|
|
|
(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
|
¨
|
Smaller reporting company
|
¨
|
|
|
Emerging growth company
|
¨
|
|
POLARIS INDUSTRIES INC.
FORM 10-Q
For Quarterly Period Ended September 30, 2018
|
|||
|
|
|
Page
|
|
|||
|
|||
|
|
||
|
|
||
|
|
||
|
|
||
|
|
||
|
|||
|
|
||
|
|
||
|
|
||
|
|
||
|
|
||
|
|||
|
|||
|
|
|
|
|
|||
|
|||
|
|||
|
|||
|
|||
|
|||
|
|
|
|
POLARIS INDUSTRIES INC.
CONSOLIDATED BALANCE SHEETS
(In thousands, except per share data)
|
|||||||
|
September 30, 2018
|
|
December 31, 2017
|
||||
|
(Unaudited)
|
|
|
||||
Assets
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
183,411
|
|
|
$
|
138,345
|
|
Trade receivables, net
|
217,694
|
|
|
200,144
|
|
||
Inventories, net
|
1,019,517
|
|
|
783,961
|
|
||
Prepaid expenses and other
|
105,066
|
|
|
101,453
|
|
||
Income taxes receivable
|
5,865
|
|
|
29,601
|
|
||
Total current assets
|
1,531,553
|
|
|
1,253,504
|
|
||
Property and equipment, net
|
807,511
|
|
|
747,189
|
|
||
Investment in finance affiliate
|
88,790
|
|
|
88,764
|
|
||
Deferred tax assets
|
116,447
|
|
|
115,511
|
|
||
Goodwill and other intangible assets, net
|
1,515,431
|
|
|
780,586
|
|
||
Other long-term assets
|
88,299
|
|
|
104,039
|
|
||
Total assets
|
$
|
4,148,031
|
|
|
$
|
3,089,593
|
|
Liabilities and Shareholders’ Equity
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Current portion of debt, capital lease obligations and notes payable
|
$
|
66,595
|
|
|
$
|
47,746
|
|
Accounts payable
|
436,401
|
|
|
317,377
|
|
||
Accrued expenses:
|
|
|
|
||||
Compensation
|
160,033
|
|
|
168,014
|
|
||
Warranties
|
122,544
|
|
|
123,840
|
|
||
Sales promotions and incentives
|
187,307
|
|
|
162,298
|
|
||
Dealer holdback
|
124,259
|
|
|
114,196
|
|
||
Other
|
179,738
|
|
|
186,103
|
|
||
Income taxes payable
|
8,963
|
|
|
10,737
|
|
||
Total current liabilities
|
1,285,840
|
|
|
1,130,311
|
|
||
Long-term income taxes payable
|
26,805
|
|
|
20,114
|
|
||
Capital lease obligations
|
16,712
|
|
|
18,351
|
|
||
Long-term debt
|
1,781,020
|
|
|
846,915
|
|
||
Deferred tax liabilities
|
7,054
|
|
|
10,128
|
|
||
Other long-term liabilities
|
122,728
|
|
|
120,398
|
|
||
Total liabilities
|
$
|
3,240,159
|
|
|
$
|
2,146,217
|
|
Deferred compensation
|
$
|
9,620
|
|
|
$
|
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, 61,773 and 63,075 shares issued and outstanding, respectively
|
$
|
618
|
|
|
$
|
631
|
|
Additional paid-in capital
|
799,607
|
|
|
733,894
|
|
||
Retained earnings
|
152,561
|
|
|
242,763
|
|
||
Accumulated other comprehensive loss, net
|
(54,534
|
)
|
|
(45,629
|
)
|
||
Total shareholders’ equity
|
898,252
|
|
|
931,659
|
|
||
Total liabilities and shareholders’ equity
|
$
|
4,148,031
|
|
|
$
|
3,089,593
|
|
POLARIS INDUSTRIES INC.
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share data)
(Unaudited)
|
|||||||||||||||
|
Three months ended September 30,
|
|
Nine months ended September 30,
|
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Sales
|
$
|
1,651,415
|
|
|
$
|
1,478,726
|
|
|
$
|
4,451,420
|
|
|
$
|
3,997,428
|
|
Cost of sales
|
1,250,145
|
|
|
1,114,764
|
|
|
3,341,493
|
|
|
3,040,589
|
|
||||
Gross profit
|
401,270
|
|
|
363,962
|
|
|
1,109,927
|
|
|
956,839
|
|
||||
Operating expenses:
|
|
|
|
|
|
|
|
||||||||
Selling and marketing
|
128,929
|
|
|
122,642
|
|
|
369,495
|
|
|
355,486
|
|
||||
Research and development
|
64,181
|
|
|
63,129
|
|
|
197,741
|
|
|
175,887
|
|
||||
General and administrative
|
90,639
|
|
|
79,421
|
|
|
262,206
|
|
|
245,998
|
|
||||
Total operating expenses
|
283,749
|
|
|
265,192
|
|
|
829,442
|
|
|
777,371
|
|
||||
Income from financial services
|
21,348
|
|
|
18,138
|
|
|
64,117
|
|
|
57,711
|
|
||||
Operating income
|
138,869
|
|
|
116,908
|
|
|
344,602
|
|
|
237,179
|
|
||||
Non-operating expense:
|
|
|
|
|
|
|
|
||||||||
Interest expense
|
19,823
|
|
|
8,492
|
|
|
37,087
|
|
|
24,438
|
|
||||
Equity in loss of other affiliates
|
111
|
|
|
1,603
|
|
|
25,576
|
|
|
4,839
|
|
||||
Other expense (income), net
|
(4,124
|
)
|
|
(2,368
|
)
|
|
(27,660
|
)
|
|
7,088
|
|
||||
Income before income taxes
|
123,059
|
|
|
109,181
|
|
|
309,599
|
|
|
200,814
|
|
||||
Provision for income taxes
|
27,530
|
|
|
27,293
|
|
|
65,816
|
|
|
59,796
|
|
||||
Net income
|
$
|
95,529
|
|
|
$
|
81,888
|
|
|
$
|
243,783
|
|
|
$
|
