Polaris 2011 Annual Report Download - page 70

(Gain) Loss on Securities Available for Sale: The net gain of $825,000 in 2010 on securities available for
sale resulted from a $1,594,000 gain on the sale of our remaining investment in KTM during the 2010 third
quarter offset by a related non-cash impairment charge of $769,000 during the 2010 second quarter. In the first
quarter 2009, we recorded a non-cash impairment charge on securities held for sales of $8,952,000 from the
decline in the fair value of the KTM shares owned by Polaris as of March 31, 2009, when it was determined that
the decline in the fair value of the KTM shares owned by the Company was other than temporary.
Use of estimates: The preparation of financial statements in conformity with accounting principles generally
accepted in the United States requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the reporting period. Ultimate results could
differ from those estimates.
Cash equivalents: Polaris considers all highly liquid investments purchased with an original maturity of
90 days or less to be cash equivalents. Cash equivalents are stated at cost, which approximates fair value. Such
investments consist principally of money market mutual funds.
Allowance for doubtful accounts: Polaris’ financial exposure to collection of accounts receivable is limited
due to its agreements with certain finance companies. For receivables not serviced through these finance
companies, the Company provides a reserve for doubtful accounts based on historical rates and trends. This
reserve is adjusted periodically as information about specific accounts becomes available.
Inventories: Inventories are stated at the lower of cost (first-in, first-out method) or market. The major
components of inventories are as follows (in thousands):
December 31,
2011 2010
Raw materials and purchased components ............ $ 61,296 $ 35,580
Service parts, garments and accessories .............. 77,437 60,813
Finished goods .................................. 175,252 155,744
Less: reserves .................................. (15,943) (16,210)
Inventories ..................................... $298,042 $235,927
Property and equipment: Property and equipment is stated at cost. Depreciation is provided using the
straight-line method over the estimated useful life of the respective assets, ranging from 10-40 years for buildings
and improvements and from 1-7 years for equipment and tooling. Fully depreciated tooling is eliminated from
the accounting records annually.
Goodwill and other intangible assets: ASC Topic 350 prohibits the amortization of goodwill and intangible
assets with indefinite useful lives. Topic 350 requires that these assets be reviewed for impairment at least
annually. An impairment charge for goodwill is recognized only when the estimated fair value of a reporting
unit, including goodwill, is less than its carrying amount. In accordance with Topic 350, the Company completed
an impairment analysis as of December 31, 2011 and 2010. Refer to Note 4 for additional information regarding
Goodwill and other intangible assets.
Research and Development Expenses: Polaris records research and development expenses in the period in
which they are incurred as a component of operating expenses. In the years ended December 31, 2011, 2010, and
2009, Polaris incurred $105,631,000, $84,940,000, and $62,999,000, respectively.
Advertising Expenses: Polaris records advertising expenses as a component of selling and marketing
expenses in the period in which they are incurred. In the years ended December 31, 2011, 2010, and 2009,
Polaris incurred $48,877,000, $40,833,000 and $37,433,000, respectively.
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