Arctic Cat making changes

[grantnelson00]

(from the Grand Forks Herald)



Arctic Cat Inc., the snowmobile and all-terrain vehicle manufacturer founded and based in Thief River Falls, will relocate its headquarters and key corporate personnel to the Minneapolis area by fall, the company announced Tuesday.

Manufacturing operations will remain in Thief River Falls, while the headquarters, with certain corporate executives, general managers and sales and marketing personnel, will move to the Twin Cities. Fifteen positions are affected.

"The new location will improve operating efficiency of this group by placing them closer to many of their business partners who are already located in this area," Arctic Cat Chairman and CEO Christopher Twomey said in a conference call Tuesday.



Arctic Cat
The move is expected to cost Arctic Cat about $1.6 million, or 9 cents per share, in fiscal 2008.

"It's a good move for Arctic Cat," Thief River Falls Mayor Steve Nordhagen said. "They're just trying to do what's best for the company."

Of the 15 positions, Nordhagen said, not all of them live in Thief River Falls, and some who do may decide to stay and find employment elsewhere.

"The impact could be as little as five people," Nordhagen said.

But the positions are some of the highest paid in the community. "You always hate to see people of that caliber leave town," Nordhagen said. "They are great citizens and wonderful people. That's what we will miss the most."


Arctic Cat, which reported employing about 1,800 workers at the start of this year, is one of the top private-sector employers in the Grand Forks region, behind Marvin Windows and Doors in Warroad, Minn.; Altru Health System in Grand Forks; Digi-Key in Thief River Falls; and Polaris Industries in Roseau, Minn., a rival snowmobile and ATV manufacturer.

"It's been a good relationship between Arctic Cat and Thief River Falls," Nordhagen said.

The company manufactures snowmobiles, ATVs and produces clothing, parts and accessories. Officials said the move is part of a reorganization that will divide the company into three separate components: ATVs, snowmobiles and retail.

Arctic Cat also plans a one-time, 30 percent reduction in snowmobile production. The intent, the company said Tuesday, is to help dealers lower their snowmobile inventory levels to more closely match demand. Company officials said steps are being taken to improve future profitability and growth prospects.

Thief River Falls' mayor does not expect to see any layoffs and loss of citizens from this event. "What they will do is start manufacturing the snowmobiles later in the year and end earlier," Nordhagen said. "I don't expect any massive layoffs."

Arctic Cat eliminated about 65 jobs in February, mostly in Thief River Falls. Twomey said then the move reflected the size of the market conditions.

Nordhagen said the job losses affected the community, but not right away. "You don't really see the impact immediately. But of course it has an impact," he said.

Earnings outlook


Arctic Cat's fiscal 2008 earnings outlook, issued Tuesday, exceeded Wall Street's expectations, and its full-year revenue forecast was in range of analysts' estimates.

The company said it sees full-year earnings between 89 cents and 95 cents per share and anticipates 2008 sales between $710 million and $736 million.

Analysts surveyed by Thomson Financial expect a full-year profit of 82 cents per share on revenue of $717.6 million.

Arctic Cat foresees a first-quarter loss in the range of 40 cents to 47 cents per share, compared with a loss of 23 cents per share the same quarter last year. The company projected revenue between $70 million and $80 million for the quarter, versus $96.4 million in the prior year.

During Tuesday afternoon trading, shares of Arctic Cat gained $1.17, or 6.5 percent, to $19.21. The stock has ranged between $15.52 and $20.01 during the past 52 weeks.

History in TRF

The Thief River Falls company opened in 1961 as Polar Manufacturing, started by Edgar Hetteen, after he left Polaris Industries in Roseau. Polar changed its name to Arctic Enterprises in 1962. The company built snowmobiles; it later purchased some boat manufacturers.

Arctic Enterprises went bankrupt in 1981. A new startup company, Arctco, was formed in 1983 to build Arctic Cat snowmobiles. The company took the Arctic Cat name in 1996, and began producing ATVs the same year.

The article includes material from The Associated Press.