Avcorp announces 2010 Second Quarter Results

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 $1,991,000 on $18,710,000 revenue, as compared to $552,000 income from operations on $16,172,000 revenue for the same quarter of the preceding year; and a net loss for the current quarter of $2,297,000 as compared to a net income of $65,000 for the quarter ended June 30, 2009 .

It should be noted that the current quarter loss includes a $285,000 foreign exchange gain, while income for the quarter ended June 30, 2009 included a $3,962,000 foreign exchange gain which occurred as a result of holding foreign-currency-denominated receivables, payables and debt.

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 $1,042,000 of cash, as compared to providing $2,272,000 of cash during the quarter ended June 30, 2009 . The Company has a working capital surplus of $2,130,000 as at June 30, 2010 ( December 31, 2009 : $820,000 surplus) and an accumulated deficit of $70,381,000 at June 30, 2010 ( December 31, 2009 : $65,379,000).

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).




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.

SOURCE Avcorp Industries Inc.