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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(cid:3) (cid:3) (cid:3) (cid:3)
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For fiscal year ended September 30, 2009
Form 10-K
Commission File Number 1-14173
MarineMax, Inc.
(Exact Name of Registrant as Specified in Its Charter)
Delaware
(State of Incorporation)
59-3496957
(I.R.S. Employer
Identification No.)
18167 U.S. Highway 19 North
Suite 300
Clearwater, Florida 33764
(727) 531-1700
(Address, including zip code, and telephone number,
including area code, of principal executive offices)
Securities registered pursuant to Section 12(b) of the Exchange Act:
Title of Each Class
Name of Each Exchange on Which Registered
Common Stock, par value $.001 per share
Rights to Purchase Series A Junior Participating
Preferred Stock
New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Exchange 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 (cid:1)
No (cid:3)
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Securities
Act. Yes (cid:1) No (cid:3)
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 (cid:3) No (cid:1)
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every
Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 229.405 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 (cid:1)
No (cid:1)
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. (cid:3)
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 the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in
Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer (cid:1)
Accelerated filer (cid:1)
Non-accelerated filer (cid:3) Smaller reporting company (cid:1)
(Do not check if a smaller reporting company)
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes (cid:1) No (cid:3)
The aggregate market value of common stock held by nonaffiliates of the registrant (17,208,443 shares) based on the closing
price of the registrant’s common stock as reported on the New York Stock Exchange on March 31, 2009, which was the last
business day of the registrant’s most recently completed second fiscal quarter, was $33,728,548. For purposes of this computation,
all officers, directors, and 10% beneficial owners of the registrant are deemed to be affiliates. Such determination should not be
deemed to be an admission that such officers, directors, or 10% beneficial owners are, in fact, affiliates of the registrant.
As of November 30, 2009, there were outstanding 21,921,384 shares of registrant’s common stock, par value $.001 per share.
Documents Incorporated by Reference
Portions of the registrant’s definitive proxy statement for the 2010 Annual Meeting of Stockholders are incorporated by
reference into Part III of this report.
MARINEMAX, INC.
ANNUAL REPORT ON FORM 10-K
Fiscal Year Ended September 30, 2009
TABLE OF CONTENTS
PART I
ITEM 1.
ITEM 1A.
ITEM 1B.
ITEM 2.
ITEM 3.
ITEM 4.
BUSINESS
RISK FACTORS
UNRESOLVED STAFF COMMENTS
PROPERTIES
LEGAL PROCEEDINGS
SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
PART II
ITEM 5.
ITEM 6.
ITEM 7.
MARKET FOR THE REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER
MATTERS, AND ISSUER PURCHASES OF EQUITY SECURITIES
SELECTED FINANCIAL DATA
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
ITEM 7A.
ITEM 8.
ITEM 9.
ITEM 9A.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE
CONTROLS AND PROCEDURES
PART III
ITEM 10.
ITEM 11.
ITEM 12.
ITEM 13.
DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE GOVERNANCE
EXECUTIVE COMPENSATION
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
AND RELATED STOCKHOLDER MATTERS
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
INDEPENDENCE
ITEM 14.
PRINCIPAL ACCOUNTANT FEES AND SERVICES
PART IV
EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
ITEM 15.
SIGNATURES
EX-10.21
EX-23.1
EX-31.1
EX-31.2
EX-32.1
EX-32.2
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Item 1. Business
Our Company
PART I
Introduction
We are the largest recreational boat dealer in the United States. Through 55 retail locations in Alabama, Arizona,
California, Colorado, Connecticut, Florida, Georgia, Maryland, Minnesota, Missouri, New Jersey, New York, North
Carolina, Ohio, Oklahoma, Rhode Island, Tennessee, and Texas, we sell new and used recreational boats, including
pleasure and fishing boats, with a focus on premium brands in each segment. We also sell related marine products,
including engines, trailers, parts, and accessories. In addition, we arrange related boat financing, insurance, and
extended service contracts; provide repair and maintenance services; offer boat and yacht brokerage services; and,
where available, offer slip and storage accommodations.
We are the nation’s largest retailer of Sea Ray, Boston Whaler, Cabo, Hatteras, and Meridian recreational boats
and yachts, all of which are manufactured by Brunswick Corporation. Sales of new Brunswick boats accounted for
approximately 51% of our revenue in fiscal 2009. Brunswick is the world’s largest manufacturer of marine products
and marine engines. We believe our sales represented approximately 6% of all Brunswick marine sales, including
approximately 31% of its Sea Ray boat sales, during our 2009 fiscal year. We are parties to dealer agreements with
Brunswick covering Sea Ray products and are the exclusive dealer of Sea Ray boats in almost all of our geographic
markets. We also are the exclusive dealer for Hatteras Yachts throughout the state of Florida (excluding the Florida
panhandle) and the states of New Jersey, New York, and Texas; the exclusive dealer for Cabo Yachts throughout the
states of Florida, New Jersey, and New York; the exclusive dealer for Boston Whaler in many of our markets,
including our locations in the states of New York, North Carolina, and portions of the states of Florida, California,
and Texas; and the exclusive dealer for Meridian Yachts in most of our geographic markets. In addition, we are the
exclusive dealer for Italy-based Azimut-Benetti Group for Azimut and Atlantis mega-yachts, yachts, and other
recreational boats for the Northeast United States from Maryland to Maine and the state of Florida.
We commenced operations as a result of the March 1, 1998 acquisition of five previously independent
recreational boat dealers. Since that time, we have acquired 20 additional previously independent recreational boat
dealers, two boat brokerage operations, and two full-service yacht repair operations. We capitalize on the experience
and success of the acquired companies in order to establish a new national standard of customer service and
responsiveness in the highly fragmented retail boating industry. As a result of our emphasis on premium brand boats,
our average selling price for a new boat in fiscal 2009 was approximately $133,000, an increase of approximately 5%
from fiscal 2008, compared with the industry average calendar 2008 selling price of approximately $37,000 based on
industry data published by the National Marine Manufacturers Association. Our stores, which operated at least
12 months, averaged approximately $11.3 million in annual sales in fiscal 2009. We consider a store to be one or
more retail locations that are adjacent or operate as one entity. Our same-store sales decreased 28% in fiscal 2008 and
29% in fiscal 2009, but averaged an annual increase of approximately 11% for the preceding five years.
We adopt the best practices developed by us and our acquired companies as appropriate to enhance our ability to
attract more customers, foster an overall enjoyable boating experience, and offer boat manufacturers stable and
professional retail distribution and a broad geographic presence. We believe that our full range of services, no hassle
sales approach, prime retail locations, premium product offerings, extensive facilities, strong management and team
members, and emphasis on customer service and satisfaction before and after a boat sale are competitive advantages
that enable us to be more responsive to the needs of existing and prospective customers.
The U.S. recreational boating industry generated approximately $33.6 billion in retail sales in calendar 2008,
including sales of new and used boats; marine products, such as engines, trailers, equipment, and accessories; and
related expenditures, such as fuel, insurance, docking, storage, and repairs. Retail sales of new and used boats,
engines, trailers, and accessories accounted for approximately $24.8 billion of these sales in 2008 based on industry
data from the National Marine Manufacturers Association. The highly fragmented retail boating industry generally
consists of small dealers that operate in a single market and provide varying degrees of merchandising, professional
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management, and customer service. We believe that many small dealers are finding it increasingly difficult to make
the managerial and capital commitments necessary to achieve higher customer service levels and upgrade systems
and facilities as required by boat manufacturers and demanded by customers. We also believe that many dealers lack
an exit strategy for their owners. We believe these factors contribute to our opportunity.
Strategy
Our goal is to enhance our position as the nation’s leading recreational boat dealer. Key elements of our
operating and growth strategy include the following:
• emphasizing customer satisfaction and loyalty by creating an overall enjoyable boating experience, beginning
with a hassle-free purchase process, superior customer service, company-led events called Getaways!, and
premier facilities;
• achieving efficiencies and synergies among our operations to enhance internal growth and profitability;
• promoting national brand name recognition and the MarineMax connection;
• emphasizing the “best practices” developed by us and our acquired dealers as appropriate throughout our
dealerships;
• offering additional products and services, including those involving higher profit margins;
• pursuing strategic acquisitions to capitalize upon the consolidation opportunities in the highly fragmented
recreational boat dealer industry by acquiring additional dealers and related operations and improving their
performance and profitability through the implementation of our operating strategies;
• opening additional retail facilities in our existing and new territories;
• emphasizing employee training and development;
• expanding our Internet retail operations and marketing;
• operating with a decentralized approach to the operational management of our dealerships; and
• utilizing information technology throughout operations, which facilitates the interchange of information
sharing and enhances cross-selling opportunities throughout our company.
Development of the Company; Expansion of Business
MarineMax was founded in January 1998. MarineMax itself, however, conducted no operations until the
acquisition of five independent recreational boat dealers on March 1, 1998, and we completed our initial public
offering in June 1998. Since the initial acquisitions in March 1998, we have acquired 20 additional recreational boat
dealers, two boat brokerage operations, and two full-service yacht repair operations. Acquired dealers operate under
the MarineMax name.
We continually attempt to enhance our business by providing a full range of services, offering extensive and
high-quality product lines, maintaining prime retail locations, pursuing the MarineMax Value Price sales approach,
and emphasizing the highest level of customer service and customer satisfaction.
We also evaluate opportunities to expand our operations by acquiring recreational boat dealers to expand our
geographic scope, expanding our product lines, opening new retail locations within our existing territories, and
offering new products and services for our customers.
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Acquisitions of additional recreational boat dealers represent an important strategy in our goal to enhance our
position as the nation’s leading retailer of recreational boats. The following table sets forth information regarding the
businesses that we have acquired and their geographic regions.
Acquired Companies
Acquisition Date
Geographic Region
Bassett Boat Company of Florida
Louis DelHomme Marine
Gulfwind USA, Inc.
Gulfwind South, Inc.
Harrison’s Boat Center, Inc. and
Harrison’s Marine Centers of
Arizona, Inc.
Stovall Marine, Inc.
Cochran’s Marine, Inc. and C & N
Marine Corporation
Sea Ray of North Carolina, Inc.
Brevard Boat Company
Sea Ray of Las Vegas
Treasure Cove Marina, Inc.
Woods & Oviatt, Inc.
Boating World
Merit Marine, Inc.
Suburban Boatworks, Inc.
Hansen Marine, Inc.
Duce Marine, Inc.
Clark’s Landing, Inc. (selected New
Jersey locations and operations)
March 1998
March 1998
March 1998
March 1998
Southeast Florida
Dallas and Houston, Texas
West Central Florida
Southwest Florida
March 1998
April 1998
Northern California (closed 2009) and Arizona
Georgia
July 1998
July 1998
September 1998
September 1998
September 1998
October 1998
February 1999
March 1999
April 1999
August 1999
December 1999
Minnesota
North and South Carolina
East Central Florida
Nevada
Northern Ohio
Southeast Florida
Dallas, Texas
Southern New Jersey
Central New Jersey
Northeast Florida
Utah (closed 2009)
Associated Marine Technologies, Inc.
Gulfwind Marine Partners, Inc.
Seaside Marine, Inc.
Sundance Marine, Inc.
Killinger Marine Center, Inc. and
April 2000
January 2001
April 2002
July 2002
June 2003
Northern New Jersey
Southeast Florida
West Florida
Southern California
Colorado
Killinger Marine Center of Alabama,
Inc.
September 2003
Emarine International, Inc. and Steven
Myers, Inc.
Imperial Marine
Port Jacksonville Marine
Port Arrowhead Marina, Inc.
Great American Marina(1)
October 2003
June 2004
June 2004
January 2006
February 2006
Surfside — 3 Marina, Inc.
March 2006
Northwest Florida and Alabama
Southeast Florida
Baltimore, Maryland
Northeast Florida
Missouri, Oklahoma
West Florida
Connecticut, Maryland, New York and Rhode
Island
(1) Joint Venture
Apart from acquisitions, we have opened 27 new retail locations in existing territories, excluding those opened
on a temporary basis for a specific purpose. We also monitor the performance of our retail locations and close retail
locations that do not meet our expectations. Based on these factors and the recent depressed economic conditions,
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we have closed 47 retail locations since March 1998, excluding those opened on a temporary basis for a specific
purpose, including 26 in fiscal 2009.
As a part of our acquisition strategy, we frequently engage in discussions with various recreational boat dealers
regarding their potential acquisition by us. In connection with these discussions, we and each potential acquisition
candidate exchange confidential operational and financial information; conduct due diligence inquiries; and consider
the structure, terms, and conditions of the potential acquisition. In certain cases, the prospective acquisition candidate
agrees not to discuss a potential acquisition with any other party for a specific period of time, grants us an option to
purchase the prospective dealer for a designated price during a specific time period, and agrees to take other actions
designed to enhance the possibility of the acquisition, such as preparing audited financial information and converting
its accounting system to the system specified by us. Potential acquisition discussions frequently take place over a
long period of time and involve difficult business integration and other issues, including in some cases, management
succession and related matters. As a result of these and other factors, a number of potential acquisitions that from
time to time appear likely to occur do not result in binding legal agreements and are not consummated.
In addition to acquiring recreational boat dealers and opening new retail locations, we also add new product
lines to expand our operations. The following table sets forth various current product lines that we have added to our
existing locations during the years indicated.
Product Line
Boston Whaler
Hatteras Yachts
Boston Whaler
Meridian Yachts
Grady White
Hatteras Yachts
Boston Whaler
Princecraft
Boston Whaler
Meridian Yachts
Azimut
Atlantis
Cabo
Cabo
Azimut
Cabo
Hatteras Yachts
Meridian Yachts
Meridian Yachts
Boston Whaler
Fiscal Year
Geographic Regions
1997 West Central Florida; Stuart, Florida; Dallas, Texas
1999 Florida (excluding the Florida panhandle)
2000 North Palm Beach, Florida
2002
Florida, Georgia, North and South Carolina, New Jersey,
Ohio, Minnesota, Texas, and Delaware
2002 Houston, Texas
2002 Texas
2004 North and South Carolina
2004 Minnesota
2005 Houston and Dallas, Texas
2005 Chattanooga, Tennessee
2006 Northeast United States from Maryland to Maine
2006 Northeast United States from Maryland to Maine
2006 West coast of Florida
2007 East coast of Florida
2008 Florida
2008 New Jersey and New York
2008 New Jersey and New York
2008 Arizona, and Colorado
2009 Maryland and Delaware
2009 Southwest Florida
As we add a brand, we believe we are offering a migration path for our existing customer base or filling a gap in
our product offerings. As a result, we do not believe that new product offerings will compete with or cannibalize the
business generated from our other prominent brands. We also discontinue offering product lines from time to time,
primarily based upon customer preferences.
During the nine-year period from the commencement of our operations through our fiscal year ended
September 30, 2007, our revenue increased from $291 million to $1.2 billion. Our revenue and net income increased
in seven of those nine years over the prior year revenue and net income. This period was marked by an increase in
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retail locations from 41 on September 30, 1998 to 88 on September 30, 2007, resulting from acquisitions and opening
new stores in existing territories.
Our growth was interrupted during the fiscal year ended September 30, 2007, primarily as a result of factors
related to the deteriorating housing market. Substantially deteriorating economic and financial conditions, reduced
consumer confidence and spending, increases in fuel prices, lower credit availability, stock and bond market
declines, and asset value deterioration all contributed to substantially lower financial performance in the fiscal years
ended September 30, 2008 and September 30, 2009, including significant losses.
We have taken a number of actions to address recent market and economic conditions, including deferring our
acquisition program, slowing our new store openings, reducing our inventory purchases, engaging in inventory
reduction efforts, closing a number of our retail locations, significantly reducing our headcount, and modifying our
debt structure and credit agreement. We cannot predict the length or severity of the current recessionary environment
or the magnitude of the effects it will have on our operating performance nor can we predict the effectiveness of the
measures we have taken to address this environment.
Despite the foregoing, we are maintaining our core values of customer service and satisfaction and plan to
continue to pursue strategies that will enable us to achieve long-term growth. We believe that we are well positioned
for long-term success and growth when economic conditions improve. Upon a return to more normal economic
conditions, we plan to resume expanding our business through acquisitions in new geographical territories, new store
openings in existing territories, and adding new product lines. In addition, we plan to continue to expand other
services, including conducting used boat sales; offering yacht and boat brokerage services; offering our customers the
ability to finance new or used boats; offering extended service contracts; arranging insurance coverage, including
boat property, credit-life, accident, disability, and casualty coverage; selling related marine products, including
engines, trailers, parts, and accessories; providing maintenance and repair services at our retail locations and at stand-
alone service facilities; and expanding our ability to provide slip and storage accommodations. Our expansion plans
will depend upon the return of normal economic conditions.
We maintain our executive offices at 18167 U.S. Highway 19 North, Suite 300, Clearwater, Florida 33764, and
our telephone number is (727) 531-1700. We were incorporated in the state of Delaware in January 1998. Unless the
context otherwise requires, all references to “MarineMax” mean MarineMax, Inc. prior to its acquisition of five
previously independent recreational boat dealers in March 1998 (including their related real estate companies) and all
references to the “Company,” “our company,” “we,” “us,” and “our” mean, as a combined company, MarineMax,
Inc. and the 20 recreational boat dealers, two boat brokerage operations, and two full-service yacht repair operations
acquired to date (the “acquired dealers,” and together with the brokerage and repair operations, “operating
subsidiaries,” or the “acquired companies”).
Our website is located at www.MarineMax.com . Through our website, we make available free of charge our
annual report on Form 10-K, our quarterly reports on Form 10-Q, our current reports on Form 8-K, our proxy
statements, and any amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the
Securities Exchange Act of 1934. These reports are available as soon as reasonably practicable after we
electronically file those reports with the Securities and Exchange Commission, or SEC. We also post on our website
the charters of our Audit, Compensation, and Nominating/Corporate Governance Committees; our Corporate
Governance Guidelines, Code of Business Conduct and Ethics, and Code of Ethics for the CEO and Senior Financial
Officers, and any amendments or waivers thereto; and any other corporate governance materials contemplated by
SEC or the regulations of the New York Stock Exchange, or NYSE. These documents are also available in print to
any stockholder requesting a copy from our corporate secretary at our principal executive offices. Because our
common stock is listed on the NYSE, our Chief Executive Officer is required to make an annual certification to the
NYSE stating that he is not aware of any violation by us of the corporate governance listing standards of the NYSE.
Our Chief Executive Officer made his annual certification to that effect to the NYSE on February 18, 2009.
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General
BUSINESS
We are the largest recreational boat dealer in the United States. Through 55 retail locations in Alabama, Arizona,
California, Colorado, Connecticut, Florida, Georgia, Maryland, Minnesota, Missouri, New Jersey, New York, North
Carolina, Ohio, Oklahoma, Rhode Island, Tennessee, and Texas, we sell new and used recreational boats, including
pleasure boats (such as sport boats, sport cruisers, sport yachts, and yachts), and fishing boats, with a focus on
premium brands in each segment. We also sell related marine products, including engines, trailers, parts, and
accessories. In addition, we arrange related boat and yacht financing, insurance, and extended service contracts;
provide repair and maintenance services; offer boat and yacht brokerage services; and, where available, slip and
storage accommodations.
We are the nation’s largest retailer of Sea Ray, Boston Whaler, Cabo, Hatteras, and Meridian recreational boats
and yachts, all of which are manufactured by Brunswick Corporation. Sales of new Brunswick boats accounted for
approximately 51% of our revenue in fiscal 2009. Brunswick is the world’s largest manufacturer of marine products
and marine engines. We believe our sales represented approximately 6% of all Brunswick marine sales, including
approximately 31% of its Sea Ray boat sales, during our 2009 fiscal year. We are parties to dealer agreements with
Brunswick covering Sea Ray products and are the exclusive dealer of Sea Ray boats in almost all of our geographic
markets. We also are the exclusive dealer for Hatteras Yachts throughout the state of Florida (excluding the Florida
panhandle) and the states of New Jersey, New York, and Texas; the exclusive dealer for Cabo Yachts throughout the
states of Florida, New Jersey, and New York; the exclusive dealer for Boston Whaler in many of our markets,
including our locations in the states of New York, North Carolina, South Carolina, and portions of the states of
Florida, California, and Texas; and the exclusive dealer for Meridian Yachts in most of our geographic markets,
excluding California. In addition, we are the exclusive dealer for Italy-based Azimut-Benetti Group for Azimut and
Atlantis mega-yachts, yachts, and other recreational boats for the Northeast United States from Maryland to Maine
and the state of Florida.
U.S. Recreational Boating Industry
The total U.S. recreational boating industry generated approximately $33.6 billion in retail sales in calendar
2008, including retail sales of new and used recreational boats; marine products, such as engines, trailers, parts, and
accessories; and related boating expenditures, such as fuel, insurance, docking, storage, and repairs. Retail sales of
new and used boats, engines, trailers, and accessories accounted for approximately $24.8 billion of such sales in
2008. Annual retail recreational boating sales were $17.9 billion in the late 1980s, but declined to a low of
$10.3 billion in 1992 based on industry data published by the National Marine Manufacturers Association. We
believe this decline was attributable to several factors, including a recession, the Gulf War, and the imposition
throughout 1991 and 1992 of a luxury tax on boats sold at prices in excess of $100,000. The luxury tax was repealed
in 1993, and retail boating sales increased each year thereafter except for 1998, 2003, 2007, 2008, and 2009.
The recreational boat retail market remains highly fragmented with little consolidation having occurred to date
and consists of numerous boat retailers, most of which are small companies owned by individuals that operate in a
single market and provide varying degrees of merchandising, professional management, and customer service. We
believe that many boat retailers are encountering increased pressure from boat manufacturers to improve their levels
of service and systems, increased competition from larger national retailers in certain product lines, and, in certain
cases, business succession issues.
Strategy
Our goal is to enhance our position as the nation’s leading recreational boat dealer. Key elements of our strategy
include the following.
Emphasizing Customer Satisfaction and Loyalty. We seek to achieve a high level of customer satisfaction
and establish long-term customer loyalty by creating an overall enjoyable boating experience beginning with a
hassle-free purchase process. We further enhance and simplify the purchase process by helping to arrange
financing and insurance at our retail locations with competitive terms and streamlined
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turnaround. We offer the customer a thorough in-water orientation of boat operations where available, as well as
ongoing boat safety, maintenance, and use seminars and demonstrations for the customer’s entire family. We
also continue our customer service after the sale by leading and sponsoring MarineMax Getaways! group
boating trips to various destinations, rendezvous gatherings, and on-the-water organized events to provide our
customers with pre-arranged opportunities to enjoy the pleasures of the boating lifestyle. We also endeavor to
provide superior maintenance and repair services, often through mobile service at the customer’s wet slip and
with extended service department hours and emergency service availability, that minimize the hassles of boat
maintenance.
Achieving Operating Efficiencies and Synergies. We strive to increase the operating efficiencies of and
achieve certain synergies among our dealerships in order to enhance internal growth and profitability. We
centralize various aspects of certain administrative functions at the corporate level, such as accounting, finance,
insurance coverage, employee benefits, marketing, strategic planning, legal support, purchasing and distribution,
and management information systems. Centralization of these functions reduces duplicative expenses and
permits the dealerships to benefit from a level of scale and expertise that would otherwise be unavailable to each
dealership individually. We also seek to realize cost savings from reduced inventory carrying costs as a result of
purchasing boat inventories on a national level and directing boats to dealership locations that can more readily
sell such boats; lower financing costs through our credit sources; and volume purchase discounts and rebates for
certain marine products, supplies, and advertising. The ability of our retail locations to offer the complementary
services of our other retail locations, such as offering customer excursion opportunities, providing maintenance
and repair services at the customer’s boat location, and giving access to a larger inventory, increases the
competitiveness of each retail location. By centralizing these types of activities, our store managers have more
time to focus on the customer and the development of their teams.
Promoting Brand Name Recognition and the MarineMax Connection. We are promoting our brand name
recognition to take advantage of our status as the nation’s only coast-to-coast marine retailer. This strategy also
recognizes that many existing and potential customers who reside in Northern markets and vacation for
substantial periods in Southern markets will prefer to purchase and service their boats from the same well-
known company. We refer to this strategy as the “MarineMax Connection.” As a result, our signage emphasizes
the MarineMax name at each of our locations, and we conduct national advertising in various print and other
media.
Emphasizing Best Practices. We emphasize the “best practices” developed by us and our acquired dealers
as appropriate throughout our locations. As an example, we follow a no-haggle sales approach at each of our
dealerships. Under the MarineMax Value-Price approach, we sell our boats at posted prices, generally
representing a discount from the manufacturer’s suggested retail price, thereby eliminating the anxieties of price
negotiations that occur in most boat purchases. In addition, we adopt, where beneficial, the best practices
developed by us and our acquired dealers in terms of location, design, layout, product purchases, maintenance
and repair services (including extended service hours and mobile or dockside services), product mix, employee
training, and customer education and services.
Offering Additional Products and Services, Including Those Involving Higher Profit Margins. We plan to
continue to offer additional product lines and services throughout our dealerships or, when appropriate, in
selected dealerships. We are offering throughout our dealerships product lines that previously have been offered
only at certain of our locations. We also may obtain additional product lines through the acquisition of
distribution rights directly from manufacturers and the acquisition of dealerships with distribution rights. In
either situation, such expansion is typically done through agreements that appoint us as the exclusive dealer for a
designated geographic territory. We have increased our used boat sales and yacht brokerage services through an
increased emphasis on these activities, cooperative efforts among our dealerships, and the use of the Internet.
We also plan to continue to grow our financing and insurance, parts and accessories, service, and boat storage
businesses to better serve our customers and thereby increase revenue and improve profitability of these higher
margin businesses.
Pursuing Strategic Acquisitions. We capitalize upon the significant consolidation opportunities available
in the highly fragmented recreational boat dealer industry by acquiring independent dealers and
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improving their performance and profitability through the implementation of our operating strategies. The
primary acquisition focus is on well-established, high-end recreational boat dealers in geographic markets not
currently served by us, particularly geographic markets with strong boating demographics, such as areas within
the coastal states and the Great Lakes region. We also may seek to acquire boat dealers that, while located in
attractive geographic markets, have not been able to realize favorable market share or profitability and that can
benefit substantially from our systems and operating strategies. We may expand our range of product lines,
service offerings, and market penetration by acquiring companies that distribute recreational boat product lines
or boating-related services different from those we currently offer. As a result of our considerable industry
experience and relationships, we believe we are well positioned to identify and evaluate acquisition candidates
and assess their growth prospects, the quality of their management teams, their local reputation with customers,
and the suitability of their locations. We believe we are regarded as an attractive acquirer by boat dealers
because of (1) the historical performance and the experience and reputation of our management team within the
industry; (2) our decentralized operating strategy, which generally enables the managers of an acquired dealer to
continue their involvement in dealership operations; (3) the ability of management and employees of an acquired
dealer to participate in our growth and expansion through potential stock ownership and career advancement
opportunities; and (4) the ability to offer liquidity to the owners of acquired dealers through the receipt of
common stock or cash. We have entered into an agreement regarding acquisitions with the Sea Ray Division of
Brunswick. Under the agreement, acquisitions of Sea Ray dealers will be mutually agreed upon by us and Sea
Ray with reasonable efforts to be made to include a balance of Sea Ray dealers that have been successful and
those that have not been. The agreement provides that Sea Ray will not unreasonably withhold its consent to any
proposed acquisition of a Sea Ray dealer by us, subject to the conditions set forth in the agreement, as further
described in “Business — Brunswick Agreement Relating to Acquisitions.”
Opening New Facilities. We intend to continue to establish additional retail facilities in our existing and
new markets. We believe that the demographics of our existing geographic territories support the opening of
additional facilities, and we have opened 27 new retail facilities, excluding those opened on a temporary basis
for a specific purpose, since our formation in January 1998. We also plan to reach new customers through
various innovative retail formats developed by us, such as mall stores and floating retail facilities. We
continually monitor the performance of our retail locations and close retail locations that do not meet our
expectations or that were opened for a specific purpose that is no longer relevant. Based on these factors since
March 1998, we have closed 47 retail locations, excluding those opened on a temporary basis for a specific
purpose, including 26 in fiscal 2009 because of depressed economic conditions.
Emphasizing Employee Training and Development. We devote substantial efforts to train our employees to
understand our core retail philosophies, which focus on making the purchase of a boat and its subsequent use as
hassle-free and enjoyable as possible. Through our MarineMax University, or MMU, we teach our retail
philosophies to existing and new employees at various locations and online, through MMU-online. MMU is a
modularized and instructor-led educational program that focuses on our retailing philosophies and provides
instruction on such matters as the sales process, customer service, F&I, accounting, leadership, and human
resources.
Utilization of the Internet. Our web initiatives span across multiple websites including our core site,
www.MarineMax.com . The websites provide customers with the ability to learn more about our company and
our products. Our website generates direct sales and provides our stores with leads to potential customers for
new and used boats, brokerage services, finance and insurance products, and repair and maintenance services.
We also maintain multiple online storefronts for customers to purchase a wide variety of boating parts and
accessories. In addition, we utilize various feeder websites and social networking websites to drive additional
traffic and leads for our various product and service offerings.
Operating with Decentralized Management. We maintain a generally decentralized approach to the
operational management of our dealerships. The decentralized management approach takes advantage of the
extensive experience of local managers, enabling them to implement policies and make decisions, including the
appropriate product mix, based on the needs of the local market. Local management authority also fosters
responsive customer service and promotes long-term community and customer relationships. In addition, the
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centralization of certain administrative functions at the corporate level enhances the ability of local managers to
focus their efforts on day-to-day dealership operations and the customers.
Utilizing Technology Throughout Operations. We believe that our management information system, which
currently is being utilized by each of our dealerships and was developed over a number of years through
cooperative efforts with a common vendor, enhances our ability to integrate successfully the operations of our
dealerships and future acquired dealers. The system facilitates the interchange of information and enhances
cross-selling opportunities throughout our company. The system integrates each level of operations on a
company-wide basis, including purchasing, inventory, receivables, financial reporting, budgeting, and sales
management. The system also provides sales representatives with prospect and customer information that aids
them in tracking the status of their contacts with prospects, automatically generates follow-up correspondence to
such prospects, facilitates the availability of boats company-wide, locates boats needed to satisfy particular
customer requests, and monitors the maintenance and service needs of customers’ boats. Our representatives
also utilize the computer system to assist in arranging customer financing and insurance packages. Our managers
use a web-based tool to access essentially all financial and operational data from anywhere at any time.
Products and Services
We offer new and used recreational boats and related marine products, including engines, trailers, parts, and
accessories. While we sell a broad range of new and used boats, we focus on premium brand products. In addition,
we assist in arranging related boat financing, insurance, and extended service contracts; provide boat maintenance
and repair services; provide boat brokerage services; and offer slip and storage accommodations.
New Boat Sales
We primarily sell recreational boats, including pleasure boats and fishing boats. The principal products we offer
are manufactured by Brunswick, the leading worldwide manufacturer of recreational boats, including Sea Ray
pleasure boats, Boston Whaler fishing boats, Cabo Yachts, Hatteras Yachts, and Meridian Yachts. In fiscal 2009, we
derived approximately 51% of our revenue from the sale of new boats manufactured by Brunswick. We believe that
we represented approximately 6% of all of Brunswick’s marine product sales during that period. Certain of our
dealerships also sell luxury yachts, fishing boats, and pontoon boats provided by other manufacturers, including
Italy-based Azimut. During fiscal 2009, new boat sales accounted for 60.7% of our revenue.
We offer recreational boats in most market segments, but have a particular focus on premium quality pleasure
boats and yachts as reflected by our fiscal 2009 average new boat sales price of approximately $133,000, an increase
of approximately 5% from fiscal 2008, compared with an estimated industry average calendar 2008 selling price of
approximately $37,000 based on industry data published by the National Marine Manufacturers Association. Given
our locations in some of the more affluent, offshore boating areas in the United States and emphasis on high levels of
customer service, we sell a relatively higher percentage of large recreational boats, such as mega-yachts, yachts, and
sport cruisers. We believe that the product lines we offer are among the highest quality within their respective market
segments, with well-established trade-name recognition and reputations for quality, performance, and styling.
