EX-99.1 2 c87959exv99w1.htm PRESENTATION MATERIALS exv99w1
 

EXHIBIT 99.1

Polaris Exits Marine Business Today (September 2, 2004) Polaris announced that the Company plans to cease manufacturing marine products effective immediately. Form 8-K Exhibits From conference call September 2,2004

 

 

Polaris Exits Marine Business History of the industry and Polaris' marine division, con't Sales of Polaris' marine division peaked in 1996 at $171 million dollars and steadily declined over the subsequent years In 2003, sales of Polaris marine division were $53.5 million, which represents only 3 percent of total Company's sales The Company has lost money in the marine business every year since inception in 1992, including $13.2 million pre-tax in 2003 The total cumulative pre-tax losses of the marine business are in excess of $120 million

 

Polaris Exits Marine Business Minimal impact on employment levels The decision to exit the marine business will have minimal impact on our employment level at our manufacturing facilities Current seasonally-shared PWC/ATV assembly line in Spirit Lake will be converted to assemble ATVs full time All hourly workers will be retained During 2003 the marine division accounted for less than 15 percent of labor hours and units produced in the Spirit Lake facility Of the 105 employees in the marine division, fewer than 20 are expected to leave the Company

 

Polaris Exits Marine Business Positive impact on remaining business The exiting of the marine business will allow the Company to focus resources on core products including ATVs, utility vehicles, snowmobiles, PG&A, Victory motorcycles and on expanding international operations Spent $7 million in new product tooling and research and development in 2003 in the Marine division that will be redeployed to our remaining growing product lines

 

 

Polaris Exits Marine Business Loss on Disposal of Discontinued Operations The Company expects to record a loss on disposal of discontinued operations of approximately $36 million, or $24 million after tax, during the third quarter 2004 Represents a $0.53 per diluted share charge The loss includes approximately $29 million in expected future cash payments for the estimated costs to support the dealers in selling their remaining inventory, incentives and discounts to encourage consumers to purchase remaining products, costs to cancel supplier arrangements, legal and regulatory issues, and personnel termination costs The loss also includes approximately $7 million in non-cash costs related primarily to the disposition of factory inventory, tooling, and other physical assets

 

Polaris Exits Marine Business Dealer Assistance / Consumer Incentives A number of programs will be available to assist dealers in selling their remaining inventory including: Extended warranties for consumers Various rebates and dealer salesman incentives Special retail financing offers for consumers Transfer plan to move inventory geographically Advertising plan for key markets

 

Polaris Exits Marine Business Sales Guidance Percentage growth guidance for sales from continuing operations remains unchanged for the third quarter 2004 and full year 2004 Third quarter sales from continuing operations are expected to increase 5 to 8 percent over the comparable $444.4 million in the third quarter 2003 Full year 2004 sales from continuing operations are expected to increase in the range of 8 to 10 percent over the comparable $1,552.4 million for the full year 2003 Sales guidance for ATVs, snowmobiles, Victory motorcycles and parts, garments and accessories remains unchanged for the full year 2004

 

Polaris Exits Marine Business Earnings Per Share Guidance For the third quarter 2004, our guidance for earnings per share from continuing operations is $0.94 to $0.98 per diluted share This represents the separation from continuing operations of an anticipated loss of approximately $0.04 per share from the discontinued operations of the marine business for the third quarter 2004 Previously issued guidance was $0.90 to $0.94 per share Our full year 2004 earnings per share from continuing operations guidance is $2.90 to $2.98 per diluted share This represents the separation from continuing operations of an anticipated loss of approximately $0.18 per share from the discontinued operations of the marine business for the full year 2004 Previously announced guidance was $2.72 to $2.80 per share The above guidance for both the third quarter and full year 2004 excludes the approximately $0.53 per share loss on disposal of discontinued operations to be recorded in the third quarter 2004

 

Polaris Exits Marine Business Exhibits Exhibit A Reclassified statements of income for the results of continuing operations for the year 2003 and first six months of 2004 by quarter Exhibit B Statements of income (loss) for the operations of the discontinued marine business for the year 2003 and first six months of 2004 by quarter

