(Mark one) | ||
x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
¨ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Minnesota | 41-1790959 | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | |
2100 Highway 55, Medina MN | 55340 | |
(Address of principal executive offices) | (Zip Code) | |
(763) 542-0500 (Registrant’s telephone number, including area code) |
Large accelerated filer | x | Accelerated filer | ¨ |
Non-accelerated filer | ¨ | Smaller reporting company | ¨ |
Emerging growth company | ¨ |
POLARIS INDUSTRIES INC. FORM 10-Q For Quarterly Period Ended September 30, 2018 | |||
Page | |||
POLARIS INDUSTRIES INC. CONSOLIDATED BALANCE SHEETS (In thousands, except per share data) | |||||||
September 30, 2018 | December 31, 2017 | ||||||
(Unaudited) | |||||||
Assets | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 183,411 | $ | 138,345 | |||
Trade receivables, net | 217,694 | 200,144 | |||||
Inventories, net | 1,019,517 | 783,961 | |||||
Prepaid expenses and other | 105,066 | 101,453 | |||||
Income taxes receivable | 5,865 | 29,601 | |||||
Total current assets | 1,531,553 | 1,253,504 | |||||
Property and equipment, net | 807,511 | 747,189 | |||||
Investment in finance affiliate | 88,790 | 88,764 | |||||
Deferred tax assets | 116,447 | 115,511 | |||||
Goodwill and other intangible assets, net | 1,515,431 | 780,586 | |||||
Other long-term assets | 88,299 | 104,039 | |||||
Total assets | $ | 4,148,031 | $ | 3,089,593 | |||
Liabilities and Shareholders’ Equity | |||||||
Current liabilities: | |||||||
Current portion of debt, capital lease obligations and notes payable | $ | 66,595 | $ | 47,746 | |||
Accounts payable | 436,401 | 317,377 | |||||
Accrued expenses: | |||||||
Compensation | 160,033 | 168,014 | |||||
Warranties | 122,544 | 123,840 | |||||
Sales promotions and incentives | 187,307 | 162,298 | |||||
Dealer holdback | 124,259 | 114,196 | |||||
Other | 179,738 | 186,103 | |||||
Income taxes payable | 8,963 | 10,737 | |||||
Total current liabilities | 1,285,840 | 1,130,311 | |||||
Long-term income taxes payable | 26,805 | 20,114 | |||||
Capital lease obligations | 16,712 | 18,351 | |||||
Long-term debt | 1,781,020 | 846,915 | |||||
Deferred tax liabilities | 7,054 | 10,128 | |||||
Other long-term liabilities | 122,728 | 120,398 | |||||
Total liabilities | $ | 3,240,159 | $ | 2,146,217 | |||
Deferred compensation | $ | 9,620 | $ | 11,717 | |||
Shareholders’ equity: | |||||||
Preferred stock $0.01 par value, 20,000 shares authorized, no shares issued and outstanding | — | — | |||||
Common stock $0.01 par value, 160,000 shares authorized, 61,773 and 63,075 shares issued and outstanding, respectively | $ | 618 | $ | 631 | |||
Additional paid-in capital | 799,607 | 733,894 | |||||
Retained earnings | 152,561 | 242,763 | |||||
Accumulated other comprehensive loss, net | (54,534 | ) | (45,629 | ) | |||
Total shareholders’ equity | 898,252 | 931,659 | |||||
Total liabilities and shareholders’ equity | $ | 4,148,031 | $ | 3,089,593 |
POLARIS INDUSTRIES INC. CONSOLIDATED STATEMENTS OF INCOME (In thousands, except per share data) (Unaudited) | |||||||||||||||
Three months ended September 30, | Nine months ended September 30, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
Sales | $ | 1,651,415 | $ | 1,478,726 | $ | 4,451,420 | $ | 3,997,428 | |||||||
Cost of sales | 1,250,145 | 1,114,764 | 3,341,493 | 3,040,589 | |||||||||||
Gross profit | 401,270 | 363,962 | 1,109,927 | 956,839 | |||||||||||
Operating expenses: | |||||||||||||||
Selling and marketing | 128,929 | 122,642 | 369,495 | 355,486 | |||||||||||
Research and development | 64,181 | 63,129 | 197,741 | 175,887 | |||||||||||
General and administrative | 90,639 | 79,421 | 262,206 | 245,998 | |||||||||||
Total operating expenses | 283,749 | 265,192 | 829,442 | 777,371 | |||||||||||
Income from financial services | 21,348 | 18,138 | 64,117 | 57,711 | |||||||||||
Operating income | 138,869 | 116,908 | 344,602 | 237,179 | |||||||||||
Non-operating expense: | |||||||||||||||
Interest expense | 19,823 | 8,492 | 37,087 | 24,438 | |||||||||||
Equity in loss of other affiliates | 111 | 1,603 | 25,576 | 4,839 | |||||||||||
Other expense (income), net | (4,124 | ) | (2,368 | ) | (27,660 | ) | 7,088 | ||||||||
Income before income taxes | 123,059 | 109,181 | 309,599 | 200,814 | |||||||||||
Provision for income taxes | 27,530 | 27,293 | 65,816 | 59,796 | |||||||||||
Net income | $ | 95,529 | $ | 81,888 | $ | 243,783 | $ | 141,018 | |||||||
Net income per share: | |||||||||||||||
Basic | $ | 1.54 | $ | 1.31 | $ | 3.88 | $ | 2.24 | |||||||
Diluted | $ | 1.50 | $ | 1.28 | $ | 3.78 | $ | 2.21 | |||||||
Weighted average shares outstanding: | |||||||||||||||
Basic | 62,207 | 62,646 | 62,894 | 62,890 | |||||||||||
Diluted | 63,546 | 63,885 | 64,550 | 63,942 |
Three months ended September 30, | Nine months ended September 30, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
Net income | $ | 95,529 | $ | 81,888 | $ | 243,783 | $ | 141,018 | |||||||
Other comprehensive income, net of tax: | |||||||||||||||
Foreign currency translation adjustments | 1,804 | 10,606 | (12,099 | ) | 41,042 | ||||||||||
Unrealized gain (loss) on derivative instruments | (2,111 | ) | (167 | ) | 2,998 | (1,208 | ) | ||||||||
Retirement plan activity | 66 | — | 196 | — | |||||||||||
Comprehensive income | $ | 95,288 | $ | 92,327 | $ | 234,878 | $ | 180,852 |
POLARIS INDUSTRIES INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) (Unaudited) | |||||||
Nine months ended September 30, | |||||||
2018 | 2017 | ||||||
Operating Activities: | |||||||
Net income | $ | 243,783 | $ | 141,018 | |||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
Depreciation and amortization | 155,910 | 138,105 | |||||
Noncash compensation | 43,219 | 34,249 | |||||
Noncash income from financial services | (22,232 | ) | (20,131 | ) | |||
Deferred income taxes | (4,171 | ) | (2,703 | ) | |||
Impairment charges | 21,716 | 25,395 | |||||
Other, net | (9,618 | ) | 4,839 | ||||
