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POLARIS INDUSTRIES INC. COMPLETES PURCHASE OF 24.9% OF KTM Polaris Industries Inc.announced today that it has completed its purchase of a 24.9% interest in Austrian motorcycle manufacturer KTM Power Sports AG, formerly known as Cross Holding AG, through its Austrian subsidiary from an institutional investor. ''This transaction, together with several strategic projects that we are cooperatively exploring with KTM, is part of the strategic partnership with KTM that we announced last month. The announcement was well received by the dealers, employees, suppliers and shareholders of both companies. They share our view that the relationship will provide substantial benefits to both Polaris and KTM,'' stated Polaris CEO Tom Tiller. KTM Power Sports AG (formerly known as Cross Holding AG and currently publicly traded on the Vienna Stock Exchange under the symbol KTM) owns and controls KTM Sportmotorcycle AG, a leading European manufacturer of motorcycles. Under the terms of a share purchase agreement with an institutional investor, Polaris, through its Austrian subsidiary, purchased 24.9% of the outstanding capital stock of KTM Power Sports AG for approximately Euros 62.6 million or approximately $75.5 million. The share purchase agreement provides that Polaris may purchase additional shares in the event that, as currently proposed, the outstanding capital of KTM Power Sports AG is increased on or before August 31, 2005. Polaris'' investment in KTM Power Sports AG is expected to be neutral to Polaris'' calendar year 2005 consolidated earnings per share and somewhat accretive for the full year 2006. The purchase was financed from borrowings under Polaris'' existing bank line of credit arrangement. As previously reported, Polaris and KTM Power Sports AG''s largest shareholder, Cross Industries AG (''Cross''), have entered into option agreements which, under certain conditions in 2007, either Cross may purchase Polaris'' interest in KTM Power Sports AG or, alternatively, Polaris may become the majority shareholder of KTM Power Sports AG. In the latter case, the majority of the purchase price to Cross will be settled in Polaris shares and Cross will become a significant shareholder in the combined Polaris/KTM organization. Cross'' principal shareholders are KTM CEO Stefan Pierer and KTM CFO Rudolf Knunz. The exercise price under both option arrangements are based on market-based, predetermined pricing formulas to be derived from operating results of both companies in 2007.
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