Polaris 2013 Annual Report Download - page 75

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, Motorcycles and Small Vehicles (SV). Polaris products, together with
related parts, garments and accessories are sold worldwide through a network of independent dealers and
distributors and its subsidiaries. The primary markets for our products are the United States, Canada and
Western Europe.
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.
On September 2, 2004, the Company announced its decision to discontinue the manufacture of marine
products effective immediately. Material financial results for the marine products division 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 its relationship with Polaris Acceptance, and concluded that there were no variable
interest entities requiring consolidation by the Company in 2013, 2012 and 2011.
In April 2013, the Company completed an acquisition of A.M. Holding S.A.S., which operates under the name
Aixam Mega S.A.S. (‘‘Aixam’’). The Company has included the financial results of the acquisition in its
consolidated results of operations beginning on the acquisition date; however, the acquisition did not have a
material impact on Polaris’ consolidated financial position or results of operations. Refer to Note 5 for
additional information regarding the acquisition of Aixam.
Reclassifications. Certain reclassifications of previously reported balance sheet amounts have been made to
conform to the current year presentation. The reclassifications had no impact on the consolidated statements
of income, current assets or current liabilities in the consolidated balance sheets, as previously reported.
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.
Fair value measurements. Fair value is 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. Assets and liabilities measured at
fair value are classified using the following hierarchy, which is based upon the transparency of inputs to the
valuation as of the measurement date:
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.
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