<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K/A
(AMENDMENT NO. 1)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED MARCH 31, 2000
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
MKR HOLDINGS
(Exact name of registrant as specified in its charter)
UTAH 87-0372759
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1070 WEST 2300 SOUTH
SALT LAKE CITY, UTAH 84119
(Address of principal executive office) (Zip Code)
Registrant's telephone number, including area code: (801) 972-2100
Securities registered pursuant to Section 12(b) of the Act: NONE
Securities registered pursuant to Section 12(g) of the Act:
Title of Class
--------------
COMMON STOCK, PAR VALUE $.01 PER SHARE
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
filing requirements for the past 90 days.
YES X NO
--- ---
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [x]
The aggregate market value of voting stock held by non-affiliates of
the Registrant as of June 30, 2000 (based upon the average of closing bid and
ask prices as of such date) was $946,209.
The number of shares of Common Stock outstanding as of June 30, 2000
was 11,120,577.
DOCUMENTS INCORPORATED BY REFERENCE:
LIST HEREUNDER THE FOLLOWING DOCUMENTS IF INCORPORATED BY REFERENCE AND
THE PART OF THE FORM 10-K INTO WHICH THE DOCUMENT IS INCORPORATED: NONE.
<PAGE>
The information appearing in Part IV, Item 14, of MKR Holding's Annual
Report on Form 10-K for the fiscal year ended March 31, 2000 is hereby amended
to include the following financial statements of Marker International GmbH.
ITEM 14. EXHIBITS, CONSOLIDATED FINANCIAL STATEMENT SCHEDULES AND REPORTS ON
FORM 8-K
(a) 1. MARKER INTERNATIONAL GMBH
<PAGE>
AUDITOR'S REPORT
To the Shareholders of Marker International GmbH:
We have audited the accompanying consolidated balance sheet of Marker
International GmbH and subsidiaries as of March 31, 2000 and the related
statement of loss and cash flows for the nine months period then ended. These
consolidated financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these consolidated
financial statements based on our audit.
We conducted our audit in accordance with International Standards on
Auditing. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the consolidated financial
statements are free of material misstatement. An audit includes examining, on
a test basis, evidence supporting the amounts and disclosures in the
consolidated financial statements. An audit also includes assessing the
accounting principles used and the significant estimates made by management,
as well as evaluating the overall consolidated financial statements
presentation. We believe that our audit provides a reasonable basis for our
opinion.
The financial statements of Marker International GmbH have been examined by
another auditing firm, whose report have been provided to us. Our opinion
expressed in this report, insofar as it relates to the amounts included for
that company, is based also upon the audit of the other auditing firm.
In our opinion, the consolidated financial statements give a true and fair
view of the financial position of Marker International GmbH and subsidiaries
as of March 31, 2000, and of the results of their operations and their cash
flows for the nine months period then ended, in accordance with International
Accounting Standards.
Without qualifying our opinion, we draw attention to the fact that, as shown
in the accompanying consolidated financial statements, the Group has incurred
significant losses during its first business period and presents a deficit of
Euro 4,433 thousand at March 31, 2000. Management's plans in regards to these
matters are described in paragraph 1 of the notes to the consolidated
financial statements, and their success depends on the financial support of
the shareholders and the banks. At present bank negotiations are in process
with the purpose of establishing the conditions of credit lines to be granted
for the business period 2000/2001. Presently, the outcome of these
negotiations has not yet been defined. The consolidated financial statements
have been prepared assuming that the Group will continue as a going concern
and do not include any evaluation should the agreement not be reached.
<PAGE>
Page 2
Accounting practices used by Marker International GmbH in preparing the
accompanying consolidated financial statements conform with the International
Accounting Standards but do not conform with accounting principles generally
accepted in the United States. A description of these differences and a
partial reconciliation as permitted by Form 20-F of consolidated income and
shareholders' equity to U.S. generally accepted accounting principles is set
forth in Note 34.
/s/ Arthur Andersen S.p.A
------------------------------
Arthur Andersen S.p.A
Treviso, Italy,
June 19, 2000
<PAGE>
MARKER GROUP
CONSOLIDATED BALANCE SHEET AS OF MARCH 31ST ,2000
<TABLE>
<CAPTION>
March, 31 2000
Thousands of Euro
-----------------
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents Note 6 5.595
Trade receivables Note 7 18.268
Receivables due from related companies Note 8 280
Other receivables Note 9 303
Inventories Note 10 16.594
Prepaid expenses and accrued income Note 11 295
Other current assets Note 12 134
-----------
TOTAL CURRENT ASSETS 41.469
-----------
NON-CURRENT ASSETS
Tangible fixed assets Note 13 5.870
Goodwill Note 14 3.755
Intangible fixed assets Note 14 2.417
Other non current assets Note 15 531
-----------
TOTAL NON-CURRENT ASSETS 12.573
-----------
TOTAL ASSETS 54.042
===========
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
March, 31 2000
Thousands of Euro
-----------------
<S> <C> <C>
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Trade Payables 1.829
Related Companies Payables Note 8 4.453
Bank overdrafts and loans Note 16 21.290
Short-term portion of medium/long term Note 17 1.834
loans
Other payables Note 18,19 3.431
Creditors due within 12 months
Accrued Expenses and deferred income Note 20 1.550
-----------
TOTAL CURRENT LIABILITIES 34.387
-----------
NON-CURRENT LIABILITIES
Medium/long term loans net of Note 21 9.891
short-term portion
Parent Company loan Note 21 12.744
Medium/long term loans net of Note 21 1.453
short-term portion from related companies
-----------
TOTAL NON-CURRENT LIABILITIES 24.088
-----------
-----------
TOTAL LIABILITIES 58.475
-----------
SHAREHOLDERS' EQUITY
Share Capital Note 17 1.249
Translation Adjustments Note 17 (30)
Net result of the year Note 17 (5.652)
-----------
TOTAL NET EQUITY (4.433)
-----------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY 54.042
===========
</TABLE>
<PAGE>
MARKER GROUP
CONSOLIDATED INCOME STATEMENT FOR THE 9 MONTHS PERIOD ENDED MARCH 31ST, 2000
<TABLE>
<CAPTION>
Thousands of Euro
-----------------
<S> <C> <C> <C>
Net sales Note 22 20.516
Cost of sales Note 23 (16.432)
--------
GROSS PROFIT 4.084
Selling Expenses Note 25 (4.951)
Warehouse and Shipping Note 26 (702)
General and Administrative Expenses Note 27 (2.702)
Other Operating Expenses Note 28 (604)
Operating Expenses (8.959)
--------
PROFIT FROM OPERATIONS (4.875)
Financial Expenses, Net Note 29 (1.123)
Other Expenses Note 30 356
Other income (expenses) (767)
------ --------
PROFIT BEFORE TAXATION (5.642)
Current (10)
Deferred 0
------
Income taxes Note 31 (10)
--------
NET RESULT FOR THE YEAR (5.652)
========
</TABLE>
The Group's consolidated income statement is prepared for the 9- months
period from the incorporation of the parent company to March 31st, 2000. The
income statements of the operating subsidiaries are included for the 4 month
period from the date of their contribution into the Group - November, 30th,
1999 - to March, 31st, 2000.
