ATVs were introduced to the North American market in 1971 by Honda Motor Co., Ltd. (“Honda”). Other Japanese motorcycle manufacturers, including Yamaha Motor Corporation (“Yamaha”), Kawasaki Motors Corp. (“Kawasaki”), and Suzuki Motor Corporation (“Suzuki”), entered the North American ATV market in the late 1970’s and early 1980’s. We entered the ATV market in 1985, Arctic Cat Inc. (“Arctic Cat”) entered in 1995 and Bombardier Recreational Products Inc. (BRP)(“BRP”) entered in 1998 with their Can-Am product line. In addition, numerous Chinese and Taiwanese manufacturers of youth and small ATVs exist for which limited industry sales data is available. By 1985, the number of three- and four-wheel ATVs sold in North America had grown to approximately 650,000 units per year, then dropped dramatically to a low of 148,000 in 1989. The ATV industry then grew each year in North America from 1990 until 2005, but declined between 2005 and 2011, primarily due to weak overall economic conditions and a move to side-by-side vehicles, until returning to modest low single digit percentage growth in 2012.2012 through 2014. The North American ATV industry was approximately flat in 2015. Internationally, ATVs are also sold primarily in Western European countries by similar manufacturers as in North America. Due primarily to a decline in ATV sales in Western Europe, weWe estimate that during 20132015 world-wide industry sales decreased approximately two percent from 20122014 levels with an estimated 407,000412,000 ATVs sold worldwide.

We estimate that total worldwide off-road vehicle industry sales for 2013,2015, which includes core ATVs and side-by-side vehicles, increased threetwo percent from 20122014 levels with an estimated 792,000851,000 units sold worldwide.sold.

before gradually declining through the 2012 season, but grew again in 2013 and 2014. We estimate that during the season ended March 31, 2015, world-wide industry sales of snowmobiles on a worldwide basis are estimated at 136,000 units, up approximatelydecreased four percent from the previous season.season levels with an estimated 151,000 units sold worldwide.

We produce or supply a variety of replacement parts and the high-performance RZR XP^® 1000.accessories for our ORVs. ORV accessories include winches, bumper/brushguards, plows, racks, mowers, tires, pull-behinds, cabs, cargo box accessories, tracks and oil. We also market a full line of recreational apparel for our ORVs, including helmets, jackets, pants and hats. In 2014, we acquired Kolpin Outdoors, Inc. (“Kolpin”), an aftermarket brand delivering purpose-built and universal-fit ORV accessories and lifestyle products. We also acquired certain assets of LSI Products Inc. and Armor Holdings LLC (collectively “Pro Armor”), an aftermarket accessories company that specializes in accessories for performance side-by-side vehicles and all-terrain vehicles. These two 2014 acquisitions added industry leading aftermarket accessory brands to our ORV operating segment.

Our products are assembled at our original manufacturing facilityfacilities in Roseau, Minnesota and at our facilities inMinnesota; Spirit Lake, Iowa, and its surrounding areas,areas; Osceola, Wisconsin,Wisconsin; Monterrey, MexicoMexico; Opole, Poland; Shanghai, China and in facilitiesvarious locations across France. Since our product lines incorporate similar technology, substantially the same equipment and personnel are employed in theiracross production in North America. We are vertically integrated in several key components of our manufacturing process, including plastic injection molding, welding, clutch assembly and balancing and painting. Fuel tanks, tracks, tires, seats and instruments, and certain other component parts are purchased from third-party vendors. Raw materials or standard parts are readily available from multiple sources for the components manufactured by us. Our work force is familiar with the use, operation and maintenance of the products since many employees own the products we manufacture. In 2010, we announced plans to realign our manufacturing operations. We have created manufacturing centers of excellence forestablished at our products by enhancing the existingproduction facilities in Roseau and Spirit Lake, as well as at our Monterrey production facilities and established a manufacturing facility, in Monterrey, Mexico, which became operational in 2011, that assembles ORVs and certain engines. This realignment led to the sale of part of our Osceola, Wisconsin manufacturing operations, moving frame tube bending into Roseau and Monterrey, and outsourcing some operations including seat manufacturing and stamping. Several of the engines used in our vehicles continue to be manufactured in Osceola. In 2013, construction began on a new

Pursuant to informal agreements between us and Fuji Heavy Industries Ltd. (“Fuji”), Fuji was the sole manufacturer of our two-cycle snowmobile engines from 1968 to 1995. Fuji has manufactured engines for our ATV products since their introduction in 1985. We had entered into an agreement with Fuji to form Robin Manufacturing, U.S.A. (“Robin”) in 1995. Under the agreement, we made an investment for a 40 percent ownership position in Robin, which built engines in the United States for recreational and industrial products. The Robin facility was closed in 2011 as the production volume of engines made at the facility had declined significantly in recent years.significantly. Since 2011, our reliance on and use of Fuji manufactured engines in our products has steadily declined as our internal engine manufacturing capabilities have expanded. We expectAfter decreasing from 2011 to 2014, our use of Fuji engines in our vehicles stabilized in 2015, and is expected to continue to decline throughout 2014.remain stable in 2016.

We have been designing and producing our own engines for select models of snowmobiles since 1995, for all Victory motorcycles since 1998, for select ORV models since 2001 and for Indian motorcycles since the re-launch in 2013. During 2013,2015, approximately 6585 percent of the total vehicles we produced were powered by engines designed and assembled by us.

We do not anticipate any significant difficulties in obtaining substitute supply arrangements for other raw materials or components that we generally obtain from limited sources.

Contract carriers ship our products from our manufacturing and distribution facilities to our customers. We maintain several leased wholegoods distribution centers where final setupset-up and up-fitting is completed for certain models before shipment to customers.

