Manufacturing Realignment

6 Months Ended

Jun. 30, 2011

Manufacturing Realignment

NOTE 12. 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, MN and Spirit Lake, IA as well as establish a new facility in Monterrey, Mexico. The realignment will lead to the sale or closure of a portion of the Osceola, WI manufacturing operations by 2012. Due to the increased demand for Polaris product, in April 2011, the Company reconsidered its decision regarding the Osceola operations and announced that it would maintain its snowmobile and motorcycle engine assembly in Osceola, WI. The Company expects to record transition charges, including both exit costs and startup costs, over the 2010 to 2012 periods. The exit costs pertaining to the manufacturing realignment are expected to total approximately $10,000,000 over that time period. The exit costs are classified within cost of sales in the consolidated statements of income. A summary of these exit costs follows (in thousands):

	Total Amount Expected to  be Incurred		Amount Incurred during the Three Months Ended June 30, 2011			Cumulative Amounts Incurred through June 30, 2011
Employee termination benefits	$	7,500	$	(724	)	$	6,041
Other associated costs		2,500		105			617
Total Exit Costs	$	10,000	$	(619	)	$	6,658

Utilization of components of the accrued exit costs during the three months ended June 30, 2011 is as follows (in thousands):

	Balance March 31,  2011		Amount provided for during the Three Months Ended June 30, 2011			Amount  Utilized during the Three  Months Ended June 30, 2011			Balance June 30,  2011
Employee termination benefits	$	5,960	$	(724	)	$	(669	)	$	4,567
Other associated costs		—		105			(105	)		—
Total Exit Costs	$	5,960	$	(619	)	$	(774	)	$	4,567