Polaris 2008 Annual Report Download - page 64

New accounting pronouncements: In February 2007, the FASB issued SFAS No. 159, “The Fair Value Option
for Financial Assets and Financial Liabilities — including an amendment of FASB Statement No. 115.”
SFAS No. 159 permits companies, at their election, to measure specified financial instruments and warranty
and insurance contracts at fair value on a contract-by-contract basis, with changes in fair value recognized in
earnings each reporting period. The election, called the “fair value option,” will enable some companies to reduce
the volatility in reported earnings caused by measuring related assets and liabilities differently. SFAS No. 159 is
effective for fiscal years beginning after November 15, 2007. The Company did not elect to apply the provisions of
SFAS No. 159 to any financial assets or liabilities.
In March 2008, the FASB issued SFAS No. 161, “Disclosures about Derivative Instruments and Hedging
Activities — an amendment of FASB Statement No. 133” (“FAS 161”). FAS 161 changes the disclosure require-
ments for derivative instruments and hedging activities. Entities are required to provide enhanced disclosures about
(a) how and why an entity uses derivative instruments, (b) how derivative instruments and related hedged items are
accounted for under Statement 133 and its related interpretations, and (c) how derivative instruments and related
hedged items affect an entity’s financial position, financial performance, and cash flows. The guidance in FAS 161
is effective for financial statements issued for fiscal years and interim periods beginning after November 15, 2008.
Early adoption is permitted. The Company does not expect the provisions of FASB 161 to have a material impact on
the Company’s consolidated financial statements.
In December 2007, the FASB issued SFAS No. 141(R), Business Combinations (”SFAS 141(R)”), which
establishes principles and requirements for how an acquirer recognizes and measures in its financial statements the
identifiable assets acquired, the liabilities assumed, any non controlling interest in the acquiree and the goodwill
acquired. The Statement also establishes disclosure requirements which will enable users to evaluate the nature and
financial effects of the business combination. FAS 141R is effective as of the beginning of an entity’s fiscal year that
begins after December 15, 2008 and will impact the Company’s financial statements only in the event of such a
business combination.
Reclassifications: Certain reclassifications of previously reported amounts have been made to conform to the
current year presentation. The reclassifications had no impact on operations as previously reported.
NOTE 2. Share-Based Employee Compensation
In the first quarter 2006 Polaris adopted SFAS 123(R) which requires companies to recognize in the financial
statements the grant-date fair value of stock options and other equity-based compensation issued to employees.
Polaris adopted SFAS 123(R) using the modified retrospective method. Polaris recorded on the consolidated
statements of income in the first quarter of 2006 an after tax benefit of $407,000 or $0.01 per diluted share from the
cumulative effect of the accounting change. Beginning with the first quarter 2006, the Company has reclassified
other share-based compensation expenses, previously reported in General and administrative operating expenses, to
Cost of sales and the Operating expenses lines on the consolidated statements of income. The balance sheet and
statements of cash flow have also been adjusted to reflect the impact of SFAS 123(R) for all prior periods presented.
The impact to the Company’s net earnings of adopting SFAS 123(R) is consistent with the pro forma disclosures
provided in the footnotes contained in previous financial statements.
Share-Based Plans
Polaris maintains the 2007 Omnibus Incentive Plan (“Omnibus Plan”) under which the Company grants long-
term equity-based incentives and rewards for the benefit of its employees, directors and consultants, which were
previously provided under several separate incentive and compensatory plans. Upon approval by the shareholders of
the Omnibus Plan in April 2007, the Polaris Industries Inc. 1995 Stock Option Plan (“Option Plan”), the 1999 Broad
Based Stock Option Plan (“Broad Based Plan”), the Restricted Stock Plan (“Restricted Plan”) and the 2003 Non-
Employee Director Stock Option Plan (“Director Stock Option Plan” and, collectively with the Option Plan,
Restricted Plan and Broad Based Plan, the “Prior Plans”) were frozen and no further grants or awards have since
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POLARIS INDUSTRIES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)