VANCOUVER, March 31, 2014 /CNW/ - Avcorp Industries Inc. (TSX: AVP) (the "Company" or "Avcorp") today announced its financial results for the year ended December 31, 2013.
Revenue for the year ended December 31, 2013 was $77,364,000 as compared to $89,337,000 for the year ended December 31, 2012. Current year revenues have decreased relative to the previous year primarily as a result of the wind-down of Cessna programs, offset by increased deliveries for the F-35 CV-OBW program.
During the year ended December 31, 2013, the Company recorded a loss from operations of $2,015,000 on $77,364,000 revenue, as compared to $24,002,000 operating income on $89,337,000 revenue for the preceding year; and a net loss for the current year of $1,802,000 as compared to net income of $20,641,000 for the year ended December 31, 2012.
On November 16, 2012, the Company received the determination of an appointed arbitration panel constituted to adjudicate outstanding issues relating to cost reimbursements and compensation payable to the Company in connection with the transition of Cessna Aircraft Company ("Cessna") production work back to Cessna and other suppliers. The quantum of damages was assessed by the arbitration panel in 2012 at US$27,391,000.
On September 5, 2013 the Company entered into a settlement agreement, from a court directed mediation with Cessna, which settled all outstanding litigation between the Company and Cessna. The settlement required payment by Cessna of US$27,964,000 ($29,380,000) in satisfaction of the judgement entered against Cessna from the arbitration award made on November 16, 2012, resulting in US$573,000 ($604,000) recorded as additional award settlement for 2013. The settlement funds were received in full by the Company on September 6, 2013. This settlement satisfies the judgement and has resulted in the dismissal of the outstanding appeal.
Cash flows from operating activities during the year ended December 31, 2013 provided $23,849,000 of cash as compared to providing $6,109,000 of cash during the year ended December 31, 2012. The primary source of cash from operations during the current year is from the Cessna award settlement. The Company utilized the funds received from the Cessna award settlement to repay $6,660,000 of bank indebtedness, a $4,045,000 convertible debenture, and $11,803,000 preferred shares and accrued dividends leaving $6,872,000 of cash from the Cessna award settlement for funding operations. As at December 31, 2013 the Company had $7,012,000 cash on hand.
During fiscal 2013 and 2012 the Company has repaid in excess of $26 million of debt and has cash reserves on hand as at December 31, 2013 amounting to $7,012,000 (December 31, 2012: $2,597,000).
The Company has a working capital surplus of $14,213,000 as at December 31, 2013 which has decreased from the December 31, 2012 $16,759,000 surplus, as a result of repaying bank indebtedness from Cessna award settlement proceeds. The Company's accumulated deficit as at December 31, 2013 is $57,723,000 (December 31, 2012: $55,921,000).
During 2013 the Company added $53 million to its order backlog due to increases in the production rates and contract renewals for various existing programs, as well as recently awarded statements of work.
The Company has amended its accounting with respect to the classification of deferred program revenues in its 2013 financial statements. Previously, all of the Company's deferred program revenues were classified as non-current. Deferred program revenues will now be classified as current or non-current based on the estimated timing of when the related revenue will be recognized. As a result, deferred program revenues as at December 31, 2012 in the amount of $17,514,000 has been reclassified from non-current to current. The impact as of January 1, 2012 has not been estimated as it is impracticable to determine what management would have estimated as of January 1, 2012 without undue application of hindsight.
As a result of the reclassification of deferred program revenues, 2012 cash inflows of $9,712,000 have been reclassified from financing activities to operating activities, to reflect the nature of the deferred revenue balance which has generated the cash flows.
About Avcorp
Avcorp designs and builds major airframe structures for some of the world's leading aircraft companies, including BAE Systems, Boeing, and Bombardier. With more than 50 years of experience, over 400 skilled employees and 354,000 square feet of facilities in Delta BC and Burlington ON, 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. Our Comtek subsidiary also offers composite repairs for commercial aircraft out of their Burlington location. Avcorp is a Canadian public company traded on the Toronto Stock Exchange (TSX:AVP).
