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 December 31, 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 February 13, 1997
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 December 31, 1996 and March 31, 1996 3
Condensed Consolidated Statements of Operations
For the Three Months and Nine Months
Ended December 31, 1996 and 1995 5
Condensed Consolidated Statements of Cash Flows
For the Nine Months Ended
December 31, 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
December 31, March 31,
1996 1996
CURRENT ASSETS:
<S> <C> <C>
Cash and cash equivalents $ 17,868 $ 6,189
Accounts receivable, net 52,783 22,151
Inventories 34,050 32,668
Prepaid and other current assets 4,926 3,584
----------- -----------
Total current assets 109,627 64,592
----------- -----------
PROPERTY, PLANT AND EQUIPMENT:
Land 386 386
Building and improvements 4,904 4,912
Machinery and equipment 24,960 19,973
Furniture, fixtures and office equipment 4,198 4,225
Construction in progress 2,510 913
----------- -----------
36,958 30,409
Less accumulated depreciation and amortization (18,620) (17,288)
----------- -----------
Net property, plant and equipment 18,338 13,121
----------- -----------
INVESTMENT IN UNCONSOLIDATED SUBSIDIARY - 6,832
----------- -----------
INTANGIBLE ASSETS, net of amortization 20,955 -
----------- -----------
OTHER ASSETS 2,791 2,720
----------- -----------
$ 151,711 $ 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
December 31, March 31,
1996 1996
CURRENT LIABILITIES:
<S> <C> <C>
Notes payable to banks $ 58,199 $ 30,556
Current maturities of long-term debt 1,293 7,576
Current maturities of Series A Bonds, issued
to a related party 4,500 3,500
Accounts payable 8,635 2,899
Other current liabilities 12,075 6,514
----------- -----------
Total current liabilities 84,702 51,045
----------- -----------
LONG-TERM DEBT, net of current maturities 20,122 5,452
----------- -----------
SERIES A BONDS, issued to a related party,
net of current maturities 5,500 10,000
----------- -----------
MINORITY INTEREST 2,189 -
----------- -----------
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 earnings (deficit) 3,049 (1,293)
Cumulative foreign currency translation adjustments (255) 446
----------- -----------
Total shareholders' equity 39,198 20,768
----------- -----------
$ 151,711 $ 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 Nine Months
December 31, Ended December 31,
1996 1995 1996 1995
<S> <C> <C> <C> <C>
NET SALES $ 60,305 $ 33,965 $ 93,529 $ 66,217
COST OF SALES 39,656 20,070 59,662 37,765
-------- -------- -------- --------
GROSS PROFIT 20,649 13,895 33,867 28,452
-------- -------- -------- --------
OPERATING EXPENSES:
Selling 4,950 4,250 10,450 10,266
General and administrative 4,121 2,529 8,710 7,527
Research and development 924 412 2,354 1,662
Warehousing and shipping 565 456 1,321 1,145
-------- -------- -------- --------
10,560 7,647 22,835 20,600
-------- -------- -------- --------
OPERATING INCOME 10,089 6,248 11,032 7,852
-------- -------- -------- --------
OTHER INCOME (EXPENSE):
Interest expense (1,326) (1,424) (3,611) (4,041)
Equity in income (loss) of
unconsolidated subsidiary - 607 (281) 607
Other, net 713 76 655 307
-------- -------- -------- --------
(613) (741) (3,237) (3,127)
-------- -------- -------- --------
INCOME BEFORE MINORITY INTEREST AND PROVISION
FOR INCOME TAXES 9,476 5,507 7,795 4,725
MINORITY INTEREST (1,010) - (1,010) -
-------- ------- -------- --------
INCOME BEFORE PROVISION FOR INCOME TAXES 8,466 5,507 6,785 4,725
PROVISION FOR INCOME TAXES (3,048) (2,007) (2,443) (1,694)
-------- ------- -------- -------
NET INCOME $ 5,418 $ 3,500 $ 4,342 $ 3,031
======== ======== ======== ========
NET INCOME PER COMMON SHARE $ 0.49 $ 0.40 $ 0.43 $ 0.35
======== ======== ======== ========
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING 11,129,127 8,732,331 10,004,702 8,655,279
========== ========= ========== =========
</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 Nine Months
Ended December 31,
1996 1995
CASH FLOWS FROM OPERATING ACTIVITIES:
<S> <C> <C>
Net income $ 4,342 $ 3,031
Adjustments to reconcile net income to net cash
used in operating activities:
Depreciation and amortization 2,756 2,317
Minority interest in income 1,010 -
Equity in (income) loss of unconsolidated subsidiary 281 (607)
Change in assets and liabilities net of effects from the
purchase of DNR:
Increase in accounts receivable, net (25,836) (20,269)
Increase in inventories (1,570) (7,651)
Increase in prepaid and other assets (1,567) (605)
Increase (decrease) in accounts payable 815 (849)
Increase in other current liabilities 4,516 688
--------- ---------
NET CASH USED FOR OPERATING ACTIVITIES (15,253) (23,945)
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property, plant and equipment (7,342) (2,027)
Equity investment in DNR - (5,410)
Proceeds from disposition of equipment 591 139
Payment for purchase of DNR, net of cash acquired (14,469) -
--------- --------
NET CASH USED FOR INVESTING ACTIVITIES (21,220) (7,298)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net borrowings on notes payable to banks 29,403 22,146
Proceeds from issuance of common stock, net 14,789 -
Proceeds from issuance of long-term debt 10,118 8,205
Principal payments on Series A Bonds (3,500) (3,500)
Principal payments on other long-term debt (2,582) (2,791)
--------- ---------
NET CASH PROVIDED BY FINANCING ACTIVITIES 48,228 24,060
--------- ---------
Effect of foreign exchange rate changes on cash (76) 1,521
---------- ---------
Net increase (decrease) in cash and cash equivalents 11,679 (5,662)
Cash and cash equivalents at beginning of period 6,189 12,281
--------- ---------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 17,868 $ 6,619
========= =========
</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 nine months ended December
31, 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 $2.0 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)
December 31, 1996 March 31, 1996
------------------- --------------
Raw materials $ 399 $ 489
Work in process 4,936 2,551
Finished goods 28,715 29,628
---------- ----------
$ 34,050 $ 32,668
========== ==========
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. As a result of the acquisition, Marker
International's total ownership of DNR Sportsystem increased to 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)" and "Santa Cruz(R)".