<PAGE>
MARKER GROUP
CONSOLIDATED CASH FLOW STATEMENTS
FOR THE 9 MONTHS PERIOD ENDED MARCH 31ST, 2000
<TABLE>
<CAPTION>
Thousands of Euro
-----------------
<S> <C> <C>
NET PROFIT/(LOSS) OF THE PERIOD BEFORE FINANCIAL
EXPENSES AND NON-OPERATING EXPENSES (4.875)
Adjustments for:
- Depreciation, amortization and write-downs of
fixed assets 1.541
- Bad debt provision 336
---------
WORKING CAPITAL MOVEMENTS (2.998)
- (Increase) decrease in trade debtors 20.822
- (Increase) decrease in trade creditors (571)
- (Increase) decrease in stock 2.783
- (Increase) decrease in other current assets (120)
- (Increase) decrease in other current liabilities (891)
---------
NET WORKING CAPITAL MOVEMENTS 22.023
--------
NET CASH FLOWS ARISING FROM OPERATING ACTIVITIES 19.025
--------
Cash flows from investing activities:
- (Increase) decrease in tangible assets 1.535
- (Increase) decrease in intangible assets (869)
- (Increase) decrease in other non current assets (9)
---------
NET CASH FLOWS USED IN OPERATIONAL ACTIVITIES 657
Cash flows used in financing activities:
- Increase (decrease) of medium/long term loans (1.351)
- Net financial expenses (1.123)
- Other Income 422
- Other changes in equity (30)
---------
NET CASH FLOWS ARISING FROM/ (USED) IN FINANCING
ACTIVITIES (2.082)
CASH FROM THE CONTRIBUTION OF MARKER SUBSIDIARIES AS OF
NOVEMBER 30TH, 1999 (34.816)
Net Cash Flows (17.216)
Cash at the beginning of the year 0
Cash at the end of the year (17.216)
</TABLE>
<PAGE>
MARKER GROUP
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AS OF MARCH 31ST, 2000
1 GROUP PROFILE
MARKER International GmbH, located in Ruessenstrasse 6, in 6340 Baar,
Canton Zug, Switzerland, was registered on July 5th, 1999 at the Company
Registry of the Canton Zug. With effect of November 30th, 1999 , the
ongoing companies listed below have been contributed in MARKER
International GmbH by MARKER International Inc. located in Salt Lake City,
USA:
- MARKER Deutschland GmbH
- MARKER USA Inc.
- MARKER Canada Ltd.
- MARKER JAPAN Co. Ltd.
- MARKER Austria GmbH
- MARKER Ltd, in its process of winding up
Below is a chart of the Group's structure.
[FLOWCHART]
MARKER International GmbH owns 100% of the six MARKER subsidiaries
listed above.
H.D. Cleven, with 41,375 % share, is one of the two major shareholders of
MARKER International GmbH and he also holds a major share of Volkl Group,
which is a manufacturer engaged in the development, production and
world-wide distribution of skis, snowboards, tennis ware and clothes.
The second major shareholder of MARKER International GmbH, with a share of
41,375%, is Tecnica S.p.A by means of the holding Tesi II. Tecnica Group is
engaged in the development, production and world-wide distribution of
ski-boots, inline skates, and clothes.
MKR Holdings Inc. is the new name of the former shareholder of MARKER
operating companies world-wide, and holds 15% of MARKER International GmbH.
The residual shares are owned by minority shareholders.
1
<PAGE>
Tecnica and Volkl both serve the same end-consumer and retail market as of
MARKER Group does, thus creating commercial synergies for all these Groups.
MARKER Group is engaged in the development, production and world-wide
distribution of high quality ski bindings.
The production plant is located in Germany, in leased facilities.
With regards to major markets, USA, Canada, Japan and Austria, MARKER
products are sold by its own trade companies. In other countries, the
trading activity is entrusted to distributors. MARKER Canada Ltd. and
MARKER Japan Co. Ltd. also distribute the product lines of Tecnica and
Volkl.
The full business year of MARKER lasts from April 1st to March 31st.
The first business year of MARKER Group includes the operations of MARKER
subsidiaries for the four months period from the date of their contribution
- November, 30th 1999 - to March 31st, 2000.
MAJOR RESTRUCTURING EVENTS OF THE FIRST FOUR MONTHS OF THE NEW MARKER GROUP
Since January 2000, MARKER Canada Ltd. and MARKER Japan Co. Ltd, distribute
the product lines of Tecnica and Volkl, in addition to MARKER ski-bindings;
as a consequence they have increased their turnover and are allowed to
benefit from the improved infrastructure. Besides that the market demand
for sets of skis and bindings were met with a joint ski-skibinding-set of
Volkl and MARKER.
