SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended September 30, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from __________ to __________
Commission File Number: 0-24556
MARKER INTERNATIONAL
(Exact name of registrant as specified in its charter)
Utah 87-0372759
(State or other jurisdiction of incorporation) (I.R.S. Employer ID No.)
1070 West 2300 South
Salt Lake City, Utah 84119
(Address of principal executive offices)
(801) 972-2100
(Telephone number)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filings
requirements for the past 90 days.
Yes X No
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Class of Common Stock Outstanding at November 13, 1996
Common Stock, $0.01 par value 11,129,127
<PAGE>
MARKER INTERNATIONAL
TABLE OF CONTENTS
Part I - Financial Information
Item 1. Financial Statements Page
Condensed Consolidated Balance Sheets
As of September 30, 1996 and March 31, 1996 3
Condensed Consolidated Statements of Operations
For the Three Months and Six Months
Ended September 30, 1996 and 1995 5
Condensed Consolidated Statements of Cash Flows
For the Six Months Ended
September 30, 1996 and 1995 6
Notes to Condensed Consolidated Financial Statements 7
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 10
Part II - Other Information
Item 1. Legal Proceedings 16
Item 6. Exhibits and Reports on Form 8-K 16
Signatures 17
<PAGE>
PART I - FINANCIAL INFORMATION
MARKER INTERNATIONAL AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in Thousands) (Unaudited)
<TABLE>
<CAPTION>
===================================================================================================================
ASSETS
September 30, March 31,
1996 1996
CURRENT ASSETS:
<CAPTION>
<S> <C> <C>
Cash and cash equivalents $ 8,915 $ 6,189
Accounts receivable, net 52,149 22,151
Inventories 41,473 32,668
Prepaid and other current assets 6,965 3,584
----------- -----------
Total current assets 109,502 64,592
----------- -----------
PROPERTY, PLANT AND EQUIPMENT:
Land 386 386
Building and improvements 4,874 4,912
Machinery and equipment 22,631 19,973
Furniture, fixtures and office equipment 3,881 4,225
Construction in progress 1,786 913
----------- -----------
33,558 30,409
Less accumulated depreciation and amortization (17,353) (17,288)
----------- -----------
Net property, plant and equipment 16,205 13,121
----------- -----------
INVESTMENT IN UNCONSOLIDATED SUBSIDIARY - 6,832
----------- -----------
INTANGIBLE ASSETS 21,173 -
----------- -----------
OTHER ASSETS 2,634 2,720
----------- -----------
$ 149,514 $ 87,265
=========== ===========
</TABLE>
The accompanying notes to condensed consolidated financial statements
are an integral part of these condensed consolidated balance sheets.
<PAGE>
MARKER INTERNATIONAL AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS (Continued)
(Dollars in Thousands)
(Unaudited)
<TABLE>
<CAPTION>
===================================================================================================================
LIABILITIES AND SHAREHOLDERS' EQUITY
September 30, March 31,
1996 1996
CURRENT LIABILITIES:
<CAPTION>
<S> <C> <C>
Notes payable to banks $ 62,875 $ 30,556
Current maturities of long-term debt 2,143 7,576
Current maturities of Series A Bonds, issued
to a related party 3,500 3,500
Accounts payable 8,042 2,899
Other current liabilities 8,033 6,514
----------- -----------
Total current liabilities 84,593 51,045
----------- -----------
LONG-TERM DEBT, net of current maturities 19,657 5,452
----------- -----------
SERIES A BONDS, issued to a related party,
net of current maturities 10,000 10,000
----------- -----------
MINORITY INTEREST 1,179 -
----------- -----------
SHAREHOLDERS' EQUITY:
Preferred stock, $0.01 par value, 5,000,000
authorized and none issued - -
Common stock, $0.01 par value, 25,000,000
shares authorized, 11,129,127 and 8,447,877
shares issued and outstanding, respectively 111 84
Additional paid-in capital 36,293 21,531
Accumulated deficit (2,369) (1,293)
Cumulative foreign currency translation adjustments 50 446
----------- -----------
Total shareholders' equity 34,085 20,768
----------- -----------
$ 149,514 $ 87,265
=========== ===========
</TABLE>
The accompanying notes to condensed consolidated financial statements
are an integral part of these condensed consolidated balance sheets.