DNR Sportsystem 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 DNR's financial
information. As such, DNR's operating results for its third quarter, which began
July 1, 1996, and ended September 30, 1996, are consolidated in Marker's third
quarter which ended December 31, 1996. As stated above, the Company completed
the acquisition of an additional 55% of DNR Sportsystem Ltd. in June 1996,
bringing its total ownership to 80%. Prior to its 80% ownership, the Company
accounted for its then 25% investment in DNR using the equity method of
accounting.
<PAGE>
MARKER INTERNATIONAL AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Unaudited)
The following pro forma information presents a summary of consolidated
results of operations of the Company and DNR as if the Company had owned 80% of
DNR on April 1, 1996 and 1995. Pro forma adjustments have been made to give
effect to amortization of goodwill, interest expense on acquisition debt and
certain other adjustments. These pro forma results have been prepared for
comparative purposes only. They do not purport to be indicative of the results
of operations which actually would have resulted had the Company owned 80% of
DNR on April 1, 1996 and 1995, or of future results of operations of the
consolidated entities.
Nine months ended December 31,
1996 1995
-------- --------
Net Sales $ 98,392 $ 87,799
Operating income 9,128 10,417
Net income 3,506 4,189
Earnings per common share $ 0.32 $ 0.38
Note 5. Intangible Assets
Intangible assets totaling $21.2 million have been recorded as a result
of the additional purchase of DNR common shares, bringing the Company's total
ownership to 80%. These intangible assets result from the excess of the
consideration paid for DNR over the fair market value of DNR's net assets at the
date of acquisition. Intangible assets are amortized using the 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 partly finance the purchase of the additional shares of DNR.
<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 an 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 enters 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.
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS - (continued)
Accordingly, the relationship of the exchange rate between the functional
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 December 31, 1996, average exchange rates
between the Dollar and the Mark and between 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 7% and 11%, 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 nine months ended December 31, 1996, average exchange rates
between the Dollar and the Mark and between 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 7% and 17% , 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 and snowboard industries 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 December 31, 1996 with the three months
ended December 31, 1995
Net sales for the quarter ended December 31, 1996, increased to $60.3
million, compared to $34.0 million for the corresponding quarter of the prior
fiscal year. The increase in sales is primarily attributable to the
consolidation of DNR's third quarter (July 1, 1996 through September 30, 1996)
net sales into the Company's operating results for the three months ended
December 31, 1996 (See Note 4).
Gross profit for the quarter ended December 31, 1996, increased to
$20.6 million, or 34.2% of net sales, compared to $13.9 million, or 40.9% of net
sales, for the corresponding quarter of the prior fiscal year. The increase in
gross profit is attributable to the consolidation of DNR's operating results.
The decrease in gross profit as a percentage of sales is primarily a result of
lower gross margins recognized by DNR, compared to the consolidated margin
percentage of the Company's other subsidiaries. Historically, DNR has recognized
gross margin only on sales of its products to distributors at the wholesale
level, unlike the Company's other subsidiaries, which recognize gross margin
from sales of their products at the production, wholesale and distribution
levels.
Operating expenses for the quarter ended December 31, 1996, increased
to $10.6 million, compared to $7.6 million for the corresponding quarter of the
prior fiscal year. The overall increase in operating expenses is primarily a
result of consolidating DNR's operating expenses for the quarter, with those of
the Company. In addition, research and development expenses increased
approximately $0.5 million, compared to the same quarter of the prior fiscal
year.
