<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) September 2, 1998
MARINEMAX, INC.
(Exact name of registrant as specified in its charter)
1-14173 59-3496957
(Commission File No.) (IRS Employer
Identification Number)
18167 U.S. 19 NORTH, SUITE 499
Clearwater, Florida 33764
(Address of principal executive offices) (ZIP Code)
(813) 531-1700
Registrant's Telephone Number, Including Area Code)
<PAGE> 2
ITEM 5. OTHER EVENTS
REPORTING OF CERTAIN FINANCIAL AND OTHER INFORMATION FOR REGISTRATION AND
OTHER PURPOSES
On July 7, 1998, MarineMax Inc. (the "Company") acquired Cochran's Marine, Inc,
C & N Marine Corporation, and four limited liability companies that own three
retail facilities and a boat storage facility (collectively "Cochran's Marine")
in a stock-for-stock merger. The acquisition has been accounted for under the
pooling-of-interests method of accounting.
On July 30, 1998, the Company acquired Sea Ray of North Carolina (f.k.a. Skipper
Bud's of North Carolina) in a stock-for-stock merger. The acquisition has been
accounted for under the pooling-of-interests method of accounting.
The Company is filing herewith: (i) audited supplemental consolidated financial
statements for the nine-month period ended September 30, 1997 and for the
twelve-month periods ended December 31, 1996 and 1995; and (ii) management's
discussion and analysis of financial condition and results of operations for
each of the periods described above, all of which have been restated for
businesses acquired in 1998 accounted for under the pooling-of-interests method
of accounting.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The Company is the largest recreational boat dealer in the United States
in terms of revenue. Through 34 retail locations in seven states, the Company
sells new and used recreational boats and related marine products, including
engines, boats, trailers, parts, and accessories. The Company also arranges
related boat financing, insurance and extended warranty contracts, provides boat
repair and maintenance services, and offers boat brokerage services.
MarineMax Inc. was formed in January 1998, merged with five recreational
boat retailers on March 1, 1998, acquired a sixth recreational boat retailer on
April 30, 1998 and merged with two additional boat retailers on July 7, 1998 and
July 30, 1998, respectively. The March 1, July 7, and July 30, 1998 mergers were
stock-for-stock transactions and have been accounted for under the
pooling-of-interests method of accounting (the Pooled Companies). The April 30,
1998 acquisition of Stovall Marine, Inc. (Stovall) was also stock-for-stock but
is being accounted for under the purchase method of accounting. The Pooled
Companies' financial statements have been restated to reflect the operations as
if the companies had operated as one entity since inception. The Pooled
Companies had an average operating history of 16 years under the ownership
existing at the time of their acquisition. The discussion below does not include
the acquisition of Stovall, which was accounted for under the purchase method of
accounting at the April 30, 1998 acquisition date.
Each of the Pooled Companies and Stovall historically operated with a
calendar year end, but adopted the September 30 year-end of MarineMax upon
completion of the Mergers. The September 30 year-end more closely conforms to
the natural business cycle of the Company. The following discussion compares the
nine months ended September 30, 1997 to the nine months ended September 30,
1996, and calendar 1996 to calendar 1995, and should be read in conjunction with
the supplemental consolidated financial statements of the Company, including the
related notes thereto, appearing elsewhere in this current filing on Form 8-K.
<PAGE> 3
The Company derives its revenue from (i) selling new and used recreational
boats and related marine products; (ii) arranging financing, insurance, and
extended warranty products; (iii) providing boat repair and maintenance
services; and (iv) offering boat brokerage services. Revenue from boat or
related marine product sales, boat repair and maintenance services, and boat
brokerage services is recognized at the time the product is delivered to the
customer or the service is completed. Revenue earned by the Company for
arranging financing, insurance, and extended warranty products is recognized at
the later of customer acceptance of the service contract terms as evidenced by
contract execution, or when the related boat sale is recognized.
Cost of sales generally includes the cost of the recreational boat or
other marine product, plus any additional parts or consumables used in providing
maintenance, repair, and rigging services.
The Pooled Companies operated historically as independent, privately owned
entities, and their results of operations reflect varying tax structures,
including both S and C corporations, which have influenced the historical level
of employee-stockholder compensation. The selling, general, and administrative
expenses of the Pooled Companies include compensation to employee-stockholders
totaling $4.7 million and $4.4 million for the nine-months ended September 30,
1997 and 1996, respectively, and $9.8 million and $7.3 million for the years
ended December 31, 1996 and 1995, respectively. As a result of the varying
practices regarding compensation to employee-stockholders among the Pooled
Companies, the comparison of operating margins from period to period is not
meaningful. Certain employee-stockholders have entered into employment
agreements with the Company, reflecting reduced compensation when compared to
historical levels.
Nine-months Ended September 30, 1997 Compared to Nine-months Ended September
30, 1996
Revenue. Revenue increased $43.8 million, or 27.9%, to $200.4 million for
the nine-month period ended September 30, 1997 from $156.6 million for the
nine-month period ended September 30, 1996. Of this increase, $39.0 million was
attributable to 25.9% growth in comparable stores sales in 1997 and $4.8 million
was attributable to stores not eligible for inclusion in the comparable store
base. The increase in comparable store sales in 1997 resulted primarily from
more effective utilization of the prospective customer tracking feature of the
integrated computer system, a greater emphasis on used boat sales, the addition
of the Boston Whaler product line at 12 locations, the introduction of the
Value-Price sales approach at seven retail locations, which the Company believes
has resulted in increased closing rate on sales, and participation in additional
boat shows.
Gross Profit. Gross profit increased $10.8 million, or 27.7%, to $49.9
million for the nine-month period ended September 30, 1997 from $39.1 million
for the nine-month period ended September 30, 1996. Gross profit margin as a
percentage of revenue remained relatively constant at 24.9% during the
nine-month periods ended September 30, 1997 and 1996.
Selling, General, and Administrative Expenses. Selling, general, and
administrative expenses increased approximately $5.0 million, or 19.7%, to $30.4
million for the nine-month period ended September 30, 1997 from $25.4 million
for the nine-month period ended September 30, 1996. Selling, general, and
administrative expenses as a percentage of revenue decreased to 15.2% in 1997
from 16.2% in 1996. This reduction was primarily due to proportionally lower
stockholder-employee compensation.
Interest Expense, Net. Interest expense, net increased approximately
$352,000, or 24.2%, to $1.8 million in 1997 from $1.5 million in 1996. Interest
expense, net as a percentage of revenue remained relatively constant at 0.9%
during the nine-month periods ended September 30, 1997 and 1996. Total interest
charges increased as a result of increased debt associated with the redemption
of common stock and higher levels of outstanding borrowings related to the
increased level of inventories required to support the increase in revenue.
<PAGE> 4
Year Ended December 31, 1996 Compared to Year Ended December 31, 1995
Revenue. Revenue increased $29.5 million, or 17.5%, to $197.6 million in
1996 from $168.1 million in 1995. Of this increase, $22.9 million was
attributable to 14.2% growth in comparable stores sales and $6.6 million was
attributable to stores not eligible for inclusion in the comparable store base.
The increase in comparable store sales in 1996 was due primarily to increased
use of the prospective customer tracking feature of the integrated computer
system, a stronger emphasis on used boat sales and parts and service sales, the
addition of product lines (such as Baja, Challenger Bass Boats, Sea Hunt, and
Sea Pro) in selected locations, and participation in additional boat shows.
Gross Profit. Gross profit increased $8.4 million, or 21.1%, to $47.7
million in 1996 from $39.3 million in 1995. Gross profit as a percentage of
revenue increased to 24.1% in 1996 from 23.4% in 1995. The gross profit increase
was primarily due to more effective utilization of the integrated computer
system, which allowed for more timely monitoring and emphasis on daily and
monthly gross profit margins, and increased sales of products that historically
result in higher gross profits such as finance and insurance contracts.
