**VALUATION**

**Marker International GmbH**

**As ofMarch 31, 2001**

 

 

Prepared by

**HOULIHAN VALUATION ADVISORS**675 East 2100 South, Suite 260Salt Lake City, UT  84106Tel: (801) 322-3300; Fax: (801) 322-3310

**June 29, 2001**

** **

| **HOULIHAN VALUATION ADVISORS**VALUATION  & CAPITAL CONSULTANTS | ****   |
|---------------------------------------------------------------------|--------|
| June  29, 2001                                                      |   |

Mr. Robert BurrMKR HoldingsP.O. Box 26548Salt Lake City, UT 84126

Re:   ValuationUpdate of Marker International GmbH

Dear Mr. Burr:

Attached is thevaluation report on Marker International GmbH (hereinafter referred to as“Marker” or “the Company”) which Houlihan Valuation Advisors (“HVA”) hascompleted at the request of MKR Holdings. The purpose of the valuation is todetermine the value as of March 31, 2001 of a 15% interest in the Company heldby MKR Holdings. Pursuant to the terms of the Operating Agreement datedNovember 30, 1999 among Marker International GmbH, CT Sports Holdings AG andMarker International (subsequently renamed MKR Holdings), the valuation of the15% interest “shall not take into account any minority discounts with respectto the Oldco (MKR Holdings) equity interest.”

The report hasbeen prepared in accordance with the Uniform Standards of ProfessionalAppraisal Practice and the Business Valuation Standards I through VII set forthby the American Society of Appraisers.

The term “fairmarket value” is defined as the value at which a willing buyer and willingseller, neither being compelled to act and both being well informed of therelevant facts and conditions which might be anticipated, would effect a saleof an asset at “arm’s length” on a given date.

The businessvaluation study was undertaken using widely accepted principles of financialanalysis and valuation.  In particular,we observed the principles set forth in Internal Revenue Ruling 59-60, 1959-1CB 237.  The book value, transactionvalue, market value and income value methods of valuation were utilized inarriving at an estimate of the fair market value of the common stock of Marker.

In preparingthe report, we have used information provided by the Company.  It has been represented by the Company thatthe information is reasonably complete and accurate. We did not makeindependent examinations of information prepared by Company management which wasrelied upon and, accordingly, we make no representations or warranties nor dowe express any opinion regarding the accuracy or reasonableness of such.  All of the information made available to uswas carefully analyzed and reasonable attempts were made to find additionalinformation which would be helpful in this study.

All financialprojections relied upon were prepared by Marker management, which hasrepresented to us that such projections reflect its best estimates as to thefuture potential of the Company.  Itshould be emphasized that forecasting the future is at best a difficult andtenuous process.  There will undoubtedlybe disparities between the projected figures and actual results, since eventsand circumstances frequently do not occur as expected, and those disparitiesmay be material.

This report hasbeen prepared for the specific purpose of determining the value of a 15%interest in the Company held by MKR Holdings as of March 31, 2001, and isintended for no other use. The report is not to be copied or given tounauthorized persons without the direct written consent of HVA.

Since valuationis an imprecise science, HVA does not purport to be a guarantor of value.Reasonable people can differ in their estimates of value.  HVA does certify that this valuation studywas conducted and the conclusions arrived at independently using conceptuallysound and commonly accepted methods of valuation.

Our study hasconcluded that a reasonable estimate of the fair market value of the equity ofMarker (as defined by the Operating Agreement) as of March 31, 2001 is $21.7million. The estimated value of a 15% interest in the Company on that date is$3.255 million based on the Agreement whereby a minority interest discount isnot applicable to MKR Holdings’ 15% interest in the Company.

Neither HVA orits principals have any present or intended interest in Marker. HVA’s fees forthis valuation are based on professional time charges, and are in no waycontingent upon the final valuation figure determined.

HOULIHANVALUATION ADVISORS

| By:    |                        |
|--------|-----------------------------|
|   |                             |
|   | Frederic L. Jones, ASA      |
|   | Accredited Senior Appraiser |

** **

| ****                                                         |
|--------------------------------------------------------------|
| **TABLE OF CONTENTS**                                        |
|                                                         |
|                                                         |
| **TABLE OF  CONTENTS**                                       |
|                                                         |
| **PREFACE**                                                  |
|                                                         |
| **BASIC PRINCIPLES OF VALUATION**                            |
|                                                         |
| **INTRODUCTION**                                             |
|                                                         |
| PURPOSE                                                      |
| SCOPE                                                        |
| METHODOLOGY                                                  |
|                                                         |
| **COMPANY BACKGROUND**                                       |
|                                                         |
| OVERVIEW                                                     |
| MKR HOLDINGS                                                 |
| COMPANY HISTORY                                              |
| PRODUCTS                                                     |
| SALES                                                        |
| MARKETING                                                    |
| PRODUCT  DEVELOPMENT AND INTELLECTUAL PROPERTY               |
| COMPETITION                                                  |
| PROPERTY, PLANT AND  EQUIPMENT                               |
| MANAGEMENT                                                   |
| EMPLOYEES AND LABOR  RELATIONS                               |
| STRATEGY                                                     |
| OPERATIONAL DIRECTIVES                                       |
|                                                         |
| **ECONOMIC OVERVIEW AND  OUTLOOK**                           |
|                                                         |
| OVERVIEW NATIONAL ECONOMY                                    |
| EUROPEAN ECONOMIC OVERVIEW                                   |
| JAPANESE  ECONOMIC OVERVIEW                                  |
|                                                         |
| **INDUSTRY  OVERVIEW  - SPORTING GOODS  MANUFACTURING** |
|                                                         |
| STATE OF THE INDUSTRY -  2000                                |
| ALPINE SPORTS  PRODUCTS                                      |
| ALPINE SKI EQUIPMENT MARKET                                  |
|                                                         |
| **FINANCIAL REVIEW**                                         |
|                                                         |
| **CROSS  SECTIONAL ANALYSIS**                                |
|                                                         |
| **ESTIMATES OF VALUE**                                       |
|                                                         |
| OVERVIEW                                                     |
| NATURE OF THE SECURITY                                       |
| NORMALIZATION OF EARNINGS                                    |
| BOOK VALUE                                                   |
| TRANSACTION VALUE                                            |
| MARKET VALUE                                                 |
| INCOME VALUE                                                 |
|                                                         |
| **SUMMARY  AND CONCLUSION**                                  |

 

| **EXHIBITS**   |                                                                            |
|----------------|---------------------------------------------------------------------------------|
|           |                                                                            |
| EXHIBIT #1     | HISTORICAL  INCOME STATEMENTS                                                   |
| EXHIBIT #2     | INCOME STATEMENT ITEMS AS A  % OF REVENUE                                       |
| EXHIBIT #3     | INCOME  STATEMENT ITEM GROWTH RATES                                             |
| EXHIBIT #4     | SELECTED  FINANCIAL RATIOS                                                      |
| EXHIBIT #5     | HISTORICAL  BALANCE SHEETS                                                      |
| EXHIBIT #6     | BALANCE SHEET ITEMS AS A %  OF ASSETS                                           |
| EXHIBIT #7     | SELECTED STATISTICS FOR  MARKER & OTHER SPORTING GOODS MANUFACTURERS        |
| EXHIBIT #8     | PROJECTED INCOME STATEMENT                                                      |
| EXHIBIT #9     | INDUSTRY  SAMPLE GROUP - DESCRIPTION OF COMPANIES                               |
| EXHIBIT  #10   | INDUSTRY  SAMPLE GROUP - PUBLIC MARKET DATA                                     |
| EXHIBIT  #11   | MARKET  VALUE RATIOS OF THE INDUSTRY SAMPLE GROUP                               |
| EXHIBIT  #12   | HISTORICAL  STRUCTURE OF YIELDS OBSERVABLE AND AVAILABLE ON SELECTED SECURITIES |
| EXHIBIT  #13   | COMPUTATION  OF APPLICABLE DISCOUNT AND CAPITALIZATION RATES                    |
| EXHIBIT  #14   | WEIGHTED AVERAGE COST OF  CAPITAL                                               |
|           |                                                                            |
|           |                                                                            |
| **APPENDICES** |                                                                            |
|           |                                                                            |
| APPENDIX  A    | CERTIFICATION                                                                   |
| APPENDIX  B    | STATEMENT  OF LIMITING CONDITIONS                                               |
| APPENDIX  C    | REVENUE  RULING #59-60                                                          |
| APPENDIX  D    | PROFESSIONAL  CREDENTIALS                                                       |

 

| **Preface** |
|-------------|

This valuation study was conducted by HoulihanValuation Advisors (“HVA”) at the request of MKR Holdings to provide anestimate of the fair market value on a controlling basis of the common stock ofMarker International GmbH (hereinafter “the Company” or “Marker”) as of March31, 2001. The purpose of the valuation is to determine the value of a 15% interestin the Company held by MKR Holdings. Pursuant to the terms of the OperatingAgreement dated November 30, 1999 among Marker International GmbH, CT SportsHoldings AG and Marker International (subsequently renamed MKR Holdings), thevaluation of the 15% interest “shall not take into account any minoritydiscounts with respect to the Oldco (MKR Holdings) equity interest.”

This valuation report has been prepared inaccordance with the Uniform Standards of Professional Appraisal Practice aswell as Business Valuation Standards I through IX set forth by the AmericanSociety of Appraisers.

In preparing this report, information providedby the Company was used. Management has represented the information as beingreasonably complete and accurate, and as fairly presenting the financialposition, prospects and related facts of the Company.  HVA is not in a position to certify the accuracy of basic dataprovided by management, and the validity of this valuation study is dependentupon the accuracy of such data.  HVA doescertify that conceptually sound methods were used in the valuation.

 

| ******Basic Principles of Valuation** |
|---------------------------------------|

The principles that have governed this analysis provide a basis for thedetermination of value where an active market for a company’s securities is lacking. The valuation procedure attempts to analyze the earning power of a company andthe ability of the company to convert this earning power into value. Earning power is related to the rates of return expected in the financialmarkets for various types of investment alternatives, with consid­eration givento past history, expected growth rates and risk.  This report provides adirect comparison between Marker’s operations and those of companies operatingin the same industry.  From this comparison, certain reasonableconclusions concerning the relative financial position and performance of theCompany may be drawn.

Fair market value is that value at which a willing buyer and willingseller, neither being compelled to act and both being well informed of therelevant facts and conditions which might be anticipated, would effect a saleof an asset at “arm’s-length” on a given date.

The value of securities of a corporation in thehands of its stockholders and the value of the underlying assets of thecorporation are often only incidentally related.  The value of securitiesthat are freely traded in a public market is influenced as much by externalfactors beyond the control of the company as it is by internal factors withinthe control of management.  Such external factors include:

             •            General economic conditions;

             •            Conditions existing within aspecific industry (e.g., degree of risk, stability or rate of growth);

             •            Public attitude and investorsentiment toward particular industries and companies.

Fair market value of securities that enjoy an active public market isdetermined by actual market quotations on a particular date, unless the marketfor a security is affected by some abnormal influence or condition.  Determination of fair market value ofsecurities of a closely held corporation, however, cannot be determined asprecisely, thus creating a need for independent professional businessvaluation. Principal weight must be given to evidences of earning power, bookvalue, dividend paying capacity, financial and competitive position, and otherfacts and circumstances which a potential buyer and seller would consider.Also, prices realized in actual sales of similar companies on or about thevaluation date afford a realistic measure of value.

Professional valuation of a closely held company cannot be consideredan exact science; however, experience has shown that comprehensive and thoroughvaluation analyses can generate ranges of value that are reasonable andrelevant.

The various techniques used in this report are based on differentconcepts and assumptions. As a result, their application produces a range ofpossible values. A single number within that range is given as a reasonableestimate of value as of the valuation date. It should be emphasized that, as is the case with publicly tradedsecurities, when expectations for Marker change over time, so does its value.Further, the value of a firm may fluctuate over time even though its internaloperating characteristics remain essentially unchanged. The securities marketplaces different significance on income and risk properties of companies asgeneral economic conditions vary.

 

| **Introduction** |
|------------------|

 

|           |
|-----------|
| *Purpose* |

The purpose of the valuation is to determine the value of a 15%interest in the Company held by MKR Holdings. Pursuant to the terms of theOperating Agreement dated November 30, 1999 among Marker International GmbH, CTSports Holdings AG and Marker International (subsequently renamed MKRHoldings), the valuation of the 15% interest “shall not take into account anyminority discounts with respect to the Oldco (MKR Holdings) equity interest.”

|         |
|---------|
| *Scope* |

Both internal and external factors that influence the value of Markerhave been analyzed and interpreted. Internal factors include the firm’s performance and financial structure,as well as the size and mar­ketability of the interest being valued. Externalfactors include, among others, the health of the industry and the position ofthe Company therein, economic trends, and conditions in the secur­itiesmarkets.

|               |
|---------------|
| *Methodology* |

The report first looks at the background andoperating characteristics of Marker.  Itnext provides overviews of the national and international economies and thesporting goods manufacturing industry, each important as a description of theenvironment in which the Company operates.

A financial analysis of the Company, as well asa comparative analysis of the performance of the Company with that of theindustry, follows.  Next, the report determines explicit values for theCompany via the application of alternative valuation techniques.  Fourvaluation methods are utilized: book value, transaction value, market value(derived from market value ratios of similar firms), and ­income value (basedon the present value of future benefits). After considering the assumptions andrelative justi­fication of each valuation method,theresults are synthesized into a fair market value estimate of the Company’scommon stock.

 

|                        |
|------------------------|
| **Company Background** |

** **

| *****Overview* |
|----------------|

Marker is a designer, developer, manufacturerand marketer of alpine ski bindings in North America, Europe and Asia. Markeris a holding company that operates through its subsidiaries, Marker DeutschlandGmbH (“Marker Germany”), Marker USA Inc. (“Marker USA”), Marker Japan Co., Ltd.(“Marker Japan”), Marker Austria Gesellschaft m.b.H (“Marker Austria”) andMarker Canada, Ltd. (“Marker Canada”) and Marker Ltd. (in the process ofwinding up).

Substantially all of the Company’s ski bindings are manufactured byMarker Germany in Eschenlohe, Germany. In addition to manufacturing thebindings, Marker Germany also distributes bindings in Germany, sells bindingsto subsidiaries of the Company and sells to independent distributors in Europeand other countries where the Company does not have a distribution subsidiary.The production of Junior bindings is outsourced to a third party manufacturerin the Czech Republic. Marker USA and Marker Japan each have their own salesforces and marketing departments for sales and marketing of bindings andrelated parts directly to retailers in the United States and to both retailersand wholesalers in Japan, respectively. In January 1998, Marker Canada begandistributing Marker ski bindings along with other brand name sportingequipment, including Tecnica ski boots, in-line skates, trekking boots andVölkl skis and tennis equipment. Marker Austria distributes the Company’s skibindings in Austria through an independent sales force.

Until March 1999, Marker Ltd., a subsidiary of the Company, designed,distributed and sold to retailers Marker branded clothing, gloves and luggageproducts for skiing and other recreational activities. On March 8, 1999, MKRHoldings and Marker Ltd. granted Ski & Sports Recreations Company, L.L.C.an exclusive, worldwide right to manufacture, market and sell Marker Ltd.’sapparel and luggage products utilizing the “Marker” tradename in return forroyalty payments equal to a percentage of net sales, which ranges from 3% to5%. Marker has the right to terminate the license agreement in the event annualnet sales fall below a certain level. In addition, Marker and Marker Ltd. may,at any time before March 21, 2001, acquire by assignment all of the rights ofSki & Sports Recreation Company under the license agreement. Marker andMarker Ltd. also have the right of first refusal through March 31, 2002 as toany sale or transfer of the business or assets used by Ski & SportsRecreation Company, L.L.C. for the manufacture, sale and marketing of theapparel business. 

 

|                 |
|-----------------|
| *MKR  Holdings* |

Prior to November 30, 1999, the Company’s business was owned andoperated by MKR Holdings. MKR Holdings was a holding company that operated itsbusiness through its subsidiaries, Marker Germany, Marker USA, Marker Ltd.,Marker Japan, Marker Austria and Marker Canada. MKR Holdings and itssubsidiaries were a leading designer, developer, manufacturer and marketer ofalpine ski bindings in North America, Europe and Asia.  Substantially all of MKR Holdings’ skibindings were manufactured by Marker Germany, which also distributed bindingsin Germany, to subsidiaries of MKR Holdings, and to independent distributors incountries where MKR Holdings did not have a distribution subsidiary.

On November 30, 1999 (the “Closing Date”), MKR Holdings soldsubstantially all of its assets (including the equity securities of itssubsidiaries) to Marker, a GmbH organized under the laws of Switzerland,pursuant to an asset purchase agreement (as amended by the Amendment to theAsset Purchase Agreement dated as of September 20, 1999, the “PurchaseAgreement”) between the Company and MKR Holdings. In exchange, Marker assumedsubstantially all of the liabilities of MKR Holdings and MKR Holdings receiveda 15% equity interest in Marker. The remaining 85% equity interest in Marker isheld by CT Sports Holding AG (“CT”), a joint venture between Tecnica S.p.A. andH.D. Cleven, the principal shareholder of the Völkl Group. Pursuant to thePurchase Agreement, CT was required to contribute to Marker $15,000,000 in cashfor its 85 % equity interest in Marker. As a result of CT’s purchase of 66.66%of Marker Canada in June 1999 for $1,025,501, CT’s actual contribution toMarker, which was a combination of debt and equity, totaled $13,974,499.

In connection with the Purchase Agreement, MKRHoldings and CT entered into an operating agreement which, among other things,grants CT an option (the “Option”) to purchase MKR Holdings’ 15% equityinterest in Marker at any time on or after November 30, 2001, at the then fairmarket value, subject to reduction in an amount equal to the sum of: (a) anyindemnity obligations of MKR Holdings to Marker, (b) all unreimbursed advancesfrom Marker for operating and administrative expenses (currently estimated tobe approximately $300,000 per year) and costs of defending indemnifiableclaims, if any, incurred by Marker, together with interest thereon, (c) alladvances by Marker to MKR Holdings to pay any income tax liability, togetherwith interest thereon, plus (d) $775,000. Thereafter, MKR Holdings will be liquidated and the net proceeds of theexercise of the Option will be distributed to the shareholders of MKR Holdingsin liquidation.  In determining fairmarket value, all of CT’s $15,000,000 transfer has been considered equity.

In connection with thePurchase Agreement, MKR Holdings reached agreements-in-principleregarding the restructuring of its debt and the treatment of such debt under aplan of reorganization with substantially all of its creditors that wereimpaired under the plan of reorganization. On August 19, 1999, MKR Holdings, DNRNorth America, Inc. and DNR USA, Inc. (collectively, the “Debtors”) filedvoluntary petitions for relief under Chapter 11 of the United States BankruptcyCode in the United States Bankruptcy Court for the District of Delaware (the“Bankruptcy Court”). On September 22, 1999, the Debtors filed the First AmendedJoint Chapter 11 Plan of Reorganization (as amended by the Amendment to theFirst Amended Joint Chapter 11 Plan of Reorganization, dated as of October 25,1999, the “Plan”) and a related disclosure statement (the “DisclosureStatement”). By order dated September 22, 1999, the Bankruptcy Court approvedthe Disclosure Statement as containing adequate information.  The Disclosure Statement and the Plan weresubsequently distributed to the Debtors’ creditors and shareholders forapproval, which approval was subsequently obtained. On October 27, 1999, thePlan was confirmed by order of the Bankruptcy Court (the “Confirmation Order”).Pursuant to the Confirmation Order, the Bankruptcy Court approved the Plan andthe Purchase Agreement on October 27, 1999. MKR Holdings did not distribute anysecurities in connection with the plan.

As a result of the events described above, MKRHoldings is no longer engaged in the conduct of business and operates for thesole purpose of holding and subsequently liquidating its assets (which consistsalmost entirely of its equity interest in Marker). MKR Holdings is required todissolve and liquidate all of its assets no earlier than November 30, 2002, andno later than November 30, 2004.  If theOption is not exercised prior to liquidation, then upon liquidation, theshareholders of MKR Holdings will receive an equity interest in Marker equal toeach shareholder’s pro rata share of MKR Holdings’ 15% equity interest inMarker.

|                    |
|--------------------|
| *Company  History* |

Marker was originally founded in 1952 by ski binding pioneer HannesMarker in Garmisch-Partenkirchen, Germany. Northwest Energy Corp. acquired theCompany in 1981 and its headquarters were moved to Salt Lake City, Utah.Williams Companies subsequently acquired Northwest in 1983. In 1984, WilliamsCompanies sold Marker to Hank Tauber, a former head coach of the United StatesWomen’s Ski Team. The Company went public in August 1994, selling 2.66 millionshares at an offering price of $7.00 per share.

In June 1995, the Company entered the snowboard business through a 25%equity interest in DNR Sportsystem (“DNR”). An additional 55% of the commonshares of DNR was purchased in 1996, bringing Marker’s total ownership in DNRto 80%. The acquisition was financed through a combination of bank debt and theproceeds of a secondary equity offering (June 1996). The Company formed DNR USAin 1997 to manufacture snowboards at a newly constructed 56,608 square footsnowboard manufacturing facility located in Salt Lake City. In addition, theCompany formed DNR North America and DNR Japan, as distribution companies forsnowboards and related products in the United States and Japan, respectively.

Due to a combination of slumping market growth,industry over capacity and the Company’s own financial difficulties, theCompany decided to dispose of its snowboard manufacturing operations, includingthe sale of its manufacturing facility in Salt Lake City, and exit thesnowboarding business in September 1998. Marker’s total loss from snowboardingwas approximately $38 million.

In June 1998, Hank Tauber stepped down as theCompany’s chief executive officer. Prior to the Board’s appointment of PeterWeaver as Marker’s President and Chief Executive Officer in October 1998, aturnaround consultant was hired to serve as interim chief operating officer andto renegotiate the Company’s bank facilities.

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|------------|
| *Products* |

The Company designs, develops, manufactures and distributes skibindings consisting of more than 25 high quality models. The models range fromhigh performance racing models, such as the Logic M9.2 Turbo SC Racing andother top-end models featuring the Company’s patented Selective Control System,Biometric Programmed Upward Release and Comshock Piston, to the children’s M1.2model. Suggested retail prices in the United States of such models range from$120 to $395.

In addition to a ski binding’s primary functionof attaching a ski to a ski boot, the binding serves as a safety mechanism. Thetiming of a binding’s release mechanism is significant in both its retentionand release functions. When a skier applies an amount of force to a ski bindingthat exceeds the safety setting of the binding, the binding is designed torelease the ski boot from the ski in order to decrease the risk of injury tothe skier. Therefore, a binding must be designed to recognize specific levelsof force exerted against it.

Marker bindings feature Logic, BioMetric, EdgePressure System and Gliding AFD technology. The Company’s patented technologytightly couples the ski boot and binding, resulting in a binding system that isdesigned not to be affected by contamination between the ski boot and bindingand provide more power to the ski, less fatigue to the skier and addedprotection from injury.

 

|         |
|---------|
| *Sales* |

Approximately 60% of the Company’s total skibinding orders for each fiscal year ending March 31 are obtained through its“Pre-Season Sales Program,” which runs from February 1st throughSeptember 15th. Marker bindings ordered under the Pre-Season SalesProgram are shipped to retailers from July through November and are recorded bythe Company as sales on the date of shipment. This results in the recording ofthe majority of the Company’s annual sales during its second and third fiscalquarters. Although certain of Marker’s customers have contributed significantlyto the Company’s sales, no customer represented more than 10% of its sales inany of the last three years.

Approximately 35% of the Company’s total skibinding orders for each fiscal year are obtained through its “Reorder Program,”which includes products ordered after September 15th and shippedbefore March 31st of each year. Bindings sold under the ReorderProgram usually include models in the Company’s existing inventory andproducts, which will be discontinued in the upcoming season. The success of theReorder Program primarily affects the Company’s third and fourth fiscal quarterresults.

