Polaris 2014 Annual Report Download - page 93

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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 Accounting Standards Codification Topic 860. Polaris’
allocable share of the income of Polaris Acceptance has been included as a component of income from
financial services in the accompanying consolidated statements of income. The partnership agreement is
effective through February 2017.
Polaris’ total investment in Polaris Acceptance of $89,107,000 at December 31, 2014 is accounted for under
the equity method, and is recorded in investment in finance affiliate in the accompanying consolidated balance
sheets. At December 31, 2014, the outstanding amount of net receivables financed for dealers under this
arrangement was $1,141,068,000, which included $337,088,000 in the Polaris Acceptance portfolio and
$803,980,000 of receivables within the Securitization Facility (‘‘Securitized Receivables’’).
Polaris has agreed to repurchase products repossessed by Polaris Acceptance up to an annual maximum of
15 percent of the aggregate average month-end outstanding Polaris Acceptance receivables and Securitized
Receivables during the prior calendar year. For calendar year 2014, the potential 15 percent aggregate
repurchase obligation was approximately $120,815,000. 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,
2014 2013 2012
Revenues ....................................... $40,968 $13,010 $8,811
Interest and operating expenses ....................... 3,678 3,044 1,013
Net income ...................................... $37,290 $ 9,966 $7,798
As of December 31,
2014 2013
Finance receivables, net ........................... $337,088 $226,742
Other assets ................................... 122 172
Total Assets ................................ $337,210 $226,914
Notes payable .................................. $155,436 $ 85,096
Other liabilities ................................. 3,560 3,384
Partners’ capital ................................. 178,214 138,434
Total Liabilities and Partners’ Capital .............. $337,210 $226,914
Polaris has agreements with Capital One, Sheffield, Synchrony Bank and FreedomRoad under which these
financial institutions provide financing to end consumers of Polaris products. Polaris’ income generated from
these agreements has been included as a component of income from financial services in the accompanying
consolidated statements of income.
Polaris also administers and provides extended service contracts to consumers and certain insurance contracts
to dealers and consumers through various third-party suppliers. Polaris does not retain any warranty, insurance
or financial risk under any of these arrangements. Polaris’ service fee income generated from these
arrangements has been included as a component of income from financial services in the accompanying
consolidated statements of income.
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