10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark one)
x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2018

OR

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number 1-11411

POLARIS INDUSTRIES INC.

(Exact name of registrant as specified in its charter)

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)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No  ¨

Indicate by check mark whether the registrant has submitted electronically, if any, every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes  x    No  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer	x	Accelerated filer	¨
Non-accelerated filer	¨	Smaller reporting company	¨
		Emerging growth company	¨

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).   Yes  ¨    No   x

APPLICABLE ONLY TO CORPORATE ISSUERS:

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

As of October 17, 2018, 61,780,602 shares of Common Stock, $.01 par value, of the registrant were outstanding. 

1

POLARIS INDUSTRIES INC. FORM 10-Q For Quarterly Period Ended September 30, 2018
			Page
Part I FINANCIAL INFORMATION
	Item 1 – Financial Statements		3
		Consolidated Balance Sheets	3
		Consolidated Statements of Income	4
		Consolidated Statements of Comprehensive Income	5
		Consolidated Statements of Cash Flows	6
		Notes to Consolidated Financial Statements	7
	Item 2 – Management’s Discussion and Analysis of Financial Condition and Results of Operations		22
		Results of Operations	23
		Liquidity and Capital Resources	27
		Inflation and Foreign Exchange Rates	29
		Critical Accounting Policies	30
		Note Regarding Forward Looking Statements	30
	Item 3 – Quantitative and Qualitative Disclosures About Market Risk		30
	Item 4 – Controls and Procedures		30
Part II OTHER INFORMATION
	Item 1 – Legal Proceedings		31
	Item 1A – Risk Factors		31
	Item 2 – Unregistered Sales of Equity Securities and Use of Proceeds		32
	Item 4 – Mine Safety Disclosures		32
	Item 6 – Exhibits		32
SIGNATURES			34

2

Part I FINANCIAL INFORMATION

Item 1 – FINANCIAL STATEMENTS

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

The accompanying footnotes are an integral part of these consolidated statements.

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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

The accompanying footnotes are an integral part of these consolidated statements.

4

POLARIS INDUSTRIES INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In thousands)

(Unaudited)

	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

The accompanying footnotes are an integral part of these consolidated statements.

5

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

The accompanying footnotes are an integral part of these consolidated statements.

6

POLARIS INDUSTRIES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 1. Significant Accounting Policies

Basis of presentation. The accompanying unaudited consolidated financial statements of Polaris Industries Inc. (“Polaris” or the “Company”) have been prepared in accordance with accounting principles generally accepted in the United States for interim financial statements and, therefore, do not include all information and disclosures of results of operations, financial position and changes in cash flow in conformity with accounting principles generally accepted in the United States for complete financial statements. Accordingly, such statements should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended December 31, 2017 previously filed with the Securities and Exchange Commission (“SEC”). In the opinion of management, such statements reflect all adjustments (which include only normal recurring adjustments) necessary for a fair presentation of the financial position, results of operations, and cash flows for the periods presented. Due to the seasonality trends for certain products and to certain changes in production and shipping cycles, results of such periods are not necessarily indicative of the results to be expected for the complete year.

Fair value measurements. Fair value is the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Assets and liabilities measured at fair value are classified using the following hierarchy, which is based upon the transparency of inputs to the valuation as of the measurement date:

Level  1 — Quoted prices in active markets for identical assets or liabilities.

Level  2 — Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

Level 3 — Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

In making fair value measurements, observable market data must be used when available. When inputs used to measure fair value fall within different levels of the hierarchy, the level within which the fair value measurement is categorized is based on the lowest level input that is significant to the fair value measurement. The Company utilizes the market approach to measure fair value for its non-qualified deferred compensation assets and liabilities, and the income approach for foreign currency contracts, interest rate contracts, and commodity contracts. The market approach uses prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities, and for the income approach, the Company uses significant other observable inputs to value its derivative instruments used to hedge foreign currency, interest rate, and commodity transactions.

Assets and liabilities measured at fair value on a recurring basis are summarized below (in thousands):

	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	)	$	—

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Fair value of other financial instruments. The carrying values of the Company’s short-term financial instruments, including cash and cash equivalents, trade receivables and short-term debt, including current maturities of long-term debt, capital lease obligations and notes payable, approximate their fair values. At September 30, 2018 and December 31, 2017, the fair value of the Company’s long-term debt, capital lease obligations and notes payable was approximately $1,901,307,000 and $922,123,000, respectively, and was determined using Level 2 inputs, including quoted market prices or discounted cash flows based on quoted market rates for similar types of debt. The carrying value of long-term debt, capital lease obligations and notes payable including current maturities was $1,864,327,000 and $913,012,000 as of September 30, 2018 and December 31, 2017, respectively.

Inventories. Inventory costs include material, labor and manufacturing overhead costs, including depreciation expense associated with the manufacture and distribution of the Company’s products. Inventories are stated at the lower of cost (first-in, first-out method) or net realizable value. The major components of inventories are as follows (in thousands):

	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

Product warranties. Polaris provides a limited warranty for its vehicles and boats for a period of six months to ten years, depending on the product. Polaris provides longer warranties in certain geographical markets as determined by local regulations and market conditions and may also provide longer warranties related to certain promotional programs. Polaris’ standard warranties require the Company or its dealers to repair or replace defective products during such warranty periods at no cost to the consumer. The warranty reserve is established at the time of sale to the dealer or distributor based on management’s best estimate using historical rates and trends. Adjustments to the warranty reserve are made from time to time as actual claims become known in order to properly estimate the amounts necessary to settle future and existing claims on products sold as of the balance sheet date. Factors that could have an impact on the warranty accrual in any given period include the following: change in manufacturing quality, shifts in product mix, changes in warranty coverage periods, snowfall and its impact on snowmobile usage, product recalls and any significant changes in sales volume. The activity in the warranty reserve during the periods presented was as follows (in thousands):

	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

New accounting pronouncements.

Revenue from contracts with customers. Effective January 1, 2018, the Company adopted ASU No. 2014-09, Revenue from Contracts with Customers, ASU 2016-08, Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net), and ASU 2016-12, Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients using the modified retrospective approach. The adoption of these ASUs did not have a material impact on the Company’s consolidated financial position, results of operations, equity or cash flows as of the adoption date or for the three or nine months endedSeptember 30, 2018. The Company has included the disclosures required by ASU 2014-09 in Note 2.

Statement of cash flows. During the first quarter of 2018, the Company adopted ASU No. 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash, which requires that restricted cash be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. Prior periods were retrospectively adjusted to conform to the current period’s presentation. As a result of the adoption of ASU 2016-18, the Company recorded an increase of $2,631,000 in net cash provided by operating activities for the nine months endedSeptember 30, 2017 related to reclassifying the changes in our restricted cash balance from operating activities to the cash and cash equivalent balances within the Consolidated Statements of Cash Flows.

8

Leases. In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842). This ASU requires most lessees to recognize right of use assets and lease liabilities, but recognize expenses in a manner similar with current accounting standards. The standard is effective for fiscal years and interim periods beginning after December 15, 2018 and is effective for the Company’s fiscal year beginning January 1, 2019. Early adoption is permitted. Entities are required to use a modified retrospective approach, with an option to apply the transition provisions of the new standard at its adoption date instead of at the earliest comparative period presented. The Company plans to use a modified retrospective approach and apply the transition provisions at the adoption date. The Company developed a project plan to guide the implementation of ASU 2016-02. The Company made progress on this plan including surveying the Company’s businesses, assessing the Company’s portfolio of leases, compiling information on active leases, and selecting a lease accounting software. The Company is currently identifying and implementing appropriate changes to its policies, business processes, systems and controls to support lease accounting and disclosures under Topic 842. The Company does not expect that its results of operations or cash flows will be materially impacted by this standard. The Company expects to record right of use assets and lease liabilities on its consolidated balance sheets upon adoption of this standard, which may be material.

Derivatives and hedging. In August 2017, the FASB issued ASU No. 2017-12, Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities. This ASU better aligns accounting rules with a company’s risk management activities; better reflects economic results of hedging in financial statements; and simplifies hedge accounting treatment. The standard is effective for fiscal years and interim periods beginning after December 15, 2018 and is effective for the Company’s fiscal year beginning January 1, 2019, with early adoption permitted. The Company is evaluating the impact of this new standard on the financial statements.

Non-employee share-based payments. In June 2018, the FASB issued ASU No. 2018-07, Compensation - Stock Compensation (Topic 718): Improvements to Non-employee Share-based Payment Accounting. The amendments of this ASU apply to all share-based payment transactions to non-employees, in which a grantor acquires goods or services to be used or consumed in a grantor’s own operations, accounted for under ASC 505-50, Equity-Based Payments to Non-Employees. Under the amendments of ASU 2018-07, most of the guidance on compensation to nonemployees would be aligned with the requirements for shared based payments granted to employees in Topic 718. The standard is effective for fiscal years and interim periods beginning after December 15, 2018 and is effective for the Company’s fiscal year beginning January 1, 2019, with early adoption permitted. The Company is evaluating the impact of this new standard on the financial statements.

Income Taxes. The Tax Cuts and Jobs Act (the “Act”) was enacted on December 22, 2017. The Act reduces the U.S. federal corporate tax rate from 35% to 21%, requires companies to pay a one-time transition tax on earnings of certain foreign subsidiaries that were previously tax deferred and creates new taxes on certain foreign-sourced earnings.  

The Company has applied the guidance in ASU 2018-05, Income Taxes (Topic 740): Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 118, when accounting for the enactment-date effects of the Act. At September 30, 2018, the Company has not completed its accounting for the tax effects of the Act, as the Company is in the process of analyzing certain aspects of the Act, obtaining information, and refining its calculations of the Act’s impact. There have been no material measurement period adjustments made during the three and nine months endedSeptember 30, 2018 related to the provisional amounts recorded and disclosed in the Company’s fiscal 2017 Annual Report filed on Form 10-K.  The Company expects to complete the accounting for the tax effects of the Act during 2018.

There are no other new accounting pronouncements that are expected to have a significant impact on the Company’s consolidated financial statements.

9

Note 2. Revenue Recognition

The following tables disaggregate the Company’s revenue by major product type and geography (in thousands):

	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

Revenue is recognized when obligations under the terms of a contract with the Company’s customer are satisfied which generally occurs with the transfer of control of the wholegood vehicles, parts, garments or accessories, and upon completion of the service or over the term of the agreement in proportion to the costs expected to be incurred in satisfying the obligations under the contract, for services. Revenue is measured as the amount of consideration the Company expects to receive in exchange for transferring goods or providing services. Sales, value add, and other taxes the Company collects concurrent with revenue-producing activities are excluded from revenue. Incidental items that are immaterial in the context of the contract are recognized as expense. The expected costs associated with the Company’s limited warranties and field service bulletin actions continue to be recognized as expense when the products are sold. The Company recognizes revenue for vehicle service contracts that extend mechanical and maintenance beyond the Company’s limited warranties over the life of the contract.

ORV/Snowmobiles, Motorcycles and Global Adjacent Markets segments

Wholegood vehicles and parts, garments and accessories. For the majority of wholegood vehicles, parts, garments and accessories (PG&A), the Company transfers control and recognizes a sale when it ships the product from its manufacturing facility, distribution center, or vehicle holding center to its customer (primarily dealers and distributors). The amount of consideration the Company receives and revenue it recognizes varies with changes in marketing incentives and returns it offers to its dealers and their customers. Sales returns are not material. The Company adjusts its estimate of revenue at the earlier of when the most likely amount of consideration it expects to receive changes or when the consideration becomes fixed.

10

Depending on the terms of the arrangement, the Company may also defer the recognition of a portion of the consideration received because it has to satisfy a future obligation (e.g., free extended service contracts). The Company uses an observable price to determine the stand-alone selling price for separate performance obligations. The Company has elected to recognize the cost for freight and shipping when control over vehicles, parts, garments or accessories has transferred to the customer as an expense in Cost of sales.

Extended Service Contracts. The Company sells separately-priced service contracts that extend mechanical and maintenance coverages beyond its base limited warranty agreements to vehicle owners. The separately priced service contracts range from 12 months to 84 months. The Company primarily receives payment at the inception of the contract and recognizes revenue over the term of the agreement in proportion to the costs expected to be incurred in satisfying the obligations under the contract.

Aftermarket segment

The Company’s Aftermarket products are sold through dealer, distributor, retail, and e-commerce channels. The Company transfers control and recognizes a sale when products are shipped or delivered to its customer. The amount of consideration the Company receives and revenue it recognizes varies with changes in marketing incentives and return rights it offers to its customers and their customers. When the Company gives its customers the right to return eligible parts and accessories, it estimates the expected returns based on an analysis of historical experience. The Company adjusts its estimate of revenue at the earlier of when the most likely amount of consideration it expects to receive changes or when the consideration becomes fixed.

Service revenue. At the Company’s Transamerican Auto Parts (“TAP”) retail stores (4 Wheel Parts), it offers installation services for parts that the retail store sells. Service revenues are recognized upon completion of the service.

Depending on the terms of the arrangement, the Company may also defer the recognition of a portion of the consideration received because it has to satisfy a future obligation (e.g., extended service contracts). The Company uses an observable price to determine the stand-alone selling price for separate performance obligations. The Company has elected to recognize the cost for freight and shipping when control over parts, garments or accessories has transferred to the customer as an expense in cost of sales.

Boats segment

Boats. For the majority of boats, the Company transfers control and recognizes a sale when it ships the product from its manufacturing facility or distribution center to its customer (primarily dealers). The amount of consideration the Company receives and revenue it recognizes varies with changes in marketing incentives and returns it offers to its dealers and their customers. Sales returns are not material. The Company adjusts its estimate of revenue at the earlier of when the most likely amount of consideration it expects to receive changes or when the consideration becomes fixed. The Company has elected to recognize the cost for freight and shipping when control over boats has transferred to the customer as an expense in cost of sales.

Deferred revenue

In 2016, Polaris began financing its self-insured risks related to extended service contracts (“ESCs”). The premiums for ESCs are primarily recognized in income in proportion to the costs expected to be incurred over the contract period. Warranty costs are recognized as incurred. Revenues related to sales of its extended warranty program and related accrued costs for claims are deferred and amortized over the warranty period, generally five years, while warranty administrative costs are recognized as incurred. TAP recognizes revenues related to sales of its extended warranty programs for tires and other products over the term of the warranty period, which varies from two to five years.

At January 1, 2018, $45,760,000 of unearned revenue associated with outstanding contracts was reported in other current liabilities and other long-term liabilities. At September 30, 2018, the unearned amount was $55,586,000. The Company expects to recognize approximately $23,893,000 of the unearned amount over the next 12 months and $31,693,000 thereafter. The activity in the deferred revenue reserve during the periods presented was as follows (in thousands):

	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

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(1) The unamortized ESC premiums (deferred revenue) recorded in other current liabilities totaled $23,893,000 and $16,045,000 at September 30, 2018 and 2017, respectively, while the amount recorded in other long-term liabilities totaled $31,693,000 and $23,975,000 at September 30, 2018 and 2017, respectively.

Note 3. Acquisitions

2018 Acquisitions.

Boat Holdings, LLC

On July 2, 2018, pursuant to the Agreement and Plan of Merger dated May 29, 2018, the Company completed the acquisition of Boat Holdings, LLC, a privately held Delaware limited liability company, headquartered in Elkhart, Indiana which manufactures boats (“Boat Holdings”).

The transaction was structured as an acquisition of 100% of the outstanding equity interests in Boat Holdings for aggregate consideration of $806,658,000, net of cash acquired, subject to customary adjustments based on, among other things, the amount of cash, debt and working capital in the business of Boat Holdings at the closing date. A portion of the aggregate consideration equal to $100,000,000 will be paid in the form of a series of deferred annual payments over 12 years following the closing date.

The Company funded the purchase price for the acquisition by amending, extending, and up-sizing the Credit Facility and with the proceeds of the issuance of 4.23% Senior Notes, Series 2018, due July 3, 2028, described in Note 5.

The consolidated statements of income for both the three and nine months ended September 30, 2018 include $134,321,000 of net sales and $20,253,000 of gross profit related to Boats.

The following table summarizes the preliminary fair values assigned to the Boat Holdings net assets acquired and the determination of net assets (in thousands):

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

On the acquisition date, amortizable intangible assets had a weighted-average useful life of approximately 19 years. The customer relationships were valued based on the Discounted Cash Flow Method and are amortized over 15-20 years, depending on the customer class. The trademarks and trade names were valued on the Relief from Royalty Method and have indefinite remaining useful lives. Goodwill is deductible for tax purposes.

The following unaudited pro forma information represents the Company’s results of operations as if the fiscal 2018 acquisition of Boat Holdings had occurred at the beginning of fiscal 2017 (in thousands, except per share data).

	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

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The results for the quarter and year-to-date periods ended September 30, 2018 and 2017 have been adjusted to include the pro forma impact of amortization of intangible assets and the depreciation of property, plant, and equipment, based on purchase price allocations; the pro forma impact of additional interest expense relating to the acquisition; the pro forma impact of transaction related costs incurred by the Company directly attributable to the transaction; and the pro forma tax effect of both income before taxes and the pro forma adjustments. These performance results may not be indicative of the actual results that would have occurred under the ownership and management of the Company.

The results for the quarter and year-to-date periods ended September 30, 2018 have been adjusted to exclude the impact of approximately $4,849,000 and $8,918,000 of transaction related costs (pre-tax) incurred by the Company that are directly attributable to the transaction.

The pro forma financial information has been prepared for comparative purposes only and includes certain adjustments, as noted above. The adjustments are estimates based on currently available information and actual amounts may differ materially from these estimates. They do not reflect the effect of costs or synergies that would have been expected to result from the integration of the Boat Holdings acquisition.

2017 Acquisitions.

The Company did not complete any acquisitions in 2017.

Note 4. Share-Based Compensation

The amount of compensation cost for share-based awards to be recognized during a period is based on the portion of the awards that are ultimately expected to vest. The Company estimates forfeitures at the time of grant and revises those estimates in subsequent periods if actual forfeitures differ from those estimates. The Company analyzes historical data to estimate pre-vesting forfeitures and records share-based compensation expense for those awards expected to vest.

Total share-based compensation expenses were comprised as follows (in thousands):

	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

In addition to the above share-based compensation expenses, Polaris sponsors a qualified non-leveraged employee stock ownership plan (ESOP). Shares allocated to eligible participants’ accounts vest at various percentage rates based on years of service and require no cash payments from the recipient.

At September 30, 2018, there was $113,879,000 of total unrecognized share-based compensation expense related to unvested share-based equity awards. Unrecognized share-based compensation expense is expected to be recognized over a weighted-average period of 1.49 years. Included in unrecognized share-based compensation expense is approximately $30,570,000 related to stock options and $83,309,000 for restricted stock.

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Note 5. Financing Agreements

The carrying value of debt, capital lease obligations, and notes payable and the average related interest rates were as follows (in thousands):

	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

In August 2011, Polaris entered into a $350,000,000 unsecured revolving loan facility. In March 2015, Polaris amended the loan facility to increase the facility to $500,000,000 and to provide more beneficial covenant and interest rate terms. The amended terms also extended the expiration date to March 2020. Interest is charged at rates based on a LIBOR or “prime” base rate. In May 2016, Polaris amended the revolving loan facility to increase the facility to $600,000,000 and extend the expiration date to May 2021. The amended terms also established a $500,000,000 term loan facility. In November 2016, Polaris amended the revolving loan facility to increase the term loan facility to $750,000,000.

In July 2018, Polaris amended the revolving loan facility to increase the facility to 700,000,000 and increase the term loan facility to $1,180,000,000, of which $1,165,000,000 is outstanding as of September 30, 2018. The expiration date of the facility was extended to July 2023, and interest will continue to be charged at rates based on a LIBOR or “prime” base rate. Under the facility, the Company is required to make principal payments totaling $59,000,000 over the next 12 months, which are classified as current maturities.

In December 2010, the Company entered into a Master Note Purchase Agreement to issue $25,000,000 of unsecured senior notes due May 2018 and $75,000,000 of unsecured senior notes due May 2021 (collectively, the “Senior Notes”). The Senior Notes were issued in May 2011. In December 2013, the Company entered into a First Supplement to Master Note Purchase Agreement, under which the Company issued $100,000,000 of unsecured senior notes due December 2020. In July 2018, the Company entered into a Master Note Purchase Agreement to issue $350,000,000 of unsecured senior notes due July 2028.

The unsecured revolving loan facility and the Master Note Purchase Agreement contain covenants that require Polaris to maintain certain financial ratios, including minimum interest coverage and maximum leverage ratios. Polaris was in compliance with all such covenants at September 30, 2018.

The debt issuance costs are recognized as a reduction in the carrying value of the related long-term debt in the consolidated balance sheets and are being amortized to interest expense in our consolidated statements of income over the expected remaining terms of the related debt.

A property lease agreement for a manufacturing facility which Polaris began occupying in Opole, Poland commenced in February 2014. The Poland property lease is accounted for as a capital lease.

As a component of the Boat Holdings merger agreement, Polaris has committed to make a series of deferred payments to the former owners following the closing date of of the merger through July 2030. The original discounted payable was for $76,733,000, all of which is outstanding as of September 30, 2018. The outstanding balance is included in long-term debt.

The Company has a mortgage note payable agreement for land, on which Polaris built the Huntsville, Alabama manufacturing facility in 2016. The original mortgage note payable was for $14,500,000, of which $10,875,000 is outstanding as of September 30, 2018. The outstanding balance is included in Notes payable and other. The payment of principal and interest for the note payable is forgivable if the Company satisfies certain job commitments over the term of the

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note. The Company has met the required commitments to date. Forgivable loans related to other Company facilities are also included within notes payable.