Changes in operating assets and liabilities: | |||||||
Trade receivables | (991 | ) | (447 | ) | |||
Inventories | (201,229 | ) | (83,621 | ) | |||
Accounts payable | 90,842 | 108,198 | |||||
Accrued expenses | 1,620 | 80,949 | |||||
Income taxes payable/receivable | 28,715 | 62,336 | |||||
Prepaid expenses and others, net | 6,574 | 8,908 | |||||
Net cash provided by operating activities | 354,138 | 497,095 | |||||
Investing Activities: | |||||||
Purchase of property and equipment | (157,763 | ) | (126,647 | ) | |||
Investment in finance affiliate, net | 22,207 | 43,230 | |||||
Investment in other affiliates, net | 7,366 | (7,110 | ) | ||||
Acquisition and disposal of businesses, net of cash acquired | (729,925 | ) | 1,645 | ||||
Net cash used for investing activities | (858,115 | ) | (88,882 | ) | |||
Financing Activities: | |||||||
Borrowings under debt arrangements / capital lease obligations | 2,845,688 | 1,623,577 | |||||
Repayments under debt arrangements / capital lease obligations | (1,970,701 | ) | (1,850,247 | ) | |||
Repurchase and retirement of common shares | (246,931 | ) | (88,877 | ) | |||
Cash dividends to shareholders | (112,748 | ) | (108,923 | ) | |||
Proceeds from stock issuances under employee plans | 47,158 | 14,226 | |||||
Net cash provided by (used for) financing activities | 562,466 | (410,244 | ) | ||||
Impact of currency exchange rates on cash balances | (5,904 | ) | 9,597 | ||||
Net increase in cash, cash equivalents and restricted cash | 52,585 | 7,566 | |||||
Cash, cash equivalents and restricted cash at beginning of period | 161,618 | 145,170 | |||||
Cash, cash equivalents and restricted cash at end of period | $ | 214,203 | $ | 152,736 | |||
Supplemental Cash Flow Information: | |||||||
Interest paid on debt borrowings | $ | 33,218 | $ | 21,968 | |||
Income taxes paid (refunded) | $ | 40,178 | $ | (582 | ) | ||
The following presents cash, cash equivalents and restricted cash by category within the consolidated balance sheets: | |||||||
Cash and cash equivalents | $ | 183,411 | $ | 132,260 | |||
Other long-term assets | 30,792 | 20,476 | |||||
Total | $ | 214,203 | $ | 152,736 |
Fair Value Measurements as of September 30, 2018 | |||||||||||||||
Asset (Liability) | Total | Level 1 | Level 2 | Level 3 | |||||||||||
Non-qualified deferred compensation assets | $ | 50,161 | $ | 50,161 | $ | — | $ | — | |||||||
Foreign exchange contracts, net | 3,010 | — | 3,010 | — | |||||||||||
Interest rate contracts, net | 779 | — | 779 | — | |||||||||||
Total assets at fair value | $ | 53,950 | $ | 50,161 | $ | 3,789 | $ | — | |||||||
Non-qualified deferred compensation liabilities | $ | (50,161 | ) | $ | (50,161 | ) | $ | — | $ | — | |||||
Total liabilities at fair value | $ | (50,161 | ) | $ | (50,161 | ) | $ | — | $ | — | |||||
Fair Value Measurements as of December 31, 2017 | |||||||||||||||
Asset (Liability) | Total | Level 1 | Level 2 | Level 3 | |||||||||||
Non-qualified deferred compensation assets | $ | 54,244 | $ | 54,244 | $ | — | $ | — | |||||||
Total assets at fair value | $ | 54,244 | $ | 54,244 | $ | — | $ | — | |||||||
Non-qualified deferred compensation liabilities | $ | (54,244 | ) | $ | (54,244 | ) | $ | — | $ | — | |||||
Foreign exchange contracts, net | (426 | ) | — | (426 | ) | — | |||||||||
Total liabilities at fair value | $ | (54,670 | ) | $ | (54,244 | ) | $ | (426 | ) | $ | — | ||||
September 30, 2018 | December 31, 2017 | ||||||
Raw materials and purchased components | $ | 249,259 | $ | 194,108 | |||
Service parts, garments and accessories | 345,716 | 307,684 | |||||
Finished goods | 477,293 | 329,288 | |||||
Less: reserves | (52,751 | ) | (47,119 | ) | |||
Inventories | $ | 1,019,517 | $ | 783,961 |
Three months ended September 30, | Nine months ended September 30, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
Balance at beginning of period | $ | 106,155 | $ | 108,403 | $ | 123,840 | $ | 119,274 | |||||||
Additions to warranty reserve through acquisitions | 13,799 | — | 13,799 | — | |||||||||||
Additions charged to expense | 37,741 | 42,039 | 79,913 | 103,855 | |||||||||||
Warranty claims paid, net | (35,151 | ) | (38,357 | ) | (95,008 | ) | (111,044 | ) | |||||||
Balance at end of period | $ | 122,544 | $ | 112,085 | $ | 122,544 | $ | 112,085 |
Three months ended September 30, 2018 | |||||||||||||||||||||||
ORV / Snowmobiles | Motorcycles | Global Adj. Markets | Aftermarket | Boats | Consolidated | ||||||||||||||||||
Revenue by product type | |||||||||||||||||||||||
Wholegoods | $ | 851,733 | $ | 134,410 | $ | 78,312 | — | $ | 134,321 | $ | 1,198,776 | ||||||||||||
PG&A | 183,821 | 20,906 | 17,939 | $ | 229,973 | — | 452,639 | ||||||||||||||||
Total revenue | $ | 1,035,554 | $ | 155,316 | $ | 96,251 | $ | 229,973 | $ | 134,321 | $ | 1,651,415 | |||||||||||
Revenue by geography | |||||||||||||||||||||||
United States | $ | 866,289 | $ | 116,072 | $ | 51,363 | $ | 217,816 | $ | 132,139 | $ | 1,383,679 | |||||||||||
Canada | 70,765 | 9,712 | 837 | 12,157 | 2,182 | 95,653 | |||||||||||||||||
EMEA | 64,218 | 15,706 | 42,893 | — | — | 122,817 | |||||||||||||||||
APLA | 34,282 | 13,826 | 1,158 | — | — | 49,266 | |||||||||||||||||
Total revenue | $ | 1,035,554 | $ | 155,316 | $ | 96,251 | $ | 229,973 | $ | 134,321 | $ | 1,651,415 |
Nine months ended September 30, 2018 | |||||||||||||||||||||||
ORV / Snowmobiles | Motorcycles | Global Adj. Markets | Aftermarket | Boats | Consolidated | ||||||||||||||||||
Revenue by product type | |||||||||||||||||||||||
Wholegoods | $ | 2,356,086 | $ | 395,189 | $ | 263,874 | — | $ | 134,321 | $ | 3,149,470 | ||||||||||||
PG&A | 502,873 | 63,096 | 59,122 | $ | 676,859 | — | 1,301,950 | ||||||||||||||||
Total revenue | $ | 2,858,959 | $ | 458,285 | $ | 322,996 | $ | 676,859 | $ | 134,321 | $ | 4,451,420 | |||||||||||
Revenue by geography | |||||||||||||||||||||||
United States | $ | 2,347,202 | $ | 313,530 | $ | 151,157 | $ | 644,382 | $ | 132,139 | $ | 3,588,410 | |||||||||||