 We maintain sales and administration facilities in Medina and Plymouth, Minnesota; Rigby, Idaho; Ponderay, Idaho; Dallas, Texas; Winnipeg, Canada; Derrimut, Australia; Shanghai, China; Rolle, Switzerland; Sao Paulo, Brazil; New Delhi, India; Monterrey, Mexico and in most Western European countries. Our primary wholegoods distribution facilities are in Shakopee, Minnesota; Haviland, Ohio; Altona, Australia; Irving, Texas; and Milford, Iowa. Our primary North American dealer PG&A distribution facilities are in Vermillion, South Dakota,Dakota; Wilmington, Ohio and Rigby, Idaho. We have various other locations around the world that distribute wholegoods and PG&A to our international dealers and distributors.

We produce and deliver our products throughout the year based on dealer, distributor and customer orders. Beginning in 2008, we began testing a new dealer ordering process called Maximum Velocity Program (MVP), where ORV orders are placed in approximately two-week intervals for the high volume dealers driven by retail sales trends at the individual dealership. Smaller dealers utilize a similar MVP process, but on a less frequent ordering cycle. Effective in 2010, the MVP process was being utilized by all North American ORV dealers. For MVP dealers, ORV retail sales activity at the dealer level drives orders which are incorporated into each product’s production scheduling. International distributor ORV orders are taken throughout the year. Orders for each year’s production of snowmobiles are placed by the dealers and distributors in the spring. Non-refundable deposits made by consumers to dealers in the spring for pre-ordered snowmobiles assist in production planning. In 2012, we began utilizing our Retail Flow Management (RFM) ordering system for Victory motorcycles, and now also use it as the ordering system for Indian motorcycles. In late 2014, we began utilizing RFM for most ATV dealers. The RFM system allows dealers to order daily, create a segment stocking order, and eventually reduce order fulfillment times to what we expect will be less than 18 days. Prior to RFM, Victory motorcycle dealers would place annual orders in the summer. For non-MVP and RFMnon-RFM dealers and products, units are built to order each year, subject to fluctuations in market conditions and supplier lead times. The anticipated volume of unitsWe anticipate that we will begin to be produced is substantially committedevolve our side-by-side business to utilize RFM in late 2016 and 2017.

For snowmobiles, we offer a pre-order SnowCheck program for our customers. This program allows our customers to order a true factory-customized snowmobile by dealersselecting various options, including chassis, track, suspension, colors and distributors prior to production.

Our products are sold through a network of approximately 1,7501,800 independent dealers in North America, and approximately 1,700 independent international dealers through 2223 subsidiaries and approximately 8575 distributors in over 100 countries outside of North America. With the exception of France, the United Kingdom, Sweden, Norway, Australia, New Zealand, Germany, Spain, China, India, Mexico and Brazil, sales of our non-Global Adjacent Markets vehicles in Europe and other offshore markets are handled through independent distributors.

to increase over the coming years. Slingshot currently has approximately 450 North American dealers retailing as of the end of 2015. In 2005, we began selling Victory motorcycles in the United Kingdom. Since 2005, we have been gradually expanding our international sales of motorcycles, primarily in Europe and Australia. We expect to further expand our motorcycle dealer network over the next few years in North America and internationally for both Victory, Indian and IndianSlingshot motorcycles.

We have arrangements with Polaris Acceptance (United States) and GE affiliates (Australia, Canada, France, Germany, the United Kingdom, Ireland, Sweden, China and New Zealand) to provide floor plan financing for our dealers. A majority of our United StatesNorth American sales of snowmobiles, ORVs, motorcycles, SVsGlobal Adjacent Markets vehicles and related PG&A are financed under arrangements whereby we are paid within a few days of shipment of our product. We participate in the cost of dealer financing and have agreed to repurchase products from the finance companies under certain circumstances and subject to

In April 2006, a wholly-owned subsidiary of Polaris entered into a multi-year contract with GE Money Bank (“GE Bank”) under which GE Bank makes available closed-end installment consumer and commercial credit to customers of

our dealers for both Polaris and non-Polaris products. In 2014, GE Bank changed its name to Synchrony Bank, as a result of a spin off and is part of the GE Capital Retail Finance business. The current installment credit agreement under which GESynchrony Bank provides installment credit lending for motorcyclesPolaris products expires in March 2016.December 2020.

In January 2009, a wholly-owned subsidiary of Polaris entered into a multi-year contract with Sheffield Financial (“Sheffield”) pursuant to which Sheffield agreed to make available closed-end installment consumer and commercial credit to customers of our dealers for Polaris products. The current installment credit agreement under which Sheffield provides exclusive installment credit lending for ORVs, snowmobiles, motorcycles and certain other Polaris products expires in FebruaryDecember 2020.

In November 2014, a wholly-owned subsidiary of Polaris entered into a multi-year contract with FreedomRoad Financial (“FreedomRoad”) pursuant to which FreedomRoad agreed to make available closed-end installment consumer and commercial credit to customers of our dealers for Polaris products. The current installment credit agreement under which FreedomRoad provides installment credit lending for motorcycles expires in December 2016.

We sell clothing and accessories through our e-commerce siteswebsites polaris.com, indianmotorcycle.com, klim.com, kolpin.com, cyclecountry.com, proarmor.com, timbersled.com, hammerheadoffroad.com and klim.com.509films.com.

Our marketing activities are designed primarily to promote and communicate directly with consumers and secondarily to assist the selling and marketing efforts of our dealers and distributors. We make available and advertise discount or rebate programs, retail financing or other incentives for our dealers and distributors to remain price competitive in order to accelerate retail sales to consumers and gain market share. We advertise our products directly to consumers using print advertising in the industry press and in user group publications and on the internet, social media, billboards, television and radio. We also provide media advertising and partially underwrite dealer and distributor media advertising to a degree and on terms which vary by product and from year to year. From time to time, we produce promotional films for our products, which are available to dealers for use in the showroom or at special promotions. We also provide product brochures, leaflets, posters, dealer signs, and miscellaneous other promotional items for use by dealers.

