April 19, 2004 – Finance Digest

Polaris splits stock, increases regular dividend
Polaris Industries Inc. (NYSE/PSE: PII) has approved a 48% increase in its regular quarterly cash dividend, effective with the 2004 first quarter dividend. The first quarter dividend of 46 cents (on a pre-split basis) will be payable on Feb. 17, 2004 to shareholders of record at the close of business on Feb. 2, 2004.

Polaris also announced that its Board of Directors declared a two-for-one split of the company’s outstanding shares of common stock which will be presented to shareholders as a 100% stock dividend.

On March 8, 2004, Polaris shareholders will receive one additional share of common stock for each share they hold of record at the close of business on March 1, 2004.

Upon completion of the stock split, Polaris will have approximately 43.4 million shares of common stock outstanding.

Polaris has increased its quarterly dividend for nine straight years, and this will be the third time in the last 10 years that it has split its stock.

“This dividend increase reflects the confidence we have in the future growth of our business and cash flows and our ongoing commitment to maximize our shareholders’ investment,” said Tom Tiller, president and CEO of Polaris. “We have a clean balance sheet that has minimal debt with plenty of borrowing capacity and access to the capital markets; this dividend increase in no way restricts our ability to fund our growth initiatives.”

He said the company expects to continue to return a portion of the cash flow generated by the firm to its shareholders in the form of share repurchases; there are approximately 2.2 million shares remaining to be purchased under the current program

Tiller said the lower per share price and increased number of shares outstanding is expected “to help to make our stock more accessible to a broader base of investors who share the Polaris vision.”

In other news, Polaris reported record net income of $1.68 per diluted share (pre-split) for the fourth quarter ended Dec. 31, 2003, an 11% increase over prior year fourth quarter net income of $1.51 per diluted share (pre-split). Higher sales volume primarily from Victory motorcycles and PG&A along with favorable currency rate movement, expanded gross margins and higher income from financial services contributed to the fourth quarter earnings increase, the company said.

Net income reported for the fourth quarter 2003 was $38.0 million, a nine percent increase over prior year fourth quarter net income of $35.0 million. Sales for the fourth quarter 2003 were a record $467.1 million, up eight percent from last year’s fourth quarter sales of $431.5 million.

For the full year ended Dec. 31, 2003, Polaris reported record net income of $110.9 million or $4.92 per diluted share (pre-split), a 12% increase over $4.39 per diluted share (pre-split) for the year ended Dec. 31, 2002. Sales for the full year ended Dec. 31, 2003 totaled a record $1,605.9 million, up six percent from $1,521.3 million for the full year 2002.

Polaris continues to benefit from its diverse product portfolio with growth in ATVs, motorcycles, PG&A and financial services offsetting a weak snowmobile business due to a lack of snow in key riding areas and increased costs related to investments in research and development and sales and marketing during 2003,
said Tiller.


ATV sales in the fourth quarter 2003 increased two percent over the fourth quarter 2002. Strong growth in the RANGER product line, the introduction of the new Sportsman 700 EFI ATV and strong international sales growth helped offset higher promotional costs during the fourth quarter.

Full year 2003 sales of ATVs increased 11% over last year, a direct result of new product introductions and strong international sales growth offsetting higher promotional costs incurred during the year. Dealer inventories of Polaris ATVs at Dec. 31, 2003, are at comparable levels to a year ago, the company said.

Sales of Victory motorcycles increased 113% during the fourth quarter 2003 from the fourth quarter 2002 and reached $57.4 million for the full year 2003, a 70% increase over the prior year. Shipments to dealers of the new Kingpin cruiser motorcycle began in the fourth quarter 2003.

PG&A sales increased 17% during the fourth quarter 2003 compared to last year’s fourth quarter and climbed 10% for the year.

Polaris’ PWC sales declined 25% during the fourth quarter 2003 compared to the fourth quarter 2002. Timing of shipments at the beginning of the PWC season and a later transition to 2004 model year production in preparation for manufacturing of the new four stroke MSX personal watercraft were the primary reasons for the fourth quarter sales decline. Full year 2003 sales of PWC increased one percent compared to a year ago.

Snowmobile sales increased 16% for the fourth quarter 2003 compared to the prior year primarily due to timing of shipments between the third and fourth quarters of 2003 and the impact of favorable currency rates. For the full year 2003, snowmobile sales declined 22% compared to the prior year, as previously forecasted. As a result of a conservative production schedule in 2003, dealer inventories of Polaris snowmobiles at Dec. 31, 2003 are significantly lower than a year ago, the company said.

