<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED DECEMBER 31, 1998
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ________________ to __________________
Commission File No. 1-14173
MARINEMAX, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 59-3496957
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification Number)
18167 U.S. 19 NORTH, SUITE 499
Clearwater, Florida 33764
(Address of principal executive offices) (ZIP Code)
727-531-1700
(Registrant's telephone number, including area code)
Indicate by check whether the registrant: (1) has filed all reports to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the Registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days.
Yes [X] No [ ]
The number of outstanding shares of the registrant's Common Stock on February
8, 1999 was 14,607,361
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MARINEMAX, INC.
Table of Contents
<TABLE>
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Item No. Page
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PART I FINANCIAL INFORMATION
1. Financial Statements (unaudited):
Condensed Consolidated Results of Operations
For the Three-Month Period Ended
December 31, 1997 and 1998 ................................... 3
Condensed Consolidated Balance Sheets as of
September 30, 1998 and December 31, 1998 .................... 4
Condensed Consolidated Statements of Cash Flows
For the Three-Month Period Ended
December 31, 1997 and December 31, 1998 ...................... 5
Notes to Condensed Consolidated Financial Statements ........... 7
2. Management's Discussion and Analysis of Results of Operations
and Financial Condition . ....................................... 10
PART II OTHER INFORMATION
1. Legal Proceedings ................................................ 14
2. Use of Proceeds .................................................. 14
3. Defaults Upon Senior Securities .................................. 14
4. Submission of Matters to Vote of Security Holders ................ 14
5. Other Information ................................................ 14
6. Exhibits and Reports on Form 8-K ................................. 14
7. Signatures ....................................................... 15
</TABLE>
2
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ITEM 1. FINANCIAL STATEMENTS
MARINEMAX, INC. AND SUBSIDIARIES
Condensed Consolidated Results of Operations
(Unaudited)
<TABLE>
<CAPTION>
For the Three-Month Period
Ended December 31,
-----------------------------
1997 1998
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<S> <C> <C>
Revenue $ 46,401,174 $ 69,264,451
Cost of sales 36,662,223 52,678,357
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Gross profit 9,738,951 16,586,094
Selling, general and administrative
expenses 14,227,312 15,595,642
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Income (loss) from operations (4,488,361) 990,452
Interest expense, net 350,345 468,332
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Income (loss) before income taxes (4,838,706) 522,120
Income tax provision (benefit) (340,867) 241,189
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Net income (loss) $ (4,497,839) $ 280,931
============= ============
Basic and diluted net income (loss) per
common share $ (0.51) $ 0.02
============= ============
Shares used in computing basic and diluted
net income (loss) per common share 8,901,818 14,601,634
============= ============
PRO FORMA DATA:
Pro forma income tax provision (benefit) (1,594,615)
-------------
Pro forma net income (loss) $ (2,903,224)
=============
Pro forma basic and diluted net income
(loss) per share $ (0.33)
=============
</TABLE>
See Notes to Condensed Consolidated Financial Statements
3
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MARINEMAX, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
<TABLE>
<CAPTION>
September 30, December 31,
1998 1998
------------ ------------
(unaudited)
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 7,860,866 $ 10,078,017
Accounts receivable, net 11,735,153 9,314,138
Inventories 87,533,067 119,538,072
Prepaids and other current assets 2,824,345 4,551,630
------------ ------------
Total current assets 109,953,431 143,481,857
PROPERTY AND EQUIPMENT, net 24,776,439 26,349,034
DEFERRED TAX ASSET 103,426 152,511
GOODWILL AND OTHER ASSETS 15,624,996 16,630,193
------------ ----------
Total assets $150,458,292 $186,613,595
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 8,591,679 $ 4,543,248
Customer deposits 4,815,979 6,581,369
Accrued expenses 6,044,506 7,290,319
Short-term borrowings 45,813,419 97,882,138
Current maturities of long-term debt 442,519 469,506
Settlement payable 15,000,000 --
Deferred taxes 165,511 25,119
------------ ------------
Total current liabilities 80,873,613 116,791,699
LONG-TERM DEBT, net of current maturities 3,249,494 3,151,183
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,
14,600,428 and 14,607,361 shares issued and outstanding at