Approximately 5% of the Company’s total skibinding orders for a fiscal year are obtained through its Shop and ProPrograms, which offer reduced pricing on the Company’s products to retail skishop employees, ski instructors and other professionals in the industry. TheCompany believes recommendations from sales persons and professional skiers canbe an important factor in influencing consumer decisions to purchase aparticular binding brand.

|             |
|-------------|
| *Marketing* |

The Company actively advertises and markets itsproducts. The Company spends the majority of its advertising budget onadvertisements in ski magazines such as *Skiing Magazine, Ski Magazine, and Powder Magazine*inthe United States, and similar magazines in foreign markets.

To increase brand recognition, in addition to offering technologicallyadvanced bindings, the Company aggressively markets the Marker brand name. Toinfluence its presence in retail shops, the Company devotes resources tomaintaining and improving its relationships with retailers and shop personnel.By conducting in-shop sales clinics, shop employees are encouraged to recommendMarker products to their retail customers. In addition, the Company, as part ofthe United States Authorized Retailer Program, requires that all authorizedretail shops employ a technician who has been trained and certified by theCompany concerning the installation and adjustment of Marker bindings. Lastly,the Company sells its bindings to the sales staff of its retailers and toprofessional skiers at special prices so that they will be able to recommendthe Company’s products as a result of personal experience.

To foster the recognition of the Marker brandname, the Company also establishes endorsement relationships with national skiteams and racing professionals. These endorsement contracts, which typicallyrun from one to two years and provide for a base payment to the racer, withadditional payments for placing in a competition. Racers endorsing and usingMarker bindings have won many Olympic, World Cup and professional skicompetitions.

|                                                  |
|--------------------------------------------------|
| *Product  Development and Intellectual Property* |

In order to maintain its leadership position andto continue to offer technologically advanced ski bindings, the Company devotesresources to improving and developing its current and future products. Theresearch, development and design of its ski bindings are performed by theCompany’s Research and Development Department at its plant in Eschenlohe,Germany. The Company has developed substantially all of its proprietarytechnology used in manufacturing Marker ski bindings.

Product development is a result of the integrated efforts of theCompany’s R&D, Manufacturing and Sales departments, all of which worktogether to generate new ideas to be incorporated into its products. TheCompany also regularly receives suggestions from ski racers who use theCompany’s products. After the Company decides to use a new component in aproduct, the R&D Department, with the assistance of machine shop personnel,integrates the mechanical process and refines the product design and mechanismof the developing product. Simultaneously with the development of the internalmechanisms of its products, the Company usually engages an external design firmto assist in the determination of colors and the integration of shape with thenew technology.

The Company has a state-of-the-art laboratory used for testing productsin the development stage as well as products currently on the market.Additionally, the laboratory technicians regularly test products produced bythe Company’s competitors.

The R&D Department continually develops new components for which theCompany may obtain patents. The Company typically files its new patentapplications in the name of Marker Deutschland GmbH. Patent applications havebeen filed in the United States, Germany, Japan and, in certain cases, thecountries in which the Company’s competitors manufacture ski bindings. TheCompany has filed more than 25 patent applications over the past three yearsand currently has over 100 families of patents and patent applications coveringits technology filed in numerous countries around the world, of which over 30are devoted to technology currently used by the Company.  Currently patent trials are going on inAustria and Switzerland that were started by Atomic, a competitor.

The Company markets itsproducts under a number of trademarks registered in various countriesthroughout the world. The Company believes that the Marker trademark is widelyknown as identifying high-quality, high-technology ski bindings and is deemedto be a valuable asset of the Company. The Company is not aware of any thirdparty violations of its trademarks.

|               |
|---------------|
| *Competition* |

The Company competes on the basis of thequality, technology, brand name recognition and performance of its ski bindingsand related products. Other competitive factors include marketing and distributionmethods, customer service and the management of sales promotion activities.Marker’s competitors in alpine ski bindings include Adidas-Salomon (“Salomon”brand), Atomic (“ESS” brand), HTM (“Tyrolia” brand) and Rossignol (formerly“Geze” and “Look” brands).

| ******                           |
|----------------------------------|
| *Property,  Plant*and*Equipment* |

The Company operates under anadministrative services contract from Tecnica USA in West Lebanon, NewHampshire.  The facilities includeadministrative offices and warehousing and distribution.  Additionally, the Company leases 3,900square feet of showroom and sales office space in Park City, Utah.  The lease expires in March 2004.

The Company leases a 124,146 square foot office,research and development and manufacturing facility in Eschenlohe, Germany.Nearly all of the Company’s binding products are manufactured at this facilitywhich houses technologically advanced production and quality assurancemachinery. The Company believes that the facility is well suited to meet themanufacturing needs of the Company; it is presently utilized at approximately65% of total capacity. The lease for the manufacturing facility expires inOctober 2012. The lease was purchased by a related party in 2000 at a discount.However, as of March 31, 2000, the terms of the lease to Marker remainedunchanged.

The Company also leases three offices in Japanfrom which sales and distribution activities are directed. These offices arelocated in the cities of Tokyo, Sapporo and Osaka and comprise approximately3,500, 500 and 675 square feet, respectively. In addition, Marker Japan leaseswarehouse space for inventory storage in Tokyo and Osaka totaling approximately12,900 and 1,075 square feet, respectively. Management believes that thesefacilities are suitable for the required operational needs of Marker Japan.

The Company also leases a 4,700 square footfacility in St-Laurent, Quebec to house sales and administration staff forMarker Canada. Warehouse space in Canada is leased as needed from a publicwarehouse.

|              |
|--------------|
| *Management* |

In October 1998, Marker’s Board appointed **Peter Weaver as President and Chief Executive Officer**.Mr. Weaver previously worked for Marker before leaving for a seven-year stintas President of Easton Technical Products. At Easton, he was responsible forgrowing the company’s archery and mountain product lines. During his previoustenure at Marker, Mr. Weaver’s roles included President of Marker USA andManaging Director of Marker Germany. Peter has been involved with sportinggoods manufacturing and marketing since 1973. He holds a BA from Amherst College and a MS from University ofPennsylvania.

**Ingrid Genau is a ManagingDirector and Chief Financial Officer of Marker Germany.** She has been the CFO of the operationscompany in Germany since September 1999. Ms. Genau is a business and accounting executive with over 15 years ofexperience in aerospace and sporting goods. Her prior experience includes CFOof Mistral/North Sails, a manufacturer and marketer of sailboards, sails, andclothing. Prior to Mistral/North Sales, she was a controller for Dornier, aGerman aircraft company.

**Michael Dingman is the GeneralManager of Marker Canada.**   Mr. Dingman is a former employee ofBenetton in Canada.  He has extensiveexperience in the sales and marketing of ski equipment, skates and generalsporting goods.

**Eiichi Isomura is the Presidentof Marker Japan.**He is also the president of two other Japanese companies, Isomura Sangyo KaishaLtd. and Isomura. He was trained as an engineer in Germany. Mr. Isomura has astrong background in operations over the last 35 years.

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|----------------------------------|
| *Employees  and Labor Relations* |

Marker’s non-unionized workforce consists ofapproximately 344 full-time employees and 19 part-time employees. Of these, 229employees are involved in production, 61 in selling, 13 in warehousing andshipping, 47 in general administration, and 13 in research and development. Asof June 2001 unionized employees of Marker Germany (ca. 80) are engaged insporadic strike activity.  Management isworking actively to resolve these disputes.

|            |
|------------|
| *Strategy* |

To meet the Company’s goal of returning toprofitability, generating an operating profit margin of at least 12%, andgrowing the Company through strategic partnerships in the winter sportsbusiness and brand licensing, Mr. Weaver has communicated the followingstrategic imperatives:

| • | Renewed emphasis on alpine ski bindings as the  core business.                                                                                                                                                                                                                                                             |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| • | Maintaining Marker’s position as the  technological leader in alpine bindings.                                                                                                                                                                                                                                        |
| • | Operational planning and control will be  shifted to the Company’s manufacturing and product development facilities in  Eschenlohe, Germany. Marker Germany will assume centralized planning  authority as a means of assuring integral linkage among global forecasts,  demand, production and inventory management. |
| • | Marker International will function only as a  holding company to account for group activities.                                                                                                                                                                                                                             |
| • | The apparel business (previously operated as  Marker Ltd.) has been licensed to and financed by third parties, with a buy  back provision included in the licensing agreement.                                                                                                                                             |

*** ***
|                           |
|---------------------------|
| *Operational  Directives* |

Going forward, Marker intends to operate underthe following assumptions:

| • | Pricing to be established by local  subsidiaries or distributors based upon competitive factors at price points  in each market.                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| • | Maintenance of market share levels will not be  at the expense of supporting reasonable operating margins.                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
| • | Aggressive reorganization of the German  assembly operations to match industry demand requirements and increase plant  efficiency. The recent automation of the heel assembly process has yielded  substantial efficiencies and the toe assembly process has been targeted as  the next area for improvement. A highly reputed independent German consulting  group has been hired to lead the production reorganization initiative. Annual  cost savings after investment have been estimated at $6.3 million and will  reach full run rate by fiscal year 2003. |
| • | Production levels will be continuously  monitored against actual sales, to maximize flexibility in maintaining  reasonable minimal inventory levels.                                                                                                                                                                                                                                                                                                                                                                                                              |
| • | Overhead and operating expenses will be  reduced to levels commensurate with projected sales levels and target  profitability.                                                                                                                                                                                                                                                                                                                                                                                                                                    |
| • | R&D expenditures will be maintained at  current levels (2.8% of sales).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
| • | Intercompany charges will be utilized only for  product transfer in the ordinary course of business and fee payments.                                                                                                                                                                                                                                                                                                                                                                                                                                             |
| • | Potential inventory obsolescence to be covered  by establishing and maintaining prudent inventory reserves.                                                                                                                                                                                                                                                                                                                                                                                                                                                       |

 

| ****                               |
|------------------------------------|
| **Economic  Overview and Outlook** |

** **

|                              |
|------------------------------|
| *Overview  National Economy* |

A lot has happened in the three monthssince ValueLine last published the “Quarterly Economic Review.” For starters,the most controversial election since the 1876 Hayes-Tilden contest finally hasbeen settled and a new president has been installed. Second, the FederalReserve Board has shifted from a policy of monetary restraint to one ofmonetary ease, with the nation’s central bank having voted to reduce interestrates twice, for a total of one full percentage point, since the start of thisyear. Third, the U.S. economy, which appeared to be slowing just modestly threemonths ago, is now decelerating much more quickly, with the risk of recessioncurrently greater than any other time since the early 1990’s, in ValueLine’sopinion. Finally, the stock market, which went into a sudden tailspin whilerecent election drama was being played out, then rallied in January on optimismabout further interest rate cuts, has faltered anew, as optimism on rates nowhas been more than offset by pessimism about corporate profits in a weakeningeconomy.

At the same time, several basic themeshave remained in place. For example, oil prices have stayed in a fairly tightrange in the past three months, after having surged for much of last year;inflation has largely remained under control, although January’s larger thanexpected rise in both the Producer and the Consumer Price Indexes raisesconcerns for the first time in months; productivity (or worker efficiency) hasremained high; the global situation has continued to be relatively calm, with alarge part of the developed world experiencing weaker growth in line with theUnited States; and there has been a further absence of the kinds of exogenousshocks that could bring about upheavals, not only in the world’s financial markets,but with regard to the military balance overseas as well.

Overall, our sense is that the U.S.economy is not in a recession as the first quarter draws to a close. Indeed,the underpinnings in the consumer and industrial sectors now look to besufficiently sound for a recover to take hold after midyear, following a firsthalf in which GDP growth may be negligible at best.

ValueLine’s cautious optimism that wewill suffer, at worst, a brief and relatively mild recession, reflects not onlythe expectation that the Fed will continue to lower interest rates, but alsothe realization that still-high real estate prices, large imbedded gains in thestock market (much of which remain even after the market’s string ofreversals), and low unemployment will give consumers the wherewithal to spendthe sums needed to prevent an extended recession from evolving.

As always, ValueLine’s forecast comeswith several caveats that should be considered very carefully. The mostprominent of these is the possibility that the Federal Reserve may have keptits foot on the monetary brakes too long. That is, the Fed, which raisedinterest rates six times from mid-1999 to mid-2000, in an effort to slow thefrenetic pace of economic activity, might still have been lifting borrowing costsat a time when the economy was already in a slump.

A less likely possibility is that theeconomy does not slow as much as we suspect and that, as a result, the Fed’scurrent accommodative stance will cause growth to re-accelerate too quicklyduring the second half. Such a turn of events would increase the risk thatinflation might veer out of control. Another risk to ValueLine’s forecast isthat oil prices will surge anew, perhaps to the $40 or $50-a-barrel level, as aresult of a political or military misstep in the Middle East tinder box.Finally, there are the ever-present risks of an exogenous shock to the system,from natural or man-made disasters around the globe, including a drought or aflareup of hostilities.

**Economic Growth**The U.S. Gross Domestic Product expanded bybetter than 4% annually from 1997 to 2000. Recent events, however, make itclear that we will see no encore in 2001. In fact, growth overall this year maybe less than half the 5.0% rate of increase realized in 2000. Underlying ValueLine’sforecast of 2.0%-2.5% GDP growth is a contradiction in manufacturing activityin recent months, a sharp falloff in consumer sentiment, and an unevenmonth-to-month showing by the retail sector. A solid showing in housing, whichmay now be responding to the recent drop in mortgage rates, may prove to besomewhat offsetting, and could well prove the difference between havingessentially no growth for a quarter, or so, and suffering a recession of someduration.

Specifically, ValueLine estimates that GDPwill show little change in the current quarter, before rising by a relativelyweak 1%-2% in the second quarter. Thereafter, the pace of growth should quickenduring the third and fourth quarters, as the dual benefits of lower interestrates and an almost certain tax cut begin to be felt. Overall, we expect growthof 2.0% - 2.5% in 2001. We project that GDP will rise by 3% or so, in 2002, andthen increase by 3% - 4% a year through 2004-2006.

**Inflation**Here, too, there has been some revision inValueLine’s thinking over the past three months. Specifically, after an early2001 runup in inflation, ValueLine now expects gradually reduced pricingpressures over the balance of the year, reflecting the slower rate of growththan we had expected earlier. In ValueLine’s view, this more sluggish pace ofbusiness activity will reduce the competition for labor and materials, twomajor inflationary components. Moreover, energy supplies remain plentiful, withoil and gas prices likely to show greater stability as demand ebbs once thepeak heating season passes. Finally, productivity, a key measure of workerefficiency, is still rising. That will further help to keep inflationarypressures at bay in 2001.

Overall, ValueLine thinks consumer andproducer inflation will remain subdued this year, with price growth averaging2.0%-2.5%. Further, we see little on the horizon at this point to suggest thatthere will be any departure from the long-term trend of pricing stability overthe next 3 to 5 years.

**Interest Rates**The picture here has changed radically in thethree months since ValueLine’s last quarterly review of the economy. Back then,ValueLine had noted that the succession of interest-rate hikes had put theeconomy on a slow enough track to encourage the Fed to hold the line on furtherincreases. In fact, ValueLine opined that any additional economic weakeningmight “induce the Fed to trim rates in 2001.” The Fed, taking note of thedeterioration in the economy since late last year, has become more aggressivein this regard, having cut rates twice thus far this year. Moreover, withgrowth still faltering, the rationale for further Fed easing is in place.Indeed, comments on the economy by Fed Chairman Alan Greenspan, in which hestated that “for the period ahead, downside risks predominate,” would seem toimply that the Fed will lower rates again in the weeks ahead.

**Corporate Profits**Here, as well, the situation has changed in thepast few months, as one would expect given the aforementioned deterioration inthe economy. It is not that results to date have been all that bad. Indeed,fourth-quarter earnings generally met expectations. But, warnings about thenext couple of quarters accompanied many of the recent profit reports, with ahigh proportion of these warnings coming from the high-tech sector.

The tech warnings, in particular, havetaken the market by surprise, as some had naively assumed that the businesscycle was of concern mainly for the auto companies, the aluminum and paperconcerns, and the steel producers, and of little consequence to the tech group.That is clearly not the case. Not surprisingly, earnings estimates are comingdown, in some cases rather significantly. Overall, we think that earnings willshow very little growth this year. However, assuming economic activitystrengthens in the second half of this year and into 2002, corporate profitsshould rise nicely in the subsequent 12 months.

**Source**:The Valueline Quarterly Economic Review, March 2, 2001

 

|                              |
|------------------------------|
| *European Economic Overview* |

Average economic growth in the EU in 2000was one of the best in many years. However, the oil price hike eroded thepurchasing power of households and private consumption decelerated towards theend of that year. Now the EU economy is faced with the abrupt economic slowdownin the US and the consequences will be felt. They are expected to remainlimited thanks to resilient domestic demand and because the weakness of USeconomicactivityshould be short-lived. Growth in the EU has been revised down to 2.8 % onaverage in 2001, but is expected to be on a rising path in the second half ofthis year underpinned by sustained job creation. Inflation in the euro areawill be above 2% for a longish period, but next year it will dip again belowthe European Central Bank’s price stability objective. Public financeconsolidation continues in most Member States, but at the level of the EU,budgetary policy is mildly expansionary due to large tax cuts in a fewcountries*.*

**Austria**Relatively unscathed by the global downturn inlate 1998 and early 1999, Austria achieved a real GDP growth rate of 2.2percent in 1999 followed by 3.2 percent last year. The expansion has beenproceeding at a rate of three percent or greater since mid-1999 and is expectedto decline below three percent this year. Domestic consumption, supported byhigher employment, tax reductions and an accommodating fiscal stance, combinedwith robust merchandise exports to the CEECs are fueling the expansion. Capitalformation, similar to other primary macroeconomic parameters in Austria, hasremained very steady at a healthy 23 to 24 percent.

The Austrian Consumer Price Index (CPI),which has remained below two percent for more than five years, behavederratically during 2000, averaging two percent, before falling at year end.High energy prices and the impact of higher indirect taxes are largelyaccountable for the increase. Some concern exists that what is interpreted as atemporary surge in price levels may have an impact on imminent wagenegotiations, therefore creating an iterative impact on inflation. Expectationsare for inflation to fall below two percent in the current period.

Unemployment rates, no greater than 4.5percent during the last five years have been in decline of late and had fallento 3.7 percent by the end of the first quarter, 2001. Austria has had one ofthe EU’s lowest unemployment rates after Luxembourg and the Netherlands.Enterprise restructuring, public sector downsizing and the aging of the laborforce in general are expected to impact the employment situation in Austria incoming years.

**France**France was at the forefront of the EU economicturnaround, which began, in the second quarter of 1999. Real GDP growth of 2.7percent, which exceeded expectations, was fueled by household consumption andimproved corporate investment. The strong second-half 1999 performance combinedwith reduced structural rigidity in the labor market to produce significant jobgrowth, which is expected to continue throughout 2000. Inflation increased to1.3 percent in 1999 versus 0.3 percent in 1998, primarily due to high oilprices.

With unemployment in decline, wageincreases may contribute to maintaining inflation in the one to two percentrange in the next few years. France succeeded in bringing its budget deficitdown to 1.8 percent of GDP in 1999 as compared to 2.7 percent a year earlier.Further reductions in the deficit are forecast for 2000. Continued vigorousdomestic demand is expected to drive the French economy to a three to fourpercent increase in real GDP in 2000.

**Germany**German real GDP grew by 1.5 percent in 1999,falling from 2.2 percent achieved in 1998. Private consumption and capitalformation in machinery and equipment were the primary positive contributorswhile construction failed to recover from its three-year decline. The ConsumerPrice Index registered only a .6 percent increase in 1999, declining from .9percent the previous year. Persistently high unemployment, approaching 10percent, continues to be a problem with unemployment rates in eastern Germanydouble that of the west. Capital formation has been in steady decline as acomponent of GDP since 1994 and fell below 20 percent in 1998, but the finalthree quarters of 1999 reflected an upturn. Government austerity programs havesucceeded in reducing the size of the public sector to under 20 percent oftotal GDP during the last three years.

The prognosis for Germany in 2000brightened considerably early in the year as a depressed euro led to over a 15percent increase in real first quarter exports and capital formation continuedits momentum, growing nearly 6 percent over the first quarter 1999. Real firstquarter 2000 growth is estimated at 3.3 percent from the previous year. Inroadsinto unemployment were realized in early 2000 with further improvement expectedthroughout the year. The weak euro, combined with continued high oil prices andrenewed wage demands from Germany’s powerful labor unions, threaten theinflation forecast of one to two percent. Current forecasts of real GDP growthin Germany in 2000 center around three percent.

**Italy**Real GDP growth in Italy has languished for anextended period, remaining below two percent for the last four years. Lastyear’s increase of 1.4 percent was largely unchanged from 1998. However,forecasts for current year and 2001 growth have recently been upgraded toaround three percent as the economy enters a cyclical upswing supported bystrengthening global demand. Recovering emerging market economies combined witha depressed euro have had a positive impact on Italian trade due to a heavierreliance on these markets than the E.U. average. Italy’s persistent sub-pareconomic performance vis-à-vis its European partners during the 1990s has beenattributed to a number of factors: further deterioration of the employment situationin southern Italy as government investment activity has declined in theaftermath of “tangentopoli” (aka, bribesville); poor job creation as aconsequence of severe fiscal measures and rapidly increasing labor taxes; andan ineffectual public sector. The Italian output gap, measuring the shortfallof actual from potential performance, is the third highest amongst OECDnations, following Japan and Switzerland. Capital formation has increasedmodestly as a percentage of GDP the last two years but remained just below 19percent in 1999. Domestic demand remains dormant.

National unemployment had dipped below 11percent by April 2000, the lowest figure in many years, but unemployment in thesouth continued over 20 percent with young adult unemployment in the regionwell over 50 percent. While the government is under pressure to admit immigrantlabor in the north due to shortages, insufficient incentives exist to induceunemployed southern Italians, who typically benefit from a considerablefamilial security net, to migrate north. Italy’s greatest macroeconomic successhas been in lowering the inflation rate to acceptable levels by the middle ofthe last decade. While continuing high imported energy has increased pricelevel expectations, inflation is forecast to fall within the two to 2.5 percentranges for 2000 and 2001.

Italy’s center-left coalition governmentannounced a 2000-2001 budget in October which provides tax cuts and socialprogram increases valued at US$18 billion to 19 billion, largely for the benefitof consumers, through the end of next year. Political considerations may haveimpacted the magnitude of the package in the approach to next year’s elections,decreasing the likelihood of achieving the 2001 budget deficit target.

|                              |
|------------------------------|
| *Japanese Economic Overview* |

After a brief expectation for a recoveryin the Japanese economy in 1999, once again hopes for any recovery in theeconomy are dim. With price deflation and public debt that is at its highestpercentage of gross domestic product of any advanced nation, a sense of gloomhas settled over Japan. Once more, the economy has failed to recover and thestock market has hit 17-year lows. The high savings of the household sector andthe increased investment of the corporate sector allowed interest rates toremain low and fueled Japan’s unprecedented growth in the 1994-95 period.

Interest rates were brought back to zeroby the Bank of Japan in mid-March 2001. Inflation rates will supposedly stay atthat level until deflation is overcome. The bank had to take these measures asa result of two consecutive years of price deflation. While many approved themove, many others believe that more radical reforms are needed. Declines inprices for real estate and stocks in 2000 and in the first few months of 2001 -which hovered at a 16-year low in March 2001 –have been particularlydisconcerting. Bankruptcies have been on the rise in Japan. The number ofcorporate bankruptcies in Japan rose 0.3 percent to 1,448 in the month ofFebruary 2001 according to the Teikoku Data Bank. However the value ofcorporate bankruptcies fell 7.6 percent on an annual basis to 1.11 trillionyen. (US$9.3 billion) in the month of February 2001.

Industrial production in Japan tumbled4.2 percent in January 2001 from December 2000, the biggest month-to-month fallsince Jan. 2, 1995. The consumer price index fell 0.4 percent in 2000, havingfallen 0.3 percent in 1999. The Japanese economy grew by 0.8 percent in thefall of 2000. Japan’s government has said it is targeting a 1.2 percent growthin the 2001 fiscal year and 1.7 percent growth in 2002.

Among several concerns, one of thegreatest for the government has been reduced business investment, practicallythe only area of private sector growth in Japan. Secondly, there have beenconcerns of the job market’s deterioration that could pose a threat to theeconomies, which may further crimp consumer spending. All these factors couldreduce the projections for the growth rates in Japan for 2001 and 2002.

