Yaba yaba testing
Marker stock trades about $250,000 worth a day. The uncertainty about the Sims deal seams to thwart interest in a otherwise very successful undervalued company. The Sims ruling coming in June is not a big deal! Santa Cruz is quite capable of carrying the high end for Snowboards. Marker could and should put their name in big letters on the boards coming out of the Salt Lake plant.
Putting the Marker Name on the snowboards will kill two birds with one stone. Sell a lot of boards, because of Marker's good name, and serve as a billboard for the Marker name. On the mountain Salmon Skis scream out the name, their bindings have a big S that is immediately identifiable. In contrast' I have to squint to identify Marker products waiting at the lift or walking outside the lodge. How many skiers are going to forgo using the best bindings going, because Marker's name is blaring of a snowboard?
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 declamatory 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.
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.
Marker stock has fallen $50million in value due to this Sims arbitration deal. Marker's sales, profits, and equity have increased from when the stock was valued at $10 a share.
MARKER INTERNATIONAL AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in Thousands) (Unaudited)
ASSETS
December 31, March 31,
1996 1996
CURRENT ASSETS:
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
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
December 31, March 31,
1996 1996
CURRENT LIABILITIES:
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
=========== ===========
My take is in April Marker will release good 4th qtr. Earnings.
I believe Sims will pay DNR for breaking their agreement. Sims and Dnr will go their separate ways.
JRR
Long Marker, and still sitting in the snow strapping my Burton's on. |
