Avcorp announces 2012 Third Quarter Results

                 Avcorp announces 2012 Third Quarter Results

PR Newswire

VANCOUVER, Nov. 13, 2012

VANCOUVER, Nov. 13, 2012 /PRNewswire/ - Avcorp Industries Inc. (TSX: AVP) (the
"Company" or "Avcorp") today announced  its financial results for the  quarter 
ended September 30, 2012.

During the quarter ended September 30, 2012, the Company recorded a loss  from 
operations of $1,446,000  on $19,324,000  revenue, as compared  to a  $186,000 
operating loss on $20,383,000  revenue for the same  quarter in the  preceding 
year; and a net loss  for the current quarter of  $2,729,000 as compared to  a 
net loss of $150,000 for the quarter ended September 30, 2011.

Current quarter revenues have decreased from the same quarter in the preceding
year primarily  as  a result  of  the  wind-down of  Cessna  Aircraft  Company 
(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 $110
million increase in order backlog during the current quarter.

Earnings before interest,  taxes, depreciation and  amortization (EBITDA)  was 
negative $1,205,000 for  the quarter ended  September 30, 2012  compared to  a 
positive EBITDA of $1,455,000 for the  quarter ended September 30, 2011.  The 
decline in EBITDA  was primarily  as a result  of reduced  revenues and  costs 
associated with  customer  contract  terminations.  During  the  quarter-ended 
September 30,  2012,  the  Company  incurred  $825,000  (September  30,  2011: 
$136,000) in costs associated with customer contract terminations.

On September 27, 2012, the Company secured a three year $12,000,000  operating 
line of credit. Concurrently, the  Company repaid its $6,000,000 term  loan. 
Also during the quarter the Company increased its share capital by $2,798,000.

Cash flows from operating  activities during the  quarter ended September  30, 
2012 provided  $350,000 of  cash as  compared to  utilizing $766,000  of  cash 
during the  quarter ended  September  30, 2011.  The  Company has  a  working 
capital surplus of $10,130,000  as at September 30,  2012 which has  decreased 
from the December 31, 2011 $14,663,000 surplus, as a result of utilizing  cash 
on hand to  repay long-term  debt. The  Company's accumulated  deficit as  at 
September 30, 2012 was $78,581,000 (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 management discussion and analysis should be read in conjunction with the
Company's audited financial statements. Certain statements in this report 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 ability of the Company to renegotiate its debt agreements under  which 
it is in  default; (b)  the extent  to which the  Company is  able to  achieve 
savings from its restructuring plans; (c) uncertainty in estimating the amount
and timing  of  restructuring  charges  and  related  costs;  (d)  changes  in 
worldwide economic and political conditions  that impact interest and  foreign 
exchange rates;  (e)the  occurrence of  work  stoppages and  strikes  at  key 
facilities of  the  Company  or  the Company's  customers  or  suppliers;  (f) 
government funding and program approvals affecting products being developed or
sold under  government  programs;  (g) cost  and  delivery  performance  under 
various program and development contracts; (h)the adequacy of cost  estimates 
for various customer  care programs  including servicing  warranties; (i)  the 
ability to  control  costs  and  successful  implementation  of  various  cost 
reduction programs; (j) the timing of certifications of new aircraft products;
(k) the  occurrence of  further downturns  in customer  markets to  which  the 
Company products are sold or supplied  or where the Company offers  financing; 
(l) changes in aircraft delivery schedules or cancellation of orders; (m)  the 
Company's ability  to  offset, through  cost  reductions, raw  material  price 
increases and  pricing pressure  brought  by original  equipment  manufacturer 
customers; (n)  the availability  and  cost of  insurance; (o)  the  Company's 
ability to maintain portfolio credit quality; (p) the Company's access to debt
financing at competitive rates; and  (q) uncertainty in estimating  contingent 
liabilities and establishing reserves tailored to address such contingencies.

CONSOLIDATED STATEMENT OF FINANCIAL POSITION
(unaudited, prepared  in  accordance  with IFRS,  expressed  in  thousands  of 
Canadian dollars)

                                        September 30, 2012 December 31, 2011
ASSETS                                                                     
Current assets                                                             
Cash                                              $ 1,403         $ 3,778
Accounts receivable                                   8,312            12,160
Inventories                                          18,739            19,418
Prepayments and other assets                            994             1,396
                                                    29,448            36,752
Non-current assets                                                         
Prepaid rent                                            146               146
Development costs                                     4,736             5,540
Property, plant and equipment                        10,737            12,523
Total assets                                         45,067            54,961
                                                                          
LIABILITIES AND EQUITY                                                     
Current liabilities                                                        
Accounts payable and accrued liabilities              8,391            10,694
Current portion of long-term debt                       470             1,505
Preferred shares                                     10,457             9,890
                                                    19,318            22,089
Non-current liabilities                                                    
Deferred gain                                           275               311
Lease inducement                                        592               666
Deferred program revenues                            19,054            18,671
Long-term debt                                        4,409            12,027
Warranty provisions                                      85                85
                                                    43,733            53,849
Equity                                                                     
Capital stock                                        76,217            73,251
Equity component of convertible loan                    206               453
Contributed surplus                                   3,492             3,424
Deficit                                            (78,581)          (76,016)
                                                     1,334             1,112
Total liabilities and equity                         45,067            54,961

CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
(unaudited, prepared  in  accordance  with IFRS,  expressed  in  thousands  of 
Canadian dollars, except number of shares and per share amounts)

                                       Three months ended  Nine months ended
FOR THE PERIOD ENDED SEPTEMBER 30            2012      2011      2012     2011
                                                                    
