Polaris 2011 Annual Report Download - page 55

common stock for $132.4 million and a net repayment of debt totaling $102.3 million, offset by proceeds from
stock issuances under employee plans of $45.7 million. 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 issuance under employee plans of $68.1 million.
In August 2011, Polaris entered into a new $350 million unsecured revolving loan facility. The new bank
agreement expires in August 2016. There were no borrowings under this new facility as of December 31, 2011.
Prior to August 2011, Polaris was a party to an unsecured bank agreement comprised of a $250 million revolving
loan facility for working capital needs. As part of the previous bank agreement, the Company had a $200 million
term loan which was paid off in its entirety in May 2011 with issuance of the Senior Notes described below and
$100 million of cash on hand. 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 were issued in May 2011.
Polaris was in compliance with all debt covenants as of December 31, 2011.
We previously had interest rate swap agreements to manage exposures to fluctuations in interest rates. Each
of these interest swaps was designated as and met the criteria of cash flow hedges. The swaps expired in April
2011.
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, 2011:
(In millions): Total <1 Year 1-3 Years 3-5 Years >5 Years
Borrowings under credit agreement:
Senior Notes .................................... $100.0 — — — $100.00
Interest expense senior notes ........................... 38.2 $ 4.4 $ 8.8 $ 8.8 16.2
Capital leases ....................................... 7.3 2.7 3.6 0.9 0.1
Operating leases ..................................... 36.9 7.2 10.7 7.4 11.6
Total .......................................... $182.4 $14.3 $23.1 $17.1 $ 127.9
Additionally, at December 31, 2011, we had letters of credit outstanding of $4.5 million related to purchase
obligations for raw materials. Not included in the above table is unrecognized tax benefits of $7.8 million.
Our Board of Directors authorized the cumulative repurchase of up to 75.0 million shares of our common
stock through December 31, 2011. Of that total, approximately 71.4 million shares were repurchased
cumulatively from 1996 through December 31, 2011. We paid $132.4 million to repurchase and retire
approximately 2.6 million shares during 2011. The share repurchase activity during 2011 had a $0.02 beneficial
impact on diluted earnings per share for the year ended December 31, 2011. We have authorization from our
Board of Directors to repurchase up to an additional 3.6 million shares of Polaris stock at December 31, 2011,
which represents approximately five percent of the total shares currently outstanding.
We have arrangements with certain finance companies (including Polaris Acceptance) to provide secured
floor plan financing for our dealers. These arrangements provide liquidity by financing dealer purchases of our
products without the use of our working capital. A majority of the worldwide sales of snowmobiles, ORVs,
motorcycles and related PG&A are financed under similar arrangements whereby we receive payment within a
few days of shipment of the product. The amount financed by worldwide dealers under these arrangements at
December 31, 2011 and 2010, was approximately $731.3 million and $667.6 million, respectively. We
participate in the cost of dealer financing up to certain limits. We have agreed to repurchase products repossessed
by the finance companies up to an annual maximum of no more than 15 percent of the average month-end
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