FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
( X ) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended December 31, 1996
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
For Quarter Ended Commission File Number
0-14712
Fountain Powerboat Industries, Inc.
(Exact name of registrant as specified in its charter)
Nevada 56-1774895
(State or other jurisdiction (I.R.S. Identification No.)
of incorporation or
organization)
Whichard's Beach Road
P.O. Drawer 457
Washington, NC 27889
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number,including area code: (919)975-2000
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
---- ----
Indicate the number of shares outstanding of each of the
issurer's classes of common stock as of the latest practicable
date.
Class Outstanding at January 31,1997
Common stock, $.01 par value 3,147,572 shares
<PAGE>
FOUNTAIN POWERBOAT INDUSTRIES, INC. AND SUBSIDIARY
INDEX
PART I. Financial Information. Page No.
Review Report of Independent Certified
Public Accountants........................... 3
Consolidated Balance Sheets - Assets,
December 31, 1996 and June 30, 1996.......... 4
Consolidated Balance Sheets - Liabilities &
Shareholders' Equity, December 31, 1996
and June 30, 1996............................ 5
Consolidated Statements of Income -
Three and Six Months Ended December 31, 1996
and December 31, 1995........................ 6
Consolidated Statements of Cash Flows -
Six Months Ended December 31, 1996
and December 31, 1995........................ 7 - 8
Notes to Consolidated Financial Statements...... 9 - 13
Management's Discussion and Analysis of
Results of Operations and
Financial Condition..........................14 - 16
PART II. Other Information.
Item 6. Exhibits and Reports on Form 8 and Form 8-K..... 16
Signature....................................... 17
-2-
<PAGE>
PRITCHETT, SILER & HARDY, P.C.
430 EAST 400 SOUTH
SALT LAKE CITY, UTAH 84111
To the Board of Directors
FOUNTAIN POWERBOAT INDUSTRIES, INC.
Washington, North Carolina
We have reviewed the accompanying consolidated balance sheet of
Fountain Powerboat Industries, Inc. as of December 31, 1996, and
the related consolidated statements of income and cash flows for
the three and six months then ended. All information included
in these financial statements is the representation of the
management of Fountain Powerboat Industries, Inc.
We conducted our review in accordance with standards established
by the American Institute of Certified Public Accountants. A
review of interim financial information consists principally of
applying analytical procedures to financial data and making
inquiries of Company personnel responsible for financial and
accounting matters. It is substantially less in scope than an
audit conducted in accordance with generally accepted auditing
standards, the objective of which is the expression of an opinion
regarding the financial statements taken as a whole. Accordingly,
we do not express such an opinion.
Based on our review, we are not aware of any material modifications
that should be made to the consolidated fiancial statements referred
to above for them to be in conformity with generally accepted
accounting principles.
/s/ Pritchett, Siler & Hardy, P.C.
PRITCHETT, SILER & HARDY, P.C.
January 30, 1997
<PAGE>
PART I: Financial Information.
FOUNTAIN POWERBOAT INDUSTRIES, INC. AND SUBSIDIARY
Consolidated Balance Sheets
*** Assets ***
(Unaudited - See Accountants' Review Report)
December 31, June 30,
Assets 1996 1996
- ------------------------------------------ ------------ ------------
Current assets:
Cash................................... $ 3,160,468 $ 1,360,619
Accounts receivable, net (Note 2)...... 2,096,708 2,853,684
Inventories (Note 3)................... 5,520,901 4,009,195
Prepaid expenses....................... 333,243 154,843
------------ ------------
Total current assets................... $ 11,111,320 $ 8,378,341
------------ ------------
Property, plant, and equipment............ $ 22,725,688 $ 20,674,326
Less: Accumulated depreciation........... (11,557,083) (10,746,140)
------------ ------------
$ 11,168,605 $ 9,928,186
------------ ------------
Other assets.............................. $ 611,001 $ 191,577
------------ ------------
Total assets.............................. $ 22,890,926 $ 18,498,104
============ ============
See accompanying Notes to Consolidated Financial Statements.
