FALLS, Minn.--(BUSINESS WIRE)--Oct. 7, 1999--Arctic Cat Inc.
(Nasdaq:ACAT), today announced that it is exiting its
personal watercraft (PWC) line of business effective
September 30, 1999. The Company expects to record a pre-tax
charge of approximately $26 million related to the
discontinuation of its Tigershark line of PWCs. These
charges include the cost of closing down the production
line, and supporting its dealers in selling their remaining
PWC inventory and continuing to service their PWC customers.
Christopher Twomey, Arctic Cat president and CEO, said "We
entered this business in 1993 during a time of rapid
industry growth, however, in 1995, after only two years in
the business, PWC North American sales peaked at
approximately 210,000 units and have declined in each of the
last four years to about 110,000 units this model year.
While we are uncertain how far the industry will continue to
decline, at existing levels this is not a profitable market
for Arctic Cat or its dealers. Because of the shrinking
market many of our PWC dealers have already left the
business and more have indicated they intend to leave in the
Continuing, Twomey said "This decision will strengthen
Arctic Cat as we refocus management time and the Company's
significant financial resources on our profitable and strong
snowmobile business and profitable and rapidly growing ATV
product line. With over $90 million in cash and no debt, we
are in a strong position to grow our existing businesses
and, as previously announced, will look for profitable
products to add to our business mix.
"This has been a challenging business especially with the
numerous external threats such as emission regulations, as
well as noise and use restrictions. This year, our new
1100Di PWC exceeded emission level reduction requirements
and for a second year in a row we were able to significantly
reduce product noise levels. However, even with these
exciting achievements we do not believe this industry will
see significant growth in the near future and therefore
further investment cannot be justified."
Twomey added "Our PWC field inventory is at its lowest level
since we entered the business in 1993, which will minimize
the financial impact of this action on the Company and our
dealers. In fact, we expect to remain profitable this fiscal
year despite the charges associated with this decision. In
addition, we expect only minimal workforce reductions as
most PWC employees will have the opportunity to join other
parts of the Company."
Arctic Cat Inc. designs, engineers, manufactures and markets
snowmobiles and all-terrain vehicles (ATVs) under the Arctic
CatŪ brand name, as well as related parts, garments and
accessories. For more information on Arctic Cat, visit the
Company's Website at www.arctic-cat.com.