MarineMax (HZO) 10-Q 2005 Q3 Quarterly report

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

þ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED June 30, 2005

Commission File No. 1-14173

MARINEMAX, INC.

(Exact name of registrant as specified in its charter)

Delaware	59-3496957
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification Number)
18167 U.S. Highway 19 North, Suite 300
Clearwater, Florida	33764
(Address of principal executive offices)	(ZIP Code)

727-531-1700
(Registrant’s telephone number, including area code)

Indicate by check whether the registrant: (1) has filed all reports to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes  þ     No  o

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).

Yes  þ     No  o

The number of outstanding shares of the registrant’s Common Stock on July 29, 2005 was 17,633,789.

MARINEMAX, INC. AND SUBSIDIARIES

Table of Contents

Item No.	Page
PART I FINANCIAL INFORMATION
1. Financial Statements (Unaudited):
Condensed Consolidated Statements of Operations for the Three and Nine Months Ended June 30, 2004 and June 30, 2005		3
Condensed Consolidated Balance Sheets as of September 30, 2004 and June 30, 2005		4
Condensed Consolidated Statement of Stockholders’ Equity for the Nine Months Ended June 30, 2005		5
Condensed Consolidated Statements of Cash Flows for the Nine Months Ended June 30, 2004 and June 30, 2005		6
Notes to Condensed Consolidated Financial Statements		7
2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		11
3. Quantitative and Qualitative Disclosures About Market Risk		17
4. Controls and Procedures		17
PART II OTHER INFORMATION
1. Legal Proceedings		18
2. Unregistered Sales of Equity Securities and Use of Proceeds		18
3. Defaults Upon Senior Securities		18
4. Submission of Matters to a Vote of Security Holders		18
5. Other Information		18
6. Exhibits		18
SIGNATURES		19
Exhibit 31.1
Exhibit 31.2
Exhibit 32.1
Exhibit 32.2

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PART I. FINANCIAL INFORMATION

ITEM 1. Financial Statements

Condensed Consolidated Statements of Operations

MARINEMAX, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Operations
(Unaudited amounts in thousands, except share and per share data)

	Three Months Ended				Nine Months Ended
	June 30,				June 30,
	2004		2005		2004		2005
Revenue	$	219,729	$	306,141	$	578,706	$	718,713
Cost of sales		164,691		235,475		443,413		548,906
Gross profit		55,038		70,666		135,293		169,807
Selling, general, and administrative expenses		36,602		45,903		100,886		123,964
Income from operations		18,436		24,763		34,407		45,843
Interest expense		1,706		2,267		4,865		7,355
Income before income tax provision		16,730		22,496		29,542		38,488
Income tax provision		6,324		8,661		11,257		14,818
Net income	$	10,406	$	13,835	$	18,285	$	23,670
Basic net income per common share	$	0.66	$	0.79	$	1.18	$	1.43
Diluted net income per common share	$	0.61	$	0.74	$	1.10	$	1.33
Weighted average number of common shares used in computing net income per common share:
Basic		15,658,896		17,438,739		15,540,765		16,571,563
Diluted		16,937,505		18,633,251		16,648,441		17,806,010

See accompanying notes to condensed consolidated financial statements

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Condensed Consolidated Balance Sheets

MARINEMAX, INC. AND SUBSIDIARIES

Condensed Consolidated Balance Sheets
(Amounts in thousands, except share and per share data)

	September 30,			June 30,
	2004			2005
				(Unaudited)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	15,076		$	21,761
Accounts receivable, net		24,977			40,204
Inventories, net		283,797			297,867
Prepaid expenses and other current assets		5,966			7,472
Deferred tax assets		3,465			4,548
Total current assets		333,281			371,852
Property and equipment, net		84,507			95,018
Goodwill and other intangible assets, net		55,862			56,172
Other long-term assets		709			260
Total assets	$	474,359		$	523,302
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES:
Accounts payable	$	55,841		$	56,054
Customer deposits		15,917			19,996
Accrued expenses		17,625			23,263
Short-term borrowings		153,000			114,500
Current maturities of long-term debt		2,885			3,548
Total current liabilities		245,268			217,361
Deferred tax liabilities		8,918			10,525
Long-term debt, net of current maturities		23,352			24,173
Total liabilities		277,538			252,059
STOCKHOLDERS’ EQUITY:
Preferred stock, $.001 par value, 1,000,000 shares authorized, none issued or outstanding at September 30, 2004 and June 30, 2005		—			—
Common stock, $.001 par value, 24,000,000 shares authorized, 15,711,012 and 17,575,155 shares issued and outstanding at September 30, 2004 and June 30, 2005, respectively		16			18
Additional paid-in capital		70,325			123,660
Deferred stock compensation		—			(2,585	)
Retained earnings		127,098			150,768
Treasury stock, at cost, 30,000 shares held at September 30, 2004 and June 30, 2005		(618	)		(618	)
Total stockholders’ equity		196,821			271,243
Total liabilities and stockholders’ equity	$	474,359		$	523,302

