SOURCE: Fountain Powerboat Industries

May 15, 2008 10:00 ET

Fountain Powerboats Reports Fiscal 2008 Third Quarter and Nine-Month Financial Results

WASHINGTON, NC--(Marketwire - May 15, 2008) - Fountain Powerboat Industries, Inc. (AMEX: FPB), a leading manufacturer of high performance sport boats, fish boats and express cruisers, today announced the results of its fiscal 2008 third quarter and nine-month period, ended March 31, 2008.

"Sales for the quarter reflect continuing demand for our larger sport and fish boats, as well as our express cruiser line," commented Fountain Chairman and CEO Reginald M. Fountain, Jr. "While international sales have increased by approximately 48 percent, domestic sales of our smaller sport boats and fish boats have declined as the target market for the products is being significantly affected by increasing fuel and food prices, the mortgage crisis and loss of consumer confidence in the economy."

"We continue to introduce new and improved products as we implement production efficiencies and reduce expenses in response to our lower production expectations," stated Fountain President David Knight. "We are carefully managing our dealer inventory, which at 31 weeks of production, is at a five-year low."

Third Quarter Financial Results

--  Net sales for the third quarter of fiscal 2008 were $14,222,639, a
    decrease of approximately 13.7 percent, when compared to net sales of
    $16,475,688 for the comparable quarter of fiscal 2007. Sales for the
    quarter decreased as a result of the continued weak retail market.
    
--  Gross profit for the quarter was $1,101,194, with a gross profit
    margin of approximately 7.7 percent, versus a gross profit of $1,374,322,
    with a gross profit margin of 8.3 percent, for the third quarter of fiscal
    2007. The decrease in gross margin is primarily due to reduced fixed
    absorption because of lower sales volume.
    
--  Operating loss for the quarter was $1,692,338, as compared to an
    operating loss of $1,347,621 for the third quarter of fiscal 2007.
    
--  Net loss for the quarter was $1,966,473, or net loss per share of
    $0.45 on a basic and diluted basis, versus a net loss of $3,873,524, or net
    loss per share of $0.80 on a basic and diluted basis, for the third quarter
    of fiscal 2007. The third quarter of the prior year included a deferred tax
    expense.
    

Nine-Month Financial Results

--  Net sales for the first nine months of fiscal 2008, ended March 31,
    2008, were $47,468,106, a decrease of approximately 3 percent, when
    compared to net sales of $48,922,327 for the first nine months of fiscal
    2007.
    
--  Gross profit was $6,022,050, with a gross profit margin of
    approximately 12.7 percent, versus a gross profit of $5,374,177, with a
    gross profit margin of 11 percent, for the first nine months of fiscal
    2007. The improvement in gross margin is primarily attributable to improved
    manufacturing efficiencies and increased selling prices.
    
--  Operating loss was $1,500,929, compared to an operating loss of
    $3,401,427 for the first nine months of fiscal 2007.
    
--  Net loss was $2,458,133, or a loss per share of $0.53 on a basic and
    diluted basis, compared to a net loss of $5,565,673, or a loss per share of
    $1.15 on a basic and diluted basis, for the first nine months of fiscal
    2007.
    

About Fountain Powerboats, Inc.

Fountain Powerboats, Inc., a subsidiary of Fountain Powerboat Industries, Inc., has its executive offices and manufacturing facilities along the Pamlico River in Beaufort County, North Carolina. The company designs, manufactures and sells offshore sport boats, sport fishing boats and express cruisers that target the segment of the recreational power boat market where speed, performance, safety and quality are the main criteria for purchase. These recreational boats are based upon an innovative, award-winning design enabling world class performance while using standard reliable power. There are currently 12 buildings located on 65 acres totaling over 237,000 square feet accommodating 40 to 45 boats in various stages of construction at any one time. The present plant site can also accommodate up to 300,000 square feet of additional manufacturing space. The land and buildings are wholly owned by Fountain Powerboat Industries, Inc. and its subsidiary, Fountain Powerboats.

