þ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2011. |
Delaware (State or Other Jurisdiction of Incorporation or Organization) |
59-3496957 (I.R.S. Employer Identification Number) |
|
18167 U.S. Highway 19 North, Suite 300 | ||
Clearwater, Florida | 33764 | |
(Address of Principal Executive Offices) | (ZIP Code) |
Large accelerated filer o | Accelerated filer þ | Non-accelerated filer o (Do not check if a smaller reporting company) | Smaller reporting company o |
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Exhibit 10.21(j) | ||||||||
Exhibit 10.21(k) | ||||||||
Exhibit 31.1 | ||||||||
Exhibit 31.2 | ||||||||
Exhibit 32.1 | ||||||||
Exhibit 32.2 | ||||||||
EX-101 INSTANCE DOCUMENT | ||||||||
EX-101 SCHEMA DOCUMENT | ||||||||
EX-101 CALCULATION LINKBASE DOCUMENT | ||||||||
EX-101 LABELS LINKBASE DOCUMENT | ||||||||
EX-101 PRESENTATION LINKBASE DOCUMENT | ||||||||
EX-101 DEFINITION LINKBASE DOCUMENT |
2
ITEM 1. | Financial Statements |
Three Months Ended | Nine Months Ended | |||||||||||||||
June 30, | June 30, | |||||||||||||||
2010 | 2011 | 2010 | 2011 | |||||||||||||
Revenue |
$ | 115,383 | $ | 153,171 | $ | 325,948 | $ | 361,117 | ||||||||
Cost of sales |
80,829 | 114,088 | 245,217 | 271,657 | ||||||||||||
Gross profit |
34,554 | 39,083 | 80,731 | 89,460 | ||||||||||||
Selling, general, and administrative expenses |
33,340 | 35,224 | 92,600 | 93,111 | ||||||||||||
Income (loss) from operations |
1,214 | 3,859 | (11,869 | ) | (3,651 | ) | ||||||||||
Interest expense |
702 | 837 | 3,223 | 2,516 | ||||||||||||
Income (loss) before income tax benefit |
512 | 3,022 | (15,092 | ) | (6,167 | ) | ||||||||||
Income tax benefit |
| 333 | 19,419 | 333 | ||||||||||||
Net income (loss) |
$ | 512 | $ | 3,355 | $ | 4,327 | $ | (5,834 | ) | |||||||
Basic net income (loss) per common share |
$ | 0.02 | $ | 0.15 | $ | 0.20 | $ | (0.26 | ) | |||||||
Diluted net income (loss) per common share |
$ | 0.02 | $ | 0.15 | $ | 0.19 | $ | (0.26 | ) | |||||||
Weighted average number of common shares
used in computing net income (loss) per
common share: |
||||||||||||||||
Basic |
22,077,086 | 22,439,702 | 21,951,424 | 22,335,881 | ||||||||||||
Diluted |
22,793,218 | 23,103,280 | 22,612,105 | 22,335,881 | ||||||||||||
3
September 30, | June 30, | |||||||
2010 | 2011 | |||||||
ASSETS |
||||||||
CURRENT ASSETS: |
||||||||
Cash and cash equivalents |
$ | 16,539 | $ | 27,043 | ||||
Accounts receivable, net |
22,774 | 21,504 | ||||||
Inventories, net |
188,724 | 200,944 | ||||||
Prepaid expenses and other current assets |
7,464 | 5,428 | ||||||
Total current assets |
235,501 | 254,919 | ||||||
Property and equipment, net |
99,705 | 101,827 | ||||||
Other long-term assets |
1,554 | 1,194 | ||||||
Total assets |
$ | 336,760 | $ | 357,940 | ||||
LIABILITIES AND STOCKHOLDERS EQUITY |
||||||||
CURRENT LIABILITIES: |
||||||||
Accounts payable |
$ | 7,002 | $ | 10,958 | ||||
Customer deposits |
5,412 | 8,672 | ||||||
Accrued expenses |
24,724 | 26,997 | ||||||
Short-term borrowings |
93,844 | 105,212 | ||||||
Total current liabilities |
130,982 | 151,839 | ||||||
Other long-term liabilities |
3,748 | 6,210 | ||||||
Total liabilities |
134,730 | 158,049 | ||||||
STOCKHOLDERS EQUITY: |
||||||||
Preferred stock, $.001 par value, 1,000,000 shares
authorized, none issued or outstanding at September 30, 2010 and June
30, 2011 |
| | ||||||
Common stock, $.001 par value, 40,000,000 shares
authorized, 22,938,938 and 23,240,241 shares issued and 22,148,038
and 22,449,341 shares outstanding at September 30, 2010 and June 30,
2011, respectively |
23 | 23 | ||||||
Additional paid-in capital |
206,548 | 210,243 | ||||||
Retained earnings |
11,269 | 5,435 | ||||||
Treasury stock, at cost, 790,900 shares held at September 30, 2010
and June 30, 2011 |
(15,810 | ) | (15,810 | ) | ||||
Total stockholders equity |
202,030 | 199,891 | ||||||
Total liabilities and stockholders equity |
$ | 336,760 | $ | 357,940 | ||||
4
Additional | Total | |||||||||||||||||||||||
Common Stock | Paid-in | Retained | Treasury | Stockholders | ||||||||||||||||||||
Shares | Amount | Capital | Earnings | Stock | Equity | |||||||||||||||||||
BALANCE, September 30, 2010 |
22,938,938 | $ | 23 | $ | 206,548 | $ | 11,269 | $ | (15,810 | ) | $ | 202,030 | ||||||||||||
Net loss |
| | | (5,834 | ) | | (5,834 | ) | ||||||||||||||||
Shares issued pursuant to
employee stock purchase
plan |
81,615 | | 488 | | | 488 | ||||||||||||||||||
Shares issued upon vesting
of equity awards, net of
tax withholding |
60,389 | | (191 | ) | | | (191 | ) | ||||||||||||||||
Shares issued upon
exercise of stock options |
146,220 | | 748 | | | 748 | ||||||||||||||||||
Stock-based compensation |
13,079 | | 2,650 | | | 2,650 | ||||||||||||||||||
BALANCE, June 30, 2011 |
23,240,241 | $ | 23 | $ | 210,243 | $ | 5,435 | $ | (15,810 | ) | $ | 199,891 | ||||||||||||
5
Nine Months Ended | ||||||||
June 30, | ||||||||
2010 | 2011 | |||||||
CASH FLOWS FROM OPERATING ACTIVITIES: |
||||||||
Net income (loss) |
$ | 4,327 | $ | (5,834 | ) | |||
Adjustments to reconcile net income (loss) to net cash provided
by operating activities: |