See accompanying notes to condensed consolidated financial statements

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Condensed Consolidated Statement of Stockholders’ Equity

MARINEMAX, INC. AND SUBSIDIARIES

Condensed Consolidated Statement of Stockholders’ Equity
(Unaudited amounts in thousands, except share data)

					Additional		Deferred								Total
	Common Stock				Paid-in		Stock			Retained		Treasury			Stockholders’
	Shares		Amount		Capital		Compensation			Earnings		Stock			Equity
BALANCE, September 30, 2004		15,711,012	$	16	$	70,325	$	—		$	127,098	$	(618	)	$	196,821
Net income		—		—		—		—			23,670		—			23,670
Shares issued under employee stock purchase plan		51,727		—		1,018		—			—		—			1,018
Shares issued upon exercise of stock options		277,435		—		3,093		—			—		—			3,093
Shares issued through public offering		1,429,000		2		44,200		—			—		—			44,202
Stock-based compensation		105,981		—		3,107		(3,027	)		—		—			80
Amortization of deferred stock compensation		—		—		—		442			—		—			442
Tax benefit of options exercised		—		—		1,917		—			—		—			1,917
BALANCE, June 30, 2005		17,575,155	$	18	$	123,660	$	(2,585	)	$	150,768	$	(618	)	$	271,243

See accompanying notes to condensed consolidated financial statements

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Condensed Consolidated Statements of Cash Flows

MARINEMAX, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows
(Unaudited amounts in thousands)

	Nine Months Ended
	June 30,
	2004			2005
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	18,285		$	23,670
Adjustments to reconcile net income to net cash provided by / (used in) operating activities:
Depreciation and amortization		3,833			3,710
Deferred income tax provision		722			524
Loss / (gain) on sale of property and equipment		1			(167	)
Stock-based compensation expense		50			522
Tax benefit of options exercised		—			1,917
(Increase) / decrease in —
Accounts receivable, net		(4,792	)		(15,227	)
Inventories, net		(83,579	)		(11,305	)
Prepaid expenses and other assets		(1,632	)		(1,051	)
Increase / (decrease) in —
Accounts payable		30,509			188
Customer deposits		6,285			4,079
Accrued expenses		2,998			5,638
Short-term borrowings		52,439			(40,929	)
Net cash provided by / (used in) operating activities		25,119			(28,431	)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment		(9,006	)		(10,519	)
Net cash used in business acquisitions		(13,349	)		(637	)
Proceeds from sale of property and equipment		348			515
Net cash used in investing activities		(22,007	)		(10,641	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net proceeds from issuance of common stock through public offering		—			44,202
Net proceeds from issuance of common stock under option and employee purchase plans		3,577			4,111
Repayments of long-term debt		(1,754	)		(2,556	)
Purchases of treasury stock		(60	)		—
Net cash provided by financing activities		1,763			45,757
NET INCREASE IN CASH AND CASH EQUIVALENTS		4,875			6,685
CASH AND CASH EQUIVALENTS, beginning of period		10,508			15,076
CASH AND CASH EQUIVALENTS, end of period	$	15,383		$	21,761
Supplemental Disclosures of Cash Flow Information:
Cash paid for:
Interest	$	4,877		$	7,018
Income taxes	$	9,133		$	5,408
Supplemental Disclosures of Non-Cash Financing Activities:
Long-term debt issued for property and equipment purchase	$	—		$	4,040

See accompanying notes to condensed consolidated financial statements

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

MARINEMAX, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

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, 2005, we operated through 71 retail locations in 17 states, consisting of Alabama, Arizona, California, Colorado, Delaware, Florida, Georgia, Maryland, Minnesota, Nevada, New Jersey, North Carolina, Ohio, South Carolina, Tennessee, Texas, and Utah.

     We are the nation’s largest retailer of Sea Ray, Hatteras, Meridian, and Boston Whaler recreational boats and yachts. Sales of new Sea Ray, Hatteras, Meridian, and Boston Whaler recreational boats and yachts, all of which are manufactured by Brunswick Corporation (Brunswick), accounted for approximately 60% of our revenue in fiscal 2004. Brunswick is the world’s largest manufacturer of pleasure boats and marine engines. We believe our sales represented in excess of 10% of all Brunswick marine sales, including approximately 34% of its new Sea Ray boat sales, during our 2004 fiscal year. Through operating subsidiaries, we are a party to dealer agreements with Brunswick covering Sea Ray products and we operate as the exclusive dealer of Sea Ray boats in our geographic markets. We also have the right to sell Hatteras Yachts throughout the state of Florida (excluding the Florida Panhandle) and the state of Texas, as well as the distribution rights for Hatteras products over 82 feet for North and South America, the Caribbean, and the Bahamas. We have distribution rights for Meridian Yachts in most of our geographic markets, excluding Arizona, California, Colorado, Nevada, and Utah.

