
Less: reserves
|
(46,507
|
)
|
|
(47,119
|
)
|
||
Inventories
|
$
|
922,925
|
|
|
$
|
783,961
|
|
|
Three months ended March 31,
|
||||||
|
2018
|
|
2017
|
||||
Balance at beginning of period
|
$
|
123,840
|
|
|
$
|
119,274
|
|
Additions charged to expense
|
16,031
|
|
|
31,694
|
|
||
Warranty claims paid, net
|
(23,585
|
)
|
|
(41,116
|
)
|
||
Balance at end of period
|
$
|
116,286
|
|
|
$
|
109,852
|
|
|
For the period ended March 31, 2018
|
||||||||||||||||||
|
ORV / Snowmobiles
|
|
Motorcycles
|
|
Global Adj. Markets
|
|
Aftermarket
|
|
Consolidated
|
||||||||||
Revenue by product type
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Wholegoods
|
$
|
683,504
|
|
|
$
|
114,108
|
|
|
$
|
92,012
|
|
|
—
|
|
|
$
|
889,624
|
|
|
PG&A
|
149,060
|
|
|
17,449
|
|
|
21,315
|
|
|
$
|
220,025
|
|
|
407,849
|
|
||||
Total revenue
|
$
|
832,564
|
|
|
$
|
131,557
|
|
|
$
|
113,327
|
|
|
$
|
220,025
|
|
|
$
|
1,297,473
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Revenue by geography
|
|
|
|
|
|
|
|
|
|
||||||||||
United States
|
$
|
662,595
|
|
|
$
|
83,897
|
|
|
$
|
50,053
|
|
|
$
|
210,994
|
|
|
$
|
1,007,539
|
|
Canada
|
57,755
|
|
|
6,940
|
|
|
5,369
|
|
|
9,031
|
|
|
79,095
|
|
|||||
EMEA
|
78,929
|
|
|
26,671
|
|
|
56,921
|
|
|
—
|
|
|
162,521
|
|
|||||
APLA
|
33,285
|
|
|
14,049
|
|
|
984
|
|
|
—
|
|
|
48,318
|
|
|||||
Total revenue
|
$
|
832,564
|
|
|
$
|
131,557
|
|
|
$
|
113,327
|
|
|
$
|
220,025
|
|
|
$
|
1,297,473
|
|
|
Three months ended March 31,
|
||||||
|
2018
|
|
2017
|
||||
Balance at beginning of period
|
$
|
45,760
|
|
|
$
|
26,157
|
|
New contracts sold
|
8,324
|
|
|
6,342
|
|
||
Less: reductions for revenue recognized
|
(4,739
|
)
|
|
(2,054
|
)
|
||
Balance at end of period (1)
|
$
|
49,345
|
|
|
$
|
30,445
|
|
|
Three months ended March 31,
|
||||||
|
2018
|
|
2017
|
||||
Option plan
|
$
|
3,057
|
|
|
$
|
1,422
|
|
Other share-based awards
|
5,889
|
|
|
9,092
|
|
||
Total share-based compensation before tax
|
8,946
|
|
|
10,514
|
|
||
Tax benefit
|
2,129
|
|
|
3,905
|
|
||
Total share-based compensation expense included in net income
|
$
|
6,817
|
|
|
$
|
6,609
|
|
|
Average interest rate at March 31, 2018
|
|
Maturity
|
|
March 31, 2018
|
|
December 31, 2017
|
||||
Revolving loan facility
|
2.82%
|
|
May 2021
|
|
$
|
120,600
|
|
|
$
|
3,000
|
|
Term loan facility
|
3.11%
|
|
May 2021
|
|
680,000
|
|
|
680,000
|
|
||
Senior notes—fixed rate
|
3.81%
|
|
May 2018
|
|
25,000
|
|
|
25,000
|
|
||
Senior notes—fixed rate
|
4.60%
|
|
May 2021
|
|
75,000
|
|
|
75,000
|
|
||
Senior notes—fixed rate
|
3.13%
|
|
December 2020
|
|
100,000
|
|
|
100,000
|
|
||
Capital lease obligations
|
5.18%
|
|
Various through 2029
|
|
20,035
|
|
|
19,889
|
|
||
Notes payable and other
|
3.50%
|
|
June 2027
|
|
10,874
|
|
|
12,384
|
|
||
Debt issuance costs
|
|
|
|
|
(2,030