Interest expense for the quarter ended December 31, 1996, decreased to
$1.3 million, compared to $1.4 million for the corresponding quarter of the
prior fiscal year. The primary reasons for the decrease in interest expense are
a lower outstanding balance of Series A Bonds and lower interest rates on
borrowings.
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS - (continued)
Other income for the quarter ended December 31, 1996, increased
approximately $0.6 million, compared to the corresponding quarter of the prior
fiscal year. The increase is primarily a result of realized and unrealized
exchange gains recognized at the Company's German subsidiary.
The provisions for income taxes for the quarters ended December 31,
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 nine months ended December 31, 1996 with the nine months ended
December 31, 1995
Net sales for the nine months ended December 31, 1996, increased to
$93.5 million, compared to $66.2 million for the corresponding period of the
prior fiscal year. The increase in sales is primarily attributable to the
consolidation of DNR's operating results .
Gross profit for the nine months ended December 31, 1996, increased to
$33.9 million, or 36.3% of net sales, compared to $28.5 million, or 43.1% of net
sales, for the corresponding period of the prior fiscal year. The increase in
gross profit is attributable to the consolidation of DNR's operating results.
The decrease in gross profit as a percentage of sales is primarily a result of
lower gross margins recognized by DNR, compared to the consolidated margin
percentage of the Company's other subsidiaries.
Operating expenses for the nine months ended December 31, 1996,
increased to $22.8 million, compared to $20.6 million for the corresponding
period of the prior fiscal year. The overall increase in operating expenses is
primarily a result of consolidating DNR's operating expenses into those of the
Company. In addition, research and development expenses increased approximately
$0.7 million, compared to the corresponding period of the prior fiscal year.
Interest expense for the nine months ended December 31, 1996, decreased
to $3.6 million, compared to $4.0 million for the corresponding period of the
prior fiscal year. The primary reasons for the decrease in interest expense are
a lower outstanding balance of Series A Bonds and lower interest rates on
borrowings.
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS - (continued)
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 December 31, 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 $10.7 million to working capital at December 31, 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 primary shares of its common stock of approximately $14.8
million and proceeds from long-term borrowings of approximately $5.0 million.
The Company is near completion of the construction of its snowboard
manufacturing facility in Salt Lake City, Utah. At December 31, 1996, the
Company had disbursed approximately $2.5 million for construction of the
building and approximately $2.8 million for machinery and equipment. The Company
has borrowings, under a construction loan, associated with the facility of
approximately $1.6 million and has funded approximately $3.7 million with
short-term bank lines. The Company expects to finance the completed facility
with long-term debt.
.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS - (continued)
At December 31, 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 $58.8 million available in
short-term credit facilities, of which approximately $54.3 million had been
borrowed as of December 31, 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 (the
"Action") in the Superior Court of California for the County of Santa Barbara
(the "Superior Court") against the Company and DNR relating to a license
agreement dated as of September 8, 1991 between Sims and DNR ( the "License").
Sims alleged, among other things, that the Company and DNR were promoting
products (including DNR's Soft Boot Binding Interface System, the "Interface
System") that unfairly competed with Sims' products and that DNR had 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 sought to
enjoin DNR from using the Sims name and trademark which were licensed to DNR
under the License, and from producing and marketing the Interface System. Sims
sought monetary damages from and equitable and declaratory relief against the
Company and DNR.
On November 27, 1996, the Superior Court granted Sims' request for a
preliminary injunction against the Company and DNR. The Superior Court's ruling
prevents DNR from manufacturing, shipping, selling or distributing snowboard
products with the Sims mark, pending the outcome of the Arbitration. The
Superior Court, however, refused to grant Sims' request that DNR be enjoined
from producing and marketing the Interface System under the "DNR" and other
brand names. Additionally, the preliminary injunction does not restrict the
right of DNR to produce and market snowboards and related products under brand
names other than Sims.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS - (continued)
The preliminary injunction is not a final judgment and factual findings
made by the Superior Court in the preliminary injunction proceeding are not
binding upon the arbitrator. In the Arbitration, Sims has filed a claim against
DNR for breach of the License and DNR has in the arbitration filed a
counterclaim against Sims for wrongful termination of the License. The
Arbitration hearing is scheduled to take place over a four week period beginning
June 16, 1997. Under the terms of the License, the arbitrator's award is binding
on the parties and is not subject to appeal or further court review except for
extraordinary circumstances. The Action has been stayed while the Arbitration is
pending.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
See the description set forth in Part I of this Quarterly Report on
Form 10-Q under the caption "Management's Discussion and Analysis of Financial
Condition and Results of Operations - Recent Events." Such description updates
the Legal Proceedings set forth in the Company's Quarterly Report on Form 10-Q
for the quarterly period ended September 30, 1996.
Item 6. Exhibits and Reports on Form 8-K
a) Exhibits:
10.21 Second Restated and Amended Promissory Note Agreement
with Bayerischi Hypotheken-und Wechsel-Bank
("Hypo Bank") for a DM 7,284,205.42 loan
10.22 Amended and Restated Conditional Pledge Agreement and
Assignment with Hypo Bank for a $2.0 million time
deposit.
