Polaris 2015 Annual Report Download - page 62

At December 31, 2015 and 2014, we were in compliance with all debt covenants. Our debt to total capital
ratio was 32 percent and 21 percent at December 31, 2015 and 2014, respectively.
The following table summarizes our significant future contractual obligations at December 31, 2015:
(In millions): Total <1 Year 1–3 Years 3–5 Years >5 Years
Senior notes .................................... $200.0 — $25.0 $100.0 $ 75.0
Borrowings under our credit facility ................... 225.7 — — 225.7 —
Notes Payable ................................... 15.5 $ 1.9 2.4 2.7 8.5
Interest expense ................................. 44.4 7.6 15.1 13.6 8.1
Capital leases ................................... 26.9 3.0 4.6 3.7 15.6
Operating leases ................................. 60.7 14.9 17.2 11.1 17.5
Total ...................................... $573.2 $27.4 $64.3 $356.8 $124.7
In the table above, we assumed our December 31, 2015, outstanding borrowings under the Senior Notes will
be paid at their respective due dates. Additionally, at December 31, 2015, we had letters of credit outstanding
of $21.6 million related to purchase obligations for raw materials. Not included in the above table is
unrecognized tax benefits of $23.4 million.
Our Board of Directors has authorized the cumulative repurchase of up to 79.0 million shares of our common
stock through an authorized stock repurchase program. Of that total, approximately 76.1 million shares have
been repurchased cumulatively from 1996 through December 31, 2015. In addition to this stock repurchase
authorization, in 2013 the Polaris Board of Directors authorized the one-time repurchase of all the shares of
Polaris stock owned by Fuji. On November 12, 2013, Polaris entered into and executed a Share Repurchase
Agreement with Fuji pursuant to which Polaris purchased 3.96 million shares of Polaris stock held by Fuji. We
repurchased a total of 2.2 million shares of our common stock for $293.6 million during 2015, which increased
earnings per share by eleven cents. We have authorization from our Board of Directors to repurchase up to
an additional 2.9 million shares of our common stock as of December 31, 2015. On January 28, 2016, the
Board of Directors approved an increase in the Company’s common stock repurchase authorization by an
additional 7.5 million shares. The repurchase of any or all such shares authorized remaining for repurchase
will be governed by applicable SEC rules.
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, 2015 and 2014, was approximately $1,562.0 million and $1,337.2 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, a wholly owned subsidiary of Polaris entered into a partnership agreement with an entity that is now
a subsidiary of GE Commercial Distribution Finance Corporation (GECDF) to form Polaris Acceptance.
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 (the ‘‘Securitized Receivables’’) to a securitization facility (‘‘Securitization Facility’’)
38