HOT NEWS – May 16, 2005

POLARIS CUTS SNOWMOBILE WORKFORCE
Polaris Industries, Medina, Minn., has laid off 60 of its 3,800 employees in a cutback tied to recent slow snowmobile sales. Thirty-four of the lay-offs occurred at the company’s Roseau, Minn., production facility.
The lay-offs were part of a workforce reduction plan that paralleled a decrease in snowmobile manufacturing, said Marlys Knutson, external relations manager for Polaris.
“As we cut back snowmobile production due to the last seven years of low snowfall, we never made any staffing changes to reflect the lower build,” Knutson said.
Knutson said the lay-offs occurred “pretty much across the company,” including engineering, manufacturing, human resources, sales and marketing. She said all of the 60 employees received severance packages and job search assistance. The Roseau employees who lost their jobs, mostly engineers and personnel with technical capacities, were offered positions in the factory’s production line.
Polaris reported a record $19.1 million net income for its first quarter ended March 31, 2005, a 12% increase over the same period in 2004. The company said sled sales decreased to $7.2 million for the first quarter of 2005, compared to the prior year’s first quarter sales of $13.3 million.
For the year ended Dec. 31, 2004, snowmobile sales increased 26% compared to the prior year. Those results were aided by fourth quarter sled sales, when the company posted a 39% increase compared to last year’s fourth quarter. Polaris said the fourth quarter upswing in sales was primarily due to timing of shipments – the majority of its new Fusion 900 and 900 RMK models were shipped to dealers in the fourth quarter.

KAWASAKI USA UPDATES OPERATIONS, AGAIN
Kawasaki Motors Corp., U.S.A. (KMC) has announced yet another operational modification to the structure of its Irvine, Calif.-based sales and marketing group. Last year, both disciplines were consolidated into a single working group.
Steve Hamada, KMC president, said that reestablishing the independent structure of the sales and marketing functions will allow the company to bring stronger focus to each of them. They had been combined under Tom Orbe, who now assumes full-time responsibility for the sales function as vice president of sales. Tony Murr will continue as vice president of marketing and will oversee communications activity.
Both Murr and Orbe will report directly to Hamada.
KMC markets and sells at wholesale Kawasaki motorcycles, ATVs, personal watercraft and utility vehicles through a network of more than 1,500 independent retailers, with an additional 8,400 retailers specializing in power products and general purpose engines.

SUBCOMMITTEE DISCUSSES PWC RULEMAKING
Members of the U.S. House of Representatives Resources Subcommittee on National Parks met in early May to discuss rulemaking procedures in several national park units that have banned personal watercraft use since 2002.
In March 2000, the NPS established regulations that generally prohibited personal watercraft use (PWC) in most National Recreation Areas, Lakeshores and Seashores. At the same time, the park service established a two-year grace period for 21 park units where personal watercraft use was prevalent.
Each unit that seeks to reopen to PWC is required to complete a comprehensive scientific study of PWC impacts on the local environment and economy and prepare a rule allowing continued PWC use.
To date, 15 units have completed an environmental assessment, all of which conclude that PWC use should be allowed. Seven of these units have completed the rulemaking process and have welcomed PWC users back. There are still nine of the 21 units that have not issued regulations for personal watercraft use.
Several bipartisan Members of Congress unanimously voiced concern that the National Park Service (NPS) is taking too long to complete these rulemakings.
Mark Speaks, president of Yamaha Watercraft Group, told members of Congress that the personal watercraft industry is “not asking for special treatment —only for a level playing field.” He asked the members to “allow the environmental assessments and rulemakings to happen in a timely manner, and let sound science and facts — not bias — decide.”

TAIWANESE OEMs NOW OUTSOURCE TO CUT COSTS
Acting to overcome what has become a dilemma for manufacturers worldwide, Taiwan’s three leading producers of powersports vehicles have updated their parts procurement tactics to deal with rises in material prices that are undermining their profitability.
Until recently, Kwang Yang Motor Co., Ltd. (KYMCO) and Sanyang Industry Co., Ltd. (SYM) only exported parts to China and other Southeast Asian nations.
According to a report by the Taiwan Times, SYM now works through a trading company in Shanghai that serves as a parts supply center for its plants in Taiwan, China and Vietnam, and KYMCO out-sources price competitive parts from suppliers in Southeast Asia, Italy, China and eastern Europe. KYMCO also reportedly is debating deals in India.

SPARTA NAMES NEW CFO
Sparta Commercial Services, Inc., an Internet-based sales finance and leasing company dedicated exclusively to the powersports industry, has named Michael J. Mele as senior vice president and CFO. Mele replaces Daniel J. Lanjewar, who is leaving to pursue other interests.
Mele joins Sparta from Aon Consulting, where he served as senior vice president of finance and administration for the human resources outsourcing group.