Note 6. Goodwill and Other Intangible Assets

Goodwill and other intangible assets, net of accumulated amortization, at September 30, 2018 and December 31, 2017 are as follows (in thousands):

	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

Additions to goodwill and other intangible assets in 2018 relate to the acquisition of Boat Holdings in July 2018. The aggregate purchase price was allocated on a preliminary basis to the assets acquired and liabilities assumed based on their estimated fair values at the date of acquisition. Boat Holding’s financial results are included in the Company’s consolidated results from the date of acquisition. As of September 30, 2018, the purchase price allocation remains preliminary. The pro forma financial results and the preliminary purchase price allocation are included in Note 3. There were no material additions to goodwill and other intangible assets for the three and nine months ended September 30, 2017.

The changes in the carrying amount of goodwill for the nine months ended September 30, 2018 were as follows (in thousands):

	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

The components of other intangible assets were as follows (in thousands):

	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

Amortization expense for intangible assets for the three and nine months ended September 30, 2018 was $10,403,000 and $22,586,000, respectively, compared to $6,344,000 and $18,792,000 for the comparable prior year periods. Estimated amortization expense for the remainder of 2018 through 2023 is as follows: 2018 (remainder), $10,500,000; 2019, $40,500,000; 2020, $35,500,000; 2021, $32,700,000; 2022, $27,700,000; 2023, $25,300,000; and after 2023, $264,800,000. The preceding expected amortization expense is an estimate and actual amounts could differ due to additional intangible asset acquisitions, changes in foreign currency rates or impairment of intangible assets.

Note 7. Shareholders’ Equity

During the nine months ended September 30, 2018, Polaris paid $246,931,000 to repurchase approximately 2,069,000 shares of its common stock. As of September 30, 2018, the Board of Directors has authorized the Company to repurchase up to an additional 4,367,000 shares of Polaris stock. The repurchase of any or all such shares authorized for repurchase will be governed by applicable SEC rules and dependent on management’s assessment of market conditions. Polaris paid a regular

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cash dividend of $0.60 per share on September 17, 2018 to holders of record at the close of business on August 31, 2018. On October 24, 2018, the Polaris Board of Directors declared a regular cash dividend of $0.60 per share payable on December 17, 2018 to holders of record of such shares at the close of business on December 3, 2018.

Cash dividends declared and paid per common share for the three and nine months ended September 30, 2018 and 2017, were as follows:

	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

Net income per share

Basic income per share is computed by dividing net income available to common shareholders by the weighted average number of common shares outstanding during each period, including shares earned under the Deferred Compensation Plan for Directors (“Director Plan”) and the ESOP and deferred stock units under the 2007 Omnibus Incentive Plan (“Omnibus Plan”). Diluted income per share is computed under the treasury stock method and is calculated to compute the dilutive effect of outstanding stock options and certain shares issued under the Omnibus Plan. A reconciliation of these amounts is as follows (in thousands):

	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

During the three and nine months ended September 30, 2018, the number of options that were not included in the computation of diluted income per share because the option exercise price was greater than the market price, and therefore, the effect would have been anti-dilutive, were 1,785,000 and 1,713,000, respectively, compared to 2,892,000 and 2,816,000 for the same periods in 2017.

Accumulated other comprehensive loss

Changes in the accumulated other comprehensive loss balance are as follows (in thousands):

	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	)

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The table below provides data about the amount of gains and losses, net of tax, reclassified from accumulated other comprehensive loss into the statements of income for cash flow derivatives designated as hedging instruments for the three and nine months ended September 30, 2018 and 2017 (in thousands):

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

The net amount of the existing gains or losses at September 30, 2018 that is expected to be reclassified into the statements of income within the next 12 months is not expected to be material. See Note 11 for further information regarding Polaris’ derivative activities.

Note 8. Financial Services Arrangements

Polaris Acceptance, a joint venture between Polaris and Wells Fargo Commercial Distribution Finance, a direct subsidiary of Wells Fargo Bank, N.A. (“Wells Fargo”), which is supported by a partnership agreement between their respective wholly owned subsidiaries, finances substantially all of Polaris’ United States sales whereby Polaris receives payment within a few days of shipment of the product.

Polaris’ subsidiary has a 50 percent equity interest in Polaris Acceptance. Polaris Acceptance sells a majority of its receivable portfolio to a securitization facility (the “Securitization Facility”) arranged by Wells Fargo. The sale of receivables from Polaris Acceptance to the Securitization Facility is accounted for in Polaris Acceptance’s financial statements as a “true-sale” under Accounting Standards Codification (“ASC”) Topic 860. Polaris’ allocable share of the income of Polaris Acceptance has been included as a component of income from financial services in the accompanying consolidated statements of income. The partnership agreement is effective through February 2022.

Polaris’ total investment in Polaris Acceptance of $88,790,000 at September 30, 2018 is accounted for under the equity method, and is recorded in investment in finance affiliate in the accompanying consolidated balance sheets. At September 30, 2018, the outstanding amount of net receivables financed for dealers under this arrangement was $1,237,689,000, which included $566,102,000 in the Polaris Acceptance portfolio and $671,587,000 of receivables within the Securitization Facility (“Securitized Receivables”).

Polaris has agreed to repurchase products repossessed by Polaris Acceptance up to an annual maximum of 15 percent of the aggregate average month-end outstanding Polaris Acceptance receivables and Securitized Receivables during the prior calendar year. For calendar year 2018, the potential 15 percent aggregate repurchase obligation is approximately $164,969,000. Polaris’ financial exposure under this arrangement is limited to the difference between the amounts unpaid by the dealer with respect to the repossessed product plus costs of repossession and the amount received on the resale of the repossessed product. No material losses have been incurred under this agreement during the periods presented.

Polaris has agreements with Performance Finance, Sheffield Financial and Synchrony Bank, under which these financial institutions provide financing to end consumers of Polaris products. Polaris’ income generated from these agreements has been included as a component of income from financial services in the accompanying consolidated statements of income.

Polaris also administers and provides extended service contracts to consumers and certain insurance contracts to dealers and consumers through various third-party suppliers. Polaris finances its self-insured risks related to extended service contracts, but does not retain any insurance or financial risk under any of the other arrangements. Polaris’ service fee income generated from these arrangements has been included as a component of income from financial services in the accompanying consolidated statements of income.

Note 9. Investment in Other Affiliates

The Company has certain investments in nonmarketable securities of strategic companies. As of December 31, 2017, the Company’s investment in Eicher-Polaris Private Limited (EPPL) represented the majority of these investments and is recorded as a component of other long-term assets in the accompanying consolidated balance sheets.

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EPPL is a joint venture established in 2012 with Eicher Motors Limited (“Eicher”). Polaris and Eicher each control 50 percent of the joint venture, which is intended to design, develop and manufacture a full range of new vehicles for India and other emerging markets. The investment in EPPL is accounted for under the equity method, with Polaris’ proportionate share of income or loss recorded within the consolidated financial statements on a one month lag due to financial information not being available timely.

During the first quarter of 2018, the Board of Directors of EPPL approved a shut down of the operations of the EPPL joint venture. As a result of the expected closure, the Company fully impaired its investment in EPPL by recognizing an impairment charge of $18,733,000 within Equity in loss of other affiliates in the consolidated statement of income. The Company has recognized $0 and $23,447,000 of costs, including impairment, associated with the wind-down of EPPL for the three and nine months ended September 30, 2018, respectively.

As of September 30, 2018 and December 31, 2017, the carrying value of the Company’s investment in EPPL was $0 and $18,616,000, respectively.

Polaris will impair or write off an investment and recognize a loss if and when events or circumstances indicate there is impairment in the investment that is other-than-temporary. When necessary, Polaris evaluates investments in nonmarketable securities for impairment, utilizing Level 3 fair value inputs. As a result of the Victory^® Motorcycles wind down, the Company recognized an impairment of substantially all of its cost-method investment in Brammo, Inc. in the first quarter of 2017. See Note 13 for additional discussion related to charges incurred related to the Victory Motorcycles wind down.

In October 2017, an agreement was signed to sell the assets of Brammo, Inc. to a third party. The sale was completed in the fourth quarter of 2017, and as a result of the sale, Polaris recognized a gain, which is included in Other expense (income), net on the 2017 consolidated statements of income. During the first quarter of 2018, Polaris received additional distributions from Brammo and recognized a gain of $13,478,000, which is included in Other expense (income) on the consolidated statements of income.

Note 10. Commitments and Contingencies

Polaris is subject to product liability claims in the normal course of business. The Company carries excess insurance coverage for catastrophic product liability claims. Polaris self-insures product liability claims before the policy date and up to the purchased catastrophic insurance coverage after the policy date. The estimated costs resulting from any losses are charged to operating expenses when it is probable a loss has been incurred and the amount of the loss is reasonably estimable. The Company utilizes historical trends and actuarial analysis tools, along with an analysis of current claims, to assist in determining the appropriate loss reserve levels. At September 30, 2018, the Company had an accrual of $55,320,000 for the probable payment of pending claims related to continuing product liability litigation associated with Polaris products. This accrual is included as a component of other accrued expenses in the accompanying consolidated balance sheets.

Polaris is also a defendant in lawsuits and subject to other claims arising in the normal course of business, including matters related to intellectual property, commercial matters, product liability claims, and putative class action lawsuits. As of September 30, 2018, the Company is party to two putative class actions pending against Polaris in the United States, alleging that certain Polaris products caused personal injury, economic losses, and other damages resulting from unresolved fire hazards and excessive heat hazards. The Company is unable to provide an evaluation of the likelihood that a loss will be incurred or an estimate of the range of possible loss.

In the opinion of management, it is unlikely that any legal proceedings pending against or involving Polaris will have a material adverse effect on Polaris’ financial position, results of operations, or cash flows. However, in many of these matters, it is inherently difficult to determine whether a loss is probable or reasonably possible or to estimate the size or range of the possible loss given the variety and potential outcomes of actual and potential claims, the uncertainty of future rulings, the behavior or incentives of adverse parties, and other factors outside of the control of the Company. Accordingly, the Company’s loss reserve may change from time to time, and actual losses could exceed the amounts accrued by an amount that could be material to our consolidated financial position, results of operations, or cash flows in any particular reporting period.

In the normal course of business, the Company’s products are subject to extensive laws and regulations relating to safety, environmental and other regulations promulgated by the United States federal government and individual states, as well as international regulatory authorities. Failure to comply with applicable regulations could result in fines, penalties or other costs. 

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Note 11. Derivative Instruments and Hedging Activities

The Company is exposed to certain risks relating to its ongoing business operations. From time to time, the primary risks managed by using derivative instruments are foreign currency risk, interest rate risk and commodity price fluctuations. Derivative contracts on various currencies are entered into in order to manage foreign currency exposures associated with certain product sourcing activities and intercompany cash flows. Interest rate swaps are occasionally entered into in order to maintain a balanced risk of fixed and floating interest rates associated with the Company’s long-term debt. Commodity hedging contracts are occasionally entered into in order to manage fluctuating market prices of certain purchased commodities and raw materials that are integrated into the Company’s end products.

The Company’s foreign currency management objective is to mitigate the potential impact of currency fluctuations on the value of its U.S. dollar cash flows and to reduce the variability of certain cash flows at the subsidiary level. The Company actively manages certain forecasted foreign currency exposures and uses a centralized currency management operation to take advantage of potential opportunities to naturally offset foreign currency exposures against each other. The decision of whether and when to execute derivative instruments, along with the duration of the instrument, can vary from period to period depending on market conditions, the relative costs of the instruments and capacity to hedge. The duration is linked to the timing of the underlying exposure, with the connection between the two being regularly monitored. Polaris does not use any financial contracts for trading purposes.

At September 30, 2018, Polaris had the following open foreign currency contracts (in thousands):

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

These contracts, with maturities through September 2019, met the criteria for cash flow hedges, and are recorded in other current assets or other current liabilities on the consolidated balance sheet. The unrealized gains or losses, after tax, are recorded as a component of accumulated other comprehensive loss in shareholders’ equity.

During the third quarter of 2018, the Company entered into interest rate swap transactions to hedge the variable interest rate payments for the Term Loan Facility. In connection with this transaction, the Company will pay interest based upon a fixed rate and receive variable rate interest payments based on the one-month LIBOR.

At September 30, 2018, Polaris had the following open interest rate swap contracts (in thousands):

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

These contracts, with maturities through September 2023, met the criteria for cash flow hedges, and are recorded in other current assets or other current liabilities on the consolidated balance sheet. The unrealized gains or losses, after tax, are recorded as a component of accumulated other comprehensive loss in shareholders’ equity.

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The table below summarizes the carrying values of derivative instruments as of September 30, 2018 and December 31, 2017 (in thousands):

	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.

For derivative instruments that are designated and qualify as cash flow hedges, the effective portion of the gain or loss on the derivative is reported as a component of accumulated other comprehensive loss and reclassified into the statements of income in the same period or periods during which the hedged transaction affects the statements of income. Gains and losses on the derivative representing either hedge ineffectiveness or hedge components excluded from the assessment of effectiveness are recognized in the current statement of income.

The amount of gains (losses), net of tax, related to the effective portion of derivative instruments designated as cash flow hedges included in accumulated other comprehensive income (loss) for the three and nine months ended September 30, 2018 were $(2,111,000) and $2,998,000, respectively, compared to $(167,000) and $(1,208,000) for the same respective periods in 2017.

See Note 7 for information about the amount of gains and losses, net of tax, reclassified from accumulated other comprehensive loss into the statements of income for derivative instruments designated as hedging instruments. The ineffective portion of foreign currency contracts was not material for the three and nine month period ended September 30, 2018.

Note 12. Segment Reporting

The Company’s reportable segments are based on the Company’s method of internal reporting, which generally segregates the operating segments by product line, inclusive of wholegoods and PG&A. The internal reporting of these operating segments is defined based, in part, on the reporting and review process used by the Company’s Chief Executive Officer. The Company has six operating segments: 1) ORV, 2) Snowmobiles, 3) Motorcycles, 4) Global Adjacent Markets, 5) Aftermarket, and 6) Boats, and five reportable segments: 1) ORV/Snowmobiles, 2) Motorcycles, 3) Global Adjacent Markets, 4) Aftermarket, and 5) Boats.

Through June 30, 2018, the Company reported under four segments for segment reporting. However, during the third quarter ended September 30, 2018, as a result of the Boat Holdings acquisition, the Company established a new reporting segment, Boats, which includes only the results of Boat Holdings. As such, the comparative 2017 results were not required to be reclassified as the new reporting segment structure did not impact historical segments.

The ORV/Snowmobiles segment includes the aggregated results of our ORV and Snowmobiles operating segments. The Motorcycles, Global Adjacent Markets, Aftermarket, and Boats segments include the results for those respective operating segments. The Corporate amounts include costs that are not allocated to individual segments, which include incentive-based compensation and other unallocated manufacturing costs. Additionally, given the commonality of customers, manufacturing and asset management, the Company does not maintain separate balance sheets for each segment. Accordingly, the segment information presented below is limited to sales and gross profit data (in thousands):

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	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

Note 13. Victory Motorcycles Wind Down

In January 2017, the Company’s Board of Directors approved a strategic plan to wind down the Victory Motorcycles brand. The Company began wind down activities during the first quarter of 2017. As a result of the activities, the Company recognized total pretax charges of $1,281,000 and $3,911,000 for the three and nine month periods ended September 30, 2018, respectively, compared to $2,666,000 and $59,131,000 for the same respective periods in 2017, that are within the scope of ASC 420, Exit or Disposal Cost Obligations (ASC 420). These totals exclude the negative pretax impact of $233,000 and positive pretax impact of $2,154,000 incurred for other wind-down activities for the three and nine month periods ended September 30, 2018, respectively, and the negative pretax impact of $6,143,000 and $18,109,000 incurred for other wind-down activities for the three and nine month periods ended September 30, 2017, respectively. The Company estimates that the total impact of wind down activities in 2018 will be $5,000,000, inclusive of promotional activity. Substantially all costs related to wind down activities are expected to be recognized by the end of 2018.

As a result of the wind down activities, the Company has incurred expenses within the scope of ASC 420 consisting of dealer termination, supplier termination, dealer litigation, employee separation, asset impairment charges, including the impairment of a cost method investment, inventory write-down charges and other costs. The wind down expenses have been included as components of cost of sales, selling and marketing expenses, general and administrative expenses or other expense (income), net, in the consolidated statements of income. Charges related to the wind down plan for the three and nine months ended September 30, 2018 and 2017 within the scope of ASC 420 were as follows (in thousands):

	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

Total reserves related to the Victory Motorcycles wind down activities are $3,029,000 as of September 30, 2018. These reserves are included in other accrued expenses and inventory in the consolidated balance sheets. Changes to the reserves during the nine months endedSeptember 30, 2018 were as follows (in thousands):

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	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

Item 2 – MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Overview

The following discussion pertains to the results of operations and financial position of Polaris Industries Inc., a Minnesota corporation, for the three and nine month periods ended September 30, 2018 compared to the three and nine month periods ended September 30, 2017. The terms “Polaris,” the “Company,” “we,” “us,” and “our” as used herein refer to the business and operations of Polaris Industries Inc., its subsidiaries and its predecessors, which began doing business in 1954. We design, engineer and manufacture powersports vehicles, which include Off-Road Vehicles (ORV), including all-terrain vehicles (ATV) and side-by-side vehicles; motorcycles; Global Adjacent Markets vehicles, including Commercial, Government, and Defense vehicles; boats; and related Parts, Garments and Accessories (PG&A), as well as Aftermarket accessories and apparel. Due to the seasonality of certain products and to certain changes in production and shipping cycles, results of such periods are not necessarily indicative of the results to be expected for the complete year.

We reported net income of $95.5 million, or $1.50 per diluted share, compared to 2017third quarter net income of $81.9 million, or $1.28 per diluted share. Third quarter sales totaled $1,651.4 million, an increase of 12 percent from last year’s third quarter sales of $1,478.7 million. The sales increase was driven primarily by the acquisition of Boat Holdings and strong ORV sales. Our unit retail sales to consumers in North America increased one percent in the third quarter of 2018, primarily driven by increased retail demand for side-by-sides. Our third quarter sales to North American customers increased 12 percent, driven by Boats and growth in ORV. Our sales to customers outside of North America increased 10 percent, primarily driven by strong sales in Snowmobiles and motorcycles, partially offset by foreign exchange movements.

Our gross profit of $401.3 million increased 10 percent from $364.0 million in the comparable prior year third quarter . The increase in gross profit dollars during the quarter was primarily driven by increased sales, primarily related to the Boat Holdings acquisition. The slight decrease in gross profit margins was driven by the impact of commodity, freight and tariff cost pressure, partially offset by lower promotional costs. Additionally, quarter gross profit was affected negatively as a result of $5.4 million and $13.8 million of wind-down, realignment and supply chain transformation costs, in 2018 and 2017, respectively. Our liquidity remained adequate with $183.4 million of cash on hand and $625.8 million of availability on the revolving loan facility at September 30, 2018.

As a result of our decision to wind down the Victory Motorcycles brand, total non-recurring wind down activities had a negative pretax impact of $1.5 million and $1.8 million for the three and nine month periods ended September 30, 2018, respectively. Total wind down activities had a negative pretax impact of $8.8 million and $77.2 million for the three and nine month periods ended September 30, 2017, respectively. We estimate the total pre-tax impact of non-recurring wind down activities in 2018 to be approximately $5.0 million. Substantially all costs related to wind down activities are expected to be recognized by the end of 2018.

During the third quarter, the Company completed the acquisition of Boat Holdings, LLC, headquartered in Elkhart, Indiana. The transaction was structured as an acquisition of 100% of the outstanding equity interests in Boat Holdings for aggregate consideration of $806.7 million, subject to customary adjustments based on, among other things, the amount of cash, debt and working capital in the business of Boat Holdings at the closing date. A portion of the aggregate consideration equal to $100.0 million will be paid in the form of a series of deferred annual payments over 12 years following the closing date. The Company funded the purchase price for the acquisition by amending, extending, and up-sizing the Credit Facility and with the proceeds of the issuance of 4.23% Senior Notes, Series 2018, due July 3, 2028.

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Results of Operations

Unless otherwise noted, all “quarter” comparisons are from the third quarter2018 to the third quarter2017, and all “year-to-date” comparisons are from the nine month period ended September 30, 2018 to the nine month period ended September 30, 2017.

Sales:

Quarter sales were $1,651.4 million, a 12 percent increase from $1,478.7 million of quarter sales in the prior year. Year to date sales were $4,451.4 million, an 11 percent increase from $3,997.4 million of sales in the comparable prior year period. The consolidated statements of income for both the three and nine months ended September 30, 2018 include $134.3 million of net sales related to Boat Holdings. The following table is an analysis of the percentage change in total Company sales:

	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	%

The volume increase is primarily driven by strong ORV and Global Adjacent Market sales.

Our sales by reporting segment, which includes the respective PG&A, were as follows:

	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	%

ORV/Snowmobiles

ORVs:Quarter and year-to-date sales, including PG&A, increased 12 and 15 percent, respectively, primarily due to strong RANGER^®, RZR^®, and ATV shipments. Sales outside North America increased five percent in the quarter, primarily due to increased side-by-side shipments. The quarter average per unit sales price increased five percent compared to the prior year.

