FOUNTAIN POWERBOAT INDUSTRIES, INC.
Post Office Drawer 457
1653 Whichard's Beach Road
Washington, North Carolina 27889
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
NOTICE is hereby given that the Annual Meeting of Shareholders of
Fountain Powerboat Industries, Inc. (the "Company") will be held at
Cliff's Convention Center located on U.S. Highway 17 Chocowinity, North
Carolina, at 10:00 a.m. on Wednesday, February 7, 2001. The purposes of
the meeting are:
1. Election of Directors. To elect eight directors of the Company for
terms of one year or until their respective successors are duly
elected and qualified;
2. Proposal to Ratify Appointment of Independent Accountants. To
consider and vote on a proposal to ratify the appointment of
Pritchett, Siler & Hardy, P.A. as the Company's independent public
accountants for Fiscal 2001; and,
3. Other Business. To transact any other business properly presented
for action by shareholders at the Annual Meeting.
You are invited to attend the Annual Meeting in person. However, to
ensure the presence of a quorum, all shareholders, even if they plan to
attend, are requested to complete, sign and date the enclosed appointment
of proxy and return it promptly in the enclosed envelope. Returning a
signed appointment of proxy will not affect your right to revoke it or to
attend the Annual Meeting and vote in person.
By Order of the Board of Directors
Blanche C. Williams
Secretary
January 5, 2001
<PAGE>
FOUNTAIN POWERBOAT INDUSTRIES, INC.
1653 Whichard's Beach Road
Washington, North Carolina 27889
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
General
This Proxy Statement is being furnished to shareholders of Fountain
Powerboat Industries, Inc. (the "Company") in connection with the
solicitation by the Company's Board of Directors of appointments of proxy
in the enclosed form for use at the annual meeting of the Company's
shareholders (the "Annual Meeting") and at any adjournments of the
meeting. The Annual Meeting will be held at 10:00 a.m. on Wednesday,
February 7, 2001, at Cliff's Convention Center located on U.S. Highway 17
in Chocowinity, North Carolina. This Proxy Statement is being mailed to
the Company's shareholders on or about January 5, 2001.
Action to be Taken at Annual Meeting
At the Annual Meeting, the Company's shareholders will elect eight
directors for terms of one year (see "Proposal 1: Election of Directors")
and vote on a proposal to ratify the appointment of the Company's
independent public accountants for Fiscal 2001 (see "Proposal 2:
Ratification of Appointment of Independent Accountants"). Shareholders
also may consider any other business properly presented for action at the
Annual Meeting.
Appointment and Voting of Proxies
A form of "appointment of proxy" is included with this Proxy
Statement which names David A. Simmons, Carol J. Price, and Hannah R. Hale
(the "Proxies") as proxies to represent shareholders at the Annual
Meeting. The Board of Directors requests that shareholders sign and date
an appointment of proxy and return it to the Company in the envelope which
is enclosed for that purpose.
Shares of the Company's common stock held of record by a shareholder
who correctly executes an appointment of proxy and returns it to the
Company before the Annual Meeting will be voted by the Proxies according
to the shareholder's directions. If no directions are given by the
shareholder in the appointment of proxy, then those shares will be voted
by the Proxies "FOR" the election of each of the eight nominees for
director named in Proposal 1 below, and "FOR" ratification of the
appointment of the Company's independent public accountants for Fiscal
2001. If, at or before the time of the Annual Meeting, any nominee named
in Proposal 1 has become unavailable or unwilling to serve as a director
for any reason, the Proxies will have the discretion to vote for a
substitute nominee named by the Board of Directors. The Board of
Directors knows of no other matters that are intended to be presented for
action by shareholders at the Annual Meeting but, if any other matter is
properly presented for action by shareholders, the Proxies will be
authorized to vote shares represented by appointments of proxy according
to their best judgment.
Revocation of Appointment of Proxy
A shareholder who signs and returns an appointment of proxy may
revoke it at any time before the voting takes place at the Annual Meeting
by filing with the Company's Secretary either a written instrument
revoking it or an executed appointment of proxy dated as of a later date,
or by attending the Annual Meeting and announcing an intention to vote in
person.
Expenses and Method of Solicitation
The Company will pay all costs of the solicitation of appointments of
proxy for the Annual Meeting, including costs of preparing and mailing
this Proxy Statement.
<PAGE>
In addition to solicitation by mail, appointments of proxy may be solicited
personally or by telephone by directors, officers, and employees of the
Company and it's wholly owned subsidiary, Fountain Powerboats, Inc.
("Fountain").
