Polaris 2008 Annual Report Download - page 26

plans with the CPSC. Nevertheless, there can be no assurance that future recommendations or regulatory actions by
the federal government or individual states would not have an adverse effect on the Company. Polaris will continue
to attempt to assure that its dealers are in compliance with their safety obligations. Polaris has notified its dealers
that it may terminate or not renew any dealer it determines has violated such safety obligations. Polaris believes that
its ATVs have always complied with safety standards relevant to ATVs.
In August 2006, the CPSC issued a Notice of Proposed Rulemaking to establish mandatory standards for ATVs
and to ban three-wheeled ATVs. The proposed rules in large part would require all ATV manufacturers to comply
with ANSI/SVIA safety standards which are now voluntary. Polaris currently complies with these standards. Polaris
no longer makes three-wheeled ATVs so a three-wheeled ban would not affect Polaris production. Polaris does not
believe that the rules will negatively affect its business to any greater degree than those of its competitors who would
also be subject to the same mandatory standards. The CPSC has not issued a final rule in this matter.
In August 2008, the Consumer Product Safety Improvement Act (“Act”) was passed. The Act includes a
provision that requires all manufacturers and distributors who import into or distribute ATVs in the United States to
comply with the ANSI/SVIA safety standards which were previously voluntary. The Act also requires the same
manufacturers and distributors to have ATV action plans filed with the CPSC that are substantially similar to the
voluntary action plans that were previously in effect. Polaris currently complies with the ANSI/SVIA standard and
has had an action plan filed with the CPSC since 1998 when the Consent Decree expired so it does not believe the
new law will negatively affect its business.
The Act also includes provisions which limit the amount of lead paint and lead content that can in exist in the
ATVs, off-road side-by-side and snowmobiles Polaris sells for children twelve years of age and younger. Under the
law, products that have lead in excess of these limits may not be sold in the United States starting February 10, 2009.
Polaris is currently conducting testing to determine the level of lead existing in these children’s products. Polaris,
along with others in the recreational products industry, has also filed a petition for exclusion with the CPSC which,
if approved, will exempt certain metal alloys and battery terminals from the requirements of the law. Polaris does
not believe any of its children’s products present a harmful risk of lead exposure but until its testing is complete, or
an exclusion is granted by the CPSC, Polaris and its dealers will be restricted from selling some of its children’s
product in the United States. Polaris does not believe that this restriction has had or will have a material adverse
effect on Polaris or negatively impact its business to any greater degree than those of its competitors who sell
children’s products in the United States.
Polaris is a member of the International Snowmobile Manufacturers Association (“ISMA”), a trade association
formed to promote safety in the manufacture and use of snowmobiles, among other things. ISMA members include
all of the major snowmobile manufacturers. The ISMA members are also members of the Snowmobile Safety and
Certification Committee, which promulgated voluntary sound and safety standards for snowmobiles that have been
adopted as regulations in some U.S. states and in Canada. These standards require testing and evaluation by an
independent testing laboratory. Polaris believes that its snowmobiles have always complied with safety standards
relevant to snowmobiles.
Victory motorcycles are subject to federal vehicle safety standards administered by NHTSA. Victory
motorcycles are also subject to various state vehicle safety standards. Polaris believes that its motorcycles have
always complied with safety standards relevant to motorcycles.
Polaris products are also subject to international standards related to safety in places where it sells its products
outside the United States. Polaris believes that its Victory motorcycles, ATVs, off-road side-by-side vehicles and
snowmobiles have always complied with applicable safety standards in the United States and internationally.
Emissions. The federal Environmental Protection Agency (“EPA”) and the California Air Resources Board
(“CARB”) have adopted emissions regulations applicable to Polaris products.
CARB has emission regulations for ATVs and off-road side-by-side vehicles which the Company already
meets. In October 2002, the EPA established new corporate average emission standards effective for model years
2006 through 2012 for non-road recreational vehicles including ATVs, off road side-by-side vehicles and
snowmobiles. The Company has developed engine and emission technologies along with its existing technology
base to meet current and future requirements. In 2002, Polaris entered into an agreement with a German
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