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SECURITIES AND EXCHANGE COMMISSIONWashington D.C. 20549

FORM 10-K

ý
Annual report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934o
Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934


FOR THE FISCAL YEAR ENDED DECEMBER 31, 2001

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Commission
File No. 1-16263 MARINE PRODUCTS CORPORATION

Delaware
(State of Incorporation)

58-2572419
(I.R.S. Employer Identification No.)


2170 PIEDMONT ROAD, NE,
ATLANTA, GEORGIA 30324
(404) 321-7910

Securities registered pursuant to Section 12(b) of the Act:

Title of each classCOMMON STOCK, $0.10 PAR VALUE
(17,284,500 shares outstanding
as of February 26, 2002)

Name of each exchange on which registeredAMERICAN STOCK EXCHANGE


The aggregate market value of shares of common stock held by non-affiliates at February 26, 2002 was $44,739,422.

Securities
registered pursuant to section 12(g) of the Act:
NONE

Indicate
by check mark whether the registrant (1) has filed all reports required 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. ý  Yes        o  No

Indicate
by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in
definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ý

Documents
Incorporated by Reference

Portions
of the Proxy Statement for the 2002 Annual Meeting of Stockholders of Marine Products Corporation are incorporated by reference into Part III, Items 10 through 13 of this
report.

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PART I

References in this document to "we," "our," "us," "Marine Products," or "the Company" mean Marine Products Corporation ("MPC") and its subsidiaries, Chaparral
Boats, Inc. ("Chaparral") and Robalo Marine LLC ("Robalo") (collectively or individually).

Forward-Looking Statements

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, statements that relate to our business strategy, plans and objectives, and our beliefs and expectations regarding future demand for our
products and services and other events and conditions that may influence our performance in the future.

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. See "Risk Factors" below.

Item 1. Business

Marine Products produces fiberglass motorized boats distributed and marketed together through its dealer network. Marine Products' offerings include Chaparral
sterndrive pleasure boats, and during fiscal 2001, the Company acquired the Robalo brand and thereby entered the outboard offshore sport fishing boat market.

Marine
Products is a Delaware corporation, incorporated on August 31, 2000, in connection with a spin-off from RPC, Inc. ("RPC"). In January 2000, RPC announced plans to spin-off
Chaparral, the recreational powerboat manufacturing business of RPC, to RPC's stockholders. RPC accomplished the spin-off by contributing 100 percent of the issued and outstanding stock of Chaparral
to Marine Products, a newly formed wholly-owned subsidiary of RPC, and then distributing the common stock of Marine Products to RPC stockholders. As part of the transaction, effective February 28,
2001, RPC's stockholders received 0.6 share of Marine Products common stock for every one share of RPC common stock owned as of February 16, 2001, the record date for the spin-off.

Chaparral
designs, manufactures and sells recreational fiberglass powerboats in the sportboat, deckboat and cruiser markets. Available industry statistics measure Chaparral as the third
largest sterndrive boatbuilder in the United States. Chaparral sells its three lines of powerboats to an international network of independent authorized dealers comprised of approximately 143 domestic
dealers and 11 international dealers.

Chaparral
was founded in 1965 in Ft. Lauderdale, Florida. Chaparral's first boat was a 15-foot tri-hull design with a retail price of less than $1,000. Over time the company grew by
offering exceptional quality and consumer value. In 1976, Chaparral moved to Nashville, Georgia, where a manufacturing facility of a former boat manufacturing company was available for purchase. This
provided Chaparral an opportunity to obtain additional manufacturing space and access to a trained work force. With 36 years of boatbuilding experience, Chaparral continues to improve the design and
manufacturing of its product offerings to meet the growing needs of discriminating recreational boaters.

Since
its acquisition in 1986, Chaparral has been able to focus primarily on improving operations and profitability without concerns about the availability of capital, due to the
financial resources of

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RPC. The management team has consistently improved manufacturing efficiency, refined current products, and evaluated future product offerings, all of which have led to increasing sales and profits.
For the five years ended December 31, 2001, Marine Products has generated a nine percent compounded annual growth in net sales.

Effective
June 2001, Marine Products purchased certain operating and intangible assets of Robalo, a segment of the U.S. Marine division of Brunswick Corporation ("U.S. Marine"), for
total consideration of $1,037,000. Robalo is a leading offshore sport fishing boat brand. This purchase also included the purchase of the Wahoo!(tm) tradename. The purchase was funded by cash and has
been accounted for using the purchase method of accounting. Robalo's contribution to fiscal year 2001 sales was immaterial.

Robalo
Marine was founded in 1969 and its first boat was a 19-foot center console salt-water fishing boat, among the first of this type of boat to have an "unsinkable" hull. Robalo was
acquired by U.S. Marine and relocated to Tallahassee, Florida, in 1991. During 2000, Robalo produced and sold approximately 600 units. With the downturn in the boating industry in 2000, U.S. Marine
ceased
production of Robalo boats in early 2001, prior to its purchase by Marine Products. Following the acquisition, Marine Products moved the operating assets of Robalo from Tallahassee, Florida, to a
manufacturing facility in Valdosta, Georgia.

Robalo
entered initial production of two 23-foot models and made its first sales during the fourth quarter of 2001. Robalo plans to grow its product offerings in 2002 by adding an
18-foot boat to its production. Robalo sales comprised one percent of consolidated Marine Products fourth quarter sales, and we expect this percentage will grow as more models are introduced and
production is increased.

Marine
Products' basic mission is to enhance its customers' boating experience by providing them with high quality, innovative powerboats. Marine Products intends to remain a leading
manufacturer of recreational powerboats for sale to a broad range of consumers worldwide.

Products

Marine Products offers a comprehensive range of motorized recreational boats. Marine Products distinguishes itself by offering a wide range of products to the
family recreational market and cruiser market through its Chaparral brand, and to the offshore sport fishing market through its Robalo brand.

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The
following table provides a brief description of each of our brands and its particular market focus:

|Brand                         |  | Number of
Models |  | Overall
Length |  | Approximate
Retail
Price Range |                   | Description
|----------------------------- |  | ---------------- |  | -------------- |  | ------------------------------ | ----------------- | -----------
|ChaparralSignature Cruisers  |  | 6                |  | 24'-35'        |  | $                              | 45,000 - $200,000 |            
|ChaparralSS Sportboats       |  | 14               |  | 18'-28'        |  | $                              | 16,000 - $95,000  |            
|ChaparralSunesta Deckboats   |  | 6                |  | 22'-26'        |  | $                              | 30,000 - $50,000  |            
|RobaloOffshore Fishing Boats |  | 3                |  | 18'-23'        |  | $                              | 25,000 - $54,000  |            

Manufacturing

Marine Products' manufacturing facilities are located in Nashville, Georgia and Valdosta, Georgia. Marine Products utilizes six different plants to manufacture
interiors, design new models, create fiberglass hulls and decks, and assemble various end products. Quality control is conducted throughout the manufacturing process. When fully assembled and
inspected, the boats are loaded onto either company-owned trailers or third-party marine transport trailers for delivery to the dealers.

The
manufacturing process begins with design of the ultimate product. Plugs are constructed in the research and development area from designs. Plugs are used to create a mold from which
prototype boats can be built. Adjustments are made to the plug design until acceptable parameters are met. The
final plug is used to create the necessary number of production molds. Molds are used to produce the fiberglass hulls and decks. Fiberglass components are made by applying the outside finish or
gelcoat to the mold. Then numerous layers of fiberglass and resin are applied during the lamination process over the gelcoat. After curing, the hulls and deck are removed from the molds and are
trimmed and prepared for final assembly, which includes the installation of electrical and plumbing systems, engines, upholstery, accessories and graphics.

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Suppliers

Marine Products' two most significant components used in manufacturing boats, based on cost, are engines and fiberglass. For each of these raw materials, there is
currently an adequate supply available in the market. Marine Products has not experienced any material shortages in any of these products. Temporary shortages, when they do occur, usually involve
manufacturers switching model mixes or introducing new product lines. These temporary shortages have not impacted sales. Marine Products obtains most of its fiberglass from a leading domestic
supplier. Marine Products believes that there are several alternative suppliers if this supplier fails to provide adequate quantities at acceptable prices.

Marine
Products does not manufacture the engines installed in its boats. Engines are generally specified by the dealers at the time of ordering, usually on the basis of anticipated
customer preferences or actual customer orders. Sterndrive engines for the Chaparral brand are purchased through the American Boatbuilders Association ("ABA"), which has entered into engine supply
arrangements with Mercury Marine and Volvo Penta, the two currently existing suppliers of sterndrive engines. These arrangements contain incentives and discount provisions, which may reduce the cost
of the engines purchased, if specified purchase volumes are met during specified periods of time. Although no minimum purchases are required, Marine Products expects to continue purchasing sterndrive
engines from the ABA on a voluntary basis in order to receive purchase volume discounts. Marine Products does not have a supply contract with the ABA. Marine Products has engine supply contracts for
its Robalo product line with three engine suppliers that are not affiliated with the ABA. Outboard engines for the Robalo brand are purchased from Mercury, Honda, and Yamaha. See "Growth Strategies"
below.

In
the event of a sudden interruption in the supply of engines from these suppliers, our sales and profitability could be negatively impacted.

Sales and Distribution

Sales are made to approximately 143 Chaparral dealers and eight Robalo dealers throughout the United States. Dealers market directly to the consumer at boat shows
and in the dealers' showrooms.
Marine Products also has approximately 11 international Chaparral dealers. Most of these dealers are not exclusive to Marine Products and carry the boats of other companies, including some which
compete directly with our brands. The territories served by any dealer are not exclusive to the dealer. However, Marine Products uses discretion in locating new dealers in an effort to protect the
interests of the existing dealers. Marine Products' eight independent field sales representatives call upon existing dealers and develop new dealer relationships. The field sales force is directed by
National Sales Coordinators, who are responsible for developing a full dealer organization for the Company's products. The marketing of boats to retail customers is primarily the responsibility of the
dealer. Marine Products supports the marketing efforts by supplementing local advertising, sales and marketing follow up in boating magazines, and participation in regional, national, and
international boat shows. The largest Marine Products dealer accounts for less than 10 percent of annual sales.

Marine
Products continues to seek new dealers in many areas throughout Europe, South America, Asia and the Middle East. In general, Marine Products requires payment in full or an
irrevocable letter of credit from a domestic bank before it will ship a boat overseas. Consequently, there is no credit risk associated with its foreign sales nor risk related to foreign currency
fluctuation. Marine Products believes that within several years, foreign sales could produce additional sales growth. Management intends to selectively grow the Robalo dealer network during 2002. We
will attempt to develop relationships with the best offshore fishing boat dealers in our target markets. The Robalo dealer network will not always overlap with the Chaparral dealer network.

Marine
Products' sales orders are based on strong interest by its dealers. Although orders are cancelable at any time, substantially all boats are pre-sold to a dealer before entering
the production

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line. Historically, dealers have in most cases taken delivery of all their orders. In the past, Marine Products has been able to resell any boat for which the order has been cancelled. To date,
cancellations have not had any material effect on Marine Products.

Most
of Marine Products' domestic shipments are made pursuant to commercial dealer "floor plan financing" programs in which Marine Products' subsidiaries participate on behalf of their
dealers. Under these arrangements, a dealer establishes lines of credit with one or more third-party lenders for the purchase of showroom inventory. When a dealer purchases a boat pursuant to a floor
plan arrangement, it draws against its line of credit and the lender pays the invoice cost of the boat directly to Marine Products. Generally, payment is made to Marine Products within five business
days. When the dealer in turn sells the boat to a retail customer, the dealer repays the lender, thereby restoring its available credit line. Each dealer's floor plan credit facilities are secured by
the dealer's inventory, letters of credit, and perhaps other personal and real property. In connection with the dealer's floor plan arrangements, Marine Products or its subsidiaries has agreed to
repurchase any of its boats which a lender repossesses from a dealer and returns to Marine Products. In the event that a dealer defaults under a credit line, the lender may then invoke the
manufacturers' repurchase agreements with respect to that dealer. In that event, all repurchase agreements of all manufacturers supplying a defaulting dealer are generally invoked regardless of the
boat or boats with respect to which the dealer has defaulted. Marine Products participates in floor plan arrangements with several major third-party lenders on behalf of its dealers, most of whom have
financing arrangements with more than one lender. As of December 31, 2001, Marine Products' obligation to repurchase boats under the floor plan financing programs described above was approximately
$2,421,000. Unlike Marine Products' obligation
to repurchase boats repossessed by lenders, Marine Products is under no obligation to repurchase boats directly from dealers. Marine Products does not sponsor financing programs to the consumer; any
consumer financing promotions for Chaparral or Robalo boats would be the responsibility of the dealer.

