CAT and ASV Forge Ownership Agreement
15 October 1998
CAT and ASV Forge Ownership Agreement; Caterpillar To Acquire Interest in Northern Minnesota Firm
GRAND RAPIDS, Minn., Oct. 14 -- One of the fastest growing
companies in America, A.S.V. Inc. , may grow even faster thanks
to an agreement that has the potential to significantly expand its dealer
base, and provides the cash flow necessary for continued growth.
ASV announced today an agreement with Caterpillar Inc. , the
world's largest manufacturer of construction equipment. Under the terms of the
agreement, Caterpillar will acquire one million shares of ASV stock at $18 per
share and warrants to acquire a majority ownership at $21 per share.
Under the agreement, ASV products will gradually become available to
Caterpillar's worldwide dealer network in more than 200 countries. ASV's
Posi-Track(TM), a rubber-tracked work vehicle, moves over nearly any terrain
with minimal damage to the ground, making it effective in numerous
applications and industries.
Upon closing, Caterpillar will place two members on ASV's board of eight
directors, for a total of ten, and will make various management, financial and
engineering resources available to ASV. ASV, which has achieved 14 consecutive
record quarters, had sales of $24 million in 1997, and is on pace to do more
than $40 million in 1998.
"Many of the issues we've been working on -- expanding our dealer network,
cash flow, and meeting growing demand -- will be solved with this agreement,"
said Gary Lemke, president of ASV. "We've known for 10 years that we're
building, pound-for-pound, the best work vehicle in the world, and we're
gaining awareness and customers every day. With Caterpillar behind us, we
expect to push our company's momentum years ahead of schedule."
Dick Benson, a Caterpillar vice president with administrative
responsibilities for its Diversified Products Division, said ASV's rubber-
tracked technology is what intrigued Caterpillar, and made an association with
ASV attractive to Caterpillar.
"ASV's undercarriage technology allows the Posi-Track to go over nearly
any terrain with high flotation and very low ground pressure -- there really
is nothing like it on the market," Benson said. "By combining ASV's
suspension system technology with Caterpillar's legendary track know-how, ASV
will be ideally positioned to develop new business and new products around the
world."
The agreement, subject to regulatory and ASV shareholder approval, is
expected to be finalized within 90 days. Upon completion, the two sides will
introduce the Posi-Track to Caterpillar dealers, first in North America, then
internationally.
"We have a solid, growing base of dealers, but with Caterpillar, the Posi-
Track could be available virtually everywhere," said Lemke. He added that the
additional cash will be used to ramp up production of the Posi-Track, market
products, and begin development of additional vehicles with Caterpillar.
ASV, which has approximately 110 employees, was founded in 1983 by Lemke
and Edgar Hetteen in the small village of Marcell, Minn. It moved to its
current facility in Grand Rapids in 1995. Hetteen, now 78, also founded both
Polaris Industries and Arctic Enterprises, the two largest snowmobile
companies in the U.S.
"I believe the market for the Posi-Track is much larger than the market
for the snowmobile -- likely well into billions of dollars," Hetteen said.
"To now have Caterpillar behind us, many of the obstacles for developing those
markets have been removed. It's an exciting time here, perhaps even more
exciting than it was at Polaris and Arctic."
With its patent-pending Maximum Traction and Support System(TM)
undercarriage, ASV leads all rubber-tracked, low-ground pressure crawlers in
technology and innovation. ASV is dedicated to quality, reliability and total
customer satisfaction. More information on ASV can be found on its Web site at
http://www.asvi.com.
Caterpillar is the world's largest manufacturer of construction and mining
equipment, diesel and natural gas engines, and industrial gas turbines.
Caterpillar posted record sales in 1997 of $18.93 billion.
The statements regarding ASV Inc. contained in this release that are not
historical in nature, particularly those that utilize terminology such as
"may," "will," "expects," "anticipates," believes," "could," or "plans," are
forward-looking statements based on current expectations and assumptions, and
entail various risks and uncertainties that could cause actual results to
differ materially from those expressed in such forward-looking statements.
