Product Development and Intellectual Property
In order to maintain its leadership position and to continue to offer
technologically advanced ski 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 ski 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 all of its proprietary technology used in manufacturing Marker ski
bindings. During fiscal years 1999, 1998 and 1997, the Company's research and
development expenses from continuing operations were approximately $2.8 million,
$3.0 million, and $3.0 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 the Company's products. The
Company also regularly receives suggestions from ski racers 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. The Company has filed more than 17 patent applications over the past
three years and currently has over 93 families of patents and patent
applications covering its technology filed in numerous countries around the
world, of which over 29 are devoted to technology currently in use by the
Company. In addition, the Company owns 56 applied and registered trademarks, of
which 21 are used for our current product line.
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 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 relationship with retailers and shop personnel gives
the Company's ski products advantageous shelf space in certain retail outlets
and recommendations from shop personnel.
The Company's primary competitors are Salomon, Tyrolia/Head, Rossignol
and ESS/Atomic. 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 1998/99 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
approximately 20% in Japan.
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