Record Date
The Company's Board of Directors has set the close of business on
December 29, 2000, as the record date (the "Record Date") for determining
which shareholders are entitled to receive notice of and to vote at the
Annual Meeting. A person must be a shareholder of record on the Record
Date in order to be eligible to vote on the matters presented for action
by shareholders at the Annual Meeting.
Voting Securities
The Company's voting securities are the outstanding shares of its
common stock, $.01 par value per share. There were 4,732,608 outstanding
shares of common stock on the Record Date. Fountain holds 15,000 shares
of the Company's common stock which are treated as treasury shares and are
not entitled to be voted at the Annual Meeting. Otherwise, each
shareholder may cast one vote for each share held of record on the Record
Date on each director to be elected and on each other matter voted on by
shareholders.
Voting Procedures; Votes Required for Approval
In the election of directors, the eight nominees receiving the
highest numbers of votes will be elected. For Proposal 2 to be approved,
the votes cast in favor of the proposal must exceed the votes cast in
opposition. Abstentions and broker non-votes will have no effect in the
election of directors or in the voting on Proposal 2. Shareholders may
not vote cumulatively in the election of directors.
Beneficial Ownership of Securities
Principal Shareholders. The following table reflects, based on
information currently available to the Company, the beneficial ownership
of the Company's common stock as of the Record Date by persons known to
beneficially own more than 5% of its common stock.
Name and address Amount and nature of Percent
of beneficial owner beneficial ownership of class (1)
_____________________________ ____________________ ____________
Reginald M. Fountain, Jr.
Post Office Drawer 457
Washington, North Carolina
27889 2,588,372 (2) 50.9%
Triglova Finanz, A.G.
Edificio Torre Swiss Bank
Piso 16, Apartado Postal 1824
Panama 1, Republica de Panama 266,500 (3) 5.65%
_____________________________
(1) Percentages are calculated based on 4,732,608 total outstanding
shares, minus 15,000 shares held by Fountain, plus, in the case of
Mr. Fountain, the number of additional shares that he could purchase
upon the exercise of stock options.
(2) Includes 450,000 shares which could be purchased by Mr. Fountain from
the Company upon the exercise of stock options and as to which shares
he may be deemed to have sole investment power only.
(3) Based on information contained in filings with the Securities and
Exchange Commission.
<PAGE>
Management Ownership. The following table reflects the beneficial
ownership of the Company's common stock as of the Record Date by its
current directors, nominees for election as directors, and certain
executive officers, individually, and by all current directors and
executive officers of the Company as a group:
Name and address Amount and nature of Percent
of beneficial owner beneficial ownership(1) of class (2)
_____________________________ _______________________ ____________
Reginald M. Fountain, Jr..... 2,588,372 (3) 50.09%
George L. Deichmann III...... 17,100 *
Craig F. Goess............... -0- --
Guy L. Hecker, Jr............ -0- --
Robert L. Henkel............. -0-
Anthony J. Romersa.......... 35,000 (4) *
Mark L. Spencer.............. 33,525 (5) *
David L. Woods............... 27,500 *
All current directors and
executive officers as
a group (7 persons)........ 2,673,997 (6) 51.15%
(1) Except as otherwise noted below, the named individuals and persons
included in the group exercise sole voting and investment power with
respect to all shares.
(2) Percentages are calculated based on 4,732,608 total outstanding
shares, minus 15,000 shares held by Fountain, plus, in the case of
each individual and the group, the number of additional shares (if
any) that could be purchased by that individual or by persons
included in the group upon the exercise of stock options. An
asterisk indicates less than 1.0%.
(3) Includes 450,000 shares which could be purchased by Mr. Fountain from
the Company upon the exercise of stock options and with respect to
which shares he may be deemed to have sole investment power only.
(4) Includes 30,000 shares which could be purchased by Mr. Romersa from
the Company upon the exercise of stock options and with respect to
which shares he may be deemed to have sole investment power only.
(5) Includes 30,000 shares which could be purchased by Mr. Spencer from
the Company upon the exercise of stock options and with respect to
which shares he may be deemed to have sole investment power only.
(6) Includes an aggregate of 510,000 shares which could be purchased by
persons included in the group from the Company upon the exercise of
stock options and as to which shares such persons may be deemed to
have sole investment power only.
