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Fountain, more bad news!

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ghart

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Discussion starter · #1 ·
Press Release Source: Fountain Powerboat Industries


Fountain Powerboat Industries, Inc. Receives Audit Opinion Containing "Going Concern" Qualification
Wednesday October 1, 11:00 am ET


WASHINGTON, NC--(MARKET WIRE)--Oct 1, 2008 -- In accordance with Section 610(b) of the American Stock Exchange Company Guide, Fountain Powerboat Industries, Inc. (FPB - News) (the "Company") today announced that the audit report of its independent registered public accounting firm, Gregory & Associates LLC, included in Company's Annual Report on Form 10-K for the fiscal year ended June 30, 2008, while expressing an unqualified opinion regarding the Company's audited financial statements, identified matters which the audit report stated raised substantial doubt about the Company's ability to continue as a going concern. The Company discussed its plans to address those matters in Note 15 to the financial statements included in the Form 10-K.

The Company's announcement was required by the American Stock Exchange's rules and does not represent any change or amendment to the Company's fiscal 2008 financial statements or to its Annual Report on Form 10-K, which was filed with the Securities and Exchange Commission on September 29, 2008.
 
Discussion starter · #4 ·
Yesterday they put out their 10-Q, that is their earnings report.

I honestly expected them to post another loss but much to my amazement they posted a positive number, no record but actually made a few bucks!

In the 10-Q they have two areas that are not good news.

The first addresses the potential liability for repurchasing boats from dealers who default on their floor plan, it is a very big number should they find themselves buying boats back. In the event they file bankruptcy, I would almost guarantee the dealers will be sending boats back to Fountain!

Here is the first part of the 10-Q statement;

The Company has a contingent liability to repurchase boats where it participates in the floor plan financing made available to its dealers by third-party finance companies, aggregating to $22,869,162 and $24,375,708 at June 30, 2008 and 2007, respectively. Sales to participating dealers are approved by the respective finance companies. If a participating dealer does not satisfy its obligation to the lender and the boat is subsequently repossessed by the lender, then the Company may be required to repurchase the boat.
 
Discussion starter · #6 ·
The second troublesome statement in the 10-Q addresses the boat industry in general. As you will see and we all know, it ain't pretty!

Here's that part of the statement from Fountain in their 10-Q.

Business Environment.

Recreational boating is a discretionary expenditure and many purchasing decisions are influenced by interest rates, fuel prices, insurance rates, weather, general economic factors, and other socioeconomic and environmental factors.

Consumer confidence has been negatively affected by a number of factors; rising fuel prices, rising cost of goods and services, home mortgage failures, decline of housing starts, interest rate increases, bank and lending institution failures, and unemployment increase.


The overall marine industry began to soften in 2005 for small fiberglass boats (30 feet and less) and the downturn expanded into the larger fiberglass boat segment in 2006. Demand for sport fishing boats and cruisers weakened in 2007. Sales of all segments of the fiberglass recreational boating market have continued to decline through the second calendar quarter of 2008. Market analysts are projecting that the industry will not see a significant improvement through 2009.
 
#7 ·
ghart said:
Yesterday they put out their 10-Q, that is their earnings report.

I honestly expected them to post another loss but much to my amazement they posted a positive number, no record but actually made a few bucks!

In the 10-Q they have two areas that are not good news.

The first addresses the potential liability for repurchasing boats from dealers who default on their floor plan, it is a very big number should they find themselves buying boats back. In the event they file bankruptcy, I would almost guarantee the dealers will be sending boats back to Fountain!

Here is the first part of the 10-Q statement;

The Company has a contingent liability to repurchase boats where it participates in the floor plan financing made available to its dealers by third-party finance companies, aggregating to $22,869,162 and $24,375,708 at June 30, 2008 and 2007, respectively. Sales to participating dealers are approved by the respective finance companies. If a participating dealer does not satisfy its obligation to the lender and the boat is subsequently repossessed by the lender, then the Company may be required to repurchase the boat.
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First of all a "Going Concern" statement is not good.... but it is not the end of the world for any Company... it is added to protect the Accountant from being liable to the users of the Financial Statement.... those usually being potential lenders.... and usually results from the company not having secured needed capital prior to the issuance of the accountants report... it does not necessarily mean the Company can not secure the capital needed....

Second the important language here is "Contingent Liablility" and "then the Company may be required to repurchase the boat" ... the "May" is very significant... because it is undetermined....

Although I agree with ghart that this is not "good' news.... it is by no means the end of Fountain Powerboats....what you are seeing is the affects of the very stingy lending industry we are in now.... and the results of a company that was given too much credit when the lending industry was open to anything .....

Its Bill Clintons Fault ;)
 
Discussion starter · #8 ·
Gary, that being "your area of expertise," I am in complete agreement with your read on the situation, especially the part about Bill!

It is a strong negative for any company to have unsold inventory at the dealer level that exceeds their quarterly sales volume on the manufacturing level, more than half of which is 2 model years in age!

Not very likely any of those dealers will be adding to their standing stock anytime soon!
 
#9 ·
ghart said:
Gary, that being "your area of expertise," I am in complete agreement with your read on the situation, especially the part about Bill!

It is a strong negative for any company to have unsold inventory at the dealer level that exceeds their quarterly sales volume on the manufacturing level, more than half of which is 2 model years in age!

Not very likely any of those dealers will be adding to their standing stock anytime soon!
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You're last sentence will be the real problem.... that's the "death blow".... this is exactly the type of situation we will be seeing more of without some help from Washington for the Wall Street lenders.... very sad...
 
Discussion starter · #10 ·
Yes it is. I'm confident that the US economy is resilient enough to bounce back as soon as the banks get back to lending money again!

At the moment the banks will want a co-signer for Warren Buffett! :laugher:
 
#12 ·
ghart said:
Yes it is. I'm confident that the US economy is resilient enough to bounce back as soon as the banks get back to lending money again!

At the moment the banks will want a co-signer for Warren Buffett! :laugher:
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I hate that guy - I was all ready to zoom in and buy Constellation Energy Stock and he offered $28.50 per share - dag nabbit... I was waiting for it to hit 21 and then buy - he made his offer at $23.50 on their downward spiral...

he paid too much!!!
 
Discussion starter · #14 · (Edited)
Fountain has the answer to dealer overstock...........

Go around the dealer and sell FACTORY DIRECT!

http://www.fdfss.com/

How would you like to be a boat dealer loaded with Fountain products and have the manufacturer as competition!

That'll save the company!

Idiots

I would hope that somehow the dealers are benefiting from the "Factory Superstore" but since Fountain has played the direct sale game in the past at the cost of the dealer network, I kinda doubt it!
 
Discussion starter · #15 ·
Speedwake said:
I hate that guy - I was all ready to zoom in and buy Constellation Energy Stock and he offered $28.50 per share - dag nabbit... I was waiting for it to hit 21 and then buy - he made his offer at $23.50 on their downward spiral...

he paid too much!!!
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Mr. "B" is flush with cash. His most recent splurge was 5 Billion, that's with a "B", dollars to Goldman Sachs. Then today he dropped 3 Billion, again with a "B", into General Electric.
 
#18 ·
ghart said:
Mr. "B" is flush with cash. His most recent splurge was 5 Billion, that's with a "B", dollars to Goldman Sachs. Then today he dropped 3 Billion, again with a "B", into General Electric.
Click to expand...
Yeah, Mr. "B" also said that if the govt. would cut him in on one percent of the rescue bill he'd take it. Must be nice to have that kind of 'walking money'!
 
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ghart
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