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Polaris Reports Record 2012 Fourth Quarter And Full Year Results; Fourth Quarter EPS Increased 38% To $1.24 With Sales Growth Of 15%

Stocks in this article: PII

A replay of the conference call will be available approximately two hours after the call for a one-week period by accessing the same link on our website, or by dialing 855-859-2056 in the U.S. and Canada, or 404-537-3406 internationally.

About PolarisPolaris is a recognized leader in the powersports industry with annual 2012 sales of $3.2 billion. Polaris designs, engineers, manufactures and markets innovative, high quality off-road vehicles, including all-terrain vehicles (ATVs) and the Polaris RANGER ® and RZR ® side-by-side vehicles, snowmobiles, motorcycles and on-road electric/hybrid powered vehicles.

Polaris is among the global sales leaders for both snowmobiles and off-road vehicles and has established a presence in the heavyweight cruiser and touring motorcycle market with the Victory and Indian motorcycle brands. Additionally, Polaris continues to invest in the global on-road small electric/hybrid powered vehicle industry with Global Electric Motorcars (GEM), Goupil Industrie SA, and internally developed vehicles. Polaris enhances the riding experience with a complete line of Pure Polaris and KLIM branded apparel and Polaris accessories and parts.

Polaris Industries Inc. trades on the New York Stock Exchange under the symbol “PII”, and the Company is included in the S&P Mid-Cap 400 stock price index.

Information about the complete line of Polaris products, apparel and vehicle accessories are available from authorized Polaris dealers or anytime at www.polaris.com.

Except for historical information contained herein, the matters set forth in this news release, including management’s expectations regarding 2013 sales, shipments, net income, net income per share, manufacturing realignment projects transition costs and savings in logistical and production costs, are forward-looking statements that involve certain risks and uncertainties that could cause actual results to differ materially from those forward-looking statements. Potential risks and uncertainties include such factors as the Company’s ability to successfully implement its manufacturing operations realignment initiatives, product offerings, promotional activities and pricing strategies by competitors; acquisition integration costs; warranty expenses; impact of changes in Polaris stock price on incentive compensation plan costs; foreign currency exchange rate fluctuations; environmental and product safety regulatory activity; effects of weather; commodity costs; uninsured product liability claims; uncertainty in the retail and wholesale credit markets; changes in tax policy and overall economic conditions, including inflation, consumer confidence and spending and relationships with dealers and suppliers. Investors are also directed to consider other risks and uncertainties discussed in documents filed by the Company with the Securities and Exchange Commission. The Company does not undertake any duty to any person to provide updates to its forward-looking statements.

 
 
POLARIS INDUSTRIES INC.
CONSOLIDATED STATEMENTS OF INCOME
(In Thousands, Except Per Share Data)
(Unaudited)
 
    For Three Months     For Twelve Months
Ended December 31, Ended December 31,
2012   2011 2012   2011
Sales $ 900,647 $ 781,969 $ 3,209,782 $ 2,656,949
Cost of sales   646,847     577,661     2,284,485     1,916,366  
Gross profit 253,800 204,308 925,297 740,583
Operating expenses
Selling and marketing 57,468 48,985 210,367 178,725
Research and development 33,327 31,383 127,361 105,631
General and administrative   38,423     37,763     143,064     130,395  
Total operating expenses 129,218 118,131 480,792 414,751
 
Income from financial services   10,295     6,953     33,920     24,092  
Operating income 134,877 93,130 478,425 349,924
 
Non-operating expense (income):
Interest expense 1,489 1,221 5,932 3,987
Equity in loss of other affiliates 179 - 179 -
Other income, net   (1,173 )   (4,610 )   (7,529 )   (689 )
Income before income taxes 134,382 96,519 479,843 346,626
 
Provision for income taxes   46,318     32,620     167,533     119,051  
Net Income $ 88,064   $ 63,899   $ 312,310   $ 227,575  
 
Basic net income per share $ 1.27   $ 0.93   $ 4.54   $ 3.31  
Diluted net income per share $ 1.24   $ 0.90   $ 4.40   $ 3.20  
 

