Fountain Powerboats Announces Financial Results For Its Fiscal Third Quarter and Nine-Month Period
Sales Up 21 Percent for Nine-Month Period; Order Backlog at $45 Million

Washington, NC - May 9, 2005 - Fountain Powerboats, Inc. (AMEX:FPB), a subsidiary of Fountain Powerboat Industries, Inc. and leading manufacturer of high performance sport boats, fish boats and express cruisers, today announced results for the third quarter of fiscal 2005, ending March 31, 2005.

Net sales for the fiscal third quarter were $16,564,276, up from sales of $15,790,650 for the third quarter of fiscal 2004. The company reported an operating profit of $516,573 for the quarter compared, to an operating profit of $1,037,460 for the third quarter of fiscal 2004. Net income for the quarter was $230,560, or net earnings per share of $0.05 on a basic and diluted basis, compared to net income of $754,365 for the third quarter of fiscal 2004, or earnings per share of $0.16 on a basic and diluted basis.

"Net income for the fiscal third quarter was a significant improvement over the company's fiscal second quarter ended December 31, 2005, which posted a loss of approximately $47, 000," said Fountain Chief Financial Officer, Irving Smith. "The company's fiscal third quarter ended March 31, 2005, lagged behind the comparable quarter for fiscal 2004 due in part to disruption of the manufacturing process caused by a restructuring of our manufacturing operations and processes. The months of construction adversely affected productivity and increased our cost of goods sold. The construction is now complete, and the manufacturing operation is beginning to achieve the productivity and manufacturing efficiencies, as reflected in much improved margins, particularly for March 2005."

"The construction of the manufacturing facilities for increased capacity and optimization of production efficiencies is complete," continued Smith. "The enhancement significantly improved our cost of sales for the latter part of our fiscal third quarter which, in spite of the disruption to the manufacturing process, demonstrated measurable improvement over cost of sales for our fiscal 2005 second quarter. We expect to see this trend continue through the end of fiscal 2005."

Net sales for the nine months ended March 31, 2005, were $50,820,178, compared to net sales of $42,037,693 for the comparable nine-month period of fiscal 2004, a 21 percent increase. Operating income for the first nine months of fiscal 2005 was $1,276,260, compared to $1,605,265 for the first nine months of fiscal 2004. Net income for the first nine months of fiscal 2005 was $500,742, or earnings per share of $0.10 on a basic and diluted basis, compared to a net income of $637,077 for the first nine months of fiscal 2004, or earnings per share of $0.13 on a basic and diluted basis.

The rise in petroleum prices and metal product prices during the nine-month period ended March 31, 2005, negatively impacted gross profit. Prices of the company's boats have been adjusted to offset these increases and, coupled with the cost savings of the new manufacturing processes and efficiencies, we expect to considerably improve gross margins on a go forward basis.

The company's balance sheet remains strong with $2.4 million in cash and cash equivalents, a current ratio of 1.28:1, and shareholders' equity of approximately $6.7 million.

"We spent more than half a million dollars on restructuring and configuring our manufacturing operations and processes in order to increase capacity and improve productivity to meet the company's sales objectives of $67 million for fiscal 2005," commented Fountain Powerboats Chief Executive Officer and President Regional M. Fountain, Jr. "While our profit margins were affected during the process, we believe the improvements will allow us to increase the number of boats in the manufacturing process at any one time, as well as move them through the process more quickly, while still preserving the level of quality that is synonymous with the Fountain brand."

"During our third fiscal quarter, we unveiled four new boats at the Miami Boat Show, including a 42' Poker Run Edition Sport Boat, a 33' Sport Fish Cruiser, a 32' Center Console Fish Boat and a 23' Center Console Fish Boat," continued Fountain. "While the Fort Lauderdale International Boat Show and the New York National Boat Show produced record sales in excess of $8 million, the Miami Boat Show, our most successful show of the season, produced sales in excess of $11.6 million, increasing our backlog to $50 million."

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).