Polaris 2013 Annual Report Download - page 32

for our other product lines from which many of the approximately 450 current North American Victory
dealers were selected. Indian Motorcycle currently has approximately 140 North American dealers signed up,
of which approximately 60 are retailing Indian motorcycles as of the end of 2013. We expect the number of
Indian retailing dealerships to continue to increase over the coming years. In 2005, we began selling Victory
motorcycles in the United Kingdom. Since 2005, we have been gradually expanding our international sales of
motorcycles, primarily in Europe and Australia. We expect to further expand our motorcycle dealer network
over the next few years in North America and internationally for both Victory and Indian motorcycles.
The SV businesses each have their own distribution networks through which their respective vehicles are
distributed. GEM has approximately 270 dealers. Goupil and Aixam sell directly to customers in France,
through subsidiaries in certain Western European countries and through several dealers and distributors for
markets outside such countries.
Dealers and distributors sell our products under contractual arrangements pursuant to which the dealer or
distributor is authorized to market specified products and is required to carry certain replacement parts and
perform certain warranty and other services. Changes in dealers and distributors take place from time to time.
We believe a sufficient number of qualified dealers and distributors exist in all geographic areas to permit an
orderly transition whenever necessary. In addition, we sell Polaris vehicles directly to military and government
agencies and other national accounts and we supply a highly differentiated side-by-side vehicle branded
Bobcat to their dealerships in North America. In 2013, we entered into a partnership with Ariens Company
(‘‘Ariens’’), a Brillion, Wisconsin based manufacturer of outdoor power equipment. Through the partnership,
we anticipate leveraging each other’s dealer networks, sharing certain technologies, research and development
and supplying Ariens with a highly differentiated work vehicle to sell through its dealer network.
In 1996, a wholly-owned subsidiary of Polaris entered into a partnership agreement with a subsidiary of
Transamerica Distribution Finance (TDF) to form Polaris Acceptance. Polaris Acceptance provides floor plan
financing to our dealers in the United States. Under the partnership agreement, we have a 50 percent equity
interest in Polaris Acceptance. We do not guarantee the outstanding indebtedness of Polaris Acceptance. In
2004, TDF was merged with a subsidiary of General Electric Company (GE) and, as a result of that merger,
TDF’s name was changed to GE Commercial Distribution Finance Corporation (GECDF). No significant
change in the Polaris Acceptance relationship resulted from the change of ownership from TDF. In November
2006, Polaris Acceptance sold a majority of its receivable portfolio to a securitization facility arranged by
General Electric Capital Corporation, a GECDF affiliate (‘‘Securitization Facility’’), and the partnership
agreement was amended to provide that Polaris Acceptance would continue to sell portions of its receivable
portfolio to the Securitization Facility from time to time on an ongoing basis. See Notes 4 and 8 of Notes to
Consolidated Financial Statements for a discussion of this financial services arrangement.
We have arrangements with Polaris Acceptance (United States) and GE affiliates (Australia, Canada, France,
Germany, the United Kingdom, Ireland, Sweden, China and New Zealand) to provide floor plan financing for
our dealers. A majority of our United States sales of snowmobiles, ORVs, motorcycles, SVs and related
PG&A are financed under arrangements whereby we are paid within a few days of shipment of our product.
We participate in the cost of dealer financing and have agreed to repurchase products from the finance
companies under certain circumstances and subject to certain limitations. We have not historically been
required to repurchase a significant number of units; however, there can be no assurance that this will
continue to be the case. If necessary, we will adjust our sales return allowance at the time of sale should we
anticipate material repurchases of units financed through the finance companies. See Note 8 of Notes to
Consolidated Financial Statements for a discussion of these financial services arrangements.
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
managed our private label credit card program under the StarCard label for the purchase of Polaris products.
Since then, HSBC’s U.S. Credit Card and Retail Services business has been acquired by Capital One. Our
current agreement with Capital One expires in October 2014.
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