Avcorp announces 2009 Annual Financial Results

VANCOUVER, March 31 /CNW/ - Avcorp (AVP on the Toronto Stock Exchange) today announced its financial results for the year ended December 31, 2009.

During the year ended December 31, 2009, the Company recorded a loss from operations of $5,501,000 on $69,202,000 revenue, as compared to $485,000 earnings from operations on $128,868,000 revenue for the preceding year; and a net loss for the current year of $8,410,000 as compared to a net loss of $2,251,000 for the year ended December 31, 2008.

Gross profit (revenue less cost of sales) for the year ended December 31, 2009 was 6.7% of revenue as compared to 16.8% of revenue for the year ended December 31, 2008. Significantly reduced customer demand, relative to the preceding year, has resulted in idle plant capacity for which the Company has expensed $4,667,000 of overhead costs. Gross profit for 2009, exclusive of idle capacity costs, was 13.5% of revenue.

The Company increased its provision for loss making contracts by $515,000 during the current year.

Foregone deposits on equipment purchases as well as write-off of obsolete assets resulted in a non-cash $793,000 charge against income in 2009.

The current year loss includes a $4,412,000 foreign exchange gain (December 31, 2008: $2,349,000 foreign exchange loss) which occurred as a result of holding foreign-currency-denominated receivables, payables and debt.

Cash flows from operating activities during the current year utilized $2,002,000 of cash, as compared to providing $5,412,000 of cash during the year ended December 31, 2008. The Company has a working capital surplus of $820,000 as at December 31, 2009 (December 31, 2008: $2,065,000 deficit) and an accumulated deficit of $65,379,000 at December 31, 2009 (December 31, 2008: $56,213,000).

During 2009, the Company issued 145,417,183 common shares providing gross proceeds of $10,178,000.

As at December 31, 2009, the Company was not in compliance with a financial covenant associated with its operating lines of credit. On March 11, 2010, the Company and its Bank entered into a Forbearance Agreement which will expire on June 9, 2010.

Also, at December 31, 2009, 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. Provided no default has occurred, the Company will not be obligated to pay any interest or principal until the debenture matures on March 31, 2011.

The Company expects revenue growth in 2010 from full rate production of the Boeing Defense Space & Security CH47 helicopter as well as the Cessna Citation CJ4 business jet; both programs were in start-up phase for the Company in 2009.

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, 473 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).

    
    (signed)

    MARK VAN ROOIJ
    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 Balance Sheets
    as at December 31, 2009 and December 31, 2008
    (in thousands of Canadian dollars)
    -------------------------------------------------------------------------

                                                   December 31,  December 31,
                                                          2009          2008
                                                  ---------------------------
    Assets
    Current assets
    Accounts receivable                             $    6,689    $   12,609
    Inventories                                         15,497        19,206
    Prepayments                                          1,092         1,761
    Other assets                                            24           746
                                                  ---------------------------
                                                        23,302        34,322

    Development costs                                    3,923         3,299
    Property, plant and equipment                       17,346        19,431
    Warranty claim receivable                            1,637         1,784
    Intangible assets                                    1,818         2,154
                                                  ---------------------------
                                                        48,026        60,990
                                                  ---------------------------
                                                  ---------------------------
    Liabilities
    Current liabilities
    Bank indebtedness                                    8,422        14,273
    Accounts payable and accrued liabilities             7,929        15,841
    Current portion of long-term debt                    6,131         6,273
                                                  ---------------------------
                                                        22,482        36,387

    Deferred gain                                          405           453
    Lease inducement                                       863           962
    Deferred tooling revenues                            3,116         1,173
    Long-term debt                                       1,811         2,872
    Warranty provision                                   1,647         1,632
    Future income tax liability                            858         1,186
                                                  ---------------------------
                                                        31,182        44,665
                                                  ---------------------------
    Shareholders' Equity
    Capital stock                                       71,954        62,269
    Preferred shares                                     7,622         7,622
    Contributed surplus                                  2,647         2,647
    Deficit                                            (65,379)      (56,213)
                                                  ---------------------------
                                                        16,844        16,325
                                                  ---------------------------
                                                        48,026        60,990
                                                  ---------------------------
                                                  ---------------------------