We expended $270.3$316.7 million, $210.4$314.5 million and $178.7$270.3 million for sales and marketing activities in 2013, 20122015, 2014 and 2011,2013, respectively.

We utilize internal combustion engine testing facilities to design and optimize engine configurations for our products. We utilize specialized facilities for matching engine, exhaust system and clutch performance parameters in our products to achieve desired fuel consumption, power output, noise level and other objectives. Our engineering department is equipped to make small quantities of new product prototypes for testing and for the planning of manufacturing procedures. In addition, we maintain numerous facilities where each of the products is extensively tested under actual use conditions. In 2013, we completed a project which more than doubled our research and development facility in Wyoming, Minnesota to 272,000 square feet. We utilize our Wyoming, Minnesota facility for engineering, design and

vehicles. In 2010, we acquired Swissauto Powersports Ltd., an engineering company that develops high performance and high efficiency engines and innovative vehicles.

We expended $139.2$166.4 million, $127.4$148.5 million and $105.6$139.2 million for research and development activities in 2013, 20122015, 2014 and 2011,2013, respectively.

We rely on a combination of patents, trademarks, copyrights, trade secrets, and nondisclosure and non-competition agreements to establish and protect our intellectual property and proprietary technology. We have filed and obtained numerous patents in the United States and abroad, and regularly file patent applications worldwide in our continuing effort to establish and protect our proprietary technology. Additionally, we have numerous registered trademarks, trade names and logos in the United States, Canada and international locations.

The off-road vehicle, snowmobile, motorcycle and small vehiclepeople mobility and work utility solutions markets in the United States, Canada and other global markets are highly competitive. Competition in such markets is based upon a number of factors, including price, quality, reliability, styling, product features and warranties. At the dealer level, competition is based on a number of factors, including sales and marketing support programs (such as financing and cooperative advertising). Certain of our competitors are more diversified and have financial and marketing resources that are substantially greater than those of Polaris.

 We believe that our products are competitively priced and our sales and marketing support programs for dealers are comparable to those provided by our competitors. Our products compete with many other recreational products for the discretionary spending of consumers, and to a lesser extent, with other vehicles designed for utility applications.

In August 2008, the Consumer Product Safety Improvement Act (“Act”) was passed which, among other things, required ATV manufacturers and distributors to comply with previously voluntary American National Standards Institute (ANSI) safety standards developed by the Specialty Vehicle Institute of America (SVIA). We believe that our products comply with the ANSI/SVIA standards, and we have had an action plan on file with the CPSC since 1998 regarding safety related issues. The Act also includes a provision whichthat requires the CPSC to complete an ATV rulemaking process it started in August 2006 regarding the need for safety standards or increased safety standards for ATVs, which has not yet resulted in the issuance of a final rule.

In October 2009, the CPSC published an advance notice of proposed rulemaking regarding ROV safety under the Consumer Product Safety Act. TheIn December 2014, the CPSC noted the draft standard developed by ROHVA and expressed concerns with the draft standard in certain respects, which has resulted in meetings between ROHVA and CPSC Commissioners and staff and revisions to the ANSI standard. The CPSC has not yet issuedpublished a Notice of Proposed Rulemaking that includes proposed mandatory safety standards for ROVs in the areas of lateral stability, steering and wehandling, and occupant retention. Polaris, by itself and through ROHVA, has expressed concerns about the proposed mandatory standards, whether they would actually reduce ROV incident rates, whether the proposed tests are repeatable and appropriate for ROVs, and the unintended safety consequences that could result from them. As a result of those concerns, revisions to the standard were proposed. In 2015, CPSC expressed support for the proposed 2016 revisions to the ANSI standard, which may allow CPSC to terminate its rule-making process. We are unable to predict the outcome of the CPSC rule-making procedureprocess or the ultimate impact of any resulting rules on our business and operating results.

We are a member of the International Snowmobile Manufacturers Association (ISMA), a trade association formed to promote safety in the manufacture and use of snowmobiles, among other things. ISMA members include all of the major snowmobile manufacturers. The ISMA members are also members of the Snowmobile Safety and Certification Committee, which promulgated voluntary sound and safety standards for snowmobiles that have been adopted as regulations in some states of the United States and in Canada. These standards require testing and evaluation by an independent testing laboratory. We believe that our snowmobiles have always complied with safety standards relevant to snowmobiles.

Motorcycle and SVscertain Global Adjacent Markets vehicles are subject to federal vehicle safety standards administered by the NHTSA and are also subject to various state vehicle equipment standards. Our Slingshot vehicle is classified as a motorcycle under U.S. federal law, but may be classified differently in other jurisdictions. We believe our motorcycles (including Slingshot) and SVs have compliedpeople mobility vehicles comply with applicable federal and state safety standards.

Our products are also subject to international standards related to safety in places where we sell our products outside the United States. We believe that our motorcycles, SVs, ORVs, snowmobiles and snowmobilesGlobal Adjacent Markets vehicles have complied with applicable safety standards in the United States and other international locations.

The CARB hasEPA's emission regulations for ORVs that we already meet. In 2002, the EPA established new corporate average emission standards effective for model years 2006 and later, for off-road recreational engines and vehicles including ATVs, off-road side-by-side vehiclesapply to our ORV's and snowmobiles. We have developed engine and emission technologies along with our existing technology base to meet current and futurethese requirements, including the chassis-based ORV emission requirements that became effective in model year 2014. Snowmobiles comply using the fleet average provisions of the regulations. In 2008, the EPA announced its intention to issue a future rulemaking on snowmobiles in or around 2010 andwith any new emission standards under this rule would be effectivetaking effect after model year 2012. No further EPA rulemaking activity has followed.followed the 2008 announcement. The CARB also has emission regulations for ORVs that we meet. In 2013,2014, CARB proposedfinalized additional evaporative emission regulations for ORVs that couldwill take effect beginning in model year 2018 ORVs, similar to what the Company already complies with for motorcycles.2018.

