-- Achieved book-to-bill ratio above 1.15:1 in the quarter
-- Maintained R&D investments at 6.2% of sales to ensure continued growth
in technology and capabilities to support new customer demands
-- Captured qualification program for very high volume military ground
vehicle display product
"We were one of the last companies to suffer from the global economic slowdown and we appear to also be experiencing a delay in seeing increased activity. This combined with a 17% drop in the value of the United States dollars ("USD") since the first quarter last year made for a difficult quarter. However, activity late in the quarter and strong bookings suggest levels of demand are now increasing. During the slow period we continued to carefully manage our costs in line with our sales to minimize the impact on our financial health. Our continued investments in technologies and Operational Excellence provide us with the tools to grow market share and exceed customer expectations going forward", stated Brad Bourne, President and Chief Executive Officer.
First Quarter Results: (three months ended February 26, 2010 compared with three months ended February 27, 2009)
Q1 2010 Q1 2009
------------------------------
Sales $10,360,000 $14,694,000
------------------------------
Operating (Loss) / Earnings before (1): (124,000) 1,009,000
- Net R&D,
- Severance
- Tax
R&D Investment 643,000 1,124,000
R&D Recovery (317,000) (50)
Severance 144,000 -
Tax 2,000 2,000
------------------------------
Net (Loss) ($596,000) ($67,000)
------------------------------
(Loss) per share
- basic & diluted ($0.03) $0.00
(1) Operating Earnings (Loss) is not a measure recognized under Canadian
generally accepted accounting principles ("GAAP"). 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 (Loss) may differ from other corporations and accordingly
may not be comparable to measures used by other corporations.
Business Highlights
FTG accomplished many goals in the first quarter of 2010 that continue to improve the Corporation and position it for the future, including:
-- Risk reduction investments in ground based military display technology
that led to capture of a first qualification program with a target
customer
-- The capture of 9 new customers in key aerospace and defence markets
-- Strong backlog of new part numbers in the Circuits business
-- Reduced operating costs through elimination of overtime, staff
reductions, and wage reductions for other staff
-- Continued strong inventory management and control across the Corporation
to improve the cash cycle
For FTG overall, sales decreased by 29%, from $14.7M in Q1 2009 to $10.4M in Q1 2010. Over this same period the decline in the value of the USD was 17%. Sales in Canada were down 46% while sales in the USD were down 26% including the exchange rate decrease or 13% in constant USD. The drop in sales in Canada impacted both Circuits and Aerospace businesses. This activity is expected to recover in Q2 and beyond as activity from existing customers recovers and new customer awards transition into full scale development and production.
The Circuits Segment sales were down $3.2M or 28% in Q1 2010 versus Q1 2009. The Chatsworth facility sales decreased 43% due to a temporary drop in activity from its largest customer. The Toronto facility sales decreased 19%, primarily due to the drop in the exchange rate.
For the Aerospace segment, sales in Q1 2010 were down $1.2M or 36% compared to Q1 2009. This business was particularly affected by a drop in activity in Canada. Near the end of the quarter and in early Q2, this business won two significant new programs in Canada that could add over $2M in sales in the remaining 9 months of 2010.
Net loss at FTG in Q1 2010 was $0.6M compared to $0.1M in Q1 2009. The drop in activity, the declining value of the USD and severance costs negatively impacted results. This was offset by aggressive cost cutting measures across the company and a recovery prior period of R&D expenditures in Canada. Overall R&D spending was maintained in key areas and remained over 6.2% of sales.
The Circuits segment net income before corporate and interest costs was $7,000 in Q1 2010 compared to $54,000 in Q1 2009. Lower volume negatively impacted results, offset by lower costs, improved yields, lower R&D spending and R&D cost recovery in Canada.
The Aerospace net income before corporate and interest costs was $17,000 in Q1 2010 versus $539,000 in Q1, 2009. The drop in income was primarily due to lower volume, lower USD exchange rate and increased warranty costs in the quarter, offset by lower operating costs.