<PAGE>
MARKER INTERNATIONAL AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in Thousands, Except Per Share Amounts)
(Unaudited)
<TABLE>
<CAPTION>
===================================================================================================================
For the Three Months Ended For the Six Months
September 30, Ended September 30,
1996 1995 1996 1995
<CAPTION>
<S> <C> <C> <C> <C>
NET SALES $ 31,718 $ 30,008 $ 33,224 $ 32,252
COST OF SALES 19,163 16,311 20,006 18,167
-------- -------- -------- --------
GROSS PROFIT 12,555 13,697 13,218 14,085
-------- -------- -------- --------
OPERATING EXPENSES:
Selling 3,159 3,399 5,500 6,016
General and administrative 2,170 2,287 4,589 4,998
Research and development 769 529 1,430 1,250
Warehousing and shipping 442 397 756 689
-------- -------- -------- --------
6,540 6,612 12,275 12,953
-------- -------- -------- --------
OPERATING INCOME 6,015 7,085 943 1,132
-------- -------- -------- --------
OTHER INCOME (EXPENSE):
Interest expense (1,264) (1,527) (2,285) (2,617)
Equity in losses of
unconsolidated subsidiary (201) - (281) -
Other, net (44) 778 (58) 703
-------- -------- --------- --------
(1,509) (749) (2,624) (1,914)
-------- -------- -------- --------
INCOME (LOSS) BEFORE (PROVISION) BENEFIT FOR
INCOME TAXES 4,506 6,336 (1,681) (782)
(PROVISION) BENEFIT FOR
INCOME TAXES (1,622) (2,534) 605 313
--------- --------- -------- --------
NET INCOME (LOSS) $ 2,884 $ 3,802 $ (1,076) $ (469)
======== ======== ======== ========
NET INCOME (LOSS)
PER COMMON SHARE $ 0.28 $ 0.45 $ (0.11) $ (0.06)
======== ======== ======== ========
WEIGHTED AVERAGE SHARES OUTSTANDING
10,457,658 8,512,550 9,515,425 8,476,203
========== ========= ========= =========
</TABLE>
The accompanying notes to condensed consolidated financial statements
are an integral part of these condensed consolidated statements.
<PAGE>
MARKER INTERNATIONAL AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in Thousands)
(Unaudited)
<TABLE>
<CAPTION>
===================================================================================================================
For the Six Months
Ended September 30,
1996 1995
CASH FLOWS FROM OPERATING ACTIVITIES:
<CAPTION>
<S> <C> <C>
Net loss $ (1,076) $ (469)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation and amortization 1,602 1,609
Equity in earnings of unconsolidated subsidiary 281 -
Change in assets and liabilities net of effects from the purchase of DNR:
Increase in accounts receivable, net (24,765) (21,440)
Increase in inventories (8,642) (14,748)
Increase in prepaid and other assets (3,461) (1,646)
Increase (decrease) in accounts payable 1,256 (306)
Increase in other current liabilities 1,620 2,413
--------- ---------
NET CASH USED FOR OPERATING ACTIVITIES (33,185) (34,587)
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property, plant and equipment (3,612) (1,466)
Equity investment in DNR - (5,367)
Payment for purchase of DNR, net of cash acquired (14,469) -
--------- ---------
NET CASH USED FOR INVESTING ACTIVITIES (18,081) (6,833)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net borrowings on notes payable to banks 33,587 28,159
Proceeds from issuance of common stock, net 14,789 -
Proceeds from issuance of long-term debt 7,656 6,723
Principal payments on long-term debt (1,582) (1,283)
--------- ---------
NET CASH PROVIDED BY FINANCING ACTIVITIES 54,450 33,599
--------- ---------
Effect of foreign exchange rate changes on cash (458) 491
--------- ---------
Net Increase (decrease) in cash and cash equivalents 2,726 (7,330)
Cash and cash equivalents at beginning of period 6,189 12,281
--------- ---------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 8,915 $ 4,951
========= =========
</TABLE>
The accompanying notes to condensed consolidated financial statements
are an integral part of these condensed consolidated statements.
<PAGE>
MARKER INTERNATIONAL AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 1. Interim Financial Statements
The accompanying condensed consolidated financial statements include
the accounts of Marker International and its subsidiaries (the "Company"). The
condensed consolidated financial statements have been prepared pursuant to the
rules and regulations of the Securities and Exchange Commission. Certain
information and footnote disclosures normally required in financial statements
prepared in accordance with generally accepted accounting principles have been
omitted pursuant to such rules and regulations. The financial statements reflect
all adjustments (consisting only of normal recurring adjustments) which, in the
opinion of management, are necessary to fairly present the financial position,
results of operations and cash flows for the periods presented.
