Firan Technology Group Corporation
TSX : FTG

Firan Technology Group Corporation

April 07, 2010 16:56 ET

Firan Technology Group (FTG) Announces First Quarter 2010 Financial Results

TORONTO, ONTARIO--(Marketwire - April 7, 2010) - Firan Technology Group Corporation (TSX:FTG) today announced financial results for the first quarter 2010.

  • 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 Toronto Stock Exchange under the symbol FTG.

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        
         
(in thousands of dollars) February 26, 2010
(unaudited)
  November 30, 2009
(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 share amounts) February 26, 2010
(unaudited)
  February 27, 2009
(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)  
  Common Shares Preferred Shares Contributed Surplus Deficit   Accumulated Other Comprehensive Loss ("AOCL")   Total Shareholders' 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  
                               
                               
                               
                               
                               
                               
    Common Shares   Preferred Shares   Contributed Surplus   Deficit     Accumulated Other Comprehensive Income ("AOCI")     Total Shareholders' 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  
(in thousands of dollars) February 26, 2010 (unaudited)   February 27, 2009 (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 Information

  • Firan Technology Group Corporation
    Bradley C. Bourne
    President and CEO
    (416) 299-4000 x314
    bradbourne@ftgcorp.com
    or
    Firan Technology Group Corporation
    Joseph R. Ricci
    Vice President and CFO
    (416) 299-4000 x309
    joericci@ftgcorp.com