Our North American ORV quarter unit retail sales to consumers increased low-single digit percent compared to the 2017third quarter, with consumer purchases of side-by-side vehicles, which include RANGER, RZR, and Polaris GENERAL^™ increasing low-single digit percent, and ATVs decreasing low-single digit percent over the prior year. The Company estimates that North American industry ORV retail sales were up low-single digit percent from the third quarter of 2017. Polaris’ North American dealer unit inventory was up mid-teens percent compared to the third quarter of 2017 and we believe are now at more normalized levels.

Snowmobiles:Quarter and year-to-date sales, including PG&A, were $80.4 million and $125.7 million, respectively, compared to $156.5 million and $199.3 million for the comparable prior year period. The changes are due to the timing of shipments of pre-season snowmobile orders year-over-year.

Motorcycles

Quarter sales, including PG&A, were flat compared to the prior year, while year-to-date sales were down three percent compared to the prior year due to a weak motorcycle industry. The quarter average per unit sales price decreased four percent, excluding Victory Motorcycles, driven by a shift in sales mix towards more mid-sized motorcycles.

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North American consumer retail sales for Indian Motorcycle and Slingshot decreased high-single digits percent for the quarter. Indian Motorcycle retail sales increased low-single digit percent, in spite of an overall weak N.A. motorcycle market. Slingshot retail sales were down high-twenties percent during the quarter. Motorcycle industry retail sales, 900cc and above, decreased low-teens percent in the quarter. Indian Motorcycle gained market share for the 2018 third quarter on a year-over-year basis. North American Polaris dealer inventory was flat in the quarter compared to the same period last year.

Global Adjacent Markets

Quarter and year-to-date sales increased due primarily to strong Commercial, Government, Defense, and Polaris Adventures sales.

Aftermarket

Quarter and year-to-date sales, which include Transamerican Auto Parts (TAP), along with our other aftermarket brands of Klim, Kolpin, ProArmor, Trail Tech and 509, increased two and one percent, respectively. The growth was primarily driven by the aftermarket brands strong pre-season snow orders. TAP sales in the third quarter were down slightly, and impacted by delayed accessory development work and weakness in business-to-business sales in the South and Southwest United States.

Boats

Segment sales, which relate to the Boat Holdings acquisition which closed on July 2, 2018, were $134.3 million in the third quarter.

Sales by Geography

Sales by geographic region were as follows:

	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	%

United States:Quarter and year-to-date sales in the U.S. increased primarily due to increased ORV shipments and the addition of Boat Holdings.

Canada:Quarter sales in Canada decreased primarily due to the timing of shipments of pre-season snowmobile orders year-over-year, while year-to-date sales in Canada increased due to increased ORV shipments. Currency rate movements had an unfavorable impact of four percent on quarter sales and a favorable impact of one percent on year-to-date sales.

Other foreign countries:Quarter and year-to-date sales in other foreign countries increased due to increased shipments of all segments. Currency rate movements had an unfavorable impact of three percent on quarter sales and a favorable impact of four percent on year-to-date sales.

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Cost of Sales:

	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

The increase in quarter and year-to-date cost of sales dollars resulted primarily from purchased materials and services related to higher sales volumes, as well as the Boat Holdings acquisition during the third quarter of 2018, which contributed $114.1 million in cost of sales.

Gross Profit:

	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

Consolidated. Our quarter gross profit of $401.3 million increased 10 percent from $364.0 million in the comparable prior year period, and our year-to-date gross profit of $1,109.9 million increased 16% from $956.8 million in the comparable prior year period. Third quarter 2018 gross profit was affected negatively as a result of $1.2 million of Victory Motorcycles wind-down costs, the negative impact of $3.1 million of inventory step-up adjustments related to the Boat Holdings acquisition, and $4.1 million of restructuring and realignment costs, while 2017 was impacted negatively by $7.6 million of Victory Motorcycle wind down costs and $6.2 million of restructuring and realignment costs. Year-to-date 2018 gross profit was affected negatively as a result of $3.1 million of Boat Holdings acquisition-related costs and $16.0 million of restructuring and realignment costs, while 2017 was impacted negatively by $55.0 million of Victory Motorcycle wind down costs, $13.0 million of acquisition-related costs, and $10.5 million of restructuring and realignment costs. Gross profit margins for both periods were also negatively affected by mix and the impact of tariff, commodity and freight cost pressure during the quarter, partially offset by lower warranty and promotional costs. We expect commodity price increases, higher freight costs, and additional tariffs to continue throughout the remainder of 2018 and adversely affect our gross profit.

ORV/Snowmobiles. Gross profit, as a percentage of sales, decreased slightly for the quarter and year-to-date periods, primarily due to unfavorable product mix, higher commodity costs and freight pressures, partially offset by lower warranty expense.

Motorcycles. Gross profit, as a percentage of sales, increased for the quarter and year-to-date periods, primarily due to lower costs associated with the wind down of Victory Motorcycles, partially offset by negative mix.

Global Adjacent Markets. Gross profit, as a percentage of sales, increased for the quarter and year-to-date, primarily due to sales mix and due to $6.2 million and $10.5 million of manufacturing network realignment costs incurred in the 2017 comparable periods.

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Aftermarket. Gross profit, as a percentage of sales, increased for the quarter, primarily due to product mix. Gross profit, as a percentage of sales, increased year-to-date primarily due to the negative impact of $13.0 million of inventory step-up adjustments related to the TAP acquisition included in the prior year comparable period.

Boats. Segment gross profit, which relates to the Boat Holdings acquisition which closed on July 2, 2018, was $20.3 million in the third quarter, which includes the negative impact of $3.1 million of inventory step-up adjustment adjustments.

Operating Expenses:

	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

Operating expenses, in absolute dollars, for the quarter and year-to-date periods increased primarily due to the Boat Holdings acquisition completed during the third quarter and investments in strategic projects. Operating expenses, as a percentage of sales, for the year-to-date period decreased primarily due to realized efficiencies in selling, marketing, and general and administrative spend along with the addition of Boat Holdings which inherently has a lower operating expense to sales ratio.

Income from Financial Services:

	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

The increase for the quarter and year-to-date in income from financial services is due to improved retail financing penetration rates and higher income from Polaris Acceptance due to slightly higher dealer inventory levels. Further discussion can be found in the “Liquidity and Capital Resources” section below.

Remainder of the Statement of Income:

	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

Interest expense: Quarter and year-to-date interest expense increased primarily due to increased debt levels to finance the Boat Holdings acquisition.

Equity in loss of other affiliates: As a result of the decision by the Eicher-Polaris Private Limited (EPPL) Board of Directors to shut down the operations of the EPPL joint venture, we impaired our investment in EPPL and incurred additional wind-down related costs in 2018. The impairment and wind-down costs resulted in a year-to-date increase in Equity in loss of other

26

affiliates. Additional costs associated with the wind down of the joint venture, if any, are expected to be immaterial for the remainder of 2018.

Other expense (income), net: The quarter and year-to-date change primarily relates to foreign currency exchange rate movements and the corresponding effects on foreign currency transactions and balance sheet positions related to our foreign subsidiaries from period to period. The year-to-date change also includes a $13.5 million gain on our investment in Brammo Inc. in 2018.

Provision for income taxes:The decrease in the effective income tax rates from the prior year periods is primarily due to the reduction in the federal statutory tax rate to 21% as a result of U.S. Tax Reform offset by lower excess tax benefits related to share-based compensation.

Weighted average shares outstanding: Over the time period within and between the comparable periods, weighted average shares outstanding decreased by one percent in the quarter due to share repurchases, and increased one percent year-to-date due to the dilutive effects of stock issuances under employee compensation plans.

Cash Dividends:

We paid a regular cash dividend of $0.60 per share on September 17, 2018 to holders of record at the close of business on August 31, 2018. On October 24, 2018, the Polaris Board of Directors declared a regular cash dividend of $0.60 per share

payable on December 17, 2018 to holders of record of such shares at the close of business on December 3, 2018.

Liquidity and Capital Resources

Our primary sources of funds have been cash provided by operating and financing activities. Our primary uses of funds have been for acquisitions, repurchase and retirement of common stock, capital investment, new product development and cash dividends to shareholders.

We believe that existing cash balances and cash flow to be generated from operating activities and borrowing capacity under the credit facility arrangement will be sufficient to fund operations, new product development, cash dividends, share repurchases and capital requirements for the foreseeable future. At this time, management is not aware of any factors that would have a material adverse impact on cash flow.

Cash Flows

The following table summarizes the cash flows from operating, investing and financing activities:

($ 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

Operating activities: Net cash provided by operating activities was $354.1 million for the nine months ended September 30, 2018, compared to $497.1 million for the same period in 2017. The decrease in net cash provided by operating activities for the 2018 period was primarily due to the timing of accrual payments and higher factory inventory needed for ongoing refinement of retail flow management (“RFM”).

Investing activities: The primary use of cash was for the acquisition of Boat Holdings in the third quarter.

Financing activities: Cash provided by financing activities changed primarily due to net borrowings under debt arrangements, capital lease obligations and notes payable of $875.0 million compared to net repayments of $226.7 million in the 2017 comparable period. Common stock repurchases were $246.9 million compared to $88.9 million in the 2017 comparable period and proceeds from the issuance of stock under employee plans were $47.2 million and $14.2 million for the nine months ended September 30, 2018 and 2017, respectively. Additionally, we paid cash dividends of $112.7 million and $108.9 million for the nine months ended September 30, 2018 and 2017, respectively.

The seasonality of production and shipments cause working capital requirements to fluctuate during the year.

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Debt and Capital

We are party to a $700.0 million variable interest rate bank lending agreement and a Master Note Purchase Agreement, as amended and supplemented, under which we have unsecured borrowings. We are also party to a $1,180.0 million term loan facility, of which $1,165.0 million is outstanding as of September 30, 2018.

We enter into leasing arrangements to finance the use of certain property and equipment.

As a component of the Boat Holdings merger agreement, Polaris has committed to make a series of deferred payments to the former owners following the closing date of of the merger through July 2030. The original discounted payable was for $76,733,000, all of which is outstanding as of September 30, 2018. The outstanding balance is included in long-term debt.

We have a mortgage note payable agreement for land, on which we built our Huntsville, Alabama manufacturing facility in 2016. The original mortgage note payable was for $14.5 million, of which $10.9 million is outstanding as of September 30, 2018. The payment of principal and interest for the note payable is forgivable if we satisfy certain job commitments over the term of the note. We have met the required commitments to date and expect to comply with the commitments in the future.

Debt, capital lease obligations, notes payable, and the average related interest rates at September 30, 2018 were as follows:

($ 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

Our debt to total capital ratio was 67 percent at September 30, 2018. Additionally, at September 30, 2018, we had letters of credit outstanding of $14.7 million, primarily related to purchase obligations for raw materials.

Share Repurchases

Our Board of Directors has authorized the cumulative repurchase of up to 86.5 million shares of our common stock. Of that total, approximately 82.1 million shares have been repurchased cumulatively from 1996 through September 30, 2018. We repurchased approximately 2.1 million shares of our common stock for $246.9 million during the first nine months of 2018, which had a favorable impact of five cents on earnings per share. We have authorization from our Board of Directors to repurchase up to an additional 4.4 million shares of our common stock as of September 30, 2018. The repurchase of any or all such shares authorized remaining for repurchase will be governed by applicable SEC rules.

Other Financial Arrangements

Polaris Acceptance, a joint venture between Polaris and Wells Fargo Commercial Distribution Finance (“WFCDF”), a direct subsidiary of Wells Fargo Bank, N.A. (“Wells Fargo”), which is supported by a partnership agreement between their respective wholly owned subsidiaries, finances substantially all of our U.S. sales, whereby we receive payment within a few days of shipment of the product. The partnership agreement is effective through February 2022.

Polaris Acceptance sells a majority of its receivables portfolio (the “Securitized Receivables”) to a securitization facility (“Securitization Facility”) arranged by Wells Fargo, a WFCDF affiliate. Polaris Acceptance is not responsible for any continuing servicing costs or obligations with respect to the Securitized Receivables. At September 30, 2018, the outstanding amount of net receivables financed for dealers under this arrangement, including Securitized Receivables, was $1,237.7 million, a seven percent increase from $1,157.4 million at September 30, 2017.

We account for our investment in Polaris Acceptance under the equity method. Polaris Acceptance is funded through equal equity cash investments from the partners and a loan from an affiliate of WFCDF. We do not guarantee the outstanding indebtedness of Polaris Acceptance. The partnership agreement provides that all income and losses of Polaris Acceptance are shared 50 percent by our wholly owned subsidiary and 50 percent by WFCDF’s subsidiary. Our total investment in Polaris

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Acceptance at September 30, 2018 was $88.8 million. Our exposure to losses of Polaris Acceptance is limited to our equity in Polaris Acceptance. Credit losses in the Polaris Acceptance portfolio have been modest, averaging less than one percent of the portfolio.

We have agreed to repurchase products repossessed by Polaris Acceptance up to an annual maximum of 15 percent of the aggregate average month-end outstanding Polaris Acceptance receivables and Securitized Receivables during the prior calendar year. For calendar year 2018, the potential 15 percent aggregate repurchase obligation is approximately $165.0 million. Our financial exposure under this arrangement is limited to the difference between the amount paid to the finance company for repurchases and the amount received on the resale of the repossessed product. No material losses have been incurred under this agreement.

See Note 8 in the Notes to Consolidated Financial Statements for further discussion of Polaris Acceptance.

We have agreements with certain financial institutions, under which these financial institutions provide financing to end consumers of our products in the United States. The income generated from these agreements has been included as a component of income from financial services in the accompanying consolidated statements of income. At September 30, 2018, the agreements in place were as follows:

Financial institution	Agreement expiration date
Performance Finance	December 2021
Sheffield Financial	December 2020
Synchrony Bank	December 2020

Inflation and Foreign Exchange Rates

The changing relationships of the U.S. dollar to the Mexican peso, the Canadian dollar, the Australian dollar, the Euro, the Swiss franc and other foreign currencies have had a material impact from time to time. We actively manage our exposure to fluctuating foreign currency exchange rates by entering into foreign exchange hedging contracts.

Mexican Peso: With increased production at our Monterrey, Mexico facility, our costs in the Mexican peso have continued to increase. We also market and sell to customers in Mexico through a wholly owned subsidiary. Fluctuations in the peso to U.S. dollar exchange rate primarily impact sales, cost of sales, and net income.

Canadian Dollar: We operate in Canada through a wholly owned subsidiary. The relationship of the U.S. dollar in relation to the Canadian dollar impacts both sales and net income.

Other currencies: We operate in various countries, principally in Europe and Australia, through wholly owned subsidiaries. We also sell to certain distributors in other countries. We purchase components from certain suppliers directly for our U.S. operations in transactions denominated in Euros and other foreign currencies. The relationship of the U.S. dollar in relation to these other currencies impacts sales, cost of sales and net income.

At September 30, 2018, we had the following open foreign currency hedging contracts:

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

The assets and liabilities in all our foreign entities are translated at the foreign exchange rate in effect at the balance sheet date. Translation gains and losses are reflected as a component of accumulated other comprehensive loss, net in the shareholders’ equity section of the accompanying consolidated balance sheets. Revenues and expenses in our foreign entities are translated at the average foreign exchange rate in effect for each month of the quarter. Certain assets and liabilities related to intercompany positions reported on our consolidated balance sheet that are denominated in a currency other than the entity’s functional currency are translated at the foreign exchange rates at the balance sheet date and the associated gains and losses are included in net income. We expect currencies to have a slightly favorable impact on net income in 2018 compared to 2017.

We are subject to market risk from fluctuating market prices of certain purchased commodities and raw materials, including steel, aluminum, petroleum-based resins, certain rare earth metals and diesel fuel. In addition, we are a purchaser of

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components and parts containing various commodities, including steel, aluminum, rubber and others, which are integrated into the Company’s end products. While such materials are typically available from numerous suppliers, commodity raw materials are subject to price fluctuations. This includes the effects of new or modified tariffs or penalties on raw materials, commodities, and products manufactured outside of the United States. We generally buy these commodities and components based upon market prices that are established with the vendor as part of the purchase process and from time to time will enter into derivative contracts to hedge a portion of the exposure to commodity risk. At September 30, 2018, we did not have any outstanding commodity derivative contracts in place. Based on our current outlook for commodity prices, the total impact of commodities is expected to have a negative impact on our gross profit margins for 2018 when compared to 2017.

We are a party to a credit agreement with various lenders consisting of a $700.0 million revolving loan facility and a $1,180.0 million term loan facility. Interest accrues on the revolving loan at variable rates based on LIBOR or “prime” plus the applicable add-on percentage as defined. At September 30, 2018, we had an outstanding balance of $74.0 million on the revolving loan facility, and an outstanding balance of $1,165.0 million on the term loan facility.

During the third quarter of 2018, the Company entered into interest rate swap transactions to hedge the variable interest rate payments for the Term Loan Facility. In connection with this transaction, the Company will pay interest based upon a fixed rate and receive variable rate interest payments based on the one-month LIBOR.

Critical Accounting Policies

See our most recent Annual Report on Form 10-K for the year ended December 31, 2017 for a discussion of our critical accounting policies.

Note Regarding Forward Looking Statements

Certain matters discussed in this report are “forward-looking statements” intended to qualify for the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These “forward-looking statements,” including but not limited to the impact of foreign exchange rate movements on sales and net income, and commodity price changes on gross profit margins, can generally be identified as such because the context of the statement will include words such as the Company or management “believes,” “anticipates,” “expects,” “estimates” or words of similar import. Similarly, statements that describe the Company’s future plans, objectives or goals are also forward-looking. Forward-looking statements may also be made from time to time in oral presentations, including telephone, conferences and/or webcasts open to the public. Shareholders, potential investors and others are cautioned that all forward-looking statements involve risks and uncertainties that could cause results in future periods to differ materially from those anticipated by some of the statements made in this report, including the risks and uncertainties described under the heading titled “Item 1A-Risk Factors” appearing in the Company’s Annual Report on Form 10-K for the year ended December 31, 2017 and in this Quarterly Report on Form 10-Q. In addition to the factors discussed above, among the other factors that could cause actual results to differ materially are the following: future conduct of litigation processes; product recalls and warranty expenses; overall economic conditions, including inflation and consumer confidence and spending; interruptions in informal supply arrangements; raw material, commodity and transportation costs; tariffs and other changes to international trade policies; foreign currency exchange rate fluctuations; product offerings, promotional activities and pricing strategies by competitors; disruptions in manufacturing facilities; the ability to provide products that respond to consumer’s needs and preferences; strategic partners’ sensitivity to economic conditions; acquisition integration costs; environmental and product safety regulatory activity; appropriate levels of dealer and distributor relationships; uncertainty in the retail and wholesale credit markets and relationships with Performance Finance, Sheffield Financial and Synchrony Bank; the ability to protect our intellectual property; the ability to manage our international operations; effects of weather; impairment of goodwill or trade names; the ability to comply with our outstanding debt agreements; changes in tax policy; attracting and retaining skilled employees; and disruptions or breaches of information technology systems. The Company does not undertake any duty to any person to provide updates to its forward-looking statements.

Item 3 – QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Refer to the Company’s Annual Report on Form 10-K for the year ended December 31, 2017 for a complete discussion on the Company’s market risk. There have been no material changes in market risk from those disclosed in the Company’s Form 10-K for the year ended December 31, 2017.

Item 4 – CONTROLS AND PROCEDURES

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Evaluation of Disclosure Controls and Procedures

The Company carried out an evaluation, under the supervision and with the participation of the Company’s management, including the Company’s Chief Executive Officer and its Executive Vice President — Finance and Chief Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures (as defined in the Securities Exchange Act of 1934 Rule 13a-15) as of the end of the period covered by this report. Based on that evaluation, the Company’s Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of the period covered by this Quarterly Report on Form 10-Q, the Company’s disclosure controls and procedures were effective to ensure that information required to be disclosed by the Company in reports that it files or submits under the Securities Exchange Act of 1934 is (1) recorded, processed, summarized, and reported within the time periods specified in SEC rules and forms, and (2) accumulated and communicated to the Company’s management, including its Chief Executive Officer and Executive Vice President — Finance and Chief Financial Officer, in a manner that allows timely decisions regarding required disclosure.

Changes in Internal Controls

There have been no changes in the Company’s internal controls over financial reporting during the period covered by this quarterly report on Form 10-Q that have materially affected, or are reasonably likely to materially affect, the Company’s internal controls over financial reporting, except that on July 2, 2018, we completed the acquisition of Boat Holdings.  Prior to the acquisition, Boat Holdings was a privately-held company not subject to the Sarbanes-Oxley Act of 2002, the rules and regulations of the SEC, or other corporate governance requirements to which public companies may be subject.  As part of our ongoing integration activities, we are beginning to incorporate internal controls over significant processes specific to Boat Holdings that we believe are appropriate and necessary to account for the acquisition and to consolidate and report our financial results.  In accordance with guidance issued by the SEC, companies are permitted to exclude acquisitions from their final assessment of internal control over financial reporting during the year of the acquisition.  Accordingly,  we expect to exclude Boat Holdings from the assessment of internal control over financial reporting at December 31, 2018.

