polaris atv sales up 24

According to Polaris officials, the Minnesota-based firm's Polaris ATV (all-terrain vehicle) sales growth continued to accelerate in the second quarter of 2003, increasing 24 percent over last year's second quarter. The Sportsman line of ATVs, including the Sportsman 600 and 700, continues to sell well in the premium segment of the ATV market and the all new Predator 500, which was named "Sport ATV of the Year" by three industry publications, continues to gain market share in the sport segment.

The RANGER line of utility vehicles sales increased sharply during the second quarter while sales of Polaris ATVs outside of North America continued to grow, increasing 80 percent during the second quarter of 2003. The all new Polaris ATP (all-terrain pickup with turf, two and four wheel traction options) also added to the sales growth during the second quarter. Dealer inventory of ATVs at June 30, 2003 is at comparable levels to a year ago.

Polaris PGA Up Overall

Sales of Parts, Garments and Accessories increased four percent during the second quarter of 2003 over the second quarter 2002 with sales of ATV and Victory motorcycle related PG&A items showing strong double digit growth during the quarter partially offset by lower snowmobile PG&A sales. The main focus of the PG&A business remains unchanged: adding product offerings to its line-up, improving overall product quality and continuing to emphasize selling solutions to the customer.

Vegas Is A Victory for Sales

Sales of Victory motorcycles increased 124 percent during the second quarter 2003 from last year's second quarter. The increase is attributable to the continued market place acceptance of the all new Vegas model, which was named the year's best cruiser motorcycle by three leading motorcycle enthusiast magazines, as well as the timing of shipments as Vegas production and shipment ramped up during the second quarter. Sales of Victory motorcycles for the year-to-date period ended June 30, 2003 increased 58 percent from the comparable period in 2002.

New PWC Score Increases

Polaris' Personal Watercraft (PWC) sales increased 157 percent during the second quarter 2003 compared to the second quarter 2002. Timing of shipments between the first and second quarter of 2003 as compared to 2002 was the primary reason for the increase as Polaris shipped a large number of the all new high performance MSX models to dealers during the second quarter of 2003. The MSX is designed with cleaner and quieter engine technology and a new more aggressive hull design which have been well received in the marketplace. Sales of PWC for the year-to-date period ended June 30, 2003 increased 16 percent from the comparable period in 2002.

Lack of Snow Hurts Sled Sales

Snowmobile sales decreased 68 percent during the second quarter 2003 compared to the second quarter 2002. The lack of snowfall in the last two riding seasons, particularly in the Midwest, is the overriding factor in the anticipated decline in snowmobile sales for the full year 2003. Dealer carryover inventories of snowmobiles remain at unusually high levels and the Company has adjusted current model year production downward to compensate for the high inventory and slower sales. In order to ease the pressure of the dealer snowmobile carryover inventory, the Company delayed initial shipments of the 2004 model year snowmobiles until late in the second quarter 2003.

Polaris Profits Up

Gross profit, as a percentage of sales, was 20.6 percent for the second quarter 2003, an improvement from 20.5 percent in the comparable quarter of 2002.

The modest gross profit margin improvement for the quarter was generated by a number of Company initiatives that have been in place for several quarters now, including efficiency gains from the Roseau facility redesign; sales mix change resulting from the new products introduced over the past several quarters; growth in higher margin PG&A sales; savings from various cost reduction initiatives; higher margin in the international business generated from the new dealer direct distribution model in Great Britain, Sweden and Norway and the continued positive impact of currency fluctuations.

However, higher levels of promotional expenses incurred and the sales mix impact of shipping less snowmobiles during the second quarter 2003 offset nearly all of the positive improvements generated from the Company initiatives.

For the second quarter 2003, operating expenses increased five percent. This increase was primarily due to the continuation of initiatives taken to accelerate the design and introduction of new products and improve the dealer channel.

Research and development expenses increased six percent for the second quarter 2003 as the Company works to reduce the lead time for designing, developing and introducing new products as well as to increase the success rate of new product introductions.