Arctic Cat to Build Its First ATV Engine

THIEF RIVER FALLS, Minn.--May 1, 20043, 2004--

New 650 H1 Engine Designed by Arctic Cat; Engine to Become Available on Company's 650 ATV in Late 2004

Arctic Cat Inc. today reported that it has designed and will assemble its first ATV engine, called the 650 H1, which will debut on a new Arctic Cat 650 H1 4x4 Automatic ATV later this year. The 650 H1 engine will be assembled near the company's headquarters in Thief River Falls, Minn., at a new, state-of-the-art 24,000 square foot facility.

"The introduction of the H1 is a strategic first step in our new engine program," said Christopher A. Twomey, Arctic Cat's chairman and CEO. "While we enjoy excellent relationships with our current engine suppliers, having the capability to design and build our own ATV engines will enable us to offer customers more choices, provide excellent value and enhance our long-term competitive position."

Arctic Cat Creates ATV Engine Division

The new engine was designed by a highly specialized team of professionals that make-up the all-new ATV Engine Division within Arctic Cat. The Engine Division was conceived in the summer of 2000. To staff the team, Arctic Cat assembled expert engineers acquired from outside companies, well-known German engine design firms and existing Arctic Cat employees with unmatched experience within the disciplines of clutching, quality control and field test.

The H1 was designed and built using the latest manufacturing technology to ensure exact, quality standards. Each new engine will be thoroughly tested before being placed in an ATV. Tests include the ultra-modern Cold Spin Test, employed by manufacturers such as the "Big 3" automakers, which checks a multitude of required specifications including compression, valve and ignition timing, and a leak test, all while the engine is "cold" and not running. A separate "hot test" checks operating conditions, torque and horsepower, among other parameters, to ensure exact tolerances. The combination of both testing methods make Arctic Cat unique in requiring such rigorous quality standards.

"The H1 engine will provide an excellent combination of power, durability and value to our ATV line," Twomey said. "Moving forward, our intent is to build and continue to source the best engines that meet the requirements of our customers."

New H1 Engine

The engine's "H1" name comes from its hemispherical-shaped cylinder head and single-cylinder design. Its single-cylinder design gives the new 650 H1 a broad powerband, with an emphasis on low- and mid-range torque, that provides optimal power for pulling under heavy load or quick acceleration on trail rides.

The liquid-cooled, single-cylinder 641cc four-stroke features the Duramatic automatic transmission (with Hi-Lo range), electronic push-button two-wheel and four-wheel drive, and engine braking. It is fed by a 40mm Keihin carburetor with electric choke. With liquid cooling and a thermostatically controlled auxiliary fan, the H1 engine delivers consistent operation in all conditions.

About Arctic Cat

Arctic Cat Inc. 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 at www.arcticcat.com.