Polaris 2011 Annual Report Download - page 68

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 (“ORV”), Snowmobiles, and On-Road Vehicles, including motorcycles and Small Electric
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, India 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.
During the 2011 third quarter, the Board of Directors declared a two-for-one split of the Company’s
outstanding shares of Common Stock. On September 12, 2011, Polaris shareholders received one additional share
of Common Stock for each share they held of record at the close of business on September 2, 2011. All amounts,
including shares and per share information, have been adjusted to give effect to the two-for-one stock split.
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 2011, 2010 and 2009.
During 2011, the Company completed three acquisitions: Indian Motorcycle Company in April, 2011;
Global Electric Motorcars LLC (“GEM”) in June, 2011; and Goupil Industries S.A. (“Goupil”) in November,
2011. The purchase prices totaled approximately $51,899,000, of which approximately $16,482,000 was
allocated to goodwill, $31,106,000 to identifiable intangible assets and $4,311,000 to assumed tangible assets,
net of liabilities. The Company has included the financial results of these acquisitions in its consolidated results
of operations beginning on the acquisition dates in accordance with ASC 805, Business Combinations; however,
the impact of these acquisitions, combined, did not have a material impact on Polaris’ consolidated financial
position or results of operations.
Reclassifications: Certain reclassifications of previously reported amounts have been made to conform to
the current year presentation. The reclassifications had no impact on operations as previously reported.
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.
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