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: February 13, 1997 /s/ Henry E. Tauber
--------------------
Henry E. Tauber
Chairman of the Board,
President and Chief
Executive Officer
Dated: February 13, 1997 /s/ Brad L. Stewart
--------------------
Brad L. Stewart
Vice President - Finance
and Administration
(Chief Financial Officer and
Chief Accounting Officer)
HYPO BANK
Bayerisch Hypomeken- und Wachsel-Bank
Aldiongosollxchaft
New York Branch
Financial Square Phone: General (212)248-0650
New York, NY 10005 Forox (212)809-1000
Postal Address: MMKT (212)809-1370
P.O. Box 810 Fax (212)440-0798
New York, NY 10288/USA Cable Address: hypobank Nyk
Telex Forx TRT 170921 Hypo FxUt
TRT 175850 Hypo-Bank NYK
TRT 175851 Hypo-Bank NYK
General: WU Dom. 6400248
December 27, 1996
Marker International
Mr. Brad L. Stewart
1070 West 2300 South
Salt Lake City, Utah 84119
Dear Brad,
We are pleased to send you the revised version of the Promissory Note. Please
execute the original and send it back via FedEx.
Thank you very much for your cooperation.
Best regards
Bayerische-Hypotheken- und Wechsel-Bank
Aktiengesellschaft
New York Branch
/s/ Christine Elcik /s/ Yoram Dankner
------------------- -----------------
Christine Elcik Yoram Dankner
Banking Officer Senior Vice President
Public Limited Company entered in the Chairman of Supervisory Board:
Commercial Register of the Munich Dr. jur. Klaus Gotte
District Court, Section 8. No. 4900
Registered Office Munich.
Members of the Board of Martin Kolsch, Dr. Eberhard Martini
Managing Directors: Wemer Munstermann
Dr. Hans Fey, Dr. Hans H. Friedl Dr. Martin Schutte
Dr. Joachim Hausser, Dr. Klaus Heiss Josef F. Wertschulte
Dr. Peter Hoch, Franz Huber (01/96)
<PAGE>
Second Restated and Amended Promissory Note (the "Note")
Dated as of December 18, 1996
For value received, MARKER INTERNATIONAL, a corporation organized under the laws
of the State of Utah, with its principal place of business located at 1070 West
2300 South, Salt Lake City, Utah 84126 ("Borrower"), hereby unconditionally
promises to pay to the order of BAYERISCHE HYPOTHEKEN- UND WECHSEL-BANK
AKTIENGESELLSCHAFT, acting through its New York Branch ("Lender"), at its office
at 32 Old Slip, Financial Square, 32nd floor, New York, New York 10005, or any
other branch or office of Lender which it shall designate, the principal sum of
Seven Million Two Hundred Eighty Four Thousand Two Hundred Five Deutsche Marks
and forty Two Pfennigs (DEM 7,284,205.42)("Principal") on April 15, 1998
("Maturity Date"), and to pay interest thereon, to the extent permitted by
applicable law in accordance with the following:
1. Interest.
(a) Interest shall accrue (i) for the period from the Effective Date, through
December 27, 1996 at 4.6875% per annum; (ii) for the period from December 27,
1996 through and including April 15, 1997 at 4.8125% per annum; and (iii) for
the period thereafter at Borrower's option of (x) a rate to mutually agreed upon
between Borrower and Lender, or (y) at a rate per annum equal to one point five
percent (1.5%) above LIBOR (as defined below) for interest periods of 1,2,3 or 6
months (each period set forth herein shall be an "Interest Period").
(b) "LIBOR" shall mean that rate of interest, as determined by Lender in its
sole judgment, at which, for a Interest Period commencing on the date of each
borrowing ("Borrowing") and, if applicable, each successive Interest Period.
Deutsche Mark deposits in an amount equal to the outstanding Principal shall be
offered to Lender in the London Interbank market at approximately 11 a.m. London
time two Business Days (as defined below) prior to the first day of such
Interest Period, whether or not borrower shall have notice thereof: provided
that LIBOR is available, and provided further, that each such period shall
commence on the day on which the immediately preceding period expires. If LIBOR
shall be deemed unavailable, interest shall accrue at a per annum rate to
mutually agreed to by Lender and Borrower. LIBOR shall be deemed unavailable if
no deposit in the amount of the outstanding Principal hereunder based on the
Interest Period selected is readily obtainable by Lender in the London Interbank
market, as determined by Lender in its sole judgment.
(c) As used herein. "Business Day" shall mean any day on which commercial banks
in Frankfurt, Federal Republic of Germany, London, England and New York, New
York are open for general business.
(d) Except as otherwise provided herein, interest shall accrue on the
outstanding Principal form the date hereof (the "Effective Date") until its
payment to Lender in full, computed on the basis of a 360-day year and the
actual number of days elapsed. Accrued interest shall be paid to Lender, (i) on
the Maturity Date, (ii) on the last day of each Interest Period, (iii) when the
Interest Period is longer than three months, every three months after the
Initial Day, (as defined below) and (iv) whenever else a payment of Principal
shall be make of shall become payable.
