Virtek Vision Reports Fiscal Third-Quarter Results



    WATERLOO, ON, Dec. 13 /CNW/ - Virtek Vision International Inc. (TSX:
VRK), a leading developer and provider of high-value industrial laser
solutions, today announced its financial results for the fiscal 2008 third
quarter ended October 31, 2007. All references to quarters or years are for
the fiscal periods and all currency amounts are in Canadian dollars unless
otherwise noted.
    "The third quarter traditionally is our weakest period reflecting the
cyclical nature of the business of many of our customers. Thanks largely to
demand in Europe for our Marking & Engraving systems and aerospace products,
our third-quarter revenues were slightly ahead of our results for last year's
third quarter," reported Peter Monsberger, Vice-President, Finance and Chief
Financial Officer.
    "The strength of our European sales in this year's third quarter more
than offset a $1.6 million decline in our North American sales, which
continued to be affected by the decline in capital goods purchases in the
markets we serve, particularly the residential construction business," he
continued.
    The results reported below exclude the activities of the iLS business
unit which have been reported as discontinued operations.

    Third-Quarter Results
    ---------------------

    Sales for the 2008 third quarter were $15.0 million, a 2 percent increase
from $14.7 million in the 2007 period. Marking & Engraving sales were flat for
the period at $8.9 million in the 2008 quarter, compared with $9.0 million a
year ago. Although European sales rose 55 percent to $7.3 million in the 2008
third quarter weakness in North America offset the gain. Imaging & Templating
sales were up by 5 percent, primarily reflecting increased aerospace sales in
European and North American markets. This growth was offset by weaker
prefabrication construction sales in the United States as many of the large
truss manufacturers closed or mothballed plants.
    Consolidated gross margin was flat at 46 percent in the 2008 and 2007
third quarters. Gross profit was likewise flat at $6.9 million and
$6.8 million in the respective periods. Marking & Engraving's gross margin
fell to 35 percent from 44 percent in the 2007, due to a large lower-margin
contract in the Asia Pacific region. The Imaging & Templating segment
experienced an increase in its gross margin to 62 percent from 50 percent a
year earlier, reflecting a more favorable product mix and lower warranty
costs.
    Operating expenses, comprising selling, general, and administrative
(SG&A) and research and development (R&D), were down slightly at $5.8 million,
compared with $6.0 million (38 percent of sales compared with 41 percent). 
This was offset by reorganization costs in the 2008 quarter, mainly related to
severance costs, of $0.8 million. The loss on foreign exchange was about the
same level at $0.3 million in the 2008 and 2007 third quarters. In addition,
the company's provision for income taxes in the 2008 quarter was $0.5 million,
resulting from a valuation allowance taken against the future tax asset,
compared to a small recovery of taxes in the 2007 period.
    The net loss from continuing operations for the 2008 quarter was
$1.0 million ($0.03 per basic and diluted share), compared with a net loss of
$0.1 million ($0.00 per basic and diluted share) in the same period last year.
    Virtek completed the sale of the assets of its iLS business unit on
August 15, 2007 for proceeds of $6.2 million in cash, plus a $1.2 non-interest
bearing promissory note due no later than June 15, 2008. The proceeds from
this promissory note will be held in escrow with one half to be released in
each of August 15, 2008 and August 15, 2009. As the result of this sale,
discontinued operations recorded an income of $4.0 million in the 2008
quarter.
    The company's net income was $3.0 million in the 2008 third quarter
($0.09 per basic and diluted share), compared with a net loss of $0.4 million
($0.01 per basic and diluted share) in the 2007 period.

