Fountain Powerboats Announces Fiscal 2008 First Quarter Results

WASHINGTON, NC , a leading manufacturer of high performance sport boats, fish boats and express cruisers, today announced the results of its fiscal 2008 first quarter ended September 30.

Net Sales

Net sales for the first quarter were $18 million, a 7 percent decrease when compared to sales of $19.4 for the first quarter of fiscal 2007.

"We expect revenues for Fiscal 2008 to be flat, at approximately $68 million, which is an aggressive goal given the weak market for fiberglass recreational boats," stated Fountain's founder and CEO Reginald M. Fountain, Jr. "Our revenue for the first quarter is in line with our goals for the year. While attendance at boat shows has been down this year our participation has been intense and our sales at retail at the shows have been encouraging. We are confident that the introduction of new and enhanced boat models during Fiscal 2008 will give a boost to our sales," added Fountain.

Operating Profit/(loss)

Operating profit for the first quarter of Fiscal 2008 was $638,470, versus an operating loss of ($38,505) for the first quarter of Fiscal 2007.

"The improvement in operating profit is the result of improvements in the productivity of the manufacturing operation and the aggressive cost and expense reduction program that the Company's management has effected over the past few months," commented Fountain's Chief Financial Officer, Irving Smith.

Net Profit/(Loss)

Net profit for the first quarter of Fiscal 2008 was $273,340, or net earnings per share of $0.06 on a basic and diluted basis, versus a net loss of ($196,670), or net loss per share of ($0.04) on a basic and diluted basis, for the first quarter of Fiscal 2007.

About Fountain Powerboats, Inc.

Fountain Powerboats, Inc., a subsidiary of Fountain Powerboat Industries, Inc., has its executive offices and manufacturing facilities along the Pamlico River in Beaufort County, North Carolina. The company designs, manufactures and sells offshore sport boats, sport fishing boats and express cruisers that target the segment of the recreational power boat market where speed, performance, safety and quality are the main criteria for purchase. These recreational boats are based upon an innovative, award-winning design enabling world class performance while using standard reliable power. There are currently 12 buildings located on 65 acres totaling over 237,000 square feet accommodating 40 to 45 boats in various stages of construction at any one time. The present plant site can also accommodate up to 300,000 square feet of additional manufacturing space. The land and buildings are wholly owned by Fountain Powerboat Industries, Inc. and its subsidiary, Fountain Powerboats, Inc. For more information, visit www.fountainpowerboats.com.

SAFE HARBOR FOR FORWARD-LOOKING STATEMENTS:

Except for the historical information contained herein, this press release contains forward-looking statements, including statements containing the words "planned," "expects," "believes," "strategy," "opportunity," "anticipates" and similar words. Such forward-looking statements are subject to known and unknown risks, uncertainties or other factors that may cause the company's actual results to be materially different from historical results or any results expressed or implied by such forward-looking statements. We assume no obligation to update any forward-looking statements to reflect events or circumstances arising after the date hereof. The potential risks and uncertainties which could cause actual growth and results to differ materially include, but are not limited to, customer acceptance of the company's services, products and fee structures, the success of the company's brand development efforts, the volatile and competitive nature of the industry, and changes in domestic and international market conditions, and foreign exchange rates. Further information on the factors and risks that could affect Fountain Powerboat Industries, Inc.'s business, financial condition and results of operations are included under the "Risk Factors" or "Factors Affecting Our Operating Results" sections of Fountain Powerboat Industries, Inc. public filings with the Securities and Exchange Commission, available at (http://www.sec.gov).

           FOUNTAIN POWERBOAT INDUSTRIES, INC. AND SUBSIDIARIES
              UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

                                              September 30,   June 30,
                                                  2007          2007
                                              ------------  ------------
ASSETS

CURRENT ASSETS:
      Cash and cash equivalents               $    781,373  $  2,379,383
      Accounts receivable, net                   2,949,453     3,688,986
      Inventories                                6,635,783     6,645,213
      Prepaid expenses                             563,869       668,237
                                              ------------  ------------

         Total Current Assets                   10,930,478    13,381,819

Property, Plant & Equipment                     49,791,438    49,533,443
    Less: Accumulated Depreciation             (33,692,793)  (33,104,217)
                                              ------------  ------------
                                                16,098,645    16,429,226