The production facility in Germany has been completely re-organised. The
reorganisation led to decreased production times, labor cost and higher
flexibility.
FINANCIAL SITUATION
Total net financial indebtedness of the Group amount to E41.617 thousand,
of which E27.420 thousand are towards banks and other private financiers,
and E14.197 thousand is towards the Parent Company and other related
parties. The detail of financial debts is indicated in paragraph 16 and 17
of these notes. The current portion of the net financial indebtedness
amounts to 23.124 thousand Euro. Interests accrue at annual rates from 2%
to 6%.
The financial situation described above is the result of the negotiations
with banks and other financiers during the period before the contribution
of MARKER operating companies to MARKER International GmbH, the purpose of
which was to give financial support to the start up and the re-organization
of the new MARKER Group.
As an important result of these negotiations, the German banks, which were
financing MARKER Germany GmbH, have forgiven debts for about E15,7 million.
As described in note 8, the parent company loan of E12.744 thousand is a
granted loan: according to the agreements with banks, the Group is not
allowed to reimburse the parent company loan up to the complete
reimbursement of the loans obtained by the banks. This
2
<PAGE>
parent company loan has the purpose to guarantee the banks and assure the
necessary financial support to the Group, without requiring periodic
reimbursements.
The major banks of MARKER Deutschland GmbH are the Bayerische Hypo- und
Vereinsbank AG and the Deutsche Bank AG. They have indicated their
willingness to further finance MARKER Deutschland GmbH after the
presentation of the year end report, the presentation of the budget
approved by the shareholders for the business year 2001 and the
registration of the MARKER trademarks at MARKER International GmbH.
All assets inventory, receivables, fixed assets, trademarks and patents
owned by MARKER Deutschland GmbH serve the German banks as securities.
The credit lines of MARKER USA Inc. and MARKER Canada depend on their
amount of receivables and inventory.
MARKER Japan Co. Ltd., and MARKER Austria GmbH have no credit lines
available.
LITIGATION
A major competitor called Atomic has sued MARKER for allegedly violating
one of their patents for a rental skibinding in Austria and Switzerland. To
the day of finalizing these notes, no final decision has been made by the
courts. In all of the countries MARKER was allowed to present its Speed
Point Demo Binding at trade shows.
With reference to Atomic litigation, no provision for risks has been
recorded in the consolidated financial statements, as no loss will
reasonably arise from it according to the available elements and the legal
consultant opinion.
2 SUMMARY OF RESULTS OF OPERATIONS
Sales revenues are Mio 20,5E. Out of the gross profit of Mio 4,8E there
results a margin of 23 %. Operating expenses are Mio 9E. Non operating
expenses are Mio 1,4E. The loss before taxes of the first four months is
Mio 5,6E. These results refer to a four-months period from December 1st ,
1999 to March 31st, 2000.
RESTRUCTURING PROGRAM OF BUSINESS YEAR TO 2000/2001
MARKER Deutschland GmbH has established a restructuring program to improve
productivity and reduce scrap and absenteeism rate in the production. In
addition the cost cutting program for all departments has continued.
For the distribution companies, cost saving programs have been established
and the distribution of additional program lines, especially for Tecnica
and Volkl, is in progress.
For all the MARKER Group companies, the controlling function has been
substantially improved.
3
<PAGE>
3 FORM AND CONTENT OF THE CONSOLIDATED FINANCIAL STATEMENTS
As described in paragraph 1), MARKER Group has been incorporated during the
fiscal year 1999-2000, by means of the contribution to MARKER International
GmbH of all investments held by an American holding company, located in
Salt Lake City. The consolidated financial statements as of March 31st,
2000 are the first financial statements prepared by the Group, and include:
- as far as the consolidated balance sheet is concerned, the assets and
liabilities of the parent company MARKER International GmbH and of all
its subsidiaries, which are either directly or indirectly controlled
by the parent company.
- with regards to the consolidated income statement, the income
statement of the parent company for the nine-months period from the
incorporation in July 1999 to March 31st, 2000, and the income
statements of its operating subsidiaries for the four-months period
from the date of the contribution - December 1st, 1999 - to March 31st
2000.
Because the business year 1999/2000 is the first business period of the new
MARKER Group, the consolidated financial statements do not show any
comparable figures.
The financial statements utilized for the consolidation consist of the
financial statements prepared for the approval of the relevant
shareholders' meetings. Such financial statements were re-classified in
order for their format to better comply with the criteria adopted by the
parent company.
Where necessary, these financial statements were amended to conform with
the accounting principles issued by the International Accounting Standards
Committee (I.A.S.C.) as adopted by the Group. Swiss requirements referring
to the consolidated financial statements have also been complied with.
All the amounts included in the consolidated financial statements and in
the relative notes are in thousands of Euro.
4 PRINCIPLES OF CONSOLIDATION AND FOREIGN CURRENCY TRANSLATION METHOD
The most significant principles of consolidation adopted in the financial
statements are the following:
(a) Global integration of the financial statements of the consolidated
companies and elimination of the carrying values of investments of the
parent company against the net equity at the date of the contribution.
Any excess of the cost of the acquisition over the purchaser's
interest at fair value of the identifiable assets and liabilities
acquired as at the date of the transaction, is stated as a
consolidation difference in the item Goodwill under Intangible Assets
and is amortized over the expected useful life. If a negative
difference arises, it is stated as a consolidated provision for future
risks and expenses under Other Long-Term Liabilities, where reflecting
expected future losses. Otherwise it is classified as a reserve under
the item Net Equity.
(b) In-full elimination of intragroup receivables and payables, income and
expenses and all other relevant intragroup transactions, including
Group dividends, write-downs, and
4
<PAGE>
revaluation of consolidated investments, unrealised profits and
losses, resulting from intragroup transactions, are also offset.
(c) At the balance sheet date, monetary assets and liabilities stated in
foreign currencies are converted into Euro at year-end rate. Net
Equity is converted at historical-exchange rate. Income statements are
converted at average-exchange rate. Exchange differences arising from
the conversion of foreign currency financial statements are charged to
Net Equity under the item Exchange Rate Differences".
