Polaris 2015 Annual Report Download - page 33

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approximately 215 dealers. Goupil and Aixam sell directly to customers in France, through subsidiaries in
certain Western European countries and through several dealers and distributors for markets outside such
countries. Polaris Defense products are sold based upon contract terms with certain military and governmental
agencies.
In addition, we sell Polaris vehicles directly to military and government agencies and other national accounts
and we supply a highly differentiated side-by-side vehicle branded Bobcat to their dealerships in North
America. In 2013, we entered into a partnership with Ariens Company (‘‘Ariens’’), a Brillion, Wisconsin based
manufacturer of outdoor power equipment. Through the partnership, we leverage each other’s dealer
networks, sharing certain technologies, research and development and supplying Ariens with a highly
differentiated work vehicle to sell through its dealer network. In 2014, we began shipping vehicles to Ariens
under the terms of the partnership.
Dealer agreements. Dealers and distributors sell our products under contractual arrangements pursuant to
which the dealer or distributor is authorized to market specified products and is required to carry certain
replacement parts and perform certain warranty and other services. Changes in dealers and distributors take
place from time to time. We believe a sufficient number of qualified dealers and distributors exist in all
geographic areas to permit an orderly transition whenever necessary.
Polaris Acceptance. In 1996, a wholly-owned subsidiary of Polaris entered into a partnership agreement with a
subsidiary of Transamerica Distribution Finance (TDF) to form Polaris Acceptance. Polaris Acceptance
provides floor plan financing to our dealers in the United States. Under the partnership agreement, we have a
50 percent equity interest in Polaris Acceptance. We do not guarantee the outstanding indebtedness of Polaris
Acceptance. In 2004, TDF was merged with a subsidiary of General Electric Company (GE) and, as a result
of that merger, TDF’s name was changed to GE Commercial Distribution Finance Corporation (GECDF). No
significant change in the Polaris Acceptance relationship resulted from the change of ownership from TDF. In
November 2006, Polaris Acceptance sold a majority of its receivable portfolio to a securitization facility
arranged by General Electric Capital Corporation, a GECDF affiliate (‘‘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. In 2015, GECDF
announced that it agreed to sell a portfolio of assets, including its ownership interests in Polaris Acceptance to
Wells Fargo & Company, with the closing of the transaction expected in the first quarter of 2016. The sale is
not expected to impact the operations of the partnership agreement, which is effective through February 2022.
See Notes 4 and 8 of Notes to Consolidated Financial Statements for a discussion of this financial services
arrangement.
We have arrangements with Polaris Acceptance (United States) and GE affiliates (Australia, Canada, France,
Germany, the United Kingdom, Ireland, China and New Zealand) to provide floor plan financing for our
dealers. A majority of our North American sales of snowmobiles, ORVs, motorcycles, Global 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 certain limitations. We have
not historically been required to repurchase a significant number of units; however, there can be no assurance
that this will continue to be the case. If necessary, we will adjust our sales return allowance at the time of sale
should we anticipate material repurchases of units financed through the finance companies. See Note 8 of
Notes to Consolidated Financial Statements for a discussion of these financial services arrangements.
Customer financing. In August 2005, a wholly-owned subsidiary of Polaris entered into 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 February 2016, and is not expected to be
renewed.
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