SECURITIES AND EXCHANGE COMMISSION

FORM 10-Q

Commission File No. 1-14173

MARINEMAX, INC.

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 April 22, 2005 was 17,540,745.

MARINEMAX, INC.

Table of Contents

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PART I. FINANCIAL INFORMATION

ITEM 1. Financial Statements

MARINEMAX, INC. AND SUBSIDIARIES

See accompanying notes to condensed consolidated financial statements

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MARINEMAX, INC. AND SUBSIDIARIES

See accompanying notes to condensed consolidated financial statements

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MARINEMAX, INC. AND SUBSIDIARIES

See accompanying notes to condensed consolidated financial statements

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MARINEMAX, INC. AND SUBSIDIARIES

See accompanying notes to condensed consolidated financial statements

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MARINEMAX, INC. AND SUBSIDIARIES

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 March 31, 2005, we operated through 68 retail locations in 16 states, consisting of Alabama, Arizona, California, Colorado, Delaware, Florida, Georgia, Maryland, Minnesota, Nevada, New Jersey, North Carolina, Ohio, South Carolina, 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, including 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 six months ended March 31, 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 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 March 31, 2005 are as follows (amounts in thousands):

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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 January 2008, with two one-year renewal options remaining. As of March 31, 2005, we were in compliance with all of the credit facility covenants.

     The credit facility replaces 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. Stockholders’ Equity

     We issued a total of 370,824 shares of our common stock in conjunction with our Incentive Stock Plan and Employee Stock Purchase Plan during the six months ended March 31, 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.

     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 $44.0 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.

7. 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 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.

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     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):

     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 March 31, 2005, approximately $2.8 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 six months ended March 31, 2005, we recorded approximately $252,000 of stock-based compensation expense in selling, general, and administrative expenses related to the restricted stock awards.

8. Earnings Per Share

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

     Options to purchase 445 and 433 shares of common stock as of March 31, 2004 and March 31, 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.

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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 2004 revenue exceeding $762.0 million. Through our current 68 retail locations in 16 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 have made 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 and storage services on a straight line basis over the term of the slip or storage agreement. Commissions earned by us for placing notes with financial institutions in connection with customer boat financing are recognized when the related boat sales are recognized. Marketing fees earned on credit life, accident and disability, and hull insurance products sold by third-party insurance companies are recognized at the later of customer acceptance of the insurance

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product, as evidenced by contract execution, or when the related boat sale is recognized. Commissions earned on extended warranty service contracts sold on behalf of third-party companies are 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.

     Certain finance and extended warranty commissions and marketing fees on insurance products may be charged back if a customer terminates or defaults on the underlying contract within a specified period of time. Based upon our experience of 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 March 31, 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 March 31, 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 six months ended March 31, 2005 to the three and six months ended March 31, 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 March 31, 2005 Compared with Three Months Ended March 31, 2004

     Revenue. Revenue increased $26.1 million, or 12.9%, to $228.4 million for the three months ended March 31, 2005 from $202.3 million for the three months ended March 31, 2004. Of this increase, $3.0 million was attributable to stores opened or acquired that were not eligible for inclusion in the comparable-store base and $23.1 million was attributable to a 11.4% growth in comparable-store sales. The increase in comparable-store sales for the three months ended March 31, 2005 resulted primarily from an increase of approximately $21.9 million in boat sales, partially offset by a decrease 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 $2.4 million.

     Gross Profit. Gross profit increased $9.8 million, or 21.8% to $55.0 million for the three months ended March 31, 2005 from $45.2 million for the three months ended March 31, 2004. Gross profit as a percentage of revenue increased to 24.1% for the three months ended March 31, 2005 from 22.3% for the three months ended March 31, 2004. The increase was primarily attributable to an increase in gross margins on boat sales. The increase in gross margins on boat sales was partially driven by an increase in manufacturer programs in place for the three months ended March 31, 2005 versus the three months ended March 31, 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.

