Avcorp announces 2007 Second Quarter Results



    
    -  revenue increase by 13% over second quarter 2006
    -  net income increases over comparable quarter last year
    -  quarter on quarter EBITDA growth hits 42%
    

    VANCOUVER, Aug. 14 /CNW/ - Avcorp Industries Inc. (AVP on the Toronto
Stock Exchange) today announces results for the quarter ended June 30, 2007.
    The second quarter of 2007 saw a 13% increase in revenue over the same
quarter in 2006. For the quarter ended June 30, 2007, the Company recorded net
income of $817,000 on $29,352,000 revenue.
    The strengthening of the Canadian dollar, relative to the US dollar has
decreased revenues, diminishing the full impact of operational performance
improvements. However, the highest revenues and net income in two years has
driven EBITDA to exceed prior year's second quarter EBITDA by over $600,000.
    Cash flows from operating activities provided $1,163,000 of cash,
primarily from operating income, as compared to $1,013,000 during the same
quarter last year. The Company has a working capital surplus of $8,052,000 as
at June 30, 2007.
    The Company has invested over $2,800,000 in new equipment and
infrastructure. Technology upgrades in high-speed machining, and
implementation of non-destructive (ultrasonic) testing equipment allows the
Company to augment its quality assurance systems and bring currently
out-sourced work in-house thereby reducing costs.
    Subsequent to June 30, 2007, the Company agreed to a placement of 840,000
units at $2.20 per unit; 287,500 units are to be subscribed for by insiders of
the Company. Each unit consists of one share and one warrant, where one
warrant entitles the holder the right to purchase one additional share at
$2.40 per share for a 24-month period from the closing date. Gross proceeds
from the placement amount to $1,848,000. The net proceeds of the financing
will be used for working capital.
    The Company has also seen 417,200 of the convertible preferred shares,
issued at a price of $10.00 per share, converted into common shares leaving
782,800 convertible preferred shares outstanding with a conversion price of
$1.75 to July 10, 2008.

    About Avcorp

    Avcorp designs and builds major airframe structures for some of the
world's leading aircraft companies, including Boeing, Bombardier, and Cessna.
With 50 years of experience, more than 650 skilled employees and a 300,000
square foot facility near Vancouver, Canada, the Company's depth and breadth
of capabilities are unique in the aerospace industry for a company of its
size. Avcorp is a Canadian public company traded on the Toronto Stock
Exchange. 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.


    
    Balance Sheets
    as at June 30, 2007 and December 31, 2006
    (unaudited, in thousands of Canadian dollars)

                                                       June 30   December 31
                                                          2007          2006
                                                             $             $
    Assets
    Current assets
    Accounts receivable                                 11,142         8,394
    Inventories                                         18,776        19,421
    Prepayments                                          2,091         1,611
    Convertible loan receivable                            804             -
    Other assets                                           689            40
                                                  ---------------------------
                                                        33,502        29,466
    Development costs                                    1,460         1,186
    Property, plant and equipment                       17,569        15,746
    Investment                                             759           759
    Prepaid rent                                         1,500         1,500
                                                  ---------------------------
                                                        54,790        48,657
                                                  ---------------------------
                                                  ---------------------------
    Liabilities
    Current liabilities
    Bank indebtedness                                    9,982         5,564
    Accounts payable and accrued liabilities            14,503        13,525
    Current portion of long-term debt                      965           737
                                                  ---------------------------
                                                        25,450        19,826
    Deferred gain                                          524           548
    Lease inducement                                     1,109         1,159
    Deferred tooling revenues                            2,860         3,434
    Long-term debt                                       5,064         4,957
                                                  ---------------------------
                                                        35,007        29,924
                                                  ---------------------------
    Shareholders' Equity
    Capital stock                                       57,861        55,600
    Preferred shares                                     9,447        11,454
    Contributed surplus                                  2,373         2,244
    Deficit                                            (49,898)      (50,565)
                                                  ---------------------------
                                                        19,783        18,733
                                                  ---------------------------
                                                        54,790        48,657
                                                  ---------------------------
                                                  ---------------------------

    Nature of operations and going concern



    Statements of Operations and Other Comprehensive Income
    For the three and six months ended June 30, 2007 and June 30, 2006
    (unaudited, in thousands of Canadian dollars, except number of shares and
    per share amounts)

                                    three months ended      six months ended
                                               June 30               June 30
                                       2007       2006       2007       2006
                                          $          $          $          $
                                   --------------------  --------------------

