Polaris Inc. · NYSE:PII
Polaris — Polaris Industries — Investor Presentation (March 2001)
45 slides from Polaris's investor presentation, Mar 26, 2001
Slide 1: Polaris Industries Inc.
Polaris Industries Inc. • Founded in 1954 • Manufacture a diversified mix of high-quality, high-performance motorized products for recreation and utility use • Well known brand name • Product innovation key to success • Highly productive non-union workforce - 3,500 strong • National and internationa
Slide 2: The Way Out. March 23, 2001
€> PeLarnis The Way Out. March 23, 2001 xe <= <> POLARIS
Slide 3: Polaris Industries Inc.
Polaris Industries Inc. + Founded in 1954 + Manufacture a diversified mix of high-quality, high- performance motorized products for recreation and utility use + Well known brand name + Product innovation key to success + Highly productive non-union workforce - 3,500 strong + National and internation
Slide 4: The Goals: Higher Expectations
€> PcLaARIs The Way Out. The Goals.... +$2 Billion by 2002; $3 Billion by 2007 *Grow EPS as fast as revenue Build a dominant brand with industry-leading quality -Expand P/E multiple to 20+ Higher Expectations {Smet pla his id hmm ng ts” gal i hte si te Seat Catan Pent 195” eee rs aa asd ot eo ‘Sold
Slide 5: Strong Business Foundation
Strong Business Foundation Products (% of saies) ‘Strengths/Opportunities -$844M business growing double digit “Strong #2 and growing share -Maintain #1 leadership position “Generate cash “Minimum investment “Upside only -$300-500MM long-term opportunity -Superior product features ‘Highest margin pr
Slide 6: Strong Business Foundation: Growth Initiatives (Catalysts)
Strong Business Foundation Growth Initiatives (Catalysts) Strengths/Opportunities » sus -Rapidly grow retail credit portfolio +Grow from 6% to 10% of revenue “Become closer to our customer “Brand extensions/partnerships -Acquisitions/JV’s Tom Tiller new CEO in 1999 -Over half of the top managers are
Slide 7: Sales: A Consistent Track Record
Sales A Consistent Track Record... 1990 to 2000 CAGR $1,800 17.3% $1,426 $1,600 TE] st184——$4,18¢ : elaine $1,104 $4,031 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 © PcLanris: nw oe
Slide 8: Polaris Sales by Business Unit
Polaris Sales by business unit 2000 Sales: $1.426 Billion - $20 pies Victory $68 PWC Sales In Millions © PcLaRis
Slide 9: Earnings Per Share: A Consistent Track Record
Eamings Pen Share A Consistent Track Record. 1990 - 2000 [79 years of consecutive earnings growth $4.00 $3.50 $3.60 $3.07 $272 CAGR 16.0% $3.00 $2.45 $2.19 $2.24 $2.0 $1.98 $2.00 $1.0 $1.21 $0.91 $1.00 $079 soat $0.50 $0.00 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 © PcLaRis
Slide 10: Historically Not Sensitive to Negative Economic Changes
Historically not sensitive to negative economic changes Polaris’earnings |40 ‘grew an average of 14% peryear 120 from 1989 to 1992 eeed POPEELEREEEEEEEER © PcLARIs Consumer Confidence Index
Slide 11: Product Cost Reduction Efforts
10 Product Cost Reduction Efforts Gross Margin Percentage “Gross Margins have improved 160 basis points from 1998 to 2000 23.0% Initiatives taken to improve gross 22.4% margins include: 21.4% . 1998 1999 2000 EDGE snowmobile chassis ATV model platform consolidation Victory product cost reduced over
Slide 12: Cash Flow: A Consistent Track Record
" Cash Flow A Consistent Track Record... Before changes in working capital items and deferred taxes $140 $120 $100 $80 $60 $48 $38 $40 Doliars (in millions) $40 $20 $0 $59 $87 $95 $97 CAGR $127 | 12.8% $115 $107 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 © PcLaRis
Slide 13: Return on Shareholders Equity
42 Return on Shareholders Equity _ Significantly above Industry Averages 50% 45% 2th 1990 1991 43% gay 45% 41% 1992 1993 1994 1995 1996 1997 ill 44k aT ayy, 1998 1999 2000 © PcLARIS
Slide 14: Debt to Total Capital Ratio
43 Debt to Total Capital Ratio Ample credit capacity 30% 25% 25% 19% 20% 18% 18% 10% 8% 0% 0% 0% 0% O% 0% 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 © PcLaRis
Slide 15: Share Repurchases
Share Repurchases Cumulatively to date have repurchased 5.8 million of 7.5 million authorized for a total of $184 million. $40 $38 $40 al lil In Millions 1 =: \__Fs ==: =: 1996 1997 1998 1999 2000 5 1997 1998 1999 2000 1 shares repurchased BB in dollars © PcLanris: 414 "The Way Out.