Marine
Products' dealer incentive programs are designed to promote early replenishment of the stock in dealer inventories depleted throughout the prime spring and summer selling seasons
and level out Marine Products' manufacturing between the peak and offpeak periods. For the 2002 model year (which commenced July 1, 2001), dealers had an option whereby Marine Products made
arrangements to pay all interest charged to dealers by certain floor plan lenders until April 1, 2002. This and other incentives to the dealers have resulted in relatively level month-to-month
production and sales. After the free interest program ends, interest costs revert to the dealer at the rates set by the lender. The dealers make curtailment payments (principal payments) on the boats
as required by their particular commercial lenders. Similar sales promotion programs were in effect during the past six years.

In
order to generate additional sales of boat inventory by dealers at boat shows, several of our competitors recently announced increased customer rebates and dealer incentives. In
response to this, Chaparral supplemented its existing dealer incentive program for the period January 2002 to March 2002. This program was designed to share the cost of a direct dealer-to-customer
incentive on existing dealer inventory, payable to the dealer based on new inventory purchases. Because the incentive is shared with the dealer, the cost of this supplemental program is not expected
to significantly affect net sales or margins of Marine Products.

As
of December 31, 2001, the sales order backlog was 1,325 boats with estimated sales of $38,104,000. This represents a 13-week backlog based on recent production levels. Marine Products
normally does not manufacture boats for inventory.

Product Warranty

Marine Products provides a five year transferable hull and deck structural warranty on Chaparral products against defects in material and workmanship and a 10
year transferable hull warranty on

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Robalo products. A one year warranty on components is provided as well. The engine manufacturer warrants engines included in the boats. Warranty costs of $1,143,000 or one percent of sales were
recorded in fiscal 2001. Warranty costs were $1,483,000 in 2000 and $1,475,000 in 1999, or one percent of sales in both years. Marine Products' warranty costs as a percentage of sales are considered
low relative to the marine industry, reflecting Marine Products' superior construction of its boats.

Research and Development

Essentially the same technologies and processes are used to produce fiberglass boats by all boat manufacturers. The most common method is open-face molding. This
is usually a labor-intensive, manual process whereby employees hand spray and apply fiberglass and resin in layers on open molds to create boat hulls, decks, stringers and other smaller fiberglass
components. This process can result in inconsistencies in the size and weight of parts, which may lead to higher warranty costs. Open-face molding is typically capable of producing approximately three
hulls per week.

Chaparral
has been a leading innovator in the recreational boating industry. One of Chaparral's most innovative designs is the full-length "Extended V-Plane" running surface. Typically,
sterndrive boats have a several foot gap on the bottom rear of the hull where the engine enters the water. With Chaparral's design, the running surface extends the full length to the rear of the boat.
The benefit of this innovation is more space, better performance and a more comfortable ride. All of Chaparral's models have the "Extended V-Plane" running surface. Although the basic hull designs are
similar, Chaparral introduces a variety of new models each year. New models are generally in production for several years before being replaced, updated, or discontinued.

Robalo's
hulls utilize the Hydrolift hull design. This variable dead rise hull design provides a smooth ride in rough offshore conditions. It also increases fuel economy and
allows a given level of engine horsepower to propel a heavier boat to a given speed. Robalo's current models utilize the Hydrolift design and we plan to utilize the design on future
models as well.

Marine
Products incurred research and development costs of $1,955,000 in fiscal 2001, $1,428,000 in fiscal 2000, and $1,500,000 in fiscal 1999.

Industry Overview

For 2001, the recreational boat industry accounted for less than one percent of the United States Gross Domestic Product. The recreational marine market is a
mature market, with 2001 retail expenditures of $26 billion spent on new and used boats, motors and engines, trailers, accessories and other associated costs as estimated by the National Marine
Manufacturers Association ("NMMA"). Pleasure boats compete for consumers' free time with all other leisure activities, from computers and video games to other sports. The greatest obstacle for the
pleasure boat industry is the consumers' diminishing leisure time.

The
NMMA conducts various surveys of pleasure boat industry trends. The NMMA surveys estimate that 69 million people in the United States participate in recreational boating. There are
currently over 17 million boats owned in the United States, including outboard, inboard, sterndrive, sailboats, personal watercraft, and miscellaneous (canoes, rowboats, dinghies, etc.). Marine
Products Corporation competes
in the outboard boating category with its newly launched line of Robalo offshore fishing boats, and in the sterndrive boating category with its three lines of Chaparral boats. Outboard boats comprised
49 percent of all boats in use during 2001, totaling 8,342,300. Sterndrive boats number 1,742,800, or 2.5 percent of all boats in use during 2001.

At
74,100 units, sterndrive boats accounted for more than 14 percent of the total new boat units sold in 2001, making sterndrive boats the fourth largest category of boats sold. Sales of
boats with sterndrive engines in 2001 had a total retail value of $2.3 billion, or an average retail price per boat of

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approximately $31,000. Management believes that the five largest states for boat sales are Michigan, California, Florida, Minnesota and Texas. Chaparral has dealers in each of these states.

The
United States domestic recreational boating industry realized an estimated $26 billion in retail sales during 2001, according to NMMA estimates. These sales were realized in the
segments of new and used boat sales, motors and engines, trailers, and other associated expenses. Marine Products' subsidiaries compete in the new boat market, which realized an estimated $8.7 billion
in retail sales during 2001. The table below shows estimated sales by boat industry segment for 2000 and 2001, ranked by 2001 retail sales (source: NMMA estimates):

2000

2001Units

Sales ($ B)

Units

Sales ($ B)Inboard boatscruisers

8,000

$
2.3

8,100

$
2.8Outboard Boats

241,200


2.3

224,400


2.3Sterndrive boats

78,400


2.3

74,100


2.3Personal water craft

92,000


.7

83,000


.7Inboard boatsrunabouts

13,600


.4

13,700


.4Jetboats

7,000


.1

6,000


.1Canoes

121,800


.1

105,800


.1Total

562,000

$
8.2

515,100

$
8.7


Chaparral's
products are categorized as sterndrive boats and Robalo's products are categorized as outboard boats.

The
recreational boat manufacturing market remains highly fragmented with little consolidation. We estimate that the boat manufacturing industry includes more than 100 sterndrive only
manufacturers, largely small, privately held companies with varying degrees of professional management and manufacturing skills. According to estimates provided by Statistical Surveys, Inc., the top
five manufacturers have a market share of 47.7 percent.

Several
factors influence sales trends in the recreational boating industry, including general economic growth, consumer confidence, household incomes, tax laws, and demographics.
Interest rates and fuel prices also have a direct impact on boat sales, as well as trends at the local, regional and national level. Competition from other leisure and recreational activities, such as
vacation properties and travel, can also affect sales of recreational boats.

Management
believes Marine Products Corporation is well positioned to take advantage of the following conditions, which continue to characterize the industry:



Growth Strategies

The pleasure boat market is a mature industry. Growth in the total number of sterndrive boats in use has been just two percent annually for the past three years,
so Marine Products Corporation plans to grow by exceeding industry trends, by increasing its market share and by expanding its product line. Marine Products has grown its Chaparral sterndrive market
share from 4.75 percent in fiscal 1996 to 7.35 percent for the six months ended June 2001 (latest statistics available to us) and continues to expand its product offerings by expanding into the
largest potential boat market, outboard boats, and by constant improvement and expansion into larger boats within their sterndrive offerings.

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Marine
Products' operating strategy emphasizes innovative designs and high quality manufacturing processes, by delivering a superior quality product while lowering manufacturing costs
through increased efficiencies in our facilities. We have been leveraging our buying power through economies of scale. Marine Products is one of the largest independent boat manufacturers that does
not manufacture its own engines. Management believes this, together with its membership in the ABA, positions Marine Products as a significant third party customer of major engine suppliers. Marine
Products' Chaparral subsidiary is a founding member of the ABA which collectively represents 13 independent boat manufacturers which have formed a buying group to pool their purchasing power in order
to gain improved pricing on engines, fiberglass, resin and many other components. Marine Products intends to continue seeking the most advantageous purchasing arrangements from its suppliers. Marine
Products is also a significant consumer of fiberglass materials and management intends to capitalize on relationships with fiberglass suppliers to assist Marine Products' growth.

Our
marketing strategy seeks to increase market share by enabling Marine Products to expand its international presence by continuing to build dedicated sales, marketing and distribution
systems.
Marine Products has a distribution network of approximately 162 dealers located throughout the United States and internationally. Our strategy is to increase the number and quality of our dealers.
Marine Products seeks to capitalize on this strong dealer network by educating its dealers on the sales and servicing of our products and helping them provide more comprehensive customer service, with
the goal of increasing customer satisfaction, customer retention and future sales. Marine Products provides promotional and incentive programs to help its dealers increase product sales. Marine
Products intends to continue to strengthen its dealer network and build brand loyalty with both dealers and customers.

As
part of Marine Products' overall strategy, Marine Products will also consider making strategic acquisitions in order to complement existing product lines, expand Marine Products'
geographic presence in the marketplace and strengthen capabilities.

Competition

The recreational boat industry is highly fragmented, resulting in intense competition for customers, quality products and boat show space. There is significant
competition both within markets we currently serve and in new markets that we may enter. Marine Products' brands compete with several large national or regional manufacturers that have substantial
financial, marketing and other resources. However, we believe that our corporate infrastructure and marketing and sales capabilities, in addition to our cost structure and our nationwide presence,
enable us to compete effectively against these companies. In each of our markets, Marine Products competes on the basis of responsiveness to customer needs and the quality and range of products and
services offered. Additionally, Marine Products faces general competition from all other recreational businesses seeking to attract consumers' leisure time and discretionary spending dollars.

According
to Statistical Surveys, the following is a list of the top ten (largest to smallest) sterndrive boat manufacturers in the United States based on unit sales for the six months
ended June 30, 2001 (the most current information available to us). Several of these manufacturers are part of larger integrated boat building companies and are marked with asterisks. Management
believes the companies set forth below represent approximately 68 percent of all United States retail sterndrive boat registrations during the six months ending June 30, 2001.

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The
outboard engine powered market has a large breadth and depth, accounting for almost 50 percent of all boats sold. Robalo's share of the offshore sport fishing boat market in 2001 was immaterial,
due to Brunswick's ceasing production in the first quarter and Marine Products' relocation of the production facilities in the second and third quarter. Some competitors for Robalo going forward will
be: Grady-White, Mako, Boston Whaler* and Trophy*.

Environmental and Regulatory Matters

Certain materials used in boat manufacturing, including the resins used to make the decks and hulls, are toxic, flammable, corrosive, or reactive and are
classified by the federal and state governments as "hazardous materials." Control of these substances is regulated by the Environmental Protection Agency ("EPA") and state pollution control agencies,
which require reports and inspect facilities to monitor compliance with their regulations. The Occupational Safety and Health Administration ("OSHA") standards limit the amount of emissions to which
an employee may be exposed without the need for respiratory protection or upgraded plant ventilation. Marine Products' manufacturing facilities are regularly inspected by OSHA and by state and local
inspection agencies and departments. Marine Products believes that its facilities comply with substantially all regulations. Marine Products' cost of compliance with environmental regulations has not
been material.

In
connection with the expansion of the Signature Cruisers manufacturing facility, Marine Products has incurred costs of approximately $700,000 to install an air purification system.
This equipment is designed to comply with OSHA and EPA regulatory limits. Although capital expenditures related to compliance with environmental laws are expected to increase during the coming years,
we do not currently anticipate that any material expenditures will be required to continue to comply with existing environmental or safety regulations in connection with our ongoing operations.

Recreational
powerboats sold in the United States must be certified by the manufacturer to meet United States Coast Guard specifications. In addition, boats manufactured for sale in the
European Community must be certified to meet the European Community's imported manufactured products standards. These certifications specify standards for the design and construction of powerboats.
All boats sold by Marine Products meet these standards. In addition, their safety is subject to federal regulation under the Boat Safety Act of 1971. The Boat Safety Act requires boat manufacturers to
recall products for replacement of parts or components that have demonstrated defects affecting safety. While Marine Products has instituted recalls for defective component parts produced by other
manufacturers, there has never been a safety related recall resulting from Marine Products' design or manufacturing process. None of the recalls had a material adverse effect on Marine Products.

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Employees

As of December 31, 2001, Marine Products had approximately 760 employees, of whom five are management and 31 are administrative. None of Marine Products'
employees is party to a collective bargaining agreement. All of Marine Products' workforce are currently employed in the United States and Marine Products believes that its relations with its
employees are good.