Section 16(a) Beneficial Ownership Reporting Compliance
The Company's directors and executive officers are required by
Section 16(a) of the Securities Exchange Act of 1934, as amended, to file
reports with the Securities and Exchange Commission regarding the amount
of and changes in their beneficial ownership of the Company's common
stock. Based on its review of copies of those reports, the Company is
required each year to disclose failures during the previous fiscal year to
report shares beneficially owned or changes in beneficial ownership, or to
timely file required reports. It has come to the Company's attention
that, during Fiscal 2000, George L. Deichmann III inadvertently failed to
report one purchase transaction. Upon discovery of the omission, his
report was filed approximately one month following its due date. Also,
Federico Pignatelli, who served as a director of the Company during Fiscal
2000, made a timely filing to report two purchase transactions but, due to
errors in information supplied by his broker, the report did not
accurately describe his transactions. Mr. Pignatelli's report was amended
promptly following discovery of the error. However, because his
transactions were not accurately reported until the amended report was
filed (approximately one week following the due date of the original
report), Mr. Pignatelli may be considered to have filed a late report.
<PAGE>
PROPOSAL 1: ELECTION OF DIRECTORS
The Company's Bylaws provide for a Board of Directors composed of not
less than three nor more than 25 members and authorize the Board of
Directors to set and change the number of directors from time to time
within those limits. Directors are elected each year at the Annual
Meeting for terms of one year or until their respective successors have
been elected and have qualified.
The Board of Directors currently consists of six members whose terms
will expire at the Annual Meeting, and there are two vacancies on the
board. The Board has set the number of the Company's directors at eight
for the year following the Annual Meeting and has nominated the persons
named below for election at the Annual Meeting as directors of the Company
for one-year terms. Six of the nominees currently serve as directors and
have been nominated for reelection.
Position(s) with the First Principal occupation and
Name and age Company and Fountain elected (1) business experience
______________ _____________________ ___________ _________________________
Reginald M. Chairman, Presiedent 1986 Officer of the Company and
Fountain, Jr. and Executive Officer Fountain
(60)
George L. Director 1998 Owner and President of
Deichmann III Trent-Olds-Cadillac-Buick-
(56) Pontiac-GMC Trucks, Inc.
(auto dealership),
New Bern, NC
Craig F. Goess Director 1998 President and General
(46) Manager of Greenville
Toyota, Inc. and Auto
Truck Center of
Greenville, Inc. (auto
dealerships), Greenville,
NC
Guy L. Hecker, Director 2000 President, Stafford, Burke
Jr. (2) & Hecker, Inc., Alexandria,
(68) VA (high technology
consultants)
Robert L. New nominee - Chief Operating Officer,
Henkel Coastal Plains Restaurants,
(45) LLC (restaurant chain
operator), Greenville, NC
Anthony J. Executive Vice 1999 Officer of the Company and
Romersa President, Chief Fountain since August 1998;
(55) Operating Officer previously served as
and Director Director of Planning -
Marine Operations for
Brunswick Corp., Lake
Forest, IL (1986-1998)
Mark L. Spencer Director 1992 Owner of Spencer
(45) Communications (advertising
and public relations firm),
Montrose, CA; from 1976-
1987, employed by Powerboat
Magazine, serving as
Executive Editor from 1981-
1987; commentator for ESPN
covering the boating
industry since 1985
David L. Woods New nominee - Co-owner and manager, Woods
(42) & McCauley, LLC, dba Pier
57 Boat Sales and Service,
Counce TN (boat sales and
service)
______________
(1) The term "First elected" refers to the year in which each individual
first became a director of the Company.
(2) Mr. Hecker also serves as a director of 8X8, Inc., a public company
headquartered in Santa Clara, CA, which develops, manufactures and
markets telecommunications equipment.
The Board of Directors recommends that shareholders vote "For" each
of the nominees named above. In the election of directors, the eight
nominees receiving the highest numbers of votes will be elected.
Director Compensation
<PAGE>
Director Compensation
The Company's directors currently do not receive any fees or other
compensation for their services as directors, but they are reimbursed for
travel and other out-of-pocket expenses incurred in connection with their
attendance at meetings of the Board of Directors.
Meetings the Board of Directors
The Company's Board of Directors met twice during Fiscal 2000. Each
director attended 75% or more of the aggregate number of meetings of the
Board of Directors and any committees on which he served.
Committees
During Fiscal 2000, the Company's Board of Directors appointed a
three-member Audit Committee and adopted a written charter for the
Committee. The current members of the Audit Committee are Craig F. Goess,
George L. Deichman III, and Guy L. Hecker, Jr. Each current member of the
Audit Committee is "independent" as that term is defined by the listing
standards of the The Nasdaq Stock Market. A copy of the Audit Committee
Charter is included as Appendix A to this Proxy Statement. The Audit
Committee did not meet separate from the full Board of Directors during
Fiscal 2000.
The Company does not have a standing nominating or compensation
committee.