**Sources:***European Commission Presents Spring 2001 Economic Forecast,*EuropeanUnion in the US, April 2001*CountryWatch.com.IMF (www.imf.org)Economist (www.economist.com)Bank of Japan; www.cnnfn.com.*

** **

|                                                      |
|------------------------------------------------------|
| **Industry Overview - Sporting Goods Manufacturing** |

Marker designs, develops, manufactures and marketsalpine ski bindings in the United States, Europe and Asia. The Company is partof the larger outdoor specialty market and, as such, the following will providea brief overview of this industry.

|                                 |
|---------------------------------|
| *State  of the Industry - 2000* |

According to ORCA’s 2000 Outdoor RecreationParticipation Study, participation in human-powered outdoor recreationactivities remained at an all-time high in the United States last year.  The study concludes that at least once lastyear, more than 53 percent of Americans 16 and older – or nearly 111 millionpeople – participated in one or more of the 14 human-powered outdoor recreationactivities tracked by ORCA (including hiking, climbing, cross-country skiing,snowshoeing, etc.).

The total impact of these recreational activitieson retail sales is greater than $17.8 billion, of which outdoor specialtyretailers and chain stores captured approximately $4.78 billion. SnowSportsIndustries of America (SIA) reports 1999 retail sales of $2.3 billion, whilebike industry sales were estimated at $5 billion.

The impact of outdoor activities on total retail sales is understated, as thesefigures do not include fly-fishing sales, catalogue sales or results from verylarge single store retailers (e.g., L.L. Bean).  Nor do these figures factor in Internet purchases, whichrepresented 11 percent of all sporting equipment purchases from November 1999to March 2000.  Of these on-line sales,14 percent are attributed specifically to outdoor-related activities.

According to ORCA’s 1999 Top-line Reportentitled *ARetail Audit of Outdoor Specialty and Sporting Goods Stores*,retailers of all sizes reported sales increases over 1998.  Specialty stores posted 13.1 percentincreases, while sales in chains rose 3.4 percent.  Total sales of outdoor products finished up 6.6 percent over 1998with $4.78 billion in sales. Both specialty and retailers attribute much oftheir 1999 growth to especially strong holiday sales as well as an increase indiscounting and liquidation.

With the exception of apparel sales in the chainstores, both specialty and chain stores posted sales increases in each of thefollowing categories:  Apparel,Equipment and Footwear. From 1998 to 1999, equipment sales increased from $1.62billion to $1.78 billion, apparel increased from $2.10 billion to $2.19 billionand footwear increased from .$73 billion to $.83 billion.

Specialty stores are defined by ORCA as thosethat position themselves by offering performance merchandise, a high level ofservice and information and guidance about outdoor sports and the purchase ofmerchandise.  Examples of thisretail  channel include Adventure16.  Sales in specialty stores grew from$1.4 billion in 1998 to $1.6 billion in 1999. During the same period, sales of outdoor products increased from 32 percentof total sales to 34 percent of total sales. All three major merchandise categories grew at least 10 percent inspecialty stores.  In the Equipmentcategory, sales of big ticket items such as tents, sleeping bags and packsleveled off or declined, while sales of accessory items posted a 37 percentincrease.  Although the average retailpurchase price declined, strong sales contributed to an overall increase.

Chain stores are defined as those that carry abroad assortment of sporting goods merchandise.  Examples of chain stores include REI, EMS and SportsAuthority.  This retail channel reportedincreases of 3.4 percent, or $105 million, in the sale of outdoor products.  Equipment and Footwear posted particularlystrong sales, with increases of 9 and 14 percent, respectively.  These increases were offset by a 5 percentdecline in Apparel sales.  EquipmentAccessories posted extremely strong sales, while all other segments of theEquipment and Apparel categories (tents, sleeping bags, backpacks, travelluggage, climbing gear, clothing) saw significant sales declines.  Footwear fared better, with strongperformance in the Athletic Outdoor Shoes and Sports Sandals segments.

ORCA tracks an end user segment it callsEnthusiasts, which are defined as the most active participants in outdoorrecreation activities, and attempts to spot trends in the behavior of thisgroup.  The Participation Study of 2000shows moderate to high growth concentrated mostly in the more physicallydemanding and higher adventure sports, such as kayaking, climbing and telemarkskiing.  This growth was not strongenough to offset declines in higher-participation sports such as cycling,canoeing, and rafting.  The industry’srevenue growth was instead fueled by increased levels of participation byEnthusiasts and increases in spending by non-user consumers on outdoor appareland footwear.  The profile of the 111million Americans who participated in the recreation activities trackedindicates that about half of the participants are women,  most have a household annual income between$40 and $80 thousand, most have at least some college education, half havechildren under the age of 18 and about half are married.  The median age of participants across allsegments is 36.

**Source**: State of the Industry Report 2000, ORCA

 

|                                             |
|---------------------------------------------|
| *2000-2001 Sales of Alpine Sports Products* |

Sales of snow sports products remained steady inMarch, the last month of the 2001 selling season and the industry was able torecord its third best sales year ever with $2.2 billion in sales, reportsSnowSport Industries America (“SIA”), the non-profit industry trade group.  This season’s $2.2 billion in sales wasseven percent behind last year.

During the 1999-2000 season, scorching sales inFebruary and March ($814 million) pushed 2000 season sales to an all-time highof $2.4 billion, well above the $2.2 billion recorded in 1999.  Looking beyond the sales numbers indicatesthat the 2000-2001 season was a good year.  According to Leisure Trends Group, a research firm that prepares anannual Retail Audit for SIA, sales were down 5.4 percent in dollars, but unitswere up 5.2 percent.  The sales downturnwas caused almost completely by the average price dropping in alpine skiequipment.  Additionally, inventorieshave never been so low.   According toJim Spring of Leisure Trends, “the positive news is that unit sales are up,which is an expression of demand.  Whilethe other part of the equation is that inventories were too low to supportdemand.  The industry lost sales becauseof low stocks of best selling items.”

Spring asserts that “since many people viewskiing as too expensive, this is the year that technology in equipment droveprices down to the benefit of the consumer... In specialty stores, carver skisdropped in price significantly, ski boards sold for an average of $208, andtwintips for $321.”  Analysis of thesales returns indicates that the market is turning away from the expertskier.  Another factor credited forbrisk business was good snow conditions, which usually drives additionalspending on ski equipment.

Specialty Store SalesAll sales at specialty stores were $1.7 billion for the season, a 6 percentdrop from the $1.8 billion in 2000, but comparable to the $1.7 billion reportedin 1999.  In equipment only, specialtystore sales were $666 million, a 12 percent drop from 2000’s $758 million andoff the $732 million in sales in 1999.

In specific categories: alpine equipment hadsales of $467 million, down 16 percent from 2000’s $557 million and less than1999’s $560 million;  snowboardequipment had sales of $173 million, with no percent change from 2000, but morethan 1999’s $131 million;  and Nordicequipment reported sales of $25 million, down from 2000’s $28 million and wellbelow 1999’s $41 million.

Alpine ski sales for the year were $207 million,down 19 percent from 2000.  Mid-fat skiscontinued to be a positive selling item with sales of $80 million, up 6percent.  Twintip skis sales were $7million, a 243 percent increase over last year.

Alpine boot sales for 2001 were $172 million,down eight percent.  Adult sportsperformance boots led the way with $59 million in sales, up 62 percent, whileadult recreational boots showed a 21 percent jump to $15 million.  Sales of bindings were $72 million, down 26percent; and pole sales were $16 million, off two percent from last year.

Chain Store SalesAll sales at chain stores were $537 million, a one percent increase compared to2000’s $531 million, but not quite matching 1999’s $541 million in sales.

In the categories, alpine equipment sales were$80 million, down 12 percent;  sales ofsnowboard gear were $61 million, up 17 percent; and Nordic equipment sales were$8 million, down 27 percent.

Alpine ski sales at the chains came in at $34million, down 14 percent.  Alpine bootssales recorded $29 million in sales, down 12 percent.  Bindings sales totaled $13 million, down 13 percent; and polessales were reported to be around $4 million, up 39 percent.

**Source**: Snow Sports Industries Survey, June 12, 2001

|                               |
|-------------------------------|
| *Alpine Ski Equipment Market* |

A decline in worldwide participation hashampered the alpine ski equipment market. This trend has been driven by fourkey factors: (1) aging global population (participation dramatically declinesin the over 50 age group), (2) migration to snowboarding, at the expense ofalpine skiing, especially among new participants, (3) continued escalation ofcosts related to the ski experience (transportation, lodging, lift tickets,etc.) combined with the increased competitiveness for the entertainment dollarand (4) an increasing percentage of participants who are renting rather thanbuying skis. As a result, the alpine ski equipment market has been flat toslightly declining over the last five years.

 

|                       |
|-----------------------|
| **Financial  Review** |

The financial performance of Marker deterioratedduring the period examined in this report, comprised of the fiscal years endedMarch 31, 1996. Exhibit #1 presents the historical income statements of theCompany for the period.  Exhibit #2 reflectsincome statement data as a percent of sales, while Exhibit #3 reflects incomestatement item growth rates.  Selectedfinancial ratios for the Company are presented in Exhibit #4.

Sales during the 1996-2001 period decreased from$87.9 million in 1996 to $60.4 million in 2001. Over the period examined, salesdecreased at a compound annual growth of rate of 7.2%. Sales had grown at arapid rate from the time of the Company’s inception through 1995. Since 1995,sales have grown at a slower rate. In 1995, the Company entered the snowboardbusiness through a 25% equity interest in DNR Sport system (“DNR”).  An additional 55% of the common shares ofDNR was purchased in 1996, bringing Marker’s total ownership in DNR to80%.  Due to a combination of slumpingmarket growth, industry over capacity and the Company’s own financialdifficulties, the Company decided to dispose of its snowboard business inSeptember 1998.  By the time the Companyexited the snowboard manufacturing business in 1999, it had lost a total ofapproximately $38 million.

During the 1997-2000 period, the sale of theCompany’s primary products, ski bindings, also slumped.  Several factors contributed to the declinein the sale of the Company’s ski bindings. Generally, retail sales of ski equipment declined during the 1995-2001period.  Also, the Company had afunctional problem with its rental binding, which impacted the sales in thatmarket segment in the past several years.

During the 1996-2001 period, earnings decreasedfrom $3.4 million in 1996 to a loss of $48.0 in 1999.  In 2000, the Company reported a loss of $7.7 million, whichimproved to a net gain of $555,000 (adjusted) in 2001. Cost of sales as apercent of revenues increased from 59.8% in 1996 to 62.1% in 2001, averaging66.0% over the six-year period.  Grossmargin decreased correspondingly during the period, from 40.2% in 1996 to 37.9%in 2001.  Operating expenses as apercent of total revenue increased from 33.5% in 1996 to 47.8% in 1999, beforefalling to 32.6% in 2001, averaging 36.2% for the six-year period.  Income from operations declined from 6.6% in1996 to a loss of 21.5% in 1999, before rising to a positive 5.4% in 2001.  Net margin also declined during the six-yearperiod from a positive net margin of 3.9% in 1996 to a negative net margin of64.7% in 1999 before rising to 0.0% in 2001, averaging a negative net margin of15.0% for the six years.

Marker’s total asset turnover ratio, whichmeasures the efficiency with which the assets of the firm are utilized,improved somewhat during the six-year period, from 1.0 times in 1996 to 1.4times in 2001, although it dipped as low as 0.7 times in 1997. Receivablesturnover trended downward during the first part of the period, from 4.3 timesin 1996 to 2.6 times in 1998, then increased to 3.5 times in 2001, averaging3.4 times for the period. Inventory turnover trended upward during the period,increasing from 1.6 times in 1996 to 3.3 times in 2001.  The Company’s net fixed asset turnover ratiodecreased during the first part of the period from 6.7 times in 1996 to 4.3times in 1997 before increasing to 12.8 times in 2001.

Marker was profitable in three of the six yearsexamined in this report. Net income as a percent of sales was 3.9% in 1996 and5.5% in 1997.  In 1998-2000, however,the Company reported significant losses.  Net loss as a percent of sales was 21.3% in 1998, 64.7% in 1999and 13.7% in 2000.  In 2001, Markerreported net income as a percent of sales of a positive 0.9% (adjusted).

Exhibit #5 presents the Company's balance sheetsas of March 31, 1996-2001. Exhibit #6 presents balance sheet data as a percentof total assets.  The balance sheetsreflect an increase in the Company's financial risk over the period.  The Company's adjusted total liabilities tototal asset ratio increased from 76.2% in 1996 to 150.5% in 1999, beforefalling to 110.2% in 2001. Long-term debt as a percent of equity increasedduring the early part of the period, rising from 0.7 times in 1996 to 1.2 timesin 1998, before falling to a negative 2.6 times in 2000.  Long-term debt to equity increased to anegative 1.7 in 2001, averaging  anegative 0.3 times for the six-year period. The Company's liquidity, asmeasured by the current ratio, rose from 1.3 times in 1996 to 1.4 times in 1997before falling to 0.6 times in 1999.  By2001, the current ratio had risen to 1.2 times. The Company's interest coverageratio declined over the 1996-2001 period, from 1.8 times in 1996 to a negative6.0 times in 1999 before rising to 1.1 times in 2001, averaging a negative 0.7times for the period.

In summary, although the Company experienced asignificant decline in revenue and profitability over the 1996-1999 period,Marker showed improvement in some areas in 2000 and 2001. After reporting asignificant net loss in 1998 and 1999, net loss decreased significantly in 2000and by 2001, the Company reported net income of $20,000.   Management appears to have made someprogress in managing costs in 2000 and 2001 as evidenced by an improvement inseveral of the cost control ratios. Turnover ratios also improved slightly in 2001.  In addition, the Company’s financial risk,which peaked during 1998 and 1999, appeared to improve somewhat during the lasttwo years of the period examined in this report.  In conclusion, although the Company’s overall performance waspoor for the six-year period examined in this report, management appears tohave achieved some improvement in the last two years.

 

|                               |
|-------------------------------|
| **Cross  Sectional Analysis** |

To acquire a better impression of Marker’sfiscal 2001 performance, its record is compared with the average experience ofother sporting goods manufacturers. Financial data on companies in the sportinggoods manufacturing industry is collected by Robert Morris Associates,Philadelphia, Pennsylvania, and published in that company's Annual Statement Studies.  Although the activities of the companies inthe group may not be totally consistent with those of Marker, the informationis nevertheless considered representative of firms engaged in the same types ofactivities as the Company.  As such, thedata provide a reasonable backdrop for a comparative analysis of the Company'sperformance.

Exhibit #7 displays selected 2001 statistics forMarker and the average of other sporting goods manufacturing companies. Severalinteresting differences are evident. The Company had a somewhat different assetcomposition in 2001 when compared with the industry average, with less cash asa percent of total assets 4.2% vs. 10.5%), but significantly higher accountsreceivable as a percent of assets (40.5% vs. 28.2%).  Marker and the industry sample group reported the same inventoryas a percent of assets (27.3%).  As aresult, the Company’s total current assets as a percent of total assets weresomewhat higher than the industry average (75.9% vs. 68.0%), and the Company’snet fixed assets as a percent of total assets were lower than the industryaverage (11.2% and 16.2%).

The Company's 2001 capital structure was alsosomewhat different than that of the industry average.  The Company's total debt (adjusted) as a percent of assets wassignificantly higher than the industry average (79.1% compared to 48.2%), whileits long-term liabilities as a percent of assets were only somewhat greaterthan the industry average (16.9% vs. 13.6%). Current liabilities as a percent of assets were significantly higherthan the industry average (62.3% vs. 30.0%), while the Company's net worth as apercent of total assets was significantly lower than the industry average(20.9% vs. 51.8%).

Marker’s 2001 gross margin was slightly betterthan the industry average (37.9% vs. 36.0%) and the Company's operatingexpenses as a percent of sales were higher than the industry average (32.6% vs.29.3%). As a result, Marker’s operating margin was slightly lower than theindustry average (5.4% vs. 6.7%). Marker’s income before tax as a percent of sales was significantly lowerthan the industry average (1.5% vs. 5.3%).

Accounts receivable turnover for Marker wassomewhat lower than that of the industry average (3.5 times vs. 5.3 times),while the Company's inventory turnover was only slightly lower than theindustry average (3.3 times vs. 3.6 times). The Company's fixed asset turnover was higher than the industry average(12.8 times vs. 11.2 times). The Company’s total asset turnover ratio, however,was the same as the industry average (1.4 times).

The 2001 profitability of the Company, asmeasured by before-tax return on assets, was significantly inferior to theindustry average (2.2% vs. 19.3%).  TheCompany’s before tax return on equity was somewhat higher than the industryaverage (10.6% vs. 7.7%).

Finally, Marker’s overall financial risk appearsto be greater than that of the industry average. The Company's liquidity, asmeasured by the current ratio, was lower than the average of the industry (1.2times vs. 2.2 times), as was its quick ratio (0.7 times vs. 1.4 times). TheCompany's total debt to equity ratio was significantly higher than the industryaverage (3.8 times vs. 1.1 times). Finally, the Company's interest coverage ratio was lower than theindustry average (1.1 times vs. 2.4 times).

In summary, the overall 2001 financialperformance of the Company was inferior to that of the average company in theindustry in many respects. The Company's reported a minimal profit compared tohealthier profits of the industry sample group. The Company's receivablesturnover ratio was lower than the industry average, as was its inventoryturnover ratio.  Finally, the financialrisk of the Company, as measured by liquidity, total debt to equity and the interest coverage ratios, was significantlyinferior to the industry average.

 

|                         |
|-------------------------|
| **Estimates  Of Value** |

 

|            |
|------------|
| *Overview* |

Four widely recognized approaches are used toestimate the fair market value of Marker's common stock as of March 31, 2001:book value, transaction value, market value (derived from market value ratiosof similar firms), and income value (based on the present value of futurebenefits­). As previously stated, the uncertainty inherent in the valuationprocess most likely will cause these differing methods of valuation to producedifferent estimates of value.  Before estimates of value can be made,however, the nature of the security being valued and the expected income ofMarker must be discussed.

|                           |
|---------------------------|
| *Nature  of the Security* |

The value of a security is influenced by many ofits characteristics, ­includingcontrol and marketability.

**Control:**  The market value of public securities normallyreflects the minority interest being traded.  The price of a successfultender offer seeking control is usually higher than previous minority tradesand reflects the value of the premium for control. This report determines thevalue of the Company on a controlling interest basis. Thus, a control premiumis applicable.

**Control Premium**

The value of control depends on theshareholder’s ability to exercise any or all of a variety of rights typicallyassociated with control. Common prerogatives of control include:

| • | Elect directors and appoint management                      |
|--------|-------------------------------------------------------------|
|   |                                                        |
| • | Determine management compensation and  perquisites          |
|   |                                                        |
| • | Set policy and change the course of business                |
|   |                                                        |
| • | Acquire or liquidate assets                                 |
|   |                                                        |
| • | Select people with whom to do business and  award contracts |
|   |                                                        |
| • | Make acquisitions of other companies                        |
|   |                                                        |
| • | Liquidate, dissolve, sell out, or recapitalize  the company |
|   |                                                        |
| • | Sell or acquire treasury shares                             |
|   |                                                        |
| • | Register the company’s stock for public  offering      |

| • | Declare and pay dividends                      |
|--------|------------------------------------------------|
|   |                                           |
| • | Change the articles of incorporation or bylaws |

In reviewing the prerogatives of control, it isapparent that the owner of a controlling interest in a company enjoys some veryvaluable rights that the owner of a minority interest does not have. There aremany factors, however, which may limit the ability of a majority owner toexercise those rights. Therefore, even if a shareholder or group ofshareholders owns more than 50% of a company’s stock, it may not have all ofthe benefits of control. In addition, minority owners may enjoy somesignificant rights through their ability to cast important swing votes. It istherefore not enough to say that a control value is appropriate for anyownership of more than 50%, nor is an interest of less than 50% always valuedstrictly as a minority interest. The extent of control premium or minoritydiscount in a given situation is often a matter of degree. Factors that affectthe degree of control that can be exercised include the following:

| • | Cumulative versus noncumulative voting           |
|--------|--------------------------------------------------|
|   |                                             |
| • | Contractual restrictions                         |
|   |                                             |
| • | Effects of regulation, including state  statutes |
|   |                                             |
| • | Financial condition of the business              |
|   |                                             |
| • | Effects of distribution of ownership             |

**Control Premium Studies:** The thousands of daily transactions onstock exchanges are minority interest transactions. Each year, a controllinginterest in a few hundred of these public companies is purchased. In almost allcases, the prices paid for the stock of these companies represent a premiumover the market price at which the stock previously traded as a minorityinterest. *MergerstatReview*publishes data on control premiums based on acquisitionactivity in the public markets. This source indicates that since 1983, theaverage control premium paid has been approximately 40%, the median controlpremium has been approximately 30%, and the implied average minority interestdiscount has ranged from 27% to 29%. It should be noted, however, that thesepremiums are based on a company’s stock price shortly before the announcementdate of a merger transaction. Because stock prices have a tendency to riseshortly before such transactions, the premiums may be understated. It shouldalso be noted that a portion of the control premium may be related to otherfactors. For example, an acquiring company may pay a premium in order toacquire an important supplier of its raw materials.

**Quantifying Control Premiums:** The value of a control premium relates tothe extent that the owners were able to exercise the prerogatives of controllisted above as well as the ownership structure of the firm. Some potentialadjustments that would affect the size of the control premium include:

| • | Size of the block being valued (absolute  versus operating control) |
|--------|---------------------------------------------------------------------|

| • | Actual dividends paid                                    |
|--------|----------------------------------------------------------|
|   |                                                     |
| • | Quality and attractiveness of the company  being valued  |
|   |                                                     |
| • | Prerogatives of control available to the  equity holders |
|   |                                                     |
| • | The degree of leverage                                   |

**Application to Marker:**The purpose of this study is to valueMarker on a controlling interest basis pursuant to the Operating Agreement.Given the degree of control that is inherent in a 100% interest in Marker andabsent any provisions existing that limit the prerogatives of control, HVA has selecteda control premium of 35% for purposes of estimating the value of the Company ona controlling interest basis.

**Marketability:** The market value and income valuemethods of valuation are based on comparisons with current values of securitiestraded on national ex­changes.  There are, however, certain marketabilitydifferences between Marker securities and publicly traded securities.  An owner of publicly traded securities canknow at all times the market value of his holding.  He can sell that holding on virtually a moment's notice andreceive cash net of brokerage fees within five working days.

Such is not the case with Marker, being aprivately held company. Although selling a controlling interest in a privatecompany is inherently more marketable than the sale of a minority interest inthe same company, liquidating an equity position in the Company could well be amore costly and time-consuming process than liquidating stock in publiclytraded firms. Therefore, a small marketability discount (10%) is applicable tothe common stock of Marker.

|                              |
|------------------------------|
| *Normalization  of Earnings* |

The reported net income of a typical firm issubject to random fluc­tuations as well as external and internalshocks. Thus, some "norm­al­ization" procedure generally must beapplied to smooth the data series and reveal the underlying, stabilized trendin net income.  Normalizati­on of net income is required to projectearnings figures to be used in calcu­lating the income value estimate, as wellas in providing a realistic earnings figure to which to apply the market valueapproach.

Normalization of earnings involves twosteps.  The first is the elimination of extraordinary items which impactthe firm's earnings but which are not expected to repeat or persist.

Several adjustments have been made to the 2001income statement.  Two items associatedwith Marker’s operations in Austria, a non-recurring bad debt expense of$200,000 and a loss from discontinued operations of $134,000, have been addedto pretax net income.  Additionally,interest expense associated with a parent company loan has also beenadded.  After accounting for income tax,the resulting adjusted net income is $555,000.

The second step involves identification of thetrend in the normalized earnings to eliminate random fluctuations in anyparticular year and to project future expected earnings.

Several procedures are used to normalize andproject earnings.  These approachesinclude statistical trend line and logarithmic analysis of past earnings(regression analysis);  past net marginsapplied to statistically derived sales estimates, and income statementprojections.