(d) Notwithstanding any provision to the contrary contained herein, (i) if the
last day of an Interest Period falls on a day other than a Business Day, then
the last day of the Interest Period shall be extended to fall on the next
succeeding Business Day, unless such extension would cause the last day of the
Interest Period to occur in the next following calendar month, in which case,
the Interest Period shall end on the immediately preceding Business Day; (ii) if
any Interest Period begins on the last Business Day of a calendar month (or a
day for which there is no numerically corresponding day in the calendar month at
the end of such Interest Period), then it shall end on a day which is the last
Business Day of the applicable calendar month: and (iii) no Interest Period may
be selected that would end later than the Maturity Date.
2. Prepayments.
The Principal may be paid before the Maturity Date, only if Lender shall have
given its prior written consent. With such a prepayment, Borrower shall also pay
accrued interest and any other amounts owed to Lender in respect of the
Borrowing and shall reimburse Lender for any fee, cost, expense or loss which
Lender shall incur or suffer, in an amount to be determined by Lender in its
sole discretion, because of early payment of Principal including, but not
limited to, any fee, cost, expense or loss which Lender shall incur in the
redeployment of its funds.
<PAGE>
3.Payments.
(a) Each payment due under this Note shall be made in immediately
available funds at the office of Lender or to such account as Lender may
designate to Borrower without any setoff, withholding or deduction of any kind.
Whenever any payment to be made hereunder would without this provision be due
and payable on a day which is not a Business Day, it shall be due on the next
succeeding Business Day.
(b) Lender shall apply payments received from or for the account of Borrower
first to accrued, unpaid interest due Lender and next to sums due Lender other
than Principal, notwithstanding any direction by Borrower to the contrary.
(c) All payments of Principal, interest and any other sums due hereunder shall
be made in the amounts required hereby without any reduction or setoff (unless
based on a final judgment in which execution may be had), notwithstanding the
assertion of any right of recoupment or setoff or any counterclaim, and without
any withholding on account of taxes, levies or duties or any other deduction
whatsoever, In the event that Borrower is required by law to withhold or to
deduct any sum from payments required hereby, Borrower shall, to the extent
permitted by applicable law, increase the amount paid by it to Lender by such
withholding or deductions as may be necessary so that Lender shall receive an
amount which after payment of any sum withheld or deducted shall be equal to the
amount that Lender would have received had such sum not been withheld or
deducted.
(d) In the event that Borrower does not cause a payment to be made when and as
due to Lender, Lender may charge the amount due to any account of Borrower with
Lender or any other branch or any subsidiary of Lender and apply funds from such
account to the payment due, unless Lender shall have agreed expressly with
Borrower not to do so.
4. Interest Selection Notice.
(a) to request an Interest Rate and/or Interest Period, borrower shall in
communication to Lender (the "Notice") refer to this Note and specify the
Interest Rate being selected, and if applicable, the duration of such Interest
Period and the Business Day on which the Interest Rate and /or Interest Period
is to commence ("Initial Day"). to be effective, a Notice must be received by
Lender at least two full business days prior to the Initial Day. A Notice not in
writing shall be deemed to have been complete and in accordance with the record
Lender makes of the Borrowing.
(b) By requesting an Interest Rate and/or Interest Period, Borrower shall be
deemed to represent that, as of the date of the request, the Representations and
Warranties of Section 5 hereof remain accurate and that no Event of Default (as
defined below) or an event which, with the giving of notice or the passage of
time, or both, would become an Event of Default, will result or have resulted.
No selection of an Interest Rate and/or Interest Period shall be effective
unless all such Representations and Warranties shall then be true and correct[.
and Lender shall have received in form and substance satisfactory to Lender and
its counsel, certificates of corporate officers of Borrower or other evidence,
reasonably requested by Lender, as to its corporate existence, its authority to
act and to perform as contemplated hereby, the identity of its officers acting
on its behalf in connection with this Agreement and their authority to act on
its behalf].
