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> |