Our Victory, Indian and IndianSlingshot motorcycles are also subject to EPA and CARB emission standards.standards for on-highway motorcycles. We believe that our motorcycles have compliedthese vehicles comply with thesethe applicable standards. GEM electric vehicles are subject to CARB emissions certification requirements, which they meet.

Our products are also subject to international emission laws and regulations related to emissions in places where we sell our products outside the United States. Canada’s emission regulations for motorcycles, ORVs and snowmobiles are similar to those in the United States, and Polaris complies with the applicable Canada requirements. Europe currently regulates emissions from our motorcycles and certain of our ATV-based products for which we obtain whole vehicle type approvals, and these products meet the applicable requirements. TheIn 2014, the European Parliament and Council in 2013 issuedfinalized the details of new regulations that will changemake these European emission requirements as early asmore stringent beginning in 2016. The details ofWe are developing the future EU regulationstechnology to meet these requirements, and the first motorcycle certifications are being finalizedexpected to occur in 2014.2016. Emissions from othercertain Polaris off-road products in the EU will be covered in the future by the non-road mobile machinery directive, which is also currently being revised. Polaris is reviewing the technology requirements ofand developing compliance solutions for these future EU regulations.

Due to the seasonality of our business and certain changes in production cycles, total employment levels vary throughout the year. Despite such variations in employment levels, employee turnover has not been high. During 2013,2015, on a

worldwide basis, we employed an average of approximately 5,4008,100 full-time persons, a 2016 percent increase from 2012.2014. Approximately 2,4003,400 of our employees are salaried. We consider our relations with our employees to be excellent.

 Available Information

Our Internet website is http://www.polaris.com. We make available free of charge, on or through our website, our annual, quarterly and current reports, and any amendments to those reports, as soon as reasonably practicable after electronically filing such reports with the Securities and Exchange Commission. We also make available through our website our corporate governance materials, including our Corporate Governance Guidelines, the charters of the Audit Committee, Compensation Committee, Corporate Governance and Nominating Committee and Technology Committee of our Board of Directors and our Code of Business Conduct and Ethics. Any shareholder or other interested party wishing to receive a copy of these corporate governance materials should write to Polaris Industries Inc., 2100 Highway 55, Medina, Minnesota 55340, Attention: Investor Relations. Information contained on our website is not part of this report.

This 20132015 Annual Report contains not only historical information, but also “forward-looking statements” intended to qualify for the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These “forward-looking statements” can generally be identified as such because the context of the statement will include words such as we or our management “believes,” “anticipates,” “expects,” “estimates” or words of similar import. Similarly, statements that describe our future plans, objectives or goals are also forward-looking. Forward-looking statements may also be made from time to time in oral presentations, including telephone conferences and/or webcasts open to the public. Shareholders, potential investors and others are cautioned that all forward-looking statements involve risks and uncertainties that could cause results in future periods to differ materially from those anticipated by some of the statements made in this report, including the risks and uncertainties described below under the heading entitled “Item 1A—Risk Factors” and elsewhere in this report. The risks and uncertainties discussed in this report are not exclusive and other factors that we may consider immaterial or do not anticipate may emerge as significant risks and uncertainties.

Any forward-looking statements made in this report or otherwise speak only as of the date of such statement, and we undertake no obligation to update such statements to reflect actual results or changes in factors or assumptions affecting such forward-looking statements. We advise you, however, to consult any further disclosures made on related subjects in future quarterly reports on Form 10-Q and current reports on Form 8-K that are filed with or furnished to the Securities and Exchange Commission.

Mr. Wine joined Polaris Industries Inc. as Chief Executive Officer on September 1, 2008, and was named Chairman of the Board of Directors in January 2013. Prior to joining Polaris, Mr. Wine was President of Fire Safety Americas, a division of United Technologies, a provider of high technology products and services to the building systems and aerospace industries, from 2007 to August 2008. Prior to that, Mr. Wine held senior leadership positions at Danaher Corp. in the United States and Europe from 2003 to 2007, including President of its Jacob Vehicle Systems and Veeder-Roots subsidiaries, and Vice President and General Manager, Manufacturing Programs in Europe. From 1996 to 2003, Mr. Wine held a number of operations and executive posts, both international and domestic with Allied Signal Corporations’Corporation's Aerospace Division.

Mr. Morgan has been President and Chief Operating Officer of the Company since April 2005; prior to that, he was Vice President and General Manager of the ATV division of Polaris. Prior to managing the ATV division, Mr. Morgan was General Manager of the PG&A division for Polaris from 1997 to 2001. He joined Polaris in 1987 and spent his early career in various product development, marketing and operations management positions of increasing responsibility.

Mr. MalonePucel joined Polaris in December 2014 as Executive Vice President—Global Operations, Engineering and Lean. Prior to joining Polaris, Mr. Pucel was with Boston Scientific Corporation (BSC), a global provider of medical solutions. Most recently, Mr. Pucel held the position of Executive Vice President of Global Operations, Quality and Technology and was a member of BSC’s Executive Committee from 2004 to 2014. Since 2004, he managed BSC’s manufacturing facilities, supply chain and numerous distributions centers; in 2010, he added responsibility for enterprise-wide Lean and research and development activities.

Ms. Bogart has been Senior Vice President—General Counsel and Secretary of Polaris since September 2015. Prior to her current role, she was Vice President—General Counsel and Compliance Officer of Polaris since November 2009 and Corporate Secretary since January 2010. From February 2009 to November 2009, Ms. Bogart was General Counsel of Liberty Diversified International. From October 1999 until February 2009, Ms. Bogart held several positions at The Toro Company, including Assistant General Counsel and Assistant Secretary. Before joining The Toro Company, Ms. Bogart was a Senior Attorney for Honeywell Inc.

