Avcorp announces 2006 Annual Results



    
    -  Net income increases more than $15 million over 2005 to $1.4 million
    -  EBITDA increases more than $12 million over 2005 to $7 million
    -  Revenue increases 31% over previous year
    -  Order backlog increases $69 million on existing contracts
    -  Debt decreased by $9 million during 2006
    

    VANCOUVER, March 28 /CNW/ - Avcorp (AVP on the Toronto Stock Exchange)
today announced results for the year ended December 31, 2006.
    2006 saw a 31% increase in revenue over 2005, as a result of full rates
of production on all customer programs. For the year ended December 31, 2006,
the Company recorded earnings from operations of $3,483,000 on $103,850,000
revenue, as compared to an operating loss of $11,691,000 from $79,484,000
revenue for the preceding year. Net income for the year was $1,450,000 (2005:
$14,380,000 net loss) or $0.06 per share (2005: $0.78 loss per share).
    Cash flows from operating activities provided $768,000 of cash, primarily
from cash generated by operations, as compared to a $11,248,000 cash
utilization during the previous year which was primarily as a result of losses
from operations.
    The Company has a working capital surplus of $9,600,000 as at December
31, 2006 (December 31, 2005: $5,880,000 deficit).
    In 2006 the Company repaid $1,972,000 of demand loans and retired
$7,062,000 of debentures.
    Over the course of the year the Company continued to strengthen its
business, as evidenced by a $69,000,000 order backlog increase from existing
customer contracts and its strategic acquisition of a machining operation
subsequent to the end of the year.

    About Avcorp

    Avcorp Industries Inc. designs and builds major airframe structures for
some of the world's most respected aircraft companies, including Boeing,
Bombardier and Cessna. With 50 years of experience, more than 650 skilled
employees and a 300,000 square foot facility near Vancouver, Canada, the
company's depth and breadth of capabilities are unique in the aerospace
industry for a company of its size. Avcorp is a Canadian public company traded
on the Toronto Stock Exchange (TSX: AVP). More information is available at
www.avcorp.com.

    
    (signed)                             (signed)
    MICHAEL SCHOLZ                       PAUL KALIL
    CHAIRMAN                             PRESIDENT
    

    Forward-Looking Statements

    This release should be read in conjunction with the Company's audited
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.



    
    Balance Sheets
    as at December 31, 2006 and 2005
    (in thousands of Canadian dollars)

                                                            2006        2005
                                                               $           $
    Assets
    Current assets
    Accounts receivable                                    8,394       8,482
    Inventories                                           19,421      13,465
    Prepayments                                            1,611       1,429
                                                        ---------------------

                                                          29,426      23,376
    Development costs                                      1,186         615
    Property, plant and equipment                         15,746      16,557
    Investment                                               759         759
    Prepaid rent                                           1,500       1,500
                                                        ---------------------

                                                          48,617      42,807
                                                        ---------------------
                                                        ---------------------
    Liabilities
    Current liabilities
    Bank indebtedness                                      5,564       7,846
    Accounts payable and accrued liabilities              13,525      12,272
    Demand loans                                               -       2,642
    Debenture                                                  -       5,110
    Current portion of long-term debt                        737       1,386
                                                        ---------------------

                                                          19,826      29,256
    Deferred gain                                            548         596
    Lease inducement                                       1,159       1,258
    Deferred tooling revenues                              3,434       4,220
    Long-term debt                                         4,957       7,338
                                                        ---------------------

                                                          29,924      42,668
                                                        ---------------------
    Shareholders' Equity
    Capital stock                                         55,600      49,626
    Preferred shares                                      11,454           -
    Contributed surplus                                    2,244       2,042
    Deficit                                              (50,605)    (51,529)
                                                        ---------------------

                                                          18,693         139
                                                        ---------------------

                                                          48,617      42,807
                                                        ---------------------
                                                        ---------------------



    Statements of Operations
    for the years ended December 31
    (in thousands of Canadian dollars, except per share amounts)

                                                            2006        2005
                                                               $           $

    Revenues                                             103,850      79,484
                                                        ---------------------

    Cost of sales and expenses
    Cost of sales                                         89,561      78,255
    Equipment cost write down                                  -       2,623
    Administrative and general expenses                    7,665       7,395
    Depreciation                                           3,138       2,672
    Foreign exchange (gain) loss                               3        (280)
    Collective agreement signing bonus                         -         510
                                                        ---------------------

                                                         100,367      91,175
                                                        ---------------------

    Income (loss) from operations                          3,483     (11,691)

    Interest expense and financing charges                (2,033)     (2,689)
                                                        ---------------------

    Income (loss) before income taxes                      1,450     (14,380)

    Income taxes                                               -           -
                                                        ---------------------

    Income (loss) for the year                             1,450     (14,380)
                                                        ---------------------
                                                        ---------------------

    Basic and diluted earnings (loss) per common share      0.06       (0.78)
                                                        ---------------------
                                                        ---------------------

    Basic weighted average number of shares outstanding
     (000's)                                              24,964      18,511
                                                        ---------------------
                                                        ---------------------

    Diluted weighted average number of shares
     outstanding (000's)                                  25,872      18,511
                                                        ---------------------
                                                        ---------------------



    Statements of Deficit
    for the years ended December 31
    (in thousands of Canadian dollars)

                                                            2006        2005
                                                               $           $
                                                        ---------------------

    Deficit - Beginning of year                          (51,529)    (37,149)

    Income (loss) for the year                             1,450     (14,380)

    Preferred share dividends                               (526)          -
                                                        ---------------------

    Deficit - End of year                                (50,605)    (51,529)
                                                        ---------------------
                                                        ---------------------



    Statements of Cash Flows
    for the years ended December 31
    (in thousands of Canadian dollars)

                                                            2006        2005
                                                               $           $

    Cash flows from operating activities
    Income (loss) for the year                             1,450     (14,380)
    Items not affecting cash                               3,556       6,414
                                                        ---------------------

                                                           5,006      (7,966)

    Change in non-cash items related to operating
     activities                                           (4,238)     (3,282)
                                                        ---------------------

                                                             768     (11,248)
                                                        ---------------------

    Cash flows from investing activities
    Purchase of property, plant and equipment             (2,111)     (1,721)
    Proceeds from sale of property, plant and equipment       21           -
    Payments relating to capitalized development costs      (873)       (222)
                                                        ---------------------

                                                          (2,963)     (1,943)
                                                        ---------------------

    Cash flows from financing activities
    Net proceeds from (repayment of) bank indebtedness    (2,282)      3,193
    Proceeds from sale of tooling                              -       4,618
    Proceeds from current and long-term debt                 490      10,400
    Repayment of current and long-term debt               (7,263)     (9,948)
    Issue of common shares                                 4,720       5,028
    Issue of preferred share                               7,635           -
    Preferred share dividends                               (526)          -
    Share issue expense                                     (579)       (100)
                                                        ---------------------

                                                           2,195      13,191
                                                        ---------------------

    Net change in cash and cash equivalents                    -           -

    Cash and cash equivalents - Beginning of year              -           -
                                                        ---------------------

    Cash and cash equivalents - End of year                    -           -
                                                        ---------------------
                                                        ---------------------

    Interest paid                                          1,377       1,823
                                                        ---------------------
                                                        ---------------------
    




For further information:

For further information: Investor Relations Contact: Sandi DiPrimo,
(604) 587-4938


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