Canada | 197,096 | 27,421 | 16,422 | 32,477 | 2,182 | 275,598 | |||||||||||||||||
EMEA | 207,779 | 74,044 | 151,982 | — | — | 433,805 | |||||||||||||||||
APLA | 106,882 | 43,290 | 3,435 | — | — | 153,607 | |||||||||||||||||
Total revenue | $ | 2,858,959 | $ | 458,285 | $ | 322,996 | $ | 676,859 | $ | 134,321 | $ | 4,451,420 |
Three months ended September 30, | Nine months ended September 30, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
Balance at beginning of period | $ | 52,620 | $ | 36,188 | $ | 45,760 | $ | 26,157 | |||||||
New contracts sold | 8,054 | 6,962 | 25,226 | 22,076 | |||||||||||
Less: reductions for revenue recognized | (5,088 | ) | (3,130 | ) | (15,400 | ) | (8,213 | ) | |||||||
Balance at end of period (1) | $ | 55,586 | $ | 40,020 | $ | 55,586 | $ | 40,020 |
Cash and cash equivalents | $ | 16,534 | |
Trade receivables | 17,602 | ||
Inventory | 39,990 | ||
Other current assets | 3,938 | ||
Property, plant and equipment | 36,769 | ||
Customer relationships | 341,080 | ||
Trademarks / trade names | 210,680 | ||
Non-compete agreements | 2,630 | ||
Goodwill | 207,126 | ||
Accounts payable | (30,017 | ) | |
Other liabilities assumed | (23,140 | ) | |
Total fair value of net assets acquired | 823,192 | ||
Less cash acquired | (16,534 | ) | |
Total consideration for acquisition, less cash acquired | $ | 806,658 |
Three months ended September 30, | Nine months ended September 30, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
Net sales | $ | 1,651,415 | $ | 1,593,659 | $ | 4,802,580 | $ | 4,410,691 | |||||||
Net income | 99,224 | 81,473 | 268,660 | 149,517 | |||||||||||
Basic earnings per share | $ | 1.60 | $ | 1.30 | $ | 4.27 | $ | 2.38 | |||||||
Diluted earnings per common share | $ | 1.56 | $ | 1.28 | $ | 4.16 | $ | 2.34 |
Three months ended September 30, | Nine months ended September 30, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
Option plan | $ | 6,821 | $ | 5,766 | $ | 16,636 | $ | 12,837 | |||||||
Other share-based awards | (748 | ) | (3,919 | ) | 18,988 | 18,191 | |||||||||
Total share-based compensation before tax | 6,073 | 1,847 | 35,624 | 31,028 | |||||||||||
Tax benefit | 1,446 | 686 | 8,479 | 11,524 | |||||||||||
Total share-based compensation expense included in net income | $ | 4,627 | $ | 1,161 | $ | 27,145 | $ | 19,504 |
Average interest rate at September 30, 2018 | Maturity | September 30, 2018 | December 31, 2017 | ||||||||
Revolving loan facility | 1.84% | July 2023 | $ | 74,023 | $ | 3,000 | |||||
Term loan facility | 3.77% | July 2023 | 1,165,000 | 680,000 | |||||||
Senior notes—fixed rate | 3.81% | May 2018 | — | 25,000 | |||||||
Senior notes—fixed rate | 4.60% | May 2021 | 75,000 | 75,000 | |||||||
Senior notes—fixed rate | 3.13% | December 2020 | 100,000 | 100,000 | |||||||
Senior notes—fixed rate | 4.23% | July 2028 | 350,000 | — | |||||||
Capital lease obligations | 5.25% | Various through 2029 | 18,052 | 19,889 | |||||||
Notes payable and other | 4.23% | Various through 2030 | 87,608 | 12,384 | |||||||
Debt issuance costs | (5,356 | ) | (2,261 | ) | |||||||
Total debt, capital lease obligations, and notes payable | $ | 1,864,327 | $ | 913,012 | |||||||
Less: current maturities | 66,595 | 47,746 | |||||||||
Total long-term debt, capital lease obligations, and notes payable | $ | 1,797,732 | $ | 865,266 |
September 30, 2018 | December 31, 2017 | ||||||
Goodwill | $ | 637,486 | $ | 433,374 | |||
Other intangible assets, net | 877,945 | 347,212 | |||||
Total goodwill and other intangible assets, net | $ | 1,515,431 | $ | 780,586 |
Nine months ended September 30, 2018 | |||
Goodwill, beginning of period | $ | 433,374 | |
Goodwill from businesses acquired | 207,126 | ||
Currency translation effect on foreign goodwill balances | (3,014 | ) | |
Goodwill, end of period | $ | 637,486 |
Total estimated life (years) | September 30, 2018 | December 31, 2017 | |||||||
Non-amortizable—indefinite lived: | |||||||||
Brand names | $ | 440,976 | $ | 230,709 | |||||
Amortizable: | |||||||||
Non-compete agreements | 4 | 2,370 | 540 | ||||||
Dealer/customer related | 5-20 | 505,543 | 169,694 | ||||||
Developed technology | 5-7 | 13,368 | 22,903 | ||||||
Total amortizable | 521,281 | 193,137 | |||||||
Less: Accumulated amortization | (84,312 | ) | (76,634 | ) | |||||
Net amortized other intangible assets | 436,969 | 116,503 | |||||||
Total other intangible assets, net | $ | 877,945 | $ | 347,212 |
Three months ended September 30, | Nine months ended September 30, | |||||||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||||||
Cash dividends declared and paid per common share | $ | 0.60 | $ | 0.58 | $ | 1.80 | $ | 1.74 |
Three months ended September 30, | Nine months ended September 30, | ||||||||
2018 | 2017 | 2018 | 2017 | ||||||
Weighted average number of common shares outstanding | 61,927 | 62,398 | 62,630 | 62,637 | |||||
Director Plan and deferred stock units | 181 | 161 | 175 | 154 | |||||
ESOP | 99 | 87 | 89 | 99 | |||||
Common shares outstanding—basic | 62,207 | 62,646 | 62,894 | 62,890 | |||||
Dilutive effect of Omnibus Plan | 1,339 | 1,239 | 1,656 | 1,052 | |||||
Common and potential common shares outstanding—diluted | 63,546 | 63,885 | 64,550 | 63,942 |
Foreign Currency Items | Cash Flow Hedging Derivatives | Retirement Plan Activity | Accumulated Other Comprehensive Loss | ||||||||||||
Balance as of December 31, 2017 | $ | (42,442 | ) | $ | (34 | ) | $ | (3,153 | ) | $ | (45,629 | ) | |||
Reclassification to the statement of income | — | (7,141 | ) | 196 | (6,945 | ) | |||||||||
Change in fair value | (12,099 | ) | 10,139 | — | (1,960 | ) | |||||||||
Balance as of September 30, 2018 | $ | (54,541 | ) | $ | 2,964 | $ | (2,957 | ) | $ | (54,534 | ) |
Derivatives in Cash Flow Hedging Relationships | Location of (Gain) Loss Reclassified from Accumulated Other Comprehensive Loss into Income | Three months ended September 30, | Nine months ended September 30, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||||
