Polaris 2010 Annual Report Download - page 75

Download and view the complete annual report

Please find page 75 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

2010 2009
As of December 31,
Finance receivables, net ........................................ $174,040 $167,485
Other assets ................................................ 67 81
Total Assets............................................... $174,107 $167,566
Notes payable ............................................... $ 92,863 $ 83,899
Other liabilities .............................................. 6,980 1,766
Partners’ capital ............................................. 74,264 81,901
Total Liabilities and Partners’ Capital ............................ $174,107 $167,566
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 is
continuing to manage the Polaris private label credit card program under the StarCard label, which until July 2007
included providing retail credit for non-Polaris products. The 2005 agreement provides for income to be paid to
Polaris based on a percentage of the volume of revolving retail credit business generated including non-Polaris
products. The previous agreement provided for equal sharing of all income and losses with respect to the retail credit
portfolio, subject to certain limitations. The 2005 contract removed all credit, interest rate and funding risk to
Polaris and also eliminated the need for Polaris to maintain a retail credit cash deposit with HSBC, which was
approximately $50,000,000 at August 1, 2005. HSBC ceased financing non-Polaris products under its arrangement
with Polaris effective July 1, 2007. During the first quarter of 2008, HSBC notified the Company that the
profitability to HSBC of the 2005 contractual arrangement was unacceptable and, absent some modification of that
arrangement, HSBC might significantly tighten its underwriting standards for Polaris customers, reducing the
number of qualified retail credit customers who would be able to obtain credit from HSBC. In order to avoid the
potential reduction of revolving retail credit available to Polaris consumers, Polaris began to forgo the receipt of a
volume based fee provided for under its agreement with HSBC effective March 1, 2008. Management currently
anticipates that the elimination of the volume based fee will continue and that HSBC will continue to provide
revolving retail credit to qualified customers through the end of the contract term. During the 2010 second quarter
Polaris and HSBC extended the term of the agreement on similar terms to October 2013.
In April 2006, a wholly-owned subsidiary of Polaris entered into a multi-year contract with GE Money Bank
(“GE Bank”) under which GE Bank makes available closed-end installment consumer and commercial credit to
customers of Polaris dealers for both Polaris and non-Polaris products. In November 2010, the Company extended
its installment credit agreement to March 2016 under which GE Bank will provide exclusive installment credit
lending for Victory motorcycles only. Polaris’ income generated from the GE Bank agreement has been included as
a component of Income from financial services in the accompanying consolidated statements of income.
In January 2009, a wholly-owned subsidiary of Polaris entered into a multi-year contract with Sheffield
Financial (“Sheffield”) pursuant to which Sheffield agreed to make available closed-end installment consumer and
commercial credit to customers of Polaris dealers for Polaris products. In October 2010, Polaris extended its
installment credit agreement to February 2016 under which Sheffield will provide exclusive installment credit
lending for ORVand Snowmobiles. Polaris’ income generated from the Sheffield agreement has been included as a
component of Income from financial services in the accompanying consolidated statements of income.
Polaris also provides extended service contracts to consumers and certain insurance contracts to dealers and
consumers through various third-party suppliers. Polaris does not retain any warranty, insurance or financial risk in
any of these arrangements. Polaris’ service fee income generated from these arrangements has been included as a
component of Income from financial services in the accompanying consolidated statements of income.
60
POLARIS INDUSTRIES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)