Arctic Cat to Exit Personal Watercraft Business; Focus on Profitable, Strong Snowmobile and Profitable, Rapidly Growing ATV Businesses.

THIEF RIVER 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 not-to-distant future."

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 Cat(R) 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.

Forward-Looking Statements

The Private Securities Litigation Reform Act of 1995 provides a safe harbor for certain forward-looking statements. The Company's Annual Report, as well as the Report on Form 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 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 in excess of insured amounts; environmental and product safety regulatory activity; effects of the weather; overall economic conditions; and consumer demand and confidence.