Shareholders' Equity

6 Months Ended

Jun. 30, 2013

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Shareholders' Equity

NOTE 8. Shareholders’ Equity

During the six months ended June 30, 2013, Polaris paid $31,869,000 to repurchase and retire approximately 372,000 shares of its common stock. As of June 30, 2013, the Board of Directors has authorized the Company to repurchase up to an additional 1,609,000 shares of Polaris stock. The repurchase of any or all such shares authorized for repurchase will be governed by applicable SEC rules and dependent on management’s assessment of market conditions. Polaris paid a regular cash dividend of $0.42 per share on June 17, 2013 to holders of record at the close of business on June 3, 2013.

Cash dividends declared per common share for the three and six months ended June 30, 2013 and 2012, were as follows:

	Three months ended June 30,				Six months ended June 30,
	2013		2012		2013		2012
Cash dividends declared and paid per common share	$	0.42	$	0.37	$	0.84	$	0.74

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 period, including shares earned under the nonqualified deferred compensation plan (“Director Plan”), the ESOP and deferred stock units under the Omnibus Incentive Plan (“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 issued under the 1995 Stock Option Plan and the 2003 Non-Employee Director Stock Option Plan (collectively, the “Option Plans”) and certain shares issued under the Omnibus Plan. A reconciliation of these amounts is as follows (in thousands):

	Three months ended June 30,		Six months ended June 30,
	2013	2012	2013	2012
Weighted average number of common shares outstanding	68,536	68,507	68,445	68,342
Director Plan and deferred stock units	233	338	287	348
ESOP	98	109	98	105
Common shares outstanding—basic	68,867	68,954	68,830	68,795
Dilutive effect of Option Plans and Omnibus Plan	1,888	2,207	1,929	2,198
Common and potential common shares outstanding—diluted	70,755	71,161	70,759	70,993

During the second quarter and year-to-date periods ended June 30, 2013, 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 were 1,018,000 and 799,000, respectively, compared to 916,000 and 1,117,000 for the same respective periods in 2012.

Accumulated other comprehensive income

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

	Foreign Currency Items			Cash Flow Hedging Derivatives			Accumulated Other Comprehensive Income
Balance as of December 31, 2012	$	13,669		$	(1,431	)	$	12,238
Reclassification to the income statement	—			(358		)	(358		)
Change in fair value	(6,327		)	3,378			(2,949		)
Balance as of June 30, 2013	$	7,342		$	1,589		$	8,931

The table below provides data about the amount of gains and losses, net of tax, reclassified from accumulated other comprehensive income into the income statement for cash flow derivatives designated as hedging instruments for the three and six months ended June 30, 2013 and 2012 (in thousands):

Derivatives in Cash Flow Hedging Relationships	Location of Gain (Loss) Reclassified from Accumulated OCI into Income	Three months ended June 30,						Six months ended June 30,
		2013			2012			2013			2012
Foreign currency contracts	Other income, net	$	(891	)	$	(1,609	)	$	(1,111	)	$	(3,616	)
Foreign currency contracts	Cost of sales	537			7			753			113
Total		$	(354	)	$	(1,602	)	$	(358	)	$	(3,503	)

The net amount of the existing gains or losses at June 30, 2013 that is expected to be reclassified into the income statement within the next 12 months is expected to not be material. See Note 10 for further information regarding Polaris' derivative activities.