Exchange rate used for the translation of items stated in currency
other than Euro
1 Euro = Unit of Local Currency
<TABLE>
<CAPTION>
AVERAGE IN THE
CURRENCY PERIOD MARCH 31, 2000
------------------ -------------- --------------
<S> <C> <C>
Swiss Franc 1,599232 1,592103
German Mark 1,955837 1,955837
Austrian Schilling 13,76046 13,76046
US Dollar 0,962177 0,957304
Canadian Dollar 1,399384 1,39334
Japanese Yen 103,48 100,5996
</TABLE>
5 ACCOUNTING PRINCIPLES
The consolidated financial statements have been prepared in accordance with
the accounting principles issued by the International Accounting Standards
Committee (I.A.S.C.). The most significant are the following:
a) Receivables -- Receivables are shown at their estimated realizable
value.
b) Inventories -- Inventories are valued at the lower of purchase or
production cost, determined on the basis of the average weighted cost,
and market or realizable value.
Manufacturing cost includes raw materials, and all related direct and
indirect costs.
The estimated realizable value is calculated considering both
manufacturing costs still to be incurred, and direct sales costs.
Obsolete or slow moving inventories are written off depending on their
possible utilization or sale.
5
<PAGE>
c) Tangible fixed assets -- Tangible fixed assets are stated at purchase
or factory cost, possibly increased by applying specific revaluation
laws. The cost includes direct and indirect costs which can be
reasonably attributed to the asset.
Accumulated depreciation is charged on the basis of the estimated
useful economic lives of the assets by using the following rates:
<TABLE>
<S> <C>
Buildings 10%
Plants and Equipment 33%
Industrial and Commercial Equipment 33%
Vehicles 20%
Furniture, fixtures and fittings 25%
Office Equipment 33%
</TABLE>
In the case of a permanent loss in value, the assets are written down
appropriately. If, during the following years, the conditions leading
to the write-down no longer exist, the original value is restored
appropriately amortised.
Ordinary maintenance costs are charged in full to the profit and loss
account. Maintenance costs that improve an asset are added to its
value and depreciated over its residual useful life.
d) Intangible fixed assets -- These are shown at purchase or production
cost, inclusive of ancillary expenses and are amortised on a
straight-line basis over the period they are expected to benefit.
The amortisation periods are as follows:
<TABLE>
<S> <C>
Trademarks 10 years
Patents 5 years
Setting up and development 3 years
Goodwill 5 years
</TABLE>
In the case of a permanent loss in value, the intangible fixed assets
are written down appropriately. In subsequent years, if the conditions
leading to the write down no longer exist, the original value is
restored appropriately amortized.
e) Securities held as fixed assets are valued at cost, which is written
down in case of durable losses. In subsequent years, if the conditions
leading to the write down no longer exist, the original value is
restored.
f) Payables -- Like other liabilities, payables are reported at their
nominal value.
g) Reserves for risks and charges -- Reserves for risks and charges
(included under Other Payables and Other Long Term Liabilities) are
provided to cover certain or probable losses or liabilities that could
not be specifically quantified or scheduled at the year-end.
Provisions reflect the best possible estimate ,based on the
information available.
h) Foreign currency transactions -- Receivables and payables originally
denominated in foreign currencies are translated into Euro using the
historical exchange rates ruling at the transaction dates. Exchange
differences realised on the collection of receivables and
6
<PAGE>
the settlement of payables are booked to the income statement. At the
year-end, receivables and payables originally denominated in foreign
currencies, are translated into Euro at the year-end exchange rates.
The exchange differences arising from the transaction are booked in
the income statement.
i) Pre-payments and accruals -- Pre-payments and accruals refer to
revenues and costs relating to two or more financial years in
accordance with the accrual basis of accounting.
j) Revenue and cost recognition -- Revenue from the sale of goods is
recognised on transfer of property, which generally coincides with
shipment. Cost and revenues are recognised in the financial statements
according to the accruals and prudence concepts.
k) Taxes -- These are recorded on the basis of estimated taxable income,
calculated in accordance with current regulations, taking into account
any tax credits due. Provisions are also made to a specific reserve
for deferred tax assets and liabilities arising from timing
differences between the results reported in the financial statements
and the corresponding amounts recognized for fiscal purposes, as well
as from consolidation adjustments (elimination of adjustments recorded
solely for tax purposes and of unrealised intercompany profit) and
from the deferred taxation of capital gains on the disposal of fixed
assets and business divisions and of capital grants. Deferred tax
assets are recorded only if it is reasonably certain that they will be
recovered and, therefore, prepaid taxes are only recognised if it is
probable that they will be absorbed by sufficient future taxable
income or, otherwise, that they will be eliminated in years in which
timing differences giving rise to an equivalent value of deferred tax
liabilities reserve.
6 CASH AND CASH EQUIVALENTS
At the date of the financial statements the item was composed as follows:
<TABLE>
<S> <C>
Cash on hand 13
Bank Accounts in Local Currency 5.466
Bank Accounts in Foreign Currency 116
-------
TOTAL 5.595
=======
</TABLE>
7 TRADE RECEIVABLES
At March 31, 2000, the item amounted to E18.268 thousands. The amount is
net of a provision for bad and doubtful debts of E1.353 thousand.
The high amount of trade receivables at the date of the financial
statements (about 90% of total sales of the period) is principally due to
the seasonality of sales, which are concentrated in autumn and winter.
Normally sales of products for wintertime are totally cashed in June and
July; sales of products for summertime are cashed in September or October.
In general the collection times are long in MARKER market.
7
<PAGE>
The reserve for doubtful accounts has been accrued based on a prudent
estimate on the risk of losses on receivables at the end of the period,
considering their age and the specific risk factor in the foreign markets.
