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 SEPTEMBER 30, 1997
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
0-10316
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 OCTOBER 31, 1997
Common stock, $.01 par value 4,755,108 shares
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,
September 30, 1997 and June 30, 1997......... 4
Consolidated Balance Sheets - Liabilities &
Shareholders' Equity, September 30, 1997
and June 30, 1997............................ 5
Consolidated Statements of Income -
Three Months Ended September 30, 1997
and September 30, 1996.......................6 -7
Consolidated Statements of Cash Flows -
Three Months Ended September 30, 1997
and September 30, 1996......................8 - 9
Notes to Consolidated Financial Statements....10 - 15
Management's Discussion and Analysis of
Results of Operations and
Financial Condition........................15 - 18
PART II. OTHER INFORMATION.
Item 6. Exhibits and Reports on Form 8 and Form 8-K....... 18
Signature....................................... 19
-2-
PRITCHETT, SILER & HARDY, P.C.
430 East 400 South
Salt Lake City, Utah
(801) 328-2727
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 September 30, 1997, and
the related consolidated statements of operations and cash flows
for the three 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 financial
statements referred to above for them to be in conformity with
generally accepted accounting principles.
PRITCHETT, SILER & HARDY, P.C.
November 14, 1997
-3-
FOUNTAIN POWERBOAT INDUSTRIES, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
ASSETS
(Unaudited - See Accountants' Review Report)
September 30, June 30,
1997 1997
___________ ___________
CURRENT ASSETS:
Cash and cash equivalents $1,532,994 $2,994,503
Certificates of deposit - 696,155
Accounts receivable, net 3,948,585 1,867,747
Inventories 5,703,911 3,937,757
Prepaid expenses 1,020,302 1,131,703
Deferred tax asset 774,007 369,268
___________ ___________
Total Current Assets 12,979,799 10,997,133
___________ ___________
PROPERTY, PLANT AND EQUIPMENT 26,841,681 24,554,322
Less: Accumulated depreciation (12,727,478) (12,335,166)
___________ ___________
14,114,203 12,219,156
___________ ___________
OTHER ASSETS 500,607 497,607
___________ ___________
$27,594,609 $23,713,896
___________ ___________
[Continued]
-4-
FOUNTAIN POWERBOAT INDUSTRIES, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
LIABILITIES AND STOCKHOLDERS' EQUITY
[Continued]
September 30, June 30,
1997 1997
___________ ___________
CURRENT LIABILITIES:
Current portion/long-term debt $ 716,251 $ 595,607
Accounts payable 3,780,639 1,987,508
Accrued expenses 1,058,101 860,786
Dealer territory service accrual 1,220,817 1,637,572
Customer deposits 211,272 310,042
Allowance for boat repurchases 200,000 200,000
Reserve for warranty expense 500,000 500,000
Net liabilities of discontinued operations 81,996 213,697
___________ ___________
Total Current Liabilities 7,769,076 6,305,212
___________ ___________
LONG-TERM DEBT, LESS CURRENT PORTION 8,377,193 7,677,771
NOTE PAYABLE - RELATED PARTY 415,821 -
DEFERRED TAX LIABILITY 593,035 369,268
___________ ___________
Total Liabilities 17,155,125 14,352,251
___________ ___________
COMMITMENTS AND CONTINGENCIES [NOTE 6] - -
STOCKHOLDERS' EQUITY:
Common stock, $.01 par value,
200,000,000 shares authorized,
4,755,108 shares issued 47,551 47,251
Capital in excess of par value 10,624,940 10,517,740
Deficit accumulated (122,259) (1,092,598)
___________ ___________
10,550,232 9,472,393
Less: Treasury stock (110,748) (110,748)
___________ ___________
Total Stockholders' Equity 10,439,484 9,361,645
___________ ___________
$27,594,609 $23,713,896
___________ ___________
The accompanying notes are an integral part of these financial
statements.