**Past Averages:**  One method of normalizing and projecting incomeis to use past averages, both an historical average growth rate and an averagenet margin.  Essentially, the procedure applies an historical average orexpected future net margin to sales forecasts to derive net incomeforecasts.  The rationale is that sales tend to be more stable than netincome.

Marker has gone through significant transitionsin recent years.  In an effort tobroaden its product line, the Company invested heavily in acquiring  and building a snowboard manufacturingfacility.  Their timing to enter themarket, however, coincided with a decline in growth in the snowboard market andsignificant excess manufacturing capacity in the industry.  As a result, the Company abandoned itsventure into the snowboard business in 1998-99.   At the same time, the market for the Company’s primary productline – ski bindings – has been going through a transition.  A general decline in sales of ski hardgoodshas characterized the market worldwide for the past several years.  As a result, the Company went through amajor restructuring in late 1999.  Therestructuring consolidated the debts of the Company and aligned it with a majorski boot manufacturer and a major ski manufacturer.  It is anticipated by management that the synergies of  aligning these three companies will resultin increased sales and market penetration for all three products.

Consequently, the recent history of Marker isnot necessarily representative of the future prospects of the restructuredCompany.  Therefore, adjustments to thehistorical operating statements of the Company to predict probable futureresults is neither particularly meaningful nor legitimate in HVA’s opinion.

**CompanyProjections:**Marker's management has prepared financial projections for 2002, which aresummarized in Exhibit #8. Management has represented the projections asreflecting its best estimate as to the future prospects of the Company.

**Projected CashFlow:**Theprojected income statements contained in Exhibit #8 is deemed to be the mostreliable estimates as to the future prospects of the Company, and are thereforeutilized for valuation purposes.  Thisapproach yields projected net free cash flow of $2,857,000 in 2002.

Marker's management has represented theprojections as being reasonable and as reflecting its best estimates as to thefuture prospects of the Company. However, it should be emphasized that forecasting the future is at besta difficult and tenuous process. There will undoubtedly be disparities betweenthe projected figures and actual results, since events and circumstancesfrequently do not occur as expected, and those disparities may be material.

|              |
|--------------|
| *Book Value* |

The book value of a company's assets reflectstheir depreciated historical cost, rather than their fair market value. As such, book value normally bears only a tenuous relationship to the marketvalue of a company.  A useful account­ing concept, it has a somewhatlimited role in the valuation process.  For informational purposes, thebook value (unaudited) – in which the Parent Company loan of $13.036 million isconsidered equity for purposes of this valuation -  of Marker as of March 31, 2001 was $8,768,025.

A common alternative measure of book value isthe liquidation value of a company.  A quitting concern concept,liquidation value is not entirely appli­cable to the valuation of a typicalgoing concern.  The value of a company is typically not a function of whatits assets could be sold for (net of liabilities), but is rather a function ofhow they can be utilized in generating revenue and net income. In addition, theanalysis contained herein indicates that the Company will generate significantpositive cash flow on an operating basis in the foreseeable future.

|                      |
|----------------------|
| *Transaction  Value* |

Transaction value is the value at which sharesof the Company were recently sold.  A recent sale of a security is anindicat­or of value for both legal and economic purposes.  If anexamination of all the relevant facts reveals that the transaction took placeat arm's-length, i.e., that neither buyer nor seller was forced to deal andboth had adequate information and that the transaction was for reasonable consideration,the value established in such a transaction would be diffi­cult to contest.

On November 30, 1999, MKR Holdings soldsubstantially all of its assets to Marker. In exchange, Marker assumed substantially all of the liabilities of MKRHoldings and MKR Holdings received a 15% equity interest in Marker.  Prior to the sale to Marker, MKR Holdingshad filed a voluntary petition for relief under Chapter 11 of the United StatesBankruptcy Code.

As of December 31, 1999, Marker’s 85% interestwas valued at $15 million (Source:  MKRHoldings 10Q;  Period Ended December 31,1999).  This valuation would indicate avalue of 100% of the equity of approximately $17.65 million as of that date.

Marker is a privately held entity.  Since November 30, 1999, there have been norecent arm’s length transactions in the Company’s common stock other thantransactions in the Company’s equity.

|                 |
|-----------------|
| *Market  Value* |

The market value approach attempts to determinethe value of Marker by comparing it with other comparable firms traded inactive, public markets.  This is accomplished by determining a comparativeprice-earnings ratio, which is the ratio of the market price of a share ofstock to the earnings per share; a comparative price to revenue ratio, which isthe ratio of the market price of a share of stock to the dollar sales pershare; and a comparative price to book ratio, which is the ratio of the marketprice of a share of stock to the book value per share. Appropriate ratiosfor Marker can be determined by comparing the firm with others in the sameindustry and, from its relative standing in the industry, inferring marketvalue ratios based on ratios in the industry.

The price-earnings ratio is an importantdeterminant of value because it reflects the expectations of marketparticipants. Generally speaking, investors are willing to pay a higher pricefor today's earnings if they expect earnings to grow in the future. Conversely,they will pay a lower price if they anticipate earnings to decline.  Not only is the price-earnings ratio areading of the market's psychology, but is also represents the consensus of themarketplace as to the worth of a security. This is significant for threereasons. First, the market is competitive, with participating investors seekingto enhance their wealth. Second, the market is informed, with investors seekingto deepen their understanding of the companies and industries in which theyhave positions. Finally, the market is rational, since investors act upon theinformation acquired to further their objectives.  All three factors contribute much weight to the resultingvaluation in spite of imperfections in the market. Similar arguments can bemade for the other market value ratios.

Ideally, market value ratios for Marker shouldbe inferred from ratios of similar firms whose stocks are traded actively inpublic markets. Unfortunately, many sporting goods manufacturing companies withoperations similar to those of the Company are small, closely held businessesfor which no market value has been established.  Since these companies are not publicly traded, it is impossibleto use them as a basis for making inferences regarding the market value ofMarker. Therefore, a group of larger publicly traded sporting goodsmanufacturing companies has been selected as being representative of theindustry in which the Company operates.

Exhibit #9 presents the names and briefdescriptions of a sample group of ten sporting goods manufacturing companiesconsidered representative of the industry of which Marker is a member. Althoughthese companies obviously differ somewhat from Marker, in that they produceproducts for different markets and some are much larger and enjoy economies ofscale and synergies that may not be available to smaller companies such asMarker, the differences are not of prime significance here, since a directcomparison is not intended but rather a relative comparison that reflects anaggregate appraisal of the industry. To the extent that the firms in theindustry sample group and Marker are affected by similar fundamental economicfactors, investors' expectations regarding the long-term growth and success ofthe former are justifiably imputable to the future of the latter.

Exhibit #10 presents the market data for theindustry sample group and compares that data to Marker. Marker is asignificantly smaller company than the median of the sample group, with salesof $60.4 million compared to the median sales of the sample group of $172.1million and with total assets of $42.0 million compared to median total assetsof the sample group of $103.7 million. Marker’s adjusted net margin, wasinferior to the median of the sample group (0.9% vs. 6.6%), as was its returnon assets and return on equity (0.7% and 3.1% vs 8.7% and 11.2%, respectively).Marker, however, was more highly leveraged that the median of the sample groupas measured by the debt to equity ratio (284.3% vs. 20.0%). Overall, Markerrepresents an inferior investment opportunity compared the sample group becauseof its significantly smaller size, limited market for its products, and higherleverage.

Exhibit #11 displays the March 31, 2001 marketvalue ratios of the companies in the publicly traded sample group.  To the industry sample's mean price-forwardearnings ratio of 14.3, mean price–current earnings ratio of 9.7, mean price torevenue ratio of 55.0%, and mean price to book ratio of 125%, a 10% discount isapplied to reflect the relative lack of marketability of Marker's shares. Tothe resulting figure is applied an additional 5% discount to reflect a discountfor the smaller size of the Company compared to the companies in the samplegroup, and a further discount of 10% to reflect the greater financial risk ofthe Company compared to the sample group companies.  In addition, a 35% premium is applied to reflect valuation of acontrolling interest (compared to minority interest positions represented bythe multiples of the sample group of companies).  The net result is an adjustment factor of 103.9 applicable to themean market value ratios of the sample group in valuing Marker.  The price to revenue ratio is furtheradjusted to reflect the Company’s lack of profitability compared to the medianof the sample group.   A furtherdiscount of 30% is applied to the price to revenue ratio to reflect thisdifference.

Application of the price-current earnings ratioof 10.0 to Marker's adjusted 2001 earnings of $555,000 yields a market valueestimate of $5,554,000.  Application ofthe price-forward earnings ratio of 14.8 to Marker’s projected 2002 adjustedearnings of $726,000 yields a market value of $10,751,000.  Application of the resulting price torevenue ratio of 40.0% to Marker's 2001 revenue of $60,393,000 yields a marketvalue estimate of $24,157,000. Finally, application of the resulting price tobook ratio of 130.0% to Marker's book value as of March 31, 2001 of $8,768,000yields a market value estimate of $11,398,000.

Each of these market value figures is as ofMarch 31, 2001, and each will be considered in arriving at a final estimate ofthe fair market value of the common stock of Marker on a minority interestbasis as of that date.

|                 |
|-----------------|
| *Income  Value* |

The income approach to valuation estimates theworth of a company's stock by determining the present value of the futureincome stream expected to accrue to the stockholders.  This isaccomplished by, first, forecasting the firm's future income stream and thedisposition of such and, second, discounting it at a rate commensurate with therisk to which it is exposed.

The present value of future income depends onthe amount and timing of that income. Since both the amount and timing areuncertain, income might be less than expected and/or income might materializelater than expected, this uncertainty must be quantified and incorporated intoa discount rate. Thus, given the amount and timing of a future income stream,high uncertainty necessitates a high discount rate and results in a relativelylow present value, while low uncertainty merits a low discount rate and arelatively high present value.

The appropriate discount rate, that is, theminimum rate of return required by an investor purchasing the firm's stock,must have as its foundation the yields available on competing financial assetsin the public markets.  This follows from the observations noted below.

| • | Securities with different risk characteristics  provide different rates of return commensurate with those uncertainties.  This hierarchy of risk and reward  furnishes benchmarks from which a suitable discount rate may be selected for  an income stream of known risk properties.        |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                              |
| • | A particular investor, due perhaps to his  aversion to risk, may find market returns inadequate at every level of  risk.  In a competitive market, however, he is a "price  taker"  and, as such, is limited  to either investing at the going rates or not investing at all. |

| • | On the other hand, there will always be a  buyer and seller willing to deal at the market rates, precisely because the  market rates represent the consensus of many investors. |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

Thus, it is possible to estimate an"objective" valuation of a company based on a discount rate derivedfrom the market.

**Debt-Free Valuation Method**

Debt-free valuation methodology is used tominimize the impacts of a particular capital structure that is deemed to beunrepresentative of what would be considered a normal capital structure. In thecase of Marker, the Company purchased the assets of MKR Holdings throughrestructuring proceedings. As a result, portions of the assumed debt had beenrestructured. In addition, the capital structure of the Company was highlyleveraged as of the valuation date compared to the median of the industry.

To determine the “normal” capital structure ofthe Company, HVA examined the capital structure of other companies in thesporting goods manufacturing industry. The analysis indicated a wide range ofcapital structures, with debt ranging from 0% to 42% of the capital structure,with a median of 19.3% (see Exhibit #10). HVA also reviewed the capitalstructure of K2, which is a company whose primary products are ski related. Thecapital structure of K2 was approximately 35% debt and 65% equity. HVA selectedthe capital structure of K2 as being reasonably representative of a“normalized” capital structure for Marker.

**Equity Discount Rate Based onHistorical Data:**Exhibit #12 presents an historical structure of rates of return observ­able andavailable (and, in the long run, "required") on selected class­es ofsecurities.  As can be seen, the rate of return required on"typical" publicly traded common stocks is approximately 9.1% abovethe prevailing risk-free rate (or 13.0%, assuming a risk-free rate of return,as represented by the March 31, 2001 three month Treasury Bill rate, of 3.9%).An investor would require from his holding of a controlling interest in Markercommon stock a return estimated to be 2.5% above the average yield available inthe common stock market, due to valuation on a controlling interest basis. Itis reasonable for him to require a premium on the general market because ofindustry and Company-specific risk characteristics (e.g., the smaller size ofthe Company and limited markets for the Company’s products). An offsettingpremium for control of 35% was applied. The resultant estimated required rateof return of 10.0% is a function of the returns available in the market forpublicly traded common stocks, as quantitatively estimated by the Capital AssetPricing Model and the HVA discount rate build-up method, plus a risk premiumfor the Company-specific risk characteristics previously alluded to.

**Cost of Debt:** The Company does business in Europe,Japan, the United States and Canada. In each of its primary markets, itfinances inventory and receivables utilizing short-term revolving loans.Lending rates vary significantly between the countries in which the Companydoes business. In an attempt to estimate the average cost of debt for such amulti-national operation, the prime lending rates of each company have beenweighted by the percentage of the Company’s business that is represented by eachof the companies. The weighted average prime rate as of March 31, 2001 was 5.5%(see Exhibit #14).  Management estimatesthat on average, the Company’s short-term lending rate is approximately 100basis points above prime. Therefore, the average cost of short-term debt hasbeen estimated to be 6.5%.

In addition to short-term debt, the Companyutilizes long-term debt to finance capital assets. Most of these assets arerelated to the Company’s manufacturing operation in Germany. The prime rate inGermany as of the valuation date was 4.75%. Existing long-term financingcarries rates ranging from 4.95% to 6.1%. Based on existing financing, along-term rate of prime appears to be the market rate for such financing.Therefore, the long-term cost of debt is estimated to be 4.75%.

Currently, approximately 71.5% of the Company’sinterest bearing debt is short-term debt, with 28.5% being long-term debt.Weighting the cost of short-term and long-term debt by the percentage of eachtype of debt results in a weighted average cost of debt estimate for theCompany of 6.0% (see Exhibit #14)

Interest expense, however, is a pre-tax expense.Management estimates that the average tax rate applicable to the consolidatedcompany is approximately 40%. Therefore, the weighted average after-tax cost ofdebt is estimated to be 3.6%.

**Weighted Average Cost ofCapital:**Marker’s estimated weighted average cost of capital (e.g., the overall requiredrate of return on total invested capital used to discount the Company’s futureprojected pre-debt service net free cash flow) is derived by multiplying theafter-tax cost of debt by the debt-financed portion of the purchase price, thenadding that figure to the product of the cost of equity and the equity-financedportion of the purchase price, assuming a capital structure of 35% debt and 65%equity (see Exhibit #10). The resulting estimated weighted average cost ofcapital is 7.8% (see Exhibit #14).

**Income ValueEstimate:**The income valuation model used is based on the assumption that a company'scash flow is retained in total and dividend payments deferred until a specifiedyear when the company begins paying all of its cash flow out as dividends anddoes so indefinitely into the future. Once these dividend payments begin tooccur, the basis for the company's internally financed growth ceases. In theabsence of new external financing, the company reaches a "steadystate" and cash flow remains constant indefinitely thereafter, growingonly in nominal terms in step with inflation. While it is not necessary thatthe firm actually so behaves, this is a necessary specification for thevaluation formula to be technically correct. Basically, what is being specifiedis the firm's dividend-paying ability. Only dividends can correctly be used inthe income valuation approach for a common stock.

If it is assumed that all of Marker's projectednet free cash flow will be available to be paid out as dividends toshareholders from the valuation date forward, and if it is further assumed thatpost-2002 net free cash flow will grow at a compound annual rate of 3% from theprojected 2002 level, an income value estimate of the common stock of theCompany on a controlling interest basis as of March 31, 2001 of $30,835,000 isderived (see Exhibit #8). This figure will be considered in arriving at a finalestimate of the fair market value of the Company on a controlling interestbasis as of that date.

 

|                          |
|--------------------------|
| *Summary And Conclusion* |

Four approaches have been considered inestimating the fair market enterprise value of the equity of Marker as of March31, 2001: book value, tran­saction value, market value and income value. The outcomes are summarized below.

| **Estimates of Equity Value - Controlling Interest  Marker International  March 31, 2001  ($000s)** |                   |
|-----------------------------------------------------------------------------------------------------|------------------------|
|                                                                                                     |                   |
|                                                                                                | Equity Value  Estimate |   | Weight |   | Implied  Equity Value  Contribution |   |
|                                                                                                |                        |   |  |   |  |   |
| **Cost**                                                                                            |                   |   |   |   |   |   |
| Book Value (Adjusted)                                                                               | 8,768                  |   | 0.0 | % | 0 |   |
| **Market**                                                                                          |                   |   |   |   |   |   |
| Price/2001Adjusted Earnings                                                                         | 5,554                  |   | 15.0 | % | 833 |   |
| Price/Projected 2002 Earnings                                                                       | 10,751                 |   | 15.0 | % | 1,613 |   |
| Price/Revenue                                                                                       | 24,157                 |   | 20.0 | % | 4,831 |   |
| Price/Adjusted Book                                                                                 | 11,398                 |   | 5.0 | % | 570 |   |
| **Transaction Value**                                                                               | NA                     |   | 0.0 | % | 0 |   |
| **Income Value**                                                                                    | 30,835                 |   | 45.0 | % | 13,876 |   |
|                                                                                                |                   |   |  |  |  |   |
| Total                                                                                               |                   |   | 100.0 | %   | $ | 21,723 |   |
| **Rounded**                                                                                         |                   |   |   |   | **$** | **21,700** |   |
|                                                                                                |                   |   |   |   |   |   |   |
| Estimated Value of 15% Interest (per Agreement)                                                     |                   |   |   |   |   | 3,255 |   |
|                                                                                                |                   |   |   |   |   |   |   |
| **Estimated Value of 15% Interest - Rounded**                                                       |                   |   |   |   | **$** | **3,255** |   |
|                                                                                                |                   |   |   |   |  |   |
|                                                                                                     |                        |  |  |  |  |  |  |  |  |  |

Considering the assumptions of each method andweighing the relative justification of each, it is our opinion that areasonable estimate of the fair market enterprise value of the equity of Markeras of March 31, 2001 is $21.7 million. The estimated value of a 15% interest inthe Company on that date is $3.255 million based on the Agreement whereby aminority interest discount is not applicable to MKR Holdings’ 15% interest inthe Company.

**EXHIBIT #1**

**Marker International****Historical Income StatementsFiscal Years Ended March 31, 1996-20011996-2001 U.S. Dollars****(000's)**

|                                                                 | 1996   |   | 1997   |   | 1998    |   | 1999    |   | 2000   |   | 2001    |       |
|----------------------------------------------------------------------|--------|--------|--------|--------|---------|--------|---------|--------|--------|--------|---------|------------|
|                                                                 |        |   |        |   |         |   |         |   |        |   |         |       |
| **Net Sales**                                                        | 87,911 |   | 83,076 |   | 81,401  |   | 74,167  |   | 56,241 |   | 60,393  |       |
|                                                                 |   |   |   |   |    |   |    |   |   |   |    |       |
| Cost  of Sales                                                       | 52,608 |   | 50,441 |   | 54,460  |   | 54,638  |   | 40,831 |   | 37,488  |       |
|                                                                 |        |   |        |   |         |   |         |   |        |   |         |       |
| **Gross Margin**                                                     | 35,303 |   | 32,635 |   | 26,941  |   | 19,529  |   | 15,410 |   | 22,904  |       |
|                                                                 |   |   |   |   |    |   |    |   |   |   |    |       |
| **Operating Expenses**                                               |   |   |   |   |    |   |    |   |   |   |    |       |
| Selling                                                              | 14,592 |   | 14,730 |   | 13,065  |   | 15,275  |   | 11,460 |   | 8,941   |       |
| General  and Administrative                                          | 10,559 |   | 8,616  |   | 7,475   |   | 15,401  |   | 6,826  |   | 7,847   |       |
| Research  & Development                                          | 2,762  |   | 2,996  |   | 3,003   |   | 2,756   |   | 1,698  |   | 1,235   |       |
| Warehouse  & Shipping                                            | 1,566  |   | 1,617  |   | 1,660   |   | 2,020   |   | 1,843  |   | 1,648   |       |
|                                                                 |        |   |        |   |         |   |         |   |        |   |         |       |
| **Total Operating Expenses**                                         | 29,479 |   | 27,959 |   | 25,203  |   | 35,452  |   | 21,827 |   | 19,671  |       |
|                                                                 |        |   |        |   |         |   |         |   |        |   |         |       |
|                                                                 |   |   |   |   |    |   |    |   |   |   |    |       |
| **Income from Operations**                                           | 5,824  |   | 4,676  |   | 1,738   |   | (15,923 | )      | (6,418 | )      | 3,233   |       |
|                                                                 |   |   |   |   |    |   |    |   |   |   |    |       |
| **Other Income and Expense**                                         |   |   |   |   |    |   |    |   |   |   |    |       |
| Interest  Expense                                                    | (5,193 | )      | (5,109 | )      | (5,746  | )      | (6,637  | )      | (3,110 | )      | (3,316  | )          |
| Exchange  Gain (Loss)                                                | 0      |   | 0      |   | 0       |   | 0       |   | 2,676  |   | 540     |       |
| Investment  in Unconsolidated Subsidiary                             | 1,595  |   | 0      |   | 0       |   | 0       |   | 0      |   | 0       |       |
| Other                                                                | 2,072  |   | 2,814  |   | 33      |   | 1,508   |   | (822   | )      | 0       |       |
|                                                                 |        |   |        |   |         |   |         |   |        |   |         |       |
| **Total Other Income and Expense**                                   | (1,526 | )      | (2,295 | )      | (5,713  | )      | (5,129  | )      | (1,255 | )      | (2,776  | )          |
|                                                                 |        |   |        |   |         |   |         |   |        |   |         |       |
|                                                                 |   |   |   |   |    |   |    |   |   |   |    |       |
| **Income (Loss) Before Income Tax**                                  | 4,298  |   | 2,381  |   | (3,975  | )      | (21,052 | )      | (7,673 | )      | 457     |       |
|                                                                 |   |   |   |   |    |   |    |   |   |   |    |       |
| Income  Tax Provision (Benefit)                                      | 609    |   | 700    |   | 1,158   |   | 1,458   |   | 21     |   | 437     |       |
| Income  From Disc. Oper. - Snowboard                                 | 0      |   | 2,921  |   | (12,196 | )      | (25,508 | )      | 0      |   | 0       |       |
| Cummulative  Effect of Accounting Change                             | 266    |   | 0      |   | 0       |   | 0       |   | 0      |   | 0       |       |
|                                                                 |        |   |        |   |         |   |         |   |        |   |         |       |
| **Net Income**                                                       | 3,423  |   | 4,602  |   | (17,329 | )      | (48,018 | )      | (7,694 | )      | 20      |       |
|                                                                 |        |   |        |   |         |   |         |   |        |   |         |       |
|                                                                 |   |   |   |   |    |   |    |   |   |   |    |       |
| **Adjustments:**                                                     |   |   |   |   |    |   |    |   |   |   |    |       |
| Income  Before Tax                                                   |   |   |   |   |    |   |    |   |   |   | 457     |       |
| Non-Recurring  Bad Debt Expense (Austria)                            |   |   |   |   |    |   |    |   |   |   | 200     |       |
| Loss  from Discontinued Operations (Austria - less bad-debt expense) |   |   |   |   |    |   |    |   |   |   | 134     |       |
| Interest  Expense - Parent Company Loan (Balance)                    |   |   |   |   |    |   |    |   |   |   | 135     |       |
|                                                                 |   |   |   |   |    |   |    |   |   |   |         |       |
| **Adjusted Income Before Tax**                                       |   |   |   |   |    |   |    |   |   |   | 926     |       |
| Income  Tax Provision (40%)                                          |   |   |   |   |    |   |    |   |   |   | (370    | )          |
|                                                                 |   |   |   |   |    |   |    |   |   |   |         |       |
| **Adjusted Net Income**                                              |   |   |   |   |    |   |    |   |   |   | **555** | ** ** |
|                                                                 |   |   |   |   |    |   |    |   |   |   | ****    |       |
|                                                                 |   |   |   |   |    |   |    |   |   |   |    |       |
| Euro  Conversion – 1 Euro = USD (3/31/00)                       | 0.961  |   |   |   |    |   |    |   |   |   |    |       |
| Euro  Conversion – 1 Euro = USD (3/31/01)                       | 0.879  |   |   |   |    |   |    |   |   |   |    |       |
|                                                                 |   |   |   |   |    |   |    |   |   |   |    |       |
| Swiss  Franc = USD (3/31/01)                                         | 0.5864 |   |   |   |    |   |    |   |   |   |    |       |