8 RELATED COMPANY RECEIVABLES, PAYABLES AND LOANS
RECEIVABLES: the amount of E280 thousand refers to trading operations with
related companies which took place on an arms' length basis, and are
composed as follows:
<TABLE>
<S> <C>
Dolomite S.p.A 188
Tecnica S.p.A 19
MARKER International Inc. 58
Other related parties 15
---
TOTAL RELATED COMPANY RECEIVABLES 280
===
</TABLE>
Dolomite S.p.A. is a company of Tecnica Group. Other related company
receivables of E15 refer to Volkl Group companies.
PAYABLES AND LOANS: the balance of E4.453 thousand due to related companies
at year-end was composed as follows:
<TABLE>
<S> <C>
Payables:
Tecnica S.p.A 3.716
Volkl Group 618
C.T. Holding (parent company) 119
-------
TOTAL RELATED COMPANY PAYABLES 4.453
=======
</TABLE>
All payables towards related parties derive from commercial transactions
consisting in the purchase of finished goods, taken place on an arm's
length basis.
The balance of E1.453 thousand for Medium/Long term Payables due to related
companies at the year-end was composed as follows:
<TABLE>
<S> <C>
Volkl 818
Tecnica S.p.A 635
-----
TOTAL RELATED COMPANY PAYABLES 1.453
=====
</TABLE>
These payables derive from commercial transactions. With respect to them,
the Group has obtained from the related companies (they are the major
shareholders which control the Group through CT Sport Holding), an
extension of payment. The payables are non-interest bearing.
The amount of E12.744 thousand included in the item Parent Company Loans,
refers to a loan granted by the parent company C.T. Sport Holding. The
interests of the loan are determined according to the regulations of the
Swiss Tax Authorities for unsecured
8
<PAGE>
shareholder loans. Therefore the annual interest rate will be 4,5%;
interests are paid annually at March 31st. The loan does not have a
formally defined expiring date; in any case it is due beyond five years.
According to an agreement with the credit institutions which are financing
the Group, the loan which the parent company granted to MARKER Group cannot
be repaid before the repayment of the banks' loans.
9 OTHER RECEIVABLES
The item is composed as follows (in thousand of Euro), and the most
relevant item is Receivables For Territory Sales, which refers to trading
receivables due from representatives for samples.
<TABLE>
<S> <C>
Receivables from tax authorities 66
V.A.T. recoverable 52
Territory sales 149
Insurance 3
Advances to personnel 1
Other receivables 32
---
TOTAL OTHER RECEIVABLES 303
===
</TABLE>
10 INVENTORIES
As of March 31, 2000, inventories amounted to E16.594 thousand, and
consisted for the most part of the bindings produced by MARKER Germany,
included in the item Finished Goods. A minor amount of the stock is made up
of those goods which MARKER does not produce itself, but trades under its
brand. The total amount can be detailed as follows:
<TABLE>
<S> <C>
Raw materials 1.627
Work in progress 544
Finished goods 15.884
Reserve for obsolete or slow moving inventory (1.461)
-------
TOTAL 16.594
=======
</TABLE>
The reserve for obsolete or slow moving inventory has been accrued according to
the best estimate of the realizable value of obsolete stock made by the
management, based on the available information.
9
<PAGE>
11 PREPAID EXPENSES AND ACCRUED INCOME
As of March 31, 2000 the item consists of the following:
<TABLE>
<S> <C>
Rent installments 29
Insurance 27
Prepaid Air Ticket 122
Other 117
---
TOTAL 295
===
</TABLE>
12 OTHER CURRENT ASSETS
At March 31, 2000, the item was composed as follows:
<TABLE>
<S> <C>
Deferred Charges 90
Deposits 44
---
TOTAL 134
===
</TABLE>
13 TANGIBLE FIXED ASSETS
Net tangible fixed assets at March 31, 2000 amount to E5.870 thousand. In
Annex 2 is attached the detail of movements of Tangible Fixed Assets during
the period.
Main Tangible fixed assets refer to production plant and machinery at the
German production site in Eschenlohe, and to office furniture and equipment
at the distributors subsidiaries world wide. The buildings, where Group
companies run their activities, are leased.
As explained above, all tangible fixed assets, as well as patents, software
and the other assets in the consolidated balance sheet, are secured as a
warranty for banks credit lines.
10
<PAGE>
14 INTANGIBLE FIXED ASSETS
At the date of the consolidated financial statements Net Intangible Fixed
Assets amount to E6.172 thousand, and are detailed as follows:
<TABLE>
<CAPTION>
As of Transl. As of
01/11/99* Additions Amortiz. Differenc. 31/03/00
--------- --------- -------- ---------- --------
<S> <C> <C> <C> <C> <C>
Trademarks 2.369 -- (81) 14 2.302
Patents 4 4 (2) --- 6
Software 24 18 (2) 1 41
Other 23 44 (1) 2 68
----- ---- ----- --- -----
Sub total 2.420 66 (86) 17 2.417
----- ---- ----- --- -----
Goodwill 3.643 339 (257) 30 3.755
----- ---- ----- --- -----
Total 6.063 405 (343) 47 6.172
===== ==== ===== === =====
</TABLE>
* date of the contribution of MARKER operating subsidiaries to MARKER
International GmbH.
Trademarks refer to the amounts allocated to the trademark "MARKER" of a
portion of the surplus cost emerging from the elimination of the
investments in the subsidiaries against their equity at the date of the
contribution at the fair value of the assets and liabilities, according to
IAS 22. The total surplus cost which has arisen, is of E6.012 thousand, and
has been stated for E2.369 in the item Trademarks, and for E3.643 in
Goodwill. As stated in the section relating to the accounting principles,
the trademark is amortised in 10 years, and Goodwill is amortised in 5
years. Amortisation is calculated for the four-month period, from the date
of contribution to March 31st, 2000.
15 OTHER NON CURRENT ASSETS
At March 31, 2000, the item was composed as follows:
<TABLE>
<S> <C>
Guarantee Deposit 152
Security held as fixed assets 379
---
Total 531
===
</TABLE>
Security held as fixed assets mainly relate to membership rights, typical
of the Japanese economic environment, and are treated as shares. They are
valued at cost.
