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Press release from Marketwire

Firan Technology Group (FTG) Announces Second Quarter 2012 Financial Results

Monday, July 09, 2012

Firan Technology Group (FTG) Announces Second Quarter 2012 Financial Results17:05 EDT Monday, July 09, 2012TORONTO, ONTARIO--(Marketwire - July 9, 2012) - Firan Technology Group Corporation (TSX:FTG) today announced financial results for the second quarter 2012.Grew sales by 4% over second quarter 2011 and by 7% over year-to-date 2011 Fifth consecutive profitable quarter Earnings increased 50% over Q2 2011, with $0.2M expenses related to startup of FTG Aerospace Tianjin and FTG Aerospace Chatsworth Began production in FTG Aerospace-Tianjin facility Signed Letter of Intent for first significant program in China on C919 single aisle aircraft being developed "The second quarter of 2012 saw significant breakthroughs for FTG with the first shipments from our FTG Aerospace - Tianjin facility and the signing of a Letter of Intent for the design and production of Cockpit Panel Assemblies for the Chinese C919 single aisle aircraft currently under development. The business is performing well and strategic initiatives put in place in prior years are coming to fruition", stated Brad Bourne, President and Chief Executive Officer. He added, "FTG continues to invest in equipment and R&D to move FTG up the value chain and capture content on key new aircraft platforms being developed worldwide." Second Quarter Results: (three months ended June 1, 2012 compared with three months ended May 27, 2011) Q2 2012 Q2 2011 Sales$14,396,000$13,874,000Operating Earnings (1):1,286,0001,260,000• Net R&D Investment655,000840,000• Tax--Net Earnings$631,000$420,000Earnings per share- basic$0.04$0.02- diluted$0.03$0.02(1) Operating Earnings is not a measure recognized under the International Financial Reporting Standards ("IFRS").Management believes that this measure is important to many of the Corporation's shareholders, creditors and other stakeholders.The Corporation's method of calculating Operating Earnings may differ from other corporations and accordingly may not be comparable to measures used by other corporations. Year-To-Date Results: (six months ended June 1, 2012 compared with six months ended May 27, 2011) Year-To-Date 2012 Year-To-Date 2011 Sales$27,870,000$26,087,000Operating Earnings(1):1,901,0001,738,000• Net R&D Investment1,230,0001,507,000• Tax2,0002,000Net Earnings$669,000$229,000Earnings per share- basic$0.04$0.01- diluted$0.03$0.01Business HighlightsFTG accomplished many goals in our second quarter 2012 that continue to improve the Corporation and position it for the future, including:Achieved 4% year-over-year sales growth despite softness in the North American printed circuit board industry Installed third Laser Direct Imaging (LDI) system in FTG Circuits - Toronto Completed 3-year MIL-P-55110 and MIL-P-50884 validation audit at FTG Circuits - Chatsworth Signed Letter of Intent for C919 cockpit panel assemblies Shipped first parts from FTG Aerospace - Tianjin Assembled first parts at FTG Aerospace - Chatsworth Completed implementation of new ERP system for FTG Aerospace - Toronto and began implementation at FTG Aerospace - Tianjin and FTG Aerospace - Chatsworth Completed AS9100 C surveillance audit at FTG Aerospace - Toronto For FTG overall sales increased by $0.5M (4%), from $13.9M in Q2 2011 to $14.4M in Q2 2012. FTG Aerospace - Toronto drove the growth in the quarter. For the first six months, sales were $27.9M, an increase of $1.8M or 7% over the same period last year.The Circuits Segment sales were down $0.4M or 4% in Q2 2012 versus Q2 2011. Year-to-date Circuits sales were up $0.5M or 3%.For the Aerospace segment, sales in Q2 2012 were up $0.9M or 31% to $3.9M compared to $3.0M in Q2 2011. This growth resulted from strong demand for commercial aerospace products. Year-to-date sales were up $1.3M or 21%.Net earnings at FTG in Q2 2012 were $0.6M compared to $0.4M in Q2 2011. Included in this year's earnings are expenses of $0.2M incurred in the quarter related to the startup of FTG Aerospace - Tianjin and FTG Aerospace - Chatsworth. For the six month period, net earnings were $0.7M versus $0.2M last year, an increase of 190%.The Circuits segment net earnings before corporate, interest and tax costs was $1.2M in Q2 2012 compared to $0.9M in Q2 