Audit Committee Report
The Audit Committee has (i) reviewed the Company's audited financial
statements for Fiscal 2000 and discussed them with management, (ii)
discussed with the Company's independent accountants the matters required
to be discussed by Statement of Accounting Standards 61, as amended, (iii)
received written disclosures and a letter from the Company's independent
accountants required by Independence Standards Board Statement No. 1, and
(iv) discussed the independence of the Company's accountants with the
accountants. The Company's Board of Directors approved the inclusion of
the Company's audited financial statements in its Annual Report on Form 10-
K for Fiscal 2000, but that approval took place prior to, and was not
based upon, the above review and discussions.
The Audit Committee:
George L. Deichmann III Guy L. Hecker, Jr. Craig F. Goess
Compensation Committee Interlocks and Insider Participation
The Company's executive officers are compensated by Fountain for
their services as its officers and, with the exception of stock options,
they receive no separate or additional compensation from the Company.
Fountain's full Board of Directors considers and takes action on matters
pertaining to the compensation of executive officers, and neither Fountain
nor the Company has a standing compensation committee. During Fiscal
2000, Reginald M. Fountain, Jr., who serves as Chairman, President and
Chief Executive Officer of Fountain and the Company, and Anthony J.
Romersa, who serves as Executive Vice President and Chief Operating
Officer of Fountain and the Company, participated in deliberations of
Fountain's Board of Directors pertaining to executive compensation, but
each officer abstained from participation in deliberations regarding his
own compensation.
Mark L. Spencer, a director of the Company, is President and sole
shareholder of Spencer Communications, which is retained by Fountain to
provide it with advertising and public relations services. Pursuant to
their arrangement, Fountain pays $12,000 per month for the services of
Mr. Spencer's company, together with additional amounts for printing and
production costs and other associated expenses. During Fiscal 2000,
Fountain paid an aggregate of $345,049 to Mr. Spencer's company.
<PAGE>
Board Report on Executive Compensation
Fountain's goal is to provide an executive compensation program that
will enable it to attract and retain qualified and motivated individuals
as executive officers. Currently, Fountain's and the Company's executive
compensation program includes: (i) base salary, (ii) cash bonuses to
selected executive officers, (iii) stock options to selected executive
officers, and (iv) contributions to the individual accounts of all
participating employees (including executive officers) under Fountain's
Section 401(k) plan. In addition, Fountain provides other employee
benefit and welfare plans customary for companies of its size.
Base salary paid by Fountain to its and the Company's President and
Chief Executive Officer, Reginald M. Fountain, Jr., is set by Fountain's
Board of Directors from time to time based on its evaluation of
Mr. Fountain's individual level of responsibility and performance and, in
particular, his historical importance and current leadership and direction
in the development and growth of both Fountain and the Company. Prior to
Fiscal 2000, Mr. Fountain's received annual base salary of $350,000 during
each of three consecutive years during which he received no salary
increase. For Fiscal 2000, the Board of Directors increased
Mr. Fountain's base salary by approximately 3% to $361,330. Mr. Romersa
was first employed by Fountain during Fiscal 1999, and his initial annual
base salary of $160,000, as well as the grant to him of an option to
purchase 30,000 shares of the Company's common stock, was negotiated as
part of his employment agreement prior to the time of his employment. For
Fiscal 2000, the Board of Directors increased Mr. Romersa's base salary by
4% to $184,347. Pursuant to their employment agreements, Mr. Fountain and
Mr. Romersa also may receive cash bonuses each year based on Fountain's
and the Company's financial performance. Mr. Fountain's agreement
provides that his bonus shall equal 5% of the Company's consolidated net
income (calculated after deductions of profit sharing contributions but
before deductions for income taxes), but not more than $250,000. Mr.
Romersa's agreement provides that his bonus shall equal 1% of Fountain's
net profits before taxes and before the deduction of bonuses paid to other
officers. Mr. Fountain's and Mr. Romersa's cash bonuses earned for Fiscal
2000 were $81,438 and $16,288, respectively.
The salaries and cash bonuses of Fountain's and the Company's other
executive officers are determined by Mr. Fountain and Mr. Romersa based on
their judgment of the levels of responsibility, qualifications,
experience, and performance of the individual officers, as well as the
Company's size, complexity, growth, and financial performance. The
amounts of contributions to the separate accounts of executive officers
under Fountain's 401(k) plan are determined solely by the terms of that
plan. Except as described above with respect to Mr. Fountain's and Mr.
Romersa's cash bonuses, the performance review process and, thus, the
setting of salaries and the awarding of cash bonuses, largely are
subjective and there are no specific formulae, objective criteria, or
other such mechanisms by which the salary of, or the amount of the cash
bonus paid to, any executive officer, including Mr. Fountain and Mr.
Romersa, are tied empirically to his individual performance or to the
Company's financial performance.
