The following items were the
                                                   subject of a Form 12b-25 and
                                                   are included herein: Exhibits
                                                   10.46, 10.47 and 21.1.


                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   FORM 10-K/A

                 X  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
                ---
              OF THE SECURITIES EXCHANGE ACT OF 1934 (Fee Required)

                  For the Fiscal Year Ended September 30, 1999

                TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

                         Commission file number 0-20757

                           TRAVIS BOATS & MOTORS, INC.
             (Exact name of registrant as specified in its charter)

                                      TEXAS
                         (State or other jurisdiction of
                         incorporation or organization)

                                   74-2024798
                                (I.R.S. Employer
                             Identification Number)

                5000 PLAZA ON THE LAKE, SUITE 250, AUSTIN, TEXAS
                      78746 (Address of principal executive
                                    offices)

       Registrant's telephone number, including area code: (512) 347-8787
        Securities registered pursuant to Section 12(b) of the Act: None
               Securities registered pursuant to Section 12(g) of
                                    the Act:

                          COMMON STOCK, $.01 PAR VALUE
                                (Title of class)

         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  Registrant
was  required  to file such  reports),  and (2) has been  subject to such filing
requirements for the past 90 days. Yes   X     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 Report on Form 10-K or
any amendment to this Report on Form 10-K. _____

         The aggregate  market value of the voting stock (which  consists solely
of  shares of Common  Stock)  held by  non-affiliates  of the  Registrant  as of
December 23, 1999,  (based upon the last reported price of $10.25 per share) was
approximately $29,973,050 on such date.

         The number of shares of the issuer's  Common Stock,  par value $.01 per
share,  outstanding  as of December 23, 1999 was 4,326,022,  of which  2,924,200
shares were held by non-affiliates.

         Documents  Incorporated by Reference:  Portions of  Registrant's  Proxy
Statement  relating to the 2000  Annual  Meeting of  Shareholders  to be held in
March 2000, have been incorporated by reference herein (Part III).

                                       1

<PAGE>

         The Registrant files this amendment to make certain clarifying changes,
to correct certain  typographical errors, to update the disclosure regarding the
Registrant's  credit  facility,  and  to  add  Exhibit  10.46,  "Product  Supply
Agreement dated June 29, 1999 between the Company,  its subsidiaries and Mercury
Marine,  a division of Brunswick  Corporation,"  Exhibit  10.47,  "Larson Master
Dealer  Agreement   effective   September  29,  1999  between  the  Company  and
Larson/Glastron  Boats,  Inc.,"  and  Exhibit  21.1,  "List of  Subsidiaries  of
Registrant."


                                       ii

<PAGE>

<TABLE>
<CAPTION>

                  TRAVIS BOATS & MOTORS, INC. AND SUBSIDIARIES

                               REPORT ON FORM 10-K

                                TABLE OF CONTENTS
                                                                                                             PAGE
                                                                                                             ----
<S>                                                                                                           <C>

PART I.........................................................................................................7

   Item 1.  Business...........................................................................................7

   Item 2.  Properties........................................................................................12

   Item 3.  Legal Proceedings.................................................................................14

   Item 4.  Submission of Matters to a Vote of Security Holders...............................................14

PART II.......................................................................................................14

   Item 5.  Market for Registrant's Common Stock and Related Stockholder Matters..............................14

   Item 6.  Selected Financial Data...........................................................................15

   Item 7.  Management's Discussion and Analysis of Financial Condition and Results of Operations.............16

   Item 7A. Quantitative and Qualitative Disclosures About Market Risk........................................24

   Item 8.  Financial Statements..............................................................................26

   Item 9.  Changes in and Disagreements with Accountants on Accounting and Financial Disclosure..............27

PART III......................................................................................................27

   Item 10. Directors and Executive Officers..................................................................27

   Item 11. Executive Compensation............................................................................27

   Item 12. Security Ownership of Certain Beneficial Owners and Management....................................27

   Item 13. Certain Relationships and Related Transactions....................................................27

PART IV.......................................................................................................27

   Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K...................................27

</TABLE>

                                       2


 <PAGE>
                                  RISK FACTORS

         Some  of  the   information  in  this  Report  on  Form  10-K  contains
forward-looking statements that involve substantial risks and uncertainties. You
can identify these  statements by  forward-looking  words such as "may," "will,"
"expect," "anticipate,"  "believe," "estimate," and "continue" or similar words.
You should read statements  that contain these words carefully  because they (1)
discuss our future  expectations;  (2) contain projections of our future results
of  operation  or  of  our  future  financial  condition;  or  (3)  state  other
"forward-looking"  information.  We believe it is important to  communicate  our
expectations to people that may be interested.  However,  unexpected  events may
arise in the future that we are not able to predict or control. The risk factors
that we describe in this section,  as well as any other  cautionary  language in
this Report on Form 10-K, give examples of the types of  uncertainties  that may
cause our actual  performance  to differ  materially  from the  expectations  we
describe in our forward- looking statements.  You should know that if the events
described in this section and elsewhere in this Report on Form 10-K occur,  they
could have a material  adverse  effect on our  business,  operating  results and
financial condition.

         WE DEPEND ON STRONG SALES IN THE FIRST HALF OF THE YEAR.  Our business,
and  the  recreational  boating  industry  in  general,  is very  seasonal.  Our
strongest sales period begins in January, because many boat and recreation shows
are held in that month.  Strong sales demand  continues from January through the
summer months.  Of our average annual net sales over the last three years,  over
27% occurred in the quarter ending March 31 and over 41% occurred in the quarter
ending June 30. With the exception of our store locations in Florida,  our sales
are generally much lower in the quarter ending  December 31. Because the overall
sales level in the December quarter are much less than in the months with warmer
weather,  we generally do not make a profit in the quarter  ending  December 31.
Because of the  difference  in sales in the warm spring and summer months versus
the cold fall and winter months,  if our sales in the months of January  through
June are  significantly  lower than we expect, we may not earn profits or we may
lose money and have a net loss. This  experience may lead to a material  adverse
effect on our business,  our operating results and our financial condition.  See
"Our Sales Depend on Good Weather" and "Management's  Discussion and Analysis of
Financial Condition and Results of Operations."

         OUR  SALES  DEPEND  ON GOOD  WEATHER.  Our  business  also  depends  on
favorable weather conditions.  For example,  too much or too little rain, either
of which may result in dangerous or inconvenient  boating conditions,  can force
boating  areas to close and  severely  limit our sales.  A long  winter can also
reduce our selling  season.  Hurricanes  and other  storms  could  result in the
disruption  of our  operations  or  result  in  damage  to our  inventories  and
facilities.  We purchase insurance for storm damage, but the amount of insurance
purchased  or  coverages  we purchase  may not repay us for all weather  related
damages or disruptions to our operations.  Bad weather  conditions in the future
may  decrease  customer  demand for our boats,  which may decrease our sales and
could significantly lower the trading price of our common stock.

         GENERAL ECONOMIC CONDITIONS IN THE UNITED STATES AND IN THE AREAS WHERE
WE  HAVE  STORES  AFFECT  OUR  SALES.  Our  industry,  like  many  other  retail
industries,  depends on the local,  regional and national economy. High interest
rates,  unfavorable economic  developments,  volatility or declines in the stock
market,  changes to the tax law such as the  imposition  of a luxury  tax,  or a
major employer's decision to leave a certain city can all significantly decrease
the amount of money consumers are willing to spend. When these situations arise,
consumers often decide not to purchase relatively expensive, "luxury" items like
recreational  boats.  For  example,  from 1988 to 1990,  our  business  suffered
dramatically  because of the  declines  in the  financial,  oil and gas and real
estate  markets  in Texas.  If similar  downturns  in the  national  or in local
economies arise in the future, we may suffer significant operating losses. Also,
changes in federal and state tax laws, such as the imposition of luxury taxes on
new boat  purchases  also  could  influence  consumers'  decisions  to  purchase
products we sell and could have a negative effect on our

                                       3

<PAGE>

sales. For example, during 1991 and 1992 the federal government imposed a luxury
tax on new  recreational  boats with sales  prices in excess of  $100,000.  This
luxury tax coincided with a sharp decline in boating  industry sales from a high
of $17.9 billion in the late 1980s to a low of $10.3 billion in 1992.

         OUR GROWTH  DEPENDS ON OUR ABILITY TO ACQUIRE  AND OPEN NEW STORES.  We
have grown primarily  through the acquisition of recreational  boat dealerships.
Our growth strategy involves significant risks. We began with one store in Texas
in 1979 and,  since  then,  have  opened or  acquired  37 new stores in Alabama,
Arkansas,  Florida, Georgia,  Louisiana,  Mississippi,  Oklahoma,  Tennessee and
Texas.  Stores that we  acquired or opened  since we went public in June of 1996
have accounted for 25.1% of our net sales in fiscal year 1997,  46.0% of our net
sales in fiscal  year 1998 and 60.2% of our net sales in fiscal  year  1999.  By
comparison,  our comparable store sales (which are sales in stores that are open
in the same location for two  consecutive  years) have  increased 5.7% in fiscal
year  1997,  6.6% in fiscal  year 1998 and 1.9% in fiscal  1999.  We expect  our
comparable  store  sales to  fluctuate  from the impact of (i) when and where we
acquire new store locations,  (ii) the number of store locations that we remodel
or  relocate to  superstores,  and (iii) the market  conditions  in the areas or
cities in which our stores are located.  Although we expect our existing  stores
to have sales growth and to remain profitable,  most of our sales growth is from
newly  added  store  locations  and we may not be able  to  continue  to grow or
purchase new store  locations at the same rapid pace or on terms and  conditions
favorable to us.

         We may  continue  to make  acquisitions  depending  upon,  among  other
things, the availability of suitable  acquisition  opportunities and our ability
to finance these transactions.  Our success in these acquisitions will depend on
our  financial  strength  at the time of  acquisition,  our  ability to hire and
retain  qualified  employees and our ability to identify markets in which we can
successfully sell our products. In addition, once we identify a store that meets
our  criteria,  our  success  will  depend on our  ability  to sell the  store's
remaining  inventory,  to convert  the store to a Travis  Boating  Center and to
attract new customers to the store after the  conversion.  Our inability to meet
our planned  growth  potential  will  severely  impact our  business,  operating
results and financial condition.

         Besides  acquiring  existing  stores and  converting  them into  Travis
Boating Centers,  we plan to build new stores in certain cities or towns that do
not have other boat  retailers  that we can  purchase or would like to purchase.
Our success in building and operating new  facilities  will depend on whether we
obtain reliable  information about each potential  market,  such as how many and
what type of boats  have  previously  been sold in the  market.  We must then be
certain  that the prices of our boats are  competitive  with other boat  dealers
that sell boats in the market so that we can sell  enough  boats to operate  our
store  profitably.  We cannot promise or be certain that we will be able to open
and  operate  new  stores  in a  time  frame  that  we  are  expected  to by our
shareholders  or  that  we  can  operate  stores  on  a  profitable  basis.  See
"Management's  Discussion  and  Analysis of Financial  Condition  and Results of
Operations. "

         OUR  SUCCESS  WILL  DEPEND ON HOW WELL WE MANAGE  OUR  GROWTH.  We have
undergone a period of rapid  growth and,  consequently,  we have spent much time
and effort in  acquiring  and opening new stores.  Although we believe  that our
systems,  procedures and controls are adequate to support our growth,  we cannot
assure that this is the case.  In addition,  our growth will impose  substantial
added  responsibilities on our existing senior management  including the need to
identify, recruit and integrate new senior level managers. Management may not be
able to oversee the growth  efficiently or to implement  effectively  our growth
and operating  strategies.  Our inability to manage our growth would result in a
significant and severe financial impact on our business,  operating  results and
financial condition.

         WE ARE INSTALLING A NEW MIS SYSTEM IN EACH OF OUR STORES, WHICH MAY NOT
OPERATE  EFFECTIVELY.  Beginning  in fiscal year 1998,  we  purchased  and began
installing  a new  management  information  system to  monitor  and  manage  our
geographically  dispersed stores.  This system is now operational in each of our
38 stores. We believe that our company is among the first to install this

                                       4

<PAGE>





management  information  system  on a large  scale,  fully  centralized  network
architecture.  Accordingly,  we are testing  the  continued  application  of the
system in a large scale  multiple  user  network  that will  accommodate  future
growth in the number of store  locations  we  operate.  Any  faults,  defects or
networking  limitations  in this  system  could harm our  ability to operate our
stores  and would  result in a  significant  impact on our  business,  operating
results and financial  condition.  See "Management's  Discussion and Analysis of
Financial  Condition and Results of  Operations--Disclosure  of Year 2000 Issues
and Consequences."

         OUR SUPPLIERS  COULD INCREASE THE PRICES THEY CHARGE US OR COULD DECIDE
NOT SELL TO US. We have entered into  non-exclusive  dealer  agreements with our
key manufacturers.  Most of these agreements are renewable each year and contain
other conditions that are standard in the industry.  Because of our relationship
with these  manufacturers  and the volumes we purchase,  we receive volume price
discounts and other favorable terms;  however,  the manufacturers may change the
prices  they  charge us for any  reason at any time or could  decide not to sell
their products to us. A change in  manufacturer's  prices or changes in industry
regulations  could have a material  adverse  effect on our  business,  financial
conditions and results of operations.

         WE RELY ON SEVERAL KEY  MANUFACTURERS  FOR ALMOST ALL OF OUR  INVENTORY
PURCHASES.  Our success depends to a significant extent on the continued quality
and popularity of the products of our  manufacturers.  We purchase almost all of
our outboard  motors from two  manufacturers.  In fiscal years 1998 and 1997, we
purchased nearly all of the outboard motors we use on our Travis Edition line of
recreational  boats  from  Outboard  Marine  Corporation,  which  makes  Johnson
outboard  motors.  In fiscal year 1999 we also  purchased  outboard  motors from
Brunswick  Corporation,  which makes Mercury outboard motors. We have three-year
master  agreements  with Outboard Marine  Corporation and Brunswick  Corporation
that provide  volume price  discounts and  reimbursement  for certain  marketing
expenses.  Each  agreement  is  currently  in the second  year.  Either of these
agreements may be canceled, however, if we do not buy certain minimum quantities
or if the  manufacturer  cannot  supply the  quantity we need.  Cancellation  or
modification of our agreements to purchase outboard motors could have a material
adverse effect on our business, financial condition and results of operations.

         We also buy much of our boat inventory from Genmar Industries, Inc., or
Genmar.  For example,  in fiscal year 1997 we purchased  34.3% of our  inventory
from Genmar,  in fiscal year 1998 we purchased 17.7%, and in fiscal year 1999 we
purchased 12.0% from Genmar.  The purchases of boats from this supplier are also
made based on the terms of a  three-year  master  agreement  with  volume  price
discounts.  In addition, we purchase a large percentage of the annual production
of several other boat manufacturers.  See "Management's  Discussion and Analysis
of Financial Condition and Results of Operations."

         If our sales  increase,  these key  manufacturers  may need to increase
their  production  or we may need to locate other  sources to purchase  outboard
motors or boats.  If our  suppliers  cannot  produce more or decide not to renew
their  contracts  with us,  and we cannot  find  alternative  sources at similar
quality and prices,  we would experience  inventory  shortfalls which, if severe
enough,  could  cause  significant  disruptions  and  delays in our  sales  and,
therefore,  harm our financial condition. In addition the timing, structure, and
amount  of   manufacturer   sales   incentives   could  impact  the  timing  and
profitability of our sales.

         CERTAIN LAWS AND CONTRACTS  MAY KEEP US FROM  ENTERING NEW MARKETS.  We
may be required to obtain the permission of  manufacturers to sell their product
before we enter new markets. We received permission from some key manufacturers,
including Outboard Marine Corporation,  to sell their product in the areas where
we have recently expanded. We have not, however,  received universal approval to
sell all of our products in all new markets. If our manufacturers do not give us
permission to sell their products in markets where we plan to expand, we will be
forced  to  find  alternative  supply  sources.   Besides  these  manufacturers'
restrictions,  there are also legal  restrictions on our business.  For example,
the state of

                                       5

<PAGE>

Oklahoma has adopted laws that restrict the locations of competing boat dealers.
While these types of laws are not common,  they could have a significant  effect
on our industry if other states pass similar restrictions.

         WE  MAY  NOT  BE  ABLE  TO  RESPOND   EFFECTIVELY  TO  THE  SIGNIFICANT
COMPETITION WE FACE. We operate in very competitive conditions.  We must compete
generally with other businesses trying to sell  discretionary  consumer products
and also face  intense  competition  from other  recreational  boat  dealers for
customers,  quality  products,  store  locations  and boat show  space.  We rely
heavily on boat shows to generate  sales. If we are limited in or prevented from
participating in boat shows in its markets or in markets we are targeting,  this
limited  participation  could have a negative effect on our business,  financial
condition and results of operation.

         Within our  industry,  our main  competitors  are single  location boat
dealers.  We  compete  with other  dealers  based on the  quality  of  available
products,  the price and value of the products and customer service. To a lesser
extent,  we  also  compete  with  national  specialty  marine  stores,   catalog
retailers,  sporting good stores and mass merchants,  especially with respect to
parts and accessories.  We face significant  competition in the markets where we
currently operate and in the markets we plan to enter. We believe that the trend
in the  boating  industry  is for  manufacturers  to include  more  features  as
standard  equipment on boats and for other dealers to offer packages  comparable
to our packages.  Some of our  competitors,  especially  those that sell boating
accessories,  are large  national  or regional  chains  that have  substantially
greater financial,  marketing and other resources than we do. We cannot give any
assurances  that we will be able to  effectively  compete in the retail  boating
industry in the future.

         OUR SUBSTANTIAL  INDEBTEDNESS COULD RESTRICT OUR OPERATIONS AND MAKE US
MORE VULNERABLE TO ADVERSE ECONOMIC CONDITIONS. We have had and will continue to
have a significant amount of indebtedness. Our growth strategy may require us to
secure  significant  additional  capital.  Our future capital  requirements will
depend upon the size,  timing and the structure of future  acquisitions  and our
working capital. Any borrowings to finance future operations, asset purchases or
acquisitions  could  make us more  vulnerable  to a  downturn  in our  operating
results,  a downturn in economic  conditions  or increases in interest  rates on
portions of debt that have variable interest rates.

         Our ability to make payments on our indebtedness depends on our ability
to  generate  cash  flow in the  future.  If our cash flow  from  operations  is
insufficient to meet our debt service requirements, we could be required to sell
additional equity securities,  refinance our obligations or dispose of assets in
order  to  meet  our  debt  service  requirements.   In  addition,   our  credit
arrangements  generally  will contain  financial and  operational  covenants and
other  restrictions  with which we must comply.  Adequate  financing  may not be
available if and when we need it or may not be available on terms  acceptable to
us. Our failure to achieve  required  financial and other covenants or to obtain
sufficient  financing on favorable  terms and  conditions  could have a material
adverse  effect on our business,  financial  condition and results of operations
and prospects.

         WE MAY ISSUE ADDITIONAL SECURITIES IN CONNECTION WITH ACQUISITIONS THAT
WILL DILUTE OUR CURRENT  SHAREHOLDERS  AND IMPACT OUR EARNINGS PER SHARE.  If we
choose to finance future  acquisitions  in whole or in part through the issuance
of common  stock or debt  instruments  convertible  into our common  stock,  our
existing shareholders would experience dilution and our earnings per share could
also be  impacted  by the  issuance  of  additional  shares of capital  stock in
connection with future acquisitions.


         WE ARE REFINANCING OUR CREDIT LINE AND MAY NOT OBTAIN  FAVORABLE TERMS.
One of our current credit facilities for borrowings of up to $55 million matures
on January 31, 2000.  We currently  are in technical  default  under this credit
facility based upon a financial ratio required under the terms of this facility;
however,  we have  obtained  written  waivers from each of the lenders under the
facility  regarding this technical  default.  We are currently in the process of
refinancing  and increasing this credit facility to provide for borrowings of up
to $125 million with several  financial  lenders  including certain lenders that
currently

                                       6

<PAGE>

provide a portion of the $55  million  loan.  The failure to  refinance  the $55
million  credit  facility or to obtain other  sufficient  financing on favorable
terms and  conditions  could have a  material  adverse  effect on our  business,
operating results and financial conditions.