-4-
<PAGE>
FOUNTAIN POWERBOAT INDUSTRIES, INC. AND SUBSIDIARY
Consolidated Balance Sheets
*** Liabilities & Shareholders' Equity ***
(Unaudited - See Accountants' Review Report)
December 31, June 30,
Liabilities & Shareholders' Equity 1996 1996
- ------------------------------------------ ------------ ------------
Current liabilities:
Notes payable.......................... $ 0 $ 1,173,089
Current portion/long-term debt......... 462,834 767,254
Accounts payable....................... 1,477,461 1,713,760
Accrued expenses....................... 2,034,878 1,599,602
Accrued income taxes................... 446,015 80,804
Customer deposits...................... 81,666 228,608
Allowance for boat repurchases (Note 5) 207,359 207,359
Reserve for warranty expenses (Note 5) 410,000 410,000
------------ ------------
Total current liabilities.............. $ 5,120,213 $ 6,180,476
------------ ------------
Long-term debt, less current
portion................................ $ 7,414,880 $ 5,433,184
------------ ------------
Total liabilities......................... $ 12,535,093 $ 11,613,660
------------ ------------
Commitments and contingencies (Notes 6 & 11)
Shareholders' equity:
Common stock, $.01 par value,
200,000,000 shares authorized,
3,129,072 shares issued (Note 9).... $ 31,291 $ 30,291
Capital in excess of par value......... 10,420,200 9,297,450
Retained earnings / (deficit).......... 15,090 (2,332,549)
------------ ------------
$ 10,466,581 $ 6,995,192
Less: Treasury stock...................... 110,748 110,748
------------ ------------
Total Shareholders' equity................ $ 10,355,833 $ 6,884,444
------------ ------------
Total liabilities & shareholders' equity.. $ 22,890,926 $ 18,498,104
============ ============
See accompanying Notes to Consolidated Financial Statements.
-5-
<PAGE>
FOUNTAIN POWERBOAT INDUSTRIES, INC. AND SUBSIDIARY
Consolidated Statements of Income
(Unaudited - See Accountants' Review Report)
Three Months Ended Six Months Ended
December 31, December 31,
----------------------- ------------------------
1996 1995 1996 1995
----------- ---------- ----------- -----------
Net sales (Note 4).......... $12,505,545 $ 9,287,467 $24,825,918 $18,286,991
Cost of sales............... 9,126,971 7,303,494 18,200,230 14,657,114
----------- ----------- ----------- -----------
Gross margin................ $ 3,378,574 $ 1,983,973 $ 6,625,688 $ 3,629,877
Selling expense............. 1,236,704 1,101,516 2,220,748 1,879,167
General & admin. expense.... 552,928 434,869 1,218,908 758,662
General & admin. expense -
related parties (Note 7) 86,781 35,814 170,613 72,354
----------- ----------- ----------- -----------
Operating income/(loss)..... $ 1,502,161 $ 411,774 $ 3,015,419 $ 919,694
----------- ----------- ----------- -----------
Other (income)/expense:
Interest expense......... $ 166,707 $ 204,179 $ 325,760 $ 403,632
Other sundry, net........ (42,007) (150,046) (127,871) (272,908)
Non-recurring gain....... 0 (800,000) 0 (800,000)
----------- ----------- ----------- -----------
$ 124,700 $ (745,867) $ 197,889 $ (669,276)
----------- ----------- ----------- -----------
Net income/(loss)
before income taxes...... $ 1,377,461 $ 1,157,641 $ 2,817,530 $ 1,588,970
Current tax expense/
(benefit) (Note 8)....... 365,211 0 469,891 0
Deferred tax expense/
(benefit) (Note 8)....... 0 0 0 0
----------- ----------- ----------- -----------
Net income.................. $ 1,012,250 $ 1,157,641 $ 2,347,639 $ 1,588,970
=========== =========== =========== ===========
Primary net income per share $ .30 $ .38 $ .72 $ .53
=========== =========== =========== ===========
Primary weighted average
shares outstanding...... 3,332,344 3,019,072 3,265,625 3,019,072
=========== =========== =========== ===========
Fully diluted earnings
per share (Note 10)...... $ .30 $ .38 $ .71 $ .53
=========== =========== =========== ==========
Fully diluted weighted avg.
shs. outstanding (Note 10 3,373,805 3,019,072 3,289,525 3,019,072
=========== =========== =========== ===========
See accompanying Notes to Consolidated Financial Statements.
