Morrow's 1st Quarter 1996 Report

Net sales for the quarter were $647,000, compared to $2,717,000 in the prior year. The net loss for the latest quarter was $897,000, compared with a loss of $482,000 in the first quarter last year. The loss per share for the 1996 first quarter was 16 cents, compared with a loss of 14 cents in the 1995 first quarter. The weighted average shares outstanding in the 1996 first quarter were 5,617,000 compared with 3,412,000 in the comparable period a year ago.

"Our previously announced strategy to de-emphasize the sale of snowboards to other companies as an original equipment manufacturer (OEM) is the main reason our sales were down in this quarter," commented Dennis Shelton, president of Morrow Snowboards. "In the first quarter of last year, we had about $1.7 million of OEM snowboard sales, and this year OEM snowboard sales were less than $5,000.

"For 1996 we are concentrating on building the Morrow brand as a technology and performance leader in the snowboard business," Shelton continued. "We believe our announcement on April 23 of 34 percent growth in total pre-season orders and 62 percent growth in Morrow-brand pre-season orders is more indicative of our sales prospects than the sales in the first quarter.

"Our costs in the quarter were on track with our plans," Shelton added. "Most of the sales in the first quarter were normal close-outs and sale samples of 1996-97 product to our sales reps, reducing our gross margin to 15 percent. We expect to substantially improve that number in the second half of the year as we ship 1996-97 Morrow-brand equipment to our customers. Our other operating expenses were within our planned totals. With a solid capital position, expenses on track and good pre-season orders, we remain excited about the prospects for 1996."

This press release contains forward-looking statements which are made pursuant to the safe harbor provisions of the Private Securities Litigation Act of 1995. The forward-looking statements involve risk and uncertainties that could cause actual results to differ materially from the forward-looking statements, including, without limitation, new initiatives by competitors, Morrow's ability to manufacture product at planned costs, and weather in primary skiing areas of the world. The forward-looking statements should be considered in light of these risks and uncertainties.

Morrow Snowboards is a leading designer, manufacturer and marketer of premium snowboards and related products.

MORROW SNOWBOARDS INC.

Income Statement

(000s, except per-share data)

Quarter ended

3/31/96 3/31/95

Net sales $ 647 $ 2,717

Cost of goods sold 548 2,187

Gross profit 99 530

Selling, marketing and

customer service expense 893 675

Engineering, research and

development expense 179 161

General and administrative expense 604 340

Total operating expenses 1,676 1,176

Operating loss (1,577) (646)

Interest expense 82 142

Other income (expense) 208 (2)

Loss before income tax (1,451) (790)

Income tax benefit 554 308

Net loss (897) (482)

Net loss per share (16 cents) (14 cents)

Average shares outstanding 5,617 3,412

Balance Sheet (000)

3/31/96 12/31/95

(unaudited)

Cash and cash equivalents $ 10,588 $ 15,026

Accounts receivable 1,250 5,886

Inventories 6,414 2,747

Prepaid expense 350 252

Deferred income taxes 1,475 289

Total current assets 20,077 24,200

Property, plant and equipment, net 7,747 6,936

Other assets 42 43

Total assets 27,866 31,179

Accounts payable 1,287 1,857

Accrued liabilities 638 964

Current portion of long-term debt

and capital lease obligations 304 2,657

Total current liabilities 2,229 5,478

Capital lease obligations, less

current portion 401 475

Deferred income taxes 76 76

Total long-term liabilities 477 551

Common stock 26,292 25,385

Notes receivable for common stock (94) (94)

Accumulated deficit (1,038) (141)

Total stockholders' equity 25,160 25,150

Total liabilities and equity 27,866 31,179

CONTACT:

Morrow Snowboards Inc.

David Cleary, 503/375-9300, ext. 119

or

Harris Massey Herinckx

Fletcher Chamerlin, 503/295-1922