141,018
|
|
Net income per share:
|
|
|
|
|
|
|
|
||||||||
Basic
|
$
|
1.54
|
|
|
$
|
1.31
|
|
|
$
|
3.88
|
|
|
$
|
2.24
|
|
Diluted
|
$
|
1.50
|
|
|
$
|
1.28
|
|
|
$
|
3.78
|
|
|
$
|
2.21
|
|
Weighted average shares outstanding:
|
|
|
|
|
|
|
|
||||||||
Basic
|
62,207
|
|
|
62,646
|
|
|
62,894
|
|
|
62,890
|
|
||||
Diluted
|
63,546
|
|
|
63,885
|
|
|
64,550
|
|
|
63,942
|
|
|
Three months ended September 30,
|
|
Nine months ended September 30,
|
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Net income
|
$
|
95,529
|
|
|
$
|
81,888
|
|
|
$
|
243,783
|
|
|
$
|
141,018
|
|
Other comprehensive income, net of tax:
|
|
|
|
|
|
|
|
||||||||
Foreign currency translation adjustments
|
1,804
|
|
|
10,606
|
|
|
(12,099
|
)
|
|
41,042
|
|
||||
Unrealized gain (loss) on derivative instruments
|
(2,111
|
)
|
|
(167
|
)
|
|
2,998
|
|
|
(1,208
|
)
|
||||
Retirement plan activity
|
66
|
|
|
—
|
|
|
196
|
|
|
—
|
|
||||
Comprehensive income
|
$
|
95,288
|
|
|
$
|
92,327
|
|
|
$
|
234,878
|
|
|
$
|
180,852
|
|
POLARIS INDUSTRIES INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
|
|||||||
|
Nine months ended September 30,
|
||||||
|
2018
|
|
2017
|
||||
Operating Activities:
|
|
|
|
||||
Net income
|
$
|
243,783
|
|
|
$
|
141,018
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
||||
Depreciation and amortization
|
155,910
|
|
|
138,105
|
|
||
Noncash compensation
|
43,219
|
|
|
34,249
|
|
||
Noncash income from financial services
|
(22,232
|
)
|
|
(20,131
|
)
|
||
Deferred income taxes
|
(4,171
|
)
|
|
(2,703
|
)
|
||
Impairment charges
|
21,716
|
|
|
25,395
|
|
||
Other, net
|
(9,618
|
)
|
|
4,839
|
|
||
Changes in operating assets and liabilities:
|
|
|
|
||||
Trade receivables
|
(991
|
)
|
|
(447
|
)
|
||
Inventories
|
(201,229
|
)
|
|
(83,621
|
)
|
||
Accounts payable
|
90,842
|
|
|
108,198
|
|
||
Accrued expenses
|
1,620
|
|
|
80,949
|
|
||
Income taxes payable/receivable
|
28,715
|
|
|
62,336
|
|
||
Prepaid expenses and others, net
|
6,574
|
|
|
8,908
|
|
||
Net cash provided by operating activities
|
354,138
|
|
|
497,095
|
|
||
Investing Activities:
|
|
|
|
||||
Purchase of property and equipment
|
(157,763
|
)
|
|
(126,647
|
)
|
||
Investment in finance affiliate, net
|
22,207
|
|
|
43,230
|
|
||
Investment in other affiliates, net
|
7,366
|
|
|
(7,110
|
)
|
||
Acquisition and disposal of businesses, net of cash acquired
|
(729,925
|
)
|
|
1,645
|
|
||
Net cash used for investing activities
|
(858,115
|
)
|
|
(88,882
|
)
|
||
Financing Activities:
|
|
|
|
||||
Borrowings under debt arrangements / capital lease obligations
|
2,845,688
|
|
|
1,623,577
|
|
||
Repayments under debt arrangements / capital lease obligations
|
(1,970,701
|
)
|
|
(1,850,247
|
)
|
||
Repurchase and retirement of common shares
|
(246,931
|
)
|
|
(88,877
|
)
|
||
Cash dividends to shareholders
|
(112,748
|
)
|
|
(108,923
|
)
|
||
Proceeds from stock issuances under employee plans
|
47,158
|
|
|
14,226
|
|
||
Net cash provided by (used for) financing activities
|
562,466
|
|
|
(410,244
|
)
|
||
Impact of currency exchange rates on cash balances
|
(5,904
|
)
|
|
9,597
|
|
||
Net increase in cash, cash equivalents and restricted cash
|
52,585
|
|
|
7,566
|
|
||
Cash, cash equivalents and restricted cash at beginning of period
|
161,618
|
|
|
145,170
|
|
||
Cash, cash equivalents and restricted cash at end of period
|
$
|
214,203
|
|
|
$
|
152,736
|
|
|
|
|
|
||||
Supplemental Cash Flow Information:
|
|
|
|
||||
Interest paid on debt borrowings
|
$
|
33,218
|
|
|
$
|
21,968
|
|
Income taxes paid (refunded)
|
$
|
40,178
|
|
|
$
|
(582
|
)
|
|
|
|
|
||||
The following presents cash, cash equivalents and restricted cash by category within the consolidated balance sheets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
183,411
|
|
|
$
|
132,260
|
|
Other long-term assets
|
30,792
|
|
|
20,476
|
|
||
Total
|
$
|
214,203
|
|
|
$
|
152,736
|
|
|
Fair Value Measurements as of September 30, 2018
|
||||||||||||||
Asset (Liability)
|
Total
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
||||||||
Non-qualified deferred compensation assets
|
$
|
50,161
|
|
|
$
|
50,161
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Foreign exchange contracts, net
|
3,010
|
|
|
—
|
|
|
3,010
|
|
|
—
|
|
||||
Interest rate contracts, net
|
779
|
|
|
—
|
|
|
779
|
|
|
—
|
|
||||