5. Representations and Warranties.
By executing and delivering this Note, Borrower represents and warrants that
(a) Borrower is a corporation duly organized, validly existing, and in good
standing and qualified to do business in the jurisdiction of its incorporation
and states in which it is operating: (b) Borrower has full power and authority,
not restricted by any law or governmental regulation, to execute and deliver
this Note and to perform its obligations as contemplated hereby; (c) execution
and delivery of this Note has been duly authorized and it is being duly executed
and delivered to Lender; upon delivery it will evidence a valid and legally
binding obligation of Borrower, enforceable in accordance with its terms; (d)
Borrower is not in default in the performance, observance or fulfillment of any
obligation, covenant or condition contained in any agreement or instrument to
which Borrower is a party, in which the aggregated defaulted amounts equal or
exceed Two Hundred Thousand United States Dollars ($200,000.00);
<PAGE>
(e) execution and delivery of this Note is not in violation of, nor is it an
event of default, or an event which with the passage of time or service of
notice may become an event of default, under any agreement or instrument to
which Borrower is a party;
(f) execution and delivery of, and performance under, this Note will not result
in the creation or imposition of any security interest in, or lien or
encumbrance upon, any asset of Borrower except in favor of Lender;
(g) Borrower has filed all tax returns and any other reports to government
agencies which it is required by law to file; and
(h) Borrower's financial statements, including any schedules and notes
pertaining thereto, are, and have been, prepared in accordance with generally
accepted accounting principles consistently applied except as noted in them, and
fully and fairly present, at the dates thereof, the financial condition of
Borrower and if prepared on a consolidated basis, subsidiaries of Borrower (such
subsidiaries hereinafter "Consolidated Subsidiaries"), and the results of
operations for the period covered thereby; there has been no material, adverse
change in the financial condition or business of Borrower or any Consolidated
Subsidiary since the date as of which the statements last received by Lender
were prepared (which, as of the date hereof, is March 31, 1996).
6. Events of Default Any person, corporation or other entity that (i) directly
or indirectly through one or more intermediaries is controlled by Borrower or
(ii) has given, a guaranty, pledge, security agreement, mortgage, conditional
assignment, comfort letter or other commitment to secure or support Borrower's
obligations to Lender shall hereafter be referred to as an "Affiliate". If any
of the following events ("Events of Default") shall occur, namely
(a) any representation or warranty set forth in this Note, in an document given
in connection with it or otherwise made in connection with any extension of
credit by Lender to Borrower shall prove to have been false or misleading in any
material respect when made or deemed to have been made; or
(b) Borrower shall fail to pay to Lender any Principal when and as due
hereunder; or for five days Borrower shall fail either to pay to Lender any
other sum when and as due hereunder to to comply with any other obligation of
Borrower under this Note; or any document given in connection with it or to
fulfill any condition to the Borrowing which shall not have been expressly
waived in a writing signed by two officers of Lender; or Borrower or any
Affiliate shall fail to pay when and as due and payable or within any applicable
grace period any indebtedness of an amount material in respect of his or its
financial condition or business, or shall default with respect to any evidence
of indebtedness or any obligation for borrowed money in such an amount, or with
respect to the performance of any other obligation incurred in connection with
any such indebtedness or obligation; or
(c) Borrower shall not, within ten days after Lender's request and Lender's
agreement to any reasonable requirement for confidential treatment of
information receive, provide to Lender information Borrower has pertaining to
its business or finances, or to the business or finances of an Affiliate or
allow the inspection during business hours of his or its books and records; or
(d) a final judgment shall be entered against Borrower or an Affiliate for the
payment of money in an amount material in respect of his or its financial
condition or business, or it shall have, or may reasonable be expected to have,
a material, adverse effect on his or its financial condition or business, and
the same shall remain unsatisfied for a 30-day period during which it might be
executed upon; or any writ or warrant of attachment or execution or similar
process shall be issued or levied against Borrower's or Affiliate's property
having a book value in an amount material in respect of his or its financial
condition or business, and the same shall not be discharged, released, vacated
or bonded within 30 days after its issue or levy; or a judgment creditor shall
by any means, including levy, distraint, replevin or self-help, obtain actual or
constructive possession of Borrower's or an Affiliate's property having a book
value in an amount material in respect of his or its financial condition or
business, or such possession shall have a material adverse effect on his or its
financial condition or business; or
(e)(i) Borrower generally shall not pay its debts as they become due, or as it
becomes insolvent or suspends its usual business; (ii) Borrower shall enter into
an agreement with its creditors to reduce its obligations to them or to defer
their fulfillment, make a general assignment for the benefit of its creditors,
<PAGE>
commence any proceeding relating to it under any Chapter to Title 11 of the
United States code or seek any other form of relief from its creditors or from a
court or governmental agency pursuant to any law, statue or procedure of any
jurisdiction (federal, state or foreign) for the relief of financially
distressed debtors (each of the foregoing a "Debtor Relief Procedure"); (iii) a
Debtor Relief Procedure shall be commenced against Borrower and shall not be
dismissed or otherwise terminated within 30 days; or (iv) Borrower shall take
any action to effect any event described in clauses (i), (ii) or (iii) of this
subsection; term "Borrower" used in this subsection shall also include any
Affiliate; or
(f) there shall have been any other material, adverse change in the financial
condition, business or operations of Borrower or any Affiliate or the condition
or affairs of Borrower or any Affiliate shall change in such a manner that, in
the opinion of Lender, its credit risk is increased or Lender shall deem itself
insecure, and Lender shall have given Borrower notice of such change or
insecurity and Borrower shall not have eliminated such risk within 30 days of
such notice; or
g) this Note, or any guaranty of Borrower's or an Affiliate's obligations to
Lender or any agreement or commitment securing or supporting any such obligation
shall be declared by a court of competent jurisdiction to be not in full force
and effect or shall for any other reason cease to be fully enforceable in courts
within the United States having jurisdiction over Borrower; or the validity or
enforceability of any of the foregoing shall be challenged, denied or contested
by Borrower, any Affiliate, or person acting by or through either Borrower or
any Affiliate, or any person having possession, custody or any control over any
property of Borrower or any Affiliate, or any governmental office or agency; or
(h) Borrower shall, without Lender's written consent signed by two of its
officers, transfer or grant or allow to attach a security interest in, Borower's
interest in (i) any asset without receiving fair consideration for it or (ii)
except in the ordinary course of its business, any asset having a value material
to Borrower's financial condition or that is material to the successful
operation of Borrower's business; or
(i) there shall occur any seizure, vesting or intervention by or under authority
of any government by which the management of Borrower or any Affiliate shall be
displaced, or its authority in the conduct of its business shall be curtailed or
impaired;
thereupon, by Lender giving notice thereof to Borrower, (i) every liability of
Borrower to Lender of whatever kind, whether absolute or contingent shall
forthwith become payable, both as to Principal and interest: and (ii) interest
shall accrue on the outstanding Principal until the date of its payment in full
at the lesser of a rate two percent above the Base Rate in effect from time to
time, or the maximum rate, allowed by applicable law. "Base Rate" for the use of
its loan officers in setting interest rates for borrowing, whether or not
Borrower shall have notice thereof.