-6-
<PAGE>
FOUNTAIN POWERBOAT INDUSTRIES, INC. AND SUBSIDIARY
Consolidated Statements of Cash Flows
(Unaudited - See Accountants' Review Report)
Six Months Ended
December 31,
--------------------------
1996 1995
Cash flows from operating activities: ------------ ------------
- -------------------------------------
Net income/(loss)................................ $ 2,347,639 $ 1,588,970
Adjustments to reconcile net income to net cash
provided/(used) by operating activities:
Depreciation and amortization................. 810,943 800,056
(Increase)/decrease in accounts receivable.... 756,976 117,172
(Increase)/decrease in inventory.............. (1,511,706) (172,163)
(Increase)/decrease in prepaid expenses....... (178,400) 1,334
(Increase)/decrease in other assets........... (419,424) (3,000)
Increase/(decrease) in accounts payable....... (239,174) (180,545)
Increase/(decrease) in accounts payable -
related parties........................... 0 2,431
Increase/(decrease) in accrued expenses....... 435,276 (69,433)
Increase/(decrease) in customer deposits...... (146,942) (137,118)
Increase/(decrease) in income taxes payable... 365,211 0
------------ ------------
Net cash provided/(used) by operating activities. $ 2,220,399 $ 1,947,704
------------ ------------
Cash fows from investing activities:
- ------------------------------------
Construction of molds, plugs, and other tooling.. $ (879,482) $ (350,640)
Purchases of property, plant, and equipment...... (1,171,880) (323,144)
------------ ------------
Net cash provided/(used) in investing activities. $ (2,051,362) $ (673,784)
------------ ------------
Cash flows from financing activities:
- -------------------------------------
Common stock issued.............................. $ 1,123,750 $ 0
Borrowing from G.E. Capital Corporation.......... 7,500,000 600,000
Repayment of long-term debt...................... (5,576,605) (2,473,702)
Note payable, revolving line of credit........... (1,416,333) 536,301
------------ ------------
Net cash provided/(used) in financing activities. $ 1,630,812 $ (1,337,401)
------------ ------------
(Continued)
-7-
<PAGE>
FOUNTAIN POWERBOAT INDUSTRIES, INC. AND SUBSIDIARY
Consolidated Statements of Cash Flows, Continued
(Unaudited - See Accountants' Review Report)
Six Months Ended
December 31,
--------------------------
1996 1995
------------ ------------
Net increase/(decrease) in cash..................... $ 1,799,849 $ (63,481)
Cash at beginning of the year....................... 1,360,619 490,807
------------ ------------
Cash at end of the period........................... $ 3,160,468 $ 427,326
============ ============
Supplemental disclosures of cash flow information:
- --------------------------------------------------
Cash paid during the period for:
Interest - unrelated parties.................... $ 325,760 $ 403,632
- related parties...................... 0 0
- capitalized.......................... 0 0
------------ ------------
$ 325,760 $ 403,632
============ ============
Income taxes..................................... $ 469,891 $ 0
============ ============
See accompanying Notes to Consolidated Financial Statements.
-8-
<PAGE>
FOUNTAIN POWERBOAT INDUSTRIES, INC. AND SUBSIDIARY
Notes to Consolidated Financial Statements
(Unaudited - See Accountants' Review Report)
1. Basis of Presentation.
Although these statements have been reviewed by our
independent auditors, they are unaudited. The statements reflect
all adjust-ments, in management's opinion, that are necessary to
present fairly the Company's financial position and results of
its operations for the interim periods presented. These
adjustments are, for the most part, of a normal, recurring
nature. It is suggested that this unaudited interim period
financial information be read in conjunction with the Company's
audited financial statements for the fiscal year ended June 30,
1996.
