-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, DFPBVSGT7kDhVaZnz2Nt5qfZ8cCtt11lGls2B4QqDAyB8yuzgwFakt2HqLdUC5EI iL4vv4kxm0q+dF6Q904rww== 0000912057-97-028654.txt : 19970821 0000912057-97-028654.hdr.sgml : 19970821 ACCESSION NUMBER: 0000912057-97-028654 CONFORMED SUBMISSION TYPE: 10-Q/A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19970630 FILED AS OF DATE: 19970820 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: POLARIS INDUSTRIES INC/MN CENTRAL INDEX KEY: 0000931015 STANDARD INDUSTRIAL CLASSIFICATION: MISCELLANEOUS TRANSPORTATION EQUIPMENT [3790] IRS NUMBER: 411790959 STATE OF INCORPORATION: MN FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q/A SEC ACT: 1934 Act SEC FILE NUMBER: 001-11411 FILM NUMBER: 97667123 BUSINESS ADDRESS: STREET 1: 1225 HIGHWAY 169 N CITY: MINNEAPOLIS STATE: MN ZIP: 55441 BUSINESS PHONE: 6125420500 MAIL ADDRESS: STREET 1: 1225 HIGHWAY 169 N STREET 2: 425 LEXINGTON AVE CITY: MINNESOTA STATE: MN ZIP: 55441 10-Q/A 1 FORM 10-Q/A UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q/A (Mark One) /X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 1997 ------------------------------ OR / / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from_______________________to_________________ Commission File Number 1-11411 ---------------------------------- Polaris Industries Inc. - ------------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) Minnesota 41-1790959 - ------------------------------------------------------------------------------- (State or other jurisdiction (IRS Employer of incorporation or organization) Identification No.) 1225 Highway 169 North, Minneapolis, MN 55441 - ------------------------------------------------------------------------------- (Address of principal executive offices) (Zip Code) (612) 542-0500 - ------------------------------------------------------------------------------- (Registrant's telephone number, including area code) Indicate by check mark whether the registrant (1) has filed all reports to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes X No ------ ------ APPLICABLE ONLY TO CORPORATE ISSUERS: Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. As of August 6, 1997, 26,277,106 shares of Common Stock of the issuer were outstanding. POLARIS INDUSTRIES INC. TABLE OF CONTENTS Part I. FINANCIAL INFORMATION Item 1 - Consolidated Financial Statements Consolidated Balance Sheets Pg. 3 Consolidated Statements of Operations Pg. 4 Consolidated Statements of Cash Flows Pg. 5 Consolidated Statement of Shareholders' Equity Pg. 6 Notes to Consolidated Financial Statements Pg. 7 SIGNATURE PAGE Pg. 11 -2- POLARIS INDUSTRIES INC. CONSOLIDATED BALANCE SHEETS (IN THOUSANDS)
June 30, 1997 December 31, 1996 ------------- ----------------- (Unaudited) ASSETS Current Assets: Cash and cash equivalents $ 5,897 $ 5,812 Trade receivables 30,614 36,158 Inventories 150,564 122,911 Prepaid expenses and other 3,282 3,524 Deferred tax assets 26,000 25,000 -------- -------- Total current assets 216,357 193,405 -------- -------- Deferred Tax Assets 29,000 30,000 Property and Equipment, net 91,307 93,513 Investments in Affiliates 20,008 10,421 Intangible Assets, net 23,940 24,378 -------- -------- Total Assets $380,612 $351,717 -------- -------- -------- -------- LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities: Accounts payable $ 75,898 $ 50,514 Accrued expenses 93,137 102,316 Income taxes payable 16,401 8,557 -------- -------- Total current liabilities 185,436 161,387 Borrowings under credit agreement 47,000 35,000 -------- -------- Total Liabilities 232,436 196,387 -------- -------- Shareholders' Equity: Common stock 264 270 Additional paid-in capital 85,715 102,946 Deferred compensation (2,816) (978) Compensation payable in common stock 4,912 9,710 Retained earnings 60,101 43,382 -------- -------- Total shareholders' equity 148,176 155,330 -------- -------- Total Liabilities and Shareholders' Equity $380,612 $351,717 -------- -------- -------- --------
See Notes to Consolidated Financial Statements -3- POLARIS INDUSTRIES INC. CONSOLIDATED STATEMENTS OF OPERATIONS (IN THOUSANDS, EXCEPT PER SHARE DATA) UNAUDITED
Second Quarter For the Six Months Ended June 30, Ended June 30, ------------------- ------------------- 1997 1996 1997 1996 ---- ---- ---- ---- Sales $249,888 $317,053 $474,522 $595,094 Cost of Sales 195,953 253,859 376,694 481,242 -------- -------- -------- -------- Gross profit 53,935 63,194 97,828 113,852 -------- -------- -------- -------- Operating Expenses Selling and marketing 27,044 30,569 46,732 52,150 General and administrative 8,449 7,930 15,009 15,272 -------- -------- -------- -------- Total operating expenses 35,493 38,499 61,741 67,422 -------- -------- -------- -------- Operating income 18,442 24,695 36,087 46,430 Nonoperating Expense (Income) Interest expense 1,110 1,154 1,854 1,977 Equity in income of affiliates (1,484) (1,037) (2,870) (1,037) Other expense (income), net (1,956) (199) (2,448) (735) --------- --------- -------- -------- Income before income taxes 20,772 24,777 39,551 46,225 Provision for Income Taxes 7,478 8,491 14,238 16,641 -------- -------- -------- -------- Net income $ 13,294 $ 16,286 $ 25,313 $ 29,584 -------- -------- -------- -------- -------- -------- -------- -------- Net Income Per Share $ 0.49 $ 0.58 $ 0.93 $ 1.06 -------- -------- -------- -------- -------- -------- -------- -------- Weighted Average Number of Common and Common Equivalent Shares Outstanding 26,967 28,070 27,209 28,026 -------- -------- -------- -------- -------- -------- -------- --------
