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Avcorp announces 2008 Annual Results
During the year ended
Gross profit (revenue less cost of sales) for the year ended
The following significant non-recurring charges against income and revenue reduction were recorded in 2008:
- As at September 30, 2008, management estimated that there was an
other than temporary decline in value of the Company's investment in
Eclipse Aviation Corporation. Accordingly, the investment was written
down to $Nil. This non-cash write-down had the impact of reducing net
income by $759,000.
- Fourth quarter 2008 softening of customers' order book caused the
Company to review operations and terminate employees. This
necessitated a $607,000 charge against income in the year ended
December 31, 2008.
- On December 31, 2008, management estimated that there existed an
impairment on the goodwill which arose from the acquisition of Comtek
Advanced Structures Ltd., accordingly a $571,000 impairment loss was
recognized.
- A customer work stoppage due to a labour dispute during 2008 caused
revenues to decrease by over $2.6 million during the fourth quarter
2008 and into the first quarter 2009.
Cash flows from operating activities provided
As at
In response to an unprecedented drop in business from its major customer, Avcorp has continued to reduce its workforce to a level which is 26% below that of the beginning of the fourth quarter of last year representing a reduction of approximately 200 employees. The current economic downturn will see revenue drop by 30% this year with severe pressure being put on the Company's operations and credit lines as it deals with the dramatic economic slow down in the business jet market with recovery not anticipated until 2011.
About Avcorp
Avcorp designs and builds major airframe structures for some of the world's leading aircraft companies, including Boeing, Bombardier, and Cessna. With more than 50 years of experience, 550 skilled employees and 385,000 square feet of facilities, Avcorp offers integrated composite and metallic aircraft structures to aircraft manufacturers, a distinct advantage in the pursuit of contracts for new aircraft designs, which require lower-cost, light-weight, strong, reliable structures. Avcorp is a Canadian public company traded on the Toronto Stock Exchange (TSX:AVP).
(signed) (signed)
MARK VAN ROOIJ PAUL KALIL
CHIEF EXECUTIVE OFFICER PRESIDENT
Forward-Looking Statements
This release should be read in conjunction with the Company's unaudited financial statements contained in the Company's Annual Report and with the quarterly financial statements and accompanying notes filed with Sedar (www.sedar.com).
Certain statements in this release and other oral and written statements made by the Company from time to time are forward-looking statements, including those that discuss strategies, goals, outlook or other non-historical matters; or projected revenues, income, returns or other financial measures. These forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from those contained in the statements, including the following: (a) the extent to which the Company is able to achieve savings from its restructuring plans; (b) uncertainty in estimating the amount and timing of restructuring charges and related costs; (c) changes in worldwide economic and political conditions that impact interest and foreign exchange rates; (d) the occurrence of work stoppages and strikes at key facilities of the Company or the Company's customers or suppliers; (e) government funding and program approvals affecting products being developed or sold under government programs; (f) cost and delivery performance under various program and development contracts; (g) the adequacy of cost estimates for various customer care programs including servicing warranties; (h) the ability to control costs and successful implementation of various cost reduction programs; (i) the timing of certifications of new aircraft products; (j) the occurrence of further downturns in customer markets to which the Company products are sold or supplied or where the Company offers financing; (k) changes in aircraft delivery schedules or cancellation of orders; (l) the Company's ability to offset, through cost reductions, raw material price increases and pricing pressure brought by original equipment manufacturer customers; (m) the availability and cost of insurance; (n) the Company's ability to maintain portfolio credit quality; (o) the Company's access to debt financing at competitive rates; and (p) uncertainty in estimating contingent liabilities and establishing reserves tailored to address such contingencies.
