Polaris 2011 Annual Report Download - page 81

Polaris utilizes the liability method of accounting for income taxes whereby deferred taxes are determined
based on the estimated future tax effects of differences between the financial statement and tax bases of assets
and liabilities given the provisions of enacted tax laws. The net deferred income taxes consist of the following (in
thousands):
December 31,
2011 2010
Current deferred income taxes:
Inventories ................................. $ 5,968 $ 6,618
Accrued expenses ............................ 73,171 60,100
Derivative instruments ........................ (1,474) 651
Total current ................................ 77,665 67,369
Noncurrent net deferred income taxes:
Cost in excess of net assets of business acquired .... 2,139 (1,973)
Property and equipment ....................... (21,296) (20,786)
Compensation payable in common stock .......... 31,274 30,119
Net unrealized gains in other comprehensive
income .................................. (1,516) (8,297)
Total noncurrent ............................. 10,601 (937)
Total ...................................... $ 88,266 $ 66,432
Polaris had liabilities recorded related to unrecognized tax benefits totaling $7,837,000 and $5,509,000 at
December 31, 2011 and 2010, respectively. The liabilities were classified as Long term income taxes payable in
the accompanying consolidated balance sheets in accordance with ASC Topic 740. Polaris recognizes potential
interest and penalties related to income tax positions as a component of the Provision for income taxes on the
consolidated statements of income. Polaris had reserves related to potential interest of $496,000 and $331,000
recorded as a component of Long term income taxes payable at December 31, 2011 and 2010, respectively. The
entire balance of unrecognized tax benefits at December 31, 2011, if recognized, would affect the Company’s
effective tax rate. The Company does not anticipate that total unrecognized tax benefits will materially change in
the next twelve months. Tax years 2006 through 2010 remain open to examination by certain tax jurisdictions to
which the Company is subject. A reconciliation of the beginning and ending amount of unrecognized tax benefits
is as follows:
For the Years Ended December 31,
(In thousands): 2011 2010
Balance at January 1, ....................... $5,509 $ 4,988
Gross increases for tax positions of prior years . . 483 1,259
Gross decreases for tax positions of prior years . . ——
Gross increases for tax positions of current
year .................................. 1,956 1,345
Decreases due to settlements ................. ——
Decreases for lapse of statute of limitations ..... (111) (2,083)
Balance at December 31, .................... $7,837 $ 5,509
Note 6. Shareholders’ Equity
Stock repurchase program: The Polaris Board of Directors authorized the cumulative repurchase of up to
75,000,000 shares of the Company’s common stock. As of December 31, 2011, 3,629,000 shares remain
available for repurchases under the Board’s authorization. During 2011 Polaris paid $132,372,000 to repurchase
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