 

**EXHIBIT #2**

**Marker InternationalCommon Size Income Statements****Fiscal Years Ended March 31, 1996-2001**

|                                     | 1996   |   | 1997   |   | 1998   |   | 1999   |   | 2000   |   | 2001   |   | Average |   |
|------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|---------|--------|
|                                     |        |   |        |   |        |   |        |   |        |   |        |   |         |   |
| **Net Sales**                            | 100.0  | %      | 100.0  | %      | 100.0  | %      | 100.0  | %      | 100.0  | %      | 100.0  | %      | 100.0   | %      |
|                                     |   |   |   |   |   |   |   |   |   |   |   |   |    |   |
| Cost  of Sales                           | 59.8   | %      | 60.7   | %      | 66.9   | %      | 73.7   | %      | 72.6   | %      | 62.1   | %      | 66.0    | %      |
|                                     |        |   |        |   |        |   |        |   |        |   |        |   |         |   |
| **Gross Margin**                         | 40.2   | %      | 39.3   | %      | 33.1   | %      | 26.3   | %      | 27.4   | %      | 37.9   | %      | 34.0    | %      |
|                                     |   |   |   |   |   |   |   |   |   |   |   |   |    |   |
| **Operating Expenses**                   |   |   |   |   |   |   |   |   |   |   |   |   |    |   |
| Selling                                  | 16.6   | %      | 17.7   | %      | 16.1   | %      | 20.6   | %      | 20.4   | %      | 14.8   | %      | 17.7    | %      |
| General  and Administrative              | 12.0   | %      | 10.4   | %      | 9.2    | %      | 20.8   | %      | 12.1   | %      | 13.0   | %      | 12.9    | %      |
| Research  & Development              | 3.1    | %      | 3.6    | %      | 3.7    | %      | 3.7    | %      | 3.0    | %      | 2.0    | %      | 3.2     | %      |
| Warehouse  & Shipping                | 1.8    | %      | 1.9    | %      | 2.0    | %      | 2.7    | %      | 3.3    | %      | 2.7    | %      | 2.4     | %      |
|                                     |        |   |        |   |        |   |        |   |        |   |        |   |         |   |
| **Total Operating Expenses**             | 33.5   | %      | 33.7   | %      | 31.0   | %      | 47.8   | %      | 38.8   | %      | 32.6   | %      | 36.2    | %      |
|                                     |        |   |        |   |        |   |        |   |        |   |        |   |         |   |
|                                     |   |   |   |   |   |   |   |   |   |   |   |   |    |   |
| **Income from Operations**               | 6.6    | %      | 5.6    | %      | 2.1    | %      | (21.5  | )%     | (11.4  | )%     | 5.4    | %      | (2.2    | )%     |
|                                     |   |   |   |   |   |   |   |   |   |   |   |   |    |   |
| **Other Income and Expense**             |   |   |   |   |   |   |   |   |   |   |   |   |    |   |
| Interest  Expense                        | (5.9   | )%     | (6.1   | )%     | (7.1   | )%     | (8.9   | )%     | (5.5   | )%     | (5.5   | )%     | (6.5    | )%     |
| Exchange  Gain (Loss)                    | 0.0    | %      | 0.0    | %      | 0.0    | %      | 0.0    | %      | 4.8    | %      | 0.9    | %      | 0.9     | %      |
| Investment  in Unconsolidated Subsidiary | 1.8    | %      | 0.0    | %      | 0.0    | %      | 0.0    | %      | 0.0    | %      | 0.0    | %      | 0.3     | %      |
| Other                                    | 2.4    | %      | 3.4    | %      | 0.0    | %      | 2.0    | %      | (1.5   | )%     | 0.0    | %      | 1.1     | %      |
|                                     |        |   |        |   |        |   |        |   |        |   |        |   |         |   |
| **Total Other Income and Expense**       | (1.7   | )%     | (2.8   | )%     | (7.0   | )%     | (6.9   | )%     | (2.2   | )%     | (4.6   | )%     | (4.2    | )%     |
|                                     |        |   |        |   |        |   |        |   |        |   |        |   |         |   |
|                                     |   |   |   |   |   |   |   |   |   |   |   |   |    |   |
| **Income (Loss) Before Income Tax**      | 4.9    | %      | 2.9    | %      | (4.9   | )%     | (28.4  | )%     | (13.6  | )%     | 0.8    | %      | (6.4    | )%     |
|                                     |   |   |   |   |   |   |   |   |   |   |   |   |    |   |
| Income  Tax Provision (Benefit)          | 0.7    | %      | 0.8    | %      | 1.4    | %      | 2.0    | %      | 0.0    | %      | 0.7    | %      | 0.9     | %      |
| Income  From Disc. Oper. - Snowboard     | 0.0    | %      | 3.5    | %      | (15.0  | )%     | (34.4  | )%     | 0.0    | %      | 0.0    | %      | (7.6    | )%     |
| Cummulative  Effect of Accounting Change | 0.3    | %      | 0.0    | %      | 0.0    | %      | 0.0    | %      | 0.0    | %      | 0.0    | %      | 0.1     | %      |
|                                     |        |   |        |   |        |   |        |   |        |   |        |   |         |   |
| **Net Income**                           | 3.9    | %      | 5.5    | %      | (21.3  | )%     | (64.7  | )%     | (13.7  | )%     | 0.0    | %      | (15.0   | )%     |
|                                     |        |   |        |   |        |   |        |   |        |   |        |   |         |   |

 

**EXHIBIT #3**

**Marker InternationalIncome Statement Item Growth Rates****Fiscal Years Ended March 31, 1996-2001**

|                                     |   |   |   |   |   |   |   |   |   |   |   |   | 1996-01  CompoundGrowth |   |
|------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|-------------------------|--------|
|                                     |   |   |   |   |   |   |   |   |   |   |   |   |                    |
|                                     | 1996   |   | 1997   |   | 1998   |   | 1999   |   | 2000   |   | 2001   |   |                    |
|                                     |        |   |        |   |        |   |        |   |        |   |        |   |                         |   |
| **Net Sales**                            | --     |   | (5.5   | )%     | (2.0   | )%     | (8.9   | )%     | (24.2  | )%     | 7.4    | %      | (7.2                    | )%     |
|                                     |   |   |   |   |   |   |   |   |   |   |   |   |                    |   |
| Cost  of Sales                           | --     |   | (4.1   | )%     | 8.0    | %      | 0.3    | %      | (25.3  | )%     | (8.2   | )%     | (6.6                    | )%     |
|                                     |        |   |        |   |        |   |        |   |        |   |        |   |                         |   |
| **Gross Margin**                         | --     |   | (7.6   | )%     | (17.4  | )%     | (27.5  | )%     | (21.1  | )%     | 48.6   | %      | (8.3                    | )%     |
|                                     |   |   |   |   |   |   |   |   |   |   |   |   |                    |   |
| **Operating Expenses**                   |   |   |   |   |   |   |   |   |   |   |   |   |                    |   |
| Selling                                  | --     |   | 0.9    | %      | (11.3  | )%     | 16.9   | %      | (25.0  | )%     | (22.0  | )%     | (9.3                    | )%     |
| General  and Administrative              | --     |   | (18.4  | )%     | (13.2  | )%     | 106.0  | %      | (55.7  | )%     | 15.0   | %      | (5.8                    | )%     |
| Research  & Development              | --     |   | 8.5    | %      | 0.2    | %      | (8.2   | )%     | (38.4  | )%     | (27.3  | )%     | (14.9                   | )%     |
| Warehouse  & Shipping                | --     |   | 3.3    | %      | 2.7    | %      | 21.7   | %      | (8.8   | )%     | (10.6  | )%     | 1.0                     | %      |
|                                     |        |   |        |   |        |   |        |   |        |   |        |   |                         |   |
| **Total Operating Expenses**             | --     |   | (5.2   | )%     | (9.9   | )%     | 40.7   | %      | (38.4  | )%     | (9.9   | )%     | (7.8                    | )%     |
|                                     |        |   |        |   |        |   |        |   |        |   |        |   |                         |   |
|                                     |   |   |   |   |   |   |   |   |   |   |   |   |                    |   |
| **Income from Operations**               | --     |   | (19.7  | )%     | (62.8  | )%     | nmf    |   | (59.7  | )%     | (150.4 | )%     | (11.1                   | )%     |
|                                     |   |   |   |   |   |   |   |   |   |   |   |   |                    |   |
| **Other Income and Expense**             |   |   |   |   |   |   |   |   |   |   |   |   |                    |   |
| Interest  Expense                        | --     |   | (1.6   | )%     | 12.5   | %      | 15.5   | %      | (53.1  | )%     | 6.6    | %      | (8.6                    | )%     |
| Exchange  Gain (Loss)                    | --     |   | nmf    |   | nmf    |   | nmf    |   | nmf    |   | nmf    |   | nmf                     |   |
| Investment  in Unconsolidated Subsidiary | --     |   | nmf    |   | nmf    |   | nmf    |   | nmf    |   | nmf    |   | nmf                     |   |
| Other                                    | --     |   | 35.8   | %      | (98.8  | )%     | nmf    |   | nmf    |   | (100.0 | )%     | nmf                     |   |
|                                     |        |   |        |   |        |   |        |   |        |   |        |   |                         |   |
| **Total Other Income and Expense**       | --     |   | 50.4   | %      | 148.9  | %      | (10.2  | )%     | (75.5  | )%     | 121.2  | %      | 12.7                    | %      |
|                                     |        |   |        |   |        |   |        |   |        |   |        |   |                         |   |
|                                     |   |   |   |   |   |   |   |   |   |   |   |   |                    |   |
| **Income (Loss) Before Income Tax**      | --     |   | (44.6  | )%     | nmf    |   | 429.6  | %      | (63.6  | )%     | (106.0 | )%     | (36.1                   | )%     |
|                                     |   |   |   |   |   |   |   |   |   |   |   |   |                    |   |
| Income  Tax Provision (Benefit)          | --     |   | 14.9   | %      | 65.4   | %      | 25.9   | %      | (98.5  | )%     | 1966.3 | %      | (6.4                    | )%     |
| Income  From Disc. Oper. - Snowboard     | --     |   | nmf    |   | nmf    |   | nmf    |   | nmf    |   | nmf    |   | nmf                     |   |
| Cummulative  Effect of Accounting Change | --     |   | nmf    |   | nmf    |   | nmf    |   | nmf    |   | nmf    |   | nmf                     |   |
|                                     |        |   |        |   |        |   |        |   |        |   |        |   |                         |   |
| **Net Income**                           | --     |   | 34.4   | %      | nmf    |   | 177.1  | %      | (84.0  | )%     | (100.3 | )%     | (64.2                   | )%     |
|                                     |        |   |        |   |        |   |        |   |        |   |        |   |                         |   |

 

**EXHIBIT #4**

**Marker International****Selected Financial Ratios**

|                                  |   |       |   |       |   |       |   |       |   |       |   |       | 1996-01 |       |
|---------------------------------------|--------|------------|--------|------------|--------|------------|--------|------------|--------|------------|--------|------------|---------|------------|
|                                  | 1996   |       | 1997   |       | 1998   |       | 1999   |       | 2000   |       | 2001   |       | Average |       |
|                                  |        |       |        |       |        |       |        |       |        |       |        |       |         |       |
| **Growth**                            |   |       |   |       |   |       |   |       |   |       |   |       |    |       |
| Sales  Growth (%)                     | --     |       | (5.5   | )%         | (2.0   | )%         | (8.9   | )%         | (24.2  | )%         | 7.4    | %          | (7.2    | )%         |
| Operating  Income Growth (%)          | --     |       | (19.7  | )%         | (62.8  | )%         | nmf    |       | (59.7  | )%         | (150.4 | )%         | (11.1   | )%         |
| Earnings  Growth (%)                  | --     |       | 34.4   | %          | nmf    |       | 177.1  | %          | (84.0  | )%         | (100.3 | )%         | (64.2   | )%         |
|                                  |   |       |   |       |   |       |   |       |   |       |   |       |    |       |
| **Cost Control**                      |   |       |   |       |   |       |   |       |   |       |   |       |    |       |
| Cost  of Sales/Sales (%)              | 59.8   | %          | 60.7   | %          | 66.9   | %          | 73.7   | %          | 72.6   | %          | 62.1   | %          | 66.0    | %          |
| Operating  Expenses/Sales (%)         | 33.5   | %          | 33.7   | %          | 31.0   | %          | 47.8   | %          | 38.8   | %          | 32.6   | %          | 36.2    | %          |
| Operating  Margin (%)                 | 6.6    | %          | 5.6    | %          | 2.1    | %          | (21.5  | )%         | (11.4  | )%         | 5.4    | %          | (2.2    | )%         |
| Interest  Expense/Sales (%)           | 5.9    | %          | 6.1    | %          | 7.1    | %          | 8.9    | %          | 5.5    | %          | 5.5    | %          | 6.5     | %          |
|                                  |   |       |   |       |   |       |   |       |   |       |   |       |    |       |
| **Turnover Ratios**                   |   | ** ** |   | ** ** |   | ** ** |   | ** ** |   | ** ** |   | ** ** |    | ** ** |
| Sales/Total  Assets (x)               | 1.0    |       | 0.7    |       | 0.8    |       | 1.3    |       | 1.1    |       | 1.4    |       | 1.0     |       |
| Accounts  Receivable Turnover (x)     | 4.3    |       | 3.5    |       | 2.6    |       | 3.3    |       | 3.2    |       | 3.5    |       | 3.4     |       |
| Inventory  Turnover (x)               | 1.6    |       | 1.5    |       | 1.5    |       | 2.9    |       | 2.6    |       | 3.3    |       | 2.2     |       |
| Fixed  Asset Turnover (x)             | 6.7    |       | 4.3    |       | 4.6    |       | 6.6    |       | 10.0   |       | 12.8   |       | 7.5     |       |
|                                  |   |       |   |       |   |       |   |       |   |       |   |       |    |       |
| **Profitability**                     |   | ** ** |   | ** ** |   | ** ** |   | ** ** |   | ** ** |   | ** ** |    | ** ** |
| Adjusted  Return on Sales (%)         | 3.9    | %          | 5.5    | %          | (21.3  | )%         | (64.7  | )%         | (13.7  | )%         | 0.9    | %          | (14.9   | )%         |
| Adjusted  Return on Assets (%)        | 3.9    | %          | 3.9    | %          | (16.5  | )%         | (81.4  | )%         | (14.8  | )%         | 1.3    | %          | (17.3   | )%         |
| Adjusted  Return on Equity (%)        | 16.5   | %          | 14.5   | %          | (139.7 | )%         | 161.2  | %          | 180.6  | %          | (13.0  | )%         | 36.7    | %          |
|                                  |   |       |   |       |   |       |   |       |   |       |   |       |    |       |
| **Risk**                              |   | ** ** |   | ** ** |   | ** ** |   | ** ** |   | ** ** |   | ** ** |    | ** ** |
| Adjusted  Total Debt/Total Assets (%) | 76.2   | %          | 72.9   | %          | 88.2   | %          | 150.5  | %          | 108.2  | %          | 110.2  | %          | 101.0   | %          |
| Adjusted  Long-Term Debt/Equity (%)   | 0.7    |       | 0.9    |       | 1.2    |       | (0.1   | )          | (2.6   | )          | (1.7   | )          | (0.3    | )          |
| Current  Ratio (x)                    | 1.3    |       | 1.4    |       | 1.1    |       | 0.6    |       | 1.2    |       | 1.2    |       | 1.1     |       |
| Interest  Coverage (x)                | 1.8    |       | 2.0    |       | (1.8   | )          | (6.0   | )          | (1.5   | )          | 1.1    |       | (0.7    | )          |

 

**EXHIBIT #5**

**Marker International****Historical Balance Sheets****March 31, 1995-2000****U.S. Dollars(000's)**

|                                             | 1996   |   | 1997    |   | 1998    |   | 1999    |   | 2000   |   | 2001   |   |
|--------------------------------------------------|--------|--------|---------|--------|---------|--------|---------|--------|--------|--------|--------|--------|
|                                             |        |   |         |   |         |   |         |   |        |   |        |   |
| **ASSETS**                                       |   |   |    |   |    |   |    |   |   |   |   |   |
| **Current Assets**                               |   |   |    |   |    |   |    |   |   |   |   |   |
| Cash  & Equivalents                          | 6,189  |   | 13,532  |   | 4,241   |   | 5,547   |   | 5,377  |   | 1,767  |   |
| Accounts  Receivable                             | 20,422 |   | 24,025  |   | 31,710  |   | 22,392  |   | 17,556 |   | 17,025 |   |
| Other  Receivables                               | 0      |   | 0       |   | 0       |   | 0       |   | 291    |   | 243    |   |
| Related  Party Receivables                       | 0      |   | 0       |   | 0       |   | 0       |   | 269    |   | 788    |   |
| Inventories                                      | 32,668 |   | 33,879  |   | 37,223  |   | 18,752  |   | 15,947 |   | 11,458 |   |
| Prepaid  and Other Current Assets                | 5,313  |   | 6,628   |   | 4,440   |   | 391     |   | 412    |   | 621    |   |
|                                             |        |   |         |   |         |   |         |   |        |   |        |   |
| **Total Current Assets**                         | 64,592 |   | 78,064  |   | 77,614  |   | 47,082  |   | 39,852 |   | 31,902 |   |
|                                             |   |   |    |   |    |   |    |   |   |   |   |   |
| **Property, Plant and Equipment**                |   |   |    |   |    |   |    |   |   |   |   |   |
| Land                                             |   |   |    |   | 1,050   |   | 386     |   |   |   |   |   |
| Building  and Improvements                       |   |   |    |   | 7,581   |   | 4,645   |   |   |   |   |   |
| Machinery  and Equipment                         |   |   |    |   | 21,222  |   | 20,096  |   |   |   |   |   |
| Furniture,  Fixtures and Office Equipment        |   |   |    |   | 4,582   |   | 4,797   |   |   |   |   |   |
| Less:  Accumulated Depreciation                  |   |   |    |   | (16,733 | )      | (18,725 | )      |   |   |   |   |
|                                             |        |   |         |   |         |   |         |   |        |   |        |   |
| **Net Property, Plant and Equipment**            | 13,121 |   | 19,278  |   | 17,702  |   | 11,199  |   | 5,641  |   | 4,700  |   |
|                                             |   |   |    |   |    |   |    |   |   |   |   |   |
| **Other Assets**                                 |   |   |    |   |    |   |    |   |   |   |   |   |
| Net  Intangibles                                 | 0      |   | 17,475  |   | 8,322   |   | 244     |   | 5,931  |   | 5,014  |   |
| Other  Assets                                    | 9,552  |   | 2,115   |   | 1,482   |   | 448     |   | 510    |   | 415    |   |
|                                             |        |   |         |   |         |   |         |   |        |   |        |   |
| **Total Other Assets**                           | 9,552  |   | 19,590  |   | 9,804   |   | 692     |   | 6,442  |   | 5,429  |   |
|                                             |        |   |         |   |         |   |         |   |        |   |        |   |
| **Total Assets**                                 | 87,265 |   | 116,932 |   | 105,120 |   | 58,973  |   | 51,934 |   | 42,030 |   |
|                                             |        |   |         |   |         |   |         |   |        |   |        |   |
|                                             |   |   |    |   |    |   |    |   |   |   |   |   |
| **LIABILITIES AND SHAREHOLDERS' EQUITY**         |   |   |    |   |    |   |    |   |   |   |   |   |
| **Current Liabilities**                          |   |   |    |   |    |   |    |   |   |   |   |   |
| Notes  Payable                                   | 30,556 |   | 38,929  |   | 48,645  |   | 46,062  |   | 20,460 |   | 16,160 |   |
| Current  Maturities LTD                          | 11,076 |   | 3,038   |   | 3,512   |   | 5,595   |   | 1,762  |   | 1,672  |   |
| Current  Maturities Series A Bonds               | 0      |   | 0       |   | 4,500   |   | 11,399  |   | 0      |   | 0      |   |
| Accounts  Payable                                | 2,899  |   | 4,513   |   | 6,381   |   | 5,948   |   | 1,758  |   | 2,364  |   |
| Related  Party Payable                           | 0      |   | 0       |   | 0       |   | 0       |   | 4,279  |   | 2,396  |   |
| Accrued  Expenses & Deferred Income          | 0      |   | 0       |   | 0       |   | 0       |   | 1,490  |   | 2,139  |   |
| Other  Current Liabilities                       | 6,514  |   | 10,427  |   | 7,830   |   | 12,937  |   | 3,297  |   | 1,441  |   |
|                                             |        |   |         |   |         |   |         |   |        |   |        |   |
| **Total Current Liabilities**                    | 51,045 |   | 56,907  |   | 70,868  |   | 81,941  |   | 33,046 |   | 26,171 |   |
|                                             |   |   |    |   |    |   |    |   |   |   |   |   |
| **Long-Term Debt**                               | 15,452 |   | 28,297  |   | 14,898  |   | 3,821   |   | 10,902 |   | 7,092  |   |
|                                             |   |   |    |   |    |   |    |   |   |   |   |   |
| **Parent Company Loan**                          | 0      |   | 0       |   | 0       |   | 0       |   | 12,247 |   | 13,036 |   |
|                                             |   |   |    |   |    |   |    |   |   |   |   |   |
| **Series A Bonds**                               | 0      |   | 0       |   | 5,500   |   | 0       |   | 0      |   | 0      |   |
|                                             |   |   |    |   |    |   |    |   |   |   |   |   |
| **Stockholder Loan**                             | 0      |   | 0       |   | 0       |   | 0       |   | 0      |   | 0      |   |
|                                             |   |   |    |   |    |   |    |   |   |   |   |   |
| **Redeemable Series B Preferred Stock**          | 0      |   | 0       |   | 0       |   | 3,000   |   | 0      |   | 0      |   |
|                                             |   |   |    |   |    |   |    |   |   |   |   |   |
| **Minority Interest**                            | 0      |   | 0       |   | 1,447   |   | 0       |   | 0      |   | 0      |   |
|                                             |        |   |         |   |         |   |         |   |        |   |        |   |
| **Total Liabilities**                            | 66,497 |   | 85,204  |   | 92,713  |   | 88,762  |   | 56,194 |   | 46,299 |   |
|                                             |   |   |    |   |    |   |    |   |   |   |   |   |
| **Shareholders' Equity**                         |   |   |    |   |    |   |    |   | 0      |   | 0      |   |
| Common  Stock                                    |   |   |    |   | 111     |   | 111     |   | 1,200  |   | 1,098  |   |
| Translation  Adjustments                         | 0      |   | 0       |   | 0       |   | 0       |   | (29    | )      | (418   | )      |
| Additional  Paid-in-Capital                      |   |   |    |   | 36,299  |   | 36,311  |   | 0      |   | (4,968 | )      |
| Accumulated  Deficit                             |   |   |    |   | (16,471 | )      | (64,658 | )      | (5,432 | )      | 20     |   |
| Accumulated  other Comprehensive Loss            |   |   |    |   | (7,532  | )      | (1,553  | )      | 0      |   | 0      |   |
|                                             |        |   |         |   |         |   |         |   |        |   |        |   |
| **Total Shareholders' Equity**                   | 20,768 |   | 31,697  |   | 12,407  |   | (29,789 | )      | (4,260 | )      | (4,268 | )      |
| **Total Liabilities & Shareholders' Equity** | 87,265 |   | 116,901 |   | 105,120 |   | 58,973  |   | 51,934 |   | 42,031 |   |
|                                             |        |   |         |   |         |   |         |   |        |   |        |   |
|                                             |   |   |    |   |    |   |    |   |   |   |   |   |
| Euro  Conversion - 1 Euro = USD (3/31/00)        | 0.961  |   |    |   |    |   |    |   |   |   |   |   |
| Euro  Conversion - 1 Euro = USD (3/31/01)        | 0.879  |   |    |   |    |   |    |   |   |   |   |   |

 