16 BANK OVERDRAFTS AND LOANS
At the date of the consolidated financial statements, Current Bank
Overdrafts And Loans amounted to E21.290 thousand. The item includes
current bank accounts for E21.155 thousand and short terms loans for E135
thousand.
11
<PAGE>
17 MEDIUM/LONG TERM LOANS
As of March 31, 2000, total loans amounted to E24.401 thousand, and were
split as follows:
<TABLE>
<S> <C>
Current Portion 1.834
------
Non-current portion 9.891
Related Parties non current (Note 8) 1.453
Parent Company Loan (Note 8) 12.744
------
TOTAL 24.401
======
</TABLE>
Medium/long term loans include loans from bank institutes for E4.160
thousand and loans from other private financiers for E7.565 thousand. They
are detailed in the following table:
<TABLE>
Expiring Current M/L term
date Interest rate portion portion Total
-------- ------------- ------- -------- -----
<S> <C> <C> <C> <C> <C>
Key Bank 12/31/04 2%(*) 54 318 372
M&T Bank 12/31/04 2%(*) 208 835 1.043
Sumitomo Bank 11/20/03 2% 98 263 361
Sanwa Bank 11/29/00 2% 219 - 219
Hypo Vereinsbank(***) 2001/2007 4,95%-6,1% 313 1.454 1.767
Deutsche Bank(***) 2001/2002 5,95%-5,65% - 397 397
Tauber (bonds) 06/01/06 5%(**) 160 1.408 1.568
Isomura 10/27/04 2% 782 5.216 5.998
------ ------ -------
1.834 9.891 11.725
======= ====== =======
</TABLE>
(*) Starting from 01/01/2004 the interests will be calculated at the
Swiss prime rate.
(**) Interests are charged starting from 06/01/03
(***) Data refer to several loans. The column "Expiring date" show the
nearest and the last expiring date of the loans. The column "Interest
rate" shows for each bank the minimum and maximum rate applied.
Interest rates shown in the table above give evidence that MARKER Group is
paying low interests on its indebtedness. As explained in the paragraph
related to the financial situation, this is the result of the negotiations
with banks before the date of the contribution, when bank institutes
decided to allow particular conditions in order to facilitate Group
reconstruction.
12
<PAGE>
18 OTHER PAYABLES
Other Payables as of March 31, 2000, consist of the following:
<TABLE>
<S> <C>
Employees 1.410
Employees-incentives 350
Social Security Institutions 213
Tax Payables 100
Legal and other consultancy 62
Promotions 245
Guarantees 693
Insurance 30
Other 328
-----
TOTAL 3.431
=====
</TABLE>
19 TAXATION
The amount of E100 thousands, included in Other Payables of Current
Liabilities, is mainly related to income tax payable.
Due to the losses suffered by almost all MARKER subsidiaries, the income
tax for the year is not significant.
The tax asset referred to the fiscal benefit due to the losses carried
forward in future fiscal periods has not been prudentially reflected in the
consolidated financial statements, as there is not a reasonable certainty
of realizing fiscal incomes in the near future. In fact the positive
effects of the results of the re-organization in course at present, will
probably be perceivable in a few years.
The total amount of losses carryforward is about E10.290 thousand. The tax
benefit not recorded in the consolidated financial statements amounts to
about E4.332 thousand.
20 ACCRUED EXPENSES AND DEFERRED INCOME
Accrued expenses and deferred income as of March 31, 2000, consist of the
following :
<TABLE>
<S> <C>
Interest due to banks 271
Rent & lease expenses 219
Interest due to third parties 251
Others 809
-----
TOTAL 1.550
=====
</TABLE>
13
<PAGE>
21 NET EQUITY
Deficit as of March 31, 2000, amounts to E4.433 thousand. Details in
movements of share capital are shown in Annex 3, which forms part of these
notes.
(a) SHARE CAPITAL
The Share Capital as of March 31st, 2000 is resolved, subscribed and
fully paid for E1.249 thousand.
(b) FOREIGN CURRENCY TRANSLATION
This item presents a negative balance of E30 thousands as of March 31,
2000. This reserve represents the difference arising from the
translation of the foreign currency consolidated financial statements.
A reconciliation between the parent company's share capital and earnings
and the corresponding items of the consolidated financial statements is
shown here below:
<TABLE>
<CAPTION>
Dec. 1, 1999 - March 31, 2000
Net Equity Net Profit (Loss)
---------- -----------------
<S> <C> <C>
Statutory Financial Statements of MARKER
International GmbH 1.260 4
Net Equity and results of the subsidiaries of
the relating investment values (2.794) (4.776)
Excess cost 350 (26)
Effect deriving from adjustment of goodwill
booked in MARKER Int. GmbH 786 786
Set-off of Intercompany profit (1.996) 316
Extraordinary intercompany income booked in
MARKER Int (1.979) (1.979)
Other Consolidation Adjustments (60) 23
------- ------
Consolidated Financial Statements of MARKER
International GmbH (4.433) (5.652)
======= ======
</TABLE>
14
<PAGE>
22 NET SALES
Net sales refer to the four month period from December 1st ,1999 to March
31st 2000. Net sales of products and services, net of returns, amount to
E20.516 thousand. They are as follows, split per geographic area:
<TABLE>
<S> <C>
Europe 3.688
North America 8.236
Other Countries 8.592
------
20.516
======
</TABLE>
Net sales for lines of products are split as follows:
<TABLE>
<CAPTION>
Sales amount Percentage
------------ ----------
<S> <C> <C>
Ski-Bindings 14.528 71%
Skates 2.244 11%
Ski 897 4%
Parts and accessories 856 4%
Boots 694 3%
Clothing 600 3%
Tennis 60 0%
Trekking 30 0%
Snowboard 9 0%
Others 598 3%
------ ----
20.516 100%
====== ====
</TABLE>
MARKER Group produces only ski-bindings, the other products being purchased
from other suppliers, in particular from related companies of Tecnica and
Volkl Group. During year 2000, MARKER Group has started to sell products
purchased from its related companies. This strategy will enable the Group
to benefit of commercial synergies, consisting in the reduction of selling
expenses, and on the possibility of offering to the client a complete range
of winter sporting articles.
