Avcorp announces 2007 third quarter results



    VANCOUVER, Nov. 9 /CNW/ - Avcorp Industries Inc. (AVP on the Toronto
Stock Exchange) today announces results for the quarter ended September 30,
2007.
    The third quarter of 2007 saw a 6% increase in revenue over the same
quarter in 2006. For the quarter ended September 30, 2007, the Company
recorded net income of $32,000 on $26,696,000 revenue.
    While maintaining a workforce which is not significantly increased from
last year, the Company delivered 229 major structures to its customers; a 19%
increase over the 192 units which were delivered during the same quarter in
2006.
    The strengthening of the Canadian dollar against the US dollar, relative
to rates of exchange in effect during the third quarter 2006, has caused a
$1,281,000 reduction in revenues and an estimated benefit of $285,000 in
reduction of the cost of bought in materials. Thereby reducing gross margin
for the quarter by $996,000 as compared to the same quarter in 2006.
    Cash flows from operating activities provided $1,429,000 of cash as
compared to $341,000 during the same quarter last year. The Company has a
working capital surplus of $10,706,000 as at September 30, 2007.
    During the quarter ended September 30, 2007, the Company closed a
placement of 840,000 units at $2.20 per unit; approximately 40% of which were
subscribed for by insiders of the Company. Each unit consisted of one share
and one warrant, where one warrant entitles the holder the right to purchase
one additional share at $2.40 per share for a 24-month period from the closing
date. Gross proceeds from the placement amounted to $1,848,000. The net
proceeds of the financing will be used for working capital.

    About Avcorp

    Avcorp designs and builds major airframe structures for some of the
world's leading 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)

    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
(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 September 30, 2007 and December 31, 2006
    (unaudited, in thousands of Canadian dollars)

                                                   September 30  December 31
                                                           2007         2006
                                                              $            $
    Assets
    Current assets
    Accounts receivable                                  11,786        8,394
    Inventories                                          18,303       19,421
    Prepayments                                           2,204        1,611
    Convertible loan receivable                           1,261            -
    Other assets                                            682           40
                                                   --------------------------
                                                         34,236       29,466
    Development costs                                     1,568        1,186
    Property, plant and equipment                        17,812       15,746
    Investment                                              759          759
    Prepaid rent                                          1,500        1,500
                                                   --------------------------
                                                         55,875       48,657
                                                   --------------------------
                                                   --------------------------
    Liabilities
    Current liabilities
    Bank indebtedness                                    10,947        5,564
    Accounts payable and accrued liabilities             11,166       13,525
    Current portion of long-term debt                     1,417          737
                                                   --------------------------
                                                         23,530       19,826
    Deferred gain                                           512          548
    Lease inducement                                      1,085        1,159
    Deferred tooling revenues                             2,899        3,434
    Long-term debt                                        6,419        4,957
                                                   --------------------------
                                                         34,445       29,924
                                                   --------------------------
    Shareholders' Equity
    Capital stock                                        61,425       55,600
    Preferred shares                                      7,672       11,454
    Contributed surplus                                   2,398        2,244
    Deficit                                             (50,065)     (50,565)
                                                   --------------------------
                                                         21,430       18,733
                                                   --------------------------
                                                         55,875       48,657
                                                   --------------------------
                                                   --------------------------



    Statements of Operations and Other Comprehensive Income

    For the three and nine months ended September 30, 2007 and September 30,
    2006
    (unaudited, in thousands of Canadian dollars, except number of shares and
    per share amounts)

                                    three months ended     nine months ended
                                          September 30          September 30
                                       2007       2006       2007       2006
                                          $          $          $          $
                                   --------------------  --------------------

    Revenues                         26,696     25,199     83,405     77,906
                                   --------------------  --------------------

    Cost of sales and expenses
    Cost of sales                    23,137     21,467     72,907     67,128
    Administrative and general
     expenses                         2,472      1,896      6,732      5,698
    Depreciation                        757        778      2,302      2,377
    Foreign exchange (gain) loss       (298)       (39)      (598)       (40)
                                   --------------------  --------------------

                                     26,068     24,102     81,343     75,163
                                   --------------------  --------------------

