Polaris 2011 Annual Report Download - page 88

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For derivative instruments that are designated and qualify as a cash flow hedge, the effective portion of the
gain or loss on the derivative is reported as a component of Accumulated other comprehensive income and
reclassified into the income statement in the same period or periods during which the hedged transaction affects
the income statement. Gains and losses on the derivative representing either hedge ineffectiveness or hedge
components excluded from the assessment of effectiveness are recognized in the statement of income. The table
below provides data about the amount of gains and losses, net of tax, related to derivative instruments designated
as cash flow hedges included as a component of Accumulated other comprehensive income for the twelve month
periods ended December 31:
(In thousands):
Amount of Gain (Loss)
Recognized in Accumulated OCI on
Derivative (Effective Portion)
Amount of Gain (Loss)
Recognized in Accumulated OCI on
Derivative (Effective Portion)
Derivatives in Cash Flow
Hedging Relationships
Twelve Months Ended
December 31,
2011
Twelve Months Ended
December 31,
2010
Interest rate contracts .......... $ 62 $ 609
Foreign currency contracts ...... 3,509 (1,048)
Total ....................... $3,571 $ (439)
The table below provides data about the amount of gains and losses, net of tax, reclassified from
Accumulated other comprehensive income into income on derivative instruments designated as hedging
instruments for the twelve months ended December 31, (in thousands):
Derivatives in Cash Flow
Hedging Relationships
Location of Gain (Loss)
Reclassified from
Accumulated OCI
Into Income
Amount of Gain (Loss)
Reclassified from
Accumulated OCI
into Income
Amount of Gain (Loss)
Reclassified from
Accumulated OCI
into Income
Twelve Months Ended
December 31,
2011
Twelve Months Ended
December 31,
2010
Interest rate contracts ......... Interest expense $(152) $(1,039)
Foreign currency contracts ..... Other income, net (807) (1,133)
Foreign currency contracts ..... Cost of sales — 24
Total ...................... $(959) $(2,148)
The net amount of the existing gains or losses at December 31, 2011 that is expected to be reclassified into
the statement of income within the next 12 months is not expected to be material. The ineffective portion of
foreign currency contracts was not material for the twelve months ended December 31, 2011 and 2010.
The Company recognized a loss of $1,295,000 and a gain of $643,000 in Cost of sales on commodity
contracts not designated as hedging instruments for the twelve month period ended December 31, 2011 and 2010,
respectively.
Note 11. Manufacturing Realignment
In May 2010, the Company announced that it was realigning its manufacturing operations. The realignment
will consolidate operations into existing operations in Roseau, Minnesota and Spirit Lake, Iowa as well as
establish a new facility in Monterrey, Mexico. As part of the realignment, the Company sold a portion of the
Osceola, Wisconsin facility and outsourced certain components previously manufactured by Polaris at Osceola.
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