         MUCH OF OUR INCOME IS FROM  FINANCING,  INSURANCE AND EXTENDED  SERVICE
CONTRACTS, WHICH IS DEPENDENT ON THIRD PARTY LENDERS AND INSURANCE COMPANIES. We
receive a substantial part of our income from the fees we receive from banks and
other  lending  companies.  We call this type of income  Finance  and  Insurance
income,  or F&I income.  If our customers  desire to borrow money to finance the
purchase of their boat, we help the customers  obtain the financing by referring
them to certain banks that have offered to provide financing for boat purchases.
The bank or other  lending  company pays a fee to our company for each loan that
they are able to provide as a result of our referral.

         When we sell  boats we also  offer our  customers  the  opportunity  to
purchase  (i) a Service  Contract  that  generally  provides up to four years of
additional  warranty  coverage on their  boat's  motor after the  manufacturer's
original  warranty  expires,  and (ii) various types of insurance  policies that
will  provide  money to pay a customer's  boat loan if the  customer  dies or is
physically disabled.  We sell these products as a broker for unrelated companies
that specialize in these type of issues,  and we are paid a fee for each product
that we sell.  Since we only broker these products on behalf of other providers,
our responsibility  and/or financial risk for paying claims or expenses that are
eligible to be insured by these Service Contracts or other insurance policies is
limited.

         F&I  income  for  fiscal  year 1999 was 4.3% of our net  sales,  and we
estimate 18.8% of our net profits. In fiscal year 1998, these services accounted
for 5.4% of our net  sales  and  approximately  20.3% of our net  profits.  This
arrangement carries several potential risks. For example, the lenders we arrange
financing  through may decide to lend to our customers  directly  rather than to
work through us. If the customer  goes  directly to the bank to apply for a loan
to purchase  their boat we would not  receive a fee for  referral.  Second,  the
lenders we  currently  refer  customers to may change the criteria or terms they
use to make loan  decisions,  which could reduce the number of customers that we
can refer.  Also, our customers may use the Internet or other electronic methods
to find financing alternatives. If either of these events occur, we would lose a
significant portion of our income and profit.

         OUR SUCCESS DEPENDS ON OUR MANAGEMENT TEAM. Our company depends greatly
on our key  management,  including  Mark T.  Walton,  Chairman  of the Board and
President; Ronnie L. Spradling,  Executive Vice President-New Store Development;
Michael B. Perrine, Chief Financial Officer,  Secretary and Treasurer; and other
key employees.  We have bought and are the beneficiary of key-man life insurance
policies on Mr. Walton and Mr. Perrine in the amount of $1,000,000, each, and on
Mr. Spradling in the amount of $500,000.  However,  if any of these employees or
other  key  employees  died,  became  disabled  or left  Travis  Boats for other
reasons,  their loss could have a significant  negative effect on our operations
and our financial performance.

         IF OUR  PRODUCTS  ARE  DEFECTIVE,  WE COULD BE SUED.  Because  we sell,
service and custom package boats, motors and other boating equipment,  we may be
exposed  to  lawsuits  for  personal  injury and  property  damage if any of our
products  are  defective  and  cause  personal   injuries  or  property  damage.
Manufacturers  that we purchase  product  from  generally  maintain  product and
general  liability   insurance  and  we  carry  third  party  product  liability
insurance.  We have  avoided any  significant  liability  for these risks in the
past.  However,  if a situation arises in which a claim is not covered under our
insurance  policy or is covered under our policy but exceeds the policy  limits,
it could  have a  significant  and  material  adverse  effect  on our  financial
condition.

         OUR  FAILURE  AND THE  FAILURE OF PARTIES  WITH WHOM WE DO  BUSINESS TO
ADDRESS THEIR YEAR 2000 ISSUES COULD  NEGATIVELY  IMPACT OUR OPERATING  RESULTS.
The Year 2000 issue is the result of computer

                                       7

<PAGE>





program being written using two digits rather than four to define the applicable
year.  Computer equipment and software and devices with embedded technology that
are  time-sensitive may recognize a date using "00" as the year 1900 rather than
the year 2000. This could result in a system failure or miscalculations  causing
disruptions of operations,  including, among other things, a temporary inability
to process  transactions,  send  invoices or engage in similar  normal  business
activities.

         If all Year 2000 issues are not properly identified,  or if assessment,
remediation  and  testing  are not  effected  timely  with  respect to Year 2000
problems that are identified, there can be no assurance that the Year 2000 issue
will not  materially  adversely  impact  our  financial  position  or results of
operations or adversely  affect our  relationships  with  customers,  vendors or
others.  Additionally,  there can be no  assurance  that the Year 2000 issues of
other entities will not have a material adverse impact on our systems or results
of operations.  See "Management's Discussion and Analysis of Financial Condition
and Results of Operations--Disclosure of Year 2000 Issues and Consequences."

         OUR STOCK PRICE MAY BE  VOLATILE.  The price of our common stock may be
highly  volatile for several  reasons.  First, a limited number of shares of our
stock are owned by the public.  This may effect trading patterns which generally
occur  when a  greater  number of  shares  are  traded.  Second,  the  quarterly
variations  in our  operating  results,  as discussed  above,  may result in the
increase or decrease of our stock price. Third,  independent parties may release
information  regarding  pending  legislation,  analysts'  estimates  or  general
economic  or market  conditions  that effect the price of our stock.  Also,  our
stock price may be effected  by the demand and the market  performance  of small
capitalization  stocks. Any of these situations may have a significant effect on
the price of our common  stock or our ability to raise  additional  equity.  See
"Management's  Discussion  and  Analysis of Financial  Condition  and Results of
Operations."

         IF WE ISSUE MORE  STOCK,  OUR STOCK  PRICE MAY  DECLINE.  The sale of a
large  number of shares of our common  stock in the public  market  could have a
material  adverse effect on the market price of the common stock. As of December
23, 1999, we own or control,  together with our officers and directors and large
shareholders,  approximately  1,401,822  shares of common  stock.  Our sale of a
large portion of these shares may decrease the price of our common stock.

         OUR  CORPORATE  DOCUMENTS  MAY  PREVENT OR  INHIBIT A  TAKEOVER  OF THE
COMPANY. Our Articles of Incorporation permit us to issue up to 1,000,000 shares
of preferred stock, either all at once or in a series of issuances. Our Board of
Directors has the power to set the terms of this preferred  stock.  If we issued
this  preferred  stock,  it could  delay or  prevent a change in  control of the
company.  Also, our Articles of  Incorporation  permit the Board of Directors to
determine  the  number of  directors  and do not  specify a maximum  or  minimum
number. Our Bylaws currently provide that the Board of Directors is divided into
three classes with staggered terms.  This arrangement  could delay  shareholders
from replacing  current board members and could delay or prevent a takeover that
you may consider to be in your best interest.


                                       8


<PAGE>





                                     PART I

         Some  of the  information  in  this  Report  on  Form  10-K,  including
statements in "Item 1. Business," and  "Management's  Discussion and Analysis of
Financial  Condition  and  Results  of  Operations"   contains   forward-looking
statements that involve  substantial risks and  uncertainties.  You can identify
these  statements  by  forward-looking  words such as "may,"  "will,"  "expect,"
"anticipate," "believe," "estimate," and "continue" or similar words. You should
read statements that contain these words carefully  because they (1) discuss our
future expectations;  (2) contain projections of our future results of operation
or  of  our  future  financial  condition;  (3)  state  other  "forward-looking"
information.  We believe it is  important to  communicate  our  expectations  to
people  that may be  interested.  However,  unexpected  events  may arise in the
future that we are not able to predict or control.  Among the factors that could
cause actual results to differ  materially  are:  general  economic  conditions,
competition and government  regulations,  as well as the risks and uncertainties
discussed in this Report on Form 10-K, and the uncertainties set forth from time
to time in the Company's  other public reports,  filings and public  statements.
All  forward-looking  statements  in this  Report  on Form  10-K  are  expressly
qualified in their entirety by the cautionary statements in this paragraph.

ITEM 1.  BUSINESS

         General

         Travis Boats & Motors,  Inc.  ("Travis  Boats" or the  "Company")  is a
leading multi-state superstore retailer of recreational boats, motors,  trailers
and related marine accessories in the southern United States. The Company, which
currently  operates  38 stores  under the name Travis  Boating  Center in Texas,
Arkansas,  Louisiana,  Alabama,  Tennessee,  Mississippi,  Florida,  Georgia and
Oklahoma,  seeks to differentiate itself from competitors by providing customers
a unique superstore shopping experience that showcases a broad selection of high
quality boats, motors,  trailers and related marine accessories at firm, clearly
posted low prices.  Each superstore also offers  complete  customer  service and
support,   including  in-house   financing  programs  and  full-service   repair
facilities staffed by factory-trained mechanics.

         History

         Travis Boats was  incorporated as a Texas  corporation in 1979. As used
herein and unless  otherwise  required by the context,  the terms "Travis Boats"
and the  "Company"'  shall mean Travis  Boats & Motors,  Inc. and its direct and
indirect subsidiaries.

         Since its founding in 1979 as a single  retail store in Austin,  Texas,
the Company has grown both through  acquisitions  and the  establishment  of new
store locations.  During the 1980s, the Company expanded into San Antonio, Texas
with the  construction of a new store facility.  The Company  subsequently  made
acquisitions  of boat retailers  operating  within the Texas markets of Midland,
Dallas and  Abilene.  It was during this initial  period of  expansion  that the
Company began developing the systems necessary to manage a multi-store operation
and leveraging the economies of scale  associated  with volume  purchasing.  The
Company's success in these areas led to the proprietary Travis Edition packaging
concept and the  Company's  pricing  philosophy.  Since 1990,  Travis  Boats has
opened or acquired 33 additional store locations in the following states:  Texas
(3), Arkansas (4), Louisiana (4), Alabama (2),  Tennessee (5),  Mississippi (1),
Florida (12), Georgia (1) and Oklahoma (1).

         The Company sells  approximately  75 different Travis Edition models of
brand-name  fishing,  water-skiing and general  recreational  boats,  along with
motors,  trailers,  accessories  and  related  equipment.  Personal  watercraft,
off-shore fishing boats and cabin cruisers are also offered for sale at selected
store locations.  During fiscal 1999,  substantially  all of the boat units sold
range in size from 16

                                       9

<PAGE>





to 25 feet at prices ranging from $7,500 to $25,000.  Approximately  1.7% of new
boat sales are personal  watercraft  with retail prices  generally  ranging from
$5,000 to $10,000 and approximately 6.7% of new boat sales are off-shore fishing
boats and cruisers with lengths of 27 feet or greater and  generally  ranging in
retail price from $50,000 to $300,000.  The Company's  retail pricing  structure
seeks to maintain a consistent  gross profit  percentage  for each of its Travis
Edition models. See "Business Strategy - Travis Edition Concept."

         The Company custom  designs and  pre-packages  combinations  of popular
brand-name boats, such as Larson, Wellcraft, Bayliner, Sprint, and Sea Ark boats
with outboard motors  generally  manufactured by Outboard Marine  Corporation or
Brunswick,  along with trailers and numerous accessories,  under its proprietary
Travis Edition product line.  These  signature  Travis Edition  packages,  which
account for the vast  majority of total new boat sales,  have been  designed and
developed   in   coordination   with  the   manufacturers   and  often   include
distinguishing  features and accessories that have historically been unavailable
to, or listed as optional by, many competitors. These factors enable the Company
to  provide  the  customer  with an  exceptional  product  that is  conveniently
packaged for immediate enjoyment and competitively priced.

         The  Company  believes  that it offers a selection  of boat,  motor and
trailer  packages that fall within the price range of the majority of all boats,
motors and  trailers  sold in the United  States.  The  Company's  product  line
generally  consists  of  boat  packages  priced  from  $7,500  to  $25,000  with
approximate even distribution within this price range. While the Company's sales
have  historically  been  concentrated  on boats with retail  sales prices below
$25,000, the Company in limited market areas and quantities does sell boats that
have retail  sales prices in excess of  $200,000.  Additionally,  as the Company
continues  to operate in Florida  and  enters  other  markets  along the Gulf of
Mexico or other new coastal areas,  management believes that the distribution of
off shore  fishing  boats and cabin  cruisers  will  continue  to  increase as a
percentage  of  net  sales.  Management  believes  that  by  combining  flexible
financing  arrangements  with an even  distribution of products  through a broad
price  range,  the  Company is able to offer boat  packages  to  customers  with
different purchasing budgets and varying income levels.

         Business Strategy

         The Company has developed a multi-state, chain superstore merchandising
strategy in the recreational  boating  business.  The Company's  objective is to
continue to grow as one of the dominant retailers of recreational boats, motors,
trailers and marine  accessories  in the  southern  United  States.  As such the
Company's  strategy  is to increase  its store  location  count in the  southern
United States while also  maintaining a focus on possible  expansion  into other
regions.  Management's  merchandising  strategy is based on providing  customers
with a comprehensive selection of quality, brand name boats and boating products
in a  comfortable  superstore  environment.  The Company  intends to continue to
build  brand  identity by placing the Travis  Edition  name on complete  boating
packages.  Travis  Boats has  developed  and  implemented  a  business  strategy
designed to increase its market  penetration within both existing and new market
areas  through a variety of  advertising  and  promotional  events.  The Company
intends to emphasize the following key elements of its business strategy:

         Travis Boating  Center  superstore.  Travis Boating Center  superstores
have a distinctive  and stylish trade dress  accented with deep blue awnings,  a
nautical neon building decoration,  expansive glass storefronts and brightly lit
interiors.  The stores range in size from  approximately  2,000 (temporary store
locations) to over 33,000 square feet and management estimates the average store
size at  approximately  21,000 square feet.  The  superstore  locations  present
customers with a broad array of boats and often over 9,000 parts and accessories
in a clean,  well-stocked,  air-conditioned shopping environment.  All boats are
typically  displayed fully rigged with motor,  trailer and a complete  accessory
package,  giving  a  "ready  to take  home"  impression.  Professionally-trained
mechanics  operate service bays,  providing  customers with quality and reliable
maintenance and repair service.

                                       10

<PAGE>
         Travis Edition  concept.  The Company uses extensive  market  research,
combined  with the design  resources  of its  manufacturers,  to develop  custom
Travis Edition boating packages.  The Company's significant purchasing power and
consequent  ability to coordinate  designs with  manufacturers  have enabled the
Company to obtain products directly from the factory at the lowest prices,  with
favorable  delivery schedules and with  distinguishing  features and accessories
that have  historically  been  unavailable  to, or listed as  optional  by, many
competitors.  The Company can also add certain additional features after receipt
of the product to enhance the Company's  Travis  Edition  packages.  Each Travis
Edition is a complete,  full-feature package, including the boat, motor, trailer
and  numerous  additional  accessories  and design  features  often not found on
competitors'  products,  thus  providing  customers with superior  value.  These
features often may include enhanced styling such as additional  exterior colors,
complete  instrumentation  in dashboards,  transoms  warranted for life,  canopy
tops, trolling motors,  upgraded interiors with stereos,  wood grain dashboards,
in-dash depth finders, stainless steel motor propellers and enhanced hull design
not available on other models.  In addition,  Travis Edition boats are generally
identified  by the  Company's  attractive  private  label  logo  as  well as the
respective manufacturer's logo.

         Unlike most  recreational  boat dealers,  the Company  establishes firm
prices on its Travis Edition packages and generally maintains such prices for an
entire  season.  Prices are  advertised  and clearly posted so that the customer
receives the same price at any Travis  Boating  Center.  The  Company's  selling
philosophy is designed to eliminate  customer anxiety associated with bargaining
or negotiation and result in a price at or below prices generally available from
competitors.  The Company believes this pricing strategy and low-pressure  sales
style provide the customer with the comfort and confidence of having  received a
better boat with more  features at a lower price.  In the Company's  view,  this
approach has promoted  good  customer  relationships  and enhanced the Company's
reputation in the industry as a leading provider of quality and value.

         Acquisitions.  The Company  has made  various  acquisitions  during the
three year period ended September 30, 1999. All of the  acquisitions  were asset
purchases  (except  for  Adventure  Marine and Shelby  Marine,  which were stock
purchases) and have been accounted for using the purchase  method of accounting.
The  operating  results of the  companies  acquired  have been  included  in the
consolidated  financial statements from the respective date of acquisition.  The
assets acquired generally include boat, motor and trailer  inventory,  parts and
accessories inventory and to a lesser extent,  property and equipment. A summary
of the Company's acquisitions follows:

<TABLE>
<CAPTION>


                                                                    Non-compete
                             Date of      Purchase    Tangible      Agreements      Cash    Liabilities     Notes      Stock
     Name of Company       Acquisition      Price    Net Assets    and Goodwill     Paid      Assumed       Issued     Issued
     ---------------       -----------    --------   ----------    ------------     ----    -----------     ------     ------

                                                    (In Thousands)
<S>                           <C>        <C>          <C>            <C>           <C>        <C>          <C>          <C>
Fiscal 1999
-----------
AMLIN, INC. DBA MAGIC         01/99      $1,639       $6,019         $1,090         $1,639    $5,470       $  ---       $---
MARINE
SPORTSMAN'S HAVEN             01/99       1,748        2,624            514          1,098     1,390          650        ---

PIER 68 MARINA                02/99         738        2,218            562            408     2,043          329        ---
DSA MARINE SALES &            04/99       2,147        4,798          1,597          2,147     4,248          ---        ---
SERVICE DBA THE
BOATWORKS
SHELBY MARINE, INC.           06/99       1,334        3,426          1,050            809     3,142          ---        525
THE NEW 3 SEAS, INC.          09/99       1,103        1,419          1,100              0     1,416        1,103        ---

Fiscal 1998
-----------
SOUTHEASTERN MARINE           11/97      $1,730       $1,390         $  280         $1,606    $    -       $  124       $---
WORTHEN MARINE                12/97         287          142            145            287         -          ---        ---
HNR MARINE                    04/98         359          359              -            359         -          ---        ---
MOORE'S MARINE                05/98         777          376            401            777         -          ---        ---
RODGERS MARINE                09/98         677        2,093            350            327     1,766          ---        350

Fiscal 1997
-----------
NORTH ALABAMA                 10/96         892          687            205            812         -           80        ---
WATERSPORTS
TRI-LAKES MARINE              11/96       1,243        1,892            644            643     1,937          600        ---
BENT'S MARINE                 02/97       1,519          840            679          1,064         -          455        ---
MCLEOD MARINE                 08/97         958          730            228            958         -          ---        ---
ADVENTURE MARINE              09/97       3,023        5,536          2,690          1,430     5,203          115      1,478

</TABLE>
                                       11
<PAGE>

         Boat Show  Participation.  The Company also participates in boat shows,
typically held in January  through March,  in each of its markets and in certain
markets of close proximity. These shows are normally held at convention centers,
with all area  dealers  purchasing  space to display  their  respective  product
offerings. Boat shows and other offsite promotions generate a significant amount
of interest in products and often have an immediate impact on sales at a nominal
incremental  cost.  Although  total  boat show  sales are  difficult  to assess,
management  attributes a significant  portion of the second fiscal quarter's net
sales to such shows.

         F&I Products.  In the Travis  Edition boat packages the Company  offers
customers  the ability to purchase  extended  service  contracts  and  insurance
coverages, including credit life and accident/disability coverages (collectively
"F&I  Products").  The Company  also offers to assist the  customer in obtaining
financing  for their boat  purchase  through a  diversified  group of  financial
institutions with which the Company maintains financing agreements.  The Company
earns  commissions on these F&I Products  based upon the Company's  mark-up over
the cost of the products.  F&I Products account for a substantial portion of the
Company's  income,  the  most  significant  component  of  which  is the  income
resulting from the Company's origination of customer financing.

         Operations

         Purchasing.  The Company believes it is among the largest volume buyers
of outboard  motors in the United  States.  Until fiscal year 1999,  the Company
purchased  substantially  all  of  its  outboard  motors  from  Outboard  Marine
Corporation  ("OMC"),  which is the  manufacturer  of Johnson  outboard  motors.
Beginning  with the 1999 fiscal year, the Company  elected to further  diversify
its outboard motor  selection and entered into an agreement to purchase  Mercury
outboard motors from Brunswick  Corporation  ("Brunswick").  The Company is also
among  the  largest  domestic  volume  buyer  of  boats  from  many of the  boat
manufacturers it represents.  As a result, the Company has significant access to
the  manufacturers  and  substantial  input into the design  process for the new
boats that are  introduced  to the market  each year by such  manufacturers.  In
addition,  the Company has  designed and  developed,  in  coordination  with its
manufacturers,  signature  Travis Edition boating packages which account for the
vast majority of its total new boat sales.