SAFE HARBOR FOR FORWARD-LOOKING STATEMENTS:

Except for the historical information contained herein, this press release contains forward-looking statements, including statements containing the words "planned," "expects," "believes," "strategy," "opportunity," "anticipates" and similar words. Such forward-looking statements are subject to known and unknown risks, uncertainties or other factors that may cause the company's actual results to be materially different from historical results or any results expressed or implied by such forward-looking statements. We assume no obligation to update any forward-looking statements to reflect events or circumstances arising after the date hereof. The potential risks and uncertainties which could cause actual growth and results to differ materially include, but are not limited to, customer acceptance of the company's services, products and fee structures, the success of the company's brand development efforts, the volatile and competitive nature of the industry, and changes in domestic and international market conditions, and foreign exchange rates. Further information on the factors and risks that could affect Fountain Powerboat Industries, Inc.'s business, financial condition and results of operations are included under the "Risk Factors" or "Factors Affecting Our Operating Results" sections of Fountain Powerboat Industries, Inc. public filings with the Securities and Exchange Commission, available at (http://www.sec.gov).

           FOUNTAIN POWERBOAT INDUSTRIES, INC. AND SUBSIDIARIES
              UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

                                                  March 31,     June 30,
                                                    2008          2007
                                                ------------  ------------
ASSETS
CURRENT ASSETS:
      Cash and cash equivalents                 $  1,492,543  $  2,379,383
      Accounts receivable, net                     3,759,060     3,688,986
      Inventories                                  9,153,029     6,645,213
      Prepaid expenses                               561,164       668,237
                                                ------------  ------------

         Total Current Assets                     14,965,796    13,381,819
Property, Plant & Equipment                       50,458,014    49,533,443
    Less: Accumulated Depreciation               (34,854,523)  (33,104,217)
                                                ------------  ------------

                                                  15,603,491    16,429,226
                                                ------------  ------------

CASH SURRENDER VALUE LIFE INSURANCE                3,140,535     2,951,010
OTHER ASSETS                                         679,807       654,890
                                                ------------  ------------

TOTAL ASSETS                                    $ 34,389,629  $ 33,416,945
                                                ============  ============




           FOUNTAIN POWERBOAT INDUSTRIES, INC. AND SUBSIDIARIES
              UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

                                                 March 31,     June 30,
                                                   2008          2007
                                               ------------  -------------
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES
    Current maturities - long-term debt        $ 14,182,826  $     759,290
    Notes payable                                 4,168,877        799,333
    Accounts payable - trade                      3,643,345      2,846,303
    Accrued expenses and other liabilities        1,810,749      1,092,908
    Dealer incentives                             5,904,384      6,342,467
    Customer deposits                               945,000        879,102
    Allowance for boat repurchases                  144,487         64,124
    Warranty reserve                                916,728        941,928
                                               ------------  -------------

      Total Current Liabilities                  31,716,396     13,725,455
OTHER LONG-TERM LIABILITIES                           4,828          4,828
LONG-TERM DEBT, less current maturities           2,900,000     15,969,407
DEFERRED TAX LIABILITY                                5,954         80,896
                                               ------------  -------------

      Total Liabilities                          34,627,178     29,780,586
STOCKHOLDERS’ EQUITY
    Common stock, $.01 par value, 200,000,000
     shares authorized, 4,844,275 shares issued
     as of March 31, 2008 and June 30, 2007          48,442         48,442
    Additional paid-in capital                   10,574,753     10,574,753
    Accumulated deficit                          (9,463,133)    (7,005,001)
    Less: Treasury stock, at cost, 483,091
     shares as of March 31, 2008 and 15,000
     shares as of June 30, 2007                    (981,224)      (110,748)

    Accumulated other comprehensive income from
     interest rate swap                            (416,387)       128,913
                                               ------------  -------------