-5-
FOUNTAIN POWERBOAT INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited - See Accountants' Review Report)
For the Three Months Ended
September 30,
____________________________________
1997 1996
_____________ _____________
NET SALES $ 11,521,434 $ 12,320,373
COST OF SALES 8,568,073 9,073,259
_____________ _____________
Gross Profit 2,953,361 3,247,114
_____________ _____________
EXPENSES:
Selling expense 1,033,094 984,044
General and administrative 720,733 665,980
General and administrative
- related parties 72,921 83,832
_____________ _____________
Total expenses 1,826,748 1,733,856
_____________ _____________
OPERATING INCOME 1,126,613 1,513,258
NON-OPERATING INCOME (EXPENSE):
Other income 16,458 85,864
Interest expense (145,972) (159,053)
_____________ _____________
INCOME BEFORE INCOME TAXES 997,099 1,440,069
CURRENT TAX EXPENSE 234,332 104,680
DEFERRED TAX (BENEFIT) (180,972) -
_____________ _____________
INCOME FROM CONTINUING
OPERATIONS 943,739 1,335,389
_____________ _____________
DISCONTINUED OPERATIONS:
Income from Operations of
Fountain Power, Inc. and
Mach Performance, Inc.
(Net of no income tax effect) 26,600 -
Estimated losses on disposal
of the operations of Fountain
Power, Inc. and Mach
Performance, Inc. (Net of no
income tax effect) - -
_____________ _____________
INCOME FROM DISCONTINUED
OPERATIONS 26,600 -
_____________ _____________
NET INCOME $ 970,339 $1,335,389
_____________ _____________
[Continued]
-6-
FOUNTAIN POWERBOAT INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited - See Accountants' Review Report)
[Continued]
For the Three Months Ended
September 30,
____________________________________
1997 1996
_____________ _____________
PRIMARY EARNINGS PER SHARE:
Continuing Operations $ .18 $ .28
Loss from Operations of
Discontinued Segments .01 -
Estimated Loss on Disposal
of Discontinued Segments - -
_____________ _____________
PRIMARY EARNINGS PER SHARE $ .19 $ .28
_____________ _____________
WEIGHTED AVERAGE SHARES
OUTSTANDING 5,128,003 4,798,359
_____________ _____________
FULLY DILUTED EARNINGS PER SHARE:
Continuing Operations $ .18 $ .28
Loss from Operations of
Discontinued Segments .01 -
Estimated Loss on Disposal
of Discontinued Segments - -
_____________ _____________
FULLY DILUTED EARNINGS
PER SHARE: $ .19 $ .28
_____________ _____________
FULLY DILUTED WEIGHTED AVERAGE
SHARES OUTSTANDING 5,143,631 4,807,863
_____________ _____________
The accompanying notes are an integral part of these financial
statements.
-7-
FOUNTAIN POWERBOAT INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited - See Accountants' Review Report)
For the Three Months Ended
September 30,
__________________________________
1997 1996
__________________________
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ 970,339 $1,335,389
Adjustments to reconcile net income
(loss) to net cash provided by operating activities:
Depreciation expense 392,312 402,438
(Increase) decrease in
accounts receivable (2,080,838) 390,004
(Increase) decrease in
inventory (1,766,154) 428,794
(Increase) decrease in
prepaid expenses 111,401 (78,358)
(Increase) decrease in
other assets (3,000) (2,999)
Increase (decrease) in
accounts payable 1,793,131 (333,610)
Increase (decrease) in
accrued expenses 197,315 91,476
Increase (decrease) in
dealer service territory
accrual (416,755) -
Increase (decrease) in
customer deposits (98,770) (101,328)
Net deferred taxes (180,972) -
Net liabilities of
discontinued operations (131,701) -
__________________________
Net Cash Provided by (Used in)
Operating Activities $(1,213,692) $2,131,806
__________________________
CASH FLOWS FROM INVESTING ACTIVITIES:
Construction of molds, plugs,
and other tooling (789,878) (477,506)
Purchase of property, plant,
and equipment (122,481) (150,561)
Proceeds from certificates
of deposit, net 696,155 -
__________________________
Net Cash Provided by(Used in) Investing
Activities $(216,204) $(628,067)
__________________________
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from long-term debt $ - $ -
Repayment of long-term debt (139,113) (185,770)
Note payable, revolving line of credit - (154,306)
Proceeds from issuance
of common stock 107,500 -
__________________________
Net Cash Provided by (Used in) Financing
Activities $(31,613) $(340,076)
__________________________
Net increase (decrease) in cash $(1,461,509) $1,163,663
Cash at beginning of year 2,994,503 1,360,619
__________________________
Cash at end of period $1,532,994 $2,524,282