         The Company typically deals with each of its manufacturers  pursuant to
an annually renewable, non-exclusive dealer agreement which does not contain any
contractual  provisions concerning product pricing or purchasing levels. Pricing
is  generally  established  on an  annual  basis,  but  may  be  changed  at the
manufacturer's sole discretion.  The Company's agreements with OMC and Brunswick
to purchase  outboard  motors,  as well as its agreements to purchase boats from
GenMar Industries,  Inc.  ("Genmar"),  unlike its other dealer  agreements,  are
multi-year in nature. These current agreements include volume discounts from the
then  prevailing  dealer  net  price  over  the  entire  term of the  respective
agreement.  This dealers agreement  typically may be canceled by either party if
volume of product  purchased or available to be purchased is not  maintained  at
pre-established levels.

         Approximately  12% and 18% of the  Company's  net  purchases  in fiscal
years  1999  and  1998,   respectively,   were  products  manufactured  by  boat
manufacturers  owned by Genmar.  Genmar's  boat lines  purchased  by the Company
include Larson, AquaSport,  Wellcraft, Scarab, and Carver. OMC supplied products
that represented  approximately  $32.4 million,  or 36.3%, and $17.7 million, or
42.1%,  of the  Company's  net  purchases  during  fiscal  years  1999 and 1998,
respectively. Brunswick supplied Mercury

                                       12
<PAGE>

outboard motors that represented  approximately  $32.4 million, or 36.3%, of the
Company's net purchases during the 1999 fiscal year.

         The Company's  right to display some product lines or prices in certain
markets,  including the Internet, may be restricted by arrangements with certain
manufacturers.

         Floor  plan and other  inventory  financing.  The  Company  acquires  a
substantial  portion of its  inventory  through  floor plan and other  financing
agreements.  Inventory is generally  purchased  under floor plan lines of credit
(secured by such  inventory)  maintained  with third party finance  companies or
under revolving lines of credit maintained with commercial banks, depending upon
the type of product purchased.  The seasonal nature of the recreational  boating
industry  impacts the production  schedules of the  manufacturer's  that produce
marine products. During the fall and winter months, retail sales of recreational
boats  diminish  significantly  as compared to sales  during the warm spring and
summer months. To provide recreational boating retailers,  such as Travis Boats,
extra incentive to purchase boating products in the "off-season,"  manufacture's
typically  offer product for sale at a price that includes an interest  subsidy.
Since  retail boat dealers  typically  utilize  floor plan  financing to provide
working  capital to  purchase  inventory,  the  interest  subsidy is intended to
assist the retail dealer in stocking the product until the selling  season.  The
terms  of  the  interest  subsidy  or  assistance  vary  by  manufacturer,  with
substantially  all  manufacturers in the marine industry offering such programs.
Management  believes that these financing  arrangements  are standard within the
industry.  As of September 30, 1999,  the Company and its  subsidiaries  owed an
aggregate  of  approximately  $68.6  million  pursuant  to the  floor  plan  and
revolving lines of credit.

         Competition.  The Company operates in a highly competitive environment.
In addition to facing  competition  generally from businesses seeking to attract
discretionary  spending dollars, the recreational boat industry itself is highly
fragmented,  resulting in intense  competition for customers,  access to quality
products, access to boat show space in new markets and suitable store locations.
The Company  relies heavily on boat shows to generate  sales.  If the Company is
impeded in its ability to  participate in boat shows in its existing or targeted
markets,  it could have a material  adverse  effect on the  Company's  business,
financial condition and results of operations.

         The Company  competes  primarily  with single  location or single state
boat dealers and, to a lesser  degree,  with national  specialty  marine stores,
catalog retailers,  sporting goods stores and mass merchants,  particularly with
respect to parts and accessories.  Dealer competition,  which includes one other
publicly  traded  multi-state  retailer  of  recreational  boats,  continues  to
increase based on the quality of available products,  the price and value of the
products and attention to customer  service.  There is  significant  competition
both within  markets  currently  being  served by the Company and in new markets
into which the Company plans to enter.  While the Company generally  competes in
each of its markets with retailers of brands of boats not sold by the Company in
that  market,  it is common  for other  competitive  retailers  to sell the same
brands of outboard motors.  Management  believes that a trend in the industry is
for  independent  dealers to attempt to form  alliances or buyer's  groups,  for
manufacturers  to include  more  features  as  standard  equipment  on boats and
consequently,  and for competitive dealers to offer packages comparable to those
offered by the Company as its Travis Edition lines. In addition,  several of the
Company's competitors,  especially those selling boating accessories,  are large
national  or  regional  chains that may have  substantially  greater  financial,
marketing and other  resources than the Company.  There can be no assurance that
the Company will be able to compete  successfully  in the retail marine industry
in the future.

         Impact of  Environmental  and Other Regulatory  Issues.  On October 31,
1994,  the U.S.  Environmental  Protection  Agency  ("EPA")  announced  proposed
emissions regulations for outboard marine motors. The proposed regulations would
require a 75% average reduction in hydrocarbon emissions for outboard motors and
set standards for carbon monoxide and nitrogen oxide emissions as

                                       13
<PAGE>

well.  Under  the  proposed  regulations,  manufacturers  began  phasing  in low
emission  models  in 1998  and had  approximately  nine  years to  achieve  full
compliance.  Certain  states,  such as  California,  are  proposing and adopting
legislation  that would  require low  emission  outboards  and other  engines on
certain bodies of water or more aggressive schedules than the EPA. The Company's
primary  outboard  motor  suppliers,  Outboard  Marine  Corporation  ("OMC") and
Brunswick  each  have  begun  the  phase-in  process  for the new EPA  compliant
outboard  motors.  However,  in fiscal 1999 and 1998, the Company only purchased
minimal  quantities  of the new EPA compliant  outboard  motors as a result of a
lack of supply of the new  product  since these  manufacturers  are still in the
initial stages of the new product's release. The Company's boat models sold with
the new EPA compliant  outboards in fiscal 1999 and 1998  generally  were priced
approximately  $2,000  higher  than  those  with  traditional  outboard  motors.
Management  anticipates retail prices to generally be from $500 to $1,500 higher
for  the  new EPA  compliant  outboards  depending  on the  motor's  horsepower.
Management,  based upon  discussions  with OMC and Brunswick,  believes that the
higher retail costs will be offset by enhanced fuel efficiency and  acceleration
speed, as well as reduced  maintenance  costs of the new EPA compliant  outboard
motors.  Costs of comparable  new models,  if  materially  more  expensive  than
previous models, or the  manufacturer's  inability to deliver  responsive,  fuel
efficient  outboard  motors  that  comply  with EPA  requirements,  could have a
material  adverse  effect on the  Company's  business,  financial  condition and
results of operations.

         The Company,  in the ordinary  course of its  business,  is required to
dispose  of  certain  waste  products  that are  regulated  by state or  federal
agencies.  These products include waste motor oil, tires,  batteries and certain
paints. It is the Company's policy to use appropriately  licensed waste disposal
firms to handle this refuse.  If there were improper disposal of these products,
it could result in  potential  liability  for the Company.  Although the Company
does not own or operate any  underground  petroleum  storage tanks, it currently
maintains several above-ground tanks, which are subject to registration, testing
and governmental regulation.

         Additionally, certain states have required or are considering requiring
a license in order to operate a recreational boat or personal watercraft.  While
such  licensing   requirements  are  not  expected  to  be  unduly  restrictive,
regulations may discourage potential first-time buyers,  thereby limiting future
sales,  which could have a material  adverse  effect on the Company's  business,
financial condition and results of operations.

         Trademarks and service marks.  The Company does not hold any registered
trade or service marks at this time but has trademark  applications pending with
the U.S.  Patent and Trademark  Office for the names "Travis Boating Center" and
"Travis  Edition," for its  corporate  logo and for the overall  appearance  and
trade dress of its Travis Boating Centers. There can be no assurance that any of
these applications will be granted.  However, based on a number of years of use,
the  Company  believes  it has common law rights to these  marks at least in its
current market areas.  Notwithstanding  the  foregoing,  the Company has entered
into an agreement with a marine dealership operating in Knoxville, Tennessee not
to use the names  "Travis,"  "Travis  Boating  Center"  or "Travis  Edition"  in
certain types of uses or situations in Knoxville, Tennessee and a 50 mile radius
therefrom.

         Web  site.   The   Company   operates   a  Web  site   under  the  name
"travisboatingcenter.com."  The  Company  owns the URL  name  for this  name and
numerous derivations thereof.

         Employees.  As of September 30, 1999, the Company's  staff consisted of
708 employees,  668 of whom are full time. The full-time employees include 37 in
store level management and 51 in corporate  administration  and management.  The
Company is not a party to any collective  bargaining agreements and is not aware
of any efforts to unionize its  employees.  The Company  considers its relations
with its employees to be good.

ITEM 2.  PROPERTIES

         The  Company  leases its  corporate  offices  which are located at 5000
Plaza on the Lake,  Suite 250,  Austin,  Texas.  The Company also owns  numerous
other Travis Boating Center locations. The remaining facilities are leased under
leases with original lease terms  generally  ranging from five to ten years with
additional  multi-year renewal options.  The Company typically pays a fixed rent
and in substantially  all of the leased locations the Company is responsible for
the payment of taxes, insurance, repairs and maintenance.

                                       14

<PAGE>
<TABLE>
<CAPTION>

         The chart below reflects the status and approximate size of the various
Travis Boating Center locations operated as of December 23, 1999.


                                           Building      Land       Owned or        Year of Market
             Location                 Square Footage*  Acreage*      Leased             Entry
             --------                 ---------------  --------     --------        ---------------

<S>                                        <C>           <C>        <C>                   <C>
AUSTIN, TEXAS(1).........................  20,000        3.5         Owned                1979
SAN ANTONIO, TEXAS(1)(3).................  15,500        1.9        Leased                1982
SAN ANTONIO, TEXAS(5)....................                6.5         Owned                1999
MIDLAND, TEXAS(1)........................  18,750        3.8         Owned                1982
DALLAS, TEXAS(1).........................  20,000        4.2         Owned                1983
ABILENE, TEXAS(2)........................  24,250        3.7         Owned                1989
HOUSTON, TEXAS(2)........................  15,100        3.0        Leased                1991
BATON ROUGE, LOUISIANA(2)................  33,200        7.5         Owned                1992
BEAUMONT, TEXAS(2).......................  25,500        6.5         Owned                1994
ARLINGTON, TEXAS(2)......................  31,000        6.0        Leased                1995
HEBER SPRINGS, ARKANSAS(2)...............  26,000        9.0        Leased                1995
HOT SPRINGS, ARKANSAS(2).................  20,510        3.0         Owned                1995
NEW IBERIA, LOUISIANA(4).................  24,000        3.3        Leased                1995
FLORENCE, ALABAMA(2).....................  22,500        6.0        Leased                1996
HUNTSVILLE, ALABAMA(3)...................   2,000        3.0        Leased                1996
WINCHESTER, TENNESSEE(2).................  28,000        3.5        Leased                1996
METAIRIE, LOUISIANA(2)...................  30,000        3.5        Leased                1997
PASCAGOULA, MISSISSIPPI(2)...............  28,000        4.1         Owned                1997
KEY LARGO, FLORIDA(4)....................   3,000        1.4         Owned                1997
KEY LARGO, FLORIDA(3)(4).................   3,000        1.4         Owned                1999
FT. WALTON BEACH FL. - SALES(4)..........   7,000        2.9        Leased                1997
FT. WALTON BEACH FL. - SALES(4)..........   7,000        2.9        Leased                1999
FT. WALTON BEACH FL. - SERVICE(4)........   7,500        2.0        Leased                1997
HENDERSONVILLE, TENNESSEE(2).............  31,320        3.6        Leased                1997
GWINNETT, GEORGIA(1).....................  25,000        5.0         Owned                1998
CLAREMORE, OKLAHOMA(4)...................  15,000        2.0         Owned                1998
BOSSIER CITY, LOUISIANA(2)...............  30,000        8.6         Owned                1998
KNOXVILLE, TENNESSEE(4)..................  30,000        6.5        Leased                1998
LITTLE ROCK, ARKANSAS(4).................  16,400        3.0         Owned                1999
PINE BLUFF, ARKANSAS(4)..................  16,812        2.9        Leased                1999
LONGWOOD, FLORIDA(4).....................  10,000        3.1        Leased                1999
CLEARWATER, FLORIDA(4)...................  21,000        5.0         Owned                1999
CLEARWATER, FLORIDA(4)...................   9,000        3.7        Leased                1999
JACKSONVILLE, FLORIDA(4).................   8,000        1.5        Leased                1999
MIAMI, FLORIDA(3)........................  12,000        1.0        Leased                1999
BRADENTON, FLORIDA(4)....................  20,000        5.0        Leased                1999
ENGLEWOOD, FLORIDA(4)....................   3,000        4.5        Leased                1999
MEMPHIS, TENNESSEE(2)....................  24,000        4.3        Leased                1999
PICKWICK DAM, TENNESSEE(2)...............  48,000        5.0        Leased                1999
FT. MYERS, FLORIDA(4)....................   6,000        4.0        Leased                1999
<FN>
--------------------------
*  Square footage and acreage are approximate.
(1)       Newly constructed store.
(2)       Facility acquired/leased and converted to superstore.
(3)       Temporary facility. To be relocated.
(4)       Acquired/leased facility
(5)       Raw land.  Superstore under construction.
</FN>
</TABLE>

                                       15


<PAGE>


ITEM 3.  LEGAL PROCEEDINGS

         The  Company  is not a party to any  material  legal  proceedings.  The
Company is, however,  involved in various legal  proceedings  arising out of its
operations  in the ordinary  course of business.  The Company  believes that the
outcome of all such proceedings,  even if determined adversely, would not have a
material  adverse  effect on its  business,  financial  condition  or results of
operations.

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

         No matter was  submitted  to a vote of security  holders of the Company
during the fourth quarter of the fiscal year ended September 30, 1999.

                                     PART II

ITEM 5.  MARKET FOR REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER MATTERS

         The Company's common stock trades  on the Nasdaq Stock Market under the
symbol:  TRVS.  As of December  23,  1999,  the Company  believes its shares are
beneficially owned by more than 400 shareholders. On December 23, 1999, the last
reported  sales price of the common stock on the NASDAQ  National  Market System
was $10.25 per share.

         The following table sets forth for the period indicated, on a per share
basis,  the range of high and low sales  prices for the  Company's  common stock
during  fiscal  years  1999  and  1998 as  quoted  by the  NASDAQ.  These  price
quotations reflect inter-dealer prices,  without adjustment for retail mark-ups,
mark-downs or commissions and may not necessarily represent actual transactions:

<TABLE>
<CAPTION>

                                     Fiscal 1999 Sales Price               Fiscal 1998 Sales Price
                                     -----------------------               -----------------------
        Quarter Ended             High         Low        Ending       High         Low        Ending
        -------------             ----         ---        ------       ----         ---        ------
<S>                              <C>          <C>         <C>          <C>        <C>          <C>
December 31....................  $20.50       $12.25      $20.50       $24.125    $18.75       $24.125
March 31.......................  $23.00       $16.50      $18.00       $26.75     $22.375      $26.625
June 30........................  $18.00       $14.00      $14.50       $29.125    $24.50       $24.50
September 30...................  $16.25       $ 9.625     $ 9.625      $26.875    $15.00       $15.50
</TABLE>

         The Company has never  declared  or paid cash  dividends  on its Common
Stock and presently has no plans to do so. Any change in the Company's  dividend
policy will be at the sole  discretion of the Board of Directors and will depend
on the Company's profitability,  financial condition, capital needs, future loan
covenants,  general  economic  conditions,  future  prospects  and other factors
deemed  relevant by the Board of  Directors.  The Company  currently  intends to
retain earnings for use in the operation and expansion of the Company's business
and does not anticipate paying cash dividends in the foreseeable future. Certain
covenants  contained in the Company's loan agreements  effectively  restrict the
payment of any dividends without the lender's prior consent.


                                       16


<PAGE>

ITEM 6.  SELECTED FINANCIAL DATA

         The following  selected  consolidated  financial  information should be
read in  conjunction  with and is  qualified in its entirety by reference to the
consolidated  financial  statements  of the Company and the notes  thereto,  and
Management's  Discussion  and  Analysis of  Financial  Condition  and Results of
Operations, included elsewhere in this Report on Form 10-K:
<TABLE>
<CAPTION>

                                          FISCAL YEAR ENDED SEPTEMBER 30,


                                            1995(1)(5)      1995(2)     1996(1)(5)    1997(1)(5)   1998(1)(5)  1999(1)(5)
                                            ----------      -------     ----------    ----------   ----------  ----------
                                                        (IN THOUSANDS, EXCEPT STORE AND SHARE DATA)

Consolidated Statement of
  Operations Data:
<S>                                         <C>           <C>           <C>           <C>          <C>          <C>
  Net Sales.......................          $ 41,442      $ 44,617      $ 64,555      $ 91,309     $ 131,740    $ 182,259
  Gross Profit....................            10,306        10,815        16,483        23,955        34,901       46,634
  Selling, general and
  Administrative Expense..........             6,353         7,526        10,857        15,562        22,630       30,978
   Operating income...............             3,736         3,004         5,061         7,480        11,011       13,689
   Interest expense...............               670           845         1,289         1,354         2,310        3,808
   Net income.....................             2,050         1,486         2,383         3,982         5,563        6,573
   Basic earnings per share.......         $    0.76      $   0.55      $   0.78      $   0.96     $    1.31    $    1.53
   Diluted earnings per share.....         $    0.76      $   0.55      $   0.78      $   0.94     $    1.26    $    1.49
   Weighted avg. common
   Shares outstanding - basic.....             2,672         2,663         3,043         4,137         4,250        4,291
   Weighted avg. common
   Shares outstanding - diluted...             2,672         2,663         3,043         4,252         4,417        4,409
Store Data:
   Stores open at period end......                11            11            12            19            24           38
   Average sales per store (6)....         $   4,886      $  5,283      $  5,617      $  5,775     $   6,383    $   6,055
   Percentage increase in
    Comparable store sales(4).....               5.0%         12.2%          4.3%          5.7%          6.6%         1.9%

</TABLE>

<TABLE>
<CAPTION>
                                              FISCAL YEAR ENDED SEPTEMBER 30,

                                                1995        1996        1997           1998         1999
                                                ----        ----        ----           ----         ----
                                                                    (In Thousands)

Consolidated Balance Sheet Data:
<S>                                         <C>           <C>         <C>           <C>          <C>
  Cash and cash equivalents...............  $     996     $  1,533    $  5,816      $   4,618    $   4,125
  Working capital.........................      2,808       15,263      14,806         16,392       12,117
  Total assets............................     23,357       31,350      59,121         69,116      125,931
  Short-term debt, including current
     maturities of long-term debt.........     11,443        4,661      21,447         26,105       69,547
  Long-term debt less current maturities..      4,876        4,334       5,145          4,980        6,897
  Shareholders' equity....................      4,812       18,598      24,058         30,433       37,592
<FN>
---------------------

(1) The Company's fiscal years ended on December 31 in 1994, and on September 30
in 1995,  pursuant to a change adopted in 1995,  resulting in a nine-month  1995
fiscal year. The Consolidated  Statement of Operations Data for the fiscal years
ended  September 30, 1995,  1996,  1997, 1998 and 1999 has been derived from the
audited  consolidated  financial  statements of the Company. All other financial
and  store  data has been  derived  from the  Company's  unaudited  consolidated
financial statements.

(2) Reflects inclusion of nine-month audited financial statements for the fiscal
year ended September 30, 1995 and the three-month unaudited financial statements
for the  quarter  ended  December  31,  1994,  in order to  provide  a basis for
comparing  12  months  of  operations  in 1995 to fiscal  1996  operations.

(3) Includes only those stores open for the entire preceding  12-month  period.

(4) New stores or upgraded  facilities are included in the comparable store base
at the beginning of the store's thirteenth complete month of operations.

(5) Includes the  operations of acquired store  locations  from each  respective
date of  acquisition.  See  "Management's  Discussion  and Analysis of Financial
Condition and Results of Operations."