     We are the exclusive dealer for Italy-based Ferretti Group for Ferretti Yachts, Pershing, Riva, Apreamare, Mochi Craft, Custom Line, and CRN mega-yachts, yachts, and other recreational boats for the United States, Canada, and the Bahamas. We also are the exclusive dealer for Bertram in the United States (excluding the Florida peninsula and certain portions of New England), Canada, and the Bahamas. We believe the brands we have added offer a migration for our existing customer base or fill a void in our product offerings and accordingly will not compete with or cannibalize the business generated from our other prominent brands.

     As is typical in the industry, we deal with manufacturers, other than the Sea Ray division of Brunswick, the Ferretti Group, and Bertram, 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 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.

     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.

2. Basis of Presentation

     These unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America 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, 2004. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America 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.

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The operating results for the three and nine months ended June 30, 2005 are not necessarily indicative of the results that may be expected in future periods.

     In order to maintain consistency and comparability between periods presented, certain amounts may 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.

3. New Accounting Pronouncements

     During December 2004, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards No. 123 (Revised 2004), “Share-Based Payment” (SFAS 123(R)). SFAS 123(R) replaces FASB Statement of Financial Accounting Standards No. 123, “Accounting for Stock-Based Compensation” (SFAS 123), supersedes Accounting Principles Board (APB) Opinion No. 25, “Accounting for Stock Issued to Employees” (APB 25), and amends FASB Statement of Financial Accounting Standards No. 95, “Statement of Cash Flows” (SFAS 95). Statement 123(R) requires all share-based payments to employees, including grants of employee stock options, to be recognized in the financial statements based on their fair values and eliminates the pro forma disclosures that were allowed as an alternative to financial statement recognition. Statement 123(R) was originally effective the beginning of the first interim or annual period beginning after June 15, 2005. However, on April 14, 2005, the Securities and Exchange Commission (SEC) issued a new rule that amends the effective date of SFAS 123(R) to the first fiscal year beginning after June 15, 2005. Accordingly, we will implement the revised standard in the first quarter of fiscal year 2006, under the “modified prospective” method. Based on this revised effective date, there will not be a reduction in earnings per diluted share in the fourth quarter of fiscal 2005. We are currently assessing the implications of this revised standard and the effect it will have on our results of operations in the first quarter of fiscal 2006 and thereafter.

4. Goodwill and Other Intangible Assets

     We account for goodwill and identifiable intangible assets in accordance with Statement of Financial Accounting Standards No. 142, “Goodwill and Other Intangible Assets” (SFAS 142). 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. If the carrying amount of goodwill or an identifiable intangible asset exceeds its fair value, we would recognize an impairment loss. We measure any potential impairment based on various business valuation methodologies, including a projected discounted cash flow method.

     We have determined that our most significant acquired identifiable intangible assets are the dealer agreements of dealerships that we have acquired, which are indefinite-lived intangible assets. We completed the annual impairment test during the fourth quarter of fiscal 2004, based on financial information as of the third quarter of fiscal 2004, which resulted in no impairment of goodwill or identifiable intangible assets. We will continue to test goodwill and identifiable intangible assets for impairment at least annually and whenever events or changes in circumstances indicate that the carrying value may not be recoverable. To date, we have not recognized any impairment of goodwill or identifiable intangible assets in the application of SFAS 142.

     The carrying amounts of goodwill and identifiable intangible assets as of June 30, 2005 are as follows (amounts in thousands):

			Identifiable
			Intangible
	Goodwill		Assets		Total
Balance, September 30, 2004	$	50,322	$	5,540	$	55,862
Additions during the period		182		128		310
Balance, June 30, 2005	$	50,504	$	5,668	$	56,172

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     Goodwill and identifiable intangible asset additions during the period relate to the finalizing of purchase price allocations on recently completed acquisitions whose effects were not significant on either an individual or an aggregate basis.

5. Short-Term Borrowings

     During February 2005, we entered into an amended and restated credit and security agreement with four financial institutions. The credit facility provides us a line of credit with asset-based borrowing availability of up to $340 million for working capital and inventory financing, with the amount of permissible borrowings determined pursuant to a borrowing base formula. The credit facility also permits approved-vendor floorplan borrowings of up to $20 million. The credit facility accrues interest at the London Interbank Offered Rate (LIBOR) plus 150 to 260 basis points, with the interest rate based upon the ratio of our net outstanding borrowings to our tangible net worth. The credit facility is secured by our inventory, accounts receivable, equipment, furniture, and fixtures. The credit facility requires us to satisfy certain covenants, including maintaining a leverage ratio tied to our tangible net worth. The credit facility matures in March 2008, with two one-year renewal options remaining. As of June 30, 2005, we were in compliance with all of the credit facility covenants.