**EXHIBIT #6**

**Marker International****Common Size Balance Sheets****March 31, 1996-2001**

|                                             | 1996   |   | 1997   |   | 1998   |   | 1999   |   | 2000   |   | 2001   |    | Average |   |
|--------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|---------|---------|--------|
|                                             |        |   |        |   |        |   |        |   |        |   |        |    |         |   |
| **ASSETS**                                       |   |   |   |   |   |   |   |   |   |   |   |    |    |   |
| **Current Assets**                               |   |   |   |   |   |   |   |   |   |   |   |    |    |   |
| Cash & Equivalents                           | 7.1    | %      | 11.6   | %      | 4.0    | %      | 9.4    | %      | 10.4   | %      | 4.2    | %       | 7.8     | %      |
| Accounts Receivable                              | 23.4   | %      | 20.5   | %      | 30.2   | %      | 38.0   | %      | 33.8   | %      | 40.5   | %       | 31.1    | %      |
| Other Receivables                                | 0.0    | %      | 0.0    | %      | 0.0    | %      | 0.0    | %      | 0.6    | %      | 0.6    | %       | 0.2     | %      |
| Related Party  Receivables                       | 0.0    | %      | 0.0    | %      | 0.0    | %      | 0.0    | %      | 0.5    | %      | 1.9    | %       | 0.4     | %      |
| Inventories                                      | 37.4   | %      | 29.0   | %      | 35.4   | %      | 31.8   | %      | 30.7   | %      | 27.3   | %       | 31.9    | %      |
| Prepaid and Other  Current Assets                | 6.1    | %      | 5.7    | %      | 4.2    | %      | 0.7    | %      | 0.8    | %      | 1.5    | %       | 3.2     | %      |
|                                             |        |   |        |   |        |   |        |   |        |   |        |    |         |   |
| **Total Current Assets**                         | 74.0   | %      | 66.8   | %      | 73.8   | %      | 79.8   | %      | 76.7   | %      | 75.9   | %       | 74.5    | %      |
|                                             |   |   |   |   |   |   |   |   |   |   |   |    |    |   |
| **Property, Plant and Equipment**                |   |   |   |   |   |   |   |   |   |   |   |    |    |   |
| Land                                             | 0.0    | %      | 0.0    | %      | 1.0    | %      | 0.7    | %      | 0.0    | %      | 0.0    | %       | 0.3     | %      |
| Building and  Improvements                       | 0.0    | %      | 0.0    | %      | 7.2    | %      | 7.9    | %      | 0.0    | %      | 0.0    | %       | 2.5     | %      |
| Machinery and  Equipment                         | 0.0    | %      | 0.0    | %      | 20.2   | %      | 34.1   | %      | 0.0    | %      | 0.0    | %       | 9.0     | %      |
| Furniture, Fixtures  and Office Equipment        | 0.0    | %      | 0.0    | %      | 4.4    | %      | 8.1    | %      | 0.0    | %      | 0.0    | %       | 2.1     | %      |
| Less: Accumulated  Depreciation                  | 0.0    | %      | 0.0    | %      | (15.9  | )%     | (31.8  | )%     | 0.0    | %      | 0.0    | %       | (7.9    | )%     |
|                                             |        |   |        |   |        |   |        |   |        |   |        |    |         |   |
| **Net Property, Plant and Equipment**            | 15.0   | %      | 16.5   | %      | 16.8   | %      | 19.0   | %      | 10.9   | %      | 11.2   | %       | 14.9    | %      |
|                                             |   |   |   |   |   |   |   |   |   |   |   |    |    |   |
| **Other Assets**                                 |   |   |   |   |   |   |   |   |   |   |   |    |    |   |
| Net Intangibles                                  | 0.0    | %      | 14.9   | %      | 7.9    | %      | 0.4    | %      | 11.4   | %      | 11.9   | %       | 7.8     | %      |
| Other Assets                                     | 10.9   | %      | 1.8    | %      | 1.4    | %      | 0.8    | %      | 1.0    | %      | 1.0    | %       | 2.8     | %      |
|                                             |        |   |        |   |        |   |        |   |        |   |        |    |         |   |
| **Total Other Assets**                           | 10.9   | %      | 16.8   | %      | 9.3    | %      | 1.2    | %      | 12.4   | %      | 12.9   | %       | 10.6    | %      |
|                                             |        |   |        |   |        |   |        |   |        |   |        |    |         |   |
| **Total Assets**                                 | 100.0  | %      | 100.0  | %      | 100.0  | %      | 100.0  | %      | 100.0  | %      | 100.0  | %       | 100.0   | %      |
|                                             |        |   |        |   |        |   |        |   |        |   |        |    |         |   |
|                                             |   |   |   |   |   |   |   |   |   |   |   |    |    |   |
| **LIABILITIES AND SHAREHOLDERS' EQUITY**         |   |   |   |   |   |   |   |   |   |   |   |    |    |   |
| **Current Liabilities**                          |   |   |   |   |   |   |   |   |   |   |   |    |    |   |
| Notes Payable                                    | 35.0   | %      | 33.3   | %      | 46.3   | %      | 78.1   | %      | 39.4   | %      | 38.4   | %       | 45.1    | %      |
| Current Maturities LTD                           | 12.7   | %      | 2.6    | %      | 3.3    | %      | 9.5    | %      | 3.4    | %      | 4.0    | %       | 5.9     | %      |
| Current Maturities  Series A Bonds               | 0.0    | %      | 0.0    | %      | 4.3    | %      | 19.3   | %      | 0.0    | %      | 0.0    | %       | 3.9     | %      |
| Accounts Payable                                 | 3.3    | %      | 3.9    | %      | 6.1    | %      | 10.1   | %      | 3.4    | %      | 5.6    | %       | 5.4     | %      |
| Related Party Payable                            | 0.0    | %      | 0.0    | %      | 0.0    | %      | 0.0    | %      | 8.2    | %      | 5.7    | %       | 2.3     | %      |
| Accrued Expenses &  Deferred Income          | 0.0    | %      | 0.0    | %      | 0.0    | %      | 0.0    | %      | 2.9    | %      | 5.1    | %       | 1.3     | %      |
| Other Current  Liabilities                       | 7.5    | %      | 8.9    | %      | 7.4    | %      | 21.9   | %      | 6.3    | %      | 3.4    | %       | 9.3     | %      |
|                                             |        |   |        |   |        |   |        |   |        |   |        |    |         |   |
| **Total Current Liabilities**                    | 58.5   | %      | 48.7   | %      | 67.4   | %      | 138.9  | %      | 63.6   | %      | 62.3   | %       | 73.2    | %      |
|                                             |   |   |   |   |   |   |   |   |   |   |   |    |    |   |
| **Long-Term Debt**                               | 17.7   | %      | 24.2   | %      | 14.2   | %      | 6.5    | %      | 21.0   | %      | 16.9   | %       | 16.7    | %      |
|                                             |   |   |   |   |   |   |   |   |   |   |   |    |    |   |
| **Parent Company Loan**                          | 0.0    | %      | 0.0    | %      | 0.0    | %      | 0.0    | %      | 23.6   | %      | 31.0   | %       | 9.1     | %      |
|                                             |   |   |   |   |   |   |   |   |   |   |   |    |    |   |
| **Series A Bonds**                               | 0.0    | %      | 0.0    | %      | 5.2    | %      | 0.0    | %      | 0.0    | %      | 0.0    | %       | 0.9     | %      |
|                                             |   |   |   |   |   |   |   |   |   |   |   |    |    |   |
| **Stockholder Loan**                             | 0.0    | %      | 0.0    | %      | 0.0    | %      | 0.0    | %      | 0.0    | %      | 0.0    | %       | 0.0     | %      |
|                                             |   |   |   |   |   |   |   |   |   |   |   |    |    |   |
| **Redeemable Series B Preferred Stock**          | 0.0    | %      | 0.0    | %      | 0.0    | %      | 5.1    | %      | 0.0    | %      | 0.0    | %       | 0.8     | %      |
|                                             |   |   |   |   |   |   |   |   |   |   |   |    |    |   |
| **Minority Interest**                            | 0.0    | %      | 0.0    | %      | 1.4    | %      | 0.0    | %      | 0.0    | %      | 0.0    | %       | 0.2     | %      |
|                                             |        |   |        |   |        |   |        |   |        |   |        |    |         |   |
|                                             |   |   |   |   |   |   |   |   |   |   |   |    |    |   |
| **Total Liabilities**                            | 76.2   | %      | 72.9   | %      | 88.2   | %      | 150.5  | %      | 108.2  | %      | 110.2  | %       | 101.0   | %      |
|                                             |   |   |   |   |   |   |   |   |   |   |   |    |    |   |
| **Shareholders' Equity**                         |   |   |   |   |   |   |   |   |   |   |   |    |    |   |
| Common Stock                                     | 0.0    | %      | 0.0    | %      | 0.1    | %      | 0.2    | %      | 2.3    | %      | 2.6    | %       | 0.9     | %      |
| Translation Adjustments                          | 0.0    | %      | 0.0    | %      | 0.0    | %      | 0.0    | %      | (0.1   | )%     | (0.2   | )%      |    |   |
| Additional  Paid-in-Capital                      | 0.0    | %      | 0.0    | %      | 34.5   | %      | 61.6   | %      | 0.0    | %      | (11.8  | )%      |    |   |
| Accumulated Deficit                              | 0.0    | %      | 0.0    | %      | (15.7  | )%     | (109.6 | )%     | (10.5  | )%     | 0.0    | %  | 0.0     | %      |
| Accumulated other  Comprehensive Loss            | 0.0    | %      | 0.0    | %      | (7.2   | )%     | (2.6   | )%     | 0.0    | %      | 0.0    | %       | (1.6    | )%     |
|                                             |        |   |        |   |        |   |        |   |        |   |        |    |         |   |
| **Total Shareholders' Equity**                   | 23.8   | %      | 27.1   | %      | 11.8   | %      | (50.5  | )%     | (8.2   | )%     | (10.2  | )%      | (1.0    | )%     |
|                                             |   |   |   |   |   |   |   |   |   |   |   |    |    |   |
| **Total Liabilities & Shareholders' Equity** | 100.0  | %      | 100.0  | %      | 100.0  | %      | 100.0  | %      | 100.0  | %      | 100.0  | %       | 100.0   | %      |
|                                             |        |   |        |   |        |   |        |   |        |   |        |    |         |   |

 

**EXHIBIT #7**

**Marker International****Selected Statistics for Marker International****And Other Sporting Goods Manufacturers**

|                                                                                            | Marker  (a)                                 |   | Median  of Other Companies |   | (b)    |   |
|-------------------------------------------------------------------------------------------------|---------------------------------------------|--------|----------------------------|--------|--------|--------|
|                                                                                            |                                             |   |                            |   |   |   |
|                                                                                            |                                        |   |                       |   |   |   |
| Number of Companies                                                                             | 1                                           |   | 42                         |   |   |   |
| Total Assets   (000s)                                                                 | $                                           | 42,030 |                       | $      | 66,947 |   | (c) |   |
|                                                                                            |                                        |   |                       |   |   |   |
| **Balance Sheet Items**                                                                         |                                        |   |                       |   |   |   |
| Current Assets as a %  of Assets                                                                | 75.9                                        | %      | 68.0                       | %      |   |   |
| Cash as a % of Assets                                                                           | 4.2                                         | %      | 10.5                       | %      |   |   |
| Accounts Receivable as  a % of Assets                                                           | 40.5                                        | %      | 28.2                       | %      |   |   |
| Inventory as a% of  Assets                                                                      | 27.3                                        | %      | 27.3                       | %      |   |   |
| Net Fixed Assets as a  % of Assets                                                              | 11.2                                        | %      | 16.2                       | %      |   |   |
|                                                                                            |                                        |   |                       |   |   |   |
| Current Liabilities as  a % of Assets                                                           | 62.3                                        | %      | 30.0                       | %      |   |   |
| Long-Term Liabilities  (adjusted) as a % of Assets                                              | 16.9                                        | %      | 13.6                       | %      |   |   |
| Total Debt (adjusted)  as a % of Assets                                                         | 79.1                                        | %      | 48.2                       | %      |   |   |
| Net Worth (adjusted)  as a % of Assets                                                          | 20.9                                        | %      | 51.8                       | %      |   |   |
|                                                                                            |                                        |   |                       |   |   |   |
| **Income Statement Items**                                                                      |                                        |   |                       |   |   |   |
| Annual Sales (000s)                                                                             | $                                           | 60,393 |                       | $      | 98,785 |   | (c) |   |
|                                                                                            |                                        |   |                       |   |   |   |
| Gross Margin as a % of  Sales                                                                   | 37.9                                        | %      | 36.0                       | %      |   |   |
| Operating Expenses as  a % of Sales                                                             | 32.6                                        | %      | 29.3                       | %      |   |   |
| Operating Income as a  % of Sales                                                               | 5.4                                         | %      | 6.7                        | %      |   |   |
| Income Before Tax as a  % of Sales                                                              | 1.5                                         | %      | 5.3                        | %      |   |   |
|                                                                                            |                                        |   |                       |   |   |   |
| **Turnover Ratios**                                                                             |                                        |   |                       |   |   |   |
| Accounts Receivable  Turnover (x)                                                               | 3.5                                         |   | 5.3                        |   |   |   |
| Inventory Turnover (x)                                                                          | 3.3                                         |   | 3.6                        |   |   |   |
| Fixed Asset Turnover  (x)                                                                       | 12.8                                        |   | 11.2                       |   |   |   |
| Total Asset Turnover  (x)                                                                       | 1.4                                         |   | 1.4                        |   |   |   |
|                                                                                            |                                        |   |                       |   |   |   |
| **Profitability**                                                                               |                                        |   |                       |   |   |   |
| Before-Tax Return on  Assets (%)                                                                | 2.2                                         | %      | 19.3                       | %      |   |   |
| Before-Tax Return on  Adjusted Equity (%)                                                       | 10.6                                        | %      | 7.7                        | %      |   |   |
|                                                                                            |                                        |   |                       |   |   |   |
| **Risk**                                                                                        |                                        |   |                       |   |   |   |
| Current Ratio (x)                                                                               | 1.2                                         |   | 2.2                        |   |   |   |
| Quick Ratio (x)                                                                                 | 0.7                                         |   | 1.4                        |   |   |   |
| Total Debt/Equity (x)                                                                           | 3.8                                         |   | 1.1                        |   |   |   |
| Interest Coverage  Ratio                                                                        | 1.1                                         |   | 2.4                        |   |   |   |
|                                                                                                 |                                        |   |                       |   |   |   |
| Notes:  (a)  Fiscal year ended March 31, 2001                                              |                                        |   |                       |   |   |   |
|                                                                                            | (b)  Fiscal year  ended March 31, 2000 |   |                       |   |   |   |   |
|                                                                                            | (c)  Mean                              |   |                       |   |   |   |   |
|                                                                                            |                                        |   |                       |   |   |   |
| Source:  Annual Statement Studies, 2000-01 Edition, Robert Morris Associates,  Philadelphia, PA |
|                                                                                                 |                                             |        |                            |        |        |        |  |  |  |  |

 

**EXHIBIT #8**

**Marker International****Projected Income Statement (USD)****For Year Ending March 31, 2002**

 

|                             | **Actual** |   | **Projected** |   | **Percentage of Sales** |
|----------------------------------|------------|--------|---------------|--------|-------------------------|
|                             | 2001       |   | 2002          |   | 2001                    |   | 2002 |   |
|                             |            |   |               |   |                         |   |  |   |
|                             |       |   |          |   |                    |   |   |   |
| **Sales**                        |       |   |          |   |                    |   |   |   |
| Marker                           | 50,423     |   | 43,293        |   | 76                      | % | 75 | % |
| Tecnica                          | 8,273      |   | 6,438         |   | 13                      | % | 11 | % |
| Volkl                            | 6,567      |   | 6,961         |   | 10                      | % | 12 | % |
| Other                            | 755        |   | 909           |   | 1                       | % | 2 | % |
|                             |            |   |               |   |                         |   |  |   |
| **Total Sales**                  | 66,018     |   | 57,600        |   | 100                     | % | 100 | % |
|                             |       |   |          |   |                    |   |   |   |
| **Cost of Sales**                |       |   |          |   |                    |   |   |   |
| Marker                           | 31,125     |   | 25,508        |   | 47                      | % | 44 | % |
| Tecnica                          | 6,420      |   | 4,631         |   | 10                      | % | 8 | % |
| Volkl                            | 3,392      |   | 3,699         |   | 5                       | % | 6 | % |
| Other                            | 44         |   | 705           |   | 0                       | % | 1 | % |
|                             |            |   |               |   |                         |   |  |   |
| **Total Cost of Sales**          | 40,982     |   | 34,542        |   | 62                      | % | 60 | % |
|                             |       |   |          |   |                    |   |   |   |
| **Gross Margin**                 |       |   |          |   |                    |   |   |   |
| Marker                           | 19,299     |   | 17,785        |   | 29                      | % | 31 | % |
| Tecnica                          | 1,853      |   | 1,807         |   | 3                       | % | 3 | % |
| Volkl                            | 3,174      |   | 3,262         |   | 5                       | % | 6 | % |
| Other                            | 711        |   | 204           |   | 1                       | % | 0 | % |
|                             |            |   |               |   |                         |   |  |   |
| **Total Gross Margin**           | 25,037     |   | 23,058        |   | 38                      | % | 40 | % |
|                             |       |   |          |   |                    |   |   |   |
| **Expenses**                     |       |   |          |   |                    |   |   |   |
| Selling                          | 9,774      |   | 9,503         |   | 15                      | % | 16 | % |
| Warehouse &  Shipping        | 1,802      |   | 1,492         |   | 3                       | % | 3 | % |
| General &  Administration    | 8,578      |   | 7,387         |   | 13                      | % | 13 | % |
| Research &  Development      | 1,350      |   | 1,038         |   | 2                       | % | 2 | % |
| License Fees                     | 0          |   | 0             |   | 0                       | % | 0 | % |
| Management Fees                  | 1          |   | 0             |   | 0                       | % | 0 | % |
|                             |            |   |               |   |                         |   |  |   |
| **Total Operating Expenses**     | 21,505     |   | 19,420        |   | 33                      | % | 34 | % |
|                             |       |   |          |   |                    |   |   |   |
| **Operating Income (Loss)**      | 3,532      |   | 3,638         |   | 5                       | % | 6 | % |
|                             |       |   |          |   |                    |   |   |   |
| **Other Income (Expense)**       |       |   |          |   |                    |   |   |   |
| Interest (Expenses)  Income      | (3,626     | )      | (3,185        | )      | -5                      | % | -6 | % |
| Exchange Gains  (Losses)         | (530       | )      | 0             |   | -1                      | % | 0 | % |
| Other Income (Expense)           | 1,120      |   | 171           |   | 2                       | % | 0 | % |
|                             |            |   |               |   |                         |   |  |   |
| **Total Other Income (Expense)** | (3,036     | )      | (3,014        | )      | -5                      | % | -5 | % |
|                             |       |   |          |   |                    |   |   |   |
| **Net Income before Tax**        | 496        |   | 624           |   | 1                       | % | 1 | % |
| Provisions for Income  Taxes     | 478        |   | 0             |   | 1                       | % | 0 | % |
|                             |            |   |               |   |                         |   |  |   |
| **Net Income (Loss)**            | 18         |   | 624           |   | 0                       | % | 1 | % |
|                             |            |   |               |   |                         |   |  |   |

 

| **Adjustments to Income Statements**                                                                               |       |       |
|--------------------------------------------------------------------------------------------------------------------|------------|------------|
| Net Income Before Tax                                                                                              | 624        |       |
| Plus: Interest -  Parent Company Loan                                                                              | 587        |       |
|                                                                                                               |            |       |
| Adjusted Income Before  Tax                                                                                        | 1,211      |       |
| Income Tax Provision                                                                                               | 484        |       |
|                                                                                                               |            |       |
| **Adjusted Net Income**                                                                                            | **726**    | ** ** |
|                                                                                                               | ****       |       |
|                                                                                                               |       |       |
|                                                                                                               |       |       |
| **Debt-Free Approach**                                                                                             |       |       |
|                                                                                                               |       |       |
| **Adjustments to Projected Income Statements**                                                                     |       |       |
| Net Income Before Tax                                                                                              | 624        |       |
| Plus: Interest Expense                                                                                             | 3,185      |       |
|                                                                                                               |            |       |
| Adjusted Net Income  Before Tax                                                                                    | 3,809      |       |
| Provision for Income  Taxes1                                                                                       | (1,523     | )          |
|                                                                                                               |            |       |
| **Adjusted Net Income - Debt-Free**                                                                                | 2,285      |       |
|                                                                                                               |       |       |
| **Cash Flow Analysis**                                                                                             |       |       |
| Adjusted Debt-Free Net  Income                                                                                     | 2,285      |       |
| Plus:  Depreciation/Amortization                                                                                   | 2,753      |       |
| Less: Capital  Expenditures                                                                                        | (2,182     | )          |
|                                                                                                               |            |       |
| **Net Free Cash Flow**                                                                                             | 2,857      |       |
|                                                                                                               |       |       |
| **Capitalized Value of Net Free Cash Flow**                                                                        | 60,082     |       |
|                                                                                                               |       |       |
| Present Value of Net  Free Cash Flow - 3/31/02                                                                     |       |       |
|                                                                                                               |       |       |
| **NPV of Net Free Cash Flow - 3/31/01**                                                                            | 55,758     |       |
| Less: Interest Bearing  Debt (Adjusted)2                                                                           | 24,923     |       |
|                                                                                                               |            |       |
| **Estimated Adjusted Equity Value**                                                                                | **30,835** | ** ** |
|                                                                                                                    |       |       |
| 1Average rate estimated by Marker management                                                                       |       |
| 2Parent Company loan of $13.036 million is  considered equity for purposes of this calculation, per the Agreement. |       |
|                                                                                                               |       |       |
| Periods                                                                                                            | 1          |       |
|                                                                                                               |       |       |
| Euro  Conversion - 1 Euro = USD (3/31/00)                                                                          | 0.961      |       |
| Euro  Conversion - 1 Euro = USD (3/31/01)                                                                          | 0.879      |       |
|                                                                                                                    |            |            |  |  |

 

**EXHIBIT #9**

**MarkerInternationalIndustry Sample Group**

**Aldila:** Aldilamanufactures graphite golf shafts.  Thecompany offers standard and customized shafts designed for various performancespecifications and sold at a range of prices. It supplies shafts to golf club manufacturers such as CallawayGolf.  Sales to Callaway Golf make upapproximately 26% of the company’s total sales.  Sales of customized graphite shafts account for about 85% of thecompany’s total sales.  Aldila alsosells its products to pro shops, custom club shops, and repair shops.  The company operates production facilities inthe U.S., Mexico, and China.

**Callaway:** Callaway Golfmanufactures golf clubs.  It sells itsline of Big Bertha, Great Big Bertha, and Biggest Big Bertha oversized metalwoods and conventional-style metal woods, irons, wedges, and putters.  These clubs, as well as those marketed underother trademarks, are sold to intermediate and advanced golfers at premiumprices through retailers of professional-quality golf clubs in the UnitedStates and overseas.  Sales of metalwoods account for approximately 56% of the company’s total sales.  Foreign sales account for about 38% ofCallaway Golf’s total sales.

**Coastcast:** Coastcast primarily manufactures golfequipment.  Its products includestainless-steel and titanium golf clubheads and metal woods, irons, andputters.  Coastcast’s golf clubheads areused in Callaway, Tommy Armour, Odyssey, Titleist, Cleveland, Cobra, Wilson,Lynx, Ping, Ray Cook, Taylor Made, and Spaulding brand-name golf clubs.  Sales to Callaway Golf account forapproximately 46% of the company’s total sales.  In addition, Coastcast produces orthopedic implants and surgicaltools for use in the manufacture of replacement hip and knee joints in humansand small animals.

**Cybex:** Cybex International designs, develops,and manufactures strength-training and cardiovascular exercise equipment usedin fitness conditioning, sports medicine, and rehabilitation.  These products are marketed under varioustrademarks, primarily CYBEX.  Thecompany’s customers include fitness facilities, sports teams, research andeducational centers, hospitals, private-practice physical-therapy clinics, and rehabilitationcenters.  Approximately 57% of Cybex’srevenues are for its weight-training machines.