|
)
|
|
(2,261
|
)
|
||
Total debt, capital lease obligations, and notes payable
|
|
|
|
|
$
|
1,029,479
|
|
|
$
|
913,012
|
|
Less: current maturities
|
|
|
|
|
65,245
|
|
|
47,746
|
|
||
Total long-term debt, capital lease obligations, and notes payable
|
|
|
|
|
$
|
964,234
|
|
|
$
|
865,266
|
|
|
March 31, 2018
|
|
December 31, 2017
|
||||
Goodwill
|
$
|
435,640
|
|
|
$
|
433,374
|
|
Other intangible assets, net
|
342,204
|
|
|
347,212
|
|
||
Total goodwill and other intangible assets, net
|
$
|
777,844
|
|
|
$
|
780,586
|
|
|
Three months ended March 31, 2018
|
||
Goodwill, beginning of period
|
$
|
433,374
|
|
Currency translation effect on foreign goodwill balances
|
2,266
|
|
|
Goodwill, end of period
|
$
|
435,640
|
|
|
Total estimated life (years)
|
|
March 31, 2018
|
|
December 31, 2017
|
||||
Non-amortizable—indefinite lived:
|
|
|
|
|
|
||||
Brand names
|
|
|
$
|
231,084
|
|
|
$
|
230,709
|
|
Amortizable:
|
|
|
|
|
|
||||
Non-compete agreements
|
5
|
|
540
|
|
|
540
|
|
||
Dealer/customer related
|
5-10
|
|
170,958
|
|
|
169,694
|
|
||
Developed technology
|
5-7
|
|
23,707
|
|
|
22,903
|
|
||
Total amortizable
|
|
|
195,205
|
|
|
193,137
|
|
||
Less: Accumulated amortization
|
|
|
(84,085
|
)
|
|
(76,634
|
)
|
||
Net amortized other intangible assets
|
|
|
111,120
|
|
|
116,503
|
|
||
Total other intangible assets, net
|
|
|
$
|
342,204
|
|
|
$
|
347,212
|
|
|
Three months ended March 31,
|
||||||
|
2018
|
|
2017
|
||||
Cash dividends declared and paid per common share
|
$
|
0.60
|
|
|
$
|
0.58
|
|
|
Three months ended March 31,
|
|||
|
2018
|
|
2017
|
|
Weighted average number of common shares outstanding
|
63,050
|
|
62,873
|
|
Director Plan and deferred stock units
|
166
|
|
145
|
|
ESOP
|
87
|
|
110
|
|
Common shares outstanding—basic
|
63,303
|
|
63,128
|
|
Dilutive effect of Omnibus Plan
|
1,916
|
|
1,005
|
|
Common and potential common shares outstanding—diluted
|
65,219
|
|
64,133
|
|
|
Foreign
Currency Items |
|
Cash Flow
Hedging Derivatives |
|
Retirement Benefit Plan Activity
|
|
Accumulated Other
Comprehensive Loss |
||||||||
Balance as of December 31, 2017
|
$
|
(42,442
|
)
|
|
$
|
(34
|
)
|
|
$
|
(3,153
|
)
|
|
$
|
(45,629
|
)
|
Reclassification to the statement of income
|
—
|
|
|
(125
|
)
|
|
85
|
|
|
(40
|
)
|
||||
Change in fair value
|
10,978
|
|
|
4,654
|
|
|
—
|
|
|
15,632
|
|
||||
Balance as of March 31, 2018
|
$
|
(31,464
|
)
|
|
$
|
4,495
|
|
|
$
|
(3,068
|
)
|
|
$
|
(30,037
|
)
|
Foreign Currency
|
|
Notional Amounts
(in U.S. Dollars)
|
|
Net Unrealized Gain
|
||||
Australian Dollar
|
|
$
|
26,496
|
|
|
$
|
470
|
|
Canadian Dollar
|
|
154,671
|
|
|
3,796
|
|
||
Mexican Peso
|
|
17,080
|
|
|
998
|
|
||
Total
|
|
$
|
198,247
|
|
|
$
|
5,264
|
|
|
Carrying Values of Derivative Instruments as of March 31, 2018
|
||||||||||
|
Fair Value—
Assets
