Polaris 2010 Annual Report Download - page 47

Investing activities:
Net cash used for investing activities was $42.1 million for 2010 compared to cash used totaling $29.7 million
for 2009. The primary use of cash in 2010 and 2009 was the investment in property and equipment of $55.7 million
and $43.9 million, respectively.
Financing activities:
Net cash used for financing activities was $1.8 million for 2010 compared to $50.4 million in 2009. In 2010,
we used cash for financing activities to pay cash dividends of $53.0 million and repurchase shares of common stock
for $27.5 million, offset by proceeds from stock issuances under employee plans of $68.1 million. In 2009, we used
cash for financing activities to pay cash dividends of $50.2 million and repurchase shares of common stock for
$4.6 million.
The seasonality of production and shipments causes working capital requirements to fluctuate during the year.
We are a party to an unsecured variable interest rate bank lending agreement that matures on December 2, 2011,
comprised of a $250.0 million revolving loan facility for working capital needs and a $200.0 million term loan. The
$200 million term loan was utilized in its entirety in December 2006 principally to fund an accelerated share
repurchase transaction. Borrowings under the agreement bear interest based on LIBOR or “prime” rates plus a
margin, as defined (effective rate was 0.65 percent at December 31, 2010). At December 31, 2010 and 2009, we had
total outstanding borrowings under the agreement of $200.0 million. Our debt to total capital ratio was 35 percent at
December 31, 2010 and 49 percent at December 31, 2009.
In December 2010, we entered into a Master Note Purchase Agreement to issue $25.0 million of 3.81 percent
unsecured Senior Notes due May 2018 and $75.0 million of 4.60 percent unsecured Senior Notes due May 2021
(collectively, the “Senior Notes”). The Senior Notes are expected to be issued in May 2011. As a result, we have
classified $100.0 million of the $200.0 million term loan outstanding as long-term liabilities in the consolidated
balance sheet as of December 31, 2010.
As of December 31, 2010, we have entered into the following interest rate swap agreements to manage
exposures to fluctuations in interest rates by fixing the LIBOR interest rate as follows:
Year Swap
Entered into
Fixed Rate
(LIBOR)
Notional
Amount
Expiration
Date
2009 1.34% $25,000,000 April 2011
2009 0.98% $25,000,000 April 2011
Each of these interest rate swaps was designated as and met the criteria of cash flow hedges. The fair value of
the interest rate swap agreements on December 31, 2010 was a liability of $0.1 million.
We entered into and settled an interest rate lock contract in November 2010 in connection with the Master Note
Purchase Agreement. The interest rate lock settlement resulted in a $0.3 million gain, net of deferred taxes of
$0.1 million, which will be amortized into income over the life of the related debt.
The following table summarizes our significant future contractual obligations at December 31, 2010:
(In millions): Total G1 Year 1-3 Years 3-5 Years H5 Years
Borrowings under credit agreement:
Revolving loan facility ....................... $ 0.0 — — — —
Term loan ................................ 200.0 $200.0 — — —
Interest expense under term loan and swap
agreements................................ 1.4 1.4 — — —
Operating leases ............................. 32.0 3.7 $8.1 $5.9 $14.3
Total .................................... $233.4 $205.1 $8.1 $5.9 $14.3
Additionally, at December 31, 2010, we had letters of credit outstanding of $4.0 million related to purchase
obligations for raw materials. Not included in the above table is unrecognized tax benefits of $5.5 million.
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