Selling, General, and Administrative Expenses. Selling, general, and
administrative expenses increased approximately $7.6 million, or 24.4%, to $38.7
million in 1996 from $31.1 million in 1995. Selling, general, and administrative
expenses as a percentage of revenue increased to 19.6% in 1996 from 18.5% in
1995. The increase in selling, general, and administrative expenses as a
percentage of revenue was primarily due to an additional $1.2 million of
stockholder-employee compensation and $800,000 in additional advertising expense
in excess of their proportion to the increase in revenue. The increase in
advertising expense was primarily associated with the addition of new product
lines as noted above.
Interest Expense, Net. Interest expense, net increased approximately
$409,000, or 29.0%, to $1.8 million in 1996 from $1.4 million in 1995. Interest
expense, net as a percentage of revenue increased to 0.9% in 1996 from 0.8% in
1995. The increase in interest charges is a result of increased debt associated
with the redemption of common stock and higher levels of outstanding borrowings
related to the increased level of inventories required to support the increase
in revenue.
LIQUIDITY AND CAPITAL RESOURCES
The Company's cash needs are primarily for working capital to support
operations, including new and used boat and related parts inventories,
off-season liquidity, and growth through new store openings. These cash needs
have historically been financed with cash from operations and borrowings under
credit facilities. Historically, the Pooled Companies utilized a combination of
floor plan financing, working capital lines of credit, and loans from
stockholders to finance inventory levels. These historic facilities had varying
interest rates, terms, and payment requirements. The Company depends upon
dividends and other payments from its operating subsidiaries to fund its
obligations and meet its cash needs. No agreements exist that restrict this flow
of funds.
For the nine-month periods ended September 30, 1996 and 1997 and the
calendar years ended December 31, 1995 and 1996, the Company generated cash
flows from operating activities of approximately $3.8 million, $9.2 million,
$5.9 million, and $6.8 million, respectively. In addition to net income, cash
provided by operating activities was due primarily to inventory management,
including floor plan management. Stockholder-employee compensation significantly
impacts net income and therefore cash flows from operations, which causes
variations in operating cash flows.
<PAGE> 5
For the nine-month periods ended September 30, 1996 and 1997, the cash
flows used by investing activities approximated $1.3 million in both periods.
For the calendar years ended December 31, 1995 and 1996, cash flows used by
investing activities were $1.2 million and $1.6 million, respectively. Cash used
in investing activities was primarily attributable to purchases of property and
equipment associated with opening new or improving existing retail facilities.
For the nine-month periods ended September 30, 1996 and 1997, cash flows
provided by financing activities approximated $1.7 million and $915,000,
respectively. For the calendar years ended December 31, 1995 and 1996, cash
flows used by financing activities were $4.1 million and $4.9 million,
respectively. Cash provided by financing activities was primarily attributable
to increased borrowings on long term and shareholder debt. Cash flows used by
financing reflect distributions made to stockholder-employees for tax and other
purposes, which have historically been made in the quarter ended December 31.
At September 30, 1997, the Company's long-term indebtedness totaled
approximately $7.4 million, of which approximately $5.9 million is due to a
former stockholder of one of the Merged Companies relating to the reacquisition
of that stockholder's interest, while the remaining long-term indebtedness is
primarily associated with the Company's real estate holdings.
At September 30, 1997, the Company had approximately $35.5 million of
floor plan financing outstanding under its existing agreements with lenders. The
Company replaced the floor plan lines of credit of the Pooled Companies with a
Loan and Security Agreement, dated April 7, 1998, with Nations Credit
Distribution Finance, Inc. ("NDF"), providing for a revolving line of credit
loan to the Company in the maximum amount of $105 million (the "Loan"). Advances
accrue interest at the 90-day London Interbank Offered Rate plus 125 basis
points. The Loan terminates on April 1, 2001. The availability of loan advances
from time to time will be based upon the value of new and used inventory, parts
inventory and accounts receivable of the Company and each of its direct and
indirect subsidiaries. Advances may be used for inventory, working capital, and
other purposes satisfactory to NDF. No more than $10 million in advances may be
outstanding for working capital purposes, unless the Company and its
subsidiaries pledge their real property assets. The Loan is guaranteed by each
of the Company's direct and indirect subsidiaries. The Loan and the guaranties
of the subsidiaries are secured by all of the accounts, inventory, other goods,
equipment, fixtures and furniture of the Company and all of the subsidiaries
The Company opened two stores since the March 1, 1998 Mergers. The stores
are located in Palm Beach, Florida, and Sacramento, California. The Palm Beach
store was opened in a facility already owned by the Company and the Sacramento
store is leased from a third party. The costs to open these stores and the
related lease commitment are not material.
In April 1998, the Company acquired all of the issued and outstanding
Common Stock of Stovall Marine, Inc. (Stovall) (a Georgia corporation) in
exchange for 492,306 shares of the Company's common stock. The costs associated
with the Stovall acquisition are not material.
In June 1998, the Company completed its initial public offering ("IPO") of
4,780,569 shares of Common Stock. The IPO generated net cash proceeds of
approximately $38.3 million after deducting underwriting discounts and offering
costs to date of approximately $2.6 million. Subsequent to the IPO, the Company
used approximately $1.0 million to enhance the Company's management information
systems, $5.3 million to pay down term debt and pending the ultimate use of the
proceeds from the offering, the remaining $32.0 million has been applied to
reduce the outstanding balance on the Company's line of credit.
Except as specified in this "Management's Discussion and Analysis of
Financial Condition and Results of Operations" and in the attached supplemental
restated financial statements, the Company has no material commitments for
capital for the next 12 months. The Company believes that its existing capital
resources, including the net proceeds from its IPO, will be sufficient to
finance the Company's operations for at least the next 12 months.
<PAGE> 6
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To MarineMax, Inc.:
We have audited the accompanying supplemental consolidated balance sheets
(restated) of MarineMax, Inc. (a Delaware corporation) and subsidiaries as of
December 31, 1996, and September 30, 1997, and the related supplemental
consolidated statements of operations (restated), stockholders' equity
(restated) and cash flows (restated) for the years ended December 31, 1995 and
1996, and the nine-month period ended September 30, 1997. These consolidated
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these consolidated financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position of
MarineMax, Inc. and subsidiaries as of December 31, 1996, and September 30,
1997, and the results of their operations and their cash flows for the years
ended December 31, 1995 and 1996, and the nine-month period ended September 30,
1997, in conformity with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Tampa, Florida,
August 20, 1998
<PAGE> 7
MARINEMAX, INC. AND SUBSIDIARIES
SUPPLEMENTAL CONSOLIDATED BALANCE SHEETS (RESTATED)
<TABLE>
<CAPTION>
December 31, September 30,
1996 1997
----------- -----------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents ............................. $ 2,697,559 $11,537,934
Accounts receivable, net .............................. 5,419,255 8,204,334
Due from related parties .............................. 516,393 585,913
Inventories ........................................... 66,981,113 61,945,438
Prepaids and other current assets ..................... 536,420 679,198
Deferred tax asset .................................... 666,581 529,212
----------- -----------
Total current assets .............................. 76,817,321 83,482,029
PROPERTY AND EQUIPMENT, net ................................ 5,335,637 5,902,000
DUE FROM RELATED PARTY ..................................... 54,719 54,719
GOODWILL AND OTHER ASSETS .................................. 103,906 152,538
----------- -----------
Total assets ...................................... $82,311,583 $89,591,286
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable ...................................... $ 4,309,191 $ 6,209,029
Customer deposits ..................................... 2,339,284 3,536,045
Accrued expenses ...................................... 4,055,804 5,409,977
Floor plan notes payable .............................. 50,752,132 35,519,942
Short-term borrowings ................................. 3,390,601 2,711,677
Current maturities of long-term debt .................. 268,356 1,047,272
Due to related parties ................................ 3,141,943 5,492,487
----------- -----------
Total current liabilities ......................... 68,257,311 59,926,429
----------- -----------
LONG-TERM DEBT, net of current maturities .................. 1,169,644 6,367,019
----------- -----------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Preferred stock, $.001 par value, 5,000,000 shares
authorized, none issued or outstanding................. -- --
Common stock, $.001 par value; 40,000,000 shares authorized,
9,676,931 and 8,901,818 shares issued
and outstanding at December 31, 1996 and
September 30, 1997, respectively....................... 9,677 8,902
Additional paid-in capital ................................. 611,261 --
Retained earnings .......................................... 12,263,690 23,288,936
----------- -----------
Total stockholders' equity ........................ 12,884,628 23,297,838
----------- -----------
Total liabilities and stockholders' equity ........ $82,311,583 $89,591,286
=========== ===========
</TABLE>
The accompanying notes are an integral part of these supplemental
consolidated balance sheets.