</FN>
</TABLE>
                                       17

<PAGE>

ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

         THE  FOLLOWING  DISCUSSION  SHOULD  BE READ  IN  CONJUNCTION  WITH  THE
CONSOLIDATED  FINANCIAL STATEMENTS OF THE COMPANY AND THE NOTES THERETO INCLUDED
ELSEWHERE IN THIS REPORT ON FORM 10-K.  THE  DISCUSSION  IN THIS SECTION OF THIS
REPORT ON FORM 10-K CONTAINS  FORWARD-LOOKING  STATEMENTS THAT INVOLVE RISKS AND
UNCERTAINTIES.  THE COMPANY'S ACTUAL RESULTS COULD DIFFER  MATERIALLY FROM THOSE
DISCUSSED  HEREIN.  FACTORS THAT COULD CAUSE OR CONTRIBUTE  TO SUCH  DIFFERENCES
INCLUDE,  BUT ARE NOT  LIMITED  TO,  THOSE  DISCUSSED  IN  THIS  SECTION,  THOSE
DISCUSSED IN "RISK FACTORS" AND THOSE DISCUSSED ELSEWHERE IN THIS REPORT ON FORM
10-K.

         Overview

         The following  discussion  compares  fiscal years 1999 and 1998,  which
reflects the inclusion of the audited consolidated  financial statements for the
fiscal years ended September 30, 1999 and 1998, respectively. The results of the
acquisitions  listed  in  the  chart  below,  from  their  respective  dates  of
acquisition,  are included in the  discussion  below of the fiscal year in which
such acquisition occurred.

<TABLE>
<CAPTION>

         A summary of the Company's acquisitions follows:
                                                                   Non-compete
                              Date of    Purchase      Tangible     Agreements     Cash    Liabilities   Notes     Stock
     Name of Company        Acquisition   Price       Net Assets   and Goodwill    Paid      Assumed    Issued    Issued
     ---------------        -----------  --------     ----------   ------------    ----    -----------  ------    ------

                                                    (In Thousands)
<S>                            <C>        <C>           <C>           <C>         <C>        <C>         <C>      <C>
FISCAL 1999
-----------
AMLIN, INC. DBA MAGIC          01/99      $1,639        $6,019        $1,090      $1,639     $5,470      $-----   $-----
MARINE
SPORTSMAN'S HAVEN              01/99       1,748         2,624           514       1,098      1,390         650      ---
PIER 68 MARINA                 02/99         738         2,218           562         408      2,043         329      ---
DSA MARINE SALES &             04/99       2,147         4,798         1,597       2,147      4,248         ---      ---
SERVICE DBA THE BOATWORKS
SHELBY MARINE, INC.            06/99       1,334         3,426         1,050         809      3,142         ---      525
THE NEW 3 SEAS, INC.           09/99       1,103         1,419         1,100           0      1,416       1,103      ---

FISCAL 1998
-----------
SOUTHEASTERN MARINE            11/97      $1,730        $1,390        $  280      $1,606     $    -      $  124   $    -
WORTHEN MARINE                 12/97         287           142           145         287          -           -        -
HNR MARINE                     04/98         359           359             -         359          -           -        -
MOORE'S MARINE                 05/98         777           376           401         777          -           -        -
RODGERS MARINE                 09/98         677         2,093           350         327      1,766           -      350

FISCAL 1997
-----------
NORTH ALABAMA WATERSPORTS      10/96         892           687           205         812          -          80        -
TRI-LAKES MARINE               11/96       1,243         1,892           644         643      1,937         600        -
BENT'S MARINE                  02/97       1,519           840           679       1,064          -         455        -
MCLEOD MARINE                  08/97         958           730           228         958          -           -        -
ADVENTURE MARINE               09/97       3,023         5,536         2,690       1,430      5,203         115    1,478

</TABLE>

The following table sets forth for the periods  indicated certain financial data
as a percentage of net sales:
<TABLE>
<CAPTION>
                                             FISCAL YEAR ENDED SEPTEMBER 30,
                                        1996            1997            1998         1999
                                        ----            ----            ----         ----
<S>                                    <C>              <C>           <C>          <C>
NET SALES                              100.0%           100.0%        100.0%       100.0%
COSTS OF GOODS SOLD                     74.5             73.8          73.5         74.4
                                       -----            -----         -----        -----
GROSS PROFIT                            25.5             26.2          26.5         25.6
SELLING, GENERAL AND
   ADMINISTRATIVE EXPENSES              16.8             17.0          17.2         17.0
OPERATING INCOME                         7.8              8.2           8.4          7.5
INTEREST EXPENSE                         2.0              1.5           1.8          2.1
OTHER INCOME                             0.0              0.0           0.1          0.3
                                       -----            -----         -----        -----
INCOME BEFORE INCOME TAXES               5.9              6.7           6.7          5.7
INCOME TAX EXPENSE                       2.2              2.3           2.5          2.1
                                       -----            -----         -----        -----
NET INCOME                               3.7%             4.4%          4.2%         3.6%
                                       =====            =====         =====        =====
</TABLE>
                                       18
<PAGE>

RESULTS OF OPERATIONS

FISCAL YEAR ENDED SEPTEMBER 30, 1999 COMPARED TO THE FISCAL YEAR ENDED SEPTEMBER
30, 1998

         Highlights

         Fiscal year 1999 was a record year for the Company,  which included the
following achievements compared to fiscal 1998:

*    Net sales increased 38.4% to $182.3 million.
*    Net income increased by 18.1% to $6.6 million from $5.6 million.
*    Diluted earnings per share increased by 18.3% to $1.49 from $1.26.

         Net sales.  Net sales  increased  by 38.4% to $182.3  million in fiscal
1999 from $131.7 million in fiscal 1998.  The primary  component of the increase
in net  sales  during  the 1999 and 1998  fiscal  years  has been the  result of
newly-opened  or  acquired  store  locations.  Accordingly,  of the fiscal  1999
increase  in net  sales,  $39.7  million,  or 78.5%,  is related to the 14 store
locations  that were newly opened or acquired.  The Company also  benefited from
growth in  comparable  store sales.  During fiscal year 1999,  comparable  store
sales  increased by 1.9%, or $1.5  million,  (14 stores in base) versus 6.6%, or
$3.7  million,  (9 stores in base) during  fiscal 1998.  See "Risk Factors - Our
Growth Depends on Our Ability to Acquire and Open New Stores."

         Growth in overall sales volume  resulted,  in part, from additional new
Travis Edition boating  packages  introduced  during fiscal 1999 and 1998. These
new additions included the Pro-Line and Polar brand boats in 1998 and Wellcraft,
Bayliner and Fishmaster boat models in fiscal 1999, as well as Mercury Motors in
November 1999.

         During fiscal 1999, the Company experienced increased parts/accessories
and  service  labor  sales of 38% and 45%,  respectively,  primarily  through an
increased store network.  Parts/accessory  sales increased to $15.6 million,  or
8.6% of net sales,  from $11.3  million,  or 8.6% of net sales,  in fiscal years
1999 and 1998,  respectively.  Service labor sales increased to $6.9 million, or
3.8% of net sales, from $4.7 million, or 3.6% of net sales, in fiscal years 1999
and 1998, respectively.  Net sales also benefited from increased used boat sales
in both dollars and as a percentage of sales. Used boat sales increased by 52.5%
to $11.1 million  (6.1% of total sales) in fiscal 1999,  from $7.3 million (5.5%
of total  sales) in fiscal  1998.  The Company  plans to continue to explore the
used boat market and  potential  sites for used boat  superstores  and brokerage
facilities.

         Net sales from comparable  stores in fiscal 1999 and 1998, which had 14
and 9 stores  respectively,  included in the base for calculation,  increased by
1.9% and 6.6% in fiscal 1999 and 1998,  respectively.  The Company  relocated or
renovated  three stores and opened or acquired an  additional  12 stores  during
fiscal years 1999 and 1998  rendering  such  locations  to be excluded  from the
comparable store base. The Company's planned acquisition strategy and subsequent
renovation  of stores  to  superstore  standards  is  expected  to  continue  to
negatively  impact  the number of stores  includable  in  comparable  store base
calculations in  relationship  to the total number of store locations  operated.
See "Risk  Factors--Our  Growth  Depends on Our  Ability to Acquire and Open New
Stores." As such,  comparable  store  performance is expected to remain unstable
until higher  percentages  of the Company's  stores are includable in comparable
store calculations.

                                       19

<PAGE>

         Included  within net sales is revenue that the Company earns related to
F&I Products. The Company, through relationships with various national and local
lenders, is able to place financing for its customers' boating purchases.  These
lenders  allow the  Company to "sell" the loan at a rate  higher  than a minimum
rate  established  by each such lender,  and the Company earns fees based on the
percentage increase in the loan rate over the lender's minimum rate. The Company
sells these loans without recourse, except that in certain instances the Company
must return the fees earned if the  customer  repays the loan or defaults in the
first  120-180  days.  The Company  also sells,  as a broker,  certain  types of
insurance  (property/casualty,  credit life,  disability)  and extended  service
contracts.  The Company may also sell these  products at amounts  over a minimum
established  cost  and  earn  income  based  upon the  profit  over the  minimum
established cost.

         Net  sales   attributable   to  F&I  Products   increased  by  9.2%  to
approximately  $7.8 million in fiscal 1999 from $7.1 million in fiscal 1998,  In
fiscal 1999,  F&I income as a  percentage  of net sales  decreased  from 5.4% in
fiscal 1998 to 4.3% in fiscal 1999 due to competitive pressures on finance rates
(which  resulted in lower net  spreads  achieved  in the  placement  of customer
financing),  as well as overall  decreases in the percentage of customers buying
these products (which is referred to as "sell-through"), and a reduced demand in
certain insurance products.

         Gross profit.  Gross profit increased by 33.6% to  approximately  $46.6
million in fiscal  1999 from $34.9  million in fiscal  1998.  Gross  profit as a
percent of sales  decreased  to 25.6% in fiscal 1999 from 26.5% in fiscal  1998.
The Company  generally  seeks to maintain a gross profit margin of 21% to 23% on
its boating packages and is able to further leverage the margin through sales of
parts/accessories,  service  labor  and F&I  Products,  all of  which  generally
produce gross profit margins in excess of 25%. During fiscal 1999, the Company's
gross profit margin was negatively  impacted by a temporary  reduced revenue mix
in its boating  package  margins as a result of acquisition  boat inventory that
liquidated at below Company standard  margins,  thus,  driving the Company's new
boating  package  margins down to 20.7% and used margins down to 13.4%  (Company
standard of 18-20%).  This,  combined with the 110 basis point reduction in high
yielding  F&I income,  as a percentage  of net sales,  caused the 90 basis point
drop in gross profit margin as a percentage of sales.

         Net sales attributable to F&I Products, which have a significant impact
on the gross profit margin,  contributed $7.8 million,  or 16.7%, of total gross
profit in fiscal 1999,  as compared to $7.1  million,  or 20.3%,  of total gross
profit for fiscal 1998. Net sales attributable to F&I Products are reported on a
net basis and therefore all of such sales  contribute  directly to the Company's
gross profit. The costs associated with the sale of F&I Products are included in
selling, general and administrative expenses.

         Selling,  general and  administrative  expenses.  Selling,  general and
administrative  expenses increased by 36.9% to $31.0 million in fiscal 1999 from
$22.6 million for fiscal 1998. Selling, general and administrative expenses as a
percent of net sales  decreased by 18 basis points to 17.00% in fiscal 1999 from
17.18% for fiscal 1998. In absolute  dollars,  the increase in selling,  general
and  administrative  expenses was primarily  attributable to increased  expenses
associated  with  the  operation  of a  larger  store  network,  growth  in  the
corporate-office staffing infrastructure and increased advertising and insurance
costs associated with introducing Travis stores into new geographically  diverse
regions.

         Interest expense.  Interest expense, in absolute dollars,  increased by
64.9% to $3.8 million in fiscal 1999 from $2.3 million in fiscal 1998.  Interest
expense as a percent of net sales, increased to 2.1% in fiscal 1999 from 1.8% in
fiscal 1998.

                                       20

<PAGE>





Subsequent to the Company's  Initial  Public  Offering in June of 1996,  capital
expenditures  and growth in operating  assets  (primarily  inventory)  have been
financed with borrowings from various  commercial  banks and finance  companies.
The  growth in  assets is the  result of the  Company's  larger  store  network,
continued  implementation of its management  information  system and its planned
renovation  of store  locations to conform with its  superstore  standards.  The
higher debt levels have  resulted in the increase in interest  expense in actual
dollars and as a percentage of sales in fiscal years 1999 and 1998.  The Company
anticipates continuing to utilize bank financing to support the growth in assets
necessary  to operate a larger  store  network and  accordingly,  the  resulting
increases  in  interest  expense  associated  with  such  borrowings.  See "Risk
Factors--Our  Substantial Indebtedness Could Restrict Our Operations and Make Us
More  Vulnerable  to  Adverse  Economic   Conditions"  and   "Quantitative   and
Qualitative Disclosures About Market Risk."

         Net income. Net income increased by 18.1% to approximately $6.6 million
in fiscal 1999 from $5.6 million in fiscal 1998. While the Company  continued to
benefit  from  increased  sales and  controlled  SG&A  expenses in fiscal  1999,
reduced margins,  as a percentage of sales, and the increase in interest expense
both in actual dollars and as a percent of net sales resulted in net income as a
percent  of sales  decreasing  to 3.6% from 4.2%  during the same  periods.  Net
income  attributable to F&I Products  increased by 9.2% to  approximately  $1.24
million  (18.8% of net income) in fiscal 1999 from $1.13  million  (20.3% of net
income)  in fiscal  1998.  The  calculation  of net income  attributable  to F&I
Products is based on an  allocation  of gross profit after  adjusting  for costs
which management believes are directly allocable to F&I Products.

FISCAL YEAR ENDED SEPTEMBER 30, 1998 COMPARED TO THE FISCAL YEAR ENDED SEPTEMBER
30, 1997

         Net sales.  Net sales  increased  by 44.3% to $131.7  million in fiscal
1998 from $91.3 million in fiscal 1997. The primary component of the increase in
net sales  during  the 1998 and 1997  fiscal  years has been the result of newly
opened or acquired store locations.  Accordingly,  of the increase in net sales,
$36.6  million,  or 90.6% is related to the store  locations that were (i) newly
opened or acquired  (12),  or (ii) those  relocated or renovated (3) to meet the
Company's  superstore  standards  during  fiscal 1998 or 1997.  The Company also
benefited  from  growth in  comparable  store  sales.  During  fiscal year 1998,
comparable  store sales  increased by 6.6%, or $3.7 million,  (9 stores in base)
versus 5.7%, or $2.1 million,  (6 stores in base) during fiscal 1997.  See "Risk
Factors-Our Success Will Depend on How Well We Manage Our Growth."

         Growth  in  overall  sales  volume  was  also in  part  the  result  of
additional new Travis Edition boating packages introduced during fiscal 1998 and
1997.  This  included the new addition of the Pro- Line and Polar brand boats as
well as new boat models introduced by the Company's existing boat manufacturers.
These  additional  new Travis  Edition  boat lines have  allowed  the Company to
further  broaden its boat  line-up in an effort to continue to address the needs
and desires of the  recreational  boating  population.  During fiscal 1998,  the
Company experienced  increased  parts/accessories  and service labor sales as an
increased  percentage of the Company's  store base was relocated or renovated to
superstore   standards  which  provide  larger  and  more  accessible  areas  to
merchandise  its  product  selection  and  conduct  repair  work on boats.  This
resulted in enhanced sales of parts/accessories and service labor both in actual
dollars and as a percentage  of net sales.  Parts/accessory  sales  increased to
$11.3 million, or 8.6% of net sales, from $8.6 million, or 9.4% of net sales, in
fiscal years 1998 and 1997, respectively.  Service labor sales increased to $4.7
million,  or 3.6% of net sales,  from $3.3  million,  or 3.6% of net  sales,  in
fiscal years 1998 and 1997,  respectively.  Net sales also  benefited  from used
boat  sales  including  those  used  boat  sales  from the  Company's  used boat
superstores  located at its Beaumont,  Texas and Heber  Springs,  Arkansas store
locations.   The  used  boat  sales  in  fiscal  1998  and  fiscal  1997,   were
approximately $7.3 million and $4.0 million,  respectively. The Company plans to
continue  to  explore  the used boat  market and  potential  sites for used boat
superstores.

         Net sales from  comparable  stores,  which had 9 stores included in the
base for  calculation,  increased by 6.6% and 5.7% in fiscal year 1998 and 1997,
respectively. The Company relocated or renovated 3 stores and opened or acquired
an additional  twelve stores  during fiscal years 1998 and 1997  rendering  such
locations to be excluded from the comparable  store base. The Company's  planned
acquisition strategy and subsequent renovation of stores to superstore standards
is expected to continue to

                                       21

<PAGE>





negatively  impact  the number of stores  includable  in  comparable  store base
calculations in  relationship  to the total number of store locations  operated.
See "Risk  Factors--Our  Growth  Depends on Our  Ability to Acquire and Open New
Stores." As such,  comparable  store  performance is expected to remain unstable
until higher  percentages  of the Company's  stores are includable in comparable
store calculations.

         Included  within net sales is revenue that the Company earns related to
F&I Products. The Company, through relationships with various national and local
lenders, is able to place financing for its customers' boating purchases.  These
lenders  allow the  Company to "sell" the loan at a rate  higher  than a minimum
rate  established  by each such lender and the  Company  earns fees based on the
percentage increase in the loan rate over the lender's minimum rate. The Company
sells these loans without recourse except that in certain  instances the Company
must return the fees earned if the  customer  repays the loan or defaults in the
first  120-180  days.  The Company  also sells,  as a broker,  certain  types of
insurance  (property/casualty,  credit life,  disability)  and extended  service
contracts.  The Company may also sell these  products at amounts  over a minimum
established  cost  and  earn  income  based  upon the  profit  over the  minimum
established cost. Net sales  attributable to F&I Products  increased by 78.2% to
approximately $7.1 million in fiscal 1998 from $4.0 million in fiscal 1997. This
improvement was primarily due to higher net spreads achieved in the placement of
customer financing,  as well as overall increases in the percentage of customers
buying these products  (which is referred to as  "sell-through").  This increase
was enhanced by the  Company's  continued  emphasis on training of F&I employees
and achievement of established  goals. See "Risk  Factors--Much of Our Income Is
from Financing,  Insurance and Extended Service Contracts, Which is Dependent on
Third Party Lenders and Insurance Companies."

         Gross profit.  Gross profit increased by 45.7% to  approximately  $34.9
million in fiscal  1998 from $24.0  million in fiscal  1997.  Gross  profit as a
percent of sales  increased  to 26.5% in fiscal 1998 from 26.2% in fiscal  1997.
The Company  generally  seeks to maintain a gross profit margin of 21% to 23% on
its boating packages and is able to further leverage the margin through sales of
parts/accessories,  service  labor  and F&I  Products,  all of  which  generally
produce gross profit margins in excess of 25%. During fiscal 1998, the Company's
gross profit margin was positively  impacted by the increased  revenues  derived
from the  parts/accessory,  service labor and used boat sales as discussed above
in Net Sales.

         Net sales attributable to F&I Products, which have a significant impact
on the gross profit margin,  contributed $7.1 million,  or 20.3%, of total gross
profit in fiscal 1998,  as compared to $4.0  million,  or 16.6%,  of total gross
profit for fiscal 1997. Net sales attributable to F&I Products are reported on a
net basis and therefore all of such sales  contribute  directly to the Company's
gross profit. The costs associated with the sale of F&I Products are included in
selling, general and administrative expenses.

                                       22
<PAGE>

         Selling,  general and  administrative  expenses.  Selling,  general and
administrative  expenses increased by 45.4% to $22.6 million in fiscal 1998 from
$15.6 million for fiscal 1997. Selling, general and administrative expenses as a
percent of net sales  increased by 14 basis points to 17.18% in fiscal 1998 from
17.04% for fiscal 1997.  In absolute  dollars and as a percentage  of net sales,
the  increase in selling,  general and  administrative  expenses  was  primarily
attributable  to increased  expenses  associated  with the operation of a larger
store  network,  growth  in the  corporate-office  staffing  infrastructure  and
increased  insurance costs  associated with  introducing  Travis stores into new
geographically  diverse  regions.  Rental expense also increased as a percent of
net sales as the Company  expanded and  relocated  its  Corporate  headquarters,
which had previously been located in the Austin, Texas superstore  facility,  in
June 1997.


