Circa Announces Operating Results for the Second Quarter and Six Months Ended June 30, 2007



    CALGARY, Aug. 9 /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
second quarter and six months ended June 30, 2007.

    
    Summary of second quarter operating results:
    -   Consolidated sales of $8.2 million
    -   Net loss of $0.3 million or $0.04 per share
    -   Working capital of $5.9 million

    Year-to-date operating results:
    -   Consolidated sales of $16.0 million
    -   Net loss of $0.5 million or $0.06 per share
    

    Consolidated sales for the second quarter of 2007 were $8.2 million as
compared to sales in 2006 of $8.8 million. The decrease was primarily the
result of lower sales of Circa's surge protection business to the U.S. market,
and a reduction in sales compared to 2006 from its module supply agreement.
Partially offsetting these factors was a 25% increase in sales reported by the
Circa Metals business unit, including a 67% increase in custom metal
fabrication sales.
    On a year-to-date basis, consolidated sales of $16.0 million compared to
$18.3 million in the prior year.
    Circa's second quarter and year-to-date gross profit was lower than 2006
results due to weaker sales of the relatively higher margin surge protection
products, and lower margins in the Circa Metals business due to offshore
competitive pressures and higher production costs.
    The year-to-date foreign exchange translation loss of $0.2 million as
reported in the financial statements resulted from the continued upward trend
in the Canadian/U.S. dollar exchange rate during the period. As at June 30,
2006, the Canadian/U.S. dollar exchange rate was $0.94 versus $0.86 at
December 31, 2006. This net loss includes a $0.6 million foreign currency loss
on the translation of Circa USA accounts to Canadian dollars for consolidated
reporting purposes. This loss has the added effect of further reducing
earnings as the loss is not deductible for tax purposes resulting in an
overall reduction in earnings of approximately $0.04 per share.
    Circa's second quarter net loss of $0.3 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 lower margins in the Circa Metals business. On a year-to-date
basis, Circa recorded a net loss of $0.5 million or $0.06 per share.
    At June 30, 2007 the Company's working capital was $5.9 million,
including $0.2 million in cash. Circa ended the quarter with $3.2 million in
current bank indebtedness and long-term debt of $47,000.
    Circa's President and Chief Executive Officer, Rick Schmidt stated:
    "The weaker than expected second quarter financial performance can
primarily be attributed to two factors. The first being the significant
increase in the valuation of the Canadian dollar, which resulted in a sizeable
foreign currency loss and the second being the recent slump in the U.S.
mortgage and housing markets. While not having a direct impact on Circa sales
to the U.S., the resulting decline in the U.S. economy has resulted in
sluggish sales to Circa's end user customer base in the commercial and
industrial sectors. While year-to-date earnings have been disappointing, a
concentrated focus on developing new customers and products, and initiatives
to increase product margins is aimed at improving results over the second half
of the year."


    
    CIRCA ENTERPRISES INC.
    Consolidated Statements of Earnings and Retained Earnings
    (Unaudited)
    (Amounts expressed in thousands of Canadian dollars,
     except per share amounts)
    -------------------------------------------------------------------------
                                     Three      Three       Six         Six
                                    months     months     months     months
                                     ended      ended      ended      ended
                                   June 30,   June 30,   June 30,   June 30,
                                      2007       2006       2007       2006
                                         $          $          $          $
    -------------------------------------------------------------------------

    SALES                            8,194      8,804     15,958      18,283

    COST OF SALES
      Direct costs                   6,452      6,345     12,528      13,193
      Depreciation and amortization    137        133        282         218
    -------------------------------------------------------------------------
                                     1,605      2,326      3,148       4,872
    INTEREST AND OTHER INCOME            1         35         19          60
    -------------------------------------------------------------------------
                                     1,606      2,361      3,167       4,932
    -------------------------------------------------------------------------

    EXPENSES
      General and administrative       892        888      1,863       1,709
      Marketing and selling            601        563      1,219       1,124
      Engineering                       56         79        130         193
      Depreciation and amortization     85        128        236         246
      Interest - current                31         17         40          17
      Interest on long-term debt         5         19         18          40
    -------------------------------------------------------------------------
                                     1,670      1,694      3,506       3,329
    -------------------------------------------------------------------------
    EARNINGS BEFORE OTHER ITEMS        (64)       667       (339)      1,603

    Foreign currency translation
     loss                              218         82        200         131
    -------------------------------------------------------------------------
    EARNINGS BEFORE INCOME TAXES      (282)       585       (539)      1,472
    -------------------------------------------------------------------------

    PROVISION FOR INCOME TAXES
      Current                          191        196        217         544
      Future                          (140)        83       (233)         99
    -------------------------------------------------------------------------
                                        51        279        (16)        643
    -------------------------------------------------------------------------
    NET (LOSS) EARNINGS               (333)       306       (523)        829

    RETAINED EARNINGS, BEGINNING OF
     PERIOD                          8,385      7,967      8,575       7,444
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    RETAINED EARNINGS, END OF
     PERIOD                          8,052      8,273      8,052       8,273
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (LOSS) EARNINGS PER SHARE
      Basic and diluted              (0.04)      0.03      (0.06)       0.09
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



    CIRCA ENTERPRISES INC.
    Consolidated Balance Sheets
    Unaudited
    (Amounts expressed in thousands of Canadian dollars)

                                                            June    December
                                                        30, 2007    31, 2006
                                                               $           $
    -------------------------------------------------------------------------
    ASSETS
    Current
      Cash                                                   190         146
      Accounts receivable                                  4,212       4,070
      Income taxes recoverable                               488           -
      Inventory                                            7,071       6,426
      Prepaid expenses                                       489         330
    -------------------------------------------------------------------------
                                                          12,450      10,972
    Property, plant and equipment                          4,135       4,389
    Deferred charges                                         676         722
    Intangible assets and goodwill                           301         304
    -------------------------------------------------------------------------
                                                          17,562      16,387
    -------------------------------------------------------------------------

    LIABILITIES
    Current
      Bank indebtedness                                    2,596         500
      Accounts payable and accrued liabilities             3,365       3,145
      Income taxes payable                                     -          70
      Current portion of long-term debt                      609         592
    -------------------------------------------------------------------------
                                                           6,570       4,307
    Long-term debt                                            47         361
    Deferred gain                                              -          18
    Future income taxes                                      204         437
    -------------------------------------------------------------------------
                                                           6,821       5,123
    -------------------------------------------------------------------------

    SHAREHOLDERS' EQUITY
      Share capital                                        2,689       2,689
      Retained earnings                                    8,052       8,575
    -------------------------------------------------------------------------
                                                          10,741      11,264
    -------------------------------------------------------------------------
                                                          17,562      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: 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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