    Income from operations              628      1,097      2,062      2,743

    Interest expense and financing
     charges                           (609)      (399)    (1,546)    (1,658)

    Interest income                       7          -         11          -

    Unrealized derivative gain
     (loss)                               6          -        697          -
                                   --------------------  --------------------
                                   --------------------  --------------------

    Income before income taxes           32        698      1,224      1,085

    Income taxes                          -          -          -          -
                                   --------------------  --------------------
    Income and other comprehensive
     income for the period               32        698      1,224      1,085
                                   --------------------  --------------------
                                   --------------------  --------------------

    Basic earnings per common share    0.00       0.03       0.04       0.05
                                   --------------------  --------------------
                                   --------------------  --------------------

    Basic weighted average number
     of shares outstanding (000's)   30,870     24,972     29,111     24,026
                                   --------------------  --------------------
                                   --------------------  --------------------

    Diluted earnings per common
     share                             0.00       0.03       0.04       0.04
                                   --------------------  --------------------
                                   --------------------  --------------------

    Diluted weighted average
     number of shares outstanding
     (000's)                         36,816     25,417     34,248     24,537
                                   --------------------  --------------------
                                   --------------------  --------------------



    Statements of Deficit

    For the three and nine months ended September 30, 2007 and September 30,
    2006
    (unaudited, in thousands of Canadian dollars)

                                    three months ended     nine months ended
                                          September 30          September 30
                                       2007       2006       2007       2006
                                          $          $          $          $
                                   --------------------  --------------------
    Deficit - Beginning of period
     as previously reported         (49,898)   (51,142)   (50,605)   (51,529)

    Adoption of financial
     instruments standards                -          -         40          -
                                   --------------------  --------------------

    Deficit - Beginning of period
     as restated                    (49,898)   (51,142)   (50,565)   (51,529)

    Income for the period                32        698      1,224      1,085

    Preferred share dividends          (199)      (246)      (724)      (246)
                                   --------------------  --------------------

    Deficit - End of period         (50,065)   (50,690)   (50,065)   (50,690)
                                   --------------------  --------------------
                                   --------------------  --------------------



    Statements of Cash Flows

    For the three and nine months ended September 30, 2007 and September 30,
    2006
    (unaudited, in thousands of Canadian dollars)

                                    three months ended     nine months ended
                                          September 30          September 30
                                       2007       2006       2007       2006
                                          $          $          $          $
                                   --------------------  --------------------
    Cash flows from operating
     activities
    Income for the period                32        698      1,224      1,085
    Items not affecting cash          1,397       (357)     2,469      1,520
                                   --------------------  --------------------
                                      1,429        341      3,693      2,605


    Change in non-cash items
     related to operating
     activities                      (3,854)    (2,294)    (5,497)    (4,954)
                                   --------------------  --------------------

                                     (2,425)    (1,953)    (1,804)    (2,349)
                                   --------------------  --------------------

    Cash flows from investing
     activities
    Purchase of property, plant
     and equipment                     (681)      (514)    (3,483)      (857)
    Payments relating to
     capitalized development
     costs                             (210)      (165)      (747)      (882)
    Advance on convertible
     loan receivable                   (457)         -     (1,261)         -
    Proceeds from sale of
     property, plant and
     equipment                            -          -         15         21
                                   --------------------  --------------------
                                     (1,348)      (679)    (5,476)    (1,718)
    Cash flows from financing
     activities
    Net proceeds from bank
     indebtedness                       965       (949)     5,383       (426)
    Proceeds from current and
     long-term debt                   1,903          -      2,761        490
    Repayment of current and
     long-term debt                    (685)    (3,350)    (2,164)    (5,645)
    Issue of common shares            1,848         88      2,091      2,821
    Issue of preferred shares             -      7,635          -      7,635
    Preferred share dividends          (199)      (246)      (724)      (246)
    Share issue expense                 (59)      (546)       (67)      (562)
                                   --------------------  --------------------

                                      3,773      2,632      7,280      4,067
                                   --------------------  --------------------

    Net change in cash and
     cash equivalents                     -          -          -          -

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

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

    Interest paid                       410        349        957      1,127
                                   --------------------  --------------------
                                   --------------------  --------------------
    





For further information:

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


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