Mr. Dougherty has been President—International since September 2015.  Prior to his current role, he was Vice President—Asia Pacific and Latin America since August 2011. Mr. Dougherty joined the company in 1998 as International Sales Manager, and has held several positions, including Vice President of Global New Market Development and Vice President and General Manager of the ATV division during his tenure. Prior to Polaris, Mr. Dougherty was employed at Trident Medical International, a trading company.

Mr. Eastman has been President—Parts, Garments and Accessories since September 2015. Prior to his current role, he was Vice President—Parts, Garments and Accessories since February 2012. Prior to joining Polaris, Mr. Eastman was President of Target.com for Target Corporation, a general merchandise retailer, from July 2008 to October 2011. Prior to that, Mr. Eastman held several leadership positions at Target Corporation since 1982 in various areas, including General Merchandising, Consumer Electronics, Inventory Management and Merchandise Planning Operations.

Mr. Jonikas isLongren was appointed Senior Vice President—Snowmobiles and Slingshot. Mr. Jonikas has been Vice President of Snowmobiles since August 2011. Mr. Jonikas was Vice President of Sales and Marketing beginningEnterprise Cost in November 2007 until January 2014 when he assumed the role of Vice President of Snowmobiles and Slingshot. Mr. Jonikas was also previously Vice President—On-Road Vehicles from May 2009 to August 2011. Mr. Jonikas joined Polaris in 2000, and during the past eleven years has held several key roles including Director of Product and Marketing Management for the ATV division and General Manager of the Polaris Side-by-Side division.2016. Prior to joining Polaris, Mr. Jonikas spent 12 years at General Mills in numerous general management positions.

was a Vice President in the Weapons Systems Division of Alliant Techsystems and Vice President, Engineering and Marketing at Blount Sporting Equipment Group.

Mr. Williams joined Polaris aswas appointed Senior Vice President—Chief Human Resources Officer in September 2015. Prior to this Mr. Williams was Vice President—Human Resources insince April 2011. Prior to joining Polaris, Mr. Williams was Vice President of Human Resources for Cooper Industries, a diversified manufacturing Company, since 2006. Between 2005 and 2006, Mr. Williams was Vice President of Human Resources for Danaher Corp. Previous to that, Mr. Williams held various executive positions of increasing responsibility with Honeywell Inc. from 1995 to 2005. Prior to that, Mr. Williams held a number of posts in Human Resources with Monsanto and General Motors Corporation.

The following are significant factors known to us that could materially adversely affect our business, financial condition, or operating results, as well as adversely affect the value of an investment in our common stock.

Our 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, increased expenses to modify our products and harm to our reputation, all of which could have an adverse effect on our operations. In addition, future regulations could require additional safety standards or emission reductions that would require additional expenses and/or modification of product offerings in order to maintain compliance with applicable regulations. Our products are also subject to laws and regulations that restrict the use or manner of use during certain hours and locations, and these laws and regulations could decrease the popularity and sales of our products. We continue to monitor regulatory activities in conjunction with industry associations and support balanced and appropriate programs that educate the product user on safe use of our products and how to protect the environment.

The manufacture, sale and usage of our products expose us to significant risks associated with product liability claims. If our products are defective or used incorrectly by our customers, bodily injury, property damage or other injury, including death, may result and this could give rise to product liability claims against us or adversely affect our brand image or reputation. Any losses that we may suffer from any liability claims, and the effect that any product liability litigation may have upon the reputation and marketability of our products, may have a negative impact on our business and operating results.

Because of the high cost of product liability insurance premiums and the historically insignificant amount of product liability claims paid by us, we were self-insured from 1985 to 1996 and from 2002 to 2012. From 1996 to 2002, and beginning again in 2012, we purchased excess insurance coverage for catastrophic product liability claims for incidents occurring subsequent to the policy date that exceeded our self-insured retention levels. 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.

We had a product liability reserve accrued on our balance sheet of $17.1$19.7 million at December 31, 20132015 for the probable payment of pending claims related to product liability litigation associated with our products. We believe such accrual is adequate. We do not believe the outcome of any pending product liability litigation will have a material adverse effect on our operations. However, no assurance can be given that our historical claims record, which did not include ATVs prior to 1985, motorcycles and side-by-side vehicles prior to 1998, and SVsGlobal Adjacent Markets vehicles prior to 2011, will not change or that material product liability claims against us will not be made in the future. Adverse determination of material product liability claims made against us would have a material adverse effect on our financial condition.

We provide a limited warranty for ORVs for a period of six months, for a period of one year for our snowmobiles, and motorcycles andfor a period of one or two years for SVs.our motorcycles depending on brand and model year, and for a two year period for GEM, Goupil and Aixam vehicles. We may provide longer warranties related to certain promotional programs, as well as longer warranties in certain geographical markets as determined by local regulations and market conditions. We also provide a limited emission warranty for certain emission-related parts in our ORVs, snowmobiles, and motorcycles as required by the EPA and CARB. Although we employ quality control procedures, sometimes a product is distributed that needs repair or replacement. Our standard warranties require us or our dealers to repair or replace defective products during such warranty periods at no cost to the consumer. Historically, product recalls have been administered through our dealers and distributors. The repair and replacement costs we could incur in connection with a recall could adversely affect our

business. In addition, product recalls could harm our reputation and cause us to lose customers, particularly if recalls cause consumers to question the safety or reliability of our products.

Lack of snowfall in any year in any particular geographic region may adversely affect snowmobile retail sales and related PG&A sales in that region. Additionally, to the extent that unfavorable weather conditions are exacerbated by global climate change or otherwise, our sales may be affected to a greater degree than we have previously experienced. There is no assurance that weather conditions or natural disasters could not have a material effect on our sales, production capability or component supply continuity for any of our products.