**Direct Focus:** Direct Focus develops and marketsathletic equipment.  The company designshome-fitness equipment that it sells under the Bowflex brand name.  In addition, Direct Focus designs fitnessequipment, knees and wrist wraps, dumbbells, hand grips, ankle and wristweights, workout mats, and jump ropes that it markets under the Nautilus brandname.  It is also developing airbedsthat are sold under the Instant Comfort and Nautilus Sleep Systems labels.  The company markets its products through theInternet, television infomercials, direct mail, and distributors.

**Escalade:** Escalade produces sporting goods andoffice and graphic-arts products.  Itssporting goods include table-tennis and pool tables, archery equipment,basketball backboards, darts, and dart cabinets.  Escalade’s office and graphic-arts products, which includechecksigners, paper shredders, catalog racks, bindery carts, stamp affixers,and letter openers, are sold under private labels and brand names such asPremier, Martin Yale, and Master Products. The company makes sporting goods for Sears Roebuck, which accounts forapproximately 38% of Escalade’s total sales.

**First Team Sports:** First Team Sports produces sportingequipment and apparel.  The companymanufactures inline roller skates that are marketed under private labels andbrand names such as UltraWheels, Team Gretzky, Skate Attack, Street Attack,Roll USA, Softec, and Airborne.  It alsomakes Street-hockey equipment such as hockey sticks, pucks, nets, pads, andballs.  In addition, the companyproduces apparel such as elbow and knee pads, wrist guards, skating gloves,helmets, t-shirts, and skate bags. Sales outside of North America account for approximately 26% of thecompany’s total sales.

**K2:** K2 produces recreational and industrialproducts.  Its products include snowskis sold under the K2 and Olin brand names; Shakespeare fishing rods; Stearnswater-safety vests, jackets, and suits; Girvin and K2 mountain bikes; Morrowand Ride snowboards; in-line skates and snowboards sold under the K2 name; andsportswear.  The company’s industrialproducts include nylon and polymer monofilaments, fiberglass antennas, lightpoles, and paperboard products.  K2agreed to sell it Simplex Building Products unit to Ludlow Building Products in2000.

**Oakley:**Oakley manufactures high-performanceathletic gear.  The company’s productscurrently include sunglasses, goggles, footwear, and watches.  Its line of sunglasses includes productsmarketed under the M Frames, Zeros, Wires, Romeo, and eye jackets brandnames.  Oakley’s targeted clientele areskiers, cyclists, runners, surfers, golfers, tennis players, and motorcyclists,as well as general fashion-oriented consumers. Foreign sales account for approximately 27% of Oakley’s revenues.

**Sturm Ruger:** Sturm, Ruger & Company manufacturesand sells firearms.  The company offersproducts in all four firearm categories: pistols, revolvers, rifles, andshotguns.  These guns, sold under theRuger name, consist of .22 caliber rimfire-autoloading pistols,centerfire-autoloading pistols in various calibers, single-action anddouble-action revolvers in various calibers, single-shot and autoloading, andbolt-action rifles in various hunting calibers, and shotguns in twogauges.  The company also manufacturesferrous, aluminum, and titanium investment casting for various industries.

 

**EXHIBIT #10**

**Marker International********Public Company Comparables********Selected Characteristics********As of March 31, 2001**

| Company Name        | Market  Capitalization |       | Revenue   |       | Revenue  Growth %3 Year |       | Net  Margin  TTM |       | Net  Margin  Year 1 |       | Long-Term  Liabilities |       | Equity   |       |
|---------------------|------------------------|------------|-----------|------------|-------------------------|------------|------------------|------------|---------------------|------------|------------------------|------------|----------|------------|
|                     |                        |       |           |       |                         |       |                  |       |                     |       |                        |       |          |       |
| Aldila              | 28.0                   |       | 55.9      |       | (8.3                    | )          | 5.8              |       | (4.7                | )          | 6.3                    |       | 80.4     |       |
| Callaway Golf       | 1,644.7                |       | 840.4     |       | 1.7                     |       | 9.9              |       | 7.7                 |       | NA                     |       | 519.2    |       |
| Coastcast           | 78.6                   |       | 141.4     |       | (6.7                    | )          | 6.2              |       | 7.9                 |       | NA                     |       | 87.0     |       |
| Cybex International | 14.8                   |       | 130.8     |       | 37.5                    |       | 1.1              |       | 3.2                 |       | 33.8                   |       | 44.0     |       |
| Direct Focus        | 588.3                  |       | 223.9     |       | 142.2                   |       | 18.6             |       | 16.8                |       | 0.0                    |       | 79.2     |       |
| Escalade            | 48.5                   |       | 116.1     |       | (1.4                    | )          | 7.0              |       | 7.1                 |       | 20.3                   |       | 20.4     |       |
| First Team Sports   | 7.3                    |       | 46.9      |       | (16.2                   | )          | 1.3              |       | 0.0                 |       | 6.0                    |       | 23.8     |       |
| K2                  | 157.1                  |       | 662.2     |       | 7.4                     |       | 2.5              |       | 1.6                 |       | 75.4                   |       | 220.2    |       |
| Oakley              | 1,223.9                |       | 363.5     |       | 5.7                     |       | 14.0             |       | 7.7                 |       | 21.3                   |       | 207.1    |       |
| Sturm Ruger         | 264.3                  |       | 202.7     |       | 2.7                     |       | 13.3             |       | 14.0                |       | NA                     |       | 170.2    |       |
| **Median**          | **117.9**              | ** ** | **172.1** | ** ** | **2.2**                 | ** ** | **6.6**          | ** ** | **7.4**             | ** ** | **20.3**               | ** ** | **83.7** | ** ** |
| **Marker**          | **NA**                 | ** ** | **60.4**  | ** ** | **(9.8**                | **)**      | **0.9**          | ** ** | **0.9**             | ** ** | **7.1**                | ** ** | **8.8**  | ** ** |

 

|                | TotalAssets |       | Current  Ratio |       | Debt  to  Equity |   | Debt  to  Total Cap |       | Return  on  Assets |       | Return  on Equity |       | Beta    |       |
|---------------------|-------------|------------|----------------|------------|------------------|--------|---------------------|------------|--------------------|------------|------------------------|------------|---------|------------|
|                |             |       |                |       |                  |   |                     |       |                    |       |                        |       |         |       |
| Aldila              | 102.6       |       | 2.0            |       | 10.0             | %      | 9.3                 |       | (1.9               | )          | (2.7                   | )          | 0.79    |       |
| Callaway Golf       | 655.7       |       | 2.9            |       | NA               |   | NA                  |       | 9.0                |       | 11.1                   |       | 1.05    |       |
| Coastcast           | 97.3        |       | 7.9            |       | NA               |   | NA                  |       | 10.3               |       | 11.4                   |       | 0.57    |       |
| Cybex International | 104.8       |       | 1.8            |       | 70.0             | %      | 41.9                |       | 3.8                |       | 9.1                    |       | 0.28    |       |
| Direct Focus        | 101.9       |       | 3.7            |       | 0.0              | %      | 0.0                 |       | 30.2               |       | 38.4                   |       | 1.30    |       |
| Escalade            | 72.9        |       | 1.6            |       | 40.0             | %      | 26.7                |       | 9.1                |       | 20.7                   |       | 0.29    |       |
| First Team Sports   | 34.5        |       | 2.6            |       | 20.0             | %      | 19.3                |       | 0.0                |       | 0.1                    |       | 1.06    |       |
| K2                  | 428.8       |       | 2.2            |       | 50.0             | %      | 32.9                |       | 2.0                |       | 4.5                    |       | 0.24    |       |
| Oakley              | 290.3       |       | 2.5            |       | 10.0             | %      | 9.4                 |       | 8.3                |       | 11.2                   |       | 0.78    |       |
| Sturm Ruger         | 214.9       |       | 5.2            |       | NA               |   | NA                  |       | 15.9               |       | 20.2                   |       | 0.16    |       |
| **Median**          | **103.7**   | ** ** | **2.6**        | ** ** | **20.0**         | **%**  | **19.3**            | ** ** | **8.7**            | ** ** | **11.2**               | ** ** | **0.7** | ** ** |
| **Marker**          | **42.0**    | ** ** | **1.2**        | ** ** | **284.3**        | **%**  | **74.0**            | ** ** | **0.7**            | ** ** | **3.1**                | ** ** | **NA**  | ** ** |

 

|                | Projected  Earnings |       | 3/31/2001  Price |       | Forward  PE Ratio |       | Price/  Current Earn. |       | Price/  Book |       | Price/  Cash Flow |       | Price/  Revenue |       |
|---------------------|---------------------|------------|------------------|------------|-------------------|------------|-----------------------|------------|--------------|------------|-------------------|------------|-----------------|------------|
|                |                     |       |                  |       |                   |       |                       |       |              |       |                   |       |                 |       |
| Aldila              | 0.06                |       | 1.81             |       | 30.2              |       | 8.6                   |       | 0.3          |       | 2.6               |       | 0.5             |       |
| Callaway Golf       | 1.12                |       | 22.14            |       | 19.8              |       | 19.1                  |       | 3.2          |       | 13.2              |       | 2.0             |       |
| Coastcast           | NA                  |       | NA               |       | NA                |       | 9.5                   |       | 0.9          |       | 5.2               |       | 0.6             |       |
| Cybex International | NA                  |       | NA               |       | NA                |       | 9.4                   |       | 0.3          |       | 2.9               |       | 0.1             |       |
| Direct Focus        | 2.35                |       | 25.00            |       | 10.6              |       | 12.5                  |       | 7.4          |       | 15.5              |       | 2.6             |       |
| Escalade            | NA                  |       | NA               |       | NA                |       | 6.4                   |       | 2.4          |       | 6.6               |       | 0.4             |       |
| First Team Sports   | 0.21                |       | 1.25             |       | 6.0               |       | 12.5                  |       | 0.3          |       | 1.7               |       | 0.2             |       |
| K2                  | 1.08                |       | 8.75             |       | 8.1               |       | 9.4                   |       | 0.7          |       | 4.0               |       | 0.2             |       |
| Oakley              | 0.99                |       | 17.77            |       | 17.9              |       | 24.0                  |       | 5.9          |       | 42.0              |       | 3.4             |       |
| Sturm Ruger         | NA                  |       | NA               |       | NA                |       | 9.8                   |       | 1.6          |       | 12.4              |       | 1.3             |       |
| **Median**          |                | ** ** |             | ** ** | **14.3**          | ** ** | **9.7**               | ** ** | **1.3**      | ** ** | **5.9**           | ** ** | **0.6**         | ** ** |

 

**EXHIBIT #11**

**Marker International********Market Value Ratios of the Industry Sample Group********As of March 31, 2000**

|   | Price/ForwardEarnings |   | Price/Current  Earnings |   | Price/Book |   | Price/Revenue |   |
|--------|-----------------------|--------|-------------------------|--------|------------|--------|---------------|--------|
|   |                       |   |                         |   |            |   |               |   |
| Median | 14.3                  |   | 9.7                     |   | 125.0      | %      | 55.0          | %      |

 

**Adjustments to MarketRatios**

|                                                      | MarketValue  Adjustment |       |
|-----------------------------------------------------------|-------------------------|------------|
|                                                      |                         |       |
| Relative Lack of  Marketability Discount                  | 10.0                    | %          |
| Smaller Size of  Company Discount                         | 5.0                     | %          |
| Financial Risk                                            | 10.0                    | %          |
| Premium for Control                                       | 35.0                    | %          |
| **Net Adjustment Factor Applied to Market Ratios ***      | **103.9**               | **%**      |
| **Additional Discount Applicable to Price/Revenue Ratio** |                    | ** ** |
| Lower Net Margin  Compared to Sample Group                | 30.0                    | %          |

*Adjustment factors are multiplicative

|                          | Price/Forward  Earnings |       | Price/Current  Earnings |       | Price/Book |   | Price/Revenue |   |
|-------------------------------|-------------------------|------------|-------------------------|------------|------------|--------|---------------|--------|
|                          |                         |       |                         |       |            |   |               |   |
| Adjusted Ratios               | 14.8                    |       | 10.0                    |       | 129.9      | %      | 40.0          | %      |
| **Adjusted Ratios - Rounded** | **14.8**                | ** ** | **10.0**                | ** ** | **130.0**  | **%**  | **40.0**      | **%**  |

 

**Marker International********Indicated Market Values********($000s)**

|                                  | Marker |   | Ratio |   | IndicatedMarket  Value |   |
|---------------------------------------|--------|--------|-------|--------|------------------------|--------|
|                                  |        |   |       |   |                        |   |
| 2001 Adjusted Earnings                | 555    |   | 10.0  |   | 5,554                  |   |
| 2002 Projected  Earnings (Adjusted)   | 726    |   | 14.8  |   | 10,751                 |   |
| 2001 Revenue                          | 60,393 |   | 40.0  | %      | 24,157                 |   |
| March 31, 2001 Book  Value (Adjusted) | 8,768  |   | 130.0 | %      | 11,398                 |   |

 

**EXHIBIT #12**

**Historical Structure of Yields Observable********and Available on Selected Securties**

|                        | **Historical********Return** |   |   |              | **Differential** |   |
|-----------------------------|------------------------------|--------|--------|-------------------|------------------|--------|
|                        | ****                         |   |   |              | ****             |   |
| U.S. Treasury Bills         | 3.9                          | %      |   |              |             |   |
|                        |                         |   |   | Maturity Premium  | 1.8              | %      |
| Long-Term Government  Bonds | 5.7                          | %      |   |              |             |   |
|                        |                         |   |   | Default Premium   | 0.3              | %      |
| Long-Term Corporate  Bonds  | 6.0                          | %      |   |              |             |   |
|                        |                         |   |   | Ownership Premium | 7.0              | %      |
| Common Stocks               | 13.0                         | %      |   |              |             |   |
|                        |                         |   |   |              |             |   |
| Total Differential          |                         |   |   |              | 9.1              | %      |

**Source:**Ibbotson Associates, 2001 Stocks, Bonds,Bills, and Inflation Yearbook

**Note:** Differential represents the differencebetween returns (e.g., maturity premium = return on long-term government bondsless return on treasury bills).

 

**EXHIBIT #13**

**Marker International********Computation of Equity Discount Rate - Controlling InterestBasis********HVABuild-up Method**

| **Discount Rate:**                              |     |   |   |                          |   |
|-------------------------------------------------|----------|--------|--------|-------------------------------|--------|
| Market Factors                                  |     |   |   |                          |   |
|                                                 |     |   |   |                          |   |
| Risk-Free Rate - U. S.  Treasury Bills          | 3.9      | %      |   | 3/31/01                       |   |
| Common Stock Premium                            | 9.1      | %      |   | Exhibit  #14                  |   |
|                                            |          |   |   |                          |   |
|                                            | 13.0     | %      |   | Represents  minority position |   |
| **Company-Specific Risks**                      |     |   |   |                          |   |
| Size of Company                                 | 2.0      | %      |   |                          |   |
| Limited markets for  specialized product line   | 0.5      | %      |   |                          |   |
|                                            |          |   |   |                          |   |
| **Adjusted Rate for Company Specific Risks**    | 15.5     | %      |   |                          |   |
| **Market Adjustment for Control Premium**       | 35.0     | %      |   |                          |   |
| **Market Adjustment for Lack of Marketability** | 10.0     | %      |   |                          |   |
| **Build-up Discount Rate**                      | **11.1** | %      |   |                          |   |

 

**Discount Rate Determined By The****Capital Asset Pricing Model (CAPM)**

| **CAPM** | ** = (Risk Free Rate +  Beta(Common Stock Premium) + Company Specific Risk Adjustment** |
|----------|----------------------------------------------------------------------------------------------|
|     | **+ Lack of Marketability Discount  - Control Premium Adjustment**                      |

 

| Risk Free Rate (T-Bill  Rate)                 | 3.9     | %      |   | 3/31/01      |
|-----------------------------------------------|---------|--------|--------|--------------|
| Beta                                          | 0.7     |   |   |         |
| Common Stock Premium                          | 9.1     | %      |   | Exhibit  #14 |
| Control Premium-Market  Rate Adjustment       | 35.0    | %      |   |         |
| Lack of Marketability  Discount               | 10.0    | %      |   |         |
| **Company-Specific Risk:**                    |    |   |   |         |
| Size of Company                               | 2.0     | %      |   |         |
| Limited markets for  specialized product line | 0.5     | %      |   |         |
| **CAPM =**                                    | **9.0** | %      |   |         |
|                                          | ****    |   |   |         |

 

**Discount Rate - Averageof Two Methods**

| Build-Up Rate                                                                                | 11.1     | %      |
|----------------------------------------------------------------------------------------------|----------|--------|
| CAPM Rate                                                                                    | 9.0      | %      |
|                                                                                         |          |   |
| Total                                                                                        | 20.1     | %      |
| Average Discount Rate                                                                        | 10.0     | %      |
| **Average Discount Rate  - Rounded**                                                    | **10.0** | %      |
|                                                                                         | ****     |   |
|                                                                                         |     |   |
| **Capitalization Rate******(Capitalization rate = Discount rate  less long term growth rate) |
|                                                                                         |     |   |
| Disount Rate                                                                                 | 10.0     | %      |
| Less: Long-Term Growth  Rate                                                                 | 3.0      | %      |
|                                                                                         |          |   |
| **Equity Capitalization Rate**                                                               | **7.0**  | %      |
|                                                                                         | ****     |   |

**EXHIBIT #14**

**Marker International********Weighted Average Cost of Capital**

| **Cost of Debt**                |   |    |   |
|---------------------------------|--------|---------|--------|
| ****                            |   |    |   |
| Weighted Average Cost  of Debt  |   | 6.0     | %      |
| **Net Cost of Debt After Tax1** |   | **3.6** | %      |

 

| **Capital Structure**         |   |   |   |
|-------------------------------|--------|--------|--------|
| ****                          |   |   |   |
| Debt as % of Total  Capital2  |   | 35     | %      |
| Equity as % of Total  Capital |   | 65     | %      |

 

| **Weighted Average Cost of Capital** |   |   |   |   |   |         |   |
|--------------------------------------|--------|--------|--------|--------|--------|--------------|--------|
| ****                                 |   |   |   |   |   |         |   |
|                                 |   | Weight |   | Cost   |   | WeightedCost |   |
|                                 |   |        |   |        |   |              |   |
| Debt                                 |   | 35     | %      | 3.6    | %      | 1.3          |   |
| Equity                               |   | 65     | %      | 10.0   | %      | 6.5          |   |
|                                 |   |   |   |   |   |              |   |
| **Weighted Average Cost of Capital** |   |   |   |   |   | **7.8**      | %      |

 

| **Weighted Average Capitalization Rate** |   |   |   |   |   |    |   |
|------------------------------------------|--------|--------|--------|--------|--------|---------|--------|
| ****                                     |   |   |   |   |   |    |   |
| Weighted Average Cost  of Capital        |   |   |   |   |   | 7.8     | %      |
| Less: Long-Term Growth  Rate             |   |   |   |   |   | 3.0     | %      |
|                                     |   |   |   |   |   |         |   |
| **Weighted Average Capitalization Rate** |   |   |   |   |   | **4.8** | **%**  |

 

| **Prime Rate** |   | Rate   |     | Sales  |     | %  Sales |   | Weighted  Average |     |
|----------------|--------|--------|---------------|--------|---------------|----------|--------|-------------------|---------------|
| ****           |   |        |          |        |          |          |   |                   |          |
| United States  |   | 8.00   | %             | 18,294 |          | 29.4     | %      | 2.4               | %             |
| Germany        |   | 4.75   | %             | 36,828 |          | 59.2     | %      | 2.8               | %             |
| Canada         |   | 6.75   | %             | 1,577  |          | 2.5      | %      | 0.2               | %             |
| Japan          |   | 1.38   | %             | 5,470  |          | 8.8      | %      | 0.1               | %             |
|           |   |   |          |        |          |          |   |                   |          |
|           |   |   |          | 62,169 |          | 100.0    | %      | 5.5               | %             |

 

| **Debt Mix**    |   |   |   |   |   |
|-----------------|--------|--------|--------|--------|--------|
| ****            |   |   |   |   |   |
| Short-Term Debt |   | 17,831 |   | 71.5   | %      |
| Long-Term Debt  |   | 7,092  |   | 28.5   | %      |
|            |   |        |   |        |   |
| Total Debt      |   | 24,923 |   | 100.0  | %      |

 

| **Short-Term Rate** |                   |    |   |
|---------------------|------------------------|---------|--------|
| ****                |                   |    |   |
|                | Weighted Average Prime |    | 5.5    | % |
|                | Premium                |    | 1.0    | % |
|                |                   |    |        |   |
| **Short-Term Rate** |                   | **6.5** | %      |

 

| **Long-term Rate** |         |     |   |
|--------------------|--------------|----------|--------|
| ****               |         |     |   |
|               | German Prime |     | 4.75   | % |
|               | Premium      |     | 0.00   | % |
|               |         |     |        |   |
| **Long-term Rate** |         | **4.75** | %      |

 

| **Weighted Average Cost of Debt** |       | Rate   |   | Weight |   | Weighted  Rate |   |
|-----------------------------------|------------|--------|--------|--------|--------|----------------|--------|
| ****                              |       |        |   |        |   |                |   |
|                              | Short-Term |   | 6.5    | %      | 71.5   | %              | 4.6    | % |
|                              | Long-Term  |   | 4.8    | %      | 28.5   | %              | 1.4    | % |
|                              |       |   |   |   |   |                |   |
| **Weighted Average Cost of Debt** |       |   |   |   |   | **6.0**        | %      |

 

| 1Tax rate =    |   | 40     | %      |
|----------------|--------|--------|--------|
| 2Similar to K2 |   |   |   |

 

 

**APPENDIX A**

**Certification**

 

**Certification**

I certify that,to the best of my knowledge and belief:

| • | the statements of fact contained in this  report are true and correct.                                                                                                                                                                                        |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                          |
| • | the report analyses, opinions, and conclusions  are limited only by the reported assumptions and limiting conditions, and are  my personal, unbiased professional analyses, opinions, and conclusions.                                                        |
|   |                                                                                                                                                                                                                                                          |
| • | I have no present or prospective interest in  the company that is the subject of this report, and I have no personal  interest or bias with respect to the parties involved.                                                                                  |
|   |                                                                                                                                                                                                                                                          |
| • | my compensation is not contingent upon the  reporting of a predetermined value or direction in value that favors the  cause of the client, the amount of the value estimate, the attainment of a  stipulated result, or the occurrence of a subsequent event. |
|   |                                                                                                                                                                                                                                                          |
| • | my analysis, opinions, and conclusions were  developed, and this report has been prepared, in conformity with the Uniform  Standards of Professional Appraisal Practice.                                                                                      |
|   |                                                                                                                                                                                                                                                          |
| • | no one provided significant professional  assistance to the person signing this certification.                                                                                                                                                                |

 

|   |                         |
|--------|-------------------------|
|   | Frederic  L. Jones, ASA |

 

**APPENDIX B**

**Statement of LimitingConditions**

 

**STATEMENTOF LIMITING CONDITIONS**

***The following conditions are an integral part of thisvaluation of Marker International GmbH (“the Company") prepared by Houlihan Valuation Advisors (“HVA”):***

|   | Neither  HVA nor its principals have any present or intended interest in the Company.  HVA's fees for this valuation are based on professional time charges and are  in no way contingent upon the final valuation figure determined herein.                                                                                                                                                                                                                                                                  |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|   | This  report is intended only for the specific use and purpose stated herein. It is  intended for no other use and is not to be copied or given to unauthorized  persons without the direct written consent of HVA. The value opinion  expressed herein is valid only for the stated purpose and the date of the  valuation. The report and information and conclusions contained therein  should in no way be construed to be investment advice.                                                             |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   |
|   | HVA  does not purport to be a guarantor of value. Valuation is an imprecise  science, with value being a question of informed judgement, and reasonable  persons can differ in their estimates of value. HVA does certify that this  valuation study was conducted and the conclusion arrived at independently  using conceptually sound and commonly accepted methods of valuation.                                                                                                                          |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   |
|   | In  preparing the valuation report, we used information provided by the Company.  It has been represented by the Company that the information is reasonably  complete and accurate. We did not make independent examinations of any  financial statements, projections, or other information, prepared or provided  by Company management which were relied upon and, accordingly, we make no  representations or warranties nor do we express any opinion regarding the  accuracy or reasonableness of such. |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   |
|   | The  valuation conclusions derived herein implicitly assume that the existing  management of the Company will maintain the character and integrity of the  Company through any sale, reorganization, or diminution of the owners'  participation.                                                                                                                                                                                                                                                             |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   |
|   | Publicly  available information utilized herein, (e.g., economic, industry, statistical  and/or investment information) has been obtained from sources deemed to be  reliable. It is beyond the scope of this report to verify the accuracy of  such information, and we make no representations as to its accuracy.                                                                                                                                                                                          |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|   | This  engagement is limited to the production of the report and conclusions  contained herein. HVA has no obligation to provide future services (e.g.,  expert testimony in court or before governmental agencies) related to the  contents of this report unless arrangements for such future services have  been made.                                                                                                                                                                                      |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|   | This  valuation report and the conclusions contained herein are necessarily based  on market and economic conditions as they existed at the date of valuation.                                                                                                                                                                                                                                                                                                                                                |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   |
|   | The  principals of HVA assigned to this engagement are Accredited Senior  Appraisers in good standing with the American Society of Appraisers, a  national organization that certifies business appraisers. HVA conforms to the  Uniform Standards of Professional Appraisal Practice for purposes of business  valuations. HVA also conforms to the business valuation standards I through  IX set forth by the American Society of Appraisers.                                                              |

 

 

**APPENDIX C**

**Internal Revenue Ruling 59-60**

 

| **REVENUE RULING #59-60** |
|---------------------------|
| ****                      |

SECTION 2031.  DEFINITION OF GROSS ESTATE

26 CFR 20.2031-2; Valuationof stocks and bonds.(Also Section 2512.)(Also Part II, Sections 811 (k), 1005 Regulations 105, Section 81.10.)

|   | In valuing the stock of  closely held corporations, or the stock of corporations where market  quotations are not available, all other available financial data, as well as  all relevant factors affecting the fair market value, must be considered for  estate tax and gift tax purposes.  No  general formula may be given that is applicable to the many different  valuation situations arising in the valuation of such stock.  However, the general approach, methods,  and factors which must be considered in valuing such securities are outlined. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|   | Revenue  Ruling 54-77, C.B. 1954-1, 187, superseded.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |

Section 1.  Purpose

The purpose of this RevenueRuling is to outline and review in general the approach, methods and factors tobe considered in valuing shares of the capital stock of closely heldcorporations for estate tax and gift tax purposes.  The methods discussed herein will apply likewise to the valuationof corporate stocks on which market quotations are either unavailable or are ofsuch scarcity that they do not reflect the fair market value.

