MARINE PRODUCTS CORPORATION (NYSE: MPX) DESIGNS, MANUFACTURES AND DISTRIBUTES PREMIUM-BRANDED CHAPARRAL JET BOATS, STERNDRIVE PLEASURE BOATS AND OUTBOARD DECKBOATS, AS WELL AS ROBALO OUTBOARD SPORT FISHING BOATS THROUGH 147 DOMESTIC AND 85 INTERNATIONAL DEALERS.With premium brands, a solid capital structure and a strong independent dealer network, over the years Marine Products Corporation has generated strong financial performance and has built long-term stockholder value. Marine Products Corporation is also seeking to utilize its financial strength to capitalize on opportunities that profitably increase its market share and broaden its product offerings within the pleasure boat market. For more information, visit our website at www.marineproductscorp.com.Inside Front Cover . . . . . . . . . . . . . . . . . .Product Overview01 . . . . . . . . . . . . . . . . . . . . . . . . . . Financial Highlights02 . . . . . . . . . . . . . . . . . . . . . . . . Letter to Stockholders04 . . . . . . . . . . . . . . . . . . . . . . . . . Making Choices Easy07 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . FORM 10KInside Back Cover . . . . . . . . . . . . . . . Corporate InformationFeatured on Front Cover (from top to bottom)R220 n CENTER CONSOLE227 n SSX223 VRX n VORTEX230 n SUNCOASTPOWEROFCHOICEOUTBOARDSTERNDRIVEJET PROPULSIONOUTBOARDINTEGRITYANDINNOVATIONMARINE PRODUCTS CORPORATION2015 ANNUAL REPORT MARINE PRODUCTS CORPORATION 2015 ANNUAL REPORT2801 Buford Highway NE, Suite 520, Atlanta, Georgia 30329404.321.7910 www.marineproductscorp.com©2016 Marine Products Corporation. All rights reserved. The names of other companies and products mentioned herein may be the trademarks of their respective owners.POWEROFCHOICEOUTBOARDSTERNDRIVEJET PROPULSIONOUTBOARDINTEGRITYANDINNOVATIONMARINE PRODUCTS CORPORATION2015 ANNUAL REPORT MARINE PRODUCTS CORPORATION 2015 ANNUAL REPORT MARINE PRODUCTS CORPORATION (NYSE: MPX) DESIGNS, MANUFACTURES AND DISTRIBUTES PREMIUM-BRANDED CHAPARRAL JET BOATS, STERNDRIVE PLEASURE BOATS AND OUTBOARD DECKBOATS, AS WELL AS ROBALO OUTBOARD SPORT FISHING BOATS THROUGH 147 DOMESTIC AND 85 INTERNATIONAL DEALERS.With premium brands, a solid capital structure and a strong independent dealer network, over the years Marine Products Corporation has generated strong financial performance and has built long-term stockholder value. Marine Products Corporation is also seeking to utilize its financial strength to capitalize on opportunities that profitably increase its market share and broaden its product offerings within the pleasure boat market. For more information, visit our website at www.marineproductscorp.com.Inside Front Cover . . . . . . . . . . . . . . . . . .Product Overview01 . . . . . . . . . . . . . . . . . . . . . . . . . . Financial Highlights02 . . . . . . . . . . . . . . . . . . . . . . . . Letter to Stockholders04 . . . . . . . . . . . . . . . . . . . . . . . . . Making Choices Easy07 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . FORM 10KInside Back Cover . . . . . . . . . . . . . . . Corporate InformationFeatured on Front Cover (from top to bottom)R220 n CENTER CONSOLE227 n SSX223 VRX n VORTEX230 n SUNCOASTPOWEROFCHOICEOUTBOARDSTERNDRIVEJET PROPULSIONOUTBOARDINTEGRITYANDINNOVATIONMARINE PRODUCTS CORPORATION2015 ANNUAL REPORT MARINE PRODUCTS CORPORATION 2015 ANNUAL REPORT2801 Buford Highway NE, Suite 520, Atlanta, Georgia 30329404.321.7910 www.marineproductscorp.com©2016 Marine Products Corporation. All rights reserved. The names of other companies and products mentioned herein may be the trademarks of their respective owners.POWEROFCHOICEOUTBOARDSTERNDRIVEJET PROPULSIONOUTBOARDINTEGRITYANDINNOVATIONMARINE PRODUCTS CORPORATION2015 ANNUAL REPORT MARINE PRODUCTS CORPORATION 2015 ANNUAL REPORT 2016 PRODUCT OVERVIEW
CORPORATE INFORMATION
21 SPORT n H20
243 VRX n VORTEX
246 n SSI
250 n SUNCOAST
284 n SUNESTA
337 n SSX
H2O SPORT SERIES
The H2O series continues an innovative line that brings Chaparral style,
performance and quality to first-time and experienced boat buyers at No
Haggle, Real Deal pricing. The H2O sport package comes in 18, 19 and
21 foot lengths, and every style is loaded with features. Choose an H2O
sport package or Ski & Fish model, and you will choose craftsmanship,
value and innovation.
18 Sport n 18 Ski & Fish n 19 Sport n 19 Ski & Fish
21 Sport n 21 Ski & Fish
R247 n DUAL CONSOLE
VORTEX JET BOATS
R207 n R227 n R247
Dive into Chaparral’s new Vortex fleet of jet boats. Chaparral’s award
winning design team built a line of jet boats that is both sleek and
stylish. Equipped with fuel-saving Eco-Mode, Chaparral’s Extended
V-Plane, Rotax® power and innovation at its absolute best, the line also
includes a trailer and is part of No Haggle, Real Deal pricing targeting
younger first-time boat owners.
R246 n CAYMAN
203VR n 203VRX n 223VR n 223VRX
243VR n 243VRX
SSI WIDE TECH™
R206 n R226 n R246
Chaparral’s SSi sport boat open bow and cuddy cabin models are
produced for the quality and style-conscious recreational boater.
Models for the 2016 model year range in size from 21 to 24 feet, and
they have once again set a high standard for engineering excellence,
attractive styling, and quality materials and workmanship. Chaparral has
incorporated its patented Wide Tech™ bow design into SSi models for
additional space in the forward part of the boat.
R300 n CENTER CONSOLE
216 n 225 n 226 n 246
ROBALO DUAL CONSOLES
Multi-purpose outboard fishing boats like the Robalo Dual Console are
enjoying sizzling popularity! Today’s fishermen want a boat that does
more than just fish, and the dual console does just that. Serious anglers
will appreciate the secure rod storage, raw water wash down, self-
bailing cockpit and standard livewell. Fish in the morning, tow the kids
all afternoon, and then cruise as the sun sets.
ROBALO CAYMAN BAY BOATS
Introducing the new Cayman Series that brings Robalo quality, style
and performance to a bay boat. Robalo engineers have successfully
mixed a shallow water draft with a soft-riding Extended V-Plane bottom
design. Enjoy Cayman’s rock-solid stability; high-quality upholstery;
high-tech, space-efficient cockpit; and wide array of fishing features at
Reel Deal pricing.
ROBALO CENTER CONSOLES
Robalo’s No Haggle, Reel Deal pricing is available for 16 to 24 foot
models. Have peace of mind with Kevlar® reinforcement and a
seaworthy hull design on the Robalo Center Console series. Whether
you’re trolling with hooks in the water or motoring through the tough
stuff in search of a trophy catch, a powerful engine and Robalo’s Hydro
Lift™ bottom design can speed you to the hottest fishing spots.
R305 n WALKAROUND
330 n SIGNATURE
SUNCOAST OUTBOARD SPORT DECK
R160 n R180 n R200 n R222 n R242 n R260 n R300
Introduced in 2015 and designed for big lakes, rivers and coastal waters,
the sensational SunCoast marks the return of Chaparral to its outboard-
powered roots in sizes ranging from 21 to 25 feet.
ROBALO WALKAROUNDS
210 n 210SF n 230 n 250
SUNESTA SPORT BOATS
Robalo is offering two walkaround models in 2016, ranging in size
from 26 to 30 feet. The R265 features a new-look cabin design
with impressive amenities, and the R305 Walkaround has a spacious
cabin with finishing touches such as teak steps, directional lighting and
a hanging locker, all of which make it suitable for comfortable family
cruising and serious fishing.
Sunesta, with its patented Wide Tech™ bow design, continues to
prove itself with broad customer appeal. With a new interior and dash
design, this boat combines the best features of many of Chaparral’s
other products and is suitable for most family uses, including cruising,
wake boarding and sightseeing. The 2016 model line offers four boats
ranging from 22 to 28 feet.
R265 n R305
SIGNATURE CRUISERS
224 n 244 n 264 n 284
SSX LUXURY SPORT BOATS
For the 2016 model season, Chaparral introduced the 227 SSX, 257SE
and 337 SSX into the lineup, increasing the choices to seven for the SSX
Luxury Sport boat. SSX Luxury Sport boats are offered with an enclosed
head, an integrated swim platform, a transom sun lounge, and most have
the option of a wet bar in the cockpit. Chaparral’s SSX series offers
high-end performance with premium components from bow to stern.
227 n 257 n 257SE n 277 n 287 n 307 n 337
STOCKHOLDER INFORMATION
Corporate Offices
Marine Products Corporation
2801 Buford Highway NE, Suite 520
Atlanta, Georgia 30329
Telephone: 404.321.7910
Stock Listing
New York Stock Exchange
Ticker Symbol
MPX
Investor Relations Website
www.marineproductscorp.com
Transfer Agent and Registrar
address, please contact:
6201 15th Avenue
Brooklyn, NY 11219
Telephone: 800.937.5449
info@amstock.com
www.amstock.com
Annual Meeting
For inquiries related to stock certificates, including changes of
American Stock Transfer & Trust Company, LLC
Shareholder Services Department
The annual meeting of Marine Products Corporation will be held at
12:00 p.m., April 26, 2016, 2170 Piedmont Road, NE, Atlanta, GA 30324.
Caution Concerning Forward-Looking Statements
The Annual Report contains statements that constitute
“forward-looking statements” under the Private Securities
Litigation Reform Act of 1995, including all statements that look
forward in time or express management’s beliefs, expectations or
hopes. In particular, such statements include, without limitation,
receptiveness to considering acquisition candidates which
manufacture complementary products; the Company’s belief that
the boating consumer continues to demand more choices and that
the Company is meeting that demand; the Company’s belief that it
has a strong portfolio of product offerings in a steadily improving
recreational boating market; and the Company’s belief that its
competitive advantages provide it benefits and the Company’s
outlook for another strong year. The actual results of the Company
could differ materially from those indicated by the forward-looking
statements because of various risks and uncertainties, including,
without limitation, those identified under the title “Risk Factors”
in the Company’s Annual Report on Form 10-K included as part of
this Annual Report. All of the foregoing risks and uncertainties are
beyond the ability of the Company to control, and in many cases
the Company cannot predict the risks and uncertainties that could
OFFICERS
R. Randall Rollins
Chairman of the Board of Directors
Richard A. Hubbell
President and Chief Executive Officer
James A. Lane, Jr.
Executive Vice President
President of Chaparral Boats, Inc.
Linda H. Graham
Vice President and Secretary
Ben M. Palmer
and Treasurer
Vice President, Chief Financial Officer
Chairman of the Board, Rollins, Inc. (consumer
services) and Chairman of the Board, RPC, Inc.
DIRECTORS
R. Randall Rollins §
(oil and gas services)
Henry B. Tippie *†
Chairman of the Board and Chief Executive Officer,
Tippie Services, Inc. (management services)
James B. Williams *
Retired Chairman of the Executive Committee,
SunTrust Banks, Inc. (bank holding company)
Gary W. Rollins §
Vice Chairman and Chief Executive Officer,
Rollins, Inc. (consumer services)
Richard A. Hubbell §
(oil and gas services)
James A. Lane, Jr.
Executive Vice President
President of Chaparral Boats, Inc.
Linda H. Graham
Vice President and Secretary and Vice President
and Secretary, RPC, Inc. (oil and gas services)
Bill J. Dismuke °
Retired President, Edwards Baking Company
(manufacturer of pies and pie parts)
Larry L. Prince *
* Member of the Audit Committee, Compensation
Committee, Diversity Committee, and Nominating and
Governance Committee
† Chairman of the Audit Committee, Compensation
Committee, Diversity Committee, and Nominating
and Governance Committee
§ Member of the Executive Committee
° Member of the Audit Committee
President and Chief Executive Officer and
the Company’s belief that its financial strength will continue
President and Chief Executive Officer, RPC, Inc.
to support future product development efforts; the Company’s
Chaparral continues the tradition of quality that has made the Signature
Cruiser a leader in the luxury sport cruiser market. The Signature
comes with many standard features that are options on other cruisers
in its class, and the largest Signatures offer a fiberglass hard top, bow
thrusters and style features as underwater lighting. The Signature
line offers four models from 27 to 33 feet in length.
270 n 290 n 310 n 330
Retired Chairman of the Board, Genuine Parts Company
cause its actual results to differ materially from those indicated in
(automotive parts distributor)
the forward-looking statements.
2016 PRODUCT OVERVIEW
CORPORATE INFORMATION
21 SPORT n H20
243 VRX n VORTEX
246 n SSI
250 n SUNCOAST
284 n SUNESTA
337 n SSX
H2O SPORT SERIES
The H2O series continues an innovative line that brings Chaparral style,
performance and quality to first-time and experienced boat buyers at No
Haggle, Real Deal pricing. The H2O sport package comes in 18, 19 and
21 foot lengths, and every style is loaded with features. Choose an H2O
sport package or Ski & Fish model, and you will choose craftsmanship,
value and innovation.
18 Sport n 18 Ski & Fish n 19 Sport n 19 Ski & Fish
21 Sport n 21 Ski & Fish
ROBALO DUAL CONSOLES
Multi-purpose outboard fishing boats like the Robalo Dual Console are
enjoying sizzling popularity! Today’s fishermen want a boat that does
more than just fish, and the dual console does just that. Serious anglers
will appreciate the secure rod storage, raw water wash down, self-
bailing cockpit and standard livewell. Fish in the morning, tow the kids
all afternoon, and then cruise as the sun sets.
VORTEX JET BOATS
R207 n R227 n R247
R247 n DUAL CONSOLE
Dive into Chaparral’s new Vortex fleet of jet boats. Chaparral’s award
winning design team built a line of jet boats that is both sleek and
stylish. Equipped with fuel-saving Eco-Mode, Chaparral’s Extended
V-Plane, Rotax® power and innovation at its absolute best, the line also
includes a trailer and is part of No Haggle, Real Deal pricing targeting
younger first-time boat owners.
R246 n CAYMAN
203VR n 203VRX n 223VR n 223VRX
243VR n 243VRX
ROBALO CAYMAN BAY BOATS
Introducing the new Cayman Series that brings Robalo quality, style
and performance to a bay boat. Robalo engineers have successfully
mixed a shallow water draft with a soft-riding Extended V-Plane bottom
design. Enjoy Cayman’s rock-solid stability; high-quality upholstery;
high-tech, space-efficient cockpit; and wide array of fishing features at
Reel Deal pricing.
SSI WIDE TECH™
R206 n R226 n R246
Chaparral’s SSi sport boat open bow and cuddy cabin models are
produced for the quality and style-conscious recreational boater.
Models for the 2016 model year range in size from 21 to 24 feet, and
they have once again set a high standard for engineering excellence,
attractive styling, and quality materials and workmanship. Chaparral has
incorporated its patented Wide Tech™ bow design into SSi models for
additional space in the forward part of the boat.
R300 n CENTER CONSOLE
216 n 225 n 226 n 246
ROBALO CENTER CONSOLES
Robalo’s No Haggle, Reel Deal pricing is available for 16 to 24 foot
models. Have peace of mind with Kevlar® reinforcement and a
seaworthy hull design on the Robalo Center Console series. Whether
you’re trolling with hooks in the water or motoring through the tough
stuff in search of a trophy catch, a powerful engine and Robalo’s Hydro
Lift™ bottom design can speed you to the hottest fishing spots.
R305 n WALKAROUND
330 n SIGNATURE
SUNCOAST OUTBOARD SPORT DECK
R160 n R180 n R200 n R222 n R242 n R260 n R300
Introduced in 2015 and designed for big lakes, rivers and coastal waters,
the sensational SunCoast marks the return of Chaparral to its outboard-
powered roots in sizes ranging from 21 to 25 feet.
ROBALO WALKAROUNDS
210 n 210SF n 230 n 250
SUNESTA SPORT BOATS
Robalo is offering two walkaround models in 2016, ranging in size
from 26 to 30 feet. The R265 features a new-look cabin design
with impressive amenities, and the R305 Walkaround has a spacious
cabin with finishing touches such as teak steps, directional lighting and
a hanging locker, all of which make it suitable for comfortable family
cruising and serious fishing.
Sunesta, with its patented Wide Tech™ bow design, continues to
prove itself with broad customer appeal. With a new interior and dash
design, this boat combines the best features of many of Chaparral’s
other products and is suitable for most family uses, including cruising,
wake boarding and sightseeing. The 2016 model line offers four boats
ranging from 22 to 28 feet.
R265 n R305
SIGNATURE CRUISERS
224 n 244 n 264 n 284
SSX LUXURY SPORT BOATS
For the 2016 model season, Chaparral introduced the 227 SSX, 257SE
and 337 SSX into the lineup, increasing the choices to seven for the SSX
Luxury Sport boat. SSX Luxury Sport boats are offered with an enclosed
head, an integrated swim platform, a transom sun lounge, and most have
the option of a wet bar in the cockpit. Chaparral’s SSX series offers
high-end performance with premium components from bow to stern.
227 n 257 n 257SE n 277 n 287 n 307 n 337
Chaparral continues the tradition of quality that has made the Signature
Cruiser a leader in the luxury sport cruiser market. The Signature
comes with many standard features that are options on other cruisers
in its class, and the largest Signatures offer a fiberglass hard top, bow
thrusters and style features as underwater lighting. The Signature
line offers four models from 27 to 33 feet in length.
270 n 290 n 310 n 330
STOCKHOLDER INFORMATION
Corporate Offices
Marine Products Corporation
2801 Buford Highway NE, Suite 520
Atlanta, Georgia 30329
Telephone: 404.321.7910
Stock Listing
New York Stock Exchange
Ticker Symbol
MPX
Investor Relations Website
www.marineproductscorp.com
Transfer Agent and Registrar
address, please contact:
6201 15th Avenue
Brooklyn, NY 11219
Telephone: 800.937.5449
info@amstock.com
www.amstock.com
Annual Meeting
For inquiries related to stock certificates, including changes of
American Stock Transfer & Trust Company, LLC
Shareholder Services Department
The annual meeting of Marine Products Corporation will be held at
12:00 p.m., April 26, 2016, 2170 Piedmont Road, NE, Atlanta, GA 30324.
Caution Concerning Forward-Looking Statements
The Annual Report contains statements that constitute
“forward-looking statements” under the Private Securities
Litigation Reform Act of 1995, including all statements that look
forward in time or express management’s beliefs, expectations or
hopes. In particular, such statements include, without limitation,
receptiveness to considering acquisition candidates which
manufacture complementary products; the Company’s belief that
the boating consumer continues to demand more choices and that
the Company is meeting that demand; the Company’s belief that it
has a strong portfolio of product offerings in a steadily improving
recreational boating market; and the Company’s belief that its
competitive advantages provide it benefits and the Company’s
outlook for another strong year. The actual results of the Company
could differ materially from those indicated by the forward-looking
statements because of various risks and uncertainties, including,
without limitation, those identified under the title “Risk Factors”
in the Company’s Annual Report on Form 10-K included as part of
this Annual Report. All of the foregoing risks and uncertainties are
beyond the ability of the Company to control, and in many cases
the Company cannot predict the risks and uncertainties that could
OFFICERS
R. Randall Rollins
Chairman of the Board of Directors
Richard A. Hubbell
President and Chief Executive Officer
James A. Lane, Jr.
Executive Vice President
President of Chaparral Boats, Inc.
Linda H. Graham
Vice President and Secretary
Ben M. Palmer
and Treasurer
Vice President, Chief Financial Officer
Chairman of the Board, Rollins, Inc. (consumer
services) and Chairman of the Board, RPC, Inc.
DIRECTORS
R. Randall Rollins §
(oil and gas services)
Henry B. Tippie *†
Chairman of the Board and Chief Executive Officer,
Tippie Services, Inc. (management services)
James B. Williams *
Retired Chairman of the Executive Committee,
SunTrust Banks, Inc. (bank holding company)
Gary W. Rollins §
Vice Chairman and Chief Executive Officer,
Rollins, Inc. (consumer services)
Richard A. Hubbell §
(oil and gas services)
James A. Lane, Jr.
Executive Vice President
President of Chaparral Boats, Inc.
Linda H. Graham
Vice President and Secretary and Vice President
and Secretary, RPC, Inc. (oil and gas services)
Bill J. Dismuke °
Retired President, Edwards Baking Company
(manufacturer of pies and pie parts)
Larry L. Prince *
* Member of the Audit Committee, Compensation
Committee, Diversity Committee, and Nominating and
Governance Committee
† Chairman of the Audit Committee, Compensation
Committee, Diversity Committee, and Nominating
and Governance Committee
§ Member of the Executive Committee
° Member of the Audit Committee
Retired Chairman of the Board, Genuine Parts Company
cause its actual results to differ materially from those indicated in
(automotive parts distributor)
the forward-looking statements.
President and Chief Executive Officer and
the Company’s belief that its financial strength will continue
President and Chief Executive Officer, RPC, Inc.
to support future product development efforts; the Company’s
FINANCIAL HIGHLIGHTS
NET SALES (thousands)
AVERAGE SELLING PRICE
PER UNIT (thousands)
,
1
6
0
7
0
2
$
3
9
2
,
8
6
1
$
0
5
0
,
1
7
1
$
0
5
9
,
8
4
1
$
7
3
4
,
6
0
1
$
8
4
$
1
4
$
4
4
$
5
4
$
4
4
$
2011
2012
2013
2014
2015
2011
2012
2013
2014
2015
NET INCOME (thousands)
TOTAL NUMBER OF BOATS SOLD
6
0
3
,
4
1
$
4
1
9
,
8
$
9
7
9
,
6
$
8
2
5
7
,
$
6
0
7
,
4
$
5
8
2
,
4
4
0
4
,
3
9
6
5
,
3
0
9
4
,
3
0
0
1
,
2
2011*
2012
2013
2014
2015
2011
2012
2013
2014
2015
NET SALES
GROSS PROFIT
OPERATING INCOME
NET INCOME
EARNINGS PER SHARE - DILUTED
GROSS PROFIT MARGIN PERCENT
OPERATING MARGIN PERCENT
* Excludes other income of $2,025 (in thousands)
2011
2012
2013
2014
2015
$ 106,437 $ 148,950
$ 168,293
$ 171,050 $ 207,061
$
$
$
$
19,506 $ 27,204
$ 29,813
$ 32,671 $ 43,800
5,376 $
8,761
4,706 * $
6,979
0.13 * $
0.19
$
$
$
9,506
$
12,006 $ 20,551
7,528
0.20
$
$
8,914 $
14,306
0.24 $
0.39
18.3 %
%
5.1 %
%
18.3 %
%
5.9 %
%
17.7 %
%
5.6 %
%
19.1 %
%
21.2
%
7.0 %
%
9.9
%
2 0 1 5 A N N UA L R E P O R T
01
LETTER TO STOCKHOLDERS
THE YEAR 2015 MARKED OUR
SIXTH CONSECUTIVE YEAR
OF INCREASED NET SALES
AND PROFITABILITY. NET
SALES FOR 2015 WERE $207.1
MILLION, AN INCREASE OF
21.1 PERCENT COMPARED TO
$171.1 MILLION IN 2014.
industry
recreational boating
The
improved
moderately during 2015 as consumer confidence and
the general U.S. economy continued to grow. Sales
of our Vortex jet boats continued to grow, and this
product has now attained significant market share
in its category. Sales of our Robalo sport fishing
boats continued to contribute to our financial results
and gain market share within their segment, and
we introduced the Robalo 160, a smaller boat that
is reaching a new market. Chaparral SunCoast
pleasure boats, which we introduced in 2014,
performed well in 2015 and we now offer four models
of this outboard deckboat. Our Chaparral sterndrive
models maintained the largest market share in their
segment, as they have for several
years, although overall industry
sterndrive unit sales continued
to decline. Our financial results
from these
in 2015 benefited
products as well as
improved
efficiencies resulting from higher
production volumes.
The year 2015 marked our sixth
consecutive year of increased net
sales and profitability. Net sales
for 2015 were $207.1 million, an
increase of 21.1 percent compared to $171.1 million in
2014. Net sales improved due to higher unit sales of
our Robalo sport fishing boats, increased sales of our
Vortex jet boats, especially the larger models, and
strong sales of our Chaparral SunCoast deckboats.
The Company’s net sales
improved despite a
decrease in international sales of 14.9 percent in 2015
compared to 2014. Gross profit was $43.8 million, an
increase of 34.1 percent compared to $32.7 million
in 2014. Gross margin improved to 21.2 percent of
net sales, compared to 19.1 percent of net sales in
2014. Selling, general and administrative expenses
increased to $23.2 million in 2015 from $20.7 million
in 2014, but as a percentage of net sales, declined
from 12.1 percent in 2014 to 11.2 percent in 2015.
Operating profit in 2015 was $20.6 million, or 9.9
percent of net sales, compared to $12.0 million, or 7.0
percent of net sales, in 2014.
2 0 1 5 A N N UA L R E P O R T
Interest income was $420 thousand in 2015, a
decline compared to $521 thousand in 2014, due to
a reduction in the average balance of our investment
portfolio. We continue to be satisfied with the
performance of this portfolio in a historically low
interest rate environment. Net income for 2015 was
$14.3 million, compared to net income of $8.9 million
in 2014. Diluted earnings per share were $0.39 in
2015, a 62.5 percent increase compared to diluted
earnings per share of $0.24 in 2014.
During 2015 our Board of Directors continued the
regular quarterly dividend of $0.04 per share, which
represented an increase of $0.01 compared to the
quarterly dividend of $0.03 in 2014,
and in the fourth quarter, declared
the fourth consecutive year-end
special dividend, which in 2015 was
$0.04 per share. At its meeting early
in 2016, the Board voted to increase
the regular quarterly dividend by 50
percent, to $0.06 per share. Marine
Products Corporation’s balance
sheet remained strong at the end
of 2015, with $42.9 million in cash
and marketable securities, a slight
increase compared to the balance at
the end of 2014. Our financial strength will continue
to support future product development efforts of the
type that drove increased sales and profitability in
2015. While we did not complete any acquisitions
in 2015, we are still receptive to considering
acquisition candidates who manufacture products
that complement our own offerings.
Over the past several years our perception of
customer preferences and market dynamics has
led our expert design and manufacturing teams to
create new products of which we are very proud. The
demand for these products and our ability to build
them profitably has driven our financial results. The
boating consumer continues to demand more choices,
and we are meeting that demand by extending our
existing strong brands with a wider range of models
with a variety of engine options.
R 2 2 2 R O B A LO
Our proven design and engineering expertise is
exemplified by the successful adoption of different engine
configurations. Our high purchasing volumes allow us
to expand these product offerings at significantly lower
costs. As we begin 2016, Marine Products Corporation
finds itself with a strong portfolio of product offerings
in a steadily improving recreational boating market. We
are pleased about the benefits that our competitive
advantages provide, and we look forward to another
strong year. As always, we appreciate the hard work of our
employees, the support of our dealers, and the continued
loyalty of our customers and stockholders.
RICHARD A. HUBBELL
President and Chief Executive Officer
JAMES A LANE, JR.
Executive Vice President and President,
Chaparral Boats, Inc.
2 0 1 5 A N N UA L R E P O R T
24 3 VO R T E X
MAKING CHOICES EASY
trim tabs. The Vortex 243 enhances the
experience for passengers staying in the
boat, with a large privacy compartment,
retractable armrests, and plenty of
storage. The optional folding arch on
this boat makes transport and storage
easier, and the arch can be fitted with a
Bimini top and Go-ProTM camera mount
to record all the wake surfing action. The
230 SunCoast is a new model for 2016
that follows the first model introduced in
the previous model year. The SunCoast
is a versatile, high-performance outboard
that meets the needs of many boaters.