    Nine-month Results
    ------------------

    Sales for the first nine months of 2008 were $40.1 million, down 8
percent from $43.6 million in the first nine months of 2007. Marking &
Engraving sales rose 13 percent in the 2008 period on the strength of
increased European demand.
    Imaging & Templating sales declined 25 percent primarily from the
templating business which includes aerospace and prefabricated construction. 
Aerospace has returned to normal levels with the completion in the first half
of 2007 of the initial procurement by Boeing subcontractors for the 787
program. Demand for the prefabricated construction product line continues to
be adversely affected by the slump in the U.S. home construction industry.
    Gross margin was 50 percent for the first nine months of 2008, compared
with 51 percent a year ago. The Marking & Engraving segment's gross margin
declined three points to 42 percent from 45 percent in the nine-month 2007
period due to regional sales mix changes. The Imaging & Templating segment's
gross margin rose five points to 60 percent from 55 percent a year ago,
reflecting a more favorable product mix in the prefabricated construction line
and higher aerospace margins resulting from the selling of refurbished
systems.
    Operating expenses were flat at $18.0 million and $18.1 million for 2008
and 2007 periods, respectively, but were a higher percentage of sales at 45
percent in the first nine months of 2008, compared with 41 percent for the
2007 period, reflecting the decline in sales. The company incurred
reorganization costs in the 2008 nine months related to severance costs of
$0.8 million. The loss on foreign exchange was $2.1 million in the 2008
nine-month period compared with $0.1 million in the first nine months of 2007.
The company's provision for income taxes in the 2008 nine-month period was
$0.6 million, compared with just $0.1 million in the 2007 period.
    Virtek recorded a net loss from continuing operations of $2.5 million
($0.07 per basic and diluted share) in the first nine months of 2008, compared
with net income from continuing operations of $2.2 million ($0.08 per basic
and diluted share) in the 2007 period.
    Discontinued operations recorded an income of $3.4 million in the 2008
period, including a $3.9 million gain on sale of assets, compared with a loss
of $1.3 million a year ago.
    Net income for the fiscal 2008 nine-month period was $0.9 million ($0.03
per basic and diluted share) compared with net income of $0.9 million ($0.03
per basic and diluted share) in the fiscal 2007 period.
    At the end of the 2008 third quarter, Virtek's backlog was $5.1 million,
compared with $7.7 million at the end of the 2008 second quarter. The backlog
consists of $3.7 million of orders for Marking & Engraving (compared with
$7.0 million at the end of the second quarter) and $1.4 million of Imaging &
Templating orders ($0.7 million at the end of the second quarter).
    Working capital increased to $15.5 million at the end of the 2008 third
quarter, up from $11.4 million a year earlier. The increase includes proceeds
from the sale of the assets from discontinued operations and from the
financing completed in February.

    Outlook
    -------

    "We expect that the continued weakness of the U.S. economy in the housing
and manufacturing sectors will continue to result in lower demand for our
products in North America until conditions improve," Mr. Monsberger said. "As
a result, we have been increasing our focus on growing our business in the
European and Asian markets and are having success with this as the 2008 third
quarter results indicate.
    "We are continuing to make progress in reducing our costs through product
innovation and operating efficiencies. These include using newer more cost
efficient components in our laser projectors and further design improvements
will be introduced during the next year that will again lower our
manufacturing costs.

    Conference Call and Webcast

    Virtek will hold a conference call for analysts and investors to discuss
its third-quarter results on Friday, December 14, 2007 at 10 a.m. (Eastern).
    Peter Monsberger, Vice President, Finance and Chief Financial Officer,
will be available to answer questions during the call. Joining him will be the
Chairman of Virtek, Mr. Robert Nally.
    To  participate in the conference call, please dial 416-644-3414 or
1-800-732-0232 about five minutes prior to the start of the call.
    A live audio webcast of the call will be available at www.newswire.ca and
www.virtek.ca.
    An archived recording of the call will be available at 416-640-1917 or
1-877-289-8525 (Passcode 21256018 followed by the number sign) from 12:00 p.m.
on December 14 to 11:59 p.m. on December 21. An archived recording of the
webcast will also be available at Virtek's website.

    Forward-looking Statements

    This news release may contain information and statements of a
forward-looking nature concerning the future performance of the Company. Any
such forward-looking statements are based on current suppositions and
expectations that are subject to significant risks and uncertainties. These
include, but are not limited to, the effects of general economic conditions on
the customers and markets that we serve, the impact of price pressures exerted
by competitors, changes that may take place in our costs and expenditures, the
results of our research and development programs, and other factors discussed
in our Management Discussion and Analysis and other regulatory filings. 
Virtek assumes no obligation to update the forward-looking statements or to
update the reasons why actual results could differ from those reflected in the
forward-looking statements.

    About Virtek

    Virtek Vision International Inc. is a leading developer and provider of
high-value industrial laser solutions, providing marking & engraving products,
templating, and inspection products, to customers around the world. Virtek is
a full-service provider, offering research and development, manufacturing,
training, after-sales support, and installation for customers in the
prefabricated construction, transportation, metalworking, tool and die, and
mold-making industries worldwide. Based in Waterloo, Ontario, Canada, Virtek
also has offices in Boston, Massachusetts, USA; Ludenscheid and Nurnberg,
Germany; and Busto Arsizio, Italy. Please visit www.virtek.ca for more
information.