||||||||
Depreciation and amortization |
5,690 | 4,962 | ||||||
Loss on sale of property and equipment |
25 | 7 | ||||||
Loss on extinguishment and modification of debt and
short-term borrowings |
1,023 | | ||||||
Stock-based compensation expense |
3,256 | 2,650 | ||||||
Tax benefits from options exercised |
19 | | ||||||
Excess tax benefits from stock-based compensation |
(19 | ) | | |||||
Decrease (increase) in |
||||||||
Accounts receivable, net |
16,109 | 1,270 | ||||||
Income tax receivable |
9,983 | | ||||||
Inventories, net |
24,546 | (9,972 | ) | |||||
Prepaid expenses and other assets |
(196 | ) | (169 | ) | ||||
Increase (decrease) in |
||||||||
Accounts payable |
12,750 | 3,956 | ||||||
Customer deposits |
11,596 | 3,260 | ||||||
Accrued expenses and other long-term liabilities |
(5,606 | ) | 4,735 | |||||
Net cash provided by operating activities |
83,503 | 4,865 | ||||||
CASH FLOWS FROM INVESTING ACTIVITIES: |
||||||||
Purchases of property and equipment |
(1,186 | ) | (4,411 | ) | ||||
Capitalization of software and website development costs |
| (242 | ) | |||||
Net cash used to acquire inventory and equipment of a business |
| (2,258 | ) | |||||
Proceeds from sale of property and equipment |
31 | 146 | ||||||
Net cash used in investing activities |
(1,155 | ) | (6,765 | ) | ||||
CASH FLOWS FROM FINANCING ACTIVITIES: |
||||||||
Net (repayments) borrowings on short-term borrowings |
(84,788 | ) | 11,368 | |||||
Debt modification costs |
(60 | ) | (9 | ) | ||||
Net proceeds from issuance of common stock under incentive
compensation and employee purchase plans |
1,329 | 1,045 | ||||||
Excess tax benefits from stock-based compensation |
19 | | ||||||
Net cash (used in) provided by financing activities |
(83,500 | ) | 12,404 | |||||
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS |
(1,152 | ) | 10,504 | |||||
CASH AND CASH EQUIVALENTS, beginning of period |
25,508 | 16,539 | ||||||
CASH AND CASH EQUIVALENTS, end of period |
$ | 24,356 | $ | 27,043 | ||||
Supplemental Disclosures of Cash Flow Information: |
||||||||
Cash paid for: |
||||||||
Interest |
$ | 3,751 | $ | 2,393 | ||||
Income taxes |
$ | 31 | $ | |
6
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Weighted | ||||||||||||||||||||
Weighted | Average | |||||||||||||||||||
Shares | Aggregate | Average | Remaining | |||||||||||||||||
Available | Options | Intrinsic Value | Exercise | Contractual | ||||||||||||||||
for Grant | Outstanding | (in thousands) | Price | Life | ||||||||||||||||
Balance at September 30, 2010 |
614,089 | 2,101,881 | $ | 3,713 | $ | 10.27 | 6.8 | |||||||||||||
Options authorized |
1,000,000 | | | |||||||||||||||||
Options granted |
(443,350 | ) | 443,350 | $ | 7.61 | |||||||||||||||
Options
cancelled/forfeited/expired |
92,101 | (92,101 | ) | $ | 11.12 | |||||||||||||||
Restricted stock awards issued |
(62,393 | ) | | | ||||||||||||||||
Restricted stock awards forfeited |
17,126 | | | |||||||||||||||||
Options exercised |
| (146,220 | ) | $ | 5.12 | |||||||||||||||
Balance at June 30, 2011 |
1,217,573 | 2,306,910 | $ | 5,641 | $ | 10.06 | 6.8 | |||||||||||||
Exercisable at June 30, 2011 |
1,702,263 | $ | 4,498 | $ | 10.92 | 6.2 | ||||||||||||||
12
Three Months Ended | Nine Months Ended | |||||||||||||||
June 30, | June 30, | |||||||||||||||
2010 | 2011 | 2010 | 2011 | |||||||||||||
Dividend yield |
0.0 | % | 0.0 | % | 0.0 | % | 0.0 | % | ||||||||
Risk-free interest rate |
2.4 | % | 0.7 | % | 2.3 | % | 1.3 | % | ||||||||
Volatility |
86.2 | % | 107.4 | % | 85.8 | % | 94.9 | % | ||||||||
Expected life |
5.0 years | 3.0 years | 5.0 years | 4.4 years |
Three Months Ended | Nine Months Ended | |||||||||||||||
June 30, | June 30, | |||||||||||||||
2010 | 2011 | 2010 | 2011 | |||||||||||||
Dividend yield |
0.0 | % | 0.0 | % | 0.0 | % | 0.0 | % | ||||||||
Risk-free interest
rate |
0.2 | % | 0.2 | % | 0.2 | % | 0.2 | % | ||||||||
Volatility |
61.4 | % | 40.5 | % | 71.3 | % | 53.1 | % | ||||||||
Expected life |
six months | six months | six months | six months |
13
Weighted | ||||||||
Average Grant | ||||||||
Shares | Date Fair Value | |||||||
Non-vested balance at September 30, 2010 |
434,169 | $ | 18.31 | |||||
Changes during the period |
||||||||
Awards granted |
62,393 | $ | 7.59 | |||||
Awards vested |
(189,827 | ) | $ | 22.63 | ||||
Awards forfeited |
(17,126 | ) | $ | 13.86 | ||||
Non-vested balance at June 30, 2011 |
289,609 | $ | 13.43 | |||||
Three Months Ended | Nine Months Ended | |||||||||||||||
June 30, | June 30, | |||||||||||||||
2010 | 2011 | 2010 | 2011 | |||||||||||||
Weighted average common shares outstanding
used in calculating basic income (loss) per
share |
22,077,086 | 22,439,702 | 21,951,424 | 22,335,881 | ||||||||||||
Effect of dilutive options |
716,132 | 663,578 | 660,681 | | ||||||||||||
Weighted average common and common
equivalent shares used in calculating diluted
income (loss) per share |
22,793,218 | 23,103,280 | 22,612,105 | 22,335,881 | ||||||||||||
14
ITEM 2. | MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |
15
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ITEM 3. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK |
ITEM 4. | CONTROLS AND PROCEDURES |
22
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ITEM 1. | LEGAL PROCEEDINGS |
ITEM 1A. | RISK FACTORS |
ITEM 2. | UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS |
ITEM 3. | DEFAULTS UPON SENIOR SECURITIES |
ITEM 4. | REMOVED AND RESERVED |
ITEM 5. | OTHER INFORMATION |
ITEM 6. | EXHIBITS |
10.21(j) | Amendment Number Two to Inventory Financing Agreement, executed on June 1,
2011, among MarineMax, Inc. and its subsidiaries, as Borrowers, and GE Commercial
Distribution Finance Corporation, as Lender. |
|||
10.21(k) | Amendment Number Two to Program Terms Letter, executed on June 1, 2011,
among MarineMax, Inc. and its subsidiaries, as Borrowers, and GE Commercial
Distribution Finance Corporation, as Lender. |
|||
31.1 | 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. |
|||
31.2 | 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. |
|||
32.1 | Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002. |
|||
32.2 | Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002. |
|||
101.INS | XBRL Instance
Document* |
|||
101.SCH | XBRL Taxonomy
Extension Schema Document* |
|||
101.CAL | XBRL Taxonomy
Extension Calculation Linkbase Document* |
|||
101.LAB | XBRL Taxonomy
Extension Label Linkbase Document* |
|||
101.PRE | XBRL Taxonomy
Extension Presentation Linkbase Document* |
|||
101.DEF | XBRL Taxonomy
Extension Definition Linkbase Document* |
| 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. |
|
* | Pursuant to Rule 406T
of Regulation S-T, these interactive data files are deemed not
filed or part of a registration statement or prospectus for purposes
of Sections 11 or 12 of the Securities Act of 1933, as amended,
are deemed not filed for purposes of Section 18 of the Securities
Exchange Act of 1934, as amended, and otherwise are not subject to
liability under those sections. |
24
MARINEMAX, INC. |
||||
August 5, 2011 | By: | /s/ Michael H. McLamb | ||
Michael H. McLamb | ||||
Executive Vice President, Chief Financial Officer, Secretary, and Director (Principal Accounting and Financial Officer) |
25
2
3
4
5
MARINEMAX, INC. | ||||
By:
|
/s/ Kurt M. Frahn
|
|||
Title: Vice President of Finance, | ||||
Treasurer and Assistant Secretary | ||||
MARINEMAX EAST, INC. | ||||
By:
|
/s/ Kurt M. Frahn
|
|||
Title: Assistant Secretary |
6
MARINEMAX SERVICES, INC. | ||||
By:
|
/s/ Kurt M. Frahn
|
|||
Title: Assistant Secretary | ||||
MARINEMAX NORTHEAST, LLC | ||||
By:
|
/s/ Kurt M. Frahn
|
|||
Title: Assistant Secretary | ||||
BOATING GEAR CENTER, LLC | ||||
By: MARINEMAX EAST, INC., the sole member of Boating | ||||
Gear Center, LLC | ||||
By:
|
/s/ Kurt M. Frahn
|
|||
Title: Assistant Secretary | ||||
US LIQUIDATORS, LLC | ||||
By:
|
/s/ Kurt M. Frahn
|
|||
Title: Assistant Secretary | ||||
NEWCOAST FINANCIAL SERVICES, LLC | ||||
By:
|
/s/ Kurt M. Frahn
|
|||
Title: Assistant Secretary |
7
CDF: | ||||
GE COMMERCIAL DISTRIBUTION | ||||
FINANCE CORPORATION | ||||
By:
|
/s/ Michael McKay
|
|||
Title: Credit Director |
8
Dealer Rate:
|
The effective dealer interest rate for any month (after the manufacturer subsidy period expires, if applicable) shall be the One month LIBOR rate (as defined in the Inventory Financing Agreement) plus 3.83%. | |
Dealer Rate shall be the same for both new and pre-owned inventory. | ||
The Dealer Rate will be recalculated monthly based on changes in the One month LIBOR rate as outlined above. |
Floorplan Advance Rate:
|
For new inventory (other than inventory financed by CDF in connection with the Initial Advances), 100% of invoice amount, including freight (if included on original invoice). For new inventory financed by CDF in connection with the Payoff Advance, such percentage, as CDF and Dealers may agree in writing for each such unit of inventory, of the result of (a) invoice amount, less (b) any curtailment amounts that would have been required to be made with respect to such units if CDF had financed 100% of the original invoice amount with respect to such units on or about the applicable invoice date. For new inventory financed by CDF in connection with the [****], 100% of the result of (1) invoice amount, less (2) any curtailment amounts that would have been required to be made with respect to such units if CDF had financed 100% of the original invoice amount with respect to such units on or about the applicable invoice date. In each case, subject to Availability. As used herein, Availability shall mean (i) the lesser of (a) the Maximum Credit Amount and (b) at any time the aggregate outstanding amount of Obligations is less than $100,000,000.00, 100% of total eligible inventory shown on the most recent inventory certificate or, at any time the aggregate outstanding amount of Obligations is equal to or greater than $100,000,000.00, 90% of total eligible inventory shown on such inventory certificate, (ii) minus the outstanding amount of Approvals, (iii) minus the aggregate outstanding amount of Obligations (as each such term is defined in the Inventory Financing Agreement). If Availability is negative at any time, then immediate payment shall be required of amount sufficient to cause Availability to be equal to or greater than $0. |
