Polaris Inc. · NYSE:PII
Polaris — Polaris Industries — Investor Presentation (February 2002)
44 slides from Polaris's investor presentation, Feb 8, 2002
Slide 1: Presentation Materials Dated February 5, 2002
PRESENTATION MATERIALS DATED FEBRUARY 5, 2002
Slide 2: 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 — 3,600 strong * National and internationa
Slide 3: Strong Business Foundation
Strong Business Foundation Products (% of 2001 Sales) Strengths/Opportunities + $840M business + Growth opportunities going forward + Maintain #1 leadership position + Generate cash + Minimum investment > Upside only + $300-500MM long-term opportunity + Superior product features + Highest margin pro
Slide 4: Strong Business Foundation: Growth Initiatives
Strong Business Foundation Growth Initiatives (Catalysts) | Strengths/Opportunities + Rapidly grow retail credit portfolio ° Grow from 6% to 10% of revenue + Become closer to our customer + Brand acquisitions/partnerships AcquisitionsV's = Tom Tiller new CEO in 1999 Over half of the top managers are
Slide 5: Sales 1991-2001
Sales 1991-2001 A Consistent Track Record... sao up $1600 AVES i} 3.6% sao vie) range Saed sitet 120 saat e 1p31 100 600 $520 400 Al i. Aa ee ee ee ne ee ee ee Forecast e= PSLARIS The Way Out.
Slide 6: Earnings Per Share
Earnings Per Share 1991-2001 (diluted) A Consistent Track Record... 10-13% Increase " 4.25%0 $4.40 3450 $4.00 pata $350 $350 $307 3300 $272 $245 9250 $224 g2ag $200 150 000 4 Pevaris The Way Out.
Slide 7: Historically Not Sensitive to Negative Economic Changes
Historically Not Sensitive to Negative Economic Changes s1o00 g900 $600 s700 3600 $500 $400 Net Income (millions) $300 Cansumer Confidence Index 200 100 son + “Polaris NetIncome —®-CCI cA The Way Out
Slide 8: Product Cost Reduction Efforts
Product Cost Reduction Efforts Gross Margin Percentage 23.4 — 23.6% +60 to +80 Basis Points 24.0% 23.5% 23.0% 22.5% 22.0% 21.8% 1999 2000. 2001 2002 Forecast Initiatives taken to improve gross margins include: + Roseau manufacturing facility redesign + EDGE snowmobile chassis + ATV model platform co
Slide 9: Cash Flow
Cash Flow Before Changes in Working Capital items and Deferred Taxes A Consistent Track Record... $160 $147 $140 $127 $115 $120 $107 $95 $97 $100 $37 $89 $80 $60 $59 $40 $46 $40 Af $0 + 1991 1992 1993 1994 1995) Dollars (in millions) 1996 1997 1998 1999 2000 2001 4 Pevaris The Way Out.
Slide 10: Return on Shareholders Equity
Return on Shareholders Equity Significantly Above Industry Average 50% 2 AT ao 1% a, 2% wee 44% 45% 41% Az 41% 40% 40% ae 31% 30% 24% 25% 20% 15% | 10% 5% 0% i991 1992 1998 1994 1995 1998 1997 1998 1999 2000 2001 o> PSLtaARIs The Way Out.
Slide 11: Debt to Total Capital Ratio
Debt to Total Capital Ratio Ample Credit Capacity 25% 19% 19% 1991 1992 1998 1994 1995 1998 1997 1998 1999 2000 2001 4 Pevaris The Way Out.
Slide 12: Share Repurchases
Share Repurchases Cumulatively to date have repurchased 6.9 million of 9.5 million authorized for a total of $233 million. In Millions In Millions 20 $60 252 $49 15 15 $50 16 $40 $40 $38 = 12), $40 1.0 $30 05 $20) g44 a5 | | #10 il aot got 1996 1997 1998 1999 2000 2001 1996 1997 1998 1999 2000 2001
Slide 13: A Solid Investment
A Solid Investment Total Return to Investors tg.6% December 29, 2000 - December 31, 2001 Polaris Russell2000 NASDAQ DowJones S&P 500 December 31, 1996 December 31,2001 Polaris Russell 2000 Dow Jones 22>, PSLARIS Sap 500 The Way Out.