    
    CONSOLIDATED BALANCE SHEETS

    As at                                             October 31, January 31,
    Canadian dollars in thousands                           2007        2007
    UNAUDITED                                                  $           $
    -------------------------------------------------------------------------
    ASSETS
    Current
    Cash and cash equivalents                              4,624       1,451
    Short-term investment                                  3,017           -
    Restricted cash and investment                             -       1,535
    Accounts receivable                                   11,353      10,999
    Inventory                                              7,832       8,721
    Prepaid expenses                                         600         681
    Future tax asset                                           -         144
    Current assets of discontinued operations                656       2,955
    -------------------------------------------------------------------------
                                                          28,082      26,486
    -------------------------------------------------------------------------
    Capital assets                                         3,033       3,097
    Investment tax credits                                    74          84
    Future tax asset                                         200         456
    Goodwill                                               1,907       1,346
    Intangible assets                                        291         305
    Long-term assets of discontinued operations              584       1,388
    -------------------------------------------------------------------------
                                                           6,089       6,676
    -------------------------------------------------------------------------
    Total assets                                          34,171      33,162
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    LIABILITIES, NON-CONTROLLING INTEREST AND SHAREHOLDERS' EQUITY
    Current
    Bank indebtedness                                      1,496       1,384
    Accounts payable and accrued liabilities               7,829       9,431
    Deferred revenue                                       2,557       1,295
    Current liabilities of discontinued operations           174       2,293
    -------------------------------------------------------------------------
                                                          12,056      14,403
    Lease inducement                                         133         191
    -------------------------------------------------------------------------
                                                          12,189      14,594
    -------------------------------------------------------------------------

    -------------------------------------------------------------------------
    Non-controlling interest                                 154         723
    -------------------------------------------------------------------------
    Commitments and contingencies

    Shareholders' equity
    Share capital                                         41,754      38,115
    Contributed surplus                                      466         351
    Deficit                                              (19,668)    (20,583)
    Accumulated other comprehensive loss                    (724)        (38)
    -------------------------------------------------------------------------
                                                          21,828      17,845
    -------------------------------------------------------------------------
    Total liabilities, non-controlling interest and
     shareholders' equity                                 34,171      33,162
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



    CONSOLIDATED STATEMENTS OF OPERATIONS

    Canadian dollars in         Three months ended       Nine months ended
     thousands, except per          October 31               October 31
     share data                     2007        2006        2007        2006
    UNAUDITED                          $           $           $           $
    -------------------------------------------------------------------------
    Sales                         14,960      14,716      40,121      43,553
    Cost of goods sold             8,105       7,886      20,025      21,558
    -------------------------------------------------------------------------
    Gross margin                   6,855       6,830      20,096      21,995
    -------------------------------------------------------------------------
    Expenses
    Selling, general and
     administrative                4,879       4,683      14,712      13,960
    Research and development
     (net of investment
     tax credits of $102,
     nil in 2006)                    880       1,305       3,229       4,107
    Reorganization costs             841           -         841           -
    Amortization                     421         366       1,170       1,040
    Foreign exchange loss            257         286       2,083          95
    -------------------------------------------------------------------------
                                   7,278       6,640      22,035      19,202
    -------------------------------------------------------------------------
    Income (loss) from
     operations                     (423)        190      (1,939)      2,793
    -------------------------------------------------------------------------
    Other income (expenses)
    Interest income                   69          17         151          78
    Interest expense - short term    (67)       (121)       (241)       (333)
    Interest expense - long term     (12)         (7)        (44)        (32)
    -------------------------------------------------------------------------
                                     (10)       (111)       (134)       (287)
    -------------------------------------------------------------------------
    Income (loss) before
     (provision for) recovery
     of income taxes,
     non-controlling interest
     and discontinued operations    (433)         79      (2,073)      2,506

    (Provision for) recovery
     of income taxes                (522)          5        (561)        (58)
    Non-controlling interest         (53)       (205)        127        (232)
    -------------------------------------------------------------------------
    Income (loss) from continuing
     operations                   (1,008)       (121)     (2,507)      2,216
    Income (loss) from
     discontinued operations       3,997        (232)      3,422      (1,320)
    -------------------------------------------------------------------------
    Net income (loss)              2,989        (353)        915         896
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Basic and diluted earnings
     (loss) per share
      From continuing operations   (0.03)       0.00       (0.07)       0.08
      From discontinued operations  0.12       (0.01)       0.10       (0.05)
    -------------------------------------------------------------------------
                                    0.09       (0.01)       0.03        0.03
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Weighted average number of
     shares outstanding
      Basic                   33,473,241  28,668,785  33,350,164  28,555,624
      Diluted                 33,473,241  29,355,082  33,365,363  28,867,356
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



    CONSOLIDATED STATEMENTS OF DEFICIT

    Canadian dollars in         Three months ended       Nine months ended
     thousands,                     October 31               October 31
                                    2007        2006        2007        2006
    UNAUDITED                          $           $           $           $
    -------------------------------------------------------------------------
    Deficit, beginning of the
     period                      (22,657)    (21,485)    (20,583)    (22,734)
    Net income (loss)              2,989        (353)        915         896
    -------------------------------------------------------------------------
    Deficit, end of the
     period                      (19,668)    (21,838)    (19,668)    (21,838)
    -------------------------------------------------------------------------



