Polaris 2010 Annual Report Download - page 73

Shareholder rights plan: During 2000, the Polaris Board of Directors adopted a shareholder rights plan.
Under the plan, a dividend of preferred stock purchase rights will become exercisable if a person or group should
acquire 15 percent or more of the Company’s stock. The dividend will consist of one purchase right for each
outstanding share of the Company’s common stock held by shareholders of record on June 1, 2000. The shareholder
rights plan was amended and restated in April 2010. The amended and restated rights agreement extended the final
expiration date of the rights from May 2010 to April 2020, expanded the definition of “Beneficial Owner” to include
certain derivative securities relating to the common stock of the Company and increased the purchase price for the
rights from $150 to $250 per share. The Board of Directors may redeem the rights earlier for $0.01 per right.
Accumulated other comprehensive income: Accumulated other comprehensive income consisted of
$6,991,000 and $3,861,000 of unrealized currency translation gains (net of tax of $8,298,000 and $8,520,000)
as of December 31, 2010 and 2009, respectively, offset by $1,093,000 and $654,000 of unrealized losses (net of tax
benefit of $650,000 and $394,000) related to derivative instruments as of December 31, 2010 and 2009,
respectively, and $382,000 of unrealized losses on shares held for sale as of December 31, 2009.
Changes in the Accumulated other comprehensive income (loss) balances is as follows (in thousands):
Foreign Currency
Items
Unrealized Gains
(Losses) on
Securities
Net Gains (Losses)
on Cash Flow
Hedging Derivatives
Accumulated Other
Comprehensive
Income
Balance at December 31, 2009. . . $3,861 $(382) $ (655) $ 2,824
Reclassification to the income
statement ................. — 382 (2,148) (1,766)
Change in fair value .......... 3,130 — 1,710 4,840
Balance at December 31, 2010. . . $6,991 — $(1,093) $ 5,898
Net income per share: Basic earnings per share is computed by dividing net income available to common
shareholders by the weighted average number of common shares outstanding during each year, including shares
earned under the Director Plan, ESOP and deferred stock units under the Omnibus Plan. Diluted earnings per share
is computed under the treasury stock method and is calculated to compute the dilutive effect of outstanding stock
options and certain shares issued under the Restricted Plan and Omnibus Plan. A reconciliation of these amounts is
as follows (in thousands):
2010 2009 2008
Weighted average number of common shares outstanding ........... 33,159 32,245 32,456
Director Plan and Deferred stock units......................... 163 154 112
ESOP ................................................. 128 0 202
Common shares outstanding — basic .......................... 33,450 32,399 32,770
Dilutive effect of Restricted Plan and Omnibus Plan............... 66 265 178
Dilutive effect of Option Plan and Omnibus Plan ................. 866 410 616
Common and potential common shares outstanding — diluted ....... 34,382 33,074 33,564
During 2010, 2009 and 2008, the number of options that could potentially dilute earnings per share on a fully
diluted basis that were not included in the computation of diluted earnings per share because to do so would have
been anti-dilutive was 394,000, 1,672,000, and 2,862,000, respectively.
Stock Purchase Plan: Polaris maintains an employee stock purchase plan (“Purchase Plan”). A total of
1,500,000 shares of common stock are reserved for this plan. The Purchase Plan permits eligible employees to
purchase common stock at 95 percent of the average market price each month. As of December 31, 2010,
approximately 587,000 shares had been purchased under the Purchase Plan.
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POLARIS INDUSTRIES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)