Part II OTHER INFORMATION

Item 1 – LEGAL PROCEEDINGS

We are, and from time to time may become, subject to various legal claims or litigation arising in the normal course of business activities, such as intellectual property, commercial and product liability claims, lawsuits, class actions and other legal matters. Generally, such actions seek compensatory or punitive damages, attorneys’ fees, injunctive relief, or a combination thereof. Adverse and/or unexpected developments, settlements, or resolutions may occur. If a potential settlement or resolution is probable and reasonably estimable, we record the estimated liability based on knowledge, circumstances, and assumptions existing at the time. Although the outcome of these matters cannot be predicted with certainty, management does not presently believe that the ultimate resolution of these matters will have a material adverse effect on our financial condition or results of operations.

As of the date hereof, we are party to two putative class actions pending against Polaris in the U.S., both of which were previously reported in our quarterly report filed on July 25, 2018. One putative class action is pending in the United States District Court for the District of Minnesota and arises out of allegations that certain Polaris products suffer from unresolved fire hazards allegedly resulting in economic loss, and is the result of the consolidation of the three putative class actions we reported in our April 26, 2018 quarterly report and that were filed between April 5-10, 2018: James Bruner, Jose Luna, Clint Halvorsrod, Robert Lenz, Michael Zeeck, Chad Rogers, Richard Berens, Steve Bailey, Michael Jacks, Bryan Forrest and Ed Beattie, individually and on behalf of all others similarly situated v. Polaris Industries/Sales Inc. (D. Minn.), June 15, 2018. The second putative class action also is pending in the United States District Court for the District of Minnesota and alleges excessive heat hazards on certain other Polaris products and seeks damages for alleged personal injury and economic loss: Riley Johannesshon, Daniel Badilla, James Kelley, Kevin Wonders, William Bates and James Pinion, individually and on behalf of all others similarly situated v. Polaris Industries (D. Minn.), October 4, 2016. As these proceedings are still in the early stages, we are unable to provide an evaluation of the likelihood that a loss will be incurred or an estimate of the range of possible loss.

Item 1A – RISK FACTORS

Please consider the factors discussed in “Part I, Item 1A. Risk Factors” in our fiscal 2017 Annual Report filed on Form 10-K, “Part II, Item 1A. Risk Factors” in our Form 10-Q for the quarter ended March 31, 2018, and “Part II, Item 1A. Risk Factors” in our Form 10-Q for the quarter ended June 30, 2018. There have been no material changes or additions to our risk factors discussed in such reports, which could materially affect the Company’s business, financial condition, or future results.

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Item 2 – UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

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

(1) The Board of Directors has authorized the cumulative repurchase of up to an aggregate of 86.5 million shares of the Company’s common stock (the “Program”). Of that total, 82.1 million shares have been repurchased cumulatively from 1996 through September 30, 2018. The Program does not have an expiration date.

Item 4 – MINE SAFETY DISCLOSURES

Not applicable.

Item 6 – EXHIBITS

A list of exhibits to this Form 10-Q is set forth on the Exhibit Index and is incorporated herein by reference.

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Exhibit Index

Exhibit Number	Description
2.1	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.
3.a	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.
3.b	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.
4.1	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.
4.f	Third Amendment to Master Note Purchase Agreement, as Supplemented by the First Supplement to the Master Note Amendment, effective as of July 31, 2018
10.1	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.
31.a	Certification of Chief Executive Officer required by Exchange Act Rule 13a-14(a).
31.b	Certification of Chief Financial Officer required by Exchange Act Rule 13a-14(a).
32.a	Certification furnished pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.b	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.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

		POLARIS INDUSTRIES INC. (Registrant)
Date:	October 24, 2018	/s/ SCOTT W. WINE
		Scott W. Wine Chairman and Chief Executive Officer (Principal Executive Officer)
Date:	October 24, 2018	/s/ MICHAEL T. SPEETZEN
		Michael T. Speetzen Executive Vice President — Finance and Chief Financial Officer (Principal Financial and Chief Accounting Officer)

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EX-4.F

EXECUTION COPY

POLARIS INDUSTRIES INC.

THIRD AMENDMENT

TO MASTER NOTE PURCHASE AGREEMENT,

AS SUPPLEMENTED BY THE FIRST SUPPLEMENT TO

MASTER NOTE PURCHASE AGREEMENT

$75,000,000 4.60% Senior Notes, Series 2011, Tranche B, due May 3, 2021

$100,000,000 3.13% Senior Notes, Series 2013, due December 21, 2020

Dated as of July 31, 2018

To the Holders (as defined below) of

the above-referenced Notes named in

the attached Schedule I

Reference is made to the Master Note Purchase Agreement dated as of December 13, 2010, between Polaris Industries Inc., a Minnesota corporation (the “Company”), and each of the Purchasers named in Schedule A thereto pursuant to which the Company issued and sold $100,000,000 aggregate principal amount of Senior Notes (the “2011 Senior Notes”), as amended by that certain First Amendment to Master Note Purchase Agreement dated as of August 19, 2011 and that certain Second Amendment to Master Note Purchase Agreement dated as of December 28, 2016, and as supplemented by that certain First Supplement to Master Note Purchase Agreement, dated as of December 19, 2013, between the Company and each of the Purchasers named in Schedule A thereto, pursuant to which the Company issued and sold $100,000,000 aggregate principal amount of Senior Notes (the “2013 Senior Notes” and, together with the 2011 Senior Notes, the “Notes”), as amended by that certain First Amendment to First Supplement to Master Note Purchase Agreement, dated as of February 24, 2014 (collectively, the “Note Agreement”). You are referred to in this Third Amendment to Master Note Purchase Agreement (this “Third Amendment”) individually as a “Holder” and collectively as the “Holders.” Capitalized terms used and not otherwise defined herein shall have the meanings ascribed to them in the Note Agreement, as amended by this Third Amendment.

The Company has requested the modification of Section 1.4, Section 8.2(a), Section 10.1 and Section 22.3 of the Note Agreement; the modification of the definition for “EBITDA” in Schedule B of the Note Agreement; and the addition of the definition for “Elevated Leverage Period” to Schedule B of the Note Agreement. The Holders have agreed to modify the Note Agreement on the terms and conditions set forth herein.

In consideration of the premises and for good and valuable consideration, the receipt and sufficiency of which are acknowledged, the Company and the Holders agree as follows:

1. AMENDMENT TO NOTE AGREEMENT

a.Amendment of Section 1.4. A new Section 1.4 is added to the Note Agreement to read in its entirety as follows:

“1.4 Additional Interest.

If the Leverage Ratio exceeds 3.00 to 1.00 as of the date of any fiscal quarter end pursuant to the terms of Section 10.1, as evidenced by an Officer’s Certificate delivered pursuant to Section 7.2(a), the interest rate payable on the Notes shall be increased by (i) 0.25% for any period that the Leverage Ratio exceeds 3.00 to 1.00 but is less than or equal to 3.50 to 1.00 and (ii) 0.75% for any period that the Leverage Ratio exceeds 3.50 to 1.00 (collectively clauses (i) and (ii), the “Incremental Interest”) for a period of time determined as follows: (a) such Incremental Interest shall begin to accrue on the first day of the fiscal quarter following the fiscal quarter in respect of which such Officer’s Certificate was delivered, and (b) shall continue to accrue until the Company has provided an Officer’s Certificate pursuant to Section 7.2(a) demonstrating that, as of the last day of the fiscal quarter in respect of which such Certificate is delivered, the Leverage Ratio is not more than 3.00 to 1.00, and in the event such Officer’s Certificate is delivered, the Incremental Interest shall cease to accrue on the last day of the fiscal quarter in respect of which such Certificate is delivered. For the avoidance of doubt, (i) if the Leverage Ratio exceeds 3.00 to 1.00 as of the last day of a fiscal quarter, Incremental Interest shall accrue as provided in this Section 1.4 regardless of whether an Officer’s Certificate is delivered pursuant to Section 7.2(a) and (ii) in no event shall the Incremental Interest for any period exceed 0.75%.”

b.Amendment of Section 7.2.

(i)Section 7.2(a) of the Note Agreement is amended to read in its entirety as follows:

“(a) Covenant Compliance -- the information (including detailed calculations and reconciliations to GAAP in the event of a change in the treatment of operating leases under GAAP) required in order to establish whether the Company was in compliance with the requirements of Section 10.1 through Section 10.9, inclusive, during the quarterly or annual period covered by the statements then being furnished (including with respect to each such Section, where applicable, the calculations of the maximum or minimum amount, ratio or percentage, as the case may be, permissible under the terms of such Sections, and the calculation of the amount, ratio or percentage then in existence). In the event that the Company or any Subsidiary has made an election to measure any financial liability using fair value (which election is being disregarded for purposes of determining compliance with this Agreement pursuant to Section 22.3) as to the period covered by any such financial statement, such Senior Financial Officer’s certificate as to such period shall include a reconciliation from GAAP with respect to such election.”

(ii)A new Section 7.2(c) is added to the Note Agreement to read in its entirety as follows:

“(c) Subsidiary Guarantors -- a list of all Subsidiaries that are Subsidiary Guarantors and certifying that each Subsidiary that is required to be a Subsidiary Guarantor pursuant to Section

9.7 is a Subsidiary Guarantor, in each case, as of the date of such certificate of Senior Financial Officer.”

c.Amendment of Section 8.2(a). The following sentence is added at the end of Section 8.2(a):

“For the avoidance of doubt, any Make-Whole Amount determination pursuant to this Section 8.2(a) shall exclude any Incremental Interest.”

d.Amendment of Section 10.1. Section 10.1 of the Note Agreement is amended to read in its entirety as follows:

“10.1 Leverage Ratio.

The Company will not permit the Leverage Ratio, as of the last day of each fiscal quarter of the Company, to be more than 3.50 to 1.00; provided that, upon notice by the Company to the holders of Notes, as of the last day of each of the four consecutive fiscal quarters beginning with and including the fiscal quarter in which a Qualified Acquisition is consummated (each such period, an “Elevated Leverage Period”), the Leverage Ratio may be greater than 3.50 to 1.00, but in no event greater than 4.00 to 1.00; provided that it is understood and agreed that (i) the Company may not permit the Leverage Ratio to be more than 3.50 to 1.00 until there has been at least two complete fiscal quarters since the last Elevated Leverage Period ended; (ii) there shall not be more than three Elevated Leverage Periods during the term of this Agreement and the Notes; and (iii) if the Leverage Ratio, as of the last day of any fiscal quarter of the Company exceeds 3.00 to 1.00, the Company shall pay Incremental Interest to the extent required by Section 1.4.”

e.Amendment to Section 22.3.

“22.3 Accounting Matters. All accounting terms used herein which are not expressly defined in this Agreement have the meanings respectively given to them in accordance with GAAP. Except as otherwise specifically provided herein, (i) all computations made pursuant to this Agreement shall be made in accordance with GAAP, and (ii) all financial statements shall be prepared in accordance with GAAP; provided, however, that in the event of a change in the treatment of operating leases under GAAP (e.g. adoption of ASC 842), all lease liabilities and right of use assets related to operating leases shall be excluded from all calculations thereafter made for the purpose of determining compliance with the financial ratios and financial covenants contained herein. If at any time any change in GAAP would affect the computation of any financial ratio or requirement set forth in this Agreement, and the Company or the Required Holders shall so request, the Company and the holders shall negotiate in good faith to amend such ratio or requirement to preserve the original intent thereof in light of such change in GAAP (subject to the approval of the Required Holders); provided, that, until so amended, such ratio or requirement shall continue to be computed in accordance with GAAP prior to such change therein and the Company shall provide to the requisite holders reconciliation statements showing the difference in such calculation, together with the delivery of quarterly and annual financial statements required under Sections 7.1(a) and 7.1(b) hereunder. In addition, notwithstanding any other provision contained herein, the definitions set forth in this Agreement and any financial calculations required by this Agreement shall be computed to exclude any change to lease accounting rules from those in effect pursuant to Financial Accounting Standards Board Accounting Standards Codification 840 (Leases) and other related lease accounting guidance as in effect on the date hereof. For purposes of

determining compliance with this Agreement (including Section 9, Section 10 and the definition of “Indebtedness”), any election by the Company to measure any financial liability using fair value (as permitted by Financial Accounting Standards Board Accounting Standards Codification Topic No. 825-10-25 - Fair Value Option, International Accounting Standard 39 - Financial Instruments: Recognition and Measurement or any similar accounting standard) shall be disregarded and such determination shall be made as if such election had not been made.”

f.Amendments to Schedule B. Schedule B of the Note Agreement is amended as follows:

i.The following new definition is added to Schedule B in the appropriate alphabetical order:

“Elevated Leverage Period” is defined in Section 10.1.

ii.The following definition in Schedule B is amended and restated in its entirety as follows:

“EBITDA” means, for any period, the sum of Net Income for such period (excluding the effect of any extraordinary or other non-recurring gains or losses (including any gain or loss from the sale of property)) plus, to the extent deducted in determining such Net Income (excluding the effect of any extraordinary or other non-recurring gains or losses (including any gain or loss from the sale of property)), (i) federal, state, local and foreign income, value added and similar taxes, (ii) Consolidated Interest Expense, (iii) depreciation and amortization expense and (iv) other non-cash charges. If, during the period for which EBITDA of the Company is being calculated, the Company or any Subsidiary has (i) acquired sufficient Equity Interests of a Person to cause such Person to become a Subsidiary; (ii) acquired all or substantially all of the assets or operations, division or line of business of a Person; or (iii) disposed of one or more Subsidiaries (or disposed of all or substantially all of the assets or operations, division or line of business of a Subsidiary or other person), EBITDA shall be calculated after giving pro forma effect thereto as if all of such acquisitions and dispositions had occurred on the first day of such period.

“Qualified Acquisition” means any acquisition of either or both the capital stock or assets of any Person or Persons (or any portion thereof) that involves the payment of consideration (including, without limitation, the assumption of Indebtedness) by the Company and/or its Subsidiaries in excess of $250,000,000.

2. REAFFIRMATION; AUTHORIZATION

a.Reaffirmation of Note Agreement. The Company reaffirms its agreement to comply with each of the covenants, agreements, and other provisions of the Note Agreement and the Notes, including the amendments of such provisions effected by this Third Amendment.

b.No Default or Event of Default. There currently exists, and after giving effect to this Third Amendment there will exist, no Default or Event of Default.

c.Authorization. The execution, delivery, and performance by the Company of this Third Amendment have been duly authorized by all necessary corporate action and, except as provided herein, do not require any registration with, consent or approval of, notice to or any action by, any Person (including any Governmental Authority) in order to be effective and enforceable. The Note

Agreement and this Third Amendment each constitute the legal, valid, and binding obligations of the Company, enforceable in accordance with their respective terms, except as such enforceability may be limited by (i) applicable bankruptcy, insolvency, reorganization, moratorium, or other similar laws affecting the enforcement of creditors’ rights generally and (ii) general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law).

d.Section 5 of the Note Agreement. The Company represents and warrants that the representations and warranties contained in Section 5 of the Note Agreement are true and correct as of the date hereof, except (i) to the extent that any of such representations and warranties specifically relate to an earlier date, (ii) for such changes, facts, transactions, and occurrences that have arisen since December 28, 2016 in the ordinary course of business, and (iii) for other changes that could not reasonably be expected to have a Material Adverse Effect.

3. EFFECTIVE DATE

This Third Amendment shall become effective as of the date set forth above upon the satisfaction of the following conditions:

a.Consent of Holders to this Third Amendment. The execution by the Holders of 100% of the aggregate principal amount of the Notes outstanding and receipt by the Holders of a counterpart of this Third Amendment duly executed by the Company.

b.Acknowledgment of Subsidiary Guarantors. Each Subsidiary Guarantor shall have acknowledged this Amendment by executing the signature page hereto.

c.Expenses. The Company shall have paid all fees and expenses of Foley & Lardner LLP, special counsel to the Holders.

d.Amendment Fee.  Each Holder shall have received payment of an amendment fee equal to 0.05% of the principal amount of the outstanding Notes held by such Holder.

4.MISCELLANEOUS

a.Ratification. The Note Agreement, as amended hereby, shall remain in full force and effect and is ratified, approved, and confirmed in all respects.

b.Reference to and Effect on the Note Agreement. Upon the final effectiveness of this Third Amendment, each reference in the Note Agreement and in other documents describing or referencing the Note Agreement to the “Agreement,” “Note Agreement,” “hereunder,” “hereof,” “herein,” or words of like import referring to the Note Agreement, shall mean and be a reference to the Note Agreement, as amended hereby.

c.Binding Effect. This Third Amendment shall be binding upon and inure to the benefit of the respective successors and assigns of the parties hereto.

d.Governing Law. This Third Amendment shall be governed by and construed in accordance with New York law, excluding choice-of-law principles of the law of such State that would require the application of the laws of a jurisdiction other than such State.

e.Counterparts. This Third Amendment may be executed in any number of counterparts, each executed counterpart constituting an original, but altogether only one instrument.

[Remainder of page intentionally left blank]

IN WITNESS WHEREOF, the Company and the Holders have caused this Third Amendment to be executed and delivered by their respective officer or officers thereunto duly authorized.

POLARIS INDUSTRIES INC.

By:     /s/ Michael T. Speetzen                

Name:Michael T. Speetzen

Title: Executive Vice President-Finance and Chief Financial Officer

VOYA RETIREMENT INSURANCE AND ANNUITY COMPANY (f/k/a ING Life Insurance and Annuity Company)

RELIASTAR LIFE INSURANCE COMPANY

RELIASTAR LIFE INSURANCE COMPANY OF NEW YORK

SECURITY LIFE OF DENVER INSURANCE COMPANY

By: Voya Investment Management LLC, as Agent

By:/s/ Justin Stach

Name: Justin Stach

Title: Vice President

VOYA INSURANCE AND ANNUITY COMPANY (f/k/a ING USA Annuity and Life Insurance Company)

By:/s/ Justin Stach

Name: Justin Stach

Title: Vice President

VOYA INSURANCE AND ANNUITY COMPANY (F/K/A ING USA ANNUITY AND LIFE INSURANCE COMPANY)

By: Athene Asset Management LLC, its investment adviser

By: /s/ Roger D. Fors

Name: Roger D. Fors

Title: Senior Vice President, Fixed Income

RELIASTAR LIFE INSURANCE COMPANY

By: Voya Investment Management LLC, its investment adviser

By: Athene Asset Management LLC, its sub-adviser

By:/s/ Roger D. Fors

Name: Roger D. Fors

Title: Senior Vice President, Fixed Income

THE PRUDENTIAL INSURANCE COMPANY OF AMERICA

By:

Name:

Title:

PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY

By:

Name:

Title:

GIBRALTAR LIFE INSURANCE CO., LTD.

By: Prudential Investment Management (Japan), Inc.,

as Investment Manager

By: Prudential Investment Management, Inc.,

as Sub-Adviser

By:

Name:

Title:

MTL INSURANCE COMPANY

By: Prudential Private Placement Investors, L.P.

(as Investment Advisor)

By: Prudential Private Placement Investors, Inc.

(as its General Partner)

By:

Name:

Title:

BCBSM, INC. DBA BLUE CROSS AND BLUE SHIELD OF MINNESOTA

By: Prudential Private Placement Investors, L.P.

(as Investment Advisor)

By: Prudential Private Placement Investors, Inc.

(as its General Partner)

By:

Name:

Title:

MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY

By: Barings LLC, as Investment Adviser

By: /s/ John B. Wheeler

Name: John B. Wheeler

Title: Managing Director

THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY

By:     Northwestern Mutual Investment

Management Company, LLC,

its investment adviser

By: /s/Michael H. Leske    

Name: Michael H. Leske

Title: Managing Director

ALLIANZ GLOBAL RISKS US INSURANCE COMPANY

By: Allianz Global Investors U.S. LLC,

as the authorized signatory and investment manager

By: /s/ Charles Dudley

Name: Charles Dudley

Title: Managing Director

FIREMAN’S FUND INSURANCE COMPANY

By: Allianz Global Investors U.S. LLC,

as the authorized signatory and investment manager

By: /s/ Charles Dudley

Name: Charles Dudley

Title: Managing Director

AMERICAN UNITED LIFE INSURANCE COMPANY

By: s/ Michael Bullock    

Name: Michael Bullock

Title: VP, Private Placements

THE PHOENIX INSURANCE COMPANY

By: /s/ David D. Rowland        

Name: David D. Rowland

Title: Executive Vice President

Each of the undersigned Subsidiary Guarantors acknowledges the foregoing Third Amendment to Note Agreement.

POLARIS ACCEPTANCE INC.

POLARIS INDUSTRIES INC. [DE]

POLARIS SALES INC.

INDIAN MOTORCYCLE COMPANY

INDIAN MOTORCYCLE INTERNATIONAL, LLC

TAP AUTOMOTIVE HOLDINGS, LLC

TETON OUTFITTERS, LLC

POLARIS DIRECT INC.

INDIAN MOTORCYCLE USA LLC

By: /s/ Michael T. Speetzen    

Michael T. Speetzen,

Vice President-Finance, Chief Financial Officer and Treasurer

NORTH 54 INSURANCE, INC.

By: /s/ Michael T. Speetzen    

Michael T. Speetzen, President

POLARIS SALES EUROPE INC.

BOAT HOLDINGS, LLC

PONTOON BOAT, LLC

HIGHWATER MARINE LLC

By: s/ Michael T. Speetzen    

Michael T. Speetzen,

Vice President and Treasurer

Schedule I

SCHEDULE I

4.60% Senior Notes, Series 2011, Tranche B, due May 3, 2021

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

3.13% Senior Notes, Series 2013, due December 21, 2020

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

EX-31.A

EXHIBIT 31.a

I, Scott W. Wine, certify that:

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/ SCOTT W. WINE

Scott W. Wine

Chairman and Chief Executive Officer

Date: October 24, 2018

EX-31.B

EXHIBIT 31.b

I, Michael T. Speetzen, certify that:

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/ MICHAEL T. SPEETZEN

Michael T. Speetzen

Executive Vice President — Finance

and Chief Financial Officer

Date: October 24, 2018

EX-32.A

Exhibit 32.a

POLARIS INDUSTRIES INC.