      Total Stockholders’ Equity (Deficit)         (237,549)     3,636,359
                                               ------------  -------------

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY     $ 34,389,629  $  33,416,945
                                               ============  =============




           FOUNTAIN POWERBOAT INDUSTRIES, INC. AND SUBSIDIARIES
        UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

                                                For the Three Months Ended
                                                --------------------------
                                                  March 31,     March 31,
                                                     2008          2007
                                                ------------  ------------
NET SALES                                       $ 14,222,639  $ 16,475,688
COST OF SALES                                     13,121,445    15,101,366
                                                ------------  ------------

    Gross Profit                                   1,101,194     1,374,322
                                                ------------  ------------

EXPENSES:
    Selling                                        1,886,839     1,869,486
    General and administrative                       906,693       852,457
                                                ------------  ------------

    Total Expenses                                 2,793,532     2,721,943
                                                ------------  ------------

OPERATING LOSS                                    (1,692,338)   (1,347,621)
                                                ------------  ------------

NON-OPERATING INCOME (EXPENSE):
    Other                                             (7,379)           26
    Interest                                        (266,756)     (293,095)
                                                ------------  ------------

      Total Non-operating Expense                   (274,135)     (293,069)
                                                ------------  ------------

LOSS BEFORE INCOME TAXES                          (1,966,473)   (1,640,690)
INCOME TAX EXPENSE                                        --     2,232,834
NET LOSS                                        $ (1,966,473) $ (3,873,524)
                                                ============  ============

BASIC EARNINGS (LOSS) PER SHARE                 $       (.45) $       (.80)
                                                ============  ============

WEIGHTED AVERAGE SHARES OUTSTANDING                4,361,758     4,835,164
                                                ============  ============

DILUTED EARNINGS (LOSS) PER SHARE               $       (.45) $       (.80)
                                                ============  ============

WEIGHTED AVERAGE SHARES OUTSTANDING ASSUMING
 DILUTION                                          4,361,758     4,835,164
                                                ============  ============




           FOUNTAIN POWERBOAT INDUSTRIES, INC. AND SUBSIDIARIES
              UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF
                                OPERATIONS

                                                 For the Nine Months Ended
                                                --------------------------
                                                  March 31,     March 31,
                                                     2008          2007
                                                ------------  ------------
NET SALES                                       $ 47,468,106  $ 48,922,327
COST OF SALES                                     41,446,056    43,548,150
                                                ------------  ------------

    Gross Profit                                   6,022,050     5,374,177
                                                ------------  ------------

EXPENSES:
    Selling expenses                               4,782,095     6,045,455
    General and administrative expenses            2,740,884     2,730,149
                                                ------------  ------------

    Total Expenses                                 7,522,979     8,775,604
                                                ------------  ------------

OPERATING LOSS                                    (1,500,929)   (3,401,427)
                                                ------------  ------------

NON-OPERATING EXPENSE:
    Other                                           (124,810)      (49,985)
    Interest                                        (832,394)     (830,534)
                                                ------------  ------------

      Total Non-operating Expense                   (957,204)     (880,519)
                                                ------------  ------------

LOSS BEFORE INCOME TAXES                          (2,458,133)   (4,281,946)
INCOME TAX EXPENSE                                        --     1,283,727
NET LOSS                                        $ (2,458,133) $ (5,565,673)
                                                ============  ============

BASIC EARNINGS (LOSS) PER SHARE                 $       (.53) $      (1.15)
                                                ============  ============

WEIGHTED AVERAGE SHARES OUTSTANDING                4,661,981     4,834,567
                                                ============  ============

DILUTED EARNINGS (LOSS) PER SHARE               $       (.53) $      (1.15)
                                                ============  ============

WEIGHTED AVERAGE SHARES OUTSTANDING ASSUMING
 DILUTION                                          4,661,981     4,834,567
                                                ============  ============

Contact Information