Foreign currency contracts | Other expense, net | $ | 4,587 | $ | (174 | ) | $ | 6,681 | $ | 2,433 | |||||||
Foreign currency contracts | Cost of sales | (62 | ) | 258 | 460 | (178 | ) | ||||||||||
Retirement benefit plan activity | Operating expenses | (66 | ) | — | (196 | ) | — | ||||||||||
Total | $ | 4,459 | $ | 84 | $ | 6,945 | $ | 2,255 |
Foreign Currency | Notional Amounts (in U.S. Dollars) | Net Unrealized Gain | ||||||
Australian Dollar | $ | 7,350 | $ | 577 | ||||
Canadian Dollar | 104,486 | 1,451 | ||||||
Mexican Peso | 20,023 | 982 | ||||||
Total | $ | 131,859 | $ | 3,010 |
Effective Date | Termination Date | Notional Amounts | Net Unrealized Gain (Loss) | |||||||
May 2, 2018 | May 4, 2021 | $ | 25,000 | $ | 682 | |||||
September 28, 2018 | September 30, 2019 | 250,000 | (65 | ) | ||||||
September 30, 2019 | September 30, 2023 | 150,000 | 162 | |||||||
Total | $ | 425,000 | $ | 779 |
Carrying Values of Derivative Instruments as of September 30, 2018 | |||||||||||
Fair Value— Assets | Fair Value— (Liabilities) | Derivative Net Carrying Value | |||||||||
Derivatives designated as hedging instruments | |||||||||||
Foreign exchange contracts(1) | $ | 3,010 | $ | — | $ | 3,010 | |||||
Interest rate contracts(1) | 779 | — | 779 | ||||||||
Total derivatives designated as hedging instruments | $ | 3,789 | $ | — | $ | 3,789 | |||||
Total derivatives | $ | 3,789 | $ | — | $ | 3,789 |
Carrying Values of Derivative Instruments as of December 31, 2017 | |||||||||||
Fair Value— Assets | Fair Value— (Liabilities) | Derivative Net Carrying Value | |||||||||
Derivatives designated as hedging instruments | |||||||||||
Foreign exchange contracts(1) | $ | 621 | $ | (1,047 | ) | $ | (426 | ) | |||
Total derivatives designated as hedging instruments | $ | 621 | $ | (1,047 | ) | $ | (426 | ) | |||
Total derivatives | $ | 621 | $ | (1,047 | ) | $ | (426 | ) |
(1) | Assets are included in prepaid expenses and other and liabilities are included in other accrued expenses on the accompanying consolidated balance sheets. |
Three months ended September 30, | Nine months ended September 30, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
Sales | |||||||||||||||
ORV/Snowmobiles | $ | 1,035,554 | $ | 1,007,392 | $ | 2,858,959 | $ | 2,577,003 | |||||||
Motorcycles | 155,316 | 155,059 | 458,285 | 473,345 | |||||||||||
Global Adjacent Markets | 96,251 | 91,575 | 322,996 | 280,152 | |||||||||||
Aftermarket | 229,973 | 224,700 | 676,859 | 666,928 | |||||||||||
Boats | 134,321 | — | 134,321 | — | |||||||||||
Total sales | $ | 1,651,415 | $ | 1,478,726 | $ | 4,451,420 | $ | 3,997,428 | |||||||
Gross profit | |||||||||||||||
ORV/Snowmobiles | $ | 290,631 | $ | 296,904 | $ | 831,413 | $ | 776,013 | |||||||
Motorcycles | 19,577 | 10,354 | 60,817 | 11,589 | |||||||||||
Global Adjacent Markets | 24,155 | 15,983 | 83,520 | 65,297 | |||||||||||
Aftermarket | 66,092 | 63,239 | 182,291 | 164,721 | |||||||||||
Boats | 20,253 | — | 20,253 | — | |||||||||||
Corporate | (19,438 | ) | (22,518 | ) | (68,367 | ) | (60,781 | ) | |||||||
Total gross profit | $ | 401,270 | $ | 363,962 | $ | 1,109,927 | $ | 956,839 |
Three months ended September 30, | Nine months ended September 30, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
Contract termination charges | $ | 1,149 | $ | 1,501 | $ | 2,866 | $ | 19,196 | |||||||
Asset impairment charges | — | — | — | 18,760 | |||||||||||
Inventory charges | — | — | — | 12,680 | |||||||||||
Other costs | 132 | 1,165 | 1,045 | 8,495 | |||||||||||
Total | $ | 1,281 | $ | 2,666 | $ | 3,911 | $ | 59,131 |
Contract termination charges | Inventory charges | Other costs | Total | ||||||||||||
Reserves balance as of December 31, 2017 | $ | 3,187 | $ | 777 | $ | 1,681 | $ | 5,645 | |||||||
Expenses | 2,866 | — | 1,045 | 3,911 | |||||||||||
Cash payments / scrapped inventory | (4,907 | ) | (85 | ) | (1,535 | ) | (6,527 | ) | |||||||
Reserves balance as of September 30, 2018 | $ | 1,146 | $ | 692 | $ | 1,191 | $ | 3,029 |
Percent change in total Company sales compared to corresponding period of the prior year | |||||
Three months ended | Nine months ended | ||||
September 30, 2018 | September 30, 2018 | ||||
Volume | 3 | % | 6 | % | |
Product mix and price | 1 | 1 | |||
Acquisitions | 9 | 3 | |||
Currency | (1 | ) | 1 | ||
12 | % | 11 | % |
Three months ended September 30, | Nine months ended September 30, | ||||||||||||||||||||||||||||||||
($ in millions) | 2018 | Percent of Total Sales | 2017 | Percent of Total Sales | Percent Change 2018 vs. 2017 | 2018 | Percent of Total Sales | 2017 | Percent of Total Sales | Percent Change 2018 vs. 2017 | |||||||||||||||||||||||
ORV/Snowmobiles | $ | 1,035.5 | 63 | % | $ | 1,007.4 | 68 | % | 3 | % | $ | 2,858.9 | 64 | % | $ | 2,577.0 | 64 | % | 11 | % | |||||||||||||
Motorcycles | 155.3 | 9 | % | 155.1 | 11 | % | 0 | % | 458.3 | 10 | % | 473.3 | 12 | % | (3 | )% | |||||||||||||||||
Global Adjacent Markets | 96.3 | 6 | % | 91.5 | 6 | % | 5 | % | 323.0 | 7 | % | 280.2 | 7 | % | 15 | % | |||||||||||||||||
Aftermarket | 230.0 | 14 | % | 224.7 | 15 | % | 2 | % | 676.9 | 16 | % | 666.9 | 17 | % | 1 | % | |||||||||||||||||
Boats | 134.3 | 8 | % | 0.0 | 0 | % | 100 | % | 134.3 | 3 | % | 0.0 | 0 | % | 100 | % | |||||||||||||||||
Total sales | $ | 1,651.4 | 100 | % | $ | 1,478.7 | 100 | % | 12 | % | $ | 4,451.4 | 100 | % | $ | 3,997.4 | 100 | % | 11 | % |
Three months ended September 30, | Nine months ended September 30, | ||||||||||||||||||||||||||||||||
($ in millions) | 2018 | Percent of Total Sales | 2017 | Percent of Total Sales | Percent Change 2018 vs. 2017 | 2018 | Percent of Total Sales | 2017 | Percent of Total Sales | Percent Change 2018 vs. 2017 | |||||||||||||||||||||||
United States | $ | 1,383.7 | 84 | % | $ | 1,202.0 | 81 | % | 15 | % | $ | 3,588.4 | 81 | % | $ | 3,217.2 | 80 | % | 12 | % | |||||||||||||
Canada | 95.7 | 6 | % | 120.0 | 8 | % | (20) | % | 275.6 | 6 | % | 266.1 | 7 | % | 4 | % | |||||||||||||||||
