recreational and side-by-side models, with 2014models. 2017 model year suggested United States retail prices rangingrange from approximately $2,100 to $22,000.$27,500 in the United States.

Our products are primarily assembled at our original18 global manufacturing facility in Roseau, Minnesota and at our facilities in Spirit Lake, Iowa, and its surrounding areas, Osceola, Wisconsin, Monterrey, Mexico and in facilities across France. Since our product lines incorporate similar technology, substantially the same equipment and personnel are employed in their production in North America.facilities. 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 for our products by enhancing the existing Roseau and Spirit Lake 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

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 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 ORVSide-by-side 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, ORVSide-by-side 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

We utilize our Retail Flow Management (RFM) ordering system for Victory motorcycles,motorcycle and now also use it as the ordering system for Indian motorcycles.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 toWe are implementing the RFM Victory motorcycle dealers would place annual orderssystem for our side-by-side vehicles in the summer. 2017.

For non-MVP and RFM dealers and products, units are builtsnowmobiles, we offer a pre-order SnowCheck program for our customers. This program allows our customers to order each year, subject to fluctuations in market conditionsa true factory-customized snowmobile by selecting various options, including chassis, track, suspension, colors and supplier lead times. The anticipated volume of units to be produced is substantially committed to by dealers and distributors prior to production.

autumn or early winter of the current season. We manufacture ORVs, motorcycles and SV’speople mobility vehicles year round. We have the ability to mix production of the various products on the existing manufacturing lines as demand dictates.

We have arrangements with Polaris Acceptance (United States) and GEWells Fargo 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

A wholly-owned subsidiary of Polaris entered intohas a multi-year contract with HSBC Bank Nevada, National Association (“HSBC”), formerly known as Household Bank (SB), N.A., under which HSBC managed our private label credit card program under the StarCard label for the purchase of Polaris products. Since then, HSBC’s U.S. Credit Card and Retail Services business has been acquired by Capital One. Our current agreement with Capital One expires in October 2014.

We promoteA wholly-owned subsidiary of Polaris entered into a multi-year agreement with Evergreen Bank Group in September 2016. The agreement established Performance Finance as a division of Evergreen Bank Group, and is exclusively focused on the financing of Polaris motorcycles. The agreement replaced our brands among the ridingprevious arrangement with Freedom Road. The current installment credit agreement under which Performance Finance provides installment credit lending for motorcycles expires in December 2021.

A wholly-owned subsidiary of Polaris has a multi-year contract with Synchrony Bank, under which Synchrony Bank makes available closed-end installment consumer and non-riding publiccommercial credit to customers of our dealers for both Polaris and provide a wide range ofnon-Polaris products. The current installment credit agreement under which Synchrony Bank provides installment credit lending for Polaris products for enthusiasts by licensing the name Polaris. We currently license the production and sale of a range of items, including die cast toys, ride-on toys and numerous other products.expires in December 2020.

We expended $270.3$342.2 million, $210.4$316.7 million and $178.7$314.5 million for sales and marketing activities in 2013, 20122016, 2015 and 2011,2014, respectively.

We have approximately 600850 employees who are engaged in the development and testing of existing products and research and development of new products and improved production techniques, located primarily in our Roseau and Wyoming, Minnesota facilities and in Burgdorf, Switzerland. Our recent SV acquisitions of GEM, Goupil and Aixam included research and development resources for their respective product lines. We believe Polaris was the first to develop, for wide commercial use, independent front suspensions for snowmobiles, long travel rear suspensions for snowmobiles, liquid cooled snowmobile brakes, hydraulic brakes for snowmobiles, the three cylinder engine in snowmobiles, the adaptation of the MacPherson strut front suspension, “on demand” all-wheel drive systems and the Concentric Drive System for use in ORVs, the application of a forced air cooled variable power transmission system in ORVs and the use of electronic fuel injection for ORVs.

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

We expended $139.2$185.1 million, $127.4$166.4 million and $105.6$148.5 million for research and development activities in 2013, 20122016, 2015 and 2011,2014, 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 other international locations.countries.

The off-road vehicle, snowmobile, motorcycle, people mobility and small vehiclework utility solutions, and aftermarket markets in the United States, Canada and other global markets are highly competitive. Our competition primarily comes from North American and Asian manufacturers. 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.

MotorcycleMotorcycles and SVscertain people mobility 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, snow-bikes and snowmobilespeople mobility vehicles have complied with applicable safety standards in the United States and other international locations.

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 2013,2016, on a worldwide basis, we employed an average of approximately 5,4008,600 full-time persons, a 20six percent increase from 2012.2015. Including our 2016 acquisitions, we employed approximately 10,000 full-time persons as of December 31, 2016. Approximately 2,4003,800 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 20132016 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—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.