Total assets at fair value
|
$
|
53,950
|
|
|
$
|
50,161
|
|
|
$
|
3,789
|
|
|
$
|
—
|
|
Non-qualified deferred compensation liabilities
|
$
|
(50,161
|
)
|
|
$
|
(50,161
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
Total liabilities at fair value
|
$
|
(50,161
|
)
|
|
$
|
(50,161
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
||||||||
|
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
|
)
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
September 30, 2018
|
|
December 31, 2017
|
||||
Raw materials and purchased components
|
$
|
249,259
|
|
|
$
|
194,108
|
|
Service parts, garments and accessories
|
345,716
|
|
|
307,684
|
|
||
Finished goods
|
477,293
|
|
|
329,288
|
|
||
Less: reserves
|
(52,751
|
)
|
|
(47,119
|
)
|
||
Inventories
|
$
|
1,019,517
|
|
|
$
|
783,961
|
|
|
Three months ended September 30,
|
|
Nine months ended September 30,
|
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Balance at beginning of period
|
$
|
106,155
|
|
|
$
|
108,403
|
|
|
$
|
123,840
|
|
|
$
|
119,274
|
|
Additions to warranty reserve through acquisitions
|
13,799
|
|
|
—
|
|
|
13,799
|
|
|
—
|
|
||||
Additions charged to expense
|
37,741
|
|
|
42,039
|
|
|
79,913
|
|
|
103,855
|
|
||||
Warranty claims paid, net
|
(35,151
|
)
|
|
(38,357
|
)
|
|
(95,008
|
)
|
|
(111,044
|
)
|
||||
Balance at end of period
|
$
|
122,544
|
|
|
$
|
112,085
|
|
|
$
|
122,544
|
|
|
$
|
112,085
|
|
|
Three months ended September 30, 2018
|
||||||||||||||||||||||
|
ORV / Snowmobiles
|
|
Motorcycles
|
|
Global Adj. Markets
|
|
Aftermarket
|
|
Boats
|
|
Consolidated
|
||||||||||||
Revenue by product type
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Wholegoods
|
$
|
851,733
|
|
|
$
|
134,410
|
|
|
$
|
78,312
|
|
|
—
|
|
|
$
|
134,321
|
|
|
$
|
1,198,776
|
|
|
PG&A
|
183,821
|
|
|
20,906
|
|
|
17,939
|
|
|
$
|
229,973
|
|
|
—
|
|
|
452,639
|
|
|||||
Total revenue
|
$
|
1,035,554
|
|
|
$
|
155,316
|
|
|
$
|
96,251
|
|
|
$
|
229,973
|
|
|
$
|
134,321
|
|
|
$
|
1,651,415
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Revenue by geography
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
United States
|
$
|
866,289
|
|
|
$
|
116,072
|
|
|
$
|
51,363
|
|
|
$
|
217,816
|
|
|
$
|
132,139
|
|
|
$
|
1,383,679
|
|
Canada
|
70,765
|
|
|
9,712
|
|
|
837
|
|
|
12,157
|
|
|
2,182
|
|
|
95,653
|
|
||||||
EMEA
|
64,218
|
|
|
15,706
|
|
|
42,893
|
|
|
—
|
|
|
—
|
|
|
122,817
|
|
||||||
APLA
|
34,282
|
|
|
13,826
|
|
|
1,158
|
|
|
—
|
|
|
—
|
|
|
49,266
|
|
||||||
Total revenue
|
$
|
1,035,554
|
|
|
$
|
155,316
|
|
|
$
|
96,251
|
|
|
$
|
229,973
|
|
|
$
|
134,321
|
|
|
$
|
1,651,415
|
|
|
Nine months ended September 30, 2018
|
||||||||||||||||||||||
|
ORV / Snowmobiles
|
|
Motorcycles
|
|
Global Adj. Markets
|
|
Aftermarket
|
|
Boats
|
|
Consolidated
|
||||||||||||
Revenue by product type
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Wholegoods
|
$
|
2,356,086
|
|
|
$
|
395,189
|
|
|
$
|
263,874
|
|
|
—
|
|
|
$
|
134,321
|
|
|
$
|
3,149,470
|
|
|
PG&A
|
502,873
|
|
|
63,096
|
|
|
59,122
|
|
|
$
|
676,859
|
|
|
—
|
|
|
1,301,950
|
|
|||||
Total revenue
|
$
|
2,858,959
|
|
|
$
|
458,285
|
|
|
$
|
322,996
|
|
|
$
|
676,859
|
|
|
$
|
134,321
|
|
|
$
|
4,451,420
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Revenue by geography
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
United States
|
$
|
2,347,202
|
|
|
$
|
313,530
|
|
|
$
|
151,157
|
|
|
$
|
644,382
|
|
|
$
|
132,139
|
|
|
$
|
3,588,410
|
|
Canada
|
197,096
|
|
|
27,421
|
|
|
16,422
|
|
|
32,477
|
|
|
2,182
|
|
|
275,598
|
|
||||||
EMEA
|
207,779
|
|
|
74,044
|
|
|
151,982
|
|
|
—
|
|
|
—
|
|
|
433,805
|
|
||||||
APLA
|
106,882
|
|
|
43,290
|
|
|
3,435
|
|
|
—
|
|
|
—
|
|
|
153,607
|
|
||||||
Total revenue
|
$
|
2,858,959
|
|
|
$
|
458,285
|
|
|
$
|
322,996
|
|
|
$
|
676,859
|
|
|
$
|
134,321
|
|
|
$
|
4,451,420
|
|
|
Three months ended September 30,
|
|
Nine months ended September 30,
|
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Balance at beginning of period
|
$
|
52,620
|
|
|
$
|
36,188
|
|
|
$
|
45,760
|
|
|
$
|
26,157
|
|
New contracts sold
|
8,054
|
|
|
6,962
|
|
|
25,226
|
|
|
22,076
|
|
||||
Less: reductions for revenue recognized
|
(5,088
|
)
|
|
(3,130
|
)
|
|
(15,400
|
)
|
|
(8,213
|
)
|
||||
Balance at end of period
(1)
|
$
|
55,586
|
|
|
$
|
40,020
|
|
