April 25, 2005 – Finance Digest

American IronHorse Names CFO, Sales Director
American IronHorse Motorcycle Co. (AIH), Fort Worth, Texas, has named Robert A. Krause as its Chief Financial Officer and Gary Sipes as National Sales Director.

Krause began his post at American IronHorse on March 28. He replaces the company’s interim CFO Robert Schleizer.

Before joining AIH, Krause was senior vice president of finance & administration for Collins & Aikman Corp., a $4 billion Fortune 500 manufacturer of automotive interiors and related technologies headquartered in Troy, Mich.

Krause is a Certified Public Accountant and holds an MBA in Finance from The University of Michigan.

As national sales director, Sipes will oversee a team of regional dealer relations managers and attempt to develop dealer prospects for the company.

Sipes holds about seven years of sales management experience. He previously served as dealer relations manager for AIH, as well as sales manager for Rick Fairless’ Strokers Dallas. Prior to that, he worked in Michigan as the District Sales Manager for Yamaha Motor Corp.

H-D’s 2004 U.S. Cycle Sales Up 7.1%
Harley-Davidson, Inc., Milwaukee, reported net income for its fourth quarter ended Dec. 31, 2004, of $209.0 million, or 71 cents per share, up from $182.4 million, or 60 cents per share, during the same period in 2003. Revenue for its fourth quarter was $1.22 billion, up 5.4% from revenue of $1.16 billion in the year-ago quarter.

For the full year, retail sales of Harley-Davidson motorcycles grew 7.1% in the United States and 1.5% internationally. In Europe, sales shrunk by 5.3%. Total 2004 motorcycle revenue was $3.93 billion, an increase of $306.7 million or 8.5%.

The company shipped 317,289 units in 2004, compared with 291,147 units in 2003.
Revenue for the year ended Dec. 31, 2004, was $5.02 billion, 8.5% more than the $4.62 billion posted in 2003. Net income for the year ended Dec. 31 was $889.8 million, or $3.00 per share, compared to last year’s net income of $760.9 million, or $2.50 per share.

In the fourth quarter, retail sales of Harley-Davidson motorcycles were up 6.7% in the United States and up 14% in international markets compared to the year-ago quarter. Fourth quarter revenue from Harley-Davidson motorcycles was $992.6 million, an increase of $47.3 million or five percent. Motorcycle shipments totaled 80,587 units, an increase of 3,531 units or 4.6%.

Fourth quarter revenue from Parts and Accessories (P&A), which consists of Genuine Motor Parts and Genuine Motor Accessories, totaled $157.9 million, an increase of $16.9 million or 12% over the year-ago quarter. Revenue from General Merchandise, which consists of MotorClothes, apparel and collectibles, totaled $54.9 million, an increase of $4.2 million or 8.2%.

Full-year P&A revenue totaled $781.6 million, a $68.8 million or 9.7% increase, while full-year General Merchandise revenue totaled $223.7 million, a $12.3 million or 5.8% increase.


Harley-Davidson Financial Services, Inc. (HDFS), a subsidiary of Harley-Davidson, Inc., reported fourth quarter operating income of $39.2 million, up $5.4 million or 15.9% compared to the year-ago quarter.

Full year operating income for HDFS was $188.6 million, an increase of $20.7 million or 12.3% compared to 2003.

Officials at Harley said the company expects to ship 339,000 units in 2005. Jeffrey L. Bleustein, chairman and CEO, says the company, responding to current market conditions and the strong euro, will reduce prices on select motorcycles in Europe in 2005 in an effort to attract a broader range of customer.

Gabilan Manufacturing Inc., a privately held California supplier of motorcycle exhaust systems to Harley-Davidson Inc., has been purchased by Tenneco Automotive Inc., Lake Forest, Ill., for $10 million in cash.

Tenneco is a $4.2 billion manufacturing company with 18,800 employees and supplies shock absorbers, struts, mufflers and exhaust systems under the Monroe, Walker and other brands.

Gabilan had 2004 revenues of $38 million. Based in Salinas, Calif., the company has been a supplier to Harley-Davidson since 1978 and serves as the exclusive muffler manufacturer for all of Harley’s product lines. The company has 240 employees and operates plants in Salinas; Milwaukee; Lincoln, Neb.; and Emigsville, Pa.

Tenneco says it has reached a long-term agreement with Harley-Davidson to continue the supply relationship.

As part of the acquisition agreement, Tenneco is acquiring nearly all the assets of Gabilan. However, the company is not acquiring the Gabilan name, Gabilan real estate in Salinas, its discontinued farm equipment or other businesses or certain liabilities associated with the exhaust business. Tenneco Automotive will lease the facility in Salinas and will assume the current leasing agreements at the other Gabilan facilities.

