September 30, 2009				December 31, 2008
ASSETS						(Note 1)
Cash and cash equivalents		$	973			$	4,622
Marketable securities			24,190				8,799
Accounts receivable, net			2,722				5,575
Inventories			16,073				22,453
Income taxes receivable			5,587				2,464
Deferred income taxes			666				1,116
Prepaid expenses and other current assets			1,198				1,681
Total current assets			51,409				46,710
Property, plant and equipment, net			13,599				14,579
Goodwill			3,308				3,308
Other intangibles, net			465				465
Marketable securities			23,354				37,953
Deferred income taxes			2,771				2,934
Other assets			4,996				4,344
Total assets		$	99,902			$	110,293

 

Accounts payable		$	3,114			$	1,437
Accrued expenses and other liabilities			6,937				12,281
Total current liabilities			10,051				13,718
Pension liabilities			5,792				5,285
Other long-term liabilities			346				501
Total liabilities			16,189				19,504
Common stock			3,690				3,643
Capital in excess of par value			—				—
Retained earnings			81,021				88,535
Accumulated other comprehensive loss			(998	)			(1,389	)
Total stockholders’ equity			83,713				90,789
Total liabilities and stockholders’ equity		$	99,902			$	110,293

 

 

 

		Three months ended September 30,								Nine months ended September 30,
		2009				2008				2009				2008
Net sales		$	8,734			$	31,582			$	35,158			$	152,858
Cost of goods sold			7,596				26,478				33,616				123,263
Gross profit			1,138				5,104				1,542				29,595
Selling, general and administrative expenses			4,478				4,086				15,949				18,965
Operating (loss) income			(3,340	)			1,018				(14,407	)			10,630
Interest income			420				623				1,257				1,815
(Loss) income before income taxes			(2,920	)			1,641				(13,150	)			12,445
Income tax (benefit) provision			(1,312	)			957				(5,221	)			3,733
Net (loss) income		$	(1,608	)		$	684			$	(7,929	)		$	8,712
(Loss) earnings per share
Basic		$	(0.04	)		$	0.02			$	(0.22	)		$	0.24
Diluted		$	(0.04	)		$	0.02			$	(0.22	)		$	0.24
Dividends per share		$	—			$	0.065			$	0.010			$	0.195
Average shares outstanding
Basic			36,084				35,824				36,059				35,773
Diluted			36,084				36,476				36,059				36,465

 

 

 

		Comprehensive Income (Loss)									Capital in Excess of Par Value			Retained Earnings			Accumulated Other			Total
					Common Stock
					Shares			Amount
Balance, December 31, 2008						36,425		$	3,643		$	—		$	88,535		$	(1,389	)	$	90,789
Stock issued for stock incentive plans, net						631			63			(204	)		—			—			(141	)
Stock purchased and retired						(158	)		(16	)		(1,463	)		784			—			(695	)
Net loss		$	(7,929	)		—			—			—			(7,929	)		—			(7,929	)
Other comprehensive income, net of tax:
Pension adjustment			216			—			—			—			—			216			216
Unrealized gain on securities, net of reclassification adjustment			175			—			—			—			—			175			175
Comprehensive loss		$	(7,538	)
Dividends declared						—			—			—			(369	)		—			(369	)
Stock-based compensation						—			—			1,214			—			—			1,214
Excess tax benefits for share - based payments						—			—			453			—			—			453
Balance, September 30, 2009						36,898		$	3,690		$	—		$	81,021		$	(998	)	$	83,713

 

 

 

		Nine months ended September 30,
		2009				2008
OPERATING ACTIVITIES
Net (loss) income		$	(7,929	)		$	8,712
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Depreciation and amortization			1,056				1,300
Gain on sale of property and equipment			(15	)			(14	)
Stock-based compensation expense			1,214				1,116
Excess tax benefits for share-based payments			(453	)			(608	)
Deferred income tax provision (benefit)			76				(228	)
(Increase) decrease in assets:
Accounts receivable			2,853				2,140
Inventories			6,380				8,452
Prepaid expenses and other current assets			483				367
Income taxes receivable			(2,670	)			294
Other non-current assets			(652	)			338
Increase (decrease) in liabilities:
Accounts payable			1,677				55
Accrued expenses and other liabilities			(5,344	)			(3,650	)
Other long-term liabilities			686				(224	)
Net cash (used for) provided by operating activities			(2,638	)			18,050
INVESTING ACTIVITIES
Capital expenditures			(76	)			(289	)
Proceeds from sale of property and equipment			15				14
Purchases of marketable securities			(13,556	)			(46,302	)
Sales of marketable securities			7,081				37,387
Maturities of marketable securities			5,954				1,000
Net cash used for investing activities			(582	)			(8,190	)
FINANCING ACTIVITIES
Payment of dividends			(369	)			(7,074	)
Excess tax benefits for share-based payments			453				608
Cash paid for common stock purchased and retired			(537	)			(1,619	)
Proceeds received upon exercise of stock options			24				37
Net cash used for financing activities			(429	)			(8,048	)
Net (decrease) increase in cash and cash equivalents			(3,649	)			1,812
Cash and cash equivalents at beginning of period			4,622				3,233
Cash and cash equivalents at end of period		$	973			$	5,045

 

The accompanying notes are an integral part of these consolidated statements.