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The following table is illustrative of the range and approximate manufacturer suggested retail price range of new
boats that we currently offer, but is not all inclusive.
Product Line and Trade Name
Motor Yachts
Hatteras Motor Yachts
Azimut
Convertibles
Hatteras Convertibles
Cabo
Pleasure Boats
Sea Ray
Meridian
Fishing Boats
Boston Whaler
Grady White
Overall Length
Manufacturer Suggested
Retail Price Range
60’ to 100’+ $ 3,000,000 to $10,000,000 +
790,000 to 12,000,000 +
38’ to 116’+
54’ to 77’+
32’ to 52’
2,300,000 to 7,000,000 +
475,000 to 2,000,000 +
17’ to 60’
34’ to 59’
21,000 to 2,500,000
300,000 to 1,600,000
11’ to 37’
18’ to 36’
8,000 to 400,000
40,000 to 500,000
Motor Yachts. Hatteras Yachts and Azimut are two of the world’s premier yacht builders. The motor yacht
product lines typically include state-of-the-art designs with live-aboard luxuries. Hatteras offers a flybridge with
extensive guest seating; covered aft deck, which may be fully or partially enclosed, providing the boater with
additional living space; an elegant salon; and multiple staterooms for accommodations. Azimut yachts are known for
their Americanized open layout with Italian design and powerful performance. The luxurious interiors of Azimut
yachts are accented by windows and multiple accommodations that have been designed for comfort.
Convertibles. Hatteras Yachts and Cabo Yachts are two of the world’s premier convertible yacht builders and
offer state-of-the-art designs with live-aboard luxuries. Convertibles are primarily fishing vessels, which are well
equipped to meet the needs of even the most serious tournament-class competitor. Hatteras features interiors that
offer luxurious salon/galley arrangements, multiple staterooms with private heads, and a cockpit that includes a bait
and tackle center, fishbox, and freezer. Cabo is known for spacious cockpits and accessibility to essentials, such as
bait chests, livewells, bait prep centers, and tackle lockers. Cabo interiors offer elegance, highlighted by teak
woodwork, halogen lighting, and ample storage areas.
Pleasure Boats. Sea Ray and Meridian pleasure boats target both the luxury and the family recreational boating
markets and come in a variety of configurations to suit each customer’s particular recreational boating style. Sea Ray
sport yachts and yachts serve the luxury segment of the recreational boating market and include top-of-the line living
accommodations with a salon, a fully equipped galley, and multiple staterooms. Sea Ray sport yachts and yachts are
available in cabin, bridge cockpit, and cruiser models. Sea Ray sport boat and sport cruiser models are designed for
performance and dependability to meet family recreational needs and include many of the features and
accommodations of Sea Ray’s sport yacht and yacht models. Meridian sport yachts and yachts are known for their
solid performance and thoughtful use of space with 360-degree views and spacious salon, galley, and stateroom
accommodations. Meridian sport yachts and yachts are available in sedan, motoryacht, and pilothouse models. All
Sea Ray and Meridian pleasure boats feature custom instrumentation that may include an electronics package;
various hull, deck, and cockpit designs that can include a swim platform; bow pulpit and raised bridge; and various
amenities, such as swivel bucket helm seats, lounge seats, sun pads, wet bars, built-in ice chests, and refreshment
centers. Most Sea Ray and Meridian pleasure boats feature Mercury or MerCruiser engines.
Fishing Boats. The fishing boats we offer, such as Boston Whaler and Grady White, range from entry level
models to advanced models designed for fishing and water sports in lakes, bays, and off-shore waters, with cabins
with limited live-aboard capability. The fishing boats typically feature livewells, in-deck fishboxes, rodholders,
rigging stations, cockpit coaming pads, and fresh and saltwater washdowns.
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Used Boat Sales
We sell used versions of the new makes and models we offer and, to a lesser extent, used boats of other makes
and models generally taken as trade-ins. During fiscal 2009, used boat sales accounted for 22.5% of our revenue, and
74.7% of the used boats we sold were Brunswick models.
Our used boat sales depend on our ability to source a supply of high-quality used boats at attractive prices. We
acquire substantially all of our used boats through customer trade-ins. We intend to continue to increase our used
boat business as a result of the availability of quality used boats generated from our new boat sales efforts, the
increasing number of used boats that are well-maintained through our service initiatives, including our Premium
Certified Pre-Owned Program, our ability to market used boats throughout our combined dealership network to
match used boat demand, and the experience of our yacht brokerage operations. Additionally, substantially all of our
used boat inventory is posted on our website, www.MarineMax.com , which expands the awareness and availability
of our products to a large audience of boating enthusiasts.
To further enhance our used boat sales, we launched a Premium Certified Pre-Owned Program, or PCPO, in
fiscal 2008. Generally, PCPO boats are less than four years old, have passed a 150+ point inspection, and carry a one
year warranty. Additionally, we offer the Sea Ray Legacy warranty plan available for used Sea Ray boats less than
six years old. The Legacy plan applies to each qualifying used Sea Ray boat, which has passed a 48-point inspection,
and provides protection against failure of most mechanical parts for up to three years. We believe these programs
enhance our sales of used Sea Ray boats by motivating purchasers of used Sea Ray boats to complete their purchases
through our Sea Ray dealerships.
Marine Engines, Related Marine Equipment, and Boating Accessories
We offer marine engines and propellers, substantially all of which are manufactured by Mercury Marine, a
division of Brunswick. We sell marine engines and propellers primarily to retail customers as replacements for their
existing engines or propellers. Mercury Marine has introduced various new engine models that reduce engine
emissions to comply with current Environmental Protection Agency requirements. See “Business — Environmental
and Other Regulatory Issues.” An industry leader for almost six decades, Mercury Marine specializes in
state-of-the-art marine propulsion systems and accessories. Many of our dealerships have been recognized by
Mercury Marine as “Premier Service Dealers.” This designation is generally awarded based on meeting certain
standards and qualifications.
We also sell related marine parts and accessories, including oils, lubricants, steering and control systems,
corrosion control products, engine care, maintenance, and service products (primarily Mercury Marine’s Quicksilver
line); high-performance accessories (such as propellers) and instruments; and a complete line of boating accessories,
including life jackets, inflatables, and water sports equipment. We also offer novelty items, such as shirts, caps, and
license plates bearing the manufacturer’s or dealer’s logo.
The sale of marine engines, related marine equipment, and boating accessories accounted for 5.0% of our fiscal
2009 revenue.
Maintenance, Repair, and Storage Services
Providing customers with professional, prompt maintenance and repair services is critical to our sales efforts and
contributes to our success. We provide maintenance and repair services at most of our retail locations, with extended
service hours at certain of our locations. In addition, in many of our markets, we provide mobile maintenance and
repair services at the location of the customer’s boat. We believe that this service commitment is a competitive
advantage in the markets in which we compete and is critical to our efforts to provide a trouble-free boating
experience. To further this commitment, in certain of our markets, we have opened stand-alone maintenance and
repair facilities in locations that are more convenient for our customers and that increase the availability of such
services. We also believe that our maintenance and repair services contribute to strong customer relationships and
that our emphasis on preventative maintenance and quality service increases the potential supply of well-maintained
boats for our used boat sales.
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We perform both warranty and non-warranty repair services, with the cost of warranty work reimbursed by the
manufacturer in accordance with the manufacturer’s warranty reimbursement program. For warranty work, most
manufacturers, including Brunswick, reimburse a percentage of the dealer’s posted service labor rates, with the
percentage varying depending on the dealer’s customer satisfaction index rating and attendance at service training
courses. We derive the majority of our warranty revenue from Brunswick products, as Brunswick products comprise
the majority of products sold. Certain other manufacturers reimburse warranty work at a fixed amount per repair.
Because boat manufacturers permit warranty work to be performed only at authorized dealerships, we receive
substantially all of the warranted maintenance and repair work required for the new boats we sell. The third-party
extended warranty contracts we offer also result in an ongoing demand for our maintenance and repair services for
the duration of the term of the extended warranty contract.
Our maintenance and repair services are performed by manufacturer-trained and certified service technicians. In
charging for our mechanics’ labor, many of our dealerships use a variable rate structure designed to reflect the
difficulty and sophistication of different types of repairs. The percentage markups on parts are similarly based on
manufacturer suggested prices and market conditions for different parts.
At many of our locations, we offer boat storage services, including in-water slip storage and inside and outside
land storage. These storage services are offered at competitive market rates and include in-season and winter storage.
Maintenance, repair, and storage services accounted for 7.9% of our revenue during fiscal 2009. This includes
warranty and non-warranty services.
F&I Products
At each of our retail locations, we offer our customers the ability to finance new or used boat purchases and to
purchase extended service contracts and arrange insurance coverage, including boat property, credit life, and
accident, disability, and casualty insurance coverage (collectively, “F&I”).
We have relationships with various national marine product lenders under which the lenders purchase retail
installment contracts evidencing retail sales of boats and other marine products that are originated by us in
accordance with existing pre-sale agreements between us and the lenders. These arrangements permit us to receive a
portion of the finance charges expected to be earned on the retail installment contract based on a variety of factors,
including the credit standing of the buyer, the annual percentage rate of the contract charged to the buyer, and the
lender’s then current minimum required annual percentage rate charged to the buyer on the contract. This
participation is subject to repayment by us if the buyer prepays the contract or defaults within a designated time
period, usually 90 to 180 days. To the extent required by applicable state law, our dealerships are licensed to
originate and sell retail installment contracts financing the sale of boats and other marine products.
We also offer third-party extended service contracts under which, for a predetermined price, we provide all
designated services pursuant to the service contract guidelines during the contract term at no additional charge to the
customer above a deductible. While we sell all new boats with the boat manufacturer’s standard hull warranty of
generally five years and standard engine warranty of generally one year, extended service contracts provide
additional coverage beyond the time frame or scope of the manufacturer’s warranty. Purchasers of used boats
generally are able to purchase an extended service contract, even if the selected boat is no longer covered by the
manufacturer’s warranty. Generally, we receive a fee for arranging an extended service contract. Most required
services under the contracts are provided by us and paid for by the third-party contract holder.
We also are able to assist our customers with the opportunity to purchase credit life insurance, accident and
disability insurance, and property and casualty insurance. Credit life insurance policies provide for repayment of the
boat financing contract if the purchaser dies while the contract is outstanding. Accident and disability insurance
policies provide for payment of the monthly contract obligation during any period in which the buyer is disabled.
Property and casualty insurance covers loss or damage to the boat. We do not act as an insurance broker or agent or
issue insurance policies on behalf of insurers. We do, however, provide marketing activities and other related
services to insurance companies and brokers for which we receive marketing fees. One of our strategies is to generate
increased marketing fees by offering more competitive insurance products.
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During fiscal 2009, fee income generated from F&I products accounted for 2.7% of our revenue. We believe
that our customers’ ability to obtain competitive financing quickly and easily at our dealerships complements our
ability to sell new and used boats. We also believe our ability to provide customer-tailored financing on a
“same-day” basis gives us an advantage over many of our competitors, particularly smaller competitors that lack the
resources to arrange boat financing at their dealerships or that do not generate sufficient volume to attract the
diversity of financing sources that are available to us.
Brokerage Services
Through employees or subcontractors that are licensed boat or yacht brokers, we offer boat or yacht brokerage
services at most of our retail locations. For a commission, we offer for sale brokered boats or yachts, listing them on
the “BUC” system, advising our other retail locations of their availability through our integrated computer system,
and posting them on our web site, www.MarineMax.com . The BUC system, which is similar to a real estate multiple
listing service, is a national boat or yacht listing service of approximately 900 brokers maintained by BUC
International. Often sales are co-brokered, with the commission split between the buying and selling brokers. We
believe that our access to potential used boat customers and methods of listing and advertising customers’ brokered
boats or yachts is more extensive than is typical among brokers. In addition to generating revenue from brokerage
commissions, our brokerage services also enable us to offer a broad array of used boats or yachts without increasing
related inventory costs. During fiscal 2009, brokerage services accounted for 1.2% of our revenue.
Our brokerage customers generally receive the same high level of customer service as our new and used boat
customers. Our waterfront retail locations enable in-water demonstrations of an on-site brokered boat. Our
maintenance and repair services, including mobile service, also are generally available to our brokerage customers.
The purchaser of a boat brokered through us also can take advantage of MarineMax Getaways! weekend and day
trips and other rendezvous gatherings and in-water events, as well as boat operation and safety seminars. We believe
that the array of services we offer are unique in the brokerage business.
Retail Locations
We sell our recreational boats and other marine products and offer our related boat services through 55 retail
locations in Alabama, Arizona, California, Colorado, Connecticut, Florida, Georgia, Maryland, Minnesota, Missouri,
New Jersey, New York, North Carolina, Ohio, Oklahoma, Rhode Island, Tennessee, and Texas. Each retail location
generally includes an indoor showroom (including some of the industry’s largest indoor boat showrooms) and an
outside area for displaying boat inventories, a business office to assist customers in arranging financing and
insurance, and maintenance and repair facilities.
Many of our retail locations are waterfront properties on some of the nation’s most popular boating locations,
including the Mission Bay in California; Norwalk Harbor in Connecticut; multiple locations on the Intracoastal
Waterway, the Atlantic Ocean, Biscayne Bay, Boca Ciega Bay, Naples Bay (next to the Gulf of Mexico), Tampa
Bay, and the Caloosahatchee River in Florida; Lake Lanier in Georgia; Chesapeake Bay in Maryland; Leech Lake
and the St. Croix River in Minnesota; Lake of the Ozarks, Table Rock Lake, and the Mississippi River in Missouri;
Barnegat Bay, the Hudson River, Lake Hopatcong, Little Egg Harbor, and the Manasquan River in New Jersey;
Great Sound Bay, the Hudson River, and Huntington Harbor in New York; the Intracoastal Waterway in
North Carolina; Lake Erie in Ohio; Grand Lake in Oklahoma; Tennessee River in Tennessee; and Clear Lake, and
Lake Lewisville in Texas. Our waterfront retail locations, most of which include marina-type facilities and docks at
which we display our boats, are easily accessible to the boating populace, serve as in-water showrooms, and enable
the sales force to give customers immediate in-water demonstrations of various boat models. Most of our other
locations are in close proximity to water.
Operations
Dealership Operations and Management
We have adopted a generally decentralized approach to the operational management of our dealerships. While
certain administrative functions are centralized at the corporate level, local management is primarily responsible for
the day-to-day operations of the retail locations. Each retail location is managed by a store manager, who oversees
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the day-to-day operations, personnel, and financial performance of the individual store, subject to the direction of a
regional manager, who generally has responsibility for the retail locations within a specified geographic region.
Typically, each retail location also has a staff consisting of an F&I manager, a parts manager, and a service manager,
sales representatives, maintenance and repair technicians, and various support personnel.
We attempt to attract and retain quality employees at our retail locations by providing them with ongoing
training to enhance sales professionalism and product knowledge, career advancement opportunities within a larger
company, and favorable benefit packages. We maintain a formal training program, called MarineMax University or
MMU, which provides training for employees in all aspects of our operations. Training sessions are held at our
various regional locations covering a variety of topics. MMU-online offers various modules over the Internet. Highly
trained, professional sales representatives are an important factor to our successful sales efforts. These sales
representatives are trained at MMU to recognize the importance of fostering an enjoyable sales process, to educate
customers on the operation and use of the boats, and to assist customers in making technical and design decisions in
boat purchases. The overall focus of MMU is to teach our core retailing values, which focus on customer service.
Sales representatives receive compensation primarily on a commission basis. Each store manager is a salaried
employee with incentive bonuses based on the performance of the managed dealership. Maintenance and repair
service managers receive compensation on a salary basis with bonuses based on the performance of their
departments. Our management information system provides each store and department manager with daily financial
and operational information, enabling them to monitor their performance on a daily, weekly, and monthly basis. We
have a uniform, fully integrated management information system serving each of our dealerships.
Sales and Marketing
Our sales philosophy focuses on selling the pleasures of the boating lifestyle. We believe that the critical
elements of our sales philosophy include our appealing retail locations, no-hassle sales approach, highly trained sales
representatives, high level of customer service, emphasis on educating the customer and the customer’s family on
boat usage, and providing our customers with opportunities for boating. We strive to provide superior customer
service and support before, during, and after the sale.
Each retail location offers the customer the opportunity to evaluate a large variety of new and used boats in a
comfortable and convenient setting. Our full-service retail locations facilitate a turn-key purchasing process that
includes attractive lender financing packages, extended service agreements, and insurance. Many of our retail
locations are located on waterfronts and marinas, which attract boating enthusiasts and enable customers to operate
various boats prior to making a purchase decision.
We sell our boats at posted value prices that generally represent a discount from the manufacturer’s suggested
retail price. Our sales approach focuses on customer service by minimizing customer anxiety associated with price
negotiation.
As a part of our sales and marketing efforts, we also participate in boat shows and in-the-water sales events at
area boating locations, typically held in January and February and toward the end of the boating season, in each of
our markets and in certain locations in close proximity to our markets. These shows and events are normally held at
convention centers or marinas, with area dealers renting space. Boat shows and other offsite promotions are an
important venue for generating sales orders. The boat shows also generate a significant amount of interest in our
products resulting in boat sales after the show.
We emphasize customer education through one-on-one education by our sales representatives and, at some
locations, our delivery captains, before and after a sale, and through in-house seminars for the entire family on boat
safety, the use and operation of boats, and product demonstrations. Typically, one of our delivery captains or the
sales representative delivers the customer’s boat to an area boating location and thoroughly instructs the customer
about the operation of the boat, including hands-on instructions for docking and trailering the boat. To enhance our
customer relationships after the sale, we lead and sponsor MarineMax Getaways! group boating trips to various
destinations, rendezvous gatherings, and on-the-water organized events that promote the pleasures of the boating
lifestyle. Each company-sponsored event, planned and led by a company employee, also provides a favorable
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medium for acclimating new customers to boating, sharing exciting boating destinations, creating friendships with
other boaters, and enabling us to promote actively new product offerings to boating enthusiasts.
As a result of our relative size, we believe we have a competitive advantage within the industry by being able to
conduct an organized and systematic advertising and marketing effort. Part of our marketing effort includes an
integrated prospect management system that tracks the status of each sales representative’s contacts with a prospect,
automatically generates follow-up correspondence, facilitates company-wide availability of a particular boat or other
marine product desired by a customer, and tracks the maintenance and service needs for the customer’s boat.
Suppliers and Inventory Management
We purchase substantially all of our new boat inventory directly from manufacturers, which allocate new boats
to dealerships based on the amount of boats sold by the dealership. We also exchange new boats with other dealers to
accommodate customer demand and to balance inventory.
We purchase new boats and other marine-related products from Brunswick, which is the world’s largest
manufacturer of marine products, including Sea Ray, Boston Whaler, Cabo, Hatteras, and Meridian. We also
purchase new boats and other marine related products from other manufacturers, including Azimut, Grady White,
and Tracker Marine. In fiscal 2009, sales of new Brunswick boats accounted for approximately 51% of our revenue.
No other manufacturer accounted for more than 10% of our revenue in fiscal 2009. We believe our Sea Ray boat
purchases represented approximately 31% of Sea Ray’s new boat sales and approximately 6% of all Brunswick
marine product sales during fiscal 2009.
We have entered into agreements with Brunswick covering Sea Ray products. The dealer agreements with the
Sea Ray division of Brunswick do not restrict our right to sell any Sea Ray product lines or competing products. The
terms of each dealer agreement appoints a designated geographical territory for the dealer, which is exclusive to the
dealer so long as the dealer is not in breach of the material obligations and performance standards under the
agreement and Sea Ray’s then current material policies and programs following notice and the expiration of any
applicable cure periods without cure.
Upon the completion of the Surfside-3 acquisition, we became the exclusive dealer for Azimut-Benetti Group’s
Azimut product line in the Northeast United States. The Azimut dealer agreement provides a geographic territory to
promote the product line and to network with the appropriate clientele through various independent locations
designated for Azimut retail sales.
We typically deal with each of our manufacturers, other than the Sea Ray division of Brunswick, under an
annually renewable, non-exclusive dealer agreement. Manufacturers generally establish prices on an annual basis, but
may change prices in their sole discretion. Manufacturers typically discount the cost of inventory and offer inventory
financing assistance during the manufacturers’ slow seasons, generally October through March. To obtain lower cost
of inventory, we strive to capitalize on these manufacturer incentives to take product delivery during the
manufacturers’ slow seasons. This permits us to gain pricing advantages and better product availability during the
selling season. Arrangements with certain other manufacturers may restrict our right to offer some product lines in
certain markets.
We transfer individual boats among our retail locations to fill customer orders that otherwise might take
substantially longer to fill from the manufacturer. This reduces delays in delivery, helps us maximize inventory
turnover, and assists in minimizing potential overstock or out-of-stock situations. We actively monitor our inventory
levels to maintain levels appropriate to meet current anticipated market demands. We are not bound by contractual
agreements governing the amount of inventory that we must purchase in any year from any manufacturer, but the
failure to purchase at agreed upon levels may result in the loss of certain manufacturer incentives. We participate in
numerous end-of-summer manufacturer boat shows, which manufacturers sponsor to sell off their remaining
inventory at reduced costs before the introduction of new model year products, typically beginning in July.
Inventory Financing
Marine manufacturers customarily provide interest assistance programs to retailers. The interest assistance
varies by manufacturer and may include periods of free financing or reduced interest rate programs. The interest
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assistance may be paid directly to the retailer or the financial institution depending on the arrangements the
manufacturer has established. We believe that our financing arrangements with manufacturers are standard within the
industry.
We account for consideration received from our vendors in accordance with FASB Accounting Standards
Codification 605-50, “Revenue Recognition, Customer Payments and Incentives” (ASC 605-50), previously referred
to as Emerging Issues Task Force Issue No. 02-16, “Accounting by a Customer (Including a Reseller) for Certain
Consideration Received from a Vendor.” ASC 605-50 most significantly requires us to classify interest assistance
received from manufacturers as a reduction of inventory cost and related cost of sales as opposed to netting the
assistance against our interest expense incurred with our lenders. Pursuant to ASC 605-50, amounts received by us
under our co-op assistance programs from our manufacturers are netted against related advertising expenses.
We are party to a second amended and restated credit and security agreement, which has been amended on
various occasions since its original execution in June 2006. As amended, our credit facility provides for a line of
credit with asset-based borrowing availability up to approximately $230 million, stepping down to $175 million by
September 30, 2010, with interim decreases between such dates. The amended facility has certain financial covenants
as specified in the agreement. The covenants include provisions that our leverage ratio not exceed 2.75 to 1; that our
current ratio must be greater than 1.25 to 1 or 1.20 to 1 depending on the time of year; and that our maximum
EBITDA loss and annual EBITDA, both as defined in the agreement, comply with certain thresholds as described
below. The EBITDA covenant requires that we do not exceed the allowable cumulative negative EBITDA, as
defined in the agreement, for the first nine months of fiscal 2010, which is $22 million as of December 31, 2009 and
March 31, 2010 and $15 million as of June 30, 2010. We are required to have a cumulative EBITDA greater than or
equal to our interest expense for the fiscal year ending September 30, 2010. EBITDA, as defined in the agreement, is
our earnings before interest, taxes, depreciation, and amortization plus an add back for stock-based compensation
expense and 50% of the proceeds of our September 2009 stock offering or approximately $10 million. The amended
facility provides for a variable interest rate margin of LIBOR plus 490 basis points through September 30, 2010 and
thereafter at LIBOR plus 150 to 400 basis points, depending upon our financial and operating performance. We paid
the lenders approximately $2.4 million in amendment fees during fiscal 2009. The amended facility matures in May
2011, but includes two one-year renewal options, subject to lender approval.
At September 30, 2009, we owed an aggregate of $142 million under our revolving credit facility and were in
compliance with all of the credit facility covenants. Advances under the facility accrued interest at a rate of 5.2% as
of September 30, 2009, and the facility provided us with an additional net borrowing availability of approximately
$60 million. All indebtedness associated with our real estate holdings were repaid during the fiscal year ended
September 30, 2008.
Management Information System
We believe that our management information system, which currently is being utilized by each of our
dealerships and was developed over a number of years through cooperative efforts with the vendor, enhances our
ability to integrate successfully the operations of our dealerships and future acquisitions, facilitates the interchange of
information, and enhances cross-selling opportunities throughout our company. The system integrates each level of
operations on a company-wide basis, including purchasing, inventory, receivables, financial reporting and budgeting,
and sales management. The system enables us to monitor each dealership’s operations in order to identify quickly
areas requiring additional focus and to manage inventory. The system also provides sales representatives with
prospect and customer information that aids them in tracking the status of their contacts with prospects, automatically
generates follow-up correspondence to such prospects, facilitates the availability of a particular boat company-wide,
locates boats needed to satisfy a particular customer request, and monitors the maintenance and service needs of
customers’ boats. Company representatives also utilize the system to assist in arranging financing and insurance
packages.
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Brunswick Agreement Relating to Acquisitions
We and the Sea Ray Division of Brunswick are parties to an agreement extending through December 2015 that
provides a process for the acquisition of additional Sea Ray boat dealers that desire to be acquired by us. Under the
agreement, acquisitions of Sea Ray dealers will be mutually agreed upon by us and Sea Ray with reasonable efforts
to be made to include a balance of Sea Ray dealers that have been successful and those that have not been. The
agreement provides that Sea Ray will not unreasonably withhold its consent to any proposed acquisition of a Sea Ray
dealer by us, subject to the conditions set forth in the agreement. Among other things, the agreement provides for us
to provide Sea Ray with a business plan for each proposed acquisition, including historical financial and five-year
projected financial information regarding the acquisition candidate; marketing and advertising plans; service
capabilities and managerial and staff personnel; information regarding the ability of the candidate to achieve
performance standards within designated periods; and information regarding the success of our previous acquisitions
of Sea Ray dealers. The agreement also contemplates Sea Ray reaching a good faith determination whether the
acquisition would be in its best interest based on our dedication and focus of resources on the Sea Ray brand and Sea
Ray’s consideration of any adverse effects that the approval would have on the resulting territory configuration of
adjacent or other dealers and the absence of any violation of applicable laws or rights granted by Sea Ray to others.
Dealer Agreements with Brunswick
Brunswick, through its Sea Ray division, and we, through our dealerships, are parties to Sales and Service
Agreements relating to Sea Ray products extending through December 2015. Each of these dealer agreements
appoints one of our dealerships as a dealer for the retail sale, display, and servicing of designated Sea Ray products,
parts, and accessories currently or in the future sold by Sea Ray. Each dealer agreement designates a designated
geographical territory for the dealer, which is exclusive to the dealer as long as the dealer is not in breach of the
material obligations and performance standards under the agreement and Sea Ray’s then current material policies and
programs following notice and the expiration of any applicable cure periods without cure. Each dealer agreement
also specifies retail locations, which the dealer may not close, change, or add to without the prior written consent of
Sea Ray, provided that Sea Ray may not unreasonably withhold its consent. Each dealer agreement also restricts the
dealer from selling, advertising (other than in recognized and established marine publications), soliciting for sale, or
offering for resale any Sea Ray products outside its territory without the prior written consent of Sea Ray as long as
similar restrictions also apply to all domestic Sea Ray dealers selling comparable Sea Ray products. In addition, each
dealer agreement provides for the lowest product prices charged by Sea Ray from time to time to other domestic Sea
Ray dealers, subject to the dealer meeting all the requirements and conditions of Sea Ray’s applicable programs and
the right of Sea Ray in good faith to charge lesser prices to other dealers to meet existing competitive circumstances,
for unusual and non-ordinary business circumstances, or for limited duration promotional programs.
Among other things, each dealer agreement requires the dealer to
• devote its best efforts to promote, display, advertise, and sell Sea Ray products at each of its retail locations in
accordance with the agreement and applicable laws;
• display and utilize at each of its retail locations signs, graphics, and image elements with Sea Ray’s
identification that positively reflect the Sea Ray image and promote the retail sale of Sea Ray products;
• purchase and maintain at all times sufficient inventory of current Sea Ray products to meet the reasonable
demand of customers at each of its locations and to meet Sea Ray’s applicable minimum inventory
requirements;
• maintain at each retail location, or at another acceptable location, a service department that is properly staffed
and equipped to service Sea Ray products promptly and professionally and to maintain parts and supplies to
service Sea Ray products properly on a timely basis;
• perform all necessary product rigging, installation, and inspection services prior to delivery to purchasers in
accordance with Sea Ray’s standards and perform post-sale services of all Sea Ray products sold by the dealer
and brought to the dealer for service;
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• provide or arrange for warranty and service work for Sea Ray products regardless of the selling dealer or
condition of sale;
• exercise reasonable efforts to address circumstances in which another dealer has made a sale to an original
retail purchaser who permanently resides within the dealer’s territory where such sale is contrary to the selling
dealer’s Sales and Service Agreement;
• provide appropriate instructions to purchasers on how to obtain warranty and service work from the dealer;
• furnish product purchasers with Sea Ray’s limited warranty on new products and with information and
training as to the safe and proper operation and maintenance of the products;
• assist Sea Ray in performing any product defect and recall campaigns;
• achieve sales performance in accordance with fair and reasonable standards and sales levels established by
Sea Ray in consultation with the dealer based on factors such as population, sales potential, market share
percentage of Sea Ray products sold in the territory compared with competitive products sold in the territory,
local economic conditions, competition, past sales history, number of retail locations, and other special
circumstances that may affect the sale of Sea Ray products or the dealer, in each case consistent with
standards established for all domestic Sea Ray dealers selling comparable products;
• provide designated financial information that are truthful and accurate;
• conduct its business in a manner that preserves and enhances the reputation and goodwill of both Sea Ray and
the dealer for providing quality products and services;
• maintain the financial ability to purchase and maintain on hand and display Sea Ray’s current product models;
• maintain customer service ratings in compliance with Sea Ray’s criteria;
• comply with those dealer’s obligations that may be imposed or established by Sea Ray applicable to all
domestic Sea Ray dealers;
• maintain a financial condition that is adequate to satisfy and perform its obligations under the agreement;
• achieve within designated time periods or maintain motor dealer status (which is Sea Ray’s highest
performance status) or other applicable certification requirements as established from time to time by Sea Ray
applicable to all domestic Sea Ray dealers;
• notify Sea Ray of the addition or deletion of any retail locations;
• sell Sea Ray products only on the basis of Sea Ray’s published applicable limited warranty and make no other
warranty or representations concerning the limited warranty, expressed or implied, either verbally or in
writing;
• provide timely warranty service on all Sea Ray products presented to the dealer by purchasers in accordance
with Sea Ray’s then current warranty program applicable to all domestic Sea Ray dealers selling comparable
Sea Ray products; and
• provide Sea Ray with access to the dealer’s books and records and such other information as Sea Ray may
reasonably request to verify the accuracy of the warranty claims submitted to Sea Ray by the dealer with
regard to such warranty claims.
Sea Ray has agreed to indemnify each of our dealers against any losses to third parties resulting from Sea Ray’s
negligent acts or omissions involving the design or manufacture of any of its products or any breach by it of the
agreement. Each of our dealers has agreed to indemnify Sea Ray against any losses to third parties resulting from the
dealer’s negligent acts or omissions involving the dealer’s application, use, or repair of Sea Ray products, statements
or representation not specifically authorized by Sea Ray, the installation of any after market components or any other
modification or alteration of Sea Ray products, and any breach by the dealer of the agreement.