Slide 16: ATV Overview - Market
415 ATV Overview - Market 1992-97 Industry averaged 12% annual growth 1998-99 Industry averaged 23% annual growth 2000 Industry growth 19% 2001+ Average annual growth rate 10% + Worldwide ATV Industry Growth Buyer Profile 1969 1994 1995 1006 1997 1900 1609 000 440% first time buyers + Male, married,
Slide 17: ATV Overview - Polaris
16 ATV Overview - Polaris Polaris entered ATV market in 1985 Polaris increased retail sales every year since 1989 Currently #2 in the industry Polaris ATV Sales Product Profile tn Millions + Entered ATV market in Tye ii Mid single 1985 CAGR digit growth + 18 models currently Zi available (not includ
Slide 18: Youth ATV Market
7 Youth ATV Market 1999 ‘Around 200,000 vehicles sold at retail - mostly non-branded imports Opportunity Game changer - family; young people now part of riding experience Product 3 Models * Scrambler 50 and Scrambler 90 + Sportsman 90 ‘Styled like Mom's and Dad's Sate + sized for young people + free
Slide 19: Scrambler Youth ATV
Scrambler 50 Youth AMS POLARIS the Woy Gut
Slide 20: Motorcycle Overview - Market
19 Motorcycle Overview - Market 1992 -99 All-Highway motorcycles averaged 13% growth 1992 -98 Cruisers averaged 15% growth 1999 Cruisers grew 21% 2000 Industry cruiser growth 20% to 220,000 units 2001+ Average annual growth rate 10% + Motorcycle Industry Growth Victory Buyer Profile | + Enthusiasts
Slide 21: Motorcycle Overview - Victory Business Unit
Motorcycle Overview - Victory Business Un Victory Production started July 4, 1998 Victory Sales Product Profile In Millions $41 + Three models - more coming + Priced below Harley ($14,000 average) a} ,ORP'SX _Distribution Profile $11 growth + 300+ dealers in U.S. + 25 dealers in Canada + Internation
Slide 22: Victory Status
Victory Status + Cycle World's “Cruiser of the Year” July 1998 + Motorcycle Cruiser’s “Cruiser of the Year” October 1999 + Sport Cruiser introduced in August 1999, named “Sport Cruiser of the Year” by both Easy Riders and V Twin magazines in February 2001. + Expanded to Canada and UK in 2000 + Third
Slide 23: Victory V92C Deluxe
22 DELUXE VICTORY V92C Deluxe © PcLanris: The Way Out.
Slide 24: Snowmobile Overview - Market
Snowmobile Overview - Market 1993 -96 Industry averaged 18% annual growth 1997 -00 Industry absorbs growth & poor weather (flat-down) 2001+ — Expect modest §-7% industry growth as normal snowfall returns Worldwide Snowmobile industry Growth Binyer Bietio | + Age 38 (vs. 41 industry average) + Averag
Slide 25: Snowmobile Overview - Polaris
Snowmobile Overview - Polaris Polaris has been Industry Market Share Leader for 11 consecutive years aya | ayR Snowmobile Sales ASS | Hatket inMiions ix, | Ss $325 $322 i $311 10% growth a 3 2000 2001, Forecast 24 Product Profile + 26 models covering all market segments + Half of 2001 models in new
Slide 26: Edge X
25 600 Edge X © PcLanris: "The Way Out.
Slide 27: Customized Snowmobiles
Customized Snowmobiles -New program for 2002 model SNOW few Options include choice of SELECT Peepers [MARCH t- APRIL 16, 2001 electric start ae -Consumer can save up to $1,543 on factory installed + custom options “April 16" 2001 is the deadline Positive response to date 26
Slide 28: PWC Overview - Market
7 ‘Units Gn thousand PWC Overview - Market 1991 - 1995 Industry grew 30*% annually 1996 - 1999 Rapid market decline from regulatory and legislative concerns 2000 + Industry down 10% to 120,000 units 2001+ Resume modest annual growth Worldwide PWC Industry Growth om Buyer Profile + Age 41 + Average h
Slide 29: PWC Business Overview - Polaris
28 PWC Business Overview - Polaris First manufacturer with a model (Genesis i) that complies with EPA's 2006 emission standards Polaris PWC Sales Product Profile in Millions * Eight models + Competitive pricing aR $68 Fp} ytooumn * $5999 to $9499 ($7912 CAGR avg.) 2% + Larger, cleaner and more quiet