2
<PAGE> 8
MARINEMAX, INC. AND SUBSIDIARIES
SUPPLEMENTAL CONSOLIDATED STATEMENTS OF OPERATIONS (RESTATED)
<TABLE>
<CAPTION>
For the Nine-
For the Year Ended month Period
December 31, Ended
--------------------------------- September 30,
1995 1996 1997
------------- ------------ ------------
<S> <C> <C> <C>
REVENUE ...................................... $ 168,110,742 $197,608,890 $200,413,762
COST OF SALES ................................ 128,822,766 149,947,980 150,478,921
------------- ------------ ------------
Gross profit ........................ 39,287,976 47,660,910 49,934,841
SELLING, GENERAL AND
ADMINISTRATIVE EXPENSES .................. 31,071,282 38,650,159 30,387,637
------------- ------------ ------------
Income from operations .............. 8,216,694 9,010,751 19,547,204
INTEREST EXPENSE, net ........................ 1,413,767 1,823,187 1,805,716
------------- ------------ ------------
NET INCOME BEFORE
INCOME TAXES ............................. 6,802,927 7,187,564 17,741,488
INCOME TAX (BENEFIT) PROVISION ............... (20,351) 42,029 595,823
------------- ------------ ------------
NET INCOME ................................... $ 6,823,278 $ 7,145,535 $ 17,145,665
============= ============ ============
BASIC AND DILUTED NET INCOME PER COMMON SHARE: $ 0.74 $ 0.74 $ 1.93
============= ============ ============
UNAUDITED PRO FORMA INCOME TAX PROVISION ..... 2,733,385 2,841,362 6,404,639
------------- ------------ ------------
UNAUDITED PRO FORMA
NET INCOME ............................... $ 4,089,893 $ 4,304,173 $ 10,741,025
============= ============ ============
UNAUDITED PRO FORMA BASIC AND DILUTED NET
INCOME PER COMMON SHARE .................. $ 0.44 $ 0.45 $ 1.21
============= ============ ============
WEIGHTED AVERAGE NUMBER OF COMMON SHARES USED
IN COMPUTING NET INCOME PER COMMON SHARE
AND UNAUDITED PRO FORMA NET INCOME PER
COMMON SHARE: ............................ 9,264,541 9,628,348 8,901,818
============= ============ ============
</TABLE>
The accompanying notes are an integral part of these
supplemental consolidated statements.
3
<PAGE> 9
MARINEMAX, INC. AND SUBSIDIARIES
SUPPLEMENTAL CONSOLIDATED STATEMENTS OF
STOCKHOLDERS' EQUITY (RESTATED)
FOR THE YEARS ENDED DECEMBER 31, 1995 AND DECEMBER 31, 1996 AND THE
NINE MONTH PERIOD ENDED SEPTEMBER 30, 1997
<TABLE>
<CAPTION>
Common Stock Additional Total
------------------------- Paid-in Retained Stockholders'
Shares Amount Capital Earnings Equity
---------- ------- --------- ------------ ------------
<S> <C> <C> <C> <C> <C>
BALANCE, January 1, 1995 .... 9,264,541 $ 9,265 $ 589,673 $ 9,753,384 $ 10,352,322
Net Income .................. -- -- -- 6,823,278 6,823,278
Capital Contribution ........ -- -- 1,000 -- 1,000
Distributions to stockholders -- -- -- (5,857,754) (5,857,754)
---------- ------- --------- ------------ ------------
BALANCE, December 31, 1995 .. 9,264,541 9,265 590,673 10,718,908 11,318,846
Net Income .................. -- -- -- 7,145,535 7,145,535
Capital Contribution......... 412,390 412 20,588 -- 21,000
Distributions to stockholders -- -- -- (5,600,753) (5,600,753)
---------- ------- --------- ------------ ------------
BALANCE, December 31, 1996 .. 9,676,931 9,677 611,261 12,263,690 12,884,628
Net Income .................. -- -- -- 17,145,665 17,145,665
Redemption of common stock .. (775,113) (775) (612,261) (5,486,964) (6,100,000)
Capital Contribution ........ -- -- 1,000 -- 1,000
Distributions to stockholders -- -- -- (633,455) (633,455)
---------- ------- --------- ------------ ------------
BALANCE, September 30, 1997 . 8,901,818 $ 8,902 $ -- $ 23,288,936 $ 23,297,838
========== ======= ========= ============ ============
</TABLE>
The accompanying notes are an integral part of these
supplemental consolidated statements.
4
<PAGE> 10
MARINEMAX, INC. AND SUBSIDIARIES
SUPPLEMENTAL CONSOLIDATED STATEMENTS OF CASH FLOWS (RESTATED)
<TABLE>
<CAPTION>
For the
For the Year Ended Nine-month Period
December 31, Ended
------------------------------- September 30,
1995 1996 1997
----------- ------------ ------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income ................................ $ 6,823,278 $ 7,145,535 $ 17,145,665
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization ........... 710,064 819,784 726,657
Deferred income tax (provision)
benefit................................. (71,682) (594,899) 137,369
Loss (gain) on sale of property and
equipment ............................. 13,365 (17,054) 993
(Increase) decrease in --
Accounts receivable ..................... (1,286,705) (2,129,417) (2,785,080)
Due from related parties ................ 94,346 (481,623) (69,520)
Inventories ............................. (6,840,076) (18,316,073) 5,035,675
Prepaids and other assets ............... (476,820) 338,821 (191,410)
(Decrease) increase in --
Accounts payable ........................ (852,661) 1,738,263 1,899,839
Customer deposits ....................... 577,204 (2,286,207) 1,196,761
Accrued expenses and other liabilities .. 1,048,138 1,845,565 1,354,173
Floor plan notes payable ................ 6,146,022 18,752,635 (15,232,190)
----------- ------------ ------------
Net cash provided by operating
activities ......................... 5,884,473 6,815,330 9,218,932
----------- ------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment ..... (1,176,646) (1,633,308) (1,325,001)
Proceeds from sale of property and
equipment ............................ 13,321 60,201 30,988
----------- ------------ ------------
Net cash used in investing activities (1,163,325) (1,573,107) (1,294,013)
----------- ------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Capital contribution .................... 1,000 21,000 1,000
Net decrease in cash overdraft .......... (964,355)
Net borrowings (repayments) on notes
payable to Related parties ............ 1,476,938 (114,433) 2,187,544
Borrowings on long-term debt ............ 114,568 1,464,223 1,917,381
Repayments on long-term debt ............ (267,761) (1,187,350) (2,041,090)
Net borrowings (repayments) on short-term
borrowings ............................ 1,299,460 541,141 (678,924)
Distributions to stockholders ........... (5,749,436) (5,600,753) (470,455)
----------- ------------ ------------
Net cash (used in) provided by
financing activities ............... (4,089,586) (4,876,172) 915,456
----------- ------------ ------------
NET INCREASE IN CASH AND CASH EQUIVALENTS: ... 631,562 366,051 8,840,375
CASH AND CASH EQUIVALENTS, beginning of
period .................................... 1,699,946 2,331,508 2,697,559
----------- ------------ ------------
CASH AND CASH EQUIVALENTS,
end of period ............................. $ 2,331,508 $ 2,697,559 $ 11,537,934
=========== ============ ============
</TABLE>
The accompanying notes are an integral part of these
supplemental consolidated statements.