The wraparound swim platform provides
swimmers easier access to the water,
24 3 VO R T E X
At Marine Products Corporation we have
made it easy for the discriminating boater
to choose us. Our great products form the
foundation of this choice. This year we are
offering as many as 50 different models
to an increasingly discriminating boating
consumer. Several of these models are
illustrated in this report.
features
The Robalo R222 occupies a successful
niche as a high-quality mid-size center
console offshore fishing boat. It gives
the serious fisherman
like
an integrated livewell and oversized,
insulated fish lockers. For the boater
who does more than fishing, the R222
has seating for 10 and an
interior
compartment that is bigger than other
boats in its class. The Vortex 243 is the
largest version of our highly successful
jet boat. As with the other Vortex models,
the 243 has disrupted the wakeboard
boat segment with our award-winning
Aerial Surf Platform. The Aerial Surf
Platform is a simple, effective feature
that creates the perfect wake-surfing
environment, without excessive ballast
requirements, extra power actuators or
2 0 1 5 A N N UA L R E P O R T
MARINE PRODUCTS CORPORATION HAS ALSO
MADE IT EASIER TO CHOOSE OUR PRODUCTS
BECAUSE WE OFFER AN INCREASINGLY
WIDER VARIETY OF POWER OPTIONS.
2 3 0 S U N C OA S T
and other
features make this smaller
SunCoast very competitive with other deck
and pontoon boats. Its Yamaha outboard
power gives it the versatility to operate in
saltwater as well as inland lakes. The 227 SSX
is all new for 2016. It is the smallest of our
sterndrive bowriders, but its seating capacity,
legroom, and storage space make it feel a
lot bigger. It also features a roomy lounge
cushion and a large swim platform which
provides passengers a full range of activities.
Marine Products makes it easier to choose
many of our boats by offering Chaparral’s REAL
DEAL and Robalo’s REEL DEAL nationally
advertised pricing. We implemented nationally
2 0 1 5 A N N UA L R E P O R T
2 2 7 S SX
advertised pricing several years ago,
and we have found that it delivers
advantages to both our dealers and our
consumers. It allows our dealers to focus
on the advantages of our products and
avoid haggling with a customer with
whom they want to have a strong service
relationship. For boating consumers,
nationally advertised pricing removes
an element of uncertainty when making
a first-time boat purchase, which
brings new boaters to the pastime and
offers every boater a good relationship
with the dealer, which is crucial to
our customers’ long-term satisfaction.
Nationally advertised pricing has proven
to be a success, and we have selectively
expanded this pricing structure to more
models in the fleet.
Marine Products Corporation also has
made it easier to choose our products
because we are offering an increasingly
wider variety of power options. We
are known for our flagship Chaparral
sterndrives and their commanding
market share. Robalo’s quality and
features have also earned a position
as a quality offshore outboard sport
fishing boat with strong market share.
As our market evolves, we have found
opportunities among boaters who
know our name and our quality, but are
interested in an even broader array of
power choices. Marine Products sees
this as an opportunity and over the past
few years we have designed and built
traditional Chaparral sterndrive models
with jet and outboard power.
Our financial results in 2015 speak to
the success of these products, as do our
customer satisfaction results. During
2015, we were awarded the National
Marine Manufacturers Association’s
Excellence in Customer Satisfaction
Award at both Chaparral and Robalo
for the ninth consecutive year. In
2015, we also received this award for
our Chaparral Vortex jet boats and
SunCoast outboards for the first time.
The Chaparral Vortex has garnered an
impressive market share as well, even
though it has only been on the market
for two years.
Our higher production volumes generate
efficiencies and profits that allow even
more opportunities for us to provide
the choices that consumers want. Our
ability to evaluate the evolving market
trends and our quick response time have
driven our sales and profit growth during
the past six years, and we are pleased
with the results of the application of our
strengths to broader product offerings.
OUR HIGHER PRODUCTION VOLUMES GENERATE EFFICIENCIES
AND PROFITS WHICH ALLOW EVEN MORE OPPORTUNITIES FOR US
TO PROVIDE THE CHOICES THAT CONSUMERS WANT.
2 1 0 S U N COA S T
2 0 1 5 A N N UA L R E P O R T
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
Annual report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 2015
Commission File No. 1-16263
MARINE PRODUCTS CORPORATION
58-2572419
Delaware
(I.R.S. Employer Identification No.)
(State of Incorporation)
2801 BUFORD HIGHWAY NE,
SUITE 520
ATLANTA, GEORGIA 30329
(404) 321-7910
Title of each class
COMMON STOCK, $0.10 PAR VALUE
Name of each exchange on which registered
NEW YORK STOCK EXCHANGE
Securities registered pursuant to Section 12(b) of the Act:
Securities registered pursuant to section 12(g) of the Act:
NONE
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes No
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes No
Indicate by check mark whether the registrant (1) has filed all reports required 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 No
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive
Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12
months (or for such shorter period that the registrant was required to submit and post such files). Yes No
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this
Form 10-K or any amendment to this Form 10-K.
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller
reporting company. See definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the
Exchange Act. (Check one):
Large accelerated filer Accelerated filer Non-accelerated filer Smaller reporting company
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No
The aggregate market value of Marine Products Corporation common stock held by non-affiliates on June 30, 2015, the last business day
of the registrant’s most recent second fiscal quarter, was $65,594,018 based on the closing price on the New York Stock Exchange on June
30, 2015 of $6.24 per share.
Marine Products Corporation had 38,373,970 shares of common stock outstanding as of February 18, 2016.
Portions of the Proxy Statement for the 2016 Annual Meeting of Stockholders of Marine Products Corporation are incorporated by
reference into Part III, Items 10 through 14 of this report.
Documents Incorporated by Reference
7
PART I
References in this document to “we,” “our,” “us,” “Marine Products,” or “the Company” mean Marine Products
Corporation (“MPC”) and its subsidiaries, Chaparral Boats, Inc. (“Chaparral”) and Robalo Acquisition Company
LLC (“Robalo”), collectively or individually, except where the context indicates otherwise.
Forward-Looking Statements
Certain statements made in this report that are not historical facts are “forward-looking statements” under the
Private Securities Litigation Reform Act of 1995. Such forward-looking statements may include, without limitation,
the Company’s plans regarding distribution of its products to a broad range of consumers worldwide; the
Company’s belief that there are several alternative suppliers of fiberglass that could provide adequate quality and
quantities of this raw material at acceptable prices; the Company’s plans to continue purchasing sterndrive engines
through the ABA; the Company’s belief that the level of dealer inventories of its new boat models are appropriate;
management’s belief that the Company is well positioned to take advantage of current industry conditions; the
Company’s belief that its newer boat models will expand its customer base and leverage its strong dealer network
and reputation for quality and styling; the Company’s plan to capture additional market share with respect to entry
level models and larger models; the Company’s belief that its corporate infrastructure, marketing and sales
capabilities, financial strength and nationwide presence enables it to compete effectively against its competitors; the
Company’s belief that it will not incur any material capital expenditures to comply with existing environmental or
safety regulations; the Company’s belief that it will incur lower material purchase prices in 2016 which will reduce
the costs of the Company’s products, although the Company cannot be certain lower prices will enhance profit
margins; the Company’s belief that the ultimate outcome of any litigation will not have a material effect on its
results of operations; the Company’s plan to continue to pay cash dividends subject to the earnings and financial
condition of the Company and other relevant factors; the Company’s beliefs regarding recreational boating retail
demand in many segments of the industry; the Company’s belief that continued improvement in retail boat sales will
be modest due to the lack of strong economic improvement; the Company’s belief that the recreational boating
industry promotional program has incrementally benefited the industry and Marine Products; the Company’s plans
regarding emphasis with respect to value-priced models as well as larger models in the Chaparral line-up; the
Company’s belief that certain boats will expand our customer base and leverage our strong dealer network and
reputation for quality and styling; the Company’s plans to continue to develop additional new products for
subsequent model years; the Company’s belief that its liquidity, capitalization and cash expected to be generated
from operations, will provide sufficient capital to meet the Company’s requirements for at least the next twelve
months; the Company’s expectations about capital expenditures during 2016; the Company’s expectation about
contributions to its pension plan in 2016; the Company’s estimate of the amount and timing of future contractual
obligations; the Company’s judgments and estimates with respect to its critical accounting policies; the Company’s
expectation about the impact of new accounting pronouncements on the Company’s consolidated financial
statements; and the Company’s expectation regarding market risk of its investment portfolio.
The words “may,” “should,” “will,” “expect,” “believe,” “anticipate,” “intend,” “plan,” “seek,” “project,”
“estimate,” and similar expressions used in this document that do not relate to historical facts are intended to identify
forward-looking statements. Such statements are based on certain assumptions and analyses made by our
management in light of its experience and its perception of historical trends, current conditions, expected future
developments and other factors it believes to be appropriate. We caution you that such statements are only
predictions and not guarantees of future performance and that actual results, developments and business decisions
may differ from those envisioned by the forward-looking statements. Risk factors that could cause such future
events not to occur as expected include the following: economic conditions, lack of credit availability and possible
decreases in the level of consumer confidence impacting discretionary spending, business interruptions due to
adverse weather conditions, increased interest rates, unanticipated changes in consumer demand and preferences,
deterioration in the quality of Marine Products’ network of independent boat dealers or availability of financing of
their inventory, our ability to insulate financial results against increasing commodity prices, the impact of rising
gasoline prices and a weak housing market on consumer demand for our products and competition from other boat
manufacturers and dealers. We caution you that such statements are only predictions and not guarantees of future
performance and that actual results, developments and business decisions may differ from those envisioned by the
forward-looking statements. See “Risk Factors” on page 19 for a discussion of factors that may cause actual results
to differ from our projections.
8
Item 1. Business
Marine Products manufactures fiberglass motorized boats distributed and marketed through its independent
dealer network. Marine Products’ product offerings include Chaparral sterndrive, outboard and jet pleasure boats
and Robalo outboard sport fishing boats.
Organization and Overview
Marine Products is a Delaware corporation incorporated on August 31, 2000, in connection with a spin-off from
RPC, Inc. (NYSE: RES) (“RPC”). Effective February 28, 2001, RPC accomplished the spin-off by contributing 100
percent of the issued and outstanding stock of Chaparral to Marine Products, a newly formed wholly owned
subsidiary of RPC, and then distributing the common stock of Marine Products to RPC stockholders.
Marine Products designs, manufactures and sells recreational fiberglass powerboats in the sportboat, deckboat,
cruiser, sport yacht, jet boat and sport fishing markets. The Company sells its products to a network of 147 domestic
and 85 international independent authorized dealers. Marine Products’ mission is to enhance its customers’ boating
experience by providing them with high quality, innovative powerboats. The Company intends to remain a leading
manufacturer of recreational powerboats for sale to a broad range of consumers worldwide.
The Company manufactures Chaparral sterndrive pleasure boats including H2O Sport and Fish & Ski boats, SSi
and SSX Sportboats, Sunesta Sportdecks, and Signature Cruisers, as well as SunCoast Sportdeck outboards, Vortex
Jet Boats and Robalo outboard sport fishing boats. The most recent available industry statistics [source: Statistical
Surveys, Inc. report dated September 30, 2015] indicate that Chaparral is the largest manufacturer of sterndrive
boats in lengths from 18 to 33 feet in the United States.
Chaparral was founded in 1965 in Ft. Lauderdale, Florida. Chaparral’s first boat was a 15-foot tri-hull design
with a retail price of less than $1,000. Over time Chaparral grew by offering exceptional quality and consumer
value. In 1976, Chaparral moved to Nashville, Georgia, where a manufacturing facility of a former boat
manufacturing company was available for purchase. This provided Chaparral an opportunity to obtain additional
manufacturing space and access to a trained workforce. With 51 years of boatbuilding experience, Chaparral
continues to expand the range of its offerings through insightful product design and quality manufacturing processes
in order to reach an increasingly discerning recreational boating market.
Robalo was founded in 1969 and its first boat was a 19-foot center console salt-water fishing boat, among the
first of this type of boat to have an “unsinkable” hull. The Company believes that Robalo’s share of the outboard
sport fishing boat market is approximately three percent.
9
Products
Marine Products distinguishes itself by offering a wide range of products to the family recreational and cruiser
markets through its Chaparral brand and to the sport fishing market through its Robalo brand.
The following table provides a brief description of our product lines and their particular market focus:
Product Line
Chaparral – Vortex
Jet Boat
Chaparral – H2O
Sport Series
Chaparral – SunCoast
Outboard Deckboat
Chaparral - SSi
Wide Tech™
Chaparral - SSX
Sportdeck
Number
of
Models
Overall
Length
Approximate
Retail
Price Range
Description
6
20′-24′
$33,000 - $78,000 Fiberglass sterndrive pleasure boats
marketed as jet-powered boats with
traditional bowrider styling. Features
include enhanced maneuverability at low
speeds and high seating capacity.
National fixed retail price including a
trailer. Also marketed as a high-
performance wakeboard boat with
optional surf package. Marketed to
younger families and wakeboard
enthusiasts.
6
18′-21′
$23,000 - $50,000 Fiberglass multipurpose sterndrive
runabouts. Sport and Ski & Fish series
offers an affordable, entry-level product
with a national fixed retail price
including a standard engine and single
axle trailer. Marketed to both
experienced and value-conscious buyers.
4
21′-25′
$40,000 - $93,000 Fiberglass multipurpose bowrider with
outboard power and an open bow
providing high seating capacity. Large
deckboat-style boat, suitable for large
inland bodies of water or coastal
saltwater operations. Marketed with a
national fixed retail price to saltwater
boaters carrying large numbers of
passengers.
4
21′-24′
$55,000 - $111,000 Fiberglass sterndrive runabouts. Products
encompass affordable, entry-level to
mid-range and larger sportboats.
Marketed as high value runabouts for
family groups. Wide Tech™ is marketed
as an affordable, entry-level to mid-range
pleasure boat with the handling of a
runabout and the style of a sportboat.
7
22′-33′
$61,000 - $359,000 Fiberglass sterndrive bowrider sportboats
that combine features of sportboats and
deckboats. Marketed as high value
runabouts for family groups.
10
Product Line
Number
of
Models
Overall
Length
Approximate
Retail
Price Range
Description
Chaparral – Sunesta
4
22′-28′
$67,000 - $174,000 Fiberglass sterndrive multipurpose
deckboat-style bowriders with high-
performance hull designs and flexible
seating configurations. Options include
updated graphics, swimming and galley
features.
Chaparral - Signature
Cruiser
Robalo – Center
Consoles
Robalo – Cayman
Bay Boats
Robalo – Dual
Consoles
Robalo –
Walkarounds
Manufacturing
4
27′-33′
$110,000 - $377,000 Fiberglass, accommodation-focused
sterndrive cruisers. Marketed to
experienced boat owners through trade
magazines and boat show exhibitions.
7
16′-30′
$19,000 - $253,000 Fiberglass outboard-powered sport
fishing boats for large freshwater lakes
or saltwater use. Marketed to
experienced fishermen. Smaller models
marketed with a fixed retail price and
trailer.
3
20′-24′
$30,000 - $80,000 Fiberglass outboard-powered sport
fishing boats for large freshwater lakes
or coastal saltwater use. Marketed to
experienced fishermen. All models
marketed with a fixed retail price and
trailer.
3
20′-24′
$36,000 - $128,000 Multi-purpose fiberglass outboard-
powered sport fishing boats for large
freshwater lakes or saltwater use.
Marketed to experienced fishermen and
families who use boats in salt water.
2
26′-30′
$140,000 - $302,000 Multi-purpose fiberglass outboard-
powered sport fishing boats for large
freshwater lakes or saltwater use. Models
feature cabins for overnight use.
Marketed to experienced fishermen and
families who use boats in salt water.
Marine Products’ manufacturing facilities are located in Nashville, Georgia and Valdosta, Georgia. The
Company idled its plant located in Valdosta, Georgia in response to declines in production volumes in a prior year.
Marine Products utilizes five different plants to, among other things, manufacture interiors, design new models,
create fiberglass hulls and decks, and assemble various end products. Quality control is conducted throughout the
manufacturing process. The Company’s manufacturing operations are ISO 9001: 2008 certified, which is an
international designation of design, manufacturing, and customer service processes. ISO 9001: 2008 surpasses
previous ISO designations. When fully assembled and inspected, the boats are loaded onto either company-owned
trailers or third-party marine transport trailers for delivery to dealers. The manufacturing process begins with the
design of a product to meet dealer and customer needs. Plugs are constructed in the research and development phase
from designs. Plugs are used to create a mold from which prototype boats can be built. Adjustments are made to the
plug design until acceptable parameters are met. The final plug is used to create the necessary number of production
molds. Molds are used to produce the fiberglass hulls and decks. Fiberglass components are made by applying the
11
outside finish or gel coat to the mold, then numerous layers of fiberglass and resin are applied during the lamination
process over the gel coat. After curing, the hull and deck are removed from the molds and are trimmed and prepared
for final assembly, which includes the installation of electrical and plumbing systems, engines, upholstery,
accessories and graphics.
Product Warranty
For our Chaparral products, Marine Products provides a lifetime limited structural hull warranty against defects
in material and workmanship for the original purchaser, and a five-year limited structural hull warranty for one
subsequent owner. Additionally, a non-transferable five-year limited structural deck warranty against defects in
materials and workmanship is available to the original owner. Warranties on additional items are provided for
periods of one to five years.
For our Robalo products, Marine Products provides a transferable ten-year limited structural hull warranty
against defects in material and workmanship to the original owner, and a five-year limited hull warranty to one
subsequent owner. Additionally, Marine Products provides a transferable one-year limited warranty on other
components.
The manufacturers of the engines included on our boats provide various engine warranties as well.
Suppliers
Marine Products’ three most significant components used in manufacturing its boats, based on cost, are engines,
resins and fiberglass. For each of these, there is currently an adequate supply available in the market. Marine
Products has not experienced any material shortages in any of these products. Temporary shortages, when they do
occur, usually involve manufacturers of these products adjusting model mixes, introducing new product lines or
limiting production in response to an industry-wide reduction in boat demand. Marine Products obtains most of its
fiberglass from a leading supplier. Marine Products believes that there are several alternative suppliers if this
supplier fails to provide adequate quality or quantities at acceptable prices.
Marine Products does not manufacture the engines installed in its boats. Engines are generally specified by the
dealers at the time of ordering, usually on the basis of anticipated customer preferences or actual customer orders.
Sterndrive engines are purchased through the American Boatbuilders Association (“ABA”), which has entered into
engine supply arrangements with Mercury Marine and Volvo Penta, the two currently existing suppliers of
sterndrive engines. These arrangements contain incentives and discount provisions, which may reduce the cost of the
engines purchased, if specified purchase volumes are met during specified periods of time. Although no minimum
purchases are required, Marine Products expects to continue purchasing sterndrive engines through the ABA on a
voluntary basis in order to receive volume-based purchase discounts. Marine Products does not have a long-term
supply contract with the ABA. Marine Products has an outboard engine supply contract with Yamaha and a jet
engine supply contract with BRP US Inc. These engine supply arrangements were not negotiated through the ABA.
In the event of a sudden and extended interruption in the supply of engines from any of these suppliers, our sales and
profitability could be negatively impacted. See “Risk Factors” below.
Marine Products uses other raw materials in its manufacturing processes. Among these are steel, copper and
aluminum made from hydrocarbon feedstocks. In response to global economic uncertainties, the prices of these
commodities have fluctuated significantly over the past several years. During 2015 and the first quarter of 2016 the
prices of several of these materials have fallen to their lowest prices in several years. See “Inflation” below.
Sales and Distribution
Domestic sales are made through approximately 59 Chaparral dealers, 24 Robalo dealers and 64 dealers that sell
both brands located in markets throughout the United States. Marine Products also has 85 international dealers.
During 2015 the financial strength of our dealer network continued to improve primarily due to improved
availability of floorplan financing. Most of our dealers inventory and sell boat brands manufactured by other
companies, including some that compete directly with our brands. The territories served by any dealer are not
exclusive to the dealer; however, Marine Products uses discretion in establishing relationships with new dealers in
an effort to protect the mutual interests of the existing dealers and the Company. Marine Products’ eight independent
field sales representatives call upon existing dealers and develop new dealer relationships. The field sales
representatives are directed by a National Sales Coordinator, who is responsible for developing a full dealer
12
distribution network for the Company’s products. The marketing of boats to retail customers is primarily the
responsibility of the dealer. Marine Products supports dealer marketing efforts by supplementing local advertising,
sales and marketing follow up in boating magazines, and participation in selected regional, national, and
international boat show exhibitions. No single dealer accounted for more than 10 percent of net sales during 2015,
2014 or 2013.
Marine Products continues to seek new dealers in many areas throughout the U.S., Canada, Europe, South
America, Asia, Russia and the Middle East. In general, Marine Products requires full payment prior to shipping a
boat overseas. Consequently, there is no credit risk associated with these international sales or risk related to foreign
currency fluctuation. The volume of sales to international dealers as a percentage of total net sales declined in 2015
compared to 2014 primarily due to weaknesses in the Canadian and Russian markets. The Company’s international
sales are affected by trends in consumer discretionary spending and the value of the U.S. dollar on global currency
markets, among other things. International net sales as a percentage of total net sales were 10.8 percent in 2015, 15.3
percent in 2014, and 17.2 percent in 2013.
Marine Products’ sales orders are indicators of strong interest from its dealers. Historically, dealers have in most
cases taken delivery of all their orders. The Company attempts to ensure that its dealers do not accept an excessive
amount of inventory by monitoring their inventory levels. Knowledge of inventory levels at the individual dealers
facilitates production scheduling with shorter lead times in order to maintain flexibility in the event that adjustments
need to be made to dealer shipments. In the past, Marine Products has been able to resell any boat for which an order
has been cancelled.
Approximately 53 percent of Marine Products’ domestic shipments are made pursuant to “floor plan financing”
programs in which Marine Products’ subsidiaries participate on behalf of their dealers with major third-party
financing institutions. The remaining dealers finance their boat inventory with smaller regional financial institutions
in local markets or pay cash. Under these established arrangements with qualified lending institutions, a dealer
establishes a line of credit with one or more of these lenders for the purchase of boat inventory for sales to retail
customers in their showroom or during boat show exhibitions. In general, when a dealer purchases and takes
delivery of a boat pursuant to a floor plan financing arrangement, it draws against its line of credit and the lender
pays the invoice cost of the boat directly to Marine Products generally within ten business days. When the dealer in
turn sells the boat to a retail customer, the dealer repays the lender, thereby restoring its available credit line. Each
dealer’s floor plan credit facilities are secured by the dealer’s inventory, letters of credit, and perhaps other personal
and real property. Until recently, most dealers maintained financing arrangements with more than one lender,
although that is less common at the present time, given that there are fewer lenders. In connection with a dealer’s
floor plan financing arrangements with a qualified lending institution, Marine Products or its subsidiaries have
agreed to repurchase inventory which the lender repossesses from a dealer and returns to Marine Products in a “new
and unused” condition subject to normal wear and tear, as defined. The contractual agreements that Marine Products
or its subsidiaries have with these qualified lenders contain the Company’s assumption of specified percentages of
the debt obligation on repossessed boats, up to certain contractually determined dollar limits set by the lender.
The Company currently has an agreement with one of the floor plan lenders whereby the contractual repurchase
amount is limited to a maximum of 16 percent of the average net receivables financed by the floor plan lender for
dealers during the prior 12 month period, which was $8.5 million as of December 31, 2015. The Company has
contractual repurchase agreements with additional lenders with an aggregate maximum repurchase obligation of
approximately $6.7 million, with various expiration and cancellation terms of less than one year. Accordingly, the
aggregate repurchase obligation with all financing institutions was approximately $15.2 million as of December 31,
2015. In the event that a dealer defaults on a credit line, the qualified lender may then invoke the manufacturers’
repurchase obligation with respect to that dealer. In that event, all repurchase agreements of all manufacturers
supplying a defaulting dealer are generally invoked regardless of the boat or boats with respect to which the dealer
has defaulted. Unlike Marine Products’ obligation to repurchase boats repossessed by qualified lenders, Marine
Products is under no obligation to repurchase boats directly from dealers. Marine Products does not sponsor
financing programs to the retail consumer; any consumer financing promotions for a prospective boat purchaser
would be the responsibility of the dealer.
13
Marine Products’ dealer sales incentive programs are generally designed to promote early replenishment of the
stock in dealer inventories depleted throughout the prime spring and summer selling seasons, and to promote the
sales of older models in dealer inventory and particular models during specified periods. These programs help to
stabilize Marine Products’ manufacturing between the peak and off-peak periods, and promote sales of certain
models. For the 2016 model year (which commenced July 1, 2015), Marine Products offered its dealers several sales
incentive programs based on dollar volumes and timing of dealer purchases. Program incentives offered include
sales discounts, retail sales incentives and payment of floor plan financing interest charged by qualified floor plan
lenders to dealers generally through April 30, 2016. After the interest payment programs end, interest costs revert to
the dealer at rates set by the lender. A dealer makes periodic curtailment payments (principal payments) on
outstanding obligations against its dealer inventory as set forth in the floor plan financing agreements between the
dealer and its particular lender.
We believe that dealer inventories of our boat models as of December 31, 2015 are appropriate relative to the
current level of retail customer demand; approximately 60 percent of dealer inventories are current model year units,
compared to 55 percent of current models this time last year. The sales order backlog as of December 31, 2015 was
approximately 1,435 boats with estimated net sales of approximately $55.6 million. This represents an approximate
13.2 week backlog based on recent production levels. As of December 31, 2014, the sales order backlog was
approximately 1,343 boats with estimated net sales of $52.9 million, representing an approximate 16.8 week
backlog. The Company will continue to monitor the number of boats in dealer inventories and is prepared to adjust
its production levels as it deems necessary to manage dealer inventory levels. The Company typically does not
manufacture a significant number of boats for its own inventory. The Company occasionally manufactures boats for
its own inventory because the number of boats required for immediate shipment is not always the most efficient
number of boats to produce in a given production schedule.
Research and Development
Essentially the same technologies and processes are used to produce fiberglass boats by all boat manufacturers.
The most common method is open-face molding. This is usually a labor-intensive, manual process whereby
employees hand spray and apply fiberglass and resin in layers on open molds to create boat hulls, decks and other
smaller fiberglass components. This process can result in inconsistencies in the size and weight of parts, which may
lead to higher warranty costs. A single open-face mold is typically capable of producing approximately three hulls
per week.
Marine Products has been a leading innovator in the recreational boating industry. One of the Company’s most
innovative designs is the full-length “Extended V-Plane” running surface on its Chaparral boat models. Typically,
sterndrive boats have a several foot gap on the bottom rear of the hull where the engine enters the water. With the
Extended V-Plane, the running surface extends the full length to the rear of the boat. The benefit of this innovation
is more deck space, better planing performance and a more comfortable ride. Although the basic hull designs are
similar, the Company has historically introduced a variety of new models each year and periodically replaces,
updates or discontinues existing models.
Another hull design is the Hydro LiftTM used on the Robalo boat models. This variable dead rise hull design
provides a smooth ride in rough water conditions. It increases the maximum speed obtainable by a given engine
horsepower and weight of the boat. Robalo’s current models utilize the Hydro LiftTM design and we plan to continue
to provide this design on Robalo models.
A bow design known as the Wide TechTM was first used on the Chaparral Sunesta Wide TechTM and Xtreme
models for the 2008 model year, and is currently being used on Chaparral’s SSi Wide TechTM Sportboats, Sunesta
Sportdeck, and two Signature Cruisers. The Wide TechTM bow design allows the models to have the Extended V-
Plane hull, with the features and benefits that this hull design offers. In addition, the Wide TechTM bow design
provides a larger seating area, as well as additional storage space, in the front of the boat. Furthermore, it allows the
models to have a non-skid walkway on the bow, which makes entering and leaving the boat easier than in other boat
models. This bow design may be incorporated on other Chaparral boat models in subsequent model years.
In support of its new product development efforts, Marine Products incurred research and development costs of
$663 thousand in 2015, $743 thousand in 2014, and $1.1 million in 2013.
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Industry Overview
The recreational marine market in the United States is a mature market, with 2014 (latest data available to us)
retail expenditures of approximately $35 billion spent on new and used boats, motors and engines, trailers,
accessories and other associated costs as estimated by the National Marine Manufacturers Association (“NMMA”).
Pleasure boats compete for consumers’ limited free time with all other leisure activities.
The NMMA conducts various surveys of pleasure boat industry trends, and the most recent surveys indicate that
87 million adults in the United States participated in recreational boating in 2014, although non-active boat owners
cite lack of leisure time and increased operational costs as the primary reasons for not using their boats. There are
currently approximately 16 million boats owned in the United States, including outboard, inboard, sterndrive,
sailboats, personal watercraft, and miscellaneous (canoes, kayaks, rowboats, etc.). Marine Products competes in the
sterndrive boating category with five lines of Chaparral boats, in the jet drive category with its Chaparral Vortex jet
boats and in the outboard boating category with its Robalo sport fishing boats and Chaparral SunCoast deckboats.
Approximately 47 percent of the Company’s unit sales in 2015 were sterndrive boats compared to 64 percent in
2014.
