VANCOUVER, Nov. 12, 2013 /PRNewswire/ - Avcorp Industries Inc. (TSX: AVP) (the "Company" or "Avcorp") today announced its consolidated financial results for the quarter ended September 30, 2013.

During the quarter ended September 30, 2013, the Company generated $19,767,000 revenue as compared to $19,324,000 revenue for the quarter ended September 30, 2012. Current quarter revenues have remained relatively stable from the same quarter in the preceding year, primarily as the wind-down of Cessna Aircraft Company ("Cessna") programs has been offset by an increase in F-35 Outboard Wing program revenues.

Earnings before interest, taxes, depreciation and amortization (EBITDA) was positive $514,000 for the quarter ended September 30, 2013 compared to a negative EBITDA of $1,205,000 for the quarter ended September 30, 2012.  The increase in EBITDA was primarily as a result of increased gross profit, as well as reduced administrative and general expenses.

On September 5, 2013 the Company entered into a settlement agreement, from a court directed mediation with Cessna, which settled all outstanding litigation between the Company and Cessna. The settlement required payment by Cessna of US$27,964,000 in satisfaction of the US$28,464,000 judgement entered against Cessna by the United States District Court for the District of Kansas (the "District Court") on May 8, 2013 which judgement was under appeal to the United States Court of Appeals for the Tenth Circuit. The settlement funds were received in full by the Company on September 6, 2013.  The acceptance by the Company of a settlement amount less than that awarded by the District Court in a previous quarter has resulted in the Company reducing a previously recorded gain by $525,000 during the current quarter.  The settlement satisfies the judgement and has resulted in the dismissal of the outstanding appeal.

A restructuring provision amounting to approximately $224,000 has been recorded during the current quarter to reflect severance costs associated with employees laid-off during the current quarter.

In addition to the above-noted charges against income, the current quarter $1,139,000 loss (September 30, 2012: $2,729,000 loss) includes a $644,000 foreign exchange loss resulting from holding foreign currency denominated cash, accounts receivable and payable; while the loss for the quarter ended September 30, 2012 included a $300,000 foreign exchange loss.

Cash flows from operating activities, before consideration of changes in non-cash working capital utilized $4,063,000 of cash for the quarter ended September 30, 2013 compared to utilizing $2,866,000 of cash during the same quarter in the previous year.  The increase in cash utilization in 2013 from 2012 is primarily attributable to recognition of revenues which were funded in previous periods. The Company has a working capital surplus of $30,103,000 as at September 30, 2013 which has decreased from the December 31, 2012 $34,819,000 surplus, as a result of repaying bank indebtedness from settlement proceeds.  The Company's accumulated deficit as at September 30, 2013 is $54,810,000 (December 31, 2012: $55,375,000).

About Avcorp

Avcorp designs and builds major airframe structures for some of the world's leading aircraft companies, including BAE Systems, Boeing, and Bombardier. With more than 50 years of experience, over 400 skilled employees and 354,000 square feet of facilities in Delta BC and Burlington ON, 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. Our Comtek subsidiary also offers composite repairs for commercial aircraft out of their Burlington location. Avcorp is a Canadian public company traded on the Toronto Stock Exchange (TSX:AVP).

(signed)

MARK VAN ROOIJPRESIDENT and CHIEF EXECUTIVE OFFICER

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 STATEMENTS OF FINANCIAL POSITION(unaudited, prepared in accordance with IFRS, expressed in thousands of Canadian dollars)

	September 30, 2013	December 31, 2012
ASSETS
Current assets
Cash	$    21,403	$    2,597
Accounts receivable	10,438	7,944
Inventories	16,917	16,572
Prepayments and other assets	957	1,634
Other receivable	-	27,391
	49,715	56,138
Non-current assets
Prepaid rent	146	146
Development costs	1,198	2,718
Property, plant and equipment, net	8,718	9,633
Total assets	59,777	68,635
LIABILITIES AND EQUITY
Current liabilities
Bank indebtedness	-	2,122
Accounts payable and accrued liabilities	7,559	7,859
Current portion of long-term debt	853	692
Preferred shares	11,200	10,646
	19,612	21,319
Non-current liabilities
Deferred gain	228	263
Lease inducement	493	567
Deferred program revenues	9,232	17,514
Long-term debt	3,672	4,300
Warranty provisions	85	85
	33,322	44,048
Equity
Capital stock	77,681	76,423
Contributed surplus	3,584	3,539
Deficit	(54,810)	(55,375)
	26,455	24,587
Total liabilities and equity	59,777	68,635

 

CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME(unaudited, prepared in accordance with IFRS, expressed in thousands of Canadian dollars, except number of shares and per share amounts)

