Virtek reports fiscal 2009 first quarter results



    WATERLOO, ON, June 12 /CNW/ - Virtek Vision International Inc. (TSX:VRK)
("Virtek" or the "Company"), a leading provider of high value industrial laser
solutions, today announced its financial results for the first quarter ended
April 30, 2008.
    Sales for the fiscal 2009 first quarter fell 9% to $12.1 million from
$13.3 million in the same period last year. Net income rose to $0.5 million
($0.01 per share) from a loss of $44,000 ($0.00 per share ) in the quarter
ended April 30, 2007.
    The sales decline was due to weakened demand for Imaging and Templating
products in North America because of general economic conditions. Gross margin
was down $0.8 million or two percentage points at 50%, based on a shift in
product mix and reduced sales. Operating expenses decreased $0.3 million
mainly due to lower general and administrative costs, which fell along with
personnel costs following a reorganization late last year. Foreign exchange
resulted in a gain of $0.2 million compared to a foreign exchange loss
$0.8 million in the same quarter of the prior year. As a result of these
factors, EBITDA increased to $0.9 million in the fiscal 2009 first quarter.
    "We expect that Virtek's financial performance in fiscal 2009 will
continue to improve. We correctly anticipated and are effectively managing the
Company's challenges; during the first quarter, global currency fluctuations
coupled with economic conditions in the United States exerted downward
pressure on our gross margin. Nevertheless, our bottom line improved and our
backlog is very strong," said Stephen J. Sorocky, Virtek's President and Chief
Executive Officer. "We are addressing pressures on North American Imaging &
Templating markets by focusing increasingly on Europe and Asia. Our Marking &
Engraving business is expanding in strategic markets where consistent quality
and value rather than price sensitivity is the driving force. We are also
taking steps to mitigate the impact of the rising value of the Euro against
the U.S. and Canadian dollars. For instance, we will begin manufacturing FOBA
"G" series deep engraving machines destined for the North American market in
Canada rather than in Germany in Q3 of this fiscal year."
    Sales in the Imaging & Templating segment fell $1.0 million, primarily
due to lower demand for prefabricated construction product. Marking &
Engraving sales decreased $0.2 million based on the timing of orders. However,
Virtek's sales order backlog increased 62% to $6.0 million at April 30, 2008
from $3.7 million on January 31, 2008. The backlog included $1.2 million for
the Imaging & Templating segment ($0.8 million at January 31, 2008) and
$4.8 million in the Marking & Engraving segment ($2.9 million at the fiscal
2008 year-end).
    From a geographic perspective, sales remained stable in North America
(48% compared to 40% in the fiscal 2008 first quarter), Europe (43% versus 50%
in the same quarter last year) and rest of the world (9% in fiscal 2009
compared to 10% in the prior year period).
    Virtek's net cash position was $7.7 million at April 30, 2008, up from
$7.3 million at January 31, 2008. The improvement was primarily a result of
cash provided by operations of $0.5 million. In the prior year period net cash
rose $1.4 million due to net proceeds from a stock issue of $3.7 million,
offset by using $1.6 million for continuing operations and the balance for
discontinued operations. Working capital of $18.4 million at April 30, 2008 is
sufficient to meet Virtek's ongoing needs and is up from $17.6 million at
January 31, 2008.
    Imaging & Templating sales declined to $5.2 million in the 2008 first
quarter from $6.2 million in the same period last year, as prefabricated
construction sales fell in response to slowing new home construction in the
U.S. Transportation revenues rose $0.2 million or 9.4% quarter over quarter.
Imaging revenues were down $0.5 million from $1.4 million from the same period
in fiscal 2008, as product demand softened slightly due to uncertain economic
conditions for U.S. manufacturers. First quarter net income for the segment
was unchanged year over year at $1.3 million ($0.04 per share).
    Marking & Engraving sales fell slightly to $7.0 million in the fiscal
2009 first quarter from $7.2 million in the quarter ended April 30, 2008,
while gross margin was consistent at 44%. Total loss for the segment was
$0.1 million or ($0.00 per share), compared to a loss of $0.7 million or
($0.02) per share in the fiscal 2008 first quarter.
    On April 24, 2008 the Company announced its intention to make a normal
course issuer bid for up to 1.5 million common shares, or approximately 4.48%
of its shares outstanding on April 23, 2008. Shares purchased pursuant to the
normal course issuer bid will be cancelled. As of June 12, 2008, no shares
have been repurchased.