The results of operations for the three and six months ended September
30, 1996 are not necessarily indicative of the results to be expected for the
full fiscal year.
Note 2. Cash and Cash Equivalents
Cash and cash equivalents include investments in certificates of
deposit with original maturities of less than 30 days and restricted cash. The
Company has granted a security interest in a $3.5 million time deposit held in
the Company's name at a United States branch of a German bank. This deposit is
restricted for use as collateral for borrowings from such bank.
Note 3. Inventories
Inventories include direct materials, direct labor and manufacturing
overhead costs and are recorded at the lower of cost (using the first-in,
first-out method) or market. The major classes of inventories are as follows (in
thousands):
<PAGE>
MARKER INTERNATIONAL AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Unaudited)
<TABLE>
<CAPTION>
September 30, 1996 March 31, 1996
-------------------- --------------
<CAPTION>
<S> <C> <C>
Raw materials $ 87 $ 489
Work in process 2,674 2,551
Finished goods 38,712 29,628
---------- ----------
$ 41,473 $ 32,668
========== ==========
</TABLE>
Note 4. Investment in DNR Sportsystem
On June 26, 1996 the Company completed its acquisition of an additional
55% of the common shares of DNR Sportsystem Ltd. ("DNR"), a Swiss Corporation,
for approximately $19.8 million. Marker International's total ownership of DNR
Sportsystem is now 80%. The Company used the proceeds from a secondary public
offering of primary shares of common stock (see Note 6) and long-term debt to
finance the purchase of the additional shares of DNR.
DNR Sportsystem is a leading developer, marketer and distributor of
snowboards, snowboard boots, snowboard bindings and other related products,
primarily under the trade names of "DNR(R)", "Santa Cruz(R)" and "Sims(R)."
DNR's operating headquarters are located in Switzerland. DNR has a
calendar year end and, as a foreign entity, does not have the same reporting
requirements as the Company. Consistent with prior reporting periods, the
Company uses a 90-day lag in reporting its equity portion of DNR's operating
results. As such, for the quarter ended September 30, 1996, the Company
accounted for its share of DNR's operations using the equity method of
accounting and, therefore, recorded its 25% interest in DNR's net loss for DNR's
quarter and six months ended June 30, 1996. The Company consolidated the June
30, 1996 balance sheet of DNR in its consolidated balance sheet at September 30,
1996, which is consistent with the 90-day lag in reporting.
<PAGE>
MARKER INTERNATIONAL AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Unaudited)
Note 5. Intangible Assets
Intangible assets totaling $21.2 million have been recorded from the
80% purchase of DNR. These intangible assets result from the excess of the
consideration paid for DNR over the fair value of DNR's net assets at the date
of acquisition. Intangible assets, consisting of trade names and goodwill, are
amortized using a straight-line method over lives ranging from 5 to 30 years.
Note 6. Stock Offering
On July 23,1996, the Company closed on its secondary public offering of
primary shares of the Company's common stock. On August 21, 1996, the Company
closed on the overallotment option granted to the underwriters in connection
with the secondary offering. The Company issued 2,500,000 shares of common stock
in connection with the secondary offering and 180,000 shares of common stock in
connection with the related overallotment option and received aggregate net
proceeds of approximately $14.8 million. The Company utilized such net proceeds
to finance the purchase of the additional shares of DNR (see Note 4).
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
The following discussion should be read in conjunction with the
financial statements and notes thereto appearing elsewhere in this report.
General
Marker International is a leading designer, developer, manufacturer and
marketer of alpine ski bindings in the United States and throughout the world.
The Company is a holding company which operates through its subsidiaries, Marker
Deutschland GmbH ("Marker Germany"), Marker USA, Marker Japan, Ltd. ("Marker
Japan"), Marker Canada, Ltd. ("Marker Canada"), and Marker Austria GmbH ("Marker
Austria"). Substantially all of the Company's ski bindings are manufactured by
Marker Germany, which also distributes bindings in Germany, to subsidiaries of
the Company and to independent distributors in countries where the Company does
not have a distribution subsidiary. Marker USA and Marker Japan each has its own
sales force and marketing departments for sales and marketing of bindings and
related parts directly to retailers in the United States, and to both retailers
and wholesalers in Japan, respectively. Marker Canada distributes the Company's
ski bindings into Canada which are then sold through an independent distributor.