CASH SURRENDER VALUE LIFE INSURANCE              3,013,130     2,951,010
OTHER ASSETS                                       522,226       654,890
                                              ------------  ------------

TOTAL ASSETS                                  $ 30,564,479  $ 33,416,945
                                              ============  ============





           FOUNTAIN POWERBOAT INDUSTRIES, INC. AND SUBSIDIARIES
              UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

                                                September 30,    June 30,
                                                     2007         2007
                                                ------------  -------------
LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES
    Current maturities - long-term debt        $    771,599  $     759,290
    Notes payable                                        --        799,333
    Accounts payable - trade                      2,623,189      2,846,303
    Accrued expenses and other liabilities        1,207,824      1,092,908
    Dealer incentives                             5,133,196      6,342,467
    Customer deposits                               217,000        879,102
    Allowance for boat repurchases                   81,977         64,124
    Warranty reserve                                954,149        941,928
                                               ------------  -------------
      Total Current Liabilities                  10,988,934     13,725,455

LONG-TERM DEBT, less current maturities          15,771,828     15,969,407
OTHER LONG-TERM LIABILITIES                          51,883          4,828
DEFERRED TAX LIABILITY                                   --         80,896
COMMITMENTS AND CONTINGENCIES (Note 5)
                                               ------------  -------------
      Total Liabilities                          26,812,645     29,780,586

STOCKHOLDERS' EQUITY
    Common stock, $.01 par value, 200,000,000
     shares authorized, 4,844,275 shares issued
     and outstanding as of September 30, 2007
     and June 30, 2007                               48,442         48,442
    Additional paid-in capital                   10,574,753     10,574,753
    Accumulated deficit                          (6,731,661)    (7,005,001)
    Less: Treasury stock, at cost 15,000 shares    (110,748)      (110,748)
    Accumulated other comprehensive income
     (loss) from interest rate swap                 (28,952)       128,913
                                               ------------  -------------

      Total Stockholders' Equity                  3,751,834      3,636,359
                                               ------------  -------------

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY     $ 30,564,479  $  33,416,945
                                               ============  =============



           FOUNTAIN POWERBOAT INDUSTRIES, INC. AND SUBSIDIARIES
                     UNAUDITED CONDENSED CONSOLIDATED
                         STATEMENTS OF OPERATIONS

                                                For the Three Months Ended
                                                --------------------------
                                                September 30, September 30,
                                                     2007          2006
                                                ------------  ------------
NET SALES                                       $ 18,049,430  $ 19,413,852
COST OF SALES                                     15,344,844    16,537,935
                                                ------------  ------------
    Gross Profit                                   2,704,586     2,875,917
                                                ------------  ------------

EXPENSES:
    Selling expenses                               1,230,167     1,967,096
    General and administrative expenses              835,949       947,326
                                               ------------  ------------
    Total Expenses                                 2,066,116     2,914,422
                                                ------------  ------------

OPERATING INCOME (LOSS)                              638,470       (38,505)
                                                ------------  ------------

NON-OPERATING INCOME (EXPENSE):
    Other income (expense)                          (101,722)           24
    Interest expense                                (263,368)     (239,189)
                                                ------------  ------------
      Total Non-operating Income (Expense)          (365,090)     (239,165)
                                                ------------  ------------

INCOME (LOSS) BEFORE INCOME TAXES                    273,380      (277,670)

INCOME TAX EXPENSE (BENEFIT)                              40       (81,000)
                                                ------------  ------------

NET INCOME (LOSS)                               $    273,340  $   (196,670)
                                                ============  ============

BASIC EARNINGS (LOSS) PER SHARE                 $        .06  $       (.04)
                                                ============  ============

WEIGHTED AVERAGE SHARES OUTSTANDING                4,844,275     4,834,275
                                                ============  ============

DILUTED EARNINGS (LOSS) PER SHARE               $        .06  $       (.04)
                                                ============  ============

WEIGHTED AVERAGE SHARES OUTSTANDING ASSUMING
 DILUTION                                          4,848,461     4,834,275
                                                ============  ============

For Additional Information: Irving Smith Chief Financial Officer Fountain Powerboat Industries, Inc. 252.975.7004 [e-mail]