(Mark one) | |
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 |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | ||||
(Address of principal executive offices) | (Zip Code) | ||||
(Registrant’s telephone number, including area code) | |||||
Polaris Industries Inc. (Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report) |
Securities registered pursuant to Section 12(b) of the Act: | ||
Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
x | Accelerated filer | ☐ | |
Non-accelerated filer | ☐ | Smaller reporting company | |
Emerging growth company |
POLARIS INC. FORM 10-Q For Quarterly Period Ended September 30, 2019 | |||
Page | |||
POLARIS INC. CONSOLIDATED BALANCE SHEETS (In thousands, except per share data) | |||||||
September 30, 2019 | December 31, 2018 | ||||||
(Unaudited) | |||||||
Assets | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | $ | |||||
Trade receivables, net | |||||||
Inventories, net | |||||||
Prepaid expenses and other | |||||||
Income taxes receivable | |||||||
Total current assets | |||||||
Property and equipment, net | |||||||
Investment in finance affiliate | |||||||
Deferred tax assets | |||||||
Goodwill and other intangible assets, net | |||||||
Operating lease assets | — | ||||||
Other long-term assets | |||||||
Total assets | $ | $ | |||||
Liabilities and Shareholders’ Equity | |||||||
Current liabilities: | |||||||
Current portion of debt, finance lease obligations and notes payable | $ | $ | |||||
Accounts payable | |||||||
Accrued expenses: | |||||||
Compensation | |||||||
Warranties | |||||||
Sales promotions and incentives | |||||||
Dealer holdback | |||||||
Other | |||||||
Current operating lease liabilities | — | ||||||
Income taxes payable | |||||||
Total current liabilities | |||||||
Long-term income taxes payable | |||||||
Finance lease obligations | |||||||
Long-term debt | |||||||
Deferred tax liabilities | |||||||
Long-term operating lease liabilities | — | ||||||
Other long-term liabilities | |||||||
Total liabilities | $ | $ | |||||
Deferred compensation | $ | $ | |||||
Shareholders’ equity: | |||||||
Preferred stock $0.01 par value per share, 20,000 shares authorized, no shares issued and outstanding | |||||||
Common stock $0.01 par value per share, 160,000 shares authorized, 61,169 and 60,890 shares issued and outstanding, respectively | $ | $ | |||||
Additional paid-in capital | |||||||
Retained earnings | |||||||
Accumulated other comprehensive loss, net | ( | ) | ( | ) | |||
Total shareholders’ equity | |||||||
Noncontrolling interest | |||||||
Total equity | |||||||
Total liabilities and equity | $ | $ |
POLARIS INC. CONSOLIDATED STATEMENTS OF INCOME (In thousands, except per share data) (Unaudited) | |||||||||||||||
Three months ended September 30, | Nine months ended September 30, | ||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||
Sales | $ | $ | $ | $ | |||||||||||
Cost of sales | |||||||||||||||
Gross profit | |||||||||||||||
Operating expenses: | |||||||||||||||
Selling and marketing | |||||||||||||||
Research and development | |||||||||||||||
General and administrative | |||||||||||||||
Total operating expenses | |||||||||||||||
Income from financial services | |||||||||||||||
Operating income | |||||||||||||||
Non-operating expense: | |||||||||||||||
Interest expense | |||||||||||||||
Equity in loss of other affiliates | |||||||||||||||
Other income, net | ( | ) | ( | ) | ( | ) | ( | ) | |||||||
Income before income taxes | |||||||||||||||
Provision for income taxes | |||||||||||||||
Net income | |||||||||||||||
Net loss attributable to noncontrolling interest | |||||||||||||||
Net income attributable to Polaris Inc. | $ | $ | $ | $ | |||||||||||
Net income per share attributable to Polaris Inc. common shareholders: | |||||||||||||||
Basic | $ | $ | $ | $ | |||||||||||
Diluted | $ | $ | $ | $ | |||||||||||
Weighted average shares outstanding: | |||||||||||||||
Basic | |||||||||||||||
Diluted |
Three months ended September 30, | Nine months ended September 30, | ||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||
Net income | $ | $ | $ | $ | |||||||||||
Other comprehensive income, net of tax: | |||||||||||||||
Foreign currency translation adjustments | ( | ) | ( | ) | ( | ) | |||||||||
Unrealized gain (loss) on derivative instruments | ( | ) | ( | ) | ( | ) | |||||||||
Retirement plan and other activity | ( | ) | |||||||||||||
Comprehensive income | |||||||||||||||
Comprehensive loss attributable to noncontrolling interest | |||||||||||||||
Comprehensive income attributable to Polaris Inc. | $ | $ | $ | $ |
Number of Shares | Common Stock | Additional Paid- In Capital | Retained Earnings | Accumulated Other Comprehensive Income (loss) | Non Controlling Interest | Total Equity | ||||||||||||||||||||
Balance, December 31, 2018 | $ | $ | $ | $ | ( | ) | $ | $ | ||||||||||||||||||
Employee stock compensation | — | — | — | |||||||||||||||||||||||
Deferred compensation | — | — | ( | ) | ( | ) | — | — | ( | ) | ||||||||||||||||
Proceeds from stock issuances under employee plans | — | — | — | — | ||||||||||||||||||||||
Cash dividends declared | — | — | — | ( | ) | — | — | ( | ) | |||||||||||||||||
Repurchase and retirement of common shares | ( | ) | ( | ) | ( | ) | — | — | ( | ) | ||||||||||||||||
Cumulative effect of adoption of accounting standards (ASU 2018-02) | — | — | ( | ) | ||||||||||||||||||||||
Net income | — | — | — | — | ||||||||||||||||||||||
Other comprehensive loss | — | — | — | — | ( | ) | — | ( | ) | |||||||||||||||||
Balance, March 31, 2019 | ( | ) | ||||||||||||||||||||||||
Employee stock compensation | — | — | — | — | ||||||||||||||||||||||
Deferred compensation | — | — | ( | ) | ( | ) | — | — | ( | ) | ||||||||||||||||
Proceeds from stock issuances under employee plans | — | — | — | — | ||||||||||||||||||||||
Cash dividends declared | — | — | — | ( | ) | — | — | ( | ) | |||||||||||||||||
Repurchase and retirement of common shares | ( | ) | — | ( | ) | ( | ) | — | — | ( | ) | |||||||||||||||
Net income (loss) | — | — | — | — | ( | ) | ||||||||||||||||||||
Other comprehensive loss | — | — | — | — | ( | ) | — | ( | ) | |||||||||||||||||
Balance, June 30, 2019 | ( | ) | ||||||||||||||||||||||||
Employee stock compensation | — | — | — | |||||||||||||||||||||||
Deferred compensation | — | — | ( | ) | — | — | ( | ) | ||||||||||||||||||
Proceeds from stock issuances under employee plans | — | — | — | |||||||||||||||||||||||
Cash dividends declared | — | — | — | ( | ) | — | — | ( | ) | |||||||||||||||||
Repurchase and retirement of common shares | ( | ) | ( | ) | ( | ) | ( | ) | — | — | ( | ) | ||||||||||||||
Net income | — | — | — | — | — | |||||||||||||||||||||
Other comprehensive loss | — | — | — | — | ( | ) | — | ( | ) | |||||||||||||||||
Balance, September 30, 2019 | ( | ) |
Number of Shares | Common Stock | Additional Paid- In Capital | Retained Earnings | Accumulated Other Comprehensive Income (loss) | Non Controlling Interest | Total Equity | ||||||||||||||||||||
Balance, December 31, 2017 | $ | $ | $ | $ | ( | ) | $ | $ | ||||||||||||||||||
Employee stock compensation | ( | ) | — | — | — | — | ||||||||||||||||||||
Deferred compensation | — | — | ( | ) | — | — | ||||||||||||||||||||
Proceeds from stock issuances under employee plans | — | — | — | |||||||||||||||||||||||
Cash dividends declared | — | — | — | ( | ) | — | — | ( | ) | |||||||||||||||||
Repurchase and retirement of common shares | ( | ) | ( | ) | ( | ) | ( | ) | — | — | ( | ) | ||||||||||||||
Cumulative effect of adoption of accounting standards (ASU 2016-16) | — | — | — | ( | ) | — | — | ( | ) | |||||||||||||||||
Net income | — | — | — | — | — | |||||||||||||||||||||
Other comprehensive income | — | — | — | — | — | |||||||||||||||||||||
Balance, March 31, 2018 | ( | ) | ||||||||||||||||||||||||
Employee stock compensation | — | — | — | — | ||||||||||||||||||||||
Deferred compensation | — | — | ( | ) | ( | ) | — | — | ( | ) | ||||||||||||||||
Proceeds from stock issuances under employee plans | — | — | — | |||||||||||||||||||||||
Cash dividends declared | — | — | — | ( | ) | — | — | ( | ) | |||||||||||||||||
Repurchase and retirement of common shares | ( | ) | ( | ) | ( | ) | ( | ) | — | — | ( | ) | ||||||||||||||
Net income | — | — | — | — | — | |||||||||||||||||||||
Other comprehensive loss | — | — | — | — | ( | ) | — | ( | ) | |||||||||||||||||
Balance June 30, 2018 | ( | ) | ||||||||||||||||||||||||
Employee stock compensation | — | — | — | — | ||||||||||||||||||||||
Deferred compensation | — | — | — | — | ||||||||||||||||||||||
Proceeds from stock issuances under employee plans | — | — | — | |||||||||||||||||||||||
Cash dividends declared | — | — | — | ( | ) | — | — | ( | ) | |||||||||||||||||
Repurchase and retirement of common shares | ( | ) | ( | ) | ( | ) | ( | ) | — | — | ( | ) | ||||||||||||||
Noncontrolling interest | — | — | — | — | — | |||||||||||||||||||||
Net income | — | — | — | — | — | |||||||||||||||||||||
Other comprehensive loss | — | — | — | — | ( | ) | — | ( | ) | |||||||||||||||||
Balance September 30, 2018 | $ | $ | $ | $ | ( | ) | $ | $ |
POLARIS INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) (Unaudited) | |||||||
Nine months ended September 30, | |||||||
2019 | 2018 | ||||||
Operating Activities: | |||||||