Pre-owned (trade in or used inventory) advances will be as follows, subject to Availability, the Pre-owned Inventory Sublimit, the Specific Pre-Owned Sublimit, and the Other Pre-Owned Sublimit (each as defined in the Inventory Financing Agreement): | ||
75% NADA (based on low NADA Value) Day 1 (Day 1 as used herein shall mean Acquisition Date) through Day 180 (after Acquisition Date); 67% Day 181 (after Acquisition Date) through Day 360 (after Acquisition Date); 0% Day 361+ (after Acquisition Date). | ||
All models of pre-owned inventory are eligible provided fair market values can be determined via NADA, Yachtworld.com, or survey. | ||
Internal condition and valuation methodology required on all units > $500,000.00 (Specific Pre-Owned Items). If valuation of any Specific Pre-Owned Item exceeds [****], CDF advances in excess of [****] for such Specific Pre-Owned Item shall be in CDFs discretion. | ||
Trade in units < $500,000.00 value will be financed on a borrowing base calculated as the aggregate of the pre-owned advance rates multiplied by the applicable low NADA Values of such pre-owned inventory. | ||
Borrowing base certificate in the form attached hereto as Exhibit B required to be submitted on the date hereof and monthly by the 5th day of the month based on preceding month end balances of pre-owned inventory. Month-end borrowing base certificate can be used to borrow up to 80% of eligible borrowing base for that calendar month, subject to Availability, the Pre-Owned Inventory Sublimit and the Other Pre-Owned Sublimit. Any request for advances > 80% of prior month-end borrowing base requires submission of an updated borrowing base and such advances shall be limited to 100% of updated borrowing base, subject to Availability, the Pre-Owned Inventory Sublimit and the Other Pre-Owned Sublimit. | ||
If any unit (new or pre-owned) remains at a location other than a Permitted Location for more than 30 days, then immediate payment shall be required of the full principal amount of the Obligations owed with respect to such unit. If the aggregate value of units at locations other than Permitted Locations (excluding boat shows) exceeds $5,000,000.00 at any time, then immediate payment shall be required of the Obligations with respect to such units in an aggregate amount equal to such excess. In addition, if a material adverse change results in the reduction of the value of the Collateral in an aggregate amount exceeding $250,000.00, then immediate payment shall be required of the Obligations with respect to such Collateral in an amount equal to such excess; provided that, if such reduction of value is the subject of an insurance claim payable to CDF as loss payee, then immediate payment of such excess amount shall only be required to the extent it exceeds the claim amount (net of any deductible) and payment of the remainder of such excess shall not be required until the earlier of (i) receipt of such insurance proceeds, if any, or the rejection or denial of such claim or any portion thereof and (ii) 30 days (or such later date as CDF may agree in writing) after such loss or damage. |
2
3
4
MARINEMAX, INC. | ||||
By:
|
/s/ Kurt M. Frahn
|
|||
Title: Vice President of Finance, | ||||
Treasurer and Assistant Secretary | ||||
MARINEMAX EAST, INC. | ||||
By:
|
/s/ Kurt M. Frahn
|
|||
Title: Assistant Secretary | ||||
MARINEMAX SERVICES, INC. | ||||
By:
|
/s/ Kurt M. Frahn
|
|||
Title: Assistant Secretary | ||||
MARINEMAX NORTHEAST, LLC | ||||
By:
|
/s/ Kurt M. Frahn
|
|||
Title: Assistant Secretary |
5
BOATING GEAR CENTER, LLC |
||||
By: MARINEMAX EAST, INC., the sole member of Boating | ||||
Gear Center, LLC | ||||
By:
|
/s/ Kurt M. Frahn
|
|||
Title: Assistant Secretary | ||||
US LIQUIDATORS, LLC | ||||
By:
|
/s/ Kurt M. Frahn
|
|||
Title: Assistant Secretary | ||||
NEWCOAST FINANCIAL SERVICES, LLC | ||||
By:
|
/s/ Kurt M. Frahn
|
|||
Title: Assistant Secretary |
6
CDF: | ||||
GE COMMERCIAL DISTRIBUTION | ||||
FINANCE CORPORATION | ||||
By:
|
/s/ Michael McKay
|
|||
Title: Credit Director |
7
1. | I have reviewed this quarterly report on Form 10-Q of MarineMax, Inc.; |
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 registrants 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 registrants 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 registrants internal control over
financial reporting that occurred during the registrants 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 registrants
internal control over financial reporting; and |
5. | The registrants other certifying officer and I have disclosed, based on our most
recent evaluation of internal control over financial reporting, to the registrants
auditors and the audit committee of the registrants 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 registrants 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 registrants internal control over financial
reporting. |
/s/ WILLIAM H. MCGILL JR.
