Polaris 2010 Annual Report Download - page 48

Our Board of Directors authorized the cumulative repurchase of up to 37.5 million shares of our common stock
through December 31, 2010. Of that total, approximately 34.4 million shares were repurchased cumulatively from
1996 through December 31, 2010. We paid $27.5 million to repurchase and retire approximately 0.6 million shares
during 2010 related to the exercise of certain employee stock based incentive transactions. The share repurchase
activity during 2010 had a $0.07 beneficial impact on earnings per share for the year ended December 31, 2010. We
have authorization from our Board of Directors to repurchase up to an additional 3.1 million shares of Polaris stock
at December 31, 2010, which represents approximately nine percent of the total shares currently outstanding.
We have arrangements with certain finance companies (including Polaris Acceptance) to provide secured floor
plan financing for our dealers. These arrangements provide liquidity by financing dealer purchases of our products
without the use of our working capital. A majority of the worldwide sales of snowmobiles, ORVs, motorcycles and
related PG&A are financed under similar arrangements whereby we receive payment within a few days of shipment
of the product. The amount financed by worldwide dealers under these arrangements at December 31, 2010 and
2009, was approximately $667.6 million and $714.8 million, respectively. We participate in the cost of dealer
financing up to certain limits. We have agreed to repurchase products repossessed by the finance companies up to an
annual maximum of no more than 15 percent of the average month-end balances outstanding during the prior
calendar year. Our financial exposure under these agreements is limited to the difference between the amounts
unpaid by the dealer with respect to the repossessed product plus costs of repossession and the amount received on
the resale of the repossessed product. No material losses have been incurred under these agreements. However, an
adverse change in retail sales could cause this situation to change and thereby require us to repurchase repossessed
units subject to the annual limitation referred to above.
In 1996, one of our wholly-owned subsidiaries entered into a partnership agreement with a subsidiary of TDF
to form Polaris Acceptance. In 2004, TDF was merged with a subsidiary of GE and, as a result of that merger, TDF’s
name was changed to GECDF. Polaris Acceptance provides floor plan financing to our dealers in the United States.
Our subsidiary has a 50 percent equity interest in Polaris Acceptance. In November 2006, Polaris Acceptance sold a
majority of its receivable portfolio to a Securitization Facility, and the partnership agreement was amended to
provide that Polaris Acceptance would continue to sell portions of its receivable portfolio to the Securitization
Facility from time to time on an ongoing basis. At December 31, 2010 and 2009, the outstanding balance of
receivables sold by Polaris Acceptance to the Securitization Facility (the “Securitized Receivables”) amounted to
approximately $323.8 million and $387.5 million, respectively. The sale of receivables from Polaris Acceptance to
the Securitization Facility is accounted for in Polaris Acceptance’s financial statements as a “true-sale” under ASC
Topic 860, (originally issued as SFAS No. 140: “Accounting for Transfers and Servicing of Financial Assets and
Extinguishments of Liabilities”). Polaris Acceptance is not responsible for any continuing servicing costs or
obligations with respect to the Securitized Receivables. The remaining portion of the receivable portfolio is
recorded on Polaris Acceptance’s books, and is funded to the extent of 85 percent through a loan from an affiliate of
GECDF (which at December 31, 2010 and 2009 was approximately $92.9 million and $83.9 million, respectively).
We have not guaranteed the outstanding indebtedness of Polaris Acceptance or the Securitized Receivables. In
addition, the two partners of Polaris Acceptance share equally an equity cash investment equal to 15 percent of the
sum of the portfolio balance in Polaris Acceptance plus the Securitized Receivables. Our total investment in Polaris
Acceptance at December 31, 2010 and 2009 was $37.2 million and $41.3 million, respectively. The Polaris
Acceptance partnership agreement provides for periodic options for renewal, purchase or termination by either
party. Substantially all of our United States sales are financed through Polaris Acceptance and the Securitization
Facility whereby we receive payment within a few days of shipment of the product. The partnership agreement
provides that all income and losses of the Polaris Acceptance portfolio and income and losses realized by GECDF’s
affiliates with respect to the Securitized Receivables are shared 50 percent by our wholly-owned subsidiary and
50 percent by GECDF. Our exposure to losses associated with respect to the Polaris Acceptance Portfolio and the
Securitized Receivables is limited to its equity in its wholly-owned subsidiary that is a partner in Polaris
Acceptance.
Our investment in Polaris Acceptance is accounted for under the equity method, and is recorded as investments
in finance affiliate in the consolidated balance sheets. Our allocable share of the income of Polaris Acceptance and
the Securitized Receivables has been included as a component of income from financial services in the consolidated
statements of income. At December 31, 2010, Polaris Acceptance’s wholesale portfolio receivables from dealers in
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