     The credit facility replaced our previous credit facility with the same financial institutions, which provided for borrowings of up to $260 million and permitted $20 million in approved-vendor floorplan borrowings. The previous credit facility bore interest at a rate of LIBOR plus 175 to 260 basis points. The other terms and conditions of the new credit facility are generally similar to the previous credit facility. The previous credit facility was scheduled to mature in December 2006, with two one-year renewal options remaining.

6. Long-Term Debt

     During June 2005, we executed an approximate $4.0 million mortgage note payable, with a financial institution, collateralized by the related property that is owned by us. Payment of approximately $44,000 is due monthly, and the mortgage bears interest at a fixed rate of 5.67%. The mortgage note payable matures in June 2015.

7. Stockholders’ Equity

     During February 2005, we sold and issued through a public offering, approximately 1.4 million shares of common stock at $32.75 per share, resulting in net proceeds of approximately $44.2 million. The shares were sold in conjunction with the sale of approximately 1.9 million shares of common stock by a stockholder at $32.75 per share. These shares were registered under a Registration Statement on Form S-3 (Reg. No. 333-122091) filed with the SEC on January 18, 2005 and declared effective by the SEC on January 25, 2005. We used the proceeds from the sale of shares for general corporate purposes, including the repayment of short-term indebtedness.

     We issued a total of 435,143 shares of our common stock in conjunction with our Incentive Stock Plan and Employee Stock Purchase Plan during the nine months ended June 30, 2005. Our Incentive Stock Plan provides for the grant of incentive and non-qualified stock options to acquire our common stock, the grant of common stock, the grant of stock appreciation rights, and the grant of other cash awards to key personnel, directors, consultants, independent contractors, and others providing valuable services to us. Our Employee Stock Purchase Plan is available to all our regular employees who have completed at least one year of continuous service.

8. Stock-Based Compensation

     We account for stock-based compensation plans under Accounting Principles Board Opinion No. 25, “Accounting for Stock Issued to Employees” (APB 25). We apply the disclosure provisions of Statement of Financial Accounting Standards No. 123, “Accounting for Stock-Based Compensation” (SFAS 123), as amended by Statement of Financial Accounting Standards No. 148, “Accounting for Stock-Based Compensation – Transitions and Disclosure” (SFAS 148), which allows companies to continue following the accounting guidance of APB 25, but requires pro forma disclosure of net income and earnings per share for the effects of compensation expense had the fair value method of accounting for stock options been adopted. Under APB 25, no compensation expense has been recognized as the exercise price of our employee stock options has been in excess of, or equal to, the market

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price of the underlying stock on the grant date. For SFAS 123 purposes, the fair value of each option grant has been estimated as of the date of grant using the Black-Scholes option-pricing model.

     During December 2004, we granted nonvested common stock awards (restricted stock) to key employees pursuant to the 1998 Incentive Stock Plan. The awards are accounted for using the measurement and recognition principles of APB 25, and therefore, unearned compensation is measured at the date of grant and recognized as compensation expense over the vesting period. Shares awarded during December 2004 will vest after four years. At June 30, 2005, approximately $2.6 million of unearned compensation remains to be recognized in selling, general, and administrative expenses on a straight line basis over the remaining vesting period of the restricted stock awards. For the nine months ended June 30, 2005, we recorded approximately $442,000 of stock-based compensation expense in selling, general, and administrative expenses related to the restricted stock awards.

     Had compensation expense been determined using the fair value method described in SFAS 123, our net income and net income per share, as reported, would have been the following (amounts in thousands, except per share data):

	Three Months Ended						Nine Months Ended
	June 30,						June 30,
	2004			2005			2004			2005
Net income as reported	$	10,406		$	13,835		$	18,285		$	23,670
Add: Stock-based employee compensation expense, included in reported net income, net of related tax effects		—			116			—			271
Deduct: Total stock-based employee compensation expense determined under fair value based method for all awards, net of related tax effects		(403	)		(564	)		(1,119	)		(1,562	)
Pro forma net income	$	10,003		$	13,387		$	17,166		$	22,379
Basic earnings per share:
As reported	$	0.66		$	0.79		$	1.18		$	1.43
Pro forma	$	0.64		$	0.77		$	1.10		$	1.35
Diluted earnings per share:
As reported	$	0.61		$	0.74		$	1.10		$	1.33
Pro forma	$	0.60		$	0.72		$	1.05		$	1.27

9. Earnings Per Share

     The following is a reconciliation of the shares used in the denominator for calculating basic and diluted earnings per share:

	Three Months Ended				Nine Months Ended
	June 30,				June 30,
	2004		2005		2004		2005
Weighed average common shares outstanding used in calculating basic earnings per share		15,658,896		17,438,739		15,540,765		16,571,563
Effect of dilutive options		1,278,609		1,194,512		1,107,676		1,234,447
Weighted average common and common equivalent shares used in calculating diluted earnings per share		16,937,505		18,633,251		16,648,441		17,806,010

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     Options to purchase 6,445 and 53,956 shares of common stock as of June 30, 2004 and June 30, 2005, respectively, were not included in the computation of diluted earnings 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.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

     This Management’s Discussion and Analysis of Financial Condition and Results of Operations contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements include statements relating to our future economic performance, plans and objectives for future operations, and projections of revenue and other financial items that are based on our beliefs as well as assumptions made by and information currently available to us. Actual results could differ materially from those currently anticipated as a result of a number of factors, including those listed under “Business-Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended September 30, 2004.