|
||||
Chief Executive Officer | ||||
(Principal Executive Officer) |
1. | I have reviewed this quarterly report on Form 10-Q of MarineMax, Inc.; |
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 registrants 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 registrants 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 registrants internal control over
financial reporting that occurred during the registrants 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 registrants
internal control over financial reporting; and |
5. | The registrants other certifying officer and I have disclosed, based on our most
recent evaluation of internal control over financial reporting, to the registrants
auditors and the audit committee of the registrants 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 registrants 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 registrants internal control over financial
reporting. |
/s/ MICHAEL H. MCLAMB
|
||||
Chief Financial Officer | ||||
(Principal Financial Officer) |
(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. |
/s/ WILLIAM H. MCGILL JR.
|
||||
Chief Executive Officer |
(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. |
/s/ MICHAEL H. MCLAMB
|
||||
Chief Financial Officer |
Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) (USD $)
|
Jun. 30, 2011
|
Sep. 30, 2010
|
---|---|---|
STOCKHOLDERS' EQUITY: | Â | Â |
Preferred stock, par value | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized | 1,000,000 | 1,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 40,000,000 | 40,000,000 |
Common stock, shares issued | 23,240,241 | 22,938,938 |
Common stock, shares outstanding | 22,449,341 | 22,148,038 |
Treasury stock, at cost | 790,900 | 790,900 |
Document and Entity Information (USD $)
|
9 Months Ended | ||
---|---|---|---|
Jun. 30, 2011
|
Jul. 31, 2011
|
Mar. 31, 2010
|
|
Document and Entity Information [Abstract] | Â | Â | Â |
Entity Registrant Name | MARINEMAX INC | Â | Â |
Entity Central Index Key | 0001057060 | Â | Â |
Document Type | 10-Q | Â | Â |
Document Period End Date | Jun. 30, 2011 | ||
Amendment Flag | false | Â | Â |
Document Fiscal Year Focus | 2011 | Â | Â |
Document Fiscal Period Focus | Q3 | Â | Â |
Current Fiscal Year End Date | --09-30 | Â | Â |
Entity Well-known Seasoned Issuer | No | Â | Â |
Entity Voluntary Filers | No | Â | Â |
Entity Current Reporting Status | Yes | Â | Â |
Entity Filer Category | Accelerated Filer | Â | Â |
Entity Public Float | Â | Â | $ 196,378,576 |
Entity Common Stock, Shares Outstanding | Â | 23,272,960 | Â |
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Income Taxes
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9 Months Ended |
---|---|
Jun. 30, 2011
|
|
Income Taxes [Abstract] | Â |
INCOME TAXES |
6. INCOME TAXES:
We account for income taxes in accordance with FASB Accounting Standards Codification 740,
“Income Taxes” (“ASC 740”). 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.
The Worker, Homeownership, and Business Assistance Act of 2009 was signed into law in November
2009. The act allowed us to carryback the 2009 net operating loss, which had a valuation allowance
recorded against the entire amount and which we were not able to carryback under the prior tax law.
The additional carryback generated a tax refund of $19.2 million. The tax refund was recorded as
income tax benefit during our quarter ended December 31, 2009, the period the act was enacted. We
filed a carryback claim with the Internal Revenue Service, and we received a $19.2 million refund
in the quarter ended March 31, 2010.
|
Restricted Stock Awards
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9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2011
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Stock-Based Compensation/The Incentive Stock Plans/Employee Stock Purchase Plan/Restricted Stock Awards [Abstract] | Â | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
RESTRICTED STOCK AWARDS |
11. RESTRICTED STOCK AWARDS:
We have granted non-vested (restricted) stock awards or restricted stock units (collectively,
“restricted stock awards”) to certain key employees pursuant to 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. Certain awards granted in fiscal
2008 require certain levels of performance by us after the grant before they are earned. Such
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. Certain awards granted
in fiscal 2010 and 2011 require a minimum level of performance of our stock price compared to an
index before they are earned. Such performance metrics must be achieved by September 2012 or 2013,
or the awards will be forfeited. The stock underlying the vested restricted stock units will be
delivered upon vesting. During fiscal 2010, we reversed approximately $3.9 million of stock
compensation expense, resulting from the performance criteria of certain awards no longer being
probable.
We accounted for the 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.
The following table summarizes restricted stock award activity from September 30, 2010 through
June 30, 2011:
As of June 30, 2011, we had approximately $838,000 of total unrecognized compensation cost
related to non-vested restricted stock awards. We expect to recognize that cost over a
weighted-average period of 1.8 years.
|
Basis of Presentation
|
9 Months Ended |
---|---|
Jun. 30, 2011
|
|
Company Background/Basis of Presentation [Abstract] | Â |
BASIS OF PRESENTATION |
2. BASIS OF PRESENTATION:
These unaudited condensed consolidated financial statements have been prepared in accordance
with accounting principles generally accepted in the United States for interim financial
information, the instructions to Quarterly Report on Form 10-Q, and Rule 10-01 of Regulation S-X
and should be read in conjunction with our Annual Report on Form 10-K for the fiscal year ended
September 30, 2010. Accordingly, these unaudited condensed consolidated financial statements do not
include all of the information and footnotes required by accounting principles generally accepted
in the United States for complete financial statements. All adjustments, consisting of only normal
recurring adjustments considered necessary for fair presentation, have been reflected in these
unaudited condensed consolidated financial statements. As of June 30, 2011, our financial
instruments consisted of cash and cash equivalents, accounts receivable, accounts payable and
short-term borrowings. The carrying amounts of our financial instruments reported on the balance
sheet at June 30, 2011 approximate fair value due either to length to maturity or existence of
variable interest rates, which approximate prevailing market rates. The operating results for the
three and nine months ended June 30, 2011 are not necessarily indicative of the results that may be
expected in future periods.
