Polaris 2013 Annual Report Download - page 88

Polaris classified liabilities related to unrecognized tax benefits 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. Reserves related to potential interest are recorded as a component of
long-term income taxes payable. The entire balance of unrecognized tax benefits at December 31, 2013, 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 2010 through 2013
remain open to examination by certain tax jurisdictions to which the Company is subject. A reconciliation of
the beginning and ending amounts of unrecognized tax benefits is as follows (in thousands):
For the Years Ended
December 31,
2013 2012
Balance at January 1, ............................... $ 6,704 $ 7,341
Increases due to acquisition opening balance sheet positions . . 6,420 —
Gross increases for tax positions of prior years ............ 561 83
Gross increases for tax positions of current year ........... 3,755 938
Decreases due to settlements ......................... (3,310) (1,658)
Decreases for lapse of statute of limitations .............. (1,344) —
Currency translation effect on foreign balances ............ 413 —
Balance at December 31, ............................ 13,199 6,704
Reserves related to potential interest at December 31, ....... 1,093 359
Unrecognized tax benefits at December 31, ............... $14,292 $ 7,063
Note 7. Shareholders’ Equity
Stock repurchase program. The Polaris Board of Directors has authorized the cumulative repurchase of up to
75,000,000 shares of the Company’s common stock. In addition, in 2013 the Polaris Board of Directors
authorized the one-time repurchase of all the shares of Polaris stock owned by Fuji Heavy Industries Ltd.
(‘‘Fuji’’). On November 12, 2013, Polaris entered into and executed a Share Repurchase Agreement with Fuji
pursuant to which Polaris purchased 3,960,000 shares of Polaris stock held by Fuji for an aggregate purchase
price of $497,474,000.
As of December 31, 2013, 1,604,000 shares remain available for repurchases under the Board’s authorization.
During 2013, Polaris paid $530,033,000 to repurchase and retire approximately 4,337,000 shares. During 2012,
Polaris paid $127,525,000 to repurchase and retire approximately 1,649,000 shares, and in 2011 Polaris paid
$132,372,000 to repurchase and retire approximately 2,608,000 shares.
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 $75 to $125 per share. The Board of Directors may redeem
the rights earlier for $0.01 per right.
Stock purchase plan. Polaris maintains an employee stock purchase plan (‘‘Purchase Plan’’). A total of
3,000,000 shares of common stock are reserved for this plan. The Purchase Plan permits eligible employees to
purchase common stock monthly at 95 percent of the average of the beginning and end of month stock prices.
As of December 31, 2013, approximately 1,241,000 shares had been purchased under the Purchase Plan.
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