by Gus Breiland

Polaris Industries, Inc And KTM Announce Strategic Partnership
MINNEAPOLIS, July 19, 2005 – Polaris Industries Inc. announced today that it will purchase a 24-percent interest in Austrian motorcycle manufacturer KTM Power Sports AG, formerly known as Cross Holding AG, and partner with KTM on several important strategic projects. The goal of the partnership is to strengthen the competitive position of both companies and provide tangible benefits to customers, dealers, suppliers and shareholders.

During the first phase of the partnership, each company will continue to be run separately, but will work together on several specific cooperative projects involving new product development, engine technology sharing, distribution, manufacturing, and purchasing. This initial phase of the partnership will last approximately two years and, in addition to the cooperative projects, will involve the following:

-Polaris will purchase a 24-percent stake in KTM Power Sports AG from an institutional investor for 66.6 million Euros or approximately $80 million funded from Polaris’ existing bank line of credit arrangement. This represents approximately a 12 percent discount to the market value of the shares purchased reflecting the size of the block of shares purchased and the fact that the shares are thinly traded. KTM Power Sports AG (formerly known as Cross Holding AG, which is publicly traded on the Vienna Stock Exchange under the symbol CRO), owns and controls KTM Sportmotorcycle AG, a leading European manufacturer of motorcycles with fiscal year 2004 revenue of over 400 million Euros. Over its history, KTM has earned a reputation for providing class-leading, ready-to-race, off-road motorcycles and recently has entered the on-road motorcycle segment. This transaction, subject to customary closing conditions and regulatory approval, is expected to close during the third quarter of 2005. The actual number of shares purchased and the purchase price are subject to reduction depending upon the number of shares of KTM Power Sports AG outstanding on the closing date. Polaris CEO Tom Tiller is expected to be named to the KTM Supervisory Board after the closing date of the transaction.

KTM CEO Stefan Pierer is expected to be named to the Polaris Board of Directors after the closing date of the transaction. The investment in KTM Power Sports AG is expected to be neutral to calendar year 2005 Polaris consolidated earnings per share and somewhat accretive for the full year 2006. There are no changes in employment anticipated at either company as a result of this announcement.

Additionally, Polaris and KTM Power Sports’ 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 Knünz. 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.

“I believe this partnership will provide substantial benefits to both Polaris and KTM, and both company’s dealers, employees, suppliers and shareholders for many years to come,” said Tiller. “We have long admired the success of KTM, and are excited about working together to strengthen both companies. Polaris can benefit from KTM’s substantial experience in motorcycles, an outstanding brand, leading technology, and a solid manufacturing presence and dealer network in Europe. Moreover, this relationship complements nearly every aspect of Polaris’ five-year strategic vision, which is a roadmap to make Polaris the most dominant brand in the powersports industry. Further, we believe the two-step approach we have outlined significantly lessens the cultural and execution risk associated with a partnership of this magnitude.”

Mr. Pierer commented, “Polaris and KTM complement each other very well, and we are very excited about our new relationship. By joining forces, we believe we can strengthen KTM’s presence in North America, reduce our production costs, spread our development costs over a larger base, and substantially accelerate our entry into the ATV business. We also look forward to sharing both chassis and engine technology with Polaris. The KTM and Polaris teams should work well together – both companies are driven by innovation, passion, and demand success.”

Could we see a birth of an American made Dirt Bike? An American Dual Sport…or heaven forbid an American sport bike. Imagine, a company that might even listen to the masses and put together an American Sport Touring Bike? And no, MMM does not consider the Buell to be a sport touring bike. Angry email please include, “Gus Breiland is a moron” in the subject line.

World Sidecar Land Speed Record Broken
New Zealander Glenn Hayward, driving a 1000 c.c. machine dubbed the Flying Kiwi, shattered the 19-year-old world speed record for motorcycle and sidecar on Tuesday, July 17th 2005, over a stretch of highway on New Zealand’s South Island. Riding with a 60 kg weight in the sidecar, Hayward reached a two-run average of 272 kph (170 mph), eclipsing the previous record of 222 kph (139 mph).

Covering 100 meters every 1.3 seconds is traveling at quite a pace – a world record pace in fact for a couple of serious motorcycle enthusiasts from New Zealand’s South Island who have created the fastest bike with a sidecar ever built. Glenn Hayward and Phil Garret took their ‘Flying Kiwi’ to a teeth- chattering 272 kilometers per hour (170 miles per hour) along an ordinary stretch of open road – minus the traffic of course. Tuesday’s record breaking run was supposed to have been just practice, but conditions became good enough for Hayward to open the throttle as far as it would go.

It’s taken three and-a-half years and around US$ 140-thousand of investment to overtake the previous record of 222 kph (139 mph), set back in 1986… and the initial reaction was one of relief rather than elation. Phil Garret, the team leader, also broke the old record with a run averaging 264 kph, but had to concede that his teammate was the quickest.

But the record attempts don’t stop here. Garret wants to take the Flying Kiwi to Australia – or even the salt flats of Utah, to see what the machine can really do.

MMM argues that this isn’t really a true test of speed until they reach 205 on the Flood Run.

No Taxation Without Representation—British Propose Per Mile Tax
The British Department of Transport is set to reveal plans for a new road charge scheme, which charges for every mile you cover. The pilot programs set-up within two years, although the plans are unlikely to become reality before 2015.

Road use would be measured by satellite tracking, with quiet country lanes costing 2p a mile, and the busiest areas costing £1.30 ($2.28). And riders would need to have tracking devices fitted. There’s currently no official line on whether motorcycles will be included, with the Transport saying that they can’t answer any specific questions, but it could see bikes and cars priced off the roads.

As an example, commuting ten miles in rush hour at the top price would cost £13 ($22.82) one way. To get home during rush hour doubles it to £26 ($45.64). And work five days a week and you’ll be paying £130 ($228.15) just to get to and from work. Do that every week and you’ll pay £6760 ($11,863.81) just to commute.

Kinda takes the fun out of owning anything with a motor. It just goes to show that when a human finds a way to have fun and enjoy life, government is there to put their boot on your neck and make you pay. Find a cardboard box and a tinfoil hat to play paddy cakes with your imaginary friend. But make sure you have a plan for when imaginary friends are no longer dependants in 2008.

Loud Pipes Raise Revenue
New Hampshire motorcycle riders will face stiffer penalties for bikes that are too loud under House Bill 326. House and Senate members of a conference committee came to agreement on legislation banning so-called “straight pipes” on exhaust systems which Seacoast police chiefs have said lead to excessive noise and a lot of complaints from residents in the summer. The committee agreed to keep the current testing system in place, but increase the fines for violating the 106 decibel level from $43 to $100 for a first offense, and up to $300 for subsequent offenses.

Current law does ban straight pipes, but according to House Transportation Committee Chairman Sherman Packard (R-Londonderry), the language of the law is a bit ambiguous. Current law prohibits any person from operating a motorcycle that has a measured noise level of more than 106 decibels. The full House and Senate must now approve the measure, which takes affect 30 days after passage.

So put on those life savers and head on out to Laconia. Hew Hampshire is a beautiful state and your fine dollars will make the roads so much nicer to ride on while I am out there to watch the fall colors on my stock piped bike. Odd how one of the more “freedom” loving states finds loud pipes so annoying that they are willing to fine said “right”.

M.M.M

 

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