Polaris 2013 Annual Report Download - page 90

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The table below provides data about the amount of gains and losses, net of tax, reclassified from accumulated
other comprehensive income into the income statement for cash flow derivatives designated as hedging
instruments for the year ended December 31, 2013 and 2012 (in thousands):
Location of Gain (Loss) For the Years Ended
Reclassified from December 31,
Derivatives in Cash Accumulated OCI
Flow Hedging Relationships into Income 2013 2012
Foreign currency contracts ................. Other (income), net $(1,671) $(5,681)
Foreign currency contracts ................. Cost of sales 977 (404)
Total ................................. $ (694) $(6,085)
The net amount of the existing gains or losses at December 31, 2013 that is expected to be reclassified into
the income statement within the next 12 months is expected to not be material. See Note 11 for further
information regarding Polaris’ derivative activities.
Note 8. Financial Services Arrangements
Polaris Acceptance, a joint venture partnership between a wholly owned subsidiary of Polaris and GE
Commercial Distribution Finance Corporation (GECDF), an indirect subsidiary of General Electric Capital
Corporation, finances substantially all of Polaris’ United States sales whereby Polaris receives payment within
a few days of shipment of the product. Polaris’ subsidiary has a 50 percent equity interest in Polaris
Acceptance. From time to time, Polaris Acceptance sells portions of its receivable portfolio to a securitization
facility (the ‘‘Securitization Facility’’) arranged by General Electric Capital Corporation. The sale of
receivables from Polaris Acceptance to the Securitization Facility is accounted for in Polaris Acceptance’s
financial statements as a ‘‘true-sale’’ under ASC Topic 860. Polaris’ subsidiary and GECDF have an income
sharing arrangement related to income generated from the Securitization Facility. Polaris’ allocable share of
the income of Polaris Acceptance and the Securitization Facility has been included as a component of income
from financial services in the accompanying consolidated statements of income. The agreement between
GECDF and Polaris is effective through February 2017.
Polaris’ total investment in Polaris Acceptance of $69,217,000 at December 31, 2013 is accounted for under
the equity method, and is recorded in investment in finance affiliate in the accompanying consolidated balance
sheets. The net amount financed for dealers under this arrangement at December 31, 2013 was $928,454,000,
which included $226,742,000 in the Polaris Acceptance portfolio and $701,712,000 of receivables within the
Securitization Facility.
Polaris has agreed to repurchase products repossessed by Polaris Acceptance up to an annual maximum of
15 percent of the average month-end balances outstanding during the prior calendar year. For calendar year
2013, the potential 15 percent aggregate repurchase obligation was approximately $97,897,000. Polaris’
financial exposure under this arrangement is limited to the difference between the amounts unpaid by the
dealer with respect to the repossessed product plus costs of repossession and the amount received on the
resale of the repossessed product. No material losses have been incurred under this agreement during the
periods presented.
Summarized financial information for Polaris Acceptance reflecting the effects of the Securitization Facility is
presented as follows (in thousands):
For the Years Ended
December 31,
2013 2012 2011
Revenues ....................................... $13,010 $8,811 $13,018
Interest and operating expenses ....................... 3,044 1,013 4,131
Net income ...................................... $ 9,966 $7,798 $ 8,887
66