|
|
Fair Value—
(Liabilities)
|
|
Derivative Net
Carrying Value
|
||||||
Derivatives designated as hedging instruments
|
|
|
|
|
|
||||||
Foreign exchange contracts(1)
|
$
|
5,292
|
|
|
$
|
(28
|
)
|
|
$
|
5,264
|
|
Total derivatives designated as hedging instruments
|
$
|
5,292
|
|
|
$
|
(28
|
)
|
|
$
|
5,264
|
|
Total derivatives
|
$
|
5,292
|
|
|
$
|
(28
|
)
|
|
$
|
5,264
|
|
|
Carrying Values of Derivative Instruments as of December 31, 2017
|
||||||||||
|
Fair Value—
Assets
|
|
Fair Value—
(Liabilities)
|
|
Derivative Net
Carrying Value
|
||||||
Derivatives designated as hedging instruments
|
|
|
|
|
|
||||||
Foreign exchange contracts(1)
|
$
|
621
|
|
|
$
|
(1,047
|
)
|
|
$
|
(426
|
)
|
Total derivatives designated as hedging instruments
|
$
|
621
|
|
|
$
|
(1,047
|
)
|
|
$
|
(426
|
)
|
Total derivatives
|
$
|
621
|
|
|
$
|
(1,047
|
)
|
|
$
|
(426
|
)
|
(1)
|
Assets are included in prepaid expenses and other and liabilities are included in other accrued expenses on the accompanying consolidated balance sheets.
|
|
Three months ended
March 31,
|
||||||
|
2018
|
|
2017
|
||||
Sales
|
|
|
|
||||
ORV/Snowmobiles
|
$
|
832,564
|
|
|
$
|
724,103
|
|
Motorcycles
|
131,557
|
|
|
120,289
|
|
||
Global Adjacent Markets
|
113,327
|
|
|
91,555
|
|
||
Aftermarket
|
220,025
|
|
|
217,835
|
|
||
Total sales
|
$
|
1,297,473
|
|
|
$
|
1,153,782
|
|
Gross profit
|
|
|
|
||||
ORV/Snowmobiles
|
$
|
243,561
|
|
|
$
|
212,959
|
|
Motorcycles
|
16,568
|
|
|
(19,881
|
)
|
||
Global Adjacent Markets
|
31,258
|
|
|
28,098
|
|
||
Aftermarket
|
58,452
|
|
|
41,564
|
|
||
Corporate
|
(26,358
|
)
|
|
(20,249
|
)
|
||
Total gross profit
|
$
|
323,481
|
|
|
$
|
242,491
|
|
|
Three months ended March 31,
|
||||||
|
2018
|
|
2017
|
||||
Contract termination charges
|
$
|
764
|
|
|
$
|
14,307
|
|
Asset impairment charges
|
—
|
|
|
18,760
|
|
||
Inventory charges
|
—
|
|
|
7,451
|
|
||
Other costs
|
624
|
|
|
5,264
|
|
||
Total
|
$
|
1,388
|
|
|
$
|
45,782
|
|
|
Contract termination charges
|
|
Inventory charges
|
|
Other costs
|
|
Total
|
||||||||
Reserves balance as of January 1, 2018
|
$
|
3,187
|
|
|
$
|
777
|
|
|
$
|
1,681
|
|
|
$
|
5,645
|
|
Expenses
|
764
|
|
|
—
|
|
|
624
|
|
|
1,388
|
|
||||
Cash payments / scrapped inventory
|
(2,813
|
)
|
|
(29
|
)
|
|
(540
|
)
|
|
(3,382
|
)
|
||||
Reserves balance as of March 31, 2018
|
$
|
1,138
|
|
|
$
|
748
|
|
|
$
|
1,765
|
|
|
$
|
3,651
|
|
|
Percent change in total Company sales compared to corresponding period of the prior year
|
||
|
Three months ended
|
|
|
|
March 31, 2018
|
|
|
Volume
|
10
|
%
|
|
Currency
|
2
|
|
|
|
12
|
%
|
|
|
Three months ended March 31,
|
|
|||||||||||||||
($ in millions)
|
2018
|
|
Percent
of Total Sales |
|
2017
|
|
Percent
of Total Sales |
|
Percent
Change 2018 vs. 2017 |
|
|||||||
ORV/Snowmobiles
|
$
|
832.6
|
|
|
64