Net income | $ | $ | |||||
Adjustments to reconcile net income to net cash used for operating activities: | |||||||
Depreciation and amortization | |||||||
Noncash compensation | |||||||
Noncash income from financial services | ( | ) | ( | ) | |||
Deferred income taxes | ( | ) | ( | ) | |||
Impairment charges | |||||||
Other, net | ( | ) | |||||
Changes in operating assets and liabilities: | |||||||
Trade receivables | ( | ) | ( | ) | |||
Inventories | ( | ) | ( | ) | |||
Accounts payable | |||||||
Accrued expenses | |||||||
Income taxes payable/receivable | |||||||
Prepaid expenses and others, net | |||||||
Net cash provided by operating activities | |||||||
Investing Activities: | |||||||
Purchase of property and equipment | ( | ) | ( | ) | |||
Investment in finance affiliate, net | |||||||
Investment in other affiliates, net | |||||||
Acquisition of businesses, net of cash acquired | ( | ) | ( | ) | |||
Net cash used for investing activities | ( | ) | ( | ) | |||
Financing Activities: | |||||||
Borrowings under debt arrangements / finance lease obligations | |||||||
Repayments under debt arrangements / finance lease obligations | ( | ) | ( | ) | |||
Repurchase and retirement of common shares | ( | ) | ( | ) | |||
Cash dividends to shareholders | ( | ) | ( | ) | |||
Proceeds from stock issuances under employee plans | |||||||
Net cash (used for) provided by financing activities | ( | ) | |||||
Impact of currency exchange rates on cash balances | ( | ) | ( | ) | |||
Net increase (decrease) in cash, cash equivalents and restricted cash | ( | ) | |||||
Cash, cash equivalents and restricted cash at beginning of period | |||||||
Cash, cash equivalents and restricted cash at end of period | $ | $ | |||||
Supplemental Cash Flow Information: | |||||||
Interest paid on debt borrowings | $ | $ | |||||
Income taxes paid | $ | $ | |||||
The following presents the classification of cash, cash equivalents and restricted cash within the consolidated balance sheets: | |||||||
Cash and cash equivalents | $ | $ | |||||
Other long-term assets | |||||||
Total | $ | $ |
Fair Value Measurements as of September 30, 2019 | |||||||||||||||
Asset (Liability) | Total | Level 1 | Level 2 | Level 3 | |||||||||||
Non-qualified deferred compensation assets | $ | $ | $ | — | $ | — | |||||||||
Foreign exchange contracts, net | — | — | |||||||||||||
Total assets at fair value | $ | $ | $ | $ | — | ||||||||||
Non-qualified deferred compensation liabilities | $ | ( | ) | $ | ( | ) | $ | — | $ | — | |||||
Interest rate contracts, net | ( | ) | — | ( | ) | — | |||||||||
Total liabilities at fair value | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | — | ||||
Fair Value Measurements as of December 31, 2018 | |||||||||||||||
Asset (Liability) | Total | Level 1 | Level 2 | Level 3 | |||||||||||
Non-qualified deferred compensation assets | $ | $ | $ | — | $ | — | |||||||||
Foreign exchange contracts, net | — | — | |||||||||||||
Total assets at fair value | $ | $ | $ | $ | — | ||||||||||
Non-qualified deferred compensation liabilities | $ | ( | ) | $ | ( | ) | $ | — | $ | — | |||||
Interest rate contracts, net | ( | ) | — | ( | ) | — | |||||||||
Total liabilities at fair value | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | — | ||||
September 30, 2019 | December 31, 2018 | ||||||
Raw materials and purchased components | $ | $ | |||||
Service parts, garments and accessories | |||||||
Finished goods | |||||||
Less: reserves | ( | ) | ( | ) | |||
Inventories | $ | $ |
Three months ended September 30, | Nine months ended September 30, | ||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||
Balance at beginning of period | $ | $ | $ | $ | |||||||||||
Additions to reserve related to acquisitions | |||||||||||||||
Additions charged to expense | |||||||||||||||
Warranty claims paid, net | ( | ) | ( | ) | ( | ) | ( | ) | |||||||
Balance at end of period | $ | $ | $ | $ |
Three months ended September 30, 2019 | |||||||||||||||||||||||
ORV / Snowmobiles | Motorcycles | Global Adj. Markets | Aftermarket | Boats | Consolidated | ||||||||||||||||||
Revenue by product type | |||||||||||||||||||||||
Wholegoods | $ | $ | $ | $ | $ | ||||||||||||||||||
PG&A | $ | ||||||||||||||||||||||
Total revenue | $ | $ | $ | $ | $ | $ | |||||||||||||||||
Revenue by geography | |||||||||||||||||||||||
United States | $ | $ | $ | $ | $ | $ | |||||||||||||||||
Canada | |||||||||||||||||||||||
EMEA | |||||||||||||||||||||||
APLA | |||||||||||||||||||||||
Total revenue | $ | $ | $ | $ | $ | $ | |||||||||||||||||
Three months ended September 30, 2018 | |||||||||||||||||||||||
ORV / Snowmobiles | Motorcycles | Global Adj. Markets | Aftermarket | Boats | Consolidated | ||||||||||||||||||
Revenue by product type | |||||||||||||||||||||||
Wholegoods | $ | $ | $ | $ | $ | ||||||||||||||||||
PG&A | $ | ||||||||||||||||||||||
Total revenue | $ | $ | $ | $ | $ | $ | |||||||||||||||||
Revenue by geography | |||||||||||||||||||||||
United States | $ | $ | $ | $ | $ | $ | |||||||||||||||||
Canada | |||||||||||||||||||||||
EMEA | |||||||||||||||||||||||
APLA | |||||||||||||||||||||||
Total revenue | $ | $ | $ | $ | $ | $ |
Nine months ended September 30, 2019 | |||||||||||||||||||||||
ORV / Snowmobiles | Motorcycles | Global Adj. Markets | Aftermarket | Boats | Consolidated | ||||||||||||||||||
Revenue by product type | |||||||||||||||||||||||
Wholegoods | $ | $ | $ | $ | $ | ||||||||||||||||||
PG&A | $ | ||||||||||||||||||||||
Total revenue | $ | $ | $ | $ | $ | $ | |||||||||||||||||
Revenue by geography | |||||||||||||||||||||||
United States | $ | $ | $ | $ | $ | $ | |||||||||||||||||
Canada | |||||||||||||||||||||||
EMEA | |||||||||||||||||||||||
APLA | |||||||||||||||||||||||
Total revenue | $ | $ | $ | $ | $ | $ | |||||||||||||||||
Nine months ended September 30, 2018 | |||||||||||||||||||||||
ORV / Snowmobiles | Motorcycles | Global Adj. Markets | Aftermarket | Boats | Consolidated | ||||||||||||||||||
Revenue by product type | |||||||||||||||||||||||
Wholegoods | $ | $ | $ | $ | $ | ||||||||||||||||||
PG&A | $ | ||||||||||||||||||||||
Total revenue | $ | $ | $ | $ | $ | $ | |||||||||||||||||
Revenue by geography | |||||||||||||||||||||||
United States | $ | $ | $ | $ | $ | $ | |||||||||||||||||
Canada | |||||||||||||||||||||||
EMEA | |||||||||||||||||||||||
APLA | |||||||||||||||||||||||
Total revenue | $ | $ | $ | $ | $ | $ |
Three months ended September 30, | Nine months ended September 30, | ||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||
Balance at beginning of period | $ | $ | $ | $ | |||||||||||
New contracts sold | |||||||||||||||
Less: reductions for revenue recognized | ( | ) | ( | ) | ( | ) | ( | ) | |||||||
Balance at end of period (1) | $ | $ | $ | $ |
Cash and cash equivalents | $ | ||
Trade receivables | |||
Inventory | |||
Other current assets | |||
Property, plant and equipment | |||
Customer relationships | |||
Trademarks / trade names | |||
Non-compete agreements | |||
Goodwill | |||
Accounts payable | ( | ) | |
Other liabilities assumed | ( | ) | |
Total fair value of net assets acquired | |||
Less cash acquired | ( | ) | |
Total consideration for acquisition, less cash acquired | $ |
Three months ended September 30, | Nine months ended September 30, | ||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||
Sales | $ | $ | $ | $ | |||||||||||
Net income | |||||||||||||||
Basic earnings per share | $ | $ | $ | $ | |||||||||||
Diluted earnings per common share | $ | $ | $ | $ |
Three months ended September 30, | Nine months ended September 30, | ||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||
Option awards | $ | $ | $ | $ | |||||||||||
Other share-based awards | ( | ) | |||||||||||||
Total share-based compensation before tax | |||||||||||||||
Tax benefit | |||||||||||||||
Total share-based compensation expense included in net income | $ | $ | $ | $ |
Average interest rate at September 30, 2019 | Maturity | September 30, 2019 | December 31, 2018 | ||||||||
Revolving loan facility | July 2023 | $ | $ | ||||||||
Term loan facility | July 2023 | ||||||||||
Senior notes—fixed rate | May 2021 | ||||||||||
Senior notes—fixed rate | December 2020 | ||||||||||
Senior notes—fixed rate | July 2028 | ||||||||||
Finance lease obligations | Various through 2029 | ||||||||||
Notes payable and other | Various through 2030 | ||||||||||
Debt issuance costs | ( | ) | ( | ) | |||||||
Total debt, finance lease obligations, and notes payable | $ | $ | |||||||||
Less: current maturities | |||||||||||
Total long-term debt, finance lease obligations, and notes payable | $ | $ |
September 30, 2019 | December 31, 2018 | ||||||
Goodwill | $ | $ | |||||
Other intangible assets, net | |||||||
Total goodwill and other intangible assets, net | $ | $ |
Nine months ended September 30, 2019 | |||
Goodwill, beginning of period | $ | ||
Goodwill adjustments related to businesses acquired | |||
Currency translation effect on foreign goodwill balances | ( | ) | |
Goodwill, end of period | $ |
Total estimated life (years) | September 30, 2019 | December 31, 2018 | |||||||
Non-amortizable—indefinite lived: | |||||||||
Brand/trade names | $ | $ | |||||||
Amortizable: | |||||||||
Non-compete agreements | |||||||||
Dealer/customer related | 5-20 | ||||||||
Developed technology | 5-7 | ||||||||