STATEMENT PURSUANT TO 18 U.S.C. §1350

I, Scott W. Wine, Chief Executive Officer of Polaris Industries Inc., a Minnesota corporation (the “Company”), hereby certify as follows:

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.

Date: October 24, 2018

/s/ SCOTT W. WINE

Scott W. Wine

Chairman and Chief Executive Officer

A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to Polaris Industries Inc. and will be retained by Polaris Industries Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

EX-32.B

Exhibit 32.b

POLARIS INDUSTRIES INC.

STATEMENT PURSUANT TO 18 U.S.C. §1350

I, Michael T. Speetzen, Executive Vice President — Finance and Chief Financial Officer of Polaris Industries Inc., a Minnesota corporation (the “Company”), hereby certify as follows:

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.

Date: October 24, 2018

/s/ MICHAEL T. SPEETZEN

Michael T. Speetzen

Executive Vice President — Finance

and Chief Financial Officer

A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to Polaris Industries Inc. and will be retained by Polaris Industries Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

XML

Document and Entity Information - shares	9 Months Ended
	Sep. 30, 2018	Oct. 17, 2018
Document and Entity Information [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Sep. 30, 2018
Document Fiscal Year Focus	2018
Document Fiscal Period Focus	Q3
Trading Symbol	PII
Entity Registrant Name	POLARIS INDUSTRIES INC/MN
Entity Central Index Key	0000931015
Current Fiscal Year End Date	--12-31
Entity Current Reporting Status	Yes
Entity Filer Category	Large Accelerated Filer
Entity Emerging Growth Company	false
Entity Small Business	false
Entity Common Stock, Shares Outstanding		61,780,602

XML

Consolidated Balance Sheets - USD ($) $ in Thousands	Sep. 30, 2018	Dec. 31, 2017
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
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	0	0
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

XML

Consolidated Balance Sheets (Parenthetical) - $ / shares	Sep. 30, 2018	Dec. 31, 2017
Statement of Financial Position [Abstract]
Preferred stock, par value (in dollars per share)	$ 0.01	$ 0.01
Preferred stock, shares authorized	20,000,000	20,000,000
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0
Common stock, par value (in dollars per share)	$ 0.01	$ 0.01
Common stock, shares authorized	160,000,000	160,000,000
Common stock, shares issued	61,773,000	63,075,000
Common stock, shares outstanding	61,773,000	63,075,000

XML

Consolidated Statements Of Income - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
Sales	$ 1,651,415	$ 1,478,726	$ 4,451,420	$ 3,997,428
Cost of Goods and Services Sold	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
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
Basic net income per share (in dollars per share)	$ 1.54	$ 1.31	$ 3.88	$ 2.24
Diluted net income per share (in dollars per share)	$ 1.50	$ 1.28	$ 3.78	$ 2.21
Weighted average shares outstanding:
Basic (in shares)	62,207	62,646	62,894	62,890
Diluted (in shares)	63,546	63,885	64,550	63,942
Income from financial services
Sales	$ 21,348	$ 18,138	$ 64,117	$ 57,711

XML

Consolidated Statements Of Comprehensive Income - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
Statement of Comprehensive Income [Abstract]
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)
Other Comprehensive (Income) Loss, Defined Benefit Plan, after Reclassification Adjustment, after Tax	66	0	196	0
Comprehensive income	$ 95,288	$ 92,327	$ 234,878	$ 180,852

XML

Consolidated Statements Of Cash Flows - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2018	Sep. 30, 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)
Total	$ 161,618	$ 145,170

XML

Significant Accounting Policies

9 Months Ended

Sep. 30, 2018

Accounting Policies [Abstract]

Significant Accounting Policies

Significant Accounting Policies

Basis of presentation. The accompanying unaudited consolidated financial statements of Polaris Industries Inc. (“Polaris” or the “Company”) have been prepared in accordance with accounting principles generally accepted in the United States for interim financial statements and, therefore, do not include all information and disclosures of results of operations, financial position and changes in cash flow in conformity with accounting principles generally accepted in the United States for complete financial statements. Accordingly, such statements should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended December 31, 2017 previously filed with the Securities and Exchange Commission (“SEC”). In the opinion of management, such statements reflect all adjustments (which include only normal recurring adjustments) necessary for a fair presentation of the financial position, results of operations, and cash flows for the periods presented. Due to the seasonality trends for certain products and to certain changes in production and shipping cycles, results of such periods are not necessarily indicative of the results to be expected for the complete year.

Fair value measurements. Fair value is the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Assets and liabilities measured at fair value are classified using the following hierarchy, which is based upon the transparency of inputs to the valuation as of the measurement date:

Level  1 — Quoted prices in active markets for identical assets or liabilities.

Level  2 — Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

Level 3 — Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

In making fair value measurements, observable market data must be used when available. When inputs used to measure fair value fall within different levels of the hierarchy, the level within which the fair value measurement is categorized is based on the lowest level input that is significant to the fair value measurement. The Company utilizes the market approach to measure fair value for its non-qualified deferred compensation assets and liabilities, and the income approach for foreign currency contracts, interest rate contracts, and commodity contracts. The market approach uses prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities, and for the income approach, the Company uses significant other observable inputs to value its derivative instruments used to hedge foreign currency, interest rate, and commodity transactions.

Assets and liabilities measured at fair value on a recurring basis are summarized below (in thousands):

	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	)	$	—

Fair value of other financial instruments. The carrying values of the Company’s short-term financial instruments, including cash and cash equivalents, trade receivables and short-term debt, including current maturities of long-term debt, capital lease obligations and notes payable, approximate their fair values. At September 30, 2018 and December 31, 2017, the fair value of the Company’s long-term debt, capital lease obligations and notes payable was approximately $1,901,307,000 and $922,123,000, respectively, and was determined using Level 2 inputs, including quoted market prices or discounted cash flows based on quoted market rates for similar types of debt. The carrying value of long-term debt, capital lease obligations and notes payable including current maturities was $1,864,327,000 and $913,012,000 as of September 30, 2018 and December 31, 2017, respectively.

Inventories. Inventory costs include material, labor and manufacturing overhead costs, including depreciation expense associated with the manufacture and distribution of the Company’s products. Inventories are stated at the lower of cost (first-in, first-out method) or net realizable value. The major components of inventories are as follows (in thousands):

	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

Product warranties. Polaris provides a limited warranty for its vehicles and boats for a period of six months to ten years, depending on the product. Polaris provides longer warranties in certain geographical markets as determined by local regulations and market conditions and may also provide longer warranties related to certain promotional programs. Polaris’ standard warranties require the Company or its dealers to repair or replace defective products during such warranty periods at no cost to the consumer. The warranty reserve is established at the time of sale to the dealer or distributor based on management’s best estimate using historical rates and trends. Adjustments to the warranty reserve are made from time to time as actual claims become known in order to properly estimate the amounts necessary to settle future and existing claims on products sold as of the balance sheet date. Factors that could have an impact on the warranty accrual in any given period include the following: change in manufacturing quality, shifts in product mix, changes in warranty coverage periods, snowfall and its impact on snowmobile usage, product recalls and any significant changes in sales volume. The activity in the warranty reserve during the periods presented was as follows (in thousands):

	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

New accounting pronouncements.

Revenue from contracts with customers. Effective January 1, 2018, the Company adopted ASU No. 2014-09, Revenue from Contracts with Customers, ASU 2016-08, Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net), and ASU 2016-12, Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients using the modified retrospective approach. The adoption of these ASUs did not have a material impact on the Company’s consolidated financial position, results of operations, equity or cash flows as of the adoption date or for the three or nine months endedSeptember 30, 2018. The Company has included the disclosures required by ASU 2014-09 in Note 2.

Statement of cash flows. During the first quarter of 2018, the Company adopted ASU No. 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash, which requires that restricted cash be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. Prior periods were retrospectively adjusted to conform to the current period’s presentation. As a result of the adoption of ASU 2016-18, the Company recorded an increase of $2,631,000 in net cash provided by operating activities for the nine months endedSeptember 30, 2017 related to reclassifying the changes in our restricted cash balance from operating activities to the cash and cash equivalent balances within the Consolidated Statements of Cash Flows.

Leases. In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842). This ASU requires most lessees to recognize right of use assets and lease liabilities, but recognize expenses in a manner similar with current accounting standards. The standard is effective for fiscal years and interim periods beginning after December 15, 2018 and is effective for the Company’s fiscal year beginning January 1, 2019. Early adoption is permitted. Entities are required to use a modified retrospective approach, with an option to apply the transition provisions of the new standard at its adoption date instead of at the earliest comparative period presented. The Company plans to use a modified retrospective approach and apply the transition provisions at the adoption date. The Company developed a project plan to guide the implementation of ASU 2016-02. The Company made progress on this plan including surveying the Company’s businesses, assessing the Company’s portfolio of leases, compiling information on active leases, and selecting a lease accounting software. The Company is currently identifying and implementing appropriate changes to its policies, business processes, systems and controls to support lease accounting and disclosures under Topic 842. The Company does not expect that its results of operations or cash flows will be materially impacted by this standard. The Company expects to record right of use assets and lease liabilities on its consolidated balance sheets upon adoption of this standard, which may be material.

Derivatives and hedging. In August 2017, the FASB issued ASU No. 2017-12, Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities. This ASU better aligns accounting rules with a company’s risk management activities; better reflects economic results of hedging in financial statements; and simplifies hedge accounting treatment. The standard is effective for fiscal years and interim periods beginning after December 15, 2018 and is effective for the Company’s fiscal year beginning January 1, 2019, with early adoption permitted. The Company is evaluating the impact of this new standard on the financial statements.

Non-employee share-based payments. In June 2018, the FASB issued ASU No. 2018-07, Compensation - Stock Compensation (Topic 718): Improvements to Non-employee Share-based Payment Accounting. The amendments of this ASU apply to all share-based payment transactions to non-employees, in which a grantor acquires goods or services to be used or consumed in a grantor’s own operations, accounted for under ASC 505-50, Equity-Based Payments to Non-Employees. Under the amendments of ASU 2018-07, most of the guidance on compensation to nonemployees would be aligned with the requirements for shared based payments granted to employees in Topic 718. The standard is effective for fiscal years and interim periods beginning after December 15, 2018 and is effective for the Company’s fiscal year beginning January 1, 2019, with early adoption permitted. The Company is evaluating the impact of this new standard on the financial statements.

Income Taxes. The Tax Cuts and Jobs Act (the “Act”) was enacted on December 22, 2017. The Act reduces the U.S. federal corporate tax rate from 35% to 21%, requires companies to pay a one-time transition tax on earnings of certain foreign subsidiaries that were previously tax deferred and creates new taxes on certain foreign-sourced earnings.  

The Company has applied the guidance in ASU 2018-05, Income Taxes (Topic 740): Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 118, when accounting for the enactment-date effects of the Act. At September 30, 2018, the Company has not completed its accounting for the tax effects of the Act, as the Company is in the process of analyzing certain aspects of the Act, obtaining information, and refining its calculations of the Act’s impact. There have been no material measurement period adjustments made during the three and nine months endedSeptember 30, 2018 related to the provisional amounts recorded and disclosed in the Company’s fiscal 2017 Annual Report filed on Form 10-K.  The Company expects to complete the accounting for the tax effects of the Act during 2018.

There are no other new accounting pronouncements that are expected to have a significant impact on the Company’s consolidated financial statements.

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Revenue Recognition (Notes)

9 Months Ended

Sep. 30, 2018

Revenue Recognition [Abstract]

Revenue Recognition, Sales of Goods [Policy Text Block]

Note 2. Revenue Recognition

The following tables disaggregate the Company’s revenue by major product type and geography (in thousands):

	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

Revenue is recognized when obligations under the terms of a contract with the Company’s customer are satisfied which generally occurs with the transfer of control of the wholegood vehicles, parts, garments or accessories, and upon completion of the service or over the term of the agreement in proportion to the costs expected to be incurred in satisfying the obligations under the contract, for services. Revenue is measured as the amount of consideration the Company expects to receive in exchange for transferring goods or providing services. Sales, value add, and other taxes the Company collects concurrent with revenue-producing activities are excluded from revenue. Incidental items that are immaterial in the context of the contract are recognized as expense. The expected costs associated with the Company’s limited warranties and field service bulletin actions continue to be recognized as expense when the products are sold. The Company recognizes revenue for vehicle service contracts that extend mechanical and maintenance beyond the Company’s limited warranties over the life of the contract.

ORV/Snowmobiles, Motorcycles and Global Adjacent Markets segments

Wholegood vehicles and parts, garments and accessories. For the majority of wholegood vehicles, parts, garments and accessories (PG&A), the Company transfers control and recognizes a sale when it ships the product from its manufacturing facility, distribution center, or vehicle holding center to its customer (primarily dealers and distributors). The amount of consideration the Company receives and revenue it recognizes varies with changes in marketing incentives and returns it offers to its dealers and their customers. Sales returns are not material. The Company adjusts its estimate of revenue at the earlier of when the most likely amount of consideration it expects to receive changes or when the consideration becomes fixed.

Depending on the terms of the arrangement, the Company may also defer the recognition of a portion of the consideration received because it has to satisfy a future obligation (e.g., free extended service contracts). The Company uses an observable price to determine the stand-alone selling price for separate performance obligations. The Company has elected to recognize the cost for freight and shipping when control over vehicles, parts, garments or accessories has transferred to the customer as an expense in Cost of sales.

Extended Service Contracts. The Company sells separately-priced service contracts that extend mechanical and maintenance coverages beyond its base limited warranty agreements to vehicle owners. The separately priced service contracts range from 12 months to 84 months. The Company primarily receives payment at the inception of the contract and recognizes revenue over the term of the agreement in proportion to the costs expected to be incurred in satisfying the obligations under the contract.

Aftermarket segment

The Company’s Aftermarket products are sold through dealer, distributor, retail, and e-commerce channels. The Company transfers control and recognizes a sale when products are shipped or delivered to its customer. The amount of consideration the Company receives and revenue it recognizes varies with changes in marketing incentives and return rights it offers to its customers and their customers. When the Company gives its customers the right to return eligible parts and accessories, it estimates the expected returns based on an analysis of historical experience. The Company adjusts its estimate of revenue at the earlier of when the most likely amount of consideration it expects to receive changes or when the consideration becomes fixed.

Service revenue. At the Company’s Transamerican Auto Parts (“TAP”) retail stores (4 Wheel Parts), it offers installation services for parts that the retail store sells. Service revenues are recognized upon completion of the service.

Depending on the terms of the arrangement, the Company may also defer the recognition of a portion of the consideration received because it has to satisfy a future obligation (e.g., extended service contracts). The Company uses an observable price to determine the stand-alone selling price for separate performance obligations. The Company has elected to recognize the cost for freight and shipping when control over parts, garments or accessories has transferred to the customer as an expense in cost of sales.

Boats segment

Boats. For the majority of boats, the Company transfers control and recognizes a sale when it ships the product from its manufacturing facility or distribution center to its customer (primarily dealers). The amount of consideration the Company receives and revenue it recognizes varies with changes in marketing incentives and returns it offers to its dealers and their customers. Sales returns are not material. The Company adjusts its estimate of revenue at the earlier of when the most likely amount of consideration it expects to receive changes or when the consideration becomes fixed. The Company has elected to recognize the cost for freight and shipping when control over boats has transferred to the customer as an expense in cost of sales.

Deferred revenue

In 2016, Polaris began financing its self-insured risks related to extended service contracts (“ESCs”). The premiums for ESCs are primarily recognized in income in proportion to the costs expected to be incurred over the contract period. Warranty costs are recognized as incurred. Revenues related to sales of its extended warranty program and related accrued costs for claims are deferred and amortized over the warranty period, generally five years, while warranty administrative costs are recognized as incurred. TAP recognizes revenues related to sales of its extended warranty programs for tires and other products over the term of the warranty period, which varies from two to five years.

At January 1, 2018, $45,760,000 of unearned revenue associated with outstanding contracts was reported in other current liabilities and other long-term liabilities. At September 30, 2018, the unearned amount was $55,586,000. The Company expects to recognize approximately $23,893,000 of the unearned amount over the next 12 months and $31,693,000 thereafter. The activity in the deferred revenue reserve during the periods presented was as follows (in thousands):

	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

(1) The unamortized ESC premiums (deferred revenue) recorded in other current liabilities totaled $23,893,000 and $16,045,000 at September 30, 2018 and 2017, respectively, while the amount recorded in other long-term liabilities totaled $31,693,000 and $23,975,000 at September 30, 2018 and 2017, respectively.

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Acquisitions

9 Months Ended

Sep. 30, 2018

Business Combinations [Abstract]

Acquisitions

Acquisitions

2018 Acquisitions.

Boat Holdings, LLC

On July 2, 2018, pursuant to the Agreement and Plan of Merger dated May 29, 2018, the Company completed the acquisition of Boat Holdings, LLC, a privately held Delaware limited liability company, headquartered in Elkhart, Indiana which manufactures boats (“Boat Holdings”).

The transaction was structured as an acquisition of 100% of the outstanding equity interests in Boat Holdings for aggregate consideration of $806,658,000, net of cash acquired, subject to customary adjustments based on, among other things, the amount of cash, debt and working capital in the business of Boat Holdings at the closing date. A portion of the aggregate consideration equal to $100,000,000 will be paid in the form of a series of deferred annual payments over 12 years following the closing date.

The Company funded the purchase price for the acquisition by amending, extending, and up-sizing the Credit Facility and with the proceeds of the issuance of 4.23% Senior Notes, Series 2018, due July 3, 2028, described in Note 5.

The consolidated statements of income for both the three and nine months ended September 30, 2018 include $134,321,000 of net sales and $20,253,000 of gross profit related to Boats.

The following table summarizes the preliminary fair values assigned to the Boat Holdings net assets acquired and the determination of net assets (in thousands):

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

On the acquisition date, amortizable intangible assets had a weighted-average useful life of approximately 19 years. The customer relationships were valued based on the Discounted Cash Flow Method and are amortized over 15-20 years, depending on the customer class. The trademarks and trade names were valued on the Relief from Royalty Method and have indefinite remaining useful lives. Goodwill is deductible for tax purposes.

The following unaudited pro forma information represents the Company’s results of operations as if the fiscal 2018 acquisition of Boat Holdings had occurred at the beginning of fiscal 2017 (in thousands, except per share data).

	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

The results for the quarter and year-to-date periods ended September 30, 2018 and 2017 have been adjusted to include the pro forma impact of amortization of intangible assets and the depreciation of property, plant, and equipment, based on purchase price allocations; the pro forma impact of additional interest expense relating to the acquisition; the pro forma impact of transaction related costs incurred by the Company directly attributable to the transaction; and the pro forma tax effect of both income before taxes and the pro forma adjustments. These performance results may not be indicative of the actual results that would have occurred under the ownership and management of the Company.

The results for the quarter and year-to-date periods ended September 30, 2018 have been adjusted to exclude the impact of approximately $4,849,000 and $8,918,000 of transaction related costs (pre-tax) incurred by the Company that are directly attributable to the transaction.

The pro forma financial information has been prepared for comparative purposes only and includes certain adjustments, as noted above. The adjustments are estimates based on currently available information and actual amounts may differ materially from these estimates. They do not reflect the effect of costs or synergies that would have been expected to result from the integration of the Boat Holdings acquisition.

2017 Acquisitions.

The Company did not complete any acquisitions in 2017.

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Share-Based Compensation

9 Months Ended

Sep. 30, 2018

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Share-Based Compensation

Share-Based Compensation

The amount of compensation cost for share-based awards to be recognized during a period is based on the portion of the awards that are ultimately expected to vest. The Company estimates forfeitures at the time of grant and revises those estimates in subsequent periods if actual forfeitures differ from those estimates. The Company analyzes historical data to estimate pre-vesting forfeitures and records share-based compensation expense for those awards expected to vest.

Total share-based compensation expenses were comprised as follows (in thousands):

	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

In addition to the above share-based compensation expenses, Polaris sponsors a qualified non-leveraged employee stock ownership plan (ESOP). Shares allocated to eligible participants’ accounts vest at various percentage rates based on years of service and require no cash payments from the recipient.

At September 30, 2018, there was $113,879,000 of total unrecognized share-based compensation expense related to unvested share-based equity awards. Unrecognized share-based compensation expense is expected to be recognized over a weighted-average period of 1.49 years. Included in unrecognized share-based compensation expense is approximately $30,570,000 related to stock options and $83,309,000 for restricted stock.

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Financing Agreement

9 Months Ended

Sep. 30, 2018

Debt Disclosure [Abstract]

Financing Agreement

Financing Agreements

The carrying value of debt, capital lease obligations, and notes payable and the average related interest rates were as follows (in thousands):

	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

In August 2011, Polaris entered into a $350,000,000 unsecured revolving loan facility. In March 2015, Polaris amended the loan facility to increase the facility to $500,000,000 and to provide more beneficial covenant and interest rate terms. The amended terms also extended the expiration date to March 2020. Interest is charged at rates based on a LIBOR or “prime” base rate. In May 2016, Polaris amended the revolving loan facility to increase the facility to $600,000,000 and extend the expiration date to May 2021. The amended terms also established a $500,000,000 term loan facility. In November 2016, Polaris amended the revolving loan facility to increase the term loan facility to $750,000,000.