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Each dealer agreement may be terminated
• by Sea Ray, upon 60 days prior written notice, if the dealer fails or refuses to place a minimum stocking order
of the next model year’s products in accordance with requirements applicable to all Sea Ray dealers generally
or fails to meet its financial obligations as they become due to Sea Ray or to the dealer’s lenders;
• by Sea Ray or the dealer, upon 60 days written notice to the other, in the event of a breach or default by the
other with any of the of the material obligations, performance standards, covenants, representations,
warranties, or duties imposed by the agreement or the Sea Ray manual that has not been cured within 60 days
of the notice of the claimed deficiency or within a reasonable period when the cure cannot be completed
within a 60-day period, or at the end of the 60-day period without the opportunity to cure when the cause
constitutes bad faith;
• by Sea Ray or the dealer if the other makes a fraudulent misrepresentation that is material to the agreement or
the other engages in an incurable act of bad faith;
• by Sea Ray or the dealer in the event of the insolvency, bankruptcy, or receivership of the other;
• by Sea Ray in the event of the assignment of the agreement by the dealer without the prior written consent of
Sea Ray;
• by Sea Ray upon at least 15 days’ prior written notice in the event of the failure to pay any sums due and
owing to Sea Ray that are not disputed in good faith; and
• upon the mutual consent of Sea Ray and the dealer.
Employees
As of September 30, 2009, we had 1,245 employees, 1,195 of whom were in store-level operations and 50 of
whom were in corporate administration and management. We are not a party to any collective bargaining
agreements. We consider our relations with our employees to be excellent.
Trademarks and Service Marks
We have registered trade names and trademarks with the U.S. Patent and Trademark Office for various names,
including “MarineMax,” “MarineMax Getaways,” “MarineMax Care,” “Delivering the Dream,” “MarineMax
Delivering the Boating Dream,” “Newcoast Financial Services,” “MarineMax Boating Gear Center,” and “Women
on Water.” We have registered the name “MarineMax” in the European Community. We have trade name and
trademark applications pending in Canada for various names, including “MarineMax,” “Delivering the Dream,” and
“The Water Gene.” There can be no assurance that any of these applications will be granted.
Seasonality and Weather Conditions
Our business, as well as the entire recreational boating industry, is highly seasonal, with seasonality varying in
different geographic markets. Over the three-year period ended September 30, 2009, the average revenue for the
quarters ended December 31, March 31, June 30, and September 30 represented approximately 20%, 25%, 30%, and
25%, respectively, of our average annual revenues. With the exception of Florida, we generally realize significantly
lower sales and higher levels of inventories and related short-term borrowings, in the quarterly periods ending
December 31 and March 31. The onset of the public boat and recreation shows in January stimulates boat sales and
typically allows us to reduce our inventory levels and related short-term borrowings throughout the remainder of the
fiscal year.
Our business is also subject to weather patterns, which may adversely affect our results of operations. 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 certain locations.
Hurricanes and other storms could result in disruptions of our operations or damage to our boat inventories and
facilities, as has been the case when Florida and other markets were affected by hurricanes. Although our
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geographic diversity is likely to reduce the overall impact to us of adverse weather conditions in any one market area,
these conditions will continue to represent potential, material adverse risks to us and our future financial
performance.
Environmental and Other Regulatory Issues
Our operations are subject to extensive regulation, supervision, and licensing under various federal, state, and
local statutes, ordinances, and regulations. While we believe that we maintain all requisite licenses and permits and
are in compliance with all applicable federal, state, and local regulations, there can be no assurance that we will be
able to maintain all requisite licenses and permits. The failure to satisfy those and other regulatory requirements
could have a material adverse effect on our business, financial condition, and results of operations. The adoption of
additional laws, rules, and regulations could also have a material adverse effect on our business. Various federal,
state, and local regulatory agencies, including the Occupational Safety and Health Administration, or OSHA, the
United States Environmental Protection Agency, or EPA, and similar federal and local agencies, have jurisdiction
over the operation of our dealerships, repair facilities, and other operations with respect to matters such as consumer
protection, workers’ safety, and laws regarding protection of the environment, including air, water, and soil.
The EPA has various air emissions regulations for outboard marine engines that impose more strict emissions
standards for two-cycle, gasoline outboard marine engines. The majority of the outboard marine engines we sell are
manufactured by Mercury Marine. Mercury Marine’s product line of low-emission engines, including the OptiMax,
Verado, and other four-stroke outboards, have already achieved the EPA’s mandated 2006 emission levels. Any
increased costs of producing engines resulting from EPA standards, or the inability of our manufacturers to comply
with EPA requirements, could have a material adverse effect on our business.
Certain of our facilities own and operate underground storage tanks, or USTs, for the storage of various
petroleum products. The USTs are generally subject to federal, state, and local laws and regulations that require
testing and upgrading of USTs and remediation of contaminated soils and groundwater resulting from leaking USTs.
In addition, if leakage from company-owned or operated USTs migrates onto the property of others, we may be
subject to civil liability to third parties for remediation costs or other damages. Based on historical experience, we
believe that our liabilities associated with UST testing, upgrades, and remediation are unlikely to have a material
adverse effect on our financial condition or operating results.
As with boat dealerships generally, and parts and service operations in particular, our business involves the use,
handling, storage, and contracting for recycling or disposal of hazardous or toxic substances or wastes, including
environmentally sensitive materials, such as motor oil, waste motor oil and filters, transmission fluid, antifreeze,
freon, waste paint and lacquer thinner, batteries, solvents, lubricants, degreasing agents, gasoline, and diesel fuels.
Accordingly, we are subject to regulation by federal, state, and local authorities establishing requirements for the
use, management, handling, and disposal of these materials and health and environmental quality standards, and
liability related thereto, and providing penalties for violations of those standards. We are also subject to laws,
ordinances, and regulations governing investigation and remediation of contamination at facilities we operate to
which we send hazardous or toxic substances or wastes for treatment, recycling, or disposal.
We do not believe we have any material environmental liabilities or that compliance with environmental laws,
ordinances, and regulations will, individually or in the aggregate, have a material adverse effect on our business,
financial condition, or results of operations. However, soil and groundwater contamination has been known to exist
at certain properties owned or leased by us. We have also been required and may in the future be required to remove
aboveground and underground storage tanks containing hazardous substances or wastes. As to certain of our
properties, specific releases of petroleum have been or are in the process of being remedied in accordance with state
and federal guidelines. We are monitoring the soil and groundwater as required by applicable state and federal
guidelines. In addition, the shareholders of the acquired dealers have indemnified us for specific environmental
issues identified on environmental site assessments performed by us as part of the acquisitions. We maintain
insurance for pollutant cleanup and removal. The coverage pays for the expenses to extract pollutants from land or
water at the insured property, if the discharge, dispersal, seepage, migration, release, or escape of the pollutants is
caused by or results from a covered cause of loss. We also have additional storage tank liability insurance and
“Superfund” coverage where applicable. In addition, certain of our retail locations are located on waterways that are
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subject to federal or state laws regulating navigable waters (including oil pollution prevention), fish and wildlife, and
other matters.
Two of the properties we own were historically used as gasoline service stations. Remedial action with respect
to prior historical site activities on these properties has been completed in accordance with federal and state law.
Also, two of our properties are within the boundaries of a “Superfund” site, although neither property has been nor is
expected to be identified as a contributor to the contamination in the area. We, however, do not believe that these
environmental issues will result in any material liabilities to us.
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 limiting future sales, which could adversely affect our business, financial
condition, and results of operations.
Product Liability
The products we sell or service may expose us 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 our business. Our manufacturers generally maintain product liability insurance, and we maintain third-party
product liability insurance, which we believe to be adequate. However, we may experience legal claims in excess of
our insurance coverage, and those claims may not be covered by insurance. Furthermore, any significant claims
against us could adversely affect our business, financial condition, and results of operations and result in negative
publicity. Excessive insurance claims also could result in increased insurance premiums.
Competition
We operate in a highly competitive environment. In addition to facing competition generally from recreation
businesses seeking to attract consumers’ leisure time and discretionary spending dollars, the recreational boat
industry itself is highly fragmented, resulting in intense competition for customers, quality products, boat show
space, and suitable retail locations. We rely to a certain extent on boat shows to generate sales. Our inability to
participate in boat shows in our existing or targeted markets could have a material adverse effect on our business,
financial condition, and results of operations.
We compete primarily with single-location boat dealers and, with respect to sales of marine equipment, parts,
and accessories, with national specialty marine stores, catalog retailers, sporting goods stores, and mass merchants.
Dealer competition continues to increase based on the quality of available products, the price and value of the
products, and attention to customer service. There is significant competition both within markets we currently serve
and in new markets that we may enter. We compete in each of our markets with retailers of brands of boats and
engines we do not sell in that market. In addition, several of our competitors, especially those selling boating
accessories, are large national or regional chains that have substantial financial, marketing, and other resources.
However, we believe that our integrated corporate infrastructure and marketing and sales capabilities, our cost
structure, and our nationwide presence enable us to compete effectively against these companies. Private sales of
used boats is an additional significant source of competition.
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Executive Officers
The following table sets forth information concerning each of our executive officers:
Name
William H. McGill Jr.
Michael H. McLamb
Edward A. Russell
Kurt M. Frahn
Jack P. Ezzell
Jay J. Avelino
Paulee C. Day
Age
66
44
Position
Chairman of the Board, President, Chief Executive
Officer, and Director
Executive Vice President, Chief Financial Officer,
Secretary, and Director
49 Executive Vice President of Operations and Sales
41 Vice President of Finance and Treasurer
39 Vice President, Chief Accounting Officer, and Controller
59 Vice President of Human Resources
40 Vice President, General counsel and Assistant Secretary
William H. McGill Jr. has served as the Chief Executive Officer of MarineMax since January 23, 1998 and as
the Chairman of the Board and as a director of our company since March 6, 1998. Mr. McGill served as the President
of our company from January 23, 1988 until September 8, 2000 and re-assumed the position on July 1, 2002.
Mr. McGill was the principal owner and president of Gulfwind USA, Inc., one of our operating subsidiaries, from
1973 until its merger with us.
Michael H. McLamb has served as Executive Vice President of our company since October 2002, as Chief
Financial Officer since January 23, 1998, as Secretary since April 5, 1998, and as a director since November 1, 2003.
Mr. McLamb served as Vice President and Treasurer of our company from January 23, 1998 until October 22, 2002.
Mr. McLamb, a certified public accountant, was employed by Arthur Andersen LLP from December 1987 to
December 1997, serving most recently as a senior manager.
Edward A. Russell has served as Executive Vice President of Operations and Sales of our company since
February 2008. Mr. Russell served as Vice President of Operations of our company from March 2006 until February
2008, and as a Vice President of our company from October 22, 2002 until March 2006. Mr. Russell served as the
Regional Manager of our Florida operations from August 1, 2002 until October 22, 2002 and as the District President
for our Central and West Florida operations from March 1998 until August 1, 2002. Mr. Russell was an owner and
General Sales Manager of Gulfwind USA Inc., one of our operating subsidiaries, now called MarineMax of Central
Florida, from 1984 until its merger with our company in March 1998.
Kurt M. Frahn has served as Vice President of Finance and Treasurer of our company since October 22, 2002.
Mr. Frahn served as Director of Taxes and Acquisitions of our company from May 15, 1998 until October 22, 2002.
Mr. Frahn was employed by Arthur Andersen LLP from September 3, 1991 until May 15, 1998, serving most
recently as a tax consulting manager.
Jack P. Ezzell has served as Vice President and Chief Accounting Officer of our company since October 22,
2002 and as Corporate Controller of our company since June 1, 1999. Mr. Ezzell served as Assistant Controller from
January 13, 1998 until June 1, 1999. Mr. Ezzell, a certified public accountant, was employed by Arthur Andersen
LLP from August 1996 until January 1998, serving most recently as a senior auditor.
Jay J. Avelino has served as Vice President of Human Resources of our company since February 2008.
Mr. Avelino served as Vice President of Team Development of our company from May 2000 until February 2008.
Previously, Mr. Avelino was employed by Caliper Corporation, a New Jersey-based personality assessment and
human resources consulting company, most recently as Senior Vice President.
Paulee C. Day has served as Vice President of our company since February 2009 and as General Counsel and
Assistant Secretary since January 2003. Ms. Day, an active member of the Florida Bar, was employed by Maxxim
Medical from May 1999 to November 2002, serving as Vice President, General Counsel, and Secretary. Prior to that
time, Ms. Day was Corporate Attorney at Eckerd Corporation from June 1997 through May 1999 and a corporate
attorney at the law firm Trenam, Kemker, Scharf, Barkin, Frye, O’Neill and Mullis, P.A. from January 1995 through
June 1997. Ms. Day is a graduate of the Indiana University School of Law and a graduate of Vanderbilt University
where she attained both her Bachelor’s and Masters in Business Administration.
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Item 1A.
Risk Factors
General economic conditions and consumer spending patterns can negatively impact our operating results, and
the severe recession that began in late 2007 has adversely affected the boating industry and our company.
General economic conditions and consumer spending patterns can negatively impact our operating results.
Unfavorable local, regional, national, or global economic developments or uncertainties regarding future economic
prospects could reduce consumer spending in the markets we serve and adversely affect our business. Economic
conditions in areas in which we operate dealerships, particularly Florida in which we generated 44%, 43%, and 45%
of our revenue during fiscal 2007, 2008, and 2009, respectively, can have a major impact on our operations. Local
influences, such as corporate downsizing and military base closings, also could adversely affect our operations in
certain markets.
In an economic downturn, consumer discretionary spending levels generally decline, at times resulting in
disproportionately large reductions in the sale of luxury goods. Consumer spending on luxury goods also may decline
as a result of lower consumer confidence levels, even if prevailing economic conditions are favorable. Although we
have expanded our operations during periods of stagnant or modestly declining industry trends, the cyclical nature of
the recreational boating industry or the lack of industry growth could adversely affect our business, financial
condition, or results of operations in the future. Any period of adverse economic conditions or low consumer
confidence has a negative effect on our business.
Lower consumer spending resulting from a downturn in the housing market and other economic factors
adversely affected our business in fiscal 2007 and continued weakness in consumer spending resulting from
substantial weakness in the financial markets and deteriorating economic conditions had a very substantial negative
effect on our business in fiscal 2008 and 2009. Our revenue decreased from $1.2 billion in fiscal 2007, to
$885.4 million in fiscal 2008, to $588.6 million in fiscal 2009. Our earnings have decreased from a net income of
$20.1 million in fiscal 2007 to a net loss of $134.3 million in fiscal 2008 (including a $122.1 million goodwill
impairment charge) and a net loss of $76.8 million in fiscal 2009. These substantially deteriorating economic and
financial conditions have had a greater impact on many other participants in the boating industry, with certain
manufacturers and dealers ceasing business operations or filing for bankruptcy. While the reduction in boating
industry participants might have a long-term positive impact on our company’s competitive position, we are facing
and expect to continue to face short-term competitive pressure resulting from decreased selling prices as a result of
forced sales and other liquidations of excess inventory.
These conditions caused us to defer our acquisition program, slow our new store openings, reduce our inventory
purchases, engage in inventory reduction efforts, close some of our retail locations, and reduce our headcount. While
we believe the steps we have taken to date will enable us to emerge from the current economic environment as a
stronger and more profitable company, we cannot predict the length or severity of these unfavorable economic or
financial conditions or the extent to which they will adversely affect our operating results nor can we predict the
effectiveness of the measures we have taken to address this environment or whether additional measures will be
necessary. A continuation of depressed economic factors could have additional negative effects on our company,
including interfering with our supply of certain brands by manufacturers, reduced marketing and other support by
manufacturers, decreased revenue, additional pressures on margins, and our failure to satisfy covenants under our
credit agreement.
The availability and costs of borrowed funds can adversely affect our ability to obtain adequate boat inventory
and the ability and willingness of our customers to finance boat purchases.
The availability and costs of borrowed funds can adversely affect our ability to obtain and maintain adequate
boat inventory as well as the ability and willingness of our customers to finance boat purchases. As of September 30,
2009, we had no long-term debt. We rely on our credit facility to purchase and maintain our inventory of boats. Our
ability to borrow under our credit facility depends on our ability to continue to satisfy our covenants and other
obligations under our credit facility. The aging of our inventory limits our borrowing capacity as defined provisions
in our credit facility reduce the allowable advance rate as our inventory ages. Our access to funds under our credit
facility also depends upon the ability of the banks that are parties to that facility to meet their funding commitments,
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particularly if they experience shortages of capital or experience excessive volumes of borrowing requests from
others during a short period of time. A continuation of depressed economic conditions, weak consumer spending,
turmoil in the credit markets, and lender difficulties could interfere with our ability to maintain compliance with our
debt covenants and to utilize the credit agreement to fund our operations. Accordingly, it may be necessary for us to
close additional stores, further reduce our expense structure, or modify the covenants with our lenders. Any inability
to utilize our credit facility or the acceleration of amounts owed, resulting from a covenant violation, insufficient
collateral, or lender difficulties, could require us to seek other sources of funding to repay amounts outstanding under
the credit agreement or replace or supplement our credit agreement, which may not be possible at all or under
commercially reasonable terms.
Our current revolving credit facility, as amended, provides a line of credit with asset-based borrowing
availability of up to approximately $230 million, stepping down to $175 million by September 30, 2010. We have
pledged various of our assets, including boat inventories, accounts receivable, equipment, fixtures, and real estate, to
secure borrowings under our credit facility. As of September 30, 2009, we were in compliance with all of the credit
facility covenants and our additional available borrowings under our credit facility were approximately $60 million.
Similarly, the decreases in the availability of credit and increases in the cost of credit adversely affect the ability
of our customers to purchase boats from us and thereby adversely affects our ability to sell our products and impact
the profitability of our finance and insurance activities. Tight credit conditions during fiscal 2008 and fiscal 2009
adversely affected the ability of customers to finance boat purchases, which had a negative affect on our operating
results.
Our success depends to a significant extent on the well being, as well as the continued popularity and reputation
for quality of the boating products, of our manufacturers, particularly Brunswick’s Sea Ray, Boston Whaler,
Cabo, Hatteras, and Meridian boat lines and Azimut-Benetti Group’s Azimut and Atlantis products.
Approximately 51% of our revenue in fiscal 2009 resulted from sales of new boats manufactured by Brunswick,
including approximately 37% from Brunswick’s Sea Ray division and approximately 14% from Brunswick’s other
divisions. The remainder of our fiscal 2009 revenue from new boat sales resulted from sales of products from a
limited number of other manufacturers, none of which accounted for more than 10% of our revenue.
We depend on our manufacturers to provide us with products that compare favorably with competing products
in terms of quality, performance, safety, and advanced features, including the latest advances in propulsion and
navigation systems. Any adverse change in the production efficiency, product development efforts, technological
advancement, marketplace acceptance, marketing capabilities, and financial condition of our manufacturers,
particularly Brunswick given our reliance on Sea Ray, Boston Whaler, Cabo, Hatteras, and Meridian, would have a
substantial adverse impact on our business. Any difficulties encountered by any of our manufacturers, particularly
Brunswick, resulting from economic, financial, or other factors could adversely affect the quality and amount of
products that they are able to supply to us and the services and support they provide to us.
The interruption or discontinuance of the operations of Brunswick or other manufacturers could cause us to
experience shortfalls, disruptions, or delays with respect to needed inventory. Although we believe that adequate
alternate sources would be available that could replace any manufacturer other than Brunswick as a product source,
those alternate sources may not be available at the time of any interruption, and alternative products may not be
available at comparable quality and prices.
We maintain dealer agreements with Brunswick covering Sea Ray products. Each dealer agreement has a multi-
year term and provides for the lowest product prices charged by the Sea Ray division of Brunswick from time to time
to other domestic Sea Ray dealers. These terms are subject to
• the dealer meeting all the requirements and conditions of Sea Ray’s applicable programs; and
• the right of Brunswick in good faith to charge lesser prices to other dealers
– to meet existing competitive circumstances;
– for unusual and non-ordinary business circumstances; or
– for limited duration promotional programs.
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Each dealer agreement designates a specific geographical territory for the dealer, which is exclusive to the dealer
so long as the dealer is not in breach of the material obligations and performance standards under the agreement and
Sea Ray’s then current material policies and programs following notice and the expiration of any applicable cure
periods without cure.
We also maintain dealer agreements with Hatteras covering Hatteras products. Each agreement allows Hatteras
to revise prices at any time, and such new prices will supersede previous prices. Pursuant to the agreements, we must
bear any losses we incur as a result of such price changes and may not recover from Hatteras for any losses. In
addition, certain of our dealerships may not represent manufacturers or product lines that compete directly with
Hatteras without its prior written consent.
Upon the completion of the Surfside-3 acquisition, we became the exclusive dealer for Azimut-Benetti Group’s
Azimut product line. In September 2008, our geographic territory was expanded to include Florida. The Azimut
dealer agreement provides a geographic territory to promote the product line and to network with the appropriate
clientele through various independent locations designated for Azimut retail sales.
As is typical in the industry, we generally deal with manufacturers, other than the Sea Ray division of
Brunswick, under renewable annual dealer agreements. These agreements do not contain any contractual provisions
concerning product pricing or required purchasing levels. Pricing is generally established on a model year basis, but
is subject to change in the manufacturer’s sole discretion. Any change or termination of these arrangements for any
reason could adversely affect product availability and cost and our financial performance.
Boat manufacturers exercise substantial control over our business.
We depend on our dealer agreements. Through dealer agreements, boat manufacturers, including Brunswick,
exercise significant control over their dealers, restrict them to specified locations, and retain approval rights over
changes in management and ownership, among other things. The continuation of our dealer agreements with most
manufacturers, including Brunswick, depends upon, among other things, our achieving stated goals for customer
satisfaction ratings and market share penetration in the market served by the applicable dealership. Failure to meet
the customer satisfaction, market share goals, and other conditions set forth in any dealer agreement could have
various consequences, including the following:
• the termination of the dealer agreement;
• the imposition of additional conditions in subsequent dealer agreements;
• limitations on boat inventory allocations;
• reductions in reimbursement rates for warranty work performed by the dealer;
• loss of certain manufacturer to dealer incentives; or
• denial of approval of future acquisitions.
Our dealer agreements with certain manufacturers, including Brunswick, do not give us the exclusive right to
sell those manufacturers’ products within a given geographical area. Accordingly, a manufacturer, including
Brunswick, could authorize another dealer to start a new dealership in proximity to one or more of our locations, or
an existing dealer could move a dealership to a location that would be directly competitive with us. These events
could have a material adverse effect on our competitive position and financial performance.
The failure to receive rebates and other dealer incentives on inventory purchases or retail sales could
substantially reduce our margins.
We rely on manufacturers’ programs that provide incentives for dealers to purchase and sell particular boat
makes and models or for consumers to buy particular boat makes or models. Any eliminations, reductions,
limitations, or other changes relating to rebate or incentive programs that have the effect of reducing the benefits we
receive, whether relating to the ability of manufactures to pay or our ability to qualify for such incentive programs,
could increase the effective cost of our boat purchases, reduce our margins and competitive position, and have a
material adverse effect on our financial performance.
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Fuel prices and supply may affect our business.
All of the recreational boats we sell are powered by diesel or gasoline engines. Consequently, an interruption in
the supply, or a significant increase in the price or tax on the sale, of fuel on a regional or national basis could have a
material adverse effect on our sales and operating results. Increases in fuel prices (such as those that occurred during
fiscal 2008) negatively impact boat sales. At various times in the past, diesel or gasoline fuel has been difficult to
obtain. The supply of fuels may be interrupted, rationing may be imposed, or the price of or tax on fuels may
significantly increase in the future, adversely impacting our business.
The availability of boat insurance is critical to our success.
The ability of our customers to secure reasonably affordable boat insurance that is satisfactory to lenders that
finance our customers’ purchases is critical to our success. Historically, affordable boat insurance has been available.
With the hurricanes that have impacted the state of Florida and other markets over the past several years, insurance
rates have escalated and insurance coverage has become more difficult to obtain. Any difficulty of customers to
obtain affordable boat insurance could impede boat sales and adversely affect our business.
Other recreational activities and poor industry perception can adversely affect the levels of boat purchases.
Other recreational activities and poor industry perception can adversely affect the levels of boat purchases. As a
seller of high-end consumer products, we must compete for discretionary spending with a wide variety of other
recreational activities and consumer purchases. In addition, perceived hassles of boat ownership and relatively poor
customer service and customer education throughout the retail boat industry represent impediments to boat
purchases. Our customer-centric strategy is intended to overcome these perceptions.
Adverse federal tax policies can have a negative effect on us.
Changes in federal and state tax laws, such as an imposition of luxury taxes on new boat purchases, increases in
prevailing tax rates, and weak stock market performance also influence consumers’ decisions to purchase products
we offer and could have a negative effect on our sales. For example, during 1991 and 1992, the federal government
imposed a luxury tax on new recreational boats with sales prices in excess of $100,000, which coincided with a sharp
decline in boating industry sales from a high of more than $17.9 billion in the late 1980s to a low of $10.3 billion in
1992. Any increase in tax rates, including those on capital gains and dividends, particularly those on high-income
taxpayers, could adversely affect our boat sales.
Our success depends, in part, on our ability to continue to make successful acquisitions and to integrate the
operations of acquired dealers and each dealer we acquire in the future.
Since March 1, 1998, we have acquired 20 recreational boat dealers, two boat brokerage operations, and two
full-service yacht repair facilities. Each acquired dealer operated independently prior to its acquisition by us. Our
success depends, in part, on our ability to continue to make successful acquisitions and to integrate the operations of
acquired dealers, including centralizing certain functions to achieve cost savings and pursuing programs and
processes that promote cooperation and the sharing of opportunities and resources among our dealerships. We may
not be able to oversee the combined entity efficiently or to implement effectively our growth and operating strategies.
To the extent that we successfully pursue our acquisition strategy, our resulting growth will place significant
additional demands on our management and infrastructure. Our failure to pursue successfully our acquisition
strategies or operate effectively the combined entity could have a material adverse effect on our rate of growth and
operating performance.
Unforeseen expenses, difficulties, and delays frequently encountered in connection with rapid expansion
through acquisitions could inhibit our growth and negatively impact our profitability.
Our growth strategy of acquiring additional recreational boat dealers involves significant risks. This strategy
entails reviewing and potentially reorganizing acquired business operations, corporate infrastructure and systems, and
financial controls. Unforeseen expenses, difficulties, and delays frequently encountered in connection with
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rapid expansion through acquisitions could inhibit our growth and negatively impact our profitability. We may be
unable to identify suitable acquisition candidates or to complete the acquisitions of candidates that we identify.
Increased competition for acquisition candidates or increased asking prices by acquisition candidates may increase
purchase prices for acquisitions to levels beyond our financial capability or to levels that would not result in the
returns required by our acquisition criteria. Acquisitions also may become more difficult in the future as we acquire
more of the most attractive dealers. In addition, we may encounter difficulties in integrating the operations of
acquired dealers with our own operations or managing acquired dealers profitably without substantial costs, delays,
or other operational or financial problems.
We may issue common or preferred stock and incur substantial indebtedness in making future acquisitions. The
size, timing, and integration of any future acquisitions may cause substantial fluctuations in operating results from
quarter to quarter. Consequently, operating results for any quarter may not be indicative of the results that may be
achieved for any subsequent quarter or for a full fiscal year. These fluctuations could adversely affect the market
price of our common stock.
Our ability to continue to grow through the acquisition of additional dealers will depend upon various factors,
including the following:
• the availability of suitable acquisition candidates at attractive purchase prices;
• the ability to compete effectively for available acquisition opportunities;
• the availability of borrowed funds or common stock with a sufficient market price to complete the
acquisitions;
• the ability to obtain any requisite manufacturer or governmental approvals;
• the ability to obtain approval of our lenders under our current credit agreement; and
• the absence of one or more manufacturers attempting to impose unsatisfactory restrictions on us in connection
with their approval of acquisitions.
As a part of our acquisition strategy, we frequently engage in discussions with various recreational boat dealers
regarding their potential acquisition by us. In connection with these discussions, we and each potential acquisition
candidate exchange confidential operational and financial information, conduct due diligence inquiries, and consider
the structure, terms, and conditions of the potential acquisition. In certain cases, the prospective acquisition candidate
agrees not to discuss a potential acquisition with any other party for a specific period of time, grants us an option to
purchase the prospective dealer for a designated price during a specific time, and agrees to take other actions
designed to enhance the possibility of the acquisition, such as preparing audited financial information and converting
its accounting system to the system specified by us. Potential acquisition discussions frequently take place over a
long period of time and involve difficult business integration and other issues, including in some cases, management
succession and related matters. As a result of these and other factors, a number of potential acquisitions that from
time to time appear likely to occur do not result in binding legal agreements and are not consummated.
We may be required to obtain the consent of Brunswick and various other manufacturers prior to the
acquisition of other dealers.
In determining whether to approve acquisitions, manufacturers may consider many factors, including our
financial condition and ownership structure. Manufacturers also may impose conditions on granting their approvals
for acquisitions, including a limitation on the number of their dealers that we may acquire. Our ability to meet
manufacturers’ requirements for approving future acquisitions will have a direct bearing on our ability to complete
acquisitions and effect our growth strategy. There can be no assurance that a manufacturer will not terminate its
dealer agreement, refuse to renew its dealer agreement, refuse to approve future acquisitions, or take other action that
could have a material adverse effect on our acquisition program.
We and the Sea Ray Division of Brunswick have an agreement extending through June 2015 that provides a
process for the acquisition of additional Sea Ray boat dealers that desire to be acquired by us. Under the agreement,
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acquisitions of Sea Ray dealers will be mutually agreed upon by us and Sea Ray with reasonable efforts to be made
to include a balance of Sea Ray dealers that have been successful and those that have not been. The agreement
provides that Sea Ray will not unreasonably withhold its consent to any proposed acquisition of a Sea Ray dealer by
us, subject to the conditions set forth in the agreement. Among other things, the agreement requires us to provide Sea
Ray with a business plan for each proposed acquisition, including historical financial and five-year projected
financial information regarding the acquisition candidate; marketing and advertising plans; service capabilities and
managerial and staff personnel; information regarding the ability of the candidate to achieve performance standards
within designated periods; and information regarding the success of our previous acquisitions of Sea Ray dealers.
The agreement also contemplates Sea Ray reaching a good faith determination whether the acquisition would be in
its best interest based on our dedication and focus of resources on the Sea Ray brand and Sea Ray’s consideration of
any adverse effects that the approval would have on the resulting territory configuration and adjacent or other dealers
sales and the absence of any violation of applicable laws or rights granted by Sea Ray to others.
Our growth strategy also entails expanding our product lines and geographic scope by obtaining additional
distribution rights from our existing and new manufacturers. We may not be able to secure additional distribution
rights or obtain suitable alternative sources of supply if we are unable to obtain such distribution rights. The inability
to expand our product lines and geographic scope by obtaining additional distribution rights could have a material
adverse effect on the growth and profitability of our business.
Our growth strategy may require us to secure significant additional capital, the amount of which will depend
upon the size, timing, and structure of future acquisitions and our working capital and general corporate needs.
If we finance future acquisitions in whole or in part through the issuance of common stock or securities
convertible into or exercisable for common stock, existing stockholders will experience dilution in the voting power
of their common stock and earnings per share could be negatively impacted. The extent to which we will be able and
willing to use our common stock for acquisitions will depend on the market value of our common stock and the
willingness of potential sellers to accept our common stock as full or partial consideration. Our inability to use our
common stock as consideration, to generate cash from operations, or to obtain additional funding through debt or
equity financings in order to pursue our acquisition program could materially limit our growth.
Any borrowings made to finance future acquisitions or for operations could make us more vulnerable to a
downturn in our operating results, a downturn in economic conditions, or increases in interest rates on borrowings
that are subject to interest rate fluctuations. If our cash flow from operations is insufficient to meet our debt service
requirements, we could be required to sell additional equity securities, refinance our obligations, or dispose of assets
in order to meet our debt service requirements. In addition, our credit arrangements contain financial and operational
covenants and other restrictions with which we must comply, including limitations on capital expenditures and the
incurrence of additional indebtedness. Adequate financing may not be available if and when we need it or may not be
available on terms acceptable to us. The failure to obtain sufficient financing on favorable terms and conditions could
have a material adverse effect on our growth prospects and our business, financial condition, and results of
operations.
Our internal growth and operating strategies of opening new locations and offering new products involve risk.