The snowmobile, off-road vehicle, motorcycle and small vehicleglobal adjacent markets are highly competitive. Competition in such markets is based upon a number of factors, including price, quality, reliability, styling, product features and warranties. At the dealer level, competition is based on a number of factors, including sales and marketing support programs (such as financing and cooperative advertising). Certain of our competitors are more diversified and have financial and marketing resources that are substantially greater than ours, which allow these competitors to invest more heavily in intellectual property, product development and advertising. If we are not able to compete with new products or models of our competitors, our future business performance may be materially and adversely affected. Internationally, our products typically face more competition where certain foreign competitors manufacture and market products in their respective countries. This allows those competitors to sell products at lower prices, which could adversely affect our competitiveness. In addition, our products compete with many other recreational products for the discretionary spending of consumers and, to a lesser extent, with other vehicles designed for utility applications. A failure to effectively compete with these other competitors could have a material adverse effect on our performance.

We have informal supply arrangements with many of our suppliers. In the event of a termination of the supply arrangement, there can be no assurance that alternate supply arrangements will be made on satisfactory terms. If we need to enter into supply arrangements on unsatisfactory terms, or if there are any delays to our supply arrangements, it could adversely affect our business and operating results.

The changing relationships of primarily the United States dollar to the Canadian dollar, Australian dollar, the Euro, the Swiss franc, the Mexican peso, the Japanese yen and certain other foreign currencies have from time to time had a negative impact on our results of operations. Fluctuations in the value of the United States dollar relative to these foreign currencies can adversely affect the price of our products in foreign markets, the costs we incur to import certain components for our products, and the translation of our foreign balance sheets. While we actively manage our exposure to fluctuating foreign currency exchange rates by entering into foreign exchange hedging contracts from time to time, these contracts hedge foreign currency denominated transactions and any change in the fair value of the contracts would be offset by changes in the underlying value of the transactions being hedged.

Our results of operations may be sensitive to changes in overall economic conditions, primarily in North America and Europe, that impact consumer spending, including discretionary spending. Weakening of, and fluctuations in, economic conditions affecting disposable consumer income such as employment levels, business conditions, changes in housing market conditions, capital markets, tax rates, savings rates, interest rates, fuel and energy costs, the impacts of natural disasters and acts of terrorism and other matters, including the availability of consumer credit could reduce consumer spending or reduce consumer spending on powersports products. A general reduction in consumer spending or a reduction in consumer spending on powersports products could adversely affect our sales growth and profitability. In addition, we have a financial services partnership arrangement with a subsidiary of General Electric Company that requires us to repurchase products financed and repossessed by the partnership, subject to certain limitations. For calendar year 2013,2015, our maximum aggregate repurchase obligation was approximately $97.9$146.4 million. If adverse

changes to economic conditions result in increased defaults on the loans made by this financial services partnership, our repurchase obligation under the partnership arrangement could adversely affect our liquidity and harm our business.

We distribute our products through numerous dealers and distributors and rely on them to retail our products to the end customers. Our sales growth and profitability could be adversely affected if deterioration of economic or business conditions results in a weakening of the financial condition of a material number of our dealers and distributors. Additionally, weak demand for, or quality issues with, our products may cause dealers and distributors to voluntarily or involuntarily reduce or terminate their relationship with us. Further, if we fail to establish and maintain an appropriate level of dealers and distributors for each of our products, we may not obtain adequate market coverage for the desired level of retail sales of our products.

We source component parts and raw materials through numerous suppliers and have relationships with a limited number of sources of product financing for our dealers and consumers. Our sales growth and profitability could be adversely affected if deterioration of economic or business conditions results in a weakening of the financial condition of a material number of our suppliers or financing sources, or if uncertainty about the economy or the demand for our products causes these business partners to voluntarily or involuntarily reduce or terminate their relationship with us.

We have arrangements with each of Capital One, Sheffield Financial, Synchrony Bank, Chrome Capital and GE BankFreedomRoad to make retail financing available to consumers who purchase our products in the United States. During 2013,2015, consumers financed approximately 3231 percent of the vehicles we sold in the United States through the Capital One revolving retail credit and Sheffield Financial, Synchrony Bank, Chrome Capital and GE BankFreedomRoad installment retail credit programs. Furthermore, some customers use financing from lenders who do not partner with us.us, such as local banks and credit unions. There can be no assurance that retail financing will continue to be available in the same amounts and under the same terms that had been previously available to our customers. If retail financing is not available to customers on satisfactory terms, it is possible that our sales and profitability could be adversely affected. Our income from financial services is affected by changes in interest rates.

One of our growth strategies is to drive growth in our businesses and accelerate opportunities to expand our global presence through targeted acquisitions, non-consolidating investments, alliances, and new joint ventures and partnerships that add value while considering our existing brands and product portfolio. The benefits of an acquisition, non-consolidating investment, new joint venture or partnership may take more time than expected to develop or integrate into our operations, and we cannot guarantee that acquisitions, non-consolidating investments, alliances, joint ventures or partnerships will in factultimately produce any benefits. In addition, acquisitions, non-consolidating investments, alliances, joint ventures and partnerships involve a number of risks, including:

Our ability to grow through acquisitions will depend, in part, on the availability of suitable acquisition targets at acceptable prices, terms, and conditions, our ability to compete effectively for these acquisition candidates, and the availability of capital and personnel to complete such acquisitions and run the acquired business effectively. These risks could be heightened if we complete a large acquisition or multiple acquisitions within a relatively short period of time. Any potential acquisition could impair our operating results, and any large acquisition could impair our financial condition, among other things.

 Our reliance upon patents, trademark laws, and contractual provisions to protect our proprietary rights may not be sufficient to protect our intellectual property from others who may sell similar products and may lead to costly litigation.