In July 2018, Polaris amended the revolving loan facility to increase the facility to 700,000,000 and increase the term loan facility to $1,180,000,000, of which $1,165,000,000 is outstanding as of September 30, 2018. The expiration date of the facility was extended to July 2023, and interest will continue to be charged at rates based on a LIBOR or “prime” base rate. Under the facility, the Company is required to make principal payments totaling $59,000,000 over the next 12 months, which are classified as current maturities.

In December 2010, the Company entered into a Master Note Purchase Agreement to issue $25,000,000 of unsecured senior notes due May 2018 and $75,000,000 of unsecured senior notes due May 2021 (collectively, the “Senior Notes”). The Senior Notes were issued in May 2011. In December 2013, the Company entered into a First Supplement to Master Note Purchase Agreement, under which the Company issued $100,000,000 of unsecured senior notes due December 2020. In July 2018, the Company entered into a Master Note Purchase Agreement to issue $350,000,000 of unsecured senior notes due July 2028.

The unsecured revolving loan facility and the Master Note Purchase Agreement contain covenants that require Polaris to maintain certain financial ratios, including minimum interest coverage and maximum leverage ratios. Polaris was in compliance with all such covenants at September 30, 2018.

The debt issuance costs are recognized as a reduction in the carrying value of the related long-term debt in the consolidated balance sheets and are being amortized to interest expense in our consolidated statements of income over the expected remaining terms of the related debt.

A property lease agreement for a manufacturing facility which Polaris began occupying in Opole, Poland commenced in February 2014. The Poland property lease is accounted for as a capital lease.

As a component of the Boat Holdings merger agreement, Polaris has committed to make a series of deferred payments to the former owners following the closing date of of the merger through July 2030. The original discounted payable was for $76,733,000, all of which is outstanding as of September 30, 2018. The outstanding balance is included in long-term debt.

The Company has a mortgage note payable agreement for land, on which Polaris built the Huntsville, Alabama manufacturing facility in 2016. The original mortgage note payable was for $14,500,000, of which $10,875,000 is outstanding as of September 30, 2018. The outstanding balance is included in Notes payable and other. The payment of principal and interest for the note payable is forgivable if the Company satisfies certain job commitments over the term of the note. The Company has met the required commitments to date. Forgivable loans related to other Company facilities are also included within notes payable.

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Goodwill and Other Intangible Assets

9 Months Ended

Sep. 30, 2018

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill and Other Intangible Assets

Goodwill and Other Intangible Assets

Goodwill and other intangible assets, net of accumulated amortization, at September 30, 2018 and December 31, 2017 are as follows (in thousands):

	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

Additions to goodwill and other intangible assets in 2018 relate to the acquisition of Boat Holdings in July 2018. The aggregate purchase price was allocated on a preliminary basis to the assets acquired and liabilities assumed based on their estimated fair values at the date of acquisition. Boat Holding’s financial results are included in the Company’s consolidated results from the date of acquisition. As of September 30, 2018, the purchase price allocation remains preliminary. The pro forma financial results and the preliminary purchase price allocation are included in Note 3. There were no material additions to goodwill and other intangible assets for the three and nine months ended September 30, 2017.

The changes in the carrying amount of goodwill for the nine months ended September 30, 2018 were as follows (in thousands):

	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

The components of other intangible assets were as follows (in thousands):

	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

Amortization expense for intangible assets for the three and nine months ended September 30, 2018 was $10,403,000 and $22,586,000, respectively, compared to $6,344,000 and $18,792,000 for the comparable prior year periods. Estimated amortization expense for the remainder of 2018 through 2023 is as follows: 2018 (remainder), $10,500,000; 2019, $40,500,000; 2020, $35,500,000; 2021, $32,700,000; 2022, $27,700,000; 2023, $25,300,000; and after 2023, $264,800,000. The preceding expected amortization expense is an estimate and actual amounts could differ due to additional intangible asset acquisitions, changes in foreign currency rates or impairment of intangible assets.

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Shareholders' Equity

9 Months Ended

Sep. 30, 2018

Equity [Abstract]

Shareholders' Equity

Shareholders’ Equity

During the nine months ended September 30, 2018, Polaris paid $246,931,000 to repurchase approximately 2,069,000 shares of its common stock. As of September 30, 2018, the Board of Directors has authorized the Company to repurchase up to an additional 4,367,000 shares of Polaris stock. The repurchase of any or all such shares authorized for repurchase will be governed by applicable SEC rules and dependent on management’s assessment of market conditions. Polaris paid a regular cash dividend of $0.60 per share on September 17, 2018 to holders of record at the close of business on August 31, 2018. On October 24, 2018, the Polaris Board of Directors declared a regular cash dividend of $0.60 per share payable on December 17, 2018 to holders of record of such shares at the close of business on December 3, 2018.

Cash dividends declared and paid per common share for the three and nine months ended September 30, 2018 and 2017, were as follows:

	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

Net income per share

Basic income per share is computed by dividing net income available to common shareholders by the weighted average number of common shares outstanding during each period, including shares earned under the Deferred Compensation Plan for Directors (“Director Plan”) and the ESOP and deferred stock units under the 2007 Omnibus Incentive Plan (“Omnibus Plan”). Diluted income per share is computed under the treasury stock method and is calculated to compute the dilutive effect of outstanding stock options and certain shares issued under the Omnibus Plan. A reconciliation of these amounts is as follows (in thousands):

	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

During the three and nine months ended September 30, 2018, the number of options that were not included in the computation of diluted income per share because the option exercise price was greater than the market price, and therefore, the effect would have been anti-dilutive, were 1,785,000 and 1,713,000, respectively, compared to 2,892,000 and 2,816,000 for the same periods in 2017.

Accumulated other comprehensive loss

Changes in the accumulated other comprehensive loss balance are as follows (in thousands):

	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	)

The table below provides data about the amount of gains and losses, net of tax, reclassified from accumulated other comprehensive loss into the statements of income for cash flow derivatives designated as hedging instruments for the three and nine months ended September 30, 2018 and 2017 (in thousands):

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

The net amount of the existing gains or losses at September 30, 2018 that is expected to be reclassified into the statements of income within the next 12 months is not expected to be material. See Note 11 for further information regarding Polaris’ derivative activities.

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Financial Services Arrangements

9 Months Ended

Sep. 30, 2018

Investments in and Advances to Affiliates, Schedule of Investments [Abstract]

Financial Services Arrangements

Financial Services Arrangements

Polaris Acceptance, a joint venture between Polaris and Wells Fargo Commercial Distribution Finance, a direct subsidiary of Wells Fargo Bank, N.A. (“Wells Fargo”), which is supported by a partnership agreement between their respective wholly owned subsidiaries, finances substantially all of Polaris’ United States sales whereby Polaris receives payment within a few days of shipment of the product.

Polaris’ subsidiary has a 50 percent equity interest in Polaris Acceptance. Polaris Acceptance sells a majority of its receivable portfolio to a securitization facility (the “Securitization Facility”) arranged by Wells Fargo. The sale of receivables from Polaris Acceptance to the Securitization Facility is accounted for in Polaris Acceptance’s financial statements as a “true-sale” under Accounting Standards Codification (“ASC”) Topic 860. Polaris’ allocable share of the income of Polaris Acceptance has been included as a component of income from financial services in the accompanying consolidated statements of income. The partnership agreement is effective through February 2022.

Polaris’ total investment in Polaris Acceptance of $88,790,000 at September 30, 2018 is accounted for under the equity method, and is recorded in investment in finance affiliate in the accompanying consolidated balance sheets. At September 30, 2018, the outstanding amount of net receivables financed for dealers under this arrangement was $1,237,689,000, which included $566,102,000 in the Polaris Acceptance portfolio and $671,587,000 of receivables within the Securitization Facility (“Securitized Receivables”).

Polaris has agreed to repurchase products repossessed by Polaris Acceptance up to an annual maximum of 15 percent of the aggregate average month-end outstanding Polaris Acceptance receivables and Securitized Receivables during the prior calendar year. For calendar year 2018, the potential 15 percent aggregate repurchase obligation is approximately $164,969,000. Polaris’ financial exposure under this arrangement is limited to the difference between the amounts unpaid by the dealer with respect to the repossessed product plus costs of repossession and the amount received on the resale of the repossessed product. No material losses have been incurred under this agreement during the periods presented.

Polaris has agreements with Performance Finance, Sheffield Financial and Synchrony Bank, under which these financial institutions provide financing to end consumers of Polaris products. Polaris’ income generated from these agreements has been included as a component of income from financial services in the accompanying consolidated statements of income.

Polaris also administers and provides extended service contracts to consumers and certain insurance contracts to dealers and consumers through various third-party suppliers. Polaris finances its self-insured risks related to extended service contracts, but does not retain any insurance or financial risk under any of the other arrangements. Polaris’ service fee income generated from these arrangements has been included as a component of income from financial services in the accompanying consolidated statements of income.

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Investment in Other Affiliates

9 Months Ended

Sep. 30, 2018

Equity Method Investments and Joint Ventures [Abstract]

Investment in Other Affiliates

Investment in Other Affiliates

The Company has certain investments in nonmarketable securities of strategic companies. As of December 31, 2017, the Company’s investment in Eicher-Polaris Private Limited (EPPL) represented the majority of these investments and is recorded as a component of other long-term assets in the accompanying consolidated balance sheets.

EPPL is a joint venture established in 2012 with Eicher Motors Limited (“Eicher”). Polaris and Eicher each control 50 percent of the joint venture, which is intended to design, develop and manufacture a full range of new vehicles for India and other emerging markets. The investment in EPPL is accounted for under the equity method, with Polaris’ proportionate share of income or loss recorded within the consolidated financial statements on a one month lag due to financial information not being available timely.

During the first quarter of 2018, the Board of Directors of EPPL approved a shut down of the operations of the EPPL joint venture. As a result of the expected closure, the Company fully impaired its investment in EPPL by recognizing an impairment charge of $18,733,000 within Equity in loss of other affiliates in the consolidated statement of income. The Company has recognized $0 and $23,447,000 of costs, including impairment, associated with the wind-down of EPPL for the three and nine months ended September 30, 2018, respectively.

As of September 30, 2018 and December 31, 2017, the carrying value of the Company’s investment in EPPL was $0 and $18,616,000, respectively.

Polaris will impair or write off an investment and recognize a loss if and when events or circumstances indicate there is impairment in the investment that is other-than-temporary. When necessary, Polaris evaluates investments in nonmarketable securities for impairment, utilizing Level 3 fair value inputs. As a result of the Victory^® Motorcycles wind down, the Company recognized an impairment of substantially all of its cost-method investment in Brammo, Inc. in the first quarter of 2017. See Note 13 for additional discussion related to charges incurred related to the Victory Motorcycles wind down.

In October 2017, an agreement was signed to sell the assets of Brammo, Inc. to a third party. The sale was completed in the fourth quarter of 2017, and as a result of the sale, Polaris recognized a gain, which is included in Other expense (income), net on the 2017 consolidated statements of income. During the first quarter of 2018, Polaris received additional distributions from Brammo and recognized a gain of $13,478,000, which is included in Other expense (income) on the consolidated statements of income.

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Commitments and Contingencies

9 Months Ended

Sep. 30, 2018

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

Commitments and Contingencies

Polaris is subject to product liability claims in the normal course of business. The Company carries excess insurance coverage for catastrophic product liability claims. Polaris self-insures product liability claims before the policy date and up to the purchased catastrophic insurance coverage after the policy date. The estimated costs resulting from any losses are charged to operating expenses when it is probable a loss has been incurred and the amount of the loss is reasonably estimable. The Company utilizes historical trends and actuarial analysis tools, along with an analysis of current claims, to assist in determining the appropriate loss reserve levels. At September 30, 2018, the Company had an accrual of $55,320,000 for the probable payment of pending claims related to continuing product liability litigation associated with Polaris products. This accrual is included as a component of other accrued expenses in the accompanying consolidated balance sheets.

Polaris is also a defendant in lawsuits and subject to other claims arising in the normal course of business, including matters related to intellectual property, commercial matters, product liability claims, and putative class action lawsuits. As of September 30, 2018, the Company is party to two putative class actions pending against Polaris in the United States, alleging that certain Polaris products caused personal injury, economic losses, and other damages resulting from unresolved fire hazards and excessive heat hazards. The Company is unable to provide an evaluation of the likelihood that a loss will be incurred or an estimate of the range of possible loss.

In the opinion of management, it is unlikely that any legal proceedings pending against or involving Polaris will have a material adverse effect on Polaris’ financial position, results of operations, or cash flows. However, in many of these matters, it is inherently difficult to determine whether a loss is probable or reasonably possible or to estimate the size or range of the possible loss given the variety and potential outcomes of actual and potential claims, the uncertainty of future rulings, the behavior or incentives of adverse parties, and other factors outside of the control of the Company. Accordingly, the Company’s loss reserve may change from time to time, and actual losses could exceed the amounts accrued by an amount that could be material to our consolidated financial position, results of operations, or cash flows in any particular reporting period.

In the normal course of business, the Company’s products are subject to extensive laws and regulations relating to safety, environmental and other regulations promulgated by the United States federal government and individual states, as well as international regulatory authorities. Failure to comply with applicable regulations could result in fines, penalties or other costs.

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Derivative Instruments and Hedging Activities

9 Months Ended

Sep. 30, 2018

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivative Instruments and Hedging Activities

Derivative Instruments and Hedging Activities

The Company is exposed to certain risks relating to its ongoing business operations. From time to time, the primary risks managed by using derivative instruments are foreign currency risk, interest rate risk and commodity price fluctuations. Derivative contracts on various currencies are entered into in order to manage foreign currency exposures associated with certain product sourcing activities and intercompany cash flows. Interest rate swaps are occasionally entered into in order to maintain a balanced risk of fixed and floating interest rates associated with the Company’s long-term debt. Commodity hedging contracts are occasionally entered into in order to manage fluctuating market prices of certain purchased commodities and raw materials that are integrated into the Company’s end products.

The Company’s foreign currency management objective is to mitigate the potential impact of currency fluctuations on the value of its U.S. dollar cash flows and to reduce the variability of certain cash flows at the subsidiary level. The Company actively manages certain forecasted foreign currency exposures and uses a centralized currency management operation to take advantage of potential opportunities to naturally offset foreign currency exposures against each other. The decision of whether and when to execute derivative instruments, along with the duration of the instrument, can vary from period to period depending on market conditions, the relative costs of the instruments and capacity to hedge. The duration is linked to the timing of the underlying exposure, with the connection between the two being regularly monitored. Polaris does not use any financial contracts for trading purposes.

At September 30, 2018, Polaris had the following open foreign currency contracts (in thousands):

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

These contracts, with maturities through September 2019, met the criteria for cash flow hedges, and are recorded in other current assets or other current liabilities on the consolidated balance sheet. The unrealized gains or losses, after tax, are recorded as a component of accumulated other comprehensive loss in shareholders’ equity.

During the third quarter of 2018, the Company entered into interest rate swap transactions to hedge the variable interest rate payments for the Term Loan Facility. In connection with this transaction, the Company will pay interest based upon a fixed rate and receive variable rate interest payments based on the one-month LIBOR.

At September 30, 2018, Polaris had the following open interest rate swap contracts (in thousands):

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

These contracts, with maturities through September 2023, met the criteria for cash flow hedges, and are recorded in other current assets or other current liabilities on the consolidated balance sheet. The unrealized gains or losses, after tax, are recorded as a component of accumulated other comprehensive loss in shareholders’ equity.

The table below summarizes the carrying values of derivative instruments as of September 30, 2018 and December 31, 2017 (in thousands):

	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.

For derivative instruments that are designated and qualify as cash flow hedges, the effective portion of the gain or loss on the derivative is reported as a component of accumulated other comprehensive loss and reclassified into the statements of income in the same period or periods during which the hedged transaction affects the statements of income. Gains and losses on the derivative representing either hedge ineffectiveness or hedge components excluded from the assessment of effectiveness are recognized in the current statement of income.

The amount of gains (losses), net of tax, related to the effective portion of derivative instruments designated as cash flow hedges included in accumulated other comprehensive income (loss) for the three and nine months ended September 30, 2018 were $(2,111,000) and $2,998,000, respectively, compared to $(167,000) and $(1,208,000) for the same respective periods in 2017.

See Note 7 for information about the amount of gains and losses, net of tax, reclassified from accumulated other comprehensive loss into the statements of income for derivative instruments designated as hedging instruments. The ineffective portion of foreign currency contracts was not material for the three and nine month period ended September 30, 2018.

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Segment Information

9 Months Ended

Sep. 30, 2018

Segment Reporting [Abstract]

Segment Information

Segment Reporting

The Company’s reportable segments are based on the Company’s method of internal reporting, which generally segregates the operating segments by product line, inclusive of wholegoods and PG&A. The internal reporting of these operating segments is defined based, in part, on the reporting and review process used by the Company’s Chief Executive Officer. The Company has six operating segments: 1) ORV, 2) Snowmobiles, 3) Motorcycles, 4) Global Adjacent Markets, 5) Aftermarket, and 6) Boats, and five reportable segments: 1) ORV/Snowmobiles, 2) Motorcycles, 3) Global Adjacent Markets, 4) Aftermarket, and 5) Boats.

Through June 30, 2018, the Company reported under four segments for segment reporting. However, during the third quarter ended September 30, 2018, as a result of the Boat Holdings acquisition, the Company established a new reporting segment, Boats, which includes only the results of Boat Holdings. As such, the comparative 2017 results were not required to be reclassified as the new reporting segment structure did not impact historical segments.

The ORV/Snowmobiles segment includes the aggregated results of our ORV and Snowmobiles operating segments. The Motorcycles, Global Adjacent Markets, Aftermarket, and Boats segments include the results for those respective operating segments. The Corporate amounts include costs that are not allocated to individual segments, which include incentive-based compensation and other unallocated manufacturing costs. Additionally, given the commonality of customers, manufacturing and asset management, the Company does not maintain separate balance sheets for each segment. Accordingly, the segment information presented below is limited to sales and gross profit data (in thousands):

	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

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Victory Motorcycles Wind Down (Notes)

9 Months Ended

Sep. 30, 2018

Discontinued Operations and Disposal Groups [Abstract]

Victory Motorcycles Wind Down

Victory Motorcycles Wind Down

In January 2017, the Company’s Board of Directors approved a strategic plan to wind down the Victory Motorcycles brand. The Company began wind down activities during the first quarter of 2017. As a result of the activities, the Company recognized total pretax charges of $1,281,000 and $3,911,000 for the three and nine month periods ended September 30, 2018, respectively, compared to $2,666,000 and $59,131,000 for the same respective periods in 2017, that are within the scope of ASC 420, Exit or Disposal Cost Obligations (ASC 420). These totals exclude the negative pretax impact of $233,000 and positive pretax impact of $2,154,000 incurred for other wind-down activities for the three and nine month periods ended September 30, 2018, respectively, and the negative pretax impact of $6,143,000 and $18,109,000 incurred for other wind-down activities for the three and nine month periods ended September 30, 2017, respectively. The Company estimates that the total impact of wind down activities in 2018 will be $5,000,000, inclusive of promotional activity. Substantially all costs related to wind down activities are expected to be recognized by the end of 2018.

As a result of the wind down activities, the Company has incurred expenses within the scope of ASC 420 consisting of dealer termination, supplier termination, dealer litigation, employee separation, asset impairment charges, including the impairment of a cost method investment, inventory write-down charges and other costs. The wind down expenses have been included as components of cost of sales, selling and marketing expenses, general and administrative expenses or other expense (income), net, in the consolidated statements of income. Charges related to the wind down plan for the three and nine months ended September 30, 2018 and 2017 within the scope of ASC 420 were as follows (in thousands):

	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

Total reserves related to the Victory Motorcycles wind down activities are $3,029,000 as of September 30, 2018. These reserves are included in other accrued expenses and inventory in the consolidated balance sheets. Changes to the reserves during the nine months endedSeptember 30, 2018 were as follows (in thousands):

	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

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Significant Accounting Policies (Policies)

9 Months Ended

Sep. 30, 2018

Accounting Policies [Abstract]

Basis of presentation

Basis of presentation. The accompanying unaudited consolidated financial statements of Polaris Industries Inc. (“Polaris” or the “Company”) have been prepared in accordance with accounting principles generally accepted in the United States for interim financial statements and, therefore, do not include all information and disclosures of results of operations, financial position and changes in cash flow in conformity with accounting principles generally accepted in the United States for complete financial statements. Accordingly, such statements should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended December 31, 2017 previously filed with the Securities and Exchange Commission (“SEC”). In the opinion of management, such statements reflect all adjustments (which include only normal recurring adjustments) necessary for a fair presentation of the financial position, results of operations, and cash flows for the periods presented. Due to the seasonality trends for certain products and to certain changes in production and shipping cycles, results of such periods are not necessarily indicative of the results to be expected for the complete year.

Fair value measurements

Fair value measurements. Fair value is the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Assets and liabilities measured at fair value are classified using the following hierarchy, which is based upon the transparency of inputs to the valuation as of the measurement date:

Level  1 — Quoted prices in active markets for identical assets or liabilities.