 

 

The Company has considered subsequent events through November XX, 2009, the date of issuance, in preparing the consolidated financial statements and notes thereto.

 

	Recently Adopted Accounting Pronouncements:
	In June 2009, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update No. 2009-01(ASU 2009-01) titled “Topic 105-Generally Accepted Accounting Principles amendments based on Statement of Financial Accounting Standards No. 168-The FASB Accounting Standards CodificationTM and the Hierarchy of Generally Accepted Accounting Principles.” FASB Accounting Standards CodificationTM (ASC) Topic 105, “Generally Accepted Accounting Principles” has become the single source of authoritative U.S. generally accepted accounting principles (GAAP) recognized by the FASB to be applied by nongovernmental entities, effective for financial statements issued for interim and annual periods ending after September 15, 2009.  Rules and interpretive releases of the Securities and Exchange Commission (SEC) under authority of federal securities laws are also sources of authoritative GAAP for SEC registrants.  The FASB now issues Accounting Standards Updates that are not considered authoritative in their own right, but will serve to update the Codification, provide background information about the guidance, and provide the bases for conclusions on the change(s) in the Codification.

Certain amendments to FASB ASC 260-10 clarifies that all outstanding unvested share-based payment awards that contain non-forfeitable rights to dividends or dividend equivalents, whether paid or unpaid, are participating securities. An entity must include participating securities in its calculation of basic and diluted earnings per share (EPS) pursuant to the two-class method, as described in ASC 260-10. The Company has periodically issued share-based payment awards that contain non-forfeitable rights to dividends.  The Company evaluated these amendments and determined that the impact was not material and there was no change to the basic and diluted earnings per share amounts as reported.

 

	The Company reserved 5,250,000 shares of common stock under the 2001 and 2004 Stock Incentive Plans each of which expires ten years from the date of approval.  These plans provide for the issuance of various forms of stock incentives, including, among others, incentive and non-qualified stock options and restricted stock.  As of September 30, 2009, there were approximately 1,438,000 shares available for grants.
	Stock-based compensation for the three and nine months ended September 30, 2009 and 2008 were as follows:

 

 

 

 

	Other Information
	As of September 30, 2009, total unrecognized compensation cost related to non-vested restricted shares was approximately $4,739,000.  This cost is expected to be recognized over a weighted-average period of 4.1 years.  As of September 30, 2009, all compensation cost related to stock options has been recognized.

Investments with remaining maturities of less than 12 months are considered to be current marketable securities.  Investments with remaining maturities greater than 12 months are considered to be non-current marketable securities.

 

 

 

 

11.	EMPLOYEE BENEFIT PLAN
	The Company participates in a multiple employer pension plan.  The following represents the net periodic benefit cost (credit) and related components for the plan:

 

	The Company does not currently expect to make any contributions to this plan in 2009.
12.	FAIR VALUE MEASUREMENTS
	FASB ASC 820, “ Fair Value Measurements and Disclosures,” defines fair value, establishes a framework for measuring fair value and expands disclosure requirements about items measured at fair value. FASB ASC 820 does not require any new fair value measurements.  It applies to accounting pronouncements that already require or permit fair value measures.
	FASB ASC 820 establishes a fair value hierarchy that distinguishes between assumptions based on market data (observable inputs) and the Company’s assumptions (unobservable inputs). The hierarchy consists of three broad levels as follows:
		Level 1 – Quoted market prices in active markets for identical assets or liabilities Level 2 – Inputs other than level 1 that are either directly or indirectly observable Level 3 – Unobservable inputs developed using the Company’s estimates and assumptions, which reflect those that market participants would use.
	Securities:
	The Company determines the fair value of marketable securities that are classified as available for sale securities and investments in the non-qualified plan that are classified as trading securities using quoted market prices.  The adoption of SFAS 157 had no effect on the Company’s valuation of these marketable securities or investments.
	The following table summarizes the valuation of financial instruments measured at fair value on a recurring basis in the balance sheet as of September 30, 2009:

 

 

 