The preparation of unaudited condensed 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 unaudited condensed consolidated financial statements and
the reported amounts of revenue and expenses during the reporting periods. The estimates made by us
in the accompanying unaudited condensed consolidated financial statements include valuation
allowances, valuation of long-lived assets, and valuation of accruals. Actual results could differ
from those estimates.
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 21 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”).
In order to provide comparability between periods presented, certain amounts have been
reclassified from the previously reported unaudited condensed consolidated financial statements to
conform to the unaudited condensed consolidated financial statement presentation of the current
period. The unaudited condensed 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.
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Stock-Based Compensation
|
9 Months Ended |
---|---|
Jun. 30, 2011
|
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Stock-Based Compensation/The Incentive Stock Plans/Employee Stock Purchase Plan/Restricted Stock Awards [Abstract] | Â |
STOCK-BASED COMPENSATION |
8. STOCK-BASED COMPENSATION:
We account for our share-based compensation plans following the provisions of FASB Accounting
Standards Codification 718, “Compensation — Stock Compensation” (“ASC 718”). In accordance with
ASC 718, we use the Black-Scholes valuation model for valuing all stock-based compensation and
shares granted under the Employee Stock Purchase Plan. 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.
During the nine months ended June 30, 2010 and 2011, we recognized stock-based compensation
expense of approximately $3.3 million and $2.7 million, respectively, in selling, general, and
administrative expenses in the condensed consolidated statements of operations. Tax benefits
realized for tax deductions from option exercises for the nine months ended June 30, 2010 was
approximately $19,000. There were no tax benefits realized for tax deductions from option exercises
for the nine months ended June 30, 2011.
Cash received from option exercises under all share-based compensation arrangements for the
nine months ended June 30, 2010 and 2011, was approximately $1.3 million and $1.2 million,
respectively. We currently expect to satisfy share-based awards with registered shares available to
be issued.
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Commitments and Contingencies
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9 Months Ended |
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Jun. 30, 2011
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Commitments and Contingencies [Abstract] | Â |
COMMITMENTS AND CONTINGENCIES |
13. COMMITMENTS AND CONTINGENCIES:
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 June 30, 2011, we do not
believe that these matters will have a material adverse effect on our consolidated financial
condition, results of operations, or cash flows.
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The Incentive Stock Plans
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Jun. 30, 2011
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Stock-Based Compensation/The Incentive Stock Plans/Employee Stock Purchase Plan/Restricted Stock Awards [Abstract] | Â | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
THE INCENTIVE STOCK PLANS |
9. THE INCENTIVE STOCK PLANS:
During January 2011, our stockholders approved a proposal to approve our 2011 Stock-Based
Compensation Plan (“2011 Plan”), which replaced our 2007 Incentive Compensation Plan (“2007 Plan”).
Our 2011 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 2011 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 2011 Plan is equal to
1,000,000 shares, plus (i) any shares available for issuance and not subject to an award under the
2007 Plan, (ii) the number of shares with respect to which awards granted under the 2011 Plan and
the 2007 Plan terminate without the issuance of the shares or where the shares are forfeited or
repurchased; (iii) with respect to awards granted under the 2011 Plan and the 2007 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 2011 Plan and the 2007 Plan. The 2011
Plan terminates in January 2021, and awards may be granted at any time during the life of the 2011
Plan. The date on which awards vest are determined by the Board of Directors or the Plan
Administrator. The exercise prices of options are determined by the Board of Directors or the Plan
Administrator and 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 2011 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, 2010 through June 30, 2011:
The weighted-average grant date fair value of options granted during the nine months ended
June 30, 2010 and 2011, was $5.41 and $5.16, respectively. The total intrinsic value of options
exercised during the nine months ended June 30, 2010 and 2011 was $900,000 and $551,000,
respectively.
As of June 30, 2010 and 2011, there were approximately $1.6 million and $1.3 million,
respectively, of unrecognized compensation costs related to non-vested options that are expected to
be recognized over a weighted average period of 2.2 years and 3.6 years, respectively. The total
fair value of options vested during the nine months ended June 30, 2010 and 2011 was approximately
$2.2 million and $3.5 million, respectively.
We continued using the Black-Scholes model to estimate the fair value of options granted
during fiscal 2011. 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 each respective period:
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Short-Term Borrowings
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9 Months Ended |
---|---|
Jun. 30, 2011
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Short-Term Borrowings [Abstract] | Â |
SHORT-TERM BORROWINGS |
7. SHORT-TERM BORROWINGS:
In June 2011, we entered into an amendment to our Inventory Financing Agreement (the “Credit
Facility”), originally entered into in June 2010 with GE Commercial Distribution Finance Company
(“GECDF”), as amended in December 2010. The June 2011 amendment, among other things, modified the
amount of borrowing availability, interest rate, and maturity date of the Credit Facility. The
amended Credit Facility provides a floor plan financing commitment up to $150 million, up from the
previous limit of $100 million, subject to borrowing base availability resulting from the amount
and aging of our inventory. The amended Credit Facility matures in June 2014, subject to extension
for two one-year periods, with the approval of GECDF.