We hold patents and trademarks relating to various aspects of our products, such as our patented “on demand” all-wheel drive, and believe that proprietary technical know-how is important to our business. Proprietary rights relating to our products are protected from unauthorized use by third parties only to the extent that they are covered by valid and enforceable patents or trademarks or are maintained in confidence as trade secrets. We cannot be certain that we will be issued any patents from any pending or future patent applications owned by or licensed to us or that the claims allowed under any issued patents will be sufficiently broad to protect our technology. In the absence of enforceable patent or trademark protection, we may be vulnerable to competitors who attempt to copy our products, gain access to our trade secrets and know-how or diminish our brand through unauthorized use of our trademarks, all of which could adversely affect our business. Others may initiate litigation to challenge the validity of our patents, or allege that we infringe their patents, or they may use their resources to design comparable products that do not infringe our patents. We may incur substantial costs if our competitors initiate litigation to challenge the validity of our patents, or allege that we infringe their patents, or if we initiate any proceedings to protect our proprietary rights. If the outcome of any such litigation is unfavorable to us, our business, operating results, and financial condition could be adversely affected. Regardless of whether litigation relating to our intellectual property rights is successful, the litigation could significantly increase our costs and divert management’s attention from operation of our business, which could adversely affect our results of operations and financial condition. We also cannot be certain that our products or technologies have not infringed or will not infringe the proprietary rights of others. Any such infringement could cause third parties, including our competitors, to bring claims against us, resulting in significant costs, possible damages and substantial uncertainty.

We currently manufacture our products in the United States, Mexico, Poland, France and France.China. We sell our products throughout the world and maintain sales and administration facilities in the United States, Canada, Switzerland and

several other Western European countries, Australia, China, Brazil, Mexico and India. Our primary distribution facilities are in Vermillion, South Dakota, Wilmington, Ohio, and Rigby, Idaho, which distribute PG&A products to our North American dealers and

Our international operations may not produce desired levels of total sales or one or more of the factors listed above may harm our business and operating results. Any material decrease in our international sales or profitability could also adversely impact our operating results.

One of our growth strategies is to develop innovative, customer-valued products to generate revenue growth. Our sales from new products in the past have represented a significant component of our sales and are expected to continue to represent a significant component of our future sales. We may not be able to compete as effectively with our competitors, and ultimately satisfy the needs and preferences of our customers, unless we can continue to enhance existing products and develop new innovative products in the global markets in which we compete. Product development requires significant financial, technological, and other resources. While we expended $139.2$166.4 million, $127.4$148.5 million and $105.6$139.2 million for research and development efforts in 2013, 20122015, 2014 and 2011,2013, respectively, there can be no assurance that this level of investment in research and development will be sufficient to maintain our competitive advantage in product innovation, which could cause our business to suffer. Product improvements and new product introductions also require significant planning, design, development, and testing at the technological, product, and manufacturing process levels and we may not be able to timely develop product improvements or new products. Our competitors’ new products may beat our products to market, be more effective with more features and/or less expensive than our products, obtain better market acceptance, or render our products obsolete. Any new products that we develop may not receive market acceptance or otherwise generate any meaningful sales or profits for us relative to our expectations based on, among other things, existing and anticipated investments in manufacturing capacity and commitments to fund advertising, marketing, promotional programs, and research and development.

Not Applicable.

We own substantially all tooling and machinery (including heavy presses, conventional and computer-controlled welding facilities for steel and aluminum, assembly lines and paint lines) used in the manufacture of our products. We make ongoing capital investments in our facilities. These investments have increased production capacity for our products. We believe our current manufacturing and distribution facilities are adequate in size and suitable for our present manufacturing and distribution needs. WeHowever, we expect a significant amount of capital expenditures in 20142016, which will expand our current manufacturing facilities in anticipation of the capacity and capability requirements of expected

future growth. In January 2015, we announced plans to build a new production facility in Huntsville, Alabama to provide additional capacity and flexibility. The 725,000 square-foot facility will focus on ORV and Slingshot production. We broke ground on the facility in the first quarter of 2015 with start of production expected in the second quarter of 2016.

We are involved in a number of other legal proceedings incidental to our business, none of which isare expected to have a material effect on the financial results of our business.

Not applicable.

The information under the caption “Other Investor Information” appearing on the inside back cover of the Company’s 20132015 Annual Report is incorporated herein by reference. On February 18, 2014,17, 2016, the last reported sale price for shares of our common stock on the New York Stock Exchange was $130.97$86.81 per share.

The graph below compares the five-year cumulative total return to shareholders (stock price appreciation plus reinvested dividends) for the Company’s common stock with the comparable cumulative return of two indexes: S&P Midcap 400 Index and Morningstar’s Recreational Vehicles Industry Group Index. The graph assumes the investment of $100 at the close on December 31, 20082010 in common stock of the Company and in each of the indexes, and the reinvestment of all dividends. Points on the graph represent the performance as of the last business day of each of the years indicated.

The following discussion pertains to the results of operations and financial position of the Company for each of the three years in the period ended December 31, 2013,2015, and should be read in conjunction with the Consolidated Financial Statements and the Notes thereto included elsewhere in this report.

 Overview

In 2013,2015, we had record sales and net income, from continuing operations, with our fourthsixth straight year of growth in both sales growth exceeding 15 percent and net income growth exceeding 20 percent.earnings per share. This growth iswas fueled by award-winning innovative new products leading to continued market share leadership in side-by-side vehicles and ATV's. In 2013, we also experienced growth in our motorcycles, international and adjacent market businesses.ATVs. The overall North American powersports industry continued its positive trend with mid-single digit percentage growthwas approximately flat in 2013.2015. Our North America retail sales to consumers increased 10five percent in 2013,2015, helping to drive total full year Company sales up 18five percent to a record $3.78$4.72 billion. DespiteWith the global economy remaining difficult,challenged, and the U.S. dollar strengthening, our international sales increased 29decreased five percent due to continued market share growthvolatility in all product categories and strong results by our recent European acquisitions.the currency markets.