    
    CONSOLIDATED BALANCE SHEETS

    As at                                              April 30,  January 31,
    Canadian dollars in thousands                          2008         2008
    UNAUDITED                                                 $            $
    -------------------------------------------------------------------------

    ASSETS
    Current
    Cash and cash equivalents                             6,084        5,316
    Short-term investment                                 3,080        3,049
    Accounts receivable                                  10,163       10,197
    Inventory                                             8,795        7,583
    Prepaid expenses                                        875          556
    Future tax asset                                        200          200
    Current portion of promissory note receivable           609          609
    -------------------------------------------------------------------------
                                                         29,806       27,510
    -------------------------------------------------------------------------
    Capital assets                                        2,936        3,196
    Investment tax credits                                   84           84
    Goodwill                                              1,070        1,070
    Intangible assets                                     1,027        1,039
    Long-term portion of promissory note receivable         584          584
    -------------------------------------------------------------------------
                                                          5,701        5,973
    -------------------------------------------------------------------------
    Total assets                                         35,507       33,483
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    LIABILITIES, NON-CONTROLLING INTEREST
     AND SHAREHOLDERS' EQUITY
    Current
    Bank indebtedness                                     1,470        1,071
    Accounts payable and accrued liabilities              8,298        7,214
    Deferred revenue                                      1,620        1,671
    -------------------------------------------------------------------------
                                                         11,388        9,956
    Lease inducements                                        92          113
    -------------------------------------------------------------------------
                                                         11,480       10,069
    -------------------------------------------------------------------------

    -------------------------------------------------------------------------
    Non-controlling interest                                321          307
    -------------------------------------------------------------------------
    Commitments and contingencies

    Shareholders' equity
    Share capital                                        41,754       41,754
    Contributed surplus                                     480          474
    Deficit                                             (17,804)     (18,397)
    Accumulated other comprehensive loss                   (724)        (724)
    -------------------------------------------------------------------------
                                                         23,706       23,107
    -------------------------------------------------------------------------
    Total liabilities, non-controlling interest
     and shareholders' equity                            35,507       33,483
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



    CONSOLIDATED STATEMENTS OF OPERATIONS                 Three months ended
                                                                April 30
    Canadian dollars in thousands, except per share data   2008         2007
    UNAUDITED                                                 $            $
    -------------------------------------------------------------------------

    Sales                                                12,161       13,344
    Cost of goods sold                                    6,038        6,430
    -------------------------------------------------------------------------
    Gross margin                                          6,123        6,914
    -------------------------------------------------------------------------
    Expenses
    Selling, general and administrative                   4,393        4,570
    Research and development                              1,056        1,182
    Amortization                                            410          374
    Foreign exchange (gain) loss                           (236)         757
    -------------------------------------------------------------------------
                                                          5,623        6,883
    -------------------------------------------------------------------------
    Income from operations                                  500           31
    -------------------------------------------------------------------------
    Other income (expense)
    Interest income                                          64           41
    Interest expense - short term                           (42)         (85)
    Interest expense - long term                             (5)          (6)
    -------------------------------------------------------------------------
                                                             17          (50)
    -------------------------------------------------------------------------
    Income (loss) before provision for income
     taxes, non-controlling interest and
     discontinued operations                                517          (19)

    Provision for income taxes                              (21)         (27)
    Non-controlling interest                                (15)           2
    -------------------------------------------------------------------------
    Income (loss) from continuing operations                481          (44)
    Income from discontinued operations                       -           45
    -------------------------------------------------------------------------
    Net income                                              481            1
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    -------------------------------------------------------------------------
    Earnings per share basic and Diluted
      From Continuing operations                           0.01         0.00
      From Discontinued operations                         0.00         0.00
    -------------------------------------------------------------------------

    -------------------------------------------------------------------------
    Weighted average number of shares outstanding
      Basic                                          33,473,241   33,095,713
      Diluted                                        33,473,241   33,229,477
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



    CONSOLIDATED STATEMENTS OF DEFICIT                    Three months ended
                                                                April 30
    Canadian dollars in thousands                          2008         2007
    UNAUDITED                                                 $            $
    -------------------------------------------------------------------------

    Deficit, beginning of period                        (18,397)     (20,583)

    Application of inventory accounting
     policy change (Note 2)                                 112            -
    Net income                                              481            1
    -------------------------------------------------------------------------
    Deficit, end of period                              (17,804)     (20,582)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



    CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME       Three months ended
                                                                April 30
    Canadian dollars in thousands                          2008         2007
    UNAUDITED                                                 $            $
    -------------------------------------------------------------------------