Proprietary Matters

Marine Products owns a number of trademarks and tradenames that Marine Products believes are important to its business. Except for the Chaparral, Robalo and
Wahoo! trademarks, however, Marine Products is not dependent upon any single trademark or tradename or group of trademarks or tradenames. The Chaparral, Robalo and Wahoo! trademarks are currently
registered in the United States. The current duration for such registration ranges from seven to 15 years in the United States, but each registration may be renewed an unlimited number of times.

Risk Factors

Economic Conditions and Consumer Confidence Level Affect Marine Products' Sales because Marine Products' Products are Purchased with Discretionary Income

During an economic recession or when an economic recession is perceived as a threat, Marine Products will be affected as consumers have less discretionary income
or are more apt to save their discretionary income rather than spend it.

Marine Products' Dependence On Its Network Of Independent Boat Dealers May Affect Its Growth Plans And Sales

Virtually all of Marine Products' sales are derived from its network of independent boat dealers. Marine Products has no long-term agreements with these dealers.
Dealer competition continues to increase based on the quality of available products, the price and value of the products, and attention to customer service. We face intense competition from other
recreational powerboat manufacturers in attracting and retaining independent boat dealers. The number of independent boat dealers supporting the Chaparral and Robalo tradenames and the quality of
their marketing and servicing efforts are essential to Marine Products' ability to generate sales. A deterioration in the number or quality of Marine Products' network of independent boat dealers
would have a material adverse effect on its powerboat sales. Marine Products' inability to attract new dealers and retain those dealers, or its inability to increase sales with existing dealers, could
substantially impair its ability to execute its growth plans.

Although
Marine Products' management believes that the quality of its products and services in the recreational powerboat market should permit it to maintain its relationship with its
dealers and its market position, there can be no assurance that Marine Products will be able to sustain its current sales levels. In addition, independent dealers in the recreational boating industry
have experienced significant
consolidation in recent years, which could result in the loss of one or more of Marine Products' dealers in the future if the surviving entity in any such consolidation purchases similar products from
a Marine Products competitor. See " Growth Strategies" above.

Marine Products' Sales Are Affected By Weather Conditions

Marine Products' business is subject to weather patterns which may adversely affect its sales. 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

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products. In addition, unseasonably cool weather and prolonged winter conditions may lead to a shorter selling season in some locations.

Marine Products Has Potential Liability for Personal Injury and Property Damage Claims

The products we sell or service may expose Marine Products to potential liabilities for personal injury or property damage claims relating to the use of those
products. Historically, the resolution of product liability claims has not materially affected Marine Products' business. Marine Products maintains product liability insurance that it believes to be
adequate. However, there can be no assurance that Marine Products will not experience legal claims in excess of its insurance coverage or that claims will be covered by insurance. Furthermore, any
significant claims against Marine Products could result in negative publicity, which could cause Marine Products' sales to decline.

Because Marine Products Relies On Third Party Vendors, Marine Products May Be Unable To Obtain Adequate Raw Materials

Marine Products is dependent on third party vendors to provide raw materials and components essential to the construction of its various powerboats. Especially
critical are the availability and cost of marine engines and commodity raw materials used in the manufacture of Marine Products' boats. While Marine Products' management believes that vendor
relationships currently in place are sufficient to provide the materials necessary to meet present production demands, there can be no assurance that these relationships will continue or that the
quantity or quality of materials available from these vendors will be sufficient to meet Marine Products' future needs irrespective of whether Marine Products successfully implements its growth and
acquisition strategies. Disruptions in current vendor relationships or the inability of Marine Products to continue to purchase construction materials in sufficient quantities and of sufficient
quality to meet ongoing production schedules could cause a decrease in sales or a sharp increase in the cost of goods sold. Additionally, because of this dependence, the volatility in commodity raw
materials or current or future price increases in construction materials or the inability of Marine Products' management to purchase construction materials required to complete its growth and
acquisition strategies could cause a reduction in Marine
Products' profit margins or reduce the number of powerboats Marine Products may be able to produce for sale.

Marine Products May Be Unable To Identify Or Complete Acquisitions

Marine Products intends to pursue acquisitions and form strategic alliances that will enable Marine Products to acquire complementary skills and capabilities,
offer new products, expand its customer base, and obtain other competitive advantages. There can be no assurance, however, that Marine Products will be able successfully to identify suitable
acquisition candidates or strategic partners, obtain financing on satisfactory terms, complete acquisitions or strategic alliances, integrate acquired operations into its existing operations, or
expand into new markets. Once integrated, acquired operations may not achieve anticipated levels of sales, profitability, or otherwise perform as expected. Acquisitions also involve special risks,
including risks associated with unanticipated problems, liabilities and contingencies, diversion of management resources, and possible adverse effects on earnings and earnings per share resulting from
increased interest costs, the issuance of additional securities, and difficulties related to the integration of the acquired business. The failure to integrate acquisitions successfully may divert
management's attention from Marine Products' existing business and may damage Marine Products' relationships with its key customers and suppliers.

12

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Marine Products Success Will Depend On Its Key Personnel, And The Loss Of Any Key Personnel May Affect Its Powerboat Sales

Marine Products' success will depend to a significant extent on the continued service of key management personnel. The loss or interruption of the services of any
senior management personnel or the inability to attract and retain other qualified management, sales, marketing and technical employees could disrupt Marine Products' operations and cause a decrease
in its sales and profit margins.

Marine Products' Ability To Attract And Retain Qualified Employees Is Crucial To Its Results Of Operations And Future Growth

Marine Products relies on the existence of an available hourly workforce to manufacture its products. As with many businesses, we are challenged to find qualified
employees. There are no assurances that Marine Products will be able to attract and retain qualified employees to meet current and/or future growth needs.

If Marine Products Is Unable To Comply With Environmental And Other Regulatory Requirements, Its Business May Be Exposed to Liability and Fines

Marine Products' operations are subject to extensive regulation, supervision, and licensing under various federal, state, and local statutes, ordinances, and
regulations. While Marine Products believes that it maintains all requisite licenses and permits and is in compliance with all applicable federal, state and local regulations, there can be no
assurance that Marine Products will be able to continue to maintain all requisite licenses and permits. The failure to satisfy these and other regulatory requirements could cause Marine Products to
incur fines or penalties or could increase the cost of operations. The adoption of additional laws, rules and regulations could also increase Marine Products' costs.

As
with boat construction in general, our manufacturing processes involve the use, handling, storage and contracting for recycling or disposal of hazardous or toxic substances or wastes.
Accordingly, we are subject to regulations regarding these substances, and the misuse or mishandling of such substances could expose Marine Products to liability or fines.

Additionally,
certain states have required or are considering requiring a license in order to operate a recreational boat. While such licensing requirements are not expected to be unduly
restrictive, regulations may discourage potential first-time buyers, thereby reducing future sales.

Marine Products' Management Has A Substantial Ownership Interest; Public Stockholders May Have No Effective Voice In Marine Products' Management

Marine Products' executive officers, directors and their affiliates hold directly or through indirect beneficial ownership, in the aggregate, approximately 66
percent of Marine Products' outstanding common stock. As a result, these stockholders will effectively control the operations of Marine Products, including the election of directors and approval of
significant corporate transactions such as acquisitions. This concentration of ownership could also have the effect of delaying or preventing a third party from acquiring control over Marine Products
at a premium. In addition, the availability of Marine Products common stock to the investing public is limited to those shares not held by the executive officers, directors and their affiliates, which
could negatively impact Marine Products' stock trading prices and affect the ability of minority stockholders to sell their shares. Future sales by executive officers, directors and their affiliates
of all or a portion of their shares could also negatively affect the trading price of Marine Products common stock.

13

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Provisions In Marine Products' Certificate of Incorporation And Bylaws May Inhibit A Takeover Of Marine Products

Marine Products' certificate of incorporation, bylaws and other documents contain provisions that may make more difficult or expensive, or that may otherwise
discourage, a tender offer, change in control or takeover attempt that is opposed by Marine Products' Board of Directors.

Item 2. Properties

Marine Products' principal executive office is located in Atlanta, Georgia. This office is currently shared with RPC and is leased from a third party. The monthly
rent paid to the third party is allocated between Marine Products and RPC. Under this arrangement, Marine Products pays approximately $1,300 per month in rent. Marine Products may cancel this
arrangement at any time. Chaparral owns and maintains approximately 815,000 square feet of manufacturing, research and development, warehouse, and sales office and operations in Nashville, Georgia.
Chaparral's operations are conducted among 12 facilities located on its Nashville site. There are five main manufacturing plants where Chaparral's boats are built. The largest of the manufacturing
plants, which was put into service in fiscal year 2000, sits on approximately 10 acres and comprises 253,000 square feet. It is used to build Marine Products' larger SSI Sportboats, which are 18 to 28
feet in length. Chaparral's total square footage under roof is allocated as follows: manufacturing629,000, research and development65,000, warehousing75,000,
office and other46,000. Marine Products also owns and maintains 83,000 square feet of manufacturing space at our Robalo facility in Valdosta, Georgia.

Item 3. Legal Proceedings

Marine Products is involved in litigation from time to time in the ordinary course of its business. Marine Products does not believe that the outcomes of such
litigation will have a material adverse effect on the financial position or results of operations of Marine Products.

Item 4. Submission of Matters to a Vote of Security Holders

There were no matters submitted to a vote of security holders during the fourth quarter of 2001.

14

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Item 4A. Executive Officers of the Registrant

Each of the executive officers of Marine Products was elected by the Board of Directors to serve until the Board of Directors' meeting immediately following the
next annual meeting of stockholders or until his or her earlier removal by the Board of Directors or his or her resignation. The following table lists the executive officers of Marine Products and
their ages, offices, and date first elected to office.

Name and Office with Registrant

Age

Date First Elected to
OfficeR. Randall Rollins
Chairman of the Board

70

2/28/01Richard A. Hubbell
President
Chief Executive Officer

57

2/28/01James A. Lane, Jr.
Executive Vice President
President of Chaparral Boats, Inc.

59

2/28/01Linda H. Graham
Vice President
Secretary

65

2/28/01Ben M. Palmer
Vice President
Chief Financial Officer, Treasurer and Assistant Secretary

41

2/28/01


Part II

Item 5. Market for Registrant's Common Equity and Related Stockholder Matters

Marine Products' common stock is listed on the American Stock Exchange under the ticker symbol "MPX". At February 26, 2002, there were 17,284,500 shares of common
stock outstanding.

At
the close of business on December 31, 2001, there were approximately 2,500 holders of record of common stock. The high and low prices of Marine Products' common stock, since the
spin-off on February 28, 2001, for each quarter in the year ended December 31, 2001, were as follows:

2001Quarter

High

LowFirst

$
5.10

$
2.40Second


4.65


2.60Third


5.00


3.90Fourth


4.45


3.95


Beginning
with the second quarter of 2001, Marine Products has declared and paid quarterly cash dividends of $0.02 per common share.

15

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Item 6. Selected Financial Data

The following table summarizes certain selected combined financial data of Marine Products. The historical information may not be indicative of Marine Products'
future results of operations. This information set forth below should be read in conjunction with "Management's Discussion And Analysis of Financial Condition And Results of Operations," the
Consolidated Financial Statements and the notes thereto, included elsewhere in this document.

|                                             |  | Years Ended December 31,
|-------------------------------------------- |  | ------------------------
|
|
|Statement of Income Data:                    |  |                         
|Net Sales                                    |  | $                       
|Cost of Goods Sold                           |  |                         
|                                             |  |                         
|Gross Profit                                 |  |                         
|Selling, General and Administrative Expenses |  |                         
|                                             |  |                         
|Operating Income                             |  |                         
|Interest Income                              |  |                         
|Gain on Settlement of Claim                  |  |                         
|                                             |  |                         
|Income Before Income Taxes                   |  |                         
|Income Tax Provision                         |  |                         
|                                             |  |                         
|Net Income                                   |  | $                       
|                                             |  |                         
|Share and Per Share Data (a):                |  |                         
|Earnings per sharebasic                     |  | $                       
|Earnings per sharediluted                   |  | $                       
|Shares outstandingbasic                     |  |                         
|Shares outstandingdiluted                   |  |                         
|Other Financial Data:                        |  |                         
|Gross profit margin percent                  |  |                         
|Operating margin percent                     |  |                         
|EBITDA (b)                                   |  | $                       
|Net Cash Provided by Operating Activities    |  |                         
|Net Cash Used for Investing Activities       |  |                         
|Net Cash Used for Financing Activities       |  |                         
|Capital expenditures                         |  | $                       
|Employees at end of period                   |  |                         
|Manufacturing space (square ft.)             |  |                         
|Balance Sheet Data:                          |  |                         
|Cash and marketable securities               |  | $                       
|Inventories                                  |  |                         
|Working capital                              |  |                         
|Property, plant and equipment, net           |  |                         
|Total assets                                 |  |                         
|Total stockholders' equity                   |  | $                       

16

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Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations

The following discussion is based upon and should be read in conjunction with "Selected Financial Data," "Consolidated Financial Statements," and the notes
thereto. See also "Forward-Looking Statements" above.