Industry sales of new sterndrive boats in the United States during 2015 totaling 11,565 (source: Info-Link
Technologies, Inc.) accounted for approximately 18 percent of the total new fiberglass powerboats sold between 18
and 33 feet in hull length. Sales of sterndrive boats had an estimated total retail value of $825 million, or an average
retail price per boat of approximately $71,000. Management believes that the five largest states for boat sales at the
present time are Florida, California, Minnesota, Michigan and Wisconsin. Marine Products has dealers in each of
these states.
The U.S. domestic recreational boating industry includes sales in the segments of new and used boats, motors
and engines, trailers, and other boat accessories. The new fiberglass boat market segment with hull lengths of 18 to
33 feet, the primary market segment in which Marine Products competes, represented $3.4 billion in retail sales
during 2015. The table below reflects the estimated sales within this segment by category for 2015 and 2014
(source: Info-Link Technologies, Inc.):
2015
2014
Sterndrive Boats . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Outboard Boats . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Inboard Boats . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Jet Boats . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
TOTAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Boats
11,565
42,552
8,250
2,410
64,777
$
Sales ($ B)
0.8
1.7
0.8
0.1
3.4
$
Boats
12,508
38,232
7,472
1,892
60,104
$
Sales ($ B)
0.8
1.4
0.6
0.1
2.9
$
Chaparral’s products are categorized as sterndrive, jet boats and outboard boats and Robalo’s products are
categorized as outboard boats. Although industry-wide sterndrive boat unit sales have been declining, the rate of
decline in recent years has slowed. The Company introduced its first three jet boat models in 2014 and has been
pleased with their reception by dealers and customers. Based on available market share data, Chaparral’s share of
the jet boat market during the nine months ended September 30, 2015 was approximately 11.0 percent.
The recreational boat manufacturing market remains highly fragmented with the exception of Brunswick
Corporation, which has acquired and currently operates a number of recreational boat brands. We estimate that the
boat manufacturing industry includes fewer than 50 sterndrive manufacturers and fewer than 125 outboard boat
manufacturers with significant unit production, with the majority representing small, privately held companies with
varying degrees of professional management and manufacturing skill. According to estimates provided by Statistical
Surveys, Inc., during the nine months ended September 30, 2015 (latest information available), the top five
sterndrive manufacturers, which includes Chaparral, have a combined market share of approximately 54 percent;
approximately the same as one year ago. Chaparral’s market share in sterndrive units during this nine month period
was approximately 13.9 percent, which represents a decrease of approximately 0.4 percentage points compared to
14.3 percent during the nine months ended September 30, 2014. The Company believes that this decrease in market
share is due to increased sales of smaller boats produced by several other manufacturers.
Several factors influence sales trends in the recreational boating industry, including general economic growth,
consumer confidence, household incomes, the availability and cost of financing for our dealers and customers,
15
weather, fuel prices, tax laws, demographics and consumers’ leisure time. Also, the value of residential and vacation
real estate in coastal and recreational areas influences recreational boat sales. The most recent NMMA surveys
indicate that many past boating participants do not currently participate in boating because of high costs and a lack
of leisure time. The increases in the cost of certain components, operating costs, and the impact of environmental
regulation have increased the cost of boats and boat ownership in recent years, and these trends may continue.
Competition from other leisure and recreational activities for available leisure time can also affect sales of
recreational boats.
Management believes Marine Products is well positioned to take advantage of the following conditions, which
continue to characterize the industry:
labor-intensive manufacturing processes that remain largely unautomated;
increasingly strict environmental standards derived from governmental regulations and customer
sensitivities;
a lack of focus on coordinated customer service and support by dealers and manufacturers;
a lack of financial strength among retail boat dealers and many manufacturers; and
a high degree of fragmentation and competition among the large number of sterndrive and outboard
recreational boat manufacturers.
Business Strategies
Recreational boating is a mature industry. According to Info-Link Technologies, Inc., sales of new boats of all
types increased at a compounded annual rate of approximately 9.3 percent between 2011 and 2015. During this
period, Marine Products experienced a compounded annual growth rate of approximately 19.5 percent in the number
of boats sold. The Company has historically grown its boat sales and net sales primarily through increasing market
share and by expanding its number of models and product lines. During 2015 the Company’s strategy has been to
support our dealers’ need to maintain a higher level of inventories than in previous years, given relatively stable
retail demand and an improved dealer financing environment. At the end of 2015, the Company’s dealer inventories
were approximately 12.9 percent higher than they were at the end of 2014, and our unit order backlog remained
strong. We believe that higher inventories and the current unit order backlog are appropriate relative to expected
retail demand during the 2016 retail selling season. Chaparral has grown its sterndrive market share in the 18 to 33
feet length category from 5.9 percent in fiscal 1996 to 13.9 percent during the nine months ended September 30,
2015 (the most recent information available to us from Statistical Surveys, Inc.).
During 2015, we introduced three new Chaparral Suncoast outboard models and a new Robalo R160 center
console model, the smallest model in our sport fishing line. Marine Products developed these models in order to
increase unit sales in segments in which the Company has an opportunity to increase market share and improve
profitability. Furthermore, we believe that these boat models will expand our customer base, and leverage our strong
dealer network and reputation for quality and styling. These models were partially responsible for increases in our
net sales, gross profit, operating profit, and net income. The new Robalo model has contributed to an increase in
Robalo’s share of the coastal offshore sport fishing boat market during 2015.
These new models align with Marine Products’ overall operating strategy, which emphasizes innovative designs
and manufacturing processes, and the production of a high quality product, while also seeking to lower
manufacturing costs through increased efficiencies in our facilities. In the current environment, this strategy also
includes the production of lower-priced, entry level models which appeal to a value-conscious consumer who wants
an updated, high quality product. In addition, we seek opportunities to leverage our buying power through
economies of scale. Management believes its membership in the ABA positions Marine Products as a significant
third-party customer of major suppliers of sterndrive engines. Marine Products’ Chaparral subsidiary is a founding
member of the ABA, which collectively represents 14 independent boat manufacturers that have formed a buying
group to pool their purchasing power in order to achieve improved pricing on engines, fiberglass, resin and many
other components. Marine Products intends to continue seeking the most advantageous purchasing arrangements
from its suppliers.
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Our marketing strategy seeks to increase market share by enabling Marine Products to expand its presence by
building dedicated sales, marketing and distribution systems. Marine Products has a distribution network of 232
dealers located throughout the United States and several international markets. Our strategy is to increase selectively
the quantity of our dealers, and to improve the quality and effectiveness of our entire dealer network. Marine
Products seeks to capitalize on its strong dealer network by educating its dealers on the sales and servicing of our
products and helping them provide more comprehensive customer service, with the goal of increasing customer
satisfaction, customer retention and future sales. Marine Products provides promotional and incentive programs to
help its dealers increase product sales and customer satisfaction.
A component of Marine Products’ overall strategy is to consider making strategic acquisitions in order to
complement existing product lines, expand its geographic presence in the marketplace and strengthen its capabilities
depending upon availability, price and complementary product lines. We constantly review potential acquisition
targets and intend to continue doing so in the future.
Competition
The recreational boat industry is highly fragmented, resulting in intense competition for customers, dealers and
boat show exhibition space. There is significant competition both within markets we currently serve and in new
markets that we may enter. Marine Products’ brands compete with several large national or regional manufacturers
that have substantial financial, marketing and other resources. However, we believe that our corporate infrastructure
and marketing and sales capabilities, in addition to our financial strength, and our nationwide presence, enable us to
compete effectively against these companies. In each of our markets, Marine Products competes on the basis of
responsiveness to customer needs, the quality and range of models offered, and the competitive pricing of those
models. Additionally, Marine Products faces general competition from all other recreational businesses seeking to
attract consumers’ leisure time and discretionary spending dollars.
According to Statistical Surveys, Inc., the following is a list of the top ten (largest to smallest) sterndrive boat
manufacturers in the United States based on unit sales in 2015. According to Statistical Surveys, Inc., the companies
set forth below represent approximately 79 percent of all United States retail sterndrive boat registrations with hull
lengths of 18 to 33 feet for the nine months ended September 30, 2015.
1. Chaparral
2. Cobalt
3. Sea Ray*
4. Tahoe
5. Regal
6. Four Winns**
7. Monterey
8. Crownline
9. Bayliner*
10. Stingray
The outboard engine powered market encompasses a wide variety of boats, accounting for approximately 65.7
percent of traditional powerboat unit sales during 2015. Robalo’s share of the outboard sport fishing boat market in
the 16 to 30 foot range during the nine months ended September 30, 2015 was approximately 3.9 percent. Primary
competitors for Robalo during 2015 included Carolina Skiff, Sea Hunt Boats, Key West, Nautic Star, Mako, Boston
Whaler*, Sea Fox, Sportsman, and Ranger.
The jet engine powered market encompasses a narrow range of pleasure boat types, accounting for
approximately 3.7 percent of traditional powerboat unit sales during 2015. Chaparral was the second largest jet boat
manufacturer in the 20 to 24 foot range during the nine months ended September 30, 2015, and its share of the
market during this period was approximately 11.0 percent. The largest manufacturer of jet boats in the 20 to 24 foot
range was Yamaha. Other competitors include Scarab, Glastron and Sea-Doo***.
*
Division or subsidiary of Brunswick Corporation.
** Division or subsidiary of Beneteau Group
*** Division or subsidiary of BRP.
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Environmental and Regulatory Matters
Certain materials used in boat manufacturing, including the resins used to make the decks and hulls, are toxic,
flammable, corrosive, or reactive and are classified by the federal and state governments as “hazardous materials.”
Control of these substances is regulated by the Environmental Protection Agency (“EPA”) and state pollution
control agencies, which require reports and inspect facilities to monitor compliance with their regulations. The
Occupational Safety and Health Administration (“OSHA”) standards limit the amount of emissions to which an
employee may be exposed without the need for respiratory protection or upgraded plant ventilation. Marine
Products’ manufacturing facilities are regularly inspected by OSHA and by state and local inspection agencies and
departments. Marine Products believes that its facilities comply in all material aspects with these regulations.
Although capital expenditures related to compliance with environmental laws are expected to increase during the
coming years, we do not currently anticipate that any material expenditure will be required to continue to comply
with existing environmental or safety regulations in connection with our existing manufacturing facilities.
Recreational powerboats sold in the United States must be manufactured to meet the standards of certification
required by the United States Coast Guard. In addition, boats manufactured for sale in the European Community
must be certified to meet the European Community’s imported manufactured products standards. These
certifications specify standards for the design and construction of powerboats. All boats sold by Marine Products
meet these standards. In addition, safety of recreational boats is subject to federal regulation under the Boat Safety
Act of 1971. The Boat Safety Act requires boat manufacturers to recall products for replacement of parts or
components that have demonstrated defects affecting safety. Marine Products has from time to time instituted recalls
for defective component parts produced by other manufacturers. None of the recalls has had a material adverse
effect on Marine Products.
The EPA has adopted regulations stipulating that many marine propulsion engines meet an air emission
standard that requires fitting a catalytic converter to the engine. These regulations also require, among other things,
that the engine manufacturer provide a warranty that the engine meets EPA emission standards. The engines used in
Marine Products’ Chaparral and Robalo product lines are subject to these regulations. These regulations are similar
to regulations adopted by the California Air Resources Board in 2007, but apply to all U.S. states and territories.
This regulation has increased the cost to manufacture the majority of the Company’s boat products. The additional
cost of complying with these EPA regulations may reduce Marine Products’ profitability, because the Company may
have to absorb the increased cost. It may also reduce Marine Products’ net sales, because the increased cost of
owning a boat may force consumers to buy a smaller or less expensive boat or forego a boat purchase, and because
increased product cost will reduce the amount of inventory that Marine Products’ dealers can carry, thus reducing
retail consumers’ choices.
Employees
As of December 31, 2015, Marine Products had approximately 767 employees (an increase from approximately
605 at December 31, 2014), of whom 6 were management, 43 were administrative and 8 were sales. The Company
currently maintains a significantly smaller work force compared to years prior to 2008 in an effort to align costs with
sales and consumer demand for our products.
None of Marine Products’ employees are party to a collective bargaining agreement. Marine Products’ entire
workforce is currently employed in the United States and Marine Products believes that its relations with its
employees are good.
Proprietary Matters
Marine Products owns a number of trademarks, trade names and patents that it believes are important to its
business. Except for the Chaparral, Robalo and Wahoo! trademarks, however, Marine Products is not dependent
upon any single trademark or trade name or group of trademarks or trade names. The Chaparral, Robalo and Wahoo!
trademarks are currently registered in the United States. The current duration for such registration ranges from seven
to 15 years but each registration may be renewed an unlimited number of times.
Several of Chaparral’s and Robalo’s designs are protected under the U.S. Copyright Office’s Vessel Hull
Design Protection Act. This law grants an owner of an original vessel hull design certain exclusive rights. Protection
is offered for hull designs that are made available to the public for purchase provided that the application is made
18
within two years of the hull design being made public. As of December 31, 2015, there were 22 Chaparral hull
designs and four Robalo hull designs registered under the Vessel Hull Design Protection Act.
During 2008 Chaparral was granted a design patent on its Wide TechTM hull design by the U.S. Patent and
Trademark Office. The patent has a term of 14 years and protects the Wide TechTM hull currently used on the
Sunesta Wide TechTM and Xtreme, SSi Wide TechTM and two of its Signature Cruisers from being used by other
pleasure boat manufacturers. Marine Products believes that this patent is important to its business.
Seasonality
Marine Products’ quarterly operating results are affected by weather and general economic conditions.
Quarterly operating results for the second quarter have historically recorded the highest sales volume for the year
because this corresponds with the highest retail sales volume period. The results for any quarter are not necessarily
indicative of results to be expected in any future period.
Inflation
The market prices of certain material and component costs used in manufacturing the Company’s products,
especially resins that are made with hydrocarbon feedstocks, copper and steel, have been volatile in the years
following the financial crisis of 2008. During 2015 and the first quarter of 2016, the prices of several of these raw
materials have fallen to their lowest prices in several years. As a result, we believe that the Company will incur
lower materials purchase prices in 2016. These lower prices of materials will reduce the costs of the Company’s
products, but we do not expect that these lower prices will enhance our profit margins, due to the competitive nature
of the selling environment for the Company’s products. Furthermore, the prices of these raw materials remain
volatile, and may increase in the future.
New boat buyers typically finance their purchases. Higher inflation typically results in higher interest rates that
could translate into an increased cost of boat ownership. Should higher inflation and increased interest rates occur,
prospective buyers may choose to forego or delay their purchases or buy a less expensive boat in the event that
interest rates rise or credit is not available to finance their boat purchases.
Availability of Filings
Marine Products makes available free of charge on its website, www.marineproductscorp.com, the annual
report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and all amendments to those
reports on the same day as they are filed with the Securities and Exchange Commission.
Item 1A. Risk Factors
Economic Conditions, Availability of Credit and Consumer Confidence Levels Affect Marine Products’ Sales
Because Marine Products’ Products are Purchased with Discretionary Income
During an economic recession or when an economic recession is perceived as a threat, Marine Products will be
adversely affected as consumers have less discretionary income or are more apt to save their discretionary income
rather than spend it. During times of global political or economic uncertainty, Marine Products will be negatively
affected to the extent consumers forego or delay large discretionary purchases pending the resolution of those
uncertainties. The 2008 financial crisis and lingering recession may have long-term effects on consumer behavior
with regard to pleasure boating as well. Financial market volatility may force consumers to delay retirement, or to
choose more modest lifestyles when they do retire. In such a case, consumers may not purchase boats, may purchase
boats later in their lives, or may purchase smaller or less expensive boats. Tight lending and credit standards, which
until recently have been in use by lenders in the United States, can make loans for boats harder to secure, and such
loans may carry unfavorable terms, which may force consumers to forego boat purchases. These factors have also
resulted in the past, and may continue to result in the future, in a reduction in the quality and number of dealers upon
which Marine Products relies to sell its products.
Marine Products Relies upon Third-Party Dealer Floor Plan Lenders Which Provide Financing to its Network of
Independent Dealers
Marine Products sells its products to a network of independent dealers, most of whom rely on one or more third-
party dealer floor plan lenders to provide financing for their inventory prior to its sale to retail customers. In general,
19
this source of financing is vital to Marine Products’ ability to sell products to its dealer network. While dealer floor
plan credit is currently available for many of our dealers during the 2016 model year, the Company’s sales and
profitability could be adversely affected in the event of a decline in floor plan financing availability, or if financing
terms change unfavorably.
Interest Rates and Fuel Prices Affect Marine Products’ Sales
The Company’s products are often financed by our dealers and the retail boat consumers. Higher interest rates
increase the borrowing costs and, accordingly, the cost of doing business for dealers and the cost of boat purchases
for consumers. Fuel costs can represent a large portion of the costs to operate our products. Therefore, higher
interest rates and fuel costs can adversely affect consumers’ decisions relating to recreational boating purchases.
Marine Products’ Dependence on its Network of Independent Boat Dealers may Affect its Operating Results and
Sales
Virtually all of Marine Products’ sales are derived from its network of independent boat dealers. Marine
Products has no long-term agreements with these dealers. Competition for dealers among recreational powerboat
manufacturers continues to increase based on the quality of available products, the price and value of the products,
and attention to customer service. The Company faces intense competition from other recreational powerboat
manufacturers in attracting and retaining independent boat dealers. The number of independent boat dealers
supporting the Chaparral and Robalo trade names and the quality of their marketing and servicing efforts are
essential to Marine Products’ ability to generate sales. A deterioration in the number of Marine Products’ network of
independent boat dealers could have a material adverse effect on its boat sales. Marine Products’ inability to attract
new dealers and retain those dealers, or its inability to increase sales with existing dealers, could substantially impair
its ability to execute its business plans. Although Marine Products’ management believes that the quality of its
products and services in the recreational boating market should permit it to maintain its relationship with its dealers
and its market position, there can be no assurance that Marine Products will be able to sustain its current sales levels.
Marine Products’ Financial Condition and Operating Results may be Adversely Affected by Boat Dealer Defaults
The Company’s products are sold through dealers and the financial health of these dealers is critical to the
Company’s continued success. The Company’s results can be negatively affected if a dealer defaults because Marine
Products or its subsidiaries may be contractually required to repurchase inventory up to certain limits, although for
business reasons, the Company may decide to purchase additional boats in excess of this contractual obligation.
Marine Products’ Ability to Adjust its Business Operations to Compensate for Reduced Sales of Boats may be
Restricted in the Future
In 2008 Marine Products idled certain production facilities and reduced its number of employees to offset the
impact that reduced net sales had on the Company’s operating results and cash flows. As a result, the Company
experienced lower rates of absorption of its fixed costs. The Company’s sales improved in 2014 and 2015, thus
increasing the rate of absorption of its fixed costs and improving operating and net income. Although the
Company’s unit sales have improved, Marine Products still operates at levels which are significantly lower than full
manufacturing capacity. These lower operating levels may continue to have an adverse affect in 2016 and in future
periods beyond 2016. In addition, the Company’s ability to reduce its fixed costs to respond to potential future
reduced net sales is limited.
Marine Products’ Sales are Affected by Weather Conditions
Marine Products’ business is subject to weather patterns that may adversely affect its sales. For example,
drought conditions, or merely reduced rainfall levels, or excessive rain, may close area boating locations or render
boating dangerous or inconvenient, thereby curtailing customer demand for our products. In addition, unseasonably
cool weather and prolonged winter conditions may lead to a shorter selling season in some locations. Hurricanes and
other storms could cause disruptions of our operations or damage to our boat inventories and manufacturing
facilities.
Marine Products Encounters Intense Competition Which Affects our Sales and Profits
The recreational boat industry is highly fragmented, resulting in intense competition for customers, dealers and
boat show exhibition space. This competition affects both the markets which we currently serve and new markets
20
that we may enter in the future. We compete with several large national or regional manufacturers that have
substantial financial, marketing and other resources.
Marine Products has Potential Liability for Personal Injury and Property Damage Claims
The products we sell or service may expose Marine Products to potential liabilities for personal injury or
property damage claims relating to the use of those products. Historically, the resolution of product liability claims
has not materially affected Marine Products’ business. Marine Products maintains product liability insurance that it
believes to be adequate. However, there can be no assurance that Marine Products will not experience legal claims
in excess of its insurance coverage or that claims will be covered by insurance. Furthermore, any significant claims
against Marine Products could result in negative publicity, which could cause Marine Products’ sales to decline.
Because Marine Products Relies on Third-party Suppliers, Marine Products may be Unable to Obtain Adequate
Raw Materials, Engines and Components Which Could Adversely Affect Sales and Profit Margins
Marine Products is dependent on third-party suppliers to provide raw materials, engines and components
essential to the construction of its various powerboats. Especially critical are the availability and cost of marine
engines and commodity raw materials used in the manufacture of Marine Products’ boats. While Marine Products’
management believes that supplier relationships currently in place are sufficient to provide the engines and materials
necessary to meet present production demands, there can be no assurance that these relationships will continue, that
these suppliers will remain in operation or that the quantity or quality of materials available from these suppliers will
be sufficient to meet Marine Products’ future needs. Disruptions in current supplier relationships or the inability of
Marine Products to continue to purchase construction materials in sufficient quantities and of sufficient quality at
acceptable prices to meet ongoing production schedules could cause a decrease in sales or a sharp increase in the
cost of goods sold. Additionally, because of this dependence, the volatility in commodity raw materials or current or
future price increases in production materials or the inability of Marine Products’ management to purchase engines
and materials required to complete its growth and acquisition strategies could reduce the number of boats Marine
Products may be able to produce for sale or cause a reduction in Marine Products’ profit margins.
Marine Products may be Unable to Identify, Complete or Successfully Integrate Acquisitions
Marine Products intends to pursue acquisitions and form strategic alliances that will enable Marine Products to
acquire complementary skills and capabilities, offer new products, expand its customer base, and obtain other
competitive advantages. There can be no assurance, however, that Marine Products will be able to successfully
identify suitable acquisition candidates or strategic partners, obtain financing on satisfactory terms, complete
acquisitions or strategic alliances, integrate acquired operations into its existing operations, or expand into new
markets. Once integrated, acquired operations may not achieve anticipated levels of sales or profitability, or
otherwise perform as expected. Acquisitions also involve special risks, including risks associated with unanticipated
problems, liabilities and contingencies, diversion of management resources, and possible adverse effects on earnings
and earnings per share resulting from increased interest costs, the issuance of additional securities, and difficulties
related to the integration of the acquired business. The failure to integrate acquisitions successfully may divert
management’s attention from Marine Products’ existing operations and may damage Marine Products’ relationships
with its key customers and suppliers.
Marine Products’ Success will Depend on its key Personnel, and the Loss of any key Personnel may Affect its
Powerboat Sales
Marine Products’ success will depend to a significant extent on the continued service of key management
personnel. The loss or interruption of the services of any senior management personnel or the inability to attract and
retain other qualified management, sales, marketing and technical employees could disrupt Marine Products’
operations and cause a decrease in its sales and profit margins.
Marine Products’ Ability to Attract and Retain Qualified Employees is Crucial to its Results of Operations and
Future Growth
Marine Products relies on the existence of an available hourly workforce to manufacture its products. As with
many businesses, we are challenged at times to find qualified employees. There are no assurances that Marine
Products will be able to attract and retain qualified employees to meet current and/or future growth needs.
21
If Marine Products is Unable to Comply with Environmental and Other Regulatory Requirements, its Business may
be Exposed to Liability and Fines
Marine Products’ operations are subject to extensive regulation, supervision and licensing under various federal,
state and local statutes, ordinances and regulations. While Marine Products believes that it maintains all requisite
licenses and permits and is in compliance with all applicable federal, state and local regulations, there can be no
assurance that Marine Products will be able to continue to maintain all requisite licenses and permits and comply
with applicable laws and regulations. The failure to satisfy these and other regulatory requirements could cause
Marine Products to incur fines or penalties or could increase the cost of operations. The adoption of additional laws,
rules and regulations could also increase Marine Products’ costs.
The U.S. Environmental Protection Agency (EPA) has adopted regulations affecting many marine propulsion
engines. This regulation has increased the cost of boats subject to the regulation, which may either reduce the
Company’s profitability or reduce sales.
As with boat construction in general, our manufacturing processes involve the use, handling, storage and
contracting for recycling or disposal of hazardous or toxic substances or wastes. Accordingly, we are subject to
regulations regarding these substances, and the misuse or mishandling of such substances could expose Marine
Products to liability or fines.
Additionally, certain states have required or are considering requiring a license in order to operate a recreational
boat. While such licensing requirements are not expected to be unduly restrictive, regulations may discourage
potential first-time buyers, thereby reducing future sales.
Marine Products’ Stock Price has been Volatile
Historically, the market price of common stock of companies engaged in the discretionary consumer products
industry has been highly volatile. Likewise, the market price of our common stock has varied significantly in the
past. In addition, the availability of Marine Products common stock to the investing public is limited to the extent
that shares are not sold by the executive officers, directors and their affiliates, which could negatively impact the
trading price of Marine Products’ common stock, increase volatility and affect the ability of minority stockholders to
sell their shares. Future sales by executive officers, directors and their affiliates of all or a substantial portion of their
shares could also negatively affect the trading price of Marine Products’ common stock.
Marine Products’ Management has a Substantial Ownership Interest; Public Stockholders may have no Effective
Voice in Marine Products’ Management
The Company has elected the “Controlled Corporation” exemption under Section 303A of the New York Stock
Exchange (“NYSE”) Listed Company Manual. The Company is a “Controlled Corporation” because a group that
includes the Company’s Chairman of the Board, R. Randall Rollins and his brother, Gary W. Rollins, who is also a
director of the Company, and certain companies under their control, controls in excess of fifty percent of the
Company’s voting power. As a “Controlled Corporation,” the Company need not comply with certain NYSE rules
including those requiring a majority of independent directors.
Marine Products’ executive officers, directors and their affiliates hold directly or through indirect beneficial
ownership, in the aggregate, approximately 67 percent of Marine Products’ outstanding shares of common stock. As
a result, these stockholders effectively control the operations of Marine Products, including the election of directors
and approval of significant corporate transactions such as acquisitions. This concentration of ownership could also
have the effect of delaying or preventing a third-party from acquiring control of Marine Products at a premium.
Provisions in Marine Products’ Certificate of Incorporation and Bylaws may Inhibit a Takeover of Marine Products
Marine Products’ certificate of incorporation, bylaws and other documents contain provisions including
advance notice requirements for stockholder proposals and staggered terms of office for the Board of Directors.
These provisions may make a tender offer, change in control or takeover attempt that is opposed by Marine
Products’ Board of Directors more difficult or expensive.
Item 1B. Unresolved Staff Comments
None.
22
Item 2. Properties
Marine Products’ corporate offices are located in Atlanta, Georgia. These offices are currently shared with RPC
and are leased. The monthly rent paid is allocated between Marine Products and RPC. Under this arrangement,
Marine Products pays approximately $2,100 per month in rent. Marine Products may cancel this arrangement at any
time after giving a 30 day notice.
Chaparral owns and maintains approximately 1,012,000 square feet of space utilized for manufacturing,
research and development, warehouse, sales office and operations in Nashville, Georgia. In addition, the Company
owns 83,000 square feet of manufacturing space at the Robalo facility in Valdosta, Georgia. During 2008, the
Robalo facility was temporarily idled and production of these boats was moved to the Nashville facility. There are
no plans or current intentions to dispose of the facilities in Valdosta, Georgia. The Company also leases 111,000
square feet of warehouse space in Nashville, Georgia under a long-term arrangement expiring in 2018. Marine
Products’ total square footage under roof is allocated as follows: manufacturing — 712,000, research and
development — 68,500, warehousing — 294,500, office and other — 131,400.
Item 3. Legal Proceedings
Marine Products is involved in litigation from time to time in the ordinary course of its business. Marine
Products does not believe that the ultimate outcome of such litigation will have a material adverse effect on its
liquidity, financial condition or results of operations.
Item 4. Mine Safety Disclosures
Not applicable.
Item 4A. Executive Officers of the Registrant
Each of the executive officers of Marine Products was elected by the Board of Directors to serve until the Board
of Directors’ meeting immediately following the next annual meeting of stockholders or until his or her earlier
removal by the Board of Directors or his or her resignation. The following table lists the executive officers of
Marine Products and their ages, offices, and date first elected to office.
Name and Office with Registrant
R. Randall Rollins (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Age
84
Date First Elected to Present Office
2/28/01
Chairman of the Board
Richard A. Hubbell (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
71
President and Chief Executive Officer
James A. Lane, Jr. (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
73
Executive Vice President and President of Chaparral Boats, Inc.