September 30, 1998 and December 31, 1998, respectively 14,601 14,608
Additional paid-in capital 57,113,708 57,168,298
Retained earnings 9,206,876 9,487,807
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Total stockholders' equity 66,335,185 66,670,713
------------ ------------
Total liabilities and stockholders' equity $150,458,292 $186,613,595
============ ============
</TABLE>
See Notes to Condensed Consolidated Financial Statements
4
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MARINEMAX, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
For the Three-Month Periods Ended
(Unaudited)
<TABLE>
<CAPTION>
December 31, December 31,
1997 1998
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<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income (loss) $ (4,497,839) $ 280,931
Adjustments to reconcile net income
(loss) to net cash provided by (used in)
operating activities:
Depreciation and amortization 228,930 589,339
Deferred income tax provision (benefit) 529,212 (189,477)
Loss (gain) on sale of property and equipment -- 18,000
Stock Compensation -- 54,597
Decrease (increase) in --
Accounts receivable 3,287,023 2,421,015
Due from related parties 640,632 --
Inventories (15,749,079) (32,005,005)
Prepaids and other assets (1,090,742) (1,833,589)
Increase (decrease) in --
Accounts payable 2,548,250 (4,048,431)
Customer deposits (1,007,635) 1,765,390
Accrued expenses and other liabilities (1,259,981) 1,245,813
Short-term borrowings 19,347,965 52,068,719
Settlement payable -- (15,000,000)
------------ ------------
Net cash provided by (used in)
operating activities 2,976,736 5,367,302
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CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment (437,608) (2,099,743)
Proceeds from sale of property and equipment -- 23,000
Cash used in purchase of business -- (1,002,084)
------------ ------------
Net cash provided by (used in) investing activities (437,608) (3,078,827)
------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net borrowings (repayments) on notes
payable to related parties (3,853,173) --
Borrowings on long-term debt 34,766 --
Repayments on long-term debt (130,788) (71,324)
Distributions to stockholders (8,651,176) --
------------ ------------
Net cash provided by (used in)
financing activities (12,600,371) (71,324)
------------ ------------
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS (10,061,243) 2,217,151
CASH AND CASH EQUIVALENTS,
beginning of period 11,537,934 7,860,866
------------ ------------
CASH AND CASH EQUIVALENTS, end of period $ 1,476,691 $ 10,078,017
============ ============
</TABLE>
See Notes to Condensed Consolidated Financial Statements
5
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MARINEMAX, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
For the Three-Month Periods Ended
(Unaudited)
(Continued)
<TABLE>
<CAPTION>
December 31, December 31,
1997 1998
------------ ------------
<S> <C> <C>
SUPPLEMENTAL DISCLOSURES OF CASH FLOW
INFORMATION:
Cash paid for
Interest $598,757 $614,515
Income taxes $ 6,000 $182,500
</TABLE>
See Notes to Condensed Consolidated Financial Statements
6
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MARINEMAX, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
1. COMPANY BACKGROUND AND BASIS OF PRESENTATION
MarineMax, Inc. (a Delaware corporation) was incorporated in January 1998.
MarineMax, Inc. and subsidiaries (MarineMax or the Company) engage primarily in
the retail sale and service of new and used boats, motors, trailers, marine
parts and accessories. The Company currently operates through 41 retail
locations in nine states, consisting of Arizona, California, Florida, Georgia,
Minnesota, Nevada, North Carolina, Ohio and Texas.
In October 1998, the Company formed a new subsidiary, MarineMax Motor
Yachts, Inc. (Motor Yachts) and entered in to a Dealership Agreement with
Hatteras Yachts, a Division of Genmar Industries, Inc. The Agreement gives the
Company the rights to sell Hatteras Yachts throughout the state of Florida
(excluding the Florida Panhandle) and the U.S. distribution rights for Hatteras
products over 74 feet.
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 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.
The accompanying financial statements are unaudited and have been prepared
by the Company pursuant to the rules and regulations of the Securities and
Exchange Commission (the SEC). Although the September 30,1998 balance sheet was
derived from audited financial statements, certain information and footnote
disclosures normally included in financial statements prepared in accordance
with generally accepted accounting principles have been condensed or omitted
pursuant to SEC rules and regulations. The accompanying condensed financial
statements and related notes should be read in conjunction with the Company's
Annual Report on Form 10-K (File number 1-4173) as filed with the SEC on
December 29, 1998.
