VANCOUVER , Aug. 13 /PRNewswire-FirstCall/ - Avcorp (AVP on the Toronto Stock Exchange) today announced its financial results for the quarter ended June 30, 2010 .
During the quarter ended June 30, 2010 , the Company recorded a loss from operations of
It should be noted that the current quarter loss includes a
The Company has realized the expected revenue growth in 2010 from full rate production of the Boeing Defense Space & Security CH47 helicopter and the Cessna Citation CJ4 business jet; both programs were in start-up phase for the Company in 2009. Additionally, the Company will experience moderate revenue growth during the second half of 2010 as a result of program re-starts and production rate increases. The previously announced signing of an agreement with BAE Systems Operations Ltd. for the production of the F35 CV-OBW will further increase revenues in 2011.
Cash flows from operating activities during the current quarter utilized
As at June 30, 2010 , the Company was not in compliance with financial covenants associated with its operating lines of credit. The lender had agreed to forbear from demanding payment of the indebtedness and from taking steps to enforce the security, subject to the Company complying with terms and conditions of a Forbearance Agreement which ends on October 15, 2010 . Also, as at June 30, 2010 , the Company was not in compliance with a financial covenant associated with the convertible debenture held by Export Development Canada. The Company has obtained a waiver from the debenture holder for this non-compliance.
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, 507 skilled employees and 354,000 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)
MARK VAN ROOIJ
CHIEF EXECUTIVE OFFICER
Forward-Looking Statements
This management discussion and analysis should be read in conjunction with the Company's audited financial statements. Certain statements in this report 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 ability of the Company to renegotiate its debt agreements under which it is in default; (b) the extent to which the Company is able to achieve savings from its restructuring plans; (c) uncertainty in estimating the amount and timing of restructuring charges and related costs; (d) changes in worldwide economic and political conditions that impact interest and foreign exchange rates; (e) the occurrence of work stoppages and strikes at key facilities of the Company or the Company's customers or suppliers; (f) government funding and program approvals affecting products being developed or sold under government programs; (g) cost and delivery performance under various program and development contracts; (h) the adequacy of cost estimates for various customer care programs including servicing warranties; (i) the ability to control costs and successful implementation of various cost reduction programs; (j) the timing of certifications of new aircraft products; (k) the occurrence of further downturns in customer markets to which the Company products are sold or supplied or where the Company offers financing; (l) changes in aircraft delivery schedules or cancellation of orders; (m) the Company's ability to offset, through cost reductions, raw material price increases and pricing pressure brought by original equipment manufacturer customers; (n) the availability and cost of insurance; (o) the Company's ability to maintain portfolio credit quality; (p) the Company's access to debt financing at competitive rates; and (q) uncertainty in estimating contingent liabilities and establishing reserves tailored to address such contingencies.
Consolidated Balance Sheets as at June 30, 2010 and December 31, 2009 (unaudited, in thousands of Canadian dollars) ------------------------------------------------------------------------- June 30, December 31, 2010 2009 --------------------------- Assets Current assets Accounts receivable $ 7,536 $ 6,689 Inventories 13,278 15,497 Prepayments 1,552 1,092 Other assets 25 24 --------------------------- 22,391 23,302 Development costs 4,349 3,923 Property, plant and equipment 16,110 17,346 Warranty claim receivable 1,637 1,637 Intangible assets 1,650 1,818 --------------------------- 46,137 48,026 --------------------------- --------------------------- Liabilities Current liabilities Bank indebtedness 4,618 8,422 Accounts payable and accrued liabilities 10,305 7,929 Current portion of long-term debt 5,338 6,131 --------------------------- 20,261 22,482 Deferred gain 382 405 Lease inducement 813 863 Deferred tooling revenues 4,610 3,116 Long-term debt 4,046 1,811 Warranty provision 2,352 1,647 Future income tax liability 858 858 --------------------------- 33,322 31,182 --------------------------- Shareholders' Equity Capital stock 72,927 71,954 Preferred shares 7,622 7,622 Contributed surplus 2,647 2,647 Deficit (70,381) (65,379) --------------------------- 