2. Accounts Receivable.
As of December 31, 1996, accounts receivable were $2,096,708
net of the allowance for bad debts of $27,000. This represents a
decrease of $756,976 from the $2,853,684 in net accounts
receivable recorded at June 30, 1996. Of the $2,096,708 balance
at December 31, 1996, $1,893,704 has subsequently been collected
as of February 5, 1997, and the remaining $203,004 is believed to
be fully collectible.
3. Inventories.
Inventories at December 31, 1996 and June 30, 1996 consisted
of the following:
December 31, June 30,
1996 1996
____________ ____________
Parts and supplies.................$ 3,621,218 $ 3,095,379
Work-in-process.................... 1,285,748 715,133
Finished goods..................... 733,935 260,269
Trailers........................... -0- 38,414
Obsolete inventory reserve......... (120,000) (100,000)
____________ _____________
Total..............................$ 5,520,901 $ 4,009,195
============= =============
-9-
<PAGE>
FOUNTAIN POWERBOAT INDUSTRIES, INC. AND SUBSIDIARY
Notes to Consolidated Financial Statements
(Unaudited - See Accountants' Review Report)
4. Revenue Recognition.
The Company recognizes revenue when its products are sold to
its dealers. At this time, all incidents of title pass to the
buyer and the Company receives payment, usually within two weeks,
for the products sold. Revenues are deferred only in instances
where there is a direct repurchase agreement with the dealer or
where the Company has agreed to pay floor plan interest for the
dealer for a period of time beyond the normal six month time
alloted by its published sales promotion program. At December
31, 1996 and June 30, 1996, there were no deferred sales or cost
of sales.
5. Allowance and Qualifying Accounts.
For the six months ended December 31, 1996, the Company
adjusted its allowance and qualifying accounts as follows:
Balance at Charged to Balance
Beginning Cost and Additions at End
of Period Expense (Deductions) of Period
_________ _________ __________ ________
Allowance for
boat repur-
chases $ 207,359 $ -0- $ -0- $ 207,359
Allowance for
doubtful
accounts 27,000 268 (268) 27,000
Allowance for
warranty
claims 410,000 201,874 (201,874) 410,000
Allowance for
inventory
values 100,000 20,000 -0- 120,000
---------- ---------- ---------- ---------
Total $ 744,359 $ 222,142 $(202,142) $ 764,359
========== ========== ========== =========
In management's opinion, the balances of the allowance and
qualifying accounts are adequate to provide for all reasonably
anticipated future losses.
-10-
<PAGE>
FOUNTAIN POWERBOAT INDUSTRIES, INC. AND SUBSIDIARY
Notes to Consolidated Financial Statements
(Unaudited - See Accountants' Review Report)
6. Commitments and Contingencies.
The Company makes available through third-party finance
companies floor plan financing for many of its dealers. Sales to
participating dealers are approved by the respective finance
companies. If a participating dealer does not satisfy its
obligations under the floor plan financing agreement in effect
with its commercial lender(s) and boats are subsequently
repossessed by the lender(s), then under certain circumstances
the Company may be required to repurchase the repossessed boats
if it has executed a repurchase agreement with the lender(s). At
December 31, 1996, the Company had a total contingent liability
to repurchase boats in the event of dealer defaults and if
repossessed by the commercial lenders amounting to approximately
$12,125,000. The Company has reserved for the reasonably
anticipated future losses it might incur upon the repossession
and repurchase of boats from commercial lenders. At December 31,
1996, the allowance for losses on boat repurchases was $207,359.
Additionally, the Company regularly pays a portion of
dealers' interest charges for floor plan financing for up to six
months. Such charges amounting to $396,000 for the first six
months of Fiscal 1997 are included in selling expenses in the
accompanying statement of operations.