Linda H. Graham (4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
79
Vice President and Secretary
Ben M. Palmer (5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
55
Vice President, Chief Financial Officer and Treasurer
2/28/01
2/28/01
2/28/01
2/28/01
(1) R. Randall Rollins began working for Rollins, Inc. (consumer services) in 1949. At the time of the spin-off of RPC from Rollins, Inc. in
1984, Mr. Rollins was elected Chairman of the Board and Chief Executive Officer of RPC. He remains Chairman of RPC and stepped down
from the position of Chief Executive Officer effective in 2003. He has served as Chairman of the Board of Marine Products since 2001 and
Chairman of the Board of Rollins, Inc. since 1991. He is also a director of Dover Downs Gaming and Entertainment, Inc. and Dover
Motorsports, Inc.
(2) Richard A. Hubbell has been the President and Chief Executive Officer of Marine Products since it was spun off in 2001. He has also been
President of RPC since 1987 and its Chief Executive Officer since 2003. Mr. Hubbell serves on the Board of Directors of both of these
companies.
(3)
James A. Lane, Jr. has held the position of President of Chaparral Boats (formerly a subsidiary of RPC) since 1976. Mr. Lane has been
Executive Vice President and Director of Marine Products since it was spun off in 2001. He is also a director of RPC and has served in that
capacity since 1987.
(4) Linda H. Graham has been Vice President and Secretary of Marine Products since it was spun off in 2001, and Vice President and Secretary
of RPC since 1987. Ms. Graham serves on the Board of Directors of both of these companies.
(5) Ben M. Palmer has been Vice President, Chief Financial Officer and Treasurer of Marine Products since it was spun off in 2001 and has
served the same roles at RPC since 1996.
23
PART II
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of
Equity Securities
Marine Products’ common stock is listed for trading on the New York Stock Exchange under the symbol
“MPX.” As of February 18, 2016, there were 38,373,970 shares of common stock outstanding.
At the close of business on February 18, 2016, there were approximately 2,990 beneficial holders of record of
the Company’s common stock. The high and low prices of Marine Products’ common stock and dividends paid for
each quarter in the years ended December 31, 2015 and 2014 were as follows:
Quarter
First . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Second . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Third . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Fourth . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
High
$ 8.99
8.90
7.55
$ 7.25
2015
Low
$ 7.03
5.95
5.73
$ 5.50
Dividends
$ 0.04
0.04
0.04
$ 0.08
High
2014
Low
$ 10.29 $ 7.17
6.67
7.55
$ 8.50 $ 5.87
8.30
9.12
Dividends
$ 0.03
0.03
0.03
$ 0.07
In December 2015, in addition to the quarterly dividend of $0.04 per share, the board of directors approved a
special year-end dividend of $0.04 per share. The Company expects to continue to pay cash dividends to the
common stockholders, subject to the earnings and financial condition of the Company and other relevant factors.
Issuer Purchases of Equity Securities
In accordance with actions by the Company’s Board of Directors, an aggregate of 8,250,000 shares have been
authorized for repurchase in connection with a stock buyback program initially announced in 2001, and subsequent
increases announced in 2005 and 2008. These programs do not have predetermined expiration dates. There were
24,703 shares repurchased as part of this program during the fourth quarter of 2015. As of December 31, 2015, a
total of 2,869,757 shares remain available for repurchase under this program.
Total
Number of
Shares (or
Units)
Purchased
(1)
Period
October 1, 2015 to October 31, 2015 . . . . . . . .
November 1, 2015 to November 30, 2015 . . .
December 1, 2015 to December 31, 2015 . . . . 24,703(1)
Totals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24,703
—
—
Total Number of
Shares (or Units)
Purchased as
Part of Publicly
Announced
Plans or
Programs
—
—
24,703
24,703
Average
Price Paid
Per Share
(or Unit)
—
—
6.12
6.12
Maximum Number (or
Approximate Dollar Value) of
Shares (or Units) that May
Yet Be Purchased Under the
Plans or Programs (1)
2,894,460
2,894,460
2,869,757
2,869,757
(1) The Company’s Board of Directors announced a stock buyback program on April 25, 2001 authorizing the repurchase of 2,250,000 shares
in the open market and another on March 14, 2005 authorizing the repurchase of an additional 3,000,000 shares. On January 22, 2008 the
Board of Directors authorized an additional 3,000,000 shares that the Company may repurchase. As of December 31, 2015, a total of
5,380,243 shares have been repurchased in the open market under this program and there are 2,869,757 shares that remain available for
repurchase. The program does not have a predetermined expiration date.
24
Performance Graph
The following graph shows a five-year comparison of the cumulative total stockholder return based on the
performance of the stock of the Company, assuming dividend reinvestment, as compared with both a broad equity
market index and an industry or peer group index. The indices included in the following graph are the Russell 2000
Index (“Russell 2000”) and a peer group which includes companies that are considered peers of the Company (“Peer
Group”). The companies included in the Peer Group have been weighted according to each respective issuer’s stock
market capitalization at the end of each year. The companies in the Peer Group are Brunswick Corporation,
MarineMax, Inc. and Malibu Boats, Inc. Malibu Boats, Inc. is included in the Peer Group because it is a pleasure
boat manufacturer with similar products and operations as the Company, as well as a market capitalization that was
similar to, though slightly higher than, the market capitalization of the Company at December 31, 2015. Malibu
Boats, Inc. was not previously included in the Peer Group because its common stock did not trade on a securities
exchange until the first quarter of 2015. For comparison purposes, the following graph includes the performance of
the Peer Group as well as the peer group without the inclusion of Malibu Boats, Inc. (the “Former Peer Group”).
The Russell 2000 is used because the Company is a component of the Russell 2000, and because the Russell
2000 is a stock index representing small capitalization U.S. stocks. During 2015 the components of the Russell 2000
had a weighted average market capitalization of $1.9 billion, and a median market capitalization of $0.7 billion.
The graph below assumes the value of $100.00 invested on December 31, 2010.
25
Item 6. Selected Financial Data
The following table summarizes certain selected financial data of Marine Products. The historical information
may not be indicative of Marine Products’ future results of operations. The information set forth below should be
read in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of
Operations” and the Consolidated Financial Statements and the notes thereto included elsewhere in this document.
Years Ended December 31,
(In thousands, except share, per share and employee data)
2013
2012
2014
2015
2011
Statement of Operations Data:
Net sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cost of goods sold . . . . . . . . . . . . . . . . . . . . . . . . . .
Gross profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Selling, general and administrative
expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Operating income . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other income (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income before income taxes . . . . . . . . . . . . . . . .
Income tax provision . . . . . . . . . . . . . . . . . . . . . . . .
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Earnings per share:
Basic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Dividends paid per share . . . . . . . . . . . . . . . . . .
Other Financial and Operating Data:
Gross profit margin percent . . . . . . . . . . . . . . . . .
Operating margin percent . . . . . . . . . . . . . . . . . . .
Net cash provided by operating activities . . .
Net cash (used for) provided by investing
activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net cash used for financing activities . . . . . . .
Capital expenditures . . . . . . . . . . . . . . . . . . . . . . . .
Employees at end of year . . . . . . . . . . . . . . . . . . .
Factory and administrative space at end of
$ 207,061
163,261
43,800
$ 171,050
138,379
32,671
$ 168,293
138,480
29,813
$ 148,950
121,746
27,204
$ 106,437
86,931
19,506
23,249
20,551
420
—
20,971
6,665
$ 14,306
20,665
12,006
521
—
12,527
3,613
8,914
$
$
$
$
0.39
0.39
0.20
$
$
$
0.24
0.24
0.16
20,307
9,506
524
—
10,030
2,502
7,528
0.20
0.20
0.15
18,443
8,761
960
—
9,721
2,742
6,979
0.19
0.19
0.63
$
$
$
$
14,130
5,376
997
2,025
8,398
1,667
6,731
0.19
0.18
0.00
$
$
$
$
$
$
$
$
21.2%
9.9%
19.1%
7.0%
$ 16,044
$ 10,656
$
17.7%
5.6%
$
10,937
18.3%
5.9%
$
9,664
18.3%
5.1%
3,296
(2,489)
(9,641)
3,878
767
(4,157)
(7,541)
451
605
$
$
$
(1,326)
(6,145)
521
651
15,329
(24,301)
354
587
$
(12,853)
(316)
357
450
$
year (square ft.) . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,205
1,205
1,205
1,205
1,205
Balance Sheet Data at end of year:
Cash and cash equivalents . . . . . . . . . . . . . . . . . .
Marketable securities — current . . . . . . . . . . . .
Marketable securities — non-current . . . . . . .
Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Working capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Property, plant and equipment, net . . . . . . . . . .
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total stockholders’ equity . . . . . . . . . . . . . . . . . .
$
7,986
7,825
27,129
32,638
38,846
12,761
110,677
$ 90,212
$
4,072
3,653
33,831
28,819
30,014
9,890
103,823
$ 83,494
$
5,114
5,639
30,949
28,859
30,698
11,265
102,553
81,483
$
$
1,648
1,150
35,773
28,159
22,789
11,470
97,315
$ 77,747
$
956
12,402
41,699
24,907
32,301
11,884
110,837
$ 93,418
(1) Other income for 2011 is comprised of a tax-free gain from an employee benefit plan financing arrangement.
26
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion is based upon and should be read in conjunction with “Selected Financial Data” and
“Financial Statements and Supplementary Data.” See also “Forward-Looking Statements” on page 8.
Overview
Marine Products, through our wholly owned subsidiaries Chaparral and Robalo, is a leading manufacturer of
recreational fiberglass powerboats. Our sales and profits are generated by selling the products that we manufacture
to a network of independent dealers who in turn sell the products to retail consumers. These dealers are located
throughout the continental United States and in several international markets. Dealers either remit payment upon
receipt of the product or finance their inventory through third-party floor plan lenders, who pay Marine Products
generally within ten days of delivery of the products to the dealers.
We manage our Company by focusing on the execution of the following business and financial strategies:
Manufacturing high-quality, stylish, and innovative powerboats for our dealers and retail consumers,
Providing our independent dealer network appropriate incentives, training, and other support to enhance
their success and their customers’ satisfaction, thereby facilitating their continued relationship with us,
Managing our production and dealer order backlog to optimize operating results and reduce risk in the
event of a downturn in sales of our products,
Maintaining a flexible, variable cost structure which can be reduced quickly when deemed appropriate,
Focusing on the competitive nature of the boating business and designing our products and strategies in
order to grow and maintain profitable market share,
Monitoring the recreational boat market for strong complementary product lines which we may enter
through new product development or acquisition,
Extending our brand name recognition to enhance the success of new boat models that complement our
existing offerings,
Improving our sales and profits by increasing the utilization of our manufacturing capacity,
Monitoring the activities and financial condition of our dealers and of the third-party floor plan lenders who
finance our dealers’ inventories,
Maximizing stockholder return by optimizing the balance of cash invested in the Company’s productive
assets, the payment of dividends to stockholders, and the repurchase of the Company’s common stock on
the open market, and
Aligning the interests of our management and stockholders.
In implementing these strategies and attempting to optimize our financial returns, management closely monitors
dealer orders and inventories, the production mix of various models, and indications of near term demand such as
consumer confidence, interest rates, dealer orders placed at our annual dealer conferences, and retail attendance and
orders at annual winter boat show exhibitions. We also consider trends related to certain key financial and other
data, including our historical and forecasted financial results, market share, unit sales of our products, average
selling price per boat, and gross profit margins, among others, as indicators of the success of our strategies. Marine
Products’ financial results are affected by consumer confidence — because pleasure boating is a discretionary
expenditure, interest rates — because many retail customers finance the purchase of their boats, and other
socioeconomic and environmental factors such as availability of leisure time, consumer preferences, demographics
and the weather.
During 2015, several segments of the recreational boating industry improved due to stable consumer confidence
and improving residential real estate markets, as well as a strong financing environment for dealers and consumers.
Overall retail sales of outboard recreational boats improved during 2015, although sterndrive unit sales declined.
Our net sales improved in 2015 compared to 2014 due to higher unit sales of our Robalo sport fishing boats, coupled
with higher unit sales of our Vortex jet boats and sales of our new Suncoast outboard models. We achieved higher
net sales, as well as increased gross and operating profit in 2015 compared to 2014. During 2015, Chaparral
27
produced and sold three new Suncoast outboard models, and a new, smaller Robalo model. Management will
continue to monitor retail demand among the various segments in the recreational boat market, dealer inventory
levels and the availability of dealer and consumer financing for the purchase of our products and adjust our
production levels as deemed appropriate.
We continuously monitor our market share in the 18 to 33 foot sterndrive category as one indicator of the
success of our strategies and the market’s acceptance of our products. For the nine months ended September 30,
2015 (latest data available to us), Chaparral’s market share in the 18 to 33 foot sterndrive category was 13.9 percent
compared to 14.3 percent during the same period in 2014. Although Chaparral’s market share declined during this
period, it remained the highest in its category. Chaparral’s market share in the 18 to 20 foot category was 10.4
percent during this period in 2015, and its market share in the 21 to 33 foot category was 17.0 percent. Chaparral’s
market share concentrations within these size ranges has remained relatively consistent during the past several years.
For the nine months ended September 30, 2015, Robalo’s share of the 16 to 30 foot outboard sport fishing boat
market was 3.9 percent. For the same period, Chaparral’s share of the 20 to 24 foot jet boat market was
approximately 11.0 percent. We will continue to monitor our market share and believe it to be important, but we
believe that maximizing profitability takes precedence over growing our market share. Furthermore, as we continue
to expand the breadth of our product offerings within our core category and new categories, we consider our overall
market share across the various powerboat categories to be of greater importance to the long-term health of our
company than our market share within any specific type of recreational boat.
Outlook
We believe that recreational boating retail demand in many segments of the industry is improving. Attendance
and sales during the 2016 winter boat shows have been moderately higher than the 2015 winter boat show season,
residential real estate markets and consumer confidence have stabilized, and fuel prices have declined significantly.
We also believe that there is improved demand from consumers who have delayed purchasing a boat over the past
few years due to economic uncertainty.
Although industry wide retail boat sales remain lower than they were prior to the 2008 financial crisis, retail
boat sales have increased each year since 2013. We believe that continued improvements in retail boat sales will be
modest due to the lack of strong economic improvement, which tends to discourage consumers from purchasing
large discretionary goods such as pleasure boats. Fluctuations in fuel prices can impact our sales, and during 2015
fuel prices decreased significantly, and have fallen to some of the lowest inflation-adjusted levels recorded during
the past 10 years. In general, however, the overall cost of boat ownership has increased, especially in the sterndrive
recreational boat market segment, which comprises almost 50 percent of the Company’s sales. The higher cost of
boat ownership discourages consumers from purchasing recreational boats. For a number of years, Marine Products
as well as other boat manufacturers have been improving their customer service capabilities, marketing strategies
and sales promotions in order to attract more consumers to recreational boating as well as improve consumers’
boating experiences. The Company provides financial incentives to its dealers for receiving favorable customer
satisfaction surveys. In addition, the recreational boating industry conducts a promotional program which involves
advertising and consumer targeting efforts, as well as other activities designed to increase the potential consumer
market for pleasure boats. Many manufacturers, including Marine Products, participate in this program.
Management believes that these efforts have incrementally benefited the industry and Marine Products. As in past
years, Marine Products enhanced its selection of models for the 2016 model year which began on July 1, 2015. We
are continuing to emphasize the value-priced Chaparral and Robalo models, as well as larger models in the
Chaparral line-up including the SSX’s and Robalo bay boat models. In addition, we continue to experience a
favorable consumer reception of our Chaparral Vortex jet boats and Chaparral SunCoast outboard boats. For the
2016 model year, we have introduced a smaller Robalo model, a new Chaparral sterndrive sportboat, and a smaller
SunCoast outboard boat. We believe that these boat models will expand our customer base, and leverage our strong
dealer network and reputation for quality and styling. We plan to continue to develop and produce additional new
products for subsequent model years.
Our financial results for 2016 will depend on a number of factors, including interest rates, consumer confidence,
the availability of credit to our dealers and consumers, fuel costs, the continued acceptance of our new products in
the recreational boating market, our ability to compete in the competitive pleasure boating industry, and the costs of
labor and certain of our raw materials and key components.
28
Results of Operations
($’s in thousands)
Total number of boats sold to dealers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4,285
43.5
Average gross selling price per boat . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Net sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 207,061
Percentage of gross profit to net sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Percentage of selling, general and administrative expenses to net sales
Operating income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Warranty expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
20,551
1,222
2015
21.2%
11.2%
3,490
44.9
$
$ 171,050
3,569
43.7
$
$ 168,293
19.1%
12.1%
$
$
12,006
1,977
$
$
17.7%
12.1%
9,506
2,446
Years ended December 31,
2014
2013
Year Ended December 31, 2015 Compared To Year Ended December 31, 2014
Net Sales. Marine Products’ net sales increased by $36.0 million or 21.1 percent in 2015 compared to 2014. The
increase was primarily due to a 22.8 percent increase in the number of boats sold, partially offset by a 3.2 percent
decrease in the average gross selling price per boat. Unit sales increased due to higher sales of our Robalo outboard
sport fishing boats, as well as increased unit sales of our Chaparral Vortex jet boats and Suncoast outboards,
partially offset by a decrease in sales of our Chaparral sterndrive boats. Average selling prices decreased primarily
due to higher sales of our smaller Robalo models. Domestic net sales increased 27.6 percent to $184.8 million
compared to the prior year. International sales decreased 14.9 percent during 2015 compared to 2014 primarily due
to the strength of the U.S. dollar.
Cost of Goods Sold. Cost of goods sold increased 18.0 percent in 2015 compared to 2014. As a percentage of
net sales, cost of goods sold decreased to 78.8 percent in 2015, compared to 80.9 percent in 2014, primarily due to
improved manufacturing efficiencies due to higher production volumes, coupled with a favorable model mix.
Selling, General and Administrative Expenses. Selling, general and administrative expenses increased 12.5
percent in 2015 compared to 2014 primarily as a result of costs that vary with sales, such as sales commissions,
coupled with an increase in advertising expense. Selling, general and administrative expenses as a percentage of
sales decreased from 12.1 percent in 2014 to 11.2 percent in 2015. As a percentage of net sales, warranty expense
decreased to 0.6 percent in 2015, compared to 1.2 percent in 2014. This decrease was primarily due to a model mix
in recent years which included an increase in smaller boats with fewer accessories resulting in fewer warranty
claims, coupled with engineering improvements.
Interest Income. Interest income declined to $420 thousand in 2015 compared to $521 thousand in 2014. Marine
Products generates interest income primarily from investments in tax-exempt municipal obligations. The decrease
was primarily due to a 13.7 percent reduction in the average balance of our marketable securities portfolio.
Income Tax Provision. The income tax provision was $6.7 million in 2015 compared to $3.6 million in 2014.
The effective tax rate in 2015 was 31.8 percent compared to 28.8 percent in 2014. Our effective rate increased
primarily due to higher income which was subject to higher state and federal tax brackets.
Year Ended December 31, 2014 Compared To Year Ended December 31, 2013
Net Sales. Marine Products’ net sales increased by $2.8 million or 1.6 percent in 2014 compared to 2013. The
increase was primarily due to a 2.7 percent increase in the average gross selling price per boat, partially offset by a
2.2 percent decrease in the number of boats sold. Unit sales decreased due to lower sales of our Chaparral sterndrive
models, partially offset by increased unit sales of our Robalo outboard sport fishing boats and sales of our Vortex jet
boats. Average selling prices increased due to higher sales of our larger models in both the Chaparral and Robalo
boat lines. During 2014, sales outside of the United States accounted for 15.3 percent of net sales, a decrease
compared to 17.2 percent of net sales in the prior year. Domestic sales increased 4.0 percent and international sales
decreased 9.5 percent during the period compared to the prior year.
Cost of Goods Sold. Cost of goods sold decreased 0.1 percent in 2014 compared to 2013. As a percentage of net
sales, cost of goods sold decreased to 80.9 percent in 2014, compared to 82.3 percent in 2013, primarily due to a
favorable model mix, coupled with improved manufacturing efficiencies.
29
Selling, General and Administrative Expenses. Selling, general and administrative expenses increased 1.8
percent in 2014 compared to 2013 primarily as a result of costs that vary with sales, such as sales commissions,
coupled with an increase in advertising expense. Selling, general and administrative expenses as a percentage of
sales were 12.1 percent in 2014 and 2013. As a percentage of net sales, warranty expense decreased to 1.2 percent in
2014, compared to 1.5 percent in 2013. This decrease was primarily due to a model mix in recent years which
included an increase in smaller boats with fewer accessories resulting in fewer warranty claims, coupled with lower
consumer boat usage in 2014 primarily due to wide spread adverse weather conditions in many boating markets.
Interest Income. Interest income was $521 thousand in 2014 compared to $524 thousand in 2013. Marine
Products generates interest income primarily from investments in tax-exempt municipal obligations. The decrease
was primarily due to lower yields, partially offset by a 14.8 percent increase in the average balance of our
marketable securities portfolio.
Income Tax Provision. The income tax provision was $3.6 million in 2014 compared to $2.5 million in 2013.
The effective tax rate in 2014 was 28.8 percent compared to 24.9 percent in 2013. The lower 2013 effective tax rate
is a result of both a one-time beneficial adjustment of the 2012 R&D credit totaling approximately $244,000 which
was retroactively enacted into law in 2013, coupled with the benefit of the 2013 R&D credit. The 2014 effective rate
is higher primarily due to increased income, coupled with a higher federal tax bracket based on estimated taxable
income, partially offset by the 2014 R&D credit.
Liquidity and Capital Resources
Cash and Cash Flows
The Company’s cash and cash equivalents were $8.0 million at December 31, 2015, $4.1 million at December
31, 2014 and $5.1 million at December 31, 2013. In addition, the aggregate of short-term and long-term marketable
securities was $35.0 million at December 31, 2015, $37.5 million at December 31, 2014 and $36.6 million at
December 31, 2013.
The following table sets forth the historical cash flows for the twelve months ended December 31:
Net cash provided by operating activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 16,044
(2,489)
Net cash used for investing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(9,641)
Net cash used for financing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2015
(in thousands)
2014
$ 10,656
(4,157)
(7,541)
2013
$ 10,937
(1,326)
(6,145)
2015
Cash provided by operating activities increased by $5.4 million in 2015 compared to 2014. This increase was
primarily due to an increase in net income, partially offset by a net unfavorable change in working capital.
The major components of the net unfavorable change in working capital were as follows: a favorable change in
accounts payable of $2.1 million due to the timing of payments; an unfavorable change of $3.9 million in
inventories to support higher production levels in the current year; and a $1.5 million favorable change in accounts
receivable due to the timing of receipts.
Cash used for investing activities was $2.5 million in 2015 compared to $4.2 million used for investing
activities in 2014. The decrease in cash used for investing activities is primarily due to a decrease in purchases of
marketable securities, coupled with a decrease in proceeds from the sale of assets, partially offset by an increase in
capital expenditures.
Cash used for financing activities increased $2.1 million in 2015 primarily due to an increase in regularly
quarterly dividends paid in the current year, coupled with an increase in open market share repurchases in 2015
compared to 2014. The Company paid a $0.04 per share special dividend in both the fourth quarter of 2015 and the
fourth quarter of 2014.
2014
Cash provided by operating activities decreased by $0.3 million in 2014 compared to 2013. This decrease was
primarily due to an unfavorable change in working capital, partially offset by an increase in net income.
30
The major components of the net unfavorable change in working capital were as follows: an unfavorable change
in accounts payable of $3.3 million due to the timing of payments; and a favorable change of $0.7 million in
inventories due to a decrease in inventory in the current year.
Cash used for investing activities was $4.2 million in 2014 compared to $1.3 million used for investing
activities in 2013. The increase in cash used for investing activities is primarily due to the investment in a joint
venture which was funded with a contribution of approximately $2.6 million coupled with increased purchases of
marketable securities as a result of improved cash flows.
Cash used for financing activities increased $1.4 million in 2014 primarily due to an increase in open market
share repurchases, coupled with an increase in the special dividend paid in the fourth quarter of 2014. The Company
paid a $0.04 per share special dividend in the fourth quarter of 2014 compared to $0.03 per share paid in the fourth
quarter of 2013.
Cash Requirements
Management expects that capital expenditures during 2016 will be approximately $3.5 million.
The Company participates in a multiple employer Retirement Income Plan, sponsored by RPC, Inc. (“RPC”).
During 2015, the Company made cash contributions of $170 thousand to this plan in order to achieve the
Company’s funding objective. We expect that additional contributions by the Company to the Retirement Income
Plan of approximately $180 thousand will be made in 2016.
On January 27, 2016, the Board of Directors approved a quarterly dividend of $0.06 per common share payable
March 10, 2016 to stockholders of record at the close of business on February 10, 2016.
The Company has agreements with two employees, which provide for a monthly payment to the employees
equal to 10 percent of profits (defined as pretax income before goodwill amortization and certain allocated corporate
expenses).
In January 2008, the Board of Directors authorized an additional 3,000,000 shares that the Company may
repurchase for a total aggregate authorization of 8,250,000 shares. The Company repurchased 221,794 shares in the
open market during 2015. As of December 31, 2015, the Company has repurchased under this program a total of
5,380,243 shares in the open market and there are 2,869,757 shares that remain available for repurchase.
The Company has entered into agreements with third-party floor plan lenders where it has agreed, in the event
of default by a dealer, to repurchase MPC boats repossessed from the dealer. These arrangements are subject to
maximum repurchase amounts and the associated risk is mitigated by the value of the boats repurchased. There were
no material repurchases of dealer inventory during 2015. The Company incurred obligations for inventory
repurchases totaling approximately $1.1 million during 2014 resulting from dealer defaults on floor plan financing.
The Company recorded costs in connection with these repurchases of approximately $75 thousand during 2014 as a
reduction of net sales. If dealers experience financial difficulty as a result of the current market conditions, the
Company may incur repurchase obligations under current programs or programs initiated in the future. See further
information regarding repurchase obligations in “NOTE 9: COMMITMENTS AND CONTINGENCIES” of the
Consolidated Financial Statements.
The Company believes that the liquidity provided by its existing cash and cash equivalents, marketable
securities, and cash expected to be generated from operations will provide sufficient capital to meet its requirements
for at least the next twelve months. The Company’s decisions about the amount of cash to be used for investing and
financing purposes are influenced by its capital position and the expected amount of cash to be provided by
operations.
31
Contractual Obligations
The following table summarizes the Company’s contractual obligations as of December 31, 2015:
Contractual Obligations
Total
(in thousands)
Long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ —
—
Capital lease obligation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,294
Operating leases (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
—
Purchase obligations (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
—
Due to floor plan lenders (3) . . . . . . . . . . . . . . . . . . . . . . . . . .
—
Other long-term liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,294
Payments due by period
1-3
years
$ —
—
918
—
—
—
918
3-5
years
$ —
—
1
—
—
—
1
$
Less than
1 year
$ —
—
375
—
—
—
$ 375
$
More
than 5 years
$ —
—
—
—
—
—
$ —
(1) Operating leases represent agreements for warehouse space, various office and operating equipment.
(2) As part of the normal course of business the Company enters into purchase commitments to manage its various operating needs. However,
the Company does not have any obligations that are non-cancelable or subject to a penalty if canceled.
(3) The Company has agreements with various third-party lenders where it guarantees varying amounts of debt for qualifying dealers on boats
in dealer inventory. As of December 31, 2015, there are no payables outstanding to floor plan lenders.
Fair Value Measurements
The Company’s assets and liabilities measured at fair value are classified in the fair value hierarchy (Level 1, 2
or 3) based on the inputs used for valuation. Assets and liabilities that are traded on an exchange with a quoted price
are classified as Level 1. Assets and liabilities that are valued using significant observable inputs in addition to
quoted market prices are classified as Level 2. The Company currently has no assets or liabilities measured on a
recurring basis that are valued using unobservable inputs and therefore no assets or liabilities measured on a
recurring basis are classified as Level 3. For defined benefit plan assets classified as Level 3, the values are
computed using inputs such as cost, discounted future cash flows, independent appraisals and market based
comparable data or on net asset values calculated by the fund and not publicly available.
Off Balance Sheet Arrangements
To assist dealers in obtaining financing for the purchase of its boats for inventory, the Company has entered into
agreements with various third-party floor plan lenders whereby the Company guarantees varying amounts of debt
for qualifying dealers on boats in inventory. The Company’s obligation under these guarantees becomes effective in
the case of a default under the financing arrangement between the dealer and the third-party lender. The agreements
typically provide for the return of all repossessed boats in “new and unused” condition subject to normal wear and
tear, as defined, to the Company, in exchange for the Company’s assumption of specified percentages of the debt
obligation on those boats, up to certain contractually determined dollar limits which vary by lender. There were no
material repurchases of dealer inventory during 2015. During 2014, MPC became contractually obligated to
repurchase inventory of approximately $1.1 million as a result of dealer defaults, none of which remained
outstanding as of December 31, 2014. The Company recorded costs in connection with these repurchases of
approximately $75 thousand during 2014 as a reduction of net sales.