2011. On a year-to-date basis, earnings were $1.6M, an increase of $0.6m or 60%. The improvement was due to higher activity and strong operational performance.The Aerospace net earnings before corporate and interest costs was $0M in Q2 2012 versus $0.1M in Q2 2011. The results are due to higher activity, offset by implementation costs related to the new ERP system and startup costs at the two new facilities in California and China. For the first six months 2012, earnings were $0.3M, a drop of $0.1M, again due to the above noted one-time costs.As at June 1, 2012, the Corporation's primary source of liquidity included cash of $0.3M, accounts receivable of $10.7M and inventory of $8.8M. Inventories increased in the quarter due to higher activity and ongoing investment in one large aerospace program where shipments began late in Q2. Net working capital at November 30, 2011 was $10.9M. The Corporation will host a live conference call on July 11, 2012 at 11:30 am (EST) to discuss the results of the second quarter 2012.Anyone wishing to participate in the call should dial 416-340-8527 or 1-877-240-9772 and identify that you are calling to participate in the FTG conference call. The Chairperson is Mr. Brad Bourne. A replay of the call will be available until July 25, 2012 and will be available on the FTG website at www.ftgcorp.com. The number to call for a rebroadcast is 905-694-9451 or 1-800-408-3053, pass code 8807452.ABOUT FIRAN TECHNOLOGY GROUP CORPORATIONFTG is an aerospace and defense electronics product and subsystem supplier to customers around the globe. FTG has two operating units:FTG Circuits is a manufacturer of high technology, high reliability printed circuit boards. Our customers are leaders in the aviation, defense, and high technology industries. FTG Circuits has operations in Toronto, Ontario and Chatsworth, California.FTG Aerospace manufactures illuminated cockpit panels, keyboards and sub-assemblies for original equipment manufacturers of aerospace and defense equipment. FTG Aerospace has operations in Toronto, Ontario, Chatsworth, California and Tianjin, China. The Corporation's shares are traded on the Toronto Stock Exchange under the symbol FTG. FORWARD-LOOKING STATEMENTSThis news release contains certain forward-looking statements. These forward-looking statements are related to, but not limited to, FTG's operations, anticipated financial performance, business prospects and strategies. Forward-looking information typically contains words such as "anticipate", "believe", "expect", "plan" or similar words suggesting future outcomes. Such statements are based on the current expectations of management of the Corporation and inherently involve numerous risks and uncertainties, known and unknown, including economic factors and the Corporation's industry, generally. The preceding list is not exhaustive of all possible factors. Such forward-looking statements are not guarantees of future performance and actual events and results could differ materially from those expressed or implied by forward-looking statements made by the Corporation. The reader is cautioned to consider these and other factors carefully when making decisions with respect to the Corporation and not place undue reliance on forward-looking statements. Other than as may be required by law, FTG disclaims any intention or obligation to update or revise any such forward-looking statements, whether as a result of new information, future events or otherwise. Additional information can be found at the Corporation's website www.ftgcorp.com.FIRAN TECHNOLOGY GROUP CORPORATIONInterim Consolidated Balance Sheets(unaudited)June 1,November 30,December 1,(in thousands of dollars)201220112010ASSETSCurrent assetsCash$318$1,944$305Accounts receivable10,6679,5929,332Taxes receivable364378448Inventories8,7907,9738,726Prepaid expenses55134966920,69020,23619,480Non-current assetsPlant and equipment, net5,1204,4744,024Goodwill1,0391,0391,039Deferred income taxes1,3751,375667Intangible and other assets375293336Total assets$28,599$27,417$25,546LIABILITIES AND SHAREHOLDERS' EQUITYCurrent liabilitiesBank indebtedness$-$-$109Accounts payable and accrued liabilities8,4268,1237,420Provisions356485544Unearned revenue779714152Customer deposit205--Current portion of long-term bank debt-1,4583,0599,76610,78011,284Non-current liabilitiesSubordinated loan3,4762,4441,746Government