|
$
|
55,586
|
|
|
$
|
40,020
|
|
Cash and cash equivalents
|
$
|
16,534
|
|
Trade receivables
|
17,602
|
|
|
Inventory
|
39,990
|
|
|
Other current assets
|
3,938
|
|
|
Property, plant and equipment
|
36,769
|
|
|
Customer relationships
|
341,080
|
|
|
Trademarks / trade names
|
210,680
|
|
|
Non-compete agreements
|
2,630
|
|
|
Goodwill
|
207,126
|
|
|
Accounts payable
|
(30,017
|
)
|
|
Other liabilities assumed
|
(23,140
|
)
|
|
Total fair value of net assets acquired
|
823,192
|
|
|
Less cash acquired
|
(16,534
|
)
|
|
Total consideration for acquisition, less cash acquired
|
$
|
806,658
|
|
|
Three months ended September 30,
|
|
Nine months ended September 30,
|
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Net sales
|
$
|
1,651,415
|
|
|
$
|
1,593,659
|
|
|
$
|
4,802,580
|
|
|
$
|
4,410,691
|
|
Net income
|
99,224
|
|
|
81,473
|
|
|
268,660
|
|
|
149,517
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Basic earnings per share
|
$
|
1.60
|
|
|
$
|
1.30
|
|
|
$
|
4.27
|
|
|
$
|
2.38
|
|
Diluted earnings per common share
|
$
|
1.56
|
|
|
$
|
1.28
|
|
|
$
|
4.16
|
|
|
$
|
2.34
|
|
|
Three months ended September 30,
|
|
Nine months ended September 30,
|
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Option plan
|
$
|
6,821
|
|
|
$
|
5,766
|
|
|
$
|
16,636
|
|
|
$
|
12,837
|
|
Other share-based awards
|
(748
|
)
|
|
(3,919
|
)
|
|
18,988
|
|
|
18,191
|
|
||||
Total share-based compensation before tax
|
6,073
|
|
|
1,847
|
|
|
35,624
|
|
|
31,028
|
|
||||
Tax benefit
|
1,446
|
|
|
686
|
|
|
8,479
|
|
|
11,524
|
|
||||
Total share-based compensation expense included in net income
|
$
|
4,627
|
|
|
$
|
1,161
|
|
|
$
|
27,145
|
|
|
$
|
19,504
|
|
|
Average interest rate at September 30, 2018
|
|
Maturity
|
|
September 30, 2018
|
|
December 31, 2017
|
||||
Revolving loan facility
|
1.84%
|
|
July 2023
|
|
$
|
74,023
|
|
|
$
|
3,000
|
|
Term loan facility
|
3.77%
|
|
July 2023
|
|
1,165,000
|
|
|
680,000
|
|
||
Senior notes—fixed rate
|
3.81%
|
|
May 2018
|
|
—
|
|
|
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
|
|
||
Senior notes—fixed rate
|
4.23%
|
|
July 2028
|
|
350,000
|
|
|
—
|
|
||
Capital lease obligations
|
5.25%
|
|
Various through 2029
|
|
18,052
|
|
|
19,889
|
|
||
Notes payable and other
|
4.23%
|
|
Various through 2030
|
|
87,608
|
|
|
12,384
|
|
||
Debt issuance costs
|
|
|
|
|
(5,356
|
)
|
|
(2,261
|
)
|
||
Total debt, capital lease obligations, and notes payable
|
|
|
|
|
$
|
1,864,327
|
|
|
$
|
913,012
|
|
Less: current maturities
|
|
|
|
|
66,595
|
|
|
47,746
|
|
||
Total long-term debt, capital lease obligations, and notes payable
|
|
|
|
|
$
|
1,797,732
|
|
|
$
|
865,266
|
|
|
September 30, 2018
|
|
December 31, 2017
|
||||
Goodwill
|
$
|
637,486
|
|
|
$
|
433,374
|
|
Other intangible assets, net
|
877,945
|
|
|
347,212
|
|
||
Total goodwill and other intangible assets, net
|
$
|
1,515,431
|
|
|
$
|
780,586
|
|
|
Nine months ended September 30, 2018
|
||
Goodwill, beginning of period
|
$
|
433,374
|
|
Goodwill from businesses acquired
|
207,126
|
|
|
Currency translation effect on foreign goodwill balances
|
(3,014
|
)
|
|
Goodwill, end of period
|
$
|
637,486
|
|
|
Total estimated life (years)
|
|
September 30, 2018
|
|
December 31, 2017
|
||||
Non-amortizable—indefinite lived:
|
|
|
|
|
|
||||
Brand names
|
|
|
$
|
440,976
|
|
|
$
|
230,709
|
|
Amortizable:
|
|
|
|
|
|
||||
Non-compete agreements
|
4
|
|
2,370
|
|
|
540
|
|
||
Dealer/customer related
|
5-20
|
|
505,543
|
|
|
169,694
|
|
||
Developed technology
|
5-7
|
|
13,368
|
|
|
22,903
|
|
||
Total amortizable
|
|
|
521,281
|
|
|
193,137
|
|
||
Less: Accumulated amortization
|
|
|
(84,312
|
)
|
|
(76,634
|
)
|
||
Net amortized other intangible assets
|
|
|
436,969
|
|
|
116,503
|
|
||
Total other intangible assets, net
|
|
|
$
|
877,945
|
|
|
$
|
347,212
|
|
|
|
Three months ended September 30,
|
|
Nine months ended September 30,
|
||||||||||||
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Cash dividends declared and paid per common share
|
|
$
|
0.60
|
|
|
$
|
0.58
|
|
|
$
|
1.80
|
|
|
$
|
1.74
|
|
|
Three months ended September 30,
|
|
Nine months ended September 30,
|
||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||
Weighted average number of common shares outstanding
|
61,927
|
|
62,398
|
|
|
62,630
|
|
62,637
|
|
