Polaris Inc. · NYSE:PII
Polaris — Polaris Industries — Merger or Acquisition (July 2005)
20 slides from Polaris's merger presentation, Jul 19, 2005
Slide 1: Polaris / KTM Strategic Partnership
Polaris / KTM Strategic Partnership July 19, 2005
Slide 2: Who is KTM? Background and Operations
Who is KTM? Background Austrian-based company founded in 1953 Largest non-Japanese off-road motorcycle company in the world Best known for its racing heritage, the company has won 106 world championship titles KTM's philosophy is to develop engines and chassis for racing and then transfer it to seri
Slide 3: Who is KTM? (con't) Performance
Who is KTM? (con't) Performance Sales of Euro 402 million (+7% growth) for latest fiscal year ended August 31, 2004 Unit volume of motorcycles sold in fiscal year 2004 was approximately 76,800, up 9% KTM has experienced 12 consecutive years of increasing sales Source: KTM website at www.KTM.com. Fir
Slide 4: KTM Financial Performance
KTM Financial Performance The financial information of KTM Group GmbH set forth above is contained in certain audited financial statements of KTM Group GmbH for the fiscal years ended August 31, 2004 and 2003 (the "KTM Group Financial Statements"). The KTM Group Financial Statements have been furnis
Slide 5: Strategic Rationale
Strategic Rational Meets desire for manufacturing capabilities in Europe Enhances our product innovation capabilities Expands powertrain capabilities Compliments our growth initiatives: Strengthens both our Victory and ATV businesses Allows us to expand globally more quickly, from both a distributio
Slide 6: Polaris' Long-Term Goals
Polaris' 5 Year Goals The KTM partnership helps ensure a successful future for Polaris; it "fits" with Polaris' long-term goals Our expectation is that the partnership at maturity potentially will contribute to Polaris' three primary goals, which are: Grow sales to $3 billion by 2009 Expand net inco
Slide 7: The Goals and Growth Initiatives
The Goals . . . . Grow. $3B by 2009 Expand net margins to 9% Build a dominant brand with industry-leading product quality and distribution Achieved by . . . . Growth Initiatives A leaner, stronger, more profitable dealer network. 1500 - 1700 in North America. A bigger, stronger Victory motorcycle bu
Slide 8: Transaction Overview: Phase I
Transaction Overview Two-Phase Process Phase I: Approximately a two-year term Polaris purchased a 24% stake in KTM Power Sports AG, formerly known as Cross Holdings AG, the holding company that owns and controls KTM, for approximately $80 million, which is approximately a 12 percent discount to the
Slide 9: Transaction Overview (cont.): Phase II
Transaction Overview (cont.) Two-Phase Process Phase II: End of two-year term The partnership may be extended or expanded subject to certain option agreements and based on predetermined pricing formulas derived from operating results of both companies in 2007 Polaris has entered into a call option a
Slide 10: Transaction Overview (cont.): Transaction Benefits
Transaction Overview (cont.) Transaction Benefits Lower financial, cultural and execution risk than typically associated with outright acquisitions By first entering into a strategic partnership through collaborating on specific projects we can better assess the synergies and compatibility of our tw
Slide 11: Financial Impact: Transaction Related
Transaction Related A one-time cash payment of approximately $80 million will be made upon final regulatory approval Polaris will own 24% of KTM Power Sports AG, formerly known as Cross Holdings AG, a holding company which owns a majority of KTM The 24% equity investment will be recorded on the Pola
Slide 12: Financial Impact (cont.): Sales and Earnings Per Share
Polaris' Sales The 24% investment in KTM does not have a direct impact on Polaris' full year 2005 sales. As a result, the Company's sales guidance will remain as previously stated at 7 to 10 percent growth Polaris' Earnings Per Share The 24% investment in KTM is expected to be neutral to earnings pe
Slide 13: Forward Looking Statements
These presentation materials contain forward-looking statements that involve certain risks and uncertainties that could cause actual results to differ materially from those forward-looking statements. Potential risks and uncertainties include such factors as product offerings; promotional activities
Slide 14: Exhibits
Exhibits Exhibit A: Motorbike Market Statistics Exhibit B: KTM's Product Offerings Exhibit C: Brand Comparison Note: More information about the Polaris/KTM relationship may be found at www.polarisindustries.com under the Investor Relations section
Slide 15: Exhibit A: Motorbike Market Statistics
Exhibit A: Motorbike Market Statistics Off Road Motorcycle Market 2004 world-wide market is estimated to be 495,000 units KTM's world-wide market share is approximately 13% KTM's European market share is 25% compared to 6% in the U.S. KTM holds the #2 share position in U.S Enduro market at approxima
Slide 16: Exhibit B: KTM Product Offerings
Exhibit B: KTM Product Offerings Motocross Segment: Motocross motorcycles are designed for racing on a closed track less than one mile long. Motorcycles in this segment are developed with a rigid chassis and specialty suspensions engineered to support the demands of racing, jumps and other aggressiv
Slide 17: Exhibit B: KTM Product Offerings (cont.)
Exhibit B: KTM Product Offerings (cont.) Youth Racing: Designed for competition similar to Enduro motorcycles, youth racing bikes are used by riders who compete at the youth level and want to develop their riding skills so they can advance to Enduro or motocross racing. These bikes look like adult c
Slide 18: Exhibit C: Brand Comparison
Exhibit C: Brand Comparison Polaris Industries KTM1 1. Began building snowmobiles in 1954 in Roseau, Minnesota Began building motorcycles and mopeds in 1953 in Mattighofen, Austria 2. Company was founded by Edgar Hetteen, Allan Hetteen and David Johnson in a small Roseau workshop Company was founded
Slide 19: Exhibit C: Brand Comparison (cont.)
Polaris Industries KTM1 5. In 1981, an investment group headed by Hall Wendel purchased Polaris and helped it emerge from financial hardship by focusing on a broader range of high-quality products In 1992, an investment group including Stefan Pierer, Rudi Knunz and Hans-Joerg Hofer reopened the comp
Slide 20: Exhibit C: Brand Comparison (cont.)
Polaris Industries KTM1 8. Polaris' on-road motorcycle (Victory) division is growing at a strong pace KTM is developing its on-road motorcycle division 9. Victory is working to strengthen its presence in the motorcycle market in the U.S. and eventually abroad KTM is the world's largest non-Japanese
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