Level  2 — Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

Level 3 — Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

In making fair value measurements, observable market data must be used when available. When inputs used to measure fair value fall within different levels of the hierarchy, the level within which the fair value measurement is categorized is based on the lowest level input that is significant to the fair value measurement. The Company utilizes the market approach to measure fair value for its non-qualified deferred compensation assets and liabilities, and the income approach for foreign currency contracts, interest rate contracts, and commodity contracts. The market approach uses prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities, and for the income approach, the Company uses significant other observable inputs to value its derivative instruments used to hedge foreign currency, interest rate, and commodity transactions.

Inventories

Inventories. Inventory costs include material, labor and manufacturing overhead costs, including depreciation expense associated with the manufacture and distribution of the Company’s products. Inventories are stated at the lower of cost (first-in, first-out method) or net realizable value.

New Accounting Pronouncements

New accounting pronouncements.

Revenue from contracts with customers. Effective January 1, 2018, the Company adopted ASU No. 2014-09, Revenue from Contracts with Customers, ASU 2016-08, Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net), and ASU 2016-12, Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients using the modified retrospective approach. The adoption of these ASUs did not have a material impact on the Company’s consolidated financial position, results of operations, equity or cash flows as of the adoption date or for the three or nine months endedSeptember 30, 2018. The Company has included the disclosures required by ASU 2014-09 in Note 2.

Statement of cash flows. During the first quarter of 2018, the Company adopted ASU No. 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash, which requires that restricted cash be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. Prior periods were retrospectively adjusted to conform to the current period’s presentation. As a result of the adoption of ASU 2016-18, the Company recorded an increase of $2,631,000 in net cash provided by operating activities for the nine months endedSeptember 30, 2017 related to reclassifying the changes in our restricted cash balance from operating activities to the cash and cash equivalent balances within the Consolidated Statements of Cash Flows.

Leases. In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842). This ASU requires most lessees to recognize right of use assets and lease liabilities, but recognize expenses in a manner similar with current accounting standards. The standard is effective for fiscal years and interim periods beginning after December 15, 2018 and is effective for the Company’s fiscal year beginning January 1, 2019. Early adoption is permitted. Entities are required to use a modified retrospective approach, with an option to apply the transition provisions of the new standard at its adoption date instead of at the earliest comparative period presented. The Company plans to use a modified retrospective approach and apply the transition provisions at the adoption date. The Company developed a project plan to guide the implementation of ASU 2016-02. The Company made progress on this plan including surveying the Company’s businesses, assessing the Company’s portfolio of leases, compiling information on active leases, and selecting a lease accounting software. The Company is currently identifying and implementing appropriate changes to its policies, business processes, systems and controls to support lease accounting and disclosures under Topic 842. The Company does not expect that its results of operations or cash flows will be materially impacted by this standard. The Company expects to record right of use assets and lease liabilities on its consolidated balance sheets upon adoption of this standard, which may be material.

Derivatives and hedging. In August 2017, the FASB issued ASU No. 2017-12, Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities. This ASU better aligns accounting rules with a company’s risk management activities; better reflects economic results of hedging in financial statements; and simplifies hedge accounting treatment. The standard is effective for fiscal years and interim periods beginning after December 15, 2018 and is effective for the Company’s fiscal year beginning January 1, 2019, with early adoption permitted. The Company is evaluating the impact of this new standard on the financial statements.

Non-employee share-based payments. In June 2018, the FASB issued ASU No. 2018-07, Compensation - Stock Compensation (Topic 718): Improvements to Non-employee Share-based Payment Accounting. The amendments of this ASU apply to all share-based payment transactions to non-employees, in which a grantor acquires goods or services to be used or consumed in a grantor’s own operations, accounted for under ASC 505-50, Equity-Based Payments to Non-Employees. Under the amendments of ASU 2018-07, most of the guidance on compensation to nonemployees would be aligned with the requirements for shared based payments granted to employees in Topic 718. The standard is effective for fiscal years and interim periods beginning after December 15, 2018 and is effective for the Company’s fiscal year beginning January 1, 2019, with early adoption permitted. The Company is evaluating the impact of this new standard on the financial statements.

Income Taxes. The Tax Cuts and Jobs Act (the “Act”) was enacted on December 22, 2017. The Act reduces the U.S. federal corporate tax rate from 35% to 21%, requires companies to pay a one-time transition tax on earnings of certain foreign subsidiaries that were previously tax deferred and creates new taxes on certain foreign-sourced earnings.  

The Company has applied the guidance in ASU 2018-05, Income Taxes (Topic 740): Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 118, when accounting for the enactment-date effects of the Act. At September 30, 2018, the Company has not completed its accounting for the tax effects of the Act, as the Company is in the process of analyzing certain aspects of the Act, obtaining information, and refining its calculations of the Act’s impact. There have been no material measurement period adjustments made during the three and nine months endedSeptember 30, 2018 related to the provisional amounts recorded and disclosed in the Company’s fiscal 2017 Annual Report filed on Form 10-K.  The Company expects to complete the accounting for the tax effects of the Act during 2018.

There are no other new accounting pronouncements that are expected to have a significant impact on the Company’s consolidated financial statements.

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Significant Accounting Policies (Tables)

9 Months Ended

Sep. 30, 2018

Accounting Policies [Abstract]

Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis

Assets and liabilities measured at fair value on a recurring basis are summarized below (in thousands):

	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	)	$	—

Schedule of major components of inventories

The major components of inventories are as follows (in thousands):

	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

Schedule of activity in the warranty reserve

The activity in the warranty reserve during the periods presented was as follows (in thousands):

	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

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Revenue Recognition (Tables)

9 Months Ended

Sep. 30, 2018

Revenue Recognition [Abstract]

Disaggregation of Revenue

The following tables disaggregate the Company’s revenue by major product type and geography (in thousands):

	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

Deferred Revenue, by Arrangement, Disclosure

The activity in the deferred revenue reserve during the periods presented was as follows (in thousands):

	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

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Acquisitions (Tables)

9 Months Ended

Sep. 30, 2018

Business Combinations [Abstract]

Summary of preliminary fair values of net assets acquired and determination of final net assets

The following table summarizes the preliminary fair values assigned to the Boat Holdings net assets acquired and the determination of net assets (in thousands):

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

Unaudited pro forma information

The following unaudited pro forma information represents the Company’s results of operations as if the fiscal 2018 acquisition of Boat Holdings had occurred at the beginning of fiscal 2017 (in thousands, except per share data).

	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

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Share-Based Compensation (Tables)

9 Months Ended

Sep. 30, 2018

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Schedule of share-based compensation expenses

Total share-based compensation expenses were comprised as follows (in thousands):

	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

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Financing Agreement (Tables)

9 Months Ended

Sep. 30, 2018

Debt Disclosure [Abstract]

Debt and Capital Lease Obligations

The carrying value of debt, capital lease obligations, and notes payable and the average related interest rates were as follows (in thousands):

	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

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Goodwill and Other Intangible Assets (Tables)

9 Months Ended

Sep. 30, 2018

Goodwill and Intangible Assets Disclosure [Abstract]

Schedule of intangible assets and goodwill

Goodwill and other intangible assets, net of accumulated amortization, at September 30, 2018 and December 31, 2017 are as follows (in thousands):

	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

Schedule of changes in carrying amount of goodwill

The changes in the carrying amount of goodwill for the nine months ended September 30, 2018 were as follows (in thousands):

	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

Schedule of other intangible assets, changes in net carrying amount

Schedule of components of other intangible assets

The components of other intangible assets were as follows (in thousands):

	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

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Shareholders' Equity (Tables)

9 Months Ended

Sep. 30, 2018

Equity [Abstract]

Schedule of cash dividends declared per common share

Cash dividends declared and paid per common share for the three and nine months ended September 30, 2018 and 2017, were as follows:

	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

Schedule of reconciliation of weighted average number of shares

A reconciliation of these amounts is as follows (in thousands):

	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

Schedule of changes in accumulated other comprehensive income (loss) balances

Changes in the accumulated other comprehensive loss balance are as follows (in thousands):

	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	)

Schedule of gains and losses, net of tax, reclassified from accumulated other comprehensive income into the income statement for cash flow derivatives designated as hedging instruments

The table below provides data about the amount of gains and losses, net of tax, reclassified from accumulated other comprehensive loss into the statements of income for cash flow derivatives designated as hedging instruments for the three and nine months ended September 30, 2018 and 2017 (in thousands):

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

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Derivative Instruments and Hedging Activities (Tables)

9 Months Ended

Sep. 30, 2018

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Schedule of open foreign currency contracts

At September 30, 2018, Polaris had the following open foreign currency contracts (in thousands):

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

Schedule of open interest rate swap contracts

At September 30, 2018, Polaris had the following open interest rate swap contracts (in thousands):

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

Schedule of carrying values of derivative instruments

The table below summarizes the carrying values of derivative instruments as of September 30, 2018 and December 31, 2017 (in thousands):

	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.

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Segment Information (Tables)

9 Months Ended

Sep. 30, 2018

Segment Reporting [Abstract]

Schedule of Segment Reporting Information, by Segment

Accordingly, the segment information presented below is limited to sales and gross profit data (in thousands):

	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

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Victory Motorcycles Wind Down (Tables)

9 Months Ended

Sep. 30, 2018

Discontinued Operations and Disposal Groups [Abstract]

Schedule of Disposal Group Activity

Charges related to the wind down plan for the three and nine months ended September 30, 2018 and 2017 within the scope of ASC 420 were as follows (in thousands):

	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

Changes to the reserves during the nine months endedSeptember 30, 2018 were as follows (in thousands):

	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

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Significant Accounting Policies Fair Value Measurements (Details) - USD ($) $ in Thousands	Sep. 30, 2018	Dec. 31, 2017
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Foreign exchange contracts, net		$ 54,244
Debt and Capital Lease Obligations	$ 1,864,327	913,012
Estimate of Fair Value Measurement [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Long-term Debt, Fair Value	1,901,307	922,123
Reported Value Measurement [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Debt and Capital Lease Obligations	1,864,327	913,012
Fair value, measurements, recurring
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Foreign exchange contracts, net		54,244
Total assets at fair value	53,950
Non-qualified deferred compensation liabilities		(54,244)
Financial and Nonfinancial Liabilities, Fair Value Disclosure	(50,161)	(54,670)
Fair value, measurements, recurring | Supplemental Employee Retirement Plans, Defined Benefit
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Non-qualified deferred compensation assets	50,161	54,244
Non-qualified deferred compensation liabilities	(50,161)
Fair value, measurements, recurring | Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total assets at fair value	50,161
Financial and Nonfinancial Liabilities, Fair Value Disclosure	(50,161)	(54,244)
Fair value, measurements, recurring | Level 1 | Supplemental Employee Retirement Plans, Defined Benefit
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Non-qualified deferred compensation assets	50,161	54,244
Non-qualified deferred compensation liabilities	(50,161)	(54,244)
Fair value, measurements, recurring | Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total assets at fair value	3,789
Financial and Nonfinancial Liabilities, Fair Value Disclosure	0	(426)
Foreign Exchange Contract | Fair value, measurements, recurring
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Foreign exchange contracts, net	3,010
Foreign Exchange Contract | Fair value, measurements, recurring | Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Foreign exchange contracts, net	3,010
Interest rate swap | Fair value, measurements, recurring
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Foreign exchange contracts, net	$ 779
Commodity contracts | Fair value, measurements, recurring
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Financial and Nonfinancial Liabilities, Fair Value Disclosure		(426)
Commodity contracts | Fair value, measurements, recurring | Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Financial and Nonfinancial Liabilities, Fair Value Disclosure		$ (426)

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Significant Accounting Policies Major Components of Inventories (Details) - USD ($) $ in Thousands	Sep. 30, 2018	Dec. 31, 2017
Accounting Policies [Abstract]
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

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Significant Accounting Policies Activity in Polaris Accrued Warranty Reserve (Detail) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017	Dec. 31, 2017
Accounting Policies [Abstract]
Deferred tax liabilities	$ 7,054		$ 7,054		$ 10,128
Activity in Product Warranty Reserve [Roll Forward]
Balance at beginning of period	106,155	$ 108,403	123,840	$ 119,274
Additions to warranty reserve through acquisitions	13,799	0	13,799	0
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

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Significant Accounting Policies Additional Information (Details) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017
New Accounting Pronouncements and Changes in Accounting Principles
Net cash provided by (used for) operating activities	$ (354,138)	$ (497,095)
Accounting Standard Update 2016-18
New Accounting Pronouncements and Changes in Accounting Principles
Net cash provided by (used for) operating activities		$ 2,631,000
Transamerican Auto Parts | Vehicles And Boats | Minimum
Product Warranty Liability [Line Items]
Period of warranties provided by Polaris	6 months
Transamerican Auto Parts | Vehicles And Boats | Maximum
Product Warranty Liability [Line Items]
Period of warranties provided by Polaris	10 years
Transamerican Auto Parts | Off Road Vehicle | Minimum
Product Warranty Liability [Line Items]
Period of warranties provided by Polaris	2 years
Transamerican Auto Parts | Off Road Vehicle | Maximum
Product Warranty Liability [Line Items]
Period of warranties provided by Polaris	5 years

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Significant Accounting Policies Deferred Revenue (Details) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017	Mar. 31, 2018	Dec. 31, 2017	Mar. 31, 2017	Dec. 31, 2016
Deferred Revenue Arrangement [Line Items]
Deferred Revenue	$ 55,586,000	$ 40,020,000	$ 55,586,000	$ 40,020,000	$ 52,620,000	$ 45,760,000	$ 36,188,000	$ 26,157,000
New contracts sold	8,054,000	6,962,000	25,226,000	22,076,000
Less: reductions for revenue recognized	(5,088,000)	(3,130,000)	(15,400,000)	(8,213,000)
Deferred Revenue, Current	23,893,000	16,045,000	23,893,000	16,045,000
Deferred Revenue, Noncurrent	$ 31,693,000	$ 23,975,000	$ 31,693,000	$ 23,975,000

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Revenue Recognition (Narrative) (Details) - USD ($)	9 Months Ended
	Sep. 30, 2018	Mar. 31, 2018	Dec. 31, 2017	Sep. 30, 2017	Mar. 31, 2017	Dec. 31, 2016
Deferred Revenue Arrangement [Line Items]
Deferred Revenue	$ 55,586,000	$ 52,620,000	$ 45,760,000	$ 40,020,000	$ 36,188,000	$ 26,157,000
Deferred Revenue, Current	23,893,000			16,045,000
Deferred Revenue, Noncurrent	$ 31,693,000			$ 23,975,000
Transamerican Auto Parts | Tires And Other [Member] | Minimum
Deferred Revenue Arrangement [Line Items]
Standard Product Warranty Time Period	2 years
Transamerican Auto Parts | Tires And Other [Member] | Maximum
Deferred Revenue Arrangement [Line Items]
Standard Product Warranty Time Period	5 years

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Revenue Recognition (Contract Revenue) (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
Disaggregation of Revenue [Line Items]
Revenue	$ 1,651,415	$ 1,478,726	$ 4,451,420	$ 3,997,428
ORV/Snowmobiles
Disaggregation of Revenue [Line Items]
Revenue	1,035,554		2,858,959
Motorcycles
Disaggregation of Revenue [Line Items]
Revenue	155,316		458,285
Global Adjacent Markets
Disaggregation of Revenue [Line Items]
Revenue	96,251		322,996
Aftermarket
Disaggregation of Revenue [Line Items]
Revenue	229,973		676,859
Boats
Disaggregation of Revenue [Line Items]
Revenue	134,321		134,321
Wholegoods
Disaggregation of Revenue [Line Items]
Revenue	1,198,776		3,149,470
Wholegoods | ORV/Snowmobiles
Disaggregation of Revenue [Line Items]
Revenue	851,733		2,356,086
Wholegoods | Motorcycles
Disaggregation of Revenue [Line Items]
Revenue	134,410		395,189
Wholegoods | Global Adjacent Markets
Disaggregation of Revenue [Line Items]
Revenue	78,312		263,874
Wholegoods | Aftermarket
Disaggregation of Revenue [Line Items]
Revenue	0		0
Wholegoods | Boats
Disaggregation of Revenue [Line Items]
Revenue	134,321		134,321
PG&A
Disaggregation of Revenue [Line Items]
Revenue	452,639		1,301,950
PG&A | ORV/Snowmobiles
Disaggregation of Revenue [Line Items]
Revenue	183,821		502,873
PG&A | Motorcycles
Disaggregation of Revenue [Line Items]
Revenue	20,906		63,096
PG&A | Global Adjacent Markets
Disaggregation of Revenue [Line Items]
Revenue	17,939		59,122
PG&A | Aftermarket
Disaggregation of Revenue [Line Items]
Revenue	229,973		676,859
PG&A | Boats
Disaggregation of Revenue [Line Items]
Revenue	0		0
UNITED STATES
Disaggregation of Revenue [Line Items]
Revenue	1,383,679		3,588,410
UNITED STATES | ORV/Snowmobiles
Disaggregation of Revenue [Line Items]
Revenue	866,289		2,347,202
UNITED STATES | Motorcycles
Disaggregation of Revenue [Line Items]
Revenue	116,072		313,530
UNITED STATES | Global Adjacent Markets
Disaggregation of Revenue [Line Items]
Revenue	51,363		151,157
UNITED STATES | Aftermarket
Disaggregation of Revenue [Line Items]
Revenue	217,816		644,382
UNITED STATES | Boats
Disaggregation of Revenue [Line Items]
Revenue	132,139		132,139
CANADA
Disaggregation of Revenue [Line Items]
Revenue	95,653		275,598
CANADA | ORV/Snowmobiles
Disaggregation of Revenue [Line Items]
Revenue	70,765		197,096
CANADA | Motorcycles
Disaggregation of Revenue [Line Items]
Revenue	9,712		27,421
CANADA | Global Adjacent Markets
Disaggregation of Revenue [Line Items]
Revenue	837		16,422
CANADA | Aftermarket
Disaggregation of Revenue [Line Items]
Revenue	12,157		32,477
CANADA | Boats
Disaggregation of Revenue [Line Items]
Revenue	2,182		2,182
EMEA
Disaggregation of Revenue [Line Items]
Revenue	122,817		433,805
EMEA | ORV/Snowmobiles
Disaggregation of Revenue [Line Items]
Revenue	64,218		207,779
EMEA | Motorcycles
Disaggregation of Revenue [Line Items]
Revenue	15,706		74,044
EMEA | Global Adjacent Markets
Disaggregation of Revenue [Line Items]
Revenue	42,893		151,982
EMEA | Aftermarket
Disaggregation of Revenue [Line Items]
Revenue	0		0
EMEA | Boats
Disaggregation of Revenue [Line Items]
Revenue	0		0
APLA
Disaggregation of Revenue [Line Items]
Revenue	49,266		153,607
APLA | ORV/Snowmobiles
Disaggregation of Revenue [Line Items]
Revenue	34,282		106,882
APLA | Motorcycles
Disaggregation of Revenue [Line Items]
Revenue	13,826		43,290
APLA | Global Adjacent Markets
Disaggregation of Revenue [Line Items]
Revenue	1,158		3,435
APLA | Aftermarket
Disaggregation of Revenue [Line Items]
Revenue	0		0
APLA | Boats
Disaggregation of Revenue [Line Items]
Revenue	$ 0		$ 0

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Revenue Recognition (Deferred Revenue) (Details) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
Revenue Recognition [Abstract]
Balance at beginning of period			$ 45,760,000	$ 26,157,000
New contracts sold	$ 8,054,000	$ 6,962,000	25,226,000	22,076,000
Less: reductions for revenue recognized	(5,088,000)	(3,130,000)	(15,400,000)	(8,213,000)
Balance at end of period	$ 55,586,000	$ 40,020,000	$ 55,586,000	$ 40,020,000

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Acquisitions - Additional Information (Detail) - USD ($)		3 Months Ended		9 Months Ended
	Jul. 02, 2018	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
Business Acquisition [Line Items]
Sales		$ 1,651,415,000	$ 1,478,726,000	$ 4,451,420,000	$ 3,997,428,000
Gross profit		$ 401,270,000	$ 363,962,000	$ 1,109,927,000	$ 956,839,000
Senior Unsecured Notes 4.23% Due July 2028 | Senior Notes
Business Acquisition [Line Items]
Stated interest rate	4.23%	4.23%		4.23%
Boat Holdings, LLC
Business Acquisition [Line Items]
Percentage of equity interests acquired	100.00%
Aggregate consideration transferred	$ 806,658,000
Consideration, aggregate deferred annual payment	$ 100,000,000
Deferred annual payment term	12 years
Sales		$ 134,321,000		$ 134,321,000
Gross profit		20,253,000		20,253,000
Weighted average useful life	19 years
Transaction related costs		$ 4,849,000		$ 8,918,000
Boat Holdings, LLC | Customer relationships | Minimum
Business Acquisition [Line Items]
Weighted average useful life	15 years
Boat Holdings, LLC | Customer relationships | Maximum
Business Acquisition [Line Items]
Weighted average useful life	20 years

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Acquisitions - Summary of Assets Acquired and Liabilities Assumed (Details) - USD ($) $ in Thousands	Jul. 02, 2018	Sep. 30, 2018	Dec. 31, 2017
Business Acquisition [Line Items]
Goodwill		$ 637,486	$ 433,374
Boat Holdings, LLC
Business Acquisition [Line Items]
Cash and cash equivalents	$ 16,534
Trade receivables	17,602
Inventory	39,990
Other current assets	3,938
Property, plant and equipment	36,769
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
Boat Holdings, LLC | Trademarks / trade names
Business Acquisition [Line Items]
Indefinite-lived intangibles	210,680
Boat Holdings, LLC | Customer relationships
Business Acquisition [Line Items]
Finite-lived intangibles	341,080
Boat Holdings, LLC | Non-compete agreements
Business Acquisition [Line Items]
Finite-lived intangibles	$ 2,630