Director Plan and deferred stock units
|
181
|
|
161
|
|
|
175
|
|
154
|
|
ESOP
|
99
|
|
87
|
|
|
89
|
|
99
|
|
Common shares outstanding—basic
|
62,207
|
|
62,646
|
|
|
62,894
|
|
62,890
|
|
Dilutive effect of Omnibus Plan
|
1,339
|
|
1,239
|
|
|
1,656
|
|
1,052
|
|
Common and potential common shares outstanding—diluted
|
63,546
|
|
63,885
|
|
|
64,550
|
|
63,942
|
|
|
Foreign
Currency Items |
|
Cash Flow
Hedging Derivatives |
|
Retirement 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
|
—
|
|
|
(7,141
|
)
|
|
196
|
|
|
(6,945
|
)
|
||||
Change in fair value
|
(12,099
|
)
|
|
10,139
|
|
|
—
|
|
|
(1,960
|
)
|
||||
Balance as of September 30, 2018
|
$
|
(54,541
|
)
|
|
$
|
2,964
|
|
|
$
|
(2,957
|
)
|
|
$
|
(54,534
|
)
|
Derivatives in Cash
Flow Hedging Relationships
|
Location of (Gain) Loss Reclassified from Accumulated Other Comprehensive Loss into Income
|
|
Three months ended September 30,
|
|
Nine months ended September 30,
|
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||||
Foreign currency contracts
|
Other expense, net
|
|
$
|
4,587
|
|
|
$
|
(174
|
)
|
|
$
|
6,681
|
|
|
$
|
2,433
|
|
Foreign currency contracts
|
Cost of sales
|
|
(62
|
)
|
|
258
|
|
|
460
|
|
|
(178
|
)
|
||||
Retirement benefit plan activity
|
Operating expenses
|
|
(66
|
)
|
|
—
|
|
|
(196
|
)
|
|
—
|
|
||||
Total
|
|
|
$
|
4,459
|
|
|
$
|
84
|
|
|
$
|
6,945
|
|
|
$
|
2,255
|
|
Foreign Currency
|
|
Notional Amounts
(in U.S. Dollars)
|
|
Net Unrealized Gain
|
||||
Australian Dollar
|
|
$
|
7,350
|
|
|
$
|
577
|
|
Canadian Dollar
|
|
104,486
|
|
|
1,451
|
|
||
Mexican Peso
|
|
20,023
|
|
|
982
|
|
||
Total
|
|
$
|
131,859
|
|
|
$
|
3,010
|
|
Effective Date
|
|
Termination Date
|
|
Notional Amounts
|
|
Net Unrealized Gain (Loss)
|
||||
May 2, 2018
|
|
May 4, 2021
|
|
$
|
25,000
|
|
|
$
|
682
|
|
September 28, 2018
|
|
September 30, 2019
|
|
250,000
|
|
|
(65
|
)
|
||
September 30, 2019
|
|
September 30, 2023
|
|
150,000
|
|
|
162
|
|
||
Total
|
|
|
|
$
|
425,000
|
|
|
$
|
779
|
|
|
Carrying Values of Derivative Instruments as of September 30, 2018
|
||||||||||
|
Fair Value—
Assets
|
|
Fair Value—
(Liabilities)
|
|
Derivative Net
Carrying Value
|
||||||
Derivatives designated as hedging instruments
|
|
|
|
|
|
||||||
Foreign exchange contracts
(1)
|
$
|
3,010
|
|
|
$
|
—
|
|
|
$
|
3,010
|
|
Interest rate contracts
(1)
|
779
|
|
|
—
|
|
|
779
|
|
|||
Total derivatives designated as hedging instruments
|
$
|
3,789
|
|
|
$
|
—
|
|
|
$
|
3,789
|
|
Total derivatives
|
$
|
3,789
|
|
|
$
|
—
|
|
|
$
|
3,789
|
|
|
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 September 30,
|
|
Nine months ended September 30,
|
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Sales
|
|
|
|
|
|
|
|
||||||||
ORV/Snowmobiles
|
$
|
1,035,554
|
|
|
$
|
1,007,392
|
|
|
$
|
2,858,959
|
|
|
$
|
2,577,003
|
|
Motorcycles
|
155,316
|
|
|
155,059
|
|
|
458,285
|
|
|
473,345
|
|
||||
Global Adjacent Markets
|
96,251
|
|
|
91,575
|
|
|
322,996
|
|
|
280,152
|
|
||||
Aftermarket
|
229,973
|
|
|
224,700
|
|
|
676,859
|
|
|
666,928
|
|
||||
Boats
|
134,321
|
|
|
—
|
|
|
134,321
|
|
|
—
|
|
||||
Total sales
|
$
|
1,651,415
|
|
|
$
|
1,478,726
|
|
|
$
|
4,451,420
|
|
|
$
|
3,997,428
|
|
Gross profit
|
|
|
|
|
|
|
|
||||||||
ORV/Snowmobiles
|
$
|
290,631
|
|
|
$
|
296,904
|
|
|
$
|
831,413
|
|
|
$
|
776,013
|
|
Motorcycles
|
19,577
|
|
|
10,354
|
|
|
60,817
|
|
|
11,589
|
|
||||
Global Adjacent Markets
|
24,155
|
|
|
15,983
|
|
|
83,520
|
|
|
65,297
|
|
||||
Aftermarket
|
66,092
|
|
|
63,239
|
|
|
182,291
|
|
|
164,721
|
|
||||
Boats
|
20,253
|
|
|
—
|
|
|
20,253
|
|
|
—
|
|
||||
Corporate
|
(19,438
|
)
|
|
(22,518
|
)
|
|
(68,367
|
)
|
|
(60,781
|
)
|
||||
Total gross profit
|
$
|
401,270
|
|
|
$
|
363,962
|
|
|
$
|
1,109,927
|
|
|
$
|
956,839
|
|
|
Three months ended September 30,
|
|
Nine months ended September 30,
|
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Contract termination charges
|
$
|
1,149
|
|
|
$
|
1,501
|
|
|
$
|
2,866
|
|
|
$
|
19,196
|
|
Asset impairment charges
|
—
|
|
|
—
|
|
|
—
|
|
|
18,760
|
|
||||
Inventory charges
|
—
|
|
|
—
|
|
|
—
|
|
|
12,680
|
|
||||
Other costs
|
132
|
|
|
1,165
|
|
|
1,045
|
|
|
8,495
|
|
||||
Total
|
$
|
1,281
|
|
|
$
|
2,666
|
|
|
$
|
3,911
|
|
|
$
|
59,131
|
|
|
Contract termination charges
|
|
Inventory charges
|
|
Other costs
