Shareholders' Equity

9 Months Ended

Sep. 30, 2019

Shareholders’ Equity

During the nine months ended September 30, 2019, Polaris paid $6,997,000 to repurchase approximately 81,000 shares of its common stock. As of September 30, 2019, the Board of Directors has authorized the Company to repurchase up to an additional 3,170,000 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 $0.61 per share on September 16, 2019 to holders of record at the close of business on September 3, 2019.

Cash dividends declared and paid per common share for the three and nine months ended September 30, 2019 and 2018, were as follows:



	Three months ended September 30,				Nine months ended September 30,
	2019		2018		2019		2018
Cash dividends declared and paid per common share	$	0.61	$	0.60	$	1.83	$	1.80

Net income per share

Basic income 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 Deferred Compensation Plan for Directors (“Director Plan”) and the ESOP and deferred stock units under the 2007 Omnibus Incentive Plan (“Omnibus Plan”). Diluted income 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 Omnibus Plan. A reconciliation of these amounts is as follows (in thousands):



	Three months ended September 30,		Nine months ended September 30,
	2019	2018	2019	2018
Weighted average number of common shares outstanding	61,143	61,927	61,064	62,630
Director Plan and deferred stock units	212	181	205	175
ESOP	125	99	125	89
Common shares outstanding—basic	61,480	62,207	61,394	62,894
Dilutive effect of Omnibus Plan	785	1,339	758	1,656
Common and potential common shares outstanding—diluted	62,265	63,546	62,152	64,550

During the three and nine months ended September 30, 2019, the number of options that were not included in the computation of diluted income per share because the option exercise price was greater than the market price, and therefore, the effect would have been anti-dilutive, was 4,333,000 and 4,157,000, respectively, compared to 1,785,000 and 1,713,000 for the same periods in 2018.

Accumulated other comprehensive loss

Changes in the accumulated other comprehensive loss balance are as follows (in thousands):



	Foreign Currency Items			Cash Flow Hedging Derivatives			Retirement Plan and Other Activity			Accumulated Other Comprehensive Loss
Balance as of December 31, 2018	$	(60,504	)	$	423		$	(2,892	)	$	(62,973	)
Reclassification to the statement of income	—			(2,711		)	187			(2,524		)
Reclassification to retained earnings	—			—			(668		)	(668		)
Change in fair value	(13,189		)	(4,237		)	—			(17,426		)
Balance as of September 30, 2019	$	(73,693	)	$	(6,525	)	$	(3,373	)	$	(83,591	)

The table below provides data about the amount of gains and losses, net of tax, reclassified from accumulated other comprehensive loss into the statements of income for cash flow derivatives designated as hedging instruments for the three and nine months ended September 30, 2019 and 2018 (in thousands):



Derivatives in Cash Flow Hedging Relationships and Other Activity	Location of Gain (Loss) Reclassified from Accumulated Other Comprehensive Loss into Income	Three months ended September 30,						Nine months ended September 30,
		2019			2018			2019			2018
Foreign currency contracts	Other expense, net	$	458		$	4,587		$	2,591		$	6,681
Foreign currency contracts	Cost of sales	266			(62		)	552			460
Interest rate contracts	Interest expense	(327		)	—			(432		)	—
Retirement plan activity	Operating expenses	(61		)	(66		)	(187		)	(196		)
Total		$	336		$	4,459		$	2,524		$	6,945

The net amount of the existing gains or losses at September 30, 2019 that is expected to be reclassified into the statements of income within the next 12 months is not expected to be material. See Note 12 for further information regarding derivative activities.