F R E Q U E N T L Y    A S K E D    Q U E S T I O NS Why did Polaris initiate a Share Repurchase Program? We initiated a repurchase program in 1996 and extended it in 1997 because we felt Polaris’ share price didn’t reflect the true value of the company. We’re very confident in the long-term prospects of the company, and expressed that confidence by repurchasing and retiring 521,000 shares in 1996 and 1,455,900 shares in 1997. What made you decide to go into motorcycles? Our long-term strategy includes diversification as a means to achieve growth, and the motorcycle market offers significant growth opportunities. The U.S. market has nearly doubled in the past five years, and favorable demographic trends support continued growth. In addition, motorcycles fit with our existing engineering, manufacturing and distribution processes—and we have ample capacity for another year-round product. How will Victory be distributed, and will dealers service the bikes, too? An initial 200 U.S. dealers are being selected from our top-notch dealer network. All are being trained and will offer servicing, which is standard for Polaris dealers. We’ll expand U.S. distribution to 500 to 600 dealers over the next few years, and expect many of those will be existing Polaris dealers, too. We plan to enter the Canadian market in 1999 and the international market in the year 2000. Will you focus exclusively on cruisers, or expand into other motorcycle segments? Our long-range plan is to follow the successful path of our other product lines and offer a full range of models to meet the needs of owners in numerous segments, including touring and sportbikes. What is the outlook for government (federal, state and local) PWC regulation? We anticipate continued regulatory activity in all our product categories, and we’re confident our products can satisfactorily meet the requirement of any future regulations. Currently, we’re preparing to meet the new PWC engine emissions requirements that become effective in 1999. We are aware of several states that have initiated legislative activities relating to the use of PWC. Polaris, together with the industry, has always been a proponent of balanced and appropriate programs that educate the customer on safe use of the product and protect the environment, yet also allow for recreational enjoyment of the waterways. How will demographic trends affect Polaris in the future? Positively. Baby Boomers—born between 1946 and 1964—comprise the majority of our owners. The bulk of them are moving into peak earning years—and they already earn 48 percent higher than the national average and spend 44 percent more than the national average on big-ticket leisure items. And as Boomers age, they’ll demand the greater comfort features that are the hallmark of Polaris products. What are Polaris’ plans for future growth? Our growth has been and will continue to be driven by new product development—like our new Victory motorcycle line—that leverages our engineering and manufacturing expertise, the Polaris brand name, and our marketing and distribution abilities. We also continue to review potential strategic acquisitions that could utilize these strengths. What impact does weather have on Polaris sales? We have greatly minimized the impact of weather during any particular year. We accomplish this by applying industry-leading inventory management techniques such as maintaining conservative product builds to more closely match supply with consumer demand, implementing marketing programs to promote preseason sales of our products, and aggressively managing field inventories by shifting product among dealers as needed. Long term, our snowmobile customers need access to snow, while warm summers increase interest in personal watercraft. To offset these seasonal products, we also offer ATVs and now motorcycles that can be operated year-round in most areas. And we’re expanding into new geographic markets worldwide to further reduce the impact of regional weather variations. Forward-looking statements made herein contain certain important factors that could cause results to differ materially from those anticipated. See Management's Discussion and Analysis and Results of Operations beginning on page 11.