Management continues to monitor the risk of additional defaults and resulting repurchase obligation based
primarily upon information provided by the third-party floor plan lenders and to adjust the guarantee liability at the
end of each reporting period based on information reasonably available at that time. As of December 31, 2015, the
Company believes the fair value of its remaining guarantee liability is immaterial. See further information regarding
repurchase obligations in “NOTE 9: COMMITMENTS AND CONTINGENCIES” of the Consolidated Financial
Statements.
32
The Company currently has an agreement with one of the floor plan lenders whereby the contractual repurchase
obligation is limited to a maximum of 16 percent of the average net receivables financed by the floor plan lender for
dealers during the prior 12 month period, which was $8.5 million as of December 31, 2015. The Company has
contractual repurchase agreements with additional lenders with an aggregate maximum repurchase obligation of
approximately $6.7 million, with various expiration and cancellation terms of less than one year. Accordingly, the
aggregate repurchase obligation with all financing institutions is approximately $15.2 million as of December 31,
2015. Although the Company has these agreements with financial institutions, in certain situations, the Company
may decide for business reasons to repurchase boats in excess of these contractual amounts.
Related Party Transactions
In conjunction with its spin-off from RPC in 2001, the Company and RPC entered into various agreements that
define the companies’ relationship after the spin-off.
The Transition Support Services Agreement provides for RPC to provide certain services, including financial
reporting and income tax administration, acquisition assistance, etc., to Marine Products until the agreement is
terminated by either party. Marine Products reimbursed RPC for its estimated allocable share of administrative costs
incurred for services rendered on behalf of Marine Products totaling $753,000 in 2015, $663,000 in 2014, and
$670,000 in 2013. The Company’s receivable (payable) due from (to) RPC for these services was $11,000 as of
December 31, 2015 and $(47,000) as of December 31, 2014. The Company’s directors are also directors of RPC and
all of the Company’s executive officers with the exception of one are employees of both the Company and RPC.
RPC and Marine Products own 50 percent each of a limited liability company called 255 RC, LLC that was
created for the joint purchase and ownership of a corporate aircraft. The purchase of the aircraft was completed in
January 2015, and the purchase was funded primarily by a $2,554,000 contribution by each company to 255 RC,
LLC. Each of RPC and Marine Products is a party to an operating lease agreement with 255 RC, LLC for a period of
five years. During 2015, Marine Products recorded certain net operating costs comprised of rent and an allocable
share of fixed costs of approximately $148,000 for the corporate aircraft. The Company accounts for this investment
using the equity method and its proportionate share of income or loss is recorded in selling, general and
administrative expenses. As of December 31, 2015, the investment closely approximates the underlying equity in the
net assets of 255 RC, LLC.
The Employee Benefits Agreement provides for, among other things, the Company’s employees to continue
participating subsequent to the spin-off in two RPC sponsored benefit plans, specifically, the defined contribution
401(k) plan and the defined benefit retirement income plan.
A group that includes the Company’s Chairman of the Board, R. Randall Rollins and his brother Gary W.
Rollins, who is also director of the Company, and certain companies under their control, controls in excess of fifty
percent of the Company’s voting power.
Critical Accounting Policies
The consolidated financial statements are prepared in accordance with accounting principles generally accepted
in the United States of America, which require significant judgment by management in selecting the appropriate
assumptions for calculating accounting estimates. These judgments are based on our historical experience, terms of
existing contracts, trends in the industry, and information available from other outside sources, as appropriate.
Senior management has discussed the development, selection and disclosure of its critical accounting estimates with
the Audit Committee of our Board of Directors. The Company believes that, of its significant accounting policies,
the following may involve a higher degree of judgment and complexity.
Sales recognition - The Company sells its boats through its network of independent dealers. Sales orders used to
plan production are firm indications of interest from dealers and are cancelable at any time, although historically
very few orders are cancelled after they have been placed. The Company recognizes sales when all the following
conditions are met: (1) a fully executed sales agreement exists, (2) the price of the boat is established, (3) the dealer
takes delivery of the boat, and (4) collectability of the sales price is reasonably assured.
Sales incentives and discounts – The Company records incentives as a reduction of sales or as a cost of sales as
appropriate. Using historical trends and management estimates, adjusted for current changes, the Company estimates
the amount of incentives that will be paid in the future on boats sold and accrues an estimated liability. The
33
Company offers various incentives that promote sales to dealers, and to a lesser extent, retail customers. These
incentives are designed to encourage timely replenishment of dealer inventories after peak selling seasons, stabilize
manufacturing volumes throughout the year, and improve production model mix. The dealer incentive programs are
a combination of annual volume commitment discounts, and additional discounts at time of invoice for those dealers
who do not finance their inventory through specified floor plan financing agreements. The annual dealer volume
discounts are primarily based on July 1 through June 30 model year purchases. In addition, the Company offers at
various times other time-specific or model-specific incentives.
The factors that complicate the calculation of the cost of these incentives are the ability to forecast sales of the
Company and individual dealers, the volume and timing of inventory financed by specific dealers, identification of
which boats have been sold subject to an incentive, and the estimated lag time between sales and payment of
incentives. Settlement of the incentives generally occurs from three to twelve months after the sale. The Company
regularly analyzes the historical incentive trends and makes adjustments to recorded liabilities for changes in trends
and terms of incentive programs. Total cost of incentives recorded in net sales as a percentage of gross sales was 6.8
percent in 2015, 8.3 percent in 2014, and 9.5 percent in 2013. A 0.25 percentage point change in cost of incentives
as a percentage of gross sales during 2015 would have increased or decreased net sales, gross margin and
operating income by approximately $0.3 million.
Warranty costs -The Company records as part of selling, general and administrative expenses an experience
based estimate of the future warranty costs to be incurred when sales are recognized. The Company evaluates its
warranty obligation for each product line on a model year basis. The Company provides warranties against
manufacturing defects for various components of the boats, primarily the fiberglass deck and hull, with warranty
periods extending up to a lifetime. Warranty costs, if any, on other components of the boats are generally absorbed
by the original component manufacturer. Warranty costs can vary depending upon the size and number of
components in the boats sold, the pre-sale warranty claims, and the desired level of customer service. While we
focus on high quality manufacturing programs and processes, including actively monitoring the quality of our
component suppliers and managing the dealer and customer service warranty experience and reimbursements, our
estimated warranty obligation is based upon the warranty terms and the Company’s enforcement of those terms over
time, defects, repair costs, and the volume and mix of boat sales. The estimate of warranty costs is regularly
analyzed and is adjusted based on several factors including the actual claims that occur. Warranty expense as a
percentage of net sales was 0.6 percent in 2015, 1.2 percent in 2014, and 1.5 percent in 2013. A 0.10 percentage
point increase in the estimated warranty expense as a percentage of net sales during 2015 would have increased
selling, general and administrative expenses and reduced operating income by approximately $0.2 million.
Income taxes - The effective income tax rate was 31.8 percent in 2015, 28.8 percent in 2014, and 24.9 percent
in 2013. The effective tax rates vary due to changes in estimates of future taxable income, fluctuations in the tax
jurisdictions in which the earnings and deductions are realized, variations in the relationship of tax-exempt income
or losses to income before taxes and favorable or unfavorable adjustments to estimated tax liabilities related to
proposed or probable assessments. As a result, the effective tax rate may fluctuate significantly on a quarterly or
annual basis.
The Company establishes a valuation allowance against the carrying value of deferred tax assets when it is
determined that it is more likely than not that the asset will not be realized through future taxable income. Such
amounts are charged to earnings in the period the determination is made. Likewise, if it is later determined that it is
more likely than not that the net deferred tax assets would be realized, the applicable portion of the previously
provided valuation allowance is reversed. The Company considers future market growth, forecasted earnings, future
taxable income, the mix of earnings in the jurisdictions in which the Company operates, and prudent and feasible tax
planning strategies in determining the need for a valuation allowance.
The Company calculates the current and deferred tax provision based on estimates and assumptions that could
differ from the actual results reflected in income tax returns filed during the subsequent year. Adjustments based on
filed tax returns are recorded when identified, which is generally in the third quarter of the subsequent year for U.S.
federal and state provisions. Deferred tax liabilities and assets are determined based on the differences between the
financial and tax bases of assets and liabilities using enacted tax rates in effect in the year the differences are
expected to reverse.
The amount of income taxes the Company pays is subject to ongoing audits by federal and state tax authorities,
which often result in proposed assessments. Our estimate for the potential outcome for any uncertain tax issue is
34
highly judgmental. The Company believes it has adequately provided for any reasonably foreseeable outcome
related to these matters. However, future results may include favorable or unfavorable adjustments to estimated tax
liabilities in the period the assessments are made or resolved or when statutes of limitation on potential assessments
expire. Additionally, the jurisdictions in which earnings or deductions are realized may differ from current
estimates.
Impact of Recent Accounting Pronouncements
During the year ended December 31, 2015, the Financial Accounting Standards Board (FASB) issued the
following Accounting Standards Updates (ASU):
Recently Adopted Accounting Pronouncements:
Accounting Standards Update 2014-08, Presentation of Financial Statements (Topic 205) and Property,
Plant, and Equipment (Topic 360): Reporting Discontinued Operations and Disclosures of Disposals of
Components of an Entity. The amendments in the ASU require that only disposals representing a strategic shift
in operations should be presented as discontinued operations. Those strategic shifts should have a major effect
on the organization’s operations and financial results. Examples include a disposal of a major geographic area, a
major line of business, or a major equity method investment. In addition, the new guidance requires expanded
disclosures about discontinued operations that will provide financial statement users with more information
about the assets, liabilities, income, and expenses of discontinued operations. The new guidance also requires
disclosure of the pre-tax income attributable to a disposal of a significant part of an organization that does not
qualify for discontinued operations reporting. The Company adopted these provisions in the first quarter of
2015 and the adoption did not have a material impact on the Company’s consolidated financial statements.
Accounting Standards Updates No. 2015-17, Income Taxes (Topic 740): Balance Sheet Classification of
Deferred Taxes. The amendments in this ASU eliminate the current requirement to present deferred tax
liabilities and assets as current and noncurrent in a classified balance sheet and now requires that all deferred tax
assets and liabilities be classified as noncurrent. The amendments are effective for financial statements issued
for annual periods beginning after December 15, 2016, with early application permitted. The Company elected
to early adopt the provisions of this ASU and classified its deferred tax balances as a non-current asset as of
December 31, 2015. Deferred tax balances for prior periods have not been retrospectively adjusted.
Recently Issued Accounting Pronouncements Not Yet Adopted:
Accounting Standards Update No. 2015-16, Business Combinations (Topic 805): Simplifying the Accounting
for Measurement-Period Adjustments. To simplify the accounting for adjustments made to provisional
amounts recognized in a business combination, the amendments in this ASU eliminate the requirement to
retrospectively account for those adjustments. Instead, an acquirer is required to recognize adjustments to
provisional amounts that are identified during the measurement period in the reporting period in which the
adjustment amounts are determined. All of the changes are to be recorded in the reporting period and calculated
as if the accounting had been completed at the acquisition date and either disclosed on the face of the income
statement or in the notes by each category. These amendments are effective for fiscal years beginning after
December 15, 2015, including interim periods within those fiscal years. The amendments are to be applied
prospectively to adjustments to provisional amounts that occur after the effective date with earlier application
permitted for financial statements that have not been issued. The Company plans to adopt the provisions in the
first quarter of 2016 for all business combinations completed thereafter and currently does not expect the
adoption to have a material impact on its consolidated financial statements.
Accounting Standards Update No. 2015-11, Inventory (Topic 330): Simplifying the Measurement of
Inventory. Current guidance requires an entity to measure inventory at the lower of cost or market. Market
could be replacement cost, net realizable value, or net realizable value less an approximately normal profit
margin. The amendments in this ASU simplify the measurement process and allows inventory to be measured at
lower of cost or net realizable value and eliminates the market requirement. Net realizable value is the estimated
selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal, and
transportation. The amendments do not apply to inventory that is measured using last-in, first-out or the retail
inventory method. The amendments are effective for fiscal years beginning after December 15, 2016, including
interim periods within those fiscal years. The amendments are to be applied prospectively with earlier
35
application permitted. The Company plans to adopt the provisions in the first quarter of 2017 and currently does
not expect the adoption to have a material impact on its consolidated financial statements.
Accounting Standards Update (ASU) No. 2015-07, Fair Value Measurement (Topic 820): Disclosures for
Investments in Certain Entities That Calculate Net Asset Value per Share (or Its Equivalent). The
amendments apply to the fair value of an investment that is measured using the net asset value per share (or its
equivalent) practical expedient. The amendments remove the requirement to categorize within the fair value
hierarchy all investments for which fair value is measured using the net asset value per share practical
expedient. The amendments also remove the requirement to make certain disclosures for all investments that are
eligible to be measured at fair value using the net asset value per share practical expedient. The amendments are
effective for public business entities for fiscal years beginning after December 15, 2015, and interim periods
within those fiscal years and are required to be applied retrospectively to all periods presented, with earlier
application permitted. The Company plans to adopt the provisions in the first quarter of 2016 and currently does
not expect the adoption to have a material impact on its consolidated financial statements.
Accounting Standards Update No. 2015-03, Interest—Imputation of Interest (Subtopic 835-30): Simplifying
the Presentation of Debt Issuance Costs. The amendments in this ASU require that debt issuance costs related
to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of
that debt liability, consistent with debt discounts. The recognition and measurement guidance for debt issuance
costs are not affected by the amendments in this ASU. The amendments should be applied on a retrospective
basis, wherein the balance sheet of each individual period presented should be adjusted to reflect the period-
specific effects of applying the new guidance. Upon transition, an entity is required to comply with the
applicable disclosures for a change in an accounting principle. These disclosures include the nature of and
reason for the change in accounting principle, the transition method, a description of the prior-period
information that has been retrospectively adjusted, and the effect of the change on the financial statement line
items (i.e., debt issuance cost asset and the debt liability). The amendments in this ASU are effective for
financial statements issued for fiscal years beginning after December 15, 2015, and interim periods within those
fiscal years. Early adoption of the amendments is permitted for financial statements that have not been
previously issued. The Company plans to adopt the provisions in the first quarter of 2016 and currently does not
expect the adoption to have a material impact on its consolidated financial statements.
Accounting Standards Update No. 2014-15, Presentation of Financial Statements —Going Concern
(Subtopic 205-40): Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern.
The provisions in this ASU are intended to define management’s responsibility to evaluate whether there is
substantial doubt about an organization’s ability to continue as a going concern and to provide related footnote
disclosures. Currently, financial statements are prepared under the presumption that the reporting organization
will continue to operate as a going concern, except in limited circumstances. This going concern basis of
accounting is critical to financial reporting because it establishes the fundamental basis for measuring and
classifying assets and liabilities. This ASU provides guidance regarding management’s responsibility to
evaluate whether there is substantial doubt about the organization’s ability to continue as a going concern and
the related footnote disclosures. The amendments are effective for the year ending December 31, 2016, and for
interim periods beginning the first quarter of 2017, with early application permitted. The Company plans to
adopt these provisions in the first quarter of 2016 and will provide such disclosures as required if there are
conditions and events that raise substantial doubt about its ability to continue as a going concern. The Company
currently does not expect the adoption to have a material impact on its consolidated financial statements.
Accounting Standards Update 2014-09, Revenue from Contracts with Customers (Topic 606). This ASU
affects any entity using U.S. GAAP that either enters into contracts with customers to transfer goods or services
or enters into contracts for the transfer of nonfinancial assets unless those contracts are within the scope of other
standards (e.g., insurance contracts or lease contracts). The core principle of the guidance is that an entity
should recognize revenue to depict the transfer of promised goods or services to customers in an amount that
reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. To
achieve that core principle, an entity should apply a five step process – (i) identifying the contract(s) with a
customer, (ii) identifying the performance obligations in the contract, (iii) determining the transaction price, (iv)
allocating the transaction price to the performance obligations in the contract and (v) recognizing revenue when
(or as) the entity satisfies a performance obligation. The Company plans to adopt these provisions in the first
quarter of 2018 in accordance with ASU 2015-14 that deferred the effective date of ASU 2014-09 for all entities
36
by one year. The Company is currently evaluating the impact of these provisions on its consolidated financial
statements.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
Marine Products holds no derivative financial instruments which could expose the Company to significant
market risk. Marine Products maintains an investment portfolio, comprised primarily of municipal debt and
corporate debt securities, which are subject to interest rate risk exposure. This risk is managed through conservative
policies to invest in high-quality obligations. Marine Products has performed an interest rate sensitivity analysis
using a duration model over the near term with a 10 percent change in interest rates. Marine Products’ portfolio is
not subject to material interest rate risk exposure based on this analysis. Marine Products does not expect any
material changes in market risk exposures or how those risks are managed.
37
MANAGEMENT’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
To the Stockholders of Marine Products Corporation:
The management of Marine Products Corporation is responsible for establishing and maintaining adequate
internal control over financial reporting for the Company. Marine Products Corporation maintains a system of
internal accounting controls designed to provide reasonable assurance, at a reasonable cost, that assets are
safeguarded against loss or unauthorized use and that the financial records are adequate and can be relied upon to
produce financial statements in accordance with accounting principles generally accepted in the United States of
America. The internal control system is augmented by written policies and procedures, an internal audit program
and the selection and training of qualified personnel. This system includes policies that require adherence to ethical
business standards and compliance with all applicable laws and regulations.
There are inherent limitations to the effectiveness of any controls system. A controls system, no matter how
well designed and operated, can provide only reasonable, not absolute, assurance that the objectives of the controls
system are met. Also, no evaluation of controls can provide absolute assurance that all control issues and any
instances of fraud, if any, within the Company will be detected. Further, the design of a controls system must reflect
the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. The
Company intends to continually improve and refine its internal controls.
Under the supervision and with the participation of our management, including our principal executive officer
and principal financial officer, we conducted an evaluation of the effectiveness of the design and operations of our
internal control over financial reporting, as of December 31, 2015 based on criteria established in 2013 Internal
Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway
Commission. Based on this evaluation, management’s assessment is that Marine Products Corporation maintained
effective internal control over financial reporting as of December 31, 2015.
The independent registered public accounting firm, Grant Thornton LLP, has audited the consolidated financial
statements as of and for the year ended December 31, 2015, and has also issued their report on the effectiveness of
the Company’s internal control over financial reporting, included in this report on page 39.
Richard A. Hubbell
President and Chief Executive Officer
Ben M. Palmer
Vice President, Chief Financial Officer and Treasurer
Atlanta, Georgia
February 29, 2016
38
Report of Independent Registered Public Accounting Firm
Board of Directors and Stockholders
Marine Products Corporation
We have audited the internal control over financial reporting of Marine Products Corporation (a Delaware
corporation) and subsidiaries (the “Company”) as of December 31, 2015, based on criteria established in the 2013
Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway
Commission (COSO). The Company’s management is responsible for maintaining effective internal control over
financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in
the accompanying Management’s Report on Internal Control over Financial Reporting. Our responsibility is to
express an opinion on the Company’s internal control over financial reporting based on our audit.
We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board
(United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about
whether effective internal control over financial reporting was maintained in all material respects. Our audit
included obtaining an understanding of internal control over financial reporting, assessing the risk that a material
weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the
assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe
that our audit provides a reasonable basis for our opinion.
A company’s internal control over financial reporting is a process designed to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of financial statements for external purposes in
accordance with generally accepted accounting principles. A company’s internal control over financial reporting
includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail,
accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable
assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance
with generally accepted accounting principles, and that receipts and expenditures of the company are being made
only in accordance with authorizations of management and directors of the company; and (3) provide reasonable
assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s
assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect
misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that
controls may become inadequate because of changes in conditions, or that the degree of compliance with the
policies or procedures may deteriorate.
In our opinion, the Company maintained, in all material respects, effective internal control over financial
reporting as of December 31, 2015, based on criteria established in the 2013 Internal Control—Integrated
Framework issued by COSO.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board
(United States), the consolidated financial statements of the Company as of and for the year ended December 31,
2015, and our report dated February 29, 2016 expressed an unqualified opinion on those financial statements.
Atlanta, Georgia
February 29, 2016
39
Report of Independent Registered Public Accounting Firm
Board of Directors and Stockholders
Marine Products Corporation
We have audited the accompanying consolidated balance sheets of Marine Products Corporation (a Delaware
corporation) and subsidiaries (the “Company”) as of December 31, 2015 and 2014, and the related consolidated
statements of operations, comprehensive income, stockholders’ equity, and cash flows for each of the three years in
the period ended December 31, 2015. Our audits of the basic consolidated financial statements included the financial
statement schedule listed in the index appearing under Item 15(2). These financial statements and financial
statement schedule are the responsibility of the Company’s management. Our responsibility is to express an opinion
on these financial statements and financial statement schedule based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board
(United States). 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
financial position of Marine Products Corporation and subsidiaries as of December 31, 2015 and 2014, and the
results of their operations and their cash flows for each of the three years in the period ended December 31, 2015 in
conformity with accounting principles generally accepted in the United States of America. Also in our opinion, the
related financial statement schedule, when considered in relation to the basic consolidated financial statements taken
as a whole, presents fairly, in all material respects, the information set forth therein.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board
(United States), the Company’s internal control over financial reporting as of December 31, 2015, based on criteria
established in the 2013 Internal Control—Integrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission (COSO), and our report dated February 29, 2016 expressed an
unqualified opinion thereon.
Atlanta, Georgia
February 29, 2016
40
Item 8. Financial Statements and Supplementary Data
CONSOLIDATED BALANCE SHEETS
MARINE PRODUCTS CORPORATION AND SUBSIDIARIES
(in thousands except share information)
2015
2014
December 31,
ASSETS
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Marketable securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accounts receivable, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income taxes receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Prepaid expenses and other current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Property, plant and equipment, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Goodwill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other intangibles, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Marketable securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
7,986
7,825
1,256
32,638
820
—
2,119
52,644
12,761
3,308
465
27,129
4,338
10,032
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 110,677
$
4,072
3,653
2,369
28,819
123
2,480
1,706
43,222
9,890
3,308
465
33,831
3,214
9,893
$ 103,823
LIABILITIES AND STOCKHOLDERS’ EQUITY
Liabilities
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Accrued expenses and other liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Pension liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other long-term liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3,681
10,117
13,798
6,590
77
20,465
$
3,577
9,631
13,208
7,039
82
20,329
Commitments and contingencies (Note 9)
Stockholders’ Equity
Preferred stock, $0.10 par value, 1,000,000 shares authorized, none issued . . . . . . . . . . . . . .
Common stock, $0.10 par value, 74,000,000 shares authorized, issued and outstanding
—
—
3,811
– 38,111,625 shares in 2015, 38,130,862 shares in 2014 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3,879
Capital in excess of par value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
84,423
Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(1,901)
Accumulated other comprehensive loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total stockholders’ equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
90,212
Total liabilities and stockholders’ equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 110,677
3,813
3,895
77,755
(1,969)
83,494
$ 103,823
The accompanying notes are an integral part of these statements.
41
CONSOLIDATED STATEMENTS OF OPERATIONS
MARINE PRODUCTS CORPORATION AND SUBSIDIARIES
(in thousands except per share data)
2015
Years ended December 31,
Net sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 207,061 $ 171,050 $ 168,293
138,480
Cost of goods sold . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
29,813
Gross profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
20,307
Selling, general and administrative expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
9,506
Operating income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
524
Interest income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
10,030
Income before income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2,502
Income tax provision . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
7,528
EARNINGS PER SHARE
163,261
43,800
23,249
20,551
420
20,971
6,665
14,306 $
138,379
32,671
20,665
12,006
521
12,527
3,613
8,914 $
2014
2013
Basic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Dividends paid per share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
0.39 $
0.39
0.20 $
0.24 $
0.24
0.16 $
0.20
0.20
0.15
The accompanying notes are an integral part of these statements.
42
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
MARINE PRODUCTS CORPORATION AND SUBSIDIARIES
(in thousands)
Years ended December 31,
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 14,306
Other comprehensive income, net of taxes:
125
Pension adjustment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(57)
Unrealized loss on securities, net of reclassification adjustments . . . . . . . . . . . . . .
Comprehensive income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 14,374
2015
2014
$ 8,914
2013
$ 7,528
(1,034)
(82)
$ 7,798
781
(62)
$ 8,247
The accompanying notes are an integral part of these statements.
43
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
MARINE PRODUCTS CORPORATION AND SUBSIDIARIES
(in thousands)
Three Years Ended
December 31, 2015
Balance, December 31, 2012 . . . . . . . . . . . . . . . . . . . . . . . . .
Stock issued for stock incentive plans, net . . . . . . . . . . . . . .
Stock purchased and retired . . . . . . . . . . . . . . . . . . . . . . . . . .
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Pension adjustment, net of taxes . . . . . . . . . . . . . . . . . . . . . .
Unrealized loss on securities, net of taxes and
reclassification adjustments . . . . . . . . . . . . . . . . . . . . . . .
Excess tax benefits for share-based payments . . . . . . . . . . .
Dividends declared . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Balance, December 31, 2013 . . . . . . . . . . . . . . . . . . . . . . . . .
Stock issued for stock incentive plans, net . . . . . . . . . . . . . .
Stock purchased and retired . . . . . . . . . . . . . . . . . . . . . . . . . .
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Pension adjustment, net of taxes . . . . . . . . . . . . . . . . . . . . . .
Unrealized loss on securities, net of taxes and
reclassification adjustments . . . . . . . . . . . . . . . . . . . . . . .
Excess tax benefits for share-based payments . . . . . . . . . . .
Dividends declared . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Balance, December 31, 2014 . . . . . . . . . . . . . . . . . . . . . . . . .
Stock issued for stock incentive plans, net . . . . . . . . . . . . . .
Stock purchased and retired . . . . . . . . . . . . . . . . . . . . . . . . . .
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Pension adjustment, net of taxes . . . . . . . . . . . . . . . . . . . . . .
Unrealized loss on securities, net of taxes and
reclassification adjustments . . . . . . . . . . . . . . . . . . . . . . .
Excess tax benefits for share-based payments . . . . . . . . . . .
Dividends declared . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Balance, December 31, 2015 . . . . . . . . . . . . . . . . . . . . . . . . .
Common Stock
Capital in
Excess of Retained
Shares Amount Par Value Earnings
2,417 $ 73,120
—
1,597
—
(567)
7,528
—
—
—
3,782 $
37
(9)
—
—
37,821
364
(90)
—
—
$
Accumulated
Other
Comprehensive
Income (Loss)
$ (1,572)
—
—
—
781
Total
$ 77,747
1,634
(576)
7,528
781
—
—
—
38,095
260
(224)
—
—
—
—
—
38,131
317
(336)
—
—
—
—
—
38,112
$
$
$
—
—
—
3,810 $
25
(22)
—
—
—
—
—
3,813 $
32
(34)
—
—
—
—
—
3,811 $
—
136
—
—
—
(5,705)
3,583 $ 74,943
—
1,729
—
(1,759)
8,914
—
—
—
—
342
—
—
—
(6,102)
3,895 $ 77,755
—
1,953
—
(2,225)
14,306
—
—
—
(62)
—
$
(853)
—
—
—
(1,034)
(82)
—
—
$ (1,969)
—
—
—
125
(62)
136
(5,705)
$ 81,483
1,754
(1,781)
8,914
(1,034)
(82)
342
(6,102)
$ 83,494
1,985
(2,259)
14,306
125
—
256
—
—
—
(7,638)
3,879 $ 84,423
(57)
—
—
$ (1,901)
(57)
256
(7,638)
$ 90,212
The accompanying notes are an integral part of these statements.
44
CONSOLIDATED STATEMENTS OF CASH FLOWS
MARINE PRODUCTS CORPORATION AND SUBSIDIARIES
(in thousands)
Years ended December 31,
OPERATING ACTIVITIES
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Adjustments to reconcile net income to net cash provided by operating
activities:
Depreciation expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(Gain) loss on sale of equipment and property . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Amortization of premium related to marketable securities . . . . . . . . . . . . . . . .
Stock-based compensation expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Excess tax benefits for share-based payments . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred income tax provision (benefit) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(Increase) decrease in assets:
Accounts receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Prepaid expenses and other current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income taxes receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other non-current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Increase (decrease) in liabilities:
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other accrued expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other long-term liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net cash provided by operating activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
INVESTING ACTIVITIES
Capital expenditures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Proceeds from sale of assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Investment in joint venture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sales and maturities of marketable securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Purchases of marketable securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net cash used for investing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
FINANCING ACTIVITIES
Payment of dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash paid for common stock purchased and retired . . . . . . . . . . . . . . . . . . . . . . . . .