Consolidated Balance Sheets
as at December 31, 2008 and December 31, 2007
(in thousands of Canadian dollars)
-------------------------------------------------------------------------
For the year ended December 31 2008 2007
--------------------------
Assets
Current assets
Accounts receivable $ 12,609 $ 12,224
Inventories 19,206 17,801
Prepayments 1,761 2,401
Other assets 746 138
--------------------------
34,322 32,564
Prepaid rent - 481
Development costs 3,299 1,545
Property, plant and equipment 19,431 20,310
Investment - 759
Warranty claim receivable 1,784 1,454
Intangible assets 2,154 2,620
Goodwill - 571
--------------------------
60,990 60,304
--------------------------
--------------------------
Liabilities
Current liabilities
Bank indebtedness 14,273 11,279
Accounts payable and accrued liabilities 15,841 14,812
Current portion of long-term debt 6,273 2,056
--------------------------
36,387 28,147
Deferred gain 453 501
Lease inducement 962 1,060
Deferred tooling revenues 1,173 2,676
Long-term debt 2,872 6,761
Warranty provision 1,632 1,454
Future income tax liability 1,186 1,186
--------------------------
44,665 41,785
--------------------------
Shareholders' Equity
Capital stock 62,269 61,194
Preferred shares 7,622 7,672
Contributed surplus 2,647 2,857
Deficit (56,213) (53,204)
--------------------------
16,325 18,519
--------------------------
60,990 60,304
--------------------------
--------------------------
Consolidated Statements of Operations and Comprehensive Loss
For the years ended December 31, 2008 and 2007
(in thousands of Canadian dollars, except number of shares
and per share amounts)
-------------------------------------------------------------------------
For the year ended December 31 2008 2007
--------------------------
Revenues $ 128,868 $ 110,283
--------------------------
Cost of sales and expenses
Cost of sales 107,188 98,442
Administrative and general expenses 13,676 9,562
Amortization and depreciation 4,599 3,395
Write-down of goodwill 571 -
Foreign exchange (gain) loss 2,349 (1,321)
--------------------------
128,383 110,078
--------------------------
--------------------------
Income from operations 485 205
Interest expense and financing charges (2,479) (2,094)
Unrealized derivative gain 502 170
Write-down of investment (759) -
--------------------------
--------------------------
Loss and comprehensive loss for the year (2,251) (1,719)
--------------------------
--------------------------
Basic and diluted loss per common share (0.07) (0.06)
--------------------------
--------------------------
Basic and diluted weighted average number
of shares outstanding (000's) 32,143 29,674
--------------------------
--------------------------
Consolidated Statements of Deficit
For the years ended December 31, 2008 and 2007
(in thousands of Canadian dollars)
-------------------------------------------------------------------------
For the year ended December 31 2008 2007
--------------------------
Deficit - Beginning of year $ (53,204) $ (50,565)
Loss for the year (2,251) (1,719)
Preferred share dividends (758) (920)
--------------------------
Deficit - End of year (56,213) (53,204)
--------------------------
--------------------------
Consolidated Statements of Cash Flows
For the years ended December 31, 2008 and 2007
(in thousands of Canadian dollars)
-------------------------------------------------------------------------
For the year ended December 31 2008 2007
--------------------------
Cash flows from operating activities
Loss for the year $ (2,251) $ (1,719)
Items not affecting cash 7,663 4,790
--------------------------
5,412 3,071
Change in non-cash items related to
operating activities (589) (1,323)
--------------------------
4,823 1,748
--------------------------
Cash flows from investing activities
Purchase of property, plant and equipment (2,771) (5,020)
Payments relating to development costs
and tooling (2,766) (744)
Proceeds from sale of property, plant
and equipment - 15
Acquisition of Comtek Advanced Structures Ltd. - (2,073)
--------------------------
(5,537) (7,822)
Cash flows from financing activities
Net proceeds from bank indebtedness 2,994 4,790
Proceeds from long-term debt 131 858
Proceeds from sale and leaseback of property,
plant and equipment 1,215 1,903
Proceeds from sale of tooling 103 -
Repayment of long-term debt (3,342) (2,581)
Issue of common shares 371 1,680
Issue of warrants - 411
Preferred share dividends (758) (920)
Share issue expense - (67)
--------------------------
714 6,074
--------------------------
Net change in cash and cash equivalents - -
Cash and cash equivalents - Beginning of year - -
--------------------------
Cash and cash equivalents - End of year - -
--------------------------
--------------------------
Interest paid 1,714 1,244
--------------------------
--------------------------
SOURCE Avcorp Industries Inc.