Circa Announces Operating Results for the Third Quarter and Nine Months Ended September 30, 2007



    CALGARY, Nov. 7 /CNW/ - Circa Enterprises Inc. (CTO-TSX) (the "Company"
or "Circa"), a manufacturer of equipment for the telecommunication, electrical
utility, and construction industries, reports results of operations for the
third quarter and nine months ended September 30, 2007.

    
    Summary of third quarter operating results:
    -   Consolidated sales of $8.4 million
    -   Foreign currency loss of $0.3 million, or $0.03 per share
    -   Net loss of $0.4 million or $0.04 per share
    -   Cash flow from operations of $1.0 million

    Year-to-date operating results:
    -   Consolidated sales of $24.4 million
    -   Foreign currency loss of $0.8 million, or $0.08 per share
    -   Net loss of $0.9 million or $0.09 per share
    -   Working capital of $5.4 million, with $3.3 million available on its
        revolving credit facility
    

    Consolidated sales for the third quarter of 2007 were $8.4 million as
compared to sales in 2006 of $11.0 million. The decrease was primarily the
result of lower sales of Circa's surge protection business to the U.S. market
when translated to Canadian dollars, and lower sales from the custom metal
fabrication business. In addition, sales from its module supply agreement were
lower than the 2006 result, which included a single significant sale.
    On a year-to-date basis, consolidated sales were $24.4 million compared
to $29.3 million in the prior year, the decrease primarily as a result of
reduced sales to the U.S. market. This reduction was due in part to currency
issues as well as a weaker U.S. market, driven by housing and related
construction sector concerns.
    Circa's third quarter and year-to-date gross profit was lower than 2006
mainly due to lower sales of the relatively higher margin surge protection
products, as well as somewhat reduced margins in the Circa Metals business.
    A year-to-date foreign exchange translation loss of $0.4 million resulted
from the continued upward trend in the Canadian/U.S. dollar exchange rate
during the period. As at September 30, 2007, the Canadian/U.S. dollar exchange
rate was $1.01 versus $0.86 at December 31, 2006. This loss includes the
translation of Circa USA accounts to Canadian dollars for consolidated
reporting purposes, and has the added effect of further reducing earnings as
it is not deductible for income tax purposes.
    Circa's third quarter net loss of $0.4 million reflects the foreign
currency translation loss and the resulting lower tax recovery as discussed
above, a reduction in the earnings contribution from the surge protection
business, and slightly lower margins in the Circa Metals business. On a
year-to-date basis, Circa recorded a net loss of $0.9 million or $0.09 per
share. The Company has estimated that on a year-to-date basis, overall net
foreign currency losses amounted to $0.8 million, or $0.08 per share of this
loss. For the third quarter, this estimated loss is $0.3 million or $0.03 per
share.
    At September 30, 2007 the Company's working capital was $5.4 million,
including $0.2 million in cash. The working capital supports an additional
$3.3 million currently available under the Company's revolving credit
facility. Circa ended the quarter with $2.4 million in current bank
indebtedness, an improvement of $0.8 million over the June 30, 2007 balance.
Included in current bank indebtedness is $0.5 million representing the current
portion of its term loan facility ("term facility"). Under the terms and
conditions of its term facility, the Company is required to maintain certain
operating covenants. The Company complied with such covenants under the term
facility at the end of its fiscal quarter ending September 30, 2007, except
for debt service coverage. In view of this, the Company's lender waived the
condition which required compliance with the minimum debt service coverage
covenant for the fiscal quarter ended September 30, 2007. As mentioned above,
Circa has considerable additional unused borrowing capacity under its
revolving credit facility.
    Subsequent to September 30, 2007, the Company reached material agreement
to extend for one year its current third party module supply agreement that
was scheduled to expire on October 20, 2007.
    Circa's President and Chief Executive Officer, Rick Schmidt stated:
    "2007 continues to be a difficult year for Circa due primarily to the
strengthening of the Canadian dollar and the continued slump in the U.S.
housing market and related construction sectors. For example, on a
year-to-date basis we estimate that, the foreign currency loss from the
stronger Canadian dollar has had the effect of reducing earnings by
approximately $0.8 million or $0.08 per share. In spite of these challenges,
the third quarter had some very positive developments, such as $1.0 million in
cash flow from operations, and the pending extension of an important supply
agreement. While U.S. market conditions are currently difficult, the fact that
roughly 50% of Circa's sales are to a strengthening Canadian economy provides
management with confidence in the Company's stability and the availability of
growth opportunities. Circa continues to focus on overcoming marketplace
challenges, generating earnings, and providing returns for our shareholders."