         Interest expense.  Interest expense, in absolute dollars,  increased by
70.6% to $23 million in fiscal 1998 from $1.4 million in fiscal  1997.  Interest
expense as a percent of net sales, increased to 1.8% in fiscal 1998 from 1.5% in
fiscal 1997.  Subsequent to the  Company's  Initial  Public  Offering in June of
1996, capital expenditures and growth in operating assets (primarily  inventory)
have been financed with  borrowings  from various  commercial  banks and finance
companies.  The growth in assets is the  result of the  Company's  larger  store
network,  continued  implementation of its management information system and its
planned renovation of store locations to conform with its superstore  standards.
The higher  debt levels have  resulted  in the  increase in interest  expense in
actual  dollars and as a percentage of sales in fiscal years 1999 and 1998.  The
Company  anticipates  continuing to utilize bank financing to support the growth
in assets  necessary  to operate a larger  store  network and  accordingly,  the
resulting  increases in interest expense  associated with such  borrowings.  See
"Risk  Factors--Our  Substantial  Indebtedness Could Restrict Our Operations and
Make Us More Vulnerable to Adverse Economic  Conditions" and  "Quantitative  and
Qualitative Disclosures About Market Risk."

         Net income. Net income increased by 39.7% to approximately $5.6 million
in fiscal 1998 from $4.0 million in fiscal 1997. While the Company  continued to
benefit  from  enhanced  gross profit  margins in fiscal  1998,  the increase in
interest  expense both in actual  dollars and as a percent of net sales resulted
in net income as a percent of sales decreasing to 4.2% from 4.4% during the same
periods.  Net  income  attributable  to  F&I  Products  increased  by  33.3%  to
approximately  $1.6 million in fiscal 1998 from $1.2 million in fiscal 1997. The
calculation of net income attributable to F&I Products is based on an allocation
of gross profit after adjusting for costs which management believes are directly
allocable to F&I Products.

         Quarterly Data and Seasonality

         The following table sets forth certain  unaudited  quarterly  financial
data for each of the Company's  last eight quarters and such data expressed as a
percentage  of  the  Company's  net  sales  for  the  respective  quarters.  The
information has been derived from unaudited  financial  statements  that, in the
opinion  of  management,  reflect  all  adjustments  (consisting  only of normal
recurring  adjustments)  necessary  for a fair  presentation  of such  quarterly
information.   The  operating  results  for  any  quarter  are  not  necessarily
indicative of the results to be expected for any future period.

                                       23

<PAGE>

<TABLE>
<CAPTION>

                                                                    QUARTER ENDED
                                             ------------------------------------------------------------
                                             Fiscal Year 1998                            Fiscal Year 1999
                                             ----------------                            ----------------

                                    DEC. 31   MARCH 31    JUNE 30    SEPT. 30    DEC. 31    MARCH 31   JUNE 30  SEPT. 30
                                    -------   --------    -------    --------    -------    --------   -------  --------
                                                                       (IN THOUSANDS)

<S>                                <C>        <C>        <C>         <C>         <C>         <C>       <C>       <C>
NET SALES...................       $10,142    $33,427    $55,699     $32,472     $12,097     $43,965   $74,890   $51,307
GROSS PROFIT................         2,611      9,104     14,185       9,001       2,941      11,359    18,909    13,425
SELLING, GENERAL AND
   ADMINISTRATIVE EXPENSES..         3,694      5,294      7,941       5,701       4,505       7,252    10,129     9,092
OPERATING INCOME (LOSS).....        (1,416)     3,464      5,896       3,067      (1,979)      3,703     8,202     3,763
INTEREST EXPENSE............           461        578        649         622         555         948     1,170     1,135
NET INCOME (LOSS)...........        (1,156)     1,798      3,267       1,654      (1,600)      1,777     4,459     1,936
BASIC EARNINGS (LOSS) PER
   SHARE....................             (.27)       .42        .77         .39        (.37)        .41      1.04       .45
DILUTED EARNINGS (LOSS) PER
   SHARE....................             (.27)       .41        .74         .38        (.37)        .40      1.01       .44
WTD. AVG. COMMON SHARES
   OUTSTANDING - BASIC......         4,225       4,254     4,255       4,260       4,286       4,288     4,290     4,300
WTD. AVG. COMMON SHARES
   OUTSTANDING - DILUTED....         4,225       4,423     4,439       4,409       4,286       4,430     4,402     4,391


                                                             AS A PERCENTAGE OF NET SALES
                                        -----------------------------------------------------------------------------
NET SALES...................         100.0%      100.0%    100.0%      100.0%      100.0%      100.0%    100.0%    100.0%
                                    ------      ------    ------      ------      ------      ------    ------    ------
GROSS PROFIT................          25.7        27.2      25.5        27.7        24.3        25.8      25.3      26.2
SELLING, GENERAL AND
   ADMINISTRATIVE EXPENSES..          36.4        15.8      14.3        17.6        37.2        16.5      13.5      17.7
OPERATING INCOME (LOSS).....         (14.0)       10.4      10.6         9.5       (16.4)        8.4      11.0       7.3
INTEREST EXPENSE............           4.5         1.7       1.2         1.9         4.6         2.2       1.6       2.2
NET INCOME (LOSS)...........         (11.4)        5.4       5.9         5.1       (13.2)        4.0       6.0       3.8

</TABLE>


         The Company's  business,  as well as the sales demand for various types
of boats,  tends to be highly seasonal.  Strong sales typically begin in January
with the onset of the public boat and  recreation  shows,  and continue  through
July. Over the previous three-year period,  the average annual net sales for the
quarterly  periods ended March 31 and June 30 represented  approximately 27% and
41%, respectively, of the Company's annual net sales. With regard to net income,
the Company  historically  generates profits in three of its fiscal quarters and
experiences  operating  losses in the quarter  ended  December 31 due to a broad
seasonal  slowdown in sales.  During the quarter ended  September 30,  inventory
typically  reaches its lowest levels and  accumulated  cash  reserves  reach the
highest  levels.  During the quarter  ended  December 31, the Company  generally
builds  inventory  levels in preparation  for the upcoming  selling season which
begins with boat and recreation  shows occurring during January through March in
certain  market  areas in which the Company  conducts  business.  Travis  Boats'
operating  results would be materially and adversely  affected if net sales were
to fall  significantly  below  historical  levels  during  the months of January
through June.

                                       24

<PAGE>

         The  Company's  business  is also  significantly  affected  by  weather
patterns.  Weather  conditions  that are  unseasonable  or unusual may adversely
affect the Company's results of operations.  For example,  drought conditions or
merely  reduced  rainfall  levels,  as well as  excessive  rain,  may affect the
Company's sale of boating  packages and related  products and  accessories.  See
"Risk Factors -We Depend on Strong Sales in the First Half of the Year" and "Our
Sales Depend on Good Weather."

         Quarterly results may fluctuate as a result of the expenses  associated
with new store openings or acquisitions.  The Company, prior to fiscal 1997, had
attempted  to  concentrate  expansion  during the  seasonal  slowdown  generally
occurring in the quarter  ending  December 31. During  fiscal 1997,  the Company
modified its  acquisition  strategy to acquire store  locations  through-out the
fiscal  year.  This was done to allow  the  Company  the  opportunity  to derive
in-season  sales from the  acquisitions as well as to provide a longer period in
which to integrate the acquired store's operations. Accordingly, the results for
any quarterly period may not be indicative of the expected results for any other
quarterly period.

         Liquidity and Capital Resources

         The Company's  short-term  cash needs are primarily for working capital
to support operations,  including inventory  requirements,  off-season liquidity
and store expansion. These short-term cash needs have historically been financed
with cash from  operations  and  borrowings  under the Company's  floor plan and
revolving credit lines (collectively the "credit facilities").  At September 30,
1999, the Company had working  capital of $12.1 million,  including $4.1 million
in cash, $12.4 million in accounts  receivable  (primarily  contracts in transit
from  sales) and $75.7  million in  inventories,  offset by  approximately  $6.8
million of accounts payable and accrued  liabilities,  $35.4 million outstanding
under floor plan lines of credit,  approximately  $33.2 million under  revolving
lines of credit and $6.8 million in other  current  liabilities  and  short-term
indebtedness  including  current  maturities  of  long-term  debt.  Contracts in
transit  are  amounts  receivable  from a  customer  or a  customer's  financial
institution  related to that customer's  purchase of a boat. As of September 30,
1999,  the  aggregate  maximum  borrowing  limits under floor plan and revolving
lines  of  credit  were   approximately   $54.0   million  and  $55.0   million,
respectively.

         In fiscal  1998,  operating  activities  generated  cash  flows of $2.9
million due primarily to increased net profits,  controlled inventory growth and
proceeds received on unearned manufacturer rebate revenues.  Management believes
that store inventory  levels at September 30, 1998 were below standard  stocking
levels as the  Company  was in the  process  of  contract  discussions  with its
primary outboard motor supplier,  Outboard Marine  Corporation.  The Company was
also in  discussions  with a new  alternate  outboard  motor  supplier,  Mercury
Marine.  The  Company  could not order  outboard  motor  powered  boats  until a
determination  of what type of outboard  motor was to be placed on the boat. The
Company agreed in principal to agreements with Outboard  Marine  Corporation and
Mercury  Marine in November of 1998 and the  Company  has since  re-stocked  its
store locations to levels that management believes are historically appropriate.

         In fiscal  1999,  operating  activities  utilized  cash  flows of $13.3
million  due  primarily  to an increase  of $18.0  million  and $7.3  million in
inventories  and accounts  receivable,  respectively.  These amounts were offset
partially by net income, before depreciation and amortization,  of $8.5 million,
an increase  in accrued  liabilities  of $667,000  and an increase in income tax
payables of $3.2 million.

         Investing activities utilized cash flows of $13.8 million due primarily
to the 14 new store  locations,  either newly opened or acquired in fiscal 1999,
along with the  construction of a new facility in Gwinnett County,  Georgia.  In
addition,  the Company  purchased  real estate in  Clearwater,  Florida (for the
relocation of the St. Petersburg,  Florida location), Key Largo, Florida and San
Antonio,  Texas (to take the place of the existing one).  These  activities were
funded through the mix of the Company's revolving line of credit facility,  with
Bank of America (formerly  NationsBank of Texas,  N.A.) as agent,  mortgage debt
and internal cash.

                                       25

<PAGE>

         Financing  activities  in fiscal 1999  provided  $26.6  million of cash
flows primarily from the net proceeds of borrowings  under the Company's  credit
facilities.  The Company has a $55.0 million revolving line of credit agented by
Bank of  America  (formerly  NationsBank  of  Texas,  N.A.)  This line of credit
provides for borrowing pursuant to a borrowing formula based upon certain of the
Company's  inventory and accounts  receivable.  Collateral for this indebtedness
consists of a security interest in specific  inventories (and proceeds thereof),
accounts receivable and contracts in transit. The line has a maturity on January
31, 2000 and pricing is at the Company's  election of the prime rate minus 1.00%
or on a LIBOR-  based  price  structure.  There is a fee on the  unused  portion
assessed  quarterly.  A comprehensive loan agreement governs the line of credit.
The agreement  contains financial  covenants  regulating debt service coverages,
tangible  net  worth,  operating  leverage  and  restrictions  on  dividends  or
distributions. As of December 15, 1998, $41.5 million was drawn on the revolving
line  and the  Company  could  borrow  an  additional  $13.5  million,  of which
approximately  $5.4 million was  immediately  available for borrowing based upon
the revolving line's borrowing formula. As the Company purchases inventory,  the
amount  purchased  increases the borrowing base  availability  and typically the
Company makes a  determination  to borrow  depending  upon  anticipated  working
capital requirements. The Company is presently out of compliance with one of the
financial ratios of the current revolving line of credit;  however,  the Company
has  obtained  written  waivers  from each of the  lenders  under  the  facility
regarding  this technical  default.  The Company,  however,  is currently in the
process of  refinancing  and  increasing  this  credit  facility  to provide for
borrowings  up to $125.0  million  with  several  financial  lenders,  including
certain lenders that currently provide a portion of the $55.0 million loan. This
refinancing  is  expected  to occur on or before  February  1, 2000 and will not
include  the ratio that is out of  compliance  at the present  time.  Management
believes the Company to be in compliance  with all other terms and conditions of
the current loan agreement and all proposed terms and conditions being set forth
in the new refinanced line of credit.

         The Company  also  maintains  floor plan lines of credit  with  various
finance companies totaling  approximately $54.0 million in credit limits,  which
generally have no stated maturity and utilize  subsidies from  manufacturers  to
provide for certain  interest free periods each  calendar  year (usually  August
through at least May). Certain floor plan lines of credit with finance companies
are governed by loan agreements containing financial covenants concerning, among
others, minimum tangible net worth and leverage ratios. As of December 15, 1999,
approximately  $46.2  million was drawn  under the floor plan lines.  Management
believes the Company is in  compliance  with the terms and  conditions  of these
loan agreements.

         Merchandise  inventories  were $38.9  million  and $75.7  million as of
September  30, 1998 and September 30, 1999,  respectively.  Accounts  receivable
increased by  approximately  $7.5 million to $12.4  million at the end of fiscal
1999 from a year earlier.  The receivables amount represents primarily contracts
in  transit  generated  from  sales.  Costs in  excess  of net  assets  acquired
increased to by  approximately  $5.4 million to $11.6 million in fiscal 1999 due
to the  acquisitions  during  fiscal 1999  discussed  previously  in the section
Overview.

         The Company had capital  expenditures of approximately  $7.7 million in
fiscal 1999 and approximately $4.3 million in fiscal 1998. Capital  expenditures
during fiscal 1998 and 1999  included the  acquisitions  of the store  locations
discussed  previously  in  the  section  Overview,  the  renovation  of  several
facilities to the Company's superstore standards and expenditures related to the
roll-out  of the  Company's  management  information  systems in  certain  store
locations.  The Company also  acquired  real estate in San Antonio,  Texas,  Key
Largo,  Florida,  Clearwater,  Florida  and is under the  construction  of a new
superstore located in Gwinnett County, Georgia (relocating the Roswell,  Georgia
temporary store location).  The fiscal 1998 and 1999 capital  expenditures  were
primarily financed under the Company's credit facilities, mortgages and internal
cash.

         The Company's  proposed  refinanced  $125.0  revolving credit facility,
which  includes  enhanced  advance  rates on new and used boat  inventories  and
certain accounts  receivable,  existing floorplan lines of credit and internally
generated  working  capital  should be  sufficient  to meet the  Company's  cash
requirements in the near future.

                                       26

<PAGE>

         Disclosure of Year 2000 Issues and Consequences

         The Year 2000 Issue  ("Y2K") is the result of computer  programs  being
written using two digits rather than four to define the applicable  year. Any of
the Company's computer programs or hardware that have date-sensitive software or
embedded  chips may recognize a date using "00" as the year 1900 rather than the
year 2000. This could cause a system failure or miscalculations in the Company's
point of sale,  accounting  and other  financial  operations  which  could cause
disruptions  of  operations,  including,  among other things,  could result in a
temporary  inability  to process  financial  transactions,  or engage in similar
normal business or financial reporting activities. Similarly, material suppliers
to the Company may be unable to produce or ship product in the  ordinary  course
of their business operations.

         Based on recent system evaluations,  surveys,  and on-site inventories,
the Company  determined  that it will be  required to modify or replace  minimal
portions  of its  software  and  certain  hardware  so that those  systems  will
properly utilize dates beyond December 31, 1999. As part of a previously planned
company-wide  upgrade to its accounting  systems initiated in March of 1998, the
Company has replaced its  integrated  accounting  and  point-of-sale  management
information system ("MIS").  The new MIS system is currently operating in all 38
store  locations.  The new MIS system was selected in part due to its ability to
allow the Company  increased  efficiencies in its efforts to further  centralize
full financial and accounting  operations.  The Company has received  assurances
that new MIS system is a Y2K compliant system.

         The Company has one other key system that is not part of the integrated
package.  The Company  contracts  with  Automatic  Data  Processing  ("ADP") for
payroll processing.  ADP has provided the Company with separate software,  which
is used to administer the company-wide  payroll.  The Human Resources department
of the Company has completed  installation of a year 2000 compliant version that
has been provided to the Company by ADP.

         A survey has been performed on all back office  software  packages.  We
have not seen any  material  date macros or other date  related  functions  that
would be materially affected by dates beyond December 31, 1999.

         Significant  non-technical  systems  and  equipment  that  may  contain
microcontrollers  that are not Y2K compliant are being  identified and have been
addressed if deemed  critical.  This includes,  but is not limited to, telephone
systems,  copiers,  fax  machines  and point of sale credit  card  authorization
terminals.

         The Company has utilized a written questionnaire  specifically designed
to query  significant  vendors,  including  but not limited to, boat  suppliers,
parts/accessory suppliers and wholesalers,  and financial institutions.  Certain
of the companies  queried have  responded to  questionnaires  stating that their
systems  are  Y2K  compliant.  The  Company  is  monitoring  the  status  of the
questionnaire  respondents  that have  indicated that Y2K compliance was not yet
complete,  but is  anticipated  to be complete  during  calendar year 1999.  The
Company has not received any  questionnaires  from companies that have expressed
an inability or business  related purpose that would render them unable to reach
Y2K  compliance.  To date,  the Company is not aware of any Y2K issue that would
materially  impact the Company's  results of operations,  liquidity,  or capital
resources.  However,  the  Company  has no means of  ensuring  that  significant
vendors  will be Y2K ready.  The  inability  of vendors  to  complete  their Y2K
resolution process in a timely fashion could materially impact the Company.  The
effect of non-compliance by significant vendors is not determinable.

         While  the  Company  believes  its  efforts  will  provide   reasonable
assurance that material  disruptions will not occur due to internal failure, the
possibility of interruption still exists.

         In the  ordinary  course  of  business,  the  Company  has  acquired  a
significant amount of Y2K compliant hardware and software.  These purchases were
part of specific  operational and financial system  enhancements with completion
dates  during late 1999 that were  planned  without  specific  regard to the Y2K
issue.  These  system  enhancements  resolve many Y2K problems and have not been
delayed as a result of any  additional  efforts to  address  the Y2K issue.  The
Company  expects  that  Minimal  costs will be  associated  with Y2K issue.  The
Company  does  not  expect  the Y2K  cost of  unforeseen  hardware  or  software
applications to exceed $100,000.

                                       27

<PAGE>

         Management believes it has an effective program in place to resolve the
Y2K issue. However,  disruptions in the economy generally resulting from the Y2K
issues could also result in a materially adverse affect to the Company.

         The Company  currently has assigned three management level employees to
further identify risks and carry out contingency plans in the event the Company,
or its vendors, does not complete all phases of the Y2K program.

         New Accounting Standards

         In  September  1998,  the FASB  issued  SFAS No.  133,  Accounting  for
Derivative  Instruments and Hedging  Activities  ("SFAS No. 133").  SFAS No. 133
establishes  accounting and reporting  standards requiring that every derivative
instrument   (including  certain  derivative   instruments   embedded  in  other
contracts)  be  recorded in the  balance  sheet as either an asset or  liability
measured  at  its  fair  value.  SFAS  No.  133  requires  that  changes  in the
derivative's  fair value be  recognized  currently in earnings  unless  specific
hedge  accounting  criteria are met.  Special  accounting for qualifying  hedges
allows a derivative's  gains and losses to offset related  results on the hedged
item  in the  income  statement,  and  requires  that a  company  must  formally
document,  designate,  and assess the effectiveness of transactions that receive
hedge accounting.  Because of the Company's minimal use of derivative  financial
instruments,  management  does not anticipate  that the adoption of SFAS No. 133
will have a material impact on the Company's consolidated results of operations,
financial position or cash flows.

         In April 1998,  the Accounting  Standards  Executive  Committee  issued
Statement  of  Position  ("SOP")  98-5,  Reporting  on  the  Costs  of  Start-Up
Activities. The SOP requires costs of start-up activities and organization costs
to be expensed as incurred,  and is effective for fiscal years  beginning  after
December  15,  1998.  The effects of adoption  must be reported as a  cumulative
change in accounting principle.  The Company expects that the impact of adoption
will not be material to its financial position or results of operations.

         Inflation

         The Company  believes that  inflation  generally has not had a material
impact on its operations or liquidity to date.

ITEM 7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

         At  September  30, 1999,  approximately  84.5% of the  Company's  notes
payable  and other short term  obligations  bear  interest  at  variable  rates,
generally tied to a reference rate such as the prime rate of interest of certain
banks.  During the fiscal year ended  September  30,  1999,  the average rate of
interest of such variable  rates was 5.47%.  Increases in the variable  interest
rates result in increased  interest expense and decreased earnings and cashflow.
Assuming the same level of  borrowings  for the year ended  September  30, 1999,
which averaged approximately $46,853,000,  an increase of 2% in the average rate
of  interest   would  result  in  an  increase  in  1999  interest   expense  of
approximately  $937,060 and a decrease in 1999 net income and after-tax cashflow
of approximately $592,878. Similarly, a decrease in the average rate of interest
would result in a decrease in interest expense and an increase in net income and
after-tax cashflow.

ITEM 8.  FINANCIAL STATEMENTS

         For the financial  statements and  supplementary  data required by this
Item 8, see the Index to Consolidated Financial Statements and Schedules.


                                       28

<PAGE>

ITEM  9.  CHANGES  IN AND  DISAGREEMENTS  WITH  ACCOUNTANTS  ON  ACCOUNTING  AND
FINANCIAL DISCLOSURE

         Not applicable.

                                    PART III

ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS

         There is incorporated herein by reference that portion of the Company's
proxy  statement  for the 2000  Annual  Meeting of  Shareholders  which  appears
therein  under the captions  "Item 1: Election of  Directors"  and  "Information
Concerning Directors."

ITEM 11.  EXECUTIVE COMPENSATION

         There is  incorporated in this Item 11 by reference that portion of the
Company's definitive proxy statement for the 2000 Annual Meeting of Shareholders
which appears under the caption "Executive Compensation."

ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

         There is  incorporated in this Item 12 by reference that portion of the
Company's definitive proxy statement for the 2000 Annual Meeting of Shareholders
which appears under the caption "Securities Holdings of Principal  Shareholders,
Directors, Nominees and Officers."

ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

         There is  incorporated in this Item 13 by reference that portion of the
Company's definitive proxy statement for the 2000 Annual Meeting of Shareholders
which   appears   under  the  captions   "Certain   Relationships   and  Related
Transactions" and "Compensation Committee Interlocks and Insider
Participation."

                                    PART IV

ITEM 14.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

(A) 1.   FINANCIAL STATEMENTS

         The  following  consolidated  financial  statements  of the Company are
included following the Index to Consolidated  Financial Statements and Schedules
on page F-1 of this Report.


     REPORT OF INDEPENDENT AUDITORS.................              F-2
     CONSOLIDATED BALANCE SHEETS....................              F-3
     CONSOLIDATED STATEMENTS OF INCOME..............              F-5
     CONSOLIDATED STATEMENTS OF STOCKHOLDER'S EQUITY              F-6
     CONSOLIDATED STATEMENTS OF CASH FLOWS..........              F-7
     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.....              F-9



                                       29


<PAGE>

(A) 2.   FINANCIAL STATEMENT SCHEDULES

         All schedules have been omitted  because they are not  applicable,  not
required under the  instructions,  or the information  requested is set forth in
the consolidated financial statements or related notes thereto.

(A) 3.   EXHIBITS

         The following  Exhibits are  incorporated by reference to the filing or
are included following the Index to Exhibits.

                                            INDEX TO EXHIBITS

           (a) Exhibits:


          3.1  --Restated  Articles  of  Incorporation  of  the  Registrant,  as
               amended.(1)

          3.2  --Restated Bylaws of the Registrant, as amended.(1)

          10.2(a)[Intentionally left blank]

          10.2(b)--Dealer  Agreement  dated as of October 13, 1995,  between the
               Company and Outboard Marine Corporation.(1)

          10.3 --[Intentionally left blank]

          10.4 --Dealer  Agreement  dated as of August  17,  1995,  between  the
               Company and Mastercrafters Corporation.(1)(6) 10.5(a) --Inventory
               Security Agreement and Power of Attorney dated as of November 30,
               1993, Between Bombardier Capital Inc. and the Company.(1)

          10.5(b) --Inventory  Security Agreement and Power of Attorney dated as
               of November 30, 1993,  Between Bombardier Capital Inc. and Falcon
               Marine Abilene, Inc.(1)

          10.6(a)  --Agreement  for Wholesale  Financing  dated as of August 17,
               1995, by and among Deutsche Financial Services  Corporation,  the
               Company and its  subsidiaries;  and  Amendment to  Agreement  for
               Wholesale Financing dated as of September 22, 1995.(1)

          10.6(b)  --Agreement  for Wholesale  Financing  dated as of August 17,
               1995, between Deutsche Financial Services  Corporation and Travis
               Boats & Motors Baton Rouge, Inc.(1)

          10.7(a)  --Inventory  Loan  Agreement  dated as of September 20, 1995,
               between TBC Arkansas, Inc. And Hibernia National Bank.(1)

          10.7(b)  --Commercial  Security  Agreement  dated  September  1, 1995,
               between TBC Arkansas, Inc. and Hibernia National Bank.(1)

          10.8(a)  --Inventory  Loan  Agreement  dated as of December  17, 1992,
               between  Travis  Boats & Motors  Baton  Rouge,  Inc. and Hibernia
               National  Bank;  and First  Amendment to Inventory Loan Agreement
               dated as of February 7, 1994.(1)

          10.8(b)  --Promissory  Note  dated  May  30,  1995,  in  the  original
               principal  amount of  $100,000,  payable By Travis Boats & Motors
               Baton Rouge, Inc. to Hibernia National Bank.(1)

          10.8(c)  --Promissory  Note  dated  May  30,  1995,  in  the  original
               principal  amount of  $800,000,  payable By Travis Boats & Motors
               Baton Rouge, Inc. to Hibernia National Bank.(1)

          10.8(d)  --Promissory  Note  dated  July  14,  1995,  in the  original
               principal  amount of  $480,000,  payable By Travis Boats & Motors
               Baton Rouge, Inc. to Hibernia National Bank.(1)

          10.8(e) --Business Loan Agreement dated July 14, 1995,  between Travis
               Boats & Motors Baton Rouge, Inc. and Hibernia National Bank.(1)


                                       30

<PAGE>


          10.8(f) --Commercial  Security  Agreement dated July 14, 1995, between
               Travis  Boats & Motors Baton  Rouge,  Inc. and Hibernia  National
               Bank.(1)

          10.8(g) --Collateral Mortgage dated July 14, 1995, from Travis Boats &
               Motors Baton Rouge, Inc. to Hibernia National Bank.(1)

          10.8(h) --Assignment of Leases and Rents dated July 14, 1995,  between
               Travis  Boats & Motors Baton  Rouge,  Inc. and Hibernia  National
               Bank.(1)

          10.8(i) --Pledge of Collateral Mortgage Note dated July 14, 1995, from
               Travis  Boats & Motors  Baton  Rouge,  Inc. to Hibernia  National
               Bank.(1)

          10.9(a)  --Promissory  Note dated  September 1, 1995,  in the original
               principal amount of $3,000,000,  Payable by TBC Arkansas, Inc. to
               Hibernia National Bank.(1)

          10.9(b)  --Commercial  Guaranty dated September 1, 1995 by the Company
               in favor of  Hibernia  National  Bank  guarantying  a  $3,000,000
               Promissory Note.(1)

          10.9(c)  --Promissory  Note dated  September 1, 1995,  in the original
               principal amount of $250,000, Payable by TBC Arkansas to Hibernia
               National Bank.(1)

          10.10(a) --Amended and Restated Loan  Agreement  dated as of September
               15, 1995, by and among  NationsBank  of Texas,  N.A., the Company
               and its subsidiaries.(1)

          10.10(b)  --Security  Agreement  dated  July 31,  1995,  by and  among
               NationsBank of Texas, N.A., the Company and its subsidiaries.(1)

          10.11--General  Promissory Note dated August 31, 1995, in the original
               principal amount of $300,000, payable by the Company to Amerisure
               Property & Casualty, Ltd.(1)

          10.12--General  Promissory Note dated August 31, 1995, in the original
               principal  amount of $100,000,  payable by the Company to Capitol
               Commerce Reporter, Inc.(1)

          10.13--General  Promissory Note dated August 31, 1995, in the original
               principal  amount of  $75,000,  payable by the Company to Capitol
               Commerce Reporter, Inc.(1)

          10.14--General  Promissory Note dated August 31, 1995, in the original
               principal  amount  of $50,000,  payable  by  the  Company  to Joe
               Simpson and Pat Simpson.(1)

          10.15--Asset  Purchase  Agreement  dated as of September  20, 1995, by
               and among Red River Marine,  Inc., Red River Marine, Inc. #2, and
               TBC Arkansas, Inc.(1)

          10.16--Promissory  Note dated  September  20,  1995,  in the  original
               principal  amount of $800,000,  Payable by TBC Arkansas,  Inc. to
               Benny Hargrove.(1)

          10.17(a)  --Promissory  Note dated as of September  20,  1995,  in the
               original   principal  amount  of  $462,145.53,   payable  by  TBC
               Arkansas, Inc. to Red River Marine, Inc. #2.(1)

          10.17(b) --Mortgage  With Power of Sale (Realty)  dated  September 20,
               1995, from TBC Arkansas, Inc. to Red River Marine, Inc. #2.(1)

          10.18--Promissory  Note dated  September  20,  1995,  in the  original
               principal amount of $230,177.16, payable by TBC Arkansas, Inc. to
               Red River Marine, Inc. and Red River Marine, Inc. #2.(1)

          10.19--Promissory  Note dated  September  20,  1995,  in the  original
               principal  amount of $108,750,  Payable by TBC Arkansas,  Inc. to
               Red River Marine, Inc. and Red River Marine, Inc. #2.(1)

          10.20 --Travis Boats and Motors, Inc. 1995 Incentive Plan.(1)

          10.21--[Intentionally left blank]

          10.22--Form  of  Option  Agreement  dated May 17,  1995,  between  the
               Company and Michael B. Perrine,  Ronnie L.  Spradling and Mark T.
               Walton.(1)

          10.23--Form of  Indemnification  Agreement  for Directors and Officers
               of the Company.(1)  10.24  --Management  Agreement dated December
               14, 1995, by and among TBC Management,  Ltd., the Company and its
               subsidiaries.(1)

          10.24--Management Agreement  dated December 14, 1995  by and among TBC
               Management, Ltd., the Company and its subsidiaries.(1)

          10.25 --[Intentionally left blank]

          10.26(a) --First Lien Promissory Note dated September 15, 1995, in the
               original principal amount of $679,000,  payable by Travis Snowden
               Marine, Inc. to NationsBank of Texas, N.A.(1)

          10.26(c) --First Lien Deed of Trust,  Assignment,  Security  Agreement
               and Financing  Statement  dated  September 15, 1995,  from Travis
               Snowden Marine, Inc. to Michael F. Hord, Trustee.(1)

                                       31

<PAGE>

          10.27(a) --Second Modification and Extension Agreement dated April 26,
               1994, between the Company and NationsBank of Texas, N.A.(1)

          10.27(b) --"504" Note dated April 28, 1994, in the original  principal
               amount of $454,000,  payable by the Company to Cen-Tex  Certified
               Development Corporation.(1)

          10.27(c) --Deed of Trust, Assignment, Security Agreement and Financing
               Statement  dated  March 5, 1993,  from the  Company to Michael F.
               Hord,  Trustee.(1) 10.27(d) --Deed of Trust dated April 28, 1994,
               from the  Company  to Wm. H.  Harrison,  Jr.,  Trustee.(1)  10.28
               --Trust  Agreement  dated  December 31, 1994,  by and among Ideal
               Insurance Company, Ltd. and the Company.(1)

          10.29(a) --Revolving  Credit  Agreement dated as of December 12, 1996,
               in the original  principal Amount of $15,000,000 by and among the
               Company,  its  Subsidiaries  and  NationsBank  of Texas,  N.A. as
               agent.(2)

          10.29(b) --Commercial Security Agreement dated as of December 12, 1996
               by and among the Company,  its  Subsidiaries  and  NationsBank of
               Texas, N.A. as agent.(2)

          10.29(c)--Promissory  Note  dated  as of  December  12,  1996  in  and
               original  principal amount of $9,000,000  among the Company,  its
               subsidiaries and NationsBank of Texas, N.A., as agent.(2)

          10.29(d)  --Promissory  Note  dated  as of  December  12,  1996 in the
               original  principal amount of $6,000,000  among the Company,  its
               subsidiaries and NationsBank of Texas, N.A. as agent.(2)

          10.30--Asset  Purchase  Agreement dated as of November 1, 1996 between
               Travis  Boating  Center  Tennessee,  Inc. and  Tri-Lakes  Marine,
               Inc.(2)

          10.31--Asset  Purchase  Agreement dated as of November 1, 1996 between
               Travis Boating Center Alabama, Inc. and Tri-Lakes Marine, Inc.(2)

          10.32--Asset Purchase  Agreement dated as of February 19, 1997 between
               Travis Boating Center Louisiana, Inc. and Bent's Marine, Inc.(3)

          10.33--Asset  Purchase  Agreement  dated as of August 1, 1997  between
               Travis  Boating  Center  Mississippi,  Inc.  and  McLeod  Marine,
               Inc.(4)

          10.34--Stock  Purchase  Agreement dated as of September 30, 1997 among
               Travis Boating Center Florida, Inc. and Frederic D. Pace and John
               W.  Reinhold  providing  for the  purchase  of 100% of the common
               stock of Adventure Boat Brokerage, Inc. (4)

          10.35--Stock  Purchase  Agreement dated as of September 30, 1997 among
               Travis  Boating  Center  Florida,   Inc.  and  John  W.  Reinhold
               providing  for  the  purchase  of  100% of the  common  stock  of
               Adventure Marine & Outdoors, Inc.(4)

          10.36--Stock  Purchase  Agreement dated as of September 30, 1997 among
               Travis Boating Center Florida, Inc. and Frederic D. Pace and John
               W.  Reinhold  providing  for the  purchase  of 100% of the common
               stock of Adventure Marine South, Inc.(4)

          10.37--First  Amendment  to  Revolving  Credit  Agreement  dated as of
               October 31, 1997, in the original principal amount of $55,000,000
               by and among the Company,  its  Subsidiaries  and  NationsBank of
               Texas, N.A. as agent.(4)

          10.38--Asset Purchase  Agreement dated as of November 20, 1997 between
               Travis Boating Center  Tennessee,  Inc. and  Southeastern  Marine
               Group, Inc.(4)

          10.39--Travis Boats & Motors, Inc. 1995 Incentive Plan.(5)

          10.40--Employment  Agreement  dated  November  16,  1999  between  TBC
               Management, Ltd. and Mark T. Walton.

          10.41--Employment  Agreement  dated  November  16,  1999  between  TBC
               Management, Ltd. and Michael B. Perrine.

          10.42--Employment  Agreement  dated  November  16,  1999  between  TBC
               Management, Ltd. and Ronald L. Spradling.

          10.43--Wellcraft Master Dealer Agreement  effective September 29. 1998
               between the Company and Wellcraft Marine Corp. (6)


                                       32

<PAGE>
          10.44--Aquasport Master Dealer Agreement  effective September 29, 1998
               between the Company and Aquasport, a division of Wellcraft Marine
               Corp. (6)

          10.45--Outboard  Marine   Corporation   Private   Label/Retail   Store
               Agreement  dated  November  13,  1998  between  the  Company  and
               Outboard Marine Corporation.(6)

          10.46--Product  Supply  Agreement  dated  June 29,  1999  between  the
               Company,  its  subsidiaries  and  Mercury  Marine,  a division of
               Brunswick Corporation. (6)

          10.47--Larson  Master Dealer  Agreement  effective  September 29, 1999
               between the Company and Larson/Glastron Boats, Inc. (6)

          16   --Letter re: change in certifying accountant(1)

          21.1 --List of Subsidiaries of Registrant.

          23.1 --Consent of Independent  Auditors of Registrant,  dated December
               27, 1999.


          23.2 --Consent of Independent Auditors, dated January 12, 2000.


          27.1 --Financial Data Schedule


(1)  Incorporated by reference to the Company's  Registration  Statement on Form
     S-1 effective June 26, 1996 (File No. 333-03283).

(2)  Incorporated by reference to the Company's Annual Report on Form 10-K filed
     December 31, 1006 (File No. 000-20757)

(3)  Incorporated  by reference to the Company's  Quarterly  Report on Form 10-Q
     filed May 15, 1997 (File No. 000-20757).

(4)  Incorporated by reference to the Company's Annual Report on Form 10-K filed
     December 29, 1997 (File No. 000-20757).

(5)  Incorporated by reference to the Company Registration Statement on Form S-8
     (File No. 333-41981).

(6)  Portions  of  this  exhibit  have  been  omitted  and  are  subject  to  an
     application  for   confidential   treatment   filed   separately  with  the
     Commission.

         No annual report or proxy material has been sent to security holders as
of the date of this Form 10-K;  however,  the  Company  anticipates  sending the
annual report and proxy  materials on or before any applicable  deadlines.  When
such a report and proxy  materials are furnished,  the  Registrant  will furnish
copies of such materials to the Commission.

                      [THIS SPACE INTENTIONALLY LEFT BLANK]



                                       33

<PAGE>

                                   SIGNATURES

         Pursuant to the  requirements  of Section 13 or 15(d) of the Securities
Exchange Act of 1934,  the registrant has caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.

                                                     TRAVIS BOATS & MOTORS, INC.

Date:  January 12, 2000                              By:  /s/   Mark T. Walton
-----------------------                                  -----------------------
                                                           Mark T. Walton
                                                           Chairman of the Board
                                                           And President


                      POWER OF ATTORNEY TO SIGN AMENDMENTS

         KNOW ALL BY THESE PRESENTS, that each person whose signature appears
below does  hereby  constitute  and  appoint  Mark T. Walton his true and lawful
attorney-in-fact  and agent for him and in his name, place and stead, in any and
all capacities, to sign any or all amendments to the Travis Boats & Motors, Inc.
Annual Report on Form 10-K for the year ending  September 30, 1999,  and to file
the  same,  with  all  exhibits  thereto,  and  other  documents  in  connection
therewith,  with the  Securities  and Exchange  Commission,  granting  unto said
attorney-in-fact  and agents full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the premises
in order to effectuate the same as fully,  to all intents and purposes,  as they
or he might or could do in person, hereby ratifying and confirming all that said
attorney-in-fact and agents, or any of them, may lawfully do or cause to be done
by virtue hereof.  This Power of Attorney has been signed below by the following
persons in the capacities and on the dates indicated.


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


<TABLE>
<CAPTION>

Name                                  Title                                        Date Signed
----                                  -----                                        -----------
<S>                                   <C>                                          <C>
/S/   MARK T. WALTON                  Chairman of the Board, President and         January 12, 2000
--------------------                  Director (Principal Executive Officer)
Mark T. Walton


/S/    MICHAEL B. PERRINE             Chief Financial Officer, Secretary and       January 12, 2000
-------------------------             Treasurer (Principal Financial and
Michael B. Perrine                    Accounting Officer)


/S/  RONNIE L. SPRADLING              Executive Vice President-New Store           January 12, 2000
------------------------
Ronnie L. Spradling                   Development Director


                                      Director                                     January __, 2000
----------------------------
Steven W. Gurasich, Jr.


_____________________                 Director                                     January __, 2000
Zach McClendon, Jr.



/S/  ROBERT C. SIDDONS                Director                                     January 12, 2000
----------------------------
Robert C. Siddons


/S/ JOSEPH E. SIMPSON                 Director                                     January 12, 2000
---------------------
Joseph E. Simpson

</TABLE>

                                       34

<PAGE>






                  Travis Boats & Motors, Inc. and Subsidiaries

                        Consolidated Financial Statements



                  Years ended September 30, 1999, 1998 and 1997




                                    CONTENTS

Report of Independent Auditors...............................................F-2

Audited Consolidated Financial Statements

Consolidated Balance Sheets..................................................F-3
Consolidated Statements of Income............................................F-5
Consolidated Statements of Stockholders' Equity..............................F-6
Consolidated Statements of Cash Flows........................................F-7
Notes to Consolidated Financial Statements...................................F-9



                                       F-1




<PAGE>














                         Report of Independent Auditors



The Board of Directors
Travis Boats & Motors, Inc. and Subsidiaries


We have audited the accompanying  consolidated  balance sheets of Travis Boats &
Motors,  Inc. and Subsidiaries as of September 30, 1999 and 1998 and the related
consolidated statements of income,  stockholders' equity and cash flows for each
of the three years in the period  ended  September  30,  1999.  These  financial
statements   are  the   responsibility   of  the   Company's   management.   Our
responsibility  is to express an opinion on these financial  statements based on
our audits.

We  conducted  our  audits  in  accordance  with  generally   accepted  auditing
standards.  Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of 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 consolidated  financial  position of Travis Boats &
Motors,  Inc.  and  Subsidiaries  as of  September  30,  1999  and  1998 and the
consolidated  results of their  operations  and their cash flows for each of the
three years in the period ended September 30, 1999, in conformity with generally
accepted accounting principles.



                                                          /s/  Ernst & Young LLP
                                                         -----------------------

December 8, 1999
Austin, Texas





                                       F-2




<PAGE>



<TABLE>
<CAPTION>


                  Travis Boats & Motors, Inc. and Subsidiaries

                           Consolidated Balance Sheets
                        (in thousands, except share data)




                                                                             SEPTEMBER 30,
                                                                        1999               1998
                                                                 ----------------- ------------------
   ASSETS
   Current assets:
<S>                                                                 <C>               <C>
     Cash and cash equivalents                                      $    4,125        $    4,618
     Accounts receivable, net of allowance
          for doubtful accounts of
          $247 in 1999 and $0 in 1998                                   12,421             4,893
     Prepaid expenses                                                    1,177             1,045
     Prepaid income taxes                                                  ---               425
     Inventories                                                        75,700            38,934
     Deferred tax asset                                                    136               180
                                                                 ----------------- ------------------
   Total current assets                                                 93,559            50,095

   Property and equipment:
     Land                                                                5,819             3,516
     Buildings and improvements                                         11,069             8,485
     Furniture, fixtures and equipment                                   8,056             4,109
                                                                 ----------------- ------------------
                                                                        24,944            16,110
     Less accumulated depreciation                                      (4,529)           (3,417)
                                                                 ----------------- ------------------
                                                                        20,415            12,693

   Deferred tax asset                                                      121                96

   Goodwill, net of accumulated amortization
      of $591 in 1999 and $290 in 1998                                   9,110             4,910
   Noncompete agreements, net of accumulated
      amortization of $703 in 1999 and $396 in 1998                      2,527             1,292

   Other assets                                                            199                30
                                                                 ----------------- ------------------
  Total assets                                                      $  125,931        $   69,116
                                                                 ================= ==================


                                                   F-3




<PAGE>

                                                                             SEPTEMBER 30,

                                                                        1999               1998
                                                                 ----------------- ------------------
   LIABILITIES
   Current liabilities:
     Accounts payable                                               $    3,613        $    1,697
     Accrued liabilities                                                 3,179             2,512
     Amounts due for purchase of businesses                              2,134             2,117
     Income taxes payable                                                2,820                 -
   Unearned revenue                                                        149             1,272

   Floor plan and revolving line of credit payable                      68,558            25,148

     Current portion of notes payable and other
           short-term obligations                                          989               957
   Total current liabilities                                            81,442            33,703

                                    Notes payable, less current          6,897             4,980
                                    portion




   Stockholders' equity:
     Serial preferred stock, $.01 par value, 1,000,000 shares
       authorized, no shares issued or outstanding                           -                 -
     Common stock, $.01 par value, 50,000,000 shares authorized,
       4,326,022 and 4,285,063 issued and outstanding at
       September 30, 1999 and 1998, respectively                            43                43
     Paid-in capital                                                    14,402            13,816
     Retained earnings                                                  23,147            16,574
                                                                 ----------------- ------------------
   Total stockholders' equity                                           37,592            30,433
                                                                 ----------------- ------------------
   Total liabilities and stockholders' equity                       $  125,931        $   69,116
                                                                 ================= ==================
</TABLE>


See accompanying notes.


                                                        F-4




<PAGE>

<TABLE>
<CAPTION>

                                   Travis Boats & Motors, Inc. and Subsidiaries

                                         Consolidated Statements of Income
                                         (in thousands, except share data)




                                                                    Year ended September 30,
                                                        1999                1998                1997
                                                 --------------------------------------------------------
<S>                                              <C>                 <C>                   <C>
   Net sales                                     $     182,259       $     131,740         $      91,309
   Cost of sales                                       135,625              96,839                67,354
                                                 --------------------------------------------------------
   Gross profit                                         46,634              34,901                23,955

   Selling, general and administrative expenses         30,978              22,630                15,562
   Depreciation and amortization                         1,967               1,260                   913
                                                 --------------------------------------------------------
                                                        32,945              23,890                16,475
   Operating income                                     13,689              11,011                 7,480
   Interest expense                                     (3,808)             (2,310)               (1,354)
   Gain on sale of asset                                   457                 ---                   ---
   Other income (expenses)                                  80                  80                   (12)
                                                 ---------------------------------------------------------

   Income before income taxes                           10,419               8,781                 6,114
   Income taxes                                          3,846               3,218                 2,132
                                                 ---------------------------------------------------------

   Net income                                    $       6,573       $       5,563         $       3,982

   Earnings per share:
     Basic                                       $           1.53    $           1.31      $            .96
                                                 =================== =================== ===================
     Diluted                                     $           1.49    $           1.26      $            .94
                                                 =================== =================== ===================

See accompanying notes.

</TABLE>

                                                        F-5



<PAGE>


<TABLE>
<CAPTION>

                                   Travis Boats & Motors, Inc. and Subsidiaries

                                  Consolidated Statements of Stockholders' Equity
                                                  (in thousands)


                                                  Common Stock
                                                  ------------            Paid-in        Retained
                                              Shares        Amount        Capital        Earnings          Total
                                             ------------------------------------------------------------------------


<S>                                           <C>            <C>          <C>            <C>              <C>
   Balance at September 30, 1996              4,137          $41          $11,527        $ 7,029          $18,597

     Issuance of common stock in purchase
     of business                                 88            1            1,477              -            1,478
     Net income                                   -            -                -          3,982            3,982
                                             ------------------------------------------------------------------------
   Balance at September 30, 1997              4,225           42           13,004         11,011           24,057

     Issuance of common stock                    40            1              462              -              463
     Issuance of common stock in purchase
     of business                                 20            -              350              -              350
      Net income                                  -            -                -          5,563            5,563
                                             ------------------------------------------------------------------------
   Balance at September 30, 1998              4,285           43           13,816         16,574           30,433

   Issuance of common stock                       5            -               61              -               61
     Issuance of common stock in purchase
     of business                                 36            -              525              -              525
      Net income                                  -            -                -          6,573            6,573
                                             ------------------------------------------------------------------------
   Balance at September 30, 1999              4,326          $43          $14,402        $23,147          $37,592
                                             ------------------------------------------------------------------------

</TABLE>

See accompanying notes.


                                       F-6




<PAGE>


<TABLE>
<CAPTION>

                                    Travis Boats & Motors, Inc. and Subsidiaries

                                       Consolidated Statements of Cash Flows
                                                  (in thousands)



                                                                   Year ended September 30,
                                                          1999                1998                1997
                                                       --------------------------------------------------
<S>                                                    <C>                 <C>                 <C>
   OPERATING ACTIVITIES
   Net income                                          $   6,573           $   5,563           $   3,982
   Adjustments to reconcile net income to net
   cash provided by (used in) operating
   activities:
       Depreciation                                        1,359                 807                 780
       Amortization                                          608                 453                 133
       Changes in operating assets and
       liabilities:
           Accounts receivable                            (7,315)               (978)             (1,995)
           Prepaid assets                                   (132)               (674)               (244)
           Inventories                                   (17,990)               (416)             (5,166)
           Other assets                                     (123)                105                 (18)
           Deferred tax asset                                 19                  17                 (92)
           Accounts payable                                  925                (570)              1,453
           Accrued liabilities                               667                (689)                884
           Prepaid income taxes/ income tax
               payable                                     3,245              (1,506)                128
           Unearned revenue                               (1,123)                750                (653)
                                                       ---------------------------------------------------
   Net cash provided by (used in) operating
        activities                                       (13,287)              2,862                (808)

   INVESTING ACTIVITIES
   Purchase of businesses                                 (6,101)             (4,522)             (3,477)
   Purchase of property and equipment                     (7,725)             (4,301)             (2,256)
   Net cash used in investing activities                 (13,826)             (8,823)             (5,733)




                                       F-7





<PAGE>
                                   Travis Boats & Motors, Inc. and Subsidiaries

                                 Consolidated Statements of Cash Flows (continued)

                                                                   Year ended September 30,
                                                          1999                1998                1997
                                                       --------------------------------------------------
   FINANCING ACTIVITIES

   Net increase (decrease) in notes payable and
        other short-term obligations                   $26,559             $4,300              $10,824
   Net proceeds from issuance of common
        stock                                               61                463                    -
                                                       --------------------------------------------------
   Net cash provided by financing activities            26,620              4,763               10,824

   Change in cash and cash equivalents                    (493)            (1,198)               4,283
   Cash and cash equivalents, beginning of
        year                                             4,618              5,816                1,533
                                                       --------------------------------------------------
   Cash and cash equivalents, end of year              $ 4,125             $4,618              $ 5,816
                                                       ==================================================


SUPPLEMENTAL DISCLOSURE OF DEBT AND STOCK ISSUED IN PURCHASE OF BUSINESSES
--------------------------------------------------------------------------

                                                                   Year ended September 30,
                                                          1999                1998                1997
                                                       --------------------------------------------------

Debt issued in purchase of businesses                  $ 2,082             $  124              $1,250
Stock issued in purchase of businesses                     525                350               1,478


SEE ACCOMPANYING NOTES.

</TABLE>
                                       F-8

<PAGE>

                  TRAVIS BOATS & MOTORS, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.       SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

DESCRIPTION OF BUSINESS AND CONSOLIDATION

Travis  Boats & Motors,  Inc.  (the  "Company")  based in  Austin,  Texas,  is a
retailer of boats,  motors,  trailers and related  watersport  accessories.  The
Company  operates  locations in the southern  region of the United  States.  The
consolidated  financial  statements  include the accounts of the Company and its
wholly-owned   subsidiaries.   All   significant   intercompany   accounts   and
transactions have been eliminated in consolidation.

USE OF ESTIMATES

The preparation of financial  statements in conformity  with generally  accepted
accounting principles requires management to make estimates and assumptions that
affect the amounts reported in the financial  statements and accompanying notes.
Actual results could differ from those estimates.

COMPREHENSIVE INCOME

In September 1997, the FASB issued SFAS No. 130, Reporting  Comprehensive Income
("SFAS No. 130").  SFAS No. 130 establishes  standards for reporting and display
of  comprehensive  income and its  components  in a full set of  general-purpose
financial statements.  The adoption of SFAS No. 130 by the Company had no impact
as the Company had no items of comprehensive income for all years presented.

SEGMENTS

Effective  October 1, 1998, the Company adopted SFAS No. 131,  Disclosures about
Segments of an Enterprise and Related Information ("SFAS No. 131"). SFAS No. 131
establishes  standards  for the way  that  public  business  enterprises  report
information about operating segments in annual financial statements and requires
that those enterprises  report selected  information about operating segments in
interim financial  reports issued to stockholders.  The adoption of SFAS No. 131
did not have a significant  effect on the  disclosure of segment  information as
the Company  continues  to consider its  business  activities  to be in a single
segment.

REVENUE RECOGNITION

The Company records  revenue on sales of boats,  motors,  trailers,  and related
watersport  parts and accessories upon delivery to or acceptance by the customer
at the closing of the  transaction.  The Company  records  revenues from service
operations at the time repair or service work is completed.

The Company refers  customers to various  financial  institutions  to assist the
customers  in obtaining  financing  for their boat  purchase.  For each loan the
financial institutions are able to fund as a result of the referral, the Company
receives  a fee.  Revenue  earned by the  Company  for  financing  referrals  is
recognized when the related boat sale is recognized. The fee amount is generally
based on the loan  amount and the term.  Generally,  the  Company  must return a
portion of the fee amount  received if the customer  repays the loan or defaults
on the loan  within a period of up to 180 days from the initial  loan date.  The
Company records such refunds,  which are not significant,  in the month in which
they occur.
                                       F-9


<PAGE>
1.       SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)


Revenues from insurance and extended service agreements are recorded at the time
such agreements are executed which  generally  coincides with the date the boat,
motor and trailer is  delivered.  Such  revenues are not deferred and  amortized
over the life of the insurance or extended service agreement  policies,  because
the  Company   sells  such   policies  on  behalf  of  third  party  vendors  or
administrators. At the time of sale, the Company records a fee for insurance and
extended  service  agreements  net  of the  related  fee  that  is  paid  to the
third-party  vendors or  administrators.  Since its  inception,  the Company has
incurred no additional costs related to insurance or extended service agreements
beyond the fees paid to the third party vendors at the time of sale.

CASH AND CASH EQUIVALENTS

For  purposes  of the  statement  of  cash  flows,  the  Company  considers  all
investments  with  maturities  of ninety days or less when  purchased to be cash
equivalents.

ACCOUNTS RECEIVABLE

Accounts  receivable  potentially expose the Company to concentrations of credit
risk,  as defined by the  Statement of Financial  Accounting  Standards No. 105,
Disclosure of Information  about Financial  Instruments with  Off-Balance  Sheet
Risk and Financial  Instruments  with  Concentrations  of Credit Risk.  Accounts
receivable  consist  primarily of amounts due from financial  institutions  upon
sales contract funding and amounts due from vendors under rebate
programs.

The accounts  receivable balances consisted of the following as of September 30,
1999 and 1998 (in thousands):

                                            1999                       1998
                                       ------------               --------------

Trade receivables...............          $ 7,793                     $3,708
Amounts due from manufacturers..            4,593                      1,139
Other receivables...............              282                         46
Allowance for doubtful accounts.             (247)                         0
                                      -------------              ---------------
                                          $12,421                     $4,893
                                      =============              ===============

Activity in the  Company's  allowance  for  doubtful  accounts is as follows (in
thousands):


Balance at September 30, 1996..........           $        -0-
         Additions charged to costs
         and expenses..................                    -0-
         Write-offs of uncollectible
         accounts......................                    -0-
                                         ---------------------------------------
Balance at September 30, 1997..........                    -0-
         Additions charged to costs
         and expenses..................                    -0-
         Write-offs of uncollectible
         accounts......................                    -0-
                                         ---------------------------------------
Balance at September 30, 1998..........                    -0-
         Additions charged to costs
         and expenses..................                    247
         Write-offs of uncollectible
         accounts......................                    -0-
                                         ---------------------------------------
Balance at September 30, 1999..........           $        247
                                                           ===


                                      F-10

<PAGE>
1.       SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

INVENTORIES

Inventories consist of boats, motors,  trailers and related watersport parts and
accessories.  Inventories  are carried at the lower of cost or market.  Cost for
boats,  motors and  trailers is  determined  using the  specific  identification
method.  Cost for parts  and  accessories  is  determined  using  the  first-in,
first-out method.

Inventories  consisted of the  following  as of September  30, 1999 and 1998 (in
thousands):

                                            1999                       1998
                                        ------------               -----------

New boats, motors and trailers........     $63,874                    $32,089
Used boats, motors, and trailers......       4,932                      2,559
Parts, accessories and other..........       7,273                      4,559
Valuation allowance...................        (379)                      (273)
                                        ------------               ------------
                                           $75,700                    $38,934
                                        ============               ============

Activity  in the  Company's  inventory  valuation  allowance  is as follows  (in
thousands):

Balance at September 30, 1996..........           $        -0-
         Additions charged to costs
         and expenses..................                     74
         Write-offs of uncollectible
         accounts......................                    -0-
                                         ---------------------------------------
Balance at September 30, 1997..........                     74
         Additions charged to costs
         and expenses..................                    199
         Write-offs of uncollectible
         accounts......................                    -0-
                                         ---------------------------------------
Balance at September 30, 1998..........                    273
         Additions charged to costs
         and expenses..................                    106
         Write-offs of uncollectible
         accounts......................                    -0-
                                         ---------------------------------------
Balance at September 30, 1999..........           $        379
                                                           ===

PROPERTY AND EQUIPMENT

Property and  equipment  are stated at cost.  Provisions  for  depreciation  are
determined using double-declining balance and straight-line methods. The Company
uses estimated useful lives of 5 - 20 years for buildings and improvements and 5
- 10 years for furniture, fixtures and equipment.

INCOME TAXES

In  accordance  with  Statement  of  Financial  Accounting  Standards  No.  109,
Accounting  for Income Taxes,  deferred  income taxes are provided for temporary
differences  between the basis of assets and liabilities for financial reporting
purposes and for income tax return purposes.

INTANGIBLE ASSETS

Amounts  assigned  to  intangible  assets  are  amortized  over  the  respective
estimated useful lives using the straight-line method as follows:


Noncompete agreements                         5 to 7 years
Goodwill                                      15 to 25 years

Statement of Financial  Accounting  Standards  (SFAS) No. 121,  "Accounting  for
Impairment  of  Long-Lived  Assets and  Long-Lived  Assets to be  Disposed  of,"
requires that  long-lived  assets be reviewed for impairment  whenever events or
changes  in  circumstances  indicate  that the  carrying  amount of the asset in
question may not be recoverable.  The Company groups  long-lived assets by store
location for  purposes of assessing  the  recoverability  of carrying  value and
measuring potential impairment.

                                      F-11

<PAGE>

1.       SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

INTANGIBLE ASSETS (CONTINUED)

To date, the Company has not experienced any events or changes in  circumstances
that indicate that the  recoverability  of the carrying  amount of an individual
store should be assessed.

Goodwill and other  intangible  assets are recorded at the lower of  unamortized
cost or fair  value.  Management  reviews  the  valuation  and  amortization  of
intangible assets on a periodic basis,  taking into  consideration any events or
circumstances  which  might  result in  diminished  fair  value.  If this review
indicates  goodwill will not be recoverable,  as determined by the  undiscounted
cash flows of the entity acquired over the remaining  amortization  period,  the
carrying  value of the  goodwill is reduced by the  estimated  shortfall of cash
flows.

PRE-OPENING COSTS

Pre-opening costs related to new store locations are expensed as incurred.

SIGNIFICANT SUPPLIERS

The Company  purchased  substantially  all of its new outboard motors for use on
its Travis Edition boat packages from two outboard motor manufacturers, Outboard
Marine  Corporation  and the Brunswick  Corporation,  in fiscal 1999, and from a
single outboard motor manufacturer, Outboard Marine Corporation, in fiscal years
1998 and 1997.

Approximately 12%, 18% and 34% of the Company's net purchases (including product
purchased in  acquisitions)  in fiscal 1999, 1998 and 1997,  respectively,  were
manufactured by boat suppliers with common ownership.

ADVERTISING COSTS

Advertising  costs are expensed as incurred and were  approximately  $1,192,000,
$643,000 and $829,000 during the fiscal years ended September 30, 1999, 1998 and
1997, respectively.

NOTES PAYABLE AND OTHER SHORT-TERM OBLIGATIONS

Interest expense on notes payable and other  short-term  obligations is recorded
as incurred.  The Company  receives  interest  assistance  on certain floor plan
payables  from various boat and motor  manufacturers  to subsidize  the carrying
cost of inventory.  Accordingly, no interest expense is recorded during portions
of the year on floor plan payables  which include  noninterest  bearing  payment
terms.  Discontinuance  of the interest  assistance  payments could result in an
increase in interest expense.

UNEARNED REVENUE

Amounts  received  from  vendors  in  connection  with  agreed  upon  rebates or
discounts  are  deferred  until the  related  product is sold and such rebate or
discount is earned.
                                      F-12

<PAGE>


1.       SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

NET INCOME PER COMMON SHARE

<TABLE>
<CAPTION>


                                                                       YEAR ENDED SEPTEMBER 30,
                                                                  1999           1998           1997
                                                            -------------- -------------- ---------------
                                                                (IN THOUSANDS, EXCEPT PER SHARE DATA)
<S>                                                            <C>            <C>              <C>
Numerator:
   Net income                                                  $ 6,573        $ 5,563          $ 3,982
                                                            =============================================
Denominator:
     Denominator for basic earnings per share - weighted
     average shares                                              4,291          4,250            4,137
Effect of dilutive securities:
   Employee stock options                                          118            168              115
                                                            ---------------------------------------------
   Denominator for diluted earnings per share - adjusted
   weighted average shares and assumed conversions               4,409          4,418            4,252
                                                            =============================================

Basic earnings per share                                       $  1.53        $  1.31          $   .96
Diluted earnings per share                                     $  1.49        $  1.26          $   .94
</TABLE>


Options to purchase 97,500 shares of common stock with a weighted average strike
price of $21.18 and a weighted average outstanding  remaining life of 7.79 years
were excluded from the computation of diluted EPS for the period ended September
30, 1999 as the option's  exercise  prices were greater than the average  market
price of the  Company's  common stock  during the fiscal year then ended.  There
were no option  shares  excluded  from the  computation  of diluted  EPS for the
fiscal years ended September 30, 1998 and 1997.

2. NOTES PAYABLE AND OTHER SHORT-TERM OBLIGATIONS

Notes  payable and other  short-term  obligations  consist of the  following (in
thousands):


                                                       SEPTEMBER 30,
                                                  1999               1998
                                            ----------------- ------------------

   Floor plans payable to commercial
     finance companies under revolving
     line of credit agreements with
     interest ranging from 0% to prime
     minus 1.00% (7.25% at September 30,
     1999) with no stated maturity date.      $   35,408        $   10,148
   Note payable to bank under a $55
     million revolving line of credit
     agreement with interest ranging
     from prime minus 1.00% to prime
     minus 1.60% (7.25% at September 30,
     1999), due January 31, 2000.                 33,150            15,000
   Notes payable (see terms below)                 7,886             5,937
                                            ----------------- ------------------
   Total notes payable and other
     short-term obligations                       76,444            31,085
   Less current portion                          (69,547)          (26,105)
                                            ----------------- ------------------
   Total notes payable, less current
     portion                                 $     6,897        $    4,980
                                            ================= ==================


                                      F-13

<PAGE>

2. NOTES PAYABLE AND OTHER SHORT-TERM OBLIGATIONS (CONTINUED)

The floor  plans  payable  are  secured  by  specific  boat,  motor and  trailer
inventory,  as well as general  security  filings on all  inventory  and certain
equipment.  The floor plans  payable to  commercial  finance  companies  include
noninterest  bearing  payment terms for part of the calendar year (typically the
months of August  through May). As of September 30, 1999 and 1998, the amount of
noninterest bearing floor plans payable to finance companies were $9,896,260 and
$3,488,888, respectively.

Floor plans payable of certain of the Company's  subsidiaries  are guaranteed by
the Company.  The Company is  significantly  limited as to annual  dividends for
preferred and common stock.


As of  September  30, 1999,  the Company was in  violation of a financial  ratio
covenant  related to its $55 million  revolving line of credit  agreement with a
bank.  The  Company,  however,  has  obtained  written  waivers from each of the
lenders under the revolving line of credit  regarding  this  technical  default.
Management of the Company is currently  negotiating  revolving credit facilities
with two  commercial  financial  companies in the amount of  approximately  $125
million.  The new credit  facilities would be used to refinance the expiring $55
million line of credit and to provide additional borrowing capacity.


The weighted average interest rate on floor plan payables and revolving lines of
credit  outstanding  as of  September  30,  1999 and  1998  was  5.5% and  4.8%,
respectively.

Notes payable consist of the following:



                                                        SEPTEMBER 30,
                                                  1999               1998
                                            ----------------- ------------------
                                                       (IN THOUSANDS)

   Mortgage notes payable to various banks,
     organizations and individuals under
     deeds of trust with interest ranging
     from 6.0% to prime plus 1%, due in
     monthly principal and interest
     installments ranging from $1,493 to
     $10,289, maturing beginning in
     February 2000.                               $6,045            $3,480

   Notes payable to various banks, a
     corporation and an individual for
     vehicles, equipment and leasehold
     improvements with interest ranging
     from 7.1% to 8.5%, due in principal
     installments ranging from $486,
     including interest, monthly
     to $62,500, plus interest
     quarterly, maturing beginning in
     February 2000.                                  757             1,030

   Acquisition related notes payable to
     individuals and corporations with
     interest ranging from 8.25% to 8.75%,
     due in monthly principal and interest
     installments ranging from $291 to
     $12,770, maturing beginning in
     February 2000.                                1,084             1,427
                                            ----------------- ------------------
   Total notes payable                            $7,886            $5,937
                                            ================= ==================


Certain notes payable are secured by assets of the Company including  inventory,
accounts  receivable,  equipment,  leasehold  improvements,  vehicles,  land and
buildings.  Notes payable of certain of its  subsidiaries  are guaranteed by the
Company.

                                      F-14





<PAGE>





2. NOTES PAYABLE AND OTHER SHORT-TERM OBLIGATIONS (CONTINUED)

At September 30, 1999 and 1998,  approximately  84.5% and 64.8%  respectively of
the Company's notes payable and other  short-term  obligations  bear interest at
variable  rates,  generally  tied to a reference  rate such as the prime rate of
interest of certain banks.  Accordingly,  the Company believes that the carrying
amount of the notes payables and other short term obligations approximates their
fair value.

Interest paid approximates interest expense during 1999, 1998 and 1997.

Aggregate annual maturities  required on notes payable at September 30, 1999 are
as follows (in thousands):



Year ending
September 30
------------

     2000                                                $     989
     2001                                                      990
     2002                                                    1,437
     2003                                                      661
     2004                                                      603
     Thereafter                                              3,206
                                                       -----------
                                                         $   7,886
                                                       ===========

3. LEASES

The Company leases various  facilities under operating leases.  Rent expense was
$2,031,000  in 1999,  $1,188,000  in 1998 and $546,000 in 1997.  Generally,  the
leases  provide for renewals for various  periods at  stipulated  rates.  Future
minimum  rentals due under  noncancelable  leases are as follows for each of the
years ending September 30 (in thousands):



2000                                 $ 2,489
2001                                   2,427
2002                                   1,813
2003                                   1,275
2004                                     886
Thereafter                             1,902
                                   ---------
                                     $10,792
                                   =========

4. ACQUISITIONS

The Company has made  various  acquisitions  during the three year period  ended
September 30, 1999. All of the  acquisitions  were asset  purchases  (except for
Adventure  Marine and Shelby Marine,  which were stock  purchases) and have been
accounted for using the purchase method of accounting.  The operating results of
the  companies  acquired  have  been  included  in  the  consolidated  financial
statements  from  the  respective  date  of  acquisition.  The  assets  acquired
generally  include  boat,  motor and trailer  inventory,  parts and  accessories
inventory  and to a lesser  extent,  property  and  equipment.  A summary of the
Company's acquisitions follows:

                                      F-15


<PAGE>


4. ACQUISITIONS (CONTINUED)





<TABLE>
<CAPTION>

                                                                  Non-compete
                              Date of     Purchase    Tangible     Agreements     Cash    Liabilities   Notes     Stock
     NAME OF COMPANY        Acquisition    Price     Net Assets   and Goodwill    Paid      Assumed     Issued   Issued
     ---------------       ------------- ----------  ----------- -------------- --------- ------------ -------- ---------
                                                              (In Thousands)
                                                   ------------------------------------

<S>                            <C>        <C>         <C>            <C>         <C>        <C>       <C>        <C>
FISCAL 1999
-----------
Amlin, Inc. dba Magic          01/99      $1,639      $6,019         $1,090      $1,639     $5,470    $   ---    $  ---
Marine
Sportsman's Haven              01/99       1,748       2,624            514       1,098      1,390        650       ---
Pier 68 Marina                 02/99         738       2,218            562         408      2,043        329       ---
DSA Marine Sales & Service     04/99       2,147       4,798          1,597       2,147      4,248        ---       ---
dba The Boatworks
Shelby Marine, Inc.            06/99       1,334       3,426          1,050         809      3,142        ---       525
The New 3 Seas, Inc.           09/99       1,103       1,419          1,100           0      1,416      1,103       ---

FISCAL 1998
-----------
Southeastern Marine            11/97      $1,730      $1,390         $  280      $1,606     $    -     $  124    $    -
Worthen Marine                 12/97         287         142            145         287          -          -         -
HnR Marine                     04/98         359         359              -         359          -          -         -
Moore's Marine                 05/98         777         376            401         777          -          -         -
Rodgers Marine                 09/98         677       2,093            350         327      1,766          -       350

FISCAL 1997
-----------
North Alabama Watersports      10/96         892         687            205         812          -         80         -
Tri-Lakes Marine               11/96       1,243       1,892            644         643      1,937        600         -
Bent's Marine                  02/97       1,519         840            679       1,064          -        455         -
McLeod Marine                  08/97         958         730            228         958          -          -         -
Adventure Marine               09/97       3,023       5,536          2,690       1,430      5,203        115     1,478

</TABLE>

Pursuant to the purchase terms of The New 3 Three Seas acquisition,  the Company
has agreed to issue 86,005  shares of its common  stock valued at  approximately
$1.1  million  upon the  registration  of such  shares with the  Securities  and
Exchange Commission pursuant to the Securities Act of 1933. The shares of common
stock were not  registered  as of the  fiscal  year ended  September  30,  1999.
Accordingly,  the Company has classified the amount payable of $1.1 million as a
liability due to The New 3 Seas, Inc.

The Company  determines the valuation of the  securities  issued in its purchase
transactions in accordance with Emerging Issues Task Force 95-19.

The  Company's  unaudited   consolidated  results  of  operations  assuming  all
acquisitions  accounted for under the purchase method of accounting had occurred
on October 1, 1998 are as follows  for the fiscal years ended September 30, 1999
and 1998:



                                      F-16


<PAGE>


                                         YEAR ENDED SEPTEMBER 30,
                                   1999                           1998
Net Sales                     $206,994,000                    $197,365,000
Net Income                       7,667,972                      $7,192,790
Diluted earnings per share            1.74                            1.63


The unaudited pro forma  results of operations  are presented for  informational
purposes  only  pursuant  to APB 16 and may not  necessarily  reflect the future
results of operations  of the Company or what results of  operations  would have
been had the Company owned and operated the business as of October 1, 1998.


5. INCOME TAXES

Deferred  income  taxes  reflect  the net tax effects of  temporary  differences
between the carrying  amounts of assets and liabilities for financial  reporting
purposes and the amounts used for income tax purposes. Significant components of
the Company's deferred tax liabilities and assets are as follows (in thousands):


                                                        September 30,
                                                  1999               1998
                                            ----------------- ------------------

   Deferred tax assets:
     Book over tax depreciation                 $ 121             $  96
     Accrued salaries and wages                   136               180
                                            ----------------- ------------------
   Total deferred tax assets                      257               276
   Valuation allowance for deferred
     tax assets                                     -                 -
   Net deferred tax assets                      $ 257             $ 276
                                            ================= ==================

Significant  components  of the  provisions  for income taxes are as follows (in
thousands):


                                           Year ended September 30,
                                 1999                1998                1997
                             ---------------------------------------------------

Current expense:
         Federal                   $3,424             $2,791             $1,993
         State                        403                410                231
Total current expense               3,827              3,201              2,224

Deferred expense (benefit):
         Federal                       19                 17                (83)
         State                          -                  -                 (9)
                             ---------------------------------------------------
Total deferred expense
     (benefit)                         19                 17                (92)
                             ---------------------------------------------------
Total provision for income
     taxes                         $3,846             $3,218             $2,132
                             ===================================================

The differences  between the effective tax rate and the U.S.  federal  statutory
rate of 34% are reconciled as follows (in thousands):


                            Year ended September 30,

                               1999                1998                1997
                          --------------      --------------      --------------

   Income tax expense
     at the federal
     statutory rate          $3,542              $2,986              $2,079
   State income taxes           403                 410                 223
   Other                        (99)               (178)               (170)
                         -------------------------------------------------------
                             $3,846              $3,218              $2,132
                         =======================================================

                                      F-17


<PAGE>


5.INCOME TAXES (CONTINUED)

Income taxes paid were  approximately  $1,563,000;  $4,207,000 and $1,900,000 in
the fiscal years ended September 30, 1999, 1998 and 1997, respectively.

6.STOCKHOLDERS' EQUITY

In March 1995, the Company  granted  options to purchase shares of the Company's
common stock to certain officers of the Company which vest over five years.

In  December  1995,  the Company  adopted an  Incentive  Stock  Option Plan (the
"Plan") which  originally  provided for the issuance of up to 200,000  shares of
the  Company's  common  stock.  The Plan  provides  for the  granting of options
(incentive  stock  options  or  non-statutory),  stock  appreciation  rights and
restricted  shares  to  officers,  key  employees,  non-employee  directors  and
consultants to purchase shares of the Company's common stock.

In March 1998,  the  Company  amended its 1995  Incentive  Stock  Option Plan to
provide that the  aggregate  number of shares of common stock that may be issued
or transferred  pursuant to awards under the Plan shall  increase  automatically
effective on April 1 of each  calendar year for the duration of the Plan so that
the aggregate number of shares of common stock that may be issued or transferred
pursuant to awards  under the Plan is equal to 10% of the total number of shares
of common stock issued and outstanding on April 1 of that year.  Notwithstanding
this provision,  the amendment  provides that (i) the aggregate number of shares
of common stock that may be issued or  transferred  pursuant to awards under the
Plan  shall not be reduced  in the event the total  number of shares  issued and
outstanding  decreases in any year,  or (ii) the  aggregate  number of shares of
common stock that may be issued or transferred pursuant to awards under the Plan
shall not exceed  1,000,000 shares of common stock over the life of the Plan. As
of September  30,  1999,  the Company was eligible to issue or transfer up to an
additional 109,525 shares of common stock pursuant to the Plan.

Total option activity for the years ended September 30, 1999, 1998 and 1997:

<TABLE>
<CAPTION>

                                                                                                Weighted
                                                                              Range of           Average
                                                          Number of       Exercise Prices       Exercise
                                                            Shares                                Price
                                                      -------------------------------------- ---------------
<S>                                                        <C>             <C>                   <C>
   Outstanding at September 30, 1996                       231,533         $5.25 - $9.00         $ 6.83
     Granted                                                38,500         $10.00-$17.00         $12.37
     Exercised                                                   -                     -              -
     Forfeited                                              (5,000)        $        9.00         $ 9.00
                                                      ------------------
   Outstanding at September 30, 1997                       265,033         $5.25 -$17.00         $ 7.58
     Granted                                               100,750         $15.00-$22.50         $20.83
     Exercised                                             (36,200)        $5.25-$13.125         $ 6.42
     Forfeited                                              (6,300)        $9.00-$13.125         $12.76
                                                      ------------------
   Outstanding at September 30, 1998                       323,281         $5.25 -$22.50         $11.75
     Granted                                                 7,500         $14.50-$20.00         $18.60
     Exercised                                              (5,000)        $9.00                 $ 9.00
     Forfeited                                              (6,500)        $13.125-$19.00        $17.93
                                                      ------------------
   Outstanding at September 30, 1999                       319,281         $5.25 -$22.50         $11.84
                                                      ==================

   Exercisable at September 30, 1999                       173,083         $5.25- $22.50         $ 8.82
                                                      ==================

   Options available for grant at September 30, 1999       109,525
                                                      ==================

   Common stock reserved for issuance at September
   30, 1999                                                428,806
                                                      ==================
</TABLE>

                                      F-18




<PAGE>


6.       STOCKHOLDERS' EQUITY (CONTINUED)

The weighted-average remaining contractual life of options at September 30, 1999
and 1998 is approximately 6.94 and 7.91 years, respectively.

Options outstanding at September 30, 1999, are comprised of the following:
<TABLE>
<CAPTION>

                                    OUTSTANDING                                         EXERCISABLE
                                    -----------                                         -----------
                                                             Weighted Avg.
                        Range of          Weighted Avg.       Contractual          Number of        Weighted Avg.
OPTIONS             Exercises Prices    Exercises Prices     Life in Years          Options         Exercise Price
----------------- ---------------------------------------- ------------------ ---------------------------------------
<S>                   <C>                     <C>                 <C>              <C>                  <C>
108,865                   $5.25               $5.25               5.62              82,092               $5.25
75,666                    $9.00               $9.00               6.74              57,666               $9.00
35,250                $9.50-$15.00            $12.19              7.70              13,825              $12.10
99,500                $16.13-$22.50           $21.03              8.19              19,500              $21.03
---------------------------------------------------------------------------------------------------------------------
319,281               $5.25-$22.50            $11.84              6.94             173,083               $8.82
---------------------------------------------------------------------------------------------------------------------
</TABLE>

The Company has elected to follow Accounting Principles Board No. 25, Accounting
for  Stock  Issued  to  Employees  (APB  25),  and  related  interpretations  in
accounting  for its employee  stock options  because,  as discussed  below,  the
alternative  fair value  accounting  provided for under FASB  Statement No. 123,
Accounting for Stock- Based Compensation (Statement 123), requires use of option
valuation  models  that were not  developed  for use in valuing  employee  stock
options.  Under APB 25,  because the exercise  price of the  Company's  employee
stock options equals market price of the underlying  stock on the date of grant,
no compensation expense is recognized.

The  assumptions  used by the  Company to  determine  the pro forma  information
regarding net income and earnings per share required by Statement No. 123 are as
follows using the Black-Sholes model:


                                          YEAR ENDED SEPTEMBER 30,
                                   1999              1998              1997
                            ----------------  ----------------  ----------------

     Risk-free interest rate       6.00%             6.00%             6.42%
     Dividend yield                   0%                0%                0%
     Expected life               5 years           5 years           5 years
     Volatility                    39.3%             39.3%             34.3%

     The pro forma amounts under Statement No. 123 are as follows:


                                          YEAR ENDED SEPTEMBER 30,

                                  1999              1998              1997
                            ----------------  ----------------  ----------------

     Net income as reported
      (000's)                   $6,572            $5,563            $3,982
     Pro forma net income
      (000's)                   $6,467            $5,467            $3,968
     Diluted EPS - as
      reported                  $    1.49         $    1.26         $     .94
     Pro forma - Diluted EPS    $    1.47         $    1.24         $     .93

7. COMMITMENTS AND CONTINGENCIES

The  Company is  currently  involved  in several  matters  regarding  pending or
threatened  litigation  in the normal  course of business.  Management  does not
expect the  ultimate  resolution  of these  matters  to have a material  adverse
effect on the Company's consolidated financial statements.

                                      F-19



<PAGE>


8.       BENEFIT PLAN

In January 1995, the Company adopted a 401(k) retirement plan which is available
to all full-time  employees.  The Company may, in its discretion,  make matching
contributions  which the Company,  in its  discretion,  determines  from year to
year.  The Company's  expenses  related to the plan were not  significant in the
years ended September 30, 1999, 1998 and 1997.

9.       NEW ACCOUNTING PRONOUNCEMENTS

In  September  1998,  the FASB issued SFAS No. 133,  Accounting  for  Derivative
Instruments and Hedging  Activities  ("SFAS No. 133").  SFAS No. 133 establishes
accounting and reporting  standards  requiring that every derivative  instrument
(including  certain  derivative  instruments  embedded  in other  contracts)  be
recorded in the balance  sheet as either an asset or  liability  measured at its
fair value. SFAS No. 133 requires that changes in the derivative's fair value be
recognized  currently in earnings unless specific hedge accounting  criteria are
met. Special  accounting for qualifying  hedges allows a derivative's  gains and
losses to offset related results on the hedged item in the income statement, and
requires  that a company  must  formally  document,  designate,  and  assess the
effectiveness  of  transactions  that receive hedge  accounting.  Because of the
Company's minimal use of derivative financial  instruments,  management does not
anticipate  that the adoption of SFAS No. 133 will have a material impact on the
Company's consolidated results of operations, financial position or cash flows.

In April 1998, the Accounting  Standards Executive Committee issued Statement of
Position ("SOP") 98-5,  Reporting on the Costs of Start-Up  Activities.  The SOP
requires costs of start-up  activities and organization  costs to be expensed as
incurred,  and is effective for fiscal years  beginning after December 15, 1998.
The effects of adoption  must be  reported as a cumulative  change in accounting
principle.  The Company expects that the impact of adoption will not be material
to its financial position or results of operations.

10.      SUBSEQUENT EVENTS

In October 1999, the Company  entered into a sale leaseback  transaction  with a
leasing company covering  substantially all of its motor vehicle fleet.  Vehicle
leases  generally  range from 24 to 60 months in term and  provide  for  various
residual balances of approximately 20% of the initial lease amount.

In  October  1999,  the  Company  entered  into a real  estate  term loan with a
commercial  bank  providing  for up to $4 million of financing for the Company's
land and buildings in Dallas and San Antonio, Texas and Atlanta, Georgia.

In November 1999,  the Company  completed the  registration  of 86,005 shares of
common  stock on Form S-3 with the  Securities  and Exchange  Commission  issued
pursuant to the acquisition of The New Three Seas, Inc.
(September 1999).

In November 1999, the Company entered into a transaction  with a finance company
providing for up to $5.0 million of financing for the Company's used boat, motor
and trailer inventory pursuant to a specific borrowing base formula.



                                      F-20