Fountain Powerboat Reports Continuing Growth
13 February 2000
WASHINGTON, N.C.--Fountain Powerboat Industries, Inc., announces sales and earnings for the second quarter ending December 31, 1999.
Sales for the quarter were up by 16.1% to $15.4 million from sales of $13.3 for the same quarter in the previous Fiscal year. Operating income for the second quarter of Fiscal 2000 increased dramatically to $1.0 million or 6.3% from $.2 million or 1.4% (before the affect of the $2.4 million strategic charge) for the same quarter in the previous Fiscal year. Net income was $.4 million or $.081 per share for the second quarter of Fiscal year 2000 as compared to a loss of $(1.2 million) or $(.252) per share for the same quarter of the previous Fiscal year.
Gross profit was $3.2 million or 20.6% for the second quarter of Fiscal 2000 as compared to $3.0 million or 22.8% for the same quarter of the previous Fiscal year. The drop in margin was primarily due to the mix of boats in the quarter. Expenses are down 22% for the quarter and down 15% for the year to date, primarily due to reductions in promotional racing expenditures. On a year to date basis, sales are ahead of the prior year not withstanding the considerable loss of sales due to the hurricanes in September.
During the second quarter of Fiscal 2000, the Company has resolved the majority of the property damage claim with its insurance carrier. The Company in its opinion has not received a timely and reasonable resolution of its business interruption claim. In late December the Company filed suit against its insurance carrier. Subsequently, in early February, the Company and its insurance carrier have initiated meaningful work to resolve the claim and the insurance carrier has provided an advance toward the resolution of the claims. The full effect of the final settlement cannot be reasonable estimated and will be recorded in the future when collected.
Following are comparative Condensed Consolidated Statements of Income and Condensed Consolidated Balance Sheets:
FOUNTAIN POWERBOAT INDUSTRIES, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
ASSETS
December 31, June 30,
1999 1999
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CURRENT ASSETS:
Cash and cash equivalents $ 842,867 $ 2,217,301
Accounts receivable, net 2,085,129 1,576,712
Inventories 8,628,767 7,307,890
Prepaid expenses 802,943 761,486
Current deferred tax assets 2,192,135 2,221,499
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Total Current Assets 14,551,841 14,081,888
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PROPERTY, PLANT AND EQUIPMENT 36,775,371 36,209,584
Less: Accumulated depreciation (18,197,612) (17,144,314)
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18,577,759 19,065,270
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OTHER ASSETS 845,199 780,802
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TOTAL ASSETS $33,974,799 $ 33,930,960
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FOUNTAIN POWERBOAT INDUSTRIES, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
LIABILITIES AND STOCKHOLDERS' EQUITY
(Continued)
December 31, June 30,
1999 1999
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CURRENT LIABILITIES:
Current maturities - long-term debt $ 2,464,535 $ 2,464,535
Current maturities - capital lease 11,788 11,788
Accounts payable 5,506,791 3,961,516
Accrued expenses 1,920,482 2,231,061
Dealer territory service accrual 1,804,916 2,037,170
Customer deposits 555,314 687,560
Allowance for boat repurchases 200,000 200,000
Reserve for warranty expense 590,000 590,000
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Total Current Liabilities 13,053,826 12,183,630
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LONG-TERM DEBT, LESS CURRENT PORTION 9,287,947 10,138,395
CAPITAL LEASE, less current maturities 76,939 76,939
DEFERRED TAX LIABILITY 912,116 899,680
COMMITMENTS AND CONTINGENCIES (NOTE 7) - -
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Total Liabilities 23,330,828 23,298,644
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STOCKHOLDERS' EQUITY:
Common stock, $.01 par value,
200,000,000 shares authorized,
4,732,608 shares issued 47,026 47,026
Capital in excess of par value 10,303,640 10,303,640
Retained earnings - accumulated 403,753 392,098
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10,754,719 10,743,064
Less: Treasury stock (110,748) (110,748)
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Total Stockholders' Equity 10,643,971 10,632,316
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$ 33,974,799 $ 33,930,960
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FOUNTAIN POWERBOAT INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
For The Three Months For The Six Months
Ended December 31 Ended December 31
1999 1998 1999 1998
NET SALES $ 15,384,022 $13,254,267 $26,179,190 $25,676,494
COST OF SALES 12,213,163 10,238,921 20,973,104 20,077,832
Gross Profit 3,170,859 3,015,346 5,206,086 5,598,662
EXPENSES
Selling Expense 1,502,305 2,151,203 3,215,685 4,094,385
General &
Administrative 694,530 676,984 1,416,033 1,318,616
Total Expenses 2,196,835 2,830,700 4,631,718 5,417,434
OPERATING INCOME BEFORE
STRATEGIC CHARGE 974,024 184,649 574,368 181,228
STRATEGIC CHARGE - (2,440,000) - (2,440,000)
OPERATING INCOME (LOSS) 974,024 (2,255,353) 574,368 (2,258,772)
NON-OPERTNG INCOME/(EXPENSE)
Other Income 10,867 59,088 39,853 54,996
Interest Expense (244,095) (264,474) (527,486) (519,631)
Interest Expense -
Related party - (5,097) - (13,933)
Other Expense (33,280) - (33,280) -
INCOME (LOSS) BEFORE TAX 707,516 (2,465,837) 53,455 (2,737,340)
CURRENT TAX EXPENSE - - - -
DEFERRED TAXES (BENEFIT) 326,103 (1,283,120) 41,800 (1,356,628)
NET INCOME (LOSS) 381,413 (1,182,717) 11,655 (1,380,712)
EARNINGS (LOSS) PER SHARE .081 (.252) .002 (.294)
WEIGHTED AVERAGE
SHARES OUTSTANDING 4,732,608 4,702,608 4,732,608 4,702,608
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DILUTED EARNINGS PER SHARE N/A N/A N/A N/A
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DILUTED WEIGHTED AVERAGE
SHARES OUTSTANDING N/A N/A N/A N/A
FOUNTAIN POWERBOAT INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Six Months Ended December 31,
1999 1998
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income (Loss) $ 11,655 $ (1,380,712)
Adjustments to reconcile
net income (loss) to net
Cash provided by operating activities:
Depreciation Expense 1,053,298 1,192,402
Strategic Charge
(Increase) decrease in
accounts receiveable (508,416) 2,246,338
(Increase) decrease in inventory (1,320,877) (1,293,310)
(Increase) decrease in prepaid
expenses (41,457) (514,422)
Increase (decrease) in accounts
payable 1,545,274 (587,933)
Increase (decrease) in accrued
expenses (258,528) 165,262
Increase (decrease) in dealer
service territory
Accrual (232,254) 18,317
Increase (decrease) in customer
deposits (132,247) (147,983)
Net deferred taxes (242,504) (1,356,629)
Net liabilities of discontinued
operations - (93,612)
Net cash Provided by (Used in)
Operating Activities $ 106,198 $ 687,718
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CASH FLOWS FROM INVESTING ACTIVITIES:
(Purchase) sale of certificates of
deposit, net
Construction of molds, plugs and
other tooling (83,033) (398,078)
Purchase of property plant and
equipment (482,754) (1,786,043)
(Increase) in other assets (64,397) (71,524)
Net Cash Provided by (Used)
Investing Activities $ (630,184) $ (2,255,645)
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CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from long-term debt - 4,000,000
Repayment of long-term debt (850,447) (813,816)
Repayment of long-term debt
- related party - (257,911)
Proceeds from issuance of
common stock - -
Net Cash Provided by (Used in)
Financing Activities $ (850,447) $ 2,928,273
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Net increase (decrease) in cash $ (1,374,433) $ 1,360,346
Cash at beginning of year 2,217,300 1,376,984
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Cash at end of period $ 842,867 $ 2,737,330