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Acquisitions - Unaudited Proforma Information (Details) - Boat Holdings, LLC - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
Business Acquisition [Line Items]
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 (in dollars per share)	$ 1.60	$ 1.30	$ 4.27	$ 2.38
Diluted earnings per common share (in dollars per share)	$ 1.56	$ 1.28	$ 4.16	$ 2.34

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Share-Based Compensation Expenses (Detail) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]
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

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Share-Based Compensation - Additional Information (Detail) $ in Thousands	9 Months Ended
	Sep. 30, 2018 USD ($)
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]
Unrecognized compensation cost related to unvested share-based equity awards	$ 113,879
Weighted average period of recognition of unvested share-based equity awards	1 year 5 months 26 days
Unrecognized compensation cost related to unvested share-based equity awards, stock options	$ 30,570
Unrecognized compensation cost related to unvested share-based equity awards, restricted stock	$ 83,309

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Financing Arrangements, Interest Rates and Maturities (Details) - USD ($) $ in Thousands	Sep. 30, 2018	Jul. 02, 2018	Dec. 31, 2017
Debt Instrument [Line Items]
Effective interest rate	5.25%
Capital lease obligations	$ 18,052		$ 19,889
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
Revolving Credit Facility
Debt Instrument [Line Items]
Debt, Weighted Average Interest Rate	1.84%
Senior Notes | Senior Unsecured Notes 3.81% Due May 2018
Debt Instrument [Line Items]
Stated interest rate	3.81%
Long-term debt	$ 0		25,000
Senior Notes | Senior Unsecured Notes 4.60% Due May 2021
Debt Instrument [Line Items]
Stated interest rate	4.60%
Long-term debt	$ 75,000		75,000
Senior Notes | Senior Unsecured Notes 3.13% Due December 2020
Debt Instrument [Line Items]
Stated interest rate	3.13%
Long-term debt	$ 100,000		100,000
Senior Notes | Senior Unsecured Notes 4.23% Due July 2028
Debt Instrument [Line Items]
Stated interest rate	4.23%	4.23%
Long-term debt	$ 350,000		0
Notes payable and other
Debt Instrument [Line Items]
Stated interest rate	4.23%
Long-term debt	$ 87,608		12,384
Revolving Credit Facility
Debt Instrument [Line Items]
Revolving loan facility	$ 74,023		3,000
Term loan
Debt Instrument [Line Items]
Average interest rate at September 30, 2018	3.77%
Revolving loan facility	$ 1,165,000		$ 680,000

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Financing Agreement - Additional Information (Detail) - USD ($)	1 Months Ended
	Dec. 31, 2013	Dec. 31, 2010	Sep. 30, 2018	Jul. 31, 2018	Dec. 31, 2017	Nov. 30, 2016	Sep. 30, 2015	Aug. 31, 2011
Senior Notes | Senior Unsecured Notes 3.81% Due May 2018
Debt Instrument [Line Items]
Proceeds from Issuance of Debt		$ 25,000,000
Long-term debt			$ 0		$ 25,000,000
Senior Notes | Senior Unsecured Notes 4.60% Due May 2021
Debt Instrument [Line Items]
Proceeds from Issuance of Debt		$ 75,000,000
Long-term debt			75,000,000		75,000,000
Senior Notes | Senior Unsecured Notes 3.13% Due December 2020
Debt Instrument [Line Items]
Proceeds from Issuance of Debt	$ 100,000,000
Long-term debt			100,000,000		100,000,000
Senior Notes | Senior Unsecured Notes 4.23% Due July 2028
Debt Instrument [Line Items]
Long-term debt			350,000,000		0
Notes payable, other | Boat Holdings, LLC
Debt Instrument [Line Items]
Long-term debt			76,733,000
Notes payable to banks
Debt Instrument [Line Items]
Long-term debt			87,608,000		12,384,000
Notes payable to banks | Mortgages [Member]
Debt Instrument [Line Items]
Long-term debt			10,875,000				$ 14,500,000
Revolving Credit Facility
Debt Instrument [Line Items]
Maximum borrowing capacity			600,000,000	$ 700,000,000			$ 500,000,000	$ 350,000,000
Revolving loan facility			74,023,000		3,000,000
Term loan
Debt Instrument [Line Items]
Maximum borrowing capacity				$ 1,180,000,000		$ 750,000,000
Debt Instrument, Face Amount			500,000,000
Revolving loan facility			1,165,000,000		$ 680,000,000
Long-term Debt, Maturities, Repayments of Principal in Next Rolling Twelve Months			$ 59,000,000

XML

Goodwill and Other Intangible Assets Changes in Carrying Amount of Goodwill (Detail) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2018	Dec. 31, 2017
Goodwill [Roll Forward]
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
Intangible Assets, Net (Excluding Goodwill)	877,945	$ 347,212
Intangible Assets, Net (Including Goodwill)	$ 1,515,431	$ 780,586

XML

Goodwill and Other Intangible Assets Components of Other Intangible Assets (Detail) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2018	Dec. 31, 2017
Amortizable:
Gross amortized other intangible assets	$ 521,281	$ 193,137
Accumulated Amortization	(84,312)	(76,634)
Net amortized other intangible assets	436,969	116,503
Total other intangible assets, net	$ 877,945	347,212
Non-compete agreements
Amortizable:
Total estimated life	4 years
Gross amortized other intangible assets	$ 2,370	540
Dealer/customer related
Amortizable:
Gross amortized other intangible assets	$ 505,543	169,694
Dealer/customer related | Minimum
Amortizable:
Total estimated life	5 years
Dealer/customer related | Maximum
Amortizable:
Total estimated life	20 years
Developed technology
Amortizable:
Gross amortized other intangible assets	$ 13,368	22,903
Developed technology | Minimum
Amortizable:
Total estimated life	5 years
Developed technology | Maximum
Amortizable:
Total estimated life	7 years
Brand names
Non-amortizable—indefinite lived:
Non-amortizable, Net	$ 440,976	$ 230,709

XML

Goodwill and Other Intangible Assets Additional Information (Detail) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017	Dec. 31, 2017
Goodwill and Intangible Assets Disclosure [Abstract]
Goodwill	$ 637,486,000		$ 637,486,000		$ 433,374,000
Total other intangible assets, net	877,945,000		877,945,000		$ 347,212,000
Amortization expense of intangible assets	10,403,000	$ 6,344,000	22,586,000	$ 18,792,000
Estimated Future Amortization Expense by Fiscal Year [Abstract]
Remainder of 2016	10,500,000		10,500,000
2017	40,500,000		40,500,000
2018	35,500,000		35,500,000
2019	32,700,000		32,700,000
2020	27,700,000		27,700,000
2021	25,300,000		25,300,000
After 2021	$ 264,800,000		$ 264,800,000

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Shareholders' Equity Cash Dividends Declared Per Common Share (Details) - $ / shares	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
Equity [Abstract]
Cash dividends declared and paid per common share (in dollars per share)	$ 0.6	$ 0.58	$ 1.8	$ 1.74

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Shareholders' Equity Reconciliation of Weighted Average Number of Shares (Detail) - shares shares in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
Equity [Abstract]
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

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Shareholders' Equity Changes in Accumulated Other Comprehensive Income (Loss) Balances (Detail) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
Accumulated Other Comprehensive Income (Loss) [Roll Forward]
Balance as of December 31, 2017			$ (45,629)
Reclassification from Accumulated Other Comprehensive Income, Current Period, Net of Tax			(6,945)
Other Comprehensive Income (Loss), Foreign Currency Transaction and Translation Adjustment, Net of Tax	$ 1,804	$ 10,606	(12,099)	$ 41,042
Other Comprehensive Income (Loss), before Reclassifications, Net of Tax			(1,960)
Balance as of September 30, 2018	(54,534)		(54,534)
Foreign Currency Items
Accumulated Other Comprehensive Income (Loss) [Roll Forward]
Balance as of December 31, 2017			(42,442)
Balance as of September 30, 2018	(54,541)		(54,541)
Cash Flow Hedging | Foreign Exchange Contract
Accumulated Other Comprehensive Income (Loss) [Roll Forward]
Balance as of December 31, 2017			(34)
Reclassification to the statement of income			(7,141)
Other Comprehensive Income (Loss), before Reclassifications, Net of Tax			10,139
Balance as of September 30, 2018	2,964		2,964
Accumulated Defined Benefit Plans Adjustment Including Portion Attributable to Noncontrolling Interest [Member]
Accumulated Other Comprehensive Income (Loss) [Roll Forward]
Balance as of December 31, 2017			(3,153)
Reclassification to the statement of income			196
Balance as of September 30, 2018	$ (2,957)		$ (2,957)

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Shareholders' Equity Gains and Losses, Net of Tax Reclassified from Accumulated Other Comprehensive Income (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
Derivative Instruments, Gain (Loss) [Line Items]
Gain (Loss) Reclassified from Accumulated OCI Into Income	$ 4,459	$ 84	$ 6,945	$ 2,255
Reclassification from Accumulated Other Comprehensive Income, Current Period, Net of Tax			6,945
Foreign Exchange Contract | Other expense, net
Derivative Instruments, Gain (Loss) [Line Items]
Gain (Loss) Reclassified from Accumulated OCI Into Income	4,587	(174)	6,681	2,433
Foreign Exchange Contract | Cost of sales
Derivative Instruments, Gain (Loss) [Line Items]
Gain (Loss) Reclassified from Accumulated OCI Into Income	(62)	258	$ 460	$ (178)
Accumulated Defined Benefit Plans Adjustment Attributable to Parent [Member] | Cost of sales
Derivative Instruments, Gain (Loss) [Line Items]
Reclassification from Accumulated Other Comprehensive Income, Current Period, Net of Tax	$ 66	$ 0

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Shareholders' Equity Additional Information (Detail) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
Equity [Abstract]
Repurchase and retirement of common stock			$ 246,931
Repurchase and retirement of common stock (shares)			2,069,000
Stock Repurchase Program, Number of Shares Authorized to be Repurchased	4,367,000		4,367,000
Cash dividend paid during period, per share (in dollars per share)	$ 0.6	$ 0.58	$ 1.8	$ 1.74
Common stock excluded from calculation of diluted earnings per share (shares)	1,785,000	2,892,000	1,713,000	2,816,000

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Financial Services Arrangements - Additional Information (Detail) - USD ($) $ in Thousands	Sep. 30, 2018	Dec. 31, 2017
Investments in and Advances to Affiliates [Line Items]
Investment in affiliates	$ 88,790	$ 88,764
Trade receivables, net	217,694	$ 200,144
Aggregate repurchase obligation, amount	$ 164,969
Maximum
Investments in and Advances to Affiliates [Line Items]
Aggregate repurchase obligation, percentage	15.00%
Polaris Acceptance
Investments in and Advances to Affiliates [Line Items]
Equity method investment ownership percentage	50.00%
Net amount financed for dealers	$ 1,237,689
Trade receivables, net	566,102
Securitization Facility
Investments in and Advances to Affiliates [Line Items]
Outstanding balance of receivables	$ 671,587

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Investment in Other Affiliates Additional Information (Details) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017	Dec. 31, 2017
Investments in and Advances to Affiliates [Line Items]
Investments in and advances to affiliates	$ 0		$ 0		$ 18,616,000
Income (loss) from equity method investments	$ (111,000)	$ (1,603,000)	(25,576,000)	$ (4,839,000)
Cost-method Investments, Realized Gains			$ 13,000,000
Eicher -Polaris Private Limited
Investments in and Advances to Affiliates [Line Items]
Equity method investment ownership percentage	50.00%		50.00%
Period for proportionate share of income (loss) to be reflected in consolidated financials			1 month
Equity Method Investment, Other than Temporary Impairment			$ 19,000,000
Income (loss) from equity method investments	$ 0		$ 23,447,000

XML

Commitments and Contingencies - Additional Information (Detail) $ in Thousands	Sep. 30, 2018 USD ($)
Commitments and Contingencies Disclosure [Abstract]
Accrual for the probable payment of pending claims	$ 55,320

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Derivative Instruments and Hedging Activities Open Foreign Currency Contracts (Details) - USD ($) $ in Thousands	Sep. 30, 2018	Dec. 31, 2017
Derivative [Line Items]
Net Unrealized Gain	$ 3,789	$ (426)
Cash Flow Hedging | Foreign Exchange Contract
Derivative [Line Items]
Notional Amounts (in U.S. Dollars)	131,859
Net Unrealized Gain	3,010
Cash Flow Hedging | Foreign Exchange Contract | Australian Dollar
Derivative [Line Items]
Notional Amounts (in U.S. Dollars)	7,350
Net Unrealized Gain	577
Cash Flow Hedging | Foreign Exchange Contract | Canadian Dollar
Derivative [Line Items]
Notional Amounts (in U.S. Dollars)	104,486
Net Unrealized Gain	1,451
Cash Flow Hedging | Foreign Exchange Contract | Mexican Peso
Derivative [Line Items]
Notional Amounts (in U.S. Dollars)	20,023
Net Unrealized Gain	$ 982

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Derivative Instruments and Hedging Activities Open Interest Rate Swap Contracts (Details) - USD ($) $ in Thousands	Sep. 30, 2018	Dec. 31, 2017
Derivative [Line Items]
Net Unrealized Gain (Loss)	$ 3,789	$ (426)
Cash Flow Hedging | Interest rate swap
Derivative [Line Items]
Notional Amounts	425,000
Net Unrealized Gain (Loss)	779
Cash Flow Hedging | Interest Rate Swap, May 2018 to May 2021
Derivative [Line Items]
Notional Amounts	25,000
Net Unrealized Gain (Loss)	682
Cash Flow Hedging | Interest Rate Swap, September 2018 to September 2019
Derivative [Line Items]
Notional Amounts	250,000
Net Unrealized Gain (Loss)	(65)
Cash Flow Hedging | Interest Rate Swap, September 2019 to September 2023
Derivative [Line Items]
Notional Amounts	150,000
Net Unrealized Gain (Loss)	$ 162

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Derivative Instruments and Hedging Activities Carrying Values of Derivative Instruments (Detail) - USD ($) $ in Thousands		Sep. 30, 2018	Dec. 31, 2017
Derivative [Line Items]
Derivative Net Carrying Value		$ 3,789	$ (426)
Designated as Hedging Instrument
Derivative [Line Items]
Derivative Net Carrying Value		3,789	(426)
Designated as Hedging Instrument | Foreign Exchange Contract
Derivative [Line Items]
Derivative Net Carrying Value	[1]	3,010	(426)
Designated as Hedging Instrument | Interest rate contract
Derivative [Line Items]
Derivative Net Carrying Value	[1]	779
Prepaid Expenses And Other Current Assets
Derivative [Line Items]
Fair Value— Assets		3,789	621
Prepaid Expenses And Other Current Assets | Designated as Hedging Instrument
Derivative [Line Items]
Fair Value— Assets		3,789	621
Prepaid Expenses And Other Current Assets | Designated as Hedging Instrument | Foreign Exchange Contract
Derivative [Line Items]
Fair Value— Assets	[1]	3,010	621
Prepaid Expenses And Other Current Assets | Designated as Hedging Instrument | Interest rate contract
Derivative [Line Items]
Fair Value— Assets	[1]	779
Other Current Liabilities
Derivative [Line Items]
Fair Value— (Liabilities)		0	(1,047)
Other Current Liabilities | Designated as Hedging Instrument
Derivative [Line Items]
Fair Value— (Liabilities)		0	(1,047)
Other Current Liabilities | Designated as Hedging Instrument | Foreign Exchange Contract
Derivative [Line Items]
Fair Value— (Liabilities)	[1]	0	$ (1,047)
Other Current Liabilities | Designated as Hedging Instrument | Interest rate contract
Derivative [Line Items]
Fair Value— (Liabilities)	[1]	$ 0

[1] Assets are included in prepaid expenses and other and liabilities are included in other accrued expenses on the accompanying consolidated balance sheets.

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Derivative Instruments and Hedging Activities Additional Information (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
Derivative [Line Items]
Unrealized gain (loss) on derivative instruments	$ (2,111)	$ (167)	$ 2,998	$ (1,208)
Designated as Hedging Instrument | Cash Flow Hedging
Derivative [Line Items]
Unrealized gain (loss) on derivative instruments	$ (2,111)	$ (167)	$ 2,998	$ (1,208)

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Segment Information (Details) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2018 USD ($)	Sep. 30, 2017 USD ($)	Sep. 30, 2018 USD ($) segment	Sep. 30, 2017 USD ($)
Segment Reporting Information [Line Items]
Revenue	$ 1,651,415	$ 1,478,726	$ 4,451,420	$ 3,997,428
Number of Operating Segments | segment			6
Gross profit	401,270	363,962	$ 1,109,927	956,839
Number of Reportable Segments | segment			5
ORV/Snowmobiles
Segment Reporting Information [Line Items]
Revenue	1,035,554		$ 2,858,959
Motorcycles
Segment Reporting Information [Line Items]
Revenue	155,316		458,285
Global Adjacent Markets
Segment Reporting Information [Line Items]
Revenue	96,251		322,996
Aftermarket
Segment Reporting Information [Line Items]
Revenue	229,973		676,859
Boats
Segment Reporting Information [Line Items]
Revenue	134,321		134,321
Operating segments | ORV/Snowmobiles
Segment Reporting Information [Line Items]
Revenue	1,035,554	1,007,392	2,858,959	2,577,003
Gross profit	290,631	296,904	831,413	776,013
Operating segments | Motorcycles
Segment Reporting Information [Line Items]
Revenue	155,316	155,059	458,285	473,345
Gross profit	19,577	10,354	60,817	11,589
Operating segments | Global Adjacent Markets
Segment Reporting Information [Line Items]
Revenue	96,251	91,575	322,996	280,152
Gross profit	24,155	15,983	83,520	65,297
Operating segments | Aftermarket
Segment Reporting Information [Line Items]
Revenue	229,973	224,700	676,859	666,928
Gross profit	66,092	63,239	182,291	164,721
Operating segments | Boats
Segment Reporting Information [Line Items]
Revenue	134,321	0	134,321	0
Gross profit	20,253	0	20,253	0
Corporate
Segment Reporting Information [Line Items]
Gross profit	$ (19,438)	$ (22,518)	$ (68,367)	$ (60,781)

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Victory Motorcycles Wind Down (Narrative) (Details) - Victory Motorcycles - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017	Dec. 31, 2017
Disposal Group, Disposed of by Means Other than Sale, Not Discontinued Operations [Member]
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Charges related to the wind down plan	$ 1,281	$ 2,666	$ 3,911	$ 59,131
Pre-tax impact of other wind-down activities	233	6,143	(2,154)	18,109
Disposal Group, Disposed of by Means Other than Sale, Not Discontinued Operations, Abandonment
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Charges related to the wind down plan	1,281	$ 2,666	3,911	$ 59,131
Liability balance	$ 3,029		3,029		$ 5,645
Disposal Group, Disposed of by Means Other than Sale, Not Discontinued Operations, Abandonment | Minimum
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Estimated charges			$ 10,000

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Victory Motorcycles Wind Down (Wind Down Charges) (Details) - Victory Motorcycles - Disposal Group, Disposed of by Means Other than Sale, Not Discontinued Operations, Abandonment - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Charges related to the wind down plan	$ 1,281	$ 2,666	$ 3,911	$ 59,131
Contract termination charges
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Charges related to the wind down plan	1,149	1,501	2,866	19,196
Asset Impairment Charges [Member]
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Charges related to the wind down plan	0	0	0	18,760
Inventory charges
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Charges related to the wind down plan	0	0	0	12,680
Other costs
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Charges related to the wind down plan	$ 132	$ 1,165	$ 1,045	$ 8,495

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Victory Motorcycles Wind Down (Liability Balance) (Details) - Victory Motorcycles - Disposal Group, Disposed of by Means Other than Sale, Not Discontinued Operations, Abandonment $ in Thousands	9 Months Ended
	Sep. 30, 2018 USD ($)
Disposal Group, Including Discontinued Operation, Liabilities [Roll Forward]
Reserves balance as of December 31, 2017	$ 5,645
Expenses	3,911
Cash payments / scrapped inventory	(6,527)
Reserves balance as of September 30, 2018	3,029
Contract termination charges
Disposal Group, Including Discontinued Operation, Liabilities [Roll Forward]
Reserves balance as of December 31, 2017	3,187
Expenses	2,866
Cash payments / scrapped inventory	(4,907)
Reserves balance as of September 30, 2018	1,146
Inventory charges
Disposal Group, Including Discontinued Operation, Liabilities [Roll Forward]
Reserves balance as of December 31, 2017	777
Expenses	0
Cash payments / scrapped inventory	(85)
Reserves balance as of September 30, 2018	692
Other costs
Disposal Group, Including Discontinued Operation, Liabilities [Roll Forward]
Reserves balance as of December 31, 2017	1,681
Expenses	1,045
Cash payments / scrapped inventory	(1,535)
Reserves balance as of September 30, 2018	$ 1,191

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Label	Element	Value
Restricted Cash and Cash Equivalents	us-gaap_RestrictedCashAndCashEquivalents	$ 20,476,000
Restricted Cash and Cash Equivalents	us-gaap_RestrictedCashAndCashEquivalents	$ 30,792,000