Avcorp announces 2008 Second Quarter Results



    VANCOUVER, Aug. 6 /CNW/ - Avcorp Industries Inc. (AVP on the Toronto
Stock Exchange) today announces results for the quarter ended June 30, 2008.
    Revenue increased 10.3% to $32,389,000 when compared to the same quarter
last year and was 4% higher than the previous quarter. Income from operations
of $859,000, excluding interest and financing charges, was comparable to the
similar quarter last year but showed almost a 5-fold increase from the
previous quarter.
    EBITDA of $2,335,000 was again a significant improvement over the EBITDA
of $1,492,000 in the previous quarter and showed an improvement over EBITDA in
the comparable quarter last year. Net income of $364,000 for the quarter
almost eliminated the loss experienced by the Company in the first quarter.
    During the quarter the Company continued to invest time and resources
into business development and the bidding process for new contracts and
programs. While the current economic climate has its challenges the Company is
being positioned to be able to secure additional work as it continues to adapt
to the rapidly changing environment.

    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, 800 skilled employees and
385,000 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). 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.


    
    Consolidated Balance Sheets
    as at June 30, 2008 and December 31, 2007
    -------------------------------------------------------------------------
    (unaudited, in thousands of Canadian dollars)

                                                                    December
                                                            June 30       31
                                                               2008     2007
    Assets                                                        $        $
    Current assets
    Accounts receivable                                      12,314   12,224
    Inventories                                              15,923   17,801
    Prepayments                                               2,819    2,401
    Other assets                                                  -      138
                                                            -----------------
                                                             31,056   32,564
    Prepaid rent                                                  -      481
    Development costs                                         2,419    1,545
    Property, plant and equipment                            20,903   20,310
    Investment                                                  759      759
    Warranty claim receivable                                 1,454    1,454
    Intangible assets                                         2,386    2,620
    Goodwill                                                    571      571
                                                            -----------------
                                                             59,548   60,304
                                                            -----------------
                                                            -----------------
    Liabilities
    Current liabilities
    Bank indebtedness                                        11,114   11,279
    Accounts payable and accrued liabilities                 14,223   14,812
    Current portion of long-term debt                         1,770    2,056
    Other liabilities                                            37        -
                                                            -----------------
                                                             27,144   28,147
    Deferred gain                                               477      501
    Lease inducement                                          1,011    1,060
    Deferred tooling revenues                                 1,975    2,676
    Long-term debt                                            7,424    6,761
    Warranty provision                                        1,454    1,454
    Future income tax liability                               1,186    1,186
                                                            -----------------
                                                             40,671   41,785
                                                            -----------------
    Shareholders' Equity
    Capital stock                                            62,219   61,194
    Preferred shares                                          7,672    7,672
    Contributed surplus                                       2,627    2,857
    Deficit                                                 (53,641) (53,204)
                                                            -----------------
                                                             18,877   18,519
                                                            -----------------
                                                             59,548   60,304
                                                            -----------------
                                                            -----------------



    Consolidated Statements of Operations and Comprehensive Income (Loss)
    For the three and six months ended June 30, 2008 and June 30, 2007
    -------------------------------------------------------------------------
    (unaudited, in thousands of Canadian dollars,
    except number of shares and per share amounts)

                                        Three months ended  Six months ended
                                                   June 30           June 30
                                             2008     2007     2008     2007
                                                $        $        $        $

    Revenues                               32,389   29,352   63,540   56,709
                                          -----------------------------------
    Cost of sales and expenses
    Cost of sales                          26,966   25,775   54,355   49,770
    Administrative and general expenses     3,544    2,332    6,500    4,260
    Depreciation                            1,136      783    2,223    1,545
    Foreign exchange (gain) loss             (116)    (397)    (580)    (300)
                                          -----------------------------------
                                           31,530   28,493   62,498   55,275

