Manufacturing Realignment

9 Months Ended

Sep. 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 Company has reevaluated the total exit costs pertaining to the manufacturing realignment and, in light of maintaining certain operations in Osceola, WI, are now expected to total approximately $7,500,000 rather than the previous estimate of $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 September 30, 2011		Cumulative Amounts Incurred through September 30, 2011
Employee termination benefits	$	6,400	$	111	$	6,152
Other associated costs		1,100		266		883
Total Exit Costs	$	7,500	$	377	$	7,035

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

	Balance June 30, 2011		Amount provided for during the Three Months Ended September 30, 2011		Amount Utilized during the Three Months Ended September 30,  2011			Balance September 30, 2011
Employee termination benefits	$	4,567	$	111	$	(1,101	)	$	3,577
Other associated costs		—		266		(266	)		—
Total Exit Costs	$	4,567	$	377	$	(1,367	)	$	3,577