Marker Austria distributes the Company's ski bindings into Austria through an
independent sales force. Marker AG, a Swiss holding company and subsidiary of
the Company, holds a 80% interest in DNR Sportsystem Ltd., an entity which
develops, markets, and distributes snowboards, snowboard boots, snowboard
bindings and other related products ("DNR"). Marker Ltd., also a subsidiary of
the Company, designs, distributes and sells to retailers the Company's clothing,
gloves and luggage products for skiing and other recreational activities. The
principal markets for the Company's products are North America, Europe and Asia.
Marker Germany receives payment primarily in German marks ("Marks") for
ski bindings sold. For subsidiaries of the Company (principally Marker USA and
Marker Japan), Marker Germany may allow payment for ski bindings sold to be made
in the functional currency of the subsidiary. Marker Germany or the distribution
subsidiary, as applicable, routinely enter into forward foreign exchange
contracts with financial institutions in order to fix the cost of converting the
functional currency to Marks. Sales prices for the ski bindings offered to the
subsidiaries and ultimately the price the subsidiaries offer for the sale of the
ski bindings to their customers are based upon, among other things, the rate
afforded by the forward foreign exchange contracts and market conditions.
Accordingly, the relationship of the exchange rate between the functional
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS - (continued)
currency of the subsidiary and the Mark has a direct impact on the results of
operations of the subsidiary as such exchange rate fluctuations affect the cost
of the products sold by the distribution subsidiary.
Each of the Company's distribution subsidiaries operates and maintains
its accounting records in the functional currency of the country in which it
operates. In accordance with United States generally accepted accounting
principles, upon consolidation of these subsidiaries in the Company's
consolidated financial statements, the assets, liabilities, revenues and
expenses of each of the Company's foreign subsidiaries are translated at the
appropriate exchange rate prevailing during the period. Therefore, the Company's
assets, liabilities and results of operations are subject to fluctuations in
forward foreign exchange contract rates and translation effects which can vary
as a result of fluctuations in the exchange rates between the functional
currencies of such foreign subsidiaries and the United States dollar ("Dollar").
For the three months ended September 30, 1996, average exchange rates
between the Dollar and the Mark, and the Dollar and the Yen, resulted in an
effective decrease in the value of the Mark against the Dollar, and the Yen
against the Dollar, of approximately 6% and 16%, respectively, compared to the
corresponding period of the prior year. Such decrease resulted in a
corresponding decrease in the value of the revenues and expenses of Marker
Germany and Marker Japan when converted to Dollars, compared to the
corresponding period of the prior fiscal year.
For the six months ended September 30, 1996, average exchange rates
between the Dollar and the Mark and between the Dollar and the Yen resulted in
an effective decrease in value of the Mark and the Yen against the Dollar of
approximately 7% and 20% , respectively, compared to the corresponding period of
the prior fiscal year. Such decrease resulted in a corresponding decrease in the
value of revenues and expenses of Marker Germany and Marker Japan when converted
to Dollars, compared to the corresponding period of the prior fiscal year.
The Company's business is seasonal in nature. Consistent with this
seasonal nature and the ski industry in general, the Company historically
records a relatively small percentage of its annual net sales during its first
fiscal quarter and records a majority of its sales during its second and third
fiscal quarters and to a lesser extent during its fourth fiscal quarter.
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS - (continued)
Results of Operations
Comparison of the three months ended September 30, 1996 with the three months
ended September 30, 1995
Net sales for the quarter ended September 30, 1996, increased to $31.7
million, compared to $30.0 million for the corresponding quarter of the prior
fiscal year. The increase in sales is primarily attributable to the timing of
early season sales of entry level product in Japan.
Gross profit for the quarter ended September 30, 1996, decreased to
$12.6 million, or 39.7% of net sales, compared to $13.7 million, or 45.7% of net
sales, for the corresponding quarter of the prior fiscal year. The decrease in
gross profit is attributable to the timing of shipments in the early season of
some special Jr. models which have a lower gross margin than the Company's
normal product line.