Excess tax benefits for share-based payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net cash used for financing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net increase (decrease) in cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . .
Cash and cash equivalents at beginning of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash and cash equivalents at end of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
The accompanying notes are an integral part of these statements.
2015
2014
2013
$ 14,306
$ 8,914
$
7,528
1,013
(12)
1,059
1,993
(256)
1,309
1,113
(3,819)
(413)
(441)
(139)
712
31
1,210
1,754
(342)
(805)
(348)
40
133
911
790
726
(15)
1,057
1,702
(136)
78
(227)
(700)
(232)
(164)
(184)
104
486
(259)
16,044
(1,992)
638
(990)
10,656
1,323
(5)
186
10,937
(3,878)
6
—
17,659
(16,276)
(2,489)
(451)
1,083
(2,554)
20,085
(22,320)
(4,157)
(521)
15
—
14,576
(15,396)
(1,326)
(7,638)
(2,259)
256
(9,641)
3,914
4,072
7,986
(6,102)
(1,781)
342
(7,541)
(1,042)
5,114
$ 4,072
$
(5,705)
(576)
136
(6,145)
3,466
1,648
5,114
$
45
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Marine Products Corporation and Subsidiaries
Years ended December 31, 2015, 2014 and 2013
NOTE 1: SIGNIFICANT ACCOUNTING POLICIES
Basis of Consolidation and Presentation — The consolidated financial statements include the accounts of
Marine Products Corporation (a Delaware corporation) and its wholly owned subsidiaries (“Marine Products” or the
“Company”). Marine Products, through Chaparral Boats, Inc. (“Chaparral”) and Robalo Acquisition Company LLC
(“Robalo”), operates as a manufacturer of fiberglass powerboats and related products and services to a broad range
of consumers worldwide.
The consolidated financial statements included herein may not necessarily be indicative of the future results of
operations, financial position and cash flows of Marine Products.
The Company has only one reportable segment — its Powerboat Manufacturing business. The Company’s
results of operations and its financial condition are not significantly reliant upon any single customer or product
model. No single dealer accounted for more than 10 percent of net sales during 2015, 2014 or 2013. Net sales to the
Company’s international dealers were approximately $22 million in 2015, $26 million in 2014, and $29 million in
2013.
Nature of Operations — Marine Products is principally engaged in manufacturing powerboats and providing
related products and services. Marine Products distributes fiberglass recreational boats through a network of
domestic and international independent dealers.
Common Stock — Marine Products is authorized to issue 74,000,000 shares of common stock, $0.10 par value.
Holders of common stock are entitled to receive dividends when, as, and if declared by our Board of Directors out of
legally available funds. Each share of common stock is entitled to one vote on all matters submitted to a vote of
stockholders. Holders of common stock do not have cumulative voting rights. In the event of any liquidation,
dissolution or winding up of the Company, holders of common stock are entitled to ratable distribution of the
remaining assets available for distribution to stockholders.
Preferred Stock — Marine Products is authorized to issue up to 1,000,000 shares of preferred stock, $0.10 par
value. As of December 31, 2015, there were no shares of preferred stock issued. The Board of Directors is
authorized, subject to any limitations prescribed by law, to provide for the issuance of preferred stock as a class
without series or, if so determined from time to time, in one or more series, and by filing a certificate pursuant to the
applicable laws of the state of Delaware and to fix the designations, powers, preferences and rights, exchangeability
for shares of any other class or classes of stock. Any preferred stock to be issued could rank prior to the common
stock with respect to dividend rights and rights on liquidation.
Share Repurchases — The Company records the cost of share repurchases in stockholders’ equity as a
reduction to common stock to the extent of par value of the shares acquired and the remainder is allocated to capital
in excess of par value or retained earnings if capital in excess of par value has been depleted.
Dividend — On January 27, 2016, the Board of Directors approved a quarterly dividend of $0.06 per common
share payable March 10, 2016 to stockholders of record at the close of business on February 10, 2016.
Use of Estimates in the Preparation of Financial Statements — The preparation of financial statements in
conformity with accounting principles generally accepted in the United States of America 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 sales and
expenses during the reporting period. Actual results could differ from those estimates. Significant estimates are used
in the determination of sales incentives and discounts, warranty costs, and income taxes.
Sales Recognition — Marine Products recognizes sales when a fully executed agreement exists, prices are
established, products are delivered to the dealer in the case of domestic dealers and collectability is reasonably
assured. See “Deferred Revenue” below for recognition of sales to international dealers.
Deferred Revenue — Marine Products requires payment from international dealers, other than Canada, prior to
shipment of products to these dealers. Amounts received from international dealers toward the purchase of boats are
classified as deferred revenue and recognized as sales when the products are shipped.
46
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Marine Products Corporation and Subsidiaries
Years ended December 31, 2015, 2014 and 2013
Shipping and Handling Charges — The shipping and handling of the Company’s products to dealers is handled
through a combination of third-party marine transporters and a company owned fleet of delivery trucks. Fees
charged to customers for shipping and handling are included in net sales in the accompanying consolidated
statements of operations and the related costs incurred by the Company are included in cost of goods sold.
Advertising — Advertising expenses are charged to expense during the period in which they are incurred.
Expenses associated with product brochures and other inventoriable marketing materials are deferred and amortized
over the related model year which approximates the consumption of these materials. As of December 31, 2015 and
2014, the Company had approximately $282,000 and $303,000 in prepaid expenses related to unamortized product
brochure costs. Advertising expenses totaled approximately $2,480,000 in 2015, $2,291,000 in 2014 and $2,113,000
in 2013 and are recorded in selling, general and administrative expenses.
Sales Incentives and Discounts — Sales incentives including dealer discounts and retail sales promotions are
provided for and recorded as a reduction of sales or as a cost of sales as appropriate. The Company records the
estimated cost of these incentives at the later of the recognition of the related sales or the announcement of a
promotional program.
Cash and Cash Equivalents — Highly liquid investments with original maturities of three months or less when
acquired are considered to be cash equivalents. The Company maintains its cash in bank accounts, which at times,
may exceed federally insured limits.
Marketable Securities — Marine Products maintains investments at a large, well-capitalized financial
institution. Marine Products’ investment policy does not allow investment in any securities rated less than
“investment grade” by national rating services.
Management determines the appropriate classification of debt securities at the time of purchase and re-evaluates
such designations as of each balance sheet date. Debt securities are classified as available-for-sale because the
Company does not have the intent to hold the securities to maturity. Available-for-sale securities are stated at their
fair values, with the unrealized gains and losses, net of taxes, reported as a separate component of stockholders’
equity. The cost of securities sold is based on the specific identification method. Realized gains and losses, declines
in value judged to be other than temporary, interest and dividends on available-for-sale securities are included in
interest income. Net realized gains on marketable securities totaled $45,000 in 2015, $57,000 in 2014, and $61,000
in 2013. Of the total gains realized, reclassification from other comprehensive income totaled approximately
$45,000 in 2015, $57,000 in 2014, and $61,000 in 2013. Gross unrealized gains on marketable securities totaled
$26,000 as of December 31, 2015 and $122,000 as of December 31, 2014. Gross unrealized losses on marketable
securities totaled $29,000 as of December 31, 2015 and $37,000 as of December 31, 2014. The amortized cost basis,
fair value and net unrealized (loss) gain of the available-for-sale securities are as follows:
December 31,
2015
Type of Securities
(in thousands)
Municipal Obligations . . . . . . . . . . . . . . . . . . . $ 30,996 $ 30,996 $
Corporate Obligations . . . . . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 34,957 $ 34,954 $
3,961
3,958
Amortized
Cost Basis
Fair
Value
Net
Unrealized
Loss
Amortized
Cost
Basis
2014
Fair
Value
Net
Unrealized
Gain
0 $ 31,990 $ 32,080 $
(3)
(3) $ 37,399 $ 37,484 $
5,404
5,409
90
(5)
85
Municipal debt obligations consist primarily of municipal notes rated AA- or higher ranging in maturity from
less than one year to over 10 years. Corporate obligations consist primarily of debentures and notes issued by other
companies ranging in maturity from one to five years. These securities are rated A- or higher. Investments with
remaining maturities of less than 12 months are considered to be current marketable securities. Investments with
remaining maturities greater than 12 months are considered to be non-current marketable securities. The Company’s
non-current marketable securities as of December 31, 2015 are scheduled to mature between 2017 and 2037.
Accounts Receivable — The majority of the Company’s accounts receivable are due from dealers located in
markets throughout the United States. Approximately 53 percent of Marine Products’ domestic shipments are made
pursuant to “floor plan financing” programs in which Marine Products’ subsidiaries participate on behalf of their
dealers with various major third-party financing institutions. Under these arrangements, a dealer establishes lines of
47
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Marine Products Corporation and Subsidiaries
Years ended December 31, 2015, 2014 and 2013
credit with one or more of these third-party lenders for the purchase of boat inventory for sales to retail customers in
their show room or during boat show exhibitions. When a dealer purchases and takes delivery of a boat pursuant to a
floor plan financing arrangement, it draws against its line of credit and the lender pays the invoice cost of the boat
directly to Marine Products within approximately ten business days. The Company determines its allowance for
doubtful accounts by considering a number of factors, including the length of time trade accounts receivable are past
due, the Company’s previous loss history, the customer’s current ability to pay its obligation to the Company, and
the condition of the general economy and the industry as a whole. The Company writes-off accounts receivable
when they become uncollectible, and payments subsequently received on such receivables are credited to the
allowance.
Inventories — Inventories are stated at the lower of cost (determined on a first-in, first-out basis) or market
value. Market value is determined based on replacement cost for raw materials and net realizable value for work in
process and finished goods.
Property, Plant and Equipment — Property, plant and equipment is carried at cost. Depreciation is provided
principally on a straight-line basis over the estimated useful lives of the assets. The cost of assets retired or
otherwise disposed of and the related accumulated depreciation are eliminated from the accounts in the year of
disposal with the resulting gain or loss credited or charged to income. Expenditures for additions, major renewals,
and betterments are capitalized while expenditures for routine maintenance and repairs are expensed as incurred.
Depreciation expense on operating equipment used in production is included in cost of goods sold in the
accompanying consolidated statements of operations. All other depreciation is included in selling, general and
administrative expenses in the accompanying consolidated statements of operations. Property, plant and equipment
are reviewed for impairment when indicators of impairment exist.
Goodwill and Other Intangibles — Intangibles consist primarily of goodwill and trade names related to
businesses acquired. Goodwill represents the excess of the purchase price over the fair value of net assets of
businesses acquired. The carrying amount of goodwill was $3,308,000 as of December 31, 2015 and 2014. The
Company evaluates whether goodwill is impaired by comparing its market capitalization based on its closing stock
price (Level 1 input) to the book value of its equity on the annual evaluation date. The Company also periodically
performs a valuation of its trade names and has concluded that the fair value of these assets is not impaired. Based
on these evaluations, the Company concluded that no impairment of its goodwill or trade names has occurred for the
years ended December 31, 2015, 2014 and 2013.
Investments — The Company maintains certain securities in the non-qualified Supplemental Executive
Retirement Plan that have been classified as trading. See Note 10 for further information regarding these securities.
Warranty Costs — The Company warrants the entire boat, excluding the engine, against defects in materials
and workmanship for a period of one year. The Company also warrants the entire deck and hull, including its
bulkhead and supporting stringer system, against defects in materials and workmanship for periods extending up to a
lifetime. The Company accrues for estimated future warranty costs at the time of the sale based on its historical
claims experience. An analysis of the warranty accruals for the years ended December 31, 2015 and 2014 is as
follows:
(in thousands)
Balance at beginning of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 3,836
(1,653)
Less: Payments made during the year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2,074
Add: Warranty provision for the current year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Changes to warranty provision for prior years . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(852)
Balance at end of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 3,405
2015
2014
3,410
(1,551)
1,863
114
3,836
$
$
Insurance Accruals — The Company fully insures its risks related to general liability, product liability,
workers’ compensation, and vehicle liability, whereas the health insurance plan is self-funded up to a maximum
annual claim amount for each covered employee and related dependents. The estimated cost of claims under the
self-insurance program is accrued as the claims are incurred and may subsequently be revised based on
developments relating to such claims.
48
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Marine Products Corporation and Subsidiaries
Years ended December 31, 2015, 2014 and 2013
Research and Development Costs — The Company expenses research and development costs for new products
and components as incurred. Research and development costs are included in selling, general and administrative
expenses and totaled $663,000 in 2015, $743,000 in 2014, and $1,069,000 in 2013.
Repurchase Obligations — The Company has entered into agreements with third-party floor plan lenders where
it has agreed, in the event of default by the dealer, to repurchase MPC boats repossessed from the dealer. These
arrangements are subject to maximum repurchase amounts and the associated risk is mitigated by the value of the
boats repurchased. The Company accrues estimated losses when a loss, due primarily to the default of one of our
dealers, is determined to be probable and the amount of the loss is reasonably estimable.
Income Taxes — Deferred tax liabilities and assets are determined based on the difference between the financial
and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are
expected to reverse. The Company establishes a valuation allowance against the carrying value of deferred tax assets
if the Company concludes that it is more likely than not that the asset will not be realized through future taxable
income.
The Company elected to early adopt the provisions of Accounting Standards Update 2015-17 that requires all
deferred tax balances to be classified as non-current. Accordingly, net deferred tax balances have been reflected as a
non-current asset in the accompanying balance sheet as of December 31, 2015. Deferred tax balances for prior
periods have not been retrospectively adjusted.
Stock-Based Compensation — Stock-based compensation expense is recognized for all share-based payment
awards, net of an estimated forfeiture rate. Thus, compensation cost is amortized for those shares expected to vest on
a straight-line basis over the requisite service period of the award. See Note 10 for additional information.
Earnings per Share —Financial Accounting Standards Board (FASB) Auditing Standards Codification (ASC)
Topic 260-10 “Earnings Per Share-Overall,” requires a basic earnings per share and diluted earnings per share
presentation. See Note 10 for further information on restricted stock granted to employees.
Basic and diluted earnings per share are computed by dividing net income by the weighted average number of
shares outstanding during the respective periods. The basic and diluted calculations differ as a result of the dilutive
effect of stock options and time lapse restricted shares included in diluted earnings per share, but excluded from
basic earnings per share. In addition, the Company has periodically issued share-based payment awards that contain
non-forfeitable rights to dividends and are therefore considered participating securities.
49
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Marine Products Corporation and Subsidiaries
Years ended December 31, 2015, 2014 and 2013
A reconciliation of weighted average shares outstanding along with the earnings per share attributable to
restricted shares of common stock (participating securities) is as follows:
(In thousands except per share data)
Net income available for stockholders: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Less: Dividends paid
2015
$ 14,306
2014
$ 8,914
2013
$ 7,528
Common stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Restricted shares of common stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Undistributed earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(7,393)
(245)
$ 6,668
(5,911)
(191)
$ 2,812
(5,525)
(180)
$ 1,823
Allocation of undistributed earnings:
Common stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Restricted shares of common stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$6,449
219
$2,720
92
$1,762
61
Basic shares outstanding:
Common stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Restricted shares of common stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Diluted shares outstanding:
Common stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Dilutive effect of stock based awards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Restricted shares of common stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Basic earnings per share:
Common stock:
Distributed earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Undistributed earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Restricted shares of common stock:
Distributed earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Undistributed earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Diluted earnings per share:
Common stock:
Distributed earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Undistributed earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
35,703
1,252
36,955
35,691
1,246
36,937
35,556
1,264
36,820
35,703
192
35,895
1,252
37,147
35,691
291
35,982
1,246
37,228
35,556
324
35,880
1,264
37,144
$0.21
0.18
$0.39
$0.20
0.17
$0.37
$0.21
0.18
$0.39
$0.16
0.08
$0.24
$0.15
0.08
$0.23
$0.16
0.08
$0.24
$0.15
0.05
$0.20
$0.14
0.05
$0.19
$0.15
0.05
$0.20
Fair Value of Financial Instruments — The Company’s financial instruments consist primarily of cash and cash
equivalents, accounts receivable, accounts payable and marketable securities. The carrying value of cash and cash
equivalents, accounts receivable and accounts payable approximate their fair values because of the short-term nature
of such instruments. The Company’s marketable securities are classified as available-for-sale securities with the
exception of investments held in the non-qualified Supplemental Executive Retirement Plan (“SERP”) which are
classified as trading securities. All of these securities are carried at fair value in the accompanying consolidated
balance sheets. See Note 8 for further information regarding the fair value measurement of assets and liabilities.
Concentration of Suppliers — The Company has only four suppliers for the three types of engines it purchases.
This concentration of suppliers could impact our sales and profitability in the event of a sudden interruption in the
delivery of these engines.
Reclassification — Certain prior year balances have been reclassified to conform to the current year
presentation.
50
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Marine Products Corporation and Subsidiaries
Years ended December 31, 2015, 2014 and 2013
Recent Accounting Pronouncements
During the year ended December 31, 2015, the FASB issued the following Accounting Standards Updates (ASU):
Recently Adopted Accounting Pronouncements:
Accounting Standards Update 2014-08, Presentation of Financial Statements (Topic 205) and Property, Plant,
and Equipment (Topic 360): Reporting Discontinued Operations and Disclosures of Disposals of Components
of an Entity. The amendments in the ASU require that only disposals representing a strategic shift in operations
should be presented as discontinued operations. Those strategic shifts should have a major effect on the
organization’s operations and financial results. Examples include a disposal of a major geographic area, a major
line of business, or a major equity method investment. In addition, the new guidance requires expanded
disclosures about discontinued operations that will provide financial statement users with more information
about the assets, liabilities, income, and expenses of discontinued operations. The new guidance also requires
disclosure of the pre-tax income attributable to a disposal of a significant part of an organization that does not
qualify for discontinued operations reporting. The Company adopted these provisions in the first quarter of
2015 and the adoption did not have a material impact on the Company’s consolidated financial statements.
Accounting Standards Updates No. 2015-17, Income Taxes (Topic 740): Balance Sheet Classification of
Deferred Taxes. The amendments in this ASU eliminate the current requirement to present deferred tax
liabilities and assets as current and noncurrent in a classified balance sheet and now requires that all deferred tax
assets and liabilities be classified as noncurrent. The amendments are effective for financial statements issued
for annual periods beginning after December 15, 2016, with early application permitted. The Company elected
to early adopt the provisions of this ASU and classified its deferred tax balances as a non-current asset as of
December 31, 2015. Deferred tax balances for prior periods have not been retrospectively adjusted.
Recently Issued Accounting Pronouncements Not Yet Adopted:
Accounting Standards Update No. 2015-16, Business Combinations (Topic 805): Simplifying the Accounting for
Measurement-Period Adjustments. To simplify the accounting for adjustments made to provisional amounts
recognized in a business combination, the amendments in this ASU eliminate the requirement to retrospectively
account for those adjustments. Instead, an acquirer is required to recognize adjustments to provisional amounts
that are identified during the measurement period in the reporting period in which the adjustment amounts are
determined. All of the changes are to be recorded in the reporting period and calculated as if the accounting had
been completed at the acquisition date and either disclosed on the face of the income statement or in the notes
by each category. These amendments are effective for fiscal years beginning after December 15, 2015,
including interim periods within those fiscal years. The amendments are to be applied prospectively to
adjustments to provisional amounts that occur after the effective date with earlier application permitted for
financial statements that have not been issued. The Company plans to adopt the provisions in the first quarter of
2016 for all business combinations completed thereafter and currently does not expect the adoption to have a
material impact on its consolidated financial statements.
Accounting Standards Update No. 2015-11, Inventory (Topic 330): Simplifying the Measurement of Inventory.
Current guidance requires an entity to measure inventory at the lower of cost or market. Market could be
replacement cost, net realizable value, or net realizable value less an approximately normal profit margin. The
amendments in this ASU simplify the measurement process and allows inventory to be measured at lower of
cost or net realizable value and eliminates the market requirement. Net realizable value is the estimated selling
prices in the ordinary course of business, less reasonably predictable costs of completion, disposal, and
transportation. The amendments do not apply to inventory that is measured using last-in, first-out or the retail
inventory method. The amendments are effective for fiscal years beginning after December 15, 2016, including
interim periods within those fiscal years. The amendments are to be applied prospectively with earlier
application permitted. The Company plans to adopt the provisions in the first quarter of 2017 and currently does
not expect the adoption to have a material impact on its consolidated financial statements.
Accounting Standards Update (ASU) No. 2015-07, Fair Value Measurement (Topic 820): Disclosures for
Investments in Certain Entities That Calculate Net Asset Value per Share (or Its Equivalent). The amendments
apply to the fair value of an investment that is measured using the net asset value per share (or its equivalent)
51
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Marine Products Corporation and Subsidiaries
Years ended December 31, 2015, 2014 and 2013
practical expedient. The amendments remove the requirement to categorize within the fair value hierarchy all
investments for which fair value is measured using the net asset value per share practical expedient. The
amendments also remove the requirement to make certain disclosures for all investments that are eligible to be
measured at fair value using the net asset value per share practical expedient. The amendments are effective for
public business entities for fiscal years beginning after December 15, 2015, and interim periods within those
fiscal years and are required to be applied retrospectively to all periods presented, with earlier application
permitted. The Company plans to adopt the provisions in the first quarter of 2016 and currently does not expect
the adoption to have a material impact on its consolidated financial statements.
Accounting Standards Update No. 2015-03, Interest—Imputation of Interest (Subtopic 835-30): Simplifying the
Presentation of Debt Issuance Costs. The amendments in this ASU require that debt issuance costs related to a
recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that
debt liability, consistent with debt discounts. The recognition and measurement guidance for debt issuance costs
are not affected by the amendments in this ASU. The amendments should be applied on a retrospective basis,
wherein the balance sheet of each individual period presented should be adjusted to reflect the period-specific
effects of applying the new guidance. Upon transition, an entity is required to comply with the applicable
disclosures for a change in an accounting principle. These disclosures include the nature of and reason for the
change in accounting principle, the transition method, a description of the prior-period information that has
been retrospectively adjusted, and the effect of the change on the financial statement line items (i.e., debt
issuance cost asset and the debt liability). The amendments in this ASU are effective for financial statements
issued for fiscal years beginning after December 15, 2015, and interim periods within those fiscal years. Early
adoption of the amendments is permitted for financial statements that have not been previously issued. The
Company plans to adopt the provisions in the first quarter of 2016 and currently does not expect the adoption to
have a material impact on its consolidated financial statements.
Accounting Standards Update No. 2014-15, Presentation of Financial Statements —Going Concern (Subtopic
205-40): Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern. The provisions
in this ASU are intended to define management’s responsibility to evaluate whether there is substantial doubt
about an organization’s ability to continue as a going concern and to provide related footnote disclosures.
Currently, financial statements are prepared under the presumption that the reporting organization will continue
to operate as a going concern, except in limited circumstances. This going concern basis of accounting is critical
to financial reporting because it establishes the fundamental basis for measuring and classifying assets and
liabilities. This ASU provides guidance regarding management’s responsibility to evaluate whether there is
substantial doubt about the organization’s ability to continue as a going concern and the related footnote
disclosures. The amendments are effective for the year ending December 31, 2016, and for interim periods
beginning the first quarter of 2017, with early application permitted. The Company plans to adopt these
provisions in the first quarter of 2016 and will provide such disclosures as required if there are conditions and
events that raise substantial doubt about its ability to continue as a going concern. The Company currently does
not expect the adoption to have a material impact on its consolidated financial statements.
Accounting Standards Update 2014-09, Revenue from Contracts with Customers (Topic 606). This ASU affects
any entity using U.S. GAAP that either enters into contracts with customers to transfer goods or services or
enters into contracts for the transfer of nonfinancial assets unless those contracts are within the scope of other
standards (e.g., insurance contracts or lease contracts). The core principle of the guidance is that an entity
should recognize revenue to depict the transfer of promised goods or services to customers in an amount that
reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. To
achieve that core principle, an entity should apply a five step process – (i) identifying the contract(s) with a
customer, (ii) identifying the performance obligations in the contract, (iii) determining the transaction price, (iv)
allocating the transaction price to the performance obligations in the contract and (v) recognizing revenue when
(or as) the entity satisfies a performance obligation. The Company plans to adopt these provisions in the first
quarter of 2018 in accordance with ASU 2015-14 that deferred the effective date of ASU 2014-09 for all entities
by one year. The Company is currently evaluating the impact of these provisions on its consolidated financial
statements.
52
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Marine Products Corporation and Subsidiaries
Years ended December 31, 2015, 2014 and 2013
NOTE 2: ACCOUNTS RECEIVABLE
Accounts receivable consist of the following:
December 31,
(in thousands)
Trade receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Less: allowance for doubtful accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net accounts receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2015
2014
$ 557
724
1,281
(25)
$ 1,256
$ 1,741
653
2,394
(25)
$ 2,369
Trade receivables consist primarily of balances related to the sales of boats which are shipped pursuant to
“floor-plan financing” programs with qualified lenders. Other receivables consist primarily of rebate receivables
from various suppliers. Changes in the Company’s allowance for doubtful accounts are disclosed in Schedule II on
page 73 of this report.
NOTE 3: INVENTORIES
Inventories consist of the following:
December 31,
(in thousands)
Raw materials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Work in process . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Finished goods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2015
2014
$ 17,058
7,562
8,018
$ 32,638
$ 16,996
6,602
5,221
$ 28,819
NOTE 4: PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment are presented at cost, net of accumulated depreciation, and consist of the
following:
December 31,
(in thousands)
Land . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Buildings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Operating equipment and property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Furniture and fixtures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Vehicles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gross property, plant and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Less: accumulated depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net property, plant and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Estimated
Useful Lives
2015
2014
N/A
7-40
3-15
5-7
5-10
657 $
$
17,586
10,843
2,141
6,697
37,924
(25,163)
$ 12,761 $
657
17,237
9,981
1,978
4,217
34,070
(24,180)
9,890
Depreciation expense was $1,013,000 in 2015, $712,000 in 2014 and $726,000 in 2013.
NOTE 5: ACCRUED EXPENSES AND OTHER LIABILITIES
Accrued expenses and other liabilities consist of the following:
December 31,
(in thousands)
Accrued payroll and related expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accrued sales incentives and discounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accrued warranty costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total accrued expenses and other liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2015
2014
$ 2,060
3,309
3,405
721
622
$ 10,117
$ 1,935
2,671
3,836
706
483
$ 9,631
53
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Marine Products Corporation and Subsidiaries
Years ended December 31, 2015, 2014 and 2013
NOTE 6: INCOME TAXES
The following table lists the components of the provision for income taxes:
Years ended December 31,
(in thousands)
Current provision:
2015
2014
2013
Federal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
State . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 5,056
300
$ 4,275
143
$ 2,325
99
Deferred provision (benefit):
Federal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
State . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total income tax provision . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,256
53
$ 6,665
(762)
(43)
$ 3,613
57
21
$ 2,502
A reconciliation between the federal graduated statutory rate and Marine Products’ effective tax rate is as
follows:
Years ended December 31,
Federal statutory rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
State income taxes, net of federal benefit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Research and experimentation credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Tax-exempt interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Tax-exempt gain on SERP assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Manufacturing deduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Change in valuation allowance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Effective tax rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2015
2014
2013
35.0%
0.8
(1.1)
(0.4)
(0.1)
(2.5)
—
—
31.7%
35.0%
0.7
(2.1)
(1.1)
(0.5)
(3.3)
—
0.1
28.8%
34.0%
0.7
(4.9)
(1.4)
(1.2)
(2.7)
0.2
0.2
24.9%
Significant components of the Company’s deferred tax assets and liabilities are as follows:
December 31,
(in thousands)
Deferred tax assets:
2015
2014
Warranty costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sales incentives and discounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Stock-based compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Pension . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
All others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
State credits and NOL’s . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Valuation allowance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total deferred tax assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred tax liabilities:
$ 1,209
547
1,061
2,300
514
4,967
(4,694)
5,904
$ 1,362
512
996
2,499
444
4,674
(4,401)
6,086
Depreciation and amortization expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Basis differences in joint venture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net deferred tax assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(1,062)
(504)
$ 4,338
(392)
—
$ 5,694
Total net income tax payments were $5,797,000 in 2015, $3,509,000 in 2014, and $2,600,000 in 2013. As of
December 31, 2015 the Company had net operating loss carry forwards related to state income taxes and credits of
approximately $20.6 million that will expire between 2016 and 2035. As of December 31, 2015 the Company has a
valuation allowance of approximately $4.7 million, representing the tax affected amount of state tax credits and loss
carry forwards that the Company does not expect to utilize, against the corresponding deferred tax asset.