Other foreign countries | 172.0 | 10 | % | 156.7 | 11 | % | 10 | % | 587.4 | 13 | % | 514.1 | 13 | % | 14 | % | |||||||||||||||||
Total sales | $ | 1,651.4 | 100 | % | $ | 1,478.7 | 100 | % | 12 | % | $ | 4,451.4 | 100 | % | $ | 3,997.4 | 100 | % | 11 | % |
Three months ended September 30, | Nine months ended September 30, | ||||||||||||||||||||||||||||||||
($ in millions) | 2018 | Percent of Total Cost of Sales | 2017 | Percent of Total Cost of Sales | Change 2018 vs. 2017 | 2018 | Percent of Total Cost of Sales | 2017 | Percent of Total Cost of Sales | Change 2018 vs. 2017 | |||||||||||||||||||||||
Purchased materials and services | $ | 1,078.9 | 86 | % | $ | 954.7 | 86 | % | 13 | % | $ | 2,894.7 | 87 | % | $ | 2,610.9 | 86 | % | 11 | % | |||||||||||||
Labor and benefits | 96.0 | 8 | % | 79.5 | 7 | % | 21 | % | 267.1 | 8 | % | 220.7 | 7 | % | 21 | % | |||||||||||||||||
Depreciation and amortization | 37.5 | 3 | % | 38.6 | 3 | % | (3 | )% | 99.8 | 3 | % | 105.1 | 4 | % | (5 | )% | |||||||||||||||||
Warranty costs | 37.7 | 3 | % | 42.0 | 4 | % | (10 | )% | 79.9 | 2 | % | 103.9 | 3 | % | (23 | )% | |||||||||||||||||
Total cost of sales | $ | 1,250.1 | 100 | % | $ | 1,114.8 | 100 | % | 12 | % | $ | 3,341.5 | 100 | % | $ | 3,040.6 | 100 | % | 10 | % | |||||||||||||
Percentage of sales | 75.7 | % | 75.4 | % | +31 basis points | 75.1 | % | 76.1 | % | -100 basis points |
Three months ended September 30, | Nine months ended September 30, | ||||||||||||||||||||||||||||||||
($ in millions) | 2018 | Percent of Sales | 2017 | Percent of Sales | Change 2018 vs. 2017 | 2018 | Percent of Sales | 2017 | Percent of Sales | Change 2018 vs. 2017 | |||||||||||||||||||||||
ORV/Snowmobiles | $ | 290.6 | 28.1 | % | $ | 296.9 | 29.5 | % | (2 | )% | $ | 831.4 | 29.1 | % | $ | 776.0 | 30.1 | % | 7 | % | |||||||||||||
Motorcycles | 19.6 | 12.6 | % | 10.4 | 6.7 | % | 88 | % | 60.8 | 13.3 | % | 11.6 | 2.4 | % | NM | ||||||||||||||||||
Global Adjacent Markets | 24.2 | 25.1 | % | 16.0 | 17.5 | % | 50 | % | 83.5 | 25.9 | % | 65.3 | 23.3 | % | 28 | % | |||||||||||||||||
Aftermarket | 66.1 | 28.7 | % | 63.2 | 28.1 | % | 5 | % | 182.3 | 26.9 | % | 164.7 | 24.7 | % | 11 | % | |||||||||||||||||
Boats | 20.3 | 15.1 | % | — | — | % | 20.3 | 15.1 | % | — | — | % | |||||||||||||||||||||
Corporate | (19.5 | ) | (22.5 | ) | (68.4 | ) | (60.8 | ) | |||||||||||||||||||||||||
Total gross profit dollars | $ | 401.3 | $ | 364.0 | 10 | % | $ | 1,109.9 | $ | 956.8 | 16 | % | |||||||||||||||||||||
Percentage of sales | 24.3 | % | 24.6 | % | -31 basis points | 24.9 | % | 23.9 | % | +100 basis points | |||||||||||||||||||||||
NM = not meaningful |
Three months ended September 30, | Nine months ended September 30, | ||||||||||||||||||||
($ in millions) | 2018 | 2017 | Change 2018 vs. 2017 | 2018 | 2017 | Change 2018 vs. 2017 | |||||||||||||||
Selling and marketing | $ | 128.9 | $ | 122.7 | 5 | % | $ | 369.5 | $ | 355.5 | 4 | % | |||||||||
Research and development | 64.2 | 63.1 | 2 | % | 197.7 | 175.9 | 12 | % | |||||||||||||
General and administrative | 90.6 | 79.4 | 14 | % | 262.2 | 246.0 | 7 | % | |||||||||||||
Total operating expenses | $ | 283.7 | $ | 265.2 | 7 | % | $ | 829.4 | $ | 777.4 | 7 | % | |||||||||
Percentage of sales | 17.2 | % | 17.9 | % | -75 basis points | 18.6 | % | 19.4 | % | -81 basis points |
Three months ended September 30, | Nine months ended September 30, | ||||||||||||||||||||
($ in millions) | 2018 | 2017 | Change 2018 vs. 2017 | 2018 | 2017 | Change 2018 vs. 2017 | |||||||||||||||
Income from financial services | $ | 21.3 | $ | 18.1 | 18 | % | $ | 64.1 | $ | 57.7 | 11 | % | |||||||||
Percentage of sales | 1.3 | % | 1.2 | % | +7 basis points | 1.4 | % | 1.4 | % | 0 basis points |
Three months ended September 30, | Nine months ended September 30, | ||||||||||||||||||||
($ in millions, except per share data) | 2018 | 2017 | Change 2018 vs. 2017 | 2018 | 2017 | Change 2018 vs. 2017 | |||||||||||||||
Interest expense | $ | 19.8 | $ | 8.5 | 133 | % | $ | 37.1 | $ | 24.4 | 52 | % | |||||||||
Equity in loss of other affiliates | $ | 0.1 | $ | 1.6 | (94 | )% | $ | 25.6 | $ | 4.8 | NM | ||||||||||
Other expense (income), net | $ | (4.1 | ) | $ | (2.4 | ) | 74 | % | $ | (27.7 | ) | $ | 7.1 | NM | |||||||
Income before taxes | $ | 123.1 | $ | 109.2 | 13 | % | $ | 309.6 | $ | 200.8 | 54 | % | |||||||||
Provision for income taxes | $ | 27.5 | $ | 27.3 | 1 | % | $ | 65.8 | $ | 59.8 | 10 | % | |||||||||
Percentage of income before taxes | 22.4 | % | 25.0 | % | NM | 21.3 | % | 29.8 | % | NM | |||||||||||
Net income | $ | 95.5 | $ | 81.9 | 17 | % | $ | 243.8 | $ | 141.0 | 73 | % | |||||||||
Diluted net income per share: | $ | 1.50 | $ | 1.28 | 17 | % | $ | 3.78 | $ | 2.21 | 71 | % | |||||||||
Weighted average diluted shares outstanding | 63.5 | 63.9 | (1 | )% | 64.6 | 63.9 | 1 | % | |||||||||||||
NM = not meaningful |
($ in millions) | Nine months ended September 30, | ||||||||||
2018 | 2017 | Change | |||||||||
Total cash provided by (used for): | |||||||||||
Operating activities | $ | 354.1 | $ | 497.1 | $ | (143.0 | ) | ||||
Investing activities | (858.1 | ) | (88.9 | ) | (769.2 | ) | |||||
Financing activities | 562.5 | (410.2 | ) | 972.7 | |||||||
Impact of currency exchange rates on cash balances | (5.9 | ) | 9.6 | (15.5 | ) | ||||||
Increase in cash, cash equivalents and restricted cash | $ | 52.6 | $ | 7.6 | $ | 45.0 |
($ in millions) | Average interest rate at September 30, 2018 | Maturity | September 30, 2018 | ||||
Revolving loan facility | 1.84% | July 2023 | $ | 74.0 | |||
Term loan facility | 3.77% | July 2023 | 1,165.0 | ||||
Senior notes—fixed rate | 4.60% | May 2021 | 75.0 | ||||
Senior notes—fixed rate | 3.13% | December 2020 | 100.0 | ||||
Senior notes—fixed rate | 4.23% | July 2028 | 350.0 | ||||
Capital lease obligations | 5.25% | Various through 2029 | 18.1 | ||||
Notes payable and other | 4.23% | Various through 2030 | 87.6 | ||||
Debt issuance costs | (5.4) | ||||||
Total debt, capital lease obligations, and notes payable | $ | 1,864.3 | |||||