|
%
|
|
$
|
724.1
|
|
|
63
|
%
|
|
15
|
%
|
|
Motorcycles
|
131.6
|
|
|
10
|
%
|
|
120.3
|
|
|
10
|
%
|
|
9
|
%
|
|
||
Global Adjacent Markets
|
113.3
|
|
|
9
|
%
|
|
91.6
|
|
|
8
|
%
|
|
24
|
%
|
|
||
Aftermarket
|
220.0
|
|
|
17
|
%
|
|
217.8
|
|
|
19
|
%
|
|
1
|
%
|
|
||
Total sales
|
$
|
1,297.5
|
|
|
100
|
%
|
|
$
|
1,153.8
|
|
|
100
|
%
|
|
12
|
%
|
|
|
Three months ended March 31,
|
|
|||||||||||||||
($ in millions)
|
2018
|
|
Percent of Total Sales
|
|
2017
|
|
Percent of Total Sales
|
|
Percent Change 2018 vs. 2017
|
|
|||||||
United States
|
$
|
1,007.6
|
|
|
78
|
%
|
|
$
|
930.6
|
|
|
81
|
%
|
|
8
|
%
|
|
Canada
|
79.1
|
|
|
6
|
%
|
|
57.0
|
|
|
5
|
%
|
|
39
|
%
|
|
||
Other foreign countries
|
210.8
|
|
|
16
|
%
|
|
166.2
|
|
|
14
|
%
|
|
27
|
%
|
|
||
Total sales
|
$
|
1,297.5
|
|
|
100
|
%
|
|
$
|
1,153.8
|
|
|
100
|
%
|
|
12
|
%
|
|
|
Three months ended March 31,
|
|
|||||||||||||||
($ in millions)
|
2018
|
|
Percent of Sales
|
|
2017
|
|
Percent of Sales
|
|
Change
2018 vs.
2017
|
|
|||||||
ORV/Snowmobiles
|
$
|
243.6
|
|
|
29.3
|
%
|
|
$
|
213.0
|
|
|
29.4
|
%
|
|
14
|
%
|
|
Motorcycles
|
16.6
|
|
|
12.6
|
%
|
|
(19.9
|
)
|
|
(16.5
|
)%
|
|
NM
|
|
|
||
Global Adjacent Markets
|
31.3
|
|
|
27.6
|
%
|
|
28.1
|
|
|
30.7
|
%
|
|
11
|
%
|
|
||
Aftermarket
|
58.4
|
|
|
26.6
|
%
|
|
41.6
|
|
|
19.1
|
%
|
|
41
|
%
|
|
||
Corporate
|
(26.4
|
)
|
|
|
|
(20.3
|
)
|
|
|
|
30
|
%
|
|
||||
Total gross profit dollars
|
$
|
323.5
|
|
|
|
|
$
|
242.5
|
|
|
|
|
33
|
%
|
|
||
Percentage of sales
|
24.9
|
%
|
|
|
|
21.0
|
%
|
|
+391 basis points
|
|
|
||||||
NM = not meaningful
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended March 31,
|
|
|||||||||
($ in millions)
|
2018
|
|
2017
|
|
Change
2018 vs. 2017 |
|
|||||
Selling and marketing
|
$
|
117.7
|
|
|
$
|
114.3
|
|
|
3
|
%
|
|
Research and development
|
65.2
|
|
|
52.0
|
|
|
25
|
%
|
|
||
General and administrative
|
78.7
|
|
|
75.5
|
|
|
4
|
%
|
|
||
Total operating expenses
|
$
|
261.6
|
|
|
$
|
241.8
|
|
|
8
|
%
|
|
Percentage of sales
|
20.2
|
%
|
|
21.0
|
%
|
|
-80 basis points
|
|
|
|
Three months ended March 31,
|
|||||||||
($ in millions)
|
2018
|
|
2017
|
|
Change
2018 vs. 2017 |
|||||
Income from financial services
|
$
|
21.4
|
|
|
$
|
20.4
|
|
|
5
|
%
|
Percentage of sales
|
1.7
|
%
|
|
1.8
|
%
|
|
-12 basis points
|
|
|
Three months ended March 31,
|
|||||||||
($ in millions, except per share data)
|
2018
|
|
2017
|
|
Change
2018 vs. 2017 |
|||||
Interest expense
|
$
|
8.0
|
|
|
$
|
7.9
|
|
|
2
|
%
|
Equity in loss of other affiliates
|
$
|
21.5
|
|
|
$
|
1.9
|
|
|
NM
|
|
Other expense (income), net
|
$
|
(20.0
|
)
|
|
$
|
11.6
|
|
|
NM
|
|
|
|
|
|
|
|
|||||
Income (loss) before taxes
|
$
|
73.7
|
|
|
$
|
(0.3
|
)
|
|
NM
|
|
Provision for income taxes
|
$
|
18.0
|
|
|
$
|
2.6
|
|
|
NM
|
|