Slide 14: ATV Overview
ATV Overview Market 1992-97 Industry averaged 12%|annual growth BuyerProfile 1998-99 Industry averaged 23% annual growth + 40% first time buyers 2000 Industry growth 199% + Male, married, age 41 2001 11% growth despite slowing econamy : ieee 21000) 2002 Average annual growth moderate to upper FarmRa
Slide 15: Polaris ATV
Polaris ATV Polaris entered ATV market in 198 Polaris increased retail sales every year since 1989 2001 Highlights Polaris ATV Sales + Retail sales up 4% for 2001; wholesale aaa sales lower due to mare competitive $840 } 35% market place and the Company lowered Growth field inventories $753 + Introd
Slide 16: Sportsman
Sportsman 700 + Strongest, most powerful ATV - new, durable, heavy duty chassis + Liquid cooled 700 Twin engine + Industry-leading independent rear suspension and True On Demand 4x4 drive system + First Polaris domestic engine in ATVs
Slide 17: RANGER
RANGER 4 x 4 *Two New Models: — Ranger 2x4 — Ranger 4x4 +High Clearance, Smooth Ride +Unbeatable Hauling & Towing ¢On-Demand True 4 Wheel Drive
Slide 18: Motorcycle Overview
Motorcycle Overview Market 1992-98 Cruisers averaged 15%) growth 1999 Cruisers grew 21% = | 2000 Industry cruiser growth 20% ta 220,000 units Victory Buyer Profile 2001 19% growth 2002 Average annual growth rate 10% + + Enthusiasts — owners of multiple bikes + Current Polaris customers Motorcycle In
Slide 19: Polaris Victory
Polaris Victory Victory production started July'4, 1998 Victory Sales 2001 Highlights + New V92C Deluxe madel being well received + New "Freedom" engine introduced with 25% more power and 10% better fuel economy $20 In excess + Introduced the new V32TC Touring $19 of 25% Cruiser + Continued ta build
Slide 20: Victory V92TC
VICTORY V92TC _ Touring Deluxe 2 Pevaris The Way Out.
Slide 21: Snowmobile Overview
ws SNOWMOB' LE Seema 1993-96 Industry averaged 18% annual growth 1997-00 Industry absorbs growth & poor weather (flat-down) 2001 Approximately flat 2002 Early season sales are better than 2001 Worldwide Snowmobile Industry Growth Season 2001 growth: a about flat 1983 1994 1995 1998 1997 1998 1993 20
Slide 22: Polaris Snowmobiles: Industry Market Share Leader
Polaris has been Industry Market Share Leader for 12 consecutive years Snowmobile Sales $380 — Down in the single-digit 22 BZ gy range a” OC Foreoart ‘ear Market CAGI Polaris Snowmobiles 2001 Highlights + Sales up 22% aver last year + Innovative Snow Cheok Select™ order option program introduced ear
Slide 23: Edge X
600 Edge X SlARiS The Way Out.
Slide 24: Customized Snowmobiles
Customized Snowmobiles + New program for 2002 model year + Options include choice of suspension, color, track, engine, shock, reverse and electric start + Consumer can save up to $1,543 on factory installed custom options + Pre-order sales up nearly 50% over last year + Margin of pre-ordered snowmob
Slide 25: PWC Overview
PWC Overview Market 1991-1995 Industry grew 30+% annually 1996-2000 Rapid market decline tram regulatory and legistative cancers 2001 Industry down 10% to 115,000 units 2002+ Modest industry growth resumes after economy Buyer Profile improves Worldwide PWC Industry Growth + Age 41 + Average househol
Slide 26: Polaris PWC
Polaris PWC First manufacturer with a model (Genesis i) that complies with EPA's 2006 emission standards Polaris PWC Sales 2001 Highlights + Inventories remain at manageable levels $68 + Gained market share in 2000-2001 seasan Down mid. ~ single digit nOOD + Introduced new entry-level boat $54 calle
Slide 27: Freedom
FREEDOM 4p Pevcaris The Way Out.