|
|
Total
|
||||||||
Reserves balance as of December 31, 2017
|
$
|
3,187
|
|
|
$
|
777
|
|
|
$
|
1,681
|
|
|
$
|
5,645
|
|
Expenses
|
2,866
|
|
|
—
|
|
|
1,045
|
|
|
3,911
|
|
||||
Cash payments / scrapped inventory
|
(4,907
|
)
|
|
(85
|
)
|
|
(1,535
|
)
|
|
(6,527
|
)
|
||||
Reserves balance as of September 30, 2018
|
$
|
1,146
|
|
|
$
|
692
|
|
|
$
|
1,191
|
|
|
$
|
3,029
|
|
|
Percent change in total Company sales compared to corresponding period of the prior year
|
||||
|
Three months ended
|
|
Nine months ended
|
||
|
September 30, 2018
|
|
September 30, 2018
|
||
Volume
|
3
|
%
|
|
6
|
%
|
Product mix and price
|
1
|
|
|
1
|
|
Acquisitions
|
9
|
|
|
3
|
|
Currency
|
(1
|
)
|
|
1
|
|
|
12
|
%
|
|
11
|
%
|
|
Three months ended September 30,
|
|
Nine months ended September 30,
|
||||||||||||||||||||||||||||||
($ in millions)
|
2018
|
|
Percent
of Total Sales |
|
2017
|
|
Percent
of Total Sales |
|
Percent
Change 2018 vs. 2017 |
|
2018
|
|
Percent
of Total Sales |
|
2017
|
|
Percent
of Total Sales |
|
Percent
Change 2018 vs. 2017 |
||||||||||||||
ORV/Snowmobiles
|
$
|
1,035.5
|
|
|
63
|
%
|
|
$
|
1,007.4
|
|
|
68
|
%
|
|
3
|
%
|
|
$
|
2,858.9
|
|
|
64
|
%
|
|
$
|
2,577.0
|
|
|
64
|
%
|
|
11
|
%
|
Motorcycles
|
155.3
|
|
|
9
|
%
|
|
155.1
|
|
|
11
|
%
|
|
0
|
%
|
|
458.3
|
|
|
10
|
%
|
|
473.3
|
|
|
12
|
%
|
|
(3
|
)%
|
||||
Global Adjacent Markets
|
96.3
|
|
|
6
|
%
|
|
91.5
|
|
|
6
|
%
|
|
5
|
%
|
|
323.0
|
|
|
7
|
%
|
|
280.2
|
|
|
7
|
%
|
|
15
|
%
|
||||
Aftermarket
|
230.0
|
|
|
14
|
%
|
|
224.7
|
|
|
15
|
%
|
|
2
|
%
|
|
676.9
|
|
|
16
|
%
|
|
666.9
|
|
|
17
|
%
|
|
1
|
%
|
||||
Boats
|
134.3
|
|
|
8
|
%
|
|
0.0
|
|
|
0
|
%
|
|
100
|
%
|
|
134.3
|
|
|
3
|
%
|
|
0.0
|
|
|
0
|
%
|
|
100
|
%
|
||||
Total sales
|
$
|
1,651.4
|
|
|
100
|
%
|
|
$
|
1,478.7
|
|
|
100
|
%
|
|
12
|
%
|
|
$
|
4,451.4
|
|
|
100
|
%
|
|
$
|
3,997.4
|
|
|
100
|
%
|
|
11
|
%
|
|
Three months ended September 30,
|
|
Nine months ended September 30,
|
||||||||||||||||||||||||||||||
($ in millions)
|
2018
|
|
Percent of Total Sales
|
|
2017
|
|
Percent of Total Sales
|
|
Percent Change 2018 vs. 2017
|
|
2018
|
|
Percent of Total Sales
|
|
2017
|
|
Percent of Total Sales
|
|
Percent Change 2018 vs. 2017
|
||||||||||||||
United States
|
$
|
1,383.7
|
|
|
84
|
%
|
|
$
|
1,202.0
|
|
|
81
|
%
|
|
15
|
%
|
|
$
|
3,588.4
|
|
|
81
|
%
|
|
$
|
3,217.2
|
|
|
80
|
%
|
|
12
|
%
|
Canada
|
95.7
|
|
|
6
|
%
|
|
120.0
|
|
|
8
|
%
|
|
(20)
|
%
|
|
275.6
|
|
|
6
|
%
|
|
266.1
|
|
|
7
|
%
|
|
4
|
%
|
||||
Other foreign countries
|
172.0
|
|
|
10
|
%
|
|
156.7
|
|
|
11
|
%
|
|
10
|
%
|
|
587.4
|
|
|
13
|
%
|
|
514.1
|
|
|
13
|
%
|
|
14
|
%
|
||||
Total sales
|
$
|
1,651.4
|
|
|
100
|
%
|
|
$
|
1,478.7
|
|
|
100
|
%
|
|
12
|
%
|
|
$
|
4,451.4
|
|
|
100
|
%
|
|
$
|
3,997.4
|
|
|
100
|
%
|
|
11
|
%
|
|
Three months ended September 30,
|
|
Nine months ended September 30,
|
||||||||||||||||||||||||||||||
($ in millions)
|
2018
|
|
Percent of Total Cost of Sales
|
|
2017
|
|
Percent of Total Cost of Sales
|
|
Change
2018 vs. 2017
|
|
2018
|
|
Percent of Total Cost of Sales
|
|
2017
|
|
Percent of Total Cost of Sales
|
|
Change 2018 vs. 2017
|
||||||||||||||
Purchased materials and services
|
$
|
1,078.9
|
|
|
86
|
%
|
|
$
|
954.7
|
|
|
86
|
%
|
|
13
|
%
|
|
$
|
2,894.7
|
|
|
87
|
%
|
|
$
|
2,610.9
|
|
|
86
|
%
|
|
11
|
%
|
Labor and benefits
|
96.0
|
|
|
8
|
%
|
|
79.5
|
|
|
7
|
%
|
|
21
|
%
|
|
267.1
|
|
|
8
|
%
|
|
220.7
|
|
|
7
|
%
|
|
21
|
%
|
||||
Depreciation and amortization
|
37.5
|
|
|
3
|
%
|
|
38.6
|
|
|
3
|
%
|
|
(3
|
)%
|
|
99.8
|
|
|
3
|
%
|
|
105.1
|
|
|
4
|
%
|
|
(5
|
)%
|
||||
Warranty costs
|
37.7
|
|
|
3
|
%
|
|
42.0
|
|
|
4
|
%
|
|
(10
|
)%
|
|
79.9
|
|
|
2
|
%
|
|
103.9
|
|
|
3
|
%
|
|
(23
|
)%
|
||||
Total cost of sales
|
$
|
1,250.1
|
|
|
100
|
%
|
|
$
|
1,114.8
|
|
|
100
|
%
|
|
12
|
%
|
|
$
|
3,341.5
|
|
|
100
|
%
|
|
$
|
3,040.6
|
|
|
100
|
%
|
|
10
|
%
|
Percentage of sales
|
75.7
|
%
|
|
|
|
75.4
|
%
|
|
+31 basis points
|
|
|
75.1
|
%
|
|
|
|
76.1
|
%
|
|
-100 basis points
|
|
|
Three months ended September 30,
|
|
Nine months ended September 30,
|
||||||||||||||||||||||||||||||
($ in millions)
|
2018
|
|
Percent of Sales
|
|
2017
|
|
Percent of Sales
|
|
Change
2018 vs.
2017
|
|
2018
|
|
Percent of Sales
|
|
2017
|
|
Percent of Sales
|
|
Change
2018 vs.
