What made Polaris decide to enter the motorcycle market? Three key factors led us to motorcycles: Our long-term strategy includes diversification as a means to achieve growth, and the cruiser motorcycle market offers significant growth opportunities. The U.S. market has nearly doubled in the past five years, the European market has increased by nearly 50 percent in that same time and favorable demographic trends support continued growth. Motorcycles fit with our existing engineering, manufacturing, distribution and marketing processes. Motorcycles provide us with another year-round product to offset the seasonal sales of our snowmobiles and PWC. What impact does weather have on Polaris sales? Not as much as it used to. We’ve greatly minimized the impact of weather during any particular year through marketing programs and product diversification. But because snowmobile consumers ultimately need access to snow and PWC enthusiasts prefer warm summers, we’ve diversified into year-round ATVs and motorcycles, two markets that offer tremendous growth potential. In the future, as we expand into new geographic markets worldwide, the impact of regional weather variations will be even less. What is the future of the PWC industry? The industry is transitioning to cleaner, quieter, more stable watercraft to meet consumer and government demands. We’re leading the way with innovative sound-reduction and low-emission engine technologies. Based on this new generation of PWC, we expect the industry to resume a modest annual growth rate after 1999. How is Polaris affected by economic downturns? In the past our sales haven’t proven sensitive to economic cycles. Our vehicles are affordably priced, can often be used for both work and play, and have become an integral part of our customers’ lifestyles. Another contributing factor is owner demographics: The majority of Polaris owners are Baby Boomers, who earn incomes 48 percent higher than the national average. What is the effect of the $61.4 million provision for litigation loss? A lawsuit was brought in 1990 alleging misappropriation of trade secrets regarding technology formerly used in some of our snowmobile engines. We appealed a jury verdict against Polaris but our appeal was denied, so we reported the loss as a one-time non-operating charge against earnings in the third quarter, 1998. The after-tax impact is $39.6 million, or $1.53 per diluted share. The settlement doesn’t affect our ongoing operations, or restrict investment in new product development and other growth opportunities. Nor will it have any impact in the future. Why did Polaris initiate a Share Repurchase Program? We initiated a repurchase program in 1996 and extended it in both 1997 and 1998 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 nearly 1.1 million shares in 1998, for a cumulative total of over 3 million repurchased shares since 1996. What are Polaris’ plans for future growth? Our solid results in 1998 give us momentum to accelerate growth and deliver even better financial performance. We feel we are well-positioned for growth in each of our core product lines. And we will add to that by investing selectively in some new areas. One is PG&A. We have an aggressive plan to double PG&A sales within three years through a low-risk investment in increased promotion and a dedicated sales group. Another growth area is Polaris Acceptance. In 1999 we’re introducing a number of new financial services for our dealers and consumers that create additional revenue streams. And we foresee investing in strategic acquisitions and licensing and co-marketing opportunities that can bring new products into our dealer channel and new customers into their stores.
		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 of Financial Condition and Results of Operation.
		© 1999 Polaris Industries Inc.