Percentage of income (loss) before taxes
|
24.4
|
%
|
|
(774.2
|
)%
|
|
NM
|
|
||
|
|
|
|
|
|
|||||
Net income (loss)
|
$
|
55.7
|
|
|
$
|
(2.9
|
)
|
|
NM
|
|
Diluted net income (loss) per share:
|
$
|
0.85
|
|
|
$
|
(0.05
|
)
|
|
NM
|
|
Weighted average diluted shares outstanding
|
65.2
|
|
|
64.1
|
|
|
2
|
%
|
||
NM = not meaningful
|
|
|
|
|
|
($ in millions)
|
Three months ended March 31,
|
||||||||||
2018
|
|
2017
|
|
Change
|
|||||||
Total cash provided by (used for):
|
|
|
|
|
|
||||||
Operating activities
|
$
|
(3.2
|
)
|
|
$
|
47.0
|
|
|
$
|
(50.2
|
)
|
Investing activities
|
(44.1
|
)
|
|
(24.7
|
)
|
|
(19.4
|
)
|
|||
Financing activities
|
75.2
|
|
|
(20.0
|
)
|
|
95.2
|
|
|||
Impact of currency exchange rates on cash balances
|
1.9
|
|
|
4.0
|
|
|
(2.1
|
)
|
|||
Increase in cash, cash equivalents and restricted cash
|
$
|
29.8
|
|
|
$
|
6.3
|
|
|
$
|
23.5
|
|
($ in millions)
|
Average interest rate at March 31, 2018
|
|
Maturity
|
|
March 31, 2018
|
||
Revolving loan facility
|
2.82%
|
|
May 2021
|
|
$
|
120.6
|
|
Term loan facility
|
3.11%
|
|
May 2021
|
|
680.0
|
|
|
Senior notes—fixed rate
|
3.81%
|
|
May 2018
|
|
25.0
|
|
|
Senior notes—fixed rate
|
4.60%
|
|
May 2021
|
|
75.0
|
|
|
Senior notes—fixed rate
|
3.13%
|
|
December 2020
|
|
100.0
|
|
|
Capital lease obligations
|
5.18%
|
|
Various through 2029
|
|
20.0
|
|
|
Notes payable and other
|
3.50%
|
|
June 2027
|
|
10.9
|
|
|
Debt issuance costs
|
|
|
|
|
(2.0)
|
|
|
Total debt, capital lease obligations, and notes payable
|
|
|
|
|
$
|
1,029.5
|
|
Less: current maturities
|
|
|
|
|
65.3
|
|
|
Long-term debt, capital lease obligations, and notes payable
|
|
|
|
|
$
|
964.2
|
|
Foreign Currency
|
|
|
Foreign currency hedging contracts
|
||||
Currency Position
|
|
Notional amounts (in thousands of U.S. Dollars)
|
|
Average exchange rate of open contracts
|
|||
Australian Dollar (AUD)
|
Long
|
|
$
|
26,496
|
|
|
$0.78 to 1 AUD
|
Canadian Dollar (CAD)
|
Long
|
|
154,671
|
|
|
$0.80 to 1 CAD
|
|
Mexican Peso
|
Short
|
|
17,080
|
|
|
19.5 Peso to $1
|
Period
|
Total
Number of
Shares
Purchased
|
|
Average
Price
Paid
per Share
|
|
Total
Number of
Shares
Purchased
as Part of
Publicly
Announced
Program
|
|
Maximum
Number of
Shares
That May
Yet Be
Purchased
Under the
Program (1)
|
|||||
January 1 — 31, 2018
|
8,000
|
|
|
$
|
123.06
|
|
|
8,000
|
|
|
6,428,000
|
|
February 1 — 28, 2018
|
124,000
|
|
|
$
|
111.95
|
|
|
124,000
|
|
|
6,304,000
|
|
March 1 — 31, 2018
|
1,000
|
|
|
$
|
113.67
|
|
|
1,000
|
|
|
6,303,000
|
|
Total
|
133,000
|
|
|
$
|
112.61
|
|
|
133,000
|
|
|
6,303,000
|
|
Exhibit
Number
|
|
Description
|
|
|
|
|
Restated Articles of Incorporation of Polaris Industries Inc. (the “Company”), effective April 28, 2017, incorporated by reference to Exhibit 3.b to the Company’s Current Report on Form 8-K filed May 2, 2017.