Income from financial services increased 63% to $7.4 million in the fourth quarter 2003, up from $4.5 million in the fourth quarter 2002. Income for the year increased 61% to $23.6 million compared to $14.6 million in 2002.

For the full year 2004, Polaris is expecting earnings to be in the range of $2.65 to $2.77 per share, on a post-split basis, an 8% to 13% increase over 2003 results of $2.46, on a post-split basis. Sales growth for the full year 2004 is expected to be in the range of 5% to 8% compared to 2003.

Cooper Tire to sell unit
ooper Tire & Rubber Company (NYSE: CTB), Findlay, Ohio, said it is exploring the possibility of a sale of its Cooper-Standard Automotive Group. The company has retained Lazard Freres to assist in this process. If this process results in a sale, the company said it may use net proceeds to reduce debt, invest in tire operations, return capital to stockholders, repurchase shares, or a combination of the foregoing.
Cooper-Standard Automotive is a leading manufacturer of fluid handling systems, body sealing systems, and active and passive vibration control systems, primarily for automotive original equipment manufacturers. The group is headquartered in Novi, Mich., and had revenue of approximately $1.66 billion in 2003.
Thomas A. Dattilo, chairman, president and CEO of Cooper Tire & Rubber Company said the firm intends to dedicate its resources to investing in its tire business and further pursuing global expansion.
Until further details are available, the Company expects to continue operations as usual by seeking new business, developing new products and filling customer orders as needed to maintain the expected level of customer service.
Cooper Tire & Rubber Company manufacture and markets products for the global automotive industry. Products include automotive, motorcycle and truck tires, inner tubes, and tread rubber and equipment. Cooper Tire & Rubber has more than 20,000 employees and 52 manufacturing facilities in 13 countries.

Big Dog Sales Increase
Big Dog Motorcycle, Wichita, Kansas, said 2003 sales for the privately-held motorcycle manufacturer were more than $80 million — an 82% increase over its 2002 sales of $42 million.
“Our sales volume has more than doubled in just the past two years, tripled in the past three,” said Sheldon Coleman, company founder and CEO. Big Dog has 90 dealers nationwide, seven of which are Big Dog Motorcycles branded, and employs 305. For more information, contact Big Dog Motorcycles at 316/267-9121 or visit the website at www.bigdogmotorcycles.com.

Gander Mtn., Cabela’s plan ipos
Gander Mountain, Bloomington, Minn., and Nebraska-based Cabela’s both plan to file initial public stock offerings (IPO), the funds from which will be used to clear debt and expand operations, the companies each say.
Gander Mountain sells ATVs for Arctic Cat and Bombardier as well as related ATV accessories. Cabelas sells ATV accessories, primarily for hunting applications.
Gander Mountain said it plans to raise up to $92 million through the sale of 5.75 million shares of stock. Family-owned through the Holiday Cos. convenience store chain, which generates an estimated $1.2 billion in annual revenue, Gander Mountain would sell between 42.5% and 45.7% of its shares, according to a prospectus.
Gander Mountain’s overall sales increased $132 million to $489.4 million in fiscal 2003, which ended in January, and the company posted profits of $1.5 million. As of January, it owed $102 million on its line of credit and another $9.8 million to Holiday.
Gander Mountain’s 66 stores are spread across the Upper Midwest, Ohio, Pennsylvania, Indiana and New York, and more are planned for this year, with the company expecting to spend between $30 million and $35 million opening between 13 and 15 new stores during 2004.
Cabelas, family-owned since 1961, filed for its own initial public stock offering March 23. The company, which had sales of $1.4 billion and earned $51.3 million in its most recent year, wants to raise $230 million to pay off $142 million in debt and open three more stores, it said in its registration statement.
According to the statement, Cabela’s distributed more than 100 million catalogs last year, handled more than 7.1 million customer orders through its Internet and catalog businesses, and completed an additional 6.1 million transactions at its nine stores.

Redline Increases Line of Credit
Redline Performance Products, Inc. (AMEX:RED) said it has increased its operating line of credit provided by the Community National Bank of North Branch, Minn., from $2 million to $2.5 million. Redline has used $2 million of the line of credit and said it intends to use the additional $500,000 to finance its ongoing production of 800 Revolt snowmobiles and operating expenses. An unidentified individual from Fargo, N.D., will be added as a guarantor for $500,000 of this line of credit, the company said. Other terms were not disclosed.
“This financing will provide Redline with needed capital until our cash flow from snowmobile shipments increases to a significant level,” says Mark Payne, president and CEO of Redline. In March, Redline began shipping an early release of the 2005 800 Revolt snowmobile to its dealers. Redline said it intends to ship 600-700 snowmobiles to dealers during the snowmobile industry’s annual 2004 spring sales period.