(in thousands)		Nine months ended September 30,
		2009				2008
Net cash (used for) provided by operating activities		$	(2,638	)		$	18,050
Net cash used for investing activities			(582	)			(8,190	)
Net cash used for financing activities		$	(429	)		$	(8,048	)

 

Certain statements made in this report that are not historical facts are “forward-looking statements” under the Private Securities Litigation Reform Act of 1995. Such forward-looking statements may include, without limitation, the expected effect of recent accounting pronouncements on the Company’s consolidated financial statements; the Company’s estimate of the guarantee liability under dealer floor plan financing arrangements; the Company’s expectation that it will not make any contributions to its pension plan in 2009; the Company’s belief that inventory financing will be available to its dealers in the current model year; the Company’s belief that dealer inventory levels have reached appropriate and manageable levels; the Company’s belief that it can curtail or eliminate the continued use of retail sales incentive programs to reduce dealer inventory; the Company’s belief that dealer inventory reductions will enable the Company to meet dealer and retail demand with current model year products; the Company’s ability to produce an appropriate quantity of 2010 model-year products to meet firm demand and preserve the value of brand names while maintaining a prudent amount of research and development to develop new models; the Company’s ability to take advantages of opportunities that may arise due to financial difficulties of other manufacturers; the Company’s belief that its liquidity and capitalization will provide sufficient capital to meet the Company’s requirements for the next twelve months; the Company’s expectations about capital expenditures during 2009; that the Company may in the future incur additional repurchase obligations as a result of dealer floor plan financing defaults; the Company’s belief that the prices of many commodities used as  raw materials for its manufacturing processes will rise in the near future; the Company’s expectations regarding market risk of its investment portfolio; and the Company’s expectation about the effect of litigation on the Company’s financial position or results of operations.  The words “may,” “should,” “will,” “expect,” “believe,” “anticipate,” “intend,” “plan,” “believe,” “seek,” “project,” “estimate,” and similar expressions used in this document that do not relate to historical facts are intended to identify forward-looking statements. Such statements are based on certain assumptions and analyses made by our management in light of its experience and its perception of historical trends, current conditions, expected future developments and other factors it believes to be appropriate. We caution you that such statements are only predictions and not guarantees of future performance and that actual results, developments and business decisions may differ from those envisioned by the forward-looking statements.  Risk factors that could cause such future events not to occur as expected include the following: economic conditions, unavailability of credit and possible decreases in the level of consumer confidence impacting discretionary spending, business interruptions due to adverse weather conditions, increased interest rates, unanticipated changes in consumer demand and preferences, deterioration in the quality of Marine Products’ network of independent boat dealers or availability of financing of their inventory, our ability to insulate financial results against increasing commodity prices, the impact of rising gasoline prices and a weak housing market on consumer demand for our products, competition from other boat manufacturers and dealers, and insurance companies that insure a number of Marine Products’ marketable securities have recently been downgraded, which may cause volatility in the market price of Marine Products’ marketable securities. Additional discussion of factors that could cause the actual results to differ materially from management's projections, forecasts, estimates and expectations is contained in Marine Products’ Form 10-K, filed with the Securities and Exchange Commission for the year ended December 31, 2008.  The Company does not undertake to update its forward-looking statements.

ITEM 6.	Exhibits
	Exhibit Number	Description
	3.1(a)	Marine Products Corporation Articles of Incorporation (incorporated herein by reference to Exhibit 3.1 to the Registrant’s Registration Statement on Form 10 filed on February 13, 2001).
	3.1(b)	Certificate of Amendment of Certificate of Incorporation of Marine Products Corporation executed on June 8, 2005 (incorporated herein by reference to Exhibit 99.1 to the Registrant’s Current Report on Form 8-K filed June 9, 2005).
	3.2	Amended and Restated By-laws of Marine Products Corporation (incorporated herein by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K filed on October 25, 2007).
	4	Restated Form of Stock Certificate (incorporated herein by reference to Exhibit 4.1 to the Registrant’s Registration Statement on Form 10 filed on February 13, 2001).
	10.1	Modifications to incentive compensation of Mr. Lane
	31.1	Section 302 certification for Chief Executive Officer
	31.2	Section 302 certification for Chief Financial Officer
	32.1	Section 906 certifications for Chief Executive Officer and Chief Financial Officer

 

 

 

	MARINE PRODUCTS CORPORATION
	/s/ Richard A. Hubbell
Date: November 5, 2009	Richard A. Hubbell
	President and Chief Executive Officer
	(Principal Executive Officer)
	/s/ Ben M. Palmer
Date: November 5, 2009	Ben M. Palmer
	Vice President, Chief Financial Officer and Treasurer
	(Principal Financial and Accounting Officer)