2. ACQUISITIONS
The Company has consummated a series of business combinations. On March 1,
1998, the Company 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., and 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 (together Cochran's Marine) in exchange for 603,386 shares
of its common stock.
On July 30, 1998, the Company acquired in a merger transaction all of the
issued and outstanding common stock of Sea Ray of Wilmington, Inc. (f.k.a.
Skipper Bud's of North Carolina) in exchange for 412,390 shares of its common
stock.
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 Pooled Companies had operated as one entity since
inception.
On March 1, 1998, MarineMax 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 L.L.C.,
Walker Marina Realty, L.L.C., Marina Drive Realty I, L.L.C., and Marina Drive
Realty II, L.L.C. (collectively, Cochran's L.L.C.s) in exchange for 120,000
shares of the Company's common stock. These acquisitions have been accounted for
under the purchase method of accounting.
7
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On April 30, 1998, the Company acquired in a merger transaction all of the
issued and outstanding common stock of Stovall Marine, Inc. (Stovall) 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 $5.3 million in goodwill, representing the
excess of the purchase price over the estimated fair value of the net assets
acquired.
On September 3, 1998, the Company acquired the net assets of Brevard Boat
Sales, Inc. (Brevard) in exchange for approximately $1.1 million and 14,652
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 $1.1 million in goodwill, representing the excess of the purchase
price over the estimated fair value of the net assets acquired.
On September 15, 1998, the Company acquired the net assets, including the
retail location of Sea Ray of Las Vegas (Vegas) in exchange for approximately
$3.5 million. The acquisition has been accounted for under the purchase method
of accounting, which resulted in the recognition of approximately $1.0 million
in goodwill, representing the excess of the purchase price over the estimated
fair value of the net assets acquired.
On September 30, 1998, the Company acquired the net assets of Treasure
Cove Marina, Inc. (Treasure Cove) in exchange for approximately $3.1 million and
250,000 shares of the Company's common stock. The asset purchase agreement calls
for the final purchase price to be determined based upon results from operations
for the period ended December 31, 1998. The acquisition has been accounted for
under the purchase method of accounting, which resulted in the recognition of an
estimated $8.1 million in goodwill, representing the excess of the estimated
purchase price over the estimated fair value of the net assets acquired. The
final purchase price could result in either a refund to the Company or an
additional payment by the Company of up to approximately $5.0 million.
On October 28, 1998, the Company acquired the net assets of Woods &
Oviatt, Inc. (Woods & Oviatt), a prominent yacht brokerage operation, in
exchange for approximately $1.0 million. The final purchase price is subject to
adjustment based on various factors, including the calendar 1998 earnings of
Woods & Oviatt. The acquisition has been accounted for under the purchase method
of accounting, which resulted in the recognition of approximately $1.0 million
in goodwill, representing the excess of the purchase price over the estimated
fair value of the net assets acquired.
The Original Property Acquisitions, Stovall, Cochran's L.L.C.s, Brevard,
Vegas, Treasure Cove and Woods & Oviatt (collectively, the Purchased Companies)
have been reflected in the Company's financial statements subsequent to their
respective acquisition dates.
3. PRO FORMA RESULTS OF OPERATIONS AND NONRECURRING SETTLEMENT OBLIGATION
In connection with the merger of the Pooled Companies, the applicable
merged companies terminated their S corporation status and recorded a deferred
income tax charge and a corresponding net deferred tax liability of
approximately $1,680,000, representing the tax effect of differences in bases in
assets and liabilities for financial reporting and income tax purposes. The
Company has presented pro forma income tax disclosure as if the Company and
subsidiaries were C corporations for the three-month period ended December 31,
1997.
8
<PAGE> 9
The Company and Brunswick Corporation (Brunswick) 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 agreed not to challenge the change
in control provisions of the dealership agreements, and the Company agreed to
pay Brunswick $15 million. The Settlement payable to Brunswick required interest
to be paid quarterly at the 30-day LIBOR rate plus 125 basis points. The $15
million Settlement payable was paid in full to Brunswick in December 1998.