As at February 26, 2010, the Corporation's primary source of liquidity included accounts receivable of $7.9M and inventory of $7.9M. Net working capital at February 26, 2010 was $8.0M.
As reported previously, FTG's largest shareholder, Glendale International Corp. filed bankruptcy on January 19, 2010 and the 8,541,987 shares of FTG are now controlled by the bankruptcy trustee. Management is not aware of any specific actions regarding the disposition of these shares.
The Corporation will host a live conference call on April 8, 2010 at 11:00am (EDT) to discuss the results of Q1 2010.
Anyone wishing to participate in the call should dial 416-695-7848 or 1-800-952-4972 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 April 22, 2010 and will be available on the FTG website at www.ftgcorp.com. The number to call for a rebroadcast is 416-695-5800 or 1-800-408-3053, pass code 4378104.
ABOUT FIRAN TECHNOLOGY GROUP CORPORATION
FTG is an aerospace and defense electronics product and subsystem supplier to the North American marketplace. 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 avionics
products as well as airframe manufacturers located in Toronto,
Ontario.
The Corporation's shares are traded on the
FORWARD-LOOKING STATEMENTS
This 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 CORPORATION
Interim Consolidated Balance Sheets
----------------------------------------------------------------------------
----------------------------------------------------------------------------
February 26, 2010 November 30, 2009
(in thousands of dollars) (unaudited) (audited)
----------------------------------------------------------------------------
----------------------------------------------------------------------------
ASSETS
CURRENT
Cash $ - $ 20
Accounts receivable 7,900 9,490
Taxes receivable 577 450
Inventories 7,926 7,618
Prepaid expenses 468 737
Future income taxes 231 232
----------------------------------------------------------------------------
17,102 18,547
CAPITAL ASSETS 5,666 6,099
GOODWILL 4,054 4,063
OTHER INTANGIBLE ASSETS 372 384
----------------------------------------------------------------------------
$ 27,194 $ 29,093
----------------------------------------------------------------------------
----------------------------------------------------------------------------
LIABILITIES
CURRENT
Bank indebtedness $ 1,916 $ 157
Accounts payable and accrued
liabilities 5,437 6,727
Current portion of long-term debt 1,689 2,075
----------------------------------------------------------------------------
9,042 8,959
LONG-TERM DEBT 4,082 5,219
----------------------------------------------------------------------------
13,124 14,178
----------------------------------------------------------------------------
SHAREHOLDERS' EQUITY
Deficit (8,378) (7,782)
Accumulated other comprehensive loss (614) (351)
----------------------------------------------------------------------------
(8,992) (8,133)
Share capital
Common shares 12,681 12,681
Preferred shares 2,218 2,218
Contributed surplus 8,163 8,149
----------------------------------------------------------------------------
14,070 14,915
----------------------------------------------------------------------------
$ 27,194 $ 29,093
----------------------------------------------------------------------------
FIRAN TECHNOLOGY GROUP CORPORATION
Interim Consolidated Statements of Loss
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Three Months Ended
----------------------------------------------------------------------------
----------------------------------------------------------------------------
(in thousands of dollars except per February 26, 2010 February 27, 2009
share amounts) (unaudited) (unaudited)
----------------------------------------------------------------------------
SALES $ 10,360 $ 14,694
COST OF SALES 8,115 10,893
----------------------------------------------------------------------------
2,245 3,801
----------------------------------------------------------------------------
EXPENSES
Selling, general and administrative 1,609 1,760
Research and development costs 643 1,124
Recovery of research and development
costs (317) (50)
Amortization of capital assets 534 644
Amortization of intangible assets 12 12
Interest expense on long-term debt 103 122
Interest expense on short-term debt 14 25
Severance expenses 144 -
Foreign exchange loss 97 229
----------------------------------------------------------------------------
2,839 3,866
----------------------------------------------------------------------------
LOSS BEFORE INCOME TAXES (594) (65)
PROVISION FOR INCOME TAXES 2 2
----------------------------------------------------------------------------
----------------------------------------------------------------------------