Mr. Pucel joined Polaris in December 2014 as Executive Vice President—Global Operations, Engineering and Lean. Prior to joining Polaris, Mr. WinePucel was with Boston Scientific Corporation (BSC), a global provider of medical solutions, where Mr. Pucel held the position of Executive Vice President of Fire Safety Americas,Global Operations, Quality and Technology and was a divisionmember of United Technologies, a provider of high technology products and servicesBSC’s Executive Committee from 2004 to the building systems and aerospace industries, from 2007 to August 2008. Prior to that, 2014.

Ms. Bogart has been Senior Vice President—General Counsel, Compliance Officer 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. Williams was appointed Senior Vice President—Chief Human Resources Officer in August 2011 and assumed responsibility for Small Vehicles in December 2012.September 2015. Prior to this Mr. HomanWilliams was Vice President of the Off-Road Vehicles division since August 2008, and was General Manager of the Side-by-Side division since December 2005. Mr. Homan joined Polaris in 2002 as Director of Marketing for the ATV division. Prior to working at Polaris, Mr. Homan spent nearly seven years at General Mills working in various marketing and brand management positions.

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.

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 have arrangements with each of Capital One,Performance Finance, Sheffield Financial and GESynchrony Bank to make retail financing available to consumers who purchase our products in the United States. During 2013,2016, consumers financed approximately 3233 percent of the vehicles we sold in the United States through the Capital One revolving retail credit and Sheffield and GE Bankthese 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.

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.

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 other factors, our sales may be affected to a greater degree than we manufacturehave 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.

If we are unableOur success depends on attracting and retaining qualified personnel. Our ability to continuesustain and grow our business requires us to enhance existing productshire, retain and develop a highly skilled and market new productsdiverse management team and workforce. Failure to ensure that respondwe have the leadership capacity with the necessary skill set and experience could impede our ability to customer needsdeliver our growth objectives and preferencesexecute our strategic plan. In addition, any unplanned turnover or inability to attract and achieve market acceptance, we may experienceretain key employees, including managers, could have a decrease in demand for our products andnegative effect on our business, could suffer.

Not Applicable.

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, 2013,2016, and should be read in conjunction with the Consolidated Financial Statements and the Notes thereto included elsewhere in this report.

 Overview

In 2013, we had record2016 was a difficult and challenging year, as sales decreased, and net income from continuing operations, with our fourth straight year of sales growth exceeding 15 percent and net income growth exceeding 20 percent. This growth is 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. Thethe overall North American powersports industry continued its positive trend with mid-single digit percentage growth in 2013.was down slightly. Our North America retail sales to consumers increased 10decreased five percent in 2013, helping to drive2016, which drove total full year Company sales up 18down four percent to a record $3.78$4.52 billion. DespiteOur 2016 results included approximately two months of activity related to our acquisition of TAP. With the global economy remaining difficult,challenged, and the U.S. dollar strengthening, our international sales increased 29 percent duewere flat compared to continued market share growth in all product categories and strong results by our recent European acquisitions.2015.

Full year earnings reflect the success of our margin expansion efforts, as we delivered a 40 basis point increase in net income marginof $212.9 million was a 53 percent decrease from continuing operations to a record 10.1 percent 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 $381.1 million,2015, with diluted earnings per share from continuing operations increasing 23decreasing 52 percent to a record $5.40$3.27 per share. These increases came while2016 results were below expectations, as we continuedresponded to investa series of vehicle recalls, and took the necessary steps to ensure that Polaris vehicles deliver the quality, safety and performance that our customers expect. We worked hard to serve our Off-Road Vehicle customers and dealers in numerous longer-term diversification2016, and growth opportunities.are accelerating that work into 2017.

In 2013, we received a benefit from prior investments while continuing to invest2016, significant progress was made across our businesses, including mid-twenty percent growth in both product development and strategic initiatives. In August 2013, we re-launched the iconic Indian Motorcycle brand, headlinedretail sales, an eight percent reduction in dealer inventories year-over-year and improving operating cash flow by three all-new models: Chief Classic, Chief Vintage and Chieftain. Additionally, in 201330 percent. Further, we introduced 11 new ORV products and eight new snowmobile models. Our late 2012completed the acquisition of Klim, a market leaderTaylor-Dunn Manufacturing Company (“Taylor-Dunn”) in the design, developmentwork and distributiontransportation space and the acquisition of premium technical riding gear for the snowmobile and motorcycle divisions, performed exceptionally well in 2013. Meanwhile,TAP in the second quarter of 2013,aftermarket space. Operationally, we acquired Aixam, a leadercompleted the construction and started production in the European on-road quadricycles market. Our footprint expanded with the doubling of our Wyoming, Minnesota research and developmentnew 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, 2014,26, 2017, we announced that our Board of Directors approved a 14five percent increase in the regular quarterly cash dividend to $0.48$0.58 per share for the first quarter of 2014,2017, representing the 19th22nd 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.2017 first quarter dividend.