Total amortizable | |||||||||
Less: Accumulated amortization | ( | ) | ( | ) | |||||
Net amortized other intangible assets | |||||||||
Total other intangible assets, net | $ | $ |
Three months ended September 30, | Nine months ended September 30, | |||||||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||||||
Cash dividends declared and paid per common share | $ | $ | $ | $ |
Three months ended September 30, | Nine months ended September 30, | ||||||||
2019 | 2018 | 2019 | 2018 | ||||||
Weighted average number of common shares outstanding | |||||||||
Director Plan and deferred stock units | |||||||||
ESOP | |||||||||
Common shares outstanding—basic | |||||||||
Dilutive effect of Omnibus Plan | |||||||||
Common and potential common shares outstanding—diluted |
Foreign Currency Items | Cash Flow Hedging Derivatives | Retirement Plan and Other Activity | Accumulated Other Comprehensive Loss | ||||||||||||
Balance as of December 31, 2018 | $ | ( | ) | $ | $ | ( | ) | $ | ( | ) | |||||
Reclassification to the statement of income | — | ( | ) | ( | ) | ||||||||||
Reclassification to retained earnings | — | — | ( | ) | ( | ) | |||||||||
Change in fair value | ( | ) | ( | ) | — | ( | ) | ||||||||
Balance as of September 30, 2019 | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) |
Derivatives in Cash Flow Hedging Relationships and Other Activity | Location of Gain (Loss) Reclassified from Accumulated Other Comprehensive Loss into Income | Three months ended September 30, | Nine months ended September 30, | ||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||||
Foreign currency contracts | Other expense, net | $ | $ | $ | $ | ||||||||||||
Foreign currency contracts | Cost of sales | ( | ) | ||||||||||||||
Interest rate contracts | Interest expense | ( | ) | ( | ) | ||||||||||||
Retirement plan activity | Operating expenses | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
Total | $ | $ | $ | $ |
Classification | September 30, 2019 | ||||
Assets | |||||
Operating lease assets | Operating lease assets | $ | |||
Finance lease assets | Property and equipment, net (1) | ||||
Total leased assets | $ | ||||
Liabilities | |||||
Current | |||||
Operating lease liabilities | Current operating lease liabilities | $ | |||
Finance lease liabilities | Current portion of debt, finance lease obligations and notes payable | ||||
Long-term | |||||
Operating lease liabilities | Long-term operating lease liabilities | ||||
Finance lease liabilities | Finance lease obligations | ||||
Total lease liabilities | $ |
Lease Cost | Classification | Three months ended September 30, 2019 | Nine months ended September 30, 2019 | ||||||
Operating lease cost (1) | Operating expenses and cost of sales | $ | $ | ||||||
Finance lease cost | |||||||||
Amortization of leased assets | Operating expenses and cost of sales | ||||||||
Interest on lease liabilities | Interest expense | ||||||||
Sublease income | Other (income) expense, net | ( | ) | ( | ) | ||||
Total lease cost | $ | $ |
Maturity of Lease Liabilities | Operating Leases (1) | Finance Leases | Total | |||||||||
2019 (remainder) | $ | $ | $ | |||||||||
2020 | ||||||||||||
2021 | ||||||||||||
2022 | ||||||||||||
2023 | ||||||||||||
Thereafter | ||||||||||||
Total lease payments | $ | $ | $ | |||||||||
Less: interest | ||||||||||||
Present value of lease payments | $ | $ |
Lease Term and Discount Rate | September 30, 2019 | ||
Weighted-average remaining lease term (years) | |||
Operating leases | |||
Finance leases | |||
Weighted-average discount rate | |||
Operating leases | % | ||
Finance leases | % |
Other Information | Nine months ended September 30, 2019 | |||
Cash paid for amounts included in the measurement of lease liabilities | ||||
Operating cash flows from operating leases | $ | |||
Operating cash flows from finance leases | ||||
Financing cash flows from finance leases | ||||
Leased assets obtained in exchange for new operating lease liabilities |
September 30, 2019 | December 31, 2018 | |||||||||||||||
Foreign Currency | Notional Amounts (in U.S. Dollars) | Net Unrealized Gain (Loss) | Notional Amounts (in U.S. Dollars) | Net Unrealized Gain (Loss) | ||||||||||||
Australian Dollar | $ | $ | $ | $ | ||||||||||||
Canadian Dollar | ||||||||||||||||
Mexican Peso | ||||||||||||||||
Total | $ | $ | $ | $ |
September 30, 2019 | December 31, 2018 | |||||||||||||||||
Effective Date | Termination Date | Notional Amounts | Net Unrealized Gain (Loss) | Notional Amounts | Net Unrealized Gain (Loss) | |||||||||||||
May 2, 2018 | May 4, 2021 | $ | $ | ( | ) | $ | $ | |||||||||||
September 28, 2018 | September 30, 2019 | ( | ) | |||||||||||||||
September 30, 2019 | September 30, 2023 | ( | ) | ( | ) | |||||||||||||
May 3, 2019 | May 3, 2020 | ( | ) | |||||||||||||||
Total | $ | $ | ( | ) | $ | $ | ( | ) |
Carrying Values of Derivative Instruments as of September 30, 2019 | |||||||||||
Fair Value— Assets | Fair Value— (Liabilities) | Derivative Net Carrying Value | |||||||||
Derivatives designated as hedging instruments | |||||||||||
Foreign exchange contracts | $ | $ | — | $ | |||||||
Interest rate contracts | — | ( | ) | ( | ) | ||||||
Total derivatives designated as hedging instruments | $ | $ | ( | ) | $ | ( | ) |
Carrying Values of Derivative Instruments as of December 31, 2018 | |||||||||||
Fair Value— Assets | Fair Value— (Liabilities) | Derivative Net Carrying Value | |||||||||
Derivatives designated as hedging instruments | |||||||||||
Foreign exchange contracts | $ | $ | $ | ||||||||
Interest rate contracts | — | ( | ) | ( | ) | ||||||
Total derivatives designated as hedging instruments | $ | $ | ( | ) | $ |
Three months ended September 30, | Nine months ended September 30, | ||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||
Sales | |||||||||||||||
ORV/Snowmobiles | $ | $ | $ | $ | |||||||||||
Motorcycles | |||||||||||||||
Global Adjacent Markets | |||||||||||||||
Aftermarket | |||||||||||||||
Boats | |||||||||||||||
Total sales | $ | $ | $ | $ | |||||||||||
Gross profit | |||||||||||||||
ORV/Snowmobiles | $ | $ | $ | $ | |||||||||||
Motorcycles | |||||||||||||||
Global Adjacent Markets | |||||||||||||||
Aftermarket | |||||||||||||||
Boats | |||||||||||||||
Corporate | ( | ) | ( | ) | ( | ) | ( | ) | |||||||
Total gross profit | $ | $ | $ | $ |
Percent change in total Company sales compared to corresponding period of the prior year | |||||
Three months ended | Nine months ended | ||||
September 30, 2019 | September 30, 2019 | ||||
Volume | 3 | % | 1 | % | |
Product mix and price | 5 | 5 | |||
Acquisitions | — | 8 | |||
Currency | (1 | ) | (1 | ) | |
7 | % | 13 | % |
Three months ended September 30, | Nine months ended September 30, | ||||||||||||||||||||||||||||||||
($ in millions) | 2019 | Percent of Total Sales | 2018 | Percent of Total Sales | Percent Change 2019 vs. 2018 | 2019 | Percent of Total Sales | 2018 | Percent of Total Sales | Percent Change 2019 vs. 2018 | |||||||||||||||||||||||
ORV/Snowmobiles | $ | 1,152.4 | 65 | % | $ | 1,035.5 | 63 | % | 11 | % | $ | 3,069.2 | 61 | % | $ | 2,858.9 | 64 | % | 7 | % | |||||||||||||
Motorcycles | 149.9 | 9 | % | 155.3 | 9 | % | (3 | )% | 464.6 | 9 | % | 458.3 | 10 | % | 1 | % | |||||||||||||||||
Global Adjacent Markets | 114.0 | 6 | % | 96.3 | 6 | % | 18 | % | 340.9 | 7 | % | 323.0 | 7 | % | 6 | % | |||||||||||||||||
Aftermarket | 236.2 | 13 | % | 230.0 | 14 | % | 3 | % | 685.7 | 13 | % | 676.9 | 16 | % | 1 | % | |||||||||||||||||
Boats | 119.1 | 7 | % | 134.3 | 8 | % | (11 | )% | 486.3 | 10 | % | 134.3 | 3 | % | NM | ||||||||||||||||||
Total sales | $ | 1,771.6 | 100 | % | $ | 1,651.4 | 100 | % | 7 | % | $ | 5,046.7 | 100 | % | $ | 4,451.4 | 100 | % | 13 | % | |||||||||||||
NM = not meaningful |
Three months ended September 30, | Nine months ended September 30, | ||||||||||||||||||||||||||||||||
($ in millions) | 2019 | Percent of Total Sales | 2018 | Percent of Total Sales | Percent Change 2019 vs. 2018 | 2019 | Percent of Total Sales | 2018 | Percent of Total Sales | Percent Change 2019 vs. 2018 | |||||||||||||||||||||||
United States | $ | 1,471.8 | 83 | % | $ | 1,383.7 | 84 | % | 6 | % | $ | 4,139.3 | 82 | % | $ | 3,588.4 | 81 | % | 15 | % | |||||||||||||
Canada | 113.3 | 6 | % | 95.7 | 6 | % | 18 | % | 286.6 | 6 | % | 275.6 | 6 | % | 4 | % | |||||||||||||||||
Other foreign countries | 186.5 | 11 | % | 172.0 | 10 | % | 8 | % | 620.8 | 12 | % | 587.4 | 13 | % | 6 | % | |||||||||||||||||
Total sales | $ | 1,771.6 | 100 | % | $ | 1,651.4 | 100 | % | 7 | % | $ | 5,046.7 | 100 | % | $ | 4,451.4 | 100 | % | 13 | % |
Three months ended September 30, | Nine months ended September 30, | ||||||||||||||||||||||||||||||||
($ in millions) | 2019 | Percent of Total Cost of Sales | 2018 | Percent of Total Cost of Sales | Change 2019 vs. 2018 | 2019 | Percent of Total Cost of Sales | 2018 | Percent of Total Cost of Sales | Change 2019 vs. 2018 | |||||||||||||||||||||||
Purchased materials and services | $ | 1,144.8 | 86 | % | $ | 1,078.9 | 86 | % | 6 | % | $ | 3,283.0 | 86 | % | $ | 2,894.7 | 87 | % | 13 | % | |||||||||||||
Labor and benefits | 114.4 | 9 | % | 96.0 | 8 | % | 19 | % | 328.9 | 9 | % | 267.1 | 8 | % | 23 | % | |||||||||||||||||
Depreciation and amortization | 44.5 | 3 | % | 37.5 | 3 | % | 19 | % | 115.1 | 3 | % | 99.8 | 3 | % | 15 | % | |||||||||||||||||
Warranty costs | 31.4 | 2 | % | 37.7 | 3 | % | (17 | )% | 94.2 | 2 | % | 79.9 | 2 | % | 18 | % | |||||||||||||||||
Total cost of sales | $ | 1,335.1 | 100 | % | $ | 1,250.1 | 100 | % | 7 | % | $ | 3,821.2 | 100 | % | $ | 3,341.5 | 100 | % | 14 | % | |||||||||||||
Percentage of sales | 75.4 | % | 75.7 | % | -34 basis points | 75.7 | % | 75.1 | % | +65 basis points |
Three months ended September 30, | Nine months ended September 30, | ||||||||||||||||||||||||||||||||
($ in millions) | 2019 | Percent of Sales | 2018 | Percent of Sales | Change 2019 vs. 2018 | 2019 | Percent of Sales | 2018 | Percent of Sales | Change 2019 vs. 2018 | |||||||||||||||||||||||
ORV/Snowmobiles | $ | 323.9 | 28.1 | % | $ | 290.6 | 28.1 | % | 11 | % | $ | 888.9 | 29.0 | % | $ | 831.4 | 29.1 | % | 7 | % | |||||||||||||
Motorcycles | 11.9 | 8.0 | % | 19.6 | 12.6 | % | (39 | )% | 45.7 | 9.8 | % | 60.8 | 13.3 | % | (25 | )% | |||||||||||||||||
Global Adjacent Markets | 31.2 | 27.3 | % | 24.2 | 25.1 | % | 29 | % | 94.8 | 27.8 | % | 83.5 | 25.9 | % | 14 | % | |||||||||||||||||
Aftermarket | 61.8 | 26.2 | % | 66.1 | 28.7 | % | (7 | )% | 173.5 | 25.3 | % | 182.3 | 26.9 | % | (5 | )% | |||||||||||||||||
Boats | 22.3 | 18.8 | % | 20.3 | 15.1 | % | 10 | % | 99.0 | 20.4 | % | 20.3 | 15.1 | % | NM | ||||||||||||||||||
Corporate | (14.6 | ) | (19.5 | ) | (76.5 | ) | (68.4 | ) | |||||||||||||||||||||||||
Total gross profit dollars | $ | 436.5 | $ | 401.3 | 9 | % | $ | 1,225.4 | $ | 1,109.9 | 10 | % | |||||||||||||||||||||
Percentage of sales | 24.6 | % | 24.3 | % | +34 basis points | 24.3 | % | 24.9 | % | -65 basis points | |||||||||||||||||||||||
NM = not meaningful |
Three months ended September 30, | Nine months ended September 30, | ||||||||||||||||||||
($ in millions) | 2019 | 2018 | Change 2019 vs. 2018 | 2019 | 2018 | Change 2019 vs. 2018 | |||||||||||||||
Selling and marketing | $ | 149.8 | $ | 128.9 | 16 | % | $ | 419.6 | $ | 369.5 | 14 | % | |||||||||
Research and development | 77.3 | 64.2 | 20 | % | 220.9 | 197.7 | 12 | % | |||||||||||||
General and administrative | 100.8 | 90.6 | 11 | % | 297.8 | 262.2 | 14 | % | |||||||||||||
Total operating expenses | $ | 327.9 | $ | 283.7 | 16 | % | $ | 938.3 | $ | 829.4 | 13 | % | |||||||||
Percentage of sales | 18.5 | % | 17.2 | % | +133 basis points | 18.6 | % | 18.6 | % | -4 basis points |
Three months ended September 30, | Nine months ended September 30, | ||||||||||||||||||||
($ in millions) | 2019 | 2018 | Change 2019 vs. 2018 | 2019 | 2018 | Change 2019 vs. 2018 | |||||||||||||||
Income from financial services | $ | 21.6 | $ | 21.3 | 1 | % | $ | 60.2 | $ | 64.1 | (6 | )% | |||||||||
Percentage of sales | 1.2 | % | 1.3 | % | -7 basis points | 1.2 | % | 1.4 | % | -25 basis points |
Three months ended September 30, | Nine months ended September 30, | ||||||||||||||||||||
($ in millions, except per share data) | 2019 | 2018 | Change 2019 vs. 2018 | 2019 | 2018 | Change 2019 vs. 2018 | |||||||||||||||
Interest expense | $ | 19.7 | $ | 19.8 | 0 | % | $ | 60.8 | $ | 37.1 | 64 | % | |||||||||
Equity in loss of other affiliates | $ | 4.1 | $ | 0.1 | NM | $ | 5.1 | $ | 25.6 | (80 | )% | ||||||||||
Other income, net | $ | (1.7 | ) | $ | (4.1 | ) | (59 | )% | $ | (5.5 | ) | $ | (27.7 | ) | (80 | )% | |||||
Income before taxes | $ | 108.2 | $ | 123.1 | (12 | )% | $ | 286.9 | $ | 309.6 | (7 | )% | |||||||||
Provision for income taxes | $ | 19.8 | $ | 27.5 | (28 | )% | $ | 62.0 | $ | 65.8 | (6 | )% | |||||||||
Effective income tax rate | 18.3 | % | 22.4 | % | -409 basis pts | 21.6 | % | 21.3 | % | +34 basis pts | |||||||||||
Net income attributable to Polaris Inc. | $ | 88.4 | $ | 95.5 | (7 | )% | $ | 225.0 | $ | 243.8 | (8 | )% | |||||||||
Diluted net income per share attributable to Polaris Inc. common shareholders: | $ | 1.42 | $ | 1.50 | (5 | )% | $ | 3.62 | $ | 3.78 | (4 | )% | |||||||||
Weighted average diluted shares outstanding | 62.3 | 63.5 | (2 | )% | 62.2 | 64.6 | (4 | )% | |||||||||||||
NM = not meaningful |
($ in millions) | Nine months ended September 30, | ||||||||||
2019 | 2018 | Change | |||||||||
Total cash provided by (used for): | |||||||||||
Operating activities | $ | 436.1 | $ | 354.1 | $ | 82.0 | |||||
Investing activities | (179.4 | ) | (858.1 | ) | 678.7 | ||||||
Financing activities | (288.0 | ) | 562.5 | (850.5 | ) | ||||||
Impact of currency exchange rates on cash balances | (3.1 | ) | (5.9 | ) | 2.8 | ||||||
Increase in cash, cash equivalents and restricted cash | $ | (34.4 | ) | $ | 52.6 | $ | (87.0 | ) |
($ in millions) | Average interest rate at September 30, 2019 | Maturity | September 30, 2019 | ||||
Revolving loan facility | 1.71% | July 2023 | $ | 60.6 | |||
Term loan facility | 3.29% | July 2023 | 1,105.0 | ||||
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 | ||||
Finance lease obligations | 5.17% | Various through 2029 | 16.1 | ||||
Notes payable and other | 4.23% | Various through 2030 | 81.4 | ||||
Debt issuance costs | (4.4) | ||||||
Total debt, finance lease obligations, and notes payable | $ | 1,783.7 | |||||
Less: current maturities | 66.7 | ||||||
Long-term debt, finance lease obligations, and notes payable | $ | 1,717.0 |
Financial institution | Agreement expiration date |
Performance Finance | December 2026 |
Sheffield Financial | December 2020 |
Synchrony Bank | December 2025 |
Foreign Currency | Foreign currency hedging contracts | ||||||
Currency Position | Notional amounts (in thousands of U.S. Dollars) | Average exchange rate of open contracts | |||||
Australian Dollar | Long | $ | 8,695 | $0.70 to 1 AUD | |||
Canadian Dollar | Long | 136,559 | $0.75 to 1 CAD | ||||
Mexican Peso | Short | 14,321 | 21.05 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, 2019 | 1,000 | $ | 90.18 | 1,000 | 3,174,000 | |||||||
August 1 — 31, 2019 | 1,000 | $ | 91.85 | 1,000 | 3,173,000 | |||||||
September 1 — 30, 2019 | 3,000 | $ | 84.27 | 3,000 | 3,170,000 | |||||||
Total | 5,000 | $ | 87.25 | 5,000 | 3,170,000 |
Exhibit Number | Description | |
Restated Articles of Incorporation of Polaris Inc., effective as of July 29, 2019, incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed July 29, 2019. | ||
Bylaws of Polaris Inc., as amended and restated on July 29, 2019, incorporated by reference to Exhibit 3.2 to the Company’s Current Report on Form 8-K filed July 29, 2019. | ||
Second Amended and Restated Joint Venture Agreement, dated as of August 1, 2019, by and between Polaris Inc. and Wells Fargo Commercial Distribution Finance, LLC, incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed August 7, 2019. | ||
Third Amended and Restated Partnership Agreement, dated as of August 1, 2019, by and among Polaris Acceptance Inc. and CDF Joint Ventures, LLC, incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed August 7, 2019. | ||
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 Inc.’s Quarterly Report on Form 10-Q for the period ended September 30, 2019, filed with the SEC on October 22, 2019, formatted in Inline eXtensible Business Reporting Language (iXBRL): (i) the Consolidated Balance Sheets at September 30, 2019 and December 31, 2018, (ii) the Consolidated Statements of Income for the three and nine month periods ended September 30, 2019 and 2018, (iii) the Consolidated Statements of Comprehensive Income for the three and nine month periods ended September 30, 2019 and 2018, (iv) the Consolidated Statements of Equity for the three and nine month periods ended September 30, 2019 and 2018, (v) the Consolidated Statements of Cash Flows for the nine month periods ended September 30, 2019 and 2018, and (vi) Notes to Consolidated Financial Statements. | |
104 | The cover page from the Quarterly Report on Form 10-Q of the Company for the quarter ended September 30, 2019, formatted in iXBRL. |
POLARIS INC. (Registrant) | |||
Date: | October 22, 2019 | /s/ SCOTT W. WINE | |
Scott W. Wine Chairman and Chief Executive Officer (Principal Executive Officer) | |||
Date: | October 22, 2019 | /s/ MICHAEL T. SPEETZEN | |
Michael T. Speetzen Executive Vice President — Finance and Chief Financial Officer (Principal Financial and Accounting Officer) |
1. | I have reviewed this quarterly report on Form 10-Q of Polaris 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 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, 2019 (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, 2019 (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 |
Significant Accounting Policies Activity in Polaris Accrued Warranty Reserve (Detail) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | |||
---|---|---|---|---|---|
Sep. 30, 2019 |
Sep. 30, 2018 |
Sep. 30, 2019 |
Sep. 30, 2018 |
Dec. 31, 2018 |
|
Accounting Policies [Abstract] | |||||
Deferred tax liabilities | $ 4,741 | $ 4,741 | $ 6,490 | ||
Activity in Product Warranty Reserve [Roll Forward] | |||||
Balance at beginning of period | 132,758 | $ 106,155 | 121,824 | $ 123,840 | |
Additions to reserve related to acquisitions | 0 | 13,799 | 8,809 | 13,799 | |
Additions charged to expense | 31,359 | 37,741 | 94,232 | 79,913 | |
Warranty claims paid, net | (27,003) | (35,151) | (87,751) | (95,008) | |
Balance at end of period | $ 137,114 | $ 122,544 | $ 137,114 | $ 122,544 |
Derivative Instruments and Hedging Activities (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of open foreign currency contracts | At September 30, 2019 and December 31, 2018, the Company had the following open foreign currency contracts (in thousands):
|
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Schedule of open interest rate swap contracts | At September 30, 2019 and December 31, 2018, the Company 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, 2019 and December 31, 2018 (in thousands):
|
Goodwill and Other Intangible Assets |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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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, 2019 and December 31, 2018 are as follows (in thousands):
The changes in the carrying amount of goodwill for the nine months ended September 30, 2019 were as follows (in thousands):
The components of other intangible assets were as follows (in thousands):
Amortization expense for intangible assets for the three months ended September 30, 2019 and 2018 was $10,428,000 and $10,403,000, respectively. Estimated amortization expense for the remainder of 2019 through 2024 is as follows: 2019 (remainder), $10,261,000; 2020, $35,978,000; 2021, $33,240,000; 2022, $28,281,000; 2023, $25,757,000; 2024, $25,054,000; and after 2024, $239,785,000. The preceding expected amortization expense is an estimate and actual amounts could differ due to additional intangible asset acquisitions, changes in foreign currency rates or impairment of intangible assets.
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Leases |
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Leases [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Leases | Leases The Company leases certain manufacturing facilities, retail stores, warehouses, distribution centers, office space, land, and equipment. Leases with an initial term of 12 months or less are not recorded on the balance sheet; the Company recognizes lease expense for these leases on a straight-line basis over the lease term. The Company does not separate non-lease components from the lease components to which they relate, and instead accounts for each separate lease and non-lease component associated with that lease component as a single lease component for all underlying asset classes. As most of the Company's leases do not provide an implicit rate, the Company uses its estimated incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. Some leases include one or more options to renew, with renewal terms that can extend the lease term from one to 20 years or more. The exercise of lease renewal options is at the Company’s sole discretion. Certain leases also include options to purchase the leased property. The depreciable life of assets and leasehold improvements are limited by the expected lease term, unless there is a transfer of title or purchase option reasonably certain of exercise. Certain lease agreements include rental payments that are variable based on usage or are adjusted periodically for inflation. The Company’s lease agreements do not contain any material residual value guarantees or material restrictive covenants. Information on the Company’s leases is summarized as follows (in thousands):
(1) Finance lease assets are recorded net of accumulated amortization of $7,024,000 as of September 30, 2019.
(1) Includes short-term leases and variable lease costs, which are immaterial.
(1) Operating lease payments include $3,594,000 related to options to extend lease terms that are reasonably certain of being exercised. Leases that the Company has signed but have not yet commenced are immaterial.
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Leases | Leases The Company leases certain manufacturing facilities, retail stores, warehouses, distribution centers, office space, land, and equipment. Leases with an initial term of 12 months or less are not recorded on the balance sheet; the Company recognizes lease expense for these leases on a straight-line basis over the lease term. The Company does not separate non-lease components from the lease components to which they relate, and instead accounts for each separate lease and non-lease component associated with that lease component as a single lease component for all underlying asset classes. As most of the Company's leases do not provide an implicit rate, the Company uses its estimated incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. Some leases include one or more options to renew, with renewal terms that can extend the lease term from one to 20 years or more. The exercise of lease renewal options is at the Company’s sole discretion. Certain leases also include options to purchase the leased property. The depreciable life of assets and leasehold improvements are limited by the expected lease term, unless there is a transfer of title or purchase option reasonably certain of exercise. Certain lease agreements include rental payments that are variable based on usage or are adjusted periodically for inflation. The Company’s lease agreements do not contain any material residual value guarantees or material restrictive covenants. Information on the Company’s leases is summarized as follows (in thousands):
(1) Finance lease assets are recorded net of accumulated amortization of $7,024,000 as of September 30, 2019.
(1) Includes short-term leases and variable lease costs, which are immaterial.
(1) Operating lease payments include $3,594,000 related to options to extend lease terms that are reasonably certain of being exercised. Leases that the Company has signed but have not yet commenced are immaterial.
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Shareholders' Equity Reconciliation of Weighted Average Number of Shares (Detail) - shares shares in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2019 |
Sep. 30, 2018 |
Sep. 30, 2019 |
Sep. 30, 2018 |
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Equity [Abstract] | ||||
Weighted average number of common shares outstanding | 61,143 | 61,927 | 61,064 | 62,630 |
Director Plan and deferred stock units | 212 | 181 | 205 | 175 |
ESOP | 125 | 99 | 125 | 89 |
Common shares outstanding—basic | 61,480 | 62,207 | 61,394 | 62,894 |
Dilutive effect of Omnibus Plan | 785 | 1,339 | 758 | 1,656 |
Common and potential common shares outstanding—diluted | 62,265 | 63,546 | 62,152 | 64,550 |
Label | Element | Value |
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Restricted Cash and Cash Equivalents | us-gaap_RestrictedCashAndCashEquivalents | $ 30,792,000 |
Restricted Cash and Cash Equivalents | us-gaap_RestrictedCashAndCashEquivalents | $ 36,514,000 |
Leases (Lease Cost) (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended |
---|---|---|
Sep. 30, 2019 |
Sep. 30, 2019 |
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Leases [Abstract] | ||
Operating lease cost | $ 10,779 | $ 31,373 |
Finance lease cost | ||
Amortization of leased assets | 364 | 1,108 |
Interest on lease liabilities | 207 | 660 |
Sublease income | (581) | (1,737) |
Total lease cost | $ 10,769 | $ 31,404 |
Commitments and Contingencies - Additional Information (Detail) $ in Thousands |
Sep. 30, 2019
USD ($)
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Commitments and Contingencies Disclosure [Abstract] | |
Accrual for the probable payment of pending claims | $ 56,812 |
Derivative Instruments and Hedging Activities Additional Information (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2019 |
Sep. 30, 2018 |
Sep. 30, 2019 |
Sep. 30, 2018 |
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Derivative [Line Items] | ||||
Unrealized gain (loss) on derivative instruments | $ (449) | $ (2,111) | $ (6,948) | $ 2,998 |
Designated as Hedging Instrument | Cash Flow Hedging | ||||
Derivative [Line Items] | ||||
Unrealized gain (loss) on derivative instruments | $ (449) | $ (2,111) | $ (6,948) | $ 2,998 |
Share-Based Compensation - Additional Information (Detail) $ in Thousands |
9 Months Ended |
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Sep. 30, 2019
USD ($)
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Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Unrecognized compensation cost related to unvested share-based equity awards | $ 111,397 |
Weighted average period of recognition of unvested share-based equity awards | 1 year 5 months 15 days |
Unrecognized compensation cost related to unvested share-based equity awards, stock options | $ 29,706 |
Unrecognized compensation cost related to unvested share-based equity awards, restricted stock | $ 81,691 |
Significant Accounting Policies (Policies) |
9 Months Ended |
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Sep. 30, 2019 | |
Accounting Policies [Abstract] | |
Basis of presentation | Basis of presentation. The accompanying unaudited consolidated financial statements of Polaris 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, 2018 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, equity, 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.
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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, and interest rate 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.
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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. Leases. In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842) and in July 2018, ASU No. 2018-10, Codification Improvements to Topic 842, Leases, and ASU 2018-11, Leases (Topic 842) - Targeted Improvements (collectively, “the new lease standard” or “ASC 842”). The new standard requires lessees to record assets and liabilities on the balance sheet for all leases with terms longer than 12 months. Leases will be classified as either finance or operating, with the classification affecting the pattern of expense recognition in the income statement. The Company adopted the standard as of January 1, 2019 using the alternative transition method provided under ASC 842, which allowed the Company to initially apply the new lease standard at the adoption date. The Company elected the package of practical expedients permitted under the transition guidance within the new standard, which among other things, allowed the Company to carry forward the historical lease classification. The Company did not elect the hindsight practical expedient permitted under the transition guidance within the new lease standard. The Company made an accounting policy election to not record leases with an initial term of 12 months or less on the balance sheet. The Company also elected the practical expedient to not separate non-lease components from the lease components to which they relate, and instead account for each separate lease and non-lease component associated with that lease component as a single lease component for all underlying asset classes. Accordingly, all costs associated with a lease contract are accounted for as a lease cost. The new standard resulted in the recognition of additional net lease assets and lease liabilities of approximately $115,681,000 as of January 1, 2019. The adoption of ASC 842 did not have a material impact on the Company’s consolidated results of operations, equity or cash flows as of the adoption date. Under the alternative method of adoption, comparative information was not restated, but will continue to be reported under the standards in effect for those periods. See Note 10 for further information regarding the Company’s leases. Derivatives and hedging. Effective January 1, 2019, the Company adopted ASU No. 2017-12, Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities. The adoption of this ASU did not have a material impact on the Company’s consolidated financial position, results of operations, equity or cash flows. Non-employee share-based payments. Effective January 1, 2019, the Company adopted ASU No. 2018-07, Compensation - Stock Compensation (Topic 718): Improvements to Non-employee Share-based Payment Accounting. The adoption of this ASU did not have a material impact on the Company’s consolidated financial position, results of operations, equity or cash flows. Intangibles-Goodwill and Other. Effective January 1, 2019, the Company early adopted ASU 2017-04, Intangibles-Goodwill and Other (Topic 350). The new standard simplifies the subsequent measurement of goodwill by eliminating the second step of the goodwill impairment test. Stranded Tax Effects. Effective January 1, 2019 the Company adopted ASU No. 2018-02, Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income, which allows a reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from the reduction of the U.S. federal statutory income tax rate to 21% from 35% due to the enactment of the Tax Cuts and Jobs Act of 2017 (the “Tax Act”). As a result of the adoption of ASU 2018-02, the Company recorded a $668,000 reclassification to decrease Accumulated Other Comprehensive Income and increase Retained Earnings. Financial instruments. In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, and in November 2018 issued a subsequent amendment, ASU 2018-19, Codification Improvements to Topic 326, Financial Instruments - Credit Losses. ASU 2016-13 significantly changes how entities will measure credit losses for most financial assets and certain other instruments that are not measured at fair value through net income. ASU 2016-13 will replace today’s “incurred loss” approach with an “expected loss” model for instruments measured at amortized cost. ASU 2018-19 will affect loans, debt securities, trade receivables, net investments in leases, off balance sheet credit exposures, reinsurance receivables, and any other financial assets not excluded from the scope of this amendment that have the contractual right to receive cash. ASU 2016-13 is effective for fiscal years and interim periods beginning after December 15, 2019, and is effective for the Company’s fiscal year beginning January 1, 2020. The adoption of the ASU is not expected to have a material impact on the Company’s consolidated financial position, results of operations, equity or cash flows. There are no other new accounting pronouncements that are expected to have a significant impact on the Company’s consolidated financial statements.
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Share-Based Compensation (Tables) |
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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):
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Leases (Tables) |
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Leases [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Lease Assets and Liabilities | Information on the Company’s leases is summarized as follows (in thousands):
(1) Finance lease assets are recorded net of accumulated amortization of $7,024,000 as of September 30, 2019.
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Summary of Lease Costs |
(1) Includes short-term leases and variable lease costs, which are immaterial.
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Summary of Operating Lease Maturities |
(1) Operating lease payments include $3,594,000 related to options to extend lease terms that are reasonably certain of being exercised. Leases that the Company has signed but have not yet commenced are immaterial.
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Summary of Finance Lease Maturities |
(1) Operating lease payments include $3,594,000 related to options to extend lease terms that are reasonably certain of being exercised.
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Leases (Other Information) (Details) $ in Thousands |
9 Months Ended |
---|---|
Sep. 30, 2019
USD ($)
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Cash paid for amounts included in the measurement of lease liabilities | |
Operating cash flows from operating leases | $ 31,538 |
Operating cash flows from finance leases | 651 |
Financing cash flows from finance leases | 935 |
Leased assets obtained in exchange for new operating lease liabilities | $ 18,562 |
Financing Arrangements, Interest Rates and Maturities (Details) - USD ($) |
Sep. 30, 2019 |
Dec. 31, 2018 |
Jul. 02, 2018 |
---|---|---|---|
Debt Instrument [Line Items] | |||
Effective interest rate | 5.17% | ||
Finance Lease, Liability | $ 16,069,000 | $ 17,587,000 | |
Debt issuance costs | (4,416,000) | (5,256,000) | |
Total debt, finance lease obligations, and notes payable | 1,783,623,000 | 1,962,570,000 | |
Less: current maturities | 66,664,000 | 66,543,000 | |
Total long-term debt, finance lease obligations, and notes payable | $ 1,716,959,000 | 1,896,027,000 | |
Revolving Credit Facility | |||
Debt Instrument [Line Items] | |||
Debt, Weighted Average Interest Rate | 1.71% | ||
Senior Notes | Senior Unsecured Notes 4.60% Due May 2021 | |||
Debt Instrument [Line Items] | |||
Stated interest rate | 4.60% | ||
Long-term debt | $ 75,000,000 | 75,000,000 | |
Senior Notes | Senior Unsecured Notes 3.13% Due December 2020 | |||
Debt Instrument [Line Items] | |||
Stated interest rate | 3.13% | ||
Long-term debt | $ 100,000,000 | 100,000,000 | |
Senior Notes | Senior Unsecured Notes 4.23% Due July 2028 | |||
Debt Instrument [Line Items] | |||
Stated interest rate | 4.23% | 4.23% | |
Long-term debt | $ 350,000,000 | 350,000,000 | |
Notes payable and other | |||
Debt Instrument [Line Items] | |||
Stated interest rate | 4.23% | ||
Long-term debt | $ 81,388,000 | 87,608,000 | |
Revolving Credit Facility | |||
Debt Instrument [Line Items] | |||
Revolving loan facility | $ 60,582,000 | 187,631,000 | |
Term loan | |||
Debt Instrument [Line Items] | |||
Average interest rate at September 30, 2019 | 3.29% | ||
Revolving loan facility | $ 1,105,000,000 | $ 1,150,000,000 |
Acquisitions - Summary of Assets Acquired and Liabilities Assumed (Details) - USD ($) $ in Thousands |
Jul. 02, 2018 |
Sep. 30, 2019 |
Dec. 31, 2018 |
---|---|---|---|
Business Acquisition [Line Items] | |||
Goodwill | $ 654,544 | $ 647,077 | |
Boat Holdings, LLC | |||
Business Acquisition [Line Items] | |||
Cash and cash equivalents | $ 16,534 | ||
Trade receivables | 17,528 | ||
Inventory | 39,948 | ||
Other current assets | 4,451 | ||
Property, plant and equipment | 35,299 | ||
Goodwill | 222,372 | ||
Accounts payable | (30,064) | ||
Other liabilities assumed | (37,266) | ||
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 |
Goodwill and Other Intangible Assets Additional Information (Detail) - USD ($) $ in Thousands |
3 Months Ended | ||
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Sep. 30, 2019 |
Sep. 30, 2018 |
Dec. 31, 2018 |
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Goodwill and Intangible Assets Disclosure [Abstract] | |||
Goodwill | $ 654,544 | $ 647,077 | |
Total other intangible assets, net | 840,102 | $ 870,517 | |
Amortization expense of intangible assets | 10,428 | $ 10,403 | |
Estimated Future Amortization Expense by Fiscal Year [Abstract] | |||
Remainder of 2016 | 10,261 | ||
2017 | 35,978 | ||
2018 | 33,240 | ||
2019 | 28,281 | ||
2020 | 25,757 | ||
2021 | 25,054 | ||
After 2021 | $ 239,785 |
Shareholders' Equity (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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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, 2019 and 2018, 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, 2019 and 2018 (in thousands):
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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. The ORV/Snowmobiles segment includes the aggregated results of the Company’s 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 segments, such as incentive-based compensation and 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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Acquisitions (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Business Combinations [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of preliminary fair values of net assets acquired and determination of final net assets | The following table summarizes the final fair values assigned to the Boat Holdings net assets acquired and the determination of net assets (in thousands):
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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 2018 (in thousands, except per share data).
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Consolidated Statements Of Cash Flows - USD ($) $ in Thousands |
9 Months Ended | |
---|---|---|
Sep. 30, 2019 |
Sep. 30, 2018 |
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Operating Activities: | ||
Net income | $ 224,929 | $ 243,783 |
Adjustments to reconcile net income to net cash used for operating activities: | ||
Depreciation and amortization | 173,003 | 155,910 |
Noncash compensation | 56,559 | 43,219 |
Noncash income from financial services | (23,704) | (22,232) |
Deferred income taxes | (9,134) | (4,171) |
Impairment charges | 3,558 | 21,716 |
Other, net | 1,575 | (9,618) |
Changes in operating assets and liabilities: | ||
Trade receivables | (23,613) | (991) |
Inventories | (304,261) | (201,229) |
Accounts payable | 239,226 | 90,842 |
Accrued expenses | 75,293 | 1,620 |
Income taxes payable/receivable | 19,680 | 28,715 |
Prepaid expenses and others, net | 3,020 | 6,574 |
Net cash provided by operating activities | 436,131 | 354,138 |
Investing Activities: | ||
Purchase of property and equipment | (189,336) | (157,763) |
Investment in finance affiliate, net | 11,703 | 22,207 |
Investment in other affiliates, net | 0 | 7,366 |
Acquisition of businesses, net of cash acquired | (1,800) | (729,925) |
Net cash used for investing activities | (179,433) | (858,115) |
Financing Activities: | ||
Borrowings under debt arrangements / finance lease obligations | 2,654,218 | 2,845,688 |
Repayments under debt arrangements / finance lease obligations | (2,831,666) | (1,970,701) |
Repurchase and retirement of common shares | (6,997) | (246,931) |
Cash dividends to shareholders | (111,722) | (112,748) |
Proceeds from stock issuances under employee plans | 8,165 | 47,158 |
Net cash (used for) provided by financing activities | (288,002) | 562,466 |
Impact of currency exchange rates on cash balances | (3,092) | (5,904) |
Net increase (decrease) in cash, cash equivalents and restricted cash | (34,396) | 52,585 |
Cash, cash equivalents and restricted cash at beginning of period | 193,126 | 161,618 |
Cash, cash equivalents and restricted cash at end of period | 158,730 | 214,203 |
Supplemental Cash Flow Information: | ||
Interest paid on debt borrowings | 63,733 | 33,218 |
Income taxes paid | 48,914 | 40,178 |
Total | $ 193,126 | $ 161,618 |
Consolidated Balance Sheets (Parenthetical) - $ / shares |
Sep. 30, 2019 |
Dec. 31, 2018 |
---|---|---|
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 | 61,169,000 | 60,890,000 |
Common stock, shares outstanding | 61,169,000 | 60,890,000 |
Significant Accounting Policies Additional Information (Details) - USD ($) |
9 Months Ended | ||
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Jan. 01, 2019 |
Sep. 30, 2019 |
Sep. 30, 2018 |
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New Accounting Pronouncements and Changes in Accounting Principles | |||
Net cash provided by (used for) operating activities | $ (436,131,000) | $ (354,138,000) | |
Accounting Standards Update 2016-02 [Member] | Minimum | |||
Product Warranty Liability [Line Items] | |||
New Accounting Pronouncement or Change in Accounting Principle, Effect of Adoption, Quantification | $ 115,681,000 | ||
Transamerican Auto Parts | Vehicles And Boats | Minimum | |||
Product Warranty Liability [Line Items] | |||
Period of warranties provided by Polaris | 6 months | ||
Transamerican Auto Parts | Vehicles And Boats | Maximum | |||
Product Warranty Liability [Line Items] | |||
Period of warranties provided by Polaris | 10 years |
Segment Information (Tables) |
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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):
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Revenue Recognition (Deferred Revenue) (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2019 |
Sep. 30, 2018 |
Sep. 30, 2019 |
Sep. 30, 2018 |
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Revenue Recognition [Abstract] | ||||
Balance at beginning of period | $ 67,681 | $ 52,620 | $ 59,915 | $ 45,760 |
New contracts sold | 11,119 | 8,054 | 32,504 | 25,226 |
Less: reductions for revenue recognized | (6,409) | (5,088) | (20,028) | (15,400) |
Balance at end of period | $ 72,391 | $ 55,586 | $ 72,391 | $ 55,586 |
Financing Agreement |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Financing Agreement | Financing Agreements The carrying value of debt, finance lease obligations, and notes payable and the average related interest rates were as follows (in thousands):
In July 2018, Polaris amended its unsecured revolving loan facility to increase the facility to $700,000,000 and increase its term loan facility to $1,180,000,000, of which $1,105,000,000 is outstanding as of September 30, 2019. 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 the consolidated balance sheets. 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 amended 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, 2019. 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 the 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 finance lease. The outstanding balance is included in long-term debt and current portion of long-term debt in the consolidated balance sheets. 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 the merger through July 2030. The original discounted payable was for $76,733,000, of which $71,722,000 is outstanding as of September 30, 2019. The outstanding balance is included in long-term debt and current portion of long-term debt in the consolidated balance sheets. 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 $9,666,000 is outstanding as of September 30, 2019. 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.
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Investment in Other Affiliates |
9 Months Ended |
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Sep. 30, 2019 | |
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. The Company had $1,000,000 and $6,133,000 of such investments as of September 30, 2019, and December 31, 2018, respectively, and are recorded as a component of other long-term assets in the accompanying consolidated balance sheets. During 2018, the Company had an investment in Eicher-Polaris Private Limited (“EPPL”), a joint venture established in 2012 with Eicher Motors Limited (“Eicher”) intended to design, develop and manufacture a full range of new vehicles for India and other emerging markets. However, 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 closure, the Company 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. No such costs were recorded in 2019. The investment was fully impaired as of September 30, 2019 and December 31, 2018. The Company impairs an investment and recognizes a loss if and when events or circumstances indicate there is impairment in the investment that is other-than-temporary. When necessary, the Company evaluates investments in nonmarketable securities for impairment, utilizing Level 3 fair value inputs. In October 2017, an agreement was signed to sell the assets of Brammo, Inc. to a third party. During the first quarter of 2018, the Company received additional distributions from Brammo and recognized a gain of $13,478,000, which is included in Other income on the consolidated statements of income.
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Leases (Lease Assets and Liabilities) (Details) - USD ($) |
9 Months Ended | |
---|---|---|
Sep. 30, 2019 |
Dec. 31, 2018 |
|
Property, Plant and Equipment [Line Items] | ||
Accumulated Depreciation, Depletion and Amortization, Property, Plant, and Equipment | $ 7,024,000 | |
Document Period End Date | Sep. 30, 2019 | |
Assets | ||
Operating lease assets | $ 107,906,000 | |
Finance lease assets | 12,451,000 | |
Total leased assets | 120,357,000 | |
Current | ||
Operating lease liabilities | 34,179,000 | |
Finance lease liabilities | 1,229,000 | |
Long-term | ||
Operating lease liabilities | 76,390,000 | |
Finance lease liabilities | 14,840,000 | $ 16,140,000 |
Total lease liabilities | $ 126,638,000 |
Shareholders' Equity Cash Dividends Declared Per Common Share (Details) - $ / shares |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2019 |
Sep. 30, 2018 |
Sep. 30, 2019 |
Sep. 30, 2018 |
|
Equity [Abstract] | ||||
Cash dividends declared and paid per common share (in dollars per share) | $ 0.61 | $ 0.60 | $ 1.83 | $ 1.80 |
Shareholders' Equity Additional Information (Detail) - USD ($) $ / shares in Units, $ in Thousands |
3 Months Ended | 9 Months Ended | ||||||
---|---|---|---|---|---|---|---|---|
Sep. 30, 2019 |
Jun. 30, 2019 |
Mar. 31, 2019 |
Sep. 30, 2018 |
Jun. 30, 2018 |
Mar. 31, 2018 |
Sep. 30, 2019 |
Sep. 30, 2018 |
|
Equity [Abstract] | ||||||||
Repurchase and retirement of common stock | $ 460 | $ 427 | $ 6,110 | $ 54,564 | $ 177,380 | $ 14,987 | $ 6,997 | |
Repurchase and retirement of common stock (shares) | 81,000 | |||||||
Stock Repurchase Program, Number of Shares Authorized to be Repurchased | 3,170,000 | 3,170,000 | ||||||
Cash dividend paid during period, per share (in dollars per share) | $ 0.61 | $ 0.60 | $ 1.83 | $ 1.80 | ||||
Common stock excluded from calculation of diluted earnings per share (shares) | 4,333,000 | 1,785,000 | 4,157,000 | 1,713,000 |
Goodwill and Other Intangible Assets Changes in Carrying Amount of Goodwill (Detail) - USD ($) $ in Thousands |
9 Months Ended | |
---|---|---|
Sep. 30, 2019 |
Dec. 31, 2018 |
|
Goodwill [Roll Forward] | ||
Goodwill, beginning of period | $ 647,077 | |
Goodwill adjustments related to businesses acquired | 10,682 | |
Currency translation effect on foreign goodwill balances | (3,215) | |
Goodwill, end of period | 654,544 | |
Intangible Assets, Net (Excluding Goodwill) | 840,102 | $ 870,517 |
Intangible Assets, Net (Including Goodwill) | $ 1,494,646 | $ 1,517,594 |
Share-Based Compensation Expenses (Detail) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2019 |
Sep. 30, 2018 |
Sep. 30, 2019 |
Sep. 30, 2018 |
|
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ||||
Option awards | $ 6,936 | $ 6,821 | $ 15,049 | $ 16,636 |
Other share-based awards | 12,755 | (748) | 37,212 | 18,988 |
Total share-based compensation before tax | 19,691 | 6,073 | 52,261 | 35,624 |
Tax benefit | 4,686 | 1,446 | 12,438 | 8,479 |
Total share-based compensation expense included in net income | $ 15,005 | $ 4,627 | $ 39,823 | $ 27,145 |
Leases (Maturity of Lease Liabilities) (Details) - USD ($) |
Sep. 30, 2019 |
Dec. 31, 2018 |
---|---|---|
Operating Leases | ||
2019 (remainder) | $ 10,193,000 | |
2020 | 35,027,000 | |
2021 | 25,430,000 | |
2022 | 17,561,000 | |
2023 | 12,828,000 | |
Thereafter | 17,793,000 | |
Total lease payments | 118,832,000 | |
Less: interest | 8,263,000 | |
Present value of lease payments | 110,569,000 | |
Finance Leases | ||
2019 (remainder) | 518,000 | |
2020 | 2,075,000 | |
2021 | 2,063,000 | |
2022 | 2,026,000 | |
2023 | 2,025,000 | |
Thereafter | 11,790,000 | |
Total lease payments | 20,497,000 | |
Less: interest | 4,428,000 | |
Finance Lease, Liability | 16,069,000 | $ 17,587,000 |
Total | ||
2019 (remainder) | 10,711,000 | |
2020 | 37,102,000 | |
2021 | 27,493,000 | |
2022 | 19,587,000 | |
2023 | 14,853,000 | |
Thereafter | 29,583,000 | |
Total lease payments | 139,329,000 | |
Option to extend operating leases | $ 3,594,000 |
Derivative Instruments and Hedging Activities Open Foreign Currency Contracts (Details) - Cash Flow Hedging - Foreign Exchange Contract - USD ($) $ in Thousands |
Sep. 30, 2019 |
Dec. 31, 2018 |
---|---|---|
Derivative [Line Items] | ||
Notional Amounts (in U.S. Dollars) | $ 159,575 | $ 74,355 |
Net Unrealized Gain (Loss) | 964 | 3,128 |
Australian Dollar | ||
Derivative [Line Items] | ||
Notional Amounts (in U.S. Dollars) | 8,695 | 0 |
Net Unrealized Gain (Loss) | 288 | 0 |
Canadian Dollar | ||
Derivative [Line Items] | ||
Notional Amounts (in U.S. Dollars) | 136,559 | 55,133 |
Net Unrealized Gain (Loss) | 33 | 2,564 |
Mexican Peso | ||
Derivative [Line Items] | ||
Notional Amounts (in U.S. Dollars) | 14,321 | 19,222 |
Net Unrealized Gain (Loss) | $ 643 | $ 564 |
Segment Information (Details) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2019
USD ($)
|
Sep. 30, 2018
USD ($)
|
Sep. 30, 2019
USD ($)
segment
|
Sep. 30, 2018
USD ($)
|
|
Segment Reporting Information [Line Items] | ||||
Revenue | $ 1,771,647 | $ 1,651,415 | $ 5,046,652 | $ 4,451,420 |
Number of Operating Segments | segment | 6 | |||
Gross profit | 436,542 | 401,270 | $ 1,225,438 | 1,109,927 |
Number of Reportable Segments | segment | 5 | |||
ORV/Snowmobiles | ||||
Segment Reporting Information [Line Items] | ||||
Revenue | 1,152,405 | 1,035,554 | $ 3,069,173 | 2,858,959 |
Motorcycles | ||||
Segment Reporting Information [Line Items] | ||||
Revenue | 149,900 | 155,316 | 464,615 | 458,285 |
Global Adjacent Markets | ||||
Segment Reporting Information [Line Items] | ||||
Revenue | 114,003 | 96,251 | 340,883 | 322,996 |
Aftermarket | ||||
Segment Reporting Information [Line Items] | ||||
Revenue | 236,261 | 229,973 | 685,668 | 676,859 |
Boats | ||||
Segment Reporting Information [Line Items] | ||||
Revenue | 119,078 | 134,321 | 486,313 | 134,321 |
Operating segments | ORV/Snowmobiles | ||||
Segment Reporting Information [Line Items] | ||||
Revenue | 1,152,405 | 1,035,554 | 3,069,173 | 2,858,959 |
Gross profit | 323,940 | 290,631 | 888,864 | 831,413 |
Operating segments | Motorcycles | ||||
Segment Reporting Information [Line Items] | ||||
Revenue | 149,900 | 155,316 | 464,615 | 458,285 |
Gross profit | 11,940 | 19,577 | 45,704 | 60,817 |
Operating segments | Global Adjacent Markets | ||||
Segment Reporting Information [Line Items] | ||||
Revenue | 114,003 | 96,251 | 340,883 | 322,996 |
Gross profit | 31,138 | 24,155 | 94,851 | 83,520 |
Operating segments | Aftermarket | ||||
Segment Reporting Information [Line Items] | ||||
Revenue | 236,261 | 229,973 | 685,668 | 676,859 |
Gross profit | 61,794 | 66,092 | 173,483 | 182,291 |
Operating segments | Boats | ||||
Segment Reporting Information [Line Items] | ||||
Revenue | 119,078 | 134,321 | 486,313 | 134,321 |
Gross profit | 22,335 | 20,253 | 98,976 | 20,253 |
Corporate | ||||
Segment Reporting Information [Line Items] | ||||
Gross profit | $ (14,605) | $ (19,438) | $ (76,440) | $ (68,367) |
Consolidated Statements Of Comprehensive Income - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2019 |
Sep. 30, 2018 |
Sep. 30, 2019 |
Sep. 30, 2018 |
|
Statement of Comprehensive Income [Abstract] | ||||
Net income | $ 88,388 | $ 95,529 | $ 224,929 | $ 243,783 |
Other comprehensive income, net of tax: | ||||
Foreign currency translation adjustments | (12,385) | 1,804 | (13,189) | (12,099) |
Unrealized gain (loss) on derivative instruments | (449) | (2,111) | (6,948) | 2,998 |
Other Comprehensive (Income) Loss, Defined Benefit Plan, after Reclassification Adjustment, after Tax | 63 | 66 | (481) | 196 |
Comprehensive income | 75,617 | 95,288 | 204,411 | 234,878 |
Other Comprehensive Income (Loss), Net of Tax, Portion Attributable to Noncontrolling Interest | 0 | 0 | 100 | 0 |
Comprehensive Income (Loss), Net of Tax, Including Portion Attributable to Noncontrolling Interest | $ 75,617 | $ 95,288 | $ 204,311 | $ 234,878 |
Document and Entity Information - shares |
9 Months Ended | |
---|---|---|
Sep. 30, 2019 |
Oct. 15, 2019 |
|
Entity Information [Line Items] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Sep. 30, 2019 | |
Document Transition Report | false | |
Entity File Number | 1-11411 | |
Entity Incorporation, State or Country Code | MN | |
Entity Tax Identification Number | 41-1790959 | |
Entity Address, Address Line One | 2100 Highway 55, | |
Entity Address, City or Town | Medina | |
Entity Address, State or Province | MN | |
Entity Address, Postal Zip Code | 55340 | |
City Area Code | 763 | |
Local Phone Number | 542-0500 | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 61,172,971 | |
Amendment Flag | false | |
Document Fiscal Year Focus | 2019 | |
Document Fiscal Period Focus | Q3 | |
Entity Registrant Name | POLARIS INC. | |
Entity Central Index Key | 0000931015 | |
Current Fiscal Year End Date | --12-31 | |
NEW YORK STOCK EXCHANGE, INC. [Member] | ||
Entity Information [Line Items] | ||
Title of 12(b) Security | Common Stock, $.01 par value | |
Trading Symbol | PII | |
Security Exchange Name | NYSE |
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):
With respect to wholegood vehicles, boats, parts, garments and accessories, revenue is recognized when the Company transfers control of the product to the customer. With respect to services provided by the Company, revenue is recognized upon completion of the service or over the term of the service agreement in proportion to the costs expected to be incurred in satisfying the obligations over the term of the service period. 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 are 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. Revenue from goods and services transferred to customers at a point-in-time accounts for the majority of the Company’s revenue. Revenue from products or services transferred over time is discussed in the deferred revenue section. 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 rebates 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. Extended service contract revenue is recorded within PG&A. 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 rebates 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. The Company offers installation services for parts that it 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. 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 rebates 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 The Company finances 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. The Company expects to recognize approximately $30,703,000 of the unearned amount over the next 12 months and $41,688,000 thereafter. The activity in the deferred revenue reserve during the periods presented was as follows (in thousands):
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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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Financing Agreement (Tables) |
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt and Capital Lease Obligations | The carrying value of debt, finance lease obligations, and notes payable and the average related interest rates were as follows (in thousands):
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Acquisitions |
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Business Combinations [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Acquisitions | Acquisitions 2019 Acquisitions. To date, the Company did not complete any material acquisitions in 2019. 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 the three and nine months ended September 30, 2019 include $119,078,000 and $486,313,000 of net sales, and $22,335,000 and $98,976,000 of gross profit, respectively, related to Boat Holdings. The following table summarizes the final 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 2018 (in thousands, except per share data).
The results for the three and nine month periods ended September 30, 2019 have been adjusted to exclude the impact of approximately $1,431,000 and $3,905,000 of integration and acquisition-related costs (pre-tax) incurred by the Company that are directly attributable to the transaction, respectively. The results for the three and nine month periods ended September 30, 2018 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; 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 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.
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Shareholders' Equity |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Equity [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Shareholders' Equity | Shareholders’ Equity During the nine months ended September 30, 2019, Polaris paid $6,997,000 to repurchase approximately 81,000 shares of its common stock. As of September 30, 2019, the Board of Directors has authorized the Company to repurchase up to an additional 3,170,000 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 $0.61 per share on September 16, 2019 to holders of record at the close of business on September 3, 2019. Cash dividends declared and paid per common share for the three and nine months ended September 30, 2019 and 2018, 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, 2019, 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, was 4,333,000 and 4,157,000, respectively, compared to 1,785,000 and 1,713,000 for the same periods in 2018. 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, 2019 and 2018 (in thousands):
The net amount of the existing gains or losses at September 30, 2019 that is expected to be reclassified into the statements of income within the next 12 months is not expected to be material. See Note 12 for further information regarding derivative activities.
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Commitments and Contingencies |
9 Months Ended |
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Sep. 30, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies Product liability. Polaris is subject to product liability claims in the normal course of business. The Company carries excess insurance coverage for product liability claims. Polaris self-insures product liability claims before the policy date and up to the purchased 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, along with an analysis of current claims, to assist in determining the appropriate loss reserve levels. At September 30, 2019, the Company had an accrual of $56,812,000 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. Litigation. Polaris is 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, 2019, the Company is party to three putative class actions pending against Polaris in the United States. Two class actions allege that certain Polaris products caused economic losses resulting from unresolved fire hazards and excessive heat hazards. The third class action alleges that Polaris violated various California consumer protection laws. 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. Regulatory. In the normal course of business, the Company’s products are subject to extensive laws and regulations relating to safety, environmental and other regulations promulgated by the United States federal government and individual states, as well as international regulatory authorities. Failure to comply with applicable regulations could result in fines, penalties or other costs.
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Revenue Recognition (Narrative) (Details) - USD ($) |
Sep. 30, 2019 |
Jun. 30, 2019 |
Dec. 31, 2018 |
Sep. 30, 2018 |
Jun. 30, 2018 |
Dec. 31, 2017 |
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Deferred Revenue Arrangement [Line Items] | ||||||
Deferred Revenue | $ 72,391,000 | $ 67,681,000 | $ 59,915,000 | $ 55,586,000 | $ 52,620,000 | $ 45,760,000 |
Deferred Revenue, Current | 30,703,000 | 23,893,000 | ||||
Deferred Revenue, Noncurrent | $ 41,688,000 | $ 31,693,000 |
Significant Accounting Policies Major Components of Inventories (Details) - USD ($) $ in Thousands |
Sep. 30, 2019 |
Dec. 31, 2018 |
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Accounting Policies [Abstract] | ||
Raw materials and purchased components | $ 385,735 | $ 233,258 |
Service parts, garments and accessories | 375,709 | 342,593 |
Finished goods | 566,021 | 442,003 |
Less: reserves | (57,355) | (48,343) |
Inventories | $ 1,270,110 | $ 969,511 |
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