Full year earnings reflectnet income of $455.4 million was approximately flat with 2014, reflecting the success of our margin expansion efforts, as we delivered a 40 basis point increase in net income margin from continuing operations to a record 10.1 percentcontinued product innovation, offset by negative currencies of sales. The combination of increased sales growth and the expansion of gross margins by 90 basis points drove net income from continuing operations up 22 percent to $381.1approximately $70.0 million, or $0.55 per diluted share, with diluted earnings per share from continuing operations increasing 23two percent to a record $5.40$6.75 per share. These increases came whileWhile 2015 results were below expectations, we continued to invest in numerous longer-term diversification and growth opportunities.

In January 2015, we introduced 11announced plans to build a new production facility in Huntsville, Alabama to provide additional capacity and flexibility. The 725,000 square-foot facility will focus on ORV products and eight new snowmobile models. Our late 2012 acquisition of Klim, a market leaderSlingshot production. We broke ground on the facility in the design, developmentfirst quarter of 2015 and distribution of premium technical riding gear for the snowmobile and motorcycle divisions, performed exceptionally well in 2013. Meanwhile,expect production to start in the second quarter of 2013, we acquired Aixam, a leader in the European on-road quadricycles market. Our footprint expanded with the doubling of our Wyoming, Minnesota research and development facility being completed in 2013, and we broke ground on a new manufacturing plant in Poland and a new manufacturing plant for our joint venture with Eicher Motors Limited, which intends to design, develop and manufacture a full range of new vehicles in India and other emerging markets.

On January 30, 2014,28, 2016, we announced that our Board of Directors approved a 14four percent increase in the regular quarterly cash dividend to $0.48$0.55 per share for the first quarter of 2014,2016, representing the 19th21st consecutive year of increased dividends to shareholders. This increase reflectsshareholders effective with the continued momentum and potential of our business and the strength of our balance sheet.2016 first quarter dividend.

Snowmobiles sales, inclusive of PG&A sales, increased five percent to $418.3 million for 2014 compared to 2012, resulting primarily from increased sales of our value-priced snowmobiles.

principally within the Scandinavian region and Russia, increased ninedecreased 28 percent in 2014 as compared to 2011.2013 due primarily to economic weakness in the region. The average unit sales price in 20122014 was approximately flat when compared to 2011.2013.

Sales of Motorcycles, inclusive of PG&A sales, increased 59 percent to $418.5 million for 2014 compared to 2013. The increase in 2014 sales is due to the continued high demand for Indian motorcycles including the new 2015 Roadmaster and the Company's first mid-sized motorcycle, Scout, and initial shipments of the Slingshot. North American industry heavyweight cruiser and touring motorcycle retail sales (which excludes Slingshot) increased low-single digits percent in 2014 compared to 2013. Over the same period, Polaris North American unit retail sales to consumers increased almost 40 percent, driven primarily by continued strong retail sales for Indian motorcycles and initial retail sales of Slingshot. North American Polaris motorcycle dealer inventory increased mid-teens digits percent in 2014 versus 2013 levels primarily due to stocking of the Indian motorcycles and Slingshot. Sales of motorcycles to customers outside of North America increased approximately 70 percent in 2014 compared to 2013. The average per unit sales price for the Motorcycles division in 2014 increased nine percent compared to 2013 due to the increased sales of higher priced Indian motorcycles.motorcycles and initial sales of Slingshot.

Sales in the United States for 20132015 increased 18ten percent compared to 2012,2014, primarily resulting from higher shipments in motorcycles and related PG&A. The United States represented 78 percent, 75 percent and 72 percent of total company

sales in 2015, 2014 and 2013, respectively. Sales in the United States for 2014 increased 23 percent compared to 2013, primarily resulting from higher shipments in all product lines and related PG&A, improved pricing and morehigher sales of higher priced side-by-side vehicles. The United States

Canadian sales decreased 17 percent in 2015 compared to 2014. Negative currency rate movement was the primary contributor for the decrease in 2015, which had an unfavorable 14 percent impact on sales for 2015 compared to 2014, along with a slower retail environment, particularly in the oil and gas producing regions. Sales in Canada represented 72eight percent, 72ten percent and 7012 percent of total company sales in 2015, 2014 and 2013, 2012 and 2011, respectively. SalesCanadian sales decreased two percent in the United States for 2012 increased 24 percent2014 compared to 2011, primarily resulting from higher shipments in all product lines due to market share gains driven by innovative products.

Sales in other foreign countries, primarily in Europe, increased 29decreased five percent for 20132015 compared to 2012.2014. The decrease was primarily driven by negative currency rate movements, which had an unfavorable 15 percentage point impact on sales for 2015 compared to 2014, as well as decreased sales of side-by-side vehicles, snowmobiles, and Global Adjacent Markets vehicles, partially offset by increased sales of motorcycles. The decrease in snowmobile sales was primarily due to poor economic conditions in Russia. Sales in other foreign countries, primarily in Europe, increased 16 percent for 2014 compared to 2013. The increase was primarily driven by increased sales of side-by-side vehicles and motorcycles, as well as the acquisition of Aixam in April 2013, along with increased sales of side-by-side vehicles and PG&A.2013. This increase was partially offset by currency rate movements, which had an unfavorable one percent impact on sales for 2013 compared to 2012. Sales in other foreign countries, primarily in Europe, increased nine percent for 2012 compared to 2011. The increase was primarily driven by the additional sales from the Goupil acquisition, higher sales of Victory motorcycles and snowmobiles, and a 21 percent increase in the Asia/Pacific and Latin America region sales. Currency rates had an unfavorable two percent impact on sales for 20122014 compared to 2011.2013.

Cost of Sales:  

 Gross Profit: