Fountain Powerboat Industries reports first quarter earnings, formation of a new subsidiary, and...

WASHINGTON, N.C.--(BUSINESS WIRE)--Oct. 24, 1996--Mr. R.M. Fountain, Jr., Chairman and Chief Executive Officer of Fountain Powerboat Industries, Inc. (NASDAQ:FPWR) announced that for the first quarter ended Sept. 30, 1996, sales were $12,320,373 and net income was $1,335,389, or $.42 per share.

Fountain said that the record net earnings for the first quarter of this fiscal year were primarily because net sales and gross margin on sales were greater than for the first quarter of last year. The company has been adding to its production capacity in the face of its record high sales order backlog. The sales backlog is for approximately 250 boats having an estimated sales value of $25 million.

The Company expects to achieve record earnings for the third straight year in Fiscal 1997. Earnings will be further improved for this fiscal year as selling price increases take effect, additional production capacity is added, and improved manufacturing processes are implemented. Mr. Fountain said that the Company will continue to pursue its strategy of more in-house, vertically integrated manufacturing because of the significant cost savings this strategy yields.

Later this fiscal year, the Company plans to introduce two new, highly profitable products, 58' and 65' wide beam luxury sport yachts. These new sport yachts will have positive lift hulls and a revolutionary new propulsion system which will give them unmatched performance.

Mr. Fountain also announced that the Company has acquired Mach Performance Inc., of Lake Hamilton, Fla. Fountain issued 85,000 new restricted shares of common stock to purchase 100% of Mach from Mr. Gary Garbrecht. The acquisition was effective Oct. 11.

Mach Performance manufactures high quality stainless steel propellers. Mach has both foundry and finishing capabilities that will enable it to make components parts used in Fountain boats in addition to its complete line of propellers.

Mr. Garbrecht will serve as vice president of operations at Fountain Powerboats and as president and chief operating officer of Fountain Power Inc., a new subsidiary. Fountain Power will concentrate its efforts on engine/drive packages for the two new wide beam 58' and 65' Fountain sport yachts. The new subsidiary will also continue to manufacture and market the Mach propellers and other marine components and accessories under the Mach Performance name.

Mr. Garbrecht was director of the Mercury Marine factory racing team from 1962 until 1980. During that time he established what is now known as Mercury High Performance Products. In 1980, Mr. Garbrecht was named president of Arneson Surface Drives and was responsible for the design and marketing of Arneson's highly successful products.

From 1982 to 1990, Mr. Garbrecht was the founder and owner of Second Effort Performance Products, which specialized in manufacturing racing engines and accessories. Second Effort was subsequently purchased by Outboard Marine Corp. In 1990, Mr. Garbrecht launched Mach Performance, Inc., which he and his oldest son, Alan Garbrecht, operated until its acquisition by Fountain.

Fountain Powerboats Inc. is a NASDAQ National Market listed company. It manufactures high performance sport boats, sport cruisers, sport yachts, and sport fishing boats in its efficient, modern plant located on the Pamlico River. Fountain boats are known internationally for their speed, style, safety, and outstanding quality.

Following are comparative Condensed Consolidated Statements of income and Condensed Consolidated Balance Sheets. -0-

                 FOUNTAIN POWERBOAT INDUSTRIES INC.
            Condensed Consolidated Statements of Income
                          (Unaudited)

                                          Sept. 30,
                                      1996          1995

Net sales                      $12,320,373   $ 8,999,524
Cost of sales                    9,073,259     7,353,620
Gross margin                   $ 3,247,114   $ 1,645,904
 Per cent                            26.36%        18.29%
Operating expenses               1,733,856     1,137,984
Other (income)/expense              73,189        76,591
Net income/(loss) before
 income taxes                  $ 1,440,069   $   431,329
Income tax provision               104,680             0
Net income/(loss)              $ 1,335,389   $   431,329
 Per cent                            10.84%         4.79%
Net income/(loss) per share    $       .42   $       .14
Weighted average
 shares outstanding              3,198,906     3,019,072
Fully diluted earnings
 per share                     $       .42    $      N/A
Fully diluted weighted
 average shares outstanding      3,205,242           N/A

                  Condensed Consolidated Balance Sheets
                             (Unaudited)

                                         Sept. 30,
                                     1996          1995
Assets

Cash                          $ 2,524,282   $   228,087
Accounts receivable             2,463,680     1,946,111
Inventories                     3,580,401     3,438,373
Prepaid expenses                  233,201       184,275
Other current assets                    0       183,393
 Total current assets           8,801,564     5,980,239
Property, plant and
 equipment                     21,302,393    19,470,850
Accumulated
 depreciation                 (11,148,578)   (9,624,674)
Other non-current
 assets                           194,576       160,448
 Total non-current
  assets                      $10,348,391   $10,006,624
Total assets                  $19,149,955   $15,986,863

Liabilities and Shareholders' Equity

Trade accounts
 payable                      $ 1,380,150   $ 1,414,508
Revolving line of credit -
 engines                        1,018,783     1,181,964
Accrued expenses                1,691,078       639,962
Current portion of long
 term debt                        782,738     1,141,905
Reserve for warranty
 expense                          410,000       400,000
Reserve for boat
 repurchases                      207,359       207,359
Customer deposits                 127,280       357,887
Other current
 liabilities                       80,804       197,541
Total current
  liabilities                   5,698,192     5,541,126
Long term debt                  5,231,930     6,809,998
 Total liabilities             10,930,122    12,351,124

Shareholders' equity:
 Common stock outstanding,
$.01 per share par value      $    30,291   $    30,291
 Treasury stock at cost
  (10,000 shares)                (110,748)     (110,748)
 Capital contributed in excess
  of par value                  9,297,450     9,297,450
 Deficit in retained
  earnings                       (997,160)   (5,581,254)
  Net shareholders'
   equity                     $ 8,219,833     3,635,739
Total liabilities and
 shareholders' equity         $19,149,955    15,986,863

CONTACT: Fountain Powerboat Industries Inc., Washington

Carol J. Price, 919/975-2000