Weighted average shares outstanding:

 
Basic 69,112 68,885 68,849 68,792
Diluted 71,152 71,062 71,005 71,057
 

 
POLARIS INDUSTRIES INC.
CONSOLIDATED BALANCE SHEETS
(In Thousands)
(Unaudited)
 

Subject to Reclassification

   

December 31, 2012

   

December 31, 2011

 
Assets
Current Assets:
Cash and cash equivalents $ 417,015 $ 325,336
Trade receivables, net 119,769 115,302
Inventories, net 344,996 298,042
Prepaid expenses and other 34,039 33,969
Income taxes receivable 15,730 24,723
Deferred tax assets   86,292   77,665
Total current assets 1,017,841 875,037
 
Property and equipment, net 253,369 213,778
Investment in finance affiliate 56,988 42,251
Investment in other affiliates 12,817 5,000
Deferred tax assets 22,389 10,601
Goodwill and other intangible assets, net 107,216 77,718
Other long-term assets   15,872   3,639
Total Assets $ 1,486,492 $ 1,228,024
 
Liabilities and Shareholders’ Equity
Current Liabilities:
Current portion of capitalized lease obligations $ 2,887 $ 2,653
Accounts payable 169,036 146,743
Accrued expenses:
Compensation 139,140 165,347
Warranties 47,723 44,355
Sales promotions and incentives 107,008 81,228
Dealer holdback 86,733 76,512
Other 73,529 68,856
Income taxes payable   4,973   639
Total current liabilities 631,029 586,333
 
Long-term income taxes payable 7,063 7,837
Capital lease obligations 4,292 4,600
Long-term debt 100,000 100,000
Other long-term liabilities   53,578   29,198
Total liabilities   795,962   727,968
 
Shareholders’ Equity:
Total shareholders’ equity   690,530   500,056
Total Liabilities and Shareholders’ Equity $ 1,486,492 $ 1,228,024
 

 
POLARIS INDUSTRIES INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands)
(Unaudited)
 
Subject to Reclassification     For the Year

Ended December 31,

2012

   

2011

Operating Activities:
Net income $ 312,310 $ 227,575

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation and amortization 70,580 66,390
Noncash compensation 35,420 20,548
Noncash income from financial services (3,899 ) (4,444 )
Noncash expense from other affiliates 179 133
Deferred income taxes (20,281 ) (16,946 )
Tax effect of share-based compensation exercises (29,892 ) (23,120 )
Changes in current operating items:
Trade receivables 2,413 (23,115 )
Inventories (36,029 ) (49,973 )
Accounts payable 21,371 27,232
Accrued expenses 39,269 80,668
Income taxes payable/receivable 42,500 (1,343 )
Prepaid expenses and others, net   (17,826 )   (1,075 )
Net cash provided by operating activities 416,115 302,530
 
Investing Activities:
Purchase of property and equipment (103,083 ) (84,484 )
Investment in finance affiliate, net (10,838 ) (638 )
Investment in other affiliates (7,996 ) (5,000 )
Proceeds from sale of investments - 876
Acquisition of businesses, net of cash acquired   (41,135 )   (51,899 )
Net cash used for investing activities (163,052 ) (141,145 )
 
Financing Activities:
Borrowings under senior notes/capital lease obligations 2,437 100,000
Repayments under credit agreement/capital lease obligations (7,478 ) (202,333 )
Repurchase and retirement of common shares (127,524 ) (132,372 )
Cash dividends to shareholders (101,534 ) (61,585 )
Tax effect of proceeds from share-based compensation exercises 29,892 23,120
Proceeds from stock issuances under employee plans   41,690     45,654  
 
Net cash used for financing activities   (162,517 )   (227,516 )
 
Impact of currency translation on cash balances   1,133     (2,460 )
 
Net decrease in cash and cash equivalents 91,679 (68,591 )
 
Cash and cash equivalents at beginning of period   325,336     393,927  
 
Cash and cash equivalents at end of period $ 417,015   $ 325,336  




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