7. Transactions with Related Parties.
The Company paid or accrued the following amounts for
services rendered or for interest on indebtedness to related
parties:
Six Months Ended
December 31,
________________________
1997 1996
__________ __________
Eastbrook Apartments - rentals $ 8,740 $ 6,470
R.M. Fountain, Jr. - aircraft
rental 161,872 65,884
----------- -----------
$ 170,612 $ 72,354
=========== ===========
At September 30, 1996 the Company had travel advances and
other receivables from employees in the amount of $19,391, of
which $720 was due from an officer of the Company.
-11-
<PAGE>
FOUNTAIN POWERBOAT INDUSTRIES, INC. AND SUBSIDIARY
Notes to Consolidated Financial Statements
(Unaudited - See Accountants' Review Report)
8. Income Taxes.
During fiscal 1997 the Company will use up all of its net
operating loss carryforwards. Consequently, for the six month
period ended December 31, 1996, the Company provided $469,891
for current income taxes.
9. Stock Options.
At December 31, 1996 there were stock options held by
officers and directors of the Company for 420,000 shares at
prices ranging from $5.375 to $7.000 per share. The Chief
Financial Officer exercised a portion of his incentive stock
options for 15,000 shares at $5.50 per share during the first
half and subsequently exercised an additional 2,500 shares at
$5.50. Subsequent to December 31, one of the Company's directors
assigned 4,000 of his options to another party and also exercised
his remaining 16,000 options at $5.375 per share.
10. Earnings Per Share.
The computations of primary and fully diluted earnings per
share amounts are based upon the weighted average number of
outstanding common shares during the periods, plus, when their
effect is dilutive, additional shares assuming the exercise of
certain vested stock options, reduced by the number of shares
which could be purchased from the proceeds from the exercise of
the stock options assuming they were exercised.
-12-
<PAGE>
11. Acquisition of Mach Performance, Inc.
The Company acquired Mach Performance, Inc. of Lake Hamilton,
Florida on October 8, 1996. The acquisition was effective as of
October 11, 1996. Mach Performance, Inc. principally
manufactures stainless steel propellers for Fountain Powerboats,
Inc. and many
other customers. Mach Performance, Inc. has foundry and
finishing capabilities that will permit it to manufacture other
products used by Fountain Powerboats, Inc., in addition to the
propellers. The purchase price was $1,041,250 and was paid to
the shareholders of Mach Performance, Inc. by the issuance of
85,000 new restricted common shares of Fountain Powerboat
Industries, Inc. common stock valued at its fair market price on
October 11, 1996, of $12.25 per share.
12. Debt Refinancing.
On December 31, 1996, the Company concluded a $10,000,000
credit agreement with General Electric Capital Corporation.
Under the terms of the new credit agreement, the Company
refinanced substantially all of its interest bearing debts and
will have additional funds made available to it for expansion.
Initially, the Company borrowed $7,500,000 from GE Capital
Services primarily to refinance existing debts. All of the
Company's prior interest bearing debts to MetLife Capital
Corporation, Deutsche Financial Services, GE Capital Corporation,
Branch Bank & Trust Leasing Corp., and other smaller creditors
were paid off entirely. Subsequently, the Company borrowed
another $1,000,000 to fund plant and equipment additions. An
additional $1,500,000 is available to the Company for further
expansion until December 31, 1997. The Company expects to have
borrowed the remaining $1,500,000 prior to December 31, 1997.
The interest rate on the indebtedness to GE Capital Services is
variable. There is a ten-year amortization of the debt with a
five-year call. The loan is secured by all of the Company's real
and personal property and by the Company's assignment of a
$1,000,000 key man life insurance policy.
******
-13-
<PAGE>
FOUNTAIN POWERBOAT INDUSTRIES, INC. AND SUBSIDIARY
Management's Discussion and Analysis of Results of Operations
and Financial Condition
Results of Operations.
Net income for the second quarter of Fiscal 1997 was
$1,012,250, or $.30 per share. This compares to net income
amounting to $1,157,641, or $.38 per share, for the first quarter
of the prior year. Net income for the first half of Fiscal 1997
was $2,347,639, or $.72 per share ($.71 per share fully-diluted).
This compares to net income amounting to $1,588,970, or $.53 per
share, for the first half of last year. Last year's net income
for the second quarter included an $800,000 or $.27 per share non-
recurring gain for the early repayment of a debt to a major
vendor.
Net sales were $12,505,545 for the second quarter of Fiscal
1997 as compared to $9,287,467 for the second quarter of the prior
year. Unit sales volume for the second quarter of Fiscal 1997
was 120 boats as compared to 110 boats for the second quarter of
last year. Net sales were $24,825,918 for the first half of
Fiscal 1997 as compared to $18,286,991 for the first half of last
year. Unit sales volume for the first half of Fiscal 1997 was
230 as compared to 207 for the first half of last year. The mix
of sales for the first half of Fiscal 1997 was more heavily
weighted with sales of high margin, large sport boats than it was
for the first half of last year.
For the second quarter of Fiscal 1997, the gross margin on
sales was $3,378,574 (27.02%) as compared to $1,983,973 (21.36%)
for the second quarter of the prior fiscal year. For the first
half of Fiscal 1997, the gross margin on sales was $6,625,688
(26.69%) as compared to $3,629,877 (19.85%) for the first half of
last year.
Selling expenses were $1,236,704 for the second quarter of
Fiscal 1997 as compared to $1,101,516 for the second quarter of
last year. Selling expenses were $2,220,748 for the first half
of Fiscal 1997 as compared to $1,879,167 for the first half of
last year. Most of the increase for Fiscal 1997 was in magazine
advertising and salaries and wages.
General and administrative expenses were $639,709 for the
second quarter of Fiscal 1997 as compared to $470,683 for the
second quarter of last year. General and administrative expenses
were $1,389,521 for the first half of Fiscal 1997 as compared to
$831,016 for the first half of last year. Most of the increase
for Fiscal 1997 was in salaries and wages, travel expense,
professional fees, and investor relations expense.
-14-
<PAGE>
Interest expense for the second quarter of Fiscal 1997 was
$166,707 as compared to $204,179 for the second quarter of last
year. Interest expense for the first half of Fiscal 1997 was
$325,760 as compared to $403,632 for the first half of last year.
The decrease in interest expense was due to lesser overall
indebtedness and to a lesser rate paid on indebtedness to a major
supplier.
Other non-operating income for the second quarter includes
consulting revenues from a vendor earned by Mr. Fountain and
assigned to the Company amounting to $65,000. This compares to
consulting revenues amounting to $146,679 for the second quarter
of last year. Consulting revenues for the first half of Fiscal
1997 were $130,000 as compared to $272,235 for the first half of
last year. The decrease is from renegotiation of Mr. Fountain's
consulting contract with the vendor.
As previously noted, other non-operating income for the
prior year includes an $800,000 or $.27 per share non-recurring
gain for the early repayment of a debt to a major vendor.
Financial Condition.
The Company's cash flows for the first half of Fiscal 1997
are summarized as follows:
Net cash provided by operating activities...$ 2,220,399
" " used in investing activities....... (2,051,362)
" " provided by financing activities... 1,630,812
-----------
Net increase in cash........................$ 1,799,849
===========
This net increase compared to a $63,481 net decrease for the
first half of the prior fiscal year.
Cash used in the first half of Fiscal 1997 to acquire
additional property, plant, and equipment (investing activity)
amounted to $2,051,362 of which $879,482 was for plugs, molds,
and other product tooling.
On December 31, 1996, the Company concluded a $10,000,000
credit agreement with General Electric Capital Corporation.
Under the terms of the new credit agreement, the Company
refinanced substantially all of its interest bearing debts and
will have additional funds made available to it for expansion.
Initially,
-15-
<PAGE>
the Company borrowed $7,500,000 from GE Capital Services
primarily to refinance existing debts. All of the Company's
prior interest bearing debts to MetLife Capital Corporation,
Deutsche Financial Services, GE Capital Corporation, Branch Bank
& Trust Leasing Corp., and other smaller creditors were paid off
entirely.