The Company’s policy is to record interest and penalties related to income tax matters as income tax expense.
Accrued interest and penalties were immaterial as of December 31, 2015 and 2014.
As of December 31, 2015 and 2014, our liability for unrecognized tax benefits was $15,000 and $14,000,
respectively, all of which would affect our effective rate if recognized. It is reasonably possible that the amount of
the unrecognized benefits with respect to our unrecognized tax positions will increase or decrease in the next 12
54
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Marine Products Corporation and Subsidiaries
Years ended December 31, 2015, 2014 and 2013
months. These changes may be the result of, among other things, state tax settlements under voluntary disclosure
agreements. However, quantification of an estimated range cannot be made at this time.
The Company and its subsidiaries are subject to U.S. federal and state income tax in multiple jurisdictions. In
many cases our uncertain tax positions are related to tax years that remain open and subject to examination by the
relevant taxing authorities. The Company’s 2012 through 2015 tax years remain open to examination. Additional
years may be open to the extent attributes are being carried forward to an open year.
The Protecting Americans from Tax Hikes Act of 2015 (“PATH”) was signed into law on December 18, 2015
and retroactively reinstated the provisions of the bonus depreciation deduction and the research and experimentation
credits (“R&E credits”) for 2015 and future years. As a result of the retroactive extension, the Company’s effective
rate for 2015 included a tax benefit due to the combined effect from the bonus depreciation on the manufacturing
deduction and the R&E credits attributable to the year.
In September 2013, the U.S. Department of the Treasury issued final regulations under Internal Revenue Code
Sections 162(a), 263(a), and 168 that provide guidance on the deduction and capitalization of expenditures related to
tangible property. Adoption of these regulations required certain mandatory and elective accounting methods with
respect to property and equipment, inventory and supplies. MPC adopted these regulations as of January 1, 2014 and
adoption of these provisions did not have a material impact on the results of operations or financial position during
2014 or 2015.
NOTE 7: ACCUMULATED OTHER COMPREHENSIVE LOSS
Accumulated other comprehensive loss consists of the following:
(in thousands)
Balance at December 31, 2013 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Change during 2014:
Before-tax amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Tax benefit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Reclassification adjustment, net of taxes Amortization of net loss . . . .
Net realized gain . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total activity in 2014 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Balance at December 31, 2014 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Change during 2015:
Before-tax amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Tax (expense) benefit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Reclassification adjustment, net of taxes Amortization of net loss . . . .
Net realized gain . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total activity in 2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Balance at December 31, 2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Pension
Adjustment
Unrealized
(Loss) gain
on
Securities
Total
$
(990)
$ 137
$
(853)
(1,639)
582
23
—
(1,034)
$ (2,024)
119
(42)
48
—
125
$ (1,899)
(213)
74
—
57
(82)
55
(213)
74
(1,034)
57
(1,116)
$ (1,969)
(157)
(157)
55
55
125
—
45
45
(57)
68
(2) $ (1,901)
$
$
55
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Marine Products Corporation and Subsidiaries
Years ended December 31, 2015, 2014 and 2013
NOTE 8: FAIR VALUE MEASUREMENTS
The various inputs used to measure assets at fair value establish a hierarchy that distinguishes between
assumptions based on market data (observable inputs) and the Company’s assumptions (unobservable inputs). The
hierarchy consists of three broad levels as follows:
1. Level 1 – Quoted market prices in active markets for identical assets or liabilities.
2. Level 2 – Quoted prices for similar instruments in active markets, quoted prices for identical or similar
instruments in markets that are not active, and model-based valuation techniques for which all significant
assumptions are observable in the market or can be corroborated by observable market data for
substantially the full term of the assets or liabilities.
3. Level 3 – Unobservable inputs developed using the Company’s estimates and assumptions, which reflect
those that market participants would use.
The following table summarizes the valuation of financial instruments measured at fair value on a recurring
basis on the balance sheet as of December 31, 2015 and 2014:
(in thousands)
Assets:
Fair Value Measurements at December 31, 2015 with:
Quoted prices in
active markets for
identical assets
(Level 1)
Significant other
observable inputs
(Level 2)
Significant
unobservable
inputs
(Level 3)
Trading securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Available-for-sale securities: . . . . . . . . . . . . . . . . . . . . .
Municipal Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . .
Corporate Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ —
$ —
—
$ —
$
6,491
$ 30,996
3,958
$ 34,954
$ —
—
$ —
—
$ —
(in thousands)
Assets:
Fair Value Measurements at December 31, 2014 with:
Quoted prices in
active markets for
identical assets
(Level 1)
Significant other
observable inputs
(Level 2)
Significant
unobservable
inputs
(Level 3)
Trading securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Available-for-sale securities: . . . . . . . . . . . . . . . . . . . . .
Municipal Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . .
Corporate Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ —
$ —
—
$ —
$
6,575
$ 32,080
5,404
$ 37,484
$ —
—
$ —
—
$ —
The Company determines the fair value of the marketable securities that are available-for-sale through quoted
prices for similar instruments in active markets or quoted prices for identical or similar instruments in markets that
are not active. The trading securities are comprised of the SERP assets, as described in Note 10, and are recorded
primarily at their net cash surrender values, which approximates fair value, as provided by the issuing insurance
company. Significant observable inputs, in addition to quoted market prices, were used to value the trading
securities. As a result, the Company classified these investments as using level 2 inputs. The Company’s policy is to
recognize transfers between levels at the beginning of quarterly reporting periods. For the year ended December 31,
2015 there were no significant transfers in or out of levels 1, 2 or 3.
The carrying amount of other financial instruments reported in the balance sheet for current assets and current
liabilities approximate their fair values because of the short-term maturity of these instruments. The Company
currently does not use the fair value option to measure any of its existing financial instruments and has not
determined whether or not it will elect this option for financial instruments it may acquire in the future.
56
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Marine Products Corporation and Subsidiaries
Years ended December 31, 2015, 2014 and 2013
NOTE 9: COMMITMENTS AND CONTINGENCIES
Lawsuits — The Company is a defendant in certain lawsuits which allege that plaintiffs have been damaged as a
result of the use of the Company’s products. The Company is vigorously contesting these actions. Management,
after consultation with legal counsel, is of the opinion that the outcome of these lawsuits will not have a material
adverse effect on the financial position, results of operations or liquidity of Marine Products.
Dealer Floor Plan Financing — To assist dealers in obtaining financing for the purchase of its boats for
inventory, the Company has entered into agreements with various dealers and selected third-party floor plan lenders
to guarantee varying amounts of qualifying dealers’ debt obligations. The Company’s obligation under these
guarantees becomes effective in the case of a default under the financing arrangement between the dealer and the
third party lender. The agreements provide for the return of repossessed boats to the Company in new and unused
condition subject to normal wear and tear as defined, in exchange for the Company’s assumption of specified
percentages of the debt obligation on those boats, up to certain contractually determined dollar limits by lender.
As a result of dealer defaults, the Company became contractually obligated to repurchase inventory for
approximately $1.1 million during the fourth quarter of 2014, none of which remains outstanding as of December
31, 2014. The Company recorded costs in connection with these repurchases of approximately $75 thousand during
2014 as a reduction of net sales. As of December 31, 2014, there were no repossessed boats remaining in inventory
as the Company redistributed all of these boats among existing and replacement dealers. There were no material
repurchases of inventory under contractual agreements during 2015. Management continues to monitor the risk of
additional defaults and resulting repurchase obligations based in part on information provided by the third-party
floor plan lenders and will adjust the guarantee liability at the end of each reporting period based on information
reasonably available at that time.
The Company currently has an agreement with one of the floor plan lenders whereby the contractual repurchase
limit is to not exceed 16 percent of the average net receivables financed by the floor plan lender for dealers during
the prior 12 month period, which was $8.5 million as of December 31, 2015. The Company has contractual
repurchase agreements with additional lenders with an aggregate maximum repurchase obligation of approximately
$6.7 million, with various expiration and cancellation terms of less than one year, for an aggregate repurchase
obligation with all financing institutions of approximately $15.2 million as of December 31, 2015. This repurchase
obligation risk is mitigated by the value of the boat repurchased.
Lease Obligations — In June 2001, the Company entered into a lease transaction for existing boat
manufacturing space located in Valdosta, Georgia. This lease was accounted for as a capital lease and was paid in
full in 2012.
Minimum annual operating lease obligations with terms in excess of one year, in effect at December 31, 2015,
are summarized in the following table:
(in thousands)
2016 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2017 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2018 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2019 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2020 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Thereafter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total rental commitments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
375
357
348
213
1
—
$ 1,294
Total rent expense charged to operations was approximately $135,000 in 2015, $118,000 in 2014 and $140,000
in 2013.
Income Taxes — The amount of income taxes the Company pays is subject to ongoing audits by federal and
state tax authorities, which often result in proposed assessments. Other long-term liabilities included the Company’s
estimated liabilities for these probable assessments and totaled approximately $43,000 as of December 31, 2015 and
$44,000 as of December 31, 2014.
57
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Marine Products Corporation and Subsidiaries
Years ended December 31, 2015, 2014 and 2013
Employment Agreements — The Company has agreements with two employees, which provide for a monthly
payment to each of the employees equal to 10 percent of profits (defined as pretax income before goodwill
adjustments and certain allocated corporate expenses) in addition to a base salary. The expense under these
agreements totaled approximately $6,411,000 in 2015, $4,225,000 in 2014 and $3,421,000 in 2013 and is included
in selling, general and administrative expenses in the accompanying consolidated statements of operations.
NOTE 10: EMPLOYEE BENEFIT PLANS
Supplemental Executive Retirement Plan (SERP)
The Company permits selected highly compensated employees to defer a portion of their compensation into the
SERP. The SERP assets are invested primarily in company-owned life insurance (“COLI”) policies as a funding
source to satisfy the obligation of the SERP. The assets are subject to claims by creditors, and the Company can
designate them to another purpose at any time. Investments in COLI policies consist of variable life insurance
policies of $7.9 million as of December 31, 2015 and $8.2 million as of December 31, 2014. In the COLI policies,
the Company is able to allocate assets across a set of choices provided by the insurance company, including fixed
income securities and equity funds. The COLI policies are recorded at their net cash surrender values, which
approximates fair value, as provided by the issuing insurance company, whose Standard & Poor’s credit rating was
A+.
The Company classifies the SERP assets as trading securities as described in Note 1. The fair value of these
assets totaled $6,491,000 as of December 31, 2015 and $6,575,000 as of December 31, 2014. The SERP assets are
reported in other assets on the consolidated balance sheets and changes related to the fair value of the assets are
included in selling, general and administrative expenses in the consolidated statements of operations. Trading
(losses) gains related to the SERP assets totaled $(84,000) in 2015, $187,000 in 2014 and $361,000 in 2013. The
SERP liabilities are recorded on the balance sheet in pension liabilities with any change in the fair value of the
SERP liabilities recorded as selling, general and administrative expenses in the consolidated statements of
operations.
Retirement Income Plan — Marine Products participates in the tax-qualified, defined benefit, noncontributory,
trusteed retirement income plan sponsored by RPC, Inc. (“RPC”) that covers substantially all employees with at
least one year of service prior to 2002.
The Company’s fair value of the plan assets exceeded the projected benefit obligation for its Retirement Income
Plan by $110,000 and thus the plan was over-funded as of December 31, 2015.
58
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Marine Products Corporation and Subsidiaries
Years ended December 31, 2015, 2014 and 2013
The following table sets forth the funded status of the Retirement Income Plan and the amounts recognized in
Marine Products’ consolidated balance sheets:
December 31,
(in thousands)
ACCUMULATED BENEFIT OBLIGATION, END OF YEAR . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2015
2014
$ 5,703
$ 6,355
CHANGE IN PROJECTED BENEFIT OBLIGATION:
Benefit obligation at beginning of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Service cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Actuarial (gain) loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Benefits paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Projected benefit obligation at end of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
CHANGE IN PLAN ASSETS:
Fair value of plan assets at beginning of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Actual return on plan assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Employer contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Benefits paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Fair value of plan assets at end of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Funded status at end of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
December 31,
(in thousands)
AMOUNTS RECOGNIZED IN THE CONSOLIDATED
BALANCE SHEETS CONSIST OF:
Noncurrent assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Noncurrent liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 6,355
—
259
(671)
(240)
$ 5,703
$ 6,014
(131)
170
(240)
$ 5,813
110
$
$ 4,873
—
261
1,450
(229)
$ 6,355
$ 5,887
221
135
(229)
$ 6,014
$ (341)
2015
2014
110
$
—
—
110
$
$ —
—
(341)
$ (341)
59
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Marine Products Corporation and Subsidiaries
Years ended December 31, 2015, 2014 and 2013
The funded status of the Retirement Income Plan was recorded in the consolidated balance sheets in other assets
as of December 31, 2015 and in pension liabilities as of December 31, 2014.
December 31,
(in thousands)
AMOUNTS (PRE-TAX) RECOGNIZED IN ACCUMULATED OTHER
COMPREHENSIVE LOSS CONSIST OF:
Net loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Prior service cost (credit) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net transition obligation (asset) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2015
2014
$ 2,944
—
—
$ 2,944
$ 3,139
—
—
$ 3,139
The accumulated benefit obligation for the Retirement Income Plan as of December 31, 2015 and 2014 has been
disclosed above. The Company uses a December 31 measurement date for this qualified plan.
Amounts recorded in the consolidated balance sheet as pension liabilities consist of:
December 31,
(in thousands)
SERP liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Funded status . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Pension liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2015
2014
$ (6,590) $ (6,698)
—
(341)
$ (6,590) $ (7,039)
Marine Products’ funding policy is to contribute to the Retirement Income Plan the amount required, if any,
under the Employee Retirement Income Security Act of 1974. Contributions to the plan totaled $170,000 during
2015 and $135,000 during 2014.
The components of net periodic benefit cost are summarized as follows:
Years ended December 31,
(in thousands)
Service cost for benefits earned during the period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest cost on projected benefit obligation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Expected return on plan assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Amortization of net loss. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2015
2014
2013
$ —
259
(421)
76
(86) $ (113 ) $
$ —
261
(411 )
37
$ —
235
(369)
68
(66)
$
The Company recognized a pre-tax increase to the funded status in accumulated other comprehensive income of
$195,000 in 2015 compared to a pre-tax decrease of $1,602,000 in 2014 and a pre-tax increase of $1,211,000 in
2013. There were no previously unrecognized prior service costs during 2015, 2014 and 2013. The pre-tax amounts
recognized in other comprehensive income for the years ended December 31, 2015, 2014 and 2013 are summarized
as follows:
(in thousands)
Net (gain) loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Amortization of net loss. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net transition obligation (asset) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Amount recognized in accumulated other comprehensive income . . . . . . . . . . . . . . . . .
2015
2014
$ (119) $ 1,639
(37 )
—
$ (195) $ 1,602
(76)
—
2013
$ (1,143)
(68)
—
$ (1,211)
The amounts in accumulated other comprehensive income expected to be recognized as components of net
periodic benefit cost in 2016 are as follows:
(in thousands)
Amortization of net loss. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Prior service cost (credit) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net transition obligation (asset) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Estimated net periodic cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
$
2016
76
—
—
76
60
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Marine Products Corporation and Subsidiaries
Years ended December 31, 2015, 2014 and 2013
The weighted average assumptions as of December 31 used to determine the projected benefit obligation and
net benefit cost were as follows:
December 31,
PROJECTED BENEFIT OBLIGATION:
Discount rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Rate of compensation increase . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
NET BENEFIT COST:
Discount rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Expected return on plan assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Rate of compensation increase . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2015
2014
2013
4.75%
N/A
4.25 %
N/A
4.25%
7.00%
N/A
5.35 %
7.00 %
N/A
5.35%
N/A
4.34%
7.00%
N/A
The Company’s expected return on assets assumption is derived from a detailed periodic assessment by its
management and investment advisor. It includes a review of anticipated future long-term performance of individual
asset classes and consideration of the appropriate asset allocation strategy given the anticipated requirements of the
plan to determine the average rate of earnings expected on the funds invested to provide for the pension plan
benefits. While the assessment gives appropriate consideration to recent fund performance and historical returns, the
rate of return assumption is derived primarily from a long-term, prospective view. Based on its recent assessment,
the Company has concluded that its expected long-term return assumption of seven percent is reasonable.
The plan’s weighted average asset allocation at December 31, 2015 and 2014 by asset category along with the
target allocation for 2016 are as follows:
Asset Category
Cash and Cash Equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Debt Securities – Core Fixed Income . . . . . . . . . . . . . . . . . . . . . . . .
Domestic Equity Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
International Equity Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Real Estate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Real Return . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Alternative/Opportunistic/Special . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Target
Allocation
for 2016
0% - 5%
15% - 50%
0% - 40%
0% - 30%
0% - 20%
0% - 20%
0% - 20%
100.0%
Percentage of
Plan Assets as of
December 31,
2015
Percentage of
Plan Assets as of
December 31,
2014
0.7%
25.8
38.5
23.2
7.2
0.0
4.6
100.0%
1.0%
24.3
37.0
22.8
10.5
1.6
2.8
100.0%
The Company’s overall investment strategy is to achieve a mix of approximately 70 percent of investments for
long-term growth and 30 percent for near-term benefit payments, with a wide diversification of asset types, fund
strategies and fund managers. Equity securities primarily include investments in large-cap and small-cap companies
domiciled domestically and internationally. Fixed-income securities include corporate bonds, mortgage-backed
securities, sovereign bonds and U.S. Treasuries. Other types of investments include real estate funds and private
equity funds that follow several different investment strategies. For each of the asset categories in the pension plan,
the investment strategy is identical – maximize the long-term rate of return on plan assets with an acceptable level of
risk in order to minimize the cost of providing pension benefits. The investment policy establishes a target allocation
for each asset class which is rebalanced as required. The plan utilizes a number of investment approaches, including
but not limited to individual market securities, equity and fixed income funds in which the underlying securities are
marketable, and debt funds to achieve this target allocation. Company management expects to make a contribution
to the pension plan of approximately $180,000 during fiscal year 2016.
Some of our assets, primarily our private equity and real estate funds, do not have readily determinable market
values given the specific investment structures involved and the nature of the underlying investments. For plan asset
reporting as of December 31, 2015, publicly traded asset pricing was used where possible. For assets without readily
determinable values, estimates were derived from investment manager statements combined with discussions
focusing on underlying fundamentals and significant events. Additionally, these investments are categorized as level
3 investments and are valued using significant non-observable inputs which do not have a readily determinable fair
value. In accordance with ASU No. 2011-12 “Investments In Certain Entities That Calculate Net Asset Value per
Share (Or Its Equivalent),” these investments are valued based on the net asset value per share calculated by the
61
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Marine Products Corporation and Subsidiaries
Years ended December 31, 2015, 2014 and 2013
funds in which the plan has invested. These valuations are subject to judgments and assumptions of the funds which
may prove to be incorrect, resulting in risks of incorrect valuation of these investments. The Company seeks to
mitigate these risks by evaluating the appropriateness of the funds’ judgments and assumptions by reviewing the
financial data included in the funds’ financial statements for reasonableness.
The following tables present our plan assets using the fair value hierarchy as of December 31, 2015 and 2014.
The fair value hierarchy has three levels based on the reliability of the inputs used to determine fair value. See Note
8 for a brief description of the three levels under the fair value hierarchy.
Fair Value Hierarchy as of December 31, 2015:
Investments (in thousands)
Cash and Cash Equivalents (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Fixed Income Securities (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Domestic Equity Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
International Equity Securities (3) . . . . . . . . . . . . . . . . . . . . . . . . .
Real Estate (4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Real Return (5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Alternative/Opportunistic/Special (6) . . . . . . . . . . . . . . . . . . . . .
Fair Value Hierarchy as of December 31, 2014:
Investments (in thousands)
Cash and Cash Equivalents (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Fixed Income Securities (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Domestic Equity Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
International Equity Securities (3) . . . . . . . . . . . . . . . . . . . . . . . . .
Real Estate (4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Real Return (5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Alternative/Opportunistic/Special (6) . . . . . . . . . . . . . . . . . . . . .
Total
$
39
1,501
2,237
1,346
418
—
272
$ 5,813
Total
$
61
1,459
2,226
1,372
631
95
170
$ 6,014
Level 1
$ 39
—
805
—
—
—
—
$ 844
Level 1
$
61
589
797
—
—
—
—
$1,447
Level 2
$ —
1,501
1,432
1,346
—
—
—
$ 4,279
Level 2
$ —
870
1,429
1,372
—
95
—
$ 3,766
Level 3
$ —
—
—
—
418
—
272
$ 690
Level 3
$ —
—
—
—
631
—
170
$ 801
(1) Cash and cash equivalents, which are used to pay benefits and plan administrative expenses, are held in Rule 2a-7 money market funds.
(2) Fixed income securities are primarily valued using a market approach with inputs that include broker quotes, benchmark yields, base
spreads and reported trades.
(3)
International equity securities are valued using a market approach based on the quoted market prices of similar instruments in their
respective markets.
(4) Real estate fund values are primarily reported by the fund manager and are based on valuation of the underlying investments, which include
inputs such as cost, discounted future cash flows, independent appraisals and market based comparable data.
(5) Real return funds invest in global equities, commodities and inflation protected core bonds that are valued primarily using a market
approach based on the quoted market prices of identical instruments in their respective markets.
(6) Alternative/Opportunistic/Special funds can invest across the capital structure in both liquid and illiquid securities that are valued using a
market approach based on the quoted market prices of identical instruments, or if no market price is available, instruments will be held at
their fair market value (which may be cost) as reasonably determined by the investment manager, independent dealers, or pricing services.
The following table presents a reconciliation of Level 3 assets held during the year ended December 31, 2015:
Investments
(in thousands)
Real Estate . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Alternative/Opportunistic/Special . . . . . .
Balance at
December 31,
2014
Net Realized and
Unrealized
Gains/(Losses)
Net Purchases,
Issuances and
Settlements
Net Transfers
In to (Out of)
Level 3
Balance at
December 31,
2015
$ 631
170
$ 801
$ 64
17
$ 81
$ (277)
85
$ (192)
$—
—
$—
$ 418
272
$ 690
62
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Marine Products Corporation and Subsidiaries
Years ended December 31, 2015, 2014 and 2013
The following table presents a reconciliation of Level 3 assets held during the year ended December 31, 2014:
Investments
(in thousands)
Real Estate . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Alternative/Opportunistic/Special . . . . . .
Balance at
December 31,
2013
Net Realized and
Unrealized
Gains/(Losses)
Net Purchases,
Issuances and
Settlements
Net Transfers
In to (Out of)
Level 3
Balance at
December 31,
2014
$ 491
—
$ 491
$ 34
4
$ 38
$ 106
166
$ 272
$ —
—
$ —
$ 631
170
$ 801
The Company expects to contribute approximately $180,000 to the Retirement Income Plan in 2016.
The Company estimates that the future benefits payable for the Retirement Income Plan over the next ten years
are as follows:
(in thousands)
2016 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2017 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2018 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2019 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2020 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2021-2025 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 278
261
251
257
269
$ 1,531
401(k) Plan— Marine Products participates in a defined contribution 401(k) plan sponsored by RPC that is
available to substantially all full-time employees with more than 90 days of service. This plan allows employees to
make tax-deferred contributions of up to 25 percent of their annual compensation, not exceeding the permissible
deduction imposed by the Internal Revenue Code. The Company matches 50 percent of each employee’s
contributions that do not exceed six percent of the employee’s compensation, as defined by the 401(k) plan.
Employees vest in the Company’s contributions after three years of service. The charges to expense for Marine
Products’ contributions to the 401(k) plan were approximately $250,000 in 2015, $194,000 in 2014 and $203,000 in
2013.
Stock Incentive Plan— The Company reserved 3,000,000 shares of common stock under the 2014 Stock
Incentive Plan with a term of ten years expiring in April 2024. All future equity compensation awards by the
Company will be issued under the 2014 plan. This plan provides for the issuance of various forms of stock
incentives, including among others, incentive and non-qualified stock options and restricted shares. As of December
31, 2015, there were approximately 2,620,250 shares available for grant.
The Company recognizes compensation expense for the unvested portion of awards outstanding over the
remainder of the service period. The compensation cost recorded for these awards will be based on their fair value at
grant date less the cost of estimated forfeitures. Forfeitures are estimated at the time of grant and revised, if
necessary, in subsequent periods to reflect actual forfeitures. Cash flows related to share-based awards to employees
that result in tax benefits in excess of recognized cumulative compensation cost (excess tax benefits) are classified
as financing cash flows.
Pre-tax stock-based employee compensation expense was approximately $1,993,000 ($1,285,000 after tax) for
2015, $1,754,000 ($1,131,000 after tax) for 2014 and $1,702,000 ($1,098,000 after tax) for 2013.
Stock Options— Stock options are granted at an exercise price equal to the fair market value of the Company’s
common stock at the date of grant except for grants of incentive stock options to owners of greater than 10 percent
of the Company’s voting securities which must be made at 110 percent of the fair market value of the Company’s
common stock. Options generally vest ratably over a period of five years and expire in 10 years, except to owners of
greater than 10 percent of the Company’s voting securities, which expire in five years.
The Company estimates the fair value of stock options as of the date of grant using the Black-Scholes option
pricing model. The Company has not granted stock options to employees since 2004.
63
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Marine Products Corporation and Subsidiaries
Years ended December 31, 2015, 2014 and 2013
There were no options exercised in 2015 and there have been no stock options outstanding since December 31,
2013. There was no tax benefit associated with the exercise of non-qualified stock options during 2015, 2014 or
2013.
Restricted Stock— Marine Products grants selected employees time lapse restricted stock. Time lapse restricted
shares vest after a certain stipulated number of years from the grant date, depending on the terms of the issue. Prior
to 2004, the Company issued time lapse restricted shares that vest over ten years. Beginning in 2004, the Company
issued time lapse restricted shares that vest in 20 percent increments starting with the second anniversary of the
grant, over the six year period beginning on the date of grant. During these years, grantees receive all dividends
declared and retain voting rights for the shares.
The agreements under which the restricted stock is issued provide that shares awarded may not be sold or
otherwise transferred until restrictions established under the stock plans have lapsed. Upon termination of
employment from the Company (other than due to death, disability or retirement on or after age 65), shares with
restrictions are forfeited in accordance with the plan.
The following is a summary of the changes in non-vested restricted shares for the year ended December 31,
2015:
Non-vested shares at January 1, 2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Granted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Vested . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Forfeited . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Non-vested shares at December 31, 2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Shares
1,251,400
319,750
(313,800)
(3,150)
1,254,200
Weighted Average
Grant-Date Fair
Value
$ 6.47
7.08
5.77
6.89
$ 6.80
The fair value of restricted stock awards is based on the market price of the Company’s stock on the date of
grant and is amortized to compensation expense on a straight line basis over the requisite service period. The
weighted average grant date fair value of these restricted stock awards was $7.08 in 2015, $7.90 in 2014 and $6.40
in 2013. The total fair value of shares vested was approximately $2,254,000 in 2015, $2,295,000 in 2014 and
$1,457,000 during 2013. Tax benefits for compensation tax deductions in excess of compensation expense related to
restricted shares credited to capital in excess of par value was approximately $256,000 in 2015, $342,000 in 2014
and $136,000 in 2013. The excess tax deductions are classified as financing cash flows in the accompanying
consolidated statements of cash flows.
Other Information— As of December 31, 2015 total unrecognized compensation cost related to non-vested
restricted shares was approximately $6,908,000 which is expected to be recognized over a weighted-average period
of 3.4 years.
NOTE 11: RELATED PARTY TRANSACTIONS
In conjunction with its spin-off from RPC in 2001, the Company and RPC entered into various agreements that
define the companies’ relationship after the spin-off.
The Transition Support Services Agreement provides for RPC to provide certain services, including financial
reporting and income tax administration, acquisition assistance, etc., to Marine Products until the agreement is
terminated by either party. Marine Products reimbursed RPC for its estimated allocable share of administrative costs
incurred for services rendered on behalf of Marine Products totaling $753,000 in 2015, $663,000 in 2014 and
$670,000 in 2013. The Company’s receivable (payable) due from (to) RPC for these services was $11,000 as of
December 31, 2015 and $(47,000) as of December 31, 2014. The Company’s directors are also directors of RPC and
all of the Company’s executive officers with the exception of one are employees of both the Company and RPC.
The Employee Benefits Agreement provides for, among other things, the Company’s employees to continue
participating subsequent to the spin-off in two RPC sponsored benefit plans, specifically, the defined contribution
401(k) plan and the defined benefit retirement income plan.