__________________________
[Continued]
-8-
FOUNTAIN POWERBOAT INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited - See Accountants' Review Report)
[Continued]
For the Three Months Ended
September 30,
__________________________________
1997 1996
__________________________
Supplemental Disclosures of Cash Flow information:
Cash paid during the period for:
Interest:
Unrelated parties $ 139,619 $ 159,053
Related parties - -
__________________________
$ 139,619 $ 159,053
__________________________
Income taxes $ 55,264 $ 104,680
__________________________
Supplemental Disclosures of Non-cash investing and financing
activities:
On September 30, 1997 the Company purchased an airplane from
a related party for $1,375,000 through the issuance of a
$415,821 note payable to the related party and assuming
$959,179 underlying indebtness on the plane.
The accompanying notes are an integral part of these financial
statements.
-9-
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, in management's
opinion, present fairly the Company's financial position and
results of its operations for the interim periods presented. Certain
information and footnote disclosures normally included in the
financial statements have been omitted. 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, 1997. The results of
operations for the period ended September 30, 1997 are not necessarily
indicative of the operating results for the full year.
2. ACCOUNTS RECEIVABLE.
As of September 30, 1997, accounts receivable were $3,948,585
net of the allowance for bad debts of $31,928. This represents a
increase of $2,080,838 from the $1,867,747 in net accounts
receivable recorded at June 30, 1997. Of the $3,948,585 balance at
September 30, 1997, $3,226,794 has subsequently been collected as
of October 31, 1997, and the remaining $721,791 is believed to be
fully collectible.
3. INVENTORIES.
Inventories at September 30, 1997 and June 30, 1997 consisted
of the following:
September 30, June 30,
1997 1997
Parts and supplies.................$ 3,164,271 $ 2,985,615
Work-in-process.................... 2,308,191 882,323
Finished goods..................... 331,449 169,819
Trailers........................... -0- -0-
Obsolete inventory reserve......... (100,000) (100,000)
Total..............................$ 5,703,911 $ 3,937,757
============= =============
-10-
FOUNTAIN POWERBOAT INDUSTRIES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited - See Accountants' Review Report)
4. REVENUE RECOGNITION.
The Company sells boats only to authorized dealers and to the
U.S. Government. A sale is recorded when a boat is shipped to a
dealer or to the Government, legal title and all other incidents of
ownership have passed from the Company to the dealer or to the
Government, and an account receivable is recorded or payment is
received from the dealer, from the Government, or from the dealer's
third-party commercial lender. This is the method of sales
recognition in use by most boat manufacturers.
The Company has developed criteria for determining whether a
shipment should be recorded as a sale or as a deferred sale (a
balance sheet liability). The criteria for recording a sale are
that the boat has been completed and shipped to a dealer or to the
Government, that title and all other incidents of ownership have
passed to the dealer or to the Government, and that there is no
direct or indirect commitment to the dealer or to the Government to
repurchase the boat or to pay floor plan interest for the dealer
beyond the normal, published sales program terms.
The sales incentive floor plan interest expense for each
individual boat sale is accrued for the maximum six month (180
days) interest payment period in the same fiscal accounting period
that the related boat sale is recorded. The entire six months'
interest expense is accrued at the time of the sale because the
Company considers it a selling expense. The amount of interest
accrued is subsequently adjusted to reflect the actual number of
days of remaining liability for floor plan interest for each
individual boat remaining in the dealer's inventory and on floor
plan.
Presently, the Company's normal sales program provides for the
payment of floor plan interest on behalf of its dealers for a
maximum of six months. The Company believes that this program is
currently competitive with the interest payment programs offered by
other boat manufacturers, but may from time to time adopt and
publish different programs as necessary in order to meet
competition.