Less: current maturities | 66.6 | ||||||
Long-term debt, capital lease obligations, and notes payable | $ | 1,797.7 |
Financial institution | Agreement expiration date |
Performance Finance | December 2021 |
Sheffield Financial | December 2020 |
Synchrony Bank | December 2020 |
Foreign Currency | Foreign currency hedging contracts | ||||||
Currency Position | Notional amounts (in thousands of U.S. Dollars) | Average exchange rate of open contracts | |||||
Australian Dollar (AUD) | Long | $ | 7,350 | $0.79 to 1 AUD | |||
Canadian Dollar (CAD) | Long | 104,486 | $0.78 to 1 CAD | ||||
Mexican Peso | Short | 20,023 | 20.0 Peso to $1 |
Period | Total Number of Shares Purchased | Average Price Paid per Share | Total Number of Shares Purchased as Part of Publicly Announced Program | Maximum Number of Shares That May Yet Be Purchased Under the Program (1) | ||||||||
July 1 — 31, 2018 | 150,000 | $ | 104.58 | 150,000 | 4,724,000 | |||||||
August 1 — 31, 2018 | 353,000 | $ | 108.88 | 353,000 | 4,371,000 | |||||||
September 1 — 30, 2018 | 4,000 | $ | 110.09 | 4,000 | 4,367,000 | |||||||
Total | 507,000 | $ | 107.62 | 507,000 | 4,367,000 |
Exhibit Number | Description | |
Merger Agreement, dated as of May 29, 2018, by and among Polaris Industries Inc., Polaris Sales Inc., Beam Merger Sub, LLC, Boat Holdings, LLC and the Holder Representative thereunder (excluding schedules and exhibits, which the Company agrees to furnish supplementally to the SEC upon request), incorporated by reference to Exhibit 2.1 to the Company’s Current Report on Form 8-K filed May 30, 2018. | ||
Restated Articles of Incorporation of Polaris Industries Inc., effective April 28, 2017, incorporated by reference to Exhibit 3.b to the Company’s Current Report on Form 8-K filed May 2, 2017. | ||
Bylaws of Polaris Industries, Inc., as amended and restated on February 27, 2018, incorporated by reference to Exhibit 3.2 to the Company’s Current Report on Form 8-K filed February 27, 2018. | ||
Master Note Purchase Agreement by and among Polaris Industries Inc. and the purchasers party thereto, dated July 2, 2018, incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K filed July 2, 2018. | ||
Third Amendment to Master Note Purchase Agreement, as Supplemented by the First Supplement to the Master Note Amendment, effective as of July 31, 2018 | ||
Fourth Amended and Restated Credit Agreement, dated July 2, 2018 by and among Polaris Industries Inc., Polaris Sales Europe Sàrl, any other Foreign Borrower (as defined therein) that hereafter becomes a party thereto, the Lenders named therein, U.S. Bank National Association, as Administrative Agent, Left Lead Arranger and Lead Book Runner, Merrill Lynch, Pierce, Fenner & Smith Incorporated, Wells Fargo Securities, LLC, and MUFG Bank, Ltd., as Joint Lead Arrangers, Joint Book Runners and Syndication Agents, and Bank of the West, Fifth Third Bank, JP Morgan Chase Bank N.A., PNC Bank, National Association and BMO Harris Bank N/A., as Documentation Agents, incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed July 2, 2018. | ||
Certification of Chief Executive Officer required by Exchange Act Rule 13a-14(a). | ||
Certification of Chief Financial Officer required by Exchange Act Rule 13a-14(a). | ||
Certification furnished pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | ||
Certification furnished pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | ||
101 | The following financial information from Polaris Industries Inc.’s Quarterly Report on Form 10-Q for the period ended September 30, 2018, filed with the SEC on October 24, 2018, formatted in Extensible Business Reporting Language (XBRL): (i) the Consolidated Balance Sheets at September 30, 2018 and December 31, 2017, (ii) the Consolidated Statements of Income for the three and nine month periods ended September 30, 2018 and 2017, (iii) the Consolidated Statements of Comprehensive Income for the three and nine month periods ended September 30, 2018 and 2017, (iv) the Consolidated Statements of Cash Flows for the three and nine month periods ended September 30, 2018 and 2017, and (v) Notes to Consolidated Financial Statements. |
POLARIS INDUSTRIES INC. (Registrant) | |||
Date: | October 24, 2018 | /s/ 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) |
1. | AMENDMENT TO NOTE AGREEMENT |
2. | REAFFIRMATION; AUTHORIZATION |
3. | EFFECTIVE DATE |
Title: | Executive Vice President-Finance and Chief Financial Officer |
Holder | Amount |
Metropolitan Life Insurance Company | $12,000,000 |
MetLife Investors USA Insurance Company | $4,000,000 |
Voya Insurance and Annuity Company (f/k/a ING USA Annuity and Life Insurance Company) | $8,200,000 |
Voya Retirement Insurance and Annuity Company (f/k/a ING Life Insurance and Annuity Company) | $3,200,000 |
Reliastar Life Insurance Company | $4,500,000 |
Reliastar Life Insurance Company of New York | $100,000 |
The Prudential Insurance Company of America | $2,300,000 |
Gibraltar Life Insurance Co., Ltd. | $11,200,000 |
Pruco Life Insurance Company of New Jersey | $5,000,000 |
MTL Insurance Company | $3,000,000 |
BCBSM, Inc. dba Blue Cross and Blue Shield of Minnesota | $1,500,000 |
Massachusetts Mutual Life Insurance Company | $20,000,000 |
Total | $75,000,000 |
Holder | Amount |
Reliastar Life Insurance Company | $4,400,000 |
Voya Insurance and Annuity Company (f/k/a ING USA Annuity and Life Insurance Company) | $5,900,000 |
Voya Retirement Insurance and Annuity Company (f/k/a ING Life Insurance and Annuity Company) | $9,600,000 |
Security Life of Denver Insurance Company | $7,100,000 |
Voya Insurance and Annuity Company (f/k/a ING USA Annuity and Life Insurance Company) | $500,000 |
Reliastar Life Insurance Company of New York | $200,000 |
Security Life of Denver Insurance Company | $200,000 |
Reliastar Life Insurance Company | $100,000 |
The Northwestern Mutual Life Insurance Company | $28,000,000 |
MetLife Alico Life Insurance K.K. | $10,000,000 |