64
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Marine Products Corporation and Subsidiaries
Years ended December 31, 2015, 2014 and 2013
RPC and Marine Products own 50 percent each of a limited liability company called 255 RC, LLC that was
created for the joint purchase and ownership of a corporate aircraft. The purchase of the aircraft was completed in
January 2015, and the purchase was funded primarily by a $2,554,000 contribution by each company to 255 RC,
LLC. Each of RPC and Marine Products is a party to an operating lease agreement with 255 RC, LLC for a period of
five years. During 2015, Marine Products recorded certain net operating costs comprised of rent and an allocable
share of fixed costs of approximately $148,000 for the corporate aircraft. The Company accounts for this investment
using the equity method and its proportionate share of income or loss is recorded in selling, general and
administrative expenses. As of December 31, 2015 the investment closely approximates the underlying equity in the
net assets of 255 RC, LLC.
A group that includes the Company’s Chairman of the Board, R. Randall Rollins and his brother Gary W.
Rollins, who is also director of the Company, and certain companies under their control, controls in excess of fifty
percent of the Company’s voting power.
65
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
None.
Item 9A. Controls and Procedures
Evaluation of disclosure controls and procedures — The Company maintains disclosure controls and
procedures that are designed to ensure that information required to be disclosed in its Exchange Act reports is
recorded, processed, summarized and reported within the time periods specified in the Commission’s rules and
forms, and that such information is accumulated and communicated to its management, including the Chief
Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required
disclosure.
As of the end of the period covered by this report, December 31, 2015 (the “Evaluation Date”), the Company
carried out an evaluation, under the supervision and with the participation of its management, including the Chief
Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of its disclosure
controls and procedures. Based upon this evaluation, the Chief Executive Officer and the Chief Financial Officer
concluded that the Company’s disclosure controls and procedures were effective at a reasonable assurance level as
of the Evaluation Date.
Management’s report on internal control over financial reporting — Management is responsible for
establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange
Act Rules 13a-15(f) and 15d-15(f). Management’s report on internal control over financial reporting is included on
page 38 of this report. Grant Thornton LLP, the Company’s independent registered public accounting firm, has
audited the effectiveness of internal control as of December 31, 2015 and issued a report thereon which is included
on page 39 of this report.
Changes in internal control over financial reporting — Management’s evaluation of changes in internal control
did not identify any changes in the Company’s internal control over financial reporting that occurred during the
Company’s most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, the
Company’s internal control over financial reporting.
Item 9B. Other Information
None.
66
Item 10. Directors, Executive Officers and Corporate Governance
PART III
Information concerning directors and executive officers will be included in the Marine Products Proxy
Statement for its 2016 Annual Meeting of Stockholders, in the section titled “Election of Directors.” This
information is incorporated herein by reference. Information about executive officers is contained on page 23 of this
document.
Audit Committee and Audit Committee Financial Expert
Information concerning the Audit Committee of the Company and the Audit Committee Financial Expert(s) will
be included in the Marine Products Proxy Statement for its 2016 Annual Meeting of Stockholders, in the section
titled “Corporate Governance and Board of Directors, Committees and Meetings – Audit Committee.” This
information is incorporated herein by reference.
Code of Ethics
Marine Products has a Code of Business Conduct that applies to all employees. In addition, the Company has a
Code of Business Conduct and Ethics for Directors and Executive Officers and Related Party Transaction Policy.
Both of these documents are available on the Company’s website at www.marineproductscorp.com. Copies are also
available at no extra charge by writing to Attn.: Human Resources, Marine Products Corporation, 2801 Buford
Highway, Suite 520, Atlanta, Georgia 30329. Marine Products intends to satisfy the disclosure requirement under
Item 10 of Form 8-K regarding an amendment to, or waiver from, a provision of its code of ethics that relates to any
elements of the code of ethics definition enumerated in SEC rules by posting such information on its internet
website, the address of which is provided above.
Section 16(a) Beneficial Ownership Reporting Compliance
Information regarding compliance with Section 16(a) of the Exchange Act will be included under “Section
16(a) Beneficial Ownership Reporting Compliance” in the Company’s Proxy Statement for its 2016 Annual Meeting
of Stockholders, which is incorporated herein by reference.
Item 11. Executive Compensation
Information concerning director and executive compensation will be included in the Marine Products Proxy
Statement for its 2016 Annual Meeting of Stockholders, in the sections titled “Compensation Committee Interlocks
and Insider Participation,” “Director Compensation,” “Compensation Discussion and Analysis” and “Executive
Compensation.” This information is incorporated herein by reference.
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder
Matters
Information concerning security ownership will be included in the Marine Products Proxy Statement for its
2016 Annual Meeting of Stockholders, in the sections titled, “Capital Stock” and “Election of Directors.” This
information is incorporated herein by reference.
67
Securities Authorized for Issuance Under Equity Compensation Plans
The following table sets forth certain information regarding equity compensation plans as of December 31,
2015.
Plan Category
Equity compensation plans
approved by securityholders . . . .
Equity compensation plans not
approved by securityholders . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . .
(A)
Number of Securities To
Be Issued Upon Exercise of
Outstanding Options,
Warrants and Rights
(B)
Weighted Average
Exercise Price of
Outstanding Options,
Warrants and Rights
—
—
—
$ —
—
$ —
(C)
Number of Securities
Remaining Available for
Future Issuance Under
Equity Compensation
Plans (Excluding
Securities Reflected in
Column (A))
2,620,250(1)
—
2,620,250
(1) All of the securities can be issued in the form of restricted stock or other stock awards.
See “NOTE 10: EMPLOYEE BENEFIT PLANS” to the Consolidated Financial Statements for information
regarding the material terms of the equity compensation plans.
Item 13. Certain Relationships and Related Transactions, and Director Independence
Information concerning certain relationships and related party transactions will be included in the Marine
Products Proxy Statement for its 2016 Annual Meeting of Stockholders, in the section titled “Certain Relationships
and Related Party Transactions.” Information regarding director independence will be included in the Marine
Products Proxy Statement for its 2016 Annual Meeting of Stockholders in the section titled “Director Independence
and NYSE Requirements.” This information is incorporated herein by reference.
Item 14. Principal Accounting Fees and Services
Information regarding principal accountant fees and services will be included in the section titled, “Independent
Registered Public Accountants” in the Marine Products Proxy Statement for its 2016 Annual Meeting of
Stockholders. This information is incorporated herein by reference.
68
Item 15. Exhibits and Financial Statement Schedules
Consolidated Financial Statements, Financial Statement Schedule and Exhibits
PART IV
1. Consolidated financial statements listed in the accompanying Index to Consolidated Financial Statements and
Schedule are filed as part of this report.
2. The financial statement schedule listed in the accompanying Index to Consolidated Financial Statements and
Schedule is filed as part of this report.
3. Exhibits listed in the accompanying Index to Exhibits are filed as part of this report. The following such
exhibits are management contracts or compensatory plans or arrangements:
10.5 Marine Products Corporation 2004 Stock Incentive Plan (incorporated herein by reference to
Appendix B to the Definitive Proxy Statement filed on March 24, 2004).
10.6
10.7
10.8
10.9
Form of stock option grant agreement under the 2001 Employee Stock Incentive Plan
(incorporated herein by reference to Exhibit 10.7 to the Form 10-K filed on March 21, 2003).
Form of performance restricted stock grant agreement under the 2001 Employee Stock Incentive
Plan (incorporated herein by reference to Exhibit 10.9 to the Form 10-K filed on March 21, 2003).
Form of stock option grant agreement under the 2004 Stock Incentive Plan (incorporated herein by
reference to Exhibit 10.1 to the Form 10-Q filed on November 1, 2004).
Form of time lapse restricted stock grant agreement under the 2004 Stock Incentive Plan
(incorporated herein by reference to Exhibit 10.8 to the Form 10-Q filed on November 1, 2004).
10.10 Form of performance restricted stock grant agreement under the 2004 Stock Incentive Plan
(incorporated herein by reference to Exhibit 10.9 to the Form 10-Q filed on November 1, 2004).
10.11 Supplemental Retirement Plan (incorporated herein by reference to Exhibit 10.16 to the Form 10-
K filed on March 15, 2005).
10.12 First Amendment to 2001 Employee Stock Incentive Plan and 2004 Stock Incentive Plan
(incorporated by reference to Exhibit 10.19 to the Form 10-K filed on March 2, 2007).
10.13 Performance Based Compensation Agreement between James A. Lane, Jr. and Chaparral Boats,
Inc. (incorporated herein by reference to Exhibit 10.1 to the Form 8-K filed on April 26, 2013).
10.14 Summary of ‘At-Will’ compensation arrangements with the Executive Officers as of February 28,
2009 (incorporated herein by reference to Exhibit 10.20 to the Form 10-K filed on March 5, 2009).
10.15 Form of time lapse restricted stock agreement under the 2004 Stock Incentive Plan (incorporated
herein by reference to Exhibit 10.1 to the Form 10-Q filed on May 2, 2012).
10.16 Summary of compensation arrangements with non-employee directors (incorporated herein by
reference to Exhibit 10.16 to the Form 10-K filed on February 27, 2015).
10.17
2014 Stock Incentive Plan (incorporated herein by reference to Appendix A to the Registrant’s
definitive Proxy Statement filed on March 17, 2014).
69
Exhibits (inclusive of item 3 above):
Exhibit
Number
Description
3.1 (A) Articles of Incorporation of Marine Products Corporation (incorporated herein by reference to Exhibit
3.1 to the Form 10 filed on February 13, 2001).
(B) Certificate of Amendment of Certificate of Incorporation of Marine Products Corporation executed on
June 8, 2005 (incorporated herein by reference to Exhibit 99.1 to the current report on Form 8-K filed on
June 9, 2005).
3.2 Amended and Restated Bylaws of Marine Products Corporation (incorporated herein by reference to
Exhibit 3.2 to the Form 10-Q filed on July 31, 2015).
4 Form of Common Stock Certificate of Marine Products Corporation (incorporated herein by reference to
Exhibit 4.1 to the Form 10 filed on February 3, 2001).
10.1 Agreement Regarding Distribution and Plan of Reorganization, dated February 12, 2001, by and between
RPC, Inc. and Marine Products Corporation (incorporated herein by reference to Exhibit 10.2 to the Form
10 filed on February 13, 2001).
10.2 Employee Benefits Agreement, dated February 12, 2001, by and between RPC, Inc., Chaparral Boats, Inc.
and Marine Products Corporation (incorporated herein by reference to Exhibit 10.3 to the Form 10 filed on
February 13, 2002).
10.3 Transition Support Services Agreement, dated February 12, 2001, by and between RPC, Inc. and Marine
Products Corporation (incorporated herein by reference to Exhibit 10.4 to the Form 10 filed on February
13, 2001).
10.4 Tax Sharing Agreement, dated February 12, 2001, by and between RPC, Inc. and Marine Products
Corporation (incorporated herein by reference to Exhibit 10.5 to the Form 10 filed on February 13, 2001).
10.5 Marine Products Corporation 2004 Stock Incentive Plan (incorporated herein by reference to Appendix B
to the Definitive Proxy Statement filed on March 24, 2004).
10.6 Form of stock option grant agreement under the 2001 Employee Stock Incentive Plan (incorporated herein
by reference to Exhibit 10.7 to the Form 10-K filed on March 21, 2003).
10.7 Form of performance restricted stock grant agreement under the 2001 Employee Stock Incentive Plan
(incorporated herein by reference to Exhibit 10.9 to the Form 10-K filed on March 21, 2003).
10.8 Form of stock option grant agreement under the 2004 Stock Incentive Plan (incorporated herein by
reference to Exhibit 10.1 to the Form 10-Q filed on November 1, 2004).
10.9 Form of time lapse restricted stock grant agreement under the 2004 Stock Incentive Plan (incorporated
herein by reference to Exhibit 10.2 to the Form 10-Q filed on November 1, 2004).
10.10 Form of performance restricted stock grant agreement under the 2004 Stock Incentive Plan (incorporated
herein by reference to Exhibit 10.3 to the Form 10-Q filed on November 1, 2004).
10.11 Supplemental Retirement Plan (incorporated herein by reference to Exhibit 10.16 to the Form 10-K filed
on March 15, 2005).
10.12 First Amendment to 2001 Employee Stock Incentive Plan and 2004 Stock Incentive Plan (incorporated
herein by reference to Exhibit 10.19 to the Form 10-K filed on March 2, 2007).
70
10.13 Performance Based Compensation Agreement between James A. Lane, Jr. and Chaparral Boats, Inc.
(incorporated herein by reference to Exhibit 10.1 to the Form 8-K filed on April 26, 2013).
10.14 Summary of ‘At-Will’ compensation arrangements with the Executive Officers as of February 28, 2009
(incorporated herein by reference to Exhibit 10.20 to the Form 10-K filed on March 5, 2009).
10.15 Form of time lapse restricted stock agreement under the 2004 Stock Incentive Plan (incorporated herein by
reference to Exhibit 10.1 to the Form 10-Q filed on May 2, 2012).
10.16 Summary of compensation arrangements with non-employee directors (incorporated herein by reference to
Exhibit 10.16 to the Form 10-K filed on February 27, 2015).
10.17 2014 Stock Incentive Plan (incorporated herein by reference to Appendix A to the Registrant’s definitive
Proxy Statement filed on March 17, 2014).
21 Subsidiaries of Marine Products Corporation (incorporated herein by reference to Exhibit 21 to the Form
10-K filed on March 4, 2008).
23 Consent of Grant Thornton LLP
24 Powers of Attorney for Directors
31.1 Section 302 certification for Chief Executive Officer
31.2 Section 302 certification for Chief Financial Officer
32.1 Section 906 certification for Chief Executive Officer and Chief Financial Officer
101.INS XBRL Instance Document
101.SCH XBRL Taxonomy Extension Schema Document
101.CAL XBRL Taxonomy Extension Calculation Linkbase Document
101.LAB XBRL Taxonomy Extension Label Linkbase Document
101.PRE XBRL Taxonomy Extension Presentation Linkbase Document
101.DEF XBRL Taxonomy Extension Definition Linkbase Document
Any schedules not shown above have been omitted because they are not applicable.
71
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has
duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
SIGNATURES
Marine Products Corporation
Richard A. Hubbell
President and Chief Executive Officer
February 29, 2016
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the
following persons on behalf of the Registrant and in the capacities and on the dates indicated.
Name
Title
Date
Richard A. Hubbell
(Principal Executive Officer)
President and Chief Executive Officer
February 29, 2016
Ben M. Palmer
(Principal Financial and Accounting Officer)
Vice President, Chief Financial Officer and Treasurer February 29, 2016
The Directors of Marine Products Corporation (listed below) executed a power of attorney, appointing Richard
A. Hubbell their attorney-in-fact, empowering him to sign this report on their behalf.
R. Randall Rollins, Director
Gary W. Rollins, Director
Henry B. Tippie, Director
James B. Williams, Director
James A. Lane, Jr., Director
Linda H. Graham, Director
Bill J. Dismuke, Director
Larry L. Prince, Director
Richard A. Hubbell
Director and as Attorney-in-fact
February 29, 2016
72
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS, REPORTS AND SCHEDULE
The following documents are filed as part of this report.
FINANCIAL STATEMENTS AND REPORTS
Management’s Report on Internal Control Over Financial Reporting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
PAGE
38
Report of Independent Registered Public Accounting Firm on Internal Control Over Financial Reporting . . . .
Report of Independent Registered Public Accounting Firm on Consolidated Financial Statements . . . . . . . . . . . .
Consolidated Balance Sheets as of December 31, 2015 and 2014 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Consolidated Statements of Operations for each of the three years ended December 31, 2015 . . . . . . . . . . . . . . . .
Consolidated Statements of Comprehensive Income for each of the three years ended December 31, 2015 . . .
Consolidated Statements of Stockholders’ Equity for each of the three years ended December 31, 2015 . . . . . .
Consolidated Statements of Cash Flows for each of the three years ended December 31, 2015 . . . . . . . . . . . . . . .
39
40
41
42
43
44
45
Notes to Consolidated Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
46-65
SCHEDULE
Schedule II — Valuation and Qualifying Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
73
Schedules not listed above have been omitted because they are not applicable or the required information is
included in the consolidated financial statements or notes thereto.
SCHEDULE II—VALUATION AND QUALIFYING ACCOUNTS
MARINE PRODUCTS CORPORATION AND SUBSIDIARIES (in thousands of dollars)
Description
Year ended December 31, 2015
Allowance for doubtful accounts . . . . . . . . . . . . . . .
Deferred tax asset valuation allowance . . . . . . . . .
Year ended December 31, 2014
Allowance for doubtful accounts . . . . . . . . . . . . . . .
Deferred tax asset valuation allowance . . . . . . . . .
Year ended December 31, 2013
Allowance for doubtful accounts . . . . . . . . . . . . . . .
Deferred tax asset valuation allowance . . . . . . . . .
For the years ended December 31, 2015, 2014 and 2013
Balance at
Beginning
of Period
Charged to
Costs and
Expenses
Net
(Write-Offs)/
Recoveries
Balance
at End of
Period
$
25
$4,401
$
25
$4,359
$
22
$4,155
$ —
$293
$ —
$ 42
$ —
$204
$ —
$ —
$ —
$ —
$ 3
$ —
$
25
$4,694
$
25
$4,401
$
25
$4,359
73
SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)
(in thousands except per share data)
2015
Net sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gross profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Earnings per share — basic (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Earnings per share — diluted (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
First
Second
Third
Fourth
$ 50,644
10,205
2,929
0.08
0.08
$
$59,498
12,604
4,429
0.12
0.12
$
$ 47,038
9,874
3,103
0.08
0.08
$
$ 49,881
11,117
3,845
0.10
0.10
$
2014
Net sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gross profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Earnings per share — basic (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Earnings per share — diluted (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 47,702
8,838
1,978
0.05
0.05
$
$47,975
9,432
3,013
0.08
0.08
$
$ 37,932
6,967
1,882
0.05
0.05
$
$ 37,441
7,434
2,041
0.06
0.05
$
(a) The sum of the earnings per share for the four quarters may differ from annual amounts due to the required method of computing the
weighted average shares for the respective periods.
74
R247 n DUAL CONSOLE
VORTEX JET BOATS
R207 n R227 n R247
R246 n CAYMAN
203VR n 203VRX n 223VR n 223VRX
243VR n 243VRX
R300 n CENTER CONSOLE
216 n 225 n 226 n 246
2016 PRODUCT OVERVIEW
CORPORATE INFORMATION
H2O SPORT SERIES
The H2O series continues an innovative line that brings Chaparral style,
performance and quality to first-time and experienced boat buyers at No
Haggle, Real Deal pricing. The H2O sport package comes in 18, 19 and
21 foot lengths, and every style is loaded with features. Choose an H2O
sport package or Ski & Fish model, and you will choose craftsmanship,
value and innovation.
18 Sport n 18 Ski & Fish n 19 Sport n 19 Ski & Fish
21 Sport n 21 Ski & Fish
Dive into Chaparral’s new Vortex fleet of jet boats. Chaparral’s award
winning design team built a line of jet boats that is both sleek and
stylish. Equipped with fuel-saving Eco-Mode, Chaparral’s Extended
V-Plane, Rotax® power and innovation at its absolute best, the line also
includes a trailer and is part of No Haggle, Real Deal pricing targeting
younger first-time boat owners.
ROBALO DUAL CONSOLES
Multi-purpose outboard fishing boats like the Robalo Dual Console are
enjoying sizzling popularity! Today’s fishermen want a boat that does
more than just fish, and the dual console does just that. Serious anglers
will appreciate the secure rod storage, raw water wash down, self-
bailing cockpit and standard livewell. Fish in the morning, tow the kids
all afternoon, and then cruise as the sun sets.
ROBALO CAYMAN BAY BOATS
Introducing the new Cayman Series that brings Robalo quality, style
and performance to a bay boat. Robalo engineers have successfully
mixed a shallow water draft with a soft-riding Extended V-Plane bottom
design. Enjoy Cayman’s rock-solid stability; high-quality upholstery;
high-tech, space-efficient cockpit; and wide array of fishing features at
Reel Deal pricing.
ROBALO CENTER CONSOLES
Robalo’s No Haggle, Reel Deal pricing is available for 16 to 24 foot
models. Have peace of mind with Kevlar® reinforcement and a
seaworthy hull design on the Robalo Center Console series. Whether
you’re trolling with hooks in the water or motoring through the tough
stuff in search of a trophy catch, a powerful engine and Robalo’s Hydro
Lift™ bottom design can speed you to the hottest fishing spots.
SSI WIDE TECH™
R206 n R226 n R246
Chaparral’s SSi sport boat open bow and cuddy cabin models are
produced for the quality and style-conscious recreational boater.
Models for the 2016 model year range in size from 21 to 24 feet, and
they have once again set a high standard for engineering excellence,
attractive styling, and quality materials and workmanship. Chaparral has
incorporated its patented Wide Tech™ bow design into SSi models for
additional space in the forward part of the boat.
SUNCOAST OUTBOARD SPORT DECK
R160 n R180 n R200 n R222 n R242 n R260 n R300
Introduced in 2015 and designed for big lakes, rivers and coastal waters,
the sensational SunCoast marks the return of Chaparral to its outboard-
powered roots in sizes ranging from 21 to 25 feet.
ROBALO WALKAROUNDS
210 n 210SF n 230 n 250
SUNESTA SPORT BOATS
Robalo is offering two walkaround models in 2016, ranging in size
from 26 to 30 feet. The R265 features a new-look cabin design
with impressive amenities, and the R305 Walkaround has a spacious
cabin with finishing touches such as teak steps, directional lighting and
a hanging locker, all of which make it suitable for comfortable family
cruising and serious fishing.
Sunesta, with its patented Wide Tech™ bow design, continues to
prove itself with broad customer appeal. With a new interior and dash
design, this boat combines the best features of many of Chaparral’s
other products and is suitable for most family uses, including cruising,
wake boarding and sightseeing. The 2016 model line offers four boats
ranging from 22 to 28 feet.
R265 n R305
SIGNATURE CRUISERS
224 n 244 n 264 n 284
Chaparral continues the tradition of quality that has made the Signature
Cruiser a leader in the luxury sport cruiser market. The Signature
comes with many standard features that are options on other cruisers
in its class, and the largest Signatures offer a fiberglass hard top, bow
thrusters and style features as underwater lighting. The Signature
line offers four models from 27 to 33 feet in length.
270 n 290 n 310 n 330
SSX LUXURY SPORT BOATS
For the 2016 model season, Chaparral introduced the 227 SSX, 257SE
and 337 SSX into the lineup, increasing the choices to seven for the SSX
Luxury Sport boat. SSX Luxury Sport boats are offered with an enclosed
head, an integrated swim platform, a transom sun lounge, and most have
the option of a wet bar in the cockpit. Chaparral’s SSX series offers
high-end performance with premium components from bow to stern.
227 n 257 n 257SE n 277 n 287 n 307 n 337
STOCKHOLDER INFORMATION
Corporate Offices
Marine Products Corporation
2801 Buford Highway NE, Suite 520
Atlanta, Georgia 30329
Telephone: 404.321.7910
Stock Listing
New York Stock Exchange
Ticker Symbol
MPX
Investor Relations Website
www.marineproductscorp.com
Transfer Agent and Registrar
For inquiries related to stock certificates, including changes of
address, please contact:
American Stock Transfer & Trust Company, LLC
Shareholder Services Department
6201 15th Avenue
Brooklyn, NY 11219
Telephone: 800.937.5449
info@amstock.com
www.amstock.com
Annual Meeting
The annual meeting of Marine Products Corporation will be held at
12:00 p.m., April 26, 2016, 2170 Piedmont Road, NE, Atlanta, GA 30324.
Caution Concerning Forward-Looking Statements
The Annual Report contains statements that constitute
“forward-looking statements” under the Private Securities
Litigation Reform Act of 1995, including all statements that look
forward in time or express management’s beliefs, expectations or
hopes. In particular, such statements include, without limitation,
the Company’s belief that its financial strength will continue
to support future product development efforts; the Company’s
receptiveness to considering acquisition candidates which
manufacture complementary products; the Company’s belief that
the boating consumer continues to demand more choices and that
the Company is meeting that demand; the Company’s belief that it
has a strong portfolio of product offerings in a steadily improving
recreational boating market; and the Company’s belief that its
competitive advantages provide it benefits and the Company’s
outlook for another strong year. The actual results of the Company
could differ materially from those indicated by the forward-looking
statements because of various risks and uncertainties, including,
without limitation, those identified under the title “Risk Factors”
in the Company’s Annual Report on Form 10-K included as part of
this Annual Report. All of the foregoing risks and uncertainties are
beyond the ability of the Company to control, and in many cases
the Company cannot predict the risks and uncertainties that could
cause its actual results to differ materially from those indicated in
the forward-looking statements.
OFFICERS
R. Randall Rollins
Chairman of the Board of Directors
Richard A. Hubbell
President and Chief Executive Officer
James A. Lane, Jr.
Executive Vice President
President of Chaparral Boats, Inc.
Linda H. Graham
Vice President and Secretary
Ben M. Palmer
Vice President, Chief Financial Officer
and Treasurer
DIRECTORS
R. Randall Rollins §
Chairman of the Board, Rollins, Inc. (consumer
services) and Chairman of the Board, RPC, Inc.
(oil and gas services)
Henry B. Tippie *†
Chairman of the Board and Chief Executive Officer,
Tippie Services, Inc. (management services)
James B. Williams *
Retired Chairman of the Executive Committee,
SunTrust Banks, Inc. (bank holding company)
Gary W. Rollins §
Vice Chairman and Chief Executive Officer,
Rollins, Inc. (consumer services)
Richard A. Hubbell §
President and Chief Executive Officer and
President and Chief Executive Officer, RPC, Inc.
(oil and gas services)
James A. Lane, Jr.
Executive Vice President
President of Chaparral Boats, Inc.
Linda H. Graham
Vice President and Secretary and Vice President
and Secretary, RPC, Inc. (oil and gas services)
Bill J. Dismuke °
Retired President, Edwards Baking Company
(manufacturer of pies and pie parts)
Larry L. Prince *
Retired Chairman of the Board, Genuine Parts Company
(automotive parts distributor)
* Member of the Audit Committee, Compensation
Committee, Diversity Committee, and Nominating and
Governance Committee
† Chairman of the Audit Committee, Compensation
Committee, Diversity Committee, and Nominating
and Governance Committee
§ Member of the Executive Committee
° Member of the Audit Committee
R305 n WALKAROUND
330 n SIGNATURE
21 SPORT n H20
243 VRX n VORTEX
246 n SSI
250 n SUNCOAST
284 n SUNESTA
337 n SSX
MARINE PRODUCTS CORPORATION (NYSE: MPX) DESIGNS, MANUFACTURES AND DISTRIBUTES PREMIUM-BRANDED CHAPARRAL JET BOATS, STERNDRIVE PLEASURE BOATS AND OUTBOARD DECKBOATS, AS WELL AS ROBALO OUTBOARD SPORT FISHING BOATS THROUGH 147 DOMESTIC AND 85 INTERNATIONAL DEALERS.With premium brands, a solid capital structure and a strong independent dealer network, over the years Marine Products Corporation has generated strong financial performance and has built long-term stockholder value. Marine Products Corporation is also seeking to utilize its financial strength to capitalize on opportunities that profitably increase its market share and broaden its product offerings within the pleasure boat market. For more information, visit our website at www.marineproductscorp.com.Inside Front Cover . . . . . . . . . . . . . . . . . .Product Overview01 . . . . . . . . . . . . . . . . . . . . . . . . . . Financial Highlights02 . . . . . . . . . . . . . . . . . . . . . . . . Letter to Stockholders04 . . . . . . . . . . . . . . . . . . . . . . . . . Making Choices Easy07 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . FORM 10KInside Back Cover . . . . . . . . . . . . . . . Corporate InformationFeatured on Front Cover (from top to bottom)R220 n CENTER CONSOLE227 n SSX223 VRX n VORTEX230 n SUNCOASTPOWEROFCHOICEOUTBOARDSTERNDRIVEJET PROPULSIONOUTBOARDINTEGRITYANDINNOVATIONMARINE PRODUCTS CORPORATION2015 ANNUAL REPORT MARINE PRODUCTS CORPORATION 2015 ANNUAL REPORT2801 Buford Highway NE, Suite 520, Atlanta, Georgia 30329404.321.7910 www.marineproductscorp.com©2016 Marine Products Corporation. All rights reserved. The names of other companies and products mentioned herein may be the trademarks of their respective owners.POWEROFCHOICEOUTBOARDSTERNDRIVEJET PROPULSIONOUTBOARDINTEGRITYANDINNOVATIONMARINE PRODUCTS CORPORATION2015 ANNUAL REPORT MARINE PRODUCTS CORPORATION 2015 ANNUAL REPORT