4. DEBT:
On April 7, 1998, the Company executed an agreement for a working capital
line of credit ( the Line of Credit) with a financial institution under which
the Company refinanced substantially all of its outstanding floor plan notes
payable. Borrowings under the Line of Credit are determined pursuant to a
borrowing base formula and are used primarily for financing the Company's
inventory. The maximum available borrowings under the Line of Credit are $105
million, which the Company plans to increase or supplement to provide $200
million of borrowing capacity. The Line of Credit bears interest at the 90-day
LIBOR rate plus 125 basis points, and has a three-year term.
9
<PAGE> 10
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
FINANCIAL CONDITION.
This Management's Discussion and Analysis of Results of Operations and Financial
Condition contains "forward-looking statements" within the meaning of Section
27A of the Securities Act of 1933, as amended (the Securities Act), and Section
21E of the Securities Exchange Act of 1934, as amended. These statements relate
to future economic performance, plans and objectives of the Company for future
operations and projections of revenue and other financial items that are based
on the belief of the Company as well as assumptions made by, and information
currently available to, the Company. Actual results could differ materially from
those currently anticipated as a result of a number of factors, including those
listed in the "Risk Factors" of the Company's Annual Report on Form 10-K
(Registration number 1-14173) as filed with the SEC on December 29, 1998. These
risks include the impact of seasonality and weather, general economic conditions
and the level of consumer spending, the Company's ability to integrate the
acquisitions into existing operations and numerous other factors identified in
the Company's filings with the Securities Exchange Commission.
GENERAL
The Company is the largest recreational boat retailer in the United
States. Through 41 retail locations in nine 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 was incorporated in January 1998. MarineMax has consummated a
series of business combinations since its formation. 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., 11502 Dumas, Inc. and subsidiaries d/b/a Louis DelHomme Marine,
Harrison's Boat Center, Inc., and 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 (together Cochran's Marine) in
exchange for 603,386 shares of its Common Stock. On July 30, 1998, the Company
acquired all of the issued and outstanding common stock of Sea Ray of
Wilmington, Inc. (f.k.a. Skipper Bud's of North Carolina) in a merger
transaction in exchange for 412,390 shares of its Common Stock.
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.
In addition to the Pooled Companies, the Company has acquired four
additional boat retailers, one brokerage operation and companies owning real
estate used in the operations of certain subsidiaries of the Company
(collectively, the Purchased Companies). In connection with these acquisitions,
the Company issued an aggregate of 2,268,984 shares of its common stock and paid
an aggregate of approximately $8.2 million in cash, resulting in the recognition
of an aggregate of $16.5 million in goodwill, which represents the excess of the
purchase price over the estimated fair value of the net assets acquired. The
Purchased Companies have been reflected in the Company's financial statements
subsequent to their respective acquisition dates. Each of the Purchased
Companies is continuing its operations as a wholly owned subsidiary of the
Company.
Each of the Pooled Companies and Purchased Companies historically operated
with a calendar year-end, but adopted the September 30 year-end of MarineMax on
or before the completion of its acquisition. The September 30 year-end more
closely conforms to the natural business cycle of the Company. The following
discussion compares the three months ended December 31, 1998 to the three months
ended December 31, 1997 and should be read in conjunction with the condensed
consolidated financial statements of the Company, including the related notes
thereto, appearing elsewhere in this Report.
10
<PAGE> 11
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 or
accepted by 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 approximately $4.1 million for the three months ended December 31,
1997. 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 difficult and less meaningful. Certain
employee-stockholders have entered into employment agreements with the Company,
reflecting reduced compensation when compared to historical levels.
In the December 1998 quarter, the Company paid $15,000,000 in relation to
a March 1998 settlement (Settlement Obligation) reached with its primary
supplier, Brunswick Corporation (see the Company's Annual Report on Form 10-K
for more details).
The condensed consolidated Financial Statements included with this filing
include a pro forma adjustment for income taxes as if the Company was a C
corporation from its inception. The condensed consolidated Financial Statements
do not include pro forma adjustments for the effects of contractually reduced
compensation levels of certain members of management nor the planned addition of
public company expenses.
