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Basis of Presentation and Significant Accounting Policies (Policies) | 3 Months Ended
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Mar. 31, 2023
Accounting Policies [Abstract] |
Basis of presentation | Basis of presentation. The accompanying unaudited consolidated financial statements of Polaris Inc. (“Polaris” or the “Company”) have been prepared in accordance with accounting principles generally accepted in the United States for interim financial statements and, therefore, do not include all information and disclosures of results of operations, financial position, and changes in cash flow in conformity with accounting principles generally accepted in the United States for complete financial statements. Accordingly, such statements should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended December 31, 2022 previously filed with the Securities and Exchange Commission (“SEC”). In the opinion of management, such statements reflect all adjustments (which include only normal recurring adjustments) necessary for a fair presentation of the financial position, results of operations, equity, and cash flows for the periods presented. Due to the seasonality trends for certain products and to certain changes in production and shipping cycles, results of such periods are not necessarily indicative of the results to be expected for the complete year. Reclassifications. Reclassifications of certain prior year segment results and account balances have been made to conform to the current-year presentation. The reclassifications had no impact on the consolidated balance sheets, statements of income, comprehensive income, equity, or cash flows, as previously reported. Refer to Note 12 for additional information. On July 1, 2022, the Company completed the sale of its Transamerican Auto Parts (“TAP”) business. The operating results of the TAP business are reported in loss from discontinued operations, net of tax, in the consolidated statements of income for all periods presented. All amounts and disclosures included in the Notes to consolidated financial statements reflect only the Company's continuing operations unless otherwise noted. Refer to Note 4 for additional information.
Fair value measurements | 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 foreign currency contracts, interest rate 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 foreign currency, interest rate transactions, and commodity transactions. Assets and liabilities measured at fair value on a recurring basis are summarized below (in millions):
|  | Input Level |  | March 31, 2023 |  | December 31, 2022
Assets |  |  |  |  |  |
Non-qualified deferred compensation assets |  | Level 1 |  | $ | 40.4 |  |  | $ | 39.8 |
Foreign exchange contracts, net |  | Level 2 |  | $ | 11.6 |  |  | $ | 8.4 |
Interest rate contracts, net |  | Level 2 |  | $ | — |  |  | $ | 5.9 |
Commodity contracts, net |  | Level 2 |  | $ | 0.9 |  |  | $ | — |
Liabilities |  |  |  |  |  |
Non-qualified deferred compensation liabilities |  | Level 1 |  | $ | (40.4) |  |  | $ | (39.8) |
Interest rate contracts, net |  | Level 2 |  | $ | (0.4) |  |  | $ | — |
Fair value of other financial instruments. The carrying values of the Company’s short-term financial instruments, including cash and cash equivalents, trade receivables, accounts payable and current financing obligations approximate their fair values due to their short-term nature. As of March 31, 2023 and December 31, 2022, the fair value of the Company’s current and long-term financing obligations was approximately $2,117.6 million and $2,070.3 million, respectively, and was determined primarily using Level 2 inputs, including quoted market prices or discounted cash flows based on quoted market rates for similar types of debt. The carrying value of current and long-term financing obligations was $2,102.9 million and $2,057.8 million as of March 31, 2023 and December 31, 2022, respectively.
Property and equipment | Property and equipment. Depreciation expense was $57.4 million and $51.6 million for the three months ended March 31, 2023 and 2022. Substantially all of the Company’s property and equipment is located in North America.
Product warranties | Product warranties.
New Accounting Pronouncements | New accounting pronouncements. There are no new accounting pronouncements that are expected to have a significant impact on the Company’s consolidated financial statements.

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