assistance1,4581,065914Total liabilities14,70014,28913,944Contingencies and commitmentsShareholders' equityDeficit$(9,363)$(10,032)$(11,506)Accumulated other comprehensive income8912-(9,274)(10,020)(11,506)Share capitalCommon shares12,68112,68112,681Preferred shares2,2182,2182,218Contributed surplus8,2748,2498,209Total shareholders' equity13,89913,12811,602Total liabilities and shareholders' equity$28,599$27,417$25,546FIRAN TECHNOLOGY GROUP CORPORATIONInterim Consolidated Statements of EarningsThree months endedSix months ended(unaudited) (in thousands of dollars except per share amounts)June 1,2012May 27, 2011June 1,2012May 27, 2011Sales$14,396$13,874$27,870$26,087Cost of salesCost of sales10,3449,78720,39618,883Depreciation of plant and equipment432458826936Total cost of sales10,77610,24521,22219,8193,6203,6296,6486,268ExpensesSelling, general and administrative2,2722,2494,4204,215Research and development costs7858701,3901,571Recovery of research and development costs(130)(30)(160)(64)Depreciation/amortization of office equipment and intangible assets35296456Interest expense on short-term debt24434587Interest expense on long-term debt7467135106Foreign exchange (gain) loss(71)(19)8366Total expenses2,9893,2095,9776,037Earnings before income taxes631420671231Income tax expense--22Net earnings$631$420$669$229Earnings per shareBasic$0.04$0.02$0.04$0.01Diluted$0.03$0.02$0.03$0.01FIRAN TECHNOLOGY GROUP CORPORATIONInterim Consolidated Statements of Comprehensive Income (Loss)Three months endedSix months ended(unaudited)June 1,May 27,June 1,May 27,(in thousands of dollars)2012201120122011Net earnings$631$420$669$229Other comprehensive income (loss)Foreign currency translation adjustments195(160)77(314)195(160)77(314)Total comprehensive income (loss)$826$260$746$(85)FIRAN TECHNOLOGY GROUP CORPORATIONInterim Consolidated Statements of Changes in Shareholders' EquitySix months ended June 1, 2012 and May 27, 2011 (unaudited) (in thousands of dollars)CommonSharesPreferredSharesDeficitContributedSurplusAccumulatedOtherComprehensiveIncome (Loss)TotalShareholders'EquityBalance, December 1, 2010$12,681$2,218$(11,506)$8,209$-$11,602Net earnings--229--229Stock-based compensation---18-18Foreign currency translation adjustments----(314)(314)Balance, May 27, 201112,6812,218(11,277)8,227(314)11,535Net earnings--1,245--1,245Stock-based compensation---22-22Foreign currency translation adjustments----326326Balance, November 30, 201112,6812,218(10,032)8,2491213,128Net earnings--669--669Stock-based compensation---25-25Foreign currency translation adjustments----7777Balance, June 1, 2012$12,681$2,218$(9,363)$8,274$89$13,899FIRAN TECHNOLOGY GROUP CORPORATIONInterim Consolidated Statements of Cash FlowsThree months endedSix months ended(unaudited)June 1,May 27,June 1,May 27,(in thousands of dollars)2012201120122011Net inflow (outflow) of cash related to the following:Operating activitiesNet earnings$631$420$669$229Items not affecting cash:Stock-based compensation16102518Gain from disposal of plant and equipment-(3)(2)(1)Effect of exchange rates on U.S. dollar Canadian debt38(3)(17)(81)Depreciation of plant and equipment455475866968Amortization of intangible assets12122424Amortization of deferred financing costs12143628AMIS interest accretion674411460Amortization of government assistance(109)(71)(180)(119)Changes in non-cash operating working capital(13)(64)(1,873)(503)1,109834(338)623Investing activitiesAdditions to plant and equipment(1,116)(326)(1,479)(1,488)Proceeds from disposals of plant and equipment-7327Additions to deferred financing costs(108)-(108)-Net additions to customer deposits205-205-(1,019)(319)(1,379)(1,461)Financing activities(Decrease) increase in bank indebtedness-(307)-536Proceeds from subordinated loan and government assistance318-1,490960Repayments of long-term debt(1,206)(208)(1,423)(1,108)(888)(515)67388Effects of foreign exchange rate changes on cash flow111-24254Net cash flow(687)-(1,626)(196)Cash, beginning of period1,005-1,944196Cash, end of period$318$-$318$-Disclosure of cash paymentsPayment for interest$26$66$66$133Payments for income taxes$-$-$2$2FOR FURTHER INFORMATION PLEASE CONTACT: Bradley C. BourneFiran Technology Group CorporationPresident and CEO(416) 299-4000 x314bradbourne@ftgcorp.comORJoseph R. RicciFiran Technology Group CorporationVice President and CFO(416) 299-4000 x309joericci@ftgcorp.comwww.ftgcorp.com