In addition to pursuing growth by acquiring boat dealers, we intend to continue to pursue a strategy of growth
through opening new retail locations and offering new products in our existing and new territories. Accomplishing
these goals for expansion will depend upon a number of factors, including the following:
• our ability to identify new markets in which we can obtain distribution rights to sell our existing or additional
product lines;
• our ability to lease or construct suitable facilities at a reasonable cost in existing or new markets;
• our ability to hire, train, and retain qualified personnel;
• the timely integration of new retail locations into existing operations;
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• our ability to achieve adequate market penetration at favorable operating margins without the acquisition of
existing dealers; and
• our financial resources.
Our dealer agreements with Brunswick require Brunswick’s consent to open, close, or change retail locations
that sell Sea Ray products, and other dealer agreements generally contain similar provisions. We may not be able to
open and operate new retail locations or introduce new product lines on a timely or profitable basis. Moreover, the
costs associated with opening new retail locations or introducing new product lines may adversely affect our
profitability.
As a result of these growth strategies, we expect to expend significant time and effort in opening and acquiring
new retail locations and introducing new products. Our systems, procedures, controls, and financial resources may
not be adequate to support expanding operations. The inability to manage our growth effectively could have a
material adverse effect on our business, financial condition, and results of operations.
Our planned growth also will impose significant added responsibilities on members of senior management and
require us to identify, recruit, and integrate additional senior level managers. We may not be able to identify, hire, or
train suitable additions to management.
Our business, as well as the entire recreational boating industry, is highly seasonal, with seasonality varying in
different geographic markets. In addition, weather conditions may adversely impact our business.
During the three-year period ended September 30, 2009, the average revenue for the quarterly periods ended
December 31, March 31, June 30, and September 30 represented 20%, 25%, 30%, and 25%, respectively, of our
average annual revenue. With the exception of Florida, we generally realize significantly lower sales in the quarterly
periods ending December 31 and March 31. The onset of the public boat and recreation shows in January stimulates
boat sales and allows us to reduce our inventory levels and related short-term borrowings throughout the remainder
of the fiscal year. Our business could become substantially more seasonal as we acquire dealers that operate in colder
regions of the United States.
Weather conditions may adversely impact our operating results. For example, drought conditions, reduced
rainfall levels, and excessive rain may force boating areas to close 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 shorter selling seasons in certain locations. Many of our dealerships sell boats to customers
for use on reservoirs, thereby subjecting our business to the continued viability of these reservoirs for boating use.
Although our geographic diversity and any future geographic expansion will reduce the overall impact on us of
adverse weather conditions in any one market area, weather conditions will continue to represent potential material
adverse risks to us and our future operating performance. As a result of the foregoing and other factors, our operating
results in some future quarters could be below the expectations of stock market analysts and investors.
In addition, hurricanes and other storms could result in the disruption of our operations or damage to our boat
inventories and facilities as has been the case when Florida and other markets has been affected by hurricanes. While
we traditionally maintain property and casualty insurance coverage for damage caused by hurricanes and other
storms, there can be no assurance that such insurance coverage is adequate to cover losses that we may sustain as a
result of hurricanes and other storms.
We face intense competition.
We operate in a highly competitive environment. In addition to facing competition generally from non-boating
recreation businesses seeking to attract discretionary spending dollars, the recreational boat industry itself is highly
fragmented and involves intense competition for customers, product distribution rights, and suitable retail locations,
particularly on or near waterways. Competition increases during periods of stagnant industry growth.
We compete primarily with single-location boat dealers and, with respect to sales of marine parts, accessories,
and equipment, with national specialty marine parts and accessories stores, catalog retailers, sporting goods stores,
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and mass merchants. Competition among boat dealers is based on the quality of available products, the price and
value of the products, and attention to customer service. There is significant competition both within markets we
currently serve and in new markets that we may enter. We compete in each of our markets with retailers of brands of
boats and engines we do not sell in that market. In addition, several of our competitors, especially those selling
marine equipment and accessories, are large national or regional chains that have substantial financial, marketing,
and other resources. Private sales of used boats represent an additional source of competition.
Due to various matters, including environmental concerns, permitting and zoning requirements, and competition
for waterfront real estate, some markets in the United States have experienced an increased waiting list for marina
and storage availability. In general, the markets in which we currently operate are not experiencing any unusual
difficulties. However, marine retail activity could be adversely effected in markets that do not have sufficient marine
and storage availability to satisfy demand.
We depend on income from financing, insurance, and extended service contracts.
A portion of our income results from referral fees derived from the placement or marketing of various finance
and insurance, or F&I, products, consisting of customer financing, insurance products, and extended service
contracts, the most significant component of which is the participation and other fees resulting from our sale of
customer financing contracts. During fiscal 2009, F&I products accounted for 2.7% of our revenue.
The availability of financing for our boat purchasers and the level of participation and other fees we receive in
connection with such financing depend on the particular agreement between us and the lender and the current rate
environment. Lenders may impose terms in their boat financing arrangements with us that may be unfavorable to us
or our customers, resulting in reduced demand for our customer financing programs and lower participation and other
fees. Customer financing became more difficult to secure during fiscal 2008, which continued in fiscal 2009.
The reduction of profit margins on sales of F&I products or the lack of demand for or the unavailability of these
products could have a material adverse effect on our operating margins.
We depend on key personnel.
Our success depends, in large part, upon the continuing efforts and abilities of our executive officers. Although
we have employment agreements with certain of our executive officers, we cannot assure that these or other
executive personnel will remain with us. Expanding our operations may require us to add additional executive
personnel in the future. As a result of our decentralized operating strategy, we also rely on the management teams of
our dealerships. In addition, we likely will depend on the senior management of any significant businesses we
acquire in the future. The loss of the services of one or more of these key employees before we are able to attract and
retain qualified replacement personnel could adversely affect our business.
The products we sell or service may expose us to potential liability for personal injury or property damage
claims relating to the use of those products.
Manufacturers of the products we sell generally maintain product liability insurance. We also maintain third-
party product liability insurance that we believe to be adequate. We may experience claims that are not covered by or
that are in excess of our insurance coverage. The institution of any significant claims against us could subject us to
damages, result in higher insurance costs, and harm our business reputation with potential customers.
Environmental and other regulatory issues may impact our operations.
Our operations are subject to extensive regulation, supervision, and licensing under various federal, state, and
local statutes, ordinances, and regulations. The failure to satisfy those and other regulatory requirements could have a
material adverse effect on our business, financial condition, and results of operations.
Various federal, state, and local regulatory agencies, including the Occupational Safety and Health
Administration and the Environmental Protection Agency, or the EPA, and similar federal and local agencies, have
jurisdiction over the operation of our dealerships, repair facilities, and other operations, with respect to matters such
as consumer protection, workers’ safety, and laws regarding protection of the environment, including air, water, and
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soil. The EPA promulgated emissions regulations for outboard marine engines that impose stricter emissions
standards for two-cycle, gasoline outboard marine engines. The majority of the outboard marine engines we sell are
manufactured by Mercury Marine. Mercury Marine’s product line of low-emission engines, including the OptiMax,
Verado, and other four-stroke outboards, have already achieved the EPA’s mandated 2006 emission levels. Any
increased costs of producing engines resulting from EPA standards or the inability of our manufacturers to comply
with EPA requirements, could have a material adverse effect on our business.
Certain of our facilities own and operate underground storage tanks, or USTs, for the storage of various
petroleum products. USTs are generally subject to federal, state, and local laws and regulations that require testing
and upgrading of USTs and remediation of contaminated soils and groundwater resulting from leaking USTs. In
addition, we may be subject to civil liability to third parties for remediation costs or other damages if leakage from
our owned or operated USTs migrates onto the property of others.
Our business involves the use, handling, storage, and contracting for recycling or disposal of hazardous or toxic
substances or wastes, including environmentally sensitive materials, such as motor oil, waste motor oil and filters,
transmission fluid, antifreeze, freon, waste paint and lacquer thinner, batteries, solvents, lubricants, degreasing
agents, gasoline, and diesel fuels. Accordingly, we are subject to regulation by federal, state, and local authorities
establishing investigation and health and environmental quality standards, and liability related thereto, and providing
penalties for violations of those standards.
We also are subject to laws, ordinances, and regulations governing investigation and remediation of
contamination at facilities we operate or to which we send hazardous or toxic substances or wastes for treatment,
recycling, or disposal. In particular, the Comprehensive Environmental Response, Compensation and Liability Act,
or CERCLA or “Superfund,” imposes joint, strict, and several liability on
• owners or operators of facilities at, from, or to which a release of hazardous substances has occurred;
• parties that generated hazardous substances that were released at such facilities; and
• parties that transported or arranged for the transportation of hazardous substances to such facilities.
A majority of states have adopted Superfund statutes comparable to and, in some cases, more stringent than
CERCLA. If we were to be found to be a responsible party under CERCLA or a similar state statute, we could be
held liable for all investigative and remedial costs associated with addressing such contamination. In addition, claims
alleging personal injury or property damage may be brought against us as a result of alleged exposure to hazardous
substances resulting from our operations. In addition, certain of our retail locations are located on waterways that are
subject to federal or state laws regulating navigable waters (including oil pollution prevention), fish and wildlife, and
other matters.
Soil and groundwater contamination has been known to exist at certain properties owned or leased by us. We
have also been required and may in the future be required to remove aboveground and underground storage tanks
containing hazardous substances or wastes. As to certain of our properties, specific releases of petroleum have been
or are in the process of being remediated in accordance with state and federal guidelines. We are monitoring the soil
and groundwater as required by applicable state and federal guidelines. We also may have additional storage tank
liability insurance and Superfund coverage where applicable. Environmental laws and regulations are complex and
subject to frequent change. Compliance with amended, new, or more stringent laws or regulations, more strict
interpretations of existing laws, or the future discovery of environmental conditions may require additional
expenditures by us, and such expenditures may be material.
Two of the properties we own were historically used as gasoline service stations. Remedial action with respect
to prior historical site activities on these properties has been completed in accordance with federal and state law.
Also, two of our properties are within the boundaries of a Superfund site, although neither property has been
identified as a contributor to the contamination in the area.
Additionally, certain states have required or are considering requiring a license in order to operate a recreational
boat. These regulations could discourage potential buyers, thereby limiting future sales and adversely affecting our
business, financial condition, and results of operations.
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The market price of our common stock could be subject to wide fluctuations as a result of many factors.
Factors that could affect the trading price of our common stock include the following:
• variations in our operating results;
• the thin trading volume and relatively small public float of our common stock;
• our ability to continue to secure adequate levels of financing;
• variations in same-store sales;
• general economic, political, and market conditions;
• changes in earnings estimates published by analysts;
• the level and success of our acquisition program and new store openings;
• the success of dealership integration;
• relationships with manufacturers;
• seasonality and weather conditions;
• governmental policies and regulations;
• the performance of the recreational boat industry in general; and
• factors relating to suppliers and competitors.
In addition, market demand for small-capitalization stocks, and price and volume fluctuations in the stock
market unrelated to our performance could result in significant fluctuations in the market price of our common stock.
The performance of our common stock could adversely affect our ability to raise equity in the public markets
and adversely affect our acquisition program.
The issuance of additional capital stock in the future, including shares that we may issue pursuant to stock-
based grants, including stock option grants, and future acquisitions, may result in dilution in the net tangible
book value per share of our common stock.
Our board of directors has the legal power and authority to determine the terms of an offering of shares of our
capital stock, or securities convertible into or exchangeable for these shares, to the extent of our shares of authorized
and unissued capital stock. The issuance of additional common stock in the future, including shares that we may
issue pursuant to stock-based grants, including stock option grants, and future acquisitions, may result in dilution in
the net tangible book value per share of our common stock. The issuance of additional capital stock in the future,
including shares that we may issue pursuant to stock-based grants, including stock option grants, and future
acquisitions, may result in dilution in the net tangible book value per share of our common stock.
A substantial number of shares are eligible for future sale.
As of September 30, 2009, there were outstanding 21,705,759 shares of our common stock. Substantially all of
these shares are freely tradable without restriction or further registration under the securities laws, unless held by an
“affiliate” of our company, as that term is defined in Rule 144 under the securities laws. Shares held by affiliates of
our company, which generally include our directors, officers, and certain principal stockholders, are subject to the
resale limitations of Rule 144 described below. Outstanding shares of common stock issued in connection with the
acquisition of any acquired dealers are available for resale beginning six months after the respective dates of the
acquisitions, subject to compliance with the provisions of Rule 144 under the securities laws.
As of September 30, 2009, we had issued options to purchase approximately 1,995,232 shares of common stock
and 740,957 restricted stock awards under our incentive stock plan, and we issued 264,493 of the 500,000 shares of
common stock reserved for issuance under our 2008 employee stock purchase plan. We have
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filed a registration statement under the securities laws to register the common stock to be issued under these plans.
As a result, shares issued under these plans will be freely tradable without restriction unless acquired by affiliates of
our company, who will be subject to the volume and other limitations of Rule 144.
We may issue additional shares of common stock or preferred stock under the securities laws as part of any
acquisition we may complete in the future. If issued pursuant to an effective registration statement, these shares
generally will be freely tradable after their issuance by persons not affiliated with us or the acquired companies.
We do not pay cash dividends.
We have never paid cash dividends on our common stock. Moreover, financial covenants under our credit
facility restrict our ability to pay dividends.
Our stockholders’ rights plan may adversely affect existing stockholders.
Our Stockholders’ Rights Plan may have the effect of deterring, delaying, or preventing a change in control that
might otherwise be in the best interests of our stockholders. Under the Rights Plan, we issued a dividend of one
Preferred Share Purchase Right for each share of our common stock held by stockholders of record as of the close of
business on September 7, 2001.
In general, subject to certain limited exceptions, the stock purchase rights become exercisable when a person or
group acquires 15% or more of our common stock or a tender offer or exchange offer for 15% or more of our
common stock is announced or commenced. After any such event, our other stockholders may purchase additional
shares of our common stock at 50% of the then-current market price. The rights will cause substantial dilution to a
person or group that attempts to acquire us on terms not approved by our board of directors. The rights may be
redeemed by us at $0.01 per stock purchase right at any time before any person or group acquires 15% or more of our
outstanding common stock. The rights should not interfere with any merger or other business combination approved
by our board of directors. The rights expire on August 28, 2011.
Certain provisions of our restated certificate of incorporation and bylaws and Delaware law may make a
change in the control of our company more difficult to complete, even if a change in control were in the
stockholders’ interest or might result in a premium over the market price for the shares held by the
stockholders.
Our certificate of incorporation and bylaws divide our board of directors into three classes of directors elected
for staggered three-year terms. The certificate of incorporation also provides that the board of directors may
authorize the issuance of one or more series of preferred stock from time to time and may determine the rights,
preferences, privileges, and restrictions and fix the number of shares of any such series of preferred stock, without
any vote or action by our stockholders. The board of directors may authorize the issuance of preferred stock with
voting or conversion rights that could adversely affect the voting power or other rights of the holders of common
stock. The certificate of incorporation also allows our board of directors to fix the number of directors and to fill
vacancies on the board of directors.
We also are subject to the anti-takeover provisions of Section 203 of the Delaware General Corporation Law,
which prohibits us from engaging in a “business combination” with an “interested stockholder” for a period of three
years after the date of the transaction in which the person became an “interested stockholder,” unless the business
combination is approved in a prescribed manner.
Certain of our dealer agreements could also make it difficult for a third party to attempt to acquire a significant
ownership position in our company. In addition, the stockholders’ agreement and governance agreement will have
the effect of increasing the control of our directors, executive officers, and persons associated with them.
Our sales of Azimut products may be adversely affected by fluctuations in currency exchange rates between the
U.S. dollar and the euro.
Products purchased from Italy-based Azimut are subject to fluctuations in the euro to U.S. dollar exchange rate,
which ultimately may impact the retail price at which we can sell such products. As a result, fluctuations in the
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value of the euro compared with the U.S. dollar may impact the price points at which we can sell profitably Azimut
products, and such price points may not be competitive with other product lines in the United States. Accordingly,
such fluctuations in exchange rates ultimately may impact the amount of revenue, cost of goods sold, cash flows, and
earnings we recognize for the Azimut product lines. The impact of these currency fluctuations could increase,
particularly if our revenue from the Azimut products increase as a percentage of our total revenue. We also could
incur losses from hedging transactions designed to reduce our risk to fluctuation in exchange rates. We cannot predict
the effects of exchange rate fluctuations or currency rate hedges on our operating results. Therefore, in certain cases,
we may, from time to time, enter into foreign currency cash flow hedges to reduce the variability of cash flows
associated with firm commitments to purchase boats and yachts from Azimut. We cannot assure that our strategies
will adequately protect our operating results from the effects of exchange rate fluctuations.
Item 1B.
Unresolved Staff Comments
Not applicable.
Item 2. Properties
We lease our corporate offices in Clearwater, Florida. We also lease 30 of our retail locations under leases,
many of which contain multi-year renewal options and some of which grant us a first right of refusal to purchase the
property at fair value. In most cases, we pay a fixed rent at negotiated rates. In substantially all of the leased
locations, we are responsible for taxes, utilities, insurance, and routine repairs and maintenance. We own the property
associated with 25 other retail locations we operate and one joint venture as noted below. Additionally, we own four
retail locations that are currently closed and three retail locations that are closed and available for sale.
The following table reflects the status, approximate size, and facilities of the various retail locations we operate
as of the date of this report.
Location
Alabama
Gulf Shores
Gulf Shores
Arizona
Tempe
California
Location Type
Square
Footage(1)
Facilities at Property
Operated
Since(2)
Waterfront
Company owned
Third-party lease
4,000 Retail and service
Retail only; 7 wet
slips
1,112
1998 —
2008 Intracoastal Waterway
Company owned 34,000 Retail and service
1992 —
San Diego (Shelter Island) Third-party lease
Colorado
Retail and service; 20
wet slips
930
2005 Mission Bay
Grand Junction
Connecticut
Norwalk
Florida
Cape Haze
Clearwater
Cocoa
Coconut Grove
Dania
Third-party lease
9,300
Retail, service, and
storage
1986 —
Third-party lease
7,000 Retail and service
1994 Norwalk Harbor
Company owned 18,000 Retail; 8 wet slips
1972 Intracoastal Waterway
Retail and service; 20
wet slips
Company owned 42,000
Company owned 15,000 Retail and service
Retail only; 24 wet
slips
Repair and service;
16 wet slips
Company owned 32,000
Third-party lease
2,000
1973 Tampa Bay
1968 —
2002 Biscayne Bay
1991 Port Everglades
34
Location Type
Square
Footage(1)
Facilities at Property
Operated
Since(2)
Waterfront
Table of Contents
Location
Destin
Fort Myers
Jacksonville
Jacksonville
Key Largo
Miami
Miami
Naples
Pensacola
Third-party lease
2,200
Retail only; 24 wet
slips
Retail and service; 18
wet slips
1,000
8,000
Third-party lease
Third-party lease
Third-party lease
Company owned 15,000 Retail and service
Retail only; 7 wet
slips
Retail and service; 6
west slips
Retail and service; 15
wet slips
Service only; 11 wet
slips
Retail and service; 14
wet slips
Company owned 19,600
Third-party lease 24,300 Retail and service
Company owned
Company owned
7,200
5,000
8,900
Pompano Beach
Company owned 23,000
Pompano Beach
Company owned
5,400
Sarasota
Third-party lease 26,500
St. Petersburg(3)
Joint venture
15,000
Retail and service; 16
wet slips
Retail and service; 24
wet slips
Retail, service, and
storage; 15 wet slips
Yacht service, 20 wet
slips
Retail and service; 66
wet slips
Stuart
Tampa
Venice
Georgia
Buford (Atlanta)
Cumming (Atlanta)
Maryland
Company owned 29,100
Company owned 13,100 Retail and service
Company owned 62,000
Retail, service, and
storage; 90 wet slips
Company owned 13,500 Retail and service
2001 —
Third-party lease 13,000
Retail and service; 50
wet slips
Baltimore
Third-party lease
7,600
Retail and service; 17
wet slips
Retail, service, and
storage; 294 wet slips
Company owned 28,400
Company owned 19,800 Retail and service
Joppa
White Marsh
Minnesota
Bayport
Rogers
Walker
Walker
Third-party lease
450
Company owned 70,000
Company owned 76,400
Company owned
6,800
Retail only; 10 wet
slips
Retail, service, and
storage
Retail, service, and
storage
Retail and service; 93
wet slips
1996 St Croix River
1991 —
1989 —
1977 Leech Lake
35
2005 Destin Harbor
1983 Caloosahatchee River
2004 —
1995 St Johns River
2002 Card Sound
1980 Little River
2005 Little River
1997 Naples Bay
1974 —
1990 Intracoastal Waterway
2005 Intracoastal Waterway
1972 Sarasota Bay
2006 Boca Ciega Bay
2002 Intracoastal Waterway
1995 —
1972 Intracoastal Waterway
1981 Lake Lanier
Baltimore Inner
Harbor
2005
1966 Gunpowder River
1958 —
Table of Contents
Location
Missouri
Lake Ozark
New Jersey
Location Type
Square
Footage(1)
Facilities at Property
Operated
Since(2)
Waterfront
Company owned 60,300
Retail and service;
300 wet slips
1987 Lake of the Ozarks
Brant Beach
Third-party lease
3,800
Brick
Company owned 20,000
Retail and service; 36
wet slips
Retail and service;
225 wet slips
Retail and service; 80
wet slips
Lake Hopatcong
Ship Bottom
Somers Point
New York
Copiague
Huntington
Lindenhurst (Delivery
4,600
Third-party lease
Third-party lease 19,300 Retail and service
Retail, service and
storage; 33 wet slips
Affiliate lease 31,000
Third-party lease 15,000 Retail only
1993 —
Third-party lease
1,200 Retail and service
Center)
Third-party lease 54,000
Lindenhurst (Marina)
Third-party lease 14,600
Retail, service, and
dry storage
Marina and service;
370 wet slips
Retail only; 75 wet
slips
Third-party lease
Third-party lease
1,200
4,650 Retail and service
Third-party lease 34,500
Third-party lease 93,300
Retail, service, and
storage
Retail, service and
storage; 8 wet slips
1965 Barnegat Bay
1977 Manasquan River
1998 Lake Hopatcong
1972 —
1987 Little Egg Harbor Bay
Huntington Harbor and
Long Island Sound
Neguntatogue Creek to
Great South Bay
Neguntatogue Creek to
Great South Bay
1995
1968
1968
1996 Hudson River
2008 Long Island Sound
1996 Intracoastal Waterway
1997 Lake Erie
Third-party lease
3,500
Retail and service; 23
wet slips
2003 Grand Lake
Third-party lease
1,800
Third-party lease
3,000
Retail only; 3 wet
slips
Retail only; 12 wet
slips
2006 Narragansett Bay
2005 Tennessee River
Company owned 22,000 Retail and service
2002 —
Seabrook
Company owned 32,000
Retail and service; 30
wet slips
2002 Clear Lake
36
Manhattan
New Rochelle
North Carolina
Wrightsville Beach
Ohio
Port Clinton
Oklahoma
Afton
Rhode Island
Wakefield
Tennessee
Chattanooga
Texas
Lewisville (Dallas)
Table of Contents
(1) Square footage is approximate and does not include outside sales space or dock or marina facilities.
(2) Operated since date is the date the facility was opened by us or opened prior to its acquisition by us.
(3) Joint venture entered into with Brunswick to acquire marina and service facility.
Item 3. Legal Proceedings
We are party to various legal actions arising in the ordinary course of business. While it is not feasible to
determine the actual outcome of these actions as of September 30, 2009, we do not believe that these matters will
have a material adverse effect on our consolidated financial condition, results of operations, or cash flows.
Item 4. Submission of Matters to a Vote of Security Holders
Not applicable.
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Table of Contents
PART II
Item 5. Market for the Registrant’s Common Equity, Related Stockholder Matters, and Issuer Purchases of
Equity Securities
Our common stock has been traded on the New York Stock Exchange under the symbol HZO since our initial
public offering on June 3, 1998 at $12.50 per share. The following table sets forth high and low sale prices of the
common stock for each calendar quarter indicated as reported on the New York Stock Exchange.
2007
First quarter
Second quarter
Third quarter
Fourth quarter
2008
First quarter
Second quarter
Third quarter
Fourth quarter
2009
First quarter
Second quarter
Third quarter
Fourth quarter (through November 30, 2009)
High
Low
$ 26.10 $ 20.01
$ 24.05 $ 18.80
$ 21.96 $ 14.30
$ 16.68 $ 13.50
$ 16.18 $ 10.38
$ 13.82 $ 6.99
$ 9.66 $ 4.92
$ 7.45 $ 1.25
$ 3.54 $ 1.19
$ 6.05 $ 2.13
$ 8.36 $ 3.08
$ 8.34 $ 6.55
On November 30, 2009, the closing sale price of our common stock was $7.00 per share. On November 30,
2009, there were approximately 100 record holders and approximately 5,000 beneficial owners of our common stock.
Dividends
We have never declared or paid cash dividends on our common stock. We currently plan to retain any earnings
to finance the growth of our business rather than to pay cash dividends. Payments of any cash dividends in the future
will depend on our financial condition, results of operations, and capital requirements as well as other factors deemed
relevant by our board of directors. Moreover, financial covenants under certain of our credit facilities also restrict our
ability to pay dividends.
38
Table of Contents
Performance Graph
The following line graph compares cumulative total stockholder returns for the five years ended September 30,
2008 for (i) our common stock, (ii) the Russell 2000 Index, and (iii) the Nasdaq Retail Trade Index. The graph
assumes an investment of $100 on September 30, 2004. The calculations of cumulative stockholder return on the
Russell 2000 Index and the Nasdaq Retail Trade Index include reinvestment of dividends. The calculation of
cumulative stockholder return on our common stock does not include reinvestment of dividends because we did not
pay any dividends during the measurement period. The historical performance shown is not necessarily indicative of
future performance.
COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN*
Among MarineMax, Inc., The Russell 2000 Index
And The NASDAQ Retail Trade Index
* $100 invested on 9/30/04 in stock or index, including reinvestment of dividends.
Fiscal year ending September 30.
The performance graph above shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange
Act of 1934, as amended, or Exchange Act, or otherwise subject to the liability of that section. The performance
graph above will not be deemed incorporated by reference into any filing of our company under the Exchange Act or
the Securities Act of 1933, as amended.
39
Table of Contents
Item 6. Selected Financial Data
The following table contains certain financial and operating data and is qualified by the more detailed
consolidated financial statements and notes thereto included elsewhere in this report. The balance sheet and statement
of operations data were derived from the consolidated financial statements and notes thereto that have been audited
by Ernst & Young LLP, an independent registered certified public accounting firm. The financial data shown below
should be read in conjunction with the consolidated financial statements and the related notes thereto and
“Management’s Discussion and Analysis of Financial Condition and Results of Operations” included elsewhere in
this report.
$
Statement of Operations Data:
Revenue
Cost of sales
Gross profit
Selling, general, and administrative expenses
Goodwill and intangible asset impairment charge
Income (loss) from operations
Interest expense, net
Income (loss) before income tax provision (benefit)
Income tax provision (benefit)
Net income (loss)
Net income (loss) per share:
$
Fiscal Year Ended September 30,
2005(1)
2009
2007
(Amounts in thousands except share, per share, and retail location data)
2008
2006
947,347 $ 1,213,541 $ 1,255,985
956,251
712,843
299,734
234,504
245,224
169,975
—
—
54,510
64,529
26,955
9,291
27,555
55,238
7,486
21,412
20,069
33,826 $
906,781
306,760
222,806
—
83,954
18,616
65,338
25,956
39,382 $
$
$
885,407
679,164
206,243
217,426
122,091
(133,274 )
20,164
(153,438 )
(19,161 )
(134,277 )
$
$
588,585
499,925
88,660
159,998
—
(71,338 )
14,064
(85,402 )
(8,630 )
(76,772 )
Diluted
$
1.88 $
2.08 $
1.04
$
(7.30 )
$
(4.11 )
Weighted average number of shares:
Diluted
Other Data (as of year-end):
Number of retail locations(2)
Sales per store(3)(5)
Same-store sales growth(4)(5)
Balance Sheet Data:
Working capital
Total assets
Long-term debt (including current portion)(6)
Total stockholders’ equity
18,032,533 18,928,735 19,289,231
18,391,488
18,685,423
$
71
16,386 $
23 %
87
17,064 $
7 %
88
15,246
$
(1 )%
80
12,492
$
(28 )%
55
11,285
(29 )%
2005
2006
September 30,
2007
2008
2009
$ 163,431 $ 153,465 $ 170,389 $ 134,458 $ 97,179
393,644
539,490
30,085
—
197,756
283,599
825,878
30,833
373,559
801,563
37,186
349,887
661,323
—
248,583
(1) Amounts exclude the effects of stock-based compensation expense recognized under the provisions of FASB
Accounting Standards Codification 718, “Compensation — Stock Compensation” (ASC 718), previously referred
to as Statement of Financial Accounting Standards No. 123R, “Share-Based Payment,” as the standard was
adopted October 1, 2005.
(2) Includes only those retail locations open at period end.
(3) Includes only those stores open for the entire preceding 12-month period.
(4) New and acquired stores are included in the comparable base at the end of the store’s thirteenth month of
operations.
(5) A store is one or more retail locations that are adjacent or operate as one entity. Sales per store and same-store
sales growth is intended only as supplemental information and is not a substitute for revenue or net income
presented in accordance with generally accepted accounting principles.
(6) Amount excludes our short-term borrowings for working capital and inventory financing.
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Table of Contents
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following should be read in conjunction with Part I, including the matters set forth in the “Risk Factors”
section of this report, and our Consolidated Financial Statements and notes thereto included elsewhere in this report.
Overview
We are the largest recreational boat retailer in the United States with fiscal 2009 revenue in excess of
$588 million. Through our current 55 retail locations in 18 states, we sell new and used recreational boats and related
marine products, including engines, trailers, parts, and accessories. We also arrange related boat financing, insurance,
and extended warranty contracts; provide boat repair and maintenance services; and offer yacht and boat brokerage
services, and where available, offer slip and storage accommodations.
MarineMax was incorporated in January 1998. We commenced operations with the acquisition of five
independent recreational boat dealers on March 1, 1998. Since the initial acquisitions in March 1998, we have
acquired 20 recreational boat dealers, two boat brokerage operations, and two full-service yacht repair facilities. As a
part of our acquisition strategy, we frequently engage in discussions with various recreational boat dealers regarding
their potential acquisition by us. Potential acquisition discussions frequently take place over a long period of time and
involve difficult business integration and other issues, including, in some cases, management succession and related
matters. As a result of these and other factors, a number of potential acquisitions that from time to time appear likely
to occur do not result in binding legal agreements and are not consummated. We did not complete any significant
acquisitions during the fiscal years ended September 30, 2008 and 2009.
General economic conditions and consumer spending patterns can negatively impact our operating results.
Unfavorable local, regional, national, or global economic developments or uncertainties regarding future economic
prospects could reduce consumer spending in the markets we serve and adversely affect our business. Economic
conditions in areas in which we operate dealerships, particularly Florida in which we generated 44%, 43%, and 45%
of our revenue during fiscal 2007, 2008, and 2009, respectively, can have a major impact on our operations. Local
influences, such as corporate downsizing, military base closings, and inclement weather, also could adversely affect
our operations in certain markets.
In an economic downturn, consumer discretionary spending levels generally decline, at times resulting in
disproportionately large reductions in the sale of luxury goods. Consumer spending on luxury goods also may decline
as a result of lower consumer confidence levels, even if prevailing economic conditions are favorable. Although we
have expanded our operations during periods of stagnant or modestly declining industry trends, the cyclical nature of
the recreational boating industry or the lack of industry growth could adversely affect our business, financial
condition, or results of operations in the future. Any period of adverse economic conditions or low consumer
confidence has a negative effect on our business.
Lower consumer spending resulting from a downturn in the housing market and other economic factors
adversely affected our business in fiscal 2007, and continued weakness in consumer spending resulting from
substantial weakness in the financial markets and deteriorating economic conditions had a very substantial negative
effect on our business in fiscal 2008 and fiscal 2009. These conditions caused us to defer our acquisition program,
slow our new store openings, reduce our inventory purchases, engage in inventory reduction efforts, close a
significant number of our retail locations, and significantly reduce our headcount. We cannot predict the length or
severity of these unfavorable economic or financial conditions or the extent to which they will adversely affect our
operating results nor can we predict the effectiveness of the measures we have taken to address this environment or
whether additional measures will be necessary.
