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"And now for something completely different."

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Old 05-12-2006, 10:29 AM
  #11
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Default Re: "And now for something completely different."

Form 10-Q for FOUNTAIN POWERBOAT INDUSTRIES INC

11-May-2006

Quarterly Report


ITEM 2: Management's Discussion and Analysis of Results of Operations and Financial Condition

Results of Operations

Net Sales - Net sales for the three months ended March 31, 2006 were $18,526,332, an increase of $1,812,192 or 11%, as compared to net sales of $16,714,140 for the three months ended March 31, 2005. Net sales for the nine months ended March 31, 2006 were $55,894,161, an increase of $5,181,194 or 10%, as compared to net sales of $50,712,967 for the nine months ended March 31, 2005. The increase in net sales from the comparable periods during the previous fiscal year was primarily attributable to increased unit sales of our larger fish boats including the new 33 foot sport fish cruiser, and increased production of express cruisers.

Gross Profit - Gross profit for the three months ended March 31, 2006 was $2,764,533 as compared to $2,891,593 for the three months ended March 31, 2005. Gross profit for the third quarter was affected in part by a special pricing program to expand the Company's presence in a segment of the sport boat market and management's decision to not ship 38' cruisers to dealers during a major redesign of the boat. The redesigned 38' cruisers are expected to begin shipment in the fourth quarter. Gross profit for the nine months ended March 31, 2006 was $9,338,349, an increase of $2,077,705, or 29%, as compared to $7,260,644 for the nine months ended March 31, 2005. The increase in gross profit for the nine months ended March 31, 2006, as compared to the comparable periods in the previous year is primarily attributable to improvements in the productivity and efficiency of the Company's manufacturing operations and increased production of express cruisers

Selling Expenses - Selling expenses for the three months ended March 31, 2006 were $1,484,647 as compared to $1,459,364 for the three months ended March 31, 2005. Selling expenses for the nine months ended March 31, 2006 were $4,211,356 as compared to $3,994,954 for the nine months ended March 31, 2005; the increase in expenses for the nine months is primarily attributable to increases in advertising and dealer training expenses.

General and Administrative Expenses - General and administrative expenses for the three months ended March 31, 2006 were $1,063,484 as compared to $824,396 for the three months ended March 31, 2005; the increase in expenses for the third quarter is primarily attributable to increases in salaries and consulting and services expenses. General and administrative expenses for the nine months ended March 31, 2006 were $3,034,937, an increase of $681,465, as compared to $2,353,472 for the nine months ended March 31, 2005; the increase in expenses for the nine month period was generally related to accounting and legal expenses related to the restatements of the Company's consolidated financial statements for the year ended June 30, 2004 and the quarterly and year-to-date periods ended September 30, December 31 and March 31, 2005, preparation for internal audit processes as required by the Sarbanes-Oxley Act: Section 404, fees for management consulting, and expenses related to an increased emphasis on investor awareness programs.

Interest Expense -Interest expense during the three months ended March 31, 2006 was $219,421, as compared to $252,308 for the three months ended March 31, 2005. Interest expense during the nine months ended March 31, 2006 was $1,027,621 as compared to $793,417 for the nine months ended March 31, 2005. The increase in interest expense was principally due to the write-off of deferred closing costs of $229,801 relating to the Bank of America loan that was refinanced during the period.

Net Income (Loss) - Net income for the three months ended March 31, 2006 was $22,410 as compared to $360,460 for the three months ended March 31, 2005. Net income for the nine months ended March 31, 2006 was $1,038,764 as compared to $124,528 for the nine months ended March 31, 2005.

Income Tax - Current tax expense is $0 and $0 for the three and nine months ended March 31, 2006 and 2005, respectively. Deferred tax expense is $0 and $0 for the three and nine months ended March 31, 2006 and 2005, respectively. The Company provided no income tax expense for the three and nine months ended March 31, 2006, even though the Company had income before income taxes, due to the recognition of deferred tax assets generated in prior years. Due to the volatility of the Company's operating results in recent years past, the net deferred tax asset at March 31, 2006 continues to be reduced to $0 through a valuation allowance.