Section 162(m) of the Internal Revenue Code of 1986, as amended,
limits the deductibility of annual compensation in excess of $1,000,000
paid to certain executive officers of public corporations. As none of
Fountain's and the Company's executive officers receive annual
compensation approaching that amount, Fountain's Board of Directors has
not yet adopted a policy with respect to Section 162(m).
The Board of Directors:
George L. Deichmann III Craig F. Goess Anthony J. Romersa
Reginald M. Fountain, Jr. Guy L. Hecker, Jr. Mark L. Spencer
<PAGE>
Executive Officers
Reginald M. Fountain, Jr., age 60, currently serves as Chairman,
President, and Chief Executive Officer of the Company and Fountain. He
founded Fountain during 1979 and became Chief Executive Officer of the
Company upon its acquisition of Fountain during 1986.
Anthony J. Romersa, age 55, was appointed as Executive Vice President
and Chief Operating Officer of the Company and Fountain during August
1998. He has over 20 years of experience in the boating industry and,
prior to joining the Company, had served as Director of Planning C Marine
Operations with Brunswick Corp. since 1986.
David A. Simmons, age 63, was appointed to serve as Chief Financial
Officer of the Company and Fountain during September 2000. He previously
served as Chief Financial Officer of Century Boat Company (boat
manufacturer) from 1993 through 1997, and as Chief Financial Officer of
Loe's Highport, Inc. (marina and retail boat sales) since 1998. Mr.
Simmons previously was employed by the Company as Vice President and Chief
Financial Officer from 1989 through 1991 and as Controller from 1997
through 1998. He has a total of 20 years experience in the boating
industry.
Executive Compensation
Cash Compensation. The following table contains information
regarding cash and certain other compensation paid to or deferred by
certain of the Company's executive officers for the fiscal years listed.
The Company's executive officers serve and are compensated as officers and
employees of Fountain, and no separate cash compensation is paid to any
officer for his or her service as an officer of the Company.
SUMMARY COMPENSATION TABLE
__________________________________________________________________________
Annual Compensation Long term
Compensation compensation
_____________________________ _____________________
Securities All
Name and Other annual Restricted Underlying Other
Principal Fiscal Compensation Stock options Compen
Position Year Salary(1) Bonus (2) awards (#) sation
__________ ______ _________ _______ ___________ __________ __________ ________
Reginald M. 2000 $361,330 $81,438 $-0- $-0- -0- $ -0-
Fountain
President 1999 350,000 -0- -0- -0- -0- -0-
and Chief
Executive 1998 350,000 192,023 -0- -0- -0- -0-
Office
Anthony J. 2000 184,347 16,288 -0- -0- -0- 5,771(3)
Romersa
Executive 1999 131,731 -0- -0- -0- 30,000 1,477(3)
Vice
President 1998 - - - - - -
and Chief
Operating
Officer
__________________
(1) Includes amounts deferred at Mr. Romersa's election pursuant
to Fountain's Section 401(k) plan. Mr. Fountain does not
participate in that plan. Mr. Romersa was employed by Fountain for
only a portion of Fiscal 1999.
(2) In addition to compensation paid in cash, Fountain's executive
officers receive certain personal benefits. The value of such
benefits received by each executive officer each year did not exceed
10% of his cash compensation for that year.
(3) Consists of Fountain's contributions to the Section 401(k) plan for
Mr. Romersa's account.
Employment Contracts and Termination of Employment and Change-in-
Control Arrangements. Mr. Fountain is employed as an officer of Fountain
pursuant to a 1989 employment agreement which provides for automatic
renewal at the end of each year for an additional one-year period until
terminated as provided therein. Pursuant to the agreement, Mr. Fountain
receives base salary in an amount approved by the Board of Directors (but
not less than $104,000), an annual cash bonus in an amount equal to 5% of
the Company's consolidated net income (calculated after deductions of
profit sharing contributions and before deductions for income taxes, but
not more than $250,000), and certain other benefits.
<PAGE>
Mr. Romersa is employed as an officer of Fountain pursuant to an
employment agreement entered into during Fiscal 1999 which provides for a
term ending August 23, 2001. Pursuant to the agreement, Mr. Romersa
receives base salary in an amount approved by the Board of Directors (but
not less than $160,000), an annual cash bonus equal to 1% of Fountain's
net profits before taxes and before the deduction of bonuses paid to other
officers, and certain other benefits. In the event (i) Mr. Romersa's
employment is terminated within 24 months following a "change in control"
(as defined in the agreement) of the Company or Fountain (other than a
termination for retirement, death, disability, or "Cause," as defined in
the Agreement), or (ii) following any Change in Control, and without his
consent, Mr. Romersa's job location is transferred an unreasonable
distance from Washington, NC, he is not paid salary or bonus at the rates
described in the agreement, other employee benefits are reduced or
eliminated in a manner that does not apply proportionately to all salaried
employees, or he is assigned duties inconsistent with his position, duties
or status at the time of the Change in Control, then he will be entitled
to receive (or, in the case of a change in job location, he may terminate
his own employment and be entitled to receive) from Fountain all
compensation he would have been entitled to receive under the agreement
and which then remains unpaid, but not more than the amount of his then
current base salary for two years. The agreement may be terminated by
Fountain for Cause.
