Polaris 2008 Annual Report Download - page 68

The following assumptions were used to estimate the weighted average fair value of options of $9.09, $13.06
and $12.56, granted during the year ended December 31, 2008, 2007, and 2006, respectively:
2008 2007 2006
For the Year
Ended December 31,
Weighted-average volatility ....................................... 31% 32% 31%
Expected dividend yield .......................................... 3.7% 2.9% 2.6%
Expected term (in years) ......................................... 5.7 5.6 5.1
Weighted average risk free interest rate .............................. 2.7% 4.9% 4.5%
The total intrinsic value of options exercised during the year ended December 31, 2008 was $10,737,000. The
total intrinsic value of options outstanding and exercisable at December 31, 2008, 2007, and 2006 was $6,405,000,
$51,527,000 and $57,579,000, respectively. The total intrinsic value at each of December 31, 2008, 2007 and 2006
is based on the Company’s closing stock price on the last trading day of the applicable year for in-the-money
options.
The following table summarizes restricted stock activity for the year ended December 31, 2008:
Shares
Outstanding
Weighted
Average
Grant Price
Balance as of December 31, 2007............................... 429,122 $50.15
Granted ................................................ 77,000 39.21
Vested ................................................. (2,500) 47.00
Canceled/Forfeited ........................................ (97,500) 61.59
Balance as of December 31, 2008............................... 406,122 $45.35
Expected to vest as of December 31, 2008 ........................ 406,122 $45.35
The total intrinsic value of restricted stock expected to vest as of December 31, 2008 was $11,635,000. The
total intrinsic value at December 31, 2008 is based on the Company’s closing stock price on the last trading day of
the year. The weighted average fair values at the grant dates of grants awarded under the Restricted Stock Plan for
the years ended December 31, 2008, 2007, and 2006 were $39.21, $47.02, and $46.74, respectively.
Employee Savings Plans
Polaris sponsors a qualified non-leveraged employee stock ownership plan (“ESOP”) under which a maximum
of 3,250,000 shares of common stock can be awarded. The shares are allocated to eligible participants accounts
based on total cash compensation earned during the calendar year. Shares vest immediately and require no cash
payments from the recipient. Substantially all employees are eligible to participate in the ESOP, with the exception
of Company officers. Total expense related to the ESOP was $6,706,000, $7,567,000, and $6,424,000 in 2008,
2007, and 2006, respectively. As of December 31, 2008 there were 2,759,000 shares vested in the plan.
Polaris sponsors a 401(k) retirement savings plan under which eligible U.S. employees may choose to
contribute up to 50 percent of eligible compensation on a pre-tax basis, subject to certain IRS limitations. The
Company matches 100 percent of employee contributions up to a maximum of five percent of eligible compen-
sation. Matching contributions were $7,251,000, $6,749,000, and $6,959,000 in 2008, 2007 and 2006, respectively.
Note 3: Financing
Bank financing: Polaris is a party to an unsecured bank agreement comprised of a $250,000,000 revolving
loan facility for working capital needs and a $200,000,000 term loan. The entire amount of the $200,000,000 term
loan was utilized in December 2006 to fund the accelerated share repurchase transaction. Interest is charged at rates
50
POLARIS INDUSTRIES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)