NEW BOARD AT DUCATI
A new board of directors has been appointed at Ducati Motor Holding S.p.A. at the company’s annual meeting of shareholders on May 5.
The new directors are composed of Federico Minoli, Mauro Benetton, Massimo Bergami, David Bonderman, Abel Halpern, Andrea Lipparini, Paolo Pietrogrande, Dante Razzano, Giorgio Seragnoli, Giles Thorley and Ulrich Weiss.
Also approved at the meeting was the authorization of a possible buy-back and subsequent disposals by the company of its own shares; a proposal to increase the share capital, excluding shareholders’ pre-emptive rights to implement the employee stock option plan; the adoption of a single-tier governance system; and the revision of company by-laws.
Ducati’s revenues for 2004 were Euro 382.8 million, up 1.0% excluding foreign exchange effects (or down 1.4% including forex effects) versus 2003. EBITDA was Euro 39.1 million, up 2.3% excluding forex effects (or down 13.5% including forex effects).
Ducati’s full-year 2004 shipments dropped 4.8% from full-year 2003. The company says 36,089 units were registered worldwide in 2004, down 5.2% from the 38,088 registered in 2003. Full-year registrations in the U.S. were 5,673 units, up 15.1% from the 4,927 units moved in 2003. Revenues from the U.S. accounted for 15.6% of the company’s total revenues, compared to 13.1% in 2003.
In related news, Ducati says profits from sales and sponsorships covered 85% of racing costs in 2004 versus 38% in 1998. In 1998, the company spent Euro 9 million on racing and recouped Euro 3.4 million in profits from sales and sponsorships. In 2004, the company spent Euro 30.0 million and recouped profits of Euro 26.1 million.

NORROD TO HEAD SEGWAY
Segway LLC, Bedford, N.H., maker of the Segway Human Transporter (HT), has named James D. Norrod president and CEO. Effective immediately, Norrod will manage company-wide operations and serve on the Segway LLC board of directors.

ROETIN INDUSTRIES SOLD
Roetin Industries Inc., Victor, N.Y., has been purchased by Argilus Capital of Pittsford, N.Y. Argilus owns multiple manufacturing companies in upstate New York. Ed Rubel, vice president of marketing for Roetin, will stay on with the new company. Roetin, which makes traction products for snowmobiles, has been in business under the same ownership for 40 years.

TWO-WHEELER SALES IN ITALY DROP 20.7% IN 1Q
Registrations of two-wheelers in Italy during the first three months of 2005 have dropped sharply compared to the year-ago period, according to Associazione Nazionale Ciclo Motociclo Accessori (ANCMA), the country’s bicycle, motorcycle and accessories association.
ANCMA says sales of motorcycles and scooters for the first quarter of 2005 totaled 107,727 units, off 20.7% compared to the 135,810 units sold during the same period of 2004. Manufacturers moved 26,927 motorcycles and scooters in January; February sales were 29,522 units; and March sales accounted for 51,278 units.
Still a great concern to the Italian market is a drop in demand for 50cc vehicles. ANCMA says 50cc sales for the first three months of the year totaled 25,453 units, down from 41,315 units in the first quarter of 2004. Sales of 50cc units in January were down 25.3% compared to sales in January 2004; February sales dropped 36.7%; and March sales slid 43.6%.

1Q CYCLE SALES IN SPAIN SURGE 85.4%
Spain’s motorcycle retailers sold 35,264 units during the first three months of 2005, up 85.4% compared to sales during the first quarter of 2004, according to Asociacion Nacional de Empresas de Dos Ruedas (ANESDOR), the country’s motorcycle manufacturers’ association.
Spain’s motorcycle retailers sold 13,548 units in March 2005, up 91.1% compared to sales in March 2004. Montesa Honda S.A moved 3,046 units, up 61.9%; Suzuki Motor España, S.A. sold 2,112 units, up 85.8%; Yamaha Motor España S.A. sold 2,096 units, up 86.6%; and the Piaggio Group (Piaggio, Vespa and Gilera) accounted for 1,337 units, a 112.9% increase.
Sales of 50cc models during the three months of the first quarter dropped 2.18% to 22,830 units. Sales of 50cc units are separated from ANESDOR’s motorcycle total. In March, retailers sold 8,341 units, a 14.52% year-on-year increase. Yamaha led the 50cc market in March with sales of 1,944 units, down 25.56%. The Piaggio Group, ini second place, retailed 1,938 units, an 11.43% drop.
The association says this year’s rise in two-wheeler sales resulted from the Spanish government’s recent decision to allow holders of a passenger car endorsement with at least three years experience behind the wheel to drive 50cc units and motorcycles of up to 125cc without obtaining a motorcycle endorsement.

BRAZIL PLANS FOR 1.1 MILLION CYCLES IN 2005
Motorcycle manufacturers in Brazil are on track to produce 1,146,000 motorized two-wheelers in 2005, up from the 1,057,333 units produced in 2004, says ABRACICLO, the country’s association of motorcycles, scooters and mopeds.
The two main producers of two-wheelers in Brazil are Moto Honda da Amazonia Ltda. and Yamaha. ABRACICLO also counts production, sales and export figures for two other manufacturers, Kasinski and Sundown.
For the January through March 2005 first quarter, Honda 225,062 units; Yamaha, 46,111 units; Sundown 7,291 units; and Kasinski, 2,082 units.
ABRACICLO says it expects Brazil’s manufacturers to export 170,000 two-wheelers in 2005, up from 157,400 shipped in 2004.