General

     We are the largest recreational boat retailer in the United States with fiscal year 2004 revenue exceeding $762.0 million. Through our current 71 retail locations in 17 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; offer yacht and boat brokerage services; and, where available, offer slip and storage accommodations.

     We were incorporated in January 1998. We conducted no operations until 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 one full-service yacht repair facility. 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.

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 our financial condition and results of operations in the preparation of our condensed consolidated financial statements in conformity with accounting principles generally accepted in the United States of America. 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 various matters, including 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

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and storage services on a straight line basis over the term of the slip or storage agreement. Our commission earned for placing notes with financial institutions in connection with customer boat financing is recognized when the related boat sale is recognized. 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. Our commission earned on extended warranty service contracts sold on behalf of third-party companies is recognized at the later of customer acceptance of the service contract terms, as evidenced by contract execution, or when the related boat sale is recognized.

     We may be charged back on certain finance and extended warranty commissions and marketing fees on insurance products if a customer terminates or defaults on the underlying contract within a specified period of time. Based upon our experience of terminations and defaults, we maintain a chargeback allowance, which was not material to our condensed consolidated financial statements taken as a whole as of September 30, 2004 or June 30, 2005. 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 Emerging Issues Task Force Issue No. 02-16, “Accounting by a Customer (Including a Reseller) for Certain Consideration Received from a Vendor” (EITF 02-16). EITF 02-16 most significantly requires us to classify interest assistance received from manufacturers as a reduction of inventory cost and related cost of sales. Additionally, based on the requirements of our co-op assistance programs from our manufacturers, EITF 02-16 permits the netting of the assistance against related advertising expenses.

Inventories

     Inventory costs consist of the amount paid to acquire the inventory, the cost of equipment added, reconditioning costs, and transportation costs relating to relocating inventory prior to sale. New and used boat inventories are stated at the lower of cost, determined on a specific-identification basis, or market. Parts and accessories are stated at the lower of cost, determined on the first-in, first-out basis, or market. If the carrying amount of our inventory exceeds its fair value, we reduce the carrying amount to reflect fair value. We utilize our historical experience and current sales trends as the basis for our lower of cost or market analysis. Further reductions may be required if events occur and market conditions change, causing the fair value to fall below carrying value.

Valuation of Goodwill and Other Intangible Assets

     We account for goodwill and identifiable intangible assets in accordance with Statement of Financial Accounting Standards No. 142, “Goodwill and Other Intangible Assets” (SFAS 142). 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. If the carrying amount of goodwill or an identifiable intangible asset exceeds its fair value, we would recognize an impairment loss. We measure any potential impairment based on various business valuation methodologies, including a projected discounted cash flow method.

     We have determined that our most significant acquired identifiable intangible assets are the dealer agreements, which are indefinite-lived intangible assets. We completed the annual impairment test during the fourth quarter of fiscal 2004, based on financial information as of the third quarter of fiscal 2004, which resulted in no impairment of goodwill or identifiable intangible assets. We will continue to test goodwill and identifiable intangible assets for impairment at least annually and whenever events or changes in circumstances indicate that the carrying value may not be recoverable. To date, we have not recognized any impairment of goodwill or identifiable intangible assets in the application of SFAS 142. Net goodwill and identifiable intangible assets amounted to $50.5 million and $5.7 million, respectively, as of June 30, 2005. The most significant estimates used in our goodwill valuation model include estimates of the future growth in our cash flows and future working capital needs to support our projected growth. Should circumstances change causing these assumptions to differ materially than expected, goodwill may become impaired, resulting in a material adverse effect on our operating margins.

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Impairment of Long-Lived Assets

     We review property, plant, and equipment for impairment in accordance with Statement of Financial Accounting Standards No.144, “Accounting for Impairment or Disposal of Long-Lived Assets” (SFAS 144). SFAS 144 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 the 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 SFAS 144 is permanent and may not be restored. To date, we have not recognized any impairment of long-lived assets in connection with SFAS 144.

Insurance

     We retain varying levels of risk relating to the insurance policies we maintain, most significantly workers’ compensation insurance and employee medical benefits. As a result, 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. Any losses above the pre-determined exposure limits are paid by our third-party insurance carriers. We estimate our future losses using our historical loss experience, our judgment, and industry information.