Slide 30: Genesis i
29 GENESIS i © PoLanis The Way Out.
Slide 31: PG&A Business Overview - Polaris
30 PG&A Business Overview - Polaris Highest margin business (almost double corporate average) Has grown 32% since 1998 (greater focus placed on product line) Polaris PG&A Sales Product Profile In Millions. “Aggressive goal to grow sales to DR 18-20% $260 million by 2002 CAGR $183 growth —_.New dedic
Slide 32: PG&A Business Overview - Polaris
31 PG&A Business Overview - Polaris © PoLanis ihe Woy Gur
Slide 33: PG&A Sales by Product Line and Business Unit
32 PG&A Business Overview - Polaris Polaris PG&A Sales by Product Line Polaris PG&A Sales by Business Unit ‘pate 2 Accessories om MetOry Non Prod. ors % eI ‘snow 40%, © PcLanris: The Way Out.
Slide 34: Polaris Professional Series
33 Polaris Professional Series -Expanded line of commercial and utility vehicles “ASL available to dealers now *Commercial Ranger 4 x 4 in development +Long-term opportunity to be a significant segment of our overall business
Slide 35: Growth Initiatives (Catalysts)
Growth Initiatives (Catalysts) Alliances © PcLARIS 34
Slide 36: Growth Initiative - Financial Services
35 Growth Initiative - Financial Services + Expansion of Polaris Acceptance joint venture with Transamerica + Create “one stop shopping” for consumers + Expect penetration rates to improve - Retail Credit 8% today eum grow to 20% - Service contracts 4% today ammp> grow to 15% + Operating income up 4
Slide 37: Growth Initiative - International Opportunities
Growth Initiative - International Opportunities +Goal to grow from 6% of sales to 10% by 2005 «Purchased Australian/New Zealand and France distributors “Hired new international VP «Increased sales 34% to $83 million in 2000 from 1998 €> PoLaRnis The Way Out
Slide 38: Growth Initiative - Alliances
Growth Initiative - Alliances + ASV + Dodge trucks + Bass Pro Shops + Remington TM Special Edition Sportsman 500 + DeWalt Tools + Ducks Unlimited + NASCAR sponsorship + Goodyear Tires + Product licensing (Go Carts & Mini-bikes) + Polaris Adventure Tours + Potential acquisitions © PoLanis ihe Woy Gur
Slide 39: Building A Dominant Brand
Building A Dominant Brand Polaris Brand Promise: Polaris promises you a better riding experience that allows you to get away with an unequalled feeling of freedom. Polaris Themeline: “The Way Out.” © PcLanris: 38 "The Way Out.
Slide 40: Building Dominant Brand
39 Building Dominant Brand * Marketing and Advertising - our promise to customers = Clean, sustainable positioning ~ Reinforced with consistent advertising, promotions and partnerships to surround the customer * Distribution - the in-store experience — Drive toward consistently outstanding customer
Slide 41: 2001 Outlook
40 2001 Outlook + 2001 outlook is positive -All product lines are expected to grow sales and earnings -Sales projected to increase 8 - 10% -EPS projected to increase 11 - 14% + Basic strategy and objectives remain unchanged + Initiatives drive improvement under “The Way Out” umbrella -Dealer / store
Slide 42: The Goals
at The Goals. $28 by 2002; $38 by 2007 Grow EPS 2s fast as revenue Bulla dominant brand with Industry leading quality Expand PIE mutiple to 20+ Achioved by . Product innovation - + ATs ‘© 700M business growing double dig © Strong #2 and growing share + Motorcycles ‘© 200-5003 opportunity (© Superior
Slide 43: How Are We Doing So Far?
How Are We Doing So Far? 3Q96 to 1098 2Q98 to 4Q00 % Sales %EPS. %Sales %EPS Growth Growth Growth Growth 3096 3% 15% 2098 10% 12% 4Q96 5 2 3Q98 23 18 1Q97 _-19 8 4Q98 18 26 2097-21 -16 1999 13 13 3997-2 44 20999 18 9 4Q97 6 15 3Q99 8 13 1098 =e -27 4Q99 12 16 1Q00 14 14 2Q00 «6 13 3Q00 2 13 4Q00 & 1
Slide 44: Polaris Contacts
43 Polaris Contacts Tom Tiller CEO Mike Malone CFO Richard Edwards Director, Investor Relations Cela Sandin Administrative Assistant Polaris Industries Inc. 2100 Highway 55 Medina, MN 55340-9770 Phone: (763) 542-0500 Fax: (763) 542-0595 E-Mail: cela.sandin@polarisind.com Web page: www.polarisindustr
Slide 45: 1995 Private Securities Reform Act
44 1995 Private Securities Reform Act Polaris Industries Inc. Disclosure Statement Our presentation and responses to your questions may contain certain statements which may be considered forward looking for the purposes of the Private Securities Reform Act of 1995. We caution you that actual results
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