MetLife Alico Life Insurance K.K. | $10,000,000 |
Allianz Global Risks US Insurance Company | $5,000,000 |
Fireman’s Fund Insurance Company | $5,000,000 |
American United Life Insurance Company | $9,000,000 |
The Phoenix Insurance Company | $5,000,000 |
Total | $100,000,000 |
1. | I have reviewed this quarterly report on Form 10-Q of Polaris Industries Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a. | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b. | Designed such internal control over financial reporting or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c. | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d. | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
a. | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b. | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
/s/ SCOTT W. WINE |
Scott W. Wine |
Chairman and Chief Executive Officer |
1. | I have reviewed this quarterly report on Form 10-Q of Polaris Industries Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a. | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b. | Designed such internal control over financial reporting or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c. | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d. | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
a. | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b. | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
/s/ MICHAEL T. SPEETZEN |
Michael T. Speetzen |
Executive Vice President — Finance |
and Chief Financial Officer |
1. | This statement is provided pursuant to 18 U.S.C. § 1350 in connection with the Company’s Quarterly Report on Form 10-Q for the period ended September 30, 2018 (the “Periodic Report”); |
2. | The Periodic Report fully complies with the requirements of Sections 13(a) and 15(d) of the Securities Exchange Act of 1934, as amended; and |
3. | The information contained in the Periodic Report fairly presents, in all material respects, the financial condition and results of operations of the Company as of the dates and for the periods indicated therein. |
/s/ SCOTT W. WINE |
Scott W. Wine |
Chairman and Chief Executive Officer |
1. | This statement is provided pursuant to 18 U.S.C. § 1350 in connection with the Company’s Quarterly Report on Form 10-Q for the period ended September 30, 2018 (the “Periodic Report”); |
2. | The Periodic Report fully complies with the requirements of Sections 13(a) and 15(d) of the Securities Exchange Act of 1934, as amended; and |
3. | The information contained in the Periodic Report fairly presents, in all material respects, the financial condition and results of operations of the Company as of the dates and for the periods indicated therein. |
/s/ MICHAEL T. SPEETZEN |
Michael T. Speetzen |
Executive Vice President — Finance |
and Chief Financial Officer |
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 |
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 |
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 |
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 |
Significant Accounting Policies |
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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 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):
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):
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 ended September 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 ended September 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 ended September 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. |
Revenue Recognition (Notes) |
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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):
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):
(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. |
Acquisitions |
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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):
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).
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. |
Share-Based Compensation |
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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):
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. |
Financing Agreement |
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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):
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. |
Goodwill and Other Intangible Assets |
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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):
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):
The components of other intangible assets were as follows (in thousands):
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. |
Shareholders' Equity |
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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:
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):
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):
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):
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. |
Financial Services Arrangements |
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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. |
Investment in Other Affiliates |
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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. |
Commitments and Contingencies |
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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. |
Derivative Instruments and Hedging Activities |
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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):
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):
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):
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. |
Segment Information |
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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):
