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Avcorp announces 2012 Annual Financial Results

Trading Symbol: AVP

VANCOUVER, March 27, 2013 /PRNewswire/ - Avcorp Industries Inc. (TSX: AVP) (the "Company" or "Avcorp") today announced its financial results for the year ended December 31, 2012.

During the year ended December 31, 2012, the Company recorded income from operations of $24,002,000 on $89,337,000 revenue, as compared to a $362,000 operating loss on $86,018,000 revenue for the preceding year; and net income for the current year of $20,641,000 as compared to a net loss of $2,452,000 for the year ended December 31, 2011.

On November 16, 2012, Avcorp received the determination of an appointed arbitration panel constituted to adjudicate outstanding issues relating to cost reimbursements and compensation payable to Avcorp in connection with the transition of Cessna Aircraft Company ("Cessna") production work back to Cessna and other suppliers. A binding arbitration award was delivered to the Company on November 16, 2012. The quantum of damages was assessed by an arbitration panel at $27,391,000.  The arbitration award, net of associated costs, amounted to $21,548,000.

On November 26, 2012 Cessna filed a complaint in the United States District Court For The District Of Kansas seeking to vacate the award as a manifest disregard for the law and in violation of public policy.

On December 21, 2012 Avcorp filed a memorandum in support of a motion to confirm final arbitration award, and dismiss the complaint in the United States District Court For The District Of Kansas.

Current year revenues have increased from the preceding year primarily as a result of significant increases in sales to The Boeing Company (Boeing) and BAE Systems (Operations) Limited (BAE), offset by the wind-down of Cessna programs. During the third quarter 2012, the Company renewed its long-term agreement with the Boeing Commercial Airplane Group (Boeing CA) which is forecasted to provide in excess of $83 million revenue over the next five years. Start-up and commencement of production deliveries for BAE Systems (Operations) Limited (BAE) F35 program has also contributed to an overall $146 million increase in order backlog during the current year.

Cash flows from operating activities during the year ended December 31, 2012 utilized $3,603,000 of cash as compared to utilizing $924,000 of cash during the year ended December 31, 2011.  The Company has a working capital surplus of $34,819,000 as at December 31, 2012 which has significantly increased from the December 31, 2011 $14,663,000 surplus, as a result of the binding arbitration award.  The Company's accumulated deficit as at December 31, 2012 was $55,375,000 (December 31, 2011: $76,016,000).

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 Burlington location also offers composite repairs for commercial aircraft. 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 2012 2011
ASSETS    
Current assets    
Cash $    2,597 $   3,778
Accounts receivable 7,944 12,160
Inventories 16,572 19,418
Prepayments and other assets 1,634 1,396
Other receivable 27,391 -
  56,138 36,752
Non-current assets    
Prepaid rent 146 146
Development costs 2,718 5,540
Property, plant and equipment, net 9,633 12,523
     
Total assets 68,635 54,961
     
LIABILITIES AND EQUITY    
Current liabilities    
Bank indebtedness 2,122 -
Accounts payable and accrued liabilities 7,859 10,694
Current portion of long-term debt 692 1,505
Preferred shares 10,646 9,890
  21,319 22,089
Non-current liabilities    
Deferred gain 263 311
Lease inducement 567 666
Deferred program revenues 17,514 18,671
Long-term debt 4,300 12,027
Warranty provisions 85 85
  44,048 53,849
Equity    
Capital stock 76,423 73,251
Equity component of convertible loan - 453
Contributed surplus 3,539 3,424
Deficit (55,375) (76,016)
  24,587 1,112
Total liabilities and equity 68,635 54,961
     
     

CONSOLIDATED STATEMENTS OF INCOME (LOSS) AND COMPREHENSIVE INCOME (LOSS)

(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 2012 2011
     
Revenues $  89,337 $  86,018
     
Cost of sales 77,722 74,366
     
Gross profit 11,615 11,652
     
Administrative and general expenses 14,517 11,370
Office equipment depreciation 487 644
Other operating income (27,391) -
     
Operating Income (loss) 24,002 (362)
     
Foreign exchange (gain) loss 193 (333)
Finance costs 2,116 2,423
Loss on repayment of debt 397 -
     
Income (loss) before income tax 21,296 (2,452)
     
Write-down of equipment 655 -
Income tax expense - -
     
Income (loss) and total comprehensive income (loss) for the period 20,641 (2,452)
     
Earnings (loss) per share:    
Basic earnings (loss) per common share 0.09 (0.01)
Diluted earnings (loss) per common share 0.09 (0.01)
     
Basic weighted average number of shares outstanding (000's) 217,775 197,959
     
Diluted weighted average number of shares outstanding (000's) 218,084 197,959
     
     

CONSOLIDATED STATEMENTS OF CASH FLOWS

(prepared in accordance with IFRS, expressed in thousands of Canadian dollars)

     
FOR THE YEAR ENDED DECEMBER 31 2012 2011
Cash flows from (used in) operating activities    
Profit (loss) before tax $   20,641 $   (2,452)
   Adjustment for items not affecting cash:    
    Accretion on convertible loan 67 85
    Accrued interest and government royalties 1,161 1,583
    Depreciation 3,012 3,494
    Deferred tooling revenue amortization and reclassification to revenue (11,576) (2,421)
    Development cost amortization and write-off 3,893 978
    Fair value of warrants amortization 132 88
    Loss on repayment of debt 397 -
    Preferred share dividends accrued 756 756
    Provision for loss-making contracts (189) (689)
    Provision for obsolete inventory (67) (226)
    Stock based compensation 115 145
    Write-down of equipment 655 -
    Other items (122) (205)
  18,875 1,136
Changes in non-cash working capital    
    Accounts receivable 4,908 (414)
    Inventories 3,102 (3,617)
    Prepayments and other assets (244) 413
    Other receivable (27,391) -
    Accounts payable and accrued liabilities (2,853) 1,558
Net cash from (used in) operating activities (3,603) (924)
     
Cash flows from (used in) investing activities    
Purchase of equipment (557) (1,224)
Payments relating to development costs and tooling (1,071) (1,337)
Net cash from (used in) investing activities (1,628) (2,561)
     
Cash flows from financing activities    
Increase (decrease) in bank indebtedness 2,122 (8,158)
Payment of interest (1,144) (1,128)
Proceeds from issuance of common shares 973 -
Proceeds from customer funding of program introduction 9,712 11,412
Proceeds from current and long-term debt - 6,000
Repayment of current and long-term debt (6,882) (863)
Repayment of government royalties (731) -
Net cash from financing activities 4,050 7,263
         
Net increase (decrease) in cash (1,181) 3,778
Cash - Beginning of year 3,778 -
Cash - End of year 2,597 3,778
         
         

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
of
convertible
loan
Contributed
surplus
Deficit Total
equity
  Shares Amount
             
Balance December 31, 2010 195,505,323 $ 72,927 $   453 $  2,662 $ (73,564) $  2,478
             
Issue of common shares 6,488,790 324 - - - 324
             
Stock based compensation expense - - - 145 - 145
             
Fair value of warrants issued - - - 617 - 617
             
Loss for the period - - - - (2,452) (2,452)
             
Balance December 31, 2011 201,994,113 73,251 453 3,424 (76,016) 1,112
             
Balance December 31, 2011 201,994,113 73,251 453 3,424 (76,016) 1,112
             
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 (55,375) 24,587

 

 

 

 

 

 

SOURCE Avcorp Industries Inc.

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