Section 2.  Background and Definitions

|   | .01         All valuations must be made in  accordance with the applicable provisions of the Internal Revenue Code of  1954 and the Federal Estate Tax and Gift Tax Regulations.  Sections 2031(a), 2032 and 2512(a) of the  1954 Code (sections 811 and 1005 of the 1939 Code) require that the property  to be included in the gross estate, or made the subject of a gift, shall be  taxed on the basis of the value of the property at the time of death of the  decedent, the alternate date if so elected, or the date of gift.                                                                                                                                                                                                                                 |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   |
|   | .02         Section 20.2031-1(b) of the  Estate Tax Regulations (section 81.10 of the Estate Tax Regulations 105) and  section 25.2512-1 of the Gift Tax Regulations (section 86.19 of Gift Tax  Regulations 108) define fair market value, in effect, as the price at which  the property would change hands between a willing buyer and a willing seller  when the former is not under any compulsion to buy and the latter is not  under any compulsion to sell, both parties having reasonable knowledge of  relevant facts.  Court decisions  frequently state in addition that the hypothetical buyer and seller are  assumed to be able, as well as willing, to trade and to be well informed  about the property and concerning the market for such property. |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   |
|   | .03         Closely held corporations are  those corporations the shares of which are owned by a relatively limited  number of stockholders.  Often the  entire stock issue is held by one family.   The result of this situation is that little, if any, trading in the  shares takes place.  There is,  therefore, no established market for the stock and such sales as occur at  irregular intervals seldom reflect all of the elements of a representative  transaction as defined by the term "fair market value."                                                                                                                                                                                                                          |

 

 

Section 3.  Approach to Valuation

|   | .01         A determination of fair market  value, being a question of fact, will depend upon the circumstances in each  case.  No formula can be devised that  will be generally applicable to the multitude of different valuation issues  arising in estate and gift tax cases.   Often, an appraiser will find wide differences of opinion as to the  fair market value of a particular stock.   In resolving such differences, he should maintain a reasonable  attitude in recognition of the fact that valuation is not an exact  science.  A sound valuation will be based  upon all the relevant facts, but the elements of common sense, informed  judgement and reasonableness must enter into the process of weighing those  facts and determining their aggregate significance.                                                        |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |
|   | .02         The fair market value of specific  shares of stock will vary as general economic conditions change from  "normal" to "boom" or "depression," that is,  according to the degree of optimism or pessimism with which the investing  public regards the future at the required date of appraisal.  Uncertainty as to the stability or  continuity of the future income from a property decreases its value by  increase the risk of loss of earnings and value in the future.  The value of shares of stock of a company  with very uncertain future prospects is highly speculative.  The appraiser must exercise his judgement  as to the degree of risk attaching to the business of the corporation which  issued the stock, but that judgement must be related to all of the other  factors affecting value. |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|   | .03         Valuation of securities is, in  essence, a prophesy as to the future and must be based on facts available at  the required date of appraisal.  As a  generalization, the prices of stocks which are traded in volume in a free and  active market by informed persons best reflect the consensus of the investing  public as to what the future holds for the corporations and industries  represented.  When a stock is closely  held, is traded infrequently, or is traded in an erratic market, some other  measure of value must be used.  In  many instances, the next best measure may be found in the prices at which the  stocks of companies engaged in the same or a similar line of business are  selling in a free and open market.                                                                                              |

 

Section 4.  Factors to Consider

|   | .01         It is advisable to emphasize that  in the valuation of the stock of closely held corporations or the stock of  corporations where market quotations are either lacking or too scarce to be  recognized, all available financial data, as well as all relevant factors  affecting the fair market value, should be considered.  The following factors, although not  all-inclusive, are fundamental and require careful analysis in each case: |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|   | (a)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   | The  nature of the business and the history of the enterprise from its inception. |   |
|   | (b)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   | The  economic outlook in general and the condition and outlook of the specific  industry in particular. |   |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |   |   |
|   | (c)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   | The  book value of the stock and the financial condition of the business. |   |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |   |   |
|   | (d)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   | The  earning capacity of the company. |   |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |   |   |
|   | (e)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   | The  dividend-paying capacity. |   |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |   |   |
|   | (f)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   | Whether  or not the enterprise has goodwill or other tangible value. |   |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |   |   |
|   | (g)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   | Sales  of the stock and the size of the block to be valued. |   |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |   |   |
|   | (h)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   | The  market price of stocks of corporations engaged in the same or a similar line  of business having their stocks actively traded in a free and open market,  either on an exchange or over-the-counter. |   |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |   |   |
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |  |  |  |  |

|   | .02    | The  following is a brief discussion of each of the foregoing factors:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | (a)    | The  history of a corporate enterprise will show its past stability or  instability, its growth or lack of growth, the diversity or lack of diversity  of its operations, and other facts needed to form an opinion of the degree of  risk involved in the business.  For an  enterprise which changed its form of organization but carried on the same or  closely similar operations of its predecessor, the history of the former  enterprise should be considered.  The  detail to be considered should increase with approach to the required date of  appraisal, since recent events are of the greatest help in predicting the  future; but a study of gross and net income, and of dividends covering a long  prior period, is highly desirable.   The history to be studied should include but need not be limited to  the nature of the business, its products or services, its operating and  investment assets, capital structure, plant facilities, sales records and  management, all of which should be considered as of the date of the  appraisal, with due regard for recent significant changes.  Events of the past that are unlikely to  recur in the future should be discounted, since value has a close relation to  future expectancy.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|   | (b)    | A  sound appraisal of a closely held stock must consider current and prospective  economic conditions as of the date of appraisal, both in the national economy  and in the industry or industries with which the corporation is allied.  It is important to know that the company  is more or less successful than its competitors in the same industry, or that  it is maintaining a stable position with respect to competitors.  Equal or even greater significance may  attach to the ability of the industry with which the company is allied to  compete with other industries.   Prospective competition which has not been a factor in prior years  should be given careful attention.   For example, high profits due to the novelty of its product and the  lack of competition often lead to increasing competition.  The public's appraisal of the future  prospects of competitive industries or of competitors within an industry may  be indicated by price trends in the markets for commodities and for  securities.  The loss of the manager  of a so-called "one-man" business may have a depressing effect upon  the value of the stock of such business, particularly if there is a lack of  trained personnel capable of succeeding to the management of the  enterprise.  In valuing the stock of  this type of business, therefore, the effect of the loss of the manager on  the future expectancy of the business and the absence of management-succession  potentialities are pertinent factors to be taken into consideration.  On the other hand, there may be factors  which offset, in whole or in part, the loss of the manager's services.  For instance, the nature of the business  and of its assets may be such that they will not be impaired by the loss of  the manager's services.  Furthermore,  the loss may be adequately covered by life insurance, or competent management  might be employed on the basis of the consideration paid for the former  manager's services.  These, or other  offsetting factors, if found to exist, should be carefully weighed against  the loss of the manager's services in valuing the stock of the enterprise. |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|   | (c)    | Balance  sheets should be obtained, preferably in the form of comparative annual  statements for two or more years immediately preceding the date of appraisal,  together with a balance sheet at the end of the month preceding that date, if  corporate accounting will permit.  Any  balance sheet descriptions that are not self-explanatory and balance sheet  items comprehending diverse assets or liabilities should be clarified in  essential detail by supporting supplemental schedules.  These statements usually will disclose to  the appraiser:  (1) liquid position  (ratio of current assets to current liabilities); (2) gross and net book  value of principal classes of fixed assets; (3) working capital; (4)  long-term indebtedness; (5) capital structure; and (6) net worth.  Consideration also should be given to any  assets not essential to the operation of the business, such as investments in  securities, real estate, etc.  In  general, such nonoperating assets will command a lower rate of return than do  the operating assets, although in exceptional cases the reverse may be true.  In computing the book value per share of  stock, assets of the investment type should be revalued on the basis of their  market price and the book value adjusted accordingly.  Comparison of the company's balance sheets  over several years may reveal, among other facts, such developments as the  acquisition of additional production facilities or subsidiary companies,  improvement in financial position, and details as to recapitalizations and  other changes in the capital structure of the corporation.  If the corporation has more than one class  of stock outstanding, the charter or certificate of incorporation should be  examined to ascertain the explicit rights and privileges of the various stock  issues, including:  (1) voting powers,  (2) preference as to dividends, and (3) preference as to assets in the event  of liquidation.                                                                                                                                                                                                           |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |

|   | (d)    | Detailed  profit-and-loss statements should be obtained and considered for a  representative period immediately prior to the required date of appraisal,  preferably five or more years.  Such  statements should show (1) gross income by principal items; (2) principal  deductions from gross income including major prior items of operating  expenses, interest and other expense on each item of long-term debt,  depreciation and depletion if such deductions are made, officers' salaries,  in total if they appear to be reasonable or in detail if they seem to be  excessive, contributions (whether or not deductible for tax purposes) that  the nature of its business and its community position require the corporation  to make, and taxes by principal items, including income and excess profit  taxes; (3) net income available for dividends; (4) rates and amounts of  dividends paid on each class of stock; (5) remaining amount carried to  surplus; and (6) adjustments to and reconciliation with surplus as stated on  the balance sheet.  With profit and  loss statements of this character available, the appraiser should be able to  separate recurrent from nonrecurrent items of income and expense, to  distinguish between operating income and investment income, and to ascertain  whether or not any line of business in which the company is engaged is  operated consistently at a loss and might be abandoned with benefit to the  company.  The percentage of earnings  retained for business expansion should be noted when dividend-paying capacity  is considered.  Potential future  income is a major factor in many valuations of closely-held stocks, and all  information concerning past income which will be helpful in predicting the  future should be secured.  Prior  earnings records usually are the most reliable guide as to the future  expectancy, but resort to arbitrary five- or ten-year averages without regard  to current trends or future prospects will not produce a realistic  valuation.  If, for instance, a record  of progressively increasing or decreasing net income is found, then greater  weight may be accorded the most recent years' profits in estimating earning  power.  It will be helpful, in judging  risk and the extent to which a business is a marginal operation, to consider  deductions from income and net income in terms of percentage of sales.  Major categories of cost and expense to be  so analyzed include the consumption of raw materials and supplies in the case  of manufacturers, processors and fabricators; the cost of purchased  merchandise in the case of merchants; utility services, insurance; taxes;  depletion or depreciation; and interest. |
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|   | (e)    | Primary  consideration should be given to the dividend-paying capacity of the company  rather than to dividends actually paid in the past.  Recognition must be given to the necessity of retaining a  reasonable portion of profits in a company to meet competition.  Dividend-paying capacity is a factor that  must be considered in an appraisal, but dividends actually paid in the past  may not have any relation to dividend-paying capacity.  Specifically, the dividends paid by a  closely held family company may be measured by the income needs of the  stockholders or by their desire to avoid taxes on dividend receipts, instead  of by the ability of the company to pay dividends.  Where an actual or effective controlling interest in a  corporation is to be valued, the dividend factor is not a material element,  since the payment of such dividends is discretionary with the controlling  stockholders.  The individual or group  in control can substitute salaries and bonuses for dividends, thus reducing  net income and understating the dividend-paying capacity of the company.  It follows, therefore, that dividends are  less reliable criteria of fair market value than other applicable factors.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |

|   | (f)    | In  the final analysis, goodwill is based upon earning capacity.  The presence of goodwill and its value,  therefore, rests upon the excess of net earnings over and above a fair return  on the net tangible assets.  While the  element of goodwill may be based primarily on earnings, such factors as the  prestige and renown of the business, the ownership of a trade or brand name,  and a record of successful operation over a prolonged period in a particular  locality also may furnish support for the inclusion of intangible value.  In some instances it may not be possible  to make a separate appraisal of the tangible and intangible assets of the  business.  The enterprise has a value  as an entity.  Whatever intangible  value there is, which is supportable by the facts, may be measured by the  amount by which the appraised value of the intangible assets exceeds the net  book value of such assets.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
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|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|   | (g)    | Sales  of stock of a closely held corporation should be carefully investigated to  determine whether they represent transactions at arm's length.  Forced or distress sales do not ordinarily  reflect fair market value nor do isolated sales in small amounts necessarily  control as the measure of value.  This  is especially true in the valuation of a controlling interest in a corporation.  Since, in the case of closely held stocks,  no prevailing market prices are available, there is no basis for making an  adjustment for blockage.  It follows,  therefore, that such stocks should be valued upon a consideration of all the  evidence affecting the fair market value.   The size of the block of stock itself is a relevant factor to be  considered.  Although it is true that  a minority interest in an unlisted corporation's stock is more difficult to  sell than a similar block of listed stock, it is equally true that control of  a corporation, either actual or in effect, representing as it does an added  element of value, may justify a higher value for a specific block of stock.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|   | (h)    | Section  2031(b) of the Code states, in effect, that in valuing unlisted securities  the value of stock or securities of corporations engaged in the same or a  similar line of business which are listed on an exchange should be taken into  consideration along with all factors.   An important consideration is that the corporations to be used for  comparisons have capital stocks which are actively traded by the public.  In accordance with section 2031(b) of the  Code, stocks listed on an exchange are to be considered first.  However, if sufficient comparable  companies whose stocks are listed on an exchange cannot be found, other  comparable companies which have stocks actively traded in on the  over-the-counter market also may be used.   The essential factor is that whether the stocks are sold on an  exchange or over-the-counter there is evidence of an active, free public  market for the stock as of the valuation date.  In selecting corporations for comparative purposes, care should  be taken to use only comparable companies.   Although the only restrictive requirement as to comparable  corporations specified in the statute is that their lines of business be the  same or similar, yet it is obvious that consideration must be given to other  relevant factors in order that the most valid comparison possible will be  obtained.  For illustration, a  corporation having one or more issues of preferred stock, bonds or debentures  in addition to its common stock should not be considered to be directly  comparable to one having only common stock outstanding.  In like manner, a company with a declining  business and decreasing markets is not comparable to one with a record of  current progress and market expansion. |

 

Section 5.  Weight to be Accorded Various Factors

The valuation of closelyheld corporate stock entails the consideration of all relevant factors asstated in Section 4.  Depending upon thecircumstances in each case, certain factors may carry more weight than othersbecause of the nature of the company's business.  To illustrate:

|   | (a)    | Earnings  may be the most important criterion of value in some cases whereas asset  value will receive primary consideration in others.  In general, the appraiser will accord primary consideration to  earnings when valuing stocks of companies which sell products or services to the  public; conversely, in the investment or holding type of company, the  appraiser may accord the greatest weight to the assets underlying the  security to be valued.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
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|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|   | (b)    | The  value of the stock of a closely held investment or real estate holding  company, whether or not family owned, is closely related to the value of the  assets underlying the stock.  For  companies of this type the appraiser should determine the fair market values  of the assets of the company.  Operating  expenses of such a company and the cost of liquidating, if any, merit consideration  when appraising the relative values of the stock and the underlying  assets.  The market values of the  underlying assets give due weight to potential earnings and dividends of the  particular items of property underlying the stock, capitalized at rates  deemed proper by the investing public at the date of appraisal.  A current appraisal by the investing  public should be superior to the retrospective opinion of an individual.  For these reasons, adjusted net worth  should be accorded greater weight in valuing the stock of a closely held  investment or real estate holding company, whether or not family owned, than  any of the other customary yardsticks of appraisal, such as earnings and  dividend paying capacity. |

Section 6.  Capitalization Rates

In the application ofcertain fundamental valuation factors, such as earnings and dividends, it isnecessary to capitalize the average or current results at some appropriaterate.  A determination of the propercapitalization rate presents one of the most difficult problems invaluation.  That there is no ready orsimple solution will become apparent by a cursory check of the rates of returnand dividend yields in terms of the selling prices of corporate shares listedon the major exchanges in the country. Wide variations will be found even for companies in the sameindustry.  Moreover, the ratio willfluctuate from year to year depending upon economic conditions.  Thus, no standard tables of capitalizationrates applicable to closely held corporations can be formulated.  Among the more important factors to be takeninto consideration in deciding upon a capitalization rate in a particular caseare:  (1) the nature of the business;(2) the risk involved; and (3) the stability or irregularity of earnings.

Section 7.  Average of Factors

Because valuations cannotbe made on the basis of a prescribed formula, there is no means whereby thevarious applicable factors in a particular case can be assigned mathematicalweights in deriving the fair market value. For this reason, no useful purpose is served by taking an average ofseveral factors (for example, book value, capitalized earnings and capitalizeddividends) and basing the valuation on the result.  Such a process excludes active consideration of other pertinentfactors, and the end result cannot be supported by a realistic application ofthe significant facts in the case except by mere chance.

Section 8.  Restrictive Agreements

Frequently, in thevaluation of closely held stock for estate and gift tax purposes, it will befound that the stock is subject to an agreement restricting its sale ortransfer.  Where shares of a stock wereacquired by a decedent subject to an option reserved by the issuing corporationto repurchase at a certain price, the option price is usually accepted as thefair market value for estate tax purposes (see Revenue Ruling 54-76, C.B.1954-1, 194.)  However, in such casesthe option price is not determinative of fair market value for gift taxpurposes.  Where the option or buy andsell agreement is the result of voluntary action by the stockholders and isbinding during the life as well as at the death of the stockholders, suchagreement may or may not, depending upon the circumstances of each case, fixthe value for estate tax purposes. However, such agreement is a factor to be considered, with otherrelevant factors, in determining fair market value.  Where the stockholder is free to dispose of his shares duringlife and the option is to become effective only upon his death, the fair marketvalue is not limited to the option price. It is always necessary to consider the relationship of the parties, therelative number of shares held by the decedent, and other material facts, todetermine whether the agreement represents a bona fide business arrangement oris a device to pass the decedent's shares to the natural objects of his bountyfor less than an adequate and full consideration in money or money'sworth.  (In this connection, see RevenueRuling 157 C.B. 1953-2, 255, and Revenue Ruling 189, C.B. 1953-2, 294.)

Section 9.  Effect on Other Documents

Revenue Ruling 54-77, C.B.1954-1, 187, is hereby superseded.1

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|   | 1Source:  Internal  Revenue Bulletin; Cumulative Bulletin 1959-1, January - June 1959, pp.  237-244. |
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**APPENDIX D**

**Credentials of HVA Professionals**

 

|   | ****   | ****                                                      |
|--------|--------|-----------------------------------------------------------|
|   |   | **FREDERIC  L. JONES, ASA** *Salt  Lake City Office* |   |
|   | ****   |
|        |        |                                                           |  |  |

** **

| **PROFESSIONAL**           |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   |
|----------------------------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
| **DESIGNATIONS**           |   | Accredited Senior  Appraiser (ASA)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |
|                       |   | Senior Member of the American Society of  Appraisers, Business Valuation                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   |
|                       |   | Registered Appraiser, State of Utah                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |   |
|                       |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   |   |
| **ACADEMIC  DEGREES**      |   | B.A., Dartmouth College, Economics                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |
|                       |   | M.B.A., Dartmouth College, Amos Tuck School of  Business Administration                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |
|                       |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   |   |
| **EMPLOYMENT**             |   | **Houlihan Valuation Advisors**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |
|                       |   | *Principal – 1988 to Present*                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |
|                       |   | The firm provides  financial opinions, securities valuation, and corporate advisory services to  corporations, institutions, agencies, fiduciaries, partnerships and  individuals requiring  expert opinion  on pricing, structure, fairness, or solvency in connection with:  mergers, acquisitions, divestitures,  recapitalizations, equity allocation, LBO’s, ESOP’s, taxes litigation,  intangible assets and fraudulent transfers.                                                                                       |   |
|                       |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   |   |
|                       |   | ***Ski  Country Advisors, A Division of Houlihan Valuation Advisors***                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   |
|                       |   | *Principal – 1988 to Present*                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |
|                       |   | The firm provides  business valuation, business planning, financial restructuring and  feasibility analyses to the ski industry.                                                                                                                                                                                                                                                                                                                                                                                                                   |   |
|                       |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   |
|                       |   | ***Sugarbush  Resort (Vermont)***                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |   |
|                       |   | *President and Chief  Executive Officer – 1985 to 1987*                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |   |
|                       |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   |
|                       |   | ***Kirkwood  Resort (California)***                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |   |
|                       |   | *President and Chief  Executive Officer – 1980 to 1985*                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |   |
|                       |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   |
|                       |   | ***Copper  Mountain (Colorado)***                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |
|                       |   | *Vice President of Operations  – 1973 to 1980*                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |   |
|                       |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   |
|                       |   | ***Waterville  Valley Resort (New Hampshire)***                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |
|                       |   | *General Manager and Vice  President – 1969 to 1973*                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   |
|                       |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   |
|                       |   | ***Mack  Molding Company***                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |
|                       |   | *Production Manager and Vice  President – 1964 to 1965, 1967 to 1969*                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |
|                       |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   |   |
|                       |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   |   |
| **EXPERIENCE**             |   | Significant  experience in business valuation and business planning, as well as financial  analysis and restructuring. Over 20 years of experience in operating and  restructuring small to medium size companies in the recreation/leisure and  manufacturing industries. Extensive background in strategic planning,  development, operation, financing and management of businesses. His business  training and practical experience give him a broad perspective from which to  provide assistance to clients in a wide variety of businesses. |   |
|                       |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   |
| **PROFESSIONAL SOCIETIES** |   | American Society of  Appraiser – Vice President Salt Lake City Chapter, 1993 to 1994; President,  1994 to 1995                                                                                                                                                                                                                                                                                                                                                                                                                                |   |
|                       |   | National Ski Areas  Association                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |
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