-11-
5. ALLOWANCE AND QUALIFYING ACCOUNTS.
For the three months ended September 30, 1997, 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 $ 200,000 $ -0- $ -0- $ 200,000
Allowance for
doubtful
accounts 30,000 2,057 (129) 31,928
Allowance for
warranty
claims 500,000 67,987 (67,987) 500,000
Allowance for
inventory
values 100,000 -0- -0- 100,000
---------- ---------- ---------- ---------
Total $ 830,000 $ 70,044 $ (68,116) $ 831,928
========== ========== ========== =========
In management's opinion, the balances of the allowance and
qualifying accounts are adequate to provide for all reasonably
anticipated future losses.
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 September 30, 1997, 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
$12,500,000.
-12-
FOUNTAIN POWERBOAT INDUSTRIES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited - See Accountants' Review Report)
The Company has reserved for probable future losses it is
expected to incur upon the repossession and repurchase of boats
from commercial lenders. At September 30, 1997, the allowance for
losses on boat repurchases was $200,000. The amount of the
allowance is based upon probable future events which can be
reasonably estimated.
Additionally, as part of its normal sales program, the Company
regularly pays a portion of dealers' interest charges for floor
plan financing for up to six months. Such charges amounting to
$126,000 for the first three months of Fiscal 1998 are included in
selling expenses in the accompanying statement of operations.
7. TRANSACTIONS WITH RELATED PARTIES.
Prior to 1993,the Company owned and operated an aircraft.
During fiscal 1993, the aircraft was sold to officer and director
of the Company. The company has been leasing airplane services
from the officer and director since that time. During the first
quarter of Fiscal 1998, the board of directors determined to
acquire an airplane for the Company and approved the acquisition of
an airplane from Mr. Fountain for $1,375,000. The Company issued
a note payable to Mr. fountain for $415,821 and assumed the balance
of a note payable to General Electric Capital Corporation for
$959,179.
The Company paid or accrued the following amounts for services
rendered or for interest on indebtedness to related parties:
Three Months Ended
September 30,
1997 1996
Apartments - rentals $ 970 $ 4,370
R.M. Fountain, Jr. - aircraft
rental 71,951 79,462
----------- -----------
$ 72,921 $ 83,832
=========== ===========
At September 30, 1997 the Company had travel advances and other
receivables from employees in the amount of $121,465, of which
$101,310 was due from an officer of the Company.
-13-
8. INCOME TAXES.
During the first quarter of Fiscal 1998, the Company will use
up all of its net operating loss carryforwards. Consequently, for
the three months ended September 30, 1997, the Company provided
$234,332 for current income taxes and a benefit of $180,972 for
deferred income taxes.
9. STOCK OPTIONS.
At September 30, 1997 there were 576,000 unexercised stock
options, of which 516,000 were held by officers and directors of
the Company at prices ranging from $3.583 to $8.167 per share.
During the first quarter of this Fiscal year, one of the directors
exercised his stock options of 30,000 shares at $3.583 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.
11. COMMON STOCK SPLIT.
During July 1997, the Company approved a three-for-two forward
stock split of all its previously issued and outstanding common
stock including options to purchase common stock (effectively a
three share for two share stock dividend). The shareholder record
date was August 1, 1997 with fractional shares paid in cash on
August 14, 1997. The split was accomplished during August. The
effect of the common stock split has been reflected in these
financial statements.
12. DISCONTINUED OPERATIONS.
Net (liabilities) of discontinued operations at September 30, 1997
consisted of the following:
-14-
1997
_________
Equipment, net 500,242
Accounts Payable (38,226)
Warranty & returns reserve (98,645)
Customer deposits (4,966)
Estimated loss on disposal (440,401)
_________
$ (81,896)
_________
13. SUBSEQUENT EVENTS.
DISOLUTION OF SUBSIDIARIES - Effective October 1, 1997, Fountain
Trucking, Inc., Fountain Sportswear, Inc., Fountain Aviation, Inc.