5
<PAGE> 11
MARINEMAX, INC. AND SUBSIDIARIES
SUPPLEMENTAL CONSOLIDATED STATEMENTS OF CASH FLOWS (RESTATED)
<TABLE>
<CAPTION>
For the
For the Year Ended Nine-month Period
December 31, Ended
------------------------------- September 30,
1995 1996 1997
----------- ------------ ------------
<S> <C> <C> <C>
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid for
Interest ................................. $2,326,809 $3,009,471 $2,763,240
Income taxes ............................. $ 29,662 $ 33,701 $ 35,745
SUPPLEMENTAL DISCLOSURES OF NON-CASH INVESTING AND
FINANCING ACTIVITIES:
Distributions declared but not yet paid ..... $ 108,318 -- 163,000
Long-term debt issued for redemption of
common stock ................................ -- -- $6,100,000
</TABLE>
The accompanying notes are an integral part of these
supplemental consolidated statements.
6
<PAGE> 12
MARINEMAX, INC. AND SUBSIDIARIES
NOTES TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS (RESTATED)
1. BUSINESS AND ORGANIZATION:
MarineMax, Inc. (MarineMax) and subsidiaries (the Company) are primarily
engaged in the retail sale and service of new and used boats, motors, trailers,
marine parts and accessories in Arizona, California Florida, Georgia, Minnesota,
North Carolina and Texas.
MarineMax Inc. (MarineMax) was incorporated in January 1998. MarineMax Inc.
and subsidiaries (collectively the Company) has consummated a series of business
combinations. On March 1, 1998, MarineMax acquired, in separate merger
transactions, all of the issued and outstanding common stock of Bassett Boat
Company of Florida, Gulfwind South, Inc., Gulfwind U.S.A., Inc., 11502 Dumas,
Inc. and subsidiaries d/b/a Louis DelHomme Marine, Harrison's Boat Center, Inc.,
Harrison's Marine Centers of Arizona, Inc. (collectively, the Original Merged
Companies) in exchange for 7,799,844 shares of the Company's common stock.
On July 7, 1998 the Company acquired, in separate merger transactions, all of
the issued and outstanding common stock of Cochran's Marine, Inc. and C & N
Marine Corporation (collectively Cochran's Marine) in a stock-for-stock merger
by issuing 603,386 shares of its Common Stock for all the stock of Cochran's
Marine.
On July 30, 1998, the Company acquired all of the issued and outstanding
common stock of Sea Ray of North Carolina, Inc. (f.k.a. Skipper Bud's of North
Carolina) in a stock-for-stock merger by issuing 412,390 shares of its Common
Stock for all the stock of Sea Ray of North Carolina, Inc.
These business combinations (collectively the Pooled Companies) have been
accounted for under the pooling-of-interests method of accounting. Accordingly,
the financial statements of the Company have been restated to reflect the
operations as if the companies had operated as one entity since inception.
On March 1, 1998, MarineMax Inc. effected business combinations in which it
acquired, in separate merger transactions, the beneficial interests in Bassett
Boat Company, Bassett Realty, L.L.C., Gulfwind South Realty, L.L.C., Harrison's
Realty, L.L.C. and Harrison's Realty California, L.L.C. (collectively the
Original Property Acquisitions) in exchange for 1,392,026 shares of the
Company's common stock. Additionally, on July 7, 1998, MarineMax acquired, in
separate merger transactions the beneficial interests in C & N Realty LLC,
Walker Marina Realty, LLC, Marina Drive Realty I, LLC, and Marina Drive Realty
II, LLC (collectively, Cochran's LLC's) in exchange for 120,000 shares of the
Company's common stock. On April 30, 1998, MarineMax Inc. acquired the issued
and outstanding common stock of Stovall Marine, Inc. (Stovall) in exchange for
492,306 shares of the Company's common stock accounted for under the purchase
method of accounting. The Original Property Acquisitions, Stovall and Cochran's
LLC's (collectively the Acquired Companies) will be reflected in the Company's
financial statements subsequent to their respective acquisition dates.
In order to maintain consistency and comparability between periods presented,
certain amounts have been reclassified from the previously reported financial
statements to conform with the financial statement presentation of the current
period. The supplemental consolidated financial statements include the accounts
of the Company and its subsidiaries, all of which are wholly owned. All
significant intercompany transactions and accounts have been eliminated.
7
<PAGE> 13
MARINEMAX, INC. AND SUBSIDIARIES
NOTES TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS (RESTATED)
2. SIGNIFICANT ACCOUNTING POLICIES:
FISCAL YEAR
The Company changed its fiscal year-end from December 31 to September 30
to coincide more closely with its natural business cycle. As a result, the
accompanying financial statements present the nine-month transition period,
which began January 1, 1997, and ended September 30, 1997. Results of operations
(unaudited) for the nine-month period ended September 30, 1996, were as follows:
<TABLE>
<CAPTION>
AMOUNT
------
<S> <C>
Revenue .................................... $156,610,835
Cost of sales .............................. 117,513,908
------------
Gross profit ......................... 39,096,927
Selling, general and administrative expenses 25,377,507
------------
Income from operations ............... 13,719,420
Interest expense, net ...................... 1,453,444
------------
Income before income tax provision ......... 12,265,976
Income tax provision ....................... 660,930
------------
Net income ........................... $ 11,605,046
============
</TABLE>
INVENTORIES
New and used boat inventories are stated at the lower of cost, determined
on a specific-identification basis, or market. Parts and accessories are stated
at the lower of cost, determined on the first-in, first-out basis, or market.
PROPERTY AND EQUIPMENT
Property and equipment are recorded at cost and depreciated over their
estimated useful lives using the straight-line method. Useful lives for purposes
of computing depreciation are as follows:
<TABLE>
<CAPTION>
YEARS
-----
<S> <C>
Buildings and improvements ...................................... 5-40
Machinery and equipment ......................................... 5-10
Furniture and Fixtures .......................................... 5-10
Vehicles ........................................................ 5
</TABLE>
The cost of property and equipment sold or retired and the related
accumulated depreciation are removed from the accounts at the time of
disposition, and any resulting gain or loss is included in the supplemental
consolidated statements of income. Maintenance, repairs and minor replacements
are charged to operations as incurred; major replacements and improvements are
capitalized and amortized over their useful lives.
8
<PAGE> 14
MARINEMAX, INC. AND SUBSIDIARIES
NOTES TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS (RESTATED)
CUSTOMER DEPOSITS
Customer deposits include amounts received from customers toward the
purchase of boats. These deposits are recognized as revenue when the related
boats are delivered to customers, or are returned to customers if the related
boat sales do not close.
LONG-LIVED ASSETS
Statement of Financial Accounting Standards (SFAS) No. 121, "Accounting
for the Impairment of Long-lived Assets and Long-lived Assets to be Disposed
Of" (SFAS 121), requires that long-lived assets be reviewed for impairment
whenever events or changes in circumstances indicate that the carrying amount of
the asset in question may not be recoverable. The Company groups long-lived
assets by store location for purposes of assessing the recoverability of
carrying value and measuring potential impairment. SFAS 121 was adopted in 1996
and did not have a material effect on the Company's supplemental consolidated
results of operations, cash flows or financial position.