 

Exhibit A
Polaris Industries Inc.
Consolidated Statements of Income
(In thousands, except per share data)

Reclassified for discontinued operations
                                                 
For Three months For Three months     For the year     For Three months For Three months
Ended June 30 Ended March 31     Ended December 31     Ended December 31 Ended September 30
2004 2004     2003     2003 2003
continuing continuing     continuing     continuing continuing
results results     results     results results
   
   
Sales
  $ 394,628     $ 328,997       $ 1,552,351       $ 455,351     $ 444,405  
Cost of Sales
    302,404       251,466         1,189,475         346,281       334,296  
   
 
Gross Profit
    92,224       77,531         362,876         109,070       110,109  
Operating Expenses
                                           
 
Selling and marketing
    23,399       28,115         92,321         25,727       23,006  
 
Research and development
     15,528       13,202         47,069         13,791       12,470  
 
General and administrative
    19,008       17,871         67,175         15,679       18,148  
   
   
Total operating expenses
    57,935       59,188         206,565         55,197       53,624  
Income from financial services
    7,252       8,136         23,587         7,372       7,277  
   
   
Operating Income
    41,541       26,479         179,898         61,245       63,762  
Non-Operating Expense (Income)
                                           
 
Interest Expense
    623       524         2,465         430       593  
 
Other expense (income), net
    (17 )     371         (83 )       2,277       593  
   
   
Income before income taxes
    40,935       25,584         177,516         58,538       62,576  
Provision for income taxes
    13,509       8,442         57,693         19,025       20,338  
   
   
Net Income from continuing operations
    27,426       17,142         119,823         39,513       42,238  
   
Loss from discontinued operations, net of tax
    (3,057 )     (2,837 )       (8,894 )       (1,482 )     (2,761 )
Net Income
  $ 24,369     $ 14,305       $ 110,929       $ 38,031     $ 39,477  
   
Basic Net Income per share
                                           
   
Continuing Operations
   $ 0.65     $ 0.40       $ 2.80       $ 0.92     $ 0.99  
   
Loss from discontinued operations
  ($ 0.07 )   ($ 0.06 )     ($ 0.21 )     ($ 0.03 )   ($ 0.07 )
   
   
Net Income
  $ 0.58     $ 0.34       $ 2.59       $ 0.89     $ 0.92  
Diluted Net Income per share
                                           
   
Continuing Operations
  $ 0.61     $ 0.38       $ 2.66       $ 0.87     $ 0.93  
   
Loss from discontinued operations
  ($ 0.07 )   ($ 0.06 )     ($ 0.20 )     ($ 0.03 )   ($ 0.06 )
   
   
Net Income
  $ 0.54     $ 0.32       $ 2.46       $ 0.84     $ 0.87  
Weighted average shares outstanding:
                                           
   
Basic
    42,181       42,570         42,905         42,719       42,760  
   
Diluted
    44,968       45,248         45,056         45,396       45,306  

[Table continued on next page]

12

 

Exhibit A
Polaris Industries Inc.
Consolidated Statements of Income
(In thousands, except per share data)

Reclassified for discontinued operations (continued)
                     
For Three months For Three months
Ended June 30 Ended March 31
2003 2003
continuing continuing
results results
Sales
  $ 350,301     $ 302,294  
Cost of Sales
    271,459       237,439  
   
 
Gross Profit
    78,842       64,855  
Operating Expenses
               
 
Selling and marketing
    19,903       23,685  
 
Research and development
    10,730       10,078  
 
General and administrative
    17,633       15,715  
   
   
Total operating expenses
    48,266       49,478  
Income from financial services
    4,565       4,373  
   
   
Operating Income
    35,141       19,750  
Non-Operating Expense (Income)
               
 
Interest Expense
    845       597  
 
Other expense (income), net
    (492 )     (2,461 )
   
   
Income before income taxes
    34,788       21,614  
Provision for income taxes
    11,305       7,025  
   