Employee Stock Options. The following table contains information
regarding options to purchase shares of the Company's common stock held at
the end of Fiscal 2000 (June 30, 2000), by the Company's executive
officers named in the Summary Compensation Table above.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND
FISCALYEAR-END OPTION VALUES
______________________________________________________________________________
Number of securities
underlying enexercised Value of unexercised
options at fiscal in-the-money options at
year-end fiscal year-end
_________________________ _________________________
Shares
acquired
on Value
Name Exercise realized Exercisable Unexercisable Exercisable Unexercisable
________ ________ ________ ___________ _____________ ___________ _____________
Reginald (1) (1) 450,000(2) -0- (4) -
M.
Fountain,
Jr.
Anthony (1) (1) 25,000(3) 5,000(3) (4) (4)
J.
Romersa
________
(1) No options were exercised during Fiscal 2000.
(2) The options are exercisable at a price of $4.67 per share and expire
on August 4, 2005.
(3) Includes options to purchase an aggregate of 30,000 shares at a price
of $5.00 per share which became exercisable as to 5,000 shares each
calendar quarter-end, beginning June 30, 1999, and, which expire on
January 11, 2004. At June 30, 2000, the options had become
exercisable as to an aggregate of 25,000 shares and remained
unexercisable as to 5,000 shares. The options became exercisable as
to the remaining 5,000 shares on September 30, 2000.
(4) The options had no value on June 30, 2000, or on December 27, 2000,
since, on each of those dates, the aggregate exercise price of the
options exceeded the aggregate market value of the underlying shares
(based on the closing sale prices of the Company's common stock on
those dates).
Related Party Relationships and Transactions
David L. Woods, a new nominee for election as a director of the
Company, is co-owner and manager of Pier 57 Boat Sales and Service,
Counce, Tennessee, which is a Fountain Powerboat dealer. During
Fiscal 2000, Mr. Woods' dealership purchased 25 powerboats from Fountain
for an aggregate wholesale price of $3,697,889 (approximately 6% of
Fountain's aggregate powerboat sales for that fiscal year), received
payments of approximately $161,100 from Fountain under dealer sales award
and promotion programs that are available to all dealers, and paid
Fountain approximately $100,000 for non-warranty service work.
Information regarding services provided to Fountain by Mark L.
Spencer, a director of the Company, is contained under the caption
"Compensation Committee Interlocks and Insider Participation."
Performance Graph
<PAGE>
The following line graphs compare the cumulative total shareholder
return (the "CTSR") on the Company's common stock during the previous five
fiscal years with the CTSR over the same measurement period of the S&P 500
index and the S&P Leisure Time (Products) index. Each line graph assumes
$100 invested on June 30, 1995, and that dividends were reinvested in
additional shares. However, since the Company has not paid dividends on
its common stock during the previous five years, no reinvestment is
included in the calculation of the CTSR on the Company's common stock.
Accumulated returns are indicated through June 30, 2000.
Comparison of Five-Year Cumulative Total Return
among the Company's Common Stock, the S&P 500 Index,
and the S&P Leisure Time (Products) Index
[GRAPH]
PROPOSAL 2: RATIFICATION OF APPOINTMENT OF INDEPENDENT ACCOUNTANTS
The Company's current independent public accounting firm, Pritchett,
Siler & Hardy, P.A., has been appointed by the Board of Directors to serve
as the Company's independent accountants again for Fiscal 2001, and a
proposal to ratify that appointment will be submitted for voting by
shareholders at the Annual Meeting. Representatives of Pritchett, Siler &
Hardy, P.A. are not expected to attend the Annual Meeting.
The Board of Directors recommends that shareholders vote "For"
Proposal 2. To be approved, votes cast in favor of Proposal 2 at the
Annual Meeting must exceed the votes cast in opposition.
