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Avcorp Reports Loss Third Quarter 2010
Tuesday, November 16, 2010

Company Profile | Follow Company

Vancouver, BC, November 16, 2010--(T-Net)--Avcorp (AVP on the Toronto Stock Exchange) today announced its financial results for the quarter ended September 30, 2010.


During the quarter ended September 30, 2010, the Company recorded income from operations of $77,000 on $21,808,000 revenue, as compared to a $2,128,000 loss from operations on $14,302,000 revenue for the same quarter of the preceding year; and a net loss for the current quarter of $269,000 as compared to a net loss of $2,585,000 for the quarter ended September 30, 2009.


The significant revenue growth for the current quarter combined with continued cost control and improved operating efficiencies have caused gross margins to improve by $3,430,000 over the same quarter in 2009.


The Company has realized 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 has experienced in excess of 52% revenue growth during the third quarter of 2010 relative to the same quarter in 2009, as a result of program re-starts and production rate increases.


It should be noted that the current quarter loss includes a $104,000 foreign exchange loss, while income for the quarter ended September 30, 2009 included a $1,384,000 foreign exchange gain which occurred as a result of holding foreign-currency-denominated receivables, payables and debt.


Cash flows from operating activities during the current quarter provided $203,000 of cash, as compared to utilizing $1,375,000 of cash during the quarter ended September 30, 2009. The Company has a working capital surplus of $2,354,000 as at September 30, 2010 (December 31, 2009: $820,000 surplus) and an accumulated deficit of $70,841,000 at September 30, 2010 (December 31, 2009: $65,379,000).


As at September 30, 2010, the Company was not in compliance with financial covenants associated with its operating lines of credit. The lender has 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 ended on October 15, 2010. The Company is currently in the process of renewing the Forbearance Agreement with the bank.


Also, as at September 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, 585 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.

Consolidated Balance Sheets as at September 30, 2010 and December 31, 2009 (unaudited, in thousands of Canadian dollars)




September 30, 2010 December 31, 2009

Assets

Current assets

Accounts receivable $ 10,126 $ 6,689

Inventories 13,158 15,497

Prepayments 2,429 1,092

Other assets 26 24

25,739 23,302



Development costs 5,158 3,923

Property, plant and equipment 15,507 17,346

Warranty claim receivable 1,637 1,637

Intangible assets 1,566 1,818

49,607 48,026

Liabilities

Current liabilities

Bank indebtedness 6,721 8,422

Accounts payable and accrued liabilities 11,290 7,929

Current portion of long-term debt 5,374 6,131

23,385 22,482



Deferred gain 370 405

Lease inducement 789 863

Deferred tooling revenues 5,672 3,116

Long-term debt 3,866 1,811

Warranty provision 2,312 1,647

Future income tax liability 858 858

37,252 31,182

Shareholders' Equity

Capital stock 72,927 71,954

Preferred shares 7,622 7,622

Contributed surplus 2,647 2,647

Deficit (70,841) (65,379)

12,355 16,844

49,607 48,026




>>
Consolidated Statements of Operations and Comprehensive Loss For the
three and nine months ended September 30, 2010 and 2009 (unaudited, in
thousands of Canadian dollars, except number of shares and per share amounts)
------------------------------------------------------------------------------

<<


Three months ended September Nine months ended September 30
30

For the quarter 2010 2009 2010 2009
ended September 30

Revenues $ 21,808 $ 14,302 $ 57,894 $ 52,561



Cost of sales and
expenses

Cost of sales 18,231 14,155 51,069 48,700

Administrative and 2,413 2,656 8,130 8,643
general expenses

Amortization and 983 1,003 2,905 3,085
depreciation

Foreign exchange 104 (1,384) (223) (4,302)
loss (gain)



21,731 16,430 61,881 56,126

Income (Loss) from 77 (2,128) (3,987) (3,565)
operations

Interest expense and (348) (458) (912) (1,423)
financing charges

Unrealized 2 1 3 (704)
derivative gain
(loss)





Income (Loss) and (269) (2,585) (4,896) (5,692)
comprehensive income
(loss) for the
period



Basic and diluted (0.00) (0.06) (0.03) (0.16)
income (loss) per
common share

Basic weighted 195,505 44,784 191,664 36,517
average number of
shares outstanding
(000's)

Diluted weighted 195,505 44,784 192,379 36,517
average number of
shares outstanding
(000's)




>>
Consolidated Statements of Deficit For the three and nine months ended
September 30, 2010 and 2009 (unaudited, in thousands of Canadian dollars)
------------------------------------------------------------------------------

<<


Three months ended September Nine months ended September 30
30

For the quarter 2010 2009 2010 2009
ended September 30

Deficit - $ (70,381) $ (59,695) $ (65,379) $ (56,213)
Beginning of
period

Income (Loss) for (269) (2,585) (4,896) (5,692)
the period

Preferred share (191) (191) (566) (566)
dividends

Deficit - End of (70,841) (62,471) (70,841) (62,471)
period




>>
Consolidated Statements of Cash Flows For the three and nine months ended
September 30, 2010 and 2009 (unaudited, in thousands of Canadian dollars)
------------------------------------------------------------------------------

<<


Three months ended September Nine months ended September 30
30

2010 2009 2010 2009

Cash flows from
operating activities

Income (loss) for $ (269) $ (2,585) $ (4,896) $ (5,692)
the period

Items not affecting 472 1,210 3,041 4,483
cash

203 (1,375) (1,855) (1,209)

Change in non-cash (2,536) (1,782) 1,158 1,446
items related to
operating activities

(2,333) (3,157) (697) 237



Cash flows from
investing activities

Purchase of (290) (12) (808) (290)
property, plant and
equipment

Payments relating to (876) (79) (1,402) (2,684)
development costs
and tooling

(1,166) (91) (2,210) (2,974)



Cash flows from
financing activities

Net increase or 2,103 (2,603) (1,701) (4,637)
(repayment) of bank
indebtedness

Proceeds from 1,658 1,809 2,739 2,214
customer funding of
program development

Proceeds from - 4,000 1,771 5,952
current and
long-term debt

Repayment of current (262) (815) (875) (1,649)
and long-term debt

Issue of common - 857 977 857
shares net of debt
repayment set-off

Share issue expense - - (4) -

3,499 3,248 2,907 2,737



Net change in cash - - - -
and cash equivalents



Cash and cash - - - -
equivalents -
Beginning of period



Cash and cash - - - -
equivalents - End of
period



Interest paid 216 348 596 992




For further information


Sandi DiPrimo, Investor Relations Contact 604-587-4938


Avcorp Industries Inc.

Delta, BC (Other Tech Sectors)
650 Employees In BC (650 Total)
Founded: 1986 | Revenues: $77.30 Million

Avcorp is one of North America's leading providers of integrated metallic and composite aerostructure design and manufacture solutions.

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Avcorp Industries Inc.

Posted: Nov 16, 2010

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