Arctic Cat Selects Site for New Manufacturing Facility

ST. PAUL, Minn.--Aug. 1, 20051, 2005--

Company to Build New Plant in St. Cloud, MN; Governor Pawlenty Praises Decision

Arctic Cat Inc. today announced that the company will build a new ATV engine manufacturing facility in St. Cloud, Minn., in order to meet growing demand for its products.

Governor Tim Pawlenty commended Arctic Cat for choosing to invest in the state by bringing new economic development and high-paying jobs to St. Cloud.

"Arctic Cat is a Minnesota success story. The company has grown into a leader in the powersports industry and ranks among the state's largest public companies," said Governor Pawlenty. "I am pleased that Arctic Cat will be expanding its operations here and continuing its longstanding commitment as a great Minnesota employer."

Governor Pawlenty was joined at a press conference in the governor's office by Arctic Cat's Chairman and CEO Chris Twomey and St. Cloud city officials.

"We are very pleased with our successful entry into the ATV engine market, and look forward to expanding our production capabilities in St. Cloud in order to meet our future production needs," said Twomey. Earlier this year, Arctic Cat introduced its first-ever designed and built ATV engine, the 650 H1.

The company plans to build a 56,000-square-foot manufacturing facility, which could be expanded in the future to 200,000-square feet. Initially, the site will house Arctic Cat's growing Engine Manufacturing Division and be used to assemble the company's ATV engines.

Twomey said St. Cloud became the logical choice to expand its operations, due to its Upper Midwest location, convenient access to major suppliers and well-educated workforce.

The plant will be located on a 15-acre site, near an additional 40-acre vehicle test track. Construction is slated to begin in 2006 and be completed around year-end, with the plant operational by 2007. The initial investment in the new facility and equipment is anticipated to cost approximately $8 million.

"Arctic Cat has earned a reputation as a technology leader in the production of high-quality, innovative recreational products," said Twomey. "This new state-of-the-art facility will provide us with greater flexibility and control over the ATVs we produce, so that we can better meet our customers' needs. It also will enhance our efficiency and reduce our ATV engine costs."

Arctic Cat initially expects to fill 50 new positions in St. Cloud, and could potentially employ up to 150 people at the site once the new facility is fully operational. The company does not currently anticipate that its expansion in St. Cloud will affect employees at its Thief River Falls, Minn., headquarters plant.

The project will involve several state and local incentives:

-- Through the Minnesota Investment Fund, the state will provide a 10-year, interest-free loan of $500,000 for the facility's development.

-- Through the Minnesota Job Skills Partnership Program, the state will work with Arctic Cat to determine the appropriate educational assistance required.

-- The site also qualifies for the Minnesota Job Opportunity Building Zones (JOBZ) program; if approved, the company would receive local and state tax exemptions through 2015.

-- The City of St. Cloud and the St. Cloud HRA will provide local assistance in locating the new facility in its I-94 Business Park.

The incentives, said St. Cloud Mayor John D. Ellenbecker, were critical in persuading the company to locate to St. Cloud. He said, "Arctic Cat is exactly the kind of high quality company we need to invest in to remain competitive and for our local economy to grow. We are very happy that they have chosen to locate in St. Cloud."

"These investments are critical to maintaining a vibrant Minnesota economy and continued job growth," said Governor Pawlenty. "Arctic Cat's expansion will be an asset to the area and the state."

About Arctic Cat

Arctic Cat Inc., based in Thief River Falls, Minn., designs, engineers, manufactures and markets all-terrain vehicles (ATVs) and snowmobiles 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 "ACAT." More information about Arctic Cat and its products is available on the Internet at www.arcticcat.com.