2017
|
||||||||||||||
ORV/Snowmobiles
|
$
|
290.6
|
|
|
28.1
|
%
|
|
$
|
296.9
|
|
|
29.5
|
%
|
|
(2
|
)%
|
|
$
|
831.4
|
|
|
29.1
|
%
|
|
$
|
776.0
|
|
|
30.1
|
%
|
|
7
|
%
|
Motorcycles
|
19.6
|
|
|
12.6
|
%
|
|
10.4
|
|
|
6.7
|
%
|
|
88
|
%
|
|
60.8
|
|
|
13.3
|
%
|
|
11.6
|
|
|
2.4
|
%
|
|
NM
|
|
||||
Global Adjacent Markets
|
24.2
|
|
|
25.1
|
%
|
|
16.0
|
|
|
17.5
|
%
|
|
50
|
%
|
|
83.5
|
|
|
25.9
|
%
|
|
65.3
|
|
|
23.3
|
%
|
|
28
|
%
|
||||
Aftermarket
|
66.1
|
|
|
28.7
|
%
|
|
63.2
|
|
|
28.1
|
%
|
|
5
|
%
|
|
182.3
|
|
|
26.9
|
%
|
|
164.7
|
|
|
24.7
|
%
|
|
11
|
%
|
||||
Boats
|
20.3
|
|
|
15.1
|
%
|
|
—
|
|
|
—
|
%
|
|
|
|
20.3
|
|
|
15.1
|
%
|
|
—
|
|
|
—
|
%
|
|
|
||||||
Corporate
|
(19.5
|
)
|
|
|
|
(22.5
|
)
|
|
|
|
|
|
(68.4
|
)
|
|
|
|
(60.8
|
)
|
|
|
|
|
||||||||||
Total gross profit dollars
|
$
|
401.3
|
|
|
|
|
$
|
364.0
|
|
|
|
|
10
|
%
|
|
$
|
1,109.9
|
|
|
|
|
$
|
956.8
|
|
|
|
|
16
|
%
|
||||
Percentage of sales
|
24.3
|
%
|
|
|
|
24.6
|
%
|
|
-31 basis points
|
|
|
24.9
|
%
|
|
|
|
23.9
|
%
|
|
+100 basis points
|
|
||||||||||||
NM = not meaningful
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended September 30,
|
|
Nine months ended September 30,
|
||||||||||||||||||
($ in millions)
|
2018
|
|
2017
|
|
Change
2018 vs. 2017 |
|
2018
|
|
2017
|
|
Change
2018 vs. 2017 |
||||||||||
Selling and marketing
|
$
|
128.9
|
|
|
$
|
122.7
|
|
|
5
|
%
|
|
$
|
369.5
|
|
|
$
|
355.5
|
|
|
4
|
%
|
Research and development
|
64.2
|
|
|
63.1
|
|
|
2
|
%
|
|
197.7
|
|
|
175.9
|
|
|
12
|
%
|
||||
General and administrative
|
90.6
|
|
|
79.4
|
|
|
14
|
%
|
|
262.2
|
|
|
246.0
|
|
|
7
|
%
|
||||
Total operating expenses
|
$
|
283.7
|
|
|
$
|
265.2
|
|
|
7
|
%
|
|
$
|
829.4
|
|
|
$
|
777.4
|
|
|
7
|
%
|
Percentage of sales
|
17.2
|
%
|
|
17.9
|
%
|
|
-75 basis points
|
|
|
18.6
|
%
|
|
19.4
|
%
|
|
-81 basis points
|
|
|
Three months ended September 30,
|
|
Nine months ended September 30,
|
||||||||||||||||||
($ in millions)
|
2018
|
|
2017
|
|
Change
2018 vs. 2017 |
|
2018
|
|
2017
|
|
Change
2018 vs. 2017 |
||||||||||
Income from financial services
|
$
|
21.3
|
|
|
$
|
18.1
|
|
|
18
|
%
|
|
$
|
64.1
|
|
|
$
|
57.7
|
|
|
11
|
%
|
Percentage of sales
|
1.3
|
%
|
|
1.2
|
%
|
|
+7 basis points
|
|
|
1.4
|
%
|
|
1.4
|
%
|
|
0 basis points
|
|
|
Three months ended September 30,
|
|
Nine months ended September 30,
|
||||||||||||||||||
($ in millions, except per share data)
|
2018
|
|
2017
|
|
Change
2018 vs. 2017 |
|
2018
|
|
2017
|
|
Change
2018 vs. 2017 |
||||||||||
Interest expense
|
$
|
19.8
|
|
|
$
|
8.5
|
|
|
133
|
%
|
|
$
|
37.1
|
|
|
$
|
24.4
|
|
|
52
|
%
|
Equity in loss of other affiliates
|
$
|
0.1
|
|
|
$
|
1.6
|
|
|
(94
|
)%
|
|
$
|
25.6
|
|
|
$
|
4.8
|
|
|
NM
|
|
Other expense (income), net
|
$
|
(4.1
|
)
|
|
$
|
(2.4
|
)
|
|
74
|
%
|
|
$
|
(27.7
|
)
|
|
$
|
7.1
|
|
|
NM
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Income before taxes
|
$
|
123.1
|
|
|
$
|
109.2
|
|
|
13
|
%
|
|
$
|
309.6
|
|
|
$
|
200.8
|
|
|
54
|
%
|
Provision for income taxes
|
$
|
27.5
|
|
|
$
|
27.3
|
|
|
1
|
%
|
|
$
|
65.8
|
|
|
$
|
59.8
|
|
|
10
|
%
|
Percentage of income before taxes
|
22.4
|
%
|
|
25.0
|
%
|
|
NM
|
|
|
21.3
|
%
|
|
29.8
|
%
|
|
NM
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Net income
|
$
|
95.5
|
|
|
$
|
81.9
|
|
|
17
|
%
|
|
$
|
243.8
|
|
|
$
|
141.0
|
|
|
73
|
%
|
Diluted net income per share:
|
$
|
1.50
|
|
|
$
|
1.28
|
|
|
17
|
%
|
|
$
|
3.78
|
|
|
$
|
2.21
|
|
|
71
|
%
|
Weighted average diluted shares outstanding
|
63.5
|
|
|
63.9
|
|
|
(1
|
)%
|
|
64.6
|
|
|
63.9
|
|
|
1
|
%
|
||||
NM = not meaningful
|
|
|
|
|
|
|
|
|
|
|
|
($ in millions)
|
Nine months ended September 30,
|
||||||||||
2018
|
|
2017
|
|
Change
|
|||||||
Total cash provided by (used for):
|
|
|
|
|
|
||||||
Operating activities
|
$
|
354.1
|
|
|
$
|
497.1
|
|
|
$
|
(143.0
|
)
|
Investing activities
|
(858.1
|
)
|
|
(88.9
|
)
|
|
(769.2
|
)
|
|||
Financing activities
|
562.5
|
|
|
(410.2
|
)
|
|
972.7
|
|
|||
Impact of currency exchange rates on cash balances
|
(5.9
|
)
|
|
9.6
|
|
|
(15.5
|
)
|
|||
Increase in cash, cash equivalents and restricted cash
|
$
|
52.6
|
|
|
$
|
7.6
|
|
|
$
|
45.0
|
|
($ in millions)
|
Average interest rate at September 30, 2018
|
|
Maturity
|
|
September 30, 2018
|
||
Revolving loan facility
|
1.84%
|
|
July 2023
|
|
$
|
74.0
|
|
Term loan facility
|
3.77%
|
|
July 2023
|
|
1,165.0
|
|
|
Senior notes—fixed rate
|
4.60%
|
|
May 2021
|
|
75.0
|
|
|
Senior notes—fixed rate
|
3.13%
|
|
December 2020
|
|
100.0
|
|
|
Senior notes—fixed rate
|
4.23%
|
|
July 2028
|
|
350.0
|
|
|
Capital lease obligations
|
5.25%
|
|
Various through 2029
|
|
18.1
|
|
|
Notes payable and other
|
4.23%
|
|
Various through 2030
|
|
87.6
|
|
|
Debt issuance costs
|
|
|
|
|
(5.4)
|
|
|
Total debt, capital lease obligations, and notes payable
|
|
|
|
|
$
|
1,864.3
|
|
Less: current maturities
|
|
|
|
|
66.6
|
|
|
Long-term debt, capital lease obligations, and notes payable
|
|
|
|
|
$
|
1,797.7
|
|
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
|
|
$
|
7,350
|
|
|
$0.79 to 1 AUD
|
Canadian Dollar (CAD)
|
Long
|
|
104,486
|
|
|
$0.78 to 1 CAD
|
|
Mexican Peso
|
Short
|
|
20,023
|
|
|
20.0 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)
|
|||||
July 1 — 31, 2018
|
150,000
|
|
|
$
|
104.58
|
|
|
150,000
|
|
|
4,724,000
|
|
August 1 — 31, 2018
|
353,000
|
|
|
$
|
108.88
|
|
|
353,000
|
|
|
4,371,000
|
|
September 1 — 30, 2018
|
4,000
|
|
|
$
|
110.09
|
|
|
4,000
|
|
|
4,367,000
|
|
Total
|
507,000
|
|
|
$
|
107.62
|
|
|
507,000
|
|
|
4,367,000
|
|
Exhibit
Number
|
|
Description
|
|
|
|
|
Merger Agreement, dated as of May 29, 2018, by and among Polaris Industries Inc., Polaris Sales Inc., Beam Merger Sub, LLC, Boat Holdings, LLC and the Holder Representative thereunder (excluding schedules and exhibits, which the Company agrees to furnish supplementally to the SEC upon request), incorporated by reference to Exhibit 2.1 to the Company’s Current Report on Form 8-K filed May 30, 2018.