Although economic conditions have adversely affected our operating results, we have capitalized on our core
strengths to substantially outperform the industry, resulting in leading market share. Our ability to produce such
market share supports the alignment of our retailing strategies with the desires of consumers. We believe the steps we
have taken to address weak market conditions will yield an increase in future revenue. As general economic trends
improve, we expect our core strengths and retailing strategies will position us to capitalize on growth opportunities as
they occur and will allow us to emerge from this challenging environment with greater earnings potential.
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Table of Contents
Application of Critical Accounting Policies
We have identified the policies below as critical to our business operations and the understanding of our results
of operations. The impact and risks related to these policies on our business operations is discussed throughout
Management’s Discussion and Analysis of Financial Condition and Results of Operations when such policies affect
our reported and expected financial results.
In the ordinary course of business, we make a number of estimates and assumptions relating to the reporting of
results of operations and financial condition in the preparation of our financial statements in conformity with
accounting principles generally accepted in the United States. We base our estimates on historical experience and on
various other assumptions that we believe are reasonable under the circumstances. The results form the basis for
making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources.
Actual results could differ significantly from those estimates under different assumptions and conditions. We believe
that the following discussion addresses our most critical accounting policies, which are those that are most important
to the portrayal of our financial condition and results of operations and require our most difficult, subjective, and
complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently
uncertain.
Revenue Recognition
We recognize revenue from boat, motor, and trailer sales, and parts and service operations at the time the boat,
motor, trailer, or part is delivered to or accepted by the customer or service is completed. We recognize commissions
earned from a brokerage sale at the time the related brokerage transaction closes. We recognize revenue from slip
and storage services on a straight-line basis over the term of the slip or storage agreement. We recognize
commissions earned by us for placing notes with financial institutions in connection with customer boat financing
when we recognize the related boat sales. We also recognize marketing fees earned on credit life, accident and
disability, and hull insurance products sold by third-party insurance companies at the later of customer acceptance of
the insurance product as evidenced by contract execution or when the related boat sale is recognized. We also
recognize commissions earned on extended warranty service contracts sold on behalf of third-party insurance
companies at the later of customer acceptance of the service contract terms, as evidenced by contract execution or
recognition of the related boat sale.
Certain finance and extended warranty commissions and marketing fees on insurance products may be charged
back if a customer terminates or defaults on the underlying contract within a specified period of time. Based upon our
experience of repayments and defaults, we maintain a chargeback allowance that was not material to our financial
statements taken as a whole as of September 30, 2008 or 2009. Should results differ materially from our historical
experiences, we would need to modify our estimate of future chargebacks, which could have a material adverse
effect on our operating margins.
Vendor Consideration Received
We account for consideration received from our vendors in accordance with FASB Accounting Standards
Codification 605-50, “Revenue Recognition, Customer Payments and Incentives” (ASC 605-50), previously referred
to as Emerging Issues Task Force Issue No. 02-16, “Accounting by a Customer (Including a Reseller) for Certain
Consideration Received from a Vendor.” ASC 605-50 most significantly requires us to classify interest assistance
received from manufacturers as a reduction of inventory cost and related cost of sales as opposed to netting the
assistance against our interest expense incurred with our lenders. Pursuant to ASC 605-50, amounts received by us
under our co-op assistance programs from our manufacturers are netted against related advertising expenses.
Inventories
Inventory costs consist of the amount paid to acquire the inventory, net of vendor consideration and purchase
discounts, the cost of equipment added, reconditioning costs, and transportation costs relating to acquiring inventory
for sale. We state new boat, motor, and trailer inventories at the lower of cost, determined on a specific-identification
basis, or market. We state used boat, motor, and trailer inventories, including trade-in’s, at the
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Table of Contents
lower of cost, determined on a specific-identification basis, or market. We state parts and accessories at the lower of
cost, determined on an average cost basis, or market. We utilize our historical experience, the aging of the
inventories, and our consideration of current market trends as the basis for determining lower of cost or market
valuation allowance. As of September 30, 2008 and 2009, our lower of cost or market valuation allowance was
$5.1 million and $17.7 million, respectively. If events occur and market conditions change, causing the fair value to
fall below carrying value, the lower of cost or market valuation allowance could increase.
Valuation of Goodwill and Other Intangible Assets
We account for goodwill and identifiable intangible assets in accordance with FASB Accounting Standards
Codification 350, “Intangibles — Goodwill and Other” (ASC 350), previously referred to as Statement of Financial
Accounting Standards No. 142, “Goodwill and Other Intangible Assets.” Under this standard, we assess the
impairment of goodwill and identifiable intangible assets at least annually and whenever events or changes in
circumstances indicate that the carrying value may not be recoverable. The first step in the assessment is the
estimation of fair value. If step one indicates that impairment potentially exists, we perform the second step to
measure the amount of impairment, if any. Goodwill and identifiable intangible asset impairment exists when the
estimated fair value is less than its carrying value.
During the three months ended June 30, 2008, we experienced a significant decline in stock market valuation
driven primarily by weakness in the marine retail industry and an overall soft economy, which hindered our financial
performance. Accordingly, we completed a step one analysis (as noted above) and estimated the fair value of the
reporting unit as prescribed by ASC 350, which indicated potential impairment. As a result, we completed a fair
value analysis of indefinite lived intangible assets and a step two goodwill impairment analysis, as required by ASC
350. We determined that indefinite lived intangible assets and goodwill were impaired and recorded a non-cash
charge of $121.1 million based on our assessment. We will not be required to make any current or future cash
expenditures as a result of this impairment charge.
Impairment of Long-Lived Assets
FASB Accounting Standards Codification 360-10-40, “Property, Plant, and Equipment, Impairment of Disposal
of Long-Lived Assets” (ASC 360-10-40), previously referred to as Statement of Financial Accounting Standards
No. 144, “Accounting for Impairment or Disposal of Long-Lived Assets,” requires that long-lived assets, such as
property and equipment and purchased intangibles subject to amortization, be reviewed for impairment whenever
events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.
Recoverability of the asset is measured by comparison of its carrying amount to undiscounted future net cash flows
the asset is expected to generate. If such assets are considered to be impaired, the impairment to be recognized is
measured as the amount by which the carrying amount of the asset exceeds its fair market value. Estimates of
expected future cash flows represent our best estimate based on currently available information and reasonable and
supportable assumptions. Any impairment recognized in accordance with ASC 360-10-40 is permanent and may not
be restored. As of September 30, 2009, we had not recognized any impairment of long-lived assets in connection
with ASC 360-10-40 based on our reviews.
During the three months ended June 30, 2008, we experienced a significant decline in market valuation driven
primarily by weakness in the marine retail industry and an overall soft economy, which adversely affected our
financial performance. As a result of this weakness, we realized a goodwill and intangible asset impairment charge,
as noted above. Based on these events, we reviewed the valuation of our investment in Gulfport in accordance with
ASC 323 and recoverability of the assets contained within the joint venture. ASC 323 requires the recognition of a
loss in value of an investment, which is other than a temporary decline. We reviewed our investment and assets
contained within the Gulfport joint venture, which consists of land, buildings, equipment, and goodwill. As a result,
we determined that our investment in the joint venture was impaired and recorded a non-cash charge of $1.0 million
based on our assessment. We will not be required to make any current or future cash expenditures as a result of this
impairment charge.
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Table of Contents
Stock-Based Compensation
Effective October 1, 2005, we adopted the provisions of FASB Accounting Standards Codification 718,
“Compensation — Stock Compensation” (ASC 718), previously referred to as Statement of Financial Accounting
Standards No. 123R, “Share-Based Payment,” for our share-based compensation plans. We adopted ASC 718 using
the modified prospective transition method. Under this transition method, compensation cost recognized includes
(a) the compensation cost for all share-based awards granted prior to, but not yet vested as of October 1, 2005, based
on the grant-date fair value estimated in accordance with the original provisions of ASC 718 and (b) the
compensation cost for all share-based awards granted subsequent to September 30, 2005, based on the grant-date fair
value estimated in accordance with the provisions of ASC 718. Additionally, we accounted for restricted stock
awards granted using the measurement and recognition provisions of ASC 718. Accordingly, the fair value of the
restricted stock awards is measured on the grant date and recognized in earnings over the requisite service period for
each separately vesting portion of the award.
Income Taxes
We account for income taxes in accordance with FASB Accounting Standards Codification 740, “Income
Taxes” (ASC 740), previously referred to as Statement of Financial Accounting Standards No. 109, “Accounting for
Income Taxes” and Financial Accounting Standard Board Interpretation No. 48, “Accounting for Uncertainty in
Income Taxes.” Under ASC 740, we recognize deferred tax assets and liabilities for the future tax consequences
attributable to temporary differences between the financial statement carrying amounts of existing assets and
liabilities and their respective tax basis. We measure deferred tax assets and liabilities using enacted tax rates
expected to apply to taxable income in the years in which we expect those temporary differences to be recovered or
settled. We record valuation allowances to reduce our deferred tax assets to the amount expected to be realized by
considering all available positive and negative evidence.
Pursuant to ASC 740, we must consider all positive and negative evidence regarding the realization of deferred
tax assets, including past operating results and future sources of taxable income. Under the provisions of ASC 740,
we determined that our net deferred tax asset needed to be fully reserved given recent earnings and industry trends.
In June 2006, the Financial Accounting Standards Board issued Interpretation No. 48, Accounting for
Uncertainty in Income Taxes, also included in ASC 740. The Interpretation clarifies the accounting for uncertainty in
income taxes recognized in an enterprise’s financial statements and prescribes a recognition threshold and
measurement attributes of income tax positions taken or expected to be taken on a tax return. The impact of an
uncertain tax position taken or expected to be taken on an income tax return must be recognized in the financial
statements at the largest amount that is more-likely-than-not to be sustained upon audit by the relevant taxing
authority. An uncertain income tax position will not be recognized in the financial statements unless it is more likely
than not of being sustained.
For a more comprehensive list of our accounting policies, including those which involve varying degrees of
judgment, see Note 3 — “Significant Accounting Policies” of Notes to Consolidated Financial Statements.
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Table of Contents
Results of Operations
The following table sets forth certain financial data as a percentage of revenue for the periods indicated:
Fiscal Year Ended September 30,
2008
(Amounts in thousands)
$ 1,255,985 100.0 % $ 885,407 100.0 % $ 588,585 100.0 %
Revenue
499,925 84.9 %
956,251 76.1 % 679,164 76.7 %
Cost of sales
88,660 15.1 %
Gross profit
299,734 23.9 % 206,243 23.3 %
Selling, general, and administrative expenses 245,224 19.6 % 217,426 24.6 %
159,998 27.2 %
Goodwill and intangible asset impairment
2009
2007
charge
Income (loss) from operations
Interest expense, net
Income (loss) before income tax provision
(benefit)
Income tax provision (benefit)
Net income (loss)
— 0.0 % 122,091 13.8 %
54,510 4.3 % (133,274 ) (15.1 )%
26,955 2.1 % 20,164 2.3 %
0 %
—
(71,338 ) (12.1 )%
14,064 2.4 %
27,555 2.2 % (153,438 ) (17.3 )%
7,486 0.6 % (19,161 ) (2.2 )%
(85,402 ) (14.5 )%
(8,630 ) (1.5 )%
20,069 1.6 % $ (134,277 ) (15.2 )% $ (76,772 ) (13.0 )%
$
Fiscal Year Ended September 30, 2009 Compared with Fiscal Year Ended September 30, 2008
Revenue. Revenue decreased $296.8 million, or 33.5%, to $588.6 million for the fiscal year ended
September 30, 2009 from $885.4 million for the fiscal year ended September 30, 2008. Of this decrease,
$234.4 million was attributable to a decline in comparable-store sales and $62.5 million was attributable to 26 stores
closed in fiscal 2009 that are not eligible for inclusion in the comparable-store base for the 12 months ended
September 30, 2009. The decline in our comparable-store sales was due to the widely reported weak economic
conditions and tighter retail lending environment, which have adversely impacted our retail sales.
Gross Profit. Gross profit decreased $117.5 million, or 57.0%, to $88.7 million for the fiscal year ended
September 30, 2009 from $206.2 million for the fiscal year ended September 30, 2008. Gross profit as a percentage
of revenue decreased to 15.1% for fiscal 2009 from 23.3% for fiscal 2008. The decrease in gross profit dollars
reflected the combination of the significant reduction in revenue because of the soft economic environment and the
decreases in gross profit percentage. The decrease in gross profit as a percentage of revenue was due to margin
pressure arising from the difficult retail environment and the aggressive pricing strategy that we deployed to drive a
significant reduction to our inventory levels. Additionally, during the fiscal 2009, we incurred losses and increased
reserves for expected losses associated with market declines in brands we no longer carry by approximately
$12.6 million. Lastly, we strategically decided to forego certain manufacturer purchase incentives and ordered
substantially less boats in fiscal 2009 than in fiscal 2008.
Selling, General, and Administrative Expenses. Selling, general, and administrative expenses decreased
$57.4 million, or 26.4%, to $160.0 million for the fiscal year ended September 30, 2009 from $217.4 million for the
fiscal year ended September 30, 2008. Selling, general, and administrative expenses as a percentage of revenue
increased to 27.2% for the year ended September 30, 2009 from 24.6% for the year ended September 30, 2008. The
fiscal year ended September 30, 2009 included $6.2 million in charges associated with store closures. The fiscal year
ended September 30, 2008 included $3.0 million in charges associated with store closures, partially offset by
$1.0 million in gains recorded as an expense offset related to proceeds from business interruption insurance claims
and the favorable settlement of certain interest rate swaps. Excluding these items would result in a comparable
selling, general, and administrative expense reduction of $65.1 million, or 29.8%, and selling, general, and
administrative expenses as a percent of revenue increased to 26.0% for the year ended September 30, 2009 from
24.7% for the year ended September 30, 2008. This increase in selling, general, and administrative expenses as a
percentage of revenue was primarily attributable to the reported same-store sales decline, which resulted in a
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reduction in our ability to leverage our expense structure. The reduction in the dollar level of selling, general, and
administrative expenses was due to the significant reductions we have made in personnel, retail locations, and most
other expense categories.
Goodwill and intangible asset impairment. During the fiscal year ended September 30, 2008, we were required
to write-off our goodwill and indefinite lived intangible assets as a result of the decline in our market valuation and
the continuation of the difficult retail environment, as prescribed by ASC 350.
Interest Expense. Interest expense decreased $6.1 million, or 30.3%, to $14.1 million for the fiscal year ended
September 30, 2009 from $20.2 million for the fiscal year ended September 30, 2008. Interest expense as a
percentage of revenue increased to 2.4% for fiscal 2009 from 2.3% for fiscal 2008. The decrease in interest expense
was primarily a result of the decline in average borrowings throughout fiscal 2009.
Income Tax Provision. Our income tax benefit decreased $10.5 million to a benefit of $8.6 million for the fiscal
year ended September 30, 2009 from an income tax benefit of $19.2 million for the fiscal year ended September 30,
2008, primarily as a result of limitations on the carryback of our pretax loss and recording a valuation allowance on
the carryforward pretax loss. The effective tax rate for the fiscal year ended September 30, 2008 differed from
previous periods primarily as a result of the recording of a non-cash valuation allowance that offsets the majority of
income tax benefit that would have arisen from the goodwill and intangible asset impairment charge.
Fiscal Year Ended September 30, 2008 Compared with Fiscal Year Ended September 30, 2007
Revenue. Revenue decreased $370.6 million, or 29.5%, to $885.4 million for the fiscal year ended
September 30, 2008 from $1.3 billion for the fiscal year ended September 30, 2007. Of this decrease, $27.4 million
was attributable to stores opened, closed, or acquired that were not eligible for inclusion in the comparable-store base
and $343.2 million was attributable to a 28% decline in comparable-store sales in fiscal 2008. The decline in our
same-store sales resulted primarily from softer economic conditions because of the turmoil in the financial markets,
which impacted our results as well as those of most other retailers. In response to these declines, we are adjusting our
structure, including store closures, in a manner in which we believe will reduce operating costs but not result in
market share losses.
Gross Profit. Gross profit decreased $93.5 million, or 31.2%, to $206.2 million for the fiscal year ended
September 30, 2008 from $299.7 million for the fiscal year ended September 30, 2007. Gross profit as a percentage
of revenue decreased to 23.3% for fiscal 2008 from 23.9% for fiscal 2007. The decrease in gross profit was a result
of the significant reduction in revenue resulting from the soft economic environment. The decrease in gross profit as
a percentage of revenue was due to margin pressure arising from the difficult retail environment and a sales mix shift
to larger products, which historically carry lower gross margins.
Selling, General, and Administrative Expenses. Selling, general, and administrative expenses decreased
$27.8 million, or 11.3%, to $217.4 million for the fiscal year ended September 30, 2008 from $245.2 million for the
fiscal year ended September 30, 2007. Selling, general, and administrative expenses as a percentage of revenue
increased to 24.6% for the year ended September 30, 2008 from 19.6% for the year ended September 30, 2007. The
fiscal year ended September 30, 2008 included $3.0 million in charges associated with store closures, partially offset
by $1.0 million in gains recorded as an expense offset related to proceeds from business interruption insurance claims
associated with ice storms damage at certain Missouri locations in 2007 and the favorable settlement of certain
interest rate swaps accounted for as cash flow hedges. Additionally, the fiscal year ended September 30, 2007
included $3.7 million in gains recorded as an expense offset related to business interruption insurance proceeds that
was received for claims associated with Hurricane Wilma in 2006, the sale of our corporate jet, and insurance
proceeds we received associated with the ice storm damage at certain Missouri locations. Excluding these items
would result in a comparable selling, general, and administrative expense reduction of $33.3 million, or 13.4% and
selling, general, and administrative expenses as a percent of revenue increased to 24.4% for the year ended
September 30, 2008 from 19.8% for the year ended September 30, 2007. This increase in selling, general, and
administrative expenses as a percentage of revenue was primarily attributable to the reported same-store sales
decline, which resulted in a reduction in our ability to leverage our expense structure.
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Goodwill and intangible asset impairment. During the fiscal year ended September 30, 2008, we were required
to write-off our goodwill and indefinite lived intangible assets as a result of the decline in our market valuation and
the continuation of the difficult retail environment, as prescribed by ASC 350.
Interest Expense. Interest expense decreased $6.8 million, or 25.2%, to $20.2 million for the fiscal year ended
September 30, 2008 from $27.0 million for the fiscal year ended September 30, 2007. Interest expense as a
percentage of revenue increased to 2.3% for fiscal 2008 from 2.1% for fiscal 2007. The decrease in interest expense
was primarily a result of a more favorable interest rate environment in fiscal 2008, which accounted for a decrease of
approximately $6.6 million in interest expense.
Income Tax Provision. Income taxes decreased $26.6 million to a benefit of $19.2 million for the fiscal year
ended September 30, 2008 from an income tax expense of $7.5 million for the fiscal year ended September 30, 2007,
primarily as a result of our pretax loss. The effective tax rate for the fiscal year ended September 30, 2008 differed
from previous periods primarily as a result of the recording of a non-cash valuation allowance that offsets the
majority of income tax benefit that would have arisen from the goodwill and intangible asset impairment charge.
Quarterly Data and Seasonality
Our business, as well as the entire recreational boating industry, is highly seasonal, with seasonality varying in
different geographic markets. With the exception of Florida, we generally realize significantly lower sales and higher
levels of inventories, and related short-term borrowings, in the quarterly periods ending December 31 and March 31.
The onset of the public boat and recreation shows in January stimulates boat sales and allows us to reduce our
inventory levels and related short-term borrowings throughout the remainder of the fiscal year. Our business could
become substantially more seasonal as we acquire dealers that operate in colder regions of the United States.
Our business is also subject to weather patterns, which may adversely affect our results of operations. 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 certain locations.
Hurricanes and other storms could result in disruptions of our operations or damage to our boat inventories and
facilities, as has been the case when Florida and other markets were hit by hurricanes. Although our geographic
diversity is likely to reduce the overall impact to us of adverse weather conditions in any one market area, these
conditions will continue to represent potential, material adverse risks to us and our future financial performance.
Liquidity and Capital Resources
Our cash needs are primarily for working capital to support operations, including new and used boat and related
parts inventories, off-season liquidity, and growth through acquisitions and new store openings. We regularly
monitor the aging of our inventories and current market trends to evaluate our current and future inventory needs. We
also use this evaluation in conjunction with our review of our current and expected operating performance and
expected customer demand to determine the adequacy of our financing needs. These cash needs have historically
been financed with cash generated from operations and borrowings under our line of credit facility. Our ability to
utilize our credit facility to fund operations depends upon the collateral levels and compliance with the covenants of
the credit facility. Turmoil in the credit markets and weakness in the retail markets may interfere with our ability to
remain in compliance with the covenants of the credit facility and therefore utilize the credit facility to fund
operations. At September 30, 2009, we were in compliance with all of the credit facility covenants. During the fiscal
years ended September 30, 2008 and 2009, we did not complete any acquisitions. We currently depend upon
dividends and other payments from our dealerships and our line of credit facility to fund our current operations and
meet our cash needs. Currently, no agreements exist that restrict this flow of funds from our dealerships.
For the fiscal years ended September 30, 2007 and 2009, cash provided by operating activities approximated
$20.0 million and $209.1 million, respectively. For the fiscal year ended September 30, 2008, cash used in operating
activities was approximately $8.8 million. For the fiscal year ended September 30, 2007, cash provided by operating
activities was due primarily to net income, adjusted for non-cash depreciation, amortization, and stock-based
compensation charges, and increases in customer deposits and accrued expenses, partially offset by a decrease in
accounts payable and an increase in inventories to ensure appropriate inventory levels. For the fiscal year ended
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September 30, 2008, cash used in operating activities was due primarily to our net loss, a decrease in accounts
payable because of reductions in purchases from our manufacturers, and a decrease in customer deposits due to a
reduction in pending sales. These amounts were primarily offset by noncash charges, including the impairment of
goodwill, stock-based compensation, and depreciation and amortization expense. The cash used in operating
activities was further offset by reductions in inventories and accounts receivables due to the reduction in sales trends.
For the fiscal year ended September 30, 2009, cash provided by operating activities was due primarily to the
significant reduction of inventories.
For the fiscal years ended September 30, 2007, 2008, and 2009, cash used in investing activities was
approximately $9.4 million, $7.9 million, and $1.9 million, respectively. For the fiscal year ended September 30,
2007, cash used in investing activities was primarily used to purchase property and equipment associated with
opening new retail facilities or improving and relocating existing retail facilities and in the finalization of certain
business acquisitions, partially offset by proceeds received from the sale and involuntary conversion of property and
equipment. For the fiscal year ended September 30, 2008, cash used in investing activities was primarily used to
purchase property and equipment associated with opening new retail facilities or improving and relocating existing
retail facilities. For the fiscal year ended September 30, 2009, cash used in investing activities was primarily used to
purchase property and equipment associated with improving and relocating existing retail facilities.
For the fiscal years ended September 30, 2007 and 2009, cash used in financing activities was approximately
$5.3 million and $212.0 million, respectively. For the fiscal year ended September 30, 2008, cash provided by
financing activities was approximately $16.5 million. For the fiscal year ended September 30, 2007, cash used in
financing activities was primarily attributable to purchases of treasury stock and repayments of long-term debt,
partially offset by proceeds from net borrowings on short-term borrowings as a result of increased inventory levels
and proceeds from common shares issued upon the exercise of stock options and under the employee stock purchase
plan. For the fiscal year ended September 30, 2008, cash provided by financing activities was primarily attributable
to a net increase in short-term borrowings, partially offset by repayments of long-term debt. For the fiscal year ended
September 30, 2009, cash used by financing activities was primarily attributable to the repayments of short-term
borrowings, partially offset by proceeds from our common stock sale.
We are party to a second amended and restated credit and security agreement, which has been amended on
various occasions since its original execution in June 2006. As amended, our credit facility provides for a line of
credit with asset-based borrowing availability up to approximately $230 million, stepping down to $175 million by
September 30, 2010, with interim decreases between such dates. The amended facility has certain financial covenants
as specified in the agreement. The covenants include provisions that our leverage ratio not exceed 2.75 to 1; that our
current ratio must be greater than 1.25 to 1 or 1.20 to 1 depending on the time of year; and that our maximum
EBITDA loss and annual EBITDA, both as defined in the agreement, comply with certain thresholds as described
below. The EBITDA covenant requires that we do not exceed the allowable cumulative negative EBITDA, as
defined in the agreement, for the first nine months of fiscal 2010, which is $22 million as of December 31, 2009 and
March 31, 2010 and $15 million as of June 30, 2010. We are required to have a cumulative EBITDA greater than or
equal to our interest expense for the fiscal year ending September 30, 2010. EBITDA, as defined in the agreement, is
our earnings before interest, taxes, depreciation, and amortization plus an add back for stock-based compensation
expense and 50% of the proceeds of our September 2009 stock offering or approximately $10 million. The amended
facility provides for a variable interest rate margin of LIBOR plus 490 basis points through September 30, 2010 and
thereafter at LIBOR plus 150 to 400 basis points, depending upon our financial and operating performance. We paid
the lenders approximately $2.4 million in amendment fees during fiscal 2009. The amended facility matures in May
2011, but includes two one-year renewal options, subject to lender approval.
As of September 30, 2008 and 2009, we owed an aggregate of $372 million and $142 million, respectively,
under our revolving credit facility and were in compliance with all of the credit facility covenants. Advances under
the facility accrued interest at a rate of 4.0% and 5.2%, as of September 30, 2008 and 2009, respectively. All
indebtedness associated with our real estate holdings were repaid during the fiscal year ended September 30, 2008.
As of September 30, 2009, the facility provided us with an additional borrowing availability of approximately
$60 million.
Except as specified in this “Management’s Discussion and Analysis of Financial Condition, and Results of
Operations” and in our consolidated financial statements, we have no material commitments for capital for the next
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12 months. We believe that our existing capital resources will be sufficient to finance our operations for at least the
next 12 months, except for possible significant acquisitions.
Contractual Commitments and Commercial Commitments
The following table sets forth a summary of our material contractual obligations and commercial commitments
as of September 30, 2009:
Year Ending September 30,
2010
2011
2012
2013
2014
Thereafter
Total
Short-Term
Borrowings(1)
Other Long-Term
Liabilities(2)
(Amounts in thousands)
Operating
Leases(3)
Total
$ 142,000 $
—
—
—
—
—
$ 142,000 $
3,831
—
—
—
—
— $ 7,401 $ 149,401
10,502
5,104
3,674
2,660
6,232
3,831 $ 31,742 $ 177,573
6,671
5,104
3,674
2,660
6,232
(1) Estimates of future interest payments for short-term borrowings have been excluded in the tabular presentation.
Amounts due are contingent upon the outstanding balances and the variable interest rates. As of September 30,
2009, the interest rate on our short-term borrowings was 5.2%.
(2) The amounts included in other long-term liabilities consist primarily of our estimated liability for claims on
certain workers’ compensation insurance policies. While we estimate the amount to be paid in excess of
12 months, the ultimate timing of the payments is subject to certain variability. Accordingly, we have classified
all amounts as due in the following year for the purposes of this table.
(3) Amounts for operating lease commitments do not include certain operating expenses such as maintenance,
insurance, and real estate taxes. These amounts are not a material component of operating expenses.
Off-Balance Sheet Arrangements
We do not have any transactions, arrangements, or other relationships with unconsolidated entities that are
reasonably likely to affect our financial condition, liquidity, or capital resources. We have no special purpose or
limited purpose entities that provide off-balance sheet financing, liquidity, or market or credit risk support; we do not
engage in leasing, hedging, or research and development services; and we do not have other relationships that expose
us to liability that is not reflected in the financial statements.
Item 7A.
Quantitative and Qualitative Disclosures about Market Risk
At September 30, 2009, all of our short-term debt bore interest at a variable rate, tied to LIBOR as a reference
rate. Changes in the underlying LIBOR interest rate or the spread charged under our performance pricing grid on our
short-term debt could affect our earnings. For example, the 100 basis point increase in the interest rate on our short-
term debt, as defined in our June 2009 amendment, is projected to result in an increase of approximately $1.4 million
in annual pre-tax interest expense. This estimated increase is based upon the outstanding balance of our short-term
debt as of September 30, 2009 and assumes no mitigating changes by us to reduce the outstanding balances, no
additional interest assistance that could be received from vendors due to the interest rate increase, and no changes in
the base LIBOR rate.
Products purchased from Italian-based manufacturers are subject to fluctuations in the euro to U.S. dollar
exchange rate, which ultimately may impact the retail price at which we can sell such products. Accordingly,
fluctuations in the value of the euro as compared with the U.S. dollar may impact the price points at which we can
profitably sell Italian products, and such price points may not be competitive with other product lines in the United
States. Accordingly, such fluctuations in exchange rates ultimately may impact the amount of revenue, cost of goods
sold, cash flows, and earnings we recognize for Italian product lines. We cannot predict the effects of
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exchange rate fluctuations on our operating results. In certain cases, we may enter into foreign currency cash flow
hedges to reduce the variability of cash flows associated with forecasted purchases of boats and yachts from Italian-
based manufacturers. We are not currently engaged in foreign currency exchange hedging transactions to manage our
foreign currency exposure. If and when we do engage in foreign currency exchange hedging transactions, we cannot
assure that our strategies will adequately protect our operating results from the effects of exchange rate fluctuations.
Item 8. Financial Statements and Supplementary Data
Reference is made to the financial statements, the notes thereto, and the report thereon, commencing on
of this report, which financial statement, notes, and report are incorporated herein by reference.
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
Not applicable.
Item 9A.
Controls and Procedures
Evaluation of Disclosure Controls and Procedures
We maintain disclosure controls and procedures that are designed to ensure that material information required to
be disclosed by us in Securities Exchange Act reports is recorded, processed, summarized and reported within the
time periods specified in the Securities and Exchange Commission’s rules and forms, and that such information is
accumulated and communicated to our management, including the Chief Executive Officer and Chief Financial
Officer, as appropriate, to allow timely decisions regarding required disclosure.
Our Chief Executive Officer and Chief Financial Officer have evaluated the effectiveness of the design and
operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities
Exchange Act of 1934) as of the end of the period covered by this report. Based on such evaluation, such officers
have concluded that, as of the end of the period covered by this report, our disclosure controls and procedures were
effective.
Changes in Internal Controls
During the quarter ended September 30, 2009, there were no changes in our internal controls over financial
reporting that materially affected, or were reasonably likely to materially affect, our internal control over financial
reporting.
Limitations on the Effectiveness of Controls
Our management, including our CEO and CFO, does not expect that our disclosure controls and internal controls
will prevent all errors and all fraud. A control system, no matter how well conceived and operated, can provide only
reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control
system must reflect the fact that there are resource constraints, and the benefits of controls must be considered
relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide
absolute assurance that all control issues and instances of fraud, if any, within the company have been detected.
These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns
can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of
some persons, by collusion of two or more people, or by management override of the control. The design of any
system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can
be no assurance that any design will succeed in achieving its stated goals under all potential future conditions; over
time, a control may become inadequate because of changes in conditions, or the degree of compliance with the
policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system,
misstatements due to error or fraud may occur and not be detected.
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CEO and CFO Certifications
Exhibits 31.1 and 31.2 are the Certifications of the CEO and the CFO, respectively. The Certifications are
required in accordance with Section 302 of the Sarbanes-Oxley Act of 2002 (the Section 302 Certifications). This
Item of this report, which you are currently reading is the information concerning the Evaluation referred to in the
Section 302 Certifications and this information should be read in conjunction with the Section 302 Certifications for
a more complete understanding of the topics presented.