REVENUE RECOGNITION
Revenue from boat, motor and trailer sales and parts and service
operations is recognized at the time the boat, motor, trailer or part is
delivered to the customer or service is completed. Revenue earned by the Company
for notes placed with financial institutions in connection with customer boat
financing is recognized when the related boat sale is recognized. Commissions
earned on credit life, accident and disability insurance sold on behalf of
third-party insurance companies are also recognized when the related boat sale
is recognized. Pursuant to negotiated agreements with financial institutions,
the Company is charged back for a portion of these fees should the customer
terminate the finance contract before it is outstanding for stipulated minimal
periods of time. The chargeback reserve, which was not material to the
supplemental consolidated financial statements taken as whole as of December 31,
1996, or September 30, 1997, is based on the Company's experience for repayments
or defaults on the finance contracts.
Commissions earned on extended warranty service contracts sold on behalf
of unrelated third-party insurance companies are recognized at the later of
customer acceptance of the service contract terms as evidenced by contract
execution, or when the related boat sale is recognized. The Company is charged
back for a portion of these commissions should the customer terminate the
service contract prior to its scheduled maturity. The chargeback reserve, which
was not material to the supplemental consolidated financial statements taken as
a whole as of December 31, 1996, or September 30, 1997, is based upon the
Company's experience for repayments or defaults on the service contracts.
ADVERTISING AND PROMOTIONAL COSTS
Advertising and promotional costs are expensed as incurred and are
included in selling, general and administrative expenses in the accompanying
supplemental consolidated statements of operations. Total advertising and
promotional expenses approximated $1,741,000, $2,886,000 and $2,662,000 for the
years ended December 31, 1995 and 1996, and the nine-month period ended
September 30, 1997, respectively.
9
<PAGE> 15
MARINEMAX, INC. AND SUBSIDIARIES
NOTES TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS (RESTATED)
INCOME TAXES AND UNAUDITED PRO FORMA INCOME TAX PROVISION
Certain subsidiaries of the Company elected S corporation status under
the provisions of the Internal Revenue Code prior to the business combinations
accounted for under the pooling-of-interests method of accounting. Accordingly,
income of these subsidiaries was passed through to the stockholders; as such,
these subsidiaries historically recorded no provision for income taxes. The
accompanying supplemental consolidated statement of operations includes an
unaudited pro forma income tax provision assuming the subsidiaries had been
taxed as C corporations during that period.
The other subsidiaries have been taxed as C corporations and have
followed the liability method of accounting for income taxes in accordance with
SFAS No.109, "Accounting for Income Taxes" (SFAS 109). Under SFAS 109, deferred
income taxes are recorded based upon differences between the financial reporting
and tax bases of assets and liabilities and are measured using the enacted tax
rates and laws that will be in effect when the underlying assets are received or
liabilities are settled.
SUPPLIER AND CUSTOMER CONCENTRATION
Dealership Agreements
The Company has entered into dealership agreements with Ray Industries,
Inc. (Ray Industries), Boston Whaler, Inc. (Boston Whaler), Mercury Marine and
Baja Marine Corporation (all subsidiaries or divisions of Brunswick
Corporation)(collectively, the Manufacturers). Approximately 84 percent of the
Company's revenue is derived from products acquired from the Manufacturers.
These agreements allow the Company to purchase, stock, sell and service boats
and products of the Manufacturers. These agreements also allow the Company to
use the Manufacturers' names, trade symbols and intellectual properties.
Although there are a limited number of manufacturers of the type of boats and
products that the Company sells, the Company believes that other suppliers could
provide similar boats and products on comparable terms. A change in suppliers,
however, could cause a potential loss of revenue, which would affect operating
results adversely. The Company's existing dealership agreements with the
Manufacturers are renewable subject to certain terms and conditions in the
agreements and expire in 2008.
Concentrations of Credit Risks
Financial instruments, which potentially subject the Company to
concentrations of credit risk, consist principally of cash and cash equivalents
and accounts receivable. Concentrations of credit risk with respect to cash and
cash equivalents are limited primarily to local financial institutions.
Concentrations of credit risk arising from receivables are limited primarily to
manufacturers and financial institutions.
CONSOLIDATED STATEMENTS OF CASH FLOWS
For purposes of the supplemental consolidated statements of cash flows,
the Company considers all highly liquid investments with an original maturity of
three-months or less to be cash equivalents.
10
<PAGE> 16
MARINEMAX, INC. AND SUBSIDIARIES
NOTES TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS (RESTATED)
FAIR VALUE OF FINANCIAL INSTRUMENTS
The Company's financial instruments consist of cash and cash
equivalents, accounts receivable and debt. The carrying amount of these
financial instruments approximates fair value due either to length of maturity
or existence of interest rates that approximate prevailing market rates unless
otherwise disclosed in these financial statements.
USE OF ESTIMATES AND ASSUMPTIONS
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenue and expenses during the reporting
period. Actual results could differ from those estimates.
NEW ACCOUNTING PRONOUNCEMENTS
During June 1996 and June 1997, the Financial Accounting Standards
Board issued SFAS No. 130, "Reporting Comprehensive Income" (SFAS 130), and SFAS
No. 131, "Disclosures About Segments of An Enterprise and Related Information"
(SFAS 131), respectively. The major provisions of these statements and their
impact on the Company are discussed below.
SFAS 130, effective for fiscal years beginning after December 15, 1997,
requires the presentation of comprehensive income in an entity's financial
statements. Comprehensive income represents all changes in equity of an entity
during the reporting period, including net income and charges directly to equity
which are excluded from net income. This statement is not anticipated to have
any impact on the Company as the Company currently does not enter into any
transactions that result in charges (or credits) directly to equity (such as
additional minimum pension liability changes, currency translation adjustments,
unrealized gains and losses on available-for-sale securities, etc.).
SFAS 131, effective for fiscal years beginning after December 15, 1997,
establishes standards for the way that public business enterprises report
information about operating segments in annual financial statements and requires
that those enterprises report selected information about operating segments in
interim financial reports issued to stockholders. It also establishes standards
for related disclosures about products and services, geographic areas, and major
customers. The Company does not believe this statement will have any impact on
its consolidated financial statements.