See Notes to Consolidated Financial Statements -4- POLARIS INDUSTRIES INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (IN THOUSANDS) UNAUDITED
For the Six Months Ended June 30, ---------------------- 1997 1996 ---- ---- Cash Flows From Operating Activities Net Income $25,313 $29,584 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 17,326 15,400 Noncash compensation 3,181 3,344 Equity in income of affiliates (2,870) (1,037) Deferred income taxes 0 2,000 Changes in current operating items - Trade receivables 5,544 (9,469) Inventories (27,653) (46,047) Accounts payable 25,384 20,543 Accrued expenses (9,179) (7,993) Income taxes payable 7,844 6,752 Others, net 451 3,153 -------- -------- Net cash provided by operating activities 45,341 16,230 -------- -------- Cash Flows From Investing Activities: Purchase of property and equipment (14,682) (17,863) Investments in affiliates, net (6,717) (10,493) -------- -------- Net cash used for investing activities (21,399) (28,356) -------- -------- Cash Flows From Financing Activities: Borrowings under credit agreement 149,500 169,000 Repayments under credit agreement (137,500) (145,200) Repurchase and retirement of common shares (27,263) - Cash dividends to shareholders (8,594) (8,237) -------- -------- Net cash provided by (used for) financing activities (23,857) 15,563 -------- -------- Increase in cash and cash equivalents 85 3,437 Cash and Cash Equivalents, Beginning 5,812 3,501 -------- -------- Cash and Cash Equivalents, Ending $ 5,897 $ 6,938 -------- -------- -------- --------
See Notes to Consolidated Financial Statements -5- POLARIS INDUSTRIES INC. CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY (IN THOUSANDS) UNAUDITED
Additional Compensation Common Paid-In Deferred Payable in Retained Stock Capital Compensation Common Stock Earnings Total ------ ---------- ------------ ------------- -------- ----- Balance, December 31, 1996 $270 $102,946 ($ 978) $9,710 $43,382 $155,330 First Rights conversion to stock 3 7,164 - (7,210) - (43) Employee stock compensation 1 2,858 ( 1,838) 2,412 - 3,433 Cash dividends declared - - - - (8,594) (8,594) Repurchase and retirement of common shares (10) (27,253) - - - (27,263) Net income - - - - 25,313 25,313 ------- -------- Balance, June 30, 1997 $264 $85,715 ($2,816) $4,912 $60,101 $148,176 ---- ------- -------- ------ ------- -------- ---- ------- -------- ------ ------- --------
See Notes to Consolidated Financial Statements -6- POLARIS INDUSTRIES INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 1. BASIS OF PRESENTATION The accompanying unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles 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 generally accepted accounting principles for complete financial statements. Accordingly, such statements should be read in conjunction with the previously filed Form 10-K. In the opinion of management, such statements reflect all adjustments (which include only normal recurring adjustments) necessary for a fair presentation of the financial position, results of operations, and cash flows for the periods presented. Due to the seasonality of the snowmobile, all terrain vehicle (ATV) and personal watercraft (PWC) business, 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. NOTE 2. INVENTORIES The major components of inventories are as follows (in thousands):
June 30, 1997 December 31, 1996 ------------- ----------------- Raw Materials $ 25,675 $ 24,469 Service Parts 47,598 45,809 Finished Goods 77,291 52,633 -------- -------- $150,564 $122,911 -------- -------- -------- --------
NOTE 3. FINANCING AGREEMENT Polaris has an unsecured bank line of credit arrangement with maximum available borrowings of $150.0 million. Interest is charged at rates based on LIBOR or "prime" (6.00% at June 30, 1997) and the agreement expires on March 31, 2000, at which time the balance is due. As of June 30, 1997, total borrowings under this credit agreement were $47.0 million and have been classified as long-term in the accompanying consolidated balance sheets. NOTE 4. INVESTMENTS IN AFFILIATES In February, 1996 a wholly-owned subsidiary of Polaris entered into a -7- partnership agreement with Transamerica Commercial Finance Corporation (TCFC) to form Polaris Acceptance. Polaris Acceptance provides floor plan financing to dealer and distributor customers of Polaris, and may in the future provide other financial services to dealers, distributors and retail customers of Polaris. In January 1997, Polaris exercised its option to increase its equity interest in Polaris Acceptance to 50 percent. Polaris has guaranteed 50 percent of the outstanding indebtedness of Polaris Acceptance under a credit agreement between Polaris Acceptance and TCFC. At June 30, 1997, Polaris' contingent liability with respect to the guarantee was approximately $122.0 million. In February, 