Operating expenses for the quarter ended September, 30, 1996, decreased
to $6.5 million, compared to $6.6 million for the corresponding quarter of the
prior fiscal year. The decrease in operating expenses is primarily a result of
the cost cutting efforts of Marker Japan and the effect of translating Marker
Japan's operating expenses from Yen to Dollars during consolidation (See
Management's Discussion and Analysis - General, for discussion of foreign
exchange).
Interest expense for the quarter ended September 30, 1996, decreased to
$1.3 million, compared to $1.5 million for the corresponding quarter of the
prior fiscal year. The primary reason for the decrease is the reduced
outstanding balance of Series A Bonds and the effect of rates used to translate
interest from Marks to Dollars and Yen to Dollars during consolidation (See
Management's Discussion and Analysis - General, for discussion of foreign
exchange).
Other income for the quarter ended September 30, 1996, decreased
approximately $0.8 million, compared to the corresponding quarter of the prior
fiscal year. The decrease relates to foreign exchange gains of approximately
$0.8 million which were recognized in the quarter ended September 30, 1995. No
similar foreign exchange gains were realized in the quarter ended September 30,
1996.
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS - (continued)
The provisions for income taxes for the quarters ended September 30,
1996 and 1995 were calculated using the estimated consolidated annual effective
tax rate which considers the effective tax rates of domestic and foreign tax
jurisdictions.
Comparison of the six months ended September 30, 1996 with the six months ended
September 30, 1995
Net sales for the six months ended September 30, 1996, increased to
$33.2 million, compared to $32.3 million for the corresponding period of the
prior fiscal year. The increase in sales is primarily attributable to the timing
of early season sales of entry level product in Japan.
Gross profit for the six months ended September 30, 1996, decreased to
$13.2 million, or 39.8% of net sales, compared to $14.1 million, or 43.7% of net
sales, for the corresponding period of the prior fiscal year. The decrease in
gross profit is attributable to the timing of shipments in the early season of
some special Jr. models which have a lower gross margin than the Company's
normal product line.
Operating expenses for the six months ended September 30, 1996,
decreased to $12.3 million, compared to $13.0 million for the corresponding
period of the prior fiscal year. The decrease in operating expenses is primarily
a result of the cost cutting efforts of Marker Japan and the effect of
translating Marker Japan's operating expenses from Yen to Dollars during
consolidation (See Management's Discussion and Analysis - General, for
discussion of foreign exchange).
Interest expense for the six months ended September 30, 1996, decreased
to $2.3 million, compared to $2.6 million for the corresponding period of the
prior fiscal year. The primary reason for the decrease is the reduced
outstanding balance of Series A Bonds and the effect of rates used to translate
interest from Marks to Dollars and Yen to Dollars during consolidation (See
Management's Discussion and Analysis - General, for discussion of foreign
exchange).
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS - (continued)
Other income for the six months ended September 30, 1996, decreased
approximately $0.8 million, compared to the corresponding period of the prior
fiscal year. The decrease relates to foreign exchange gains of approximately
$0.8 million which were recognized in the six months ended September 30, 1995.
No similar foreign exchange gains were realized in the six months ended
September 30, 1996.
Liquidity and Capital Resources
The Company's primary cash requirements are for raw materials inventory
for production, finished goods inventory, funding of accounts receivable,
capital expenditures and strategic business acquisitions. Historically, the
Company's primary sources of cash for its business activities have been cash
flows from operations and borrowings under its lines of credit and term loans.
At September 30, 1996, the Company had working capital of $24.9
million, compared to $13.5 million as of March 31, 1996. The increase in working
capital is primarily the result of the consolidation of DNR which contributed
approximately $7.6 million to working capital at September 30, 1996. In
addition, the Company refinanced certain long-term debt which at March 31, 1996
was classified as current maturities of long-term debt.
On June 26, 1996, the Company completed the acquisition of an
additional 55% of DNR, increasing the Company's total ownership of DNR to 80%.
The total purchase price for the additional 55% of DNR was approximately $19.8
million. The Company financed the purchase with aggregate net proceeds from a
secondary offering of common stock of approximately $14.8 million and proceeds
from long-term borrowings of approximately $5.0 million.
The Company is currently constructing a snowboard manufacturing
facility in Salt Lake City, Utah. At September 30, 1996, the Company had
disbursed approximately $3.7 million for construction of the building and for
machinery and equipment. The Company has borrowings, under a construction loan,
associated with the facility of approximately $0.9 million and has funded
approximately $2.8 million with short-term bank lines. The Company expects to
finance the completed facility with long-term debt.
