A Strategic Partnership in the field of POWER SPORTS Vehicles! Together, both companies share the full assortment of our sports vehicles and they are the largest manufacturers in the POWER SPORTS segment outside of Japan, with a combined turnover of USD 2.4 billion. Through this co-operation, KTM can intensify its presence in North America and accelerate its entry into the ATV segment. The KTM POWER SPORTS AG and POLARIS Industries Inc. are entering into a strategic partnership, which is limited to a two-year period during its initial stage. Thereafter both partners can independently decide whether the partnership shall be continued or to what extent the alliance shall be deepened. Both companies shall continue their business activities as independent entities In the future as well. In the past business year (2004), POLARIS Industries Inc. achieved a turnover of approx. USD 1.8 billion with 270.000 units sold. As the largest non-Japanese manufacturer of ATV’s, snowmobiles (world market leader), 4×4 utility vehicles and “Cruiser”-Motorcycles under the brand name VICTORY, POLARIS is primarily active in the North American market. Upon commencement of the partnership, POLARIS Industries Inc. shall purchase a 24% share from the KTM POWER SPORTS AG, which owns 99,77% of the KTM Sportmotorcycles AG. It is contemplated that Stefan Pierer, managing director of the KTM POWER SPORTS AG, shall be nominated for a seat on the Board of Directors at POLARIS and that Tom Tiller, the chairman of the board (CEO) of POLARIS, be simultaneously nominated for a seat on the KTM supervisory board. During the first two years, the strategic partnership includes the following segments: Distribution: KTM has a strong distribution network in Europe – POLARIS has a similar position in North America. Each company should profit from its respective partner’s strength. In selected European countries (Germany, Czech Republic, Slovakia) the distribution of the POLARIS product range will be handled through KTM. Product development: The exchange of know-how and R&D capabilities has the joint objective of accelerating development processes and increasing the rate of innovation for both companies. Manufacture: During the initial stage, KTM will supply engines to POLARIS. Also it is planned that KTM will do the final assembling of POLARIS ATVs in Mattighofen for the European market. With production sites on both continents there is the possibility for both companies to hedge against foreign exchange exposure. With POLARIS and KTM, two partners have found each other who can both point to exceptional economic successes and a dominant position in their respective business sectors. Furthermore, POLARIS and KTM share a very similar culture, in which the focal point is the “passion to ride”. Two strong brands, established distribution networks and above all the companies’ matching objectives – to become together the dominating power in the global POWER SPORTS business – are the basis of this strategic alliance, from which both companies shall profit.