     Selling, General, and Administrative Expenses. Selling, general, and administrative expenses increased $6.6 million, or 19.4%, to $40.9 million for the three months ended March 31, 2005 from $34.3 million for the three months ended March 31, 2004. Selling, general, and administrative expenses as a percentage of revenue increased

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100 basis points to 17.9% for the three months ended March 31, 2005 from 16.9% for the three months ended March 31, 2004. This increase as a percentage of revenue was attributable to an approximate 90 basis point increase in our comparable-stores selling, general, and administrative expenses. The approximate $1.8 million increase incurred by our comparable-store locations consisted of increases in personnel costs associated with increases in our overall performance and levels of operations, increases in marketing expenses associated with achieving our level of comparable-store sales growth and the addition and expansion of various product lines over the last 18 months, and increases in inventory maintenance costs related to increased levels of inventory to support our increase in comparable-store sales and the addition and expansion of various product lines. An approximate 10 basis point increase was attributable to stores opened or acquired that were not eligible for inclusion in the comparable-store base as these stores operate at a higher expense structure than our other locations.

     Interest Expense. Interest expense increased $1.0 million, or 59.0%, to $2.7 million for the three months ended March 31, 2005 from $1.7 million for the three months ended March 31, 2004. Interest expense as a percentage of revenue increased to 1.2% for the three months ended March 31, 2005 from 0.8% for the three months ended March 31, 2004. The increase was primarily a result of increased borrowings associated with our revolving credit facility and mortgages, which accounted for approximately $300,000 of the increase, coupled with a less favorable interest rate environment, which accounted for approximately $700,000.

     Income Tax Provision. Income taxes increased $900,000, or 24.0%, to $4.4 million for the three months ended March 31, 2005 from $3.5 million for the three months ended March 31, 2004 as a result of increased earnings. Our effective income tax rate remained constant at 38.5%.

Six Months Ended March 31, 2005 Compared with Six Months Ended March 31, 2004

     Revenue. Revenue increased $53.6 million, or 14.9%, to $412.6 million for the six months ended March 31, 2005 from $359.0 million for the six months ended March 31, 2004. Of this increase, approximately $4.7 million was attributable to stores opened or acquired that are not eligible for inclusion in the comparable-store base and approximately $48.9 million was attributable to a 13.6% growth in comparable-store sales. The increase in comparable-store sales for the six months ended March 31, 2005 resulted primarily from an increase of approximately $43.7 million in boat sales, including approximately $26.7 million of sales from the addition and expansion of product lines over the last 18 months. 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 $5.2 million.

     Gross Profit. Gross profit increased $18.8 million, or 23.5%, to $99.1 million for the six months ended March 31, 2005 from $80.3 million for the six months ended March 31, 2004. Gross profit as a percentage of revenue increased to 24.0% for the six months ended March 31, 2005 from 22.4% for the six months ended March 31, 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 $13.8 million, or 21.4%, to $78.1 million for the six months ended March 31, 2005 from $64.3 million for the six months ended March 31, 2004. Selling, general, and administrative expenses as a percentage of revenue increased 100 basis points to 18.9% for the six months ended March 31, 2005 from 17.9% for the six months ended March 31, 2004. This increase as a percentage of revenue was attributable to an approximate 85 basis point increase in our comparable-stores selling, general, and administrative expenses. The approximate $3.6 million increase incurred by our comparable-store locations consisted of increases in personnel costs associated with increases in our overall performance and levels of operations, increases in marketing expenses associated with achieving our level of comparable-store sales growth and the addition and expansion of various product lines over the last 18 months, and increases in inventory maintenance costs related to support our increase in comparable-store sales and the addition and expansion of various product lines. These increases were partially offset by the leveraging of certain fixed expenses related to our comparable-store sales increase. An approximate 15 basis point increase was attributable to stores opened or acquired that were not eligible for inclusion in the comparable-store base as these stores operate at a higher expense structure than our other locations.