    
    CIRCA ENTERPRISES INC.
    Consolidated Statements of Earnings and Retained Earnings
    (Unaudited)
    (Amounts expressed in thousands of Canadian dollars,
     except per share amounts)
    -------------------------------------------------------------------------
                                      Three      Three       Nine       Nine
                                     months     months     months     months
                                      ended      ended      ended      ended
                                  September  September  September  September
                                   30, 2007   30, 2006   30, 2007   30, 2006
                                          $          $          $          $
    -------------------------------------------------------------------------
    SALES                             8,433     10,975     24,391     29,258

    COST OF SALES
      Direct costs                    6,777      8,352     19,305     21,545
      Depreciation and
       amortization                     133        133        415        351
    -------------------------------------------------------------------------
                                      1,523      2,490      4,671      7,362
    INTEREST AND OTHER INCOME            15          1         34         61
    -------------------------------------------------------------------------
                                      1,538      2,491      4,705      7,423
    -------------------------------------------------------------------------

    EXPENSES
      General and
       administrative                   836        796      2,699      2,505
      Marketing and selling             608        616      1,827      1,740
      Engineering                        51         62        181        255
      Depreciation and
       amortization                      81         98        317        344
      Interest - current                 36         28         76         45
      Interest on long-term debt         10         17         28         57
    -------------------------------------------------------------------------
                                      1,622      1,617      5,128      4,946
    -------------------------------------------------------------------------
    EARNINGS BEFORE OTHER ITEMS         (84)       874       (423)     2,477

    Foreign currency
     translation loss                   183         66        383        197
    -------------------------------------------------------------------------
    EARNINGS BEFORE INCOME TAXES       (267)       808       (806)     2,280
    -------------------------------------------------------------------------

    PROVISION FOR INCOME TAXES
      Current                           203        297        420        841
      Future                           (104)        35       (337)       134
    -------------------------------------------------------------------------
                                         99        332         83        975
    -------------------------------------------------------------------------
    NET (LOSS) EARNINGS                (366)       476       (889)     1,305

    RETAINED EARNINGS,
     BEGINNING OF PERIOD              8,052      8,273      8,575      7,444
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    RETAINED EARNINGS,
     END OF PERIOD                    7,686      8,749      7,686      8,749
    -------------------------------------------------------------------------
    (LOSS) EARNINGS PER SHARE
      Basic and diluted               (0.04)      0.05      (0.09)      0.14
    -------------------------------------------------------------------------



    Consolidated Balance Sheets
    Unaudited
    (Amounts expressed in thousands of Canadian dollars)

                                                        September   December
                                                         30, 2007   31, 2006
                                                                $          $
    -------------------------------------------------------------------------
    ASSETS
    Current
      Cash                                                    178        146
      Accounts receivable                                   3,987      4,070
      Income taxes recoverable                                203          -
      Inventory                                             6,084      6,426
      Prepaid expenses                                        495        330
    -------------------------------------------------------------------------
                                                           10,947     10,972
    Property, plant and equipment                           4,054      4,389
    Deferred charges                                          678        722
    Intangible assets and goodwill                            300        304
    -------------------------------------------------------------------------
                                                           15,979     16,387
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    LIABILITIES
    Current
      Bank indebtedness                                     1,853        500
      Accounts payable and accrued liabilities              3,144      3,145
      Income taxes payable                                      -         70
      Current portion of long-term debt                       507        592
    -------------------------------------------------------------------------
                                                            5,504      4,307
    Long-term debt                                              -        361
    Deferred gain                                               -         18
    Future income taxes                                       100        437
    -------------------------------------------------------------------------
                                                            5,604      5,123
    -------------------------------------------------------------------------
    SHAREHOLDERS' EQUITY
      Share capital                                         2,689      2,689
      Retained earnings                                     7,686      8,575
    -------------------------------------------------------------------------
                                                           10,375     11,264
    -------------------------------------------------------------------------
                                                           15,979     16,387
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    

    Circa Enterprises Inc. is a public company with offices in Alberta,
Ontario and Florida, trading on the Toronto Stock Exchange under the ticker
symbol CTO. The Toronto Stock Exchange has neither approved nor disapproved
the information contained herein.

    %SEDAR: 00002951E




For further information:

For further information: Contact: Mr. Rick Schmidt, President and CEO,
Circa Enterprises Inc., (403) 258-2011; Mr. Graham Reid, VP Finance and CFO,
Circa Enterprises Inc., (403) 258-2011; E-Mail: investor@circaent.com;
Website: www.circatel.com


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