Arctic Cat Reports Record 2006 Second-Quarter Sales; Second-Quarter Revenues Up 15% Driven by ATV Sales.THIEF RIVER The Thief River is a tributary of the Red Lake River in northwestern Minnesota in the United States. Via the Red Lake River, the Red River of the North, Lake Winnipeg and the Nelson River, it is part of the watershed of Hudson Bay. FALLS, Minn. -- Arctic Cat Arctic Cat is a producer of all-terrain vehicles and snowmobiles in the United States. Located in Thief River Falls, Minnesota, they are a top competitor with other snowmobile companies such as Polaris, Ski-Doo by Bombardier, and Yamaha Motor Company Ltd.. Inc. (Nasdaq:ACAT ACAT See: Automated Customer Account Transfer ) today reported net sales Net Sales The amount a seller receives from the buyer after costs associated with the sale are deducted. Notes: This amount is calculated by subtracting the following items from gross sales: merchandise returned for credit, allowances for damaged or missing goods, freight grew 15 percent to a record $276.3 million for the fiscal 2006 second quarter ended September 30, 2005, compared to $240.7 million in the same period last year. Net earnings for the quarter were $19.2 million, or $0.96 per diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share, versus $19.7 million, or $0.94 per diluted share, in the prior-year period. For the six-month period, net sales rose 12 percent to $384.2 million compared to $343.3 million in the first half of last year. Net earnings were $19.7 million, or $0.98 per diluted share, versus $19.8 million, or $0.94 per diluted share, in the prior-year first half. "We are pleased to report strong revenue gains for the quarter, led by demand for our best-in-class ATV (1) (Advanced TV) An early name for the digital TV standard proposed by the Advisory Committee on Advanced Television Service (ACATS). See ACATS. See also ATV Forum. (2) (Analog TV) Refers to the NTSC, PAL and SECAM analog TV standads. products," said Christopher A. Twomey, chairman and chief executive officer. "As anticipated, earnings were constrained con·strain tr.v. con·strained, con·strain·ing, con·strains 1. To compel by physical, moral, or circumstantial force; oblige: felt constrained to object. See Synonyms at force. 2. by lower margins; however, we continue to aggressively pursue initiatives designed to reduce costs and enhance the company's operational efficiency. Chief among these initiatives is our effort to build more of our own ATV engines, which we expect will strengthen our long-term Long-term Three or more years. In the context of accounting, more than 1 year. long-term 1. Of or relating to a gain or loss in the value of a security that has been held over a specific length of time. Compare short-term. profit margins." During the quarter, Arctic Cat announced that it will build a new ATV engine manufacturing facility in St. Cloud, Minn., in order to meet growing demand for its products. Arctic Cat introduced its first-ever designed and built ATV engine, the 650 H1, in the spring of 2005. The company plans to significantly boost production of the H1 engine this fiscal year. Construction of the ATV engine manufacturing facility is slated to begin in calendar 2006, with the plant operational by 2007. "We expect this new state-of-the-art facility to enhance our competitiveness by increasing our manufacturing efficiency and reducing our ATV engine costs," said Twomey. "In addition, it will provide us with greater flexibility and control over the ATVs we produce to better meet changing customer needs." During its fiscal 2006 second quarter, Arctic Cat repurchased 401,500 shares of its common stock as part of its $20 million share repurchase Share Repurchase A program by which a company buys back its own shares from the marketplace, reducing the number of outstanding shares. This is usually an indication that the company's management thinks the shares are undervalued. program. Product Line Results Sales of Arctic Arctic area of constant cold. [Geography: WB, A:600] See : Coldness (language, music) Arctic - A real-time functional language, used for music synthesis. ["Arctic: A Functional Language for Real-Time Control", R.B. Cat's ATVs grew to $135.8 million, up 35 percent from $100.6 million in the prior-year second quarter. Year-to-date ATV sales increased 27 percent to $177.3 million versus $139.7 million in the first six months of last year. "We are pleased with the progress to-date of our ATV growth strategy to compete in all ATV market segments and to continue to build our international presence in the on-road European market," said Twomey. "As an example of our successful efforts, our innovative new Prowler UTV UTV Ulster Television UTV Utility Terrain Vehicle UTV Unmanned Transport Vehicle marked our first entry into the growing utility vehicle category and was a strong contributor to our ATV sales gains during the quarter." Introduced to Arctic Cat's dealers in June 2005, the Prowler features side-by-side bucket A reserved amount of memory that holds a single item or multiple items of data. Bucket is somewhat synonymous to "buffer," although buffers are usually memory locations for incoming data records, while buckets tend to be smaller holding areas for calculations. See hash table, buffer and variable. seats and a functional, rear cargo bed. The company also expanded its presence in the sport performance ATV category with the introduction in June of the 250 DVX DVX Digital Voice Exchange DVX Dvd Extended DVX Device Driver . As anticipated, sales of Arctic Cat snowmobiles were virtually flat at $111.4 million in the 2006 second quarter versus sales of $112.0 million in the same period last year. Year-to-date snowmobile snowmobile, vehicle designed to travel over snow, ice, and similar surfaces that offer limited traction and weight-supporting capability. As the performance of the vehicle depends to a large extent on keeping its weight as low as possible, there is no enclosure for sales were $163.5 million compared to $162.7 million in the prior-year period. Parts, garments and accessories (PG&A) sales totaled $29.0 million, up 3 percent compared to $28.1 million in the prior-year second quarter. Six-month PG&A sales totaled $43.5 million, an increase of 6 percent versus $40.9 million in the year-ago period. Outlook Arctic Cat currently anticipates fiscal 2006 third-quarter net sales for the period ending December 31, 2005, to range between $189 million and $199 million compared to $188.9 million for the same period last year. Net earnings for the quarter are