Overview

Marine Products' mission is to maximize the boating experience by providing its customers with high-quality, innovative powerboats and related products and
services. Marine Products, through its wholly-owned subsidiaries Chaparral and Robalo, is a leading manufacturer of recreational fiberglass powerboats. Chaparral competes in the sterndrive engine
powered, sportboat, deckboat and cruiser markets. Robalo, acquired in June 2001, competes in the outboard engine powered offshore sport
fishing boat market. Robalo sales comprised one percent of sales in the fourth quarter of 2001. This percentage is expected to grow as more models are introduced and production and distribution are
increased.

Critical Accounting Policies

The consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States, which require significant
judgment by management in selecting the appropriate assumptions for calculating financial estimates. These judgments are based on our historical experience, terms of existing contracts, trends in the
industry, and information available from other outside sources, as appropriate. The Company believes that of its significant accounting policies the following may involve a higher degree of judgment
and complexity.

Recognition
of SalesThe Company sells its boats through its international network of independent dealers. Sales orders are based on strong interest by the dealers. Although
cancelable at any time, substantially all boats are pre-sold to a dealer before entering the production line. The Company recognizes sales when all the following conditions are met: (1) a fully
executed sales agreement exists, (2) the price of the boat is established, (3) the dealer takes delivery of the boat, and (4) collectibility is reasonably ensured.

Accrued
Dealer DiscountsThe Company's dealer incentive programs include price discounts that promote early replenishment of dealer inventories after the spring and summer
peak selling seasons and to level out manufacturing volumes throughout the year. These discounts are based on the dealer purchase volumes for the period July 1 through June 30 of the following year.
Therefore, the Company continuously monitors dealer purchases throughout the year, and uses its judgment to determine the dealer discount amount. The Company records these discounts and other sales
incentives as the related sales are recognized based on these estimates.

Warranty
AccrualsThe Company provides warranties for various components related to the manufactured quality of the boats, primarily the fiberglass deck and hull. The
warranty periods vary by component, but extend up to ten years. At the time the boat sales is recognized, the Company records an experience-based estimate of the future warranty costs to be incurred
on boats sold as of the balance sheet date. While we believe that our warranty reserve is adequate and that the judgment applied is appropriate, such estimated amounts could differ materially from
what will actually transpire in the future.

Results of Operations

Year Ended December 31, 2001 Compared To Year Ended December 31, 2000

Net Sales.Marine Products generated net sales of $134,689,000 in 2001 compared to $148,276,000 in 2000, a decrease of
$13,587,000 or nine percent. Despite recent industry sales weakness, Chaparral

17

---

has continued to gain market share. The net sales decrease in 2001 compared to 2000 resulted primarily from a 19 percent decrease in the volume of boats sold offset by a 12 percent increase in the
average sales price. The decrease in unit volume was due to weakness in consumer confidence caused by the economic recession, the war on terrorism and stock market volatility. The increase in the
average sales price resulted from an increase in the number of large, higher priced, cruisers sold during the year.

Cost of Goods Sold.Cost of goods sold was $105,344,000 in 2001 compared to $115,876,000 in 2000. Cost of goods sold, as a
percent of net sales, held steady at 78 percent from 2000 to 2001. The majority of the decline in cost of goods sold related to the decline in net sales. This decline was offset by slightly higher
direct labor costs as a percentage of net sales due to production inefficiencies caused by lower production volume in 2001 compared to 2000.

Selling, General and Administrative Expenses.Selling, general and administrative expenses were $16,223,000 in 2001 compared
to $16,945,000 in 2000, a decrease of $722,000 or four percent. Selling, general and administrative expenses were 12 percent of net sales in 2001 and 11 percent of net sales in 2000. The decrease in
selling, general and administrative expenses resulted from actions taken to reduce costs to correspond with the lower net sales; however, increases were realized in research and development related to
costs for new model development, and start-up expenses associated with the Robalo operations.

Operating Income.Operating income was $13,122,000 in 2001, a decrease of $2,333,000 or 15 percent compared to $15,455,000 in
2000. The decrease in operating income resulted from lower net sales and gross profit offset slightly by the decrease in selling, general and administrative
expenses.

Gain on Settlement of Claim.In the first quarter of 2000, Marine Products recorded a pre-tax gain of $6,817,000 relating to
settlement of a claim. The gain is a result of Marine Products' receipt of its share of a non-refundable $35 million settlement payment made by Brunswick Corporation, a major engine supplier, to the
members of the ABA.

Interest Income.Interest income was $689,000 in 2001 compared to $280,000 in 2000. Marine Products generates interest income
from investment of its available cash primarily in overnight and marketable securities. The amount of cash available for investment has varied depending upon the cash requirements of Marine Products
and increased during 2001 as a result of its receipt of approximately $14 million from RPC in connection with the spin-off, and the cash generated from operations during fiscal 2001.

Net Income.Net income was $8,563,000 in 2001 compared to $13,961,000 in 2000. The decrease in net income was due to the
decrease in operating income and the impact of the after-tax gain on settlement of claim totaling $4,227,000 recognized in the first quarter of 2000. The income tax rate of 38 percent was the same in
both periods.

Year Ended December 31, 2000 Compared To Year Ended December 31, 1999

Net Sales.Marine Products generated net sales of $148,276,000 in 2000 compared to $122,878,000 in 1999, a $25,398,000 or 21
percent increase. Despite recent industry sales weakness, Chaparral continued to generate sales increases by gaining market share. The net sales increase in 2000 compared to 1999 resulted primarily
from a 19 percent increase in the volume of boats sold, coupled with a 2 percent increase in the average sales price. Weakness in consumer confidence caused by higher consumer borrowing costs and
stock market volatility put pressure on industry and Marine Products' sales during the year.

Cost of Goods Sold.Cost of goods sold was $115,876,000 in 2000 compared to $93,247,000 in 1999. The increase in cost of
goods sold, as a percent of net sales, from 76 percent in 1999 to 78

18

---

percent in 2000 was due primarily to lower manufacturing efficiencies caused by manufacturing space constraints. During the third quarter of 2000, additional manufacturing space was opened to provide
needed capacity to efficiently build a larger number of boats.

Selling, General and Administrative Expenses.Selling, general and administrative expenses were $16,945,000 in 2000 compared
to $15,147,000 in 1999, an increase of $1,798,000 or 12 percent. Selling, general and administrative expenses were 11 percent of net sales in 2000 and 12 percent of net sales in 1999. Compensation
costs increased $2,541,000 or 35 percent from $7,288,000 in 1999 to $9,829,000 in 2000. The increase in compensation costs resulted from an increase in commissions expense consistent with the increase
in net sales and an increase in officers' bonuses due to the increase in operating income. The remaining increase relates to higher warranty expense consistent with higher net sales.

Operating Income.Operating income was $15,455,000 in 2000, an increase of $971,000 or seven percent compared to $14,484,000
in 1999. The increase in operating profit resulted from the improvement in net sales and gross margin offset slightly by the increase in selling, general and administrative expenses.

Gain on Settlement of Claim.In the first quarter of 2000, Marine Products recorded a pre-tax gain of $6,817,000 relating to
settlement of a claim. The gain was a result of Marine Products' receipt of its share of a non-refundable $35 million settlement payment made by Brunswick Corporation, a major engine supplier, to the
members of the ABA.

Interest Income.Interest income was $280,000 in 2000 compared to $233,000 in 1999. Marine Products generates interest income
from investment of its available cash primarily in overnight securities. The amount of cash available for investment has varied depending upon the cash requirements of Marine Products and RPC (prior
to the spin-off).

Net Income.Net income was $13,961,000 in 2000 compared to $9,118,000 in 1999. The improvement in net income was due to the
increase in operating profit and the impact of the after-tax gain on settlement of claim totaling $4,227,000 recognized in the first quarter of 2000. The income tax rate of 38 percent was the same in
both periods.

Liquidity and Capital Resources

The Company's decisions about the amount of cash to be used for investing and financing purposes are influenced by our capital position and the expected amount of
cash to be provided by operations. As the result of being spun-off in February 2001, the Company became a separate publicly traded company. The Company's operations historically have generated
sufficient cash for its operations and the excess was transferred to RPC. In connection with the spin-off from RPC, the Company received $14,447,000 in cash and marketable securities from RPC. The
Company is now able to retain any excess cash it generates, however, in the event capital is needed to fund operations, capital expenditures or acquisitions, it is no longer able to rely upon the
capital resources of RPC. During 2001, excluding amounts received in connection with the spin-off, cash, cash equivalents and marketable securities increased $2,668,000 from December 31, 2000.

Cash
provided by operations during 2001 was $10,231,000 a decrease of $5,233,000 compared to 2000. The decrease was due to slightly lower operating income in 2001 compared to 2000, and
the $4,227,000 after-tax gain on settlement of a claim in 2000. Cash provided by operations in 2001 was generated from net income (adjusted for depreciation and amortization) offset by slightly higher
working capital at December 31, 2001. Prepaid expenses and other current assets increased because of higher advance payment for engines placed in inventory upon delivery a few days after year-end and
an increase in the Federal income tax receivable.

19

---

Cash
used for investing activities, excluding the amounts received in connection with the spin-off and marketable securities, increased $2,294,000 from $4,198,000 in 2000 to $6,493,000
in 2001. This increase was a result of additional capital expenditures in 2001 compared to 2000 primarily to fund the construction of additional manufacturing facilities and the cost of the Robalo
acquisition. During 2001, the Company constructed a new 130,000 square foot manufacturing addition to accommodate the building of Signature Cruisers up to 40 feet in length, and the Company acquired a
manufacturing facility for the new Robalo product line. These facilities required expenditures to install or repair air purification systems to comply with OSHA and EPA regulations. Although capital
expenditures related to compliance with environmental laws are expected to increase in future years, we do not currently anticipate that any material expenditures will be required to continue to
comply with existing regulations in connection with our ongoing operations.

Cash
used in financing activities in 2001 included cash dividend payments to Marine Products' stockholders after the spin-off for three quarters of 2001 totaling $1,022,000. Cash used
for financing activities in 2000 included cash generated in excess of its requirements totaling $13,600,000 in 2000 that was transferred to RPC.

The
Company has an insignificant amount of obligations and commitments that require future payments. Consistent with customary industry practices, the Company has agreements with
third-party dealer floor plan lenders to repurchase any of it boats that are repossessed by the lender. The Company maintains a reserve for estimated losses on boats repurchased. The Company's
obligation under its guarantee becomes effective in the case of default in payments by the dealer. The agreements provide for the return of all repossessed boats to the Company in new condition, in
exchange for the Company's assumption of the unpaid debt obligation on those boats. As of December 31, 2001, guarantees outstanding totaled approximately $2,421,000.

We
believe the liquidity provided by our existing cash, cash equivalents and marketable securities, our overall strong capitalization, and cash expected to be generated from operations,
will provide sufficient capital to meet our requirements for at least the next twelve months. We believe our liquidity will allow us the ability to continue to grow and provide us the opportunity to
take advantage of business opportunities that may arise.

Related Party Transactions

Effective with the spin-off, RPC established a cash balance at Marine Products of approximately $15 million by contributing $13.8 million. Effective February 28,
2001, the Company began receiving certain administrative services from RPC. The service agreements are more fully described in Note 4 to the consolidated financial statements. See Notes 1and 4 to the
consolidated financial statements for more information. The Company's cost for such services aggregated approximately $868,000 in 2001. The
Company's directors are also directors of RPC and certain officers are employees of both the Company and RPC.

Seasonality

Marine Products' quarterly operating results are affected by weather and the general economic conditions in the United States. Although quarterly operating
results for the second quarter have historically recorded the highest sales volume for the year, our quarterly operating results are generally distributed evenly throughout the year. However, the
results for any quarter are not necessarily indicative of results to be expected in any future period.

Inflation

Inflation has not had a material effect on Marine Product's operations. If inflation increases, Marine Products will attempt to increase its prices to offset its
increased expenses. No assurance can be

20

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given, however, that the Company will be able to adequately increase its prices in response to inflation. Inflation can also impact Marine Products' sales and profitability. New boat buyers typically
finance their purchases. Because higher inflation results in higher interest rates, the cost of boat ownership increases. Prospective buyers may choose to delay their purchases or buy a less expensive
boat.