    Revenues                         29,352     25,874     56,709     52,707
                                   --------------------  --------------------

    Cost of sales and expenses
    Cost of sales                    25,775     22,238     49,770     45,661
    Administrative and general
     expenses                         2,332      2,014      4,260      3,801
    Depreciation                        783        791      1,545      1,599
    Foreign exchange (gain) loss       (397)        (9)      (300)        (1)
                                   --------------------  --------------------

                                     28,493     25,034     55,275     51,060
                                   --------------------  --------------------

    Income from Operations              859        840      1,434      1,647

    Interest expense and
     financing charges                 (570)      (575)      (937)    (1,260)

    Interest Income                       4          -          4          -

    Unrealized derivative gains         524          -        691          -
                                   --------------------  --------------------
                                   --------------------  --------------------


    Income before income taxes          817        265      1,192        387

    Income taxes                          -          -          -          -
                                   --------------------  --------------------

    Income and other comprehensive
     income for the period              817        265      1,192        387
                                   --------------------  --------------------
                                   --------------------  --------------------

    Basic earnings per common share    0.03       0.01       0.04       0.02
                                   --------------------  --------------------
                                   --------------------  --------------------

    Basic weighted average number
     of shares outstanding (000's)   28,676     24,011     28,332     24,021
                                   --------------------  --------------------
                                   --------------------  --------------------

    Diluted earnings per
     common share                      0.02       0.01       0.04       0.02
                                   --------------------  --------------------
                                   --------------------  --------------------

    Diluted weighted average
     number of shares outstanding
     (000's)                         33,903     24,011     33,793     24,021
                                   --------------------  --------------------
                                   --------------------  --------------------


    Statements of Deficit
    For the three and six months ended June 30, 2007 and June 30, 2006
    (unaudited, in thousands of Canadian dollars)

                                    three months ended      six months ended
                                               June 30               June 30
                                       2007       2006       2007       2006
                                          $          $          $          $
                                   --------------------  --------------------

    Deficit - Beginning of period
     as previously reported         (50,464)   (51,407)   (50,605)   (51,529)

    Adoption of financial
     instruments standards                -          -         40          -
                                   --------------------  --------------------

    Deficit - Beginning of period
     as restated                    (50,464)   (51,407)   (50,565)   (51,529)

    Income for the period               817        265      1,192        387

    Preferred share dividends          (251)         -       (525)         -
                                   --------------------  --------------------

    Deficit - End of period         (49,898)   (51,142)   (49,898)   (51,142)
                                   --------------------  --------------------
                                   --------------------  --------------------



    Statements of Cash Flows
    For the three and six months ended June 30, 2007 and June 30, 2006
    (unaudited, in thousands of Canadian dollars)

                                    three months ended      six months ended
                                               June 30               June 30
                                       2007       2006       2007       2006
                                          $          $          $          $
    Cash flows from operating
     activities
    Income for the period               817        265      1,192        387
    Items not affecting cash            346        748      1,072      1,877
                                   --------------------  --------------------
                                      1,163      1,013      2,264      2,264

    Change in non-cash items
     related to operating
     activities                          87       (170)    (1,643)    (2,660)
                                   --------------------  --------------------

                                      1,250        843        621       (396)
                                   --------------------  --------------------

    Cash flows from investing
     activities
    Purchase of property, plant
     and equipment                     (772)      (259)    (2,802)      (343)
    Payments relating to
     capitalized development costs     (232)      (672)      (537)      (717)
    Advance on convertible loan
     receivable                        (804)         -       (804)         -
    Proceeds from sale of property,
     plant and equipment                 10          -         15         21
                                   --------------------  --------------------
                                     (1,798)      (931)    (4,128)    (1,039)

    Cash flows from financing
     activities
    Net proceeds from bank
     indebtedness                     1,032       (106)     4,418        523
    Proceeds from current and
     long-term debt                     800          -        858        490
    Repayment of current and
     long-term debt                  (1,050)    (1,592)    (1,479)    (2,294)
    Issue of common shares               17      1,792        243      2,733
    Preferred share dividends          (251)         -       (525)         -
    Share issue expense                   -         (6)        (8)       (17)
                                   --------------------  --------------------

                                        548         88      3,507      1,435
                                   --------------------  --------------------

    Net change in cash and cash
     equivalents                          -          -          -          -

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

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

    Interest paid                       258        404        547        778
                                   --------------------  --------------------
                                   --------------------  --------------------
    





For further information:

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


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