CONSOLIDATED RESULTS FROM OPERATIONS
Three-Month Period Ended December 31, 1998 Compared to Three-Month Period Ended
December 31, 1997:
Revenue. Revenue increased $22.9 million, or 49.3%, to $69.3 million for
the three-month period ended December 31, 1998 from $46.4 million for the
three-month period ended December 31, 1997. Of this increase, $8.0 million was
attributable to 17% growth in comparable stores sales and $14.8 million was
attributable to stores not eligible for inclusion in the comparable store base.
The increase in comparable store sales for the three-month period ended December
31, 1998, resulted primarily from the Company's experience-based retailing
strategies, including the implementation of MarineMax Value-Price sales approach
and MarineMax Care (two years of defined maintenance); a greater emphasis on
used boat sales and increased access to all MarineMax store inventories, which
assists the Company's retail locations in offering the products customers
desire.
Gross Profit. Gross profit increased $6.8 million, or 70.3%, to $16.6
million for the three-month period ended December 31, 1998 from $9.7 million for
the three-month period ended December 31, 1997. Gross profit as a percentage of
revenue increased to 23.9% in 1998 from 21.0% in 1997. The increase in gross
profit margin was attributable to the implementation of the Company's
experience-based retailing strategies, including the implementation of MarineMax
Value-Price sales approach and MarineMax Care (two years of defined
maintenance), the Company's expanded brokerage operations and increased sales of
products that historically result in higher gross profits such as finance and
insurance contracts.
11
<PAGE> 12
Selling, General, and Administrative Expenses. Selling, general, and
administrative expenses increased by approximately $1.4 million, or 9.6%, to
$15.6 million for the three-month period ended December 31, 1998 from $14.2
million for the three-month period ended December 31, 1997. Selling, general,
and administrative expenses as a percentage of revenue decreased to 22.5% in
1998 from 30.7% in 1997. Substantially all of the decrease was attributable to
achieving operating efficiencies and synergies, the reduction of
employee-stockholder compensation activities and offset by additional overhead
associated with being a public company.
Interest Expense, Net. Interest expense, net increased approximately
$118,000 or 33.7%, to approximately $468,000 in 1998 from approximately $350,000
in 1997. Interest expense, net as a percentage of revenue decreased to 0.7% in
1998 from 0.8% in 1997. The decrease resulted primarily from the reduced
interest rate on the Company's line of credit and reduced level of debt as a
result of the Company's Initial Public Offering. The decrease was partially
offset by increased debt associated with the Settlement Obligation and higher
levels of outstanding borrowings related to the increased level of inventories
required to support the increased level of 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 retail openings and acquisitions.
These cash needs have historically been financed with cash from operations and
borrowings under credit facilities. Historically, the Company utilized a
combination of floor plan financing, working capital lines of credit, and loans
from stockholders to finance inventory levels. These historic credit 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.
At December 31, 1998, the Company's indebtedness totaled approximately
$101.5 million, of which approximately $3.6 million was associated with the
Company's real estate holdings and the remaining $97.9 million was associated
with financing the Company's current inventory level and working capital needs.
The Company replaced the various lines of credit of the Pooled and
Purchased Companies with a Loan and Security Agreement, dated April 7, 1998,
with Nations Credit Distribution Finance, Inc. (NDF). The agreement provides for
a revolving line of credit facility to the Company with maximum available
borrowings of $105 million (the Loan). Advances on the Loan 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 guaranties of
the subsidiaries are secured by all of the accounts, inventories, other goods,
equipment, furniture, and fixtures of the Company and all of the subsidiaries.
The Company is currently in the process of increasing its inventory and
working capital borrowing capacity. The Company has obtained three commitment
letters from separate financial institutions. Upon completion and execution of
the legal documentation, the inventory and working capital borrowing capacity of
the Company is expected to be increased to over $200 million, pursuant to the
commitment letters.
12
<PAGE> 13
Since March 1, 1998, the Company has acquired six additional boat dealers,
one brokerage operation and companies owning real estate used in the operations
of certain subsidiaries of the Company. In connection with these acquisitions,
the Company issued an aggregate of 2,268,984 shares of its common stock and paid
an aggregate of approximately $8.2 million in cash, resulting in the recognition
of an aggregate of $16.5 million in goodwill, which represents the excess of the
purchase price over the estimated fair value of the net assets acquired.