The amended Credit Facility has certain financial covenants as specified in the agreement. The
covenants include provisions that our leverage ratio must not exceed 2.75 to 1.0 and that our
current ratio must be greater than 1.2 to 1.0. At June 30, 2011, we were in compliance with all of
the covenants under the amended Credit Facility. The interest rate for amounts outstanding under
the amended Credit Facility is 383 basis points above the one-month London Inter-Bank Offering Rate
(“LIBOR”). There is an unused line fee of ten basis points on the unused portion of the amended
Credit Facility.
Advances under the amended Credit Facility will be initiated by the acquisition of eligible
new and used inventory or will be re-advances against eligible new and used inventory that have
been partially paid-off. Advances on new inventory will mature 1,081 days from the original invoice
date. Advances on used inventory will mature 361 days from the date we acquire the used inventory.
Each advance is subject to a curtailment schedule, which requires that we pay down the balance of
each advance on a periodic basis starting after six months. The curtailment schedule varies based
on the type and value of the inventory. The collateral for the amended Credit Facility is all of
our personal property with certain limited exceptions. None of our real estate has been pledged for
collateral for the amended Credit Facility.
In October 2010, we entered into an Inventory Financing Agreement (the “CGI Facility”) with
CGI Finance, Inc. The CGI Facility provides a floor plan financing commitment of $30 million and
is designed to provide financing for our Azimut inventory needs. The CGI Facility has a one-year
term, which is typical in the industry for similar floor plan facilities; however, each advance
under the CGI Facility can remain outstanding for 18 months. The interest rate for amounts
outstanding under the CGI Facility is 350 basis points above the one-month LIBOR.
Advances under the CGI Facility will be initiated by the acquisition of eligible new and used
inventory or will be re-advances against eligible new and used inventory that has been partially
paid-off. Advances on new inventory will mature 550 days from the original invoice date. Advances
on used inventory will mature 366 days from the date we acquire the used inventory. Each advance
is subject to a curtailment schedule, which requires that we pay down the balance of each advance
on a periodic basis, starting after six months for used inventory and one year for new inventory.
The curtailment schedule varies based on the type of inventory.
The collateral for the CGI Facility is our entire Azimut inventory financed by the CGI
Facility with certain limited exceptions. None of our real estate has been pledged as collateral
for the CGI Facility. We must maintain compliance with certain financial covenants as specified in
the CGI Facility. The covenants include provisions that our leverage ratio must not exceed 2.75 to
1.0 and that our current ratio must be greater than 1.2 to 1.0. At June 30, 2011, we were in
compliance with all of the covenants under the CGI Facility. The CGI Facility contemplates that
other lenders may be added by us to finance other inventory not financed under the CGI Facility, if
needed.
The amended Credit Facility and CGI Facility replace our prior $180 million credit facility
that provided for a line of credit with asset-based borrowing availability. The interest rate for
amounts outstanding under the prior credit facility was 490 basis points above the one-month LIBOR.
As of June 30, 2011, our indebtedness associated with financing our inventory and working
capital needs totaled approximately $105.2 million. At June 30, 2010 and 2011, the interest rate on
the outstanding short-term borrowings was approximately 4.1% and 4.0%, respectively. At June 30,
2011, our additional available borrowings under our amended Credit Facility and CGI Facility were
approximately $47.3 million based upon the outstanding borrowing base availability.
As is common in our industry, we receive interest assistance directly from boat manufacturers,
including Brunswick. The interest assistance programs vary by manufacturer, but generally include
periods of free financing or reduced interest rate programs. The interest assistance may be paid
directly to us or our lender 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 June 30, 2011, we had no long-term
debt. However, we rely on our amended Credit Facility and CGI Facility to purchase our inventory of
boats. 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 amended Credit Facility
and CGI Facility also depends upon the ability of our lenders 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 our amended Credit Facility and CGI Facility to fund our
operations. Any inability to utilize our amended Credit Facility or CGI Facility could require us
to seek other sources of funding to repay amounts outstanding under the credit agreements or
replace or supplement our credit agreements, which may not be possible at all or under commercially
reasonable terms.
Similarly, 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
affect our ability to sell our products and impact the profitability of our finance and insurance
activities. Tight credit conditions, during fiscal 2009, 2010, and continuing in fiscal 2011,
adversely affected the ability of customers to finance boat purchases, which had a negative effect
on our operating results.
|
Revenue Recognition
|
9 Months Ended |
---|---|
Jun. 30, 2011
|
|
Revenue Recognition [Abstract] | Â |
REVENUE RECOGNITION |
3. 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 deferred
revenue from service operations and slip and storage services on a straight-line basis over
the term of the contract or when service is completed. We recognize commissions earned from a
brokerage sale at the time the related brokerage transaction closes. 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 the related boat sale is recognized. 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 minimum period of time. We base the chargeback allowance, which was not material to the
condensed consolidated financial statements taken as a whole as of June 30, 2011, 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 condensed consolidated financial statements taken as a whole as of June 30, 2011, based upon
our experience with terminations or defaults on the service contracts.
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Inventories
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9 Months Ended |
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Jun. 30, 2011
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Inventories [Abstract] | Â |
INVENTORIES |
4. INVENTORIES
Inventory costs consist of the amount paid to acquire 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-ins, 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 a
lower of cost or market valuation allowance. As of September 30, 2010 and June 30, 2011, our lower
of cost or market valuation allowance was $7.3 million and $4.0 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.