|
|
|
|
|
|
Restated Articles of Incorporation of Polaris Industries Inc., 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 Polaris Industries, Inc., 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.
|
|
|
|
|
|
Master Note Purchase Agreement by and among Polaris Industries Inc. and the purchasers party thereto, dated July 2, 2018, incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K filed July 2, 2018.
|
|
|
|
|
|
Third Amendment to Master Note Purchase Agreement, as Supplemented by the First Supplement to the Master Note Amendment, effective as of July 31, 2018
|
|
|
|
|
|
Fourth Amended and Restated Credit Agreement, dated July 2, 2018 by and among Polaris Industries Inc., Polaris Sales Europe Sàrl, any other Foreign Borrower (as defined therein) that hereafter becomes a party thereto, the Lenders named therein, U.S. Bank National Association, as Administrative Agent, Left Lead Arranger and Lead Book Runner, Merrill Lynch, Pierce, Fenner & Smith Incorporated, Wells Fargo Securities, LLC, and MUFG Bank, Ltd., as Joint Lead Arrangers, Joint Book Runners and Syndication Agents, and Bank of the West, Fifth Third Bank, JP Morgan Chase Bank N.A., PNC Bank, National Association and BMO Harris Bank N/A., as Documentation Agents, incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed July 2, 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 September 30, 2018, filed with the SEC on October 24, 2018, formatted in Extensible Business Reporting Language (XBRL): (i) the Consolidated Balance Sheets at September 30, 2018 and December 31, 2017, (ii) the Consolidated Statements of Income for the three and nine month periods ended September 30, 2018 and 2017, (iii) the Consolidated Statements of Comprehensive Income for the three and nine month periods ended September 30, 2018 and 2017, (iv) the Consolidated Statements of Cash Flows for the three and nine month periods ended September 30, 2018 and 2017, and (v) Notes to Consolidated Financial Statements.
|
|
|
|
|
|
|
|
POLARIS INDUSTRIES INC.
(Registrant)
|
|
|
|
|
Date:
|
October 24, 2018
|
|
/s/ S
COTT
W. W
INE
|
|
|
|
Scott W. Wine
Chairman and Chief Executive Officer
(Principal Executive Officer)
|
|
|
|
|
Date:
|
October 24, 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.
|
AMENDMENT TO NOTE AGREEMENT
|
2.
|
REAFFIRMATION; AUTHORIZATION
|
3.
|
EFFECTIVE DATE
|
Title:
|
Executive Vice President-Finance and Chief Financial Officer
|
Holder
|
Amount
|
Metropolitan Life Insurance Company
|
$12,000,000
|
MetLife Investors USA Insurance Company
|
$4,000,000
|
Voya Insurance and Annuity Company (f/k/a ING USA Annuity and Life Insurance Company)
|
$8,200,000
|
Voya Retirement Insurance and Annuity Company (f/k/a ING Life Insurance and Annuity Company)
|
$3,200,000
|
Reliastar Life Insurance Company
|
$4,500,000
|
Reliastar Life Insurance Company of New York
|
$100,000
|
The Prudential Insurance Company of America
|
$2,300,000
|
Gibraltar Life Insurance Co., Ltd.
|
$11,200,000
|
Pruco Life Insurance Company of New Jersey
|
$5,000,000
|
MTL Insurance Company
|
$3,000,000
|
BCBSM, Inc. dba Blue Cross and Blue Shield of Minnesota
|
$1,500,000
|
Massachusetts Mutual Life Insurance Company
|
$20,000,000
|
Total
|
$75,000,000
|
Holder
|
Amount
|
Reliastar Life Insurance Company
|
$4,400,000
|
Voya Insurance and Annuity Company (f/k/a ING USA Annuity and Life Insurance Company)
|
$5,900,000
|
Voya Retirement Insurance and Annuity Company (f/k/a ING Life Insurance and Annuity Company)
|
$9,600,000
|
Security Life of Denver Insurance Company
|
$7,100,000
|
Voya Insurance and Annuity Company (f/k/a ING USA Annuity and Life Insurance Company)
|
$500,000
|
Reliastar Life Insurance Company of New York
|
$200,000
|
Security Life of Denver Insurance Company
|
$200,000
|
Reliastar Life Insurance Company
|
$100,000
|
The Northwestern Mutual Life Insurance Company
|
$28,000,000
|
MetLife Alico Life Insurance K.K.
|
$10,000,000
|
MetLife Alico Life Insurance K.K.
|
$10,000,000
|
Allianz Global Risks US Insurance Company
|
$5,000,000
|
Fireman’s Fund Insurance Company
|
$5,000,000
|
American United Life Insurance Company
|
$9,000,000
|
The Phoenix Insurance Company
|
$5,000,000
|
Total
|
$100,000,000
|
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
September 30, 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
September 30, 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/ M
ICHAEL
T. S
PEETZEN
|
Michael T. Speetzen
|
Executive Vice President — Finance
|
and Chief Financial Officer
|