15
<PAGE>
23 COST OF SALES
Cost of sales as of March 31, 2000 comprises cost of raw materials, all
direct and indirect production labor costs, ancillary materials and
consumables, utilities, maintenance, etc. The cost of sales include also
changes in inventory. It is split as follows in its basic components:
<TABLE>
<S> <C>
Raw material 5.299
Direct production costs 1.682
Overheads 3.524
Finished products 5.947
------
16.432
======
</TABLE>
24 PERSONNEL
At March 31, 2000 the work force stood at 363 people.
Below is the detail by department of the number of employees:
<TABLE>
<CAPTION>
Totals number of persons
Full-timers Part-timers Total
----------- ----------- -------
<S> <C> <C> <C>
Production 211 18 229
Selling 61 0 61
Warehouse and shipping 13 0 13
General and administrative 46 1 47
R&D 13 0 13
--- -- ---
TOTAL PERSONNEL 344 19 363
=== == ===
</TABLE>
25 SELLING EXPENSES
This item amounts to E4.951 thousand and is split as follows:
<TABLE>
<S> <C>
Wages & Benefits 1.198
Agents' commissions 960
Travel & Entertainment 383
Advertising 709
Trade Shows 476
Endorsements / Competition 220
Warranty 499
Other Selling Expenses 506
-----
4.951
=====
</TABLE>
16
<PAGE>
26 WAREHOUSE AND SHIPPING
This item amounts to E702 thousand and is split as follows:
<TABLE>
<S> <C>
Wages & Benefits 169
Rent / Lease Expense/Storage 158
Freight Expense 136
Supplies Expense 30
Contracted Services 2
Other Warehouse and Shipping 207
---
702
===
</TABLE>
27 GENERAL AND ADMINISTRATIVE
This item amounts to E2.702 thousand and is split as follows:
<TABLE>
<S> <C>
Wages & Benefits 1.104
Insurance 8
Product Liability Expense 57
Rent / Lease Expense 347
Depreciation and Amortization 436
Consulting Fees 480
Other G&A 270
-----
2.702
=====
</TABLE>
The item Depreciation and Amortization includes the amortization of
goodwill for E195 thousand.
28 OTHER OPERATING EXPENSES
Research and Development costs amount to E604 thousand, mainly due to
research and development activities for the implementation and improvement
of finished products. All R&D activities are carried at the German
production plant in Eschenlohe.
17
<PAGE>
29 FINANCIAL EXPENSES
This item amounts to E1.123 thousand and is split as follows:
<TABLE>
<S> <C>
Interest Income Other 177
------
177
Short term bank Interest Expenses (961)
Long term bank Interest Expenses (60)
Other Interest Expenses (279)
------
Total Interest Expenses (1.300)
------
Net Financial Expenses (1.123)
======
</TABLE>
The item Other Interest Expenses includes the interest accrued towards the
Parent Company C.T. Sport Holding with reference to the long term loans of
E12.744 thousand included in the consolidated liabilities.
30 OTHER INCOME
The amount of E356 thousand mainly refer to net exchange differences
recorded in the period.
31 TAXATION
The income tax for the nine months period ended March 31, 2000 amounts to
E10 thousand. The low amount is due to the losses incurred by all Group's
subsidiaries.
As mentioned in Note 19, the amount of fiscal losses carryforward is about
E10.290 thousand. No tax asset has been prudentially recorded with
reference to these tax losses.
32 POST CLOSING EVENTS
No important post closure events occurred.
18
<PAGE>
33 COMMITMENTS
The Group is committed with the following lease payments under operating
leasing or under other rental contracts (thousand of Euro):
<TABLE>
<S> <C>
2000/2001 1.625
2001/2002 1.301
2002/2003 1.105
2003/2004 914
2004/2005 878
-------
5.823
=======
</TABLE>
The most significant yearly installment refer to the production building in
Eschenlohe, which amounts to E878 thousand.
34 RECONCILIATION TO US GAAP
The basis of the preparation of these consolidated financial statements is
set out in Note 3 through Note 5. These accounting policies vary in certain
important respects from the accounting principles generally accepted in the
United States ("US GAAP"). The material differences affecting the profit
and loss account and shareholders' equity between generally accepted
accounting principles followed by the Group and those generally accepted in
the United States are summarized below.
The Group granted an equity compensation plan to one manager, as stated in
the employment agreement between the parent company Marker International
GmbH and the manager.
According to this agreement, the manager has received during the period a
minority interest in the parent company and, under some established
conditions, he will receive additional portions of Marker International
share capital at the end of each business period and within the date of
termination of the employment agreement. In case the manager decides to
terminate the agreement before its expiring date, Marker International GmbH
shall pay to him a fixed amount for buying back the shares, or,
alternatively, can accept that the manager maintains the equity for future
fair market value.
Based on the employment agreement, in case CT Holding (which is Marker
International GmbH parent company) shall complete the acquisition of the
15% interest actually owned by the former holding (Note 1), a further 5% of
Marker International share capital will be made available to the manager at
a price equal to the fair value, as determined in the transaction.
IAS do not require the recognition of the fair value of equity compensation
plans in the financial statements. According to US GAAP the equity shares
under these plans would be valued at their fair value and would be
accounted for as an expense of the period in which they have been
recognized to the employee. No effect would derive to the consolidated
shareholders' equity, as the fair value of the shares would correspondingly
increase the retained earnings.
19
<PAGE>
During the period the manager has received 2% of Marker International share
capital. These shares have been transferred to the manager in connection
with the closing of the Assets Purchase Agreement, under which the
contribution of Marker operating subsidiaries to Marker International GmbH
was realized (Note 3), and represent the compensation to the manager for
continuing employment with Marker.
