Boat builders’ economic woes continue
The final week of January has been one the marine industry would like to forget. On top of the news that Brunswick Corp. and Marine Products Corp. saw fourth-quarter new boat sales revenue declines of 54 and 61 percent, respectively, a number of smaller boat builders have shown signs of being hard hit, as well.
According to a series of articles found Friday morning, Silverton, Twin Vee and Christiansen have endured a series of cut backs, layoffs and closures.
An article on www.NJ.com says that yacht builder Silverton Marine Corporation is eliminating 202 jobs, or about 40 percent of its workforce, in the coming months. According to the article the layoffs are scheduled to begin today and will be spread out over two months, ending in March. The company notified the New Jersey Department of Labor of its plans on New Year’s Day, the article says.
The Palm Beach Post has reported that boat builder Twin Vee has been kicked out of its Fort Pierce headquarters because it is behind on its bills. The company’s founder and former owner, Roger Dunshee, who still owns the building where the company was operating, got a court order Jan. 12 to evict his former company, the paper’s Web site says. Dunshee reportedly said that if a deal to lease or sell the property doesn’t pan out, he would consider reviving the boat business himself.
The stock market decline has been cited for the reason construction at a new boat yard in Loudon County, Tennessee, has been stopped, according to an article on the Knoxsville News Sentinel’s Web site. The cost of the construction, which began a little over a year ago, was to near $20 million, and it was an effort by Christensen Yachts to build super yachts on Tellico Lake, the article says. The lead investor, Henry Luken, reportedly told the Web site that changes to the facility, combined with a decline in the stock market and a shift in his own investment priorities have put the project on hold.
Other public companies
Brunswick and Marine Products Corp. were not the only public companies to be hit hard this week.
Marine electronics manufacturers Johnson Outdoors, Inc. posted a loss from continuing operations of $6.9 million in the first quarter of 2009. The company says that its electronics revenues were down 3.9 percent compared to last year, “primarily due to continued declines in the marine market.” Similarly, the company’s watercraft sales fell 18 percent compared to the same quarter last year.
In the high-performance boat segment, Fountain Powerboats received a non-compliance notice from the NYSE Alternext US, successor to the American Stock Exchange, that it is not in compliance with the Exchange’s standards for the continued listing of its common stock, and as a result, the company has become subject to the Exchange’s suspension and delisting procedures.
Fountain had received a similar notice on June 11, 2008, saying that it was not in compliance with Section 1003(a)(iv) of the Company Guide. Specifically, the notice stated that the Company had sustained losses which were so substantial in relation to its overall operations or its existing financial resources, or its financial condition had become so impaired that it appeared questionable, in the opinion of the Exchange, whether the company would be able to continue operations and/or meet its obligations as they mature.
On November 5, 2008, the Company received notice from the Exchange, that, based on the Exchange’s review of the Company’s Annual Report on Form 10-K for the year ended June 30, 2008, the Company was not in compliance with an additional listing standard, Section 1003(a)(i) of the Company Guide, because its stockholders’ equity was less than $2 million, and it had incurred losses from continuing operations and net losses in two of our three most recent fiscal years. Most recently, on January 26, 2009, Fountain received notice from the Exchange, that, based on its review of information Fountain submitted in response to the November notice, the boat builder has not made a reasonable demonstration of its ability to regain compliance with Section 1003(a)(i) of the Company Guide within the allotted amount of time. Additionally, the notice stated that the Company also is not in compliance with Section 1003(b)(i)(C) of the Company Guide because the aggregate market value of its publicly held shares has been less than $1 million for more than 90 consecutive days.
As a result, the Staff has determined that the Company is subject to immediate delisting proceedings and that, unless it appeals the Staff’s determination by February 2, 2009, the Exchange will suspend trading in the Company’s common stock and file an application with the Securities and Exchange Commission to strike the stock from listing and registration on the Exchange.
In light of current economic conditions in general and, in particular, conditions within the marine industry, Fountain says it does not believe it can regain compliance with the Exchange’s continued listing standards in the near-term. As a result, Fountain says its Board of Directors has elected not to appeal the Staff’s determination.