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Net Income/Loss Per Share
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Jun. 30, 2011
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Net Income/Loss Per Share [Abstract] | Â | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
NET INCOME/LOSS PER SHARE |
12. NET INCOME/LOSS PER SHARE:
The following is a reconciliation of the shares used in the denominator for calculating basic
and diluted net income/loss per share:
Options to purchase 1,294,519 and 1,068,796 shares of common stock were outstanding at June
30, 2010 and 2011, respectively, but were not included in the computation of diluted income (loss)
per share because the options’ exercise prices were greater than the average market price of our
common stock, and therefore, their effect would be anti-dilutive. For the nine months ended June
30, 2011, no options were included in the computation of diluted loss per share because we reported
a net loss and the effect of their inclusion would be anti-dilutive.
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Impairment of Long-Lived Assets
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9 Months Ended |
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Jun. 30, 2011
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Impairment of Long-Lived Assets [Abstract] | Â |
IMPAIRMENT OF LONG-LIVED ASSETS |
5. IMPAIRMENT OF LONG-LIVED ASSETS
FASB Accounting Standards Codification 360-10-40, “Property, Plant, and Equipment, Impairment
or Disposal of Long-Lived Assets” (“ASC 360-10-40”), 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 June 30, 2011, we had not recognized any impairment of long-lived assets in
connection with ASC 360-10-40.
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Company Background
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9 Months Ended |
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Jun. 30, 2011
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Company Background/Basis of Presentation [Abstract] | Â |
COMPANY BACKGROUND |
1. COMPANY BACKGROUND:
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 June 30, 2011, we operated
through 57 retail locations in 19 states, consisting of Alabama, Arizona, California, Colorado,
Connecticut, Florida, Georgia, Kansas, 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, Meridian, Cabo, and Hatteras
recreational boats and yachts, all of which are manufactured by Brunswick Corporation
(“Brunswick”). Sales of new Brunswick boats accounted for approximately 41% of our revenue in
fiscal 2010. Brunswick is the world’s largest manufacturer of marine products and marine engines.
We believe we represented in excess of 7% of all Brunswick marine sales, including approximately
46% of its Sea Ray boat sales, during our 2010 fiscal year.
We have dealership agreements with Sea Ray, Boston Whaler, Bayliner, Cabo, Hatteras, Meridian,
and Mercury Marine, all subsidiaries or divisions of Brunswick. We also have dealer agreements with
Azimut Yachts. 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 a 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 also the exclusive dealer for Boston Whaler and Bayliner through a multi-year dealer agreement
for many of our geographic markets. We are a party to a multi-year 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
multi-year dealer agreement. In addition, we are 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
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,
Boston Whaler, Bayliner, Hatteras, Cabo, 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 Sea Ray 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 43%, 45%, and 54% of our revenue during fiscal 2008,
2009, and 2010, respectively, can have a major impact on our operations. Local influences, such as
corporate downsizing, military base closings, inclement weather, and environmental conditions, such
as the BP oil spill in the Gulf of Mexico, 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 may
adversely affect our business, financial condition, and results of operations. 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, 2009, 2010, and to date in
fiscal 2011. 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 and replace our credit facility. Acquisitions
and new store openings remain important strategies to our company, and we plan to resume our growth
through these strategies when more normal economic conditions return. However, we cannot predict
the length or severity of these unfavorable economic or financial conditions or the extent to which
they will continue to 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.
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Employee Stock Purchase Plan
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Jun. 30, 2011
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Stock-Based Compensation/The Incentive Stock Plans/Employee Stock Purchase Plan/Restricted Stock Awards [Abstract] | Â | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
EMPLOYEE STOCK PURCHASE PLAN |
10. EMPLOYEE STOCK PURCHASE PLAN:
During February 2008, our stockholders approved our 2008 Employee Stock Purchase Plan (“Stock
Purchase Plan”). The Stock Purchase 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. In addition there were 52,837 shares of common stock available under our 1998 Employee
Stock Purchase Plan, which have been made available for issuance under our Stock Purchase Plan. The
Stock Purchase 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.
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 each respective period:
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Condensed Consolidated Statements of Operations (Unaudited) (USD $)
In Thousands, except Share data |
3 Months Ended | 9 Months Ended | ||
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Jun. 30, 2011
|
Jun. 30, 2010
|
Jun. 30, 2011
|
Jun. 30, 2010
|
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Condensed Consolidated Statements of Operations [Abstract] | Â | Â | Â | Â |
Revenue | $ 153,171 | $ 115,383 | $ 361,117 | $ 325,948 |
Cost of sales | 114,088 | 80,829 | 271,657 | 245,217 |
Gross profit | 39,083 | 34,554 | 89,460 | 80,731 |
Selling, general, and administrative expenses | 35,224 | 33,340 | 93,111 | 92,600 |
Income (loss) from operations | 3,859 | 1,214 | (3,651) | (11,869) |
Interest expense | 837 | 702 | 2,516 | 3,223 |
Income (loss) before income tax benefit | 3,022 | 512 | (6,167) | (15,092) |
Income tax benefit | 333 | Â | 333 | 19,419 |
Net income (loss) | $ 3,355 | $ 512 | $ (5,834) | $ 4,327 |
Basic net income (loss) per common share | $ 0.15 | $ 0.02 | $ (0.26) | $ 0.20 |
Diluted net income (loss) per common share | $ 0.15 | $ 0.02 | $ (0.26) | $ 0.19 |
Weighted average number of common shares used in computing net income (loss) per common share: | Â | Â | Â | Â |
Basic | 22,439,702 | 22,077,086 | 22,335,881 | 21,951,424 |
Diluted | 23,103,280 | 22,793,218 | 22,335,881 | 22,612,105 |