1995, Polaris entered into an agreement with Fuji Heavy Industries Ltd. to form Robin Manufacturing, U.S.A. ("Robin"). Under the agreement, Polaris has a 40 percent ownership interest in Robin, which builds engines in the United States for recreational and industrial products. Investments in affiliates are accounted for under the equity method. Polaris' allocable share of the income of Polaris Acceptance and Robin has been included as a component of nonoperating expense (income) in the accompanying consolidated statements of operations. NOTE 5. SHAREHOLDERS' EQUITY Polaris has a continuing authorization from its Board of Directors to repurchase up to 3,000,000 shares of the Company's outstanding common stock. During the first six months of 1997, Polaris paid $27.3 million to repurchase and retire 1,033,000 shares of its common stock with cash on hand and borrowings under its line of credit. Polaris has 1,446,000 shares available to repurchase under this authorization as of June 30, 1997. On April 17, 1997, the Polaris Board of Directors declared a regular cash dividend of $0.16 per share payable on May 15, 1997, to holders of record on April 30, 1997. On July 17, 1997, the Polaris Board of Directors declared a regular cash dividend of $0.16 per share payable on August 15, 1997, to holders of record on August 1, 1997. -8- NOTE 6. COMMITMENTS AND CONTINGENCIES Polaris is subject to product liability claims in the normal course of business. Effective June 1996, Polaris purchased excess insurance coverage for catastrophic product liability claims for incidents occurring subsequent to the policy date that exceed a self insured retention. The estimated costs resulting from any losses are charged to expense when it is probable a loss has been incurred and the amount of the loss is reasonably determinable. Injection Research Specialists commenced an action in 1990 against Polaris in Colorado Federal Court alleging various claims relating to electronic fuel injection systems for snowmobiles. In April 1997, a judgment was entered in favor of Injection Research Specialists , before interest, for $24.0 million in compensatory damages and $10.0 million in punitive damages against Polaris, and $15.0 million in compensatory damages and $8.0 million in punitive damages against Fuji Heavy Industries, Ltd. ("Fuji"), one of Polaris' sources of supply of engines. The judgment against Fuji was subsequently reduced on post trial motions to $11.6 million in compensatory damages and no punitive damages. Polaris has appealed the judgment against Polaris and has been advised that Fuji intends to appeal the judgment against it. As a result of this process, the Company may record additional reserves associated with this litigation on its financial statements. In addition to the aforementioned matter, Polaris is a defendant in lawsuits and subject to claims arising in the normal course of business. In the opinion of management, these legal proceedings pending against or involving Polaris will not have a material adverse effect on Polaris' financial position or results of operations. NOTE 7. FOREIGN CURRENCY CONTRACTS The Company enters into foreign exchange contracts to hedge certain of its purchase commitments denominated in foreign currencies and transfers of funds from its Canadian subsidiary; market value gains and losses are recognized at the time of purchase or transfer of funds, respectively. The purpose of the Company's foreign exchange contracts is to reduce the risk that the eventual dollar cash flows resulting from the purchase commitments and transfers of funds from its Canadian subsidiary will be adversely affected by changes in exchange rates. At June 30, 1997, the Company had open Japanese yen foreign exchange contracts with notional amounts totaling $37.2 million United States dollars, and open Canadian dollar foreign exchange contracts with notional amounts totaling $58.4 million United States dollars which mature throughout 1997. -9- NOTE 8. NEW ACCOUNTING PRONOUNCEMENTS In March 1997, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 128, "Earnings per Share", (SFAS128), which changes the way companies calculate their earnings per share (EPS). SFAS 128 replaces primary EPS with basic EPS. Basic EPS is computed by dividing reported earnings by weighted average shares outstanding, excluding potentially dilutive securities. Fully diluted EPS, termed diluted EPS under SFAS 128, is also to be disclosed. Polaris is required to adopt SFAS 128 in the first quarter of 1998 at which time all prior year EPS are to be restated in accordance with SFAS 128. -10- POLARIS INDUSTRIES INC. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this Amendment to its report to be signed on its behalf by the undersigned thereunto duly authorized. POLARIS INDUSTRIES INC. (Registrant) Date: August 20, 1997 /s/ W. Hall Wendel, Jr. ----------------------- W. Hall Wendel, Jr. Chairman of the Board and Chief Executive Officer Date: August 20, 1997 /s/ Michael W. Malone --------------------- Michael W. Malone Vice President Finance, Chief Financial Officer, Treasurer and Secretary (Principal Financial and Chief Accounting Officer) -11- -----END PRIVACY-ENHANCED MESSAGE-----