Polaris 2013 Annual Report Download - page 76

Download and view the complete annual report

Please find page 76 of the 2013 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 112

  • 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
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112

Level 3 — Unobservable inputs that are supported by little or no market activity and that are significant to
the fair value of the assets or liabilities.
In making fair value measurements, observable market data must be used when available. When inputs used
to measure fair value fall within different levels of the hierarchy, the level within which the fair value
measurement is categorized is based on the lowest level input that is significant to the fair value measurement.
The Company utilizes the market approach to measure fair value for its non-qualified deferred compensation
assets and liabilities, and the income approach for the interest rate swap agreements, foreign currency
contracts and commodity contracts. The market approach uses prices and other relevant information
generated by market transactions involving identical or comparable assets or liabilities, and for the income
approach the Company uses significant other observable inputs to value its derivative instruments used to
hedge interest rate volatility, foreign currency and commodity transactions.
Assets and liabilities measured at fair value on a recurring basis are summarized below (in thousands):
Fair Value Measurements
as of December 31, 2013
Total Level 1 Level 2 Level 3
Asset (Liability)
Commodity contracts, net .......................... $ 30 — $ 30 —
Non-qualified deferred compensation assets ............. 24,711 $ 24,711 — —
Total assets at fair value ........................ $24,741 $ 24,711 $ 30 —
Foreign exchange contracts, net ...................... $ (9) — $ (9) —
Non-qualified deferred compensation liabilities .......... (24,711) $(24,711) — —
Total liabilities at fair value ..................... $(24,720) $(24,711) $ (9) —
Fair Value Measurements
as of December 31, 2012
Total Level 1 Level 2 Level 3
Asset (Liability)
Non-qualified deferred compensation assets ............. $15,872 $ 15,872 — —
Total assets at fair value ........................ $15,872 $ 15,872 — —
Foreign exchange contracts, net ...................... $ (2,617) — $(2,617) —
Commodity contracts, net .......................... (124) — (124) —
Non-qualified deferred compensation liabilities .......... (15,872) $(15,872) — —
Total liabilities at fair value ..................... $(18,613) $(15,872) $(2,741) —
Polaris measures certain assets and liabilities at fair value on a nonrecurring basis. Assets acquired and
liabilities assumed as part of acquisitions are measured at fair value. Refer to Note 5 for additional
information. Polaris will impair or write off an investment and recognize a loss when events or circumstances
indicate there is impairment in the investment that is other-than-temporary. The amount of loss is determined
by measuring the investment at fair value. Refer to Note 9 for additional information.
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.
52