     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 included in our Annual Report on Form 10-K for the fiscal year ended September 30, 2004.

Consolidated Results of Operations

     The following discussion compares the three and nine months ended June 30, 2005 to the three and nine months ended June 30, 2004 and should be read in conjunction with the Condensed Consolidated Financial Statements, including the related notes thereto, appearing elsewhere in this Report.

Three Months Ended June 30, 2005 Compared with Three Months Ended June 30, 2004

     Revenue.Revenue increased $86.4 million, or 39.3%, to $306.1 million for the three months ended June 30, 2005 from $219.7 million for the three months ended June 30, 2004. Of this increase, $5.5 million was attributable to stores opened or acquired that were not eligible for inclusion in the comparable-store base and $80.9 million was attributable to a 37.0% growth in comparable-store sales. The increase in comparable-store sales for the three months ended June 30, 2005 resulted primarily from an increase of approximately $77.0 million in boat sales, including approximately $36.7 million in yacht sales due to the variable timing of such yacht sales. This increase in boat sales on a comparable-store basis helped generate an increase in revenue from our parts, finance, insurance, and service products of approximately $3.9 million.

     Gross Profit.Gross profit increased $15.7 million, or 28.4% to $70.7 million for the three months ended June 30, 2005 from $55.0 million for the three months ended June 30, 2004. Gross profit as a percentage of revenue decreased to 23.1% for the three months ended June 30, 2005 from 25.0% for the three months ended June 30, 2004. The decrease was primarily attributable to an increase in yacht sales, which generally yield lower gross margins than boat sales. This decrease was partially offset by an increase in gross margins on boat sales and an increase in manufacturer programs in place for the three months ended June 30, 2005, versus the three months ended June 30, 2004. The remainder of the gross profit increase was attributable to incremental improvements in finance, insurance, brokerage, parts, and service revenues, which generally yield higher gross margins than boat sales.

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     Selling, General, and Administrative Expenses.Selling, general, and administrative expenses increased $9.3 million, or 25.4%, to $45.9 million for the three months ended June 30, 2005 from $36.6 million for the three months ended June 30, 2004. Selling, general, and administrative expenses as a percentage of revenue decreased approximately 170 basis points to 15.0% for the three months ended June 30, 2005 from 16.7% for the three months ended June 30, 2004. This decrease as a percentage of revenue was attributable to an approximate 175 basis point decrease in our comparable-stores selling, general, and administrative expenses as a percentage of revenue. The decrease incurred by our comparable-store locations was due to the leveraging of our personnel costs and fixed expenses. This was partially offset by an increase in expenses associated with stores opened or acquired that were not eligible for inclusion in the comparable-store base. These opened or acquired stores generally operate at a higher expense structure than our other locations.

     Interest Expense.Interest expense increased $600,000, or 32.9%, to $2.3 million for the three months ended June 30, 2005 from $1.7 million for the three months ended June 30, 2004. Interest expense as a percentage of revenue decreased to 0.7% for the three months ended June 30, 2005 from 0.8% for the three months ended June 30, 2004. The increase was primarily a result of a less favorable interest rate environment, which accounted for approximately $700,000 of the increase, partially offset by a decrease in the average borrowings associated with our revolving credit facility, which accounted for an interest expense reduction of approximately $100,000.

     Income Tax Provision.Income taxes increased $2.4 million, or 37.0%, to $8.7 million for the three months ended June 30, 2005 from $6.3 million for the three months ended June 30, 2004 as a result of increased earnings. Our effective income tax rate remained relatively constant at an annual rate of 38.5%.

Nine Months Ended June 30, 2005 Compared with Nine Months Ended June 30, 2004

     Revenue.Revenue increased $140.0 million, or 24.2%, to $718.7 million for the nine months ended June 30, 2005 from $578.7 million for the nine months ended June 30, 2004. Of this increase, approximately $10.2 million was attributable to stores opened or acquired that are not eligible for inclusion in the comparable-store base and approximately $129.8 million was attributable to a 22.5% growth in comparable-store sales. The increase in comparable-store sales for the nine months ended June 30, 2005 resulted primarily from an increase of approximately $120.7 million in boat sales, including approximately $50.4 million in yacht sales. This increase in boat sales on a comparable-store basis helped generate an increase in revenue from our parts, service, finance, and insurance products of approximately $9.1 million.

     Gross Profit.Gross profit increased $34.5 million, or 25.5%, to $169.8 million for the nine months ended June 30, 2005 from $135.3 million for the nine months ended June 30, 2004. Gross profit as a percentage of revenue increased to 23.6% for the nine months ended June 30, 2005 from 23.4% for the nine months ended June 30, 2004. This increase was primarily attributable to an increase in gross margins on boat sales and improvements in service, finance, insurance, parts, and brokerage revenues, which generally yield higher gross margins than boat sales. The increase in gross profit was partially offset by an increase in yacht sales, which generally yield lower gross margins than boat sales.