12,815 16,844 --------------------------- 46,137 48,026 --------------------------- --------------------------- Consolidated Statements of Operations and Comprehensive Loss For the three and six months ended June 30, 2010 and 2009 (unaudited, in thousands of Canadian dollars, except number of shares and per share amounts) ------------------------------------------------------------------------- Three months ended Six months ended June 30 June 30 ------------------------------------------------ 2010 2009 2010 2009 ------------------------------------------------ ------------------------------------------------ Revenues $ 18,710 $ 16,172 $ 36,086 $ 38,259 ------------------------------------------------ Cost of sales and expenses Cost of sales 17,030 15,598 32,838 34,545 Administrative and general expenses 2,985 2,968 5,717 5,987 Amortization and depreciation 971 1,016 1,922 2,082 Foreign exchange (gain) (285) (3,962) (327) (2,918) ------------------------------------------------ 20,701 15,620 40,150 39,696 ------------------------------------------------ Income (Loss) from operations (1,991) 552 (4,064) (1,437) Interest expense and financing charges (307) (436) (564) (965) Unrealized derivative gain (loss) 1 (51) 1 (705) ------------------------------------------------ ------------------------------------------------ Income (Loss) and comprehensive income (loss) for the period (2,297) 65 (4,627) (3,107) ------------------------------------------------ ------------------------------------------------ Basic and diluted income (loss) per common share (0.01) 0.00 (0.02) (0.10) ------------------------------------------------ ------------------------------------------------ Basic weighted average number of shares outstanding (000's) 195,505 32,315 189,712 32,315 Diluted weighted average number of shares outstanding (000's) 195,505 32,315 190,404 32,315 ------------------------------------------------ ------------------------------------------------ Consolidated Statements of Deficit For the three and six months ended June 30, 2010 and 2009 (unaudited, in thousands of Canadian dollars) ------------------------------------------------------------------------- Three months ended Six months ended June 30 June 30 ------------------------------------------------ 2010 2009 2010 2009 ------------------------------------------------ ------------------------------------------------ Deficit - Beginning of period $ (67,895) $ (59,571) $ (65,379) $ (56,213) Income (Loss) for the period (2,297) 65 (4,627) (3,107) Preferred share dividends (189) (189) (375) (375) ------------------------------------------------ Deficit - End of period (70,381) (59,695) (70,381) (59,695) ------------------------------------------------ ------------------------------------------------ Consolidated Statements of Cash Flows For the three and six months ended June 30, 2010 and 2009 (unaudited, in thousands of Canadian dollars) ------------------------------------------------------------------------- Three months ended Six months ended June 30 June 30 ------------------------------------------------ 2010 2009 2010 2009 ------------------------------------------------ ------------------------------------------------ Cash flows from operating activities Income (loss) for the period $ (2,297) $ 65 $ (4,627) $ (3,107) Items not affecting cash 1,255 2,207 2,569 4,698 ------------------------------------------------ (1,042) 2,272 (2,058) 1,591 Change in non-cash items related to operating activities 2,231 911 3,694 1,958 ------------------------------------------------ 1,189 3,183 1,636 3,549 ------------------------------------------------ Cash flows from investing activities Purchase of property, plant and equipment (329) (85) (518) (278) Payments relating to development costs and tooling (288) (1,412) (526) (2,605) ------------------------------------------------ (617) (1,497) (1,044) (2,883) ------------------------------------------------ Cash flows from financing activities Net repayment of bank indebtedness (2,810) (2,920) (3,804) (2,034) Proceeds from customer funding of program development 712 100 1,081 249 Proceeds from current and long-term debt 1,771 1,552 1,771 1,952 Repayment of current and long-term debt (245) (418) (613) (833) Issue of common shares - - 977 - Share issue expense - - (4) - ------------------------------------------------ (572) (1,686) (592) (666) ------------------------------------------------ Net change in cash and cash equivalents - - - - Cash and cash equivalents - Beginning of period - - - - ------------------------------------------------ Cash and cash equivalents - End of period - - - - ------------------------------------------------ ------------------------------------------------ Interest paid 187 204 380 644 ------------------------------------------------ ------------------------------------------------SOURCE Avcorp Industries Inc.
