Optimal Operating and Financial Leverage ISLEMARINE BOAT COMPANY Directed Chris Waterson had been a water enthusiast all Of his life. He grew up with his parents in the Florida Keys. He was an avid water-skier and sport fisher. and spent most of his free time involved in water oriented activities. His first professional position was a technical and market representative for a small family owned fiberglass molder in the Midwest. His heavy involvement in all aspects Of pro- duction and sales helped the company expand and provided him key insight and experience in the fiberglass industry. The owners of the company were pleased with his enthusiasm and knowledge and gave him the opportunity Of opening and managing a new,west coast operation in Seattle. After seeing the plant develop and thrive over 15 years, Chris realized that the family opera- tion did not provide an ownership opportunity, and he wanted to develop his own business. While at a trade meeting, Mark talked to the head of a fiberglass boat company who was interested in retiring. Chris felt that these facilities might provide a good business opportunity. A boat company would blend his expertise in the fiberglass industry with his interest in boating. He also believed that the numerous contacts he had developed in the area, both within the industry and through his involvement in fishing and boating associations, would be an asset in this type of venture. Mark knew that there was strong market demand for recreational boats and an increasing inter- est in boats that younger family members could safely operate. He recently became aware of a jet propelled boat design that combined beneficial aspects of.jet skis with the advantages of a larger boat design. The shell of the jet boat was similar to a traditional motor boat and could be molded as a single fiberglass unit. The jet boat was relatively quiet and possessed incredible maneuverability. It could operate at speeds of 45 miles per hour and had sufficient power to pull skiers and tubers. It was capable of providing low maintenance transportation from island to island in the Puget Sound. The jet propulsion mechanism eliminated the dangers of a propeller and made it relatively safe for younger boaters. The lack of a propeller allowed the boat to operate in extremely shallow water. Although higher priced than a traditional boat of comparable size, industry analysts indicated pent- up demand for an upscale "water toy." A number of west coast boat dealers felt that the jet boat would cover an unfilled market niche and indicated an interested in selling them. Waterson teamed up with Sally Sawyer, a college friend who was production engineer for a jet ski manufacturer in Florida, and Ralph Redding, a financial specialist from Portland. This founding