New Accounting Standards

Statement of Financial Accounting Standards ("SFAS") No. 133, "Accounting for Derivative Instruments and Hedging Activities," establishes accounting and reporting
standards for derivative instruments, including certain derivative instruments embedded in other contracts, and for hedging activities. It requires entities to recognize all instruments as either
assets or liabilities in the balance sheet and measure those instruments at fair value. As amended, the adoption of SFAS No. 133, effective for the Company as of January 1, 2001, did not impact the
results of operations or financial condition of the Company as the Company is not a party to any derivative transactions that fall under the provisions of this statement.

In
June 2001, the Financial Accounting Standards Board ("FASB") approved SFAS No. 141, "Business Combinations," and SFAS No. 142, "Goodwill and Other Intangible Assets." SFAS No. 141
prospectively prohibits the pooling-of-interests method of accounting for business combinations initiated after June 30, 2001. SFAS No. 142 requires companies to cease amortizing goodwill that existed
on June 30, 2001 after December 31, 2001. Any goodwill resulting from acquisitions completed after June 30, 2001 will not be amortized. SFAS No. 142 also establishes a new method of testing goodwill
for
impairment on an annual basis or interim basis if an event occurs or circumstances change that would reduce the fair value of a reporting unit below its carrying value. The Company has determined that
the initial adoption of this statement did not require an adjustment to the carrying value of its intangibles, and therefore, it did not have a material effect on the results of operations or
financial position of the Company. Adoption of SFAS No. 142 will increase net income after taxes by approximately $424,000 in 2002 due to cessation of amortization of goodwill.

In
June 2001, the FASB issued SFAS No. 143, "Accounting for Asset Retirement Obligations," which addresses accounting and reporting for asset retirement costs of long-lived assets
resulting from legal obligations associated with acquisition, construction, or development transactions. The Company is required to adopt SFAS No. 143 in January 2003. Management has determined the
adoption of this statement will not have a material effect on the results of operations or financial position of the Company.

In
August 2001, the FASB issued SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets," which clarifies accounting and reporting for assets held for sale,
scheduled for abandonment or other disposal, and recognition of impairment loss related to the carrying value of long-lived assets. The Company plans to adopt SFAS No. 144 in January 2002. The
adoption of this statement did not have a material effect on the results of operations or financial position of the Company.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Marine Products does not utilize financial instruments for trading purposes and holds no derivative financial instruments which could expose Marine Products to
significant market risk. Marine Products maintains an investment portfolio, comprised of United States Government, corporate and municipal debt securities, which is subject to interest rate risk
exposure. This risk is managed through conservative policies to invest in high-quality obligations. Marine Products has performed an interest rate sensitivity analysis using a duration model over the
near term with a 10 percent change in interest rates. Marine Products' portfolio is not subject to material interest rate risk exposure based on this analysis. Marine Products does not expect any
material changes in market risk exposures or how those risks are managed.

21

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Item 8. Financial Statements and Supplementary Data

CONSOLIDATED BALANCE SHEETS  MARINE PRODUCTS CORPORATION AND SUBSIDIARIES

|                                                                                                             |  | (in thousands except
share information)
|------------------------------------------------------------------------------------------------------------ |  | ---------------------------------------
|
|
|                                                                                                            
|ASSETS                                                                                                       |  |                                        
|                                                                                                            
|Cash and cash equivalents                                                                                    |  | $                                      
|Marketable securities                                                                                        |  |                                        
|Accounts receivable, less allowance for doubtful accounts of $67 and $67 in 2001 and 2000, respectively      |  |                                        
|Inventories                                                                                                  |  |                                        
|Deferred income taxes                                                                                        |  |                                        
|Prepaid expenses and other current assets                                                                    |  |                                        
|                                                                                                            
|Current assets                                                                                               |  |                                        
|Property, plant and equipment, net                                                                           |  |                                        
|Intangibles, net of accumulated amortization of $10,389 in 2001 and $9,695 in 2000                           |  |                                        
|Marketable securities                                                                                        |  |                                        
|Receivable from RPC, Inc.                                                                                    |  |                                        
|Other assets                                                                                                 |  |                                        
|                                                                                                            
|Total assets                                                                                                 |  | $                                      
|                                                                                                            
|LIABILITIES AND STOCKHOLDERS' EQUITY                                                                         |  |                                        
|Accounts payable                                                                                             |  | $                                      
|Other accrued expenses                                                                                       |  |                                        
|                                                                                                            
|Current liabilities                                                                                          |  |                                        
|Deferred income taxes                                                                                        |  |                                        
|                                                                                                            
|Total liabilities                                                                                            |  |                                        
|                                                                                                            
|Commitments and contingencies                                                                                |  |                                        
|Common stock, $.10 par value, 50,000,000 shares authorized, 17,024,763 shares issued and outstanding in 2001 |  |                                        
|Capital in excess of par value                                                                               |  |                                        
|Earnings retained                                                                                            |  |                                        
|RPC, Inc. equity investment                                                                                  |  |                                        
|                                                                                                            
|Total stockholders' equity                                                                                   |  |                                        
|                                                                                                            
|Total liabilities and stockholders' equity                                                                   |  | $                                      
|                                                                                                            

The accompanying notes are an integral part of these statements.

22

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CONSOLIDATED STATEMENTS OF INCOME  MARINE PRODUCTS CORPORATION AND SUBSIDIARIES

|                                             |         | (in thousands except per share data)
|-------------------------------------------- | ------- | ------------------------------------
|
|
|                                            
|Net sales                                    |         | $                                   
|Cost of goods sold                           |         |                                     
|Selling, general and administrative expenses |         |                                     
|                                             |         |                                     
|Operating income                             |         |                                     
|Gain on settlement of claim                  |         |                                     
|Interest income                              |         |                                     
|                                             |         |                                     
|Income before income taxes                   |         |                                     
|Income tax provision                         |         |                                     
|                                             |         |                                     
|Net income                                   |         | $                                   
|                                             |         |                                     
|PROFORMA EARNINGS PER SHARE (Unaudited)      |         |                                     
|                                             | Basic   |                                     
|                                             |         |                                     
|                                             | Diluted |                                     
|                                             |         |                                     
|                                            

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY  MARINE PRODUCTS CORPORATION AND SUBSIDIARIES

|(in thousands)                                              |  | Common
Stock |       | Capital in
Excess of
Par Value |   | Earnings
Retained |  | RPC, Inc. Equity
Investment |        | Total |  
|----------------------------------------------------------- |  | ------------ | ----- | ------------------------------ | - | ----------------- |  | --------------------------- | ------ | ----- | -
|                                                            | 
|Balance, December 31, 1998                                  |  | $            |      |                                | $ |                  |  | $                           |       |       | $
|Net income                                                  |  |              |      |                                |   |                  |  |                             |       |       |  
|                                                            | 
|Balance, December 31, 1999                                  |  |              |      |                                |   |                  |  |                             |       |       |  
|Net income                                                  |  |              |      |                                |   |                  |  |                             |       |       |  
|                                                            | 
|Balance, December 31, 2000                                  |  |              |      |                                |   |                  |  |                             |       |       |  
|Net income (from January 1, 2001 through February 28, 2001) |  |              |      |                                |   |                  |  |                             |       |       |  
|Cancellation and repayment of Receivable from RPC, Inc.     |  |              |      |                                |   | 13,833            |  |                             |       |       |  
|Spin-off transaction                                        |  |              | 1,701 |                                |   | 25,014            |  |                             | (297   | )     |  
|Stock issued for stock incentive plans, net                 |  |              | 1     |                                |   | 21                |  |                             | 18     |       |  
|Net income (from March 1, 2001 through December 31, 2001)   |  |              |      |                                |   |                  |  |                             | 7,076  |       |  
|Dividends declared                                          |  |              |      |                                |   |                  |  |                             | (1,022 | )     |  
|                                                            | 
|Balance, December 31, 2001                                  |  | $            | 1,702 |                                | $ | 38,868            |  | $                           | 5,775  |       | $
|                                                            | 

The accompanying notes are an integral part of these statements.

23

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CONSOLIDATED STATEMENTS OF CASH FLOWS  MARINE PRODUCTS CORPORATION AND SUBSIDIARIES

|                                                         |                                           | (in thousands) |        
|-------------------------------------------------------- | ----------------------------------------- | -------------- | -------
|
|
|                                                         |                                          
|OPERATING ACTIVITIES                                     |                                           |                |        
|Net income                                               |                                           | $              | 8,563  
|Noncash charges (credits) to earnings:                   |                                           |                |        
|                                                         | Depreciation and amortization             |                |        
|                                                         | Gain on sale of equipment and property    |                |        
|                                                         | Deferred income tax provision (benefit)   |                |        
|Decrease (increase) in assets:                           |                                           |                |        
|                                                         | Accounts receivable                       |                |        
|                                                         | Inventories                               |                |        
|                                                         | Prepaid expenses and other current assets |                |        
|                                                         | Other noncurrent assets                   |                |        
|Decrease (increase) in liabilities:                      |                                           |                |        
|                                                         | Accounts payable                          |                |        
|                                                         | Other accrued expenses                    |                |        
|                                                         |                                          
|Net cash provided by operating activities                |                                           |                | 10,231 
|                                                         |                                          
|INVESTING ACTIVITIES                                     |                                           |                |        
|Capital expenditures                                     |                                           |                | (5,456 
|Proceeds from sale of equipment and property             |                                           |                |       
|Net purchase of marketable securities                    |                                           |                | (13,259
|Purchase of business                                     |                                           |                | (1,037 
|Receipt of cash and marketable securities from RPC, Inc. |                                           |                | 13,833 
|                                                         |                                          
|Net cash used for investing activities                   |                                           |                | (5,919 
|                                                         |                                          
|FINANCING ACTIVITIES                                     |                                           |                |        
|Decrease (increase) in receivable from RPC, Inc.         |                                           |                | 614    
|Payment of dividends                                     |                                           |                | (1,022 
|Cash paid for common stock purchased and retired         |                                           |                | (65    
|Proceeds received upon exercise of stock options         |                                           |                | 17     
|                                                         |                                          
|Net cash used for financing activities                   |                                           |                | (456   
|                                                         |                                          
|Net increase (decrease) in cash and cash equivalents     |                                           |                | 3,856  
|Cash and cash equivalents at beginning of year           |                                           |                | 1,097  
|                                                         |                                          
|Cash and cash equivalents at end of year                 |                                           | $              | 4,953  
|                                                         |                                          

The accompanying notes are an integral part of these statements

24

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Notes to Consolidated Financial Statements  Marine Products Corporation and Subsidiaries  Years ended December 31, 2001, 2000, and 1999

NOTE 1: SIGNIFICANT ACCOUNTING POLICIES

Basis of Consolidation and Presentation

The consolidated financial statements include the accounts of Marine Products Corporation (a Delaware corporation) and its wholly owned subsidiaries ("Marine
Products" or the "Company"). Marine Products, through Chaparral Boats, Inc. ("Chaparral") and Robalo LLC ("Robalo"), operates in a single industry segment as a leading manufacturer of fiberglass
powerboats and related products and services to a broad range of consumers worldwide.

The
consolidated financial statements included herein may not necessarily be indicative of the results of operations, financial position and cash flows of Marine Products in the future
or had it operated as a separate, independent company during all periods presented.

In
January 2000, the Board of Directors of RPC, Inc. ("RPC") announced that it planned to spin-off to RPC stockholders the business conducted through Chaparral, RPC's Powerboat
Manufacturing Segment (the "spin-off"). RPC's Board of Directors subsequently approved the spin-off on February 12, 2001. RPC accomplished the spin-off on February 28, 2001 by contributing 100 percent
of the issued and outstanding stock of Chaparral to Marine Products, and then distributing the common stock of Marine Products to RPC stockholders. RPC stockholders received 0.6 share of Marine
Products Common Stock for each share of RPC Common Stock owned as of the record date. Based on an Internal Revenue Service Private Letter ruling, subject to certain assumptions, the spin-off was
tax-free to RPC and RPC's stockholders, except for cash received for any fractional shares. Immediately after the spin-off was completed, RPC owned no shares of Marine Products Common Stock, and
Marine
Products became an independent public company. A total of 17,012,277 shares of Marine Products Common Stock were distributed in connection with the spin-off.

The
consolidated financial statements have been prepared on the historical cost basis, and present the Company's financial position, results of operations and cash flows since the
spin-off transaction and prior to the spin-off that related directly to RPC's Powerboat Manufacturing Segment operations.

Nature of Operations

Marine Products is principally engaged in manufacturing powerboats and providing related products and services. Marine Products distributes fiberglass
recreational boats through a network of domestic and foreign independent dealers.

Use of Estimates in the Preparation of Financial Statements

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of sales and
expenses during the reporting period. Actual results could differ from those estimates. Significant estimates are used in the determination of accrued dealer discounts and warranty accruals.