Important factors known to ASV that could cause such material differences are
discussed on pages 4 through 6 in the Management's Discussion and Analysis
section of ASV's 1997 Annual Report to Stockholders, and ASV's 10-Q for the
quarter ended June 30, 1998 under the caption Management's Discussion and
Analysis. Additional factors include ASV's ability to obtain the necessary
shareholder and regulatory approvals, consummate the transactions contemplated
by the agreement with Caterpillar, successfully negotiate various financing,
licensing and service agreements with Caterpillar and realize the anticipated
benefits from the relationship with Caterpillar.
Background Information
All Season Vehicles, Inc. (ASV)
The Company
-- ASV designs, builds and markets the Posi-Track(TM), an all season,
rubber-tracked vehicle used primarily in construction, agriculture and
landscaping.
-- ASV was founded in 1983 by Gary Lemke, one of the top snowmobile
dealers in the nation, and Edgar Hetteen, who also founded leading snowmobile
manufacturers Polaris and Arctic Cat.
-- Today ASV's senior management team includes: Gary Lemke, president;
Edgar Hetteen, vice president; Tom Karges, chief financial officer; and Brad
Lemke, national product manager.
-- ASV employs about 110 people at its headquarters in Grand Rapids, Minn.
Posi-Track
-- Its most popular and successful product, the Posi-Track comes in nine
different models and accounts for 98 percent of ASV's current sales.
-- Posi-Tracks perform the functions of skid-steer loaders, small dozers
and small tractors, and have sold well in the markets for such vehicles, like
construction, agriculture and landscaping. In these markets, it competes with
traditional skid-steer and tractor manufacturers such as Bobcat, Case, Gehl
and John Deere.
-- However, the Posi-Track is much more versatile than these other work
vehicles because:
1) Its rubber-tracks allow it to operate on any terrain, be it wet, steep,
fragile or rough;
2) Its patent-pending undercarriage system exerts only two pounds per
square inch of ground pressure (less than a human);
3) Its undercarriage system is maintenance free; and
4) Its quick-attach mechanism allows it to use a variety of attachments,
including loaders, backhoes, augers and planers.
-- So unlike other work vehicles, the Posi-Track is at home in muddy,
boggy or soft conditions, where it won't sink into the ground, or on the golf
course, where it leaves minimal turf disturbance on greens and fairways.
-- Due to its versatility and wide range of applications, there are many
other markets for the Posi-Track that remain to be tapped.
Unique Applications
-- Military -- After being equipped with remote control units, Posi-Tracks
have been extremely successful in the removal of unexploded ordnances
(ammunition and bombs that have not detonated), where they work in bombing
grids too dangerous for humans. These Posi-Track "robots" have also been
deployed to the Middle East to disarm large threats (such as bomb-laden
trucks) that may appear outside of bases. In the future, Posi-Tracks may be
used to locate and disarm anti-personnel landmines.
-- Ski Resorts -- Posi-Tracks are ideal for snow blowing and general
maintenance. Unlike wheeled work machines, they perform well in the snow.
And unlike steel-cleated tracked vehicles, they don't damage finished
surfaces, such as parking lots and sidewalks.
-- Vineyards -- Posi-Tracks are used at the Gallo wineries in California,
where they can work between rows of grapevines without compacting the soil or
creating damaging ruts.
-- Hobby Farms/Ranches -- Posi-Tracks can be found dozing dirt on Ted
Turner's ranches, planting trees in Mary Hart's backyard and maintaining the
lawns at Pierre duPont's Longwood Gardens Estate.
Financials
-- In late 1994, ASV conducted its IPO on the Nasdaq (symbol: ASVI) stock
market with an initial offering of $3.25 a share. Since that time, ASV's
stock has more than quintupled. ASV's analysts currently rate it a "strong
buy."
-- Including second quarter 1998 results, ASV has reported 14 consecutive
quarters of record sales.
-- In 1997, ASV reported over $24.3 million in sales and more than $2.3
million in earnings. It was the fourth consecutive year ASV has doubled its
yearly sales figures.
-- Investors Business Daily rated ASV the 11th fastest growing new issue
in the U.S. since 1990 (1/20/98).
For more information
-- Call 218-327-3434 to request ASV product brochures or annual reports.
Or visit the ASV website at http://www.asvi.com.
-- For financial information, check the following sources:
http://www.nasdaq.com or http://www.abcnews.com.