Avcorp announces 2007 Annual Financial Results

VANCOUVER, March 31 /PRNewswire-FirstCall/ -- Avcorp (AVP on the Toronto Stock Exchange) today announced its financial results for the year ended December 31, 2007.

During the year ended December 31, 2007, the Company recorded a loss of $1,719,000 on $110,283,000 revenue, as compared to a net income of $1,450,000 from $103,850,000 revenue for the preceding year. There was a 6% increase in revenue over 2006; and the Company delivered 921 major structures to its customers, a 15% increase over the 801 units which were delivered during 2006. The strengthening of the Canadian dollar as compared to the US dollar, relative to the rates of exchange in effect during 2006, has reduced revenues by $4,153,000 and negatively affected operating margins.

Cash flows from operating activities provided $3,071,000 of cash, as compared to $5,006,000 during the previous year. The Company has a working capital surplus of $4,417,000 as at December 31, 2007 (December 31, 2006: $9,600,000) and an accumulated deficit of $53,204,000 at December 31, 2007 (December 31, 2006: $50,605,000).

The acquisition of Comtek Advanced Structures Ltd. on December 31, 2007 provides an estimated $37 million order backlog to the existing base of $441 million.

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 750 skilled employees and 385,000 square feet of facilities 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. Avcorp is a Canadian public company traded on the Toronto Stock Exchange (TSX:AVP). 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.

Consolidated Balance Sheets
For years ended December 31, 2007 and 2006
(in thousands of Canadian dollars)

2007 2006
$ $
Assets
Current assets
Accounts receivable 12,224 8,394
Inventories 17,801 19,421
Prepayments 2,401 1,611
Other assets 138 - ------------------------- 32,564 29,426
Prepaid rent 481 1,500
Development costs 1,545 1,186
Property, plant and equipment 20,310 15,746
Investment 759 759
Warranty claim receivable 1,454 - Intangible assets 2,620 - Goodwill 571 - ------------------------- 60,304 48,617
------------------------- ------------------------- Liabilities
Current liabilities
Bank indebtedness 11,279 5,564
Accounts payable and accrued liabilities 14,812 13,525
Current portion of long-term debt 2,056 737
------------------------- 28,147 19,826
Deferred gain 501 548
Lease inducement 1,060 1,159
Deferred tooling revenues 2,676 3,434
Long-term debt 6,761 4,957
Warranty provision 1,454 - Future income tax liability 1,186 - ------------------------- 41,785 29,924
------------------------- Shareholders' Equity
Capital stock 61,194 55,600
Preferred shares 7,672 11,454
Contributed surplus 2,857 2,244
Deficit (53,204) (50,605)
------------------------- 18,519 18,693
------------------------- 60,304 48,617
------------------------- -------------------------

Consolidated Statements of Operations and Comprehensive Income (Loss)
For years ended December 31, 2007 and 2006
(in thousands of Canadian dollars, except number of shares and
per share amounts)

2007 2006
$ $
-------------------------
Revenues 110,283 103,850
------------------------- Cost of sales and expenses
Cost of sales 98,442 89,561
Administrative and general expenses 9,562 7,665
Depreciation 3,395 3,138
Foreign exchange (gain) loss (1,321) 3
-------------------------
110,078 100,367
-------------------------
Income from operations 205 3,483

Interest expense and financing charges (2,094) (2,033)

Unrealized derivative gain 170 - ------------------------- -------------------------
Income (loss) before income taxes (1,719) 1,450

Income taxes - - -------------------------
Income (loss) and comprehensive income (loss)
for the year (1,719) 1,450
------------------------- -------------------------
Basic earnings (loss) per common share (0.06) 0.06
------------------------- -------------------------
Basic weighted average number of shares
outstanding (000's) 29,674 24,964
------------------------- -------------------------
Diluted earnings (loss) per common share (0.06) 0.06
------------------------- -------------------------
Diluted weighted average number of shares
outstanding (000's) 29,674 25,872
------------------------- -------------------------

Consolidated Statements of Deficit
For years ended December 31, 2007 and 2006
(in thousands of Canadian dollars)
2007 2006
$ $
------------ ----------- Deficit - Beginning of year as previously
reported (50,605) (51,529)

Adoption of financial instruments standards 40 - ------------ -----------
Deficit - Beginning of year as restated (50,565) (51,529)

Income (loss) for the year (1,719) 1,450

Preferred share dividends (920) (526)

------------ -----------
Deficit - End of year (53,204) (50,605)
------------ ----------- ------------ -----------

Consolidated Statements of Cash Flows
For years ended December 31, 2007 and 2006
(in thousands of Canadian dollars)

2007 2006
$ $

Cash flows from operating activities
Income (loss) for the year (1,719) 1,450
Items not affecting cash 4,790 3,556
-------------------------
3,071 5,006

Change in non-cash items related to operating
activities (1,323) (4,238)
-------------------------
1,748 768
-------------------------
Cash flows from investing activities
Purchase of property, plant and equipment (5,020) (2,111)
Payments relating to development costs (744) (873)
Proceeds from sale of property, plant and
equipment 15 21
Acquisition of Comtek Advanced Structures Ltd. (2,073) - ------------------------- (7,822) (2,963)
Cash flows from financing activities
Net proceeds from bank indebtedness 4,790 (2,282)
Proceeds from current and long-term debt 858 490
Proceeds from sale and leaseback of property,
plant and equipment 1,903 - Repayment of current and long-term debt (2,581) (7,263)
Issue of common shares 1,680 4,720
Issue of warrants 411 - Issue of preferred shares - 7,635
Preferred share dividends (920) (526)
Share issue expense (67) (579)
-------------------------
6,074 2,195
-------------------------
Net change in cash and cash equivalents - -
Cash and cash equivalents - Beginning of year - - -------------------------
Cash and cash equivalents - End of year - - ------------------------- -------------------------
Interest paid 1,244 1,377
------------------------- -------------------------

CONTACT: Sandi DiPrimo, Investor Relations Contact, (604) 587-4938

Source: Avcorp Industries Inc.

CONTACT: Sandi DiPrimo, Investor Relations Contact, (604) 587-4938

2008-03-31 21:08:11 0324137 PRNEWSWIRE