|
|
|
|
|
|
Bylaws of the Company, as amended and restated on February 27, 2018, incorporated by reference to Exhibit 3.2 to the Company’s Current Report on Form 8-K filed February 27, 2018.
|
|
|
|
|
|
Polaris Industries Inc. Senior Executive Annual Incentive Plan, as amended and restated effective February 27, 2018.
|
|
|
|
|
|
Certification of Chief Executive Officer required by Exchange Act Rule 13a-14(a).
|
|
|
|
|
|
Certification of Chief Financial Officer required by Exchange Act Rule 13a-14(a).
|
|
|
|
|
|
Certification furnished pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
|
|
Certification furnished pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
|
101
|
|
The following financial information from Polaris Industries Inc.’s Quarterly Report on Form 10-Q for the period ended March 31, 2018, filed with the SEC on April 26, 2018, formatted in Extensible Business Reporting Language (XBRL): (i) the Consolidated Balance Sheets at March 31, 2018 and December 31, 2017, (ii) the Consolidated Statements of Income (Loss) for the three months ended March 31, 2018 and 2017, (iii) the Consolidated Statements of Comprehensive Income for the three months ended March 31, 2018 and 2017, (iv) the Consolidated Statements of Cash Flows for the three months ended March 31, 2018 and 2017, and (v) Notes to Consolidated Financial Statements.
|
|
|
|
|
|
|
|
POLARIS INDUSTRIES INC.
(Registrant)
|
|
|
|
|
Date:
|
April 26, 2018
|
|
/s/ S
COTT
W. W
INE
|
|
|
|
Scott W. Wine
Chairman and Chief Executive Officer
(Principal Executive Officer)
|
|
|
|
|
Date:
|
April 26, 2018
|
|
/s/ M
ICHAEL
T. S
PEETZEN
|
|
|
|
Michael T. Speetzen
Executive Vice President — Finance
and Chief Financial Officer
(Principal Financial and Chief Accounting Officer)
|
1.
|
I have reviewed this quarterly report on Form 10-Q of Polaris Industries Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a.
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b.
|
Designed such internal control over financial reporting or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c.
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d.
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
a.
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
b.
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
/s/ S
COTT
W. W
INE
|
Scott W. Wine
|
Chairman and Chief Executive Officer
|
1.
|
I have reviewed this quarterly report on Form 10-Q of Polaris Industries Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a.
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b.
|
Designed such internal control over financial reporting or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c.
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d.
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
a.
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
b.
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
/s/ M
ICHAEL
T. S
PEETZEN
|
Michael T. Speetzen
|
Executive Vice President — Finance
|
and Chief Financial Officer
|
1.
|
This statement is provided pursuant to 18 U.S.C. § 1350 in connection with the Company’s Quarterly Report on Form 10-Q for the period ended
March 31, 2018
(the “Periodic Report”);
|
2.
|
The Periodic Report fully complies with the requirements of Sections 13(a) and 15(d) of the Securities Exchange Act of 1934, as amended; and
|
3.
|
The information contained in the Periodic Report fairly presents, in all material respects, the financial condition and results of operations of the Company as of the dates and for the periods indicated therein.
|
/s/ S
COTT
W. W
INE
|
Scott W. Wine
|
Chairman and Chief Executive Officer
|
1.
|
This statement is provided pursuant to 18 U.S.C. § 1350 in connection with the Company’s Quarterly Report on Form 10-Q for the period ended
March 31, 2018
(the “Periodic Report”);
|
2.
|
The Periodic Report fully complies with the requirements of Sections 13(a) and 15(d) of the Securities Exchange Act of 1934, as amended; and
|
3.
|
The information contained in the Periodic Report fairly presents, in all material respects, the financial condition and results of operations of the Company as of the dates and for the periods indicated therein.
|
/s/ MICHAEL T. SPEETZEN
|
Michael T. Speetzen
|
Executive Vice President — Finance
|
and Chief Financial Officer
|