7. Governing Law; Resolution of Disputes.
This Note, any amendment to it or any note given as a replacement or in
substitution for it shall be construed in accordance with and governed by the
laws of the State of New York applicable to agreements made and to be performed
wholly in that State. IN CONNECTION WITH ANY DISPUTE WHICH MAY ARISE UNDER THIS
NOTE OR ANY AMENDMENT OF IT, OR ANY NOTE GIVEN AS A REPLACEMENT OR IN
SUBSTITUTION FOR IT. BORROWER HEREBY IRREVOCABLE SUBMITS TO, AND WAIVES ANY
OBJECTION TO, THE JURISDICTION OF THE COURTS OF THE UNITED STATES AND OF THE
STATE OF NEW YORK LOCATED IN THE COUNTY OF NEW YORK WAIVES ANY OBJECTION TO THE
LAYING OF VENUE IN SUCH A COURT; AND WAIVES ANY RIGHT TO TRIAL BY JURY.
8. Change of Circumstances.
(a) If after the date hereof there shall become effective any change in any law
or regulation, in the application or interpretation thereof by a governmental
authority, or there shall be issued or changed any guideline (whether or not
having the force of law) by an entity charged with responsibility therefor,
including without limitation any issuance or change in respect of reserve,
capital adequacy, asset ratio, tax or similar requirements, or if any such
authority or entity shall request or direct that Lender comply with any law,
regulation or guideline or if the Lender shall commence compliance with any law,
regulation, or guideline, either in effect or expected to become effective, and
if as a result of such change, request, direction or compliance the cost to the
<PAGE>
Lender of maintaining, or obtaining funds to satisfy, its commitment or its
other obligations regarding the transaction represented hereby shall increase,
the net income after taxes received or receivable by the Lender in connection
with this transaction shall be reduced or the return it would receive on its
capital or performance of this transaction shall be diminished, Borrower shall
compensate the Lender in the manner requested by the Lender so that the Lender
shall receive the sums or return on its capital it could not receive because of
such change, request, direction or compliance. The Lender's request for such
compensation shall be accompanied by a certificate setting forth the basis of
its entitlement thereto and shall be conclusive, absent manifest error. The
Lender shall not be entitled to compensation pursuant to this provision because
of an increase in tax rates applicable to its general income.
(b) If there shall be a change in an applicable law or regulation or in the
interpretation thereof, or a material change in the New York market and \ or
London Interbank Deutsche Mark market, including any changes set forth in the
foregoing paragraph (a), as may have occurred, so that in Lender's judgment it
shall become unlawful for Lender to continue such Borrowing in accordance with
this note, or if by doing so Lender, in its reasonable discretion, determines
that it would be subject to material adverse operational burdens or
restrictions, the Lender shall give notice of such fact to Borrower and
outstanding Principal and accrued interest, and all other sums owed to Lender,
shall forthwith become payable and Borrower shall pay to Lender such sums as
would be payable under this Note if a prepayment were made on the date of such
notice in an amount equal to the outstanding Principal of the Borrowing and
reimburse Lender for any fee, cost, expense or loss Lender shall incur or suffer
because of such change, in an amount to be determined by Lender in its
reasonable discretion.
9. Other Provisions.
(a) Borrower waives demand, presentment, protest, notice of dishonor and any
other form of notice, not expressly required of Lender by this Note, that may be
required to hold Borrower liable on this Note.
(b) Any notice or advice given to Borrower at the above address or any other
specified by it in writing shall be presumed received by Borrower immediately if
given by telex or facsimile transmission, within one day if given by telegram,
Express Mail or a recognized courier service, or within three days if deposited,
first class postage prepaid, in an official depository of the United States
Postal Service for mail to be delivered.
