Product Development and Intellectual Property
In order to maintain its leadership position and to continue to offer
technologically advanced ski bindings, snowboards and Interface Step-in SystemTM
bindings, the Company continues to devote resources to improving and developing
its current products and those it will use in the future. The Company's
research, development and design of both ski and snowboard bindings is managed
by the Company's Research and Development Department (the "R&D Department") at
the Company's plant in Eschenlohe, Germany. The Company has developed
substantially all of the Company's proprietary technology used in manufacturing
Marker ski bindings and has acted in partnership with others in the development
of the Interface Step-in SystemTM binding. During fiscal years 1998, 1997 and
1996, the Company's research and development expenses were approximately $4.0
million, $3.1 million, and $2.8 million, respectively.
Product development is a result of the integrated efforts of the
Company's R&D, Manufacturing and Sales departments, all of which work together
to generate new ideas to be incorporated into its products. The Company also
regularly receives suggestions from ski racers and snowboard riders who use the
Company's products. After the Company decides to use a new component in a
product, the R&D Department, with the assistance of machine shop personnel,
integrates the mechanical process and refines the product design and mechanism
of the developing product. Simultaneously with the development of the internal
mechanisms of its products, the Company usually engages an outside firm to
assist in the determination of colors and the integration of shape with the new
technology.
The Company has a state-of-the-art laboratory used for testing products
in the development stage as well as products currently on the market.
Additionally, the laboratory technicians regularly test products produced by the
Company's competitors.
The R&D Department continually develops new components for which the
Company may obtain patents. The Company typically files its patent applications
in the name of Marker International or the appropriate subsidiary. Patent
applications have been filed in the United States, Germany, Japan and, in
certain cases, the countries in which the Company's competitors manufacture ski
bindings or snowboard products. The Company has filed more than 40 patent
applications over the past three years and currently has over 130 families of patents and patent applications covering its technology filed in numerous
countries around the world, of which over 35 are devoted to technology currently
in use by the Company.
The Company has been involved in patent disputes with its competitors
in the past. In connection with the resolution of such disputes, the Company has
negotiated settlements which include cross-licensing agreements involving
certain technology believed by the Company to be significant. Based on the
Company's analysis of its competitors' products, the Company believes it may
have present patent infringement claims. The Company has not determined whether
to pursue any such claims, nor is there any assurance that if so pursued, the
Company would be successful on the merits.
The Company markets its products under a number of trademarks
registered in various countries throughout the world. The Company believes that
the MARKER trademark is widely known as identifying high-quality,
high-technology ski bindings and is deemed to be a valuable asset of the
Company. The Company is not aware of any third party violations of its
trademarks.
Competition
The Company competes on the basis of the quality, technology, brand
name recognition and performance of its ski bindings, snowboards and snowboard
bindings, and related products. Other competitive factors include marketing and
distribution methods, customer service and the management of sales promotion
activities.
The Company devotes resources to establishing and maintaining strong
relationships with retailers and shop personnel through sales clinics, technical
training and certification, and discounted prices to shop personnel. The Company
believes that its strong relationships with retailers and shop personnel gives
the Company's ski products advantageous shelf space in certain retail outlets
and recommendations from shop personnel.
Ski bindings
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The Company's primary competitors are Salomon, Tyrolia, Rossignol and
ESS. Certain of the Company's competitors offer other ski equipment in addition
to ski bindings. Based upon market surveys of the alpine ski binding market in
the United States (computed in dollars), the Company estimates that its share of
the alpine ski binding market was more than 45% for the 1997/98 ski season.
Foreign market surveys available to the Company indicate that its alpine ski
binding market share for such period was more than 40% in Germany and more than
20% in Japan.
Due to existing technological and manufacturing barriers, as well as
the difficulty of overcoming lack of brand recognition and quality concerns, the
Company does not anticipate the entry of significant new competitors into the
ski binding market. |