    Net income for period                                   481            1
    Other comprehensive income: unrealized gain
     on translating financial statements of
     self-sustaining foreign operations                       -          119
    -------------------------------------------------------------------------
    Comprehensive income for period                         481          120
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Accumulated other comprehensive income (loss),
     beginning of period                                   (724)         (38)

    Unrealized gain on translating financial
     statements of self-sustaining foreign operations         -          119
    -------------------------------------------------------------------------
    Accumulated other comprehensive income (loss),
     end of period                                         (724)          81
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



    CONSOLIDATED STATEMENTS OF CASH FLOWS                 Three months ended
                                                                April 30
    Canadian dollars in thousands                          2008         2007
    UNAUDITED                                                 $            $
    -------------------------------------------------------------------------

    OPERATING ACTIVITIES
    Net income (loss) from continuing operations            481          (44)
    Add (deduct) non-cash items:
      Amortization                                          410          374
      Non-controlling interest                               15           (2)
      Stock-based compensation                                6           36
      Lease inducements                                     (21)         (19)
    Net change in non-cash working capital
     components from operations                            (372)      (1,927)
    -------------------------------------------------------------------------
    Cash (applied to) provided by operating activities      519       (1,582)
    -------------------------------------------------------------------------

    INVESTING ACTIVITIES
    Purchase of capital assets                             (143)        (140)
    Additions to intangible assets                           (9)         (25)
    Restricted cash and investment                            -           87
    -------------------------------------------------------------------------
    Cash applied to investing activities                   (152)         (78)
    -------------------------------------------------------------------------

    FINANCING ACTIVITIES
    Increase in bank indebtedness                           399          959
    Net proceeds from issuing common shares                   -        3,688
    -------------------------------------------------------------------------
    Cash provided by financing activities                   399        4,647
    -------------------------------------------------------------------------

    -------------------------------------------------------------------------
    Net cash applied to discontinued operations (Note 9)      -         (488)
    -------------------------------------------------------------------------

    -------------------------------------------------------------------------
    Effect of foreign exchange on cash and cash equivalents   2           (2)
    -------------------------------------------------------------------------

    -------------------------------------------------------------------------
    Cash provided in the period                             768        2,497
    Cash and cash equivalents, beginning of period        5,316        1,451
    -------------------------------------------------------------------------
    Cash and cash equivalents, end of period              6,084        3,948
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    


    Annual Meeting

    The 2008 Annual General Meeting of shareholders of Virtek Vision
International Inc. will be held on Monday June 16, 2008 at 4:00 p.m. at the
Waterloo Inn, 475 King Street North, Waterloo, Ontario. The meeting will be
recorded for playback from our website and available on June 17, 2008. A
reception will follow the meeting. As such no shareholder conference call will
be held to discuss the Q1 results.

    About Virtek Vision International Inc.

    Virtek Vision International Inc. is a leading provider of high value
industrial laser solutions focused on the needs of the global manufacturing
sector, providing templating, inspection, marking and engraving products.
Virtek serves customers in the prefabricated construction, transportation,
metalworking, tool and die and mold making industries worldwide. Virtek is a
full service provider, with services including manufacturing, development,
integration, training, after sales support and installation. The Company
delivers high value to our customers, including feature-rich systems with a
quick payback, productivity enhancements and total turnkey solutions. The
majority of Virtek's sales are in the United States and Europe. Virtek
maintains offices in Waterloo, Ontario, Canada; Boston, Massachusetts, United
States; Ludenscheid and Nurnberg, Germany; and Busto Arsizio, Italy. Please
visit www.virtek.ca for more information.

    Forward-looking Statements

    Except for historical information provided herein, this press release may
contain information and statements of a forward-looking nature concerning the
future performance of the Company. These statements are based on suppositions
and uncertainties as well as on management's best possible evaluation of
future events. Such factors may include, without excluding other
considerations, fluctuations in quarterly results, evolution in customer
demand for the Company's products and services, the impact of price pressures
exerted by competitors, and general market trends or economic changes. As a
result, readers are advised that actual results may differ from expected
results.





For further information:

For further information: about Virtek Vision International Inc. please
visit www.virtek.ca or contact: Peter Monsberger, VP Finance and CFO, Tel:
(519) 746-7190, Fax: (519) 746-3383, e-mail: peter.monsberger@virtek.ca;
Stephen Sorocky, President and CEO, Tel. (519) 746-7190, Fax. (519) 746-3383,
e-mail: stephen.sorocky@virtek.ca; Investor Relations Contact: Jo Mira
Clodman, Clodman Hecht Communications Inc., (416) 787-3773, e-mail:
jomira@clodmanhecht.com

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VIRTEK VISION INTERNATIONAL INC.

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