     Selling, General, and Administrative Expenses.Selling, general, and administrative expenses increased $23.1 million, or 22.9%, to $124.0 million for the nine months ended June 30, 2005 from $100.9 million for the nine months ended June 30, 2004. Selling, general, and administrative expenses as a percentage of revenue decreased 20 basis points to 17.2% for the nine months ended June 30, 2005 from 17.4% for the nine months ended June 30, 2004. The decrease as a percentage of revenue was attributable to an approximate 50 basis point decrease in our comparable-stores selling, general, and administrative expenses. This decrease incurred by our comparable-store locations was due to the leveraging of our operating expense structure which resulted in decreases in personnel costs and fixed expenses as a percentage of revenue. These decreases were partially offset by an approximate $2.0 million increase in marketing expenses associated with achieving our level of comparable-store sales growth, the addition and expansion of various product lines, and increases in inventory maintenance costs related to support our increase in comparable-store sales and the addition and expansion of various product lines. Additionally, the reduction of the comparable-store expenses was partially offset by an increase in expenses associated with stores opened or acquired that were not eligible for inclusion in the comparable-store base. These opened or acquired stores generally operate at a higher expense structure than our other locations.

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     Interest Expense.Interest expense increased $2.5 million, or 51.2%, to $7.4 million for the nine months ended June 30, 2005 from $4.9 million for the nine months ended June 30, 2004. Interest expense as a percentage of revenue increased to 1.0% for the nine months ended June 30, 2005 from 0.8% for the nine months ended June 30, 2004. The increase was primarily a result of a less favorable interest rate environment, which accounted for approximately $1.6 million of the increase, coupled with an increase in the average borrowings associated with our revolving credit facility and mortgages, which accounted for approximately $900,000.

     Income Tax Provision.Income taxes increased $3.5 million, or 31.6%, to $14.8 million for the nine months ended June 30, 2005 from $11.3 million for the nine months ended June 30, 2004. Our effective income tax rate remained relatively constant at an annual rate of 38.5%.

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 growth 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. We currently depend upon dividends, other payments from our consolidated operating subsidiaries, 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 operating subsidiaries.

     For the nine months ended June 30, 2004, cash provided by operating activities was approximately $25.1 million. For the nine months ended June 30, 2005, cash used in operating activities was approximately $28.4 million. For the nine months ended June 30, 2004, in addition to net income, cash provided by operating activities was due primarily to inventory management, including the management of inventory financing on short-term borrowings and an increase in accounts payable due to the timing of certain payments to our manufacturers. For the nine months ended June 30, 2005, cash used in operating activities was due primarily to repayments on our short-term borrowings as a result of the use of proceeds from the issuance of common shares through a public offering, an increase in inventories to ensure appropriate inventory levels, and an increase in accounts receivable due to increased revenues, partially offset by net income.

     For the nine months ended June 30, 2004 and 2005, cash used in investing activities was approximately $22.0 million and $10.6 million, respectively. For the nine months ended June 30, 2004, cash used in investing activities was primarily used in business acquisitions and to purchase property and equipment associated with opening new retail facilities or improving and relocating existing retail facilities. For the nine months ended June 30, 2005, 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 nine months ended June 30, 2004 and 2005, cash provided by financing activities was approximately $1.8 million and $45.8 million, respectively. For the nine months ended June 30, 2004, cash provided by financing activities was primarily attributable to proceeds from common shares issued upon the exercise of stock options and under the employee stock purchase plan, offset by repayments on long-term debt. For the nine months ended June 30, 2005, cash provided by financing activities was primarily attributable to proceeds from common shares issued through the February 2005 public offering, upon the exercise of stock options, and stock purchases under our employee stock purchase plan, partially offset by repayments on long-term debt.

     As of June 30, 2005, our indebtedness totaled approximately $142.2 million, of which approximately $27.7 million was associated with our real estate holdings and approximately $114.5 million was associated with financing our inventory and working capital needs. At June 30, 2004 and 2005, the interest rate on the outstanding short-term borrowings was 2.9% and 4.6%, respectively. At June 30, 2005, our additional available borrowings under our credit facility were approximately $169.2 million.

     During February 2005, we entered into an amended and restated credit and security agreement with four financial institutions. The credit facility provides us a line of credit with asset-based borrowing availability of up to $340

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million for working capital and inventory financing, with the amount of permissible borrowings determined pursuant to a borrowing base formula. The credit facility also permits approved-vendor floorplan borrowings of up to $20 million. The credit facility accrues interest at the London Interbank Offered Rate (LIBOR) plus 150 to 260 basis points, with the interest rate based upon the ratio of our net outstanding borrowings to our tangible net worth. The credit facility is secured by our inventory, accounts receivable, equipment, furniture, and fixtures. The credit facility requires us to satisfy certain covenants, including maintaining a leverage ratio tied to our tangible net worth. The credit facility matures in March 2008, with two one-year renewal options remaining. As of June 30, 2005, we were in compliance with all of the credit facility covenants.

