VANCOUVER, May 15 /PRNewswire-FirstCall/ -- Avcorp (AVP on the Toronto Stock Exchange) today announced its financial results for the quarter ended March 31, 2009.
During the quarter ended March 31, 2009, the Company recorded a loss from operations of $1,989,000 on $22,087,000 revenue, as compared to $183,000 earnings from operations on $31,151,000 revenue for the same quarter of the preceding year; and a net loss for the current quarter of $3,172,000 as compared to a net loss of $423,000 for the quarter ended March 31, 2008.
First quarter 2009 continued softening of customers' order book has caused the Company to review operations and further reduce union and non-union employees. This has necessitated a $325,000 charge against income for the quarter ended March 31, 2009. Current quarter income was also adversely affected by foreign exchange losses amounting to $1,044,000 and unrealized derivative losses totaling $654,000.
Gross profit (revenue less cost of sales) for the quarter ended March 31, 2009 was 14.2% of revenue as compared to 12.1% of revenue for the quarter ended March 31, 2008.
Continued strong operational performance improvements in assembly and fabrication lines and proportionately reduced labour costs have in-part mitigated the adverse effect on the Company's cost structure resulting from the substantial decrease in revenues.
Cash flows from operating activities during the current quarter consumed $681,000 of cash, as compared to providing $1,529,000 of cash during the quarter ended March 31, 2008. The Company has a working capital deficit of $5,745,000 as at March 31, 2009 (December 31, 2008: $2,065,000 deficit) primarily as a result of classifying the $4,122,000 convertible debenture held by Export Development Canada as current portion of long-term debt, and an accumulated deficit of $59,571,000 at March 31, 2009 (December 31, 2008: $56,213,000).
The Company has not paid $186,000 of Preferred Share dividends which were payable as at March 31, 2009.
Subsequent to the end of the quarter, the Landlord for one of the Company's operations issued to the Company a demand for $208,000 rent and related expenses which are in arrears. The Company is currently negotiating the payment of arrears and future rent with the Landlord.
As at March 31, 2009, the Company was not in compliance with its financial covenants associated with its operating line of credit provided by a Canadian chartered bank. The Company has not obtained a waiver from the debt holder for this non-compliance and for anticipated future breaches. Also, as at March 31, 2009, the Company was not in compliance with its financial covenants associated with the convertible debenture held by Export Development Canada. The Company has not obtained a waiver from the debenture holder for these non-compliances and for anticipated future breaches. On March 13, 2009, Export Development Canada served notice to the Company requiring that if the non-compliances are not rectified within 60 days of the notice date, all balances shall become payable on demand. The Company is currently negotiating the terms of repayment with Export Development Canada.
The Company's current and forecasted financing requirements for 2009 and 2010 exceed cash from operations and its current availability of the operating line of credit. Accordingly, the Company is in the process of obtaining additional debt financing or equity, renegotiating debt repayments, reducing operating expenses and managing customer payments to existing terms in order to provide liquidity in excess of forecasted requirements.
A number of financing activities are being pursued as of the date of this report. It is important to note that the success of these activities cannot be assured.
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, 520 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" "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 (http://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 March 31, 2009 and December 31, 2008 (unaudited, in thousands of Canadian dollars) ------------------------------------------------------------------------- March 31, December 31, 2009 2008 -------------------------- Assets Current assets Accounts receivable $ 8,898 $ 12,609 Inventories 22,035 19,206 Prepayments 1,380 1,761 Other assets 85 746 -------------------------- 32,398 34,322 Development costs 4,465 3,299 Property, plant and equipment 18,642 19,431 Warranty claim receivable 1,784 1,784 Intangible assets 2,070 2,154 -------------------------- 59,359 60,990 -------------------------- -------------------------- Liabilities Current liabilities Bank indebtedness 15,159 14,273 Demand loan 400 - Accounts payable and accrued liabilities 16,342 15,841 Current portion of long-term debt 6,242 6,273 -------------------------- 38,143 36,387 Deferred gain 441 453 Lease inducement 937 962 Deferred tooling revenues 1,210 1,173 Long-term debt 2,843 2,872 Warranty provision 1,632 1,632 Future income tax liability 1,186 1,186 -------------------------- 46,392 44,665 -------------------------- Shareholders' Equity Capital stock 62,269 62,269 Preferred shares 7,622 7,622 Contributed surplus 2,647 2,647 Deficit (59,571) (56,213) -------------------------- 12,967 16,325 -------------------------- 59,359 60,990 -------------------------- -------------------------- Consolidated Statements of Operations and Comprehensive Loss For the quarter ended March 31, 2009 and 2008 (unaudited, in thousands of Canadian dollars, except number of shares and per share amounts) ------------------------------------------------------------------------- For the quarter ended March 31 2009 2008 -------------------------- Revenues $ 22,087 $ 31,151 -------------------------- Cost of sales and expenses Cost of sales 18,947 27,389 Administrative and general expenses 3,019 2,956 Amortization and depreciation 1,066 1,087 Foreign exchange (gain) loss 1,044 (464) -------------------------- 24,076 30,968 -------------------------- -------------------------- Income (Loss) from operations (1,989) 183 Interest expense and financing charges (529) (589) Unrealized derivative loss (654) (17) -------------------------- -------------------------- Loss and comprehensive loss for the period (3,172) (423) -------------------------- -------------------------- Basic and diluted loss per common share (0.10) (0.01) -------------------------- -------------------------- Basic and diluted weighted average number of shares outstanding (000's) 32,315 31,808 -------------------------- -------------------------- Consolidated Statements of Deficit For the quarter ended March 31, 2009 and 2008 (unaudited, in thousands of Canadian dollars) ------------------------------------------------------------------------- For the quarter ended March 31 2009 2008 -------------------------- Deficit - Beginning of period $ (56,213) $ (53,204) Loss for the period (3,172) (423) Preferred share dividends (186) (189) -------------------------- Deficit - End of period (59,571) (53,816) -------------------------- -------------------------- Consolidated Statements of Cash Flows For the quarter ended March 31, 2009 and 2008 (unaudited, in thousands of Canadian dollars) ------------------------------------------------------------------------- For the quarter ended March 31 2009 2008 -------------------------- Cash flows from operating activities Loss for the period $ (3,172) $ (423) Items not affecting cash 2,491 1,952 -------------------------- (681) 1,529 Change in non-cash items related to operating activities 1,447 (576) -------------------------- 766 953 -------------------------- Cash flows from investing activities Purchase of property, plant and equipment (193) (933) Payments relating to development costs and tooling (1,193) (550) -------------------------- (1,386) (1,483) Cash flows from financing activities Net proceeds from bank indebtedness 886 625 Proceeds from long-term debt - 131 Proceeds from sale of tooling 149 372 Repayment of long-term debt (415) (630) Issue of common shares - 221 Preferred share dividends - (189) -------------------------- 620 530 -------------------------- Net change in cash and cash equivalents - - Cash and cash equivalents - Beginning of period - - -------------------------- Cash and cash equivalents - End of period - - -------------------------- -------------------------- Interest paid 440 379 -------------------------- --------------------------
Avcorp Industries Inc.
CONTACT: Sandi DiPrimo, Investor Relations Contact, (604) 587-4938