Segment Reporting

The Company has adopted Statement of Financial Accounting Standards ("SFAS") No. 131, "Disclosures About Segments of an Enterprise and Related Information." As
the Company has only one reportable segmentits Powerboat Manufacturing businessthe majority of the disclosures

25

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required by SFAS No. 131 do not apply to the Company. In regard to the general disclosures required by SFAS No. 131, the Company's results of operations and its financial condition are not
significantly reliant upon any single customer or the Company's foreign operations.

Sales Recognition

The Company's sales recognition policy is in accordance with the Securities and Exchange Commission's recently released Staff Accounting Bulletin No. 101,
"Revenue Recognition in Financial Statements" which clarifies the basic criteria for recognizing revenue. Marine Products recognizes sales when a fully executed agreement exists, prices are
determinable, services and products are delivered to the dealer and collectibility is reasonably assured.

Shipping and Handling Charges

The shipping and handling of the Company's products to dealers is handled through a combination of a third-party marine transport service and a company owned
fleet of delivery trucks. Fees charged to customers for shipping and handling are included in net sales in the accompanying consolidated statements of income; the related costs incurred by the Company
are included in cost of goods sold.

Cash and Cash Equivalents

Highly liquid investments with original maturities of three months or less are considered to be cash equivalents.

Marketable Securities

Marine Products maintains cash equivalents and investments in several large, well-capitalized financial institutions, and Marine Products' policy disallows
investment in any securities rated less than "investment grade" by national rating services.

Management
determines the appropriate classification of debt securities at the time of purchase and re-evaluates such designations as of each balance sheet date. Debt securities are
classified as available-for-sale because the Company does not have the intent to hold the securities to maturity. Available-for-sale securities are stated at their fair values, with the unrealized
gains and losses, net of tax, reported as a separate component of stockholders' equity. As of December 31, 2001 and 2000, cost approximated fair value. Realized gains and losses and declines in value
judged to be other than temporary on available-for-sale securities are included in investment income. The cost of securities sold is based on the specific identification method. Interest and dividends
on securities classified as available-for-sale are included in interest income.

Investments
with original maturities between 3 and 12 months are considered to be current marketable securities. Investments with original maturities greater than 12 months are
considered to be noncurrent marketable securities. Marine Products' marketable securities generally consist of United States government, corporate and municipal debt securities.

Inventories

Inventories are stated at the lower of cost (first-in, first-out basis) or market value.

Long-Lived Assets

Long-lived assets and goodwill are reviewed whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. The
Company periodically reviews the values assigned to long-lived assets, such as property, plant and equipment and goodwill, to determine

26

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if any impairments are other than temporary. Management believes that the long-lived assets and goodwill in the accompanying balance sheets are appropriately valued.

Property, Plant and Equipment

Property, plant and equipment is carried at cost. Depreciation is provided principally on a straight-line basis over the estimated useful lives of the assets. The
cost of assets retired or otherwise disposed of and the related accumulated depreciation are eliminated from the accounts in the year of disposal with the resulting gain or loss credited or charged to
income. Expenditures for additions, major renewals, and betterments are capitalized. Depreciation expense on operating equipment used in production is included in cost of goods sold in the
accompanying consolidated statements of income. All other depreciation is included in selling, general and administrative expenses in the accompanying consolidated statements of income.

Intangibles

Intangibles represent the excess of the purchase price over the fair value of net assets of businesses and tradenames acquired. Intangibles are presented net of
accumulated amortization and are being amortized using the straight-line method over 15-20 years. Amortization expense was $694,000 in 2001, $684,000 in 2000, $685,000 in 1999.

Accrued Dealer Discounts

Sales incentives including dealer discounts are provided for in the period the related sales are recorded.

Allowance for Boat Repurchases

The Company is obligated under certain circumstances to repurchase boats from finance companies where dealers have financed boats under floor-plan financing
arrangements. The Company maintains an allowance for estimated losses on boats repurchased.

Warranty Accruals

The Company warrants the entire deck and hull, including its bulkhead and supporting stringer system, against defects in materials and workmanship for periods
ranging from five to ten years. The Company accrues for these estimated future warranty costs at the time of the sale.

Insurance Accruals

The Company fully insures its risks related to general liability, product liability, workers' compensation, and vehicle liability, whereas the health insurance
plan is self-funded up to a maximum annual claim amount for each covered employee and related dependents. The estimated cost of claims under the self-insurance program is accrued as the claims are
incurred and may subsequently be revised based on developments relating to such claims.

Research and Development Costs

The Company expenses research and development costs for new products and components as incurred. Research and development costs are included in selling, general
and administrative expenses and totaled $1,955,000 in 2001, $1,428,000 in 2000, and $1,500,000 in 1999.

27

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Income Taxes

Deferred tax liabilities and assets are determined based on the difference between the financial and tax bases of assets and liabilities using enacted tax rates
in effect for the year in which the differences are expected to reverse.

Earnings per Share

SFAS No. 128, "Earnings Per Share," requires a basic earnings per share and diluted earnings per share presentation. The two calculations differ as a result of
the dilutive effect of stock options and restricted shares included in diluted earnings per share, but excluded from basic earnings per share. A reconciliation of weighted shares outstanding is as
follows:

|                                                      
|------------------------------------------------------
|
|                                                      
|Basic                                                 
|Dilutive effect of stock options and restricted shares
|                                                      
|Diluted                                               
|                                                      

Pro
forma Earnings Per Share for all periods prior to 2001 have been calculated using 17,012,000 basic shares outstanding, which was the number of shares distributed in connection with
the spin-off and 17,045,000 diluted shares outstanding.

New Accounting Standards

SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities," establishes accounting and reporting standards for derivative instruments, including
certain derivative instruments embedded in other contracts, and for hedging activities. It requires entities to recognize all instruments as either assets or liabilities in the balance sheet and
measure those instruments at fair value. As amended, the
adoption of SFAS No. 133, effective for the Company as of January 1, 2001, did not impact the results of operations or financial condition of the Company, as the Company is not a party to any
derivative transactions that fall under the provisions of this statement.

In
June 2001, the Financial Accounting Standards Board ("FASB") approved SFAS No. 141, "Business Combinations," and SFAS No. 142, "Goodwill and Other Intangible Assets." SFAS No. 141
prospectively prohibits the pooling of interests method of accounting for business combinations initiated after June 30, 2001. SFAS No. 142 requires companies to cease amortizing goodwill that existed
on June 30, 2001 after December 31, 2001. Any goodwill resulting from acquisitions completed after June 30, 2001 will not be amortized. SFAS No. 142 also establishes a new method of testing goodwill
for impairment on an annual basis or interim basis if an event occurs or circumstances change that would reduce the fair value of a reporting unit below its carrying value. The Company has determined
that the initial adoption of this statement did not require an adjustment to the carrying value of its intangibles, and therefore, it did not have a material effect on the results of operations or
financial position of the Company. Adoption of SFAS No. 142 will increase net income after taxes by approximately $424,000 in 2002 due to cessation of amortization of goodwill.

In
June 2001, the FASB issued SFAS No. 143, "Accounting for Asset Retirement Obligations," which addresses accounting and reporting for asset retirement costs of long-lived assets
resulting from legal obligations associated with acquisition, construction, or development transactions. The Company is required to adopt SFAS No. 143 in January 2003. Management has determined the
adoption of this statement will not have a material effect on the results of operations or financial position of the Company.

28

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In
August 2001, the FASB issued SFAS No. 144, "Accounting for the Impairment or Disposal of Long-lived Assets," which clarifies accounting and reporting for assets held for sale,
scheduled for abandonment or other disposal, and recognition of impairment loss related to the carrying value of long-lived assets. The Company was required to adopt SFAS No. 144 in January 2002. The
adoption of this statement did not have a material effect on the results of operations or financial position of the Company.

NOTE 2: INVENTORIES

Inventories consist of the following:

|December 31,      |  | 2001 |        | 2000
|----------------- |  | ---- | ------ | ----
|                 
|
|                 
|Raw materials     |  | $    | 7,325  |     
|Work in process   |  |      | 1,674  |     
|Finished goods    |  |      | 5,479  |     
|                 
|Total inventories |  | $    | 14,478 |     
|                 

NOTE 3: PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment are presented at cost, net of accumulated depreciation and consist of the following:

|December 31,                        |  | Estimated
Useful Lives |  | 2001 |        | 2000
|----------------------------------- |  | ---------------------- |  | ---- | ------ | ----
|                                   
|
|                                   
|Operating equipment and property    |  | 5-10                   |  | $    | 6,238  |     
|Buildings                           |  | 20                     |  |      | 8,220  |     
|Furniture and fixtures              |  | 5-7                    |  |      | 881    |     
|Vehicles                            |  | 5                      |  |      | 2,962  |     
|Land                                |  | N/A                    |  |      | 454    |     
|Construction in progress            |  | N/A                    |  |      | 3,571  |     
|                                   
|Gross property, plant and equipment |  |                        |  |      | 22,326 |     
|Less: accumulated depreciation      |  |                        |  |      | 8,096  |     
|                                   
|Net property, plant and equipment   |  |                        |  | $    | 14,230 |     
|                                   

Depreciation
expense was $1,485,000 in 2001, $1,116,000 in 2000, and $860,000 in 1999.

NOTE 4: RECEIVABLE FROM RPC, INC. AND OTHER RELATED PARTY TRANSACTIONS

At December 31, 2000, the consolidated balance sheet reflects a Receivable from RPC. This represents the amount of cash transferred from the Company to RPC since
RPC's acquisition of Chaparral in 1986. At the spin-off, RPC established a cash balance at Marine Products of $15 million by contributing approximately $13.8 million. The remaining Receivable from RPC
totaling approximately $53.8 million was cancelled.

In
conjunction with the spin-off, RPC and Marine Products have entered into various agreements that address the allocation of assets and liabilities between the two companies and that
define the companies' relationship after the separation. These include the Distribution Agreement and Plan of Reorganization, the Transition Support Services Agreement, the Employee Benefits
Agreement, and the Tax Sharing and Indemnification Agreement.

29

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The
Distribution Agreement and Plan of Reorganization provides for, among other things, the principal corporate transactions required to effect the spin-off including the distribution
ratio of Marine Products
shares to RPC shares, the contribution of cash by RPC to Marine Products at the date of the spin-off, and the cancellation of any remaining intercompany balances.

The
Transition Support Services Agreement provides for RPC to provide certain services, including financial reporting and income tax administration, acquisition assistance, etc. to
Marine Products until the agreement is terminated by either party.

In
accordance with the Transition Support Services Agreement, Marine Products reimbursed RPC during 2001 for its allocable share of costs incurred for services rendered on behalf of
Marine Products totaling $868,000. The Company's directors are also directors of RPC and certain officers are employees of both the Company and RPC. Many of the costs previously shared with and
allocated from RPC are now incurred directly by the Company. The allocation of costs prior to the spin-off was based on Marine Products' revenue as a percent of RPC's total revenue. These allocated
costs are included in selling, general, and administrative expenses in the accompanying consolidated statements of income. Management believes that such allocation methodology was reasonable. The
costs allocated to Marine Products for these services are not necessarily indicative of the costs that would have been incurred if Marine Products had been a separate, independent entity and had
otherwise independently managed these functions. During 2000 and 1999, Marine Products was allocated shared corporate costs of $2,372,000 and $1,966,000, respectively.

The
Employee Benefits Agreement provides for, among other things, Marine Products to continue participating subsequent to the spin-off in two RPC sponsored benefit plans, specifically,
the defined contribution 401(k) plan and the defined benefit retirement income plan. It also sets forth the method of handling the stock options and other stock incentive awards issued to RPC
employees that will be employed by Marine Products subsequent to the spin-off.

The
Tax Sharing and Indemnification Agreement provides for, among other things, the treatment of income tax matters for periods through the date of the spin-off and responsibility for
any adjustments as a result of audit by any taxing authority. The general terms provide for the indemnification for any tax detriment incurred by one party caused by the other party's action.