Liquidity and Capital Resources

Cash was $2,280,394 and $4,013,225 at March 31, 2006 and June 30, 2005, respectively. The decrease of $1,732,831 in cash is primarily attributable to investing activities as discussed below.

Cash provided by operations for the nine months ended March 31, 2006 was $133,018 and cash provided by operations for the nine months ended March 31, 2005 was $4,055,989. The cash provided by operations during the nine month period ending March 31, 2006 is primarily attributable to Operating Activities ($2,991,594) and an increase in Dealer Incentives ($2,030,840), partially offset by uses of cash attributable to increases in Accounts Receivable ($1,939,063), Inventories ($1,420,358) and Prepaid Expenses ($966,186).

Cash used by investing activities for the nine months ended March 31, 2006 was $1,687,818 and for the nine months ending March 31, 2005 was $3,147,964. The use of cash during the nine months ended March 31, 2006 was primarily attributable to boat mold and tooling expenditures ($786,875) to support the Company's continued enhancement of its product lines and purchases of other property, plant and equipment ($728,347).

Cash used by financing activities for the nine months ended March 31, 2006 was $178,031 and cash used by financing activities for the nine months ended March 31, 2005 was $2,214,489. The use of cash during the nine months ended March 31, 2006 is solely attributable to the refinancing and repayment of long-term debt.

Management is of the opinion that cash flows will be sufficient to satisfy its current and future liquidity demands because of the increase in sales volumes at the date of this filing. The Company has maintained a substantial sales backlog through the date of this report and is currently enjoying a favorable business climate for its products. The Company's firm order backlog at March 31, 2006 was $49 million, as compared to $45 million at March31, 2005.

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.
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Old 05-12-2006, 10:30 AM
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Default Re: "And now for something completely different."

Looks like a nosedive.
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Old 05-12-2006, 10:38 AM
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Default Re: "And now for something completely different."

That's the problem with being a public company....

When things are good they are OK. When they're bad, everyone airs their dirty laundry!
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Old 05-12-2006, 10:39 AM
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Default Re: "And now for something completely different."

Gas prices .
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Old 05-12-2006, 10:49 AM
  #15
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Default Re: "And now for something completely different."

Gross profit for the third quarter was affected in part by a special pricing program to expand the Company's presence in a segment of the sport boat market and management's decision to not ship 38' cruisers to dealers during a major redesign of the boat. The redesigned 38' cruisers are expected to begin shipment in the fourth quarter. Gross profit for the nine months ended March 31, 2006 was $9,338,349, an increase of $2,077,705, or 29%, as compared to $7,260,644 for the nine months ended March 31, 2005. The increase in gross profit for the nine months ended March 31, 2006, as compared to the comparable periods in the previous year is primarily attributable to improvements in the productivity and efficiency of the Company's manufacturing operations and increased production of express cruisers
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Old 05-12-2006, 11:03 AM
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Default Re: "And now for something completely different."

[QUOTE]Ahh... the high cost of SBI sponsorship
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Old 05-12-2006, 11:09 AM
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Default Re: "And now for something completely different."

[QUOTE=Pete B]
Quote:
Ahh... the high cost of SBI sponsorship
sponsorship or ownership?
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Old 05-12-2006, 11:25 AM
  #18
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Default Re: "And now for something completely different."

Quote:
Originally Posted by CigDaze
Looks like a nosedive.
It's the new step bottom.
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Old 05-12-2006, 11:33 AM
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Default Re: "And now for something completely different."

Quote:
Originally Posted by OldSchool
18 million of sales with a profit of 22K for the quarter.....WOW


I would think of alot of easier ways to make $88K a year than making all of those boats!!!!!
That's probably after Reggie's salary!!
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Old 05-12-2006, 12:04 PM
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Default Re: "And now for something completely different."

Those numbers don't look good.
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