Get Started for Free Contexxia identifies hard-to-find pieces of information in SEC filings. No more highlighters, no more redlining, no more poring over huge documents. POLARIS INDUSTRIES INC/MN (931015) 10-Q published on Apr 24, 2019 at 5:08 pm
Reporting Period: Mar 30, 2019
Stranded Tax Effects. Effective January 1, 2019 the Company adopted ASU No. 2018-02, Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income, which allows a reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from the reduction of the U.S. federal statutory income tax rate to 21% from 35% due to the enactment of the Tax Cuts and Jobs Act of 2017 (the "Tax Act"). As a result of the adoption of ASU 2018-02, the Company recorded a $668,000 reclassification to decrease Accumulated Other Comprehensive Income and increase Retained Earnings.
Financial instruments. In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, and in November 2018 issued a subsequent amendment, ASU 2018-19, Codification Improvements to Topic 326, Financial Instruments - Credit Losses. ASU 2016-13 significantly changes how entities will measure credit losses for most financial assets and certain other instruments that are not measured at fair value through net income. ASU 2016-13 will replace today’s “incurred loss” approach with an “expected loss” model for instruments measured at amortized cost. ASU 2018-19 will affect loans, debt securities, trade receivables, net investments in
The Company leases certain manufacturing facilities, retail stores, warehouses, distribution centers, office space, land, and equipment. Leases with an initial term of 12 months or less are not recorded on the balance sheet; the Company recognizes lease expense for these leases on a straight-line basis over the lease term. The Company does not separate non-lease components from the lease components to which they relate, and instead accounts for each separate lease and non-lease component associated with that lease component as a single lease component for all underlying asset classes.
Some leases include one or more options to renew, with renewal terms that can extend the lease term from one to 20 years or more. The exercise of lease renewal options is at the Company’s sole discretion. Certain leases also include options to purchase the leased property. The depreciable life of assets and leasehold improvements are limited by the expected lease term, unless there is a transfer of title or purchase option reasonably certain of exercise. Certain lease agreements include rental payments that are variable based on usage or are adjusted periodically for inflation. The Company’s lease agreements do not contain any material residual value guarantees or material restrictive covenants. Information on the Company’s leases is summarized as follows (in thousands):
ORVs: ORV sales, inclusive of PG&A sales, of $827.4 million in the first quarter of 2019 increased four percent compared to $794.6 million in 2018. This increase was driven by higher side-by-side sales, partially offset by lower ATV sales. Polaris North American ORV unit retail sales to consumers decreased mid-single digits percent for the first quarter of 2019 with side-by-side vehicles down low-single digits percent and ATV vehicles down low-double digits percent compared to the comparable prior year period. The Company estimates that North American industry ORV retail sales were down low-single digits percent from the first quarter of 2018. Polaris’ North American dealer unit inventory was up mid-single digits percent compared to the first quarter of 2018. For the first quarter of 2019, the average ORV per unit sales price increased low-double digits percent compared to the first quarter of 2018’s per unit sales price, driven by favorable mix and price increases.
Snowmobiles: Snowmobile sales, inclusive of PG&A sales, increased six percent to $40.1 million for the first quarter of 2019, compared to $38.0 million for the comparable prior year period, primarily due to higher PG&A sales, partially offset by lower wholegood shipments due to timing. Polaris North American unit retail sales to consumers were up high-single digits percent during the first quarter of 2019 and up approximately 20 percent for the twelve month snowmobile season ending March 2019. The Company estimates that North American industry snowmobile retail sales were up low-double digits percent during the first quarter of 2019 and up low-single digits percent for the snowmobile season ending March 2019. Polaris gained significant market share for the snowmobile season.