11
<PAGE> 17
MARINEMAX, INC. AND SUBSIDIARIES
NOTES TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS (RESTATED)
3. ACCOUNTS RECEIVABLE:
Trade receivables consist of receivables from financial institutions,
which provide funding for customer boat financing and amounts due from financial
institutions earned from arranging financing with the Company's customers. These
receivables are normally collected within 30 days of the sale. Trade receivables
also include amounts due from customers on the sale of boats and parts and
service. Amounts due from manufacturers represent receivables for various
incentive programs and parts and service work performed pursuant to the
manufacturers' warranty. The accounts receivable balances consisted of the
following as of December 31, 1996, and September 30, 1997:
<TABLE>
<CAPTION>
DECEMBER 31, SEPTEMBER 30,
1996 1997
---------- ----------
<S> <C> <C>
Trade receivables ...................... $2,913,871 4,537,923
Amounts due from manufacturers ......... 2,238,136 3,468,897
Other receivables ...................... 267,248 197,514
---------- ----------
$5,419,255 $8,204,334
========== ==========
</TABLE>
4. INVENTORIES:
Inventories were comprised of the following as of December 31, 1996,
and September 30, 1997:
<TABLE>
<CAPTION>
DECEMBER 31, SEPTEMBER 30,
1996 1997
----------- -----------
<S> <C> <C>
New boats, motors and trailers ......... $58,447,954 $50,944,696
Used boats, motors and trailers ........ 4,905,670 6,962,908
Parts, accessories and other ........... 3,627,489 4,037,834
----------- -----------
$66,981,113 $61,945,438
=========== ===========
</TABLE>
5. PROPERTY AND EQUIPMENT:
Property and equipment consisted of the following as of December 31,
1996, and September 30, 1997:
<TABLE>
<CAPTION>
DECEMBER 31, SEPTEMBER 30,
1996 1997
------------ ------------
<S> <C> <C>
Land ........................................... $ 859,005 $ 859,005
Buildings and improvements ..................... 3,034,228 3,639,135
Machinery and equipment ........................ 3,226,029 3,398,142
Furniture and fixtures ......................... 1,859,951 2,087,579
Vehicles ....................................... 1,359,802 1,596,558
------------ ------------
10,339,015 11,580,419
Less - Accumulated depreciation and amortization (5,003,378) (5,678,419)
------------ ------------
$ 5,335,637 $ 5,902,000
============ ============
</TABLE>
12
<PAGE> 18
MARINEMAX, INC. AND SUBSIDIARIES
NOTES TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS (RESTATED)
6. FLOOR PLAN NOTES PAYABLE:
Floor plan notes payable consisted of the following as of December 31,
1996, and September 30, 1997:
<TABLE>
<CAPTION>
DECEMBER 31, SEPTEMBER 30,
1996 1997
----------- -----------
<S> <C> <C>
Floor plan notes payable to financial
institution, due when the related boats are
sold or 12 months after the advance,
whichever is earlier, bearing interest at
prime less .5% (8% at September 30,
1997), collateralized by certain
receivables, inventories and property and
equipment .................................. $ 8,398,558 $ 5,634,034
Floor plan notes payable to financial
institutions, due when related boats are
sold, bearing interest at rates ranging from
7.63 to 7.91%, collateralized by certain
receivables, inventories and property and
equipment .................................. 12,441,979 7,625,727
Floor plan notes payable to financial
institution, due when related boats are
sold, bearing interest at LIBOR plus 2.5%
(8.16% at September 30, 1997),
collateralized by certain receivables,
inventories and property and equipment ..... 4,988,971 1,502,100
Floor plan notes payable to financial
institution, due when related boats are
sold, bearing interest at prime plus .75%
(9.25% at September 30, 1997),
collateralized by certain inventories ...... 1,845,223 3,624,849
Floor plan notes payable due to financial
institutions, due when related boats are
sold or 12 months after the advance,
whichever is earlier, bearing interest at
rates ranging from .5% to prime plus 4%
(12.5% at September 30, 1997),
collateralized by certain receivables,
inventories and property and equipment ..... 11,575,324 7,765,389
</TABLE>
13
<PAGE> 19
MARINEMAX, INC. AND SUBSIDIARIES
NOTES TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS (RESTATED)
<TABLE>
<CAPTION>
DECEMBER 31, SEPTEMBER 30,
1996 1997
----------- -----------
<S> <C> <C>
Floor plan notes payable due to financial
institutions, due when related boats are
sold, bearing interest at rates ranging from
prime plus .2% to prime plus 1% (9.5% at
September 30, 1997), collateralized by
certain inventories ........................ 8,319,332 6,329,589
Floor plan notes payable due to financial
institutions, due when related boats are
sold, bearing interest at rates ranging from
1% to prime plus .7 5% (9.25% at
September 30, 1997), collateralized by
certain inventories ........................ 3,182,745 3,038,254
----------- -----------
$50,752,132 $35,519,942
=========== ===========
</TABLE>
The Company receives interest assistance directly from the
Manufacturers. The interest assistance varies by Manufacturer and may include
periods of free financing or reduced interest rate programs. The interest
assistance may be paid directly to the Company or the financial institution
depending on the arrangements the Manufacturer has established. Discontinuance
of these programs could result in an increase in interest expense.
The maximum borrowings permitted and total available borrowings under
the floor plan notes payable at September 30, 1997, were approximately
$62,350,000and $26,830,000, respectively. The weighted average interest rate on
borrowings outstanding under the floor plan notes payable as of December 31,
1996 and September 30, 1997, was approximately 6.80% and 7.50%, respectively.
7. LONG-TERM DEBT:
Long-term debt was comprised of the following as of December 31, 1996,
and September 30, 1997:
<TABLE>
<CAPTION>
DECEMBER 31, SEPTEMBER 30,
1996 1997
----------- -----------
<S> <C> <C>
Unsecured note payable to former
stockholder, due in various quarterly
installments, bearing interest at 5% for the
period January 1, 1997, through
December 31, 1997, and 10% thereafter
through maturity in January 2008 ........... $ -- $ 5,955,419
Mortgage note payable to financial
institution, due in monthly installments of
$16,337, bearing interest at 8%, maturing
in August 2002, collateralized by property
and equipment .............................. 907,337 812,628
</TABLE>
14
<PAGE> 20
MARINEMAX, INC. AND SUBSIDIARIES
NOTES TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS (RESTATED)
<TABLE>
<CAPTION>
DECEMBER 31, SEPTEMBER 30,
1996 1997
----------- -----------
<S> <C> <C>
Various notes payable, due in monthly
installments ranging from $390 to $3,141,
bearing interest at rates ranging from
4.9% to 10.25%, maturing April 1999
through May 2017, collateralized by
property and equipment ..................... 188,316 186,709
Various notes payable, due in monthly
installments ranging from $397 to $634,
bearing interest at rates ranging from
7.75% to 8.50%, maturing through
November 2000, collateralized by certain
company vehicles ........................... 97,564 52,701
Various notes payable, due in monthly
installments ranging from $767 to $3,900,
bearing interest at rates ranging from
7.90% to 8.50%, maturing through
October 2009, collateralized by property
and equipment .............................. 244,783 406,834
----------- -----------
1,438,000 7,414,291
Less - Current maturities ..................... (268,356) (1,047,272)
----------- -----------
$ 1,169,644 $ 6,367,019
=========== ===========
</TABLE>
The aggregate maturities of long-term debt were as follows at September
30, 1997:
<TABLE>
<CAPTION>
PERIOD ENDING AMOUNT
SEPTEMBER 30,
<S> <C>
1998......................................................... $1,047,272
1999......................................................... 899,362
2000......................................................... 879,901
2001......................................................... 877,661
2002......................................................... 846,414
Thereafter .................................................. 2,863,681
----------
$7,414,291
==========
</TABLE>
15
<PAGE> 21
MARINEMAX, INC. AND SUBSIDIARIES
NOTES TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS (RESTATED)
8. SHORT-TERM BORROWINGS:
Short-term borrowings consisted of the following as of December 31, 1996, and
September 30, 1997:
<TABLE>
<CAPTION>
DECEMBER 31, SEPTEMBER 30,
1996 1997
---------- ----------
<S> <C> <C>
Line of credit payable to financial institution,
due on demand, bearing interest due
monthly at prime plus .5% (9% at
September 30, 1997), collateralized by a
secondary lien on certain receivables and
property and equipment ...................... 1,095,000 --
Unsecured line of credit payable to financial
institution, due on demand, bearing
interest due monthly at prime plus .5%
(9% at September 30, 1997) .................. 2,295,601 2,711,677
---------- ----------
$3,390,601 $2,711,677
========== ==========
</TABLE>
The line of credit agreements described above provide for total maximum
borrowings of $4,750,000. Total available borrowings on the line of credit
agreements as of September 30, 1997, were approximately $2,038,000. The weighted
average interest rate on short-term borrowings as of December 31, 1996 and
September 30, 1997, was 9% and 8.75%, respectively.