(Signed)
MARK VAN ROOIJ
PRESIDENT and 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 STATEMENTS OF FINANCIAL POSITION
(prepared in accordance with IFRS, expressed in thousands of Canadian dollars)
| AS AT DECEMBER 31 |
2013 |
2012 |
| ASSETS |
||
| Current assets |
||
| Cash |
$ 7,012 |
$ 2,597 |
| Accounts receivable |
8,845 |
7,944 |
| Inventories |
14,940 |
16,572 |
| Prepayments and other assets |
1,306 |
1,634 |
| Other receivable |
- |
27,391 |
| 32,103 |
56,138 |
|
| Non-current assets |
||
| Prepaid rent |
146 |
146 |
| Development costs |
1,240 |
2,718 |
| Property, plant and equipment |
8,704 |
9,633 |
| Total assets |
42,193 |
68,635 |
| LIABILITIES AND EQUITY |
||
| Current liabilities |
||
| Bank indebtedness |
- |
2,122 |
| Accounts payable and accrued liabilities |
7,645 |
7,859 |
| Current portion of long-term debt |
199 |
692 |
| Preferred shares |
36 |
11,192 |
| Deferred program revenues |
10,010 |
17,514 |
| 17,890 |
39,379 |
|
| Non-current liabilities |
||
| Deferred gain |
216 |
263 |
| Lease inducement |
469 |
567 |
| Long-term debt |
67 |
4,300 |
| Warranty provisions |
- |
85 |
| 18,642 |
44,594 |
|
| Equity |
||
| Capital stock |
77,681 |
76,423 |
| Contributed surplus |
3,593 |
3,539 |
| Deficit |
(57,723) |
(55,921) |
| 23,551 |
24,041 |
|
| Total liabilities and equity |
42,193 |
68,635 |
CONSOLIDATED STATEMENTS OF (LOSS) INCOME AND COMPREHENSIVE (LOSS) INCOME
(prepared in accordance with IFRS, expressed in thousands of Canadian dollars, except number of shares and per share amounts)
| FOR THE YEAR ENDED DECEMBER 31 |
2013 |
2012 |
| Revenues |
$ 77,364 |
$ 89,337 |
| Cost of sales |
67,710 |
77,722 |
| Gross profit |
9,654 |
11,615 |
| Administrative and general expenses |
11,682 |
14,517 |
| Office equipment depreciation |
591 |
487 |
| Other operating (income) |
(604) |
(27,391) |
| Operating (Loss) Income |
(2,015) |
24,002 |
| Finance costs |
927 |
2,116 |
| Foreign exchange (gain) loss |
(1,085) |
193 |
| Loss on repayment of debt |
- |
397 |
| Gain on disposal of equipment |
(108) |
- |
| Write-down of equipment |
53 |
655 |
| (Loss) Income before income tax |
(1,802) |
20,641 |
| Income tax expense |
- |
- |
| (Loss) Income and total comprehensive (loss) income for the period |
(1,802) |
20,641 |
| (Loss) Earnings per share: |
||
| Basic (loss) earnings per common share |
(0.01) |
0.09 |
| Diluted (loss) earnings per common share |
(0.01) |
0.09 |
| Basic weighted average number of shares outstanding (000's) |
271,380 |
217,775 |
| Diluted weighted average number of shares outstanding (000's) |
271,380 |
218,084 |
CONSOLIDATED STATEMENTS OF CASH FLOWS
(prepared in accordance with IFRS, expressed in thousands of Canadian dollars)
| FOR THE YEAR ENDED DECEMBER 31 |
2013 |
2012 |
| Cash flows from (used in) operating activities |
||
| (Loss) Income before tax |
$ (1,802) |
$ 20,641 |
| Adjustment for items not affecting cash: |
||
| Accretion on convertible loan |
- |
67 |
| Accrued interest and government royalties |
270 |
1,161 |
| Depreciation |
2,082 |
3,012 |
| Development cost amortization |
2,034 |
3,893 |
| Fair value of warrants amortization |
- |
132 |
| Loss on repayment of debt |
- |
397 |
| Preferred share dividends accrued |
657 |
756 |
| Provision for loss-making contracts |
51 |
(189) |
| Provision for obsolete inventory |
335 |
(67) |
| Stock based compensation |
54 |
115 |
| Warranty provision |
(85) |
- |
| Write-down of equipment |
53 |
655 |
| Other items |
(127) |
(122) |
| 3,522 |
30,451 |
|
| Changes in non-cash working capital |
||
| Accounts receivable |
1,858 |
4,908 |
| Inventories |
1,246 |
3,102 |
| Prepayments and other assets |
326 |
(244) |
| Other receivable |
27,391 |
(27,391) |
| Accounts payable and accrued liabilities |
(232) |
(2,853) |
| Deferred program revenues |
(10,262) |
(1,864) |
| Net cash from (used in) operating activities |
23,849 |
6,109 |
| Cash flows from (used in) investing activities |
||
| Purchase of equipment |
(1,206) |
(557) |
| Payments relating to development costs and tooling |
(556) |
(1,071) |
| Net cash from (used in) investing activities |
(1,762) |
(1,628) |
| Cash flows from (used in) financing activities |
||
| (Decrease) in bank indebtedness |
(2,122) |
2,122 |
| Payment of interest |
(323) |
(1,144) |
| Proceeds from issuance of common shares |
1,249 |
973 |
| Redemption of preferred shares and accrued dividends |
(11,803) |
- |
| Repayment of current and long-term debt |
(4,415) |
(6,882) |
| Repayment of government royalties |
(258) |
(731) |
| Net cash from financing activities |
(17,672) |
(5,662) |
| Net increase (decrease) in cash |
4,415 |
(1,181) |
| Cash - Beginning of year |
2,597 |
3,778 |
| Cash - End of year |
7,012 |
2,597 |
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
(prepared in accordance with IFRS, expressed in thousands of Canadian dollars, except number of shares)
| Share capital |
Equity component convertible loan |
Contributed surplus |
Deficit |
Total equity |
||
| Shares |
Amount |
|||||
| Balance December 31, 2011 |
201,994,113 |
$ 73,251 |
$ 453 |
$ 3,424 |
$ (76,562) |
$ 566 |
| Issue of common shares |
52,903,959 |
2,966 |
- |
- |
- |
2,966 |
| Loan conversion |
- |
206 |
(453) |
- |
- |
(247) |
| Stock based compensation expense |
- |
- |
- |
115 |
- |
115 |
| Income for the period |
- |
- |
- |
- |
20,641 |
20,641 |
| Balance December 31, 2012 |
254,898,072 |
76,423 |
- |
3,539 |
(55,921) |
24,041 |
| Issue of common shares |
25,493,080 |
1,258 |
- |
- |
- |
1,258 |
| Stock-based compensation expense |
- |
- |
- |
54 |
- |
54 |
| Loss for the period |
- |
- |
- |
- |
(1,802) |
(1,802) |
| Balance December 31, 2013 |
280,391,152 |
77,681 |
- |
3,593 |
(57,723) |
23,551 |
SOURCE: Avcorp Industries Inc.
For further information: Sandi DiPrimo, Investor Relations Contact, 604-587-4938 or email [email protected]
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