<PAGE>
PROPOSALS OF SHAREHOLDERS
Any proposal of a shareholder which is intended to be presented for
action at the 2002 Annual Meeting must be received by the Company in
writing at its main office in Washington, North Carolina, no later than
September 7, 2001, to be considered timely received for inclusion in the
proxy statement and form of appointment of proxy distributed by the Company
in connection with that meeting. In order to be included in the Company's
proxy materials related to a particular meeting, the person submitting the
proposal must own, beneficially or of record, at least 1% or $2,000 in
market value of shares of the Company's common stock entitled to be voted
on that proposal at the meeting and must have held those shares for a
period of at least one year and continue to hold them through the date of
the meeting. Also, the proposal and the shareholder submitting it must
comply with certain other eligibility and procedural requirements contained
in rules of the Securities and Exchange Commission.
Written notice of a shareholder proposal intended to be presented for
action at the 2002 Annual Meeting but which is not intended to be included
in the Company's proxy statement and form of appointment of proxy must be
received by the Company at its main office in Washington, North Carolina,
no later than November 21, 2001, in order for that proposal to be
considered timely received for purposes of the Proxies' discretionary
authority to vote on other matters presented for action by shareholders at
that meeting.
ANNUAL REPORT ON FORM 10-K
The Company is subject to the reporting requirements of the Securities
Exchange Act of 1934 and, in accordance therewith, files reports and other
information with the Securities and Exchange Commission, including without
limitation proxy statements, annual reports and quarterly reports.
A copy of the Company's Annual Report on Form 10-K for Fiscal 2000,
which ended June 30, 2000, as filed with the Securities and Exchange
Commission, will be provided without charge upon the written request of any
shareholder entitled to vote at the Annual Meeting. Requests for copies
should be directed to David A. Simmons, Chief Financial Officer, Fountain
Powerboat Industries, Inc., Post Office Drawer 457, Washington, North
Carolina 27889 (Telephone 252-975-2000).
January 5, 2001
<PAGE>
Appendix A
FOUNTAIN POWERBOAT INDUSTRIES, INC.
AUDIT COMMITTEE CHARTER
The Audit Committee (the "Committee") of the Board of Directors (the
"Board) of Fountain Powerboat Industries, Inc. (the "Company") will have
the oversight responsibility, authority and specific duties as described
below.
COMPOSITION
The Committee will be comprised of three or more directors as
determined by the Board. The members of the Committee will meet the
independence and experience requirements of The Nasdaq Stock Market
("Nasdaq") then in effect. The members of the Committee for the following
year will be elected by the Board annually at the organizational meeting of
the full Board held following the annual meeting of shareholders. The
Committee will elect one of its members to serve as Chairman.
RESPONSIBILITY
The Committee is a part of the Board. It's primary function is to
assist the Board in fulfilling its oversight responsibilities with respect
to (i) the annual financial information to be provided to shareholders and
the Securities and Exchange Commission ("SEC"); (ii) the system of
internal controls that management has established; and (iii) the internal
and external audit process. In addition, the Committee provides an avenue
for communication between internal audit, the independent accountants,
financial management and the Board. The Committee should have a clear
understanding with the independent accountants that they must maintain an
open and transparent relationship with the Committee and that the ultimate
accountability of the independent accountants is to the Board and the
Committee. The Committee will make regular reports to the Board concerning
its activities.
While the Audit Committee has the responsibilities and powers set
forth in this charter, it is not the duty of the Audit Committee to plan or
conduct audits or to determine that the Company's financial statements are
complete and accurate and are in accordance with generally accepted
accounting principles. This is the responsibility of management and the
independent auditor. Nor is it the duty of the Audit Committee to conduct
investigations, to resolve disagreements, if any, between management and
the independent auditor, or to assure compliance with laws and regulations
and the Company's business conduct guidelines.
AUTHORITY
Subject to the prior approval of the Board, the Committee is granted
the authority to investigate any matter or activity involving financial
accounting and financial reporting, as well as the internal controls of the
Company. In that regard, the Committee will have the authority to approve
the retention of external professionals to render advice and counsel in
such matters. All employees will be directed to cooperate with respect
thereto as requested by members of the Committee.
MEETINGS
The Committee is to meet at least once annually and as many additional
times as the Committee deems necessary. Content of the agenda for each
meeting should be cleared by the Chairman. The Committee is to meet in
separate executive sessions with the chief financial officer, independent
accountants and internal audit at least once each year and at other times
when considered appropriate.
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ATTENDANCE
Committee members will strive to be present at all meetings. As
necessary or desirable, the Chairman may request that members of management
and representatives of the independent accountants and internal audit be
present at Committee meetings.