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 Rule 13a-15(f) of the Securities Exchange Act of 1934. Under the supervision and with the
participation of the Company’s management, including its principal executive officer and principal financial officer,
the Company conducted an evaluation of the effectiveness of the Company’s internal control over financial reporting
as of September 30, 2009 as required by the Securities Exchange Act of 1934 Rule 13a-15(c). In making this
assessment, the Company used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway
Commission (COSO) in Internal Control — Integrated Framework. Based on its evaluation, management concluded
that its internal control over financial reporting was effective as of September 30, 2009.
Our internal control over financial reporting as of September 30, 2009 has been audited by Ernst and Young
LLP, an independent registered public accounting firm, as stated in their report which appears below.
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REPORT OF INDEPENDENT REGISTERED CERTIFIED PUBLIC ACCOUNTING FIRM
The Board of Directors and Stockholders of
MarineMax, Inc.
We have audited MarineMax, Inc.’s internal control over financial reporting as of September 30, 2009, based on
criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission (the COSO criteria). MarineMax, Inc.’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, MarineMax, Inc. maintained, in all material respects, effective internal control over financial
reporting as of September 30, 2009, based on the COSO criteria.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board
(United States), the consolidated balance sheets of MarineMax, Inc. as of September 30, 2009 and 2008, and the
related consolidated statements of operations, comprehensive income, stockholders’ equity and cash flows for each
of the three years in the period ended September 30, 2009 of MarineMax, Inc. and our report dated December 14,
2009 expressed an unqualified opinion thereon.
Certified Public Accountants
Tampa, Florida
December 14, 2009
/s/ Ernst & Young LLP
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Item 10.
Directors, Executive Officers, and Corporate Governance
PART III
The information required by this Item relating to our directors is incorporated herein by reference to the
definitive Proxy Statement to be filed pursuant to Regulation 14A of the Exchange Act for our 2010 Annual Meeting
of Stockholders. The information required by this Item relating to our executive officers included in “Business —
Executive Officers.”
Item 11.
Executive Compensation
The information required by this Item is incorporated herein by reference to the definitive Proxy Statement to be
filed pursuant to Regulation 14A of the Exchange Act for our 2010 Annual Meeting of Stockholders.
Item 12.
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
The information required by this Item is incorporated herein by reference to the definitive Proxy Statement to be
filed pursuant to Regulation 14A of the Exchange Act for our 2010 Annual Meeting of Stockholders.
Item 13.
Certain Relationships and Related Transactions, and Director Independence
The information required by this Item is incorporated herein by reference to the definitive Proxy Statement to be
filed pursuant to Regulation 14A of the Exchange Act for our 2010 Annual Meeting of Stockholders.
Item 14.
Principal Accountant Fees and Services
The information required by this Item is incorporated herein by reference to the definitive Proxy Statement to be
filled pursuant to Regulation 14A of the Exchange Act for our 2010 Annual Meeting of Stockholders.
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PART IV
Item 15.
Exhibits and Financial Statement Schedules
(a) Financial Statements and Financial Statement Schedules
(1) Financial Statements are listed in the Index to Consolidated Financial Statements on page F-1 of this report.
(2) No financial statement schedules are included because such schedules are not applicable, are not required, or
because required information is included in the consolidated financial statements or notes thereto.
(b) Exhibits
Exhibit
Number
3 .1
3 .2
3 .3
4 .1
4 .2
10 .1(k)
10 .3(h)
10 .3(i)
10 .3(j)
10 .4
10 .5
10 .12
10 .18†
10 .19
10 .20
Exhibit
Restated Certificate of Incorporation of the Registrant, including all amendments to date(1)
Second Amended and Restated Bylaws of the Registrant(13)
Certificate of Designation of Series A Junior Participating Preferred Stock(1)
Specimen of Common Stock Certificate(1)
Rights Agreement, dated August 28, 2001 between Registrant and American Stock Transfer &
Trust Company, as Rights Agent(2)
Asset Purchase Agreement dated as of March 30, 2006 among MarineMax of New York, Inc.;
Surfside-3 Marina, Inc.; Matthew Barbara, Paul Barbara, Diane Keeney, and Angela Chianese; and
certain affiliates of Surfside-3 Marina, Inc. (Form 10-Q filed May 10, 2006)(3)
Employment Agreement between Registrant and William H. McGill Jr.(4)
Employment Agreement between Registrant and Michael H. McLamb(4)
Employment Agreement between Registrant and Edward A. Russell(4)
1998 Incentive Stock Plan, as amended through November 15, 2000(5)
1998 Employee Stock Purchase Plan(6)
Agreement Relating to Acquisitions between Registrant and Brunswick Corporation, dated
December 7, 2005(9)
Hatteras Sales and Service Agreement, effective August 1, 2006 among the Registrant, MarineMax
Motor Yachts, LLC, and Hatteras Yachts Division of Brunswick Corporation(7)
Second Amended and Restated Credit and Security Agreement dated June 19, 2006 among the
Registrant and its subsidiaries as Borrowers, Keybank Bank, N.A., Bank of America, N.A., and
various other lenders, as Lenders(8)
Agreement Relating to Acquisitions between Registrant and Brunswick Corporation, dated
December 7, 2005(9)
10 .20(a) Sea Ray Sales and Service Agreement(9)
10 .21†
10 .21(a)†
10 .21(b)†
Second Amended and Restated Credit and Security Agreement dated June 19, 2006 among the
Registrant and its subsidiaries, as Borrowers, and Bank of America, N.A., KeyBank, N.A., General
Electric Commercial Distribution Finance Corporation, Wachovia Bank, N.A., Wells Fargo Bank,
N.A., National City Bank, N.A., U.S. Bank, N.A., and Branch Banking and Trust company, as Lenders
(8)
First Amendment to Second Amended and Restated Credit and Security Agreement executed on
June 5, 2007 effective as of May 31, 2007 among the Registrant and its subsidiaries, as Borrowers, and
Bank of America, N.A., KeyBank, N.A., General Electric Commercial Distribution Finance
Corporation, Branch Banking and Trust Company, as Lenders(10)
Third Amendment to Second Amended and Restated Credit and Security Agreement executed on
March 7, 2008, among MarineMax, Inc. and its subsidiaries, as Borrowers, and Bank of America,
N.A., Keybank, N.A., General Electric Commercial Distribution Finance Corporation, Wachovia
Bank, N.A., Wells Fargo Bank, N.A., U.S. Bank, N.A., Branch Banking and Trust Company, and Bank
of the West, as Lenders(14)
54
Table of Contents
Exhibit
Number
Exhibit
10 .21(c)†
10 .21(d)†
10 .21(e)†
10 .22
10 .23
10 .24
10 .25
21
23
31 .1
31 .2
32 .1
32 .2
Fourth Amendment to Second Amended and Restated Credit and Security Agreement executed on
December 15, 2008, by and among MarineMax, Inc. and its subsidiaries, as Borrowers, and Bank of
America, N.A., Keybank, N.A., GE Commercial Distribution Finance Corporation, Wachovia Bank,
N.A., Wells Fargo Bank, N.A., U.S. Bank, N.A., Branch Banking & Trust Company, and Bank of the
West, as Lenders(15)
Fifth Amendment to Second Amended and Restated Credit and Security Agreement executed on
June 5, 2009, by and among MarineMax, Inc. and its subsidiaries, as Borrowers, and Bank of America,
N.A., Keybank, N.A., GE Commercial Distribution Finance Corporation, Wachovia Bank, N.A., Wells
Fargo Bank, N.A., U.S. Bank, N.A., Branch Banking & Trust Company, and Bank of the West, as
Lenders(16)
Sixth Amendment to Second Amended and Restated Credit and Security Agreement executed on
September 10, 2009, by and among MarineMax, Inc. and its subsidiaries, as Borrowers, and Bank of
America, N.A., Keybank, N.A., GE Commercial Distribution Finance Corporation, Wachovia Bank,
N.A., Wells Fargo Bank, N.A., U.S. Bank, N.A., Branch Banking & Trust Company, and Bank of the
West, as Lenders
MarineMax, Inc. 2007 Incentive Compensation Plan(11)
Form Stock Option Agreement for 2007 Incentive Compensation Plan(11)
Form Restricted Stock Unit Award Agreement for 2007 Incentive Compensation Plan(11)
Director Fee Share Purchase Program(12)
List of Subsidiaries
Consent of Ernst & Young LLP
Certification of Chief Executive Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a), promulgated
under the Securities Exchange Act of 1934, as amended.
Certification of Chief Financial Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a), promulgated
under the Securities Exchange Act of 1934, as amended.
Certification pursuant to U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-
Oxley Act of 2002.
Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-
Oxley Act of 2002.
† Certain information in this exhibit has been omitted and filed separately with the Securities and Exchange
Commission. Confidential treatment has been requested with respect to the omitted portions.
(1) Incorporated by reference to Registration Statement on Form 10-K for the year ended September 30, 2001, as
filed on December 20, 2001.
(2) Incorporated by reference to Registrant’s Form 8-K Report dated September 30, 1998, as filed on October 20,
1998.
(3) Incorporated by reference to Registrant’s Form 10-Q for the quarter ended March 31, 2006, as filed on May 10,
2006.
(4) Incorporated by reference to Registrant’s Form 8-K, as filed on June 13, 2006.
(5) Incorporated by reference to Registrant’s Form 10-Q for the quarterly period ended December 31, 2001, as filed
on February 14, 2002.
(6) Incorporated by reference to Registration Statement on Form S-1 (Registration 333-47873).
(7) Incorporated by reference to Registrant’s Form 10-Q/A for the quarterly period ended March 31, 2007, as filed
on September 23, 2008.
(8) Incorporated by reference to Registrant’s Form 10-Q for the quarterly period ended June 30, 2006, as filed on
August 4, 2006.
(9) Incorporated by reference to Registrant’s Form 8-K as filed on December 9, 2005.
(10) Incorporated by reference to Registrant’s Form 8-K as filed on June 11, 2007.
55
Table of Contents
(11) Incorporated by reference to Registrant’s Form 8-K as filed on March 6, 2007.
(12) Incorporated by reference to Registrant’s Form S-8 (File No. 333-141657) as filed March 29, 2007.
(13) Incorporated by reference to Registrant’s Form 8-K as filed on November 26, 2008.
(14) Incorporated by reference to Registrant’s form 8-K as filed on March 12, 2008.
(15) Incorporated by reference to Registrant’s Form 10-Q for the quarterly period ended December 31, 2008, as filed
on February 9, 2009.
(16) Incorporated by reference to Registrant’s Form 10-Q for the quarterly period ended June 3, 2009, as filed on
June 3, 2009.
(c) Financial Statements Schedules
(1) See Item 15(a) above.
56
Table of Contents
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
MARINEMAX, INC.
/s/ WILLIAM H. MCGILL JR.
William H. McGill Jr.
Chairman of the Board and Chief Executive Officer
Date: December 14, 2009
In accordance with the Securities Exchange Act of 1934, the following persons on behalf of the registrant and in
the capacities and on the date indicated have signed this report below.
Signature
Capacity
Date
/s/ WILLIAM H. MCGILL JR.
William H. McGill Jr.
Chairman of the Board, President, and
Chief Executive Officer
(Principal Executive Officer)
December 14, 2009
/s/ MICHAEL H. MCLAMB
Michael H. McLamb
Executive Vice President, Chief Financial
Officer, Secretary, and Director (Principal
Accounting and Financial Officer)
December 14, 2009
/s/ HILLIARD M. EURE III
Hilliard M. Eure III
/s/ JOHN B. FURMAN
John B. Furman
/s/ ROBERT S. KANT
Robert S. Kant
/s/ RUSSELL J. KNITTEL
Russell J. Knittel
/s/ JOSEPH A. WATTERS
Joseph A. Watters
/s/ DEAN S. WOODMAN
Dean S. Woodman
Director
December 14, 2009
Director
December 14, 2009
Director
December 14, 2009
Director
December 14, 2009
Director
December 14, 2009
Director
December 14, 2009
57
Table of Contents
MARINEMAX, INC. AND SUBSIDIARIES
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
CONSOLIDATED FINANCIAL STATEMENTS
Report of Independent Registered Certified Public Accounting Firm
Consolidated Balance Sheets
Consolidated Statements of Operations
Consolidated Statements of Comprehensive Income
Consolidated Statements of Stockholders’ Equity
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements
F-1
Page
F-2
F-3
F-4
F-5
F-6
F-7
F-8
Table of Contents
REPORT OF INDEPENDENT REGISTERED CERTIFIED PUBLIC ACCOUNTING FIRM
The Board of Directors and Stockholders of
MarineMax, Inc.
We have audited the accompanying consolidated balance sheets of MarineMax, Inc. and subsidiaries as of
September 30, 2009 and 2008, and the related consolidated statements of operations, comprehensive income,
stockholders’ equity and cash flows for each of the three years in the period ended September 30, 2009. These
financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion
on these financial statements 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 financial statements referred to above present fairly, in all material respects, the consolidated
financial position of MarineMax, Inc. and subsidiaries at September 30, 2009 and 2008, and the consolidated results
of their operations and their cash flows for each of the three years in the period ended September 30, 2009, in
conformity with U.S. generally accepted accounting principles.
As discussed in Note 3 to the financial statements, in 2008 the Company changed its method for accounting for
income tax uncertainties.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board
(United States), MarineMax, Inc.’s internal control over financial reporting as of September 30, 2009, based on
criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission and our report dated December 14, 2009 expressed an unqualified
opinion thereon.
Certified Public Accountants
Tampa, Florida
December 14, 2009
/s/ Ernst & Young LLP
F-2
Table of Contents
MARINEMAX, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Amounts in thousands except share and per share data)
ASSETS
September 30, September 30,
2008
2009
CURRENT ASSETS:
Cash and cash equivalents
Accounts receivable, net
Income tax receivable
Inventories, net
Prepaid expenses and other current assets
Deferred tax assets
Total current assets
Property and equipment, net
Other long-term assets
Deferred tax assets
Total assets
CURRENT LIABILITIES:
Accounts payable
Customer deposits
Accrued expenses
Short-term borrowings
Total current liabilities
Other long-term liabilities
Total liabilities
LIABILITIES AND STOCKHOLDERS’ EQUITY
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS’ EQUITY:
Preferred stock, $.001 par value, 1,000,000 shares authorized, none issued or
outstanding at September 30, 2008 and 2009
Common stock, $.001 par value; 24,000,000 shares authorized, 19,215,387 and
22,496,659 shares issued and 18,424,487 and 21,705,759 shares outstanding at
September 30, 2008 and 2009, respectively
Additional paid-in capital
Retained earnings
Treasury stock, at cost, 790,900 shares held at September 30, 2008 and 2009
Total stockholders’ equity
Total liabilities and stockholders’ equity
See accompanying notes.
F-3
$
30,264 $
28,931
6,744
468,629
7,949
307
542,824
113,869
3,424
1,206
25,508
35,497
9,983
205,934
12,314
—
289,236
102,316
2,092
—
$ 661,323 $ 393,644
$
4,481 $
6,505
25,380
372,000
408,366
4,374
412,740
15,847
4,882
29,328
142,000
192,057
3,831
195,888
—
—
19
178,830
85,544
(15,810 )
248,583
22
204,772
8,772
(15,810 )
197,756
$ 661,323 $ 393,644
Table of Contents
MARINEMAX, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Amounts in thousands except share and per share data)
Revenue
Cost of sales
Gross profit
Selling, general, and administrative expenses
Goodwill and intangible asset impairment charge
Income (loss) from operations
Interest expense
Income (loss) before income tax provision (benefit)
Income tax provision (benefit)
Net income (loss)
Basic net income (loss) per common share
Diluted net income (loss) per common share
Weighted average number of common shares used in computing net
income (loss) per common share:
2007
For the Year Ended September 30,
2008
885,407 $
679,164
206,243
217,426
122,091
(133,274 )
20,164
(153,438 )
(19,161 )
(134,277 ) $
(7.30 ) $
(7.30 ) $
$ 1,255,985 $
956,251
299,734
245,224
—
54,510
26,955
27,555
7,486
20,069 $
1.08 $
1.04 $
2009
588,585
499,925
88,660
159,998
—
(71,338 )
14,064
(85,402 )
(8,630 )
(76,772 )
(4.11 )
(4.11 )
$
$
$
Basic
Diluted
18,618,611 18,391,488 18,685,423
19,289,231 18,391,488 18,685,423
See accompanying notes.
F-4
Table of Contents
MARINEMAX, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Amounts in thousands)
Net income (loss)
Other comprehensive income (loss):
Change in fair market value of derivative instruments, net of tax benefit of $300
and $228 for the years ended September 30, 2007 and 2008, respectively
Reclassification adjustment for gains included in net income, net of tax of $62
and $211 for the years ended September 30, 2007 and 2008, respectively
Comprehensive income (loss)
See accompanying notes.
F-5
2007
For the Year Ended September 30,
2008
2009
$ 20,069 $ (134,277 ) $ (76,772 )
(379 )
(365 )
—
(100 )
—
$ 19,590 $ (134,305 ) $ (76,772 )
337
Table of Contents
MARINEMAX, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(Amounts in thousands except share data)
BALANCE, September 30, 2006
Net income
Purchase of treasury stock
Shares issued under employee stock purchase
plan
Shares issued upon exercise of stock options
Stock-based compensation
Tax benefits of options exercised
Change in fair market value of derivative
instruments, net of tax
BALANCE, September 30, 2007
Net loss
Purchase of treasury stock
Shares issued under employee stock purchase
plan
Shares issued upon exercise of stock options
Stock-based compensation
Tax benefits of options exercised
Cumulative effect of adoption of FIN 48
Conversion of restricted stock awards to
Common Stock
Shares
Amount Capital
Accumulated
Additional
Other
Paid-in Retained Comprehensive Treasury Stockholders’
Income
Total
Earnings
Equity
Stock
18,529,524 $ 19 $ 156,618 $ 200,306 $
— 20,069
—
—
— —
(383,300 ) —
507 $ (7,563 ) $ 349,887
20,069
—
—
(7,212 )
— (7,212 )
78,665 —
149,780 —
5,195 —
— —
1,631
1,587
7,307
769
—
—
—
—
—
—
—
—
—
—
—
—
1,631
1,587
7,307
769
18,379,864
— —
—
—
19 167,912 220,375
— (134,277 )
—
—
— —
(71,300 ) —
105,390 —
102,352 —
8,181 —
— —
1,207
1,024
8,464
223
—
—
—
—
—
(554 )
(479 )
(479 )
—
28 (14,775 ) 373,559
— (134,277 )
—
(1,035 )
— (1,035 )
—
—
—
—
—
—
—
—
—
—
1,207
1,024
8,464
223
(554 )
restricted stock units
(100,000 ) —
—
—
—
—
—
Change in fair market value of derivative
instruments, net of tax
BALANCE, September 30, 2008
Net loss
Shares issued under employee stock purchase
plan
Shares issued upon vesting of equity awards
Shares issued upon exercise of stock options
Issuance of common stock
Stock-based compensation
BALANCE, September 30, 2009
18,424,487
— —
—
—
19 178,830 85,544
— (76,772 )
— —
198,298 —
45,407 —
20,554 —
630
74
62
3 19,611
5,565
21,705,759 $ 22 $ 204,772 $
27,013 —
2,990,000
—
—
—
—
—
8,772 $
See accompanying notes.
F-6
(28 )
(28 )
—
— (15,810 ) 248,583
(76,772 )
—
—
630
—
—
74
—
—
62
—
—
19,614
—
—
—
5,565
—
— $ (15,810 ) $ 197,756
Table of Contents
MARINEMAX, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in thousands)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating
$ 20,069 $ (134,277 ) $ (76,772 )
For the Year Ended September 30,
2009
2008
2007
activities:
Goodwill and intangible asset impairment
Depreciation and amortization
Deferred income tax provision (benefit)
Loss (gain) on sale of property and equipment
Gain on involuntary conversion of property and equipment
Stock-based compensation expense
Tax benefits of options exercised
Loss on extinguishment of debt
Excess tax benefits from stock-based compensation
(Increase) decrease in —
Accounts receivable, net
Income tax receivable
Inventories, net
Prepaid expenses and other assets
Increase (decrease) in —
Accounts payable
Customer deposits
Accrued expenses
Net cash provided by (used in) operating activities
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment
Net cash used in acquisitions of businesses, net assets, and intangible assets
Proceeds from sale of property and equipment
Proceeds from involuntary conversion of property and equipment
Net cash used in investing activities
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayments of long-term debt
Net (repayments) borrowings on short-term borrowings
Purchases of treasury stock
Excess tax benefits from stock-based compensation
Debt modification costs
Net proceeds from issuance of common stock
Net proceeds from issuance of common stock under option and employee purchase
plans
Net cash provided by (used in) financing activities
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS:
CASH AND CASH EQUIVALENTS, beginning of period
CASH AND CASH EQUIVALENTS, end of period
See accompanying notes.
F-7
—
9,350
(1,367 )
(1,030 )
(613 )
7,307
769
—
(546 )
122,091
11,090
(6,303 )
259
—
8,464
223
160
(169 )
—
10,969
1,513
(64 )
—
5,565
—
492
—
256
—
(15,192 )
(1,172 )
28,402
(6,744 )
9,410
2,633
(6,566 )
(3,239 )
262,695
1,362
(17,418 )
16,250
3,332
19,995
(16,749 )
(26,915 )
(361 )
(8,786 )
11,366
(1,623 )
3,405
209,103
(9,507 )
(4,847 )
2,915
2,007
(9,432 )
(7,969 )
—
112
—
(7,857 )
(2,101 )
—
240
—
(1,861 )
(6,353 )
4,500
(7,212 )
546
—
—
(30,833 )
46,000
(1,035 )
169
—
—
—
(230,000 )
—
—
(2,378 )
19,614
766
2,231
3,218
(211,998 )
16,532
(5,301 )
(4,756 )
(111 )
5,262
25,113
30,264
30,375
$ 30,375 $ 30,264 $ 25,508
Table of Contents
MARINEMAX, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. COMPANY BACKGROUND AND BASIS OF PRESENTATION:
We are the largest recreational boat retailer in the United States. We engage primarily in the retail sale,
brokerage, and service of new and used boats, motors, trailers, marine parts, and accessories and offer slip and
storage accommodations in certain locations. In addition, we arrange related boat financing, insurance, and extended
service contracts. As of September 30, 2009, we operated through 55 retail locations in 18 states, consisting of
Alabama, Arizona, California, Colorado, Connecticut, Florida, Georgia, Maryland, Minnesota, Missouri, New Jersey,
New York, North Carolina, Ohio, Oklahoma, Rhode Island, Tennessee, and Texas.
We are the nation’s largest retailer of Sea Ray, Boston Whaler, Cabo, Hatteras, and Meridian recreational boats
and yachts, all of which are manufactured by Brunswick Corporation (Brunswick). Sales of new Brunswick boats
accounted for approximately 51% of our revenue in fiscal 2009. Brunswick is the world’s largest manufacturer of
marine products and marine engines. We believe we represented approximately 6% of all Brunswick marine sales,
including approximately 31% of its Sea Ray boat sales, during our 2009 fiscal year.
We have dealership agreements with Sea Ray, Boston Whaler, Cabo, Hatteras, Meridian, and Mercury Marine,
all subsidiaries or divisions of Brunswick. We also have dealer agreements with Azimut. These agreements allow us
to purchase, stock, sell, and service these manufacturers’ boats and products. These agreements also allow us to use
these manufacturers’ names, trade symbols, and intellectual properties in our operations.
We are party to a multi-year dealer agreement with Brunswick covering Sea Ray products that appoints us as the
exclusive dealer of Sea Ray boats in our geographic markets. We are party to a dealer agreement with Hatteras
Yachts that gives us the exclusive right to sell Hatteras Yachts throughout the states of Florida (excluding the Florida
panhandle), New Jersey, New York, and Texas. We are also the exclusive dealer for Cabo Yachts throughout the
states of Florida, New Jersey, and New York through a dealer agreement. We are also the exclusive dealer for Italy-
based Azimut-Benetti Group’s product line Azimut Yachts for the Northeast United States from Maryland to Maine
and for the state of Florida through a multi-year dealer agreement. We believe the non-Brunswick brands offer a
migration for our existing customer base or fill a void in our product offerings, and accordingly, do not compete with
the business generated from our other prominent brands.
As is typical in the industry, we deal with manufacturers, other than Sea Ray and Azimut Yachts, under
renewable annual dealer agreements, each of which gives us the right to sell various makes and models of boats
within a given geographic region. Any change or termination of these agreements, or the agreements discussed
above, for any reason, or changes in competitive, regulatory, or marketing practices, including rebate or incentive
programs, could adversely affect our results of operations. Although there are a limited number of manufacturers of
the type of boats and products that we sell, we believe that adequate alternative sources would be available to replace
any manufacturer other than Brunswick as a product source. These alternative sources may not be available at the
time of any interruption, and alternative products may not be available at comparable terms, which could affect
operating results adversely.
General economic conditions and consumer spending patterns can negatively impact our operating results.
Unfavorable local, regional, national, or global economic developments or uncertainties regarding future economic
prospects could reduce consumer spending in the markets we serve and adversely affect our business. Economic
conditions in areas in which we operate dealerships, particularly Florida in which we generated 44%, 43%, and 45%
of our revenue during fiscal 2007, 2008, and 2009, respectively, can have a major impact on our operations. Local
influences, such as corporate downsizing and military base closings, also could adversely affect our operations in
certain markets.
In an economic downturn, consumer discretionary spending levels generally decline, at times resulting in
disproportionately large reductions in the sale of luxury goods. Consumer spending on luxury goods also may decline
as a result of lower consumer confidence levels, even if prevailing economic conditions are favorable. Although we
have expanded our operations during periods of stagnant or modestly declining industry trends, the cyclical nature of
the recreational boating industry or the lack of industry growth could adversely affect our
F-8
Table of Contents
MARINEMAX, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
business, financial condition, or results of operations in the future. Any period of adverse economic conditions or low
consumer confidence has a negative effect on our business.
Lower consumer spending resulting from a downturn in the housing market and other economic factors
adversely affected our business in fiscal 2007 and continued weakness in consumer spending resulting from
substantial weakness in the financial markets and deteriorating economic conditions had a very substantial negative
effect on our business in fiscal 2008 and fiscal 2009. These conditions caused us to defer our acquisition program,
delay new store openings, reduce our inventory purchases, engage in inventory reduction efforts, close some of our
retail locations, reduce our headcount, and amend our credit facility. We cannot predict the length or severity of these
unfavorable economic or financial conditions or the extent to which they will adversely affect our operating results
nor can we predict the effectiveness of the measures we have taken to address this environment or whether additional
measures will be necessary.
In order to provide comparability between periods presented, certain amounts have been reclassified from the
previously reported consolidated financial statements to conform to the consolidated financial statement presentation
of the current period. The consolidated financial statements include our accounts and the accounts of our subsidiaries,
all of which are wholly owned. All significant intercompany transactions and accounts have been eliminated.
2. ACQUISITIONS:
We were incorporated in Delaware in January 1998 and commenced operations with the acquisition of five
independent recreational boat dealers on March 1, 1998. Since the initial acquisitions, we have acquired 20
recreational boat dealers, two boat brokerage operations, and two full-service yacht repair facilities. As a part of our
acquisition strategy, we frequently engage in discussions with various recreational boat dealers regarding their
potential acquisition by us. Potential acquisition discussions frequently take place over a long period of time and
involve difficult business integration and other issues, including, in some cases, management succession and related
matters. As a result of these and other factors, a number of potential acquisitions that from time to time appear likely
to occur do not result in binding legal agreements and are not consummated. We did not complete any significant
acquisitions during the fiscal years ended September 30, 2008 and 2009.
3. SIGNIFICANT ACCOUNTING POLICIES:
Statements of Cash Flows
For purposes of the consolidated statements of cash flows, we consider all highly liquid investments with an
original maturity of three months or less to be cash equivalents.
We made interest payments of approximately $26.6 million, $20.6 million, and $14.5 million for the fiscal years
ended September 30, 2007, 2008, and 2009, respectively, including interest on debt to finance our real estate
holdings and inventory. We made income tax payments of approximately $26.0 million and $2.6 million for the
fiscal years ended September 30, 2007 and 2008, respectively. No income tax payments have been made for the
fiscal year ended September 30, 2009.
Vendor Consideration Received
We account for consideration received from our vendors in accordance with FASB Accounting Standards
Codification 605, “Revenue Recognition, Customer Payments and Incentives” (ASC 605), previously referred to as
Emerging Issues Task Force Issue No. 02-16, “Accounting by a Customer (Including a Reseller) for Certain
Consideration Received from a Vendor.” ASC 605 most significantly requires us to classify interest assistance
received from manufacturers as a reduction of inventory cost and related cost of sales as opposed to netting the
assistance against our interest expense incurred with our lenders. Pursuant to ASC 605, amounts received by us under
our co-op assistance programs from our manufacturers are netted against related advertising expenses.
F-9
Table of Contents
Inventories
MARINEMAX, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
Inventory costs consist of the amount paid to acquire the inventory, net of vendor consideration and purchase
discounts, the cost of equipment added, reconditioning costs, and transportation costs relating to acquiring inventory
for sale. We state new boat, motor, and trailer inventories at the lower of cost, determined on a specific-identification
basis, or market. We state used boat, motor, and trailer inventories, including trade-in’s, at the lower of cost,
determined on a specific-identification basis, or market. We state parts and accessories at the lower of cost,
determined on an average cost basis, or market. We utilize our historical experience, the aging of the inventories, and
our consideration of current market trends as the basis for determining lower of cost or market valuation allowance.
As of September 30, 2008 and 2009, our lower of cost or market valuation allowance was $5.1 million and
$17.7 million, respectively. During the fiscal 2009, we incurred losses and increased reserves for expected losses
associated with market declines in brands we no longer carry by approximately $12.6 million. If events occur and
market conditions change, causing the fair value to fall below carrying value, the lower of cost or market valuation
allowance could increase.
Property and Equipment
We record property and equipment at cost, net of accumulated depreciation, and depreciate property and
equipment over their estimated useful lives using the straight-line method. We capitalize and amortize leasehold
improvements over the lesser of the life of the lease or the estimated useful life of the asset. Useful lives for purposes
of computing depreciation are as follows:
Buildings and improvements
Machinery and equipment
Furniture and fixtures
Vehicles
Years
5-40
3-10
5-10
3-5
We remove the cost of property and equipment sold or retired and the related accumulated depreciation from the
accounts at the time of disposition and include any resulting gain or loss in the consolidated statements of operations.
We charge maintenance, repairs, and minor replacements to operations as incurred; and we capitalize and amortize
major replacements and improvements over their useful lives.
Valuation of Goodwill and Other Intangible Assets
We account for goodwill and identifiable intangible assets in accordance with FASB Accounting Standards
Codification 350, “Intangibles — Goodwill and Other” (ASC 350), previously referred to as Statement of Financial
Accounting Standards No. 142, “Goodwill and Other Intangible Assets.” Under this standard, we assess the
impairment of goodwill and identifiable intangible assets at least annually and whenever events or changes in
circumstances indicate that the carrying value may not be recoverable. The first step in the assessment is the
estimation of fair value. If step one indicates that impairment potentially exists, we perform the second step to
measure the amount of impairment, if any. Goodwill and identifiable intangible asset impairment exists when the
estimated fair value is less than its carrying value.
During the three months ended June 30, 2008, we experienced a significant decline in market valuation driven
primarily by weakness in the marine retail industry and an overall soft economy, which hindered our financial
performance. Accordingly, we completed a step one analysis (as noted above) and estimated the fair value of the
reporting unit as prescribed by ASC 350, which indicated potential impairment. As a result, we completed a fair
value analysis of indefinite lived intangible assets and a step two goodwill impairment analysis, as required by
ASC 350. We determined that indefinite lived intangible assets and goodwill were impaired and recorded a non-cash
charge of $121.1 million based on our assessment. We will not be required to make any current or future cash
expenditures as a result of this impairment charge.
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MARINEMAX, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
Impairment of Long-Lived Assets
FASB Accounting Standards Codification 360-10-40, “Property, Plant, and Equipment, Impairment of Disposal
of Long-Lived Assets” (ASC 360-10-40), previously referred to as Statement of Financial Accounting Standards
No. 144, “Accounting for Impairment or Disposal of Long-Lived Assets,” requires that long-lived assets, such as
property and equipment and purchased intangibles subject to amortization, be reviewed for impairment whenever
events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.