9. INCOME TAXES:
Federal income taxes for those subsidiaries taxed as C corporations
were as follows for the years ended December 31, 1995 and 1996, and the
nine-month period ended September 30, 1997:
<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 31, SEPTEMBER 30,
1995 1996 1997
--------- --------- ---------
<S> <C> <C> <C>
Current ............. $ 50,356 $ 635,785 $ 458,454
Deferred ............ (70,707) (593,756) 137,369
--------- --------- ---------
$ (20,351) $ 42,029 $ 595,823
========= ========= =========
</TABLE>
Actual income tax expense (benefit) was not materially different from
income tax expense (benefit) computed by applying the U.S. Federal Statutory
Corporate Tax Rate of 34 percent to income (loss) before income tax provision
for the years ended December 31, 1995 and 1996, and the nine-month period ended
September 30, 1997, for those Merged Companies taxed as C corporations.
Deferred income taxes reflect the impact of temporary differences
between the amount of assets and liabilities recognized for financial reporting
purposes and such amounts recognized for income tax purposes. The components of
the net deferred tax assets are as follows:
16
<PAGE> 22
MARINEMAX, INC. AND SUBSIDIARIES
NOTES TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS (RESTATED)
<TABLE>
<CAPTION>
DECEMBER 31, SEPTEMBER 30,
1996 1997
-------- --------
<S> <C> <C>
Current deferred tax assets:
Inventory ................................. $134,980 $ --
Accrued expenses .......................... 432,070 368,394
Net operating loss (NOL) carryforwards .... 99,531 160,818
-------- --------
Net current deferred tax assets ..... $666,581 $529,212
======== ========
</TABLE>
As of September 30, 1997, the Company had NOL carryforwards of
approximately $498,000. The NOL carryforwards will be available to offset future
taxable income and will expire in various amounts from fiscal year 2009 through
fiscal year 2012.
Concurrent with the business combinations discussed in Note 1, the
Company recorded a deferred tax liability of approximately $1,577,000 for income
taxes that will be payable by the Company upon conversion of certain of the
subsidiaries that had elected S corporation status to C corporations.
10. DUE TO RELATED PARTIES:
Due to related parties includes non-collateralized demand notes, which
bear interest at rates ranging from 0 to 10 percent payable to stockholders or
their affiliated companies.
11. COMMITMENTS AND CONTINGENCIES:
LEASE COMMITMENTS
The Company leases certain land, buildings, machinery, equipment and
vehicles related to its dealerships under non-cancelable operating leases.
Rental payments, including month-to-month rentals, were approximately
$1,411,000, $1,473,000 and $1,387,000 for the years ended December 31, 1995 and
1996, and the nine-month period ended September 30, 1997, respectively. Rental
payments to related parties under both cancelable and non-cancelable operating
leases approximated $1,290,000 and $1,326,000 for the years ended December
31,1995 and 1996, and $1,085,000 for the nine-month period ended September 30,
1997, respectively.
Future minimum lease payments under non-cancelable operating leases
were as follows at September 30, 1997:
<TABLE>
<CAPTION>
AMOUNT
<S> <C>
PERIOD ENDING
SEPTEMBER 30, $1,673,244
1998................................................................ 1,266,117
1999................................................................ 883,066
2000................................................................ 652,152
2001................................................................ 592,671
2002................................................................ 2,144,700
----------
Thereafter ......................................................... $7,211,950
==========
</TABLE>
17
<PAGE> 23
MARINEMAX, INC. AND SUBSIDIARIES
NOTES TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS (RESTATED)
Approximately $4,306,000 of the above future minimum lease payments
relate to leases of property from related parties, which were canceled in
connection with property acquisitions which occurred on March 1, 1998, and July
7, 1998.
OTHER COMMITMENTS
The Company is party to various legal actions arising in the ordinary
course of business. The ultimate liability, if any, associated with these
matters was not determinable at September 30, 1997. While it is not feasible to
determine the outcome of these actions at this time, the Company does not
believe that these matters will have a material adverse effect on the Company's
financial condition, results of operations or cash flows.
The Company is subject to federal and state environmental regulations,
including rules relating to air and water pollution and the storage and disposal
of gasoline, oil, other chemicals and waste. The Company believes that it is in
compliance with such regulations.
12. EMPLOYEE 401(K) PROFIT SHARING PLANS:
Certain subsidiaries maintain defined contribution benefit plans (the
Plans). The Plans provide for matching contributions from the Company that are
limited to certain percentages of employee contributions. Additional
discretionary amounts may be contributed by the Company. The Company contributed
approximately $287,000, $353,000 and $234,000 to the Plans for the years ended
December 31, 1995 and 1996, and for the nine-month period ended September 30,
1997, respectively.
13. SUBSEQUENT EVENTS:
FLOOR PLAN NOTE PAYABLE
On April 7, 1998, the Company executed an agreement for a new working
capital line of credit with a financial institution under which the Company
refinanced all of its outstanding floor plan notes payable. The maximum
available borrowings under the new working capital line of credit are $105
million. The new working capital line of credit bears interest at LIBOR plus
1.25 percent, and has a three-year term.
BRUNSWICK CORPORATION SETTLEMENT
Subsequent to year-end, Brunswick Corporation and the Company disputed
the applicability of the change in control provisions in the dealership
agreements of the Original Merged Companies. In order to avoid a long, costly
and disruptive dispute, the Company and Brunswick Corporation entered into a
settlement agreement on March 12, 1998, under which Brunswick Corporation
consented to changes in the ownership of the Original Merged Companies resulting
from the Original Merger, and the Company agreed to pay Brunswick Corporation
$15 million by December 31, 1998. The $15 million payable to Brunswick
Corporation bears interest payable quarterly at LIBOR plus 1.25%.
STOCK SPLIT
On April 5, 1998, the Board of Directors approved a stock split whereby
each outstanding share of Company's Common Stock was converted into
approximately 1.082 shares of Common Stock. This stock split has been
retroactively reflected in the accompanying supplemental consolidated financial
statements.
18
<PAGE> 24
MARINEMAX, INC. AND SUBSIDIARIES
NOTES TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS (RESTATED)
STOCK AND OPTION PLANS
On April 5, 1998 and April 30, 1998, respectively, the Board of
Directors adopted and the stockholders approved the following stock and option
plans:
1998 Incentive Stock Plan (the Incentive Stock Plan) -- The Incentive
Stock Plan provides for the grant of incentive and non-qualified stock options
to acquire Common Stock of the Company, the direct grant of Common Stock, the
grant of stock appreciation rights and the grant of other cash awards to key
personnel, directors, consultants, independent contractors and others providing
valuable services to the Company. A maximum of the lesser of 4,000,000 shares or
15% of the then outstanding shares of Common Stock of the Company may be issued
under the Incentive Stock Plan. The Incentive Stock Plan terminates in April
2008, and options may be granted at any time during the life of the Incentive
Stock Plan. The date on which options vest and the exercise prices of options
will be determined by the Board of Directors or the Plan Administrator.
The Incentive Stock Plan also includes an Automatic Grant Program
providing for the automatic grant of options ("Automatic Options") to
non-employee directors of the Company. Under the Automatic Grant Program, each
non-employee whose election to the Board of Directors was proposed as of the
date of the Company's initial public offering will receive an Automatic Option
to acquire 10,000 shares of Common Stock on that date (an "Initial Grant"). Each
subsequent newly elected non-employee member of the Board of Directors will
receive as an Initial Grant an Automatic Option to acquire 5,000 shares of
Common Stock on the date of his or her first appointment or election to the
Board of Directors. In addition, an Automatic Option to acquire 2,500 shares of
Common Stock will be granted to each non-employee director at the meeting of the
Board of Directors held immediately after each annual meeting of stockholders
(an "Annual Grant"). Each Initial Grant will vest and become exercisable in a
series of three equal and successive installments with the first installment
vested on the date of grant (or the date of election to the Board of Directors,
if later) and the next two installments 12 months and 24 months after the date
of grant. Each Annual Grant will vest and become exercisable 12 months after the
date of grant. Each Automatic Option will vest and become exercisable only if
the optionholder has not ceased serving as a director as of such vesting date.