And Fountain Unlimited, Inc. Were dissolved. In connection with
the dissolution of the subsidiaries, the operations of Fountain
Trucking, Inc. And Fountain Sportswear, Inc. Were transferred to
Fountain Powerboats, Inc.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS
AND FINANCIAL CONDITION
RESULTS OF OPERATIONS.
The operating income for the first quarter ended September 30,
1997 was $1,126,613 or $.22 per share versus $1,513,258 or $.30 per
share for the corresponding period of the previous year. Operating
income as a percent of sales for the first quarter of Fiscal 1998
was 9.8% versus 12.3% for the same period the previous Fiscal year.
The net income for the first quarter of Fiscal 1998 was $970,339 or
$.19 per share. This compares to net income amounting to
$1,335,389, or $.28 per share (increased from effect of NOL carry-
forward from 1994) for the first quarter of Fiscal 1997. For the
first quarter of Fiscal 1998, our actual net income was as planned.
Net sales were $11,521,434 for the first quarter of Fiscal
1998 as compared to $12,320,373 for the first quarter of the prior
Fiscal year. Unit sales volume for the first quarter of Fiscal
1998 was 110 boats as compared to 111 boats for the first quarter
of 1997. The first quarter of fiscal 1998 contained one less
production week than the first quarter of the previous year due to
a planned vacation shutdown. Overall, sales were as planned for
the first quarter of Fiscal 1998.
For the first quarter of Fiscal 1998, the gross margin on
sales was $2,953,361 (26%) as compared to $3,247,114 (26%) for the
first quarter of the prior fiscal year.
Selling expenses were $1,033,094 for the first quarter of
Fiscal 1998 as compared to $984,044 for the first quarter of last
year. Most of the increase for Fiscal 1998 was in promotional
racing and fishing team expense.
-15-
General and administrative expenses were $793,654 for the
first quarter of Fiscal 1998 as compared to $749,812 for the first
quarter of last year.
Interest expense for the first quarter of Fiscal 1998 was
$145,972 as compared to $159,053 for the first quarter of last
year. Interest expense is down due to restructuring and
consolidation of several loans into one at a reduced interest rate
during the second quarter of last year.
Other non-operating income for the first quarter was
$16,458 as compared to $85,866 for the first quarter of last year
during which Mr. Fountain earned $65,000 in consulting revenue from
a vendor for the Company. A new consulting agreement for Fiscal
1998 has not yet been concluded.
FINANCIAL CONDITION.
The Company's cash flows for the first three months of Fiscal
1998 are summarized as follows:
Net cash used in operating activities.......$(1,213,692)
" " used in investing activities....... ( 216,204)
" " provided by financing activities... ( 31,613)
Net decrease in cash........................$(1,461,509)
===========
This net increase compared to a $1,163,663 net increase for
the first three months of the prior fiscal year.
Cash used in the first three months of Fiscal 1998 to acquire
additional property, plant, and equipment (investing activity)
amounted to $912,359 of which $789,878 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,
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.
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.
-16-
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 1998 and beyond, the Company expects to
generate sufficient cash through operations to meet its needs and
obligations. Management believes that the Company's sales and
production volume will continue to grow with a corresponding
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, for completion of its interim
yacht production facility and site improvements to accomodate
testing of the 65' Super Cruiser. We anticipate finishing our
first yacht during the third quarter of Fiscal 1998.
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.
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.
- -16-
PART II. OTHER INFORMATION.
-17-
ITEM 2: CHANGE IN SECURITIES.
During the first quarter of Fiscal 1998, the Company
announced a three for two forward stock split, The
shareholder record date was set at August 1, 1997, with
fractional shares to be paid in cash on the payable date,
August 14, 1997.
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 three months of Fiscal 1998.
(b) No Current Reports on Form 8-K were filed by the
Registrant during the first three months of Fiscal
1998.
-18-
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/ Joseph F. Schemenauer Date: November 14, 1997
Joseph F. Schemenauer
Vice President, Chief Financial
Officer, and Designated Principal
Accounting Officer
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