Polaris 2015 Annual Report Download - page 77

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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.
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 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, 2015
Total Level 1 Level 2 Level 3
Asset (Liability)
Non-qualified deferred compensation assets ............. $48,238 $ 48,238 — —
Foreign exchange contracts, net ...................... 2,767 — $2,767 —
Interest rate swap contracts ......................... 186 — 186 —
Total assets at fair value ........................ $51,191 $ 48,238 $2,953 —
Commodity contracts, net ........................... $ (354) — $ (354) —
Non-qualified deferred compensation liabilities ........... (48,238) $(48,238) — —
Total liabilities at fair value ...................... $(48,592) $(48,238) $ (354) —
Fair Value Measurements
as of December 31, 2014
Total Level 1 Level 2 Level 3
Asset (Liability)
Non-qualified deferred compensation assets ............. $41,797 $ 41,797 — —
Total assets at fair value ........................ $41,797 $ 41,797 — —
Commodity contracts, net .......................... $ (4,609) — $(4,609) —
Foreign exchange contracts, net ...................... (2,570) — (2,570) —
Non-qualified deferred compensation liabilities .......... (41,797) $(41,797) — —
Total liabilities at fair value ..................... $(48,976) $(41,797) $(7,179) —
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