Subsequently, the Company borrowed another $1,000,000 from GE
Capital Services to fund plant and equipment additions. An
additional $1,500,000 is available to the Company for further
expansion until December 31, 1997. The Company expects to have
borrowed the remaining $1,500,000 prior to December 31, 1997.
The interest rate on the indebtedness to GE Capital Services is
variable. There is a ten-year amortization of the debt with a
five-year call. The loan is secured by all of the Company's real
and personal property and by the Company's assignment of a
$1,000,000 key man life insurance policy.
For the remainder of Fiscal 1997 and beyond, in addition to
the foregoing borrowing from GE Capital Services, the Company
expects to generate sufficient cash from operating activities in
order to meet its needs and obligations. Management believes
that the Company's sales and production volume will continue to
grow with a commensurate increase in net earnings and cash flow.
Most of the Company's cash resources will be used to maintain and
improve its plant and equipment, for new product tooling, and to
repay existing indebtedness. The Company does not expect to pay
any dividends to shareholders for the forseeable future.
Cautionary Statement for Purposes of "Safe Harbor" Under the
Private Securities Reform Act of 1995.
The Company may from time to time make forward-looking
statements, including statements projecting, forecasting, or
estimating the Company's performance and industry trends. The
achievement of the projections, forecasts, or estimates contained
in these statements is subject to certain risks and
uncertainties, and actual results and events may differ
materially from those projected, forecasted, or estimated.
The applicable risks and uncertainties include general
economic and industry conditions that affect all businesses, as
well as, matters that are specific to the Company and the markets
it serves. For example, the achievement of projections,
forecasts, or estimates contained in the Company's forward-
looking statements may be impacted by national and international
economic conditions; compliance with governmental laws and
regulations; accidents and acts of God; and all of the general
risks associated with doing business.
-16-
<PAGE>
Risks that are specific to the Company and its markets
include but are not limited to compliance with increasingly
stringent environmental laws and regulations; the cyclical nature
of the industry; competition in pricing and new product
development from larger companies with substantial resources; the
concentration of
a substantial percentage of the Company's sales with a few major
customers, the loss of, or change in demand from, any of which
could have a material impact upon the Company; labor relations at
the Company and at its customers and suppliers; and the Company's
single-source supply and just-in-time inventory strategies for
some critical boat components, including high performance
engines, which could adversely affect production if a single-
source supplier is unable for any reason to meet the Company's
requirements on a timely basis.
PART II. Other Information.
ITEM 6: Exhibits and Reports on Form 8 and Form 8-K.
(a) No Amendments on Form 8 were filed by the
Registrant during the first nine months of Fiscal
1996.
(b) No Current Reports on Form 8-K were filed by the
Registrant during the first nine months of Fiscal
1996.
-17-
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act
of 1934, Registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
FOUNTAIN POWERBOAT INDUSTRIES, INC.
(Registrant)
By: /s/ Allan L. Krehbiel Date: February 5, 1997
Allan L. Krehbiel
Vice President, Chief Financial
Officer, and Designated Principal
Accounting Officer
-18-
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-END> DEC-31-1996
<CASH> 3,160
<SECURITIES> 0
<RECEIVABLES> 2,124
<ALLOWANCES> 27
<INVENTORY> 5,521
<CURRENT-ASSETS> 11,111
<PP&E> 22,726
<DEPRECIATION> 11,557
<TOTAL-ASSETS> 22,891
<CURRENT-LIABILITIES> 5,120
<BONDS> 0
<COMMON> 31
0
0
<OTHER-SE> 10,325
<TOTAL-LIABILITY-AND-EQUITY> 22,891
<SALES> 24,826
<TOTAL-REVENUES> 24,826
<CGS> 18,200
<TOTAL-COSTS> 18,200
<OTHER-EXPENSES> 3,610
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 326
<INCOME-PRETAX> 2,818
<INCOME-TAX> 470
<INCOME-CONTINUING> 2,347
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,347
<EPS-PRIMARY> .72
<EPS-DILUTED> .71
</TABLE>