    CONSOLIDATED STATEMENTS OF
    COMPREHENSIVE INCOME (LOSS)

    Canadian dollars in         Three months ended       Nine months ended
     thousands,                     October 31               October 31
                                    2007        2006        2007        2006
    UNAUDITED                          $           $           $           $
    -------------------------------------------------------------------------
    Net income (loss) for the
     period                        2,989        (353)        915         896
    Other comprehensive
     income: unrealized (loss)
     gain on translating
     financial statements
     of self-sustaining
     foreign operations             (777)        147        (686)        177
    -------------------------------------------------------------------------
    Comprehensive income (loss)
     for the period                2,212        (206)        229       1,073
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Accumulated other
     comprehensive income
     (loss), beginning of
     period                           53        (435)        (38)       (465)
    Unrealized (loss) gain
     on translating financial
     statements of self-
     sustaining foreign
     operations                     (777)        147        (686)        177
    -------------------------------------------------------------------------
    Accumulated other
     comprehensive loss,
     end of period                  (724)       (288)       (724)       (288)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



    CONSOLIDATED STATEMENTS OF CASH FLOWS

    Canadian dollars in         Three months ended       Nine months ended
     thousands                      October 31               October 31
                                    2007        2006        2007        2006
    UNAUDITED                          $           $           $           $
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    OPERATING ACTIVITIES
    Net income (loss) from
     continuing operations        (1,008)       (121)     (2,507)      2,216
    Add (deduct) non-cash items:
      Amortization                   421         366       1,170       1,040
      Interest accretion               -           -           -           8
      Future tax provision           400           -         400           -
      Non-controlling interest        53         205        (127)        232
      Stock-based compensation         4          28          87         120
      Lease inducements              (20)        (18)        (58)        (53)
    Net change in non-cash
     working capital components
     from operations              (1,219)        842        (845)     (1,721)
    -------------------------------------------------------------------------
    Cash provided by (applied to)
     operating activities         (1,369)      1,302      (1,880)      1,842
    -------------------------------------------------------------------------

    INVESTING ACTIVITIES
    Purchase of capital assets       (67)       (431)       (434)       (848)
    Additions to intangible assets    (1)        (37)        (55)        (84)
    Increase in short-term
     investment                   (3,017)          -      (3,017)          -
    Acquisition costs                  -           -      (1,258)          -
    Restricted cash and
     investment                        -          (2)      1,535         (20)
    -------------------------------------------------------------------------
    Cash applied to investing
     activities                   (3,085)       (470)     (3,229)       (952)
    -------------------------------------------------------------------------

    FINANCING ACTIVITIES
    Increase (decrease) in bank
     indebtedness                    286        (571)        202       2,350
    Repayment of note and bank
     loan payable                      -          (9)          -      (1,121)
    Net proceeds from issuing
     common shares                     -           6       3,688         316
    -------------------------------------------------------------------------
    Cash provided by (applied to)
     financing activities            286        (574)      3,890       1,545
    -------------------------------------------------------------------------

    Net cash provided by
     (applied to) discontinued
     operations                    5,695        (564)      4,407      (3,461)
    -------------------------------------------------------------------------

    Effect of foreign exchange
     on cash and cash
     equivalents                     (22)          -         (15)          -
    -------------------------------------------------------------------------

    -------------------------------------------------------------------------
    Net cash provided (applied)
     in the period                 1,505        (306)      3,173      (1,026)
    Cash and cash equivalents,
     beginning of period           3,119       1,552       1,451       2,272
    -------------------------------------------------------------------------
    Cash and cash equivalents,
     end of period                 4,624       1,246       4,624       1,246
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    

    %SEDAR: 00006230E




For further information:

For further information: Peter Monsberger, Vice-President, Finance and
CFO, (519) 746-7190, (519) 746-3383 (FAX), Email: peter.monsberger@virtek.ca
or Investor and Media Relations: Richard Wertheim, Managing Partner, Wertheim
+ Company Inc., (416) 594-1600 (Bus.), (416) 518-8479 (Cell), Email:
wertheim@wertheim.ca

Organization Profile

VIRTEK VISION INTERNATIONAL INC.

More on this organization


Custom Packages

Browse our custom packages or build your own to meet your unique communications needs.

Start today.

CNW Membership

Fill out a CNW membership form or contact us at 1 (877) 269-7890

Learn about CNW services

Request more information about CNW products and services or call us at 1 (877) 269-7890