Recoverability of the asset is measured by comparison of its carrying amount to undiscounted future net cash flows
the asset is expected to generate. If such assets are considered to be impaired, the impairment to be recognized is
measured as the amount by which the carrying amount of the asset exceeds its fair market value. Estimates of
expected future cash flows represent our best estimate based on currently available information and reasonable and
supportable assumptions. Any impairment recognized in accordance with ASC 360-10-40 is permanent and may not
be restored. As of September 30, 2009, we had not recognized any impairment of long-lived assets in connection
with ASC 360-10-40 based on our reviews.
Customer Deposits
Customer deposits primarily include amounts received from customers toward the purchase of boats. We
recognize these deposits as revenue upon delivery or acceptance of the related boats to customers.
Insurance
We retain varying levels of risk relating to the insurance policies we maintain, most significantly workers’
compensation insurance and employee medical benefits. We are responsible for the claims and losses incurred under
these programs, limited by per occurrence deductibles and paid claims or losses up to pre-determined maximum
exposure limits. Our third-party insurance carriers pay any losses above the pre-determined exposure limits. We
estimate our liability for incurred but not reported losses using our historical loss experience, our judgment, and
industry information.
Derivative Instruments
We account for derivative instruments in accordance with FASB Accounting Standards Codification 815,
“Derivatives and Hedging” (ASC 815), previously referred to as Statement of Financial Accounting
Standards No. 133, “Accounting for Derivative Instruments and Certain Hedging Activities,” Statement of Financial
Accounting Standards No. 138, “Accounting for Certain Derivative Instruments and Certain Hedging Activity, an
Amendment of SFAS 133” and Statement of Financial Accounting Standards No. 149, “Amendment of Statement
133 on Derivative Instruments and Hedging Activities”. Under these standards, all derivative instruments are
recorded on the balance sheet at their respective fair values.
We utilize certain derivative instruments, from time to time, including interest rate swaps and forward contracts,
to manage variability in cash flows associated with interest rates and forecasted purchases of boats and yachts from
certain of our foreign suppliers in euros. At September 30, 2008 and 2009, no such instruments were outstanding.
When utilized we designate and account for our forward contracts and interest rate swaps as cash flow hedges
(i.e., hedging the exposure to variability in expected future cash flows that is attributable to a particular risk).
ASC 815 provides that the effective portion of the gain or loss on a derivative instrument designated and qualifying
as a cash flow hedging instrument must be reported as a component of other comprehensive income and must be
reclassified into earnings in the same line item in the income statement as the hedged item in the same period or
periods during which the transaction affects earnings. We recognize the ineffective portion of the gain or loss on
these derivative instruments, if any, in other income/expense in current earnings during the period of change.
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MARINEMAX, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
For derivative instruments not designated as hedging instruments, we recognize the gain or loss in other
income/expense in current earnings during the period of change. When a cash flow hedge is terminated, if the
forecasted hedged transaction is still probable of occurrence, amounts previously recorded in other comprehensive
income remain in other comprehensive income and are recognized in earnings in the period in which the hedged
transaction affects earnings.
Revenue Recognition
We recognize revenue from boat, motor, and trailer sales and parts and service operations at the time the boat,
motor, trailer, or part is delivered to or accepted by the customer or service is completed. We recognize commissions
earned from a brokerage sale at the time the related brokerage transaction closes. We recognize revenue from slip
and storage services on a straight-line basis over the term of the slip or storage agreement. We recognize
commissions earned by us for placing notes with financial institutions in connection with customer boat financing
when we recognize the related boat sales. We recognize marketing fees earned on credit life, accident and disability,
and hull insurance products sold by third-party insurance companies at the later of customer acceptance of the
insurance product as evidenced by contract execution or when we recognize the related boat sale. Pursuant to
negotiated agreements with financial and insurance institutions, we are charged back for a portion of these fees
should the customer terminate or default on the related finance or insurance contract before it is outstanding for a
stipulated minimal period of time. We base the chargeback allowance, which was not material to the consolidated
financial statements taken as a whole as of September 30, 2008 or 2009, on our experience with repayments or
defaults on the related finance or insurance contracts.
We also recognize commissions earned on extended warranty service contracts sold on behalf of third-party
insurance companies at the later of customer acceptance of the service contract terms as evidenced by contract
execution or recognition of the related boat sale. We are charged back for a portion of these commissions should the
customer terminate or default on the service contract prior to its scheduled maturity. We determine the chargeback
allowance, which was not material to the consolidated financial statements taken as a whole as of September 30,
2008 or 2009, based upon our experience with repayments or defaults on the service contracts.
The following table sets forth percentages of our revenue generated by certain products and services, for each of
last three years.
New boat sales
Used boat sales
Maintenance and repair services
Finance and insurance products
Parts and accessories
Brokerage services
Total Revenue
Stock-Based Compensation
2008
2009
2007
68.2 % 63.5 % 60.7 %
18.8 % 20.5 % 22.5 %
5.0 % 6.6 % 7.9 %
3.6 % 3.6 % 2.7 %
3.2 % 4.4 % 5.0 %
1.2 % 1.4 % 1.2 %
100.0 % 100.0 % 100.0 %
Effective October 1, 2005, we adopted the provisions of FASB Accounting Standards Codification 718,
“Compensation — Stock Compensation” (ASC 718), previously referred to as Statement of Financial Accounting
Standards No. 123R, “Share-Based Payment,” for our share-based compensation plans. We adopted ASC 718 using
the modified prospective transition method. Under this transition method, compensation cost recognized includes
(a) the compensation cost for all share-based awards granted prior to, but not yet vested, as of October 1, 2005, based
on the grant-date fair value estimated in accordance with the original provisions of ASC 718 and (b) the
compensation cost for all share-based awards granted subsequent to September 30, 2005, based on the grant-date
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MARINEMAX, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
fair value estimated in accordance with the provisions of ASC 718. Additionally, we accounted for restricted stock
awards granted using the measurement and recognition provisions of ASC 718. We measure the fair value of the
restricted stock awards on the grant date and recognize them in earnings over the requisite service period for each
separately vesting portion of the award.
Advertising and Promotional Costs
We expense advertising and promotional costs as incurred and include them in selling, general, and
administrative expenses in the accompanying consolidated statements of operations. Pursuant to ASC 605-50, we net
amounts received by us under our co-op assistance programs from our manufacturers against the related advertising
expenses. Total advertising and promotional expenses approximated $19.6 million, $19.3 million, and $9.4 million,
net of related co-op assistance of approximately $1.2 million, $700,000, and $526,000, for the fiscal years ended
September 30, 2007, 2008, and 2009, respectively.
Income Taxes
We account for income taxes in accordance with FASB Accounting Standards Codification 740, “Income
Taxes” (ASC 740), previously referred to as Statement of Financial Accounting Standards No. 109, “Accounting for
Income Taxes,” and Financial Accounting Standard Board Interpretation No. 48, “Accounting for Uncertainty in
Income Taxes.” Under ASC 740, we recognize deferred tax assets and liabilities for the future tax consequences
attributable to temporary differences between the financial statement carrying amounts of existing assets and
liabilities and their respective tax basis. We measure deferred tax assets and liabilities using enacted tax rates
expected to apply to taxable income in the years in which we expect those temporary differences to be recovered or
settled. We record valuation allowances to reduce our deferred tax assets to the amount expected to be realized by
considering all available positive and negative evidence.
Pursuant to ASC 740, we must consider all positive and negative evidence regarding the realization of deferred
tax assets, including past operating results and future sources of taxable income. Under the provisions of
ASC 740-10, we determined that our net deferred tax asset needed to be fully reserved given recent earnings and
industry trends.
In June 2006, the Financial Accounting Standards Board issued Interpretation No. 48 (FIN 48), Accounting for
Uncertainty in Income Taxes, also included in ASC 740. The Interpretation clarifies the accounting for uncertainty in
income taxes recognized in an enterprise’s financial statements and prescribes a recognition threshold and
measurement attributes of income tax positions taken or expected to be taken on a tax return. Under FIN 48, the
impact of an uncertain tax position taken or expected to be taken on an income tax return must be recognized in the
financial statements at the largest amount that is more-likely-than-not to be sustained upon audit by the relevant
taxing authority. An uncertain income tax position will not be recognized in the financial statements unless it is more
likely than not of being sustained.
See Note 22 — “Subsequent Events” for the disclosure regarding a tax law enacted after the balance sheet date
and prior to the issuance of the financial statements.
New Accounting Pronouncements
In September 2006, the Financial Accounting Standards Board issued FASB Accounting Standards Codification
820, “Fair Value Measurements and Disclosures” (ASC 820), previously referred to as Statement of Financial
Accounting Standards No. 157, “Fair Value Measurements.” ASC 820 defines fair value, applies to other accounting
pronouncements that require or permit fair value measurements and expands disclosures about fair value
measurements. ASC 820 is effective for fiscal years beginning after November 15, 2007 and interim periods within
those fiscal years. The adoption ASC 820 did not have a material impact on our consolidated financial statements.
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MARINEMAX, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
In February 2007, the Financial Accounting Standards Board issued FASB Accounting Standards Codification
825, “Financial Instruments” (ASC 825), previously referred to as Statement of Financial Accounting Standards
No. 159, “Fair Value Option for Financial Assets and Financial Liabilities,” which permits an entity to measure
certain financial assets and financial liabilities at fair value. ASC 825 is effective for fiscal years beginning after
November 15, 2007. The adoption ASC 825 did not have a material impact on our consolidated financial statements.
In December 2007, the Financial Accounting Standards Board issued FASB Accounting Standards Codification
805, “Business Combinations” (ASC 805), previously referred to as Statement of Financial Accounting Standards
No. 141R “Business Combinations.” ASC 805 will require, among other things, the expensing of direct transaction
costs, in process research and development to be capitalized, certain contingent assets and liabilities to be recognized
at fair value and earn-out arrangements may be required to be measured at fair value recognized each period in
earnings. In addition, certain material adjustments will be required to be made to purchase accounting entries at the
initial acquisition date and will cause revisions to previously issued financial information in subsequent filings. ASC
805 is effective for transactions occurring after the beginning of the first annual reporting period beginning on or
after December 15, 2008 and may have a material impact on our consolidated financial position, results from
operations and cash flows should we enter into a material business combination after the standards effective date.
In March 2008, the Financial Accounting Standards Board issued FASB Accounting Standards
Codification 815, “Derivatives and Hedging” (ASC 815), previously referred to as Statement of Financial
Accounting Standards No. 161, “Disclosures about Derivative Instruments and Hedging Activities — An
Amendment to SFAS 133” (SFAS 161). SFAS 161 applies to all derivative instruments accounted for under ASC
815 and requires entities to provide greater transparency on how and why entities use derivative instruments, how
derivative instruments are accounted for under ASC 815, and the effect the derivative instruments may have on the
results of operations and cash flows. ASC 815 is effective for fiscal years and interim periods beginning after
November 15, 2008. Since ASC 815 only applies to disclosures it has not had a material impact on our consolidated
financial position, results from operations, and cash flows.
In June 2009, the Financial Accounting Standards Board issued Statement of Financial Accounting
Standards No. 167, “Amendments to FASB Interpretation No. 46(R)” (SFAS 167). SFAS 167, addresses the effects
of eliminating the qualifying special-purpose entity (QSPE) concept from Statement of Financial Accounting
Standards No. 140, “Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities”
and addresses certain key provisions of FIN 46(R), including transparency of enterprises’ involvement with variable
interest entities (VIEs). SFAS 167 is effective for fiscal years beginning after November 15, 2009 and interim
periods within those fiscal years. We are currently assessing the implications of this standard and evaluating the
impact of adopting SFAS 167 on our consolidated financial statements.
Concentrations of Credit Risk
Financial instruments, which potentially subject us to concentrations of credit risk, consist principally of cash
and cash equivalents and accounts receivable. Concentrations of credit risk with respect to our cash and cash
equivalents are limited primarily to amounts held with financial institutions. Concentrations of credit risk arising
from our receivables are limited primarily to amounts due from manufacturers and financial institutions.
Fair Value of Financial Instruments
The carrying amount of our financial instruments approximates fair value due either to length to maturity or
existence of interest rates that approximate prevailing market rates unless otherwise disclosed in these consolidated
financial statements.
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MARINEMAX, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
Use of Estimates and Assumptions
The preparation of consolidated financial statements in conformity with accounting principles generally
accepted in the United States requires us 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 consolidated financial
statements and the reported amounts of revenue and expenses during the reporting periods. Significant estimates
made by us in the accompanying consolidated financial statements relate to valuation allowances, valuation of long-
lived assets, and valuation of accruals. Actual results could differ materially from those estimates. We have evaluated
subsequent events for recognition or disclosure through December 14, 2009, the date which we filed this
Form 10-K with the Securities and Exchange Commission.
4. ACCOUNTS RECEIVABLE:
Trade receivables consist primarily of receivables from financial institutions, which provide funding for
customer boat financing and amounts due from financial institutions earned from arranging financing with our
customers. We normally collect these receivables within 30 days of the sale. Trade receivables also include amounts
due from customers on the sale of boats, parts, service, and storage. Amounts due from manufacturers represent
receivables for various manufacturer programs and parts and service work performed pursuant to the manufacturers’
warranties.
The allowance for uncollectible receivables, which was not material to the consolidated financial statements as
of September 30, 2008 or 2009, was based on our consideration of customer payment practices, past transaction
history with customers, and economic conditions. When an account becomes uncollectable, we expense it as a bad
debt and we credit payments subsequently received to the bad debt expense account. We review the allowance for
uncollectible receivables when an event or other change in circumstances results in a change in the estimate of the
ultimate collectability of a specific account.
The accounts receivable balances consisted of the following at September 30,
Trade receivables
Amounts due from manufacturers
Other receivables
5. INVENTORIES:
Inventories, net consisted of the following at September 30,
New boats, motors, and trailers
Used boats, motors, and trailers
Parts, accessories, and other
F-15
2008
2009
(Amounts in thousands)
$ 11,598
$ 10,408
23,501
18,343
398
180
$ 35,497
$ 28,931
2008
2009
(Amounts in thousands)
$ 386,993 $ 160,303
39,113
72,627
6,518
9,009
$ 468,629 $ 205,934
Table of Contents
MARINEMAX, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
6. PROPERTY AND EQUIPMENT:
Property and equipment consisted of the following at September 30,
Land
Buildings and improvements
Machinery and equipment
Furniture and fixtures
Vehicles
Less — Accumulated depreciation and Amortization
2008
2009
(Amounts in thousands)
$ 42,160 $ 40,410
76,411
79,641
28,002
29,540
4,982
5,809
5,717
6,863
155,522
164,013
(50,144 )
(53,206 )
$ 113,869 $ 102,316
Depreciation and amortization expense on property and equipment totaled approximately $9.5 million,
$10.9 million, and $10.4 million for the fiscal years ended September 30, 2007, 2008, and 2009, respectively.
During fiscal 2008 and 2009, we closed certain owned retail locations in an effort to better match our fixed costs
with the decline in retail business caused by the soft economic conditions. Accordingly, we entered into plans to
market and sell certain locations we have exited. We assessed our plans to sell certain locations with the criteria
identified in FASB Accounting Standards Codification 360, “Property, Plant, and Equipment” (ASC 360), previously
referred to as Statement of Financial Accounting Standards No. 144, “Accounting for Impairment or Disposal of
Long-Lived Assets,” and determined the locations should be classified as available for sale. As of September 30,
2008 and 2009, we have reclassified $1.8 million and $4.8 million, respectively, from property and equipment to
prepaid expenses and other current assets within the consolidated balance sheets.
7. GOODWILL AND OTHER INTANGIBLE ASSETS:
The changes in the carrying amounts of net goodwill and identifiable intangible assets for the fiscal years ended
September 30, were as follows:
Balance, September 30, 2007
Changes during the period
Balance, September 30, 2008
Changes during the period
Balance, September 30, 2009
Total
Goodwill
Identifiable
Intangible
Assets
(Amounts in thousands)
$ 97,446 $ 23,728 $ 121,174
(121,174 )
(23,728 )
(97,446 )
—
—
—
—
—
—
—
— $
$ — $
During the fiscal year ended September 30, 2008, we experienced a significant decline in market valuation
driven primarily by weakness in the marine retail industry and an overall soft economy, which adversely affected our
financial performance. As a result, we completed a fair value analysis of indefinite lived intangible assets and a step
two goodwill impairment analysis, as required by ASC 350. We determined that indefinite lived intangible assets and
goodwill were impaired and recorded a non-cash charge of $121.1 million based on our assessment. We will not be
required to make any current or future cash expenditures as a result of this impairment charge.
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MARINEMAX, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
8. OTHER LONG-TERM ASSETS:
During February 2006, we became party to a joint venture with Brunswick that acquired certain real estate and
assets of Great American Marina for an aggregate purchase price of approximately $11.0 million, of which we
contributed approximately $4.0 million and Brunswick contributed approximately $7.0 million. The terms of the
agreement specify that we operate and maintain the service business and that Brunswick operate and maintain the
marina business. Simultaneously with the closing, the acquired entity became Gulfport Marina, LLC (Gulfport). We
account for our investment in Gulfport in accordance with Financial Accounting Standards Board Accounting
Standards Codification 323, “Investment — Equity Method and Joint Venture” (ASC 323), previously referred to as
Accounting Principles Board Opinion No. 18, “The Equity Method of Accounting for Investments in Common
Stock.” Accordingly, we adjust the carrying amount of our investment in Gulfport to recognize our share of earnings
or losses.
During the three months ended June 30, 2008, we experienced a significant decline in market valuation driven
primarily by weakness in the marine retail industry and an overall soft economy, which adversely affected our
financial performance. As a result of this weakness, we realized a goodwill and intangible asset impairment charge,
as noted above. Based on these events, we reviewed the valuation of our investment in Gulfport in accordance with
ASC 323 and recoverability of the assets contained within the joint venture. ASC 323 requires the recognition of a
loss in value of an investment, which is other than a temporary decline. We reviewed our investment and assets
contained within the Gulfport joint venture, which consists of land, buildings, equipment, and goodwill. As a result,
we determined that our investment in the joint venture was impaired and recorded a non-cash charge of $1.0 million
based on our assessment. We will not be required to make any current or future cash expenditures as a result of this
impairment charge.
9. DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITY:
During fiscal 2006, we entered into an interest rate swap agreement with a notional amount of $4.0 million,
which was designated as a cash flow hedge, and effectively converted a portion of the floating rate debt to a fixed
rate of 5.67%. At September 30, 2007, the swap agreement had a fair value of approximately $45,000, which was
recorded in other long-term assets on the consolidated balance sheets.
During fiscal 2008, we entered into six interest rate swap agreements with a total notional amount of
approximately $23.2 million, which were designated as cash flow hedges that effectively converted a portion of the
floating rate debt to fixed rates ranging from 4.36% to 4.87%. During fiscal 2008, we prepaid the outstanding
balances of our long-term debt. With this prepayment, the swaps were terminated and the pretax fair market value of
the swaps of approximately $550,000 was reclassified from accumulated other comprehensive income and
recognized as income in the statements of operations.
During fiscal 2009, we have not entered into any interest rate swaps or currency hedging activity.
10. SHORT-TERM BORROWINGS:
During fiscal 2008, we maintained our second amended and restated credit and security agreement, entered into
during June 2006. The credit facility provided us a line of credit with asset-based borrowing availability of up to
$500 million for working capital and inventory financing, with the amount of permissible borrowings determined
pursuant to a borrowing base formula. The credit facility accrued interest at the London Interbank Offered Rate
(LIBOR) plus 150 to 260 basis points, with the interest rate was based upon the ratio of our net outstanding
borrowings to our tangible net worth. The credit facility was secured by our inventory, accounts receivable,
equipment, furniture, and fixtures. The credit facility required us to satisfy certain covenants, including maintaining a
leverage ratio tied to our tangible net worth.
During fiscal 2009, we maintained our second amended and restated credit and security agreement, which has
been amended on various occasions since its original execution in June 2006. As amended, our credit facility
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MARINEMAX, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
provides for a line of credit with asset-based borrowing availability up to approximately $230 million, stepping down
to $175 million by September 30, 2010, with interim decreases between such dates. The amended facility has certain
financial covenants as specified in the agreement. The covenants include provisions that our leverage ratio not
exceed 2.75 to 1; that our current ratio must be greater than 1.25 to 1 or 1.20 to 1 depending on the time of year; and
that our maximum EBITDA loss and annual EBITDA, both as defined in the agreement, comply with certain
thresholds as described below. The EBITDA covenant requires that we do not exceed the allowable cumulative
negative EBITDA, as defined in the agreement, for the first nine months of fiscal 2010, which is $22 million as of
December 31, 2009 and March 31, 2010 and $15 million as of June 30, 2010. We are required to have a cumulative
EBITDA greater than or equal to our interest expense for the fiscal year ending September 30, 2010. EBITDA, as
defined in the agreement, is our earnings before interest, taxes, depreciation, and amortization plus an add back for
stock-based compensation expense and 50% of the proceeds of our September 2009 stock offering or approximately
$10 million. The amended facility provides for a variable interest rate margin of LIBOR plus 490 basis points
through September 30, 2010 and thereafter at LIBOR plus 150 to 400 basis points, depending upon our financial and
operating performance. We paid the lenders approximately $2.4 million in amendment fees during fiscal 2009. The
amended facility matures in May 2011, but includes two one-year renewal options, subject to lender approval.
As of September 30, 2008 and 2009, we owed an aggregate of $372 million and $142 million, respectively
under our credit facility and were in compliance with all of the credit facility covenants. Advances under the facility
accrued interest at a rate of 4.0% and 5.2% as of September 30, 2008 and 2009, respectively. As of September 30,
2009, the facility provided us with an additional borrowing availability of approximately $60 million.
As is common in our industry, we receive interest assistance directly from boat manufacturers, including
Brunswick. The interest assistance programs vary by manufacturer and generally include periods of free financing or
reduced interest rate programs. The interest assistance may be paid directly to us or our lenders depending on the
arrangements the manufacturer has established. We classify interest assistance received from manufacturers as a
reduction of inventory cost and related cost of sales as opposed to netting the assistance against our interest expense
incurred with our lenders.
The availability and costs of borrowed funds can adversely affect our ability to obtain adequate boat inventory
and the holding costs of that inventory as well as the ability and willingness of our customers to finance boat
purchases. As of September 30, 2009, we had no long-term debt. However, we rely on our credit facility to purchase
our inventory of boats. Our ability to borrow under our credit facility depends on our continuing to satisfy our
covenants and other obligations under our credit facility. The aging of our inventory limits our borrowing capacity as
defined curtailments reduce the allowable advance rate as our inventory ages. Our access to funds under our credit
facility also depends upon the ability of the banks that are parties to that facility to meet their funding commitments,
particularly if they experience shortages of capital or experience excessive volumes of borrowing requests from
others during a short period of time. A continuation of depressed economic conditions, weak consumer spending,
turmoil in the credit markets, and lender difficulties could interfere with our ability to utilize the credit facility to
fund our operations. Any inability to utilize our credit facility resulting from a covenant violation, insufficient
collateral, or lender difficulties could require us to seek other sources of funding to repay amounts outstanding under
the credit agreement or replace or supplement our credit agreement, which may not be possible at all or under
commercially reasonable terms.
Similarly, the decreases in the availability of credit and increases in the cost of credit adversely affect the ability
of our customers to purchase boats from us and thereby adversely affects our ability to sell our products and impact
the profitability of our finance and insurance activities. Tight credit conditions during fiscal 2009 adversely affected
the ability of customers to finance boat purchases, which had a negative affect on our operating results.
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MARINEMAX, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
11. LONG-TERM DEBT:
As of fiscal 2009, we had no long-term debt. During the fiscal year ended September 30, 2008, we prepaid all
outstanding mortgages and accelerated the amortization of the associated loan costs in the amount of approximately
$160,000.
12. INCOME TAXES:
The components of our provision for income taxes consisted of the following for the fiscal years ended
September 30,
Current provision (benefit):
Federal
State
Total current provision (benefit)
Deferred provision (benefit):
Federal
State
Total deferred provision (benefit)
Total income tax provision (benefit)
2007
2008
(Amounts in thousands)
2009
$ 10,377 $ (12,776 ) $ (10,004 )
(1,524 )
(139 )
(10,143 )
8,853
(82 )
(12,858 )
1,380
(5,726 )
(1,243 )
133
(577 )
(124 )
(1,367 )
1,513
(6,303 )
$ 7,486 $ (19,161 ) $ (8,630 )
Below is a reconciliation of the statutory federal income tax rate to our effective tax rate for the fiscal years
ended September 30,
Federal tax provision
State taxes, net of federal effect
State income tax settlement
Stock based compensation
Valuation allowance
Other
Effective tax rate
2009
2008
2007
35.0 % (35.0 )% (35.0 )%
2.3 % (4.4 )% (4.0 )%
(13.7 )% —
2.1 % 0.3 % 0.4 %
1.9 % 25.5 % 29.5 %
(0.4 )% 1.1 % (1.0 )%
27.2 % (12.5 )% (10.1 )%
—
During the fiscal year ended September 30, 2007, we settled certain tax positions under an initiative offered by
one of the states in which we conduct operations. As a result of this settlement, we reduced our reserve for contingent
income tax liabilities by approximately $5.2 million. Due to the amount paid under the settlement, the reduction in
income tax expense was approximately $3.8 million for the fiscal year ended September 30, 2007. Without this
reduction, the effective tax rate would have been approximately 40.9% for the year ended September 30, 2007.
F-19
Table of Contents
MARINEMAX, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
Deferred income taxes reflect the impact of temporary differences between the amount of assets and liabilities
recognized for financial reporting purposes and such amounts recognized for income tax purposes. The tax effects of
these temporary differences representing the components of deferred tax assets (liabilities) at September 30 were as
follows:
Current deferred tax assets:
Inventories
Accrued expenses
Current deferred tax assets
Valuation Allowance
Net current deferred tax assets
Long-term deferred tax assets:
Depreciation and amortization
Stock based compensation
FIN 48 deferred tax asset
Tax loss carryforwards
Other
Long-term deferred tax assets
Valuation allowance
Net long-term deferred tax assets
2008
2009
(Amounts in thousands)
$ 3,225 $ 5,169
4,093
2,915
9,262
6,140
(9,262 )
(5,833 )
307 $ —
$
$ 24,483 $ 21,393
6,010
6,582
588
634
23,495
3,330
111
88
51,597
35,117
(33,911 )
(51,597 )
$ 1,206 $ —
Pursuant to ASC 740, we must consider all positive and negative evidence regarding the realization of deferred
tax assets, including past operating results and future sources of taxable income. Under the provisions of ASC 740,
we determined that the entire net deferred tax asset needed to be reserved given recent earnings and industry trends.
The total valuation allowance at September 30, 2008 and 2009 was $60.9 million and $39.7 million, respectively.
We have adopted the provisions of FIN 48, now under ASC 740. Under ASC 740, the impact of an uncertain tax
position taken or expected to be taken on an income tax return must be recognized in the financial statements at the
largest amount that is more-likely-than-not to be sustained upon audit by the relevant taxing authority. An uncertain
income tax position will not be recognized in the financial statements unless it is more likely than not of being
sustained. On October 1, 2007, we recognized a charge of $554,000 to retained earnings as a result of the adoption of
FIN 48. As of September 30, 2008 and 2009, we had approximately $2.1 million and $1.9 million, respectively, of
gross unrecognized tax benefits, of which approximately $1.4 million and $1.3 million, respectively, if recognized,
would impact the effective tax rate.
The reconciliation of the total amount recorded for unrecognized tax benefits at the beginning and end of the
fiscal years ended September 30, 2008 and 2009 is as follows:
Unrecognized tax benefits at the beginning of the year
Increases in tax positions for prior years
Decreases in tax positions for prior years
Lapse of statute of limitations
Unrecognized tax benefits at September 30,
F-20
2009
2008
(Amounts in thousands)
$ 2,064
$ 2,242
69
81
(100 )
(62 )
(177 )
(159 )
$ 1,894
$ 2,064
Table of Contents
MARINEMAX, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
Consistent with our prior practices, we recognize interest and penalties related to uncertain tax positions as a
component of income tax expense. As of September 30, 2009, interest and penalties represented approximately
$660,000 of the gross unrecognized tax benefits. There have been no significant changes to the balance of interest
and penalties subsequent to adoption.
Since inception, we have been subject to tax by both federal and state taxing authorities. Until the respective
statutes of limitations expire, we are subject to income tax audits in the jurisdictions in which we operate. We are no
longer subject to U.S. federal tax examinations for fiscal years prior to 2006, and we are not subject to audits prior to
the 2005 fiscal year for the majority of the state jurisdictions.
It is reasonably possible that a change to the total amount of unrecognized tax benefits could occur in the next
12 months based on examinations by tax authorities, the expiration of statutes of limitations, or potential settlements
of outstanding positions. It is not possible to estimate a range of the possible changes at this time. However, we do
not expect the change to be significant to the overall balance of unrecognized tax benefits.
13. STOCKHOLDERS’ EQUITY:
In November 2005, our Board of Directors approved a share repurchase plan allowing our company to
repurchase up to 1,000,000 shares of our common stock. Under the plan, we may buy back common stock from time
to time in the open market or in privately negotiated blocks, dependant upon various factors, including price and
availability of the shares, and general market conditions. Through September 30, 2009, we had purchased an
aggregate of 790,900 shares of common stock under the plan for an aggregate purchase price of approximately
$15.8 million.
In September 2009, we completed a public offering of 2,990,000 shares of common stock at a price to the public
of $7.00 per share for total gross proceeds of $20,930,000 million. The net proceeds of the offering were used to
reduce our short-term borrowings and general corporate purposes.
14. STOCK-BASED COMPENSATION:
In accordance with ASC 718, we use the Black-Scholes valuation model for valuing all stock-based
compensation and shares granted under the ESPP. We measure compensation for restricted stock awards and
restricted stock units at fair value on the grant date based on the number of shares expected to vest and the quoted
market price of our common stock. We recognize compensation cost for all awards in earnings, net of estimated
forfeitures, on a straight-line basis over the requisite service period for each separately vesting portion of the award.
Cash received from option exercises under all share-based compensation arrangements for the fiscal years ended
September 30, 2007, 2008, and 2009 was approximately $3.2 million, $2.2 million, and $766,000, respectively. Tax
benefits realized for tax deductions from option exercises for the fiscal years ended September 30, 2007 and 2008
was approximately $769,000 and $223,000, respectively. There were no tax benefits realized for tax deductions from
option exercises for the fiscal year ended September 30, 2009. We currently expect to satisfy share-based awards
with registered shares available to be issued.
15. THE INCENTIVE STOCK PLANS:
During February 2007, our stockholders approved a proposal to approve our 2007 Incentive Compensation Plan
(2007 Plan), which replaced our 1998 Incentive Stock Plan (1998 Plan). Our 2007 Plan provides for the grant of
stock options, stock appreciation rights, restricted stock, stock units, bonus stock, dividend equivalents, other stock
related awards, and performance awards (collectively awards), that may be settled in cash, stock, or other property.
Our 2007 Plan is designed to attract, motivate, retain, and reward our executives, employees, officers, directors, and
independent contractors by providing such persons with annual and long-term performance incentives to expend their
maximum efforts in the creation of stockholder value. The total number of shares of our common stock that may be
subject to awards under the 2007 Plan is equal to 1,000,000 shares, plus (i) any shares
F-21
Table of Contents
MARINEMAX, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
available for issuance and not subject to an award under the 1998 Plan, (ii) the number of shares with respect to
which awards granted under the 2007 Plan and the 1998 Plan terminate without the issuance of the shares or where
the shares are forfeited or repurchased; (iii) with respect to awards granted under the 2007 Plan and the 1998 Plan,
the number of shares that are not issued as a result of the award being settled for cash or otherwise not issued in
connection with the exercise or payment of the award; and (iv) the number of shares that are surrendered or withheld
in payment of the exercise price of any award or any tax withholding requirements in connection with any award
granted under the 2007 Plan and the 1998 Plan. The 2007 Plan terminates in February 2017, and awards may be
granted at any time during the life of the 2007 Plan. The Board of Directors or the Plan Administrator determines the
date on which awards vest. The Board of Directors or the Plan Administrator also determines the exercise prices of
options which are at least equal to the fair market value of shares of common stock on the date of grant. The term of
options under the 2007 Plan may not exceed ten years. The options granted have varying vesting periods. To date, we
have not settled or been under any obligation to settle any awards in cash.