    Consolidated Statements of Operations and Comprehensive Loss
    For the years ended December 31, 2009 and 2008
    (in thousands of Canadian dollars, except number
     of shares and per share amounts)
    -------------------------------------------------------------------------
                                                   December 31,  December 31,
                                                          2009          2008
                                                  ---------------------------

    Revenues                                        $   69,202    $  128,868
                                                  ---------------------------

    Cost of sales and expenses
    Cost of sales                                       64,555       107,188
    Administrative and general expenses                 10,477        13,676
    Amortization and depreciation                        4,083         4,599
    Write-down of goodwill                                   -           571
    Foreign exchange (gain) loss                        (4,412)        2,349
                                                  ---------------------------

                                                        74,703       128,383
                                                  ---------------------------
                                                  ---------------------------

    Income (Loss) from operations                       (5,501)          485

    Interest expense and financing charges              (1,739)       (2,479)
    Unrealized derivative gain (loss)                     (705)          502
    Write-down of investment                                 -          (759)
    Write-down of assets no longer in use                 (793)            -
                                                  ---------------------------
                                                  ---------------------------

    Loss before income taxes                            (8,738)       (2,251)

    Future Income Tax Recovery                             328             -
                                                  ---------------------------

    Loss and comprehensive loss for the period          (8,410)       (2,251)
                                                  ---------------------------
                                                  ---------------------------

    Basic and diluted loss per common share              (0.12)        (0.07)
                                                  ---------------------------
                                                  ---------------------------
    Basic and diluted weighted average number
     of shares outstanding (000's)                      69,632        32,143
                                                  ---------------------------
                                                  ---------------------------



    Consolidated Statements of Deficit
    For the years ended December 31, 2009 and 2008
    (in thousands of Canadian dollars)
    -------------------------------------------------------------------------
                                                   December 31,  December 31,
                                                          2009          2008
                                                  ---------------------------

    Deficit - Beginning of period                   $  (56,213)   $  (53,204)

    Loss for the period                                 (8,410)       (2,251)

    Preferred share dividends                             (756)         (758)

                                                  ---------------------------
    Deficit - End of period                            (65,379)      (56,213)
                                                  ---------------------------
                                                  ---------------------------



    Consolidated Statements of Cash Flows
    For the years ended December 31, 2009 and 2008
    (in thousands of Canadian dollars)
    -------------------------------------------------------------------------
                                                   December 31,  December 31,
                                                          2009          2008
                                                  ---------------------------
    Cash flows from operating activities
    Loss for the period                             $   (8,410)   $   (2,251)
    Items not affecting cash                             6,408         7,663
                                                  ---------------------------
                                                        (2,002)        5,412
    Change in non-cash items related to
     operating activities                                  509          (589)
                                                  ---------------------------

                                                        (1,493)        4,823
                                                  ---------------------------

    Cash flows from investing activities
    Purchase of property, plant and equipment             (402)       (2,771)
    Proceeds from disposal of property, plant
     and equipment                                          58             -
    Payments relating to development costs and
     tooling                                            (2,586)       (2,766)
                                                  ---------------------------

                                                        (2,930)       (5,537)
                                                  ---------------------------

    Cash flows from financing activities
    (Decrease) increase in bank indebtedness            (5,851)        2,994
    Proceeds from current and long-term debt             5,952           131
    Proceeds from sale and leaseback of property,
     plant and equipment                                     -         1,215
    Proceeds from sale of tooling                        2,309           103
    Repayment of current and long-term debt             (2,738)       (3,342)
    Issue of common shares net of debt repayment
     set-off                                             5,244           371
    Preferred share dividends                                -          (758)
    Share issue expense                                   (493)            -
                                                  ---------------------------

                                                         4,423           714
                                                  ---------------------------

    Net change in cash and cash equivalents                  -             -

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

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

    Interest paid                                        1,300         1,714
                                                  ---------------------------
                                                  ---------------------------
    

SOURCE Avcorp Industries Inc.

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


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