     The credit facility replaced our previous credit facility with the same financial institutions, which provided for borrowings of up to $260 million and permitted $20 million in approved-vendor floorplan borrowings. The previous credit facility bore interest at a rate of LIBOR plus 175 to 260 basis points. The other terms and conditions of the new credit facility are generally similar to the previous credit facility. The previous credit facility was scheduled to mature in December 2006, with two one-year renewal options remaining.

     During February 2005, we sold through a public offering, approximately 1.4 million shares of common stock at $32.75 per share, resulting in net proceeds of approximately $44.2 million. The shares were sold in conjunction with the sale of approximately 1.9 million shares of common stock by a stockholder at $32.75 per share. These shares were registered under a Registration Statement on Form S-3 (Reg. No. 333-122091) filed with the SEC on January 18, 2005 and declared effective by the SEC on January 25, 2005. We used the proceeds from the sale of shares for general corporate purposes, including the repayment of short-term indebtedness.

     We issued a total of 435,143 shares of our common stock in conjunction with our Incentive Stock Plan and Employee Stock Purchase Plan during the nine months ended June 30, 2005 in exchange for approximately $4.1 million in cash. Our Incentive Stock Plan provides for the grant of incentive and non-qualified stock options to acquire our common stock, the grant of common stock, the grant of stock appreciation rights, and the grant of other cash awards to key personnel, directors, consultants, independent contractors, and others providing valuable services to us. Our Employee Stock Purchase Plan is available to all our regular employees who have completed at least one year of continuous service.

     Except as specified in this “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and in the attached unaudited condensed consolidated financial statements, we have no material commitments for capital for the next 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.

Impact of Seasonality and Weather on Operations

     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 was the case during fiscal year 2004 when Florida and other markets were affected by four separate 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.

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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

     At June 30, 2005, approximately 88.9% of our short- and long-term debt bears interest at variable rates, generally tied to a reference rate such as the LIBOR rate or the prime rate of interest of certain banks. Changes in interest rates on loans from these financial institutions could affect our earnings due to interest rates charged on certain underlying obligations that are variable. At June 30, 2005, a hypothetical 100 basis point increase in interest rates on our variable rate obligations would have resulted in an increase of approximately $1.3 million in annual pre-tax interest expense. This estimated increase is based upon the outstanding balances of all of our variable rate obligations and assumes no mitigating changes by us to reduce the outstanding balances or additional interest assistance that would be received from vendors due to the hypothetical interest rate increase.

     Products purchased from the Italy-based Ferretti Group 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 sell profitably Ferretti Group 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 or cost of goods sold, cash flows, and earnings we recognize for the Ferretti Group product line. The impact of these currency fluctuations could increase; particularly as our revenue from the Ferretti Group products increases as a percentage of our total revenue. We cannot predict the effects of exchange rate fluctuations on our operating results. We do not currently intend to engage 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 4. CONTROLS AND PROCEDURES

     We have evaluated, with the participation of our Chief Executive Officer (CEO) and Chief Financial Officer (CFO), the effectiveness of our disclosure controls and procedures as of June 30, 2005. Based on this evaluation, our CEO and CFO have each concluded that our disclosure controls and procedures are effective to ensure that we record, process, summarize, and report information required to be disclosed by us in our quarterly reports filed under the Securities Exchange Act within the time periods specified by the Securities and Exchange Commission’s rules and forms.

Changes in Internal Controls

     The requirements of Section 404 of the Sarbanes-Oxley Act of 2002 will be effective for our fiscal year ending September 30, 2005. In order to comply with the Act, we are currently undergoing a comprehensive effort, which includes the documentation and testing of internal controls. We have identified certain internal control issues and deficiencies which management believes should be improved. However, to date we have not identified any material weaknesses in our internal control as defined by the Public Company Accounting Oversight Board. Accordingly, we are making improvements to our internal controls over financial reporting as a result of our documentation and testing of our internal controls. These improvements include further formalization of policies and procedures, improved segregation of duties, additional information technology system controls and additional monitoring controls. Any further internal control issues or deficiencies identified by our continued compliance efforts will be addressed accordingly.

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PART II OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

     Not applicable.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

     Not applicable.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

     Not applicable.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

     Not applicable.

ITEM 5. OTHER INFORMATION

     Not applicable.

ITEM 6. EXHIBITS

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.

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SIGNATURES

     Pursuant to the requirements of the Securities and Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	MARINEMAX, INC.
August 9, 2005	By:	/s/ Michael H. McLamb
		Michael H. McLamb
		Executive Vice President, Chief Financial Officer, Secretary, and Director (Principal Accounting and Financial Officer)

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EXHIBIT INDEX

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.