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     Interest Expense. Interest expense increased $1.9 million, or 61.1%, to $5.1 million for the six months ended March 31, 2005 from $3.2 million for the six months ended March 31, 2004. Interest expense as a percentage of revenue increased to 1.2% for the six months ended March 31, 2005 from 0.9% for the six months ended March 31, 2004. The increase was primarily a result of increased borrowings associated with our revolving credit facility and mortgages, which accounted for approximately $1.0 million of the increase, coupled with a less favorable interest rate environment, which accounted for approximately $900,000.

     Income Tax Provision. Income taxes increased $1.2 million, or 24.8%, to $6.2 million for the six months ended March 31, 2005 from $4.9 million for the six months ended March 31, 2004. Our effective income tax rate remained constant at 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. This evaluation is also used 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 six months ended March 31, 2004, cash provided by operating activities was approximately $12.8 million. For the six months ended March 31, 2005, cash used in operating activities was approximately $32.8 million. For the six months ended March 31, 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 six months ended March 31, 2005, cash used in operating activities was due primarily to increases in inventories to ensure appropriate inventory levels moving into the spring and summer boating season and in repayments on our short-term borrowings as a result of the use of proceeds from the issuance of common shares through the February 2005 public offering, partially offset by net income and an increase in accounts payable due to the timing of certain payments to our manufacturers.

     For the six months ended March 31, 2004 and 2005, cash used in investing activities was approximately $6.9 million and $6.7 million, respectively. Cash used in investing activities was primarily used to purchase property and equipment associated with opening new retail facilities or improving and relocating existing retail facilities and in business acquisitions.

     For the six months ended March 31, 2004 and 2005, cash provided by financing activities was approximately $800,000 and $45.4 million, respectively. For the six months ended March 31, 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 six months ended March 31, 2005, cash provided by financing activities was primarily attributable to 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 March 31, 2005, our indebtedness totaled approximately $179.4 million, of which approximately $24.4 million was associated with our real estate holdings and approximately $155.0 million was associated with financing our inventory and working capital needs. At March 31, 2004 and 2005, the interest rate on the outstanding short-term borrowings was 2.8% and 4.2%, respectively. At March 31, 2005, our additional available borrowings under our credit facility were approximately $153.0 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 million for working capital and inventory financing, with the amount of permissible borrowings determined pursuant

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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 March 31, 2005, we were in compliance with all of the credit facility covenants.

     The credit facility replaces 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.

     As is common in our industry, we receive interest assistance directly from boat manufacturers, including Brunswick. The interest assistance programs vary by manufacturer and generally include periods of free financing or reduced interest rate programs. The interest assistance may be paid directly to us or our lenders, depending on the arrangements the manufacturer has established. We classify interest assistance received from manufacturers as a reduction of inventory cost and related cost of sales in accordance with EITF 02-16. See Item 2 – “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Application of Critical Accounting Policies – Vendor Consideration Received” for further discussion of this standard.

     We issued a total of 370,824 shares of our common stock in conjunction with our Incentive Stock Plan and Employee Stock Purchase Plan during the six months ended March 31, 2005 in exchange for approximately $3.1 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 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 March 31, 2005, approximately 93.3% 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 March 31, 2005, a hypothetical 100 basis point increase in interest rates on our variable rate obligations would have resulted in an increase of approximately $1.7 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 March 31, 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. During the quarterly period covered by this report, there have not been any changes in our internal controls over financial reporting that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

     Subsequent to the date of their evaluation, there have not been any significant changes in our internal controls or in other facts that could significantly affect these controls.

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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

Our 2005 Annual Meeting of Stockholders was held on February 3, 2005. The following nominees were elected to our Board of Directors to serve as Class I directors for three-year terms expiring in 2008, or until their respective successors have been elected and qualified:

The following directors’ terms of office continued after the 2005 Annual Meeting of Stockholders:

Additionally, our stockholders approved the following amendments:

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Finally, our stockholders ratified the appointment of Ernst & Young LLP as our independent registered certified public accounting firm for the fiscal year ending September 30, 2005:

ITEM 5. OTHER INFORMATION

     Not applicable.

ITEM 6. EXHIBITS

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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.

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