Revenues                                $ 19,324 $ 20,383 $ 69,522 $ 61,791
                                                                    
Cost of sales                              16,936    17,686    58,151   54,526
                                                                    
Gross profit                                2,388     2,697    11,371    7,265
                                                                    
Administrative and general expenses         3,715     2,729    11,190    8,237
Office equipment depreciation                 119       160       360      495
Other (gains) and losses - net                  -       (6)       (4)     (12)
                                                                    
Operating Income (loss)                   (1,446)     (186)     (175)  (1,455)
                                                                    
Foreign exchange (gain) loss                  300     (706)       221    (571)
Finance costs                                 586       670     1,772    1,861
Loss on repayment of debt                     397         -       397        -
                                                                    
Income (loss) before income tax           (2,729)     (150)   (2,565)  (2,745)
                                                                    
Income tax expense                              -         -         -        -
                                                                    
Income (loss) and total comprehensive     (2,729)     (150)   (2,565)  (2,745)
income (loss) for the period
                                                                    
Earnings (loss) per share:                                                
Basic earnings (loss) per common share     (0.01)      0.00    (0.01)   (0.01)
Diluted earnings (loss) per common         (0.01)      0.00    (0.01)   (0.01)
share
                                                                    
Basic weighted average number of shares   205,851   198,750   204,134  196,599
outstanding (000's)
                                                                    
Diluted weighted average number of        205,851   199,930   204,321  202,684
shares outstanding (000's)

CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited, prepared  in  accordance  with IFRS,  expressed  in  thousands  of 
Canadian dollars)

                                    Three months ended    Nine months ended
FOR THE PERIOD ENDED SEPTEMBER 30           2012    2011        2012      2011
Cash flows from operating activities                                      
Profit (loss) before tax             $ (2,729) $ (150) $ (2,565) $ (2,745)
 Adjustment for items not
affecting cash:                                                           
 Accretion on convertible loan            23      21          67        63
 Accrued interest and government
royalties                                    330     466       1,007     1,232
 Amortization and depreciation           724     844       2,280     2,530
 Deferred tooling revenue
amortization and reclassification to
revenue                                  (2,292)   (214)     (8,710)     (640)
 Development cost amortization
and reclassification to cost of
sales                                        662      91       1,698       281
 Fair value of warrants
amortization                                  44      44         132        44
 Loss on repayment of debt               397       -         397         -
 Preferred share dividends
accrued                                      189     189         567       567
 Provision for loss-making
contracts                                  (108)   (300)       (189)     (591)
 Provision for obsolete
inventory                                   (84)   (123)        (67)     (173)
 Stock based compensation                 25      25          69       115
 Other items                            (47)      61       (105)      (47)
                                        (2,866)     954     (5,419)       636
Changes in non-cash working capital                                       
 Accounts receivable                    2,869 (1,396)       5,173   (3,136)
 Inventories                            (272) (1,065)         935   (3,056)
 Prepayments and other assets             471       -         396       518
Accounts payable and accrued
liabilities                                  148     818     (2,316)       451
Other Items                                -    (77)           -      (47)
Net cash from operating activities           350   (766)     (1,231)   (4,634)
                                                                         
Cash flows from investing activities                              
Purchase of equipment                       (53)   (364)       (354)     (691)
Payments relating to development
costs and tooling                          (280)    (99)       (894)     (961)
Net cash from investing activities         (333)   (463)     (1,248)   (1,652)
                                                                         
Cash flows from financing activities                                      
(Decrease) increase in bank
indebtedness                                   - (8,054)           -   (7,515)
Payment of interest                        (552)   (342)     (1,048)     (881)
Proceeds from issuance of common
shares                                       973       -         973         -
Proceeds from customer funding of
program introduction                       1,680   3,837       7,769     9,317
Proceeds from current and long-term
debt                                           -   6,000           -     6,000
Repayment of current and long-term
debt                                     (7,097)   (212)     (7,590)     (635)
Net cash from financing activities       (4,996)   1,229         104     6,286
Net increase (decrease) in cash          (4,979)       -     (2,375)         -
Cash - Beginning of period                 6,382       -       3,778         -
Cash - End of period                       1,403       -       1,403         -

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
(unaudited, prepared  in  accordance  with IFRS,  expressed  in  thousands  of 
Canadian dollars, except number of shares)

                                        Equity
                  Share capital       component
                                   convertible Contributed              Total
                    Shares   Amount        loan     surplus    Deficit  equity
Balance                                                                     $
December 31,                                                             2,481
2010           195,505,323 $ 72,927     $ 453    $ 2,662 $ (73,561)
Issue of                                                                   324
common shares    6,488,790      324           -           -          -
Stock based                                                                115
compensation
expense                  -        -           -         115          -
Fair value                                                                  42
warrants                 -        -           -          42          -
Loss for the                                                           (2,745)
period                   -        -           -           -    (2,745)
Balance                                                                    217
September 30,
2011           201,994,113   73,251         453       2,819   (76,306)
Balance                                                                  1,112
December 31,
2011           201,994,113   73,251         453       3,424   (76,016)
Issue of                                                                 2,966
common shares   52,903,959    2,966           -           -          -
Loan                                                                     (247)
conversion               -        -       (247)           -          -
Stock-based                                                                 68
compensation
expense                  -        -           -          68          -
Loss for the                                                           (2,565)
period                   -        -           -           -    (2,565)
Balance                                                                  1,334
September 30,
2012           254,898,072   76,217         206       3,492   (78,581)





SOURCE Avcorp Industries Inc.

Contact:

Contact:Sandi DiPrimo, Investor Relations Contact 604-587-4938
 
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