NOTE 5: OTHER ACCRUED EXPENSES

Other accrued expenses consist of the following:

|December 31,                         |  | 2001 |       | 2000
|------------------------------------ |  | ---- | ----- | ----
|                                    
|
|                                    
|Accrued payroll and related expenses |  | $    | 1,219 |     
|Accrued dealer discounts             |  |      | 2,486 |     
|Accrued insurance expenses           |  |      | 569   |     
|Lease obligation                     |  |      | 150   |     
|Accrued warranty expenses            |  |      | 1,739 |     
|Allowance for repurchases            |  |      | 500   |     
|Other                                |  |      | 776   |     
|                                    
|Other accrued expenses               |  | $    | 7,439 |     
|                                    

30

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NOTE 6: INCOME TAXES

The following table lists the components of the provision (benefit) for income taxes:

|Year ended December 31,    |         | 2001 |       | 2000  |   | 1999  |      
|-------------------------- | ------- | ---- | ----- | ----- | - | ----- | -----
|                           |        
|
|                           |        
|Current:                   |         |      |       |       |   |       |      
|                           | Federal |      | $     | 4,346 |   | $     | 7,639
|                           | State   |      |       | 442   |   |       | 697  
|Deferred                   |         |      | 460   |       |   | 255   |      
|                           |        
|Total income tax provision |         | $    | 5,248 |       | $ | 8,591 |      
|                           |        

A
reconciliation between the federal statutory rate and Marine Products' effective tax rate is as follows:

|Year ended December 31, |  | 2001 |   | 2000 |   | 1999 |  
|----------------------- |  | ---- | - | ---- | - | ---- | -
|                        | 
|Federal statutory rate  |  | 35.0 | % | 35.0 | % | 35.0 | %
|State income taxes      |  | 2.0  |   | 3.0  |   | 2.0  |  
|Goodwill amortization   |  | 1.7  |   | 1.2  |   | 3.0  |  
|Other                   |  | (0.7 | ) | (1.1 | ) | (2.0 | )
|                        | 
|Effective tax rate      |  | 38.0 | % | 38.1 | % | 38.0 | %
|                        | 

Significant
components of the Company's deferred tax assets and liabilities are as follows:

|December 31,                   |                           | 2001 |       | 2000 |  
|------------------------------ | ------------------------- | ---- | ----- | ---- | -
|                               |                          
|
|                               |                          
|Deferred tax assets:           |                           |      |       |      |  
|                               | Self-insurance reserves   |      | $     | 217  |  
|                               | Accrued warranty expenses |      |       | 660  |  
|                               | Allowance for repurchases |      |       | 190  |  
|                               | Pension expense           |      |       | 323  |  
|                               | Accrued dealer discounts  |      |       | 375  |  
|                               | All others                |      |       | 314  |  
|                               |                          
|Gross deferred tax assets      |                           | $    | 2,079 |      | $
|                               |                          
|Deferred tax liabilities:      |                           |      |       |      |  
|                               | Depreciation              |      | $     | (401 | )
|                               | All others                |      |       | (57  | )
|                               |                          
|Gross deferred tax liabilities |                           | $    | (458  | )    | $
|                               |                          
|Net deferred tax assets        |                           | $    | 1,621 |      | $
|                               |                          

Prior
to the spin-off, RPC paid substantially all income taxes on behalf of Marine Products. Income tax payments by Marine Products in 2001, net of refunds, totaled $4,536,000.

The
Company and RPC have entered into a tax-sharing and indemnification agreement whereby any subsequent income tax adjustments resulting in a change in income tax assets or liabilities
of either RPC or Marine Products prior to the spin-off will be settled through an exchange of cash. No settlements occurred in 2001.

31

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NOTE 7: COMMITMENTS AND CONTINGENCIES

Lawsuits

The Company is a defendant in some lawsuits, which allege that plaintiffs have been damaged as a result of the use of the Company's products. The Company is
vigorously contesting these actions. Management is of the opinion that the outcome of these lawsuits will not have a material adverse effect on the financial position or results of operations or
liquidity of Marine Products.

Dealer Floor-Plan Financing

To assist dealers in obtaining financing for the purchase of its boats, the Company has entered into agreements with various dealers and financing institutions to
guarantee varying amounts of the dealers' purchase debt obligations. The Company's obligation under its guarantee becomes effective in the case of default in payments by the dealer. The agreements
provide for the return of all repossessed boats to the Company in new condition, in exchange for the Company's assumption of the unpaid debt obligation on those boats. As of December 31, 2001,
guarantees outstanding totaled approximately $2,421,000.

Lease Obligation

In June 2001, the Company entered into a lease transaction for existing boat manufacturing space located in Valdosta, Georgia. The lease has a term of 12 years.
This lease has been accounted for as a capital lease, and accordingly, the building, land, and miscellaneous equipment have been recorded in property, plant and equipment on the consolidated balance
sheet with a corresponding lease obligation equal to the present value of the remaining lease obligation totaling $150,000.

Employment Agreements

The Company has an agreement with two employees, which provides for a monthly payment to each of the employees equal to 10 percent of profits (defined as pretax
income before goodwill amortization and certain allocated corporate expenses). During the years ended December 31, 2001, 2000, and 1999, the expense associated with this profit-sharing plan totaled
$4,151,000, $6,402,000, and $4,342,000, respectively, and is included in selling, general and administrative expenses in the accompanying consolidated statements of income.

NOTE 8: EMPLOYEE BENEFIT PLANS

Retirement Plan

Effective with the spin-off, Marine Products began participating in the tax-qualified defined benefit, noncontributory, trusteed retirement income plan sponsored
by RPC that covers substantially all employees with at least one year of service. The benefit obligation for service by Marine Products' employees prior to the spin-off is maintained by RPC. Benefits
are based on an employee's years of service and compensation near retirement. The Company has the right to terminate or modify the plan at any time.

SFAS
No. 132, "Employers' Disclosures About Pensions and Other Post Retirement Benefits," standardizes the disclosure requirements for pensions and other post retirement benefits to the
extent possible.

32

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The
following table sets forth the funded status of the retirement income plan and the amounts recognized in Marine Products' consolidated balance sheets:

|December
31                                    |  | 2001 |     
|---------------------------------------------- |  | ---- | ----
|                                               | 
|(in thousands)                                 |  |      |     
|CHANGE IN BENEFIT OBLIGATION:                  |  |      |     
|Benefit obligation at beginning of year        |  | $    |    
|Service cost                                   |  |      | 203 
|Interest cost                                  |  |      | 16  
|Actuarial loss (gain)                          |  |      | 11  
|Benefits paid                                  |  |      |    
|                                               | 
|Benefit obligation at end of year              |  | $    | 230 
|                                               | 
|CHANGE IN PLAN ASSETS:                         |  |      |     
|Fair value of plan assets at beginning of year |  |      |    
|Actual return on plan assets                   |  |      |    
|Employer contribution                          |  |      |    
|Benefits paid                                  |  |      |    
|                                               | 
|Fair value of plan assets at end of year       |  |      |    
|                                               | 
|Funded status                                  |  | $    | (230
|Unrecognized net asset                         |  |      |    
|Unrecognized net loss                          |  |      | 11  
|Unrecognized prior service cost                |  |      |    
|                                               | 
|Net accrued benefit (cost)                     |  | $    | (219
|                                               | 

Marine
Products' funding policy is to contribute to the retirement income plan the amount required, if any, under the Employee Retirement Income Security Act of 1974. No contributions
were required by the Company in 2001, 2000 and 1999.

The
net accrued benefit cost is included on the balance sheet in the line item Other Accrued Expenses.

The
components of net periodic benefit cost are summarized as follows:

|Year ended December 31,                            |  | 2001
|-------------------------------------------------- |  | ----
|                                                  
|(in thousands)                                     |  |     
|Service cost for benefits earned during the period |  | $   
|Interest cost on projected benefit obligation      |  |     
|Expected return on plan assets                     |  |     
|Net amortization and deferral                      |  |     
|                                                  
|Net periodic benefit cost                          |  | $   
|                                                  

The
weighted average assumptions were as follows:

|December 31,                   |  | 2001  |  
|------------------------------ |  | ----- | -
|                               | 
|Discount rate                  |  | 7.375 | %
|Expected return on plan assets |  | 8.500 | %
|Rate of compensation increase  |  | 4.375 | %
|                               | 

Total
retirement plan costs allocated by RPC to Marine Products, prior to the spin-off, were $25,000 for the first two months in 2001, $147,000 in 2000 and $136,000 in 1999.

33

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401(k) Plan

Marine Products participates in a defined contribution 401(k) plan sponsored by RPC that is available to substantially all full-time employees with more than six
months of service. This plan allows employees to make tax-deferred contributions of up to 15 percent of their annual compensation, not exceeding the permissible deduction imposed by the Internal
Revenue Code. The Company matches 40 percent of each employee's contributions up to 3 percent of the employee's compensation. Employees vest in the Company's contributions after three years of
service. The charges to expense for Marine Products' contributions to the 401(k) plan were $61,000 in 2001, $76,000 in 2000, and $74,000 in 1999.

Benefit Plan Changes Subsequent to Year-End

The Company has elected to cease further benefit accruals under the Retirement Income Plan effective March 31, 2002. The 401(k) employer match for 2002 will be
increased to 50 percent of each employee's contributions up to six percent of the employee's compensation. Certain supplemental retirement benefits will be provided to longer serviced employees that
will vest in five years and will be paid ratably in cash over the next seven year period. This is expected to total approximately $730,000 plus interest.

Stock Incentive Plan

Historically, certain RPC employees, including employees of Marine Products, have participated in the RPC, Inc. Employee Stock Incentive Plan ("SIP" or the
"Plan"). In conjunction with the spin-off, Marine Products has adopted a ten year Employee Stock Incentive Plan under which 2,000,000 shares of common stock have been reserved for issuance to Marine
Products employees. This plan provides for the issuance of various forms of stock incentives, including, among others, incentive stock options and restricted stock. Following the spin-off, outstanding
stock option grants under the Plan held by Marine Products employees were replaced with Marine Products stock option grants. The Marine Products grants were replaced with options equal to the relative
ratio of the exercise price per option to the market value per share, the same aggregate difference between market value and exercise price and the same vesting provisions, option periods and other
applicable terms and conditions as the RPC stock option grants that were replaced.

Incentive Stock Options

Transactions involving the Marine Products SIP were as follows:

|                                                                    |  | Shares    |  | Option
Price
(Per Share) |            | Weighted Average
Exercise Price
|------------------------------------------------------------------- |  | --------- |  | ------------------------ | ---------- | -------------------------------
|                                                                   
|Outstanding 12/31/01                                                |  | 1,104,060 |  | $                        | 0.79-$3.85 |                                
|                                                                   
|                                                                    |  | 2001      |  |                          |            |                                
|                                                                   
|Exercisable at December 31,                                         |  |           |  |                          |            |                                
|Weighted average exercise price of exercisable options              |  |           |  |                          |            |                                
|Per share weighted average grant date fair value of options granted |  |           |  |                          |            |                                
|                                                                   

The
weighted average remaining contractual life of options outstanding at December 31, 2001 was six years.

Restricted Stock

Marine Products has granted employees two forms of restricted stock: performance restricted and time lapse restricted. The performance restricted shares are
granted, but not earned and issued, until

34

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certain five-year tiered performance criteria are met. The performance criteria are predetermined market prices of Marine Products' stock. On the date the stock appreciates to each level
(determination date), 20 percent of performance shares are earned. Once earned, the performance shares vest five years from the determination date. Time lapse restricted shares vest 10 years from the
grant date. There were no units granted under these restricted stock programs in 2001. There were 18,231 performance shares earned under the plans in 2001. During 2001, no shares were forfeited or
canceled. Deferred compensation was $280,000 as of December 31, 2001.

Employees
of Marine Products with outstanding performance restricted stock awards that were not earned and issued into escrow were adjusted to account for the spin-off, based on the
average trading price of Marine Products' common stock relative to that of the combined daily average trading prices
of one share of RPC and 0.6 times one share of Marine Products, in each case during the 10 consecutive trading days beginning on the trading day that is 10 trading days after the effective date of the
spin-off. In addition, RPC employees with time lapse restricted stock awards or performance restricted stock awards that had been issued and were being held in escrow on their behalf as of the close
of business on the record date received a 0.6 share of Marine Products common stock for each share of RPC common stock held in escrow as of the close of business on the record date, pursuant to the
spin-off. Any shares of Marine Products common stock received by an RPC employee are being held in escrow on the same terms as the time lapse or performance restricted stock awards with respect to
which they were issued.

The
agreements under which the restricted stock is issued provide that shares awarded may not be sold or otherwise transferred until restrictions as established under the Marine Products
SIP have lapsed. Upon termination of employment from Marine Products, Chaparral, or Robalo, shares with restrictions must be returned to Marine Products. During 2001, no shares of restricted stock
were vested.

STOCK-BASED COMPENSATION

SFAS No. 123, "Accounting for Stock-Based Compensation" defines a fair value-based method of accounting for an employee stock option plan or similar equity
instrument. However, it also allows an entity to continue to measure compensation cost for those plans using the method of accounting prescribed in Accounting Principles Board ("APB") Opinion No. 25.
Entities electing to remain with the accounting in APB No. 25 must make pro forma disclosures of net income and earnings per share, as if the fair value-based method of accounting defined in the
statement had been applied.