The exercise price per share of Common Stock subject to an Initial Grant on the
date of the Company's initial public offering will be equal to the initial
public offering price per share and the exercise price per share of Common Stock
subject to other Automatic Options will be equal to 100% of the fair market
value (as defined in the Incentive Stock Plan) of the Company's Common Stock on
the date such option is granted. Each Automatic Option will expire on the tenth
anniversary of the date on which such Automatic Option was granted.
Subsequent to year-end, the Company has granted options to purchase
approximately 1,626,000 shares of the Company's Common Stock under the Incentive
Stock Option Plan. The options were granted at various strike prices ranging
from $10.00 to $13.75 per share. Generally, the options granted have a term of
ten years from the grant date and vest 20 percent per annum beginning at the end
of year three.
Employee Stock Purchase Plan (the Stock Purchase Plan) -- The Stock
Purchase Plan provides for up to 500,000 shares of Common Stock to be issued,
and is available to all regular, full-time employees of the Company who have
completed at least one year of continuous service.
19
<PAGE> 25
MARINEMAX, INC. AND SUBSIDIARIES
NOTES TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS (RESTATED)
The Stock Purchase Plan provides for implementation of up to 10 annual
offerings beginning on the first day of July in the years 1998 through 2007,
with each offering terminating on June 30 of the following year. Each annual
offering may be divided into two six-month offerings. For each offering, the
purchase price per share will be the lower of (i) 85% of the closing price of
the Common Stock on the first day of the offering or (ii) 85% of the closing
price of the Common Stock on the last day of the offering. The purchase price is
paid through periodic payroll deductions not to exceed 10% of the participant's
earnings during each offering period. However, no participant may purchase more
than $25,000 worth of Common Stock annually.
ACQUISITION OF STOVALL MARINE, INC.
On April 30, 1998, the Company acquired all of the issued and
outstanding Common Stock of Stovall Marine, Inc. (Stovall) (a Georgia
corporation) in exchange for 492,306 shares of the Company's common stock. The
acquisition has been accounted for under the purchase method of accounting,
which resulted in the recognition of approximately $5.6 million of goodwill,
representing the excess purchase price over the estimated fair value of net
assets acquired. The goodwill is being amortized over 40 years.
INITIAL PUBLIC OFFERING
In June 1998, the Company completed its initial public offering (IPO)
of 4,780,569 shares of Common Stock. Of the 4,780,569 shares of common stock
sold, the Company sold 3,515,824 shares and certain stockholders sold 1,264,745
shares. Of the 3,515,824 shares sold by the Company, 1,654,624 shares were sold
to the public at a price per share of $12.50 and 1,861,200 shares were sold to
Brunswick Corporation for $11.625 per share. The IPO generated net cash proceeds
of approximately $38.3 million after deducting underwriting discounts and
offering costs to date of approximately $2.6 million.
20
<PAGE> 26
ITEM 7. FINANCIAL STATEMENTS, PORFORMA FINANCIAL INFORMATION AND EXHIBITS
(a) Financial Statements of Business Acquired
The acquisitions described above do not constitute a
significant acquisition pursuant to Rule 3-05. Therefore, no
financial statements are required to be filed.
(b) Pro Forma Financial Information
Not applicable
(c) Exhibits
EXHIBIT NO. DESCRIPTION OF EXHIBIT
27 Restated Financial Data Schedules
99.1 Agreement of Merger and Plan of Reorganization dated as of the 7th day
if July, 1998 by and among MarineMax Inc., C & N Marine Acquisition
Corporation (a subsidiary of MarineMax Inc.), C & N Marine Corporation
and the Stockholders named herein (1)
99.2 Agreement of Merger and Plan of Reorganization dated as of the 7th day
if July, 1998 by and among MarineMax Inc., Cochran's Acquisition
Corporation (a subsidiary of MarineMax Inc.), Cochran's Marine, Inc.
and the Stockholders named herein (1)
- -----------------------------
(1) Previously filed
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereto duly authorized.
September 4, 1998 MARINEMAX, INC.
By:/s/ Michael H. McLamb
-----------------------------------------
Michael H. McLamb
Chief Financial Officer, Vice President
Secretary and Treasurer
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS EXHIBIT CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
REGISTRANT'S FINANCIAL STATEMENTS FOR THE PERIOD ENDED SEPTEMBER 30, 1998 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. THIS
EXHIBIT SHALL NOT BE DEEMED FILED FOR PURPOSES OF SECTION 11 OF THE SECURITIES
AND EXCHANGE ACT OF 1933 AND SECTION 18 OF THE SECURITIES AND EXCHANGE ACT OF
1934, OR OTHERWISE SUBJECT TO THE LIABILITY OF SUCH SECTIONS, NOR SHALL IT BE
DEEMED A PART OF ANY OTHER FILING WHICH INCORPORATES THIS REPORT BY REFERENCE,
UNLESS SUCH OTHER FILING EXPRESSLY INCORPORATES THIS EXHIBIT BY REFERENCE.
</LEGEND>
<RESTATED>
<S> <C> <C> <C>
<PERIOD-TYPE> 9-MOS 12-MOS 12-MOS
<FISCAL-YEAR-END> SEP-30-1997 DEC-31-1996 DEC-31-1995
<PERIOD-START> JAN-01-1997 JAN-01-1996 JAN-01-1995
<PERIOD-END> SEP-30-1997 DEC-31-1996 DEC-31-1995
<CASH> 11,537,934 2,697,559 2,331,507
<SECURITIES> 0 0 0
<RECEIVABLES> 8,790,247 5,935,648 3,379,326
<ALLOWANCES> 0 0 0
<INVENTORY> 61,945,438 66,981,113 48,664,950
<CURRENT-ASSETS> 83,482,029 76,817,321 54,997,251
<PP&E> 11,580,419 10,339,015 8,746,852
<DEPRECIATION> 5,678,419 5,003,378 4,183,594
<TOTAL-ASSETS> 89,591,286 82,311,583 59,991,873
<CURRENT-LIABILITIES> 59,926,429 68,257,311 47,589,334
<BONDS> 7,414,291 1,438,000 1,161,158
0 0 0
0 0 0
<COMMON> 8,902 620,938 599,938
<OTHER-SE> 23,288,936 12,263,690 10,718,908
<TOTAL-LIABILITY-AND-EQUITY> 89,591,286 82,311,583 59,991,873
<SALES> 200,413,762 197,608,890 168,110,742
<TOTAL-REVENUES> 200,413,762 197,608,890 168,110,742
<CGS> 150,478,921 149,947,980 128,822,766
<TOTAL-COSTS> 150,478,921 149,947,980 128,822,766
<OTHER-EXPENSES> 30,387,637 38,650,159 31,071,282
<LOSS-PROVISION> 0 0 0
<INTEREST-EXPENSE> 1,805,716 1,823,187 1,413,767
<INCOME-PRETAX> 17,741,488 7,187,564 6,802,270
<INCOME-TAX> 595,823 42,029 (20,351)
<INCOME-CONTINUING> 17,145,665 7,145,535 6,823,278
<DISCONTINUED> 0 0 0
<EXTRAORDINARY> 0 0 0
<CHANGES> 0 0 0
<NET-INCOME> 17,145,665 7,145,535 6,823,278
<EPS-PRIMARY> 1.93 0.74 0.74
<EPS-DILUTED> 1.93 0.74 0.74
</TABLE>