   
Net Income from continuing operations
    23,483       14,589  
   
Loss from discontinued operations, net of tax
    (2,491 )     (2,160 )
Net Income
  $ 20,992     $ 12,429  
   
Basic Net Income per share
               
   
Continuing Operations
  $ 0.55     $ 0.34  
   
Loss from discontinued operations
  ($ 0.06 )   ($ 0.05 )
   
   
Net Income
  $ 0.49     $ 0.29  
Diluted Net Income per share
               
   
Continuing Operations
  $ 0.53     $ 0.33  
   
Loss from discontinued operations
  ($ 0.06 )   ($ 0.05 )
   
   
Net Income
  $ 0.47     $ 0.28  
Weighted average shares outstanding:
               
   
Basic
    42,830       43,311  
   
Diluted
    44,544       44,979  

 

Exhibit B

Polaris Industries Inc.

Consolidated Statements of Income (Loss)
(In thousands, except per share data)
 
Discontinued Operations
                                                 
  For Three months   For Three months     For the year     For Three months   For Three months
  Ended June 30   Ended March 31     Ended December 31     Ended December 31   Ended September 30
  2004   2004     2003     2003   2003
  discontinued   discontinued     discontinued     discontinued   discontinued
 
 
   
   
 
Sales
    $27,717       $16,979         $53,518         $11,762       $3,291  
Cost of Sales
    29,605       17,834         56,377         12,289       4,306  
 
Gross Profit
    (1,888 )     (855 )       (2,859 )       (527 )     (1,015 )
Operating Expenses
                                           
 
Selling and marketing
    1,436       1,469         4,586         534       1,399  
 
Research and development
     971       1,288         4,691         951       1,166  
 
General and administrative
     268       622         1,041         184       511  
   
Total operating expenses
     2,675       3,379         10,318         1,669       3,076  
   
Operating Income (loss)
    (4,563 )     (4,234 )       (13,177 )       (2,196 )     (4,091 )
Provision (benefit) for income taxes
    (1,506 )     (1,397 )       (4,283 )       (714 )     (1,330 )
   
Net Income (loss), after tax
    ($3,057 )     ($2,837 )       ($8,894 )       ($1,482 )     ($2,761 )
   
Basic Net Income per share
                                           
 
Net Income (loss)
    ($0.07 )     ($0.06 )       ($0.21 )       ($0.03 )     ($0.07 )
Diluted Net Income per share
                                           
 
Net Income (loss)
    ($0.07 )     ($0.06 )       ($0.20 )       ($0.03 )     ($0.06 )
Weighted average shares outstanding:
                                           
 
Basic
    42,181       42,570         42,905         42,719       42,760  
 
Diluted
    44,968       45,248         45,056         45,396       45,306  

[Table continued on next page]

13

 

Exhibit B

Polaris Industries Inc.

Consolidated Statements of Income (Loss)
(In thousands, except per share data)
 
Discontinued Operations (continued)
                     
  For Three months   For Three months
  Ended June 30   Ended March 31
  2003   2003
  discontinued   discontinued
 
 
Sales
    $26,834       $11,631  
Cost of Sales
    27,903       11,879  
   
 
Gross Profit
    (1,069 )     (248 )
Operating Expenses
               
 
Selling and marketing
    1,077       1,576  
 
Research and development
    1,337       1,237  
General and administrative
    207       139  
       
   
Total operating expenses
    2,621       2,952  
       
Operating Income (loss)
    (3,690 )     (3,200 )
Provision (benefit) for income taxes
    (1,199 )     (1,040 )
       
Net Income (loss), after tax
    ($2,491 )     ($2,160 )
       
Basic Net Income per share
               
 
Net Income (loss)
    ($0.06 )     ($0.05 )
Diluted Net Income per share
               
 
Net Income (loss)
    ($0.06 )     ($0.05 )
Weighted average shares outstanding:
               
 
Basic
    42,830       43,311  
 
Diluted
    44,544       44,979