	Three months ended		Nine months ended
FOR THE PERIOD ENDED SEPTEMBER 30	2013	2012	2013	2012
Revenues	$  19,767	$  19,324	$  60,205	$  69,522
Cost of sales	16,493	16,936	51,463	58,151
Gross profit	3,274	2,388	8,742	11,371
Administrative and general expenses	2,816	3,715	8,292	11,186
Office equipment depreciation	144	119	432	360
Other operating (income) loss	525	-	(604)	-
Operating Income (Loss)	(211)	(1,446)	622	(175)
Foreign exchange (gain) loss	644	300	(783)	221
Finance costs	284	586	840	1,772
Loss on repayment of debt	-	397	-	397
Income (loss) before income tax	(1,139)	(2,729)	565	(2,565)
Income tax expense	-	-	-	-
Income (loss) and total comprehensive income (loss) for the period	(1,139)	(2,729)	565	(2,565)
Earnings per share:
Basic earnings per common share	(0.00)	(0.01)	0.00	(0.01)
Diluted earnings per common share	(0.00)	(0.01)	0.00	(0.01)
Basic weighted average number of shares outstanding (000's)	280,390	205,851	268,344	204,252
Diluted weighted average number of shares outstanding (000's)	280,390	205,851	269,877	204,252

 

CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited, prepared in accordance with IFRS, expressed in thousands of Canadian dollars)

	Three months ended		Nine months ended
FOR THE PERIOD ENDED SEPTEMBER 30	2013	2012	2013	2012
Cash flows from (used in) operating activities
Income (loss) before tax	$   (1,139)	$      (2,729)	$   565	$      (2,565)
Adjustment for items not affecting cash:
Accrued interest and government royalties	94	330	275	1,007
Depreciation	494	724	1,561	2,280
Deferred tooling revenue amortization and reclassification to revenue	(4,949)	(2,292)	(14,492)	(8,710)
Development cost amortization and write-off	875	662	1,855	1,698
Loss on repayment of debt	-	397	-	397
Loss on settlement	525	-	525	-
Preferred share dividends accrued	186	189	563	567
Provision for obsolete inventory	(156)	(84)	(259)	(67)
Other items	7	(63)	(15)	(26)
	(4,063)	(2,866)	(9,422)	(5,419)
Changes in non-cash working capital
Accounts receivable	(251)	2,869	597	5,173
Inventories	(197)	(272)	(86)	935
Prepayments and other assets	180	471	675	396
Other receivable	29,380	-	26,832	-
Accounts payable and accrued liabilities	(1,003)	148	(313)	(2,316)
Net cash from (used in) operating activities	24,046	350	18,283	(1,231)
Cash flows from (used in) investing activities
Purchase of equipment	(218)	(53)	(646)	(354)
Payments relating to development costs and tooling	(25)	(280)	(335)	(894)
Net cash from (used in) investing activities	(243)	(333)	(981)	(1,248)
Cash flows from (used in) financing activities
(Decrease) in bank indebtedness	(6,496)	-	(2,122)	-
Payment of interest	(95)	(552)	(277)	(1,048)
Repayment of current and long-term debt	(170)	(7,097)	(466)	(7,590)
Proceeds from customer funding of program introduction	1,549	1,680	3,120	7,769
Proceeds from issuance of common shares	-	973	1,249	973
Net cash from financing activities	(5,212)	(4,996)	1,504	104
Net increase (decrease) in cash	18,591	(4,979)	18,806	(2,375)
Cash - Beginning of period	2,812	6,382	2,597	3,778
Cash - End of period	21,403	1,403	21,403	1,403

 

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY(unaudited, prepared in accordance with IFRS, expressed in thousands of Canadian dollars, except number of shares)

	Share capital		Equitycomponentconvertibleloan	Contributedsurplus	Deficit	Totalequity
	Shares	Amount
Balance December 31, 2011	201,994,113	$ 73,251	$   453	$  3,424	$ (76,016)	$  1,112
Issue of common shares	52,903,959	2,966	-	-	-	2,966
Loan conversion	-	-	(247)	-	-	(247)
Stock based compensation expense	-	-	-	68	-	68
Income (loss) for the period	-	-	-	-	(2,565)	(2,565)
Balance September 30, 2012	254,898,072	76,217	206	3,492	(78,581)	1,334
Balance December 31, 2012	254,898,072	76,423	-	3,539	(55,375)	24,587
Issue of common shares	25,493,080	1,258	-	-	-	1,258
Stock-based compensation expense	-	-	-	45	-	45
Income for the period	-	-	-	-	565	565
Balance September 30, 2013	280,391,152	77,681	-	3,584	(54,810)	26,455

SOURCE Avcorp Industries Inc.