estimated to be between $0.19 and $0.24 per diluted share versus earnings of $0.28 per diluted share in the prior-year quarter. For the fiscal year ending March 31, 2006, Arctic Cat anticipates record net sales in the range of $710 million to $725 million. The company is continuing to forecast lower margins in fiscal 2006, due to increased raw material costs, lower snowmobile sales and a less favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. yen/dollar exchange rate, resulting in estimated full-year diluted earnings per share diluted earnings per share An earnings measure calculated by dividing net income less preferred stock dividends for a period by the average number of shares of common stock that would be outstanding if all convertible securities were converted into shares of in the range of $1.31 to $1.36. Fiscal 2005 earnings per diluted share totaled $1.36. Conference Call Arctic Cat will host a conference call today to discuss the second-quarter results at 10:30 a.m. CT (11:30 a.m. ET). To listen to the live Webcast or replay of this call via the Internet, go to the corporate portion of the company's Web site at www.arcticcat.com, and click on the conference call icon. A telephone replay also will be available from approximately 12:30 p.m. CT on Thursday, October 20, until 6 p.m. CT on Thursday, October 27. To access the telephone replay, dial 800-405-2236 and enter conference call ID 11041732. About Arctic Cat Arctic Cat Inc. designs, manufactures and markets world-class snowmobiles and all-terrain vehicles all-ter·rain vehicle n. Abbr. ATV A small, open motor vehicle having one seat and three or more wheels fitted with large tires. It is designed chiefly for recreational use over roadless, rugged terrain. (ATVs) under the Arctic Cat(R) brand name, as well as related parts, garments and accessories. Its common stock is traded on the Nasdaq National Market under the ticker symbol Ticker Symbol An arrangement of characters (usually letters) representing a particular security listed on an exchange or otherwise traded publicly. When a company issues securities to the public marketplace, it selects an available ticker symbol for its securities which investors "ACAT." More information about Arctic Cat and its products is available on the Internet at www.arcticcat.com. Forward-Looking Statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. The Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995 provides a safe harbor Safe Harbor 1. A legal provision to reduce or eliminate liability as long as good faith is demonstrated. 2. A form of shark repellent implemented by a target company acquiring a business that is so poorly regulated that the target itself is less attractive. for certain forward-looking statements. The Company's Annual Report, as well as the Report on Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. and future filings with the Securities and Exchange Commission, the Company's press releases and oral statements made with the approval of an authorized au·thor·ize tr.v. au·thor·ized, au·thor·iz·ing, au·thor·iz·es 1. To grant authority or power to. 2. To give permission for; sanction: executive officer, contain forward-looking statements that reflect the Company's current views with respect to future events and financial performance. These forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from historical results or those anticipated. The words "aim," "believe," "expect," "anticipate," "intend," "estimate" and other expressions that indicate future events and trends identify forward-looking statements. Actual future results and trends may differ materially from historical results or those anticipated depending on a variety of factors, including, but not limited to: product mix and volume; competitive pressure on sales and pricing; increase in material or production cost which cannot be recouped in product pricing; changes in the sourcing of engines from Suzuki; warranty expenses; foreign currency exchange rate fluctuations; product liability claims and other legal proceedings All actions that are authorized or sanctioned by law and instituted in a court or a tribunal for the acquisition of rights or the enforcement of remedies. in excess of insured amounts; environmental and product safety regulatory activity; effects of the weather; overall economic conditions; and consumer demand and confidence.
ARCTIC CAT INC.
Financial Highlights
(000s omitted, except per share amounts) (Unaudited)
Three Months Ended Six Months Ended
September 30, September 30,
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2005 2004 2005 2004
--------- --------- --------- ---------
Net Sales $276,270 $240,673 $384,194 $343,267
Cost of Goods Sold 221,188 188,061 306,832 271,699
--------- --------- --------- ---------
Gross Profit 55,082 52,612 77,362 71,568
Selling, General and
Administrative Expenses 26,850 23,908 48,758 42,890
--------- --------- --------- ---------
Operating Profit 28,232 28,704 28,604 28,678
Other Income
Interest Income 29 194 316 403
--------- --------- --------- ---------
Earnings Before Income Taxes 28,261 28,898 28,920 29,081
Income Taxes 9,044 9,247 9,255 9,306
--------- --------- --------- ---------
Net Earnings $19,217 $19,651 $19,665 $19,775
========= ========= ========= =========
Net Earnings Per Share
Basic $0.97 $0.95 $0.99 $0.95
========= ========= ========= =========
Diluted $0.96 $0.94 $0.98 $0.94
========= ========= ========= =========
Weighted Average Shares
Outstanding:
Basic 19,772 20,660 19,894 20,766
========= ========= ========= =========
Diluted 19,930 20,959 20,080 21,052
========= ========= ========= =========
September 30,
---------------------
Selected Balance Sheet Data: 2005 2004
---------------------------- ---------- ----------
Cash and Short-term Investments $62,273 $64,167
Accounts Receivable, net 64,969 76,177
Inventories 120,432 105,605
Total Assets 344,125 329,440
Current Liabilities 143,613 129,465
Shareholders' Equity 186,803 189,387
Three Months Ended Six Months Ended
September 30, September 30,
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Product Line
Data: 2005 2004 Change 2005 2004 Change
----------------------------------------------------------------------
Snowmobiles $111,444 $111,980 0% $163,454 $162,678 0%
All-terrain
Vehicles 135,820 100,558 35% 177,269 139,730 27%
Parts, Garments
& Accessories 29,006 28,135 3% 43,471 40,859 6%
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Total Sales $276,270 $240,673 15% $384,194 $343,267 12%
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