Polaris 2010 Annual Report Download - page 60

Download and view the complete annual report

Please find page 60 of the 2010 Polaris annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 94

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94

POLARIS INDUSTRIES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1: Organization and Significant Accounting Policies
Polaris Industries Inc. (“Polaris” or the “Company”) a Minnesota corporation, and its subsidiaries, are engaged
in the design, engineering, manufacturing and marketing of innovative, high-quality, high-performance off-road
vehicles snowmobiles, and on-road vehicles including motorcycles and low emission vehicles. Polaris products,
together with related parts, garments and accessories are sold worldwide through a network of dealers, distributors
and its subsidiaries located in the United States, Canada, France, the United Kingdom, Australia, Norway, Sweden,
Germany, Spain, China and Brazil.
Basis of presentation: The accompanying consolidated financial statements include the accounts of Polaris and
its wholly-owned subsidiaries. All inter-company transactions and balances have been eliminated in consolidation.
Income from financial services is reported as a component of operating income to better reflect income from
ongoing operations of which financial services has a significant impact.
In 2004, the Company announced its decision to discontinue the manufacture of marine products effective
immediately. The marine products division’s financial results are reported separately as discontinued operations for
all periods presented.
The Company evaluates consolidation of entities under Accounting Standards Codification (“ASC”) Topic
810. This Topic requires management to evaluate whether an entity or interest is a variable interest entity and
whether the company is the primary beneficiary. Polaris used the guidelines to analyze the Company’s relationships,
including the relationship with Polaris Acceptance, and concluded that there were no variable interest entities
requiring consolidation by the Company in 2010, 2009 and 2008.
Fair Value Measurements: ASC Topic 820 defines fair value as the exchange price that would be received for
an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or
liability in an orderly transaction between market participants on the measurement date. This Topic also establishes
a fair value hierarchy which requires classification based on observable and unobservable inputs when measuring
fair value. There are three levels of inputs that may be used to measure fair value:
Level 1 — Quoted prices in active markets for identical assets or liabilities.
Level 2 — Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities;
quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable
market data for substantially the full term of the assets or liabilities.
Level 3 — Unobservable inputs that are supported by little or no market activity and that are significant to the
fair value of the assets or liabilities.
The Company utilizes the market approach to measure fair value for its non-qualified deferred compensation assets,
and the income approach for the interest rate swap agreements, foreign currency contracts and commodity contracts. The
market approach uses prices and other relevant information generated by market transactions involving identical or
comparable assets or liabilities and for the income approach the Company uses significant other observable inputs to
45