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS - (continued)
At September 30, 1996, the Company's primary sources of liquidity
consisted of cash and short-term investments and available borrowings under
lines of credit. The Company has approximately $72.1 million available in
short-term credit facilities, of which approximately $62.9 million had been
borrowed as of September 30, 1996. Substantially all of the Company's credit
lines are secured by inventory and receivables. The Company believes that it
will have adequate bank lines to meet its cash flow demands during fiscal 1997.
Recent Events
On September 26, 1996, Thomas P. Sims ("Sims") filed an action with
Superior Court of California for the County of Santa Barbara (the "Action")
against the Company and DNR relating to a license agreement dated as of
September 8, 1991 between Sims and DNR ( the "License"). Sims alleges, among
other things, that the Company and DNR are promoting products (including DNR's
Soft Boot Binding Interface System, the "Interface System") that unfairly
compete with Sims' products and that DNR has breached the License. In addition,
by letter dated September 27, 1996, Sims notified DNR of his intention to
terminate the License and , pursuant to the terms of the License, initiated
arbitration proceedings against DNR by filing a demand for arbitration (the
"Arbitration"). Through these proceedings, Sims seeks to enjoin DNR from using
the Sims name and trademark, which are licensed to DNR under the License and
from conducting activities related to the Interface System. Sims also seeks
monetary damages from and equitable and declaratory relief against the Company
and DNR.
On November 5, 1996, DNR filed its answer and counterclaims against
Sims in both the Arbitration and Action. The Company is in the process and
intends to file their answers and counterclaim in the near future.
<PAGE>
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
On September 26, 1996, Thomas P. Sims ("Sims") filed an action
with Superior Court of California for the County of Santa Barbara (the
"Action") against the Company and DNR relating to a license agreement
dated as of September 8, 1991 between Sims and DNR ( the "License").
Sims alleges, among other things, that the Company and DNR are
promoting products (including DNR's Soft Boot Binding Interface System,
the "Interface System") that unfairly compete with Sims' products and
that DNR has breached the License. In addition, by letter dated
September 27, 1996, Sims notified DNR of his intention to terminate the
License and, pursuant to the terms of the License, initiated
arbitration proceedings against DNR by filing a demand for arbitration
(the "Arbitration"). Through these proceedings, Sims seeks to enjoin
DNR from using the Sims name and trademark, which are licensed to DNR
under the License and from conducting activities related to the
Interface System. Sims also seeks monetary damages from and equitable
and declaratory relief against the Company and DNR.
On November 5, 1996, DNR filed its answer and counterclaims
against Sims in both the Arbitration and Action. The Company is in the
process and intends to file their answers and counterclaim in the near
future.
Item 6. Exhibits and Reports on Form 8-K
a) Exhibits:
None
b) Reports Filed on Form 8-K:
None
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
MARKER INTERNATIONAL
Registrant
Dated: November 13, 1996 /s/ Henry E. Tauber
--------------------
Henry E. Tauber
Chairman of the Board,
President and Chief
Executive Officer
Dated: November 13, 1996 /s/ Brad L. Stewart
--------------------
Brad L. Stewart
Vice President - Finance
and Administration
(Chief Financial Officer and
Chief Accounting Officer)
Chairman of the Board,
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> MAR-31-1997
<PERIOD-END> SEP-30-1996
<CASH> 4730
<SECURITIES> 4185
<RECEIVABLES> 53769
<ALLOWANCES> (1620)
<INVENTORY> 41473
<CURRENT-ASSETS> 109502
<PP&E> 33558
<DEPRECIATION> (17353)
<TOTAL-ASSETS> 149514
<CURRENT-LIABILITIES> 84593
<BONDS> 10000
0
0
<COMMON> 111
<OTHER-SE> 33974
<TOTAL-LIABILITY-AND-EQUITY> 149514
<SALES> 33224
<TOTAL-REVENUES> 33224
<CGS> 20006
<TOTAL-COSTS> 12275
<OTHER-EXPENSES> 339
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2285
<INCOME-PRETAX> (1681)
<INCOME-TAX> 605
<INCOME-CONTINUING> (1076)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1076)
<EPS-PRIMARY> (0.11)
<EPS-DILUTED> 0
</TABLE>