                                          -----------------------------------
    Income from operations                    859      859    1,042    1,434
    Interest expense and
     financing charges                       (510)    (566)  (1,099)    (933)
    Unrealized derivative gain (loss)          15      524       (2)     691
                                          -----------------------------------
                                          -----------------------------------

    Income (loss) before income taxes         364      817      (59)   1,192

    Income taxes                                -        -        -        -
                                          -----------------------------------
    Income (loss) and comprehensive
     income (loss) for the period             364      817      (59)   1,192
                                          -----------------------------------
                                          -----------------------------------

    Basic earnings (loss) per
     common share                            0.01     0.03     0.00     0.04
                                          -----------------------------------
                                          -----------------------------------

    Basic weighted average number of
     shares outstanding (000's)            32,132   28,676   31,970   28,332
                                          -----------------------------------
                                          -----------------------------------

    Diluted earnings (loss) per
     common share                            0.01     0.02     0.00     0.04
                                          -----------------------------------
                                          -----------------------------------

    Diluted weighted average number of
     shares outstanding (000's)            32,132   33,903   31,970   33,793
                                          -----------------------------------
                                          -----------------------------------



    Consolidated Statements of Deficit
    For the three and six months ended June 30, 2008 and June 30, 2007
    -------------------------------------------------------------------------
    (unaudited, in thousands of Canadian dollars)

                                        Three months ended  Six months ended
                                                   June 30           June 30
                                             2008     2007     2008     2007
                                                $        $        $        $

    Deficit - Beginning of period         (53,816) (50,464) (53,204) (50,565)

    Income (loss) for the period              364      817      (59)   1,192

    Preferred share dividends                (189)    (251)    (378)    (525)

                                          -----------------------------------
    Deficit - End of period               (53,641) (49,898) (53,641) (49,898)
                                          -----------------------------------
                                          -----------------------------------



    Consolidated Statements of Cash Flows
    For the three and six months ended June 30, 2008 and June 30, 2007
    -------------------------------------------------------------------------
    (unaudited, in thousands of Canadian dollars)

                                        Three months ended  Six months ended
                                                   June 30           June 30
                                             2008     2007     2008     2007
                                                $        $        $        $

    Cash flows from operating activities
    Income (loss) for the period              364      817      (59)   1,192
    Items not affecting cash                  659      346    2,611    1,072
                                          -----------------------------------
                                            1,023    1,163    2,552    2,264


    Change in non-cash items related to
     operating activities                   2,172       87    1,596   (1,643)
                                          -----------------------------------

                                            3,195    1,250    4,148      621
                                          -----------------------------------

    Cash flows from investing activities
    Purchase of property,
     plant and equipment                   (1,627)    (772)  (2,560)  (2,802)
    Payments relating to development
     costs and tooling                       (654)    (232)  (1,204)    (537)
    Advance on convertible loan
     receivable                                 -     (804)       -     (804)
    Proceeds from sale of property,
     plant and equipment                        -       10        -       15
                                          -----------------------------------
                                           (2,281)  (1,798)  (3,764)  (4,128)
    Cash flows from financing activities
    Net proceeds from bank indebtedness      (790)   1,032     (165)   4,418
    Proceeds from current and
     long-term debt                             -      800      131      858
    Proceeds from sale and leaseback of
     property, plant and equipment          1,215        -    1,215        -
    Proceeds from sale of tooling               -        -      372        -
    Repayment of current and
     long-term debt                        (1,300)  (1,050)  (1,930)  (1,479)
    Issue of common shares                    150       17      371      243
    Preferred share dividends                (189)    (251)    (378)    (525)
    Share issue expense                         -        -        -       (8)
                                          -----------------------------------
                                             (914)     548     (384)   3,507

                                          -----------------------------------

    Net change in cash and
     cash equivalents                           -        -        -        -

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

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

    Interest paid                             303      258      726      547
                                          -----------------------------------
                                          -----------------------------------
    





For further information:

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


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