UTI plans Stock Sale
Universal Technical Institute, Inc. (UTI), Phoenix, Ariz., plans to sell 5,500,000 shares of its common stock by existing stockholders. A registration statement covering the proposed offering has been filed with the Securities and Exchange Commission (SEC). In this proposed offering, some stockholders of the company, other than senior management, plan to offer the shares of UTI’s common stock. These selling stockholders also intend to grant the underwriters an option to purchase up to 825,000 additional shares of common stock to cover over-allotments, if any.
UTI will not receive any proceeds from the sale of shares by the selling stockholders. Credit Suisse First Boston will act as lead manager in the common stock offering, and the co-managers are Banc of America Securities LLC, Jefferies & Company, Inc., Thomas Weisel Partners LLC, and SunTrust Robinson Humphrey.

Arctic Cat Sales, Earnings Improve
Arctic Cat Inc. (Nasdaq:ACAT), Thief River Falls, Minn., reported record net sales of $194.6 million for the fiscal 2004 third quarter ended Dec. 31, 2003, up 10% from net sales of $176.2 million in the prior-year quarter.
Improved sales were driven by a strong performance from Arctic’s ATV business.

Third-quarter net earnings were $9.7 million, or 46 cents per diluted share, compared to net earnings of $11.9 million, or 53 cents per diluted share, in the same period last year.

However, excluding non-recurring items, net sales in the prior-year third quarter totaled $172.2 million and net earnings were $8.5 million, or 38 cents per diluted share.

For the 2004 nine-month period, net sales grew 9% to $509.5 million versus $465.7 million in the year-ago period. Net earnings were $31.4 million, or $1.44 per diluted share, compared to net earnings of $34.4 million, or $1.51 per diluted share, in the prior-year period.

Excluding non-recurring PWC items, net sales in the first nine months last year were $461.7 million and net earnings totaled $31.0 million, or $1.36 per diluted share.

Contributing to Arctic’s improved performance were increased snowmobile sales, and strong sales of both ATVs and parts, garments and accessories, said Christopher A. Twomey, Arctic Cat’s chairman and CEO.

Sales of ATVs in the third quarter grew to $67.1 million, up 28% from $52.3 million in the same period last year. The company’s year-to-date ATV sales increased 24% to $190.2 million compared to $153.2 million last year.

“We experienced growing demand for Arctic Cat’s award-winning ATVs and continued to gain ATV market share,” said Twomey. “With our current 2004 models, we expanded our ATV line to reach virtually all market segments, including the growing sport performance segment, the two rider ATV segment, and the large displacement engine segment.”

The company now offers an extended line of 28 ATV models, with engines ranging from 50cc to 650cc.

Arctic’s ATVs have won industry honors. Its most powerful ATV, the newly introduced 650 4X4 Automatic, was named 2004 ATV of the Year by both ATV Illustrated and ATV Guide. The company’s versatile MultiRack Platform (MRP) for ATVs also has been honored. The MRP system allows users to quickly customize their ATVs with more than 40 available attachments.

Snowmobile sales grew 5% in the third quarter to $100.9 million versus $96.0 million in the prior-year period. Year-to-date snowmobile sales also rose 4% to $253.3 million compared to $243.7 million during the same period last year.

Sales of parts, garments and accessories (PG&A) increased 12% to $26.6 million versus $23.9 million in the prior-year third quarter. Year-to-date PG&A sales rose 2% to $66.0 million compared to $64.9 million in the year-ago period.

In other news, Arctic Cat raised its quarterly cash dividend 17% to seven cents per share of common and Class B common stock during the third quarter. At the end of the third quarter ended Dec. 31, 2003, the company reported $64.6 million in cash and no long-term debt.

Arctic Cat said it anticipates record revenues for its 2004 fiscal year, ending March 31, 2004, primarily driven by higher ATV sales.

The company said it expects 2004 fourth-quarter net sales to be in the range of $120 million to $130 million, compared to $111.4 million for the same period last year. The net loss for the fourth quarter is estimated to be between three cents and five cents per diluted share versus a net loss of eight cents per diluted share in the prior-year quarter.

Due to the seasonal nature of Arctic Cat’s snowmobile and ATV products, the company sells the majority of its products during its second and third fiscal quarters, and typically reports a small loss in the fourth quarter.

For the fiscal year ending March 31, 2004, Arctic Cat anticipates net sales will grow 9% to 11% and be in the range of $629 million to $639 million. Full-year diluted earnings per share are estimated to be in the range of $1.39 to $1.41 versus diluted earnings per share of $1.45 last fiscal year, which included a benefit of 15 cents per diluted share from non-recurring PWC items.

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