“We are very pleased with this announcement,” said Matt Levatich, vice president materials management, for Harley-Davidson. “The relationship we’ve had with Gabilan will be further enhanced by Tenneco Automotive with the addition of its broad engineering and manufacturing resources and advanced technology capabilities.”

Arctic Cat Inc., Thief River Falls, Minn., reported earnings of $5.8 million, or 28 cents a share, for its fiscal third quarter ended Dec. 31, 2004. This was down from last year’s profits of $9.7 million, or 46 cents a share.

Sales for the period fell to $188.9 million from $194.6 million in the year-ago quarter. Arctic said the quarter’s results reflect anticipated lower snowmobile sales and a less favorable Japanese foreign currency conversion.

Nine-month net earnings were $25.6 million, or $1.22 per diluted share, off from $31.4 million, or $1.44 per diluted share, in the same period last year. Year-to-date net sales grew four percent to $532.1 million compared to $509.5 million in the year-ago period.

Sales of ATVs in the third quarter grew to $84.1 million, up from $67.1 million in the same period last year. The company’s nine-month ATV sales rose to $223.9 million compared to $190.2 million last year. The company is currently taking orders for the 650 H1 ATV model and expects to begin shipping this product in the fourth quarter ending March 31, 2005.

“ATV sales continue to be our primary growth driver and we are successfully increasing our share of this market,” said ChrisTwomey, Arctic Cat’s chairman and CEO.

Unseasonably warm weather through mid-December resulted in poor snow conditions in the East and Midwest, slowing industry wide retail snowmobile sales during the quarter.

A planned reduction in its fiscal 2005 snowmobile production after several seasons of poor snow conditions was partly responsible for Arctic Cat’s snowmobile sales declined in the third quarter, the company said, dropping snowmobiles to $78.9 million versus $100.9 million in the prior-year quarter. Year-to-date snowmobile sales are on plan, totaling $241.6 million compared to $253.3 million during the same period last year, the company said.

Arctic’s parts, garments and accessories (PG&A) sales were $25.8 million down from $26.6 million in the third quarter last year. Nine-month PG&A sales were $66.7 million compared to $66.0 million in the year-ago period.

During the third quarter, Arctic repurchased 190,000 shares of its common stock and has approximately $11.6 million remaining on its current share repurchase authorization.

At the end of the third quarter ended Dec. 31, 2004, the company reported $84.2 million in cash and no long-term debt.

Officials at Arctic say they expect net sales for the fourth quarter ending March 31, 2005, to range between $155 million and $168 million, up from $140.2 million for the same period last year. Net earnings for the quarter are estimated to be between 24 cents and 29 cents per diluted share versus a net loss of five cents per diluted share in the prior-year period.

Arctic said it expects net sales for the fiscal year ending March 31, 2005, to grow 5% to 8% and be in the range of $687 million to $700 million. Full-year diluted earnings per share are estimated to grow four percent to eight percent and be in the range of $1.46 to $1.51.

Tom Tiller, president and CEO of Polaris Industries Inc., Medina, Minn., intends to sell a portion of his Polaris stock over the next three months.

The trading plan, effective Feb. 7, 2005, permits Tiller to dispose of 500,000 shares of Polaris common stock. Overall, he holds approximately 2.8 million Polaris shares directly or in the form of stock options or restricted shares.

“The trading plan provides me the opportunity to exercise vested options and sell shares for personal, diversification and tax reasons,” he said in a prepared statement. The net effect of the moves will be to reduce the number of shares and options that Tiller holds in Polaris by less than 10%.

At the same time, Polaris said that it renewed and extended Tiller’s employment agreement through 2006. Tiller, 43, joined Polaris as president and chief operating officer in 1998 after 15 years in various management positions with General Electric Corp. He became CEO a year later.

“Polaris has performed exceptionally well under Tom’s leadership. The results speak for themselves,” said Polaris Chairman Greg Palen. Since Tiller arrived, Polaris has completed 27 consecutive quarters of revenue and earnings growth and the common stock has climbed steadily.
A $10,000 investment in Polaris stock in 1998 was worth over $50,000 on Dec. 31, 2004, a total increase of over 400% over seven years.

MBA Adds Pre-Paid Legal Services
MBA Holdings, Inc., Scottsdale, Ariz., has entered an agreement with Pre-Paid Legal Services, Inc. to market and provide pre-paid legal services to the membership of MBA’s subsidiary, the National Motorcycle Dealers Association (NMDA). Pre-Paid Legal provides family plans, specialized professional and group plans, and business plans through a network of independent law firms.

Pre-Paid Legal also will provide credit monitoring and credit restoration in the event of identity theft. The NMDA receives a commission from every Pre-Paid Legal plan marketed and sold to NMDA members.
Under the agreement, Pre-Paid Legal will offer to NMDA members and their employees affordable legal service benefits, including unlimited attorney consultation and document preparation.

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