Fountain: Auditor’s opinion no cause for concern - Trade Only Today

Fountain: Auditor’s opinion no cause for concern

Author:
Publish date:

Fountain Powerboat Industries said this morning that a recent auditor’s opinion raising concerns about the company’s finances is a “formality.”

“This is the second year in a row we’ve had a net loss,” Irving Smith, Fountain CFO, told Soundings Trade Only this morning. “Based on that, the auditor is required to put a going concern opinion in the [annual] report.”

“The whole thing was kind of a formality,” he said.

Fountain’s independent accounting firm, Gregory & Associates, included a letter in the boatbuilder’s Sept. 29 annual report that raised doubts about Fountain’s ability to stay in business.

“The company has current liabilities in excess of current assets, recent losses from operations, negative cash flows from operating activities, and has significant debt compared to the underlying equity,” the accounting firm said in the Sept. 16 letter accompanying Fountain’s annual report.

“These factors raise substantial doubt about the company’s ability to continue as a going concern,” the accounting firm said.

However, Smith said Fountain’s finances are improving. The company reported a net loss of $2.2 million in fiscal 2008, compared to a net loss of $5 million in fiscal 2007, which included a $1.3 million tax write-off. Smith said the company has instituted numerous cost-saving initiatives over the last year or two.

“Even though we’re still in the loss column, we’ve improved quite a bit,” he said. “We feel real good about where we are now.”

Smith noted the company plans to further improve the bottom line by stabilizing revenue and increasing prices of some models to compensate for increases in material and production costs; improving manufacturing efficiency by lowering production labor costs; and reducing advertising and offshore racing expenses.

Related

E-nnovation Lab to expand at 2018 Metstrade show

The growing demand for hybrid and electric engines is becoming more apparent within the leisure marine market, prompting Metstrade to introduce the E-nnovation Lab platform for electric propulsion technology.

Aluminum, tow boats lead moderate growth in May

Boat registrations were up 2.1 percent in May in the main powerboat categories, and rose 3.2 percent in all categories, according to preliminary data from Statistical Surveys Inc., a Michigan company that tracks new boat registrations.

Retaliatory tariffs on boats to EU start today

The 25 percent tariff the EU announced Wednesday on U.S.-built boats kicks in today, and a 10 percent tariff on boats sold to Canada will start July 1, prompting boatbuilders to worry they will lose sales to those countries.