VANCOUVER, March 31, 2014 /PRNewswire/ - 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.