SPECIFIC DUTIES
In carrying out its oversight responsibilities, the Committee will:
1. Review and reassess the adequacy of this charter annually and
recommend any proposed changes to the Board for approval, all of which
should be done in compliance with applicable Nasdaq requirements
pertaining to audit committees;
2. Review with the Company's management, internal audit and independent
accountants the Company's accounting and financial reporting controls,
and obtain annually in writing from the independent accountants their
letter as to the adequacy of such controls;
3. Review with the Company's management, internal audit and independent
accountants significant accounting and reporting principles, practices
and procedures applied by the Company in preparing its financial
statements, and discuss with the independent accountants their
judgements about the quality (not just the acceptability) of the
Company's accounting principles used in financial reporting;
4. Review the scope of internal audit's work plan for the year, and
receive a summary report of major findings by internal auditors and
how management is addressing the conditions reported;
5. Review the scope and general extent of the independent accountants'
annual audit, which review should include an explanation from the
independent accountants of the factors considered by the accountants in
determining the audit scope, including the major risk factors;
6. Confirm with the independent accountants each year that no limitations
have been placed on the scope or nature of their audit procedures, and
review annually with management the fee arrangement with the independent
accountants;
7. Have a predetermined arrangement with the independent accountants that
they will (i) advise the Committee, through its Chairman and
management of the Company, of any matters identified through
procedures followed for interim quarterly financial statements, and
that such notification is to be made prior to the related press
release or, if not practicable, prior to filing Forms 10-Q, and (ii)
receive a written confirmation provided by the independent accountants
at the end of each of the first three quarters of the year that they
have nothing to report to the Committee, if that is the case, or the
written enumeration of required reporting issues;
8. At the completion of the annual audit, the Committee will:
- Review and discuss with management, internal audit and the
independent accountants the annual audited financial statements
and related footnotes, and other financial information, to be
included in the Company's annual report to shareholders and Form
10-K;
- Review and discuss with management, internal audit and the
independent accountants the results of the audit of the financial
statements and the related report thereon and, if applicable, a
report on changes during the year in accounting principles and
their application;
- Review and discuss with management, internal audit and the
independent accountants any significant changes to the audit plan,
if any, and any serious disputes or difficulties with management
encountered during the audit, inquire about the cooperation
received by the independent accountants during their audit,
including access to all requested records, data and information,
and inquire of the independent accountants whether there have
been any disagreements with management, which, if not
satisfactorily resolved, would have caused them to issue a
nonstandard report on the Company's financial statements;
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- Receive and review matters required to be communicated by the
independent accountants by Statement of Auditing Standards (SAS)
61, as amended by SAS 90, relating to the conduct of the audit,
and receive the written communication provided by the independent
accountants concerning their judgement about the quality of the
Company's accounting principles, as outlined in SAS 61, as amended
by SAS 90, and that they concur with management's representation
concerning audit adjustments;
- Inquire as to the independence of the independent accountants,
obtain from the independent accountants a formal written
disclosure and statement delineating all relationships between
the independent accountants and the Company as contemplated by
Independence Standards Board Standard No. 1, Independence
Discussions with Audit Committees, engage in a dialogue with
the independent accountants with respect to any disclosed
relationships or services that may impact their objectivity and
independence, and take, or recommend that the full Board take,
appropriate action to oversee the independence of the independent
accountants;
and, if deemed appropriate based on such inquiry, review and
discussion, recommend to the Board that the financial statements be
included in the Company's annual report on Form 10-K.
9. After preparation by management and review by internal audit and
independent accountants, review and approve the "Audit Committee
Report" required under SEC rules to be included in the Company's
annual proxy statement, and cause this charter to be published as an
appendix to the proxy statement every three years;
10. Discuss with the independent accountants the quality of the Company's
financial and accounting personnel, and elicit the comments of
management regarding responsiveness of the independent accountants to
the Company's needs;
11. Meet with management, internal audit and the independent accountants
to discuss any relevant significant recommendations that the
independent accountants may have, particularly those characterized as
"material" or "serious," which typically are presented by the
independent accountants in the form of a Letter of Comments and
Recommendations to the Committee, and review responses of management
to the Letter of Comments and Recommendations from the independent
accountants and receive follow-up reports on action taken concerning
the aforementioned recommendations;
12. Recommend to the Board the selection, retention or termination of the
Company's independent accountants;
13. Review the appointment and replacement of the senior internal audit
executive;
14. Review with management, internal audit and the independent accountants
the methods used to establish and monitor the Company's policies with
respect to unethical or illegal activities by employees of the Company
and its subsidiaries that may have a material impact on the financial
statements;
15. Generally as part of the review of the annual financial statements,
receive an oral report(s), at least annually, from the Company=s
counsel concerning legal and regulatory matters that may have a
material impact on the financial statements; and,
16. As the Committee may deem appropriate, obtain, weigh and consider
expert advice as to Audit Committee-related rules of the SEC and
Nasdaq, statements on auditing standards, and other accounting, legal
and regulatory provisions.