Marine
Products has elected to account for its stock-based compensation plans under APB No. 25. The Company has computed for pro forma disclosure purposes the value of all options
granted during 2001, 2000, and 1999 using the Black-Scholes Option Pricing Model as prescribed by SFAS No. 123 using the following weighted average assumptions for grants:

|                       
|-----------------------
|
|                       
|Risk free interest rate
|Expected dividend yield
|Expected lives         
|Expected volatility    
|                       

The
total fair value of options granted to Marine Products employees was computed as follows:

|Year ended December 31, |  | 2001 |     | 2000 |     | 1999
|----------------------- |  | ---- | --- | ---- | --- | ----
|                       
|
|                       
|Total                   |  | $    | 340 |      | N/A |     
|                       

35

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The
total fair value of options granted would be amortized over the vesting period of the options. If Marine Products had accounted for these plans in accordance with SFAS No. 123,
Marine Products' reported net income and pro forma net income would have been as follows:

|(in thousands) |             |  |   |       |  |  
|-------------- | ----------- |  | - | ----- |  | -
|
|              
|Net Income     |             |  |   |       |  |  
|               | As reported |  | $ | 8,563 |  | $
|               | Pro forma   |  | $ | 8,437 |  | $
|Basic EPS      |             |  |   |       |  |  
|               | As reported |  | $ | 0.51  |  | $
|               | Pro forma   |  | $ | 0.50  |  | $
|Diluted EPS    |             |  |   |       |  |  
|               | As reported |  | $ | 0.49  |  | $
|               | Pro forma   |  | $ | 0.48  |  | $

Pro
forma net income for 2000 and 1999 noted above is based on the fair value of RPC options held by Marine Products' employees.

NOTE 9: PURCHASE OF BUSINESS

Effective June 2001, Marine Products purchased certain operating and intangible assets of the Robalo Marine segment of the U.S. Marine division of Brunswick
Corporation ("Brunswick") for total consideration of $1,037,000. Robalo is a leading manufacturer of offshore sport fishing boats. The purchase was funded by cash and has been accounted for using the
purchase method of accounting. The purchase cost has been allocated to the assets acquired based on estimated fair values as follows:

|               |  | (in thousands)
|-------------- |  | --------------
|Inventory      |  | $             
|Prepaid Assets |  |               
|Equipment      |  |               
|Tradename      |  |               
|               |  |               
|Total Cost     |  | $             
|               |  |               

NOTE 10: GAIN ON SETTLEMENT OF CLAIM

In the first quarter of 2000, RPC recorded an after-tax gain of $4,227,000. The gain is a result of Chaparral's receipt, in the first quarter of 2000, of its
share of a non-refundable $35 million settlement payment made by Brunswick, a major engine supplier, to the members of the American Boatbuilders Association ("ABA"), a buying group which includes
Chaparral Boats. Under the terms of this agreement between the ABA and Brunswick, additional payments were to be made to the ABA depending on the final judgment or settlement of a lawsuit brought by
Independent Boatbuilders Association ("IBBI"), another buying group supplied engines by Brunswick. In March 2000, the United States Court of Appeals for the Eighth Circuit ordered the trial court to
enter a judgment for Brunswick, thereby reversing the initial decision in favor of IBBI. It is unlikely that any additional payments will be received by the Company in connection with this settlement.

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

None.

36

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PART III

Item 10. Directors and Executive Officers of the Registrant

Information concerning directors and executive officers is included in the Marine Products' Proxy for its 2002 Annual Meeting of Stockholders, in the sections
entitled "Election of Directors" and "Section 16(a) Beneficial Ownership Reporting Compliance." This information is incorporated herein by reference. Information about executive officers is contained
on pages 13-14 of this document.

Item 11. Executive Compensation

Information concerning executive compensation is included in the Marine Products' Proxy for its 2002 Annual Meeting of Stockholders, in the section entitled
"Executive Compensation." This information is incorporated herein by reference.

Item 12. Security Ownership of Certain Beneficial Owners and Management

Information concerning security ownership is included in the Marine Products' Proxy for its 2002 Annual Meeting of Stockholders, in the sections entitled "Capital
Stock" and "Election of Directors." This information is incorporated herein by reference.

Item 13. Certain Relationships and Related Transactions

Information concerning certain relationships and related transactions is included in the Marine Products' Proxy for its 2002 Annual Meeting of Stockholders, in
the sections entitled "Certain
Relationships and Related Transactions" and "Compensation Committee Interlocks and Insider Participation." This information is incorporated herein by reference.

PART IV

Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K

The following documents are filed as part of this report.

|                                                                                            |  | PAGE
|------------------------------------------------------------------------------------------- |  | ----
|FINANCIAL STATEMENTS                                                                        |  |     
|Consolidated Balance Sheets as of December 31, 2001 and 2000                                |  | 22  
|Consolidated Statements of Income for the three years ended December 31, 2001               |  | 23  
|Consolidated Statements of Stockholders' Equity for the three years ended December 31, 2001 |  | 23  
|Consolidated Statements of Cash Flows for the three years ended December 31, 2001           |  | 24  
|Notes to Consolidated Financial Statements                                                  |  | 25  
|SCHEDULES                                                                                   |  |     
|Schedule IIValuation and Qualifying Accounts                                               |  | 39  

37

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Exhibits

|Exhibit
Number |  | Description                                                                                                                                                                                                                                
|-------------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|3.1            |  | Articles of Incorporation of Marine Products Corporation (incorporated herein by reference to exhibit 3.1 to the Form 10 filed on February 13, 2001).                                                                                      
|3.2            |  | Bylaws of Marine Products Corporation (incorporated herein by reference to Exhibit 3.2 to the Form 10 filed on February 13, 2001).                                                                                                         
|4              |  | Form of Common Stock Certificate of Marine Products Corporation (incorporated herein by reference to Exhibit 4.1 to the Form 10 filed on February 13, 2001).                                                                               
|10.1           |  | Marine Products Corporation 2001 Employee Stock Incentive Plan (incorporated herein by reference to Exhibit 10.1 to the Form 10 filed on February 13, 2001).                                                                               
|10.2           |  | Agreement Regarding Distribution and Plan of Reorganization, dated February 12 2001, by and between RPC, Inc. and Marine Products Corporation (incorporated herein by reference to Exhibit 10.2 to the Form 10 filed on February 13, 2001).
|10.3           |  | Employee Benefits Agreement, dated February 12, 2001, by and between RPC, Inc., Chaparral Boats, Inc. and Marine Products Corporation (incorporated herein by reference to Exhibit 10.3 to the Form 10 filed on February 13, 2001).        
|10.4           |  | Transition Support Services Agreement, dated February 12, 2001, by and between RPC, Inc. and Marine Products Corporation (incorporated herein by reference to Exhibit 10.4 to the Form 10 filed on February 13, 2001).                     
|10.5           |  | Tax Sharing Agreement, dated February 12, 2001, by and between RPC, Inc. and Marine Products Corporation (incorporated herein by reference to Exhibit 10.5 to the Form 10 filed on February 13, 2001).                                     
|10.6           |  | Compensation Agreement between James A. Lane, Jr. and Chaparral Boats, Inc. (incorporated herein by reference to Exhibit 10.6 to the Form 10 filed on February 13, 2001).                                                                  
|21             |  | Subsidiaries of Marine Products Corporation.                                                                                                                                                                                               
|23             |  | Consent of Arthur Andersen LLP                                                                                                                                                                                                             
|24             |  | Powers of Attorney for Directors                                                                                                                                                                                                           

REPORTS ON FORM 8-K

No reports on Form 8-K were required to be filed by Marine Products for the quarter ended December 31, 2001. Any schedules or exhibits not shown above have been
omitted because they are not applicable.

38

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SCHEDULE IIVALUATION AND QUALIFYING ACCOUNTS

MARINE PRODUCTS CORPORATION AND SUBSIDIARIES (in thousands of dollars)
For the years ended December 31, 2001, 2000 and 1999

|Description                                                  |  | Balance at
Beginning of
Period |    | Charged to
Costs and
Expenses |   | Net
(Write-Offs)/
Recoveries |  | Balance at
End of
Period
|------------------------------------------------------------ |  | ------------------------------ | -- | ----------------------------- | - | ---------------------------- |  | ------------------------
|                                                            
|Year ended December 31, 2001
Allowance for Doubtful Accounts |  | $                              | 67 |                               | $ |                             |  | $                       
|                                                            
|Year ended December 31, 2000
Allowance for Doubtful Accounts |  | $                              | 69 |                               | $ |                             |  | $                       
|                                                            
|Year ended December 31, 1999
Allowance for Doubtful Accounts |  | $                              | 77 |                               | $ |                             |  | $                       
|                                                            

Signatures

Pursuant
to the requirements of Section 13 of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.



Pursuant
to the requirements of the Securities Exchange Act of 1934, this report has been signed by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.

|R. Randall Rollins
Chairman of the Board of Directors |  | Richard A. Hubbell
President and Chief Executive Officer
(Principal Executive Officer) |  | Ben M. Palmer
Chief Financial Officer
(Principal Financial and Accounting Officer)
|----------------------------------------------------- |  | -------------------------------------------------------------------------------------- |  | ----------------------------------------------------------------------------------
|March 22, 2002                                        |  | March 22, 2002                                                                         |  | March 22, 2002                                                                    

The
Directors of RPC, Inc. (listed below) executed a power of attorney, appointing Richard A. Hubbell their attorney-in-fact, empowering him to sign this report on their behalf.

|Wilton Looney, Director
Gary W. Rollins, Director
Henry B. Tippie, Director |  | James B. Williams, Director
James A. Lane, Jr., Director
Linda H. Graham, Director
|--------------------------------------------------------------------------- |  | ----------------------------------------------------------------------------------
|Richard A. Hubbell
Director and as Attorney-in-fact
March 22, 2002          |  |                                                                                   

39

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REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To
Marine Products Corporation:

We
have audited the accompanying consolidated balance sheets of Marine Products Corporation (a Delaware corporation) and subsidiaries as of December 31, 2001 and 2000, and the related
consolidated statements of income, stockholders' equity, and cash flows for each of the three years in the period ended December 31, 2001. These financial statements and the schedule referred to below
are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements and schedule based on our audits.

We
conducted our audits in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free from material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe
that our audits provide a reasonable basis for our opinion.

In
our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Marine Products Corporation and Subsidiaries as of December
31, 2001 and 2000, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2001, in conformity with accounting principles generally
accepted in the United States.

Our
audit was made for the purpose of forming an opinion on the basic financial statements taken as a whole. The schedule listed in Item 14 is presented for the purposes of complying
with the Securities and Exchange Commission's rules and is not part of the basic financial statements. This schedule has been subjected to the auditing procedures applied in our audit of the basic
financial statements and, in our opinion, fairly states in all material respects, the financial data required to be set forth therein in relation to the basic financial statements taken as a whole.

Atlanta,
Georgia                                        
                Arthur Andersen LLP
February 25, 2002

40

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UNAUDITED QUARTERLY DATA

|                  
|------------------
|
|                  
|2001              
|Net sales         
|Net income        
|Earnings Per Share
|2000              
|Net sales         
|Net income        
|Earnings Per Share

OFFICERS AND DIRECTORS

|                                                                                         
|-----------------------------------------------------------------------------------------
|
|                                                                                         
|R. Randall Rollins
Chairman of the Board of Directors                                    
|                                                                                         
|Richard A. Hubbell
President and Chief Executive Officer                                 
|                                                                                         
|James A. Lane, Jr.
Executive Vice President President of Chaparral Boats, Inc.           
|                                                                                         
|Linda H. Graham
Vice President and Secretary                                             
|                                                                                         
|Ben M. Palmer
Vice President, Chief Financial Officer, Treasurer, and Assistant Secretary
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                         

41

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STOCKHOLDER INFORMATION

CORPORATE
OFFICES
Marine Products Corporation
2170 Piedmont Road, NE
Atlanta, Georgia 30324
Telephone: (404) 321-7910

STOCK
LISTING
American Stock Exchange

TICKER
SYMBOLMPX

NEWSPAPER
SYMBOLMarine Pdts

MARINE
PRODUCTS CORPORATION INVESTOR RELATIONS WEB-SITEwww.marineproductscorp.com

TRANSFER
AGENT AND REGISTRAR
For inquiries related to stock certificates,
including changes of address, please contact:

SunTrust
Bank, Atlanta
Stock Transfer Department
PO Box 4625
Atlanta, GA 30302
Telephone: 1-800-568-3476

Annual
Meeting
The Annual Meeting of Marine Products
Corporation will be held at 9:00 a.m., April 23, 2002,
at the corporate offices in Atlanta, Georgia.

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