Polaris 2015 Annual Report Download - page 92

The table below provides data about the amount of gains and losses, net of tax, reclassified from accumulated
other comprehensive loss into the income statement for cash flow derivatives designated as hedging
instruments for the year ended December 31, 2015 and 2014 (in thousands):
Location of Gain (Loss) For the Years Ended
Reclassified from December 31,
Derivatives in Cash Accumulated OCI
Flow Hedging Relationships into Income 2015 2014
Foreign currency contracts ................. Other expense, net $(8,399) $(5,641)
Foreign currency contracts ................. Cost of sales 4,549 172
Total ................................. $(3,850) $(5,469)
The net amount of the existing gains or losses at December 31, 2015 that is expected to be reclassified into
the income statement within the next 12 months is expected to not be material. See Note 11 for further
information regarding Polaris’ derivative activities.
Note 8. Financial Services Arrangements
Polaris Acceptance, a joint venture between Polaris and GE Commercial Distribution Finance Corporation, an
indirect subsidiary of General Electric Capital Corporation (GECC), which is supported by a partnership
agreement between their respective wholly owned subsidiaries, finances substantially all of Polaris’ United
States sales whereby Polaris receives payment within a few days of shipment of the product. Polaris’ subsidiary
has a 50 percent equity interest in Polaris Acceptance. Polaris Acceptance sells a majority of its receivable
portfolio to a securitization facility (the ‘‘Securitization Facility’’) arranged by General Electric Capital
Corporation. 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 Accounting Standards Codification Topic 860.
Polaris’ allocable share of the income of Polaris Acceptance has been included as a component of income
from financial services in the accompanying consolidated statements of income. During 2015, Polaris and
GECDF amended the Polaris Acceptance partnership agreement to extend it through February 2022 with
similar terms to the previous agreement.
Polaris’ total investment in Polaris Acceptance of $99,073,000 at December 31, 2015 is accounted for under
the equity method, and is recorded in investment in finance affiliate in the accompanying consolidated balance
sheets. At December 31, 2015, the outstanding amount of net receivables financed for dealers under this
arrangement was $1,305,061,000, which included $472,029,000 in the Polaris Acceptance portfolio and
$833,032,000 of receivables within the Securitization Facility (‘‘Securitized Receivables’’).
Polaris has agreed to repurchase products repossessed by Polaris Acceptance up to an annual maximum of
15 percent of the aggregate average month-end outstanding Polaris Acceptance receivables and Securitized
Receivables during the prior calendar year. For calendar year 2015, the potential 15 percent aggregate
repurchase obligation was approximately $146,440,000. Polaris’ financial exposure under this arrangement 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 this agreement during the periods presented.
On October 13, 2015, GECC 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.
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