The fair value of these shares is determined in about Euro 369 thousand,
based on the value attributed to the assets transferred to Marker
International GmbH in the above-referred transaction.
According to the employment agreement, Marker International GmbH shall pay
to the manager about Euro 313 thousand in case he leaves the Company after
March 31, 2000, i.e. before the termination of the agreement.
There is no income tax effect on the fair value of the granted shares.
RECONCILIATION TO GENERALLY ACCEPTED ACCOUNTING
PRINCIPLES IN THE UNITED STATES
(thousand of Euro)
CONSOLIDATED NET RESULT
<TABLE>
<CAPTION>
March 31, 2000
--------------
<S> <C>
NET RESULT IN ACCORDANCE WITH IAS (5.652)
Adjusted as follows:
- Fair value of the shares granted to one manager
according to an equity compensation plan (369)
-------
NET RESULT UNDER US GAAP (6.021)
=======
STATEMENT OF CHANGES IN CONSOLIDATED
SHAREHOLDERS DEFICIT UNDER US GAAP
BEGINNING BALANCE 1.249
Additional paid-in capital - fair value of the
shares granted to the manager 369
Translation Differences (30)
Result of the period (6.021)
-------
Balance as of March 31, 2000 (4.433)
=======
</TABLE>
20
<PAGE>
ANNEX 1
MARKER GROUP
COMPANIES INCLUDED IN THE CONSOLIDATED FINANCIAL STATEMENTS AS OF MARCH 31, 2000
<TABLE>
<CAPTION>
Company Capital Share in Ownership Interest
Local Currency
------------------------------------------ ---------------- ------------------
<S> <C> <C>
MARKER International GmbH CHF 2.000.000 Parent Company
Ruessensrasse 66340 Baar
Switzerland
MARKER Deutschland DM 5.000.000 100%
Olympiastrasse 2, 82438 Eschenlohe
Germany
MARKER Austria Ges.m.b.h ATS 1.000.000 100%
Gewerbestrasse 13, 5550 Radstadt
Austria
MARKER Canada Ltd CDN 2.250.100 100%
Cote de Liesse, Suite 100 St. Laurant,
Quebec-Canada
MARKER Ltd. US$ 1000 100%
P.O. Box 26548, 1070 West 2300 South
84119, Salt Lake City,
Utah-USA
MARKER Usa Skibindings US$ 1000 100%
P.O. Box 26548, 1070 West 2300 South
84119, Salt Lake City,
Utah-USA
MARKER Japan Co. Ltd US$ 1000 100%
1-1-3 Toranomon
Minato-Ku/Isomura building J-000
Tokio 105
Japan
</TABLE>
21
<PAGE>
ANNEX 2
MARKER GROUP
PROPERTY, PLANTS AND EQUIPMENT- MOVEMENTS OF THE PERIOD
(in thousands of Euro):
<TABLE>
<CAPTION>
Original cost
Beginning Transfers or
Balances* Additions Disposals Final
--------- ------------- --------- -----
<S> <C> <C> <C> <C>
Freehold land and building 383 0 (383) 0
Industrial Buildings 2.009 0 (2.009) 0
Plant & Equipment 18.248 620 (1.939) 16.929
Motor Vehicles 209 8 (26) 191
Office furniture & Equipment 5.860 350 (1.223) 4.987
------ --- ------ ------
Balance 26.710 978 (5.580) 22.108
====== === ====== ======
</TABLE>
<TABLE>
<CAPTION>
Accumulated depreciation
Beginning Accumulated Net Book Net Book
Balances Depreciation Depreciation Value Translation Value
(*) Expense on Disposal Final Beginning adjustments Final
--------- ------------ ------------ ----- --------- ----------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Freehold land and building 0 0 0 0 383 0 0
Industrial Buildings 22 0 (22) 0 1.987 0 0
Plant & Equipment 13.967 893 (1.896) 12.963 4.281 8 3.974
Moulds and Tools 0 0 0 0 0 0 0
Motor Vehicles 132 8 (4) 136 77 0 55
Office furniture & Equipment 3.904 278 (1.003) 3.179 1.956 34 1.841
------ ----- ------ ------ ----- -- -----
Balance 18.025 1.179 (2.925) 16.279 8.685 41 5.870
====== ===== ====== ====== ===== == =====
</TABLE>
(*) Beginning balances refer to the fair value of assets as of December
1st, 1999, date of the contribution of MARKER subsidiaries in MARKER
International GmbH.
22
<PAGE>
ANNEX 3
MARKER GROUP
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' DEFICIT FOR THE NINE MONTHS
PERIOD ENDED MARCH 31, 2000
(Thousands of Euro)
<TABLE>
<CAPTION>
Foreign Net profit Total
Share Currency Retained (loss) Shareholders'
Capital Translation Earnings for the year equity
------- ----------- -------- ------------ -------------
<S> <C> <C> <C> <C> <C>
Beginning Balance 1.249 -- -- -- 1.249
Translation Differences -- (30) -- -- (30)
Loss for the period -- -- -- (5.652) (5.652)
------- ----- ---- ------- -------
Balance as of March 31, 2000 1.249 (30) -- (5.652) (4.433)
======= ===== ==== ======= =======
</TABLE>
23
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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 in the City of
Salt Lake and the State of Utah on September 29, 2000.
MKR HOLDINGS
By: /s/ Kevin Hardy
------------------------
Kevin Hardy
President and Chief Financial Officer
Pursuant to the requirements of the Securities and Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
Signature Title Date
--------- ----- ----
/s/ Kevin Hardy President (Principal Executive September 29, 2000
------------------------ and Chief Financial Officer
Kevin Hardy (Principal Financial and
Accounting Officer)
/s/ Henry E. Tauber Director September 29, 2000
------------------------
Henry E. Tauber
/s/ Louis M. Alpern Director September 29, 2000
------------------------
Louis M. Alpern