(c) Borrower shall reimburse Lender upon request for any out-of-pocket expenses,
including reasonable fees and disbursements of legal counsel, incurred in
connection with the enforcement of this Note or amendment of it, or any note
given an a replacement or in substitution for it, or maintenance of its right
thereunder. Each sum due to Lender under this Note, other than Principal and
interest, shall bear interest from the date of demand until the date of payment
in full at per annum rates equal to the lesser of two per cent above the Base
Rate or the maximum extent allowed by applicable law.
(d) In the event Lender extends credit to Borrower after the date hereof and
such extension of credit shall not be pursuant to a written agreement signed by
two officers of Lender or evidenced by a note accepted by Lender, it shall be
governed by and subject to all the provisions of this Note except that the term
and interest rate shall be as otherwise agreed.
(e) Neither Lender nor its directors, officer, attorneys, agents or employees
shall be liable to Borrower or any Affiliate for any loss or damage caused by
any act or omission on the part of any of them unless such loss or damage shall
have been caused by the gross negligence or willful misconduct of such person,
unless such loss or damage shall have been the direct, immediate and necessary
result of such act or omission and unless such result was intended by such
person or such person knew that such loss or damage was the probable result of
his act or omission.
(f) This Note constitutes the entire agreement with respect to the subject
matter hereof; Borrower has not relied upon any representation of Lender in
making the Borrowing or giving this Note. This Note supersedes all prior
agreements, understanding and arrangements, whether oral or written, regarding
the obligations of Borrower which it evidences, including specifically the
Promissory Note dated June 26, 2995 and the Restated and Amended Promissory Note
dated January 15, 1996.
(g) This Note may not be modified or amended except by an instrument or
instruments in writing signed by the person or entity against whom enforcement
of any such modification or amendment is sought, with two officers of Lender
<PAGE>
signing if it must sign: the waiver by Lender of any condition of, or any breach
or any term or provision of, this Note shall be limited to such instance and
shall not be construed as a waiver of the conditions generally or of any
subsequent breach.
(h) In the event any one or more of the provisions contained in this Note, any
amendment of it or any note taken as a replacement or in substitution for it,
should be invalid, illegal or unenforceable in any respect, the remaining
provisions shall not for that reason be affected or impaired in any way.
(i) Unless the context otherwise requires, words of any gender shall include
each other gender where appropriate.
(j) This Note shall inure to the benefit of, and shall be binding upon, Lender
and Borrower, their respective successors and Lender's assigns.
MARKER INTERNATIONAL, Borrower
By: /s/Brad L. Stewart
---------------------------
Title: Vice President & CFO
AMENDED AND RESTATED CONDITIONAL
PLEDGE AGREEMENT AND ASSIGNMENT
Marker International ("Pledgor"), whose address is 1070 West South, Salt Lake
City, Utah 84126 as an inducement to Bayerische Hypotheken -und Wechsel-Bank
Aktiengesellschaft, a banking corporation organized under the laws of the
Federal Republic of Germany, or any of its branches ("Bank"), to continue to
extend credit to Pledgor and to reduce the security held for such credit, hereby
agrees as follows:
WHEREAS, Pledgor entered a Pledge Agreement and Conditional Assignment
effective June 26, 1995 (the "Agreement"), in order to grant to Bank a security
interest in a time deposit (the "Collateral") in the amount of U.S. $3,500,000,
as an inducement to the Bank to grant Pledgor a term loan in the amount of DM
7,284,205.42 (the "Term Loan").
WHEREAS, Pledgor has requested Bank, and Bank has agreed, to release
$1,500,000 of the Collateral on the rollover date of December 27, 1996, and to
continue to hold as security for the existing Term Loan the remaining Collateral
in the amount of $2,000,000.
NOW, THEREFORE, Pledgor agrees, subject to the Bank's consent, to amend and
restate the Agreement, as follows:
A. In Line 2 of Parargraph 3, the words "nor shall Bank allow" are deleted and
the words "except with the Bank's prior written consent" are substituted in
their place.
B. All other terms of the Agreement are incorporated herein by reference, in
their entirety.
This Amendment shall be governed by the laws of the State of New York, as
applied to contracts to be performed wholly in that State.
Dates: as of December 18, 1996
Marker International, Pledgor
By: /s/Brad L. Stewart
---------------------------
Title: Vice President & CFO
Accepted and Agreed:
Bayerische Hypotheken -und Wechsel-Bank
Aktiengesellschaft, New York Branch
By:____________________________
Title:_________________________
By:____________________________
Title:_________________________
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<S> <C>
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<FISCAL-YEAR-END> MAR-31-1997
<PERIOD-START> OCT-01-1996
<PERIOD-END> DEC-31-1996
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<RECEIVABLES> 54489
<ALLOWANCES> (1706)
<INVENTORY> 34050
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<PP&E> 36958
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0
0
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