The following table summarizes option activity from September 30, 2008 through September 30, 2009:
Shares
Available Options
for Grant Outstanding
Aggregate
Intrinsic
Value
(In thousands)
Weighted
Average
Remaining
Weighted Average Contractual
Exercise Price
Life
Balance at September 30, 2008
Options granted
Options cancelled/forfeited/expired
Restricted stock units issued
Restricted stock units cancelled
Options exercised
Balance at September 30, 2009
Exercisable at September 30, 2009
1,215,006 1,740,128 $
(1,195,700 ) 1,195,700
(920,080 )
920,080
—
(10,000 )
—
99,043
(20,554 )
(20,554 )
1,007,875 1,995,194 $
927,819 $
— $
$
$
$
5,173 $
1,165 $
18.41
2.98
16.14
3.01
10.37
13.17
5.1
7.0
5.4
The weighted-average grant date fair value of options granted during the fiscal years ended September 30, 2007,
2008, and 2009 was $12.13, $6.12, and $1.75, respectively. The total intrinsic value of options exercised during the
fiscal years ended September 30, 2007, 2008, and 2009 was approximately $2.0 million, $541,000, and $54,200,
respectively.
As of September 30, 2008 and 2009, there was approximately $2.1 million and $1.2 million, respectively, of
unrecognized compensation costs related to non-vested options that is expected to be recognized over a weighted
average period of 2.5 years and 2.1 years, respectively. The total fair value of options vested during the fiscal years
ended September 30, 2007, 2008, and 2009 was approximately $1.9 million, $2.1 million, and $1.2 million,
respectively.
We continued using the Black-Scholes model to estimate the fair value of options granted during fiscal 2009.
The expected term of options granted is derived from the output of the option pricing model and represents the period
of time that options granted are expected to be outstanding. Volatility is based on the historical volatility of our
common stock. The risk-free rate for periods within the contractual term of the options is based on the U.S. Treasury
yield curve in effect at the time of grant.
F-22
Table of Contents
MARINEMAX, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
The following are the weighted-average assumptions used for the fiscal years ended September 30:
Dividend yield
Risk-free interest rate
Volatility
Expected life
2007
0.0%
4.6%
42.7%
6.5 years
2008
0.0%
3.4%
44.2%
7.5 years
2009
0.0%
2.2%
63.4%
6.0 years
16. EMPLOYEE STOCK PURCHASE PLAN (THE STOCK PURCHASE PLAN):
During February 2008, our stockholders approved our 2008 Employee Stock Purchase Plan (2008 Plan). The
2008 Plan provides for up to 500,000 shares of common stock to be available for purchase by our regular employees
who have completed at least one year of continuous service. The 2008 Plan provides for implementation of up to 10
annual offerings beginning on the first day of October starting in 2008, with each offering terminating on
September 30 of the following year. Each annual offering may be divided into two six-month offerings. For each
offering, the purchase price per share will be the lower of (i) 85% of the closing price of the common stock on the
first day of the offering or (ii) 85% of the closing price of the common stock on the last day of the offering. The
purchase price is paid through periodic payroll deductions not to exceed 10% of the participant’s earnings during
each offering period. However, no participant may purchase more than $25,000 worth of common stock annually.
During 2009, we continued using the Black-Scholes model to estimate the fair value of options granted to
purchase shares issued pursuant to the Stock Purchase Plan. The expected term of options granted is derived from the
output of the option pricing model and represents the period of time that options granted are expected to be
outstanding. Volatility is based on the historical volatility of our common stock. The risk-free rate for periods within
the contractual term of the options is based on the U.S. Treasury yield curve in effect at the time of grant.
The following are the weighted-average assumptions used for the fiscal years ended September 30:
Dividend yield
Risk-free interest rate
Volatility
Expected life
2007
0.0%
4.9%
43.4%
six-months
2008
0.0%
2.3%
75.6%
six-months
2009
0.0%
.5%
160.4%
six-months
As of September 30, 2009, we had issued 264,493 of the 500,000 shares of common stock reserved for issuance
under our 2008 employee stock purchase plan.
17. RESTRICTED STOCK AWARDS:
During fiscal 2007, 2008, and 2009, we granted non-vested (restricted) stock awards or restricted stock units
(collectively restricted stock awards) to certain key employees pursuant to the 1998 Plan or the 2007 Plan. The
restricted stock awards have varying vesting periods, but generally become fully vested at either the end of year four
or the end of year five, depending on the specific award. The awards granted in fiscal 2008 require certain levels of
performance by us before they are earned. The performance metrics must be achieved by September 2011 or the
awards will be forfeited. The stock underlying the vested restricted stock units will be delivered upon vesting.
We accounted for the restricted stock awards granted during fiscal 2007, 2008, and 2009 using the measurement
and recognition provisions of ASC 718-10. Accordingly, we measure the fair value of the restricted stock awards on
the grant date and recognize the fair value in earnings over the requisite service period for each separately vesting
portion of the award.
F-23
Table of Contents
MARINEMAX, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
The following table summarizes restricted stock activity from September 30, 2008 through September 30, 2009:
Non-vested balance at September 30, 2008
Changes during the period
Shares granted
Shares vested
Shares forfeited
Non-vested balance at September 30, 2009
Weighted
Average
Grant Date
Fair Value
830,000 $ 23.25
Shares
10,000 $
(220,887 ) $
(99,043 ) $
520,070 $
3.64
5.38
7.38
6.38
As of September 30, 2009, we had approximately $3.1 million of total unrecognized compensation cost related
to restricted stock awards granted under the Plan. We expect to recognize that cost over a weighted-average period of
1.5 years.
18. NET INCOME PER SHARE:
The following is a reconciliation of the shares used in the denominator for calculating basic and diluted earnings
per share for the fiscal years ended September 30:
Weighted average common shares outstanding used in calculating basic
net income per share
Effect of dilutive options
2007
2008
2009
18,618,611
670,620
18,391,488
—
18,685,423
—
Weighted average common and common equivalent shares used in
calculating diluted net income per share
19,289,231
18,391,488
18,685,423
Options to purchase approximately 742,000, 1,700,000 and 764,000 shares of common stock were outstanding
at September 30, 2007, 2008, and 2009, respectively, but were not included in the computation of diluted earnings
per share because the exercise prices were greater than the average market price of our common stock, and therefore,
their effect would be anti-dilutive.
19. COMMITMENTS AND CONTINGENCIES:
Lease Commitments
We lease certain land, buildings, machinery, equipment, and vehicles related to our dealerships under non-
cancelable third-party operating leases. Certain of our leases include options for renewal periods and provisions for
escalation. Rental expense, including month-to-month rentals, were approximately $13.2 million, $13.9 million, and
$9.2 million for the fiscal years ended September 30, 2007, 2008, and 2009, respectively. Rental expense to related
parties under both cancelable and non-cancelable operating leases approximated $385,000 for each of the fiscal years
ended September 30, 2007, 2008, and 2009.
The rental payments to related parties, under both cancelable and non-cancelable operating leases during fiscal
2007, 2008, and 2009, represent rental payments for buildings to an entity partially owned by a former officer of our
company. We believe the terms of the transaction are consistent with those that we would obtain from third parties.
F-24
Table of Contents
MARINEMAX, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
Future minimum lease payments under non-cancelable operating leases at September 30, 2009, were as follows:
2010
2011
2012
2013
2014
Thereafter
Total
(Amounts in thousands)
7,401
$
6,671
5,104
3,674
2,660
6,232
31,742
$
Other Commitments and Contingencies
We are party to various legal actions arising in the ordinary course of business. The ultimate liability, if any,
associated with theses matters was not believed to be material at September 30, 2009. While it is not feasible to
determine the actual outcome of these actions as of September 30, 2009, we do not believe that these matters will
have a material adverse effect on our consolidated financial condition, results of operations, or cash flows.
During fiscal 2007, we received approximately $2.0 million of insurance proceeds, of which approximately
$1.4 million offset the related losses associated with the destruction of marina docks and significant expenses we
incurred regarding damage and related clean up after the December 2006 snow and ice storms in Missouri. The
excess insurance proceeds received, of approximately $600,000, were recorded as a gain on involuntary disposal of
assets. Additionally in fiscal 2007, we received $2.1 million of business interruption insurance proceeds for claims
associated with Hurricane Wilma, which occurred in October 2005. The business interruption insurance proceeds
were to reimburse us for the interruption in our operations that resulted in lost revenue and related profits in addition
to the significant expenses incurred to move and repair inventory and to reimburse us for uninsured losses recognized
by certain locations. The gain on disposal and insurance proceeds received were recorded as a reduction to selling,
general, and administrative expenses in the consolidated statements of operations during fiscal 2007.
During fiscal 2008 and 2009, we incurred costs associated with store closings of approximately $3.0 million and
$6.2 million, respectively. These costs primarily related to the future minimum operating lease payments of the
closed locations. The store closings were a key component in our effort to better match our fixed costs with the
decline in retail business caused by the soft economic conditions. The store closing costs have been included in
selling, general, and administrative expenses in the consolidated statements of operations during fiscal 2008 and
2009.
We are subject to federal and state environmental regulations, including rules relating to air and water pollution
and the storage and disposal of gasoline, oil, other chemicals and waste. We believe that we are in compliance with
such regulations.
20. EMPLOYEE 401(k) PROFIT SHARING PLANS:
Employees are eligible to participate in our 401(k) Profit Sharing Plan (the Plan) following their
90-day introductory period starting either April 1 or October 1, provided that they are 21 years of age. Under the
Plan, we match 50% of participants’ contributions, up to a maximum of 5% of each participant’s compensation. We
contributed, under the Plan, or pursuant to previous similar plans, approximately $1.9 million, $1.5 million, and
$167,000 for the fiscal years ended September 30, 2007, 2008, and 2009, respectively. Beginning January 1, 2009,
our matching was suspended in an effort to reduce overall costs.
F-25
Table of Contents
MARINEMAX, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
21. PREFERRED SHARE PURCHASE RIGHTS:
During September 2001, we adopted a Stockholders’ Rights Plan (the Rights Plan) that may have the effect of
deterring, delaying, or preventing a change in control that might otherwise be in the best interests of our
stockholders. Under the Rights Plan, a dividend of one Preferred Share Purchase Right was issued for each share of
common stock held by the stockholders of record as of the close of business on September 7, 2001. Each right
entitles stockholders to purchase, at an exercise price of $50 per share, one-thousandth of a share of a newly created
Series A Junior Participating Preferred Stock.
In general, subject to certain limited exceptions, the stock purchase rights become exercisable when a person or
group acquires 15% or more of our common stock or a tender offer or exchange offer for 15% or more of our
common stock is announced or commenced. After any such event, other stockholders may purchase additional shares
of our common stock at 50% of the then-current market price. The rights will cause substantial dilution to a person or
group that attempts to acquire us on terms not approved by our Board of Directors. The rights should not interfere
with any merger or other business combination approved by the Board of Directors. The rights may be redeemed by
us at $0.01 per stock purchase right at any time before any person or group acquires 15% or more of the outstanding
common stock. The rights expire on August 28, 2011.
The Rights Plan adoption and Rights Distribution is a non-taxable event with no impact on our financial results.
22. SUBSEQUENT EVENTS:
During November 2009, the Worker, Homeownership, and Business Assistance Act of 2009 (the “Act”) was
signed into law. The Act contains a number of tax law changes, including a provision that permits companies to
carryback certain 2008 or 2009 net operating losses (NOL) up to five years. Under existing tax law prior to the Act,
we could only carryback an NOL a maximum of two years to offset prior taxable income. The excess net operating
loss generated in fiscal 2009, which could not be carried back under the prior law, will be able to be carried back five
years under the Act. The additional carryback will generate an additional tax refund of approximately $19 million.
As a result, our effective tax rate in the first quarter of fiscal year 2010 will be significantly impacted.
F-26
Table of Contents
MARINEMAX, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
23. QUARTERLY FINANCIAL DATA (UNAUDITED):
The following table sets forth certain unaudited quarterly financial data for each of our last eight quarters. The
information has been derived from unaudited financial statements that we believe reflect all adjustments, consisting
only of normal recurring adjustments, necessary for the fair presentation of such quarterly financial information.
December 31, March 31, June 30,
September 30, December 31, March 31, June 30,
2007
2008
2008
2008
2008
2009
2009
September 30,
2009
(Amounts in thousands except share and per share data)
$
215,268 $
167,143
48,125
233,262 $
178,783
54,479
271,277 $
209,432
61,845
165,600 $
123,806
41,794
100,224 $
76,521
23,703
129,608 $
109,894
19,714
151,514 $
118,898
32,616
207,239
194,612
12,627
Revenue
Cost of sales
Gross profit
Selling, general, and
administrative expenses
Goodwill and intangible asset
impairment
Loss from operations
Interest expense
Loss before income tax benefit
Income tax benefit
Net loss
$
53,191
56,198
51,623
56,414
38,862
36,360
38,975
45,801
—
(5,066 )
5,881
(10,947 )
(4,529 )
(6,418 ) $
—
(1,719 )
5,952
(7,671 )
(4,162 )
(3,509 ) $
122,091
(111,869 )
4,765
(116,634 )
(3,377 )
(113,257 ) $
—
(14,620 )
3,566
(18,186 )
(7,093 )
(11,093 ) $
—
(15,159 )
4,062
(19,221 )
(4,881 )
(14,340 ) $
—
(16,646 )
3,774
(20,420 )
(151 )
(20,269 ) $
—
(6,359 )
3,380
(9,739 )
(559 )
(9,180 ) $
—
(33,174 )
2,848
(36,022 )
(3,039 )
(32,983 )
Net loss per share:
Diluted
Weighted average number of
shares:
Diluted
$
(0.35 ) $
(0.19 ) $
(6.15 ) $
(0.60 ) $
(0.78 ) $
(1.09 ) $
(0.49 ) $
(1.72 )
18,364,676 18,363,692 18,415,790 18,421,629 18,500,794 18,512,104 18,575,332 19,148,498
In order to provide comparability between periods presented, certain amounts have been reclassified from the
previously reported interim financial statements to conform to the consolidated financial statement presentation of
the current period.
F-27
NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST, AND HAVE BEEN OMITTED FROM
THIS EXHIBIT. COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART
OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.
Exhibit 10.21 (e)
SIXTH AMENDMENT
TO SECOND AMENDED AND RESTATED
CREDIT AND SECURITY AGREEMENT
This SIXTH AMENDMENT TO SECOND AMENDED AND RESTATED CREDIT AND SECURITY
AGREEMENT (this “ Sixth Amendment ”) is entered into as of September 10, 2009 (the “ Sixth Amendment
Effective Date ”), by and among MARINEMAX, INC. , a Delaware corporation (the “ Company ”) and each of the six
(6) other Borrowers set forth on Schedule I attached hereto and by the reference incorporated herein (each of the
Company and each of such six (6) Persons other than the Company, singularly, a “ Borrower ,” and the Company and
all of such Persons other than the Company, collectively, the “ Borrowers ”), KEYBANK NATIONAL
ASSOCIATION , a national banking association, both individually (in such capacity, “ KeyBank ”) and as
administrative agent (in such capacity, the “ Administrative Agent ”) for the Lenders (as hereinafter defined), BANK
OF AMERICA, N.A., a national banking association, individually (in such capacity, “ BOA ”), as collateral agent (in
such capacity, the “ Collateral Agent ”) and as documentation agent (in such capacity, the “ Documentation Agent ”)
and the various other financial institutions as are or may become parties hereto, including, as of the date hereof, GE
COMMERCIAL DISTRIBUTION FINANCE CORPORATION, a Delaware corporation (“ GE Commercial ”),
WACHOVIA BANK, NATIONAL ASSOCIATION, a national banking association (“ Wachovia ”), WELLS
FARGO BANK, N.A., a national banking association (“ Wells Fargo ”), U.S. BANK NATIONAL ASSOCIATION,
a national banking association (“ US Bank ”), BRANCH BANKING & TRUST COMPANY , a North Carolina
corporation (“ BB&T ”), and BANK OF THE WEST , a California corporation (“ Bank of the West ”) (KeyBank,
BOA, GE Commercial, Wachovia, Wells Fargo, US Bank, BB&T, Bank of the West, and such other financial
institutions, collectively, the “ Lenders ”), amending that Second Amended and Restated Credit and Security
Agreement dated as of June 19, 2006, by and among Borrowers and Lenders as heretofore amended by the First
Amendment to Second Amended and Restated Credit and Security Agreement dated as of May 31, 2007, the Second
Amendment to Second Amended and Restated Credit and Security Agreement dated as of October 1, 2007, the Third
Amendment to Second Amended and Restated Credit and Security Agreement dated as of March 7, 2008, the Fourth
Amendment to Second Amended and Restated Credit and Security Agreement dated as of December 15, 2008, and the
Fifth Amendment to Second Amended and Restated Credit and Security Agreement dated as of June 5, 2009 (the “
Agreement ”). Unless otherwise defined in this Sixth Amendment, all defined terms used in this Sixth Amendment
shall have the meanings ascribed to such terms in the Agreement. This Sixth Amendment is entered into in
consideration of, and upon, the terms, conditions and agreements set forth herein.
1. Background . Borrowers and Lenders desire to amend certain provisions of the Agreement effective as
of the Sixth Amendment Effective Date.
2. Changed Definitions . The definitions of the following terms heretofore defined in the Agreement are
hereby amended to read in their entirety as follows:
“ Commitment Amount ” shall mean (a) effective as of Sixth Amendment Effective Date,
three hundred million dollars ($300,000,000), (b) effective as September 30, 2009, two hundred fifty
million dollars ($250,000,000), (c) effective as December 31, 2009, two hundred thirty-five
million dollars ($235,000,000), (d) effective as March 31, 2010, two hundred twenty million dollars
($220,000,000), (e) effective as June 30, 2010, two hundred million dollars ($200,000,000), and
(f) effective as September 30, 2010, one hundred seventy-five million dollars ($175,000,000). All such
reductions in the Commitment Amount shall reduce the Commitments of the Lenders in accordance with
their Pro Rata Percentages, as follows:
Lenders
BOA
KeyBank
GE Commercial
Wachovia
Wells Fargo
US Bank
BB&T
Bank of the West
Pro Rata
Percentage
27%
20%
18%
10%
7%
6%
6%
6%
(000
omitted)
Amend
No. 5 Date
$ 81,000
$ 60,000
$ 54,000
$ 30,000
$ 21,000
$ 18,000
$ 18,000
$ 18,000
(000
omitted)
9/30/09
$ 67,500
$ 50,000
$ 45,000
$ 25,000
$ 17,500
$ 15,000
$ 15,000
$ 15,000
(000
omitted)
12/31/09
$ 63,450
$ 47,000
$ 42,300
$ 23,500
$ 16,450
$ 14,100
$ 14,100
$ 14,100
(000 omitted)
3/31/10
$ 59,400
$ 44,000
$ 39,600
$ 22,000
$ 15,400
$ 13,200
$ 13,200
$ 13,200
(000
omitted)
6/30/10
$ 54,000
$ 40,000
$ 36,000
$ 20,000
$ 14,000
$ 12,000
$ 12,000
$ 12,000
(000 omitted)
9/30/10
$47,250
$35,000
$31,500
$17,500
$12,250
$10,500
$10,500
$10,500
100%
$ 300,000
$250,000
$235,000
$ 220,000
$200,000
$175,000
Notwithstanding the foregoing, (i) the applicable Commitment Amount under each of (a), (b), (c), (d) and
(e) above shall be reduced by the aggregate amount of Common Stock Net Proceeds received by the
Company after the Sixth Amendment Effective Date and on or before December 31, 2009, but shall never
be reduced under this clause (i) to less than one hundred seventy-five million dollars ($175,000,000), and
(ii) the applicable Commitment Amount under (f) above shall be or become one hundred seventy-five
million dollars ($175,000,000) at September 30, 2010 even if prior to such date the Company shall have
received no Common Stock Net Proceeds. In addition, the applicable Commitment Amount (A) may be
increased by virtue of any exercise of the accordion feature set forth in Section 2.01(a)(2) of the
Agreement, and (B) shall be reduced in connection with sales of Additional Real Estate Collateral in the
manner set forth in Section 4.08(g) of the Agreement.
“ EBITDA ” shall mean, for any period, the earnings before interest, Taxes, Statement of
Financial Accounting Standards No. 123R stock-based compensation, depreciation, amortization, and any
intangible asset impairment charge deducted in determining the earnings of the Borrowers on a
consolidated basis for such period; provided, however , that for each of the four quarterly periods of the
Borrowers ending on December 31, 2008, March 31, 2009, June 30, 2009 and September 30, 2009,
EBITDA shall be calculated by adding back nonrecurring restructuring charges associated with business
location closings, leasehold improvement impairment charges, lease termination charges, Lender closing
costs associated with the Fourth Amendment, the Fifth Amendment, and the Sixth Amendment to the
Agreement, and actual [****] inventory repurchase settlement writedowns up to a maximum of [****];
provided further , that for each
2
of the four quarterly periods of the Borrowers ending on December 31, 2009, March 31, 2010, June 30,
2010 and September 30, 2010, EBITDA shall be calculated by adding to earnings the lesser of (a) fifty
percent (50%) of the total Common Stock Net Proceeds received by the Company at any time after the
Sixth Amendment Effective Date and on or before December 31, 2009, and (b) fifteen million dollars
($15,000,000). For purposes of calculating EBITDA, Common Stock Net Proceeds actually received after
the Sixth Amendment Effective Date and on or before September 30, 2009 shall be deemed to have been
received by the Company during the quarterly period ending on December 31, 2009.
3. Added Definitions . The following new defined terms are hereby added to Section 1.01 of the
Agreement.
“ Common Stock Net Proceeds ” shall mean the cash proceeds from any New Common
Stock Sale, net of all fees (including investment banking fees), discounts, commissions, costs and other
expenses, in each case incurred in connection with such New Common Stock Sale. In connection with the
calculation of Common Stock Net Proceeds with respect to any New Common Stock Sale, all fees,
discounts, commissions, costs and expenses shall be allocated on a pro rata basis among the shares sold in
such New Common Stock Sale.
“ New Common Stock Sale ” shall mean any public or private cash sale of common stock
of the Company occurring at any time after the Sixth Amendment Effective Date and on or before
December 31, 2009.
“ Sixth Amendment Effective Date ” shall mean September 10, 2009, the effective date of
the Sixth Amendment to the Agreement.
4. Legal Fees and Expenses of Sixth Amendment . Borrowers shall reimburse the Administrative Agent
and the Collateral Agent for their legal fees and expenses in connection with the execution and delivery of this Sixth
Amendment.
5. Representations and Warranties of the Borrowers . The Borrowers represent and warrant to the
Agent, the Collateral Agent, and the Lenders that this Sixth Amendment and each related Loan Document has been
duly authorized by all necessary action on the part of each of the Borrowers, has been duly executed and delivered by
each of the Borrowers, and constitutes a valid and binding agreement of each of the Borrowers enforceable against such
Borrower in accordance with its terms.
6. Opinion of Counsel . This Sixth Amendment shall not become effective until the Agent, the Collateral
Agent, and the Lenders shall have received an opinion of counsel to the Company and the other Borrowers reasonably
satisfactory to the Agent, the Collateral Agent, and the Lenders to the effect set forth in Section 5 of this Sixth
Amendment; provided, however , that such opinion of counsel may be subject to customary qualifications.
7. Effect on Agreement . Except as specifically amended and modified by this Sixth Amendment, all
terms, conditions, covenants and agreements set forth in the Agreement
3
shall remain in full force and effect. The miscellaneous provisions of Article IX of the Agreement shall apply with
equal force to this Sixth Amendment.
8. Counterparts . This Sixth Amendment may be executed in two or more counterparts, each of which
shall constitute an original but all of which when taken together shall constitute one agreement.
[SIGNATURES FOLLOW]
4
IN WITNESS WHEREOF, this Sixth Amendment to the Second Amended and Restated Credit and Security
Agreement has been executed and delivered by the parties (including 100% of the Lenders) as of the day and year first
above written.
“BORROWERS”
MARINEMAX, INC. , a Delaware corporation
By: /s/ Kurt M. Frahn
Kurt M. Frahn, Vice President
MARINEMAX EAST, INC. , a Delaware corporation
By: /s/ Kurt M. Frahn
Kurt M. Frahn, Assistant Secretary
MARINEMAX SERVICES, INC. , a Delaware corporation
By: /s/ Kurt M. Frahn
Kurt M. Frahn, Assistant Secretary
US LIQUIDATORS, LLC , a Delaware limited liability
company
NEWCOAST FINANCIAL SERVICES, LLC , a Delaware
limited liability company
By: MARINEMAX, INC. , sole member
By: /s/ Kurt M. Frahn
Kurt M. Frahn, Vice President
MARINEMAX NORTHEAST, LLC , a Delaware limited
liability company
BOATING GEAR CENTER, LLC , a Delaware limited
liability company
By: MARINEMAX EAST, INC. , sole member
By: /s/ Kurt M. Frahn
Kurt M. Frahn, Assistant Secretary
Signature Page
“LENDERS”
KEYBANK NATIONAL ASSOCIATION , a
national banking association
By: /s/ Brian T. McDevitt
Name: Brian T. McDevitt
Title: Vice President
BANK OF AMERICA, N.A., successor by
merger to Banc of America Specialty Finance,
Inc.
By: /s/ L. Ransom Burts
Name: L. Ransom Burts
Title: Senior Vice President
GE COMMERCIAL DISTRIBUTION
FINANCE CORPORATION, a Delaware
corporation
By: /s/ David M. Campbell
Name: David M. Campbell
Title: Portfolio Management Director
WACHOVIA BANK, NATIONAL
ASSOCIATION , a national banking association
By: /s/ Leslie Fredericks
Name: Leslie Fredericks
Title: VP
Signature Page
WELLS FARGO BANK, N.A. , a national banking association
By: /s/ Roger Fruendt
Name: Roger Fruendt
Title: Senior Vice President
U.S. BANK NATIONAL ASSOCIATION, a national
banking association
By: /s/ Sean Devillers
Name: Sean Devillers
Title: Vice President
BRANCH BANKING & TRUST COMPANY, a
North Carolina corporation
By: /s/ Brigitta Lawton
Name: Brigitta Lawton
Title: Senior Vice President
BANK OF THE WEST, a California corporation
By: /s/ Mark Weiser
Name: Mark Weiser
Title: Vice President
“ADMINISTRATIVE AGENT”
KEYBANK NATIONAL ASSOCIATION , a
national banking association
By: /s/ Brian T. McDevitt
Name: Brian T. McDevitt
Title: Vice President
Signature Page
“COLLATERAL AGENT” and
“DOCUMENTATION AGENT”
BANK OF AMERICA, N.A., successor by merger
to Banc of America Specialty Finance, Inc.
By: /s/ L. Ransom Burts
Name: L. Ransom Burts
Title: Senior Vice President
Signature Page
Schedule I
1. MARINEMAX EAST, INC. , a Delaware corporation
2. MARINEMAX SERVICES, INC. , a Delaware corporation
3. US LIQUIDATORS, LLC , a Delaware limited liability company
4. NEWCOAST FINANCIAL SERVICES, LLC , a Delaware limited liability company
5. MARINEMAX NORTHEAST, LLC , a Delaware limited liability company
6. BOATING GEAR CENTER, LLC , a Delaware limited liability company
Schedule
Exhibit 23.1
CONSENT OF INDEPENDENT REGISTERED
CERTIFIED PUBLIC ACCOUNTING FIRM
We consent to the incorporation by reference in the following Registration Statements:
1) Registration Statement (Form S-3 No. 333-153006) pertaining to the 2008 shelf registration of MarineMax, Inc. and the related
Prospectus,
2) Registration Statement (Form S-8 No. 333-141657) pertaining to the 2007 Incentive Compensation Plan of MarineMax, Inc.,
3) Registration Statement (Form S-8 No. 333-140366) pertaining to the 1998 Employee Stock Purchase Plan of MarineMax, Inc.,
4) Registration Statement (Form S-8 No. 333-83332) pertaining to the 1998 Incentive Stock Plan of MarineMax, Inc.,
5) Registration Statement (Form S-8 No. 333-63307) pertaining to the 1998 Incentive Stock Plan and the 1998 Employee Stock Purchase
Plan of MarineMax, Inc., and
6) Registration Statement (Form S-8 No. 333-156358) pertaining to the 2008 Employee Stock Purchase Plan of MarineMax, Inc.;
of our reports dated December 14, 2009, with respect to the consolidated financial statements of MarineMax, Inc. and the effectiveness of
internal control over financial reporting of MarineMax, Inc., included in this Annual Report (Form 10-K) of MarineMax Inc. for the year ended
September 30, 2009.
Tampa, Florida
December 14, 2009
/s/ Ernst & Young LLP
Exhibit 31.1
I, William H. McGill Jr., certify that:
1. I have reviewed this report on Form 10-K of MarineMax, Inc.;
CERTIFICATION
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period
covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material
respects the financial condition, results of operations, and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-
15(f) and 15d-15(f)) for the registrant and have:
a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our
supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by
others within those entities, particularly during the period in which this report is being prepared;
b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed
under our supervision, 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;
c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions
about the effectiveness of the disclosure controls and procedures as of the end of the period covered by this report based on such
evaluation; and
d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the
registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or
is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial
reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent
functions):
a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which
are reasonably likely to adversely affect the registrant’s ability to record, process, summarize, and report financial information; and
b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s
internal control over financial reporting.
Date: December 14, 2009
/s/ WILLIAM H. MCGILL, JR.
William H. McGill Jr.
Chief Executive Officer
Exhibit 31.2
I, Michael H. McLamb, certify that:
1. I have reviewed this report on Form 10-K of MarineMax, Inc.;
CERTIFICATION
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period
covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material
respects the financial condition, results of operations, and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-
15(f) and 15d-15(f)) for the registrant and have:
a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our
supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by
others within those entities, particularly during the period in which this report is being prepared;
b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed
under our supervision, 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;
c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions
about the effectiveness of the disclosure controls and procedures as of the end of the period covered by this report based on such
evaluation; and
d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the
registrant’s most recent fiscal quarter (the registrants fourth fiscal quarter in the case of an annual report) that has materially affected, or is
reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial
reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent
functions):
a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which
are reasonably likely to adversely affect the registrant’s ability to record, process, summarize, and report financial information; and
b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s
internal control over financial reporting.
Date: December 14, 2009
/s/ MICHAEL H. MCLAMB
Michael H. McLamb
Chief Financial Officer
Exhibit 32.1
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACTS OF 2002
In connection with the Annual Report on Form 10-K of MarineMax, Inc. (the “Company”) for the year ended September 30, 2009, as
filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, William H. McGill Jr., Chief Executive Officer of the
Company, certify, to my best knowledge and belief, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of
2002, that:
(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C.
78m(a) or 78o(d)); and
(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations
of the Company.
Date: December 14, 2009
/s/ WILLIAM H. MCGILL JR.
William H. McGill Jr.
Chief Executive Officer
Exhibit 32.2
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACTS OF 2002
In connection with the Annual Report on Form 10-K of MarineMax, Inc. (the “Company”) for the year ended September 30, 2009, as
filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Michael H. McLamb, Chief Financial Officer of the
Company, certify, to my best knowledge and belief, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of
2002, that:
(3) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C.
78m(a) or 78o(d)); and
(4) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations
of the Company.
Date: December 14, 2009
/s/ MICHAEL H. MCLAMB
Michael H. McLamb
Chief Financial Officer