NET LOSS $ (596) $ (67)
----------------------------------------------------------------------------
----------------------------------------------------------------------------
NET LOSS PER SHARE
Basic $ (0.03) $ -
Diluted $ (0.03) $ -
----------------------------------------------------------------------------
----------------------------------------------------------------------------
FIRAN TECHNOLOGY GROUP CORPORATION
Interim Consolidated Statements of Shareholders' Equity
and Comprehensive Loss
(in thousands of dollars) (unaudited)
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Accumula-
ted Other Total
Comprehe- Sharehol-
Common Preferred Contribut- nsive Loss ders'
Shares Shares ed Surplus Deficit ("AOCL") Equity
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Balance,
November 30,
2009 $12,681 $ 2,218 $ 8,149 (7,782) (351) $14,915
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Net loss (596) (596)
Other
comprehensive
loss:
Foreign
currency
translation
adjustments (263) (263)
----------
Comprehensive
loss (859)
----------
----------
Stock based
compensation 14 14
----------------------------------------------------------------------------
Balance,
February 26,
2010 $12,681 $ 2,218 $ 8,163 $ (8,378) $ (614) $14,070
----------------------------------------------------------------------------
----------------------------------------------------------------------------
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Accumula-
ted Other
Comprehe- Total
nsive Sharehol-
Common Preferred Contribut- Income ders'
Shares Shares ed Surplus Deficit ("AOCI") Equity
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Balance,
November 30,
2008 $ 12,681 $ 2,218 $ 8,071 (6,692) 324 $ 16,602
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Net loss (67) (67)
Other
comprehensive
loss:
Foreign
currency
translation
adjustments 173 173
Net unrealized
gain on
derivative
financial
instruments
designated as
cash flow
hedges (235) (235)
----------
Comprehensive
loss (129)
----------
----------
Stock based
compensation 34 34
----------------------------------------------------------------------------
Balance,
February 27,
2009 $ 12,681 $ 2,218 $ 8,105 $ (6,759) $ 262 $ 16,507
----------------------------------------------------------------------------
----------------------------------------------------------------------------
FIRAN TECHNOLOGY GROUP CORPORATION
Interim Consolidated Statements of Cash Flows
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Three Months Ended
----------------------------------------------------------------------------
February 26, February 27,
2010 2009
(in thousands of dollars) (unaudited) (unaudited)
----------------------------------------------------------------------------
----------------------------------------------------------------------------
NET (OUTFLOW) INFLOW OF CASH RELATED TO THE
FOLLOWING ACTIVITIES:
OPERATING
Net loss $ (596) $ (67)
Items not affecting cash
Stock based compensation expense 14 34
Effect of exchange rates on U.S. dollar
Canadian debt (14) 120
Amortization of capital assets 534 644
Amortization of intangible assets 12 12
Changes in non-cash operating working
capital 115 906
----------------------------------------------------------------------------
65 1,649
----------------------------------------------------------------------------
INVESTING
Additions to capital assets (107) (916)
----------------------------------------------------------------------------
(107) (916)
----------------------------------------------------------------------------
FINANCING
Increase in bank indebtedness 1,760 91
Repayments of long-term debt (1,505) (466)
----------------------------------------------------------------------------
255 (375)
----------------------------------------------------------------------------
Effect of foreign exchange rate changes on
cash flow (233) (224)
----------------------------------------------------------------------------
NET CASH FLOW (20) 134
CASH, BEGINNING OF PERIOD 20 170
----------------------------------------------------------------------------
CASH, END OF PERIOD $ - $ 304
----------------------------------------------------------------------------
DISCLOSURE OF CASH PAYMENTS
Payments for interest $ 117 $ 147
Payments for income taxes $ 2 $ 2
Refund of income taxes $ - $ -
----------------------------------------------------------------------------
Contact:
Contacts:
Firan Technology Group Corporation
Bradley C. Bourne
President and CEO
(416) 299-4000 x314
bradbourne@ftgcorp.com
Firan Technology Group Corporation
Joseph R. Ricci
Vice President and CFO
(416) 299-4000 x309
joericci@ftgcorp.com
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