Slide 28: Polaris PG&A Sales
In Millions Polaris PG&A Sales $158 71008 $183 am 21 am Ea Forecast 10-15% growth Polaris PG&A 2001 Highlights Wholesale sales up 15% Introduced mare than 1,000 new products Upgrading service and product quality across the line Leveraging expanded productline, sales force, and installed product base
Slide 29: PG&A Business Overview
PG&A Business Overview Polaris +Highest margin business (almopt double corporate +Has grown 52% since 1998 (greater focus placed on product line and quality) 2001 Sales Breakdown Parts 51% Apparel 11% < ‘Accessories 38% Victa D% Non-Product 9% Snowmobiles oN Pwo 4% ATV/ RANGER 45% iPovaris The Way O
Slide 30: Home Owner
HOME OWNER 45, PSctARIS The Way Out.
Slide 31: Polaris ASL, Utility Task Vehicles, ATV Pro
Polaris ASL 300 Utility Task ATV Pro (All Surface Loader) Vehicles (UTV) 4x4, 6x6 2x4, 4x4, 6x6 + Expanded line of commercial and utility vehicles + 2002 potential sales of approximately $25 million + Additional products to be added soon + Long-term opportunity to be a significant segment of our ove
Slide 32: Growth Initiative: Financial Services
Growth Initiative Financial Services Polaris Financial Services Wholesale Retail eueneed Consumer & Financing Financing ‘ervice Dealer Contracts Insurance [ pete So L + Partnered with — Fee income from + Fee income from THEN TOE Household IRR EEE contracts written Le mes tae ct “Provides consumer —_
Slide 33: Financial Services: Loan Receivables
Financial Services Wholesale Financing inancing Loan Receivables December 31, Mitions 9551 om $502 $472 $500 $400 $300 $200 $100 % 1999 20002001 Loan Receivables $200 $180 $160 S140 $120 $100 $80 December 31, $181 $100 $50 1999 2000 2001 45, PSctARIS The Way Out.
Slide 34: Financial Services: Income
Financial Services Millions $16.0 sa0 e120 $100 sa0 Income from Financial Services Future goals: $a Sta $97 19920002001 Avg.Retunon 354 ggy 28% Investment Year CAGR: 2002 Forecast Down approx. 10% due to lower interest rates - Create “one stop shopping” for consumers -Expect penetration rates to imp
Slide 35: Financial Services: Wholesale Financing
Financial Services Wholesale Financing — Polaris Acceptance - Provides floor plan financing to Polaris’ dealers in the U.S. Business Structure Potential Benefits/Risks -Equal parmership with Transamerica called Polaris Acceptance (PA) -Formed in 1996 and has operated ata profit each year -Receivable
Slide 36: Financial Services: Retail Financing
Financial Services Retail Financing - Household - Provides private label retail credit to Polaris’ consumers through Polaris dealers in U.S. Business Structure Polaris benefits/Risks -Beginning in 1999 retail credit was extended through the Transamerica/Polaris Acceptance partnership. In October 200
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 43% to $88 million in 2001 from 1998 Sales up 6% in 2001 45, PSctARIS The Way Out.
Slide 38: 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.” The Way Out.
Slide 39: Building a Dominant Brand
Building a 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 satis
Slide 40: Upgrading Distribution Channels: Today
Upgrading Distribution Channels Today...
Slide 41: Upgrading Distribution Channels: The Goal
Upgrading Distribution Channels The goal... Drive toward consistently outstanding customer satisfaction Larger, more profitable, better managed dealerships supported consistently by Polaris through: — Co-op advertising program — Store Merchandising program Historically have seen an average increase
Slide 42: How Are We Doing So Far?
How Are We Doing So Far? 396 to 1998 2998 to 4Q01 %Sales % EPS %Sales — %EPS Growth Growth Growth Growth 3096 3% =15 % 2098 10% 12% 4Q96 5 2 3098 23. 18 1097-19 8 4a98 18 26 2097-21 -16 1099 13 13 3097 2 44 2099 18 Q 4097 6 15 3099 8 13 1098 7 27 4099 12 16 1000 14 14 200 6 13 300 2 13 400 8 5: 1001
Slide 43: In Summary: Why Buy Polaris?
In Summary..... Why Buy Polaris? ¥ 48 year track record + 20 consecutive years of earnings growth « 15 consecutive quarters of sales & EPS growth y¥ Proven product and marketing capability ¥ Strong brand ¥ Strong balance sheet ¥ Extensive engineering, manufacturing and purchasing resources ¥ Signifi
Slide 44: 1995 Private Securities Reform Act
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 co
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