IMPACT OF SEASONALITY AND WEATHER ON OPERATIONS
The Company's business, as well as the entire recreational boating
industry, is highly seasonal, with seasonality varying in different geographic
markets. With the exception of Florida, the Company generally realizes
significantly lower sales in the quarterly period ending December 31 with boat
sales generally improving in January with the onset of the public boat and
recreation shows. The Company's current operations are concentrated in the more
temperate regions of the United States, and its business could become
substantially more seasonal as it acquires retailers that operate in colder
regions of the United States.
YEAR 2000 COMPLIANCE
Many currently installed computer systems and software products are coded
to accept only two-digit entries to represent years in the date code field.
Computer systems and products that do not accept four-digit year entries will
need to be upgraded or replaced to accept four-digit entries to distinguish
years beginning with 2000 from prior years. The Company believes that its
management information system complies with the Year 2000 requirements, and the
Company currently does not anticipate that it will experience any material
disruption to its operations as a result of the failure of its management
information system to be Year 2000 compliant. There can be no assurance,
however, that computer systems operated by third parties, including customers,
vendors, credit card transaction processors, and financial institutions, with
which the Company's management information system interface will continue to
properly interface with the Company's system and will otherwise be compliant on
a timely basis with Year 2000 requirements. The Company has developed a plan to
evaluate the Year 2000 compliance status of third parties with which its system
interfaces. Any failure of the Company's management information system or the
systems of third parties to timely achieve Year 2000 compliance could have a
material adverse effect on the Company's business, financial condition, and
operating results.
13
<PAGE> 14
PART II
OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
There were no new material developments in the legal proceedings
previously reported by the Company and no new material legal proceedings during
the quarter ended December 31, 1998 other than those previously reported by the
Company.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
(c) In December 1998, the Company issued 6,933 shares of its common
stock to outside directors of the Company in lieu of cash directors'
fees. The issuance of unregistered shares was in conformity with
the approved plan of the Board of Directors without registration
under the Securities Act of 1933 in reliance on the exemption
provided by Section 4(2).
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable.
ITEM 5. OTHER INFORMATION
Not applicable.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
27.1 Financial Data Schedule
14
<PAGE> 15
MARINEMAX, INC.
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934,the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
MARINEMAX INC.
February 11, 1999 By: /s/ Michael H. McLamb
-----------------------------------
Michael H. McLamb
Chief Financial Officer, Vice
President, Secretary and
Treasurer
15
<PAGE> 16
Exhibit Index
<TABLE>
<CAPTION>
Exhibit No. Description
- ------------- -----------
<S> <C>
27.1 Financial Data Schedule
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS EXHIBIT CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
REGISTRANT'S FINANCIAL STATEMENTS FOR THE PERIOD ENDED DECEMBER 31,1998, 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>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> SEP-30-1998
<PERIOD-START> OCT-01-1998
<PERIOD-END> DEC-31-1998
<CASH> 10,078,017
<SECURITIES> 0
<RECEIVABLES> 9,314,138
<ALLOWANCES> 0
<INVENTORY> 119,538,072
<CURRENT-ASSETS> 143,481,857
<PP&E> 26,835,182
<DEPRECIATION> 486,148
<TOTAL-ASSETS> 186,613,595
<CURRENT-LIABILITIES> 116,791,699
<BONDS> 3,620,689
0
0
<COMMON> 57,182,906
<OTHER-SE> 9,487,807
<TOTAL-LIABILITY-AND-EQUITY> 186,613,595
<SALES> 69,264,451
<TOTAL-REVENUES> 69,264,451
<CGS> 52,678,357
<TOTAL-COSTS> 52,678,357
<OTHER-EXPENSES> 15,595,642
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 468,332
<INCOME-PRETAX> 522,120
<INCOME-TAX> 241,189
<INCOME-CONTINUING> 280,931
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 280,931
<EPS-PRIMARY> 0.02
<EPS-DILUTED> 0.02
</TABLE>