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Victory Motorcycles Wind Down (Notes) |
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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):
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 ended September 30, 2018 were as follows (in thousands):
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Significant Accounting Policies (Policies) |
9 Months Ended |
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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 ended September 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 ended September 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 ended September 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. |
Significant Accounting Policies (Tables) |
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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):
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Schedule of major components of inventories | The major components of inventories are as follows (in thousands):
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Schedule of activity in the warranty reserve | The activity in the warranty reserve during the periods presented was as follows (in thousands):
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Revenue Recognition (Tables) |
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Revenue Recognition [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disaggregation of Revenue | The following tables disaggregate the Company’s revenue by major product type and geography (in thousands):
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Deferred Revenue, by Arrangement, Disclosure | The activity in the deferred revenue reserve during the periods presented was as follows (in thousands):
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Acquisitions (Tables) |
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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):
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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).
|
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):
|
Financing Agreement (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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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):
|
Goodwill and Other Intangible Assets (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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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):
|
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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):
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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):
|
Shareholders' Equity (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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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:
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Schedule of reconciliation of weighted average number of shares | A reconciliation of these amounts is as follows (in thousands):
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Schedule of changes in accumulated other comprehensive income (loss) balances | Changes in the accumulated other comprehensive loss balance are as follows (in thousands):
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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):
|
Derivative Instruments and Hedging Activities (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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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):
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Schedule of open interest rate swap contracts | At September 30, 2018, Polaris had the following open interest rate swap contracts (in thousands):
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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):
|
Segment Information (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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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):
|
Victory Motorcycles Wind Down (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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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):
Changes to the reserves during the nine months ended September 30, 2018 were as follows (in thousands):
|
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 |
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 |
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 |
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 |
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 |
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 |
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 |
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 |
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 |
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 |
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 |
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 |
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 |
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 |
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 |
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 |
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 |
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 |
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 |
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) |
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) |
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 |
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 |
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 |
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 |
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