Shareholders' Equity

12 Months Ended

Dec. 31, 2012

Shareholders' Equity

Note 7. 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, 2012, 1,981,000 shares remain available for repurchases under the Board’s authorization. During 2012, Polaris paid $127,525,000 to repurchase and retire approximately 1,649,000 shares. During 2011, Polaris paid $132,372,000 to repurchase and retire approximately 2,608,000 shares, and in 2010 Polaris paid $27,486,000 to repurchase and retire approximately 1,202,000 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.

Accumulated other comprehensive income: Accumulated other comprehensive income consisted of $13,669,000 and $9,545,000 of unrealized currency translation gains (net of tax expense of $1,698,000 and $1,516,000) as of December 31, 2012 and 2011, respectively, and unrealized losses of $1,431,000 and unrealized gains of $2,478,000 (net of tax benefit of $851,000 and tax expense of $1,474,000) related to derivative instruments as of December 31, 2012 and 2011, respectively.

Changes in the Accumulated other comprehensive income balance is as follows (in thousands):

	Foreign Currency Items		Net Gains (Losses) on Cash Flow Hedging Derivatives			Accumulated Other Comprehensive Income
Balance at December 31, 2011	$	9,545	$	2,478		$	12,023
Reclassification to the income statement		—		(6,085	)		(6,085	)
Change in fair value		4,124		2,176			6,300
Balance at December 31, 2012	$	13,669	$	(1,431	)	$	12,238

Net income per share: Basic earnings per share is computed by dividing net income available to common shareholders by the weighted average number of common shares outstanding during each year, including shares earned under the Director Plan, ESOP and deferred stock units under the Omnibus Plan. Diluted earnings per share is computed under the treasury stock method and is calculated to compute the dilutive effect of outstanding stock options and certain shares issued under the Restricted Plan and Omnibus Plan. A reconciliation of these amounts is as follows (in thousands):

	2012		2011		2010
Weighted average number of common shares outstanding		68,409		68,315		66,318
Director Plan and Deferred stock units		341		342		326
ESOP		99		135		256
Common shares outstanding—basic		68,849		68,792		66,900
Dilutive effect of restricted stock awards		181		165		132
Dilutive effect of stock option awards		1,975		2,100		1,733
Common and potential common shares outstanding—diluted		71,005		71,057		68,765

During 2012, 2011 and 2010, the number of options that could potentially dilute earnings per share on a fully diluted basis that were not included in the computation of diluted earnings per share because to do so would have been anti-dilutive was 872,000, 131